STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

June 25, 1969

Morris G. Hallock, Secretary
State Highway Commission
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 69-55

Subordination agreement for right-of-way purposes

Dear Mr. Hallock:

Reference is made to your request for an official opinion on the following state of facts:

"Otter Tail Power Company is the owner of a certain easement, on which it presently owns and maintains electrical power transmission lines. The State Highway Commission, in conjunction with a Federal Aid Project, proposes to construct a controlled access highway-a portion of which will pass over said easement. In such cases as this the utility company is reimbursed for the relocation from Federal funds. The policy of the Commission has been to give the power companies, where necessary or desirable, a permit to construct their lines on the highway right-of-way. This permit allowed the construction and maintenance of the power lines, but the rights of the power companies were subordinate to the rights of the Highway Department. If it became necessary that these power transmission lines, located in the highway right-of-way, be moved or altered because of additional highway construction, it was done at the expense of the power company.

"In this present situation it is necessary for the Highway Department to pay for the relocation of Otter Tail Power Companies since they are presently located on private property.

"There are two alternatives relating to such relocation. The one alternative is to run the power lines along the highway to a point where the right-of-way is narrowest and cross over, such relocation would result in a situation where there would be no poles in the right-of-way.

"The second alternative is to cross over at the interchange in a straight line with existing lines. The latter alternative would be of less expense to the Department of Highways. Otter Tail Power Company will not agree to the latter proposal without a subordination agreement insuring them of not having to bear the costs should they be required to relocate if highway construction in the future should necessitate. A copy of their proposed subordination agreement is attached hereto."

"Otter Tail Power is the first power company to propose or demand such an agreement. It is their apparent feeling if they are being told or suggested as to where they should relocate, they should be protected as to reimbursement should they move again."

The subordination agreement reads as to pertinent parts as follows:

"Whereas, Otter Tail is the owner of certain rights under Right-of-Way Easements, copies of which are attached and made a part of this agreement, covering the following described land in Deuel County, South Dakota, to wit:

***

"WHEREAS, the State proposes the construction of an Interstate Highway known as U. S. Highway No. 29, Project 1-29-6(4) 148 Deuel County, South Dakota, and finds it necessary to request certain adjustments of facilities owned by Otter Tail and now located on a portion of the above described lands.

"NOW, THEREFORE, in consideration of the premises and the mutual covenants herein set forth, the parties hereto agree as follows:

"Section 1. Otter Tail does hereby subordinate those rights in the above described Right-of-Way easements to the paramount right of the State to build, construct, operate, maintain, and control an Interstate Public Highway across the aforedescribed lands.

"Section 2. This Agreement shall in no wise affect or impair the rights of Otter Tail or its successors or assigns under and by virtue of said Right-of-Way Easements.

* * *

"Section 5. This Agreement pertains only to the construction, operation and maintenance of Interstate Highway Project 1-29-6(4) 148 upon the above described lands, and in no manner is it intended to determine the rights of the parties hereto concerning future highway construction or improvement."

Your specific question is:

"Does the attached proposed subordination agreement received from Otter Tail Power Company relative to relocation of electrical lines which is made necessary by the construction of a highway by the State Highway Commission, conflict with any State laws relative to rights of way."

SDCL 31-26-4 provides as follows:

"When any highway along which a line has been constructed pursuant to Section 31-26-1 shall be changed, the grantee shall, upon 90 days notice in writing, remove such line to the highway as changed."

The leading South Dakota case on the question is Dakota Central Telephone Company v. Shipman Construction Company, 49 SD 251, 207 W 72. In that case Judge Gates stated:

"We are of the opinion that in granting the right to telephone companies to use the highways (now section 9791, Rev. Code 1919), the state did not divest itself of its power to construct and maintain highways, nor did it make such power subordinate to the grant. In view of this state of the law, and in view of the provision in Const. Art. 17, §4, "and the exercise of the police power of the state shall never be abridged or so construed as to permit corporations to conduct their business in such manner as to infringe the equal rights of individuals or the general well-being of the state,' we will not presume that the Legislature intended that the state should be liable to the telephone company for damage necessarily done to its lines without negligence."

The present movement of the poles from their location on private property to the highway right-of-way will be at the expense of the government. However, Otter Tail seeks to maintain its easement on the right-of-way. In other words, Otter Tail desires to grant to the State of South Dakota an easement on their easement.

It is well settled in South Dakota that where a highway is changed, the utility poles thereon being there at the sufferance of the state must be moved at the expense of the utility company. See: 1951-52 AGR 23.

The state must have the dominant easement, and it is my opinion that on this statement of facts and because of the authorities above cited, that the subordination agreement submitted by Otter Tail would be of no legal effect if entered into by the State Highway Department, and that it would be contrary to law and public policy.

This case is distinguished from the Attorney General's opinion of 1959-60 p. 19, addressed to Mr. H. C. Koch, Assistant Utilities Engineer, Department of Highways, Pierre, South Dakota, and dated December 6, 1958, for the reason that there was a question of a necessity of taking in that case. Otherwise any parts of that opinion in conflict herewith are hereby expressly overruled.

Respectfully submitted,

Gordon Mydland
Attorney General