Arizona Court of Appeals Division One Holds that Utility Relocation Reimbursement Statute, A.R.S. § 28-7156, Does Not Require the Department of Transportation to Reimburse Cities For Relocation of Utility Lines Necessitated by State Highway Construction.

During the construction of the Santan Freeway, several water and sewer utility lines owned by Chandler were relocated. Chandler paid for the relocation, but sought reimbursement from Arizona Department of Transportation, asserting a prior rights claim and a statutory reimbursement claim under A.R.S. § 28-7156. The trial court found that § 28-7156 required ADOT to reimburse Chandler; ADOT appealed.

The Arizona Appeals Court vacated the trial court’s grant of summary judgment in Chandler’s favor, finding that the trial court had erroneously interpreted the utility relocation reimbursement statute. Section 28-7156 provides, in relevant part, that ADOT “may authorize reimbursement to a city, town or county” for the cost of relocation. Under the plain language, ADOT had discretion but was not obligated, to reimburse localities for utility relocation. The Court rejected Chandler’s argument that it should construe “may authorize” as mandatory under Brooke v. Moore, 60 Ariz. 551,(1943) (in certain contexts “may” means “shall”). Unlike in Brooke, where the Tax Commission’s denial of a permit for horse and dog racing was arbitrary, capricious, and in contravention of the public interest, ADOT’s exercise of discretion to deny reimbursement to Chandler was neither arbitrary nor capricious and the denial was in the best interest of the State.

Opinion authored by Judge Snow, with Presiding Judge Winthrop and Judge Weisberg concurring.