Relocation of Utilities for State Highway Construction
Many Tennessee municipalities, along with other public and private utility owners, have facilities located in state highway rights-of-way. When state highway improvements require the relocation of these facilities, the cost of relocation can be significant and often unanticipated in local budgets.

Under T.C.A. § 54-5-804, the Commissioner of the Tennessee Department of Transportation (TDOT) has authority to include the cost of utility relocation in the overall highway construction cost. However, this is not automatic. Cities and other utility owners may request reimbursement, but eligibility depends on compliance with statutory procedures, TDOT policies, and federal rules if federal highway funds are involved. When federal funds are part of the project, reimbursement is more likely but still subject to commissioner approval and the utility owner’s timely cooperation.

Notification Requirements
T.C.A. § 54-5-853 requires TDOT to notify all utility owners with facilities in the proposed right-of-way of pending construction. Notification must be made by certified mail (or by approved electronic transmission) to the designated representative of the utility.

• First notice: Within 60 days of receiving notice, the utility must respond, confirming whether it owns facilities in the described location and providing a description of the type and general location.
• Second notice: If no response is received, TDOT must send a second notice by certified mail. The utility then has 10 days to respond.
• Failure to respond: If the utility owner fails to respond to both notices, the law presumes the entity does not own facilities at the site. TDOT and its contractor may then proceed with construction without liability for damage to those facilities. In addition, the utility owner may be held liable to the contractor for damages caused by its failure to respond.

Relocation of Utilities by the Department
If utility relocation is required, the utility owner must provide plans, cost estimates, and schedules in accordance with TDOT requirements. Failure to comply can delay or disqualify reimbursement. Under T.C.A. § 54-5-854, civil penalties may also be imposed for missed deadlines (generally $500 per day, or $250 for smaller jurisdictions).

When a contractor damages utility facilities through negligence, the contractor is liable for those damages. However, if a city or utility owner fails to comply with the statutory or procedural requirements, the contractor, with TDOT’s consent, may proceed with construction without liability for damages to those facilities. In that case, the utility owner may be responsible for any damages to the contractor caused by its failure.

Key Points and Limitations

• Not all relocations are eligible for reimbursement. Factors such as the facility’s location (e.g., within public ROW vs. private easement), the type of utility, and compliance with TDOT requirements affect eligibility.
• Reimbursement is at the discretion of the Commissioner and contingent on adherence to federal and state procedures.
• These provisions apply to all owners of utility facilities, not just municipalities. Cities are often highlighted because they frequently own utilities, but private and cooperative utility providers are equally covered.
• Timely communication, proper submittals, and adherence to TDOT schedules are critical to securing reimbursement and avoiding liability.