Phase: Applied learning · Worked scenarios · Calculations · Audit findings · Document drills
Apply what you've read — scenario by scenario, calculation by calculation
23 CFR 645 Alternate Procedure, Utility Agreements, prior rights. Each exercise has a hidden solution — work through your answer before revealing.
I
Scenario 01
Prior rights determination
Setup
A federal-aid widening project requires relocation of a 12" PG&E gas main. The gas main has been in its current location, within the street R/W, since 1962. PG&E claims the relocation is at LPA expense (federal-aid reimbursable). The LPA reviews the PG&E franchise agreement, which was executed in 1958 and granted utility easements within the street.
Question
Who pays for the relocation? What governs?
Solution
Likely LPA/federal pays — PG&E's 1958 franchise predates the current relocation need, suggesting "prior rights."
Key concept: Prior Rights Determination (23 CFR 645.107 and LAPM Ch 14):
• If the utility has compensable property rights (easement, franchise, fee) in the current location predating the public R/W or predating the project, the project bears the relocation cost.
• If the utility is in the public R/W under a permit or non-compensable right (terminable at will), the utility bears its own relocation.
For PG&E:
1. Franchise from 1958 — granted before the 1962 installation.
2. Gas main installed in 1962, presumably under franchise authority.
3. The franchise grants compensable property rights (typically perpetual easements within public street R/W with relocation reimbursement if the public agency requires relocation).
→ Likely prior rights. Project pays for relocation. Reimbursable with federal funds if proper documentation.
Procedure (23 CFR 645 Alternate Procedure):
1. LPA and utility execute a Utility Agreement before relocation begins.
2. LPA prepares cost estimate; utility provides their cost estimate.
3. LPA submits Utility Agreement to Caltrans for review/approval.
4. FHWA Specific Authorization to Relocate Utilities required (non-delegable, see Ch 2).
5. After authorizations, utility performs work; LPA reimburses utility per Utility Agreement.
6. LPA invoices Caltrans for federal participation in utility relocation costs.
If prior rights are unclear — review the franchise carefully and seek legal counsel. Erroneous prior-rights determination is a common audit finding.
Authority: LAPM Ch 14; 23 CFR 645
III
Audit Finding 01
Read the fact pattern — what's the finding?
Facts
An LPA federal-aid project included $187,000 in utility relocation work performed by a private utility. The utility relocation began on March 1, 2026. The Utility Agreement was executed on April 15, 2026. The construction phase E-76 was issued February 1, 2026.
Analysis
What is the finding?
Finding · Citation · Corrective action
Finding: Utility relocation work began before Utility Agreement execution. 23 CFR 645.119(e)(2) and LAPM Ch 14 require:
• Authorization to Proceed (E-76) — present here, dated Feb 1.
• FHWA Specific Authorization to Relocate Utilities — required and must precede work.
• FHWA Approval of Utility Agreement — required and must precede work.
Work started March 1; Utility Agreement only executed April 15. The March 1 - April 15 work was performed without authorized agreement in place.
Consequence:
1. Work performed before Utility Agreement execution is not federally reimbursable. Verify the date when work actually started — invoices, daily reports.
2. Pre-Award audit finding affecting future federal-aid projects.
3. The utility may have to absorb the costs of pre-agreement work or the LPA may have to pay with non-federal funds.
This pattern is common when LPAs feel schedule pressure: they let the utility start under "verbal authorization" with the agreement to follow. That arrangement is not federally compliant.
Corrective action:
• Ensure all utility agreements are EXECUTED before utility relocation work begins.
• If urgency requires expedited utility work, structure interim agreements or use Caltrans expedited review procedures.
• Don't rely on the construction-phase E-76 alone — utility relocations have their own authorization chain.
Authority: LAPM Ch 14; 23 CFR 645.119(e)(2)
Applied learning · Companion chapter
These exercises apply the procedural framework presented in LAPM Chapter 14: Utility Relocations. For the full chapter reference, glossary, and recall quiz, see the deep chapter file.