A federal appeals court in Richmond has ruled that Chesapeake & Potomac Telephone Co. can be classified as a "displaced person" to receive relocation benefits in a Norfolk redevelopment dispute.

The controversy began 10 years ago when the federal government gave funds to the Norfolk Redevelopment and Housing Authority to upgrade blighted areas of the city. C&P had to move some of its lines and other equipment because of the renewal project and requested federal relocation benefits reserved for displaced persons. The request was denied.

C&P then filed suit in federal court, but U.S. District Court Judge John A. MacKenzie in Norfolk said the utility did not qualify as a displaced person.

However, the Fourth U.S. Circuit Court of Appeals said last week that federal law defines a displaced person as one who must move as a result of the acquisition of property for a federal project or a program using federal funds. The law applies equally to individuals and businesses, the court said.

A C&P spokesman in Richmond said the ruling does not affect C&P telephone companies in the District or Maryland, only Virginia. The Virginia company will return to court to seek damages from the federal government, which could amount to as much as $600,000 plus interest over the last 10 years, the spokesman said.