The Contra Costa Times reports on an interesting VARA suit out of California: "According to the complaint, Frank Romero's automobile-themed 'Going to the Olympics,' a mural which had adorned the Alameda Street underpass of the Hollywood (101) Freeway since 1984, was destroyed by [the California Department of Transportation] in June 2007. ... When the agency found that Romero's 2,040-square-foot mural had been vandalized by graffiti, Caltrans workers 'simply obliterated the mural by painting over it,' said Timothy B. Sottile, Romero's attorney."
Romero seeks unspecified monetary damages. Shelby Grad of the LA Times "wonder is he should have also included the taggers as codefendants."
Apparently this is not a new problem. Here's an LA Times article from 2001 describing how LA's mural artists were getting caught between "an upsurge in vandalism among warring tagging crews and a strict Caltrans policy of eliminating graffiti on freeway walls." (Romero is one of the artists mentioned in the article.) It seems that, at least at that time, the Caltrans policy was to provide both the Mural Conservancy of Los Angeles ("a nonprofit group whose mission is to preserve the estimated 2,500 murals painted on public and private property throughout Los Angeles County ") and the affected artist with 45 days notice to clean graffitied murals before they are painted over. The agency would not pay the costs of the clean-up but did "approve the permits and provide traffic control" to allow the artists to do the work. Not clear at this point to what extent those policies have changed since then, or were followed in this case.