People ex rel. Dept. of Transportation v. Naegele Outdoor Advertising Co.

• Decision Date: 02 May 1985
• Citation: People ex rel. Dept. of Transportation v. Naegele Outdoor Advertising Co., 213 Cal.Rptr. 247, 38 Cal.3d 509, 698 P.2d 150 (Cal. 1985)
• Court: California Supreme Court
• Parties: , 698 P.2d 150 The PEOPLE ex rel. DEPARTMENT OF TRANSPORTATION, Plaintiff and Respondent, v. NAEGELE OUTDOOR ADVERTISING COMPANY OF CALIFORNIA, INC., Defendant and Appellant. DESERT OUTDOOR ADVERTISING, INC., Plaintiff and Respondent, v. NAEGELE OUTDOOR ADVERTISING COMPANY OF CALIFORNIA, INC., Defendant and Appellant. L.A. 31911.

Page 247

213 Cal.Rptr. 247

38 Cal.3d 509, 698 P.2d 150

The PEOPLE ex rel. DEPARTMENT OF TRANSPORTATION, Plaintiff and Respondent, v.NAEGELE OUTDOOR ADVERTISING COMPANY OF CALIFORNIA, INC., Defendant and Appellant.

DESERT OUTDOOR ADVERTISING, INC., Plaintiff and Respondent, v.NAEGELE OUTDOOR ADVERTISING COMPANY OF CALIFORNIA, INC., Defendant and Appellant.

L.A. 31911.

Supreme Court of California In Bank.

May 2, 1985.

As Modified July 10, 1985.

Rehearing Denied July 10, 1985.

Best, Best & Krieger, Barton C. Gaut, Ronald J. Kohut and Richard Cross, Riverside, for defendant and appellant.

Barbara E. Karshmer, Frampton, Karshmer & Kesselman and Art Bunce, Escondido, as amici curiae on behalf of defendant and appellant.

Robert F. Carlson, Gordon S. Baca, Charles E. Spencer, Jr., William M. McMillan, Sacramento, and Ruby A. Theophile, Los Angeles, Maxwell, Wright & Wheeler and Sprague Wheeler, Pasadena, for plaintiffs and respondents.

GRODIN, Justice.

This case presents the question whether the State of California may regulate billboards on Indian reservations.Upon examination of the statutes, legislative history, and precedents involved, we conclude that the state's regulatory authority is preempted by federal law.

This consolidated appeal stems from two separate judgments entered after the trial court granted each plaintiff's motion for summary judgment.Both cases, tried separately below, raise substantially the same issues and involve the same defendant.Because resolution of these issues will have a significant effect on the Morongo Band of Mission Indians, its request to file a brief amicus curiae was granted.

The Morongo Band of Mission Indians (Band) is a federally recognized Indian tribe, and is the beneficial owner of the Morongo Indian Reservation, consisting of approximately 32,300 acres of land located in Riverside County, California.The Morongo Indian Reservation was created by a series of seven executive orders of various Presidents of the United States, one presidential proclamation, one federal statute, and one deed, beginning in 1876 and ending in 1948.Under PatentNo. 172786, the United States declared it will hold the said tracts of land "... in trust for the sole use and benefit of the said Morongo Band or Village of Indians, according to the laws of California...."

The reservation lies astride a narrow pass between the San Bernardino and San Jacinto Mountain Ranges.As a result only a small portion of the land is located on the plain suitable for economic development.These relatively few acres lie adjacent to Interstate Highway 10, connecting Los Angeles to popular Southern California desert communities.

In addition to the interstate highway, the reservation is crossed by a main line of the Southern Pacific Railroad, the Colorado River Aqueduct, major oil transmission pipelines, natural gas pipelines, and numerous electrical transmission lines, all of which serve the metropolitan Los Angeles area without any significant benefit to the reservation or its residents.The reservation's few natural resources yield little income so that, despite the Band's apparent advantageous location, its economy is depressed.Many of its members are unemployed and live in poverty.

For many years, the Band has derived a major part of its income from outdoor advertising activities.The Band's general membership has determined that the highest and best use of reservation land adjacent to Interstate 10 is for outdoor advertising.In a 1977 appraisal report, the Southern California Appraisal Office of the Bureau of Indian Affairs came to the same conclusion.

Accordingly, the Band's general membership delegated to its tribal council authority to negotiate agreements for an outdoor advertising business.The Band leased some of this reservation land to non-Indian firms who operated billboards there until 1977.In 1977 the Band solicited proposals for further leases from several non-Indian firms including Naegele Outdoor Advertising Company of California, Inc.(Naegele).Naegele's bid was selected and a lease agreement followed.

Pursuant to title 25 of the United States Code, the Department of the Interior(Interior) must approve such leases before they become effective.(25 U.S.C. § 415.)Upon submission, approval was denied because the lease's purpose, in the Sacramento area director's opinion, would have violated the Highway Beautification Act(23 U.S.C. § 131 et seq.) and California's Outdoor Advertising Act(Bus. & Prof.Code, § 5200 et seq.).The Band appealed this decision and the Interior Board of Indian Affairs reversed.In its opinion, the board concluded that the provisions of the Highway Beautification Act do not apply to Indian reservations and that California's Outdoor Advertising Act cannot be enforced on tribal Indian lands.(Administrative Appeal of the Morongo Band of Mission Indians v. Area Director, Sacramento Area Office (1979) 86 InteriorDec. 680(Admin. Appeal).)

During the pendency of the Interior appeal, on March 30, 1978, the Band entered into an agency agreement ¹ with Naegele.This agreement provided for the installation, construction, operation and maintenance of 15 outdoor advertising structures located on reservation land.On June 27, 1978, the California Department of Transportation(Department) notified Naegele of its intention to apply and enforce California's Outdoor Advertising Act.

Despite the Department's warning and the implication that the displays would violate the Outdoor Advertising Act, 16 billboards were erected on reservation land.The state outdoor advertising inspector ultimately issued citations for all 16 displays.

On July 10, 1978, the People of the State of California, acting by and through the Department, filed a complaint and motion for preliminary and permanent injunction against Naegele.The complaint alleged Naegele was in control of 16 outdoor advertising structures located adjacent to Interstate Highway 10 in Riverside County.These structures were in violation of section 5350 of the Business and Professions Code, requiring display permits.Additionally these displays were situated in violation of various provisions of the Outdoor Advertising Act.The Department identified these displays as a public nuisance within the meaning of Business and Professions Code section 5461.

The preliminary injunction was granted on August 1, 1978.And, on November 6, 1981, in accordance with the Department's motion, summary judgment resulted.

The Action of Desert Outdoor Advertising, Inc.(Desert), here consolidated with that of the Department, was initially filed on June 26, 1980.In its first amended complaint of December 12, 1980, Desert alleged causes of action for nuisance, unfair competition, intentional interference with prospective economic benefit and negligent interference with prospective economic benefit.Naegele's demurrer was sustained as to the nuisance cause of action.The court dismissed both causes of action for interference and granted Desert's motion for summary judgment on the unfair competition cause of action.In its order the court enjoined Naegele from maintaining advertising structures on the reservation without complying with the Outdoor Advertising Act.Naegele was ordered to remove all noncomplying structures.The enforcement of this judgment was stayed pending appeal.

The question we must answer on appeal is whether the Department can, through the Outdoor Advertising Act, regulate billboards erected on reservation land held in trust by the United States for the beneficial use of the Band.This inquiry requires us to consider several subsidiary questions.

In 1832, Chief Justice Marshall opined, with enviable clarity, that Indian tribes were wholly distinct nations within whose boundaries "the laws of [a State] can have no force."(Worcester v. Georgia(1832)6 Pet. 515, 561, 8 L.Ed. 483.)In the interim however, the United States Supreme Court has departed from this view and acknowledged certain limitations upon tribal sovereignty.For example, " '[t]he sovereignty that the Indian tribes retain is of a unique and limited character.It exists only at the sufferance of Congress and is subject to complete defeasance.' "(Rice v. Rehner(1983)463 U.S. 713, 103 S.Ct. 3291, 3295, 77 L.Ed.2d 961, quotingUnited States v. Wheeler(1978)435 U.S. 313, 323, 98 S.Ct. 1079, 1086, 55 L.Ed.2d 303, with added emphasis.)

It is apparent that Congress may delegate its power over the governance of Indian reservations to the states.The Department argues that, in the context of outdoor advertising, Congress has done so through the Highway Beautification Act.

The Highway Beautification Act of 1965 was enacted to provide for scenic development and road beautification of the federal-aid highway systems.Title I of the act(23 U.S.C. § 131) contains requirements for the control of outdoor advertising.

In general, the act seeks to eliminate outdoor advertising displays within 660 feet of the edge of any interstate or federal primary system highway.Toward this end, the act mandates a 10 percent cut in federal-aid highway funds to any state which fails to provide for "effective control" over the erection and maintenance of such displays.(23 U.S.C. § 131(b).)

Title 23 United States Code section 131(c) explains that "effective control" means that, with five specified content-based exceptions none of which apply in this case, all such displays shall be banned.²

The act clearly contemplates that the states will achieve compliance through their inherent powers of zoning and condemnation.(23 U.S.C. § 131(d)-(g).)The act also provides that, at the states' option, advertising displays may be permitted within 660 feet of interstate and federal highways within areas zoned industrial or commercial under state law.(23 U.S.C. § 131(d).)

California complies with the Highway Beautification Act through its Outdoor Advertising Act(Bus. &...