PEOPLE OF STATE OF CAL., BY AND THROUGH DEPT. OF PW v. 25.09 Acres of Lands

• Citation: 329 F. Supp. 230
• Decision Date: 26 March 1971
• Docket Number: Civ. No. 68-118-J.
• Parties: The PEOPLE OF the STATE OF CALIFORNIA, acting BY AND THROUGH the DEPARTMENT OF PUBLIC WORKS, Plaintiff, v. 25.09 ACRES OF LANDS, MORE OR LESS, et al., Defendants.
• Court: U.S. District Court — Southern District of California

329 F. Supp. 230

The PEOPLE OF the STATE OF CALIFORNIA, acting BY AND THROUGH the DEPARTMENT OF PUBLIC WORKS, Plaintiff, v. 25.09 ACRES OF LANDS, MORE OR LESS, et al., Defendants.

Civ. No. 68-118-J.

United States District Court, S. D. California.

March 26, 1971.

Rypinski, Hollingsworth, Peterson & Endeman, San Diego, Cal., for plaintiff.

Harry D. Steward, U. S. Atty., and Raymond F. Zvetina and Keith E. McWilliams, Asst. U. S. Attys., San Diego, Cal., for the United States.

ORDER AND MEMORANDUM OPINION

JAMESON, Senior District Judge.

The State of California has condemned lands for highway purposes, including 25.09 acres on the Fort Yuma Indian Reservation, located in Imperial County, California. The land was allotted in severalty to six named defendants and is held in trust by the defendant United States. The land is subject to assessment for water services from facilities of the Yuma Project, a federal reclamation project. The United States claims a compensable interest by reason of its right to assess an annual operation and maintenance charge against all irrigable lands entitled to water service from this project. An interlocutory judgment has been entered granting awards to the owners and parties in interest, except for this claim of the United States.

On December 4, 1970 a pretrial order was entered, which recites that no issues of fact remain for determination and that the "following issues of law, and no others, remain to be litigated upon the trial:

"A. Whether or not diminution of assessment base for annual operation and maintenance charges of irrigation facilities owned by defendant UNITED STATES OF AMERICA is compensable.

"B. If said interest is compensable, whether or not such compensation is included in the fair market value of the land acquired or whether it is in addition to the fair market value.

"The UNITED STATES OF AMERICA alleges that it has a compensable interest in the subject property in addition to the fair market value thereof, by virtue of its right under Federal law to assess and collect an annual operation and maintenance charge against all irrigable lands entitled to water service from the facilities of the Yuma Project, a Federal Reclamation Project. The subject lands are irrigable lands located within the Reservation Division of the Yuma Project and are entitled to water service from the Project works. Annual operation and maintenance charges for the operation and maintenance of the Project irrigation system are assessed by the Bureau of Reclamation against all irrigable lands within the Reservation Division including the subject lands on a per acre basis, which charges, if not paid, become a lien upon the land. The said operation and maintenance charges are an affirmative obligation running with the land.

"The removal of said lands from the service area of the Project by condemnation for highway purposes will not decrease the overall cost of operating and maintaining the irrigation system, but will remove a portion of the assessment base, thereby depriving the UNITED STATES of a beneficial interest in said land and increasing the annual operation and maintenance charges assessed against the remaining owners of irrigable land within the Division. Their beneficial interest is a valuable property right separate and apart from and in addition to the ownership of the landowners of the property in question. The fair market values referred to in the Interlocutory Judgment in Condemnation to be filed herein relate to the landowners' interest and do not reflect in any manner the value of the interest of the UNITED STATES.

"Plaintiff asserts that said charges are not compensable. Plaintiff further asserts that even if said charges were held to be compensable they are necessarily included in the fair market value of the land acquired."

Supplementing the formal pretrial order, a memorandum of the United States sets forth the statutory background for the allotment of irrigable lands within the Fort Yuma Indian Reservation and for the development of land in the reservation through irrigation. The memorandum describes in more detail the construction of the Yuma project and the assessments for construction costs and current operation and maintenance charges. In particular, operation and maintenance charges against the Indian lands are made "by the Bureau of Reclamation on the basis of the irrigable acreages involved in the allotments. These assessments are totaled and are paid to the Bureau of Reclamation by the Bureau of Indian Affairs on an annual basis through a transfer of funds."

The memorandum continues in part:

"The Bureau of Indian Affairs in turn funds Reclamation's assessments by collections from lessees of leased Indian lands, Indian allottees if they can pay, and also by Congressional appropriations where the Indian cannot pay or other considerations are involved. The majority of Indian lands are presently leased to non-Indians. Under paragraph 3 of the Standard Lease Agreement, it is provided that the lessee is obligated to pay operation and maintenance assessments annually in advance of due date preceding each irrigation season. The subject lands are included under such lease arrangements.

"* * *

"The current assessments for operation and maintenance charges are a lien on the Indian lands. The liens for operation and maintenance charges are established by the provisions of 25 CFR 129.1. This regulation was issued pursuant to the Act of August 1, 1914, 38 Stat. 583, 25 U.S.C. 385. * * * See also the Act of March 7, 1928, 45 Stat. 210, 25 U.S.C. 387."

The contentions of the United States under this state of facts are summarized as follows:

"The issue in this case, as we see it, is whether the United States can be compensated for future operation and maintenance charges which would otherwise be assessed against the irrigable lands taken for highway purposes. If these are not paid by the State, then a larger burden is placed on the remaining lands of both Indian and non-Indian in the form of increased operation and maintenance charges. We are informed by the Bureau of Reclamation that there are no additional lands in the Division on which such charges may be levied. The operation and maintenance costs will not be lessened in the future by the acquisition of the lands by the State of California and the construction of its highway. Further, the Federal government as trustee of the Indian lands involved has statutory duties to provide irrigation service to the Indian allottees and their lands, and to recoup the cost or a part of the costs expended therefor by assessments on the lands within the Division except where they may be waived or cancelled by the Congress. We know of no statutory waivers of the liens for operation and maintenance charges within the Division. The Government or the Indians should not have to suffer a loss in this regard where lands are taken out of irrigable status to serve purposes other than agriculture."

Plaintiff is "in substantial agreement" with defendant's statement of facts, but points out that "the United States of America is not the landowner in the traditional sense. The true landowners are the individual allottees who have been fully compensated pursuant to the interlocutory judgment."

Neither party has cited nor has the court found any case precisely in point. Defendant United States relies primarily on Adaman Mutual Water Company v. United States, 9 Cir. 1960, 278 F.2d 842. In that case land in an agricultural development project was supplied with irrigation water by a nonprofit water company. The Government condemned 8.3 per cent of the land within the project. The court held that the duty to pay assessments was "an equitable servitude or restrictive covenant binding upon any once-cultivated segment of Project land serviced" by the water company;¹ that the company "has lost the benefit derived from this servitude, and the loss is compensable, for the Government has destroyed an intangible right directly connected with the physical substance of the land condemned"; and that the diminution of the water company's assessment base accordingly constituted the taking of a compensable interest under the Fifth Amendment.

Plaintiff contends that the instant case is "directly opposite to the situation" in Adaman for two reasons: (1) Adaman "was dealing with compensability of an equitable servitude under Arizona law", while in California "equitable servitudes are not compensable in eminent domain proceedings"; and (2) "In Adaman, the court was dealing with a private water company who did not have the power to tax", whereas in this case, "the Federal Government does have the power to tax."

Defendant in turn argues that the law of California is in no way inconsistent with the holding in Adaman, and that the term "taxation" does not include "assessments" for irrigation districts and similar improvements.

Before proceeding with the contentions of the parties it should be noted that the irrigation project was created under federal and not state law. The lands taken are located on an Indian Reservation. The defendant United States has a lien under federal law for the operation and maintenance charges, which the parties recognize in the pretrial order as an "affirmative obligation running with the land." In addition, there are no other lands which may be added to the project, and the operation and maintenance charges will not be lessened by reason of the taking. Accordingly the burden of either the United States or the Indian landowners will be increased if no compensation is allowed.

Both parties recognize that the determination of this case depends upon whether Adaman is applicable. In holding that the duty to pay assessments was an equitable servitude and the resulting loss to the water company was compensable, the court said in Adaman:

"We think that the duty to pay assessments in the instant case is an equitable servitude or restrictive

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