State of Arizona, Arizona Highway Dept. v. United States, 67-73.

• Decision Date: 17 April 1974
• Docket Number: No. 67-73.,67-73.
• Citation: 494 F.2d 1285
• Parties: STATE OF ARIZONA, a body politic acting By and Through the ARIZONA HIGHWAY DEPARTMENT v. The UNITED STATES.
• Court: U.S. Claims Court

494 F.2d 1285 (1974)

STATE OF ARIZONA, a body politic acting By and Through the ARIZONA HIGHWAY DEPARTMENT v. The UNITED STATES.

No. 67-73.

United States Court of Claims.

April 17, 1974.

Roderick G. McDougall, Phoenix, Ariz., for plaintiff. James R. Redpath, Phoenix, Ariz., attorney of record. Gary K. Nelson and Donald O. Loeb, Phoenix, Ariz., of counsel.

Ray Goddard, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.

Before NICHOLS, KUNZIG and BENNETT, Judges.

ON DEFENDANT'S MOTION AND PLAINTIFF'S CROSS MOTION FOR SUMMARY JUDGMENT

NICHOLS, Judge.

This case is here on defendant's motion and plaintiff's cross motion for summary judgment. The plaintiff is the State of Arizona (Arizona) which brings this action to recover $81,361.18 of the costs it incurred in the removal and relocation of utility facilities owned by El Paso Natural Gas Co. (El Paso) for the construction of an interstate highway. In arriving at our decision we need only consider plaintiff's first cause of action which is brought under the Tucker Act, 28 U.S.C. § 1491. The facts are as follows:

On September 18, 1950, the United States Forest Service issued a Special Use Permit to El Paso for the purpose of construction of a pipeline through the Kaibab National Forest in Arizona. Paragraph 14 of the permit states that the permit is terminable "at the discretion of the regional forester or the Chief, Forest Service." Paragraph 10 requires the permittee, at its own expense, to remove all of its structures and improvements within a reasonable time after said permit is terminated.

On January 27, 1966, Arizona submitted an application for a Special Use Permit covering the same portion of the Kaibab Forest as El Paso's permit. The purpose of use stated in such application was the construction of a section of the Kingman-Ash Fork Interstate Highway. The Kingman-Ash Fork Highway was to be built under the Federal Aid for Highways legislation, 23 U.S.C. § 101 et seq., under which the Federal Government enters into agreements with states to pay a large percentage of the cost of constructing interstate highways. The application provided that the following condition was to be made part of the Special Use Permit:

Where the State does not move the improvements involved, the State will reimburse the Forest Permittee for removing and rebuilding such improvements.

On the basis of the aforementioned application a Special Use Permit was issued to Arizona on May 25, 1966. Inter alia the permit provided:

21. General:

* * * * * *

(g) Any National Forest recreation and administrative improvements and all other existing improvements damaged, disturbed, destroyed, or required to be moved from the right-of-way due to highway construction or maintenance, whether shown or not shown on the plans, will be replaced, repaired or moved to a suitable location as specified by the Forest Supervisor.

On May 9, 1968, Arizona entered into a Utility Agreement with El Paso which obligated it to reimburse the utility for costs incurred in relocating its facilities. W. H. Baugh, Division Engineer for the United States Federal Highway Administration, had prior knowledge of such agreement and consented to it. On June 12, 1968, he formally approved the agreement by having his authorized representative, Jacob Erickson, sign it for him as Division Engineer, Bureau of Public Roads, under the word "Approved". (The Baugh signature appears in the wrong capacity. The functions of the United States Bureau of Public Roads, Department of Commerce were transferred to the Department of Transportation effective April 1, 1967, 49 U. S.C. § 1651 note, E.O. No. 11340, and assigned to the Federal Highway Administration within such Department. We assume this fact is of no legal significance since not raised by the parties.) El Paso's pipeline facilities were relocated in September 1968. In accordance with the Utility Agreement, Arizona reimbursed El Paso for the $86,187.69 of costs it incurred in relocating its pipelines.

By letter from the office of the Division Engineer, dated December 3, 1968, Arizona was informed that no authority could be found to permit any Federal reimbursement of the costs it incurred as a result of the relocation of El Paso's facilities. However, on October 7, 1969, H. C. Tilzey, who succeeded Baugh as Division Engineer, approved a detailed estimate of the cost of relocating El Paso's pipelines submitted by the plaintiff. On October 22, 1969, Jacob Erickson, an authorized representative of Tilzey signed a Federal-Aid Project Agreement for construction of the highway for him. This agreement expressly included the utility adjustment as part of the project.

On November 19, 1969, Arizona submitted a claim for $81,361.18. This amount is 94.4% of $86,187.69, the total amount paid El Paso by Arizona. On November 21, 1969, the Federal Highway Administration paid plaintiff's claim certifying that the $81,361.18 was approved for payment and was justly due. Subsequently Arizona refunded this sum at the request of the Federal Highway Administration.

In compliance with Federal Highway Administration Policies and Procedures Memorandum 30-4, Arizona submitted a memorandum of law to the defendant dated June 24, 1971, supporting its right to reimbursement for the costs it incurred in relocating El Paso. The Federal Highway Administration was not persuaded by this memorandum. On December 15, 1971, it formally and finally denied any obligation on its part to grant Federal participation in the costs of the El Paso relocation.

Defendant relies heavily on the provisions of El Paso's Special Use Permit. Such permit was expressly terminable "at the discretion of the regional forester or the Chief, Forest Service." The permit further provided:

10. Upon abandonment, termination, revocation, or cancellation of this permit, the permittee shall remove within a reasonable time all structures and improvements except those owned by the United States, and shall restore the site, unless otherwise agreed upon in writing or in this permit. If the permittee fails to remove all such structures or improvements within a reasonable period, they shall become the property of the United States, but that will not relieve the permittee of liability for the cost of their removal and restoration of the site.

Defendant cites Sinclair Pipe Line Co. v. United States, 287 F.2d 175, 152 Ct.Cl. 723 (1961), as to the non-compensability of such a license as against a Federal taking.

Because of the above provisions, the defendant argues that it is not required to reimburse Arizona under 23 U.S.C. § 123, since Arizona was not legally obligated to recompense El Paso. Such contention is based on the Government's assumption that El Paso's permit was ipso facto terminated by either: (1) the issuance of the subsequent Special Use Permit to Arizona, or (2) the...