delivered the opinion of the Court.
This action was brought as an original proceeding in the Supreme Court of Arizona by the State on the relation of its Highway Department. The Department seeks to prohibit the application by the State Land Commissioner of rules governing the acquisition of rights of way and material sites in federally donated lands held in trust by the State.
1
The Commissioner’s rules provide in pertinent part that “Rights of Way and Material Sites may be
The lands at issue here are among some 10,790,000 acres granted by the United States to Arizona in trust for the use and benefit of designated public activities within the State.
2
The Federal Government since the Northwest Ordinance of 1787 has made such grants to States newly admitted to the Union.
3
Although the terms of these grants differ, at least the most recent commonly make clear that the United States has a continuing interest in the administration of both the lands and the funds which derive from them. The grant involved here thus expressly requires the Attorney General of the United
The issues here stem chiefly from ambiguities in the grant itself. The terms under which the United States provided these lands were included in the New Mexico-Arizona Enabling Act. 36 Stat. 557. The Act describes with particularity the disposition Arizona may make of the lands and of the funds derived from them, but it does not directly refer to the conditions or consequences of the use by the State itself of the trust lands for purposes not designated in the grant. Of the issues which may arise from the Act’s silence, we need now reach only two: first, whether Arizona is permitted to obtain trust lands for such uses without first satisfying the Act’s restrictiоns on disposition of the land; and second, what standard of compensation Arizona must employ to recompense the trust for the land it uses. Both issues require consideration of the Act’s language and history.
I.
We turn first to the question of the method by which Arizona may obtain trust lands for purposes not included in the grant. The constraints imposed by the Act upon the methods by which trust lands may be transferred are few and simple. Section 28, which is reproduced in the Appendix to this opinion, requires, with exceptions inapplicable here, that lands be sold or
The parties urge, and the state court assumed, that Arizona need not follow these procedures when it seeks material sites and rights of way upon trust lands.
6
The Commissioner’s rules thus do not require an auction or other public sale. This view has been taken by other state courts construing similar grants.
Ross
v.
Trustees of University of Wyoming,
The Act’s silence obliges us to examine its purposes, as evidenced by its terms and its legislative history, to de
The central problem which confronted the Act’s draftsmen was therefore to devise constraints which would assure that the trust received in full fair cоmpensation for trust lands. The method of transfer and the transferee were material only so far as necessary to assure that the trust sought and obtained appropriate compensation. This is confirmed by the legislative history of the Enabling Act. All the restrictions on the use and disposition of the trust lands, including those on the powers of sale and lease, were first inserted by the Senate Committee on the Territories.
8
Senator Bev-eridge, the committee’s chairman, made clear on the floor
Further, we should not fail to recognize that, were we to require Arizona to follow precisely these procedures, we would sanction an empty formality. There would not often be others to bid for the material sites and rights of way which the State might seek. More importаnt, even if such bidders appeared and proved successful, nothing in the grant would prevent Arizona from thereafter condemning the land which it had failed to purchase; the anticipation of condemnation would leave the auction without any real significance. We cannot see that the trust would materially benefit from this circuity.
II.
The second issue here is the standard of compensation which Arizona must employ to recompense the trust for the land it acquires. The Land Commissioner’s rules provide simply that the State must pay the appraised value, as measured by the State’s condemnation statute, of the right of way or material site. The Highway Department urges, and the Arizona Supreme Court held, that nothing need ever be actually paid since it may be conclusively presumed that all highways enhance the value of the remaining trust lands in amounts at least equal to the value of the lands which were taken. The United States, as
amicus curiae,
suggests that the Highway Department be obliged to pay the land’s appraised value, but that it be permitted to reduce that sum by the amount of any enhancement shown in the value of the remaining trust lands. The rule urged by the United States differs from that adopted by the state court only in that the United States would not permit the Highway Department to presume enhancement, but would instead require that it be established by the Department in each instance with reasonable certainty and precision. Under this rule, enhancement would have to be individually
We are urged by the United States to determine only the validity of the rule of law stated by the Arizona Supreme Court, and to defer the broader question of whether enhancement may ever be permitted to diminish the actual compensation payable to the trust. The United States emphasizes that the broader issue does not directly arise under the Commissioner’s rules, since the Arizona condemnation statute incorporated by those rules does not permit benefits to reduce the compensation payable for the condemned land’s fair market value. 11 We are unable to take so narrow a view. The rule adopted by the state court clearly stemmed from, and depended upon, the premise that enhancement may be balanced against the value of the trust lands taken by the State. If we severed the conclusion from its premise, we would halt short of a full adjudication of the validity of the Commissioner’s rules, and unnecessarily prolong the litigation of this important question. We have therefore reached the broader issue, and have concluded that the terms and purposes of the grant do not permit Arizona to diminish the actual compensation, meaning thereby monetary compensation, payable to the trust by the amount of any enhancement in the value of the remaining trust lands.
The Enabling Act unequivocally demands both that the trust receive the full value of any lands transferred from it and that any funds received be employed only for the purposes for which the land was given. First, it requires that before trust lands or their products are offered for sale they must be “appraised at their true value,”
This is confirmed by the background and legislative history of the Enabling Act. The restrictions placed upon land grants to the States became steadily mоre rigid and specific in the 50 years prior to this Act, as Congress
Nothing in these restrictions is explicitly addressed to acquisitions by the State for its other public activities; the Enabling Act is, as we have noted, entirely silent on these questions. We must nevertheless conclude that the purposes of Congress require that the Act’s designated beneficiaries “derive the full benefit”
19
of the grant. The conclusive presumption of enhancement which the Arizona Supreme Court found does not in our view adequately assure fulfillment of that purpose, particularly in the context of lands that are as variegated and far-flung as those comprised in this grant. And we think that the more particularized showing of enhancement advocated by the United States, resting as it largely would upon the forecasts of experts which by nature
We hold therefore that Arizona must actually compensate the trust in money 21 for the full appraised value of any material sites or rights of way which it obtains on or over trust lands. 22 This standard most nearly reproduces the results of the auction prescribed by the
The judgment of the Supreme Court of Arizona is accordingly reversed and the case is remanded for further proceedings not inconsistent with this opinion.
It is so ordered.
APPENDIX TO OPINION OF THE COURT.
Section 28 of New Mexico-Arizona Enabling Act, as Amended.
Sec. 28. That it is hereby declared that all lands hereby granted, including those which, having been heretofore granted to the said Territory, are hereby expressly transferred and confirmed to the said State, shall be by the said State held in trust, to be disposed of in whole or in part only in manner as herein provided and for the several objects specified in the respective granting and confirmatory provisions, and that the natural products and money proceeds of any of said lands shall be subject to the same trusts as the lands producing the same.
Disposition of any of said lands, or of any money or thing of value directly or indirectly derived therefrom, for any object other than for which such particular lands, or the lands from which such money or thing of value shall have been derived, were granted or confirmed, or in any manner contrary to the provisions of this Act, shall be deemed a breach of trust.
No mortgage or other encumbrance of the said lands, or any part thereof, shall be valid in favor of any person or for any purpose or under any circumstances whatsoever. Said lands shall not be sold or lеased, in whole or in part, , except to the highest and best bidder at a public auction to be held at the county seat of the county wherein the lands to be affected, or the major portion thereof, shall lie, notice of which public auction shall first have
All lands, leaseholds, timber, and other products of land, before being offered, shall be appraised at their true value, and-no sale or other disposal thereof shall be made for a consideration less than the value so ascertained, nor upon credit unless accompanied by ample security, and the legal title shall not be deemed to have passed until the consideration shall have been paid.
No lands shall be sold for less than their appraised value, and no lands which are or shall be susceptible of irrigation under any projects now or hereafter completed or adopted by the United States under legislation for the reclamation of lands, or under any other project for the reclаmation of lands, shall be sold at less than twenty-five dollars per acre: Provided, That said State, at the request of the Secretary of the Interior, shall from time to time relinquish such of its lands to the United States as at any time are needed for irrigation works in connection with any such government project. And other lands in lieu thereof are hereby granted to said State, to be selected from lands of the character named and in the manner prescribed in section twenty-four of this Act.
The State of Arizona is authorized to exchange any lands owned by it for other lands, public or private, under such regulations as the legislature thereof may prescribe: Provided, That such exchanges involving public lands may be made only as authorized by Acts of Congress and regulations thereunder.
There is hereby reserved to the United States and excepted from the operation of any and all grants made or
A separate fund shall be established for each of the several objects for which the said grants are hereby made or confirmed, and whenever any moneys shall be in any manner derived from any of said land the same shall be deposited by the state treasurer in the fund corresponding to the grant under which the particular land producing such moneys was by this Act conveyed or confirmed. No moneys shall ever be taken from one fund for deposit in any other, or for any object other than that for which thе land producing the same was granted or confirmed. The state treasurer shall keep all such moneys invested in safe, interest-bearing securities, which securities shall be approved by the governor and secretary o.f state of said proposed State, and shall at all times be under a good and sufficient bond or bonds conditioned for the faithful performance of his duties in regard thereto, as defined by this Act and the laws of the State not in conflict herewith.
It shall be the duty of the Attorney-General of the United States to prosecute, in the name of the United States and in its courts, such proceedings at law or in equity as may from time to time be necessary and appropriate to enforce the provisions hereof relative to the application and disposition of the said lands and the products thereоf and the funds derived therefrom.
Nothing herein contained shall be taken as in limitation of the power of the State or of any citizen thereof to enforce the provisions of this Act.
Notes
This action is in form and substance a controversy between two agencies of the State of Arizona, both formally represented by the State’s Attorney General. We have nonetheless concluded that this is a. case with which we may properly deal. The Land Commissioner is apparently a substantially independent state officer, appointed for a term of years and removable only fоr cause. He is essentially the trustee of the trust at issue here, with custody of the trust lands. In addition, both the Commissioner and the Highway Department are represented by special counsel appointed by the Attorney General to advocate the divergent positions of the parties.
The grants consisted of four sections in each township for the support of common schools, plus specified acreages for other designated purposes. The other acreages were granted for the support of agricultural and mechanical colleges, a school of mines, military institutes, the payment of bonds, miners’ hospitals, penitentiaries, and similar purposes. Of the 10,790,000 acres granted to Arizona for all designated uses, some 9,180,000 acres were earmarked for various educational purposes, of which some 8,000,000 acres were given for the support of common schools.
Between 1803 and 1962, the United States granted a total of some 330,000,000 acres to the States for all purposes. Of these, some 78,000,000 acres were given in support of common schools. The Public Lands, Senate Committee on Interior and Insular Affairs, 88th Cong., 1st Sess., 60 (Comm. Print 1963).
36 Stat. 575.
Nine States urged as
amici curiae
that we review the judgment below. One of the nine, New Mexico, received lands in trust under the very grant in issue here. The Supreme Court of New Mexico has held in closely similar circumstances that actual compensation must be paid to the trust.
State
v.
Walker,
61 N. M. 374,
In addition, the court suggested that the restrictions of the Enabling Act are inapplicable here because the State obtains less than a fee interest. This contention is plainly foreclosed by the language of § 28, by which “Every sale, lease, conveyance, or contract of or concerning any of the lands” is void unless in substantial conformity with the Act.
The school lands were granted according to the rigid checkerboard pattern of the federal survey. Four sections per township were granted by number for the support of common schools, instead of the one section per township ordinarily given in the earlier grants, because the unappropriated lands in Arizona and New Mexico were largely of so little value. Orfield, Federal Land Grants to the States 45.
S. Rep. No. 454, 61st Cong., 2d Sess., 18.
Remarks of Senator Beveridge, 45 Cong. Rec. 8227.
Ibid. These violations culminated in a series of lawsuits brought by the Department of Justice against those privy to them. These, lawsuits were pending when the Enabling Act was under study by Congress. The importance of this episode is also indicated in the committee’s report. S. Rep. No. 454, 61st Cong., 2d Sess., 19-20.
Ariz. Fev. Stat. Ann. §12-1122. The statute permits benefits to reduce any damages caused by severance to the uncondemned portions of a parcel of land, but not to reduce the compensation paid for the land which is condemned.
36 Stat. 574.
Ibid. The Act fixed a minimum price of $3 per acre in Arizona. This requirement was removed by the Act of June 5, 1936. 49 Stat. 1477. The Act still requires that land “susceptible of irrigation” under federal or other projects not be sold for less than $25 per acre. 36 Stat. 574.
36 Stat. 574.
Orfield, Federal Land Grants to the States 48-52.
S. Rep. No. 454, 61st Cong., 2d Sess., 20.
Ibid.
Remarks of Senator Beveridge, 45 Cong. Rec. 8227.
Letter from formеr Secretary of the Interior Garfield to the House Committee on the Territories. H. R. Rep. No. 152, 61st Cong.-, 2d Sess., 3.
Despite widespread use of the value of benefits in computing condemnation awards, the various rules adopted for that purpose have created confusion and difficulties. See Haar & Hering, The Determination of Benefits in Land Acquisition, 51 Calif. L. Rev. 833. These problems would be aggravated in the context of this situation, since the benefits would have to be individually computed for tracts of land scattered over the entire State.
We do not mean to suggest that deferred pаyment arrangements might not be appropriate. Cf. the provisions of §28 (see Appendix): “no sale or other disposal thereof shall be made for a consideration less than the value so ascertained, nor upon credit unless accompanied by ample security, and the legal title shall not be deemed to have passed until the consideration shall have been paid.” Nor do we mean that exchanges, in the situations in which they are permitted by the Act, would not be appropriate. Cf. the provisions of § 28 (see Appendix): “The State of Arizona is authorized tо exchange any lands owned by it for other lands, public or private, under such regulations as the legislature thereof may prescribe: Provided, That such exchanges involving public lands may be made only as authorized by Acts of Congress and regulations thereunder.”
We are informed by counsel that over a period of years Arizona has obtained the use of large areas of trust lands on bases that may not have accorded with those set forth in this opinion. We wish to make it plain that we do not reach either the validity of any such transfers or the obligations of the State, if any, with respect thereto.