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PRIETO v. UNITED STATES

March 13, 1987

Dora Prieto, Plaintiff,
v.
United States of America, et al., Defendants



The opinion of the court was delivered by: GREENE

 By way of an unusual administrative history, this case presents the Court with the responsibility to determine whether the Department of Interior and its Bureau of Indian Affairs (BIA) have fairly treated one of the citizens under their special protection. Plaintiff Dora Prieto, an American Indian, challenges two administrative rulings -- one by the Department of Interior's Board of Indian Appeals (IBIA), the other by the Department's Deputy Assistant Secretary for Indian Affairs -- that revoked the trust status of land on which she hoped to erect and lease billboards. In a motion for summary judgment, plaintiff asks the Court to restore the land to trust status, or in the alternative to remand this matter to the BIA. The government also has moved for summary judgment.

 The motions raise interesting and complex questions about statutory requirements for trust status, the nature of Indians' personal savings, rules of construction for laws pertaining to Indians, and much more. Most of these questions need not be reached in this decision. Upon review of the administrative record in accordance with 5 U.S.C. § 706, the Court finds that the IBIA abused its discretion and acted arbitrarily and capriciously in upholding the revocation of plaintiff's trust status, and further that the Department of Interior is estopped by its own conduct from revoking this trust status. Plaintiff's motion for summary judgment will thus be granted and the government's motion will be denied. The trust status of plaintiff's land will now be restored.

 I

 Plaintiff Dora Prieto is an enrolled and alloted member of the Agua Caliente Tribe of the Cahuilla Indians of Palm Springs, California, a federally recognized Indian tribe. In 1980, she negotiated the purchase for $46,120 of about 55 acres of land alongside Interstate Highway 10 in Riverside County, California, next to the Agua Caliente Reservation. Plaintiff planned to erect and lease billboards on the land, which is about 100 feet wide and three miles long. When plaintiff bought the land, it was not in Indian trust or restricted status. *fn1"

 Plaintiff applied to the BIA to have this land accepted into trust under the provisions of 25 U.S.C. § 409a (1986), *fn2" presumably in order that the land be exempt from local taxes as well as from the Highway Beautification Act, 23 U.S.C. § 131, and the California Outdoor Advertising Act, Cal. Bus. & Prof. Code §§ 5201 et seq. (West 1974). Section 409a states that:

 
whenever any nontaxable land of a restricted Indian . . . is sold under existing law to any . . . person or corporation . . . the money received for said land may in the discretion and with the approval of the Secretary of the Interior, be reinvested in other lands selected by said Indian, and such land so selected and purchase shall be restricted as to alienation, lease, or incumbrance, and nontaxable in the same quantity and upon the same terms and conditions as the nontaxable lands from which the reinvested funds were derived, and such restrictions shall appear in the conveyance.

 Since 1958, plaintiff had sold 67 acres of trust land in five separate transactions, but most of the revenue from these sales was not deposited in her Individual Indian Money Account, as trust proceeds normally would be. *fn3" Moreover, instead of using her own money for the purchase of the land in question here, plaintiff borrowed the $46,120 from a company called the Naegele Outdoor Advertising Company of California. These facts may have raised doubts about whether plaintiff's purchase met the requirements of section 409a, but the purchase was reviewed and approved by the Director of the Palm Springs Field Office of the BIA. Indenture to the United States in trust for appellant was recorded on February 19, 1981.

 Meanwhile, plaintiff planned her billboard venture. On September 17, 1980, she entered into a business agreement with the Naegele Company. *fn4" Plaintiff also sought and obtained Certificates of Zoning Compliance for the land from the Agua Caliente Tribal Council. She sought and obtained approval, including construction permits, from the California Department of Transportation. Finally, she entered into contracts for the use of the property for advertising purposes and built storage facilities on the property. *fn5"

 On November 25, 1981, more than nine months after the land was placed in trust, the County of Riverside filed a "notice of appeal" from the BIA's decision. Riverside County argued that the BIA had not been authorized to take the land into trust because the funds for its purchase were not derived from the sale of other trust or restricted lands as required by section 409a. The county also alleged that its appeal was timely because it had been given inadequate notice of the intention to place the property in trust.

 On March 5, 1982, the Acting Area Director of the Sacramento BIA Office informed the county in writing that it did not have the right to appeal the decision. The Director told the county that it had:

 
neither the rights of protest nor appeal of [his] decision . . . Under the circumstances, had I accepted your Notice of Appeal, it would have been considered untimely and the case closed pursuant to 25 C.F.R. 2.10, because your notice was not filed within 30 days of my decision, and the record shows that the County was on notice of the matter. *fn6"

 On March 26, 1982, more than a year after the grant of trust status, the Acting Area Director issued a notice for plaintiff to show cause why the trust status of her property should not be terminated. The notice read:

 
I have reviewed your Individual Indian Money Account . . . The records reveal that the funds used for the purchase of the subject property were not received from the sale of trust of restricted lands.
 
You are, therefore, notified that unless proof or evidence is offered tracing such purchase money for the subject property to funds received from the sale of trust or restricted lands, the . . . property so acquired is subject to loss of its trust ...

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