
    SOUTHERN COUNTIES GAS COMPANY OF CALIFORNIA v. THE UNITED STATES
    [No. 483-54.
    Decided January 15, 1958.
    Plaintiff’s motion for rehearing overruled March 5, 1958]
    
    
      
      Mr. Bates Booth for tlie plaintiff. Miss Gertrude Green-gard and Mr. Irl Davis Brett were on the briefs.
    
      Mr. Herbert Pittle, with whom was Mr. Assistant Attorney General Perry W. Morton, for the defendant.
    
      
       Plaintiff’s petition for writ of certiorari denied by the Supreme Court October 13, 1958.
    
   Fahy, Circuit Judge,

sitting by designation, delivered the opinion of the court:

The case is before us on an agreed statement of facts.. Under authority of the Act of August 18,1941, 55 Stat. 638, a flood control project, including a dam, has been erected by the Corps of Engineers, United States Army, to control the flood waters of the Rio Hondo and San Gabriel Rivers at the Whittier Narrows, four miles northwest of Whittier, California. In this connection the United States by condemnation proceedings or negotiations acquired fee title- or flowage easements affecting a large area of land and improvements, situated above the dam and below the highest elevation to which the waters to be impounded could rise.

Plaintiff is a public service utility corporation supplying gas to domestic, industrial and commercial consumers in Southern California. It maintained and operated transmission lines, distribution lines, and service pipes under the-surface of public streets and on private property in the area of the project, servicing 387 residential and 7 industrial, commercial, or agricultural customers. Its facilities were installed and maintained under easements from private owners and rights of way granted by the County of Los Angeles and the City of Montebello. Plaintiff was also possessed of' private rights of way and easements for service pipes and connections granted by owners of property serviced.

The United States did not expressly acquire by condemnation or otherwise any of plaintiff’s above described properties or rights. The declarations of taking and the condemnation complaint were stated to be subject to existing easements for public utilities and pipelines. The United States did, however, contract with plaintiff for the latter to relocate or abandon in place certain of its facilities and also to transfer to the United States its interest in some of its rights of way and easements.

The United States has prohibited human habitation in the taking area and has caused to be razed or removed all structures therein except certain industrial structures which will be raised oi. buttressed against the maximum possible water elevation. Readjustment and closing of streets and ■alleys have been brought about by the United States.

If the owners did not desire to retain the improvements on land acquired by the United States, an effort was made by the United States to sell the same. Sales were public on terms which required the purchaser to remove the improvements at his expense. In other instances the United States demolished and removed the improvements. Before being removed, sold, or demolished plaintiff was notified and in some instances was instructed or requested to disconnect or remove its facilities from the premises. This the plaintiff •did, blocking off the facilities and taking safety precautions. Plaintiff then abandoned in place the facilities so blocked off and disconnected. The cost of removing them would exceed the amount that could be obtained for them as salvage, so that their value represents a total loss to plaintiff.

Plaintiff’s claim is for the value of those property rights and facilities in the area which the United States did not acquire by condemnation or otherwise and for which it has not contracted to pay plaintiff, and for its loss as a going concern in the taking area. The facilities are those which •the Army Corps of Engineers has determined do not interfere with the project and are not required for continuance of service. Plaintiff’s transmission and distribution facilities servicing 387 residential customers have been disconnected, blocked off, and abandoned. Of its facilities servicing seven industrial consumers in the area, four likewise have been disconnected and abandoned.

As we have seen, the properties for which compensation is sought under the Fifth Amendment were not in terms taken by the United States. They were excepted from the declarations of taking and from the condemnation complaint. Use of the properties was brought to an end by the acquisition by the United States of the land of residential and industrial customers of plaintiff, followed by demolition or .removal of improvements which had been serviced by plaintiff.

We think this was not, within the compensation provisions ■of the Fifth Amendment, a taking of the properties for which compensation is- sought by plaintiff. Plaintiffs loss is due to the project, but in law is a consequential and non-■compensable loss. This does not follow, however, merely from the fact that no express taking occurred. United States v. Gausby, 328 U. S. 256. In the circumstances of that case the Supreme Court held that a “flight easement,” not taken in terms, was taken in law by the use of the air above claim.ant’s land by aircraft flying low to and from an adjoining military airport. ' Unquestionably the Whittier Narrows Dam project has also resulted in the loss by plaintiff of the use and value of some of its properties, and this may be attributed in a sense to the use made by the United States of adjoining or appurtenant land. But the connection between the use referred to and the loss to plaintiff is indirect and falls within the principle which denies compensation for loss of business.

As to the franchise, it seems clear that the falling off of -customers, though caused by the project, was not a taking; the franchise became less valuable due to the changed situation in the area, but we cannot construe this as a taking of the franchise. So, too, as to the rights of way and easements. Loss of their use and value is also due to the removal of plaintiff’s customers, “an unintended incident of' the taking of land.” Mitchell v. United States, 267 U. S. 341, 345; Kellettville Gas Co. v. United States, 56 F. Supp. 919, 920. In so holding as to the easements and rights of way we read the agreed statement of facts as not presenting the case of destruction of the availability of easements and rights of way for servicing of premises which remain in the area. If there were land and improvements not taken which could be served by the aid of these easements and rights of way,, except for the project, we would have a different question.

As to the underground pipes we note initially that we are not concerned now with value, discussed in United States v. General Motors Corp., 323 U. S. 373, relied upon by plaintiff. See, also, United States v. Welch, 217 U. S.. 333. We do not reach value unless the pipes have been taken, which we think is not the case. For the loss here too is due to the taking of the property of others, that is, of plaintiff’s customers. A milk distributor, to use a rough analogy, might suffer loss by the turning of the area of a milk route into a public park. But this would not constitute a taking of the route or of the instrumentalities by which it was served. The value of land and improvements might include an element due to their location on the route — a question we do not decide — but the loss to the milk distributor is a business loss.

Though the line between a compensable and a noncom-pensable loss is sometimes a thin one, see United States v. Welch, supra, we think this case falls on the side of such cases as Omnia Co. v. United States, 261 U. S. 502, 510, where it is said that “for consequential loss or injury resulting from lawful governmental action, the law affords no remedy.”There Monongahela Navigation Co. v. United States, 148 U. S. 312, is distinguished, as it must be in the present case. See, also, Fix v. City of Tacoma, 171 Wash. 196, 17 P. 2d 599.

It follows that plaintiff’s petition must be dismissed.

It is so ordered.

Madden, Judge; Whitaker, Judge; Littleton, Judge;' and Jones, Chief Judge, concur.

FINDINGS OF FACT

The court makes findings of fact, based upon the stipulation of the parties, and the briefs and argument of counsel, as follows:

1. The plaintiff, Southern Counties Gas Company of California, now is and at all times mentioned herein has been a public service corporation incorporated under the laws of the State of California, with its principal place of business in Los Angeles, California.

2. The Whittier Narrows Flood Control Basin is a flood control project, authorized by the Act of August 18, 1941, 65 Stat. 638, for the purpose of controlling the flood waters of the Rio Hondo and the San Gabriél Rivers at a point where these two rivers converge at what is known as Whittier Narrows, four miles northwest of the City of Whittier, in Los Angeles County, California.

3. The dam and its appurtenant structures were and are being constructed by the Corps of Engineers, United States Army. The dam is approximately 17,250 feet long and will be built to an elevation of 239 feet mean sea level, with gated flood control outlets discharging into the Rio Hondo channel and gated spillway outlets discharging into the San Gabriel River channel. The height of the dam will be 55 feet above the Rio Hondo channel and its gate sill elevation will be 184 feet above mean sea level.

4. The dam is designed to intercept and temporarily to impound flood waters of the San Gabriel and Rio Hondo Rivers at Whittier Narrows, forming a reservoir upstream of the dam from which the water will be controlled and released downstream of the dam through the outlet works in regulated flows, which will be carried away without flood damage by embankments and channels constructed for the purpose and thereafter by the natural channels of the two rivers.

5. It is the intent and purpose of the Whittier Narrows project that at times of intense precipitation and severe floods in the upper areas in which the rivers have their sources, the dam will contain these flood waters in the area upstream or back of it temporarily until regulated release can be effected. The Whittier Narrows Flood Control Basin is to be.used as a detention 'flood control'project and reservoir.

6. The area devoted to reservoir purposes referred to as the taking line is predicated on a contour elevation 229, which is the maximum water surface of the reservoir flood design.

7. The design of the project is based upon an analysis of rainfall records by the Army Corps of Engineers which indicates that the largest flood shown by available records, occurring on March 2, 1938, has a frequency expectancy of from 37 to 50 years. It is calculated that an inundation of this magnitude would raise the reservoir to elevation 210 during release of impounded waters. Maximum inundations are calculated to have a frequency of 150 to 200 years. Inundation of varying degrees less than maximum have a greater frequency and occur at irregular intervals. The outlet gates and channels are designed to release maximum flood waters within a period of 48 hours.

8. The United States, by condemnation or purchase, has acquired flowage easements over or the fee simple title to all lands, including improvements thereon, lying above the dam and below the highest elevation to which the dam can raise such impounded water, together with the area required for the construction of the dam and its appurtenances up and downstream. The condemnation complaint, declarations of taking, and amendments were filed in Case No. 9103-WM Civil, entitled United States of America v. Certain Parcels of Land in the County of Los Angeles, State of California; Bessie Jackson Abbet, et al., in the United States District Court for the Southern District of California, Central Division. The declarations of taking, complaint and amendments recited that the United States acquired certain tracts:

Subject, also, to existing easements for public roads and highways, public utilities, railroads and pipe lines; and to existing easements for flood control purposes of the Los Angeles County Flood Control District.

9. The area acquired by the acquisitions described in finding 8 above constitutes an area of approximately 2,912 acres. Portions of this area, referred to as the taking area, were developed for industrial, residential and agricultural purposes prior to its acquisition by the United States. The-United States has prohibited human habitation in the taking area and has razed or removed or has caused or will cause-all of the structures within the area to be razed or removed,, except certain industrial structures which-will be raised above or buttressed against the maximum possible water elevation. The United States will obtain or has already obtained the closing of some of the public streets and alleys in the taking area, and has caused one major highway, Nose-mead Boulevard, to be reconstructed to pass over the crest of the dam and be usable during a flood of March 2, 1938-magnitude.

10. Since the year 1917, the plaintiff owned, maintained and operated a network of underground transmission lines, service pipes and distribution facilities throughout the taking area to supply gas to residential, industrial, commercial and agricultural consumers. At the time of the commencement of the Government’s project, plaintiff served 394 customers in the area taken, of which 387 were residential* customers, and 7 were industrial, commercial or agricultural customers;

11. Plaintiff’s transmission and distribution lines and service facilities were installed and maintained on private property and in the public streets, roads and alleys of the taking area under deeded rights of way and easements from private-owners and under rights of way granted to the plaintiff by-franchises from the County of Los Angeles and from the-City of Montebello, California. In addition, plaintiff was-possessed of private rights of way and easements for the installation and maintenance of service pipes and connections, in the area granted to plaintiff by the owners of the private property serviced by such installations, these rights being a part of service contracts with said owners.

12. The United States filed the condemnation suit, Civil No. 9103-WM referred to above, for the purpose of acquiring portions of the taking area. It named the plaintiff as a party to said condemnation action but made no service of the declarations of taking, complaint, or amendments thereto on plaintiff and did not seek to acquire thereby, nor did it so acquire, any of plaintiff’s property in the area, being its network of underground transmission lines, service pipes, distribution facilities, and its easements, rights of way, franchise rights and right to conduct the business of distributing and selling gas in the area. This network of distribution facilities and the franchises were expressly excepted in the declarations of taking, complaint, and amendments which recited that the United States acquired certain tracts:

Subject, also, to existing easements for public roads and highways, public utilities, railroads and pipe lines; and to existing easements for flood control purposes of the Los Angeles County Flood Control District.

13. The United States acquired other portions of the taking area by negotiation and purchase. It did not condemn, purchase or otherwise acquire any portion of plaintiff’s facilities, rights of way, easements of franchise rights within the taking area, except those facilities which were located in and under the dam site and its appurtenant embankments, diversion channels, spillways and outlet works, as are specified in the contracts and purchase order hereinafter referred to. For these facilities the United States has contracted to pay or has already paid the plaintiff the reasonable value thereof, as is set forth in said contracts and purchase order.

14. On April 21,1950, the United States, through the Corps of Engineers, Department of the Army, executed a contract' with the plaintiff whereby the plaintiff agreed to relocate, rearrange, alter, remove or abandon in place certain of its operating .facilities located within Segment “G” of the project and agreed to transfer, assign, set over to and grant to the Government all of its right, title and interest in and to rights of way and easements located within said Segment for the sum of $31,413.35. Thereafter, on June 11, 1953, by a similar contract, plaintiff agreed to remove and relocate specified facilities in another segment and assign its rights and title in the premises for the sum of $19,300.30. Thereafter, the Government executed a purchase'order dated June 14, 1954, for alteration, rearrangement, relocation and abandonment of additional specified facilities of plaintiff for the sum of $2,711.27.

15. Plaintiff’s present claim is for its property rights arid facilities in the taking area which the Government has not acquired by condemnation or otherwise and for which the Government has not paid or contracted to pay plaintiff and for its loss as a going concern in the area so taken. The facilities of the plaintiff were located on and under the public streets, roads and alleys and on and under private property in the taking area both above and below the dam proper under rights of way, easements and franchises, as set forth hereinbefore. The facilities included in this claim are those which it has been determined by the Army Corps of Engineers do not interfere with the project and are not required for continuance of service.

16. All of plaintiff’s transmission and distribution facilities servicing 387 residential customers in the taking areas as aforesaid have been disconnected, blocked off and abandoned. Of the facilities servicing seven industrial consumers in the area, four have been disconnected and abandoned. One of the remaining three of these consumers, the City of Whittier Water Department, has been rebuilt on a dike in the basin and will remain. Another, the Suburban Water System, is still in the taking area, but its future there is presently undetermined. The third, The Texas Company Plant No. 14, is still in the taking area but will definitely be moved therefrom.

17. The procedure usually followed by the defendant in its progress for the completion of the project was to acquire by condemnation, negotiation or purchase all of the buildings and improvements located in the taking area and endeavor to sell those improvements located thereon which were not desired for retention by the owners. The sales were made by public bid and provided that the improvements be removed by and at the expense of the purchasers. In some cases the Government acquired the property and demolished and removed the improvements thereon. Before improve- , ments were removed, sold or demolished, the District Engineer, Department of the Army, notified plaintiff in writing that said public sale or demolition would take place and informed plaintiff of the date thereof. In some instances the plaintiff was instructed or requested to disconnect or remove its facilities from the premises prior to such date of sale or demolition. Plaintiff complied with said instructions and requests. After disconnecting and blocking off its facilities and taking such safety precautionary measures as were necessary for public protection, plaintiff abandoned in place its facilities so disconnected and blocked off. The cost of removal of said facilities would exceed their salvage value, and their value represents a total loss to plaintiff.

18. No other order or action was taken by the United States in connection with plaintiff’s property, facilities or rights, except those contracted for as set forth in finding 14 above. Plaintiff protested to the Government that it was entitled to reasonable compensation for its facilities, property and franchise rights and loss as a going concern within the area so .taken by the Government and demanded compensation therefor. The United States, with the exceptions contained in the contracts and purchase order rejected said protests and demands.

CONCLUSION OF LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover and its petition is, therefore, dismissed. 
      
       Some areas were acquired by negotiation and purchase. Plaintiff’s facilities, Tights of way, easements or franchise rights located in and under the dam .site and its appurtenant embankments, diversion channels, spillways and outlet works were paid for by the united States at their reasonable value.
     
      
       As In United States v. (General Motors Corp., 323 U. S. 373, 378, occurs this statement:
      “Governmental action short of acquisition of title or occupancy has been held, if its effects are so complete as to deprive the owner of all or most of his interest in the subject matter, to amount to a taking.”
     
      
       That business loss is noncompensable, see Joslin Co. v. Providence, 262 U. S. 668; Mitchell v. United States, 267 U. S. 341.
     