Taxable Possessory Interest

"Possessory interest" by grazers in "public lands" is considered a valuable property interest that is recognized and taxable in the State of California. According to State of California Board of Equalization Property Tax Rules, Chapter 1, Subchapter 1, Rule 21 "Possessory Interest Definitions":

"Possessory interest' means an interest in real property which exists as a result of possession, exclusive use, or a right to possession or exclusive use of land and/or improvements unaccompanied by the ownership of a fee simple or life estate in the property. Such an interest may exist as the result of:

   A grant of a leasehold estate, an easement, a profit prendre, or any other legal or equitable interest of less than freehold, regardless of how the interest is identified in the document by which it was created, providing the grant confers a right of possession or exclusive use which is independent, durable, and exclusive of rights held by others in the property;

   Actual possession by one intending to use the property to the exclusion of any other interfering use, irrespective of any semblance of actual title or right."

Decisions in Board of Supervisors, County of Modoc v. Archer (18 Cal. App. 3d 717; 1971 - 96 Cal. Rptr. 379 and Dressler v. County of Alpine (64 Cal. App. 3d 557; 1976 - 134 Cal. Rptr. 554) resulted in additions to the California tax code. Possessory Interest Tax was codified in 1939, Calif. Stats, c. 154, pg. 1277, Section 107. The property interest taxed was defined as:

"...possession of, claim to, or right to the possession of land or improvements, except when coupled with ownership of land or improvements in the same person; taxable improvements on tax-exempt land."

"Exclusive use' means the enjoyment of a beneficial use of land or improvements, together with the ability to exclude from occupancy by means of legal process others who interfere with that enjoyment. Co-tenants may each make use of land or improvements without impairing the other's right to use the property, as this constitutes but a single use jointly enjoyed. Exclusive use is not destroyed by one or more of the following:

   Multiple use by persons making different uses of the same property in such a manner that they do not prevent the enjoyment of co-existing rights held by others, as, for example, the development of mineral resources by one person and the enjoyment of recreational uses by others;

   Concurrent use when the extent of each party's use is limited by the other party's right to use the property at the same time, as, for example, when two or more parties each have the independent right to graze cattle on the same land;

   Alternating use when the duration of each party's use is limited, as, for example, the use of premises by a professional basketball team on certain days of the week and by a professional hockey team on certain other days."

The grazing allotment tax was imposed by the California Board of Equalization and added to the code in 1971 as "the right to graze livestock or raise forage on public lands."

In 1990, the California Supreme Court in Hubbard v. Brown (785 P. 2d, 1183) rejected an argument that federal regulations denied any interest in federal lands to grazing permit holders.