Breaking: government conspired to deprive Nevada rancher of property rights

May 29, 2013 | By BRIAN HODGES

Nevada rancher E. Wayne Hage has been fighting the federal government for decades over his historical rights to water livestock, irrigate his ranch, and use water for domestic purposes. In the early 1990s, Hage filed a takings lawsuit in the Court of Federal Claims, arguing that the U.S. Forest Service and Bureau of Land Management took his water rights by interfering with his ability to access the streams and ditches in which his water flowed. That lawsuit met with mixed results. The trial court concluded that Hage held vested rights in the disputed water and that the federal agencies had taken those rights. The Federal Circuit Court of Appeals partially reversed the trial court decision. Earlier this year, PLF filed an amicus brief in support of Hage’s petition asking the U.S. Supreme Court to review his takings case.

But the legal saga does not end there. While Hage’s takings case was pending at the Court of Federal Claims, the Forest Service and BLM filed a second lawsuit in Nevada, hoping to get better results from a different judge. Despite Claims Court rulings to the contrary, the federal agencies argued that they owned Hage’s water rights and asked the court to award the government damages for Hage’s alleged “trespass” on the water. Hage counterclaimed that the feds violated his constitutional and statutory rights by interfering with his ability to access and use his water and by refusing to process applications to renew his grazing permits.

This is where the story gets really interesting.

Late last week, the Nevada district court issued a 104-page ruling detailing the federal agencies’ “vindictive,” “shocking,” and “nonsensical” actions against the Hage family. The case largely turned on the agencies’ capricious decision to reject Hage’s application to renew his grazing permits. The feds were apparently upset that Hage had written “without prejudice UCC 1-207” under his signature—a legally meaningless attempt to say that by applying for a permit renewal, he was not waiving his water rights. Because of the “offensive” marginalia, the feds refused to process that or any further applications from the Hage family. And by doing so, the agencies blocked Hage from grazing and watering his cattle on the range for over a decade.

But, oh, there is more … much more.

Apparently unsatisfied with just blocking Hage’s ability to graze on the range, the agencies decided to turn the screw on the Hage family. The feds filed paperwork with the state, seeking to transfer Hage’s water rights to other individuals. The agencies solicited and granted temporary grazing rights to others in areas where the Hage family had historically ranged their cattle and held a priority interest. And the feds sent trespass notices to people who leased or sold cattle to the Hages in order to pressure other parties not to do business with the Hages, and even to discourage or punish testimony in the lawsuit.

The feds’ behavior toward the Hage family shocked the Nevada court, which held certain government officials in contempt and found that they had “entered into a literal, intentional conspiracy to deprive the Hages not only of their permits but also of their vested water rights.”  The court determined that the agencies’ actions “arbitrarily and vindictively” stripped the Hage family of their water rights and statutory privileges and violated their due process rights.

Aside from the government’s stunning behavior, the court’s determination of Hage’s property rights is also significant. The crux of the feds’ complaint was that Hage trespassed on federal lands when his cattle grazed on the banks of streams and ditches in which he held stockwater rights. The feds argued that grazing exceeded Hage’s right to access and use water running over federal lands, and therefore constituted a trespass. The court disagreed, concluding that ranchers like Hage hold a “forage right” associated with vested stockwaters. That right allows ranchers to drive cattle to water sources without fearing liability for trespass if a cow stops to eat.  In short, the forage right recognizes that cattle can wander a bit and engage in some incidental munching while having a sip of water, so long as the foraging is within reason.

Most significant to western ranchers, however, is the court’s recognition that a rancher’s interest in renewing a grazing permit is protected by the Due Process Clause. The court recognized that, while there may be no right to a permit, government agencies may not abuse their discretion by arbitrarily or capriciously refusing to renew, or revoking, such a privilege. As explained by the court, due process requires that “there must be a reasonable relationship between denial, suspension, or termination of a permit, based upon historical custom and usage and the need to preserve the range for future use.”