Estate of Hage v. United States

• Decision Date: 19 October 2012
• Docket Number: 2011–5013.,Nos. 2011–5001,s. 2011–5001
• Citation: 687 F.3d 1281
• Parties: The ESTATE OF E. Wayne HAGE and The Estate of Jean N. Hage, Plaintiffs–Cross Appellants, v. UNITED STATES, Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

687 F.3d 1281

The ESTATE OF E. Wayne HAGE and The Estate of Jean N. Hage, Plaintiffs–Cross Appellants,

v.UNITED STATES, Defendant–Appellant.

Nos. 2011–5001, 2011–5013.

United States Court of Appeals,Federal Circuit.

July 26, 2012.

Rehearing and Rehearing En Banc Denied Oct. 19, 2012.

Lyman D. Bedford, Clausen Law Group, of Pt. Richmond, CA, argued for plaintiffs-cross appellants. With him on the brief was Michael J. Van Zandt, Hanson Bridget LLP, of San Francisco, CA.

Elizabeth Ann Peterson, Environment and Natural Resources Division, Appellate Section, United States Department of Justice, of Washington, DC, argued for defendant-appellant. With her on the brief was Ignacia S. Moreno, Assistant Attorney General.

Joseph Feller, Natural Resources Law Clinic, University of Colorado, of Boulder, CO, for amicus curiae, State of Nevada, Department of Wildlife, et al.

Brian T. Hodges, Pacific Legal Foundation, of Bellevue, WA, for amicus curiae Pacific Legal Foundation. With him on the brief was James S. Burling, of Sacramento, CA.

Before LOURIE, LINN, and MOORE, Circuit Judges.

MOORE, Circuit Judge.

E. Wayne Hage and Jean Hage brought an action against the United States, seeking compensation for a Fifth Amendment taking of private property, breach of contract, and range improvements pursuant to 43 U.S.C. § 1752(g). The Court of Federal Claims (Claims Court) awarded compensation for the taking of water rights plus interest from the date of the taking. The Claims Court also awarded compensation for range improvements, but did not award any corresponding pre-judgment interest. For the reasons set forth below, we affirm-in-part, reverse-in-part, vacate-in-part, and remand for proceedings consistent with this opinion.

Background

In 1978, E. Wayne Hage and Jean Hage acquired a ranching operation in Nevada that occupied approximately 7,000 acres of private land and used approximately 752,000 acres of adjoining federal lands under grazing permits from the Forest Service and the Bureau of Land Management.¹The Hages' predecessors in interest to the land acquired water rights under Nevada state law in streams and ditches now located on federal lands. See Act of July 26, 1866 ( 43 U.S.C. § 661).

Shortly after the Hages acquired the ranching operation, disputes arose between the Hages and the government concerning the nature and scope of the Hages' water rights and grazing permits. For example, the Hages objected to the Forest Service allowing the Nevada Department of Wildlife to release non-indigenous elk onto federal land for which the Hages had grazing permits on the ground that the elk reduced the available forage and water. The introduction of the elk caused other problems as well, such as fence damage and scattering of the Hages' cattle on the allotments.

As early as 1978, the Forest Service observed unauthorized grazing by the Hages' cattle, and made several requests that the cattle be moved. J.A. 569. This continued for several years. J.A. 570–73. The Forest Service also notified the Hages of issues relating to fence maintenance pursuant to their grazing permits. J.A. 1022. In 1983, for example, the Hages received approximately forty letters and seventy visits from the Forest Service charging them with various violations related to their grazing permits. Id.

In June 1990, the Forest Service informed the Hages of a twenty percent suspension of permitted cattle on their Table Mountain allotment during the 1990 grazing season due to the Hages' lack of livestock control and excess use on the allotment after the permitted grazing season in 1988. J.A. 1249–51. The Forest Service also notified the Hages that they were required to place a minimum number of cattle on the allotment, and notify the Forest Service prior to placing any cattle on the allotment. J.A. 1246–47. The Hages placed less than the minimum number of cattle on the allotment and failed to notify the Forest Service beforehand. J.A. 1248. The Forest Service notified the Hages of their non-compliance and ordered them to remove the cattle by September 21, 1990, which was after the end of the Hages' permitted season. Id. After requesting the Hages to “show cause” why a portion of the remaining permitted cattle should not be suspended due to the repeated violations, the Forest Service canceled some of the remaining permitted cattle rights for two years. J.A. 1249–52, 1254–55.

During the 1990 grazing season, the Forest Service also instructed the Hages to remove all of their permitted cattle from the Meadow Canyon allotment due to overgrazing. J.A. 301. Mr. Hage testified that it was impossible to keep the cattle off Meadow Canyon due to a twenty-five mile largely unfenced boundary between the surrounding land and the allotment. J.A. 1040–41. After an administrative appeal to stay this requirement was denied, Mr. Hage tried unsuccessfully to remove the cattle. J.A. 1042. Because of the continued violation, the Forest Service permanently canceled thirty-eight percent of the Hages' permitted cattle rights and suspended all grazing on the Meadow Canyon allotment for five years beginning with the 1991 grazing season. J.A. 373–88. After sending at least two notices of intent to impound cattle found on the Meadow Canyon allotment, J.A. 1256, 1265, the Forest Service eventually impounded the Hages' cattle, J.A. 1260–61, and later sold them, J.A. 367, after the Hages were unable to pay the costs of the impoundment, J.A. 1045.

Disputes also arose between the Hages and the government concerning maintenance of the Hages' ditch rights of way on federal lands. Shortly after the Hages acquired the ranch, they became aware of the requirement to take out special use permits to perform ditch maintenance. J.A. 856–57. The Hages asked for and received special use permits until early 1986. J.A. 778, 805–08. The Hages, however, stopped applying for special use permits because they no longer believed they were necessary. J.A. 778, 857–58. Mr. Hage testified that a ranger informed him he no longer needed to apply for a special use permit, and that the Forest Service manual stated the same. J.A. 857, 1028. Even though the Forest Service continued to demand that the Hages apply for a special use permit, J.A. 1029, the Hages performed ditch maintenance without applying for any special use permits, J.A. 1029–30.

Around 1990, Mr. Hage hired a woodcutter to clear trees along a ditch right of way on federal land. J.A. 1030. The Forest Service sent Mr. Hage a letter notifying him that “damaging or removing natural features ... and maintaining improvements without proper authorization are criminal acts, punishable by a up to a $5000 fine and/or 6 months imprisonment.” J.A. 1281. The letter also reminded Mr. Hage that the Forest Service previously notified him of the special use requirement. Id. Mr. Hage was subsequently prosecuted and convicted for damaging and removing government property (the trees). United States v. Seaman, 18 F.3d 649 (9th Cir.1994). The conviction, however, was overturned on the ground of inadequate proof of the value of the property damaged and removed. Id. at 651.

In 1991, the Hages filed suit against the United States alleging a Fifth Amendment taking of private property, a right to compensation for range improvements pursuant to 43 U.S.C. § 1752(g), and breach of contract. After almost twenty years of litigation, including two trials and several opinions by the Claims Court, the court awarded the Hages compensation for 1) a regulatory taking of their water rights, 2) a physical taking of their water rights, and 3) range improvements under 43 U.S.C. § 1752(g). Estate of Hage v. United States, 82 Fed.Cl. 202 (2008)(Hage V). The court awarded pre-judgment interest for the takings claims, but did not award prejudgment interest for the range improvements award. Estate of Hage v. United States, No. 91–1470L, slip op. at 5 (Fed.Cl. June 9, 2010). The government appeals each award, including the amount of just compensation awarded, and the Hages cross-appeal for pre-judgment interest on the range improvements award. We have jurisdiction under 28 U.S.C. § 1295(a)(3).

Discussion

Whether a compensable taking has occurred is a question of law based on factual underpinnings. Cary v. United States, 552 F.3d 1373, 1376 (Fed.Cir.2009) (citing Alves v. United States, 133 F.3d 1454, 1456 (Fed.Cir.1998)). We review the Claims Court's legal conclusions de novo and its fact findings for clear error. Holland v. United States, 621 F.3d 1366, 1374 (Fed.Cir.2010). Whether the Claims Court has jurisdiction is a legal issue reviewed de novo. W. Co. of N. Am. v. United States, 323 F.3d 1024, 1029 (Fed.Cir.2003). The Claims Court “does not have jurisdiction over claims that are not ripe.” Morris v. United States, 392 F.3d 1372, 1375 (Fed.Cir.2004) (citing Howard W. Heck & Assocs., Inc. v. United States, 134 F.3d 1468 (Fed.Cir.1998)).

The Fifth Amendment provides that private property shall not be taken “for public use, without just compensation.” U.S. Const. amend. V, cl.4. There are two kinds of takings under the Fifth Amendment: physical takings and regulatory takings. Washoe Cnty. v. United States, 319 F.3d 1320, 1326 (Fed.Cir.2003) (citing Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1014–15, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992)). A physical taking generally occurs by “a direct government appropriation or physical invasion of private property.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005) (citations omitted). A regulatory taking may occur “when government actions do not encroach upon or occupy the property yet still affect and limit its use to such an extent that a taking occurs.” Palazzolo v. Rhode Island, 533 U.S. 606, 617, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001) (citing Pa. Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922)). These two types of takings are subject to different analyses.

We employ a two-part test to...