Fence Creek Cattle Co. v. US Forest Service
| Decision Date | 26 April 2010 |
| Docket Number | No. 08-36051.,08-36051. |
| Citation | 602 F.3d 1125 |
| Parties | FENCE CREEK CATTLE COMPANY, an Oregon partnership; Gazelle Land and Timber, LLC, an Oregon limited liability company; King Williams; Michael G. Smith, Plaintiffs-Appellants, v. UNITED STATES FOREST SERVICE, an agency of the United States; Mary Deaguero, in her official capacity as District Ranger, Eagle Cap-HCNRA District, Wallowa-Whitman National Forest; Barbara Walker, in her official capacity as District Ranger, Wallowa Valley District, Wallowa-Whitman National Forest, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
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Paul A. Turcke, Moore Smith Buxton & Turcke, Chartered, Boise, ID, for the plaintiffs-appellants.
Kurt G. Kastorf (argued) and David Shilton, U.S. Department of Justice Environment & Natural Resources Division, and John C. Cruden, Assistant Attorney General, for the defendants-appellees.
Before RICHARD A. PAEZ, RICHARD C. TALLMAN, and MILAN D. SMITH, JR., Circuit Judges.
The issue in this case boils down to a simple question: Where's the beef? Plaintiff-Appellant Fence Creek Cattle Company ("Fence Creek") claimed that it had purchased over 1,500 head of cattle from the former owner, which it wished to continue grazing on federal land. But, when questioned by the United States Forest Service ("Forest Service"), Fence Creek could not sufficiently prove that it owned the cattle. Consequently, the Forest Service cancelled portions of Fence Creek's livestock grazing permit.
The Forest Service issued a term grazing permit to Fence Creek on February 6, 2004. The permit allowed cattle grazing on four allotments in Oregon's Wallowa-Whitman National Forest: Chesnimnus, Log Creek, Dodson-Haas, and Middlepoint. However, the Forest Service cancelled Fence Creek's use of the Chesnimnus and Log Creek allotments on December 9, 2005, for failure to comply with the terms and conditions of the permit. Fence Creek invoked the Forest Service's internal procedures for administrative review, appealing to both the Deputy Forest Supervisor and the Deputy Regional Forester. Each reviewer upheld the decision.
Still unsatisfied with the cancellation of the two allotments, Fence Creek filed a complaint in the United States District Court for the District of Oregon alleging under the Administrative Procedure Act ("APA") that the Forest Service's decision was arbitrary and capricious and that the Forest Service violated both constitutional and statutory due process requirements. The district court granted the Forest Service's summary judgment motion, and we affirm.
The facts pertaining to the grazing permit at issue arise from a real estate transaction in Wallowa County, Oregon. In September 2003, Gazelle Land & Timber ("Gazelle") purchased over 27,000 acres of land, called the Lucky Diamond Ranch, 1,459 cows, and 92 bulls from Garnet Lewis. The real estate sales agreement required Lewis to deliver grazing permit waivers to Gazelle, or its nominee, for specific federal grazing allotments, including the ones at issue in this appeal.1 The real estate sales agreement also provided that certain parcels of land be deeded to Fence Creek.2
On February 4, 2004, Fence Creek submitted an application for a grazing permit for the Chesnimnus, Log Creek, Dodson-Haas, and Middlepoint allotments.3 The application was supported by waivers signed by the previous permittees operating on the allotments: Delbert Lewis, Garnet Lewis, Geraldine Lewis, and Barbara Kudrna. The Chesnimnus allotment was permitted for 850 head of cattle, and the Log Creek allotment was permitted for 247 head. Fence Creek also provided a bill of sale indicating that Fence Creek, a partnership of Wayne and Michele Smith and Bruce and Mary Agar, purchased 1,459 cows and 92 bulls from Garnet Lewis. Bruce and Mary Agar, as the partners of Fence Creek, signed the application for the grazing permit and the supporting waivers. On February 6, 2004, the Forest Service issued the grazing permit for the Chesnimnus and Log Creek allotments pursuant to the terms of the waivers and application: it again permitted 850 head of cattle to graze on the Chesnimnus allotment and 247 head to graze on the Log Creek allotment.
In conjunction with the purchase of the Lucky Diamond Ranch, Gazelle and Fence Creek formed a joint venture with Wayne and Michele Smith, Monty and Shelly Siddoway, Bryan and Zachary Williams, and Wyatt Agar in October 2004. The joint venture agreement provided that the members of the joint venture had purchased smaller parcels of land that were originally part of the Lucky Diamond Ranch. It also identified Fence Creek as the purchaser of nearly 1,500 head of cattle and the associated grazing permit.
In June 2005, seventeen months after the issuance of the grazing permit, the Forest Service began investigating the ownership of certain cattle that Rick Smith, a Forest Service employee, had observed on Fence Creek's allotments during the 2004 grazing season. Smith saw cattle grazing on the Chesnimnus allotment bearing a brand other than the registered Lucky Diamond brand. The terms and conditions of Fence Creek's grazing permit authorized only Fence Creek's cattle to graze on the permitted allotments.
The owner of the cattle seen on the Chesnimnus allotment, Wayne Smith, claimed that he had sold them to Fence Creek and that the cattle were in fact marked with the Lucky Diamond brand, but it was smaller (and harder to see) because the brand was affixed as a hair brand rather than a cow brand.4 There followed a series of telephone calls, meetings, and written communications. Bruce Agar told the Forest Service that Fence Creek originally planned to cull the cattle purchased from Garnet Lewis and replace the culled cattle with cattle purchased from Wayne Smith and Monty and Shelly Siddoway. Although the grazing permit did not list either Wayne Smith or the Siddoways as partners of Fence Creek, Bruce Agar claimed that the intent was to include at least Wayne Smith as a partner of Fence Creek. Unsatisfied with the explanation offered by Wayne Smith and Bruce Agar, the Forest Service decided to seek clarification of who owned the cattle to determine if further action was necessary.
The Forest Service sent a written request to Fence Creek on June 28, 2005, seeking additional documentation that Fence Creek was in compliance with the terms and conditions of the grazing permit. The letter explicitly stated that Fence Creek needed to submit proof of ownership of the livestock permitted on the allotments and listed acceptable methods of proof. It also reminded Bruce and Mary Agar that "only livestock owned by the permittee are authorized to graze under this permit." This letter did not state that Fence Creek's grazing permit would be subject to cancellation; it simply requested verification that Fence Creek met the eligibility requirements for its grazing permit.
The Agars visited the local Forest Service office to address the issues identified in the written inquiry. They produced brand inspection certificates for 600 head of cattle purchased from the Lewis family in 2003. The Agars admitted that they only purchased 600 head and that they had never received a bill of sale listing them as purchasing all 1,459 cows and 92 bulls. Instead, they intended to buy 600 head from the Lewis family and then add another 400 contributed by Wayne and Michele Smith and Monty and Shelly Siddoway as capital for the Fence Creek partnership. One month later, the Agars submitted information claiming that they had in fact purchased 1,459 cows and 92 bulls, but that only 600 cows and 25 bulls were brand inspected for Fence Creek. Fence Creek represented that it then "obtained an additional 200 head of cows and 10 bulls from Wayne Smith ... and obtained another 175 head from Monty Siddoway" to make a herd of approximately 1,000 head of cattle.
While the Forest Service was investigating Fence Creek's grazing permit, the joint venture fractured and the parties entered into a settlement agreement on June 17, 2005. Under the terms of this agreement, Bruce and Mary Agar were to receive a lump-sum buyout in exchange for the transfer of all right, title, and interest in the Fence Creek partnership and brands, as well as the grazing permit issued to Fence Creek. The Agars also relinquished all right, title, and interest in Gazelle. King Williams, a partial owner of Gazelle, then notified the Forest Service that he was in control of Fence Creek. Bruce and Mary Agar requested the Forest Service contact Williams regarding its concerns over the grazing permit issued in February 2004, but the Forest Service responded that it needed to ensure that Fence Creek had in fact purchased the cattle from Garnet Lewis before it would accept a waiver of the grazing permit from the Agars to Williams.
The Forest Service sent the Agars a letter on September 6, 2005, with a copy to Williams, again attempting to acquire information that would validate the grazing permit issued to Fence Creek in February 2004. It explicitly stated that the grazing permit could be cancelled if Fence Creek failed to provide the necessary documentation and requested a response by September 30, 2005. In response, the Agars stated that they had no brand inspection certificate validating the purchase of 247 permitted cattle for the Log Creek allotment, and that they only purchased 600 cows from Garnet Lewis. The Agars told the Forest Service that Wayne and Michele Smith and Monty and Shelly Siddoway were supposed to be partners in Fence Creek, but were unable to obtain financing. The Agars admitted there was no brand inspection certificate showing that Fence Creek had purchased the cattle "contributed" by either the Smiths or the Siddoways.
King Williams responded by arguing that the grazing permit for the Log Creek allotment was waived on the basis of the purchase of the base...
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