Todd O'Bryan v. Great Plains Regional Director, 48 IBIA 109 (2008)

INTERIOR BOARD OF INDIAN APPEALS Todd O'Bryan v. Great Plains Regional Director, Bureau of Indian Affairs 48 IBIA 109 (11/13/2008)

Related Board case: 41 IBIA 119

United States Department of the Interior

OFFICE OF HEARINGS AND APPEALS INTERIOR BOARD OF INDIAN APPEALS 801 NORTH QUINCY STREET SUITE 300 ARLINGTON, VA 22203

TODD O'BRYAN, Appellant, v. GREAT PLAINS REGIONAL DIRECTOR, BUREAU OF INDIAN AFFAIRS, Appellee.

Order Vacating Decision and Remanding

Docket No. IBIA 06-53-A

November 13, 2008

Appellant Todd O'Bryan appeals to the Board of Indian Appeals (Board) from a February 7, 2006, decision (Decision) by the Great Plains Regional Director, Bureau of Indian Affairs (Regional Director, BIA), which assessed $23,732.01 in "liquidated damages"1 against Appellant for overstocking violations of grazing permits that he held for Range Units (RUs) 6 and 9 on the Pine Ridge Reservation in South Dakota.2 This dispute is before the Board following the Board's remand in 2005 to the Regional Director to reconsider the liquidated damages portion of his December 8, 2003, decision (2003 Decision). See O'Bryan v. Acting Great Plains Regional Director, 41 IBIA 119 (2005) (O'Bryan I). In O'Bryan I, we affirmed BIA's cancellation of Appellant's grazing permits, but we vacated and remanded the liquidated damages portion of the Regional Director's 2003 Decision. We acknowledged in O'Bryan I that Range Control Stipulation No. 2 (RCS1

  1. Injury to Land The Regional Director added an additional 50% to the grazing fee as an approximation of actual damages to the land from Appellant's overstocking. Because there is no factual correlation in the record between any injury to RUs 6 and 9 and Appellant's overstocking, we cannot sustain an assessment of damages for injury to the land. The Regional Director has not identified any specific injury to the land nor has the Regional Director explained how this amount ($7,910.67) compensates the landowners for any specific injury to the land. Therefore, we must reject this portion of the Regional Director's assessment of damages. The Regional Director explains in his declaration that overstocking generally leads to a reduction in plant vigor by causing plants to die and new plants to grow in their place that are less desirable and productive. He relies on the ESSIS study, which shows that in 2005, two years after Appellant overstocked RUs 6 and 9, both of the RUs had sustained a reduction in forage production, which then led to decreased grazing capacity. According to the ESSIS study, the acreage per AUM required on both RUs increased nearly 33%, which means that the overall grazing capacity for a year-long permit presumably decreased from 333 AUs to approximately 261 AUs.13 However, nothing in the record before the Board supports a finding that the degradation in forage on the RUs in 2005 is directly attributable in whole or in part to Appellant's overgrazing in 2003. At best, the Regional Director's declaration suggests that Appellant's overgrazing might have been a factor, which, in the absence of additional evidence, is speculative. Even assuming that the Regional Director were able to directly attribute the degradation in forage to Appellant's overstocking (or can attribute a percentage of the degradation to the overstocking), the Regional Director does not explain the costs of restoring plant vitality to the RUs to what they would have been had Appellant not overgrazed. Instead, the Regional Director explains that he "could only approximate actual damages" because injury to the land occurs over time, which is why he "needed to continue to rely on the liquidated damages provision [i.e., 50% of the value of forage consumed] to forecast the just compensation owed Indian landowners." Answer Brief at 4. But, nothing in the record or the Regional Director's explanation informs us why 50% of the value of forage consumed is a reasonable calculation of the actual damage over time to the land from overgrazing.13

[1]. Liquidated damages are contractually-specified damages that are agreed to by the parties to a contract for breaches of the contract. See Knecht Enterprises, Inc. v. Great Plains Regional Director, 44 IBIA 87, 96 n.11 (2007) (citing 22 Am. Jur. 2d Damages § 493 (2003)). Liquidated damages may be expressed as a fixed amount for a particular breach or as a formula from which the amount of damages is derived. Range units or RUs are consolidated tracts of rangeland that BIA creates with the consent of the Indian landowners for the purpose of grazing management. See 25 C.F.R. §§ 166.4, 166.302. 48 IBIA 109

2

No. 2), which was part of Appellant's grazing permits and on which the Regional Director relied in calculating the liquidated damages, had been upheld as enforceable in prior decisions. RCS No. 2 provides in relevant part, if the number of livestock authorized [to graze on the leased RU] is exceeded, the permittee shall be liable to pay as liquidated damages, in addition to the regular fees for the full grazing season as provided in the permit, a sum equal to 50 percent thereof for such excess livestock and such livestock shall be promptly removed from the unit. However, we also noted that whether a liquidated damages provision, such as RCS No. 2, is enforceable "in any given situation may depend upon whether it is reasonable in that situation." Id. at 128. We found that the facts of Appellant's case suggested a "strong possibility" that the application of the liquidated damages provisions -- i.e., assessing $94,928.04 in damages -- might not be reasonable. Id. at 129. Therefore, and as recognized by the Regional Director in the present appeal, we remanded the matter to BIA and "instructed the BIA to calculate the actual damages, at least approximately, so that the reasonableness of applying the liquidated damages provision could be determined." Answer Brief at 1. On remand, the Regional Director attempted to "approximate" actual damages. But instead of using that approximation to determine whether it was reasonable to apply the $94,928.04 liquidated damages sum, the Regional Director then imposed the approximated actual damages as "recalculated liquidated damages" in the amount of $23,732.01. Answer Brief at 3. The Regional Director arrived at the amount by calculating the value of the forage consumed by the excess livestock ($15,821.34) and adding this amount to an estimated "forecast [of] just compensation for the injury to the land" caused by the overgrazing ($7,910.67). Answer Brief at 1, 3. The amount for forage was calculated by multiplying the permit price of an Animal Unit Month (AUM3) ($9.14) by the number of excess cattle (577) and by the number of months (3) that the excess cattle foraged on the RUs. To compute damages for the injury to the land, the Regional Director multiplied the value of the forage by 50%, and added this figure to the damages that were based on forage consumption.

AUM or "Animal Unit Month" is used to refer to "the amount of forage required to sustain one cow or one cow with one calf for one month." 25 C.F.R. § 166.4. 48 IBIA 110

3

We conclude that the Regional Director's Decision must again be vacated and the matter remanded. We cannot affirm the Regional Director's assessment of $23,732.01, either as "recalculated liquidated damages" or as actual damages. First, the liquidated damages calculation was not made pursuant to the formula set forth in Appellant's grazing permit and the Regional Director has no authority to impose a different formula. Second, although the Board did not find it necessary in O'Bryan I to address the different interpretations by the Superintendent and the Regional Director of RCS No. 2 in calculating liquidated damages, we now conclude that the Regional Director correctly interpreted and calculated the liquidated damages provision in his December 2003 Decision in the amount of $94,928.04. Because we conclude (as, apparently, the Regional Director did also) that this amount is grossly disproportionate to the estimated actual damages, we conclude that BIA is limited to assessing actual damages, if any, against Appellant for his overstocking. Finally, as to actual damages, we cannot affirm the Regional Director's assessment because, at best, it purports to approximate actual damages and is not adequately supported as an assessment of actual, provable damages. Therefore, we remand this matter to the Regional Director to determine whether actual damages are provable and, if so, to assess actual damages.4 Background A. O'Bryan I

The history of Appellant's leases and lease violations is recounted more fully in O'Bryan I. We set forth only that history necessary for an understanding of our decision today. In January 2001, Appellant was awarded 5-year grazing permits for RUs 6 and 9 that commenced on November 1, 2000. The permits authorized Appellant to graze 165 head of cattle on RU 6 and 168 head of cattle on RU 9 for a total of 333 head of cattle or "animal units" (AUs). The permits also incorporated a number of range control stipulations, including RCS No. 2, to govern the use and management of the leased rangelands. In 2003, BIA determined that Appellant was overstocking RUs 6 and 9.

4

Although we are again remanding the matter to the Regional Director, we reconfirm our holding in O'Bryan I that Appellant is liable for his overstocking violations, and we again reject Appellant's arguments to the contrary. 48 IBIA 111

Specifically, BIA counted a total of 1,214 yearlings on the RUs, which were 577 AUs more than the aggregate number allowed under Appellant's 2 permits (i.e., nearly 3 times the number Appellant was authorized to graze).5 BIA observed the excess livestock on the RUs on various dates over a 3-month period. BIA urged Appellant to seek modification of his permits to allow the excess stock to graze on the RUs and informed him that a modification would be approved, but Appellant failed to submit any paperwork...

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