Summary of a Recent
Judicial Development in
Water Law

Cancellation of Grazing Permit Does Not Result in Taking of Water Right

L. Paul Goeringer
National AgLaw Center Research Associate

Summary of Decision

In Colvin Cattle Co. v. United States, 468 F.3d 803 (Fed. Cir. 2006), the Federal Circuit Court of Appeals affirmed the decision of the Court of Federal Claims. The court agreed that any interference with a right to graze on public land was not a taking of the plaintiff's water rights. The court also affirmed the decision that the cancelation of a grazing permit did not result in a taking of the plaintiff's ranch. Finally, the court affirmed the decision that the plaintiff had not brought its breach of contract claim during the required six-year period, and that the court lacked jurisdiction over claims for compensation for improvements because the plaintiff had not exhausted its available administrative remedies.

Background

The Bureau of Land Management (BLM) administers the Montezuma Allotment (Allotment) located in Nevada and managed under the Taylor Grazing Act. Id. at 805. The Colvin Cattle Company (Colvin) owned a ranch adjacent to the Allotment and had a grazing lease with the BLM since January 19, 1970. Id. The lease was renewed in 1989 for a period of ten years, and it required Colvin to pay annual grazing fees. Id.

In 1997, Colvin failed to pay its annual grazing fees, and in 1997, the BLM canceled the lease and assessed trespass damages against Colvin. Id. Colvin continued to graze the Allotment until June 25, 2001, when "the BLM issued a notice of intent to have [Colvin's] cattle removed." Id. In May 2002, Colvin was ordered to remove all improvements when the BLM canceled its improvement permits. Id. at 805-06. Colvin was allowed to leave any facility required to exercise a water right under Nevada law. Id. at 806. The BLM and the U.S. government did nothing to impede Colvin's use of any recognized water right. Id. The BLM later issued a lease to another rancher to use the Allotment, but it required that rancher to haul water to the allotment. Id.

Colvin filed suit in 2003 in the Court of Federal Claims, claiming a taking of its water rights, breach of contract, and entitlement to compensation under 43 U.S.C. § 1752(g) for improvements to the Allotment. Id. The Court of Federal Claims granted the federal government's motion to dismiss. Id. This appeal followed. Id.

Arguments

Colvin argued that the Mining Act of 1866 and the Taylor Grazing Act of 1934 (TGA) recognize vested state law-based water rights. Id. at 807. Colvin argued that the actions of the BLM, which limited its ability to use the Allotment, were a taking of its water rights. Id. at 806. It also asserted that the BLM's actions constituted a taking of its ranch. Id. at 808. Next, Colvin argued that the federal government infringed on its water rights by failing to prevent the succeeding rancher and wild horses from using its water rights. Id. at 808-09. Colvin also argued that the government's actions forced it to breach the lease, and it brought a breach of contract claim against the BLM. Id. at 809. Finally, it argued that it was owed compensation under 43 U.S.C. § 1752 for the value of improvements made. Id.

Analysis and Holdings

First, the court tried to determine if "Colvin's alleged grazing interest [was] a stick in the bundle of rights it ha[d] acquired in the Montezuma Allotment . . . ." Id. at 806. In determining this issue, the court examined not only the U.S. Constitution, but also "existing rules and understandings and background principles derived from an independent source, such as state, federal, or common law, [to] define the dimensions of the requisite property rights for purposes of establishing a cognizable taking." Id. at 806-07 (citations and quotations omitted).

The court determined that the Allotment was property of the U.S. subject to the Property Clause of the U.S. Constitution. Id. at 807. Congress had passed the TGA, and it gave the BLM the authority to issue grazing leases and permits to ranchers. Id. The granting of a grazing permit did not vest any property right to graze in the permittee, and such a conclusion would be inconsistent with the TGA. Id. Finally, the court determined that pre-TGA, any grazing interest was done at the sufferance of the U.S. and was not a right. Id. The TGA and pre-TGA actions did not give Colvin any interest in grazing. Id.

Next, the Colvins claimed that the Nevada Stockwatering Act gave them a property interest and that the U.S. had recognized this right in the Mining Act of 1866 and the TGA. Id. at 807-08. The court disagreed that state law supported Colvin's claim. Id. at 808. After considering prior decisions by the Nevada Supreme Court, the court found that it was clear that the Nevada Stockwatering Act conferred no right or title over the public domain. Id. The Allotment was federal property, and a right could only be obtained through congressional authorization, not through the actions of a state legislature. Id. "Therefore, because Colvin's water rights [did] not have an attendant right to graze, no governmental action restricting Colvin's ability to graze on federal land can affect its water right in a manner cognizable under the Fifth Amendment." Id.

The court rejected any argument that grazing was the only beneficial use for which the water rights could be exercised. Id. The court found that this argument failed because, again, "grazing is not a stick in the bundle of rights that [Colvin] has ever acquired." Id. The court also rejected any taking claim related to the ranch. The court found that the fact that "the ranch may have lost value by virtue of losing the grazing lease is of no moment because such loss in value has not occurred by virtue of governmental restrictions on a constitutionally cognizable property interest." Id. (citations omitted).

The court rejected Colvin's argument that the government failed to prevent the new permit holder or wild horses from infringing on Colvin's water rights. Id. at 808-09. "The government has required Colvin's successor to provide his own water for his cattle, and, more importantly, the United States cannot be held responsible for the incursion on water rights by a private party." Id. at 809 (citation omitted). Finally, the court found that wild horses were not within the control of the federal government, and not a governmental instrumentality that would give rise to a taking. Id.

As to the breach of contract claim, the court found that the governmental actions, which Colvin claimed was the cause of its failure to make lease payments, happened in and before 1995. Id. Colvin waited until 2003 to file suit against the federal government. Id. The breach of contract claim was barred by the six-year statute of limitations in the Tucker Act, and the court affirmed the grant of summary judgment on this issue. Id.

Finally, the court found that any claims for compensation for improvements under 43 U.S.C. § 1752(g) could not proceed. Id. Colvin had failed to exhaust its available administrative remedies. Id. The claim was not ripe for consideration, and the court lacked jurisdiction over the claim. Id. The court affirmed the judgment of the Court of Federal Claims. Id.

The case was decided on November 16, 2006.