## United States Court of Appeals for the Federal Circuit

06-5012

COLVIN CATTLE COMPANY, INC., Plaintiff-Appellant,

v. UNITED STATES, Defendant-Appellee.

Michael J. Van Zandt , McQuaid Bedford & Van Z andt LLP, of San Francisco, California, argued for plaintiff-appell ant. With him on the brief was Lyman D. Bedford

. Katherine J. Barton , Attorney, Environment and Natural Resources Division, United States Department of Justice, of Washington, DC, argued for defendantappellee. With her on the brief were Sue Ellen Wooldridge , Assistant Attorney General, Kathryne E. Kovacs , and Kathleen L. Doster , Attorneys. John Echeverria , Georgetown Environmental Law & Policy Institute, of Washington, DC, for Amicus Curiae. Appealed from: United States Court of Federal Claims Senior Judge John P. Wiese

## United States Court of Appeals for the Federal Circuit

06-5012

COLVIN CATTLE COMPANY, INC., Plaintiff-Appellant,

v. UNITED STATES, Defendant-Appellee.

__________ ________________ DECIDED: November 1, 2006

__________________________ Before NEWMAN, MAYER, and RADER, Circuit Judges

. MAYER, Circuit Judge

. Colvin Cattle Company, Inc. (“Colvin”) appeals the judgment of the United States Court of Federal Claims, which dismissed it s complaint alleging takings of its water rights and ranching operations, breach of cont ract, and other injuries. Colvin Cattle Co., Inc. v. United States , 67 Fed. Cl. 568 (2005). We affirm. Background Colvin owns a 520-acre cattle ranch in Nevada, adjacent to the Montezuma Allotment. The allotment comprises 625,000 acres of public land in Nevada, and the Bureau of Land Management (“BLM”) administers cattle grazing on it pursuant to the1934 Taylor Grazing Act (“TGA”), 43 U. S.C. § 315 et seq. The land was initially conferred on the United States in 1848 throu gh the Treaty of Guadalupe Hidalgo, and it has remained in the federal gov ernment’s po ssession ever since. Colvin alleges, and the government does not cont est, that it posses s es st ockwatering rights in the allotment. Colv in first applied to t he BLM for a graz ing lease in 1969, wh ic h was granted on January 19, 1970. T h e leas e was last renewed in 198 9, for a term of ten y ears, but it remained effective only upon Colv in making the requis i te annual paym e nts. By i t s terms, it conveyed “no right, title or interest held by the United Stat es in any lands o r resources.” 1 In February 1995, Colvin failed to pay the $966 annual graz ing fee. As a result of that failure, the BLM issued Co lvin a trespass notice on March 15, 1995, demanding that it stop grazing it s cattle on the allotment. Ultimately, in 1997, Colvin’s lease was canceled and trespass damages were assessed against it. Howev e r, Colv in continued to gr aze on the allotment, and on June 25, 2001, the BLM issued a notice of intent to have its c a ttle removed. Moreover, in May 2002, the BLM canceled Colvin’s range improvement permits, and issued an initial decis ion ordering that all materials related to range improvements be removed. Colvin did not

1 The lease specifically provides: This leas e; 1. Conveys no right, title or interest held by the United States in any lands or resources and 2. Is subject to (a) modifications, suspension or cancellation as requir ed by land plans and applic able law; (b) annual review and to modifica tion of terms and condit i ons as appropriate; and (c) the Taylor Graz ing Act, as amended, the Federal Land Polic y and Management Act, as amended, the Public Rangelands Improvement Act, and the rules and r egulations now or hereafter promulgated thereunder by the S e cretary of the Interior.

06-5012 2respond, and the BLM issued a final decisi on on the matter on November 26, 2003, ordering all range improvement s removed, excluding any “f acilities necessary for exercis e of water right s . . . establishe d purs uant to Nevada la w.” Colv in Cat t le , 67 Fed. Cl. at 570. Although Colv in may no longer access the allotment for grazing purposes, the government has not impeded its access to water. Th e BLM has s i nce authorized another rancher to graze liv estock, but as a c ondition of his authorization, he must haul his own water to t he allotment. On August 18, 2003, Colv in filed suit in the Court of Federal Claims, asserti n g takings claims relating to its water rights and ranching operations, a breach of contract claim relating to its canceled grazing leas e, and a c l aim for compensation under 43 U.S.C. § 1752(g) for the valu e of improvements made to t he allot m ent. The government moved to dismiss for failure to state a cl aim or, in the alternative, for summary judgment. The trial court ruled in favor of the United States on all is sues, and dismissed Colv in’s c o mplaint. Colv in appeals, an d we hav e jurisdiction under 28 U.S.C. § 1295(a)(3). Discussion Preliminarily, becaus e the trial court relied on matters outside of the pleadings in dismissing Colv in’s c o mplaint and Colvin was given a reasonable opp ortunit y to present materials relevant to the government’s motion, we treat the trial c ourt’s dismissal as a grant of summary judgment in favor of the United St ates. Fed. R. Civ. P. 12(b); see also Moden v. United States , 404 F.3d 1335 (Fed. Cir. 2005). Summary judgment is appropriate “if the pleadings, depositions, answ ers to int e rrogatories, and adm i ssions on file, together with the affidavit s, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

06-5012 3Fed. R. Civ . P. 56(c). As such, we re view the trial court’s judgment de novo , drawing all reasonable factual interferences in favor of Colv in. Crater Corp. v. Lucent Techs., Inc. , 255 F.3d 1361, 1366 (Fed. Cir. 2001) . Applying this standard, we reject each of its arguments. We begin with Colvin’s takings c l aims. Its principal c ontention is that the United States’ actions restricting it s ability to graze on the Mont ezuma Allotment constitute a taking of its water rights. It does not allege that it possesses a free-standing right to graze. Rather it say s merely that such a right is inherent in its water rights, and therefore, interfering with its ab ility to gra z e constitu tes a takin g of its water rights. Colv in Cattle , 67 Fed. Cl. at 570. Accordingly, if no such inhere n t grazing right exists , then gover nmental ac tions restricting its ab ilit y to graz e do not implicate Colvin ’s wat e r rights in any constitutionally protected manner, and cannot constitute a taking. Indeed, under our regulatory takings analys is, see, e.g. , M & J Coal Co. v. United States , 47 F.3d 1148, 1153-54 (Fed. Cir. 1995), the threshold inquiry is “whether the claimant has establis hed a ‘property intere st’ for purposes of the Fifth Amendment,” Conti v. United States , 291 F.3d 1334, 1339 (Fed. Cir. 2002) (citations omitted). In other words, the relevant question is whether Colvin’s alleged grazing interest is a stick in the bundle of rights it has acquired in the Montezuma Allotment, see M & J Coal , 47 F.3d at 1154 (citing Lucas v. S.C. Coast Counc il , 505 U.S. 1003, 1 027 (1992)): do Colv in’s water rights contain an appurtenant grazing right? In deciding this question, we do not rely on the Constitution alone because it “neither creates nor defines the scope of property interests compensable under the Fi fth Amendment.” Maritrans Inc. v. United States , 342 F.3d 1344, 1352 ( F ed. Cir. 2003) (citations omitted). We also look t o “‘existing r u les and understandi ngs’ and ‘background princi ples’ derived from an

06-5012 4independent source, such as st ate, federal, or common law, [to] define the dimensions of the requisite property right s for purposes of establishing a cognizable taking.” Id. (citing Lucas , 505 U.S. at 1030). Turning to the question at hand, the C onstit u tion prov ides that “ C ongress shall have Power to dispose of and make all needf ul Rules and Regu lations respecting the Territory or other Property bel onging to the United St ates.” U.S. Const. art. IV, § 3, cl. 2. As such, “[t]he U n ited States can prohi bit absolut ely or fix the terms on which its property may be used.” Light v. United States , 220 U.S. 535, 536 (191 1). Because the Montezuma Allotment has been the continuous property of the Un ited States since 1848, it has always been subjec t to the Property Claus e. Under t hat clause, Congress enacted the TGA, authorizi ng the Secretary of the Interior to create grazing districts on federal public lands and to issue grazing leases and pe rmits upon the payment of an annual fee. TGA §§ 315, 315b. As both parties concede, the TGA itself does not confer any grazing rights on priv ate parties. Becaus e the vesting of any property right to graze on public lands subsequent to the enactment of the TGA w ould be inconsistent with the act, any grazing right that Colvin possesses necessarily m u st have vested prior to its enactment. Howev e r, prior to the TGA, grazing on federal public lands was done at the United States’ sufferance. See Light , 220 U.S. at 535. It was, and remains , a privile ge, not a right. See Omaechevarria v

. Idaho , 246 U.S. 343, 352 (1918) (“Congress has not conferred upon citizens the right to graze stock upon the public lands. The Government has merely suffered the lands to be so used.” ). As such, the pre-TGA “implied lic ense” that these lands could be us ed for gr azing was left open only “so long as the Government did not cancel its tacit consent.” Light , 220 U.S. at 535 (citing Buford v.

06-5012 5Houtz , 133 U.S. 320, 326 (1890 )). “Its failure to object [to pre-TGA grazing] . . . did not confer any vested right . . . , nor did it depriv e t he United States of t he power of recallin g any implied lic ense under whic h the land had been used for private pur poses.” Id. (citations omitted). Accordi ngly, any water right that Colv in or its predecess o rs obtained could not and did not include an attendant right to graze on public lands. Colv in’s reliance on Nevada law to estab lis h the contrary proposition fails. Its argument begins well enough by stating that under the Mining Act of 1866, 43 U.S.C. § 661, 2 and the TGA, 43 U.S.C. § 315b, 3 the United States rec ognizes vested state lawbased wat e r rights. It runs into trouble, how ever, when it asserts that under Nevada law “a stockwatering right has always included t he right to graze.” Pet. Br. at 29. T o support this proposition, Colvin cites the 1925 Nevada Stockwatering Act, Nev. Rev. Stat. §§ 533.485-533.510 (“Stockwater ing Act”). Yet, nothing in the Stockwatering Act or Nevada Supreme Court interpretations of it establishes any such right.

2 The Mining Act of 1866 provides in pertinent part: Wherever, by priority of possession, ri ghts to the use of water for mining, argiculture, manufacturing, or ot her purposes have ves t ed and ac crued, and the same are recognized and ack nowledged by the local c u stoms, laws, and the decisions of courts, the possessors and owners of such vested rights shall be maintained and protected in the same . . . . 43 U.S.C. § 661 (2000).

3 The TGA provides in pertinent part: [N]othing in this subchapter shall be construed or adminis tered in any way to diminish or impair any right to the possession and use of water for mining, agriculture, manufacturing, or other p u rposes which has heretofore vested or accrued under existing law validl y affecting the public lands or which may be hereafter initiated or acquired and maintained in accordanc e with such law. 43 U.S.C. § 315b (2000).

06-5012 6In In re Calvo , 253 P. 671, 675 (Nev. 1927), the Ne vada Supreme Court stated: “The state is not asserting any right or title to the public domain under the [1925 Stockwatering Act]. All that the state seeks to do pursuant to the statute is to ex ercise polic e regulations ov er the public domain. . . . Furthermore any time the federal government conveys title to any portion of the pub lic domain in this state, or in any other manner undertakes to exercis e control over it, the statute in question becomes inoperative in s o far as it conflicts with th e authority of the federal gov e rnment.” In Itcaina v. Marble , 55 P.2d 625, 629-30 (Nev. 1936), it fu rther clarified: “No property right can be acquired by [grazing liv esto ck upon the public dom ai n]. All persons so using the public domain do it merely by s u ffer ance of the federal government . . . . This use is often alluded t o as a right. It is not a right that the gov er nment of the United States has conferred, and thes e public range lands may at any time be withdrawn from such use.” Moreover, the Stockwatering Act could not have conferred such a right, even if it had tried. Because the Mont ezuma Allotment is and alwa ys has been federal land, no right in it may be obtained without congressional author ization. See U.S. Const. ar t. IV, § 3, cl. 2.; see also Kleppe v. New Mexic o , 426 U.S. 529, 539-40 (1976). Ansolabehere v. Laborde , 310 P.2d 842, 842 ( N ev. 1957) , recognizes as much in ho lding that to the extent the Stockwatering Act purported to “govern[] the graz ing use of the public lands [it was] superseded and rendered ineffective by the enactment by Congress of what is known as the Taylor Grazing Act.” Ther efore, because Colv in’s water rights do not have an at tendant right to graze, no governmental ac tion restricting Colvin’s ability to graze on federal land can affect its water ri ght in a manner cognizable under the Fifth Amendment.

06-5012 7Colv in’s ar gument that grazing is the onl y beneficial us e for which it may exercise its water rights is to no avail. Eve n if we acc ept as true that its water rights are rendered sufficiently without value as to satisfy the second prong of M & J Coal , 47 F.3d at 1153- 54 (Fed. Cir. 1995) (setting forth the nature of the loss that is nec essary to c o nstitute a taking), its claim fails because, under the firs t prong, grazing is not a stick in the bundle of rights that it has ever acquired, id. at 1154 (citing Lucas , 505 U.S. at 1027). Colv in’s related claim for a taking of its ranch also fails. That the ranch may have lost value by virtue of losing the grazing le ase is of no moment because s u ch loss in value has not occurred by virtue of governm ental restrictions on a constitutionally cognizable property interest. See also United States v. Fuller , 409 U.S. 488, 493 (1973) (holding that “the Fifth Amendm ent does not require the Government to pay for that element of value bas ed on t he use of res pondents’ fee lands in combination with the Government’s permit l ands”). Next, Colv in’s argum ent that the gover nm ent’s a lleged failure to prevent the successor to its leas e and wild horses from infringing on it s water rights constitutes a taking, is also without me rit. The gover nment has required Colv in’s successor to provide his own water for his cattle, and, mo re importantly, the Unit ed States c annot be held responsible for the incursion on wa ter rights by a private party. See Alves v. United States , 133 F. 3d 1454, 1458 (Fed. Cir. 1998) (“There clearly can be no taking when what ever acts complained of are those of private parti es.”) (citing 767 Third Ave. Assocs. v. United St ates , 48 F. 3d 1575, 1580 (Fed. Cir. 1995))

. And bec ause wild horses are outside the government’ s control, they cannot cons titute an instrumentality of the government capable of giving rise to a taking. See id. at 1457-58 (citing Mountain States Legal Found. v. Hodel , 799 F.2d 1423 (10th Cir. 1986) (en banc)); see also

06-5012 8Douglas v. Seacoast Prods., Inc. , 431 U.S. 265, 284 (1977) (“[I]t is pure fantasy to talk of ‘owning’ wild fish, birds, or animals. Ne ither the States nor the Federal Government

. . . has title to these creatures until they ar e reduced t o possess ion by sk illf ul capture.”) (citations omitted); Kleppe , 426 U.S. at 535-38. Colv in next argues that the gov ernment’s actions leading up to its dec ision to stop making annual lease payment s constitute a breach of contract. Howev e r, even if a breach of contract suit coul d properly be brought under a graz ing lease, Colvin’s failur e to pay occurred in February 1995, and, therefor e, any governmental acts giving rise to such a claim necessarily occurre d before that time. Because Colv in did not file suit until August 2003, its breach of contract claim is barred by the Tucker Act’s six y ear statute of limitations, 28 U.S.C. § 2501. The trial c ourt dismis sed Co lvin’s claim on the merits; we affirm the dismiss a l, but do s o for lack of jurisdiction. See John R. Sand & Gravel Co. v. United States , 457 F.3d 1345, 1354 (Fed. Cir. 2006). Finally, Colvin seeks compens ation under 43 U.S.C. § 1752(g) 4 for the value of improvements made to the grazi ng area. Howev e r, even if suc h a claim may properly be raised here, it did not reques t a determination by the Secr etary of the value of its improvements as required by the statute. Cf. Julius Goldman’s Egg City v. United States , 556 F.2d 1096, 1099 (Ct. Cl. 1977) (holding t hat where the statute in q u estion

4 43 U.S.C. § 1752(g) provides in pertinent part: Whenever a permit or leas e for grazing domestic livestock is canceled in whole or in part, in order to devote the lands cover ed by the permit or lease to another public purpose, including dispos al, the permittee or lessee s hall receive from the United States a reasonable compens a tion for the adjusted value, to be determined by th e Secretar y concerned , of his interest in authorized pe rmanent improvements placed or constructed by the permittee or lessee on lands cover ed by such permit or lease . . . . (emphasis added).

06-5012 9required that “the m easure of fair market value shall be ‘as determined by the Secretary.’ . . . the court cannot substitute its own discretion f o r properly exercised administrative discretion.”). Therefore, its clai m is not ripe for failure to exhaust administrative remedies. Here again, the tr ial court dismissed Colv in’s claim on the merits; we affirm, but fo r lack of jurisdiction. Conclusion Accordingly, the judgment of the United States Court of Federal Claims is affirmed.

AFFIRMED

06-5012 10