Historically, the United
States encouraged, and even lauded, western
settlers for the industry and courage that it
took to eke out a living in such hostile
conditions as those present in Nevada. The
ability to do so, however, hinged on the
government’s fidelity to the settlers’ water
rights because the soil in Nevada is arid, and
unfit for cultivation unless irrigated by waters
of running streams. Because of this, our courts
recognized that water rights in the western
United States are different from those on the
east and subject to more protection. The
importance of these rights was so well
recognized that early courts ruled that it was a
duty of the national and state governments to
protect appropriated water rights which are
among the most valuable property rights known to
the law. In fact, when rendering his decision in
favor of Hage, Senior Judge Loren Smith
correctly observed, in Nevada, “water means the
difference between farm and desert, ranch and
wilderness, and even life and death.” Hage
v. United States, 35 Fed. Cl. 147 (1996).
Over time, however, the
federal government shifted its public lands
priorities away from agriculture, ranching, and
other natural resource industries and toward
public recreation and enhancement of the
environment. Thereafter, the federal government
began a campaign designed to drive ranchers out
of business by increasing the regulatory burdens
on ranchers; denying access over federal lands;
raising fees, cancelling or placing onerous
restrictions on grazing permits; and blocking
access to water.
The Hage case arose
from the federal government’s attempts to
interfere with Hage’s historical right to water
his livestock, irrigate his ranch, and use water
for domestic purposes. After a full trial, the
Court of Federal Claims concluded that U.S.
Forest Service policies and actions effected
physical and regulatory takings of Hage’s water
rights. First, the Forest Service physically
took Hage’s stock water rights when it erected
fences to block Hage’s cattle from accessing and
putting to beneficial use Hage’s vested water
rights at times when Hage had valid grazing
permits allowing cattle to move upon the federal
lands. Second, the Forest Service physically
took Hage’s water rights when it used threats,
intimidation, and harassment to bar Hage from
accessing his ditch rights-of-way to maintain
the flow of water to his patented lands. And
third, the Forest Service effected a regulatory
taking when it determined that any permit
allowing Hage to access and maintain his ditch
rights-of-way would require that the work be
done only with hand tools—an impossibility.
The Federal Circuit Court of
Appeals, however, reversed every finding and
conclusion on which a taking was found. In
regard to the regulatory taking, the Federal
Circuit found that the claim was unripe because
Hage gave up on the permitting process and took
matters into his own hands. Even though the
federal government had previously thrown Hage in
jail for clearing out his ditches (the charges
were dismissed when the government could prove
no crime), the Court held that he was required
to apply for a permit. The Federal Circuit found
that threats of jail time and extreme hostility
(Judge Smith was shocked at the government’s
hostile and threatening behavior) was not
sufficient to establish futility.
Frustratingly, the Court of
Appeals acknowledged that Hage had raised an
argument that, under the 1866 Ditch Act, prior
appropriated water rights are not subject to
permitting. PLF’s
amicus brief
went into great detail on this issue, explaining
that, for over a century, the highest courts of
the western states have recognized that the
holder of a water right has an absolute right to
cross over the land of another person to clear
obstructions from the flow of water. This raises
the difficult, and inconvenient, question
whether Hage’s right to maintain his water flow
was superior to the federal government’s policy
of promoting the growth of riparian vegetation
in ditch rights-of-way. The Court of Appeals,
however, never answered the question.
The Federal Circuit’s
conclusion regarding the physical taking is even
more frustrating. On the one hand, the Court
agreed with PLF’s amicus brief, which focused
primarily on establishing that the right of
access to water is a fundamental property right.
The Court held that:
the government could not
prevent them from accessing water to which
they owned rights without just compensation.
The government, for example, could not
entirely fence off a water source, such as a
lake, and prevent a water rights holder from
accessing such water.
But, what the court giveth,
the court taketh away. The federal government’s
fences were in place for approximately 3 years.
At some point, elk broke the fences and Hage’s
cattle were able to exploit the breach and slake
their thirst. Based on this, the Federal Circuit
held that Hage’s right to access was not
interfered with. This conclusion is at odds with
the U.S. Supreme Court’s seminal physical
takings case,
Loretto v. Teleprompter Manhattan CATV Corp.,
where the Court held that any physical invasion
of private property—no matter how small (Loretto
concerned a small cable box affixed to an
apartment building)—will effect a taking. The
fact that elk eventually breached the
government’s fences should only goes to how much
compensation is due.
While the Federal Circuit’s
decision is disappointing, this case is not
over, and we will be monitoring the next steps.
