Quick Wits Cut Short the Appeal Ordeal
Despite Forest Service, Nye County Ranch
Wins Water Rights Recognition, Payment

by Steve Miller 
copyright 1997, Electric Nevada

Most Nevada ranchers will tell you that appeals of U.S. Forest Service actions seem to take forever and even then still usually end in defeat.
But in one case early this year, the alertness of an agent for a Nye County ranch paid off exceptionally well -- not only with a relatively prompt resolution of the question at issue, but also a $31,235 payment for the ranch.
The case started out more or less typically, in February of 1995, with an announcement by the Austin Ranger District of the Humboldt-Toiyabe National Forests that it was contemplating a land swap. Western States Minerals Corporation was offering the Forest Service three choice parcels of property elsewhere in the state in exchange for 3,425 acres surrounding the company's Northumberland Mine property in Nye County's Toquima Mountain range.
Austin District Ranger Dayle Flanigan, in a February 13 letter to interested parties, announced his agency was looking favorably on the exchange because "the lands to be acquired by the Forest Service are lands of greater value."
One of those interested parties notified was the RO Ranch, which had vested stockwater rights on the Northumberland allotment. And in late July, after receiving the Forest Service's "Pre-Decisional



Notice and Proposed Finding of No Significant Impact," water rights specialist Carl V. Haas, representing the ranch, filed with Flanigan an objection to the current form of the pending land swap.
"The land area you propose to exchange includes RO Livestock's private property in the form of vested stockwater rights," wrote Haas. And he cited proof numbers of the RO's rights as filed at the office of the state engineer. Older proof numbers were also cited. The latter showed, he said, "the evidence of the transfer of title to the subject waters from the original predecessors who ... put the water to beneficial use prior to 1905."
Were the land exchange to go ahead as first proposed, said Haas, the Toiyabe National Forest would be "profiting at RO Livestock's expense" because the exchange "will make it impossible for RO Livestock to use its current, valid vested property rights and grazing privileges." Instead the ranch will "be forced to abandon them to the benefit of the United States Forest Service in the proposed trade."
Haas noted that the Forest Service had stated, in


 
its "Pre-Decisional Notice and Proposed Finding of No Significant Impact," that there was no other private property within the Northumberland allotment. The agency's pursuit of the land swap was, he charged, "predicated on a premeditated occupancy of RO Livestock's private property."
Haas noted that the Forest Service was claiming that it itself owned the vested Northumberland stockwater rights in question.
"In the absence of evidence of transfer of title from the original, legitimate users, these Forest Service claims are 'bogus' on their face," the water rights specialist wrote.
"Under Nevada water law, a vested right must be established by actually putting the water to beneficial use prior to 1905, and ... the Toiyabe National Forest was not created until 1907."
Haas also noted that the U.S. Supreme Court, in its 1978 decision, U.S. v. New Mexico, had ruled that the Forest Service had no reserved stockwater rights, because "the purpose for the establishment of the Forest Reserves was for the preservation of timber and instream flows, and not for the operation of livestock."
In an October 18, 1995 response sent to RO Livestock, District Manager Flanigan took a similarly




hard-nosed stance.
"We have considered all property rights associated with the properties and the United States is the only entity that has any interest in the properties proposed for exchange," wrote Flanigan.
"Any valid stockwater claimed by you would also be claimed as vested rights by the United States," he said, referring to the federal agency's claim that the pioneers who settled the American west were "trespassers" on government property.
Finally, argued Flanigan, the RO "cannot establish the validity of your claim of vested water rights on the lands proposed for exchange" because the Nevada state engineer has not yet completed a final basin-wide water rights adjudication.
Thirteen months later, nothing had changed in the Forest Service position. On November 8, 1996, Robert W. Ross, Jr., director of recreation and lands for the Forest Service's Intermountan Region, in Ogden, Utah, went ahead and approved the Northumberland land swap, essentially as proposed.
No provision was made for the purchase, or even recognition, of the RO water rights.
A month later, on behalf of the RO Ranch, Carl Haas formally filed a notice of appeal in a letter to Jack Ward Thomas,


 
then chief of the Forest Service.
"The proposed exchange will result in the loss of the use of appellant's vested stockwater rights and easements contemplated by the Act of Congress of July 26, 1866... and without compensation is a violation of the Fifth Amendment to the Constitution of the United States," wrote Haas.
"Further, the United States Forest Service has misled Western States Minerals and the general public by implication, in stating that they claim ownership of RO Livestock's vested stockwaters, and that RO Livestock cannot prove ownership without a basin wide adjudication.
"This," wrote Haas, "is in contradiction to Federal and State law, and recent decisions by the office of the State Engineer of the State of Nevada, in the Monitor Valley Adjudication and recent rulings by Chief Judge Loren Smith," of the United States Court of Federal Claims.
In January of this year, with the deadline for decision fast approaching, correspondence between all interested parties, including the Forest Service, speeded up.
On January 17, Denver attorney Christopher Hayes, representing Western States Minerals Corporation, weighed in with comments, analyses and exhibits intended




to support an argument the Forest Service was making -- that even if the RO Ranch had water rights on the Northumberland allotment, those rights would have no market value.
One exhibit submitted by Hayes appeared to offer powerful supporting evidence. It was a letter, sent just the day before, from a Carson City real estate appraiser under contract to the Forest Service, to the agency's Ogden, Utah office.
"You asked if the water rights could be valued separately, or if the water rights were withheld, would the appraised value of the property change," wrote Lee B. Smith.
"I am not aware of any market transactions of stockwater rights in central Nevada. The sales with stockwater rights to date have included fee land and/or federal grazing permits. No allocation was made in these sales to the stockwater rights. The lack of market evidence indicates no market for stockwater rights...."
Smith concluded his letter -- a copy of which he also dispatched to Western States Minerals -- by saying, "Lacking market evidence to prove a value attributable to the water rights, no value will be allocated to the subject water rights...."
When Carl Haas, agent for the RO Ranch, received


 
Hayes' letter and attachments, he naturally read with interest the letter from the Forest Service's contract appraiser. But what ensued was not what the Forest Service or their contract appraiser had expected.
What Haas found especially interesting, he says, was Smith's statement that "sales with stockwater rights to date have included fee land and/or federal grazing permits."
So Haas promptly got on the telephone to Janice McDougle, the Forest Service's Appeal Deciding Officer in Washington, D.C.
A follow-up letter he dispatched on January 20 repeats his key point:
"[T]he Forest property being traded surrounds three stockwater rights owned by RO Livestock ... and includes a current and valid grazing permit held by RO Livestock, which authorizes




RO Livestock to graze livestock owned by the permittee upon the subject lands... until December 31, 2005." The entire 29-page grazing permit, Haas noted, "is readily available at the Austin Forest District Office, and can be obtained by calling (702) 964-2671."
Four days later, following a teleconference involving Western States Minerals, the Forest Service and Haas, the mining company dispatched a contract to RO Livestock.
"WSMC will pay RO Livestock the sum of $31,235.17 as full compensation for any and all rights RO Livestock may claim on the Northumberland tract. Payment will be by wire transfer or cashier's check (RO Livestock may elect), at a mutually agreed-upon time and place of closing," said the agreement.
The contract was signed.


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