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Hage v. United States, Day 5, 6, and 7
Takings and Liability Trial

Day 5 - May 7, 2004
Day 6 - May 10, 2004
Day 7 - May 11, 2004

Reported by Margaret Byfield, Executive Director

Day Five (May 7, 2004)

Today, plaintiffs questioned two witnesses on the value of Pine Creek Ranch. The first,
Dr. Angus McIntosh, a professor at the University of New Mexico, broke the ranch down
into five statutorily recognized real property components: water rights, fee land
easements, range improvements, forage or grazing values and patented land parcels.

David Spore who was handling the cross-examination challenged this approach. He
attempted to limit Dr. McIntosh’s testimony only to the analysis he used but not allow
him to testify on the value of the ranch. Bedford explained to the court that Dr. McIntosh
is the only witness who has broken down the various values of the ranch and it is entirely
possible that the Court may determine that one or more of the components have been
taken, and not the entire ranch. Once the court has examined the testimony, it can choose
to reject or accept the method. Since Dr. McIntosh teaches this method to appraisers, has
completed all the coursework and passed the necessary tests that an appraiser would pass, he is qualified to testify on the value of the ranch. Judge Smith ruled that it seems
whether he is register, certified, or licensed, dose not speak to whether he has the
qualifications to testify. The test is a substantive test, whether the analytical skills meet
the degree necessary for his conclusions. Judge Smith found him qualified as an expert
in range valuation.

Through his testimony McIntosh explained how he determined the value of the five
components, and what those values would be for both agricultural value and their highest
and best use. He determined that the highest and best use for the ranch would be to sell
some of the water rights for quasi-municipal purposes, sell some of the patented land and
retain the remaining components for a livestock ranching operation.

He valued the water rights for agricultural purposes at $2,890,000. For quasi-munincipal
purposes, $11 million. The fee land easements were valued at $2.25 million. The value
of the forage was $2,311,000. In valuing the range improvements, he included fences,
roads and trails, ditches and pipelines, wells, the winter camp, and spring developments.
The total value of the ranch he concluded was 28 million.

On cross Dr. McIntosh’s method of determining the value of the ranch was challenged as
Spore tried to prove that his method does not conform with accepted standards. He read
from what they called the “yellow book” where it stated that the unit rule says you should
not break a property down into the sum of its part, but look at the property as a whole
when you value the property.

Dr. McIntosh explained that is correct when there is one owner of the land, but in this
case the government owns the underlying land, and the various rights are owned by other
parties, so his method is correctly applied in this case.

Plaintiff’s second witness was a certified ranch appraiser from Arizona, Duane Webb.
Mr. Webb spent 17 years in the farm credit system and has been a certified appraiser
since 1989. He used a more traditional method of appraising the ranch, by looking at
comparable sales. He based his appraisal on the ranches carrying capacity of 2901
animal units, which is the number of cattle permitted by the Forest Service and BLM if
unaffected by any suspensions or cancellations, and the addition of the carrying capacity
of the deeded property.

On the government’s cross, they posed the question that if the property of the ranch was
limited to the water rights, patented lands, and the forage on 50 feet of either side of the
1866 act ditches, would he have to go back and reappraise the ranch. Webb agreed and
explained that if you diminish the carrying capacity you diminish the use and the value.
On cross he was also asked if fences along a Highway’s increased the value of the ranch,
and he answered yes. On re-direct, Bedford asked if these fences were constructed in a
manner that blocked the cattle from crossing, wouldn’t that diminish the use. Webb
agreed that it would.

Day 6 (May 10, 2004)

Plaintiffs called Clare Mahannan from the Western Resource Development Company.
Mahannan testified on the export value of Pine Creek Ranch’s water rights. He
determined that it was feasible to build a pipeline from the ranch to Las Vegas. If this
was done, the water was valued at 8 million in 1991 when the case was filed, and 13
million if sold today.

He also testified that in his work to determine the value, he contacted the Las Vegas
Valley Water Authority to explore the feasibility of such a sale. However, he received a
letter from the Water Authorities attorney, which he found to be quite odd, explaining
they were not interested in purchasing the water.

When asked why they were not interested, Mahannan explained that they were already
working with the Department of Interior, plaintiffs in this case, and the Department of
Justice, on acquiring the water.

Dorothy Buracrious objected explaining that there is no conspiracy between the Justice
Department and the Department of Interior. After some discussion between the Judge
and both counsels, the Judge allowed the testimony.

That afternoon, Clare’s son, Chris Mahannan testified as to the water flow measurements
on the Pine Creek Ranch waters. He provided substantial technical data for the record on
how willow growth and other obstructions had severely decreased the amount of water
Hage is able to use. When asked if he had reviewed the governments reports on this issue
he said yes and explained that they relied heavily on a study done in the Ruby Marsh
area, and made what he felt was an erroneous leap. The terrain in the Ruby Marsh is
substantially different because there was not a spring going through that area as there is
in Monitor Valley.

He showed several aerial photo’s and pointed out to the Judge the substantial willow
encroachment and many beaver dams blocking the flow of water. He also testified there
is a significant loss of flow on the ditches due to lack of maintenance.

Tomorrow the government would begin questioning their witnesses. David Grider, the
District Ranger that authorized the confiscation of Hage’s cattle would be the first
witness.

Hage v. United States
Takings and Liability Trial
May 11, 2004
Reported by Margaret Byfield, Executive Director

Day Seven

The seventh day of testimony began with the government’s first witness, David Grider. Grider
was the USFS District Ranger in the Tonopah office from 1988 to 1995, during the years that the final action was taken by the Forest Service to eliminated Hage’s permits and confiscate his cattle.

There were three District Rangers in Tonopah from the time Hage purchased Pine Creek Ranch until the time he was forced to sell all his cattle and file this lawsuit in 1991. Glade Quilter was the first ranger, but he retired early after internal Forest Service investigations took place in the Tonopah office. Guy Pence replaced him and for the most part, Wayne testified, was easier to work with. He believes Pence was sent in to poor water over the fire from the years previous. However, in 1988, David Grider was sent to Tonopah and from Wayne’s perspective was there to accomplish the environmental agenda, “cattle free in 93.”

Grider began his testimony by saying the first two things he was met with from Wayne when he took over was a letter asking to be compensated for the forage the Elk were taking from Table Mountain, and a copy of the Takings Executive Order, 12630, requiring the federal agencies to study whether their regulatory actions were taking private property.

He described what took place over the next years was a pattern of trespass, failure to maintain fences, failure to respond to Griders notices, and other problems. Grider described his management style as very workable, but in the case with this permittee, Wayne, was
uncooperative no matter how hard the Forest Service tried to work with him.

He began by describing what took place on Table Mountain. Here, he had many complaints
from Wayne of cattle being driven off the mountain from hunters, Elk tearing up his fences, and his waters being fenced off from the cattle. To help alleviate these problems, Grider described how he offered Wayne an early off date, with a slight increase in cattle numbers, so as not to conflict with the hunting season, even though he had not witnessed any problems with hunters driving the cattle off the mountain, or problems with Elk tearing up the fences. Instead he described numerous times when he notified Hage that fences were not being maintained and where cattle were seen on the mountain after the grazing season had ended. He also testified that he would receive no response to this notices.

Because of all of the trespass problems, Grider informed Hage that 20% of his Table Mountain permit would be suspended. He explained that Hage appealed the decision and requested a stay, which they granted. In 1990, his appeal was denied so the 20% suspension went into effect. When notifying him of the suspension, he also required that the Forest Service be present to count the cattle turned onto the allotment.

Grider testified that he was under the impression that Hage planned to use the allotment because he paid his grazing fee and never filed an application for non-use. The grazing season began July 1, but since Hage did not contact them to count the cattle, he assumed Hage had not placed cattle on the mountain and sent another letter in August informing him that as a condition of his permit, he is required to stock the allotment to at least 90% capacity. His off date was September 15, 1990.

Oct 12, 1990, Grider sent a show cause letter to Hage for failure to stock the allotment. In this he also informed him they were considering canceling 25% of his permitted numbers because during the season, Hage’s cattle had been seen on the mountain, however, they hadn’t been counted on by the Forest Service.

During Hage’s testimony he explained how a Forest Service vehicle was seen at the head gates of the trail to Table Mountain during this year of non-use. When Wayne checked on the gate after the truck left, he found the gate open and tracks left from where the cattle had gone through.

Grider said he investigated this allegation and determined that from where Wayne said he was when he witnessed this, it would have been impossible for him to see an individual or type of vehicle. The gate was at least 6 and ½ miles from where Wayne was located.

The 20% suspension and the 25% cancellation of the Table Mountain allotment was put into
effect beginning with the 1991 grazing season. Griders testimony showed how in only two
grazing seasons, he had issued decisions that made it impossible for Hage to use the Table
Mountain allotment. Hage had already testified that with these reductions, it was not feasible to place cattle on the allotment.

Dorothy Buracrious, the government attorney questioning Grider, then turned to the incidents that occurred on the other half of Hage’s summer range managed by the Forest Service, the Meadow Canyon Allotment. Grider explained that Hage had complained numerous times before about the drift between the Meadow Canyon Allotment and the Monitor Valley Allotment managed by the BLM, and that previous rangers had tried to work with him on this. The court was shown a 15 minute video narrated by Grider where he pointed out the different drift fences and natural barriers. The video also included aerial footage of the allotment. He testified that the boundary was about 20 miles long and included about 2 and ½ miles of fence. The other barriers were steep, rugged mountains that cattle wouldn’t attempt to cross.

The policy in place when he arrived was that cattle would naturally drift between the two
allotments and counts would be done at the beginning and end of the season to ensure proper use.

In 1990, the Forest Service was beginning a review of the allotment before issuing a new ten
year permit. In doing this, they brought a number of specialists to the allotment to study the
range conditions. Some inspections were done between July 23rd and the 26th in which they had determined that utilization levels had been met. On July 27th, Grider sent a letter to Hage requiring that his cattle be moved off the allotment by August 10th. The off date for the season was October 30th.

Buracrious asked if Hage had removed his cattle by August 10th. Grider said no. He explained that Hage had filed an appeal and asked for a stay of that decision. Forest Supervisor Jim Nelson denied the stay, which Grider concurred with, leaving Hage only a few days to remove the cattle.

When asked if the cattle were removed after the stay was denied, Grider said no. He testified that they hadn’t seen any activity to remove the cattle until around August 20th.

When asked if there was sufficient time to comply with the removal of cattle, Grider said yes, and that there was at least sufficient time to discuss the problem.

On November 6th, Grider sent a notice to impound cattle on the allotment claiming 128 head had been sighted. February 13, 1991, Grider sent Hage a notice that a 100% suspension of the allotment would be in effect for five years beginning with the 1991 season. He said that the range studies made it clear to him that the allotment was over grazed and would need to be rested for five years. He sighted several studies that were conducted by Forest Service experts in August and October of 1990 that led to this conclusion. However, his decision to remove the livestock early in 1990 was based on his review of the allotment. He said, “I looked at the resources and it wasn’t too difficult to see that the use had been met.”

Grider then discussed the following season, where cattle were seen on the allotment numerous times, and He sent Hage several letters informing him he would have to keep his cattle off the allotment. He also reissued his impoundment notice on June 19th, which was something he really didn’t want to do, but since Hage would not comply, he was forced to implement this last resort.

He described the methodical actions he took after June 19th to prepare for the impoundment. He met with special law enforcement agent, Dave Young, to develop a law enforcement and security plan. The Forest Service constructed corrals using portable panels. They located hay, developed watering facilities for the corrals, gave advance notice to a brand inspector, and contacted a veterinarian to verify the health condition of the cattle. To do the actual gather, they hired a professional crew of cowboys contracted with the BLM gathering wild horses.

July 27th, they conducted the first gathering of the impoundment and confiscated 105 head.

He described how they implemented their law enforcement security plan. They had one officer at each of the checkpoints along the access road. One Law enforcement officer was riding with each of the two gathering crews, one was at the impoundment site, and one stayed with the cattle until they were removed from the site. He said there was somewhere between 6 to 8 law enforcement officers during the first gathering.

This plan was prepared by Dave Young and approved by several Forest Service personnel and supervisors. It was signed by Grider. The security plan states they should be in full uniform at all times. Grider explained that full uniform means they should be carrying holstered side arms. Buracrious asked if they carried rifles. Grider said he didn’t see them carry rifles but that they might have had them with them.

When asked if there were any incidents that caused them to use force, Grider said no. However, he did say there were some tense moments. The first he described was when Wayne Hage Jr., then 15, threw some rocks at one of the riders dogs as he lay in the shade of Hage’s truck. “This concerned the riders,” he said.

After the cattle were confined in the corrals, he and Dave Young delivered an impoundment
notice on August 3, 1991 to Hage at Pine Creek headquarters. It gave Hage five days to redeem his cattle by paying for the impoundment costs and value of the cattle. He said Wayne’s response was, “well David, you corralled them, you get them out.”

A second gathering was conducted on September 13, 1991 for a total of 32 head. It was
conducted much the same as the first. The cattle were later sold at auction a the Palomino Valley Wild Horse facility.

Grider testified that he left the Tonopah Ranger District January 1, 1995. Both of Hage’s Forest Service permits expired December 31, 1994.

Buracrious asked him if he believed the actions he took were reasonable under the
circumstances. Grider answered, “When you look at the number of actions we had to take, my response is there was a lot of non-compliance. We only react to non-compliance. He didn’t respond to our notice of show cause, he didn’t keep the cattle out of the meadow canyon area, so the non compliance was rather excessive.”

He went on to explain that if Hage had been actively removing his cattle, he would have given him time to remove his cattle. “If a permittee is proactive and comes into our office and says he can’t move the cattle because he broke his leg, we would work with them.”

But her very last question provided us with a good look at what tomorrow would bring. She
asked if the Forest Service prevented Mr. Hage in any way from maintaining his ditches. Grider answered, “No, not that I’m aware of.”

What was amazing about this answer is that Grider seemed to think the felony charges they filed against Hage for not having a special use permit when maintaining one of his ditches, and the criminal case they pursued up to the Ninth Circuit on this issue, was not preventing him for maintaining his ditches. Tomorrow promised to be a good day.

Throughout the testimony, Buracrious had referred to a number of documents, and at the end of the day wanted to enter all of these at once. Bedford objected and said they should have been entered when discussed so that he could raise any objections he might have at that time. The Judge instructed defendants to give plaintiffs a list of documents they wished to enter and said he would give them an opportunity to admit these later in the trial.

Tomorrow, cross examination of Grider’s testimony will be done by Ladd Bedford.

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