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Reservation Ranch v. United States

September 09, 1999

RESERVATION RANCH,
PLAINTIFF-APPELLANT,
V.
UNITED STATES,
DEFENDANT-APPELLEE.



Michel, Plager, and Gajarsa, Circuit Judges.

The opinion of the court was delivered by: Gajarsa, Circuit Judge.

NOTE: Pursuant to Fed. Cir. R. 47.6, this Disposition is not citable as precedent. It is a public record. The Disposition will appear in tables published periodically.

DECISION

Reservation Ranch appeals from the decision of the United States Court of Federal Claims, Reservation Ranch v. United States, 39 Fed. Cl. 696 (1997), granting the government's motion for summary judgment that the United States Forest Service ("USFS") did not breach its timber sale contract with Reservation Ranch. We affirm the decision of the Court of Federal Claims.

BACKGROUND

In 1978, the Regional Forester designated the northern spotted owl as a sensitive species *fn1 in Region 5, which encompasses the Six Rivers National Forest. See Forest Service Manual ("FSM") § 2633.4 (1978). In April 1990, the Interagency Scientific Committee ("ISC"), headed by USFS biologists, issued an evaluation report regarding the impact of planned timber sales in the Six Rivers National Forest on northern spotted owl habitats. The ISC Report found that the northern spotted owl was imperiled because of continuing losses of habitat from logging and natural disturbances. See Report of the Interagency Scientific Committee to Address the Conservation of the Northern Spotted Owl, A Conservation Strategy for the Northern Spotted Owl (U.S.D.A. 1990) ("ISC Report"). It concluded that the USFS management strategy for maintaining viable owl populations was "likely to adversely affect spotted owls and [their] suitable habitat." ISC Report at 353. On June 22, 1990, the United States Fish and Wildlife Service ("FWS") listed the northern spotted owl as threatened *fn2 under the Endangered Species Act. 16 U.S.C. §§ 1531-1544 (1994) ("ESA"). After that designation, the USFS, on June 27, 1990, requested a biological opinion from FWS regarding the impact of a number of planned timber sales in the Six Rivers National Forest on the northern spotted owl as required by the ESA. On July 23, 1990, the FWS issued its biological opinion, which concluded that the planned Six Rivers timber sales would not jeopardize the continued existence of the northern spotted owl.

After this biological opinion issued, the USFS entered into a timber sale contract with Reservation Ranch on November 5, 1990. Under the contract, USFS agreed to sell and Reservation Ranch agreed to cut and remove 1,160 MBF (thousand board feet) of timber from Six Rivers National Forest, Gasquet Ranger District, California. The timber sale, termed the POC Aerial Timber Sale ("POC Sale") was designed to enable the USFS to study a new environmentally friendly harvesting method, which would harvest the timber via neutral buoyancy aircraft instead of ground based logging. A provision of the POC Sale prospectus notified Reservation Ranch that spotted owls were thought to occupy the sale area and that the contract might be canceled in the event that the spotted owl was listed as a threatened or endangered species under the ESA. Moreover, Special Provision § C8.2(2)(d) *fn3 of the contract expressly authorized the Chief of the USFS ("Chief") to cancel unilaterally the contract and limit compensation in order to provide additional protection for animals that were listed as threatened or endangered under the ESA, or as sensitive by the Regional Forester. Furthermore, if the contract was canceled because of a finding of jeopardy to the continued existence of a protected species, provision § C9.52 limited purchaser compensation to those costs set out in subsections (1), (2) and (3) of § C9.5, *fn4 explicitly noting that "out-of-pocket expenses in (3) do not include lost profits, replacement cost of timber or any other anticipatory losses suffered by Purchaser."

On October 5, 1990, an environmental group sued to enjoin the USFS from proceeding with a number of timber sales, including the POC Sale. The suit was eventually settled under a court order with the USFS agreeing to cancel the contracts and to give the parties to the contracts out-of-pocket expenses only-not lost profits. On July 8, 1992, the Chief notified Reservation Ranch that USFS was canceling the POC Sale under § C8.2(2)(d) of the contract because it would jeopardize the northern spotted owl, a federally listed threatened species. On September 2, 1992, Reservation Ranch filed a claim for $5,500,000 in damages with the USFS. On June 23, 1993, the Contracting Officer issued a final decision assessing the total damages for the termination of the POC Sale contract to be $63,721.00.

Subsequently, Reservation Ranch refused the award by the Contracting Officer and filed an action in the Court of Federal Claims against the USFS to recover for cancellation of the POC Sale contract. Reservation Ranch claimed that §§ C8.2(2)(d) (species cancellation provision), C9.51 (limiting compensation for court-ordered cancellation), and C9.52 (limiting compensation for species related cancellation) of the contract were invalid because they were in conflict with a USFS cancellation regulation-36 C.F.R. § 223.116. *fn5 Moreover, Reservation Ranch argued that the Chief lacked authority to cancel the POC Sale under these disputed contract provisions. Finally, Reservation Ranch argued that the Chief's decision to cancel the contract was arbitrary.

In its decision granting summary judgment in favor of the government, the Court of Federal Claims held that the USFS adoption of the challenged contract provisions was a proper implementation of its statutory charge, under the National Forest Management Act ("NFMA"). 16 U.S.C. §§ 472a, 1604 (1994). Moreover, the court held the USFS had authority under the ESA to determine that harvesting the POC Sale in spotted owl habitat would likely jeopardize the continued existence of the owl. Finally, the court held that the jeopardy determination by the Chief was not arbitrary and supported cancellation of the POC Sale. Reservation Ranch appeals.

DISCUSSION

A. Standard of Review

The interpretation of a contract, statute, or regulation by the Court of Federal Claims in the course of reaching a decision to grant summary judgment presents a question of law that we review de novo. See Costain Coal, Inc. v. United States, 126 F.3d 1437, 1440 (Fed. Cir. 1997). Whether or not the Court of Federal Claims properly granted the government's motion for summary judgment is also a ...


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