United States of America v. 400 Acres of Land, more or less, situate in Lincoln County, State of Nevada

Filing 276

ORDERED that Landowner's motion for reconsideration (ECF No. 205 ) is denied. Signed by Judge Miranda M. Du on 11/9/2017. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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UNITED STATES OF AMERICA,
Plaintiff,

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Case No. 2:15-cv-01743-MMD-NJK
ORDER

v.
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400 ACRES OF LAND, more or less,
situate in Lincoln County, State of Nevada;
and JESSIE J. COX, et al.,

(Defs.’ Motion for Reconsideration
– ECF No. 205)

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Defendants.
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I.

INTRODUCTION

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Before the Court is Defendants’ motion for reconsideration (“Motion”) (ECF No.

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205) of the Court’s discovery order dated March 10, 2017 (ECF No. 191). The Court has

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reviewed the United States’ response (ECF No. 212). The Court also heard argument on

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the Motion on November 6, 2017. (ECF No. 267.) For the reasons discussed below, the

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Motion is denied.

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II.

RELEVANT BACKGROUND

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The United States filed a Complaint and Declaration of Taking on September 10,

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2015, to acquire 400 acres of property located within the Nevada Test and Training Range

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(“NTTR”), a military test and training facility at Nellis Air Force Base, consisting of a group

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of patented and unpatented mining claims known as the Groom Mine (“the Property”).

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(ECF No. 129; see also ECF No. 1 (Complaint); ECF No. 2 (Declaration of Taking).) The

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United States deposited the estimated compensation to the Court in the amount of

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$1,200,000 (ECF No. 10 at 1), and the funds were released to Landowners on March 9,

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2016 (ECF No. 85 at 1-2). On September 16, 2015, the Court granted the United States

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immediate possession of the Property. (ECF No. 14 at 1.) Landowners filed their Answer

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on November 6, 2015. (ECF No. 53.) On October 5, 2016, the Court determined that the

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“taking is for a congressionally authorized public use identified in the United States’

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Complaint [ECF No. 1-3], and is legally valid.” (ECF No. 111 at 1.) As a result, the amount

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of just compensation for the United States’ condemnation is the sole remaining issue.

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The Property is in the Groom Lake Valley about seven miles from Area 51. (ECF

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No. 132 at 5.) The Property is the only privately owned property that has an unobstructed

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view of Area 51. (Id. at 16.) Landowners’ family has owned the Property since about 1885,

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long before the United States began to use the nearby property. (Id. at 4-5.)

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Landowners moved to compel entry onto the Property to conduct testing and drilling

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of mineral deposits (ECF No. 131), and the United States filed a response (ECF No. 151).

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Landowners then filed a reply (ECF No. 169), and the United States filed a sur-reply with

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leave of the Court (ECF No. 186). The Magistrate Judge issued an order denying the

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Landowners’ motion to compel. (ECF No. 191.) Landowners filed an Objection (ECF No.

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205) to the Magistrate Judge’s order, which this Court now considers as a motion for

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reconsideration. The United States filed a response to the Landowners’ motion for

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reconsideration (ECF No. 212), and the Landowners filed a reply (ECF No. 215). The

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Court struck Defendants’ reply during the hearing on November 6, 2017. (ECF No. 267.)

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III.

LEGAL STANDARD

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Magistrate judges are authorized to resolve pretrial matters subject to district court

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review under a “clearly erroneous or contrary to law” standard. 28 U.S.C. § 636(b)(1)(A);

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see also Fed. R. Civ. P. 72(a); LR IB 3–1(a) (“A district judge may reconsider any pretrial

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matter referred to a magistrate judge in a civil or criminal case under LR IB 1–3, when it

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has been shown that the magistrate judge’s order is clearly erroneous or contrary to law.”).

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This standard of review is significantly deferential to the initial ruling. “A finding is

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‘clearly erroneous’ when although there is evidence to support it, the reviewing [body] on

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the entire evidence is left with the definite and firm conviction that a mistake has been
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committed.” Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Tr. for S.

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Cal., 508 U.S. 602, 622 (1993) (alteration in original) (quoting United States v. U.S.

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Gypsum Co., 333 U.S. 364, 395 (1948)). The reviewing court “may not simply substitute

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its judgment for that of the deciding court.” Grimes v. City & Cty. of San Francisco, 951

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F.2d 236, 241 (9th Cir. 1991) (citation omitted).

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IV.

DISCUSSION

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A.

Relevance

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Landowners first argue that the Magistrate Judge erred by concluding that

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Landowners failed to meaningfully address one of the United States’ arguments that

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drilling results would not be relevant. (ECF No. 205 at 8-9.) Before the Magistrate Judge,

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the United States argued that there is no market for the mineral deposits, no matter their

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extent, because their quality is too low to justify the expense of extraction. (ECF No. 151

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at 21-22.) Drilling results verifying the amount of mineral deposits would therefore be

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irrelevant. Landowners responded that the quality of the mineral deposits could be “much

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higher” than even their own expert concluded, though they did not expressly state that

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findings of higher quality would attract market interest. (ECF No. 169 at 15 (emphasis

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omitted).)

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The Court does not find that the Magistrate Judge clearly erred. Landowners

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suppose that the quality of the mineral deposits is much higher than even their own expert

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predicted on the basis of tenuous evidence—historical smelter receipts. These receipts

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ostensibly “show that the ounces of silver per ton historically produced from the Mine were

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much higher than what [both sides’ experts] have estimated.” (ECF No. 169 at 15 n.6.)

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There are a number of reasons why the historical smelter receipts do not necessarily

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reflect the overall quality of the deposits, however. First, smelter receipts reflect

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information about samples that are essentially cherry-picked for their high quality, as

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explained by the United States at the hearing. (ECF No. 267.) Landowners did not contest

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this characterization. (Id.) Second, the United States’ expert considered the historical

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smelter receipts and concluded, given all the information available to him, that the quality
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of the deposits is low relative to the quality shown on the smelter receipts. (ECF No. 180-

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1 at 17; see ECF No. 169 at 15.) The Landowners’ expert reached almost the same

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conclusion, actually determining that the quality was lower (0.69 troy ounces of silver per

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ton of ore) than what the United States’ expert determined (0.8 troy ounces of silver per

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ton of ore). (ECF No. 267; ECF No. 151 at 8.) Third, the experts did not state in their

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reports that they needed more information to determine the quality of the deposits, which

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Landowners conceded at the hearing. (ECF No. 267.)

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Even if the quality of the deposits were high enough to make their amount relevant,

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there are a number of other factors that influence market value and whether mining would

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be cost-effective. For instance, “location, commodity, geology, and deposit type” affect

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“[t]he level of market interest in exploring a given mineral property—also called exploration

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draw.” (ECF No. 151 at 2 (emphasis omitted).) The United States suggests that these

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factors detract from market interest in the Property (see id.), and Landowners did not

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address how the results of drilling would militate against these factors at the hearing (ECF

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No. 267). Neither did Landowners identify the point at which the quantity or quality of the

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deposits would become high enough to outweigh these factors. (Id.)

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Landowners additionally argued that mining properties are sometimes purchased

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even when mining is not cost-effective (ECF No. 169 at 16), but this argument actually

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mitigates the relevance of core drilling results. If mining properties attract market interest

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regardless of whether they are cost-effective to mine, information that would predict cost-

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effectiveness—the results of core drilling, for instance—amounts to only one factor in

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market participants’ larger calculus.

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B.

Adverse Inference

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Landowners next argue that the Magistrate Judge should have granted their

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request for a jury instruction of an adverse inference. (ECF No. 205 at 10 (citing ECF No.

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169 at 16-19).) Landowners base their request on the premise that the United States

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engaged in spoliation by making use of the Property it condemned and then relying on

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that use to oppose Landowner’s request for entry. (ECF No. 160 at 16-19.) However,
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leaving the Property unused would defeat the purpose of the condemnation. The Court

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does not find that the Magistrate Judge erred in rejecting the argument that the United

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States engaged in spoliation merely by using the property it condemned.

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C.

Expert Findings

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Landowners further argue that the Magistrate Judge erred by finding that Nexus

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Geos LLC (“NGL”) “stated that [its] findings do not take into account the likelihood of a

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market participant undertaking additional mining on the subject property.” (ECF No. 205

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at 11 (quoting ECF No. 191 at 4).) Landowners’ primary objection appears to be that NGL

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did not state this expressly. (See id.) Regardless, it is apparent that NGL did not consider

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the likelihood of a market participant undertaking additional mining on the Property. (See

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ECF No. 130-1.) The Court does not find that the Magistrate Judge clearly erred on this

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basis.

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D.

Estimated Length of Relocation

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Landowners further argue that the Magistrate Judge disregarded evidence that the

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United States’ estimate of thirty days for relocation was inaccurate. (ECF No. 205 at 12.)

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Landowners contend that this is material because a lengthy relocation period would

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supposedly reduce the United States’ burden of accommodating civilian entry on the

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Property. (See id. at 13.) If civilians would already be on the Property for relocation

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purposes, then presumably more civilians could be accommodated for drilling purposes.

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The United States counters that this issue was not properly before the Court, estimates of

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how long relocation would take were revised, and relocation benefits are an administrative

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matter. (ECF No. 212 at 19-20.) If the Magistrate Judge disregarded the parties’ dispute

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about the length of relocation, it was warranted. The length of relocation has relatively little

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bearing on the United States’ burden because “the costs involved to allow any private

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access, even for a week, could easily run into millions of dollars.” (ECF No. 152 at 4.) In

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light of this and other burdens the United States would bear in accommodating

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Landowners’ request for entry, detailed infra, the Court finds that the Magistrate Judge did

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not clearly err in declining to entertain Landowners’ attempts to dispute the length of

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relocation.

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E.

Burden to United States

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Landowners further argue that the Magistrate Judge erred in balancing the costs

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and harm to national security that would result if Landowners were permitted to access

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the Property against Landowners’ interest in verifying the quality and quantity of the

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mineral deposits. (ECF No. 205 at 14-15.) Landowners contend that their interest in

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gathering additional information about the deposits categorically outweighs national

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security interests, no matter their gravity, citing the Ninth Circuit Court of Appeals’ recent

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decision in Washington v. Trump, 847 F.3d 1151 (9th Cir. 2017) (subsequent history

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omitted). The holding in Washington is not so extreme. In that case, the State of

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Washington sued the United States and high-ranking officials (including the President)

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alleging that an executive order banning entry into the United States of individuals from

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seven countries for 90 days violated various federal statutes and provisions of the United

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States Constitution. Id. at 1157. The trial court granted the plaintiff’s request for a

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temporary restraining order, and the United States sought an emergency stay, including

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an immediate stay while its emergency stay motion was under consideration. Id. The Ninth

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Circuit denied the United States’ emergency motion. Id. at 1169. In considering

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reviewability of the executive order, the court cited to numerous cases confirming that

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courts are empowered to protect constitutional guarantees against encroachment in the

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name of national security. Id. at 1161-62. The court did not state or suggest that national

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security interests are always subordinate to individuals’ constitutionally protected

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interests. See id.

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Furthermore, the Court does not find clear error in the Magistrate Judge’s

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qualification of the burden the United States would bear if the Landowners were permitted

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to conduct testing and drilling. The Magistrate Judge found that the “burden and expense

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of the discovery sought appear extraordinarily high.” (ECF No. 191 at 4.) The Magistrate

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Judge’s determination was based on an affidavit from Patricia J. Zarodkiewicz, the
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Administrative Assistant to the Secretary of the Air Force, which asserted that the United

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States “must cancel classified national defense missions occurring within the NTTR and

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its remote operating locations whenever private parties are present at the [subject]

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property.” (ECF No. 191 at 4 (alteration in original) (quoting ECF No. 151 at 4).)

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Zarodkiewicz also asserted that the requested entry is “absolutely infeasible for national

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security purposes,” would constitute “an unprecedented interruption of national defense

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testing and training at an active military facility,” would jeopardize overseas operations,

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and could easily cost millions of dollars per week. (Id. (quoting ECF No. 151 at 4).) At the

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hearing, the United States additionally expressed concern that those who observe air and

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ground operations at NTTR could pool their individual knowledge and arrive at conclusions

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that no single observer could reach on her own. (ECF No. 267.) This “mosaic theory of

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intelligence” does not insulate the United States’ argument from scrutiny, but has some

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persuasive value. See Berman v. CIA, 501 F.3d 1136, 1143 (9th Cir. 2007).

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Landowners contended at the hearing that the United States’ arguments about the

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burden it will suffer are entirely conclusory. (ECF No. 267.) The Court disagrees. The

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affidavit provides reasonably specific information about the costs and concerns that entry

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onto the land would generate. While it is difficult for the Landowners to challenge these

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arguments because the United States relies on classified information, the outcome of the

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Court’s balancing test did not depend entirely on the burden to the government. As

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explained supra, Landowners also failed to rebut the United States’ argument that drilling

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would not produce relevant evidence. Accordingly, the Magistrate Judge did not err in

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finding that “on balance, the burden and expense of the discovery sought by [Landowners]

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far outweigh any potential benefit . . . . [and] is not proportional to the needs of the case.”

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(ECF No. 191 at 5.)

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V.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several cases

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not discussed above. The Court has reviewed these arguments and cases and determines

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that they do not warrant discussion as they do not affect the outcome of Landowners’

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Motion.

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It is therefore ordered that Landowner’s motion for reconsideration (ECF No. 205)
is denied.
DATED THIS 9th day of November 2017.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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