Dixon’s wins a legal battle

In a win for the longtime operators of the famous Dixon’s Apple Orchard, a hearing officer ruled Monday that State Land Commissioner Ray Powell shouldn’t have rejected assignment of the orchard lease to San Felipe Pueblo last year.

Former District Judge James A. Hall, serving as hearing officer for the orchard operators’ appeal of Powell’s denial of the lease deal, found that the land commissioner’s decision-making process was “not rational and is arbitrary and capricious as a matter of law.”

San Felipe Pueblo had agreed to pay $2.8 million to Becky and Jim Mullane of Dixon’s for assignment of their lease on the orchard and another 8,600 acres of adjacent state trust land. The Mullanes decided to leave Dixon’s, located in a picturesque canyon near Cochiti, after it was ruined by wildfire and floods in 2011.

“We’re very pleased that after a full vetting of the facts, really at the end of the story justice has been done,” said Tom Hnasko, lawyer for the Mullanes. “These people have gone through an emotional, physical and financial whirlwind and this will give them hope they can put their lives back together.”

Powell, who can accept or reject Hall’s findings, said he will assess Hall’s report and “try to be as fair and responsible as I can be and fulfill my role to take of care of the beneficiaries (of state trust land revenue) and taxpayers.”

Trust land dollars go for several purposes, including schools and hospitals. Powell has maintained the Mullanes’ lease, negotiated under former Land Commissioner Patrick Lyons, is a bad deal for the state and shouldn’t be extended by assigning it to San Felipe.

What happens to the orchard next is unclear. If Powell once again denies the lease assignment, the Mullanes can appeal to state District Court.

And whether San Felipe Pueblo still wants to pay $2.8 million for the 75-year lease — the deal it struck with the Mullanes last year — is also an unknown.

In August, after Powell rejected the lease transfer, the pueblo’s leadership informed Powell by letter that it wanted out of the deal and that it was seeking the return of $280,000 it gave the Mullanes as earnest money.

The pueblo leadership also has said its “ultimate interest” in the lease is to gain access to the 8,600 acres next to 625-acre orchard.

On Monday, Hnasko said that following Hall’s decision in their favor, the Mullanes will now try to learn if San Felipe will renew its interest in the lease. “They were fed up” by the controversy over the assignment, Hnasko said.

“They would have to chew on it for a while,” he added.

Orchard experience at issue

Hall found in his written decision that a reason Powell gave for rejecting the lease transfer — that San Felipe Pueblo didn’t meet the lease’s requirement for an operator with 20 years of experience operating an apple orchard — was just rationalization for turning down the lease assignment.

Powell, Hall wrote, had already decided he wanted to reject the lease assignment and separate the orchard’s 627 acres from the 8,600 adjacent acres of state trust land.

Powell wants to separate the two parcels because, he’s said, the state could make much more off the 8,600 acres of hardscrabble land by leasing it to someone else — to area pueblos, for instance, which are interested in its 385 archeological sites, many considered sacred to the tribes — or trading it for more developable land.

The Mullanes pay only $100 a year to lease the 8,600 acres, as would San Felipe if it took over the lease. The Mullanes’ rent for the orchard itself, based on profits, has ranged from $27,000 to $36,000 in recent years.

Hall found that Powell only brought up the apple-growing experience issue late in discussions with the Mullanes, after first raising concerns about continuing to lease the 8,600 acres for only $100 a year.

Powell “mistakenly” thought he had authority to separate the adjacent lands from the orchard but he couldn’t under the terms of the 2008 lease, Hall said.

Hall’s decision concludes: “Because San Felipe Pueblo has subsequently indicated that it is no longer interested in assignment of the Lease, the rejection of the assignment of the Lease cannot simply be reversed; however, the Commissioner and the Mullanes should be given an opportunity to explore a mutually agreeable assignment of the Lease with the understanding that the Mullanes possess a contractual right to assign the entirety of the Lease to an acceptable assignee.”

Another proposal for Dixon’s surfaced recently when Adelante Development Center Inc., a nonprofit that assists people with physical and mental disabilities, expressed an interest in running the orchard and making it more of a tourist attraction, if some state funding can be provided.