No. 03-1566

FRANCIS A. ORFF, ET AL.,

UNITED STATES OF AMERICA, ET AL.,

**Counsel of Record for Amici Curiae

Amici curiae will address the following question:

                                  TABLE OF CONTENTS

Cases:

California v. United States, 438 U.S. 645

Ltd., 526 U.S. 687 (1999)………………………………...23

Coachella Valley County Water District v. Stevens,

Eddy v. Simpson, 3 Cal. 249 (1853)……………………...24

Glendale v. County of Los Angeles, 482 U.S. 304

Fox v. Ickes, 137 F.2d 30 (D.C. Cir. 1943)………………26

Fullerton v. State Water Resources Control Board,

United States, 53 Fed. Cl. 48 (2002) ……………………...4

H.F. Allen Orchards v. United States, 4 Cl. Ct. 601

H.F. Allen Orchards v. United States, 749 F.2d 1571

Ickes v. Fox, 300 U.S. 82 (1937)…………...6, 15-16, 25-26

Jacobs v. United States, 290 U.S. 13 (1933)……………..20

Mining, 155 IBLA 354 (2001)…………………………...19

Klamath Irrigation Dist. v. United States, No. 01-591L

Klamath Water Users Ass’n v. Patterson, 15 F. Supp.2d

Klamath Water Users Ass’n v. Patterson, 204 F.3d 1206

Nebraska v. Wyoming, 325 U.S. 589 (1945)…………..6, 17

Nevada v. United States, 463 U.S. 110

Orff v. United States, 358 F.3d 1137

Peterson v. United States Dep’t of Interior, 899 F.2d 799

Rancho Santa Margarita v. Vail, 81 P.2d 533, 11

Stockton East Water Dist. v. United States, No. 04-541L

Sumner Peck Ranch, Inc. v. Bureau of Reclamation,

CAL. CONST. Art. X, § 2………………………………….20

OR. REV. STAT. § 545.511 (2004)………………………..13

OR. REV. STAT. § 547.355………………………………..13

OR. REV. STAT. § 552.350………………………………..13

OR. REV. STAT. § 553.710………………………………..13

OR. REV. STAT. § 554.260………………………………..13

Reed D. Benson, Whose Water Is It? Private Rights

and Public Authority Over Reclamation Project Water,

16 VA. ENVTL. L.J. 363, 387-88 (1997).……………..10-11

Bureau of Reclamation, About Us,

3.2, Authority in Specified Matters, available at

Arthur L. Littleworth & Eric L. Garner, California

Water 28 (1995). ………………………………………...24

Frank J. Trelease, Reclamation Water Rights, 32

Amici curiae submit this brief supporting petitioners;1 all parties have consented to its filing. See S. Ct. Rule 37.3.

    Amici curiae consist of fifteen water-management districts (Districts) in Oregon and California that receive water stored by the Bureau of Reclamation in its Klamath and Central Valley Projects. Amici curiae are the: Central San Joaquin Water Conservation District; Enterprise

    All of these Districts, amici curiae, contract with the Bureau of Reclamation (Reclamation) for delivery of project water to the end users¯farmers on tens of thousands of acres of high-value agricultural land; the farmers all possess a property right to receive the water from the Reclamation

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    1 No counsel for any party to the case authored this brief amici curiae, either in whole or in part. Furthermore, no persons other than amici curiae contributed financially to the preparation of this brief. See S. Ct. Rule 37.6.

projects. All of these Districts presently have suits pending against the United States under the Tucker Act in the U.S. Court of Federal Claims, seeking monetary damages for breach of their water service contracts or for payment of just compensation, in a representative capacity on behalf of their water users. Reclamation’s failure to deliver this water to the Districts has caused the Districts to seek monetary damages in the U.S. Court of Federal Claims under the Tucker Act for breach of the water deliver contracts or for the unconstitutional taking of their water rights. See Klamath Irrigation Dist. v. United States, No. 01-591L (Oct. 11, 2001); Stockton East Water Dist. v. United States, No. 04-541L (April 20, 2004).

    How this Court defines intended third-party beneficiary status could have a profound effect on the rights and obligations of all Reclamation Act project contract holders, including amici curiae. Reclamation has constructed more than 600 dams and reservoirs in 17 Western states. Of

10 million acres of farmland (on which they produce 60 percent of the nation’s vegetables and 25 percent of its fruit and nuts). See Bureau of Reclamation, About Us,

breach of contract damages under it. This case asks the Court to pick between decisions of two Circuit Courts of Appeal, reversing a Ninth Circuit Court of Appeals decision, Orff v. United States, 358 F.3d 1137 (9th Cir. 2004), and adopting the Federal Circuit’s analysis set forth in H.F. Allen Orchards v. United States, 749 F.2d 1571 (Fed. Cir. 1984).

    In H.F. Allen Orchards, the Federal Circuit concluded that the water users were the intended third-party beneficiaries of the contracts between Reclamation and the water district. The trial court had dismissed a suit brought by 160 water users as third-party beneficiaries of irrigation

districts’ contracts with Reclamation on two grounds: (1) lack of third-party beneficiary status; and (2) lack of merits. See H.F. Allen Orchards v. United States, 4 Cl. Ct. 601 (1984). The Federal Circuit reversed on the first holding, but affirmed on the second:

Id. at 1572-73, 1576; see also Henderson County Drainage Dist. No. 3 v. United States, 53 Fed. Cl. 48 (2002) (holding that individual farmers were third-party beneficiaries to a contract entered into between their drainage districts and the United States).

    The minority view, represented by the Ninth Circuit’s decision in Orff v. United States, 358 F.3d 1137 (9th Cir. 2004), reached a different conclusion, holding that the water users were not the intended third-party beneficiaries of the contract between Reclamation and the water district. Id. Not only is the Orff decision at odds with decisions from the Federal Circuit, it is at odds with other Ninth Circuit cases involving the same contract and same farmers. Compare Orff

v. United States, 358 F.3d 1137 (9th Cir. 2004) with Barcellos & Wolfsen v. Westlands Water District, 899 F.2d

814, 816 (9th Cir. 1990) (holding water users were third party beneficiaries under irrigation districts’ contracts with Reclamation); Sumner Peck Ranch, Inc. v. Bureau of Reclamation, 823 F. Supp. 715, 731-33 (E.D. Cal. 1993) (recognizing plaintiffs landowners as third-party

    As the Federal Circuit correctly concluded in H.F. Allen Orchards, the historical context of these water delivery contracts and the statutory structure of the Reclamation Act force an inexorable conclusion that the end water users are the intended third-party beneficiaries of these water delivery contracts. Any other result would be untenable because the subject matter of the contract, the right to receive the water, is held by the water user. Indeed, as the U.S. Department of Interior has repeatedly observed, under state law, neither the water district nor Reclamation can own the water right because they do not put the water to beneficial use; rather, the water right resides in the water user, who most typically is a farmer who puts the water to beneficial use by irrigating his farm crops.

objectives (such as protecting endangered fish) over the contractually intended delivery of the water to farmers for agricultural use. As a result, increasingly, Reclamation chooses to dramatically reduce or not deliver any water at all to the water districts, leaving the water users, farmers, with no water with which to grow their crops. Yet, it is the farmers themselves, and not the water districts, that ultimately suffer when the government breaches the water delivery contracts. 

    Amici curiae urge this Court to adopt the rule of law set forth by the Federal Circuit, recognizing that landowners do have the right to sue as third-party beneficiaries of irrigation contracts. H.F. Allen Orchards v. United States, 749 F.2d 1571, 1576 (Fed. Cir. 1984). The Federal Circuit observed that irrigation districts act as a "surrogate for the aggregation of farmers" and that their constituents are the true parties in interest in this type of litigation. Id. In upholding the right of the water user to sue individually, the Federal Circuit followed established precedent of this Court and reclamation jurisprudence. See, e.g., Ickes v. Fox, 300 U.S. 82 (1937); Nebraska v. Wyoming, 325 U.S. 589 (1945); Nevada v. United States, 463 U.S. 110 (1983). Accordingly, the Ninth Circuit’s deviation from traditional notions of water (property) rights and reclamation law should be reversed.

California v. United States, 438 U.S. 645, 648-49 (1978)

Nevada v. United States, 463 U.S. 110, 115 (1983) (citation omitted).

    In enacting the Reclamation Act, "Congress set forth on a massive program to construct and operate dams, reservoirs, and canals for the reclamation of the arid lands in 17 Western states." California, 438 U.S. at 650. A "revolving fund was established with moneys received from

the sale of public lands, and the Secretary of Interior was directed to survey the west and locate and construct irrigation projects, opening up the improved lands to settlement under the homestead laws . . . . Construction costs were to be repaid into the fund by the settlers and landowners in ten annual installments without interest." Frank J. Trelease, Reclamation Water Rights, 32 Rocky Mtn. L. Rev. 464, 465 (1960).

Peterson v. United States Dep’t of Interior, 899 F.2d 799, 802 (9th Cir. 1990).

"water users association," the forerunner of the modern water district.2

    Congress then authorized Reclamation to contract with districts rather than individual users, and, in the Omnibus Adjustment Act of 1926,3

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2 The Act of May 15, 1922, provides in pertinent part:

That in carrying out the purposes of the Act of June 17,

1902 . . ., and Acts amendatory thereof and

supplementary thereto, and known as and called the

reclamation law, the Secretary of the Interior may enter

into contract with any legally organized irrigation

district whereby such irrigation district shall agree to

pay the moneys required to be paid to the United States,

and in such event water-right applications on the part of

landowners and entrymen, in the discretion of the

Secretary of the Interior, may be dispensed with . . . .

42 Stat. 541 (1922) (codified in 43 U.S.C § 511).

3 The Omnibus Adjustment Act of May 25, 1926, provides in pertinent

part:

No water shall be delivered upon the completion of

any new project or new division of a project initiated

after May 25, 1926, until a contract or contracts in

form approved by the Secretary of the Interior shall

have been made with an irrigation district or

irrigation districts organized under State law

providing for payment by the district or districts of

Reed D. Benson, Whose Water Is It? Private Rights and Public Authority Over Reclamation Project Water, 16 VA. ENVTL. L.J. 363, 387-88 (1997).

Originally, the Department of the Interior

was given responsibility not only for

constructing the reclamation projects, but

also for administering the distribution of

water to agricultural users in a project

service area. In 1926, however, Congress

amended the reclamation laws to remove

from the Department the primary

responsibility for distributing water and

monitoring its use. Omnibus Adjustment Act

§ 46, 43 U.S.C. § 423e. Instead, the

Secretary of the Interior was directed to

enter into long-term water service contracts

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the cost of constructing, operating, and maintaining

the works during the time they are in control of the

United States, such cost of constructing to be repaid

within such terms of years as the Secretary may find

to be necessary, in any event not more than forty

years from the date of public notice hereinafter

referred to, and the execution of said contract or

contracts shall have been confirmed by a decree of a

court of competent jurisdiction. . . 

Omnibus Adjustment Act of May 25, 1926, ch. 383, § 46, 44

Stat. 636 (1926) (codified in 43 U.S.C. § 423e (2004)).

Peterson v. United States Department of the Interior, 899

    To enable water users in reclamation projects to comply with the new requirement that they contract through districts, in 1917, the California legislature enacted a statutory authorization for the creation of water districts, such as Westlands and some of amici, for the express purpose of

Cal. Water Code § 23195 (2004); see also Cal. Water Code § 31150 (authorizing "County water districts" to contract with federal government under reclamation laws); Cal. Water

storage districts" to contract with federal government under reclamation laws); Cal. Water Code § 50970 (authorizing "reclamation districts" to contract with federal government under reclamation laws); Cal. Water Code § 74610 (authorizing "water conservation districts" to contract with federal government under reclamation laws).4

    As the California Supreme Court has noted, in entering into contracts, performing them, and suing to enforce them, a water district is acting as a representative of its landowners and water users. Coachella Valley County Water District v. Stevens, 274 P. 538, 542 (Cal. 1929) ("[N]o good reason has been suggested why . . . the landowners and other water users in the district may not set up such a governmental agency to act in a representative capacity in

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4 The Oregon legislature adopted similar legislation. See Or. Rev. Stat. §

545.511 (2004) (authorizing Board of Directors of irrigation districts to

order that an election to authorize contracts with the United States); Or.

Rev. Stat. § 547.355 (authorizing the board of supervisors of drainage

districts to enter into reclamation contracts with the United States); Or.

Rev. Stat. § 552.350 (authorizing Oregon "water improvement districts"

to "cooperate with the United States in the manner provided by Congress

for flood control, reclamation, conservation and allied purposes"); Or.

Rev. Stat. § 553.710 (authorizing Oregon "water control districts" to

enter into contracts for construction of works); Or. Rev. Stat. § 554.260

(authorizing the Board of Directors of Oregon corporations for irrigation,

drainage, water supply or flood control to enter into a contract with the

United States for maintenance and operation of any works).

H.F. Allen Orchards v. United States, 749 F.2d 1571, 1576 (Fed Cir. 1984) (citations omitted).

    As the Federal Circuit explained in H.F. Allen Orchards, what makes the water delivery contract at issue in this case distinguishable from a typical utility contract is that the water users, the third-party beneficiaries, have constitutionally protected rights to the project water upon

which the water delivery contracts between Reclamation and the water district are based. H.F. Allen Orchards v. United States, 749 F.2d 1571, 1576 (Fed Cir. 1984) ("The irrigation

surrogate for the aggregation of farmers. They use no water themselves. The farmers ultimately pay for all the services which the government supplies.").5

    In the seminal case on this issue, Ickes v. Fox, 300 U.S. 82 (1937), a suit by 160 of Washington’s Yakima Project water users to enjoin the Secretary’s threat to cut off their irrigation water, this Court rejected the government’s argument that such water users’ rights were defined solely by the Sunnyside Water Users’ Association’s water delivery contract with the United States. (Their third-party beneficiary status under the contract does not appear to have

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5 Indeed, the water delivery contracts at issue in this case are

distinguishable from the contract at issue in Klamath Water Users Ass’n

v. Patterson, 204 F.3d 1206 (9th Cir. 1999), which was a contract to

operate a dam to produce hydropower. Klamath Water Users Ass’n v.

Patterson, 15 F. Supp.2d 990, 992 (D. Ore. 1998). In Patterson, the

district court had recognized that plaintiffs’ water rights derived from

their water delivery contracts, not the 1956 hydropower contract: "The

1956 contract is not the source of plaintiffs’ rights to water in the

Klamath Basin. Rather, their water rights are found primarily in their

individual repayment contracts with the federal government and in state

water law." Id. at 996. The Ninth Circuit agreed.

petitioner that thereby ownership of the

water or water-rights became vested in the

United States is not well founded.

Appropriation was made not for the use of

the government, but, under the Reclamation

Act, for the use of the landowners; and by

the terms of the law and of the contract

already referred to, the water rights became

the property of the landowners, wholly

distinct from the property right of the

government in the irrigation works. The

government was and remained simply a

carrier and distributor of the water, with the

right to receive the sums stipulated in the

contracts as reimbursement for the cost of

construction and annual charges for

operation and maintenance of the works. As

security therefore, it was provided that the

government should have a lien upon the

lands and the water rights appurtenant

thereto – a provision which in itself imports

that the water rights belong to another than

the lienor, that is to say, to the landowner.

Id. at 94-95 (citations omitted).

Id. at 95-96.

    Next, in Nebraska v. Wyoming, 325 U.S. 589 (1945), an original proceeding to apportion the waters of the Platt River, the United States claimed ownership of waters impounded by the North Platt and Kendrick Act projects.  Rejecting the United States’ argument, this Court reiterated its Ickes holding that the water users (here represented by the state) held a property right in the reclamation project water:

Id. at 614-16 (citations omitted).

    And, in Nevada v. United States, 463 U.S. 110 (1983), this Court prohibited the Bureau of Reclamation from depriving water users in Nevada’s Newlands Project of their property right to receive water. This Court opened its analysis by stating: "We are bound to say that the

Id. at 121.

    After reviewing its prior holdings in Ickes and Nebraska, this Court then stated:

In the light of these cases, we conclude that

the Government is completely mistaken if it

believes that the water rights confirmed to it

by the Orr Ditch decree in 1944 for use in

irrigating lands within the Newlands

Reclamation Project were like so many

bushels of wheat, to be bartered, sold, or

shifted about as the Government might see

fit. Once these lands were acquired by

settlers in the Project, the Government’s

"ownership" of the water rights was at most

nominal; the beneficial interest in the rights

confirmed to the Government resided in the

owners of the land within the Project to

which these water rights became

appurtenant upon the application of Project

water to the land. As in Ickes v. Fox and

Nebraska v. Wyoming, the law of relevant

State and the contracts entered into by the

landowners and the United States make this

Id. at 126.

    The United States itself has affirmed the vitality of these holdings that reclamation project water users own a property right in the project’s water. See Filings of Claims for Water Rights in General Stream Adjudication, Op. Solicitor, Dep’t of Interior, 97 Interior Dec. 21, 25; 1989 WL  506913 at *1, 5 (July 6, 1989) ("[T]he water user who puts the project water to beneficial use obtains a vested property interest in the water right."). This interpretation is entitled to

great weight. California v. United States, 438 U.S. 645, 676 n.30 (1978).6

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6 This Solicitor’s Opinion is, in fact, binding on all Interior Department

officials. As the Department of Interior, Department Manual states:

A. The responsibilities of the Solicitor in 209 DM 3.1A

include but are not limited to the authority:

(11) To issue final legal

interpretations, in the form of MOpinions

published in Decisions of

the United States Department of the

Interior, on all matters within the

jurisdiction of the Department, which

shall be binding, when signed, on all

other Departmental offices and

officials and which may be overruled

or modified only by the Solicitor, the

Deputy Secretary, or the Secretary.

Department of Interior, Departmental Manual, 209 DM 3.2, Authority in

Specified Matters, available at http://elips.doi.gov/elips/release/3537.htm

(last visited November 19, 2004). In Kentucky Resources Council, Inc. v.

Office of Surface Mining, 155 IBLA 354 (2001), the Interior Department

Board of Appeals stated that under this provision, it was bound to follow

the analysis of a prior Interior Solicitor’s Opinion: "Because we are

    Petitioners hold water rights that entitle them to receive all the water from the reclamation project that they can beneficially use. CAL. CONST. Art. X, § 2. In Western water law, any right to the use of surface water for irrigation water is appurtenant to the land, subject to beneficial use. Nevada v. United States, 463 U.S. 110, 126 (1983) ("Once these lands were acquired by settlers in the Project, the Government’s ‘ownership’ of the water rights was at most nominal; the beneficial interest in the rights confirmed to the Government resided in the owners of the land within the Project to which these water rights became appurtenant upon the application of Project water to the land.").