IN
THE UNITED STATES COURT OF FEDERAL CLAIMS
_____________________________________
)
KLAMATH
IRRIGATION DISTRICT et al.,
)
)
Plaintiffs, )
)
v. )
No. 01-591 L
)
)
Defendant. )
______________________________________)
PLAINTIFFS
SUPPLEMENTAL BRIEF ON RECENT AUTHORITIES
REGARDING
THE NATURE OF THE PROPERTY RIGHT
Roger
J. Marzulla
Nancie
G. Marzulla
MARZULLA
& MARZULLA
202-822-6760
202-822-6774
(facsimile)
Dated:
i
TABLE
OF CONTENTS
TABLE
OF
AUTHORITIES................................................................................
.......ii
QUESTION
PRESENTED
.iii
ARGUMENT
...
1
1.
2.
In re
(Consolidated
Subcase No.
91-63)
.
.
.2
3.
Commentators on Water
Rights
.
..9
4.
Klamath Water Bank, http://www.usbr.gov/mp/kbao/pilot_water_bank/
index.html
..
..10
CONCLUSION.......................................................................................................... .. 12
INDEX
TO APPENDIX OF EXHIBITS Page(s)
Ex.
A Memorandum Decision, In re
(
Ex.
B Final Order, In re
(
ii
TABLE
OF AUTHORITIES
Cases
In
re
(Consolidated Subcase No. 91-63) .. .....2-9
Other Authorities
Reed
D. Benson, So Much Conflict, Yet So Much in Common: Considering the
Similarities
Between Western Water Law and the Endangered Species Act,
44
Nat. Resources J. 29, 35-37, 68-69
(2004)
9-10
Dylan
Darling, Water Bank Applications Flood Bureau,
Herald
& News,
Draft
Contract for the 2005 Klamath Basin Pilot Water Bank, Dryland Operation,
available
at http://www.usbr.gov/mp/kbao/pilot_water_bank/docs/Contract_Draft_
Groundwater_Operation_2005.pdf
.....11-12
Megan
Hennessy,
71
U. Chi. L. Rev. 1661, 1665-66, 1672
(2004)
10
Klamath
Water Bank, http://www.usbr.gov/mp/kbao/pilot_water_bank/index.html
......................................10-12
Press
Release, Bureau of Reclamation, Mid Pacific Region, Reclamation Expands
Opportunities
to Participate in Klamath Basin 2005 Pilot Water Bank Programs
(
http://www.usbr.gov/newsroom/newsrelease/detail.cfm?RecordID=4021 ...11
iii
QUESTION
PRESENTED
Whether
there is additional legal authority, decided since
relating
to the parties pending Cross-Motions for Partial Summary Judgment regarding
the nature of the property right?
1
IN
THE UNITED STATES COURT OF FEDERAL CLAIMS
_____________________________________
)
KLAMATH
IRRIGATION DISTRICT et al.,
)
)
Plaintiffs, )
)
v. )
No. 01-591 L
)
)
Defendant. )
______________________________________)
PLAINTIFFS
SUPPLEMENTAL BRIEF ON RECENT AUTHORITIES
REGARDING
THE NATURE OF THE PROPERTY RIGHT
Plaintiffs
provide the Court with the following additional authorities decided since
Judgment,
filed on
30,
2005. See Order
(
Argument
In
this case, the Federal Circuit reaffirmed its broad definition of property
rights which specifically includes water rights ― first set forth in
In
evaluating a takings claim, we have developed a two-step approach.
First,
we determine whether the claimant possessed a cognizable property
interest
in the subject of the alleged taking for purposes of the Fifth
Amendment,
i.e., whether
the claimant possessed a stick in the bundle of
property
rights. Karuk Tribe of
(Fed.Cir.2000)
(internal citation omitted). Second, once we have
determined
that such a property interest exists, we decide whether the
governmental
action at issue constituted a taking of that stick.
2
In
this case, our analysis focuses on the threshold requirement of a recognized
property interest, i.e., whether
Appellants possessed any cognizable property interests within the meaning of the
Takings Clause . .
*
* *
We
have observed:
Property
interests are about as diverse as the human mind can
conceive.
Property interests may be real and personal, tangible and
intangible,
possessory and nonpossessory. They can be defined in
terms
of sequential rights to possession (present interests--life
estates
and various types of fees--and future interests), and in terms
of
shared interests (such as those of a mortgagee, lessee, bailee,
adverse
possessor), and there are interests in special kinds of things
(such
as water, and commercial contracts). And property interests
play
across the entire range of legal ideas.
Indus.,
Inc. v.
2.
In re
(Consolidated
Subcase No. 91-63)
In
a stream-wide adjudication of the waters of the
Court
for the Fifth Judicial District recently ruled that the irrigation districts
have
standing
to participate as claimants to a water right (on behalf of their water users),
rejecting
Reclamations argument (made in this case as well) that the water right rests
entirely
with the federal government. On
the
parties Cross-Motions for Summary Judgment, and in so doing, extensively
reviewed
the
Reclamation law, stating:
2.
Water Rights Under Early Version of Reclamation Act.
Although
the original version of the Reclamation Act expressly provided
that
the title to reservoirs and irrigation works would remain in the
government,
(unless otherwise provided), the Reclamation Act, as well as
3
its
various subsequent amendments, was vague at best regarding the
ownership
of the water rights made available by the project. The
regulations
pertaining to the implementation of provisions of the Act,
however,
do shed some light on the ownership of water rights.
In
practice, under the Reclamation Act, the Secretary of the Interior would
apply
with the state for the water rights to be developed under the project
in
accordance with state law procedures governing water rights.
Ultimately
a water right or rights for the entire project would be issued in
the
name of the
the
project area would make application for water rights and enter into
separate
contracts with the Secretary for the payment of installments and
the
terms and conditions of delivery. Following the satisfaction of
installments,
except continuing operation and maintenance charges,
entrymen
within the project would be issued a patent for the land with
appurtenant
water rights. Pre-existing landowners within the project would
be
issued water right certificates evidencing a water right subject to a lien
by
the
Section
5 of the Reclamation Act provided:
No
right to the use of water for land in private ownership shall be
sold
for a tract exceeding one hundred and sixty acres to any one
land
owner, and no such sale shall be made to any land owner
unless
he be an actual bona fide resident
on such land, or occupant
thereof
residing in the neighborhood of said land, and no such
right
shall permanently attach until all payments therefore are
made
(emphasis added).
Section
8 of the Act provided:
That
nothing in this Act shall be construed as affecting or
intending
to affect or to in any way interfere with the laws of any
State
or Territory relating to the control, appropriation, use or
distribution
of water used in irrigation, or any vested rights
acquired
there under, and the Secretary of the Interior, in carrying
out
the provisions of this Act, shall proceed inconformity with
such
laws, and nothing herein shall in any way affect any right of
any
State or of the Federal Government or of any land owner,
appropriator,
or user of water in, to, or from any interstate stream
or
the waters thereof: Provided, that the right to the use of
water
acquired
under the provisions of this Act shall be appurtenant
to
the land irrigated, and the beneficial use shall be the basis,
the
measure, and the limitation of the right (emphasis
added).
Although
the Reclamation Act has been amended and supplemented since
its
enactment, none of the amendments expressly alter, supplement or
4
clarify
treatment of water rights as expressed in the original version of the
Act.
The
early regulations governing the implementation of the Reclamation
Act
did address ownership of water rights. The Department of Interior,
General
Reclamation Circular, Laws and Regulations Relating to the
Reclamation
of Arid Lands by the
Circular),
approved
(1916),
specifically delineated between entrymen who entered project
lands
under the homestead provisions of the reclamation act and private
landowners
or those who entered project lands pursuant to homestead or
other
entry laws prior to the reclamation withdrawal for the project. In the
case
of lands held in private ownership and homestead entries made prior
to
the reclamation withdrawal, following proof of reclamation and
payment
of charges, a final water right certificate would issue. The
regulations
provide [t]he execution of a final water right certificate
has
the effect of vesting in the water-right applicant absolute title to
the
water right involved, subject in case of partial payment to a lien
for
the payment of all sums still due, and in all cases to the payment of
annual
charges for operation and maintenance.
General Reclamation
Circular
at 19, Ά 64 (emphasis
added). In the case of homestead entries
made
pursuant to the Reclamation Act, following proof of compliance
(satisfaction
of reclamation and payment of charges) a patent, subject to a
lien
for continuing charges, could then issue.
right
certificates were not required and not issued for lands entered under
the
provisions of the Reclamation Act, entries on ceded Indian lands and
desert-land
entries. However, the patent in each of such cases carries with
it
the water right to which the lands patented are entitled.
As
to all landowners or entrymen within the project the regulations
provided:
The
purpose of the reclamation law is to secure the reclamation of
arid
or semi-arid lands and to render them productive, and section
8
[of the Reclamation Act] declares that the right to the use of the
water
acquired under this act shall be appurtenant to the land
irrigated
and that beneficial use shall be the basis, the measure,
and
the limit of the right. There can be no beneficial use of water
for
irrigation until it is actually applied to reclamation of the land.
The
final and only conclusive test of reclamation is production.
This
does not necessarily mean the maturing of a crop, but does
mean
the securing of actual growth of a crop. The requirement as
to
reclamation imposed upon lands under homestead entries
applies
likewise to lands in private ownership and land entered
prior
to the withdrawal namely, that the landowner shall reclaim
his
land as required by law, and no right to the use of water will
permanently
attach until such
5
reclamation
has been shown.
Reclamation
Act regarding the administration of repayment and water
service
contracts (see infra A.2.)
also refer to the contracting party having
a
permanent right to such share or quantity upon completion of
payment.
43 U.S.C. § 485h-1(6).
The
Reclamation Act is somewhat vague as to the specifics of the
ownership
of water rights. However, it is still apparent from the original
version
of the Act, its subsequent amendments, accompanying regulations
and
the early practices of the BOR that landowners within the project were
intended
to have an interest in the water right, even though the right for
the
entire project was licensed or decreed in the name of the
3.
Subsequent Amendments, Irrigation Districts and Delivery
Contracts
In
1922, the original version of the Reclamation Act was amended to
allow
the Secretary to contract with irrigation districts established
pursuant
to state law and dispense with the water right applications on the
part
of individual water users. Act of
541
(current version at 43 U.S.C. § 511 (2003)). In 1926, the Act was
further
amended to require that all future BOR contracts be made with
irrigation
districts only. Act of
649
(current version at 43 U.S.C. § 423e (2003)). The Act was later
broadened
in 1939 to allow contracts to be entered into with other types of
water
delivery entities and associations organized pursuant to state law
under
three essentially standard types of contracts based on the repayment
status
of the project on the Act of
(current
version at 43 U.S.C. § 485g (2003)).
*
* *
The
statute provides for a permanent right upon completion of payment
of
amount assigned subject to payment of appropriate share of costs for
operation
and maintenance. 43 U.S.C. § 485h-1(4).
*
* *
None
of the statutes authorizing the different types of contracts expressly
alter
the treatment of water rights contained in the original version of the
Act
or its accompanying regulations. The statutes authorizing repayment
and
service contracts also speak in terms of permanent or perpetual rights.
None
of the parties argue that the ownership interest at issue is contingent
6
on
the type of delivery contract entered into with the BOR. This question
was
specifically asked by the Court at oral argument.
*
* *
C.
The United States Supreme Court has Defined the Relationship
Between
the BOR and the End Water Users as Concerns the Water
Rights
Developed under the Project.
On
three separate occasions the United States Supreme Court has
addressed
the issue of the ownership of water rights developed under
reclamation
projects as between the BOR and the landowners within the
project.
The Supreme Courts treatment of the rights is consistent with the
historical
treatment of project rights by the BOR. Justice Rehnquist
observed
in California v. United States, 438
U.S. 645, 98 S.Ct. 2985, 57
L.Ed.2d
1018 (1978):
The
history of the relationship between the Federal Government
and
the States in the reclamation of the arid lands and the western
states
is both long and involved, but through it runs the consistent
thread
of purposeful and continued deference to state water law by
Congress.
Recognition
of the right of a State to control waters within its boundaries
is
explicit in Section 8 of the Reclamation Act, 43 U.S.C.A. §383 . . . .
Further,
§372 of the Act provides that use of water from reclamation
projects
is appurtenant to the land irrigated . . . .
It
is not surprising, therefore, that the United States Supreme Court has
ruled
on three separate occasions spanning nearly fifty years that the land
owners
who use water diverted, stored and delivered by the United States
pursuant
to the Reclamation Act have an ownership interest in water rights
associated
with that water. The nature of that water right has been defined
in
the cases.
Memorandum
Decision at 14-23, In re
Ct.
Sept. 2, 2004) (Consolidated Subcase No. 91-63) (attached as Ex. A).
After
describing in detail the trilogy of Supreme Court cases holding that the
landowner
possesses a property right in the reclamation project water appurtenant to his
land,
the court concludes:
7
The
Courts ruling in Nevada v. United States summarizes
prior rulings
and
plainly holds that the interest of the United States in water rights
acquired
for irrigation use in projects constructed and operated pursuant to
the
Reclamation Act of 1902 is a nominal interest only and that the land
owners
within the project own a beneficial interest in those water rights.
For
this Court to rule otherwise would do away with half a century of
decided
case law relating to the Reclamation Act of 1902. Accordingly,
this
Court rules that the United States owns only a nominal interest or
legal
title to the water rights in question and that those rights are held by
the
United States for the owners of the beneficial interest--the land owners
within
the Reclamation Projects.
*
* *
The
BOR argues that any interest that the Irrigation Entities may have is
limited
to the contract and that any relief for the BORs failure to perform
is
limited to a breach of contract action. The problem with this argument is
that
was the very issue and concern which was addressed by the United
States
Supreme Court in Ickes v. Fox, Nebraska v. Wyoming, and Nevada
v.
United States. Those cases
specifically defined the relationship between
the
BOR and the project water users. The very essence of those decisions
is
that the project water users have more than simply a rental or
contractual
interest in the project rights. As
discussed earlier, the Act, the
regulations
issued in accordance with the Act and the solicitors opinion
regarding
the treatment of project water in general adjudications all
support
this conclusion. Therefore, the BOR is not free to do as it pleases
with
the water and leave the water users to resort to a breach of contract
action
against the BOR as the sole remedy. Simply put, the relationship
between
the BOR and the Irrigation Entities or end water user is not the
same
as the relationship between a commercial ditch company and the
water
users to which it distributes water.
The
Court views the relationship between the BOR and the Irrigation
Entities
more akin to the relationship between an irrigation district and the
water
users within the district, wherein water rights are decreed in the
name
of the irrigation district and by law the irrigation district holds the
rights
in trust for the water users within the district. See I.C.
§ 43-316.
Since
the Reclamation Act has passed, it has been interpreted in this
fashion.
*
* *
The
Court finds that the position the BOR advocates is inconsistent with
the
law as it stood either before or after Ickes.
Even shortly after the
commencement
of the SRBA the Solicitor for the Department of Interior
concluded
that Nevada v. United States reaffirmed
the existing state of the
8
law.
Filings of Claims for Water Rights in General Stream Adjudications,
97
I.D. 21 (1989). To the extent the Court is now being asked to clarify
existing
law against which the water right holders were entitled to rely, the
Court
does not view that as a collateral attack on a prior license or decree.
The
Court views the matter as a clarification of a prior decree or license.
*
* *
2.
The Motion for Summary Judgment of
the United States is DENIED.
The
court rules that the United States Department of Interior, Bureau of
Reclamation
holds legal title to the water rights at issue subject, to the
equitable
or beneficial interest of the landowners within the irrigation
districts
described herein.
*
* *
5.
The Motion for Summary Judgment of
Pioneer Irrigation District and
Settlers
Irrigation District is GRANTED IN PART AND DENIED IN
PART.
The water rights claimed
by these entities (63-3614A, 63-3618A,
63-5262A,
63-3614B, 63-3618B and 63- 5262B) shall be disallowed.
Provided,
however, that Water Rights 63-03614, 63-03618 and 63-303
shall
be decreed in the name of the United States of America acting
through
the Bureau of Reclamation with a remark to the effect that the
beneficial
use of the water represented by the decree is held in trust for the
landowners
within the respective irrigation districts as a matter of law and
pursuant
to contracts between the Bureau of Reclamation and the
Irrigation
Districts.
Memorandum
Decision at 27-32, In re
Ct.
Sept. 2, 2004) (Consolidated Subcase No. 91-63) (attached as Ex. A). On March 4,
2005,
the Idaho District Courts Final Order required the following be added to the
decree
regarding the Reclamation Project water rights at issue in the case:
Although
the name of the
Bureau
of Reclamation appears in the Name and Address section of this
partial
decree, the ownership of this water right is divided. The United
States
Bureau of Reclamation holds nominal legal title. Beneficial or
equitable
title to this water right is held in trust by the irrigation
organizations,
in the quantities and/or percentages specified in the
contracts
between the Bureau of Reclamation and the irrigation
organizations,
for the benefit of the landowners entitled to receive
distribution
of this water from the respective irrigation organizations
pursuant
to
9
the
lands within the boundaries of or served by such irrigation
organization.
The ownership of this water right is derived from law and is
not
based exclusively on the contracts between the Bureau of Reclamation
and
the irrigation organizations.
Final
Order, In re
(Consolidated
Subcase No. 91-63) (attached as Ex. B).
Commentators
on Water Rights
In
2004, commentators observed and explained the nature of water rights. For
instance,
in a 2004 law review article, an assistant professor of law at the University of
In
the
chiefly
state laws, and the water laws of the western states are primarily
based
on the doctrine of prior appropriation. In these states, water is
officially
a public resource, but the states have recognized permanent
property
rights in the private use of that resource. These water rights
typically
last forever as long as they are used; that is, a water right holder
who
actually exercises her right to use water will not lose it.
*
* *
It
has long been said that beneficial use is the basis, the measure, and the
limit
of a water right under prior appropriation. This phrase means two
things:
first, a user obtains a right by applying water to a so-called
beneficial
use, an activity that the law recognizes as providing some
social
benefit. Second, by applying water to a specific beneficial purpose,
the
water user obtains a right to that quantity of water reasonably needed
for
that specific purpose and no more; waste of water is officially
prohibited.
*
* *
In
sum, western water law in practice provides nearly complete protection
to
existing water rights . . . .
*
* *
Western
water law provides similarly strong protection to those who hold
water
rights. As discussed above, appropriators who divert water and
apply
it to beneficial use obtain water rights that last forever, so long as
10
they
are used. Though the water itself is by law a public resource and
water
rights provide only a right of use, these rights are considered private
property.
*
* *
At
its core, prior appropriation law still recognizes permanent property
rights
based on beneficial use, gives highest priority to the oldest water
rights,
and charges nothing for private use of a public resource. . . . [T]he
water
laws essentially allocate a natural resource by creating a system of
property
rights authorizing its use . . . .
Reed
D. Benson, So Much Conflict, Yet So Much in Common: Considering the
Similarities
Between Western Water Law and the Endangered Species Act,
44 Nat.
Resources
J. 29, 35-37, 68-69 (2004) (footnote citations omitted).
Another
commentator recently stated with respect to
Western
water law in general:
According
to state law, Western states nominally own water rights
which
they hold in trust for water right holders. . . . In practice, Colorado
River
water rights are largely privatized. Private parties hold property
rights,
albeit imperfect ones, in water. They hold use rights to a certain
volume
of water, subject to forfeiture if the water use is not reasonable
and
beneficial. They also hold exclusion rights, the right to enjoin any
other
water right users activity that infringes on their right.
*
* *
[A]s
a result of the prior appropriation doctrine and the long-term lowpriced
contracts
granted by the Bureau of Reclamation to the agricultural
industry,
the majority of Western water rights are vested in the agricultural
industry.
Irrigation alone utilizes 80 to 90 percent of the water of the West.
Megan
Hennessy,
Chi.
L. Rev. 1661, 1665-66, 1672 (2004).
4.
Klamath Water Bank, http://www.usbr.gov/mp/kbao/pilot_water_bank/
index.html
Yet
another indicia of a property right is ownership, the right to sell, and the
existence
of a market for the property. In 2004 and again in 2005, the Bureau of
11
Reclamation
has entered into contracts to purchase the annual water rights of individual
Klamath
Project water users. See,
e.g., Press
Release, Bureau of Reclamation, Mid
Pacific
Region, Reclamation Expands Opportunities to Participate in Klamath Basin 2005
Pilot
Water Bank Programs (February 11, 2005), available at
http://www.usbr.gov/newsroom/newsrelease/detail.cfm?RecordID=4021
(hereinafter
Press
Release). Through its water bank and in exchange for payment, the Bureau pays
water
users either for supplying water to the bank or for forgoing irrigating their
land. Id.
The
Bureau spent approximately $10 million in 2004 to fill the water bank to its
then required 75,000-acre foot level, paying between $63.75 and $200 per acre
foot of water.
See
Dylan Darling, Water
Bank Applications Flood Bureau,
Klamath Falls Ore. Herald &
News,
January 31, 2005 (stating that the Bureau spent an average of $146 per acre-foot
for
the required 75,000 acre feet). Figures for 2005 are not yet available because
the
application
deadline was February 24, 2005. See Press
Release.
The
draft 2005 contract, which is identical to the 2004 contract, exchanges the
landowners
right to receive Klamath Project water in exchange for payment of a sum per
acre-foot:
The
Landowner shall not irrigate by any method [Sum Of ACRES] acres
of
land identified as Unit [Application] . . . hereinafter referred to as the
Land
. . . . The Landowner affirms that he is the legal owner of the Land . .
.
and has the right to apply surface irrigation water to the Land.
Reclamation
shall pay the Landowner [Contract Amount] in a lump sum,
by
direct deposit to the Landowners designated account, no later than
of
[Bid Price] per acre for [Sum Of ACRES] acres, and when paid to the
Landowner
shall be the total due to the Landowner under this Contract.
Draft
Contract for the 2005 Klamath Basin Pilot Water Bank, Dryland Operation, §§
2(A),
2(G), available at
12
http://www.usbr.gov/mp/kbao/pilot_water_bank/docs/Contract_Draft_Groundwater_Ope
ration_2005.pdf.
Thus, the Bureau pays individual water users to relinquish their rights
to
use water.1
Conclusion
Based
on these additional authorities and the authorities cited in their prior briefs,
Plaintiffs
ask this Court to grant their Cross-Motion for Partial Summary Judgment and
deny
Defendants Cross-Motion for Partial Summary Judgment.
Respectfully
submitted,
s/
Nancie G. Marzulla
Roger
J. Marzulla
Nancie
G. Marzulla
MARZULLA
& MARZULLA
202-822-6760
202-822-6774
(facsimile)
Dated:
_______________________________
1The
target water purchase for the 2005 water bank is 100,000 acre-feet, see
Darling, supra,
which, at last years average price, would run the Bureau of Reclamation over
$14.6 million.