Klamath Irrigation District v. U.S. Bureau of Reclamation

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

MEDFORD DIVISION

KLAMATH IRRIGATION DISTRICT, Civ. No. 1:21-cv-00504-AA

Plaintiff,

OPINION & ORDER

v.

U.S. BUREAU OF RECLAMATION,

Defendant,

and

OREGON WATER RESOURCES

DEPARTMENT,

Intervenor Defendant.

_______________________________________

AIKEN, District Judge.

This case comes before the Court on an Amended Motion to Remand filed by

Plaintiff Klamath Irrigation District (“KID”). ECF No. 19. For the reasons set forth

below, KID’s motion is DENIED.

LEGAL STANDARD

Federal courts are courts of limited jurisdiction and only have subject-matter

jurisdiction over matters authorized by the United States Constitution and Congress.

Bender v. Willamsport Area Sch. Dist., 475 U.S. 534, 541 (1986); Couch v. Telescope,

Inc., 611 F.3d 629, 632 (9th Cir. 2010). “Challenges to the existence of removal

jurisdiction should be resolved within [the] same framework” as that applicable to

motions to dismiss for lack of subject-matter jurisdiction due to “the parallel nature

of the inquiry.” Leite v. Crane Co., 749 F.3d 1117, 1121-22 (9th Cir. 2014).

A motion to remand is the proper procedural vehicle for challenging removal.

Babasa v. LensCrafters, Inc., 498 F.3d 972, 974 (9th Cir. 2007). Removal is authorized

when the state court action is against “[t]he United States or any agency thereof or

any officer (or any person acting under that officer) of the United State or of any

agency thereof sued in an official or individual capacity for or relating to any act

under color of such office.” 28 U.S.C. § 1442(a)(1). Section 1442(a)(1) is interpreted

“broadly in favor of removal.” Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252

(9th Cir. 2006).

The party seeking removal bears the burden of establishing by a

preponderance of the evidence that all removal requirements have been met. Serrano

v. 180 Connect, Inc., 478 F.3d 1018, 1021 (9th Cir. 2007); Valdez v. Allstate Ins. Co.,

372 F.3d 1115, 1117 (9th Cir. 2004). Thus, if a plaintiff challenges the defendant’s

removal of a case, the defendant bears the burden of establishing the propriety of the

removal. Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d

1102, 1107 (9th Cir. 2010).

BACKGROUND

The United States Bureau of Reclamation (“Reclamation”) operates the

Klamath Project (the “Project”) to deliver water from Upper Klamath Lake (“UKL”)

and its tributaries to water users in southern Oregon and northern California. As

part of the Project, Reclamation operates dams controlling the flow of water from the

UKL. Reclamation holds water rights for the Project acquired in conformity with the

requirements of state law. Reclamation also holds federal reserved water rights for

the Klamath Tribes for instream fisheries purposes in UKL and the tributaries above

UKL in Oregon.

These rights are subject to the jurisdiction of the Klamath Basin Adjudication

(“KBA”), a comprehensive general stream adjudication in Oregon state court. The

comprehensive stream adjudication for the Klamath Basin began in 1975. In

February 2014, Oregon entered an Amended and Corrected Findings of Fact and

Final Order of Determination (“ACFFOD”) in the Klamath County Circuit Court and

the determination of rights entered the judicial phase of adjudication, which remains

ongoing. While the KBA is pending, the status quo of water rights found in the

ACFFOD is enforceable.

Reclamation also operates in accordance with the requirements of the

Endangered Species Act (“ESA”), 16 U.S.C. §§ 1531-44. The ESA applies with respect

to (1) two species of endangered sucker fish with critical habitat in UKL; (2) threated

Southern Oregon/North California Coast (“SONCC”) coho salmon with critical

habitat in the Klamath River, downstream of the Project; and (3) endangered killer

whales in the Pacific Ocean that prey on Chinook salmon which, although not listed

under the ESA, inhabit the Klamath River downstream of the Project. Biological

opinions issued by the U.S. Fish and Wildlife Service and the National Marine

Fisheries Service have determined that certain water levels are necessary in UKL to

maintain critical habitat for the endangered sucker fish and that certain flow levels

are necessary in the Klamath River to maintain critical habitat for the salmon.

Reclamation also operates the Project in accordance with the senior

downstream federal tribal reserved water rights of the Yurok and Hoopa Valley

Tribes in California. Unlike the reserved water rights of the Klamath Tribes of

Oregon, the reserved water rights of the Yurok and Hoopa Valley Tribes of California

have not been adjudicated in the KBA. However, the Federal Circuit has determined

that the water rights of the Yurok and Hoopa Valley Tribes for instream fisheries

purposes are senior to the Project’s water rights and, although not yet determined in

California, are “[a]t a minimum” equal to the amount of water needed under the ESA

to avoid jeopardy to the salmon in the Klamath River. Baley v. United States, 942

F.3d 1312, 1337 (Fed. Cir. 2019).

This arrangement is complicated by a severe and prolonged drought in the

Klamath Basin, which has reduced the amount of water available in the Project area.

Reclamation has continued to release water from UKL into the Klamath River to

preserve the salmon and satisfy the water rights of the Yurok and Hoopa Valley

Tribes while limiting the amount of water released for irrigation by the Project water

users.

KID is a contractor for the Klamath Project and a participant in the KBA. KID

asserts that Reclamation has the right to store water in UKL, but that the agency

has no authority to release water from UKL for instream uses, such as meeting

Reclamation’s obligations under the ESA or satisfying the reserved water rights of

the Yurok and Hoopa Valley Tribes unless Reclamation first seeks a stay of the

ACFFOD and posts a bond. KID filed a motion for a preliminary injunction in the

KBA seeking to enjoin Reclamation from releasing any water stored in the UKL

under the Project’s storage water rights except to satisfy the irrigation demands of

the Project’s water users under the Project’s state law-based water rights held for

beneficial use. Notice of Removal Ex. 1, at 4. ECF No. 1-1.

Such an injunction would prevent Reclamation from releasing water from UKL

to meet its obligations under the ESA or to satisfy the senior downstream rights held

by the Yurok and Hoopa Valley Tribes. Reclamation takes the position that

operations in accordance with its federal obligations—to the downstream tribes and

under the ESA—are beyond the jurisdiction of the KBA and so removed the motion

for preliminary injunction from the Klamath County Circuit Court to this Court.

DISCUSSION

As noted, Reclamation removed KID’s preliminary injunction motion from the

KBA to this Court. Federal law permits the removal of a civil action commenced in

state court “that is against or directed to” the “United States or any agency thereof.”

28 U.S.C. § 1442(a)(1). For purposes of removal, the agency need only “allege a

colorable defense under federal law.” Mesa v. California, 489 U.S. 121, 129 (1989).

“[T]he right of removal under § 1442(a)(1) is made absolute whenever a suit in a state

court is for any act ‘under color’ of federal office regardless of whether the suit could

originally have been brought in a federal court.” Willingham v. Morgan, 395 U.S.

402, 406 (1969). “Federal jurisdiction rests on a federal interest in the matter.” Id.

(internal quotation marks and citation omitted).

In this case, KID seeks to remand consideration of its motion for preliminary

injunction to the KBA on the basis that the KBA has prior exclusive jurisdiction over

the issues raised in the motion for preliminary injunction. The doctrine of prior

exclusive jurisdiction provides that “when a court of competent jurisdiction has

obtained possession, custody, or control of particular property, that possession may

not be disturbed by any other court.” State Eng’r of State of Nevada v. South Fork

Band of the Te-Moak Tribe of Western Shoshone Indians of Nevada, 339 F.3d 804, 809

(9th Cir. 2003). The doctrine is “no mere abstention rule,” but “a mandatory

jurisdictional limitation.” Id. at 810. The doctrine of prior exclusive jurisdiction

applies in the context of water rights. Id. Here, KID contends that the doctrine

applies to give the KBA exclusive jurisdiction over the water in the Klamath Basin

and the Project.

In its Response, Reclamation contends that the KBA entirely lacks jurisdiction

over the issues raised in KID’s motion for preliminary injunction, due to sovereign

immunity, and so the KBA does not possess prior exclusive jurisdiction over the

motion. “The basic rule of federal sovereign immunity is that the United States

cannot be sued at all without the consent of Congress.” Block v. North Dakota ex rel.

Bd. of Univ. & Sch. Lands, 461 U.S. 273, 287 (1983); United States v. Mitchell, 463

U.S. 206, 212 (1983) (“It is axiomatic that the United States may not be sued without

its consent and that the existence of consent is a prerequisite for jurisdiction.”).

“Sovereign immunity is jurisdictional in nature” and “the terms of the United States’

consent to be sued in any court define that court’s jurisdiction to entertain the suit.”

F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994) (internal quotation marks and citation

omitted, alterations normalized). “The Supreme Court has frequently held that a

waiver of sovereign immunity is to be strictly construed, in terms of its scope, in favor

of the sovereign.” Dunn & Black P.S. v. United States, 492 F.3d 1084, 1088 (9th Cir.

2007) (internal quotation marks and citation omitted, alterations normalized). “As

the contours of any such waiver define a court’s authority to entertain a suit against

the government, each claim against the government must rest upon an applicable

waiver of immunity.” Navajo Nation v. Dep’t of the Interior, 876 F.3d 1144, 1167-68

(9th Cir. 2017) (internal citation omitted).

In this case, KID contends that the United States has waived sovereign

immunity under the McCarran Amendment, 43 U.S.C. § 666(a). The McCarran

Amendment provides:

Consent is given to join the United States as a defendant in any suit (1)

for the adjudication of rights to the use of water of a river system or

other source, or (2) for the administration of such rights, where it

appears that the United States is the owner of or is in the process of

acquiring water rights by appropriation under State law, by purchase,

by exchange, or otherwise, and the United States is a necessary party to

such suit. The United States, when a party to any such suit, shall (1) be

deemed to have waived any right to plead that the State laws are

inapplicable or that the United States is not amendable thereto by

reason of its sovereignty, and (2) shall be subject to the judgments,

orders, and decrees of the court having jurisdiction, and may obtain

review thereof, in the same manner and to the same extent as a private

individual under like circumstances: Provided, That no judgment for

costs shall be entered against the United States in any such suit.

43 U.S.C. § 666(a).

The Supreme Court has held that, for purposes of the McCarran Amendment,

a “river system” is to be “read as one within the particular State’s jurisdiction,”

because “[n]o suit by any State could possibly encompass all of the water rights in the

entire Colorado river which runs through or touches many States.” United States v.

District Court in and for Eagle Cnty., Colo., 401 U.S. 520, 523 (1971); Baley, 942 F.3d

at 1341 (“Moreover, states have the ability to adjudicate rights in a water or river

system within their jurisdiction, but they cannot adjudicate water rights in another

state.”).

The McCarran Amendment is “not intended . . . to be used for any other

purpose than to allow the United States to be joined in a suit wherein it is necessary

to adjudicate all of the rights of various owners on a given stream. This is so because

unless all of the parties owning or in the process or acquiring water rights on a

particular stream can be joined as parties defendant, any subsequent decree would

be of little value.” District Court in and for Eagle Cnty., 401 U.S. at 525 (internal

quotation marks and citation omitted). The “administration of such rights” in §

666(a)(2) refers to the rights described in § 666(a)(1) “for they are the only ones which

in this context ‘such’ could mean; and as we have seen they are all-inclusive, in terms

at least.” Id. at 524.

The “administration” of such rights means “to execute it, to enforce its

provisions, to resolve conflicts as to its meaning, to construe and to

interpret its language. Once there has been such an adjudication and a

decree entered, then one or more persons who hold adjudicated water

rights can, within the framework of § 666(a)(2), commence among other

such actions described above, subjecting the United States, in a proper

case, to the judgments, orders, and decrees of the court having

jurisdiction.”

San Luis Obispo Coastkeeper v. U.S. Dep’t of the Interior, 394 F. Supp.3d 984, 994

(N.D. Cal. 2019) (quoting United States v. Hennen, 300 F. Supp. 256, 263 (D. Nev.

1968).

In determining whether the McCarran Amendment’s waiver of immunity

applies, courts must examine whether the case before them is the type of adjudication

described in the McCarran Amendment—that is, either a suit for adjudication of

rights to the use of a water or for the administration of such rights. United States v.

Oregon, 44 F.3d 758, 765-66 (9th Cir. 1994); see also Fent v. Oklahoma Water Res.

Bd., 235 F.3d 553, 555-57 (10th Cir. 2000) (holding that an action for damages and to

recover funds paid pursuant to an allegedly illegal contract “cannot by any stretch of

the legal imagination be characterized as an effort to obtain a comprehensive

adjudication of all water rights in a water system.”). As the district court observed

in San Luis Obispo Coastkeeper, “the purpose of the McCarran Amendment is not to

waive sovereign immunity whenever litigation may incidentally relate to water rights

administered by the United States. It is for determining substantive water rights by

giving courts the ability to enforce those determinations and to permit joinder of the

United States where necessary to effectively adjudicate competing claims thereto.”

San Luis Obispo Coastkeeper, 394 F. Supp.3d at 995.

In San Luis Obispo Coastkeeper, the court found that the McCarran

Amendment did not apply where the petitioners sought “to enforce state

environmental laws requiring sufficient flows of water for Steelhead,” because the

action was not one to adjudicate or administer a comprehensive state court stream

adjudication. San Luis Obispo Coastkeeper, 394 F. Supp.3d at 995. Here, KID’s

motion for preliminary injunction is clearly not a seeking the adjudication of

competing water rights under § 666(a)(1). Nor is it in the nature of an action to

administer such rights, but is instead an enforcement action to block the release of

water to satisfy the rights of California tribes which were not adjudicated in the KBA.

KID has attempted to litigate this issue in the past without success. In Baley

v. United States, the Federal Circuit held that, in the specific case of the Hoopa Valley

and Yurok Tribes, that “federal courts have consistently held that tribal water rights

arising from federal reservations are federal water rights not governed by state law,”

and that “the volume and scope of particular reserved rights are federal questions.”

Baley, 942 F.3d at 1340 (internal quotation marks and citation omitted, alterations

normalized). As noted, the Federal Circuit determined that the Tribes’ right to water

was at least coextensive with the requirements of the ESA to maintain the salmon in

the Klamath River. Id. at 1337. And this right is not altered by the fact that the

Tribes did not participate in the KBA. See Id., at 1341 (“Nor do we believe that the

Yurok and Hoopa Valley Tribes waived their rights because they did not participate

in the Klamath Adjudication . . . their rights are federal reserved water rights not

governed by state law . . . Thus, the Yurok and Hoopa Valley Tribes’ lack of

participation in the state of Oregon’s Klamath Adjudication did not preclude their

entitlement to water that flows in the Klamath River below the Iron Gate Dam in

California.”).1

1 In rejecting the argument that the Tribes’ water rights must be submitted to the KBA, the

Federal Circuit cast doubt on the power of the KBA to adjudicate the water rights of the Hoopa

In Klamath Irrigation District v. United States Bureau of Reclamation, 489 F.

Supp.3d 1168 (D. Or. 2020), KID brought an action alleging “in essence, that

Reclamation lacks statutory or other authority to comply with the ESA, or to protect

tribal reserved water rights held for tribal fishery needs, by reducing the amount of

water to be delivered to Project irrigators pursuant to their state water rights and

their contracts with Reclamation.” Id. at 1177. In that case, KID sought a declaration

“that Defendants must maintain, operate, and direct operations of the Project and

Project-related facilities in accordance with the requirements of the Reclamation Act

and that Defendants authorization of collection and retention and use of stored water

for ESA-listed species, and use of stored water for ESA-listed species in the Klamath

River, are not activities authorized by any applicable law.” Id. at 1178 (internal

quotation marks and citation omitted, alterations normalized). The court observed

that “[c]ourts, including the Ninths Circuit, have held that Tribes’ federal reserved

treaty water and fishing rights are at least co-extensive with the government’s

obligations to provide sufficient water under the ESA for species survival and

environmental purposes.” Id. at 1178-79 (citing Baley, 942 F.3d at 1337; Klamath

Water Users Ass’n v. Paterson, 204 F.3d 1206, 1214 (9th Cir. 2000)). “In addition,

courts have repeated[ly] held and affirmed the priority that these federally reserved

water rights have over competing irrigation rights.” Id. at 1179. As a result, the

court concluded that KID’s primary contention, “that Reclamation has no discretion

Valley and Yurok Tribes, noting that “their rights are federal reserved water rights not governed by

state law,” and “[m]oreover, states have the ability to adjudicate rights in a water or river system

within their jurisdiction, but they cannot adjudicate water rights in another state.” Baley v. United

States, 942 F.3d 1312, 1341 (Fed. Cir. 2019).

to fulfill ESA or other instream obligations prior to fulfilling water delivery

obligations to Plaintiffs, as determined by the State of Oregon’s Klamath Basin

Adjudication and the ACFFOD,” would, if successful, “ultimately either extinguish or

conflict with Reclamation’s obligations to provide water instream” to satisfy ESA

obligations, which were coextensive with the senior water rights of the Yurok and

Hoopa Valley Tribes. Id. at 1178.

In Klamath Irrigation District, the core question was whether the Tribes were

necessary parties to such an action and the court concluded that they were. Klamath

Irrigation District, 489 F. Supp.3d at 1177-81. In addition, the court concluded that

sovereign immunity prevented the Tribes from being joined in the action,

necessitating dismissal. Id. at 1181-82. In making this determination, the court

considered the application of the McCarran Amendment, concluding:

The Oregon Klamath Basin Adjudication was certainly a McCarran

Amendment case. Plaintiffs argue that, by extension, the case at bar

could be considered an “enforcement action” of the ACFFOD; indeed

KID’s Second Amended Complaint states that the defendants’ sovereign

immunity is waived “pursuant to 43 U.S.C. § 666(a), as this is a suit for

the administration of rights to the use of the water of the Klamath River

system.” However, this is not a “state general stream adjudication case.”

Even if it were, the McCarran Amendment waives the sovereign

immunity of the Indian rights at issue, not the sovereign immunity of

the Tribes themselves. The distinction is unnecessary here, however, as

this is clearly not a McCarran Amendment case.

Id. at 1181 (internal citation omitted).

Here, KID has attempted to evade the force of that ruling by bringing

essentially the same challenge in Klamath County Circuit Court as part of the KBA,

but the fact that they have attempted to bring their claim by filing in it within the

general stream adjudication does not automatically extend the waiver of sovereign

immunity to cover KID’s motion for preliminary injunction. KID’s motion does not

seek to adjudicate rights within a stream system, nor does it seek to administer rights

already adjudicated. Rather, KID seeks to reach beyond the limited waiver of the

McCarran Amendment to litigate federal issues, most notably Reclamation’s release

of water to satisfy the instream water rights of the Yurok and Hoopa Valley Tribes

and the co-extensive demands of the ESA. As the court observed in Klamath

Irrigation District, this is an enforcement action, not an action to adjudicate or

administer rights.

Waivers of sovereign immunity are strictly construed in favor of the sovereign

and the Court concludes the KID’s motion for preliminary injunction does not come

within the McCarran Amendment’s waiver, such that the KBA would possess

exclusive jurisdiction over the claim. At the very least, Reclamation has

demonstrated that it possesses a colorable federal defense, sufficient to permit

removal of the preliminary injunction motion to federal court. Accordingly, the Court

DENIES KID’s motion to remand this case.

CONCLUSION

For the reasons set forth above, KID’s Amended Motion to Remand to State

Court, ECF No. 19, is DENIED.

It is so ORDERED and DATED this 2 5th day of April, 2022.

/s/Ann Aiken

Ann Aiken

United States District Judge