Klamath Irrigation v. United States

In the United States Court of Federal Claims

Nos. 1-591L; 7-194C; 7-19401C; 7-19402C; 7-19403C; 7-19404C; 7-19405C;

7-19406C; 7-19407C; 7-19408C; 7-19409C; 7-19410C; 7-19411C; 7-19412C;

7-19413C; 7-19414C; 7-19415C; 7-19416C; 7-19417C; 7-19418C; 7-19419C;

7-19420C

Filed: September 29, 2017

* * * * * * * * * * * * * * * * * ** *

LONNY BALEY, et al., 1 and *

JOHN ANDERSON FARMS, INC., *

et al., For Themselves, and as *

Representatives of a Class of *

Similarly Situated People, *

*

Plaintiffs, * Takings, Physical or Regulatory

* Taking, Permanent or Temporary

v.

* Taking, Water Rights, Tribal Rights,

UNITED STATES, * Endangered Species Act, Federal

* Reserved Rights; Motions for

v. * Reconsideration.

*

Defendant,

*

PACIFIC COAST FEDERATION OF *

FISHERMEN’S ASSOCIATIONS, *

*

Defendant-Intervenor. *

* * * * * * * * * * * * * * * * * ** *

Nancie G. Marzulla, Marzulla Law, LLC, Washington, D.C. for plaintiffs. With her

was Roger G. Marzulla, Marzulla Law, LLC. Of counsel were William M. Ganong,

Special Counsel, Klamath Irrigation District, Klamath Falls, OR and Alan I. Saltman and

Kathleen H. Barron, Smith Currie & Hancock LLP, Washington, D.C.

Kristine S. Tardiff, Trial Attorney, for defendant. With her were Jeffrey H. Wood,

Acting Assistant Attorney General, and Edward C. Thomas, Natural Resources Section,

Environment and Natural Resources Division, United States Department of Justice,

1 As discussed below, case number 1-591L was re-captioned from Klamath Irrigation

District, et al. v. United States to Lonny Baley, et al. v. United States by order of the court

on February 14, 2017 after the claims of Klamath Irrigation District, along with a number

of plaintiffs were dismissed from the case.

Washington, D.C. Of counsel were Stephen Palmer, Office of the Regional Solicitor,

United States Department of the Interior, Sacramento, CA, and Christopher Keifer,

Office of the General Counsel, National Oceanic and Atmospheric Administration, Long

Beach, CA.

Todd D. True, Earthjustice, Seattle, WA for defendant-intervenor.

Susan Y. Noe, Native American Rights Fund, Boulder, CO for amicus Klamath

Tribes.

FINDINGS OF FACT

Plaintiffs in the above-captioned cases are a consolidated class of farmers in

southern Oregon and northern California, who claim they held a right to receive water

from the United States Department of the Interior, Bureau of Reclamation’s Klamath River

Basin reclamation project (the Klamath Project) in 2001. The cases arise from the

government’s actions in 2001, when defendant, acting through the United States

Department of the Interior, Bureau of Reclamation, temporarily terminated water

deliveries to the plaintiffs in order to meet the requirements of the Endangered Species

Act, 16 U.S.C. § 1531, et seq. (2000), as outlined in two Biological Opinions from the

United States Fish and Wildlife Service (FWS) and the United States National Marine

Fisheries Service (NMFS), and its tribal trust obligations to several Native American

tribes. After multiple opinions issued by earlier assigned judges, and, following appeal of

one of those earlier decisions to the United States Court of Appeals for the Federal Circuit,

remand to this court, and reassignment to this judge, a trial was held leading to the instant

decision. Plaintiffs allege, in their remaining claims, that the government’s actions

constituted compensable takings of their property under the Fifth Amendment to the

United States Constitution by depriving them of their alleged rights to use Klamath Project

water, as well as an impairment of their rights under the Klamath River Basin Compact,

Pub. L. No. 85-222, 71 Stat. 497 (1957) (the Klamath Compact).

I. The Klamath Project

The Klamath Project, an irrigation project straddling the southern Oregon and

northern California borders, supplies water to hundreds of farms, comprising

approximately 200,000 acres of agricultural land, including those in the Klamath River

Basin, as well as to certain National Wildlife Refuge lands owned by the United States.

The agricultural irrigation water is used by the farmers and ranchers in the Klamath

Project area to grow a variety of crops, including alfalfa, irrigated pasture, small grains,

potatoes, onions, sugar beets, as well as several other miscellaneous crops. The Klamath

Project is managed and operated by the United States Bureau of Reclamation. The

Bureau of Reclamation also manages the Klamath Project to protect tribal trust resources

that depend on Klamath Project Water, including the Lost River and shortnose suckers

and the Southern Oregon/Northern California Coast (SONCC) coho salmon, all three of

which species that are also protected under the Endangered Species Act.

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A. Appropriation of Klamath Project Water Rights by the United States

The Klamath Project is one of the earliest federal reclamation projects. Engineering

investigations for the Klamath Project began in 1903, and, in 1905, the United States

Congress authorized the Klamath Project pursuant to the Reclamation Act of 1902, which

provided for federal financing, construction, and operation of water storage and

distribution projects. See Reclamation Act of 1902, Pub. L. No. 57-161, 32 Stat. 388

(codified as amended at 43 U.S.C. § 371, et seq. (2012)). Section 8 of the Act requires

the Secretary of the Interior to comply with state law regarding the appropriation of water

for irrigation (to the extent it is not inconsistent with federal law). See 43 U.S.C. § 383.

Section 8 also provides that: “The right to the use of water acquired under the provisions

of this Act shall be appurtenant to the land irrigated, and beneficial use shall be the basis,

the measure, and the limit of the right.” 43 U.S.C. § 372.

On February 22, 1905, the Oregon legislature enacted a statute specifically related

to appropriations of water for Reclamation Act projects, such as the Klamath Project. See

1905 Or. Gen. Laws 401-02. The statute provided:

Whenever the proper officers of the United States, authorized by law to

construct works for the utilization of water within this State, shall file in the

office of the State Engineer a written notice that the United States intends

to utilize certain specified waters, the waters described in such notice and

unappropriated at the time of the filing thereof shall not be subject to further

appropriation under the laws of this State, but shall be deemed to have been

appropriated by the United States; provided, that within a period of three

years from the date of filing such notice the proper officer of the United

States shall file final plans of the proposed works in the office of the State

Engineer for his information; and provided further, that within four years

from the date of such notice the United States shall authorize the

construction of such proposed work.

Id. (emphasis in original). Pursuant to the terms of the 1905 Oregon statute, on May 17,

1905, the United States Reclamation Service, the predecessor to the United States

Bureau of Reclamation, filed a notice with the Oregon State Engineer stating that “the

United States intends to utilize . . . [a]ll of the waters of the Klamath Basin in Oregon,

constituting the entire drainage basins of the Klamath River and Lost River, and all of the

lakes, streams and rivers supplying water thereto or receiving water therefrom” for

purposes of “the operation of works for the utilization of water . . . under the provisions of

the . . . Reclamation Act.” Also pursuant to the terms of the 1905 Oregon statute, the

Reclamation Service subsequently filed with the State Engineer plans of proposed works

and proof of authorization of the Klamath Project. Prior to the development of the Klamath

Project, private landowners and irrigation companies in the area ultimately to be served

by the Klamath Project had begun to divert water for irrigation purposes. The Reclamation

Service acquired the interests of such entities in most of these pre-Klamath Project water

rights or appropriations and integrated them into the Klamath Project.

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The property rights claimed by the plaintiffs in this litigation relate to water that is

diverted from Upper Klamath Lake, a large, shallow lake in which water is stored by

means of a dam (the Link River Dam), and from locations downstream of Upper Klamath

Lake and the Link River Dam on the Klamath River in Oregon. The water is diverted out

of Upper Klamath Lake and the Klamath River and then conveyed through canals and

laterals to individual users in both California and Oregon within the Klamath Project. The

works which divert the water were constructed by the United States between 1906 and

1966 and are currently owned by the United States. The operation and maintenance of

all of the federally owned diversion works downstream of the headgates of Upper Klamath

Lake, as well as works that divert water directly from the Klamath River, however, have

been transferred to two Irrigation Districts, the Klamath Irrigation District and the Tulelake

Irrigation District, by contract, subject to the rules and regulations of the United States

Secretary of the Interior. These two Irrigation Districts operate and maintain works that

distribute this diverted water to serve benefitted lands. Other Irrigation Districts and

individuals that constructed and own their own diversion and delivery facilities also are

parties to contracts with the United States for water made available by the Klamath

Project. The individual plaintiff landowners (or their lessees) apply the diverted water to

irrigate crops.

B. Contracts Between the United States and Klamath Project Water Users

Water is generally diverted and delivered by the Klamath Project pursuant to state

law (to the extent it is not inconsistent with federal law) and pursuant to perpetual

repayment contracts between the Bureau of Reclamation and Irrigation Districts, or

Warren Act contracts between the Bureau of Reclamation and Irrigation Districts or

individuals. Water also is delivered to a smaller number of users pursuant to settlement

contracts and as part of lease agreements for lands in the National Wildlife Refuges

located within the Klamath Project.

1. Repayment Contracts

The Bureau of Reclamation has entered into repayment contracts with two large

Irrigation Districts, the Klamath Irrigation District, which covers the “Main Division” of the

Klamath Project, the approximately 40,000 acres of land that were the first developed for

irrigation as part of the Klamath Project, and the Tulelake Irrigation District, which covers

approximately 63,000 acres of reclaimed lands formerly submerged by Tule Lake in

California. 2 Related to these contracts, however, are several other contracts that were

entered into in the early years of the Klamath Project.

Form A and B Applications

Prior to the establishment of Irrigation Districts, the Department of the Interior had

adopted two forms of applications to receive water from reclamation projects such as the

2Although Tule Lake is spelled as two words, the name of the Tulelake Irrigation District

does not include the space between the two words.

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Klamath Project, “Form A” and “Form B.” See Laws and Regulations Relating to the

Reclamation of Arid Lands, 45 L.D. 385, 406-08 (May 18, 1916). The Form A application

was to be entered into by homesteaders settling within reclamation project lands. Id. at

406. As part of the Klamath Project, Tule Lake was dewatered and its reclaimed lands

were opened to homesteaders in segments between 1922 and 1948. Pursuant to the

terms of the Homestead-Reclamation Act, Pub. L. No. 62-256, 37 Stat. 265 (1912), these

homesteaders were permitted to settle these lands in exchange for payments, which

varied over time, designed to repay Klamath Project costs. Twenty eight of these Form A

applications, entered into by the predecessors of class members owning property within

the Tulelake Irrigation District, were admitted into evidence during the trial. The Form A

application was titled “APPLICATION FOR PERMANENT WATER RIGHT,”

(capitalization in original), and contained the following provision describing the “water

right” at issue in the application:

3. Description of water right.—The quantity of water to be furnished

hereunder shall be that quantity which may be applied beneficially in

accordance with good usage in the irrigation of the land described in

paragraph 2: Provided, That in case of a shortage at any time the amount

to be furnished shall be an equitable proportionate share, as nearly as

practical operations will permit, of the water actually available at the time for

all of the area being watered from the same source of supply, such

proportionate share to be determined by the project manager. . . . On

account of drought, inaccuracy in distribution, or other cause, there may

occur at times a shortage in the water supply, and while the United States

will use all reasonable means to guard against such shortages, in no event

shall any liability accrue against the United States, its officers, agents, or

employees, for any damage direct or indirect arising therefrom.

(emphasis in original). Additionally, a provision of the Form A application titled:

“Conditions of application to be continuing” stated: “All of the within terms and

conditions, in so far as they relate to said land, shall be a charge upon said land to run

with the title to same.” (emphasis in original).

Upon completion of the homesteading process, the United States issued a patent

deed to the homesteader. Twenty eight patent deeds were admitted into evidence at trial,

one for each of the parcels for which a Form A application was admitted into evidence.

Twenty seven of the twenty eight patent applications admitted at trial involved land in

California and the other patent deed involved land in Oregon. Each of these patent deeds

states:

NOW KNOW YE, That the UNITED STATES OF AMERICA, in

consideration of the premises, and in conformity with the several Acts of

Congress in such case made and provided, HAS GIVEN AND GRANTED,

and by these presents DOES GIVE AND GRANT, unto the said [name] and

to his heirs, the Tract above described, together with the right to the use of

water from the Klamath Reclamation Project as an appurtenance to the

irrigable lands in said tract; TO HAVE AND TO HOLD the same, together

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with all the rights, privileges, immunities, and appurtenances, of whatsoever

nature, thereunto belonging, unto the said [name] and to his heirs and

assigns forever . . . but excepting, nevertheless, and reserving unto the

United States, rights of way over, across, and through said lands for canals

and ditches constructed, or to be constructed, by its authority . . . .

(capitalization in original). Additionally, some of the patent deeds contained clauses

reserving to the United States “all uranium, thorium or any other material which is or may

be determined to be peculiarly essential to the production of fissionable materials” or

rights of way for the maintenance of power transmission lines.

The Form B application was to be entered into by owners of private lands that were

included as part of reclamation projects. See Laws and Regulations Relating to the

Reclamation of Arid Lands, 45 L.D. 385, 406-07. One Form B application was admitted

into evidence at trial. Regarding the water to be provided to the applicant, Form B stated:

2. The quantitative measure of the water right hereby applied for is that

quantity of water which shall be beneficially used for the irrigation of said

irrigable lands up to, but not exceeding [a quantity which varied by applicant]

acre-fee per acre per annum, measured at the land; and in no case

exceeding the share, proportionate to irrigable acreage, of water supply

actually available as determined by the Project Engineer or other proper

officer of the United States, or of its successors in the control of the project,

during the irrigation season for the irrigation of lands under said unit. . . .

Under the Department of Interior regulations which governed Form B applications, upon

acceptance by the Bureau of Reclamation, a Form B application “becomes a water-right

contract.” 45 L.D. 385, 408.

Klamath Water Users Association

Form B also included a provision requiring that Form B applicants enter into a

contract with a water users’ association, stating:

This application must bear the certificate, as hereto attached, of the water

users’ association under said project, which has entered into contract with

the Secretary of the Interior . . . . If the Secretary of the Interior has made

no contract with a water users’ association under said project, the applicant

agrees to file, upon his direction, evidence of membership in the water

users’ association organized under the said project . . . .

George Moss Driscoll, who, at the time of trial, held the position of senior water and land

specialist for the Bureau of Reclamation’s Klamath Basin area office, and previously was

a water contracts specialist for the Bureau of Reclamation, testified at trial that, “in addition

to the form A/form B water right applications, [the Bureau of] Reclamation as a matter of

policy initially intended to contract” with such water users associations, which “would be

the entity through which Reclamation intended to directly work with and communicate

with water users on the project.” In the case of the Klamath Project, the relevant

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association was the Klamath Water Users Association (KWUA). The contract between

the United States and the KWUA, dated November 6, 1905, was admitted into evidence

at trial. Under the contract, KWUA guaranteed payments for the Klamath Project works,

to be apportioned among its members. In exchange, only members of the KWUA would

be accepted as applicants for water rights in the Klamath Project. Regarding such rights,

the contract specified:

That the aggregate amount of such rights to be issued shall, in no event,

exceed the number of acres of land capable of irrigation by the total amount

of water available for the purpose . . . and that the Secretary of the Interior

shall determine the number of acres so capable of such irrigation as

aforesaid, his determination to be made upon due and expert consideration

of all available data, and to be based upon and measured and limited by the

beneficial use of water.

The KWUA contract entitles the signor to receive a specified number of shares in

the KWUA. These shares, as well as “all rights and interest represented thereby or

existing or accruing by reason thereof or incident thereto,” were to be “inseparably

appurtenant” to the real estate parcels specified in the contract. Ownership of KWUA

shares entitled their holder to “the right to have such water delivered to the owner thereof

by the Association for the irrigation of said lands, as the Association shall from time to

time acquire or control means for that purpose.” A copy of the stock subscription and

contract used by KWUA also was admitted into evidence at trial.

Klamath Irrigation District and Tulelake Irrigation District Repayment

Contracts

The November 6, 1905 contract between the United States and the KWUA was

eventually supplanted by a July 6, 1918 repayment contract between the United States,

the KWUA, and the newly formed Klamath Irrigation District. The July 6, 1918 contract

“dissolved” KWUA and transferred to the Klamath Irrigation District, an Oregon municipal

corporation, all irrigable lands for which water rights applications to the United States had

been made and/or which were covered by stock subscriptions with the KWUA, as well the

entirety of KWUA’s liability to the United States for Klamath Project construction costs.

The July 6, 1918 contract was supplemented by a November 29, 1954 “Amendatory

Contract” between the United States and the Klamath Irrigation District. The preamble of

the November 29, 1954 contract states that “the District is obligated, among other things,

to repay to the United States that part of the expenditures made by the United States in

the construction of the Project which is properly allocable to the District” and that “the

District, as the duly authorized representative of the water users within its geographic

boundaries, desires to enter into an amendatory contract with the United States, which

would provide for the District to take over the operation and maintenance of certain of the

Project works.” Under the November 29, 1954 repayment contract, the Klamath Irrigation

District assumed responsibility for the operation and maintenance of certain works in the

Klamath Project from the United States and agreed to provide water and drainage

services through those works to certain other Irrigation Districts, including the Tulelake

Irrigation District, and certain individuals located outside the Klamath Irrigation District.

7

The November 29, 1954 contract also contained the following provision regarding water

shortages:

UNITED STATES NOT LIABLE FOR WATER SHORTAGE

26. On account of drought or other causes, there may occur at times a

shortage in the quantity of water available in Project reservoirs and, while

the United States will use all reasonable means to guard against such

shortage, in no event shall any liability accrue against the United States or

any of its officers, agents, or employees for any damage, direct or indirect,

arising therefrom and the payments to the United States provided for herein

shall not be reduced because of any such shortages.

(capitalization in original). The November 29, 1954 contract between the United States

and the Klamath Irrigation District was in effect in 2001.

The Tulelake Irrigation District, a California municipal corporation, services water

users in the reclaimed lands of Tule Lake that were opened to homesteaders between

1908 and 1948. These homesteaders would have submitted a Form A application to

receive their water rights from the Klamath Project. The preamble of the contract between

the Tulelake Irrigation District and the United States states:

[T]he District desires to contract, pursuant to the Federal reclamation laws

and the laws of the State of California, for the furnishing by the United States

of a water supply form the [Klamath] Project works and for the repayment

of the construction charges hereinafter set forth, less such credits as are

applicable under the Federal reclamation laws and the provisions of this

contract; and . . . the parties desire by this contract to provide, in accordance

with and subject to the terms and conditions hereinafter provided, for the

transfer to the District of the operation and maintenance of works and

properties used or useful for the delivery of water to and protection of the

lands within the District . . . .

Similar to the Klamath Irrigation District, under a September 10, 1956 contract with the

United States, the Tulelake Irrigation District assumed responsibility for the operation and

maintenance of Klamath Project works used to supply water to the lands within the district.

The September 10, 1956 contract contained a water shortage provision that was identical

to the one contained in the November 29, 1954 contract between Klamath Irrigation

District and the United States. The September 10, 1956 contract between the United

States and the Tulelake Irrigation District was in effect in 2001.

2. Warren Act Contracts

Warren Act contracts were made with both individual water users and Irrigation

Districts which supplied water to individuals within their boundaries. Warren Act contracts

cover lands that, unlike those within the Klamath Irrigation District and Tulelake Irrigation

District, were not part of the Klamath Project when it was originally developed.

Geographically, these lands are scattered throughout the Klamath Project. These

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contracts were made pursuant to the Warren Act of 1911, Pub. L. No. 61-406, 36 Stat.

925 (codified at 43 U.S.C. §§ 523-25 (2012)). The Warren Act authorizes the Secretary

of the Interior “to cooperate with irrigation districts, water-users' associations,

corporations, entrymen, or water users for the construction or use of such reservoirs,

canals, or ditches as may be advantageously used by the Government and irrigation

districts, water-users' associations, corporations, entrymen, or water users for

impounding, delivering, and carrying water for irrigation purposes.” 43 U.S.C. § 524. In

the Klamath Project, water is delivered to Warren Act contractors through works operated

by the Klamath Irrigation District and the Van Brimmer Ditch Company, an Oregon

business discussed below. Irrigation Districts relevant to this action who have Warren Act

contracts with the United States include: the Enterprise Irrigation District; the Klamath

Basin Improvement District; the Klamath Drainage District; the Malin Irrigation District; the

Midland District Improvement Company; the Pine Grove Irrigation District; the Poe Valley

Improvement District; the Shasta View Irrigation District; the Sunnyside Irrigation District;

and the Westside Improvement District. Warren Act contracts for each of these Irrigation

Districts were admitted into evidence at trial. These Irrigation District contracts were

entered into between 1920 and 1962, although some individual contracts were entered

into as early as 1915.

The Warren Act contracts entered into by the Irrigation Districts all contain similar

or identical language in several key provisions relevant in the current cases. In each of

the contracts, the Irrigation District agrees to pay the United States a specified sum of

money in exchange for delivery of Klamath Project water. All of these contracts contain

language stating that rights to the use the water acquired under the contracts are inferior

to prior rights reserved for the lands of the Klamath Project. The Bureau of Reclamation

has interpreted this to mean that these rights are junior to those held by the Van Brimmer

Ditch Company, Klamath Lake Irrigation District, and Tulelake Irrigation District and, in

the case of a drought, would receive Klamath Project water only after the rights of users

of these three entities had been fully satisfied. Each of the contracts defines an upper

limit to the amount of water the Irrigation District is entitled to receive, although, the exact

limit varies by contract. The contracts for the Malin Irrigation District, the Sunnyside

Irrigation District, the Shasta View Irrigation District, the Enterprise Irrigation District, and

the Pine Grove Irrigation District limit the amount to “two acre feet per acre of irrigable

land during the usual irrigation season.” The contracts for the Malin Irrigation District, the

Sunnyside Irrigation District, and the Shasta View Irrigation District contain additional

language stating that the amount of water provided “shall not exceed the amount that can

be furnished, as determined by the Secretary, at a cost of Thirty-four Dollars

($34.00) . . . and in no event shall it exceed 0.6 acre-feet of water per irrigable acre in any

one month.” The Westside Improvement District’s contract entitles them to receive a

maximum of “two and one-half (2 ½) acrefeet per-acre per annum,” while the Klamath

Basin Irrigation District’s contract limits them to an amount of water “not to exceed an

average of three and six-tenths (3.6) acrefeet per irrigable acre.” Finally, the contracts for

the Klamath Drainage District, Midlands Irrigation District, and Poe Valley Irrigation

District simply limit them to the amount of water that can be put to beneficial use for

irrigation on the irrigable lands within their districts.

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Finally, each of the Warren Act contracts for Irrigation Districts admitted into

evidence at trial also contains a provision limiting the United States’ liability in the event

of water shortages, although there are two different forms this language takes. Those

contracts entered into by the Klamath Drainage District, Malin Irrigation District, the

Klamath Basin Improvement District, the Shasta View Irrigation District, the Sunnyside

Irrigation District, and the Westside Improvement District contain language relating to

shortages caused by droughts or “other cause,” stating, in language similar to that of the

contract with the Malin Irrigation District, with only minor, non-relevant variations, that:

On account of drought, inaccuracy in distribution or other cause, there may

occur at times a shortage in the quantity of water provided for herein, and

while the United States will use all reasonable means to guard against such

shortage, in no event shall any liability accrue against the United States, its

officers, agents or employees, for any damage, direct or indirect, arising

therefrom, and the payments due hereunder shall not be reduced because

of any such shortage.

The shortage provisions in the rest of the contracts, including for the Enterprise Irrigation

District, the Midland District Improvement Company, the Poe Valley Improvement District,

and the Pine Grove Irrigation District, however, are missing the “other causes” language

and state:

The United States shall not be liable for failure to supply water under this

contract caused by hostile diversion, unusual drought, interruption of

service made necessary by repairs, damages caused by floods, unlawful

acts or unavoidable accidents.

At trial, three Warren Act contracts between the United States and individuals,

under which three named plaintiffs received water in 2001, were also admitted into

evidence. Named Baley plaintiffs Daniel G. and Delores Chin owned two parcels that

received water pursuant to individual Warren Act contracts in 2001 entered into by their

predecessor-in-interest. Named John Anderson Farms plaintiff Hill Land & Cattle LLC

owned one parcel that received water pursuant to an individual Warren Act contract in

2001 that was entered into by its predecessor-in-interest. The Warren Act contracts for

these three parcels are identical, or close to identical, in almost all respects and very

similar to the Warren Act contracts entered into by the Malin Irrigation District, the

Sunnyside Irrigation District, and the Shasta View Irrigation District. Like those Irrigation

District contracts, the three individual Warren Act Contracts place upper limits on the

water that will be furnished, “two acre-feet per acre of irrigable land during the usual

irrigation season” for one of the Chin parcels and “two and one-half (2 1/2 ) acre-feet per

acre of irrigable land during the usual irrigation season) for the Hill Land & Cattle LLC

parcel and the other Chin Parcel, while also further stating that this amount “shall not

exceed the amount that can be furnished, as determined by the Secretary, at a cost of

Thirty-four Dollars ($34.00) . . . and in no event shall it exceed 0.6 acre-feet of water per

irrigable acre in any one month.” The individual Warren Act contracts also contain the

same shortage provision as those Irrigation Districts immunizing the United States from

liability in the event of a droughts or “other cause.” Finally, each of the three individual

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Warren Act Contracts has a provision stating: “The terms of this contract shall inure to the

benefit of and be binding upon the successors in interest and assigns of the parties

hereto.”

3. Settlement Contracts: the Van Brimmer Ditch Company

The third type of contract governing delivery of water in the Klamath Project,

settlement contracts, covers the distribution of water to lands that held a water right or a

claim to a water right, prior to the Klamath Project’s inception. George Driscoll testified at

trial that the settlement contractors are a “very minor group” that, among the original

named plaintiffs at the time of trial, includes only the Van Brimmer Ditch Company. The

Van Brimmer Ditch Company is not an Irrigation District, but is instead an Oregon

business corporation that delivers irrigation water to landowners. Each share of Van

Brimmer Ditch Company stock corresponds with one acre of irrigable land with an

appurtenant right to receive water from the company. As a former president of the Van

Brimmer Ditch Company, James Moore, a named plaintiff in the Baley case, testified at

trial, the Van Brimmer Ditch company traces its history back to the 1880s, prior to the

genesis of the Klamath Project, when its founders, the Van Brimmer brothers, posted

notices of appropriation and started drawing water from White Lake, which was

associated with Lower Klamath Lake, via trenches they and others had dug.

Subsequently, the creation of the Klamath Project resulted in the draining of White Lake

and the Van Brimmer Ditch Company entered into a contract with the United States to

receive water from Upper Klamath Lake instead.

The contract between Van Brimmer Ditch Company and the United States, entered

into on November 6, 1909, begins by recognizing that “the changing by the United States

of the course or water-level of the . . . Lower Klamath Lake [as a result of the construction

of the Klamath Project] will in all probability completely destroy or impair the present

source of water supply used for irrigation purposes of the [Van Brimmer Ditch] Company”

and that “the Company claims that it has established a vested right to the use of fifty

second-feet of water for irrigation purposes from the water of Lower Klamath Lake.” In the

contract, the Van Brimmer Ditch Company agreed to “waive[] and renounce[] to the use

and benefit of the United States any and all of its riparian rights, in relation to the waters

and shores of Lower Klamath Lake appurtenant or incident to the lands now being

irrigated by the Company,” and, in exchange, the United States agreed to “deliver to the

Company during each and every irrigation season . . . a quantity of water, not to exceed

fifty second feet.” The United States also “recognize[d] the right as existing in the

Company to the perpetual use of said fifty (50) second feet of water.” Named plaintiffs

James and Cheryl Moore are landowner-shareholders in Van Brimmer Ditch Company.

In 2001, the Moores owned 135 shares of stock in the Van Brimmer Ditch Company, each

of which corresponded with one acre of irrigable land with an appurtenant right to receive

irrigation water.

4. Leased Lands in the National Wildlife Refuges

The Klamath Project also administers federal lease contracts with farmers on

about 23,000 acres of land within two national wildlife refuges that sit within the Klamath

11

Project, the Tule Lake and the Lower Klamath Wildlife Refuges, pursuant to the Kuchel

Act, Pub. L. No. 88-567, 78 Stat. 850 (1964). These lands are among the most productive

lands in the Klamath Basin. Contracts in the refuges are issued for five to eight years, but

require annual renewal. The Bureau of Reclamation uses a standard lease contract on

these lands. The leases do not specify an amount of water to which the lessor is entitled,

but instead state that: “[t]he Bureau of Reclamation will handle all deliveries of irrigation

water to the leased premises and all draining of the leased premises.” The leases also

contain the following shortage provision: “[T]he United States, its officers, agents and

employees, and its successors and assigns shall not be held liable for damages because

irrigation water is not available or because of an inability to drain the leased premises in

a timely manner.” Of the named plaintiffs, only one, James Frank, alleges that he received

water through a lease contract for lands in one of the National Wildlife Refuges within the

Klamath Project. A lease signed by Mr. Frank on April 19, 1999, and renewable up to

October 31, 2003, for lands in a National Wildlife Refuge was admitted into evidence at

trial.

C. Tribal Rights in Klamath Project Waters

Three Native American tribes, the Klamath, Yurok, and Hoopa Valley Tribes,

(collectively, the Tribes) hold rights to take fish from Klamath Project waters. The rights

of the Klamath Tribes are derived from an 1864 treaty between the Klamath Tribes and

the United States, in which the Klamath Tribes “relinquished its aboriginal claim to some

12 million acres of land in return for a reservation of approximately 800,000 acres in south-

central Oregon.” United States v. Adair, 723 F.2d 1394, 1398 (9th Cir. 1983). Among

other provisions, the treaty guaranteed the Klamath Tribes “the exclusive right of taking

fish in the streams and lakes” that were included as part of the Klamath Indian

Reservation. 3 See Treaty Between the United States of Am. & the Klamath & Moadoc

Tribes & Yahooskin Band of Snake Indians, Art. I., Oct. 14, 1864, 16 Stat 707. The

Klamath Tribes’ reservation abutted Upper Klamath Lake and included several of its

tributaries. Based on the language of the 1864 treaty, a federal court water rights

adjudication determined that the Klamath Tribe holds “[a] water right to support game and

fish adequate to the needs of Indian hunters and fishers.” United States v. Adair, 723 F.2d

at 1411. This right is “non-consumptive,” meaning that the Klamath Tribes are “not entitled

to withdraw water from the stream for agricultural, industrial, or other consumptive uses,”

but instead hold “the right to prevent other appropriators from depleting the streams[’]

waters below a protected level in any area where the non-consumptive right applies.” Id.

(citing 1 R. Clark, Waters and Water Law § 55.2, at 578–81 (1967) and Cappaert v. United

States, 426 U.S. 128, 143 (1976)). Because the 1864 Treaty amounted to “a recognition

of the Tribe’s aboriginal water rights,” the Klamath Tribes’ water rights “carry a priority

date of time immemorial.” Id. at 1414. The Klamath Tribes’ water rights in Upper Klamath

Lake had not been quantified in 2001.

3The Klamath Indian Reservation was terminated in 1954 pursuant to an act of Congress,

but the act explicitly preserved the Klamath Tribes’ water rights. See United States v.

Adair, 723 F.2d at 1411-12 (quoting 25 U.S.C. § 564m(a) (1976)).

12

The rights of the Yurok and Hoopa Valley Tribes are derived from three presidential

Executive Orders issued in 1856, 1876, and 1891, which established, extended, and

combined the Klamath and Hoopa Valley Reservations in California. The first Executive

Order, signed by President Franklin Pierce on November 16, 1855, established the

Klamath Reservation in California. See Charles J. Kappler, Indian Affairs: Laws and

Treaties 817 (1904). The second, signed by President Ulysses Grant on June 23, 1876,

created the Hoopa Valley Indian Reservation, declaring certain lands in California to be

“withdrawn from public sale, and set apart for Indian purposes, as one of the Indian

reservations authorized to be set apart, in California, by act of Congress approved April

8, 1864.” Id. at 815. The third Executive Order, signed by President Benjamin Harrison

on October 16, 1891, combined the Klamath and Hoopa Valley reservations into a single

Hoopa Valley reservation by extending the Hoopa Valley reservation to include additional

portions of the Klamath River. See id. Ultimately, the combined reservation “ran along

both sides of the Klamath River, from the mouth of the Trinity River [in California] down

to the Pacific Ocean.” Parravano v. Babbitt, 70 F.3d 539, 542 (9th Cir. 1995) (citing Mattz

v. Arnett, 412 U.S. 481, 493–94 (1973)). 4 Federal and California state courts have

recognized that the right of the Yurok and Hoopa Valley Tribes “to take fish from the

Klamath River was reserved to the Indians when the [Hoopa Valley] reservation was

created.” United States v. Eberhardt, 789 F.2d 1354, 1359 (9th Cir. 1986) (citing Blake v.

Arnett, 663 F.2d 906, 911 (9th Cir.1981); People v. McCovey, 685 P.2d 687, 697 (Cal.),

cert. denied, 469 U.S. 1062 (1984)); see also Parravano v. Babbitt, 70 F.3d at 547 (“The

1876 and 1891 executive orders that created the extended Hoopa Valley Reservation

and the 1988 Hoopa–Yurok Settlement Act vested the Tribes with federally reserved

fishing rights . . . .”). “[T]he right reserved includes fishing for ceremonial, subsistence,

and commercial purposes.” United States v. Eberhardt, 789 F.2d at 1359. The

Department of the Interior, in a July 25, 1995 memorandum prepared by the Department’s

Regional Solicitor for the Pacific Southwest Region, recognized that “[t]he Yurok and

Hoopa Valley Tribes have federal Indian reserved fishing rights to take anadromous fish[ 5]

within their reservations in California” and that “[t]hese rights were secured to the Yurok

and Hoopa Indians by a series of nineteenth century executive orders.” A January 9, 1997

4 In 1988, Congress enacted the Hoopa–Yurok Settlement Act, 25 U.S.C. § 1300i, to

divide the extended Hoopa Valley Reservation into the Yurok Reservation and the Hoopa

Valley Reservation. “One of the concerns of Congress at the time of the 1988 partitioning

was to protect the [Yurok and Hoopa Valley] Tribes' fisheries.” Parravano v. Babbitt, 70

F.3d at 542. “Although the 1988 Hoopa–Yurok Settlement Act did not explicitly set aside

fishing rights, it did make clear that the partitioning would not dispossess the Tribes of

their assets.” Id. at 546.

5 “Anadromous fish hatch in fresh water, migrate to the ocean where they are reared and

reach mature size, and eventually complete their life cycle by returning to the fresh-water

place of their origin to spawn.” Washington v. Washington State Commercial Passenger

Fishing Vessel Ass'n, 443 U.S. 658, 662, modified sub nom. Washington v. United States,

444 U.S. 816 (1979). Salmon are a species of anadromous fish. See id. at 663.

13

memorandum by the Department of the Interior’s Regional Solicitors for the Pacific

Southwest and Pacific Northwest Regions recognized that the Yurok and Hoopa Valley

Tribes “hold adjudicated water rights which vested at the latest in 1891 and perhaps as

early as 1855.” In a letter the Yurok Tribe submitted to the NMFS on March 23, 2001

commenting on the NMFS’ draft Biological Opinion regarding Klamath Project operations,

the Yurok Tribe maintained that it held a federally reserved water right with a priority date

of time immemorial. There is no evidence in the record that the rights held by the Yurok

and Hoopa Valley Tribes have ever been quantified as water rights.

D. The Klamath Compact

On August 30, 1957, Congress gave its consent to the Klamath Compact, an

interstate compact between the states of California and Oregon, which plaintiffs allege

defendant has violated. See 71 Stat. 497, 497-508. The stated purposes of the Klamath

Compact are, “with respect to the water resources of the Klamath River Basin”: “[t]o

facilitate and promote the orderly, integrated, and comprehensive development, use,

conservation, and control thereof for various purposes”; and “[t]o further

intergovernmental cooperation and comity with respect to these resources and programs

for their use and development and to remove causes of present and future controversies.”

Id. at 497. Article III of the Klamath Compact recognizes certain water rights within the

Klamath basin, stating:

A. There are hereby recognized vested rights to the use of water originating

in the Upper Klamath River Basin validly established and subsisting as of

the effective date of this compact under the laws of the state in which the

use or diversion is made, including rights to the use of waters for domestic

and irrigation uses within the Klamath Project. There are also hereby

recognized rights to the use of all waters reasonably required for domestic

and irrigation uses which may hereafter be made within the Klamath Project.

B. Subject to the rights described in subdivision A of this article and

excepting the uses of water set forth in subdivision E of Article Xl [regarding

waterfowl management areas], rights to the use of unappropriated waters

originating within the Upper Klamath River Basin for any beneficial use in

the Upper Klamath River Basin, by direct diversion or by storage for later

use may be acquired by any person after the effective date of this Compact

by appropriation under the laws of the state where the use is to be made,

as modified by the following provisions of this subdivision B and subdivision

C of this article, and may not be acquired in any other way . . . .

Id. at 498. Article XIII of the Klamath Compact contains the language regarding the United

States obligations not to “impair” water rights without just compensation, which plaintiffs

allege defendant has violated, stating:

The United States shall not, without payment of just compensation, impair

any rights to the use of water for use (a) [domestic use] or (b) [irrigation use]

within the Upper Klamath River Basin by the exercise of any powers or

14

rights to use or control water (i) for any purpose whatsoever outside the

Klamath River Basin by diversions in California or (ii) for any purpose

whatsoever within the Klamath River Basin other than use (a) or (b).

Id. at 507. Article XIII, however, limits this obligation of the United States to pay just

compensation to those rights acquired after the effective date of the Klamath Compact,

stating:

But the exercise of powers and rights by the United States shall be limited

under this paragraph 2 only as against rights to the use of water for use (a)

or (b) within the Upper Klamath River Basin which are acquired as provided

in subdivision B of Article III after the effective date of this compact, but only

to the extent that annual depletion in the flow of the Klamath River at Keno

resulting from the exercise of such rights to use water for uses (a) and (b)

do not exceed 340,000 acre-feet in any one calendar year.

Id. Finally, with respect to the rights of Native Americans tribes, Article X of the Klamath

Compact states: “Nothing in this compact shall be deemed . . . [t]o deprive any individual

Indian, tribe, band or community of Indians of any rights, privileges, or immunities afforded

under Federal treaty, agreement or statute.” Id. at 505.

E. The Klamath Adjudication

In 1975, pursuant to the Water Rights Act of 1909, the Oregon Water Resources

Department initiated the Klamath Basin General Stream Adjudication (the Klamath

Adjudication), a general adjudication to determine the ownership of rights to the waters

of the Klamath Basin. The Klamath Adjudication covers pre-1909 state-based surface

water rights not previously adjudicated, as well as federal reserved water rights in the

Klamath Basin. Claims were filed beginning in 1990, and administrative hearings were

initiated in 2001. On March 7, 2013, the adjudicator for the Klamath Adjudication issued

orders of determination on all claims filed in the Klamath Adjudication. On February 28,

2014, the adjudicator issued amended and corrected versions of the orders of

determination, which have been submitted to Oregon state courts for judicial

confirmation. 6

Case 003 in the Klamath Basin Adjudication addressed water rights associated

with the Klamath Project. Three claims in case 003, claims 298, 321-6 and 321-7,

concerned the water rights appropriated by the Van Brimmer brothers and subsequently

at issue in the 1909 contract between the Van Brimmer Ditch Company and the United

States. Claim 298 was filed by the United States, which “assert[ed] that it own[ed] the

water right appropriated because Van Brimmer transferred the right to the United States”

as part of the November 6, 1909 contract. In the corrected partial order of determination

6The findings of the Klamath Adjudication are available on the Oregon Water Resources’

Department website at http://www.oregon.gov/owrd/Pages/adj/ACFFOD.aspx.

15

for case 003, 7 the adjudicator denied the government’s claims on the grounds that,

although, in the 1909 contract, the Van Brimmer Ditch Company transferred its riparian

rights to the government, the 50 cubic feet per second (cfs) of water identified in the

agreement were appropriative water rights, rather than riparian rights, and nothing in the

agreement could be construed as transferring Van Brimmer’s appropriative rights to the

government. Claims 321-6 and 321-7 were brought by the Van Brimmer Ditch Company

along with a number of other Klamath Project water users. The two claims were

“essentially duplicative,” but based on different appropriation dates. Claim 321-6 was

based on a second notice of appropriation made by the Van Brimmer brothers on

September 4, 1883. The adjudicator granted this claim to the Van Brimmer Ditch

Company with a priority date of September 4, 1883, but limited it “to a quantity of 50 cfs,

as defined in a 1909 contract between Van Brimmer and the United States,” on the

grounds that any additional water rights held at that time were abandoned by the Van

Brimmer Ditch Company. Claim 321-7 was based on a second notice of appropriation

filed by the Van Brimmer brothers on September 19, 1884. The adjudicator denied the

claim on the grounds that the earlier priority date was supported by the evidence. 8

II. Events in 2001

A. The Endangered and Threatened Fish

“In light of its dual purposes of serving agricultural uses and providing for the needs

of wildlife, the Klamath Project is subject to the requirements of the Endangered Species

Act. See Pub.L. No. 93–205, 87 Stat. 884 (1973) (codified, as amended, at 16 U.S.C. §

1531 et seq.) (the ‘ESA’).” Klamath Irr. Dist. v. United States, 635 F.3d at 508. “Pursuant

to the ESA, the Bureau [of Reclamation] has an obligation not to engage in any action

that is likely to jeopardize the continued existence of an endangered or threatened

species or result in the destruction or adverse modification of the critical habitat of such

a species.” Id. at 509 (citing 16 U.S.C. § 1536(a)(1)). “In a 1999 Ninth Circuit decision,

the interests of [Klamath] Project water users were declared subservient to the ESA, the

result being that, as necessary, the Bureau has a duty to control the operation of the Link

River Dam in order to satisfy the requirements of the ESA.” Id. at 508 (citing Klamath

Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1213 (9th Cir. 1999), amended

by 203 F.3d 1175 (9th Cir. 2000)). Of relevance to this litigation, Klamath Project

operations potentially affect three species of fish protected under the Endangered

Species Act: the endangered Lost River sucker; the endangered shortnose sucker; and

the threatened SONCC coho salmon. The Lost River and short nose suckers were listed

7 The corrected order of partial determination for case 003 is available at

http://www.oregon.gov/owrd/ADJ/ACFFOD/KBA_ACFFOD_07017.PDF.

8 In a joint status report filed October 28, 2014, the parties informed the court that, in

2014, the Klamath Adjudication also issued an order of partial determination finding that

“the United States, BIA [Bureau of Indian Affairs], as trustee for the Klamath Tribes, holds

a water right for specified elevations in Upper Klamath Lake with a priority date of ‘time

immemorial.’”

16

as endangered in 1988, see Final Rule, Determination of Endangered Status for

Shortnose Sucker and Lost River Sucker, 53 Fed. Reg. at 27130 (July 18, 1988), while

the SONCC coho salmon was listed as threatened in 1997. See Final Rule, Threatened

Status for Southern Oregon/Northern California Coast Evolutionary Significant Unit (ESU)

of Coho Salmon, 62 Fed. Reg. 24588 (May 6, 1997). The Lost River and shortnose

suckers reside in Upper Klamath Lake and nearby waters, while the SONCC coho salmon

use the mainstream and tributaries of the Klamath River downstream from the Upper

Klamath Lake and the Link River Dam.

B. Importance of the Fish to the Tribes

Evidence was presented at trial regarding the importance of the Lost River and

short nose suckers and of the SONCC coho salmon to Native American tribes living in

the Klamath basin. Dr. Ronald Larson, a retired FWS biologist, who had served for

fourteen years as the lead biologist for consultations dealing with the endangered suckers

in FWS’s Klamath Falls office, testified that the two species of suckers are considered

tribal trust species for the Klamath Tribes because of their long history with the fish. In the

Klamath language the Lost River suckers are known as “c’waam” and the shortnose

suckers as “qapdo.” According to Dr. Larson, prior to the beginning of the Klamath Project,

the Klamath and Modoc Indians would harvest suckers during the spring time when the

fish were spawning. An April 5, 2001 Biological Opinion issued by FWS for the Klamath

Project, discussed in more detail below, similarly noted that the suckers were once

abundant and important seasonal foods for Native Americans in the upper Klamath basin.

The July 25, 1995 memorandum prepared by the Regional Solicitor for the Pacific

Southwest Region of the Department of the Interior regarding the rights and obligations

related to the Klamath Project noted that the Klamath Tribes held treaty-based rights to

fish, hunt, and gather on the lands that were formerly part of their reservation along the

Upper Klamath Lake and its tributaries. The memorandum also noted that “[t]he Tribes’

primary interest is in the operation of Upper Klamath Lake because it serves as habitat

for fish protected by their treaty rights, including two endangered species of fish, the Lost

River and shortnose suckers. These fish are a traditional food source for the Tribes.”

Don Reck, at the time of the trial, a fisheries biologist at NMFS, whose primary

responsibility was to implement the Endangered Species Act, and who has worked on

Klamath Basin fishery issues since 1994, testified that the Yurok Tribe and Hoopa Valley

Tribes, both located downstream of the Iron Gate Dam along the Klamath River, have a

federally-recognized reserve fishery right for SONCC coho salmon and other fish species.

The July 25, 1995 Department of the Interior Solicitor’s Office memorandum similarly

stated that the Yurok and Hoopa Valley Tribes held “federal Indian reserved fishing rights

to take anadromous fish within their reservations in California.” Mr. Reck noted that, when

he had previously served as NMFS’s area manager for the Klamath Basin office from

1996 to 2001, he had dealt with both the Yurok and Hoopa Valley Tribes and that they

were “very interested in project operations” and were concerned that the Bureau of

Reclamation pay sufficient attention to their reserved water rights and water level issues.

Consistent with this concern, the Yurok Tribe sent the NMFS a letter on March 23, 2001

with extensive comments on NMFS’ draft 2001 Biological Opinion in which they stated

that they “concur[red] with NMFS that despite the presence of other factors that have

17

contributed to the decline of the Klamath River’s coho and other anadromous resources,

the Klamath Project was and continues to be a major factor in the decline of these

resources.” The final April 6, 2001 Biological Opinion prepared by NMFS regarding the

SONCC coho salmon, discussed in more detail below, noted that “Indian tribes in the

Klamath River Basin . . . have a profound interest in water management” and that

“[d]ownstream tribal reserved water rights consist of an instream flow sufficient to protect

the right to take fish within their reservations.”

C. The Revised 2001 Operations Plan

Prior to 2001, the Klamath Project had been through wet and dry years, including

two recent dry years, 1992 and 1994, that were even drier than was 2001. Numerous

plaintiff water users, including Lonny Baley, Frank Anderson, Keith Buckingham, Michael

Byrne, John Frank, Harold Hartman, Luther Horsley, Edwin Stastny, Jr., and Robert

Unruh, testified at trial, however, that even during those earlier, severe drought years

Klamath Project water users still received all of the water they needed. As the Bureau of

Reclamation developed its operating plan for the 2001 water year, water supply forecasts

indicated that it would be a “critical dry” year due to drought conditions. See Kandra v.

United States, 145 F. Supp. 2d 1192, 1198 (D. Or. 2001). In response, the Bureau of

Reclamation performed a biological assessment of the Klamath Project’s operations on

the Lost River sucker and the shortnose sucker, and a similar assessment regarding the

SONCC coho salmon. See Klamath Irrigation Dist. v. United States, 67 Fed. Cl. 504, 513

(2005) (citing Kandra v. United States, 145 F. Supp. 2d at 1198). “Both assessments

concluded that operation of the Project was likely to affect adversely the three species in

violation of the ESA, 16 U.S.C. § 1531, et seq.” Id. On January 22, 2001, the Bureau of

Reclamation forwarded its biological assessment regarding the SONCC coho salmon to

NMFS and requested the initiation of a formal consultation with the NMFS pursuant to

section 7(a)(2) of the Endangered Species Act. On February 13, 2001, the Bureau of

Reclamation similarly forwarded its biological assessment regarding the Lost River sucker

and the shortnose sucker to the FWS and requested the initiation of a formal consultation

with the FWS.

On March 2, 2001, the Bureau of Reclamation sent out a letter, signed by Karl

Wirkus, to the Irrigation Districts in the Klamath Project notifying them of the status of the

Endangered Species Act consultation process and that no water was to be diverted or

used until a revised operations plan for 2001 was finalized. In relevant part, the March 2,

2001 letter stated:

Reclamation is in the process of developing the 2001 Annual Operations

Plan. Biological opinions resulting from current consultations will be a critical

part of the plan's formulation. While it is possible that there may be drastic

reductions in project agriculture and refuge deliveries in 2001, Reclamation

is working diligently to avoid such an outcome. However, until Reclamation

completes the consultation process, no diversion of Project water may occur

that would result in a violation of Section 7(d) of the ESA which prohibits

“. . . any irreversible or irretrievable commitment of resources . . .” pending

completion of consultation. To date, Reclamation has not made a

18

determination as to whether and to what extent Project water could be

delivered in advance of completed consultations. Thus, until such a

determination is made or the consultations are completed, no Project water

may be diverted or used unless expressly authorized by Reclamation.

(emphasis in original).

On March 30, 2001, the Bureau of Reclamation sent out a similar letter to the

Irrigation Districts, also signed by Mr. Wirkus, updating Klamath Project water users on

the status of the Endangered Species Act consultation process. The March 30, 2001 letter

stated, in relevant part:

We had previously indicated that a new Annual Operations Plan would be

announced on April 1, 2001. We will not be announcing any new Operating

Plan at that time. We anticipate announcing such a plan by April 6, 2001.

We will continue to keep everyone advised of our progress in this regard.

Once again, however, until such a determination is made or the

consultations are completed, no Project water shall be diverted or

used unless expressly authorized by Reclamation.

(emphasis in original).

On April 5, 2001, the FWS, acting in furtherance of its statutory duties under the

Endangered Species Act, issued a final Biological Opinion (the FWS Biological Opinion),

concluding that the Bureau of Reclamation’s proposed 2001 operation plan for the

Klamath Project was “likely to jeopardize the continued existence of the LRS [Lost River

sucker] and SNS [shortnose sucker] and adversely modify their proposed critical habitat.”

On the next day, April 6, 2001, NMFS issued its final Biological Opinion (the NMFS

Biological Opinion) concluding that the proposed operation plan was “likely to jeopardize

the continued existence of SONCC coho salmon” and “to adversely modify critical habitat

for the SONCC coho salmon.” As required by the Endangered Species Act, 16 U.S.C.

§ 1536(b)(3)(A), the Biological Opinions of both agencies included “reasonable and

prudent alternatives” to address the threat to the three species. FWS’ reasonable and

prudent alternatives required, among other actions, that the Bureau of Reclamation

maintain “not divert water from UKL [Upper Klamath Lake] for irrigation purposes if

surface elevations are anticipated to go below [certain minimum levels], regardless of

inflow year type.” The FWS Biological Opinion determined that “[i]mplementation of the

[Klamath] Project with these minimum elevations is necessary to avoid jeopardy and

adverse modification of proposed critical habitat” for the Lost River and short nose

suckers. The NMFS’ only reasonable and prudent alternative required the Bureau of

Reclamation to operate the Klamath Project in such a way so as to provide certain levels

of “minimum IGD [Iron Gate Dam, a dam downstream from the Link River Dam,] water

releases” into the Klamath River between April and September 2001. The NMFS

Biological Opinion stated that this reasonable and prudent alternative was “intended to

19

prevent further decline of the listed fish . . . while longer-term protections can be

implemented to affect the recovery of the species.” 9

On April 6, 2001, the Bureau of Reclamation issued a revised 2001 operations plan

for the Klamath Project (the Revised 2001 Operations Plan) that incorporated the

reasonable and prudent alternatives proposed by the FWS and the NMFS Biological

Opinions. The Revised 2001 Operations Plan listed four “Guiding Principles and

Objectives” which it stated were “described” in the July 25, 1995 memorandum from the

Department of the Interior’s Regional Solicitor for the Pacific Southwest Region, and

“further addressed” in a second memorandum, dated January 9, 1997, prepared by the

Department of the Interior’s Regional Solicitors for the Pacific Northwest and Pacific

Southwest Regions. (emphasis in original). The principles and objectives were: “Meeting

the Requirements of the Endangered Species Act”; “Trust Responsibility of the United

States to Federally Recognized Tribes Within the Klamath River Basin”; “Providing

Deliveries of Project Water”; and “Conserving Wetland and Wildlife Values.” With regard

to the Endangered Species Act, the Revised 2001 Operations Plan stated: “The Lost

River and shortnose suckers, coho salmon, and bald eagles are listed under the ESA.

Reclamation will manage Project water supplies in accordance with the April, 2001, [sic]

biological opinions issued by NMFS and the U.S. Fish and Wildlife Service (FWS) for this

year’s Project operation. . . .” With regard to the tribal trust responsibilities, the Revised

2001 Operations Plan stated, in full:

The trust responsibility to the Klamath Basin Tribes is shared by all federal

agencies that undertake activities in the Klamath Basin. Fishery and other

resources in the Klamath River, Upper Klamath Lake (UKL), and nearby

lakes and streams are important tribal trust resources to the Klamath Basin

tribes. Reclamation's Plan provides flow regimes and lake levels for

protection of tribal trust resources within the limitations of the available

water supply.

With regard to deliveries to Klamath Project water users, the Revised 2001 Operations

Plan stated: “Due to the requirements of the biological opinions and the ESA [Endangered

Species Act] and the current drought conditions, only limited deliveries of Project water

will be made for irrigation.” The Revised 2001 Operations Plan summarized its ultimate

decisions regarding operation of the Klamath Project, as follows:

9 “In addition, at this time, the Bureau was subject to a preliminary injunction order issued

by the U.S. District Court for the Northern District of California in the Pacific Coast

[Federation of Fishermen's Associations v. United States Bureau of Reclamation, 138 F.

Supp. 2d 1228 (N.D. Cal. 2001)] case.” Klamath Irr. Dist. v. United States, 635 F.3d at

509. “The order barred the delivery of Klamath Project water for irrigation purposes when

water flow was below certain minimum levels, until the Bureau complied with ESA

consultation requirements.” Id. (citing Pac. Coast Fed'n of Fishermen's Ass'ns v. United

States Bureau of Reclamation, 138 F. Supp. 2d at 1251).

20

Reclamation prepared the 2001 Plan . . . for certain UKL [Upper Klamath

Lake] levels and Klamath River flows at Iron Gate Dam consistent with the

guiding principles and objectives. . . .

Prior to listing of endangered and threatened species and the increased

scientific understanding of the needs of ESA-listed species and tribal trust

resources, the Project was operated to optimize irrigation diversions, with

UKL releases and resulting flows at Iron Gate Dam (IGD) targeted to meet

Federal Energy Regulatory Commission (FERC) minimums. Lake

elevations were the result of hydropower releases judged against irrigation

demand.

Minimum UKL levels and Klamath River flows have been specified as a

result of ESA consultation on listed species. . . . As a result, current

conditions indicate water deliveries to farms and refuges within the Project

service area will be severely limited. Under the current hydrology, the UKL

levels and river flows under this Plan are consistent with requirements of

the ESA and Reclamation's obligation to protect Tribal trust resources.

At trial, Karl Wirkus, the Area Manager of the Bureau of Reclamation’s Klamath Basin

area office and the author of the Revised 2001 Operations Plan, testified that as he put

the Revised 2001 Operations Plan together and “ran the numbers,” he determined that

meeting the minimum Upper Klamath Lake levels and Klamath River flows set forth in the

FWS and NMFS Biological Opinions would require all available Klamath Project water

and that there would not be any additional quantity of water available to meet other

obligations.

On the same day the Revised 2001 Operations Plan was released, April 6, 2001,

the Department of the Interior issued a news release stating that, based on the FWS and

NMFS Biological Opinions “and the requirements of [the] Endangered Species Act, the

Bureau of Reclamation announced today that no water will be available from Upper

Klamath Lake to supply the farmers of the Klamath Project.” The news release continued:

To provide some assistance to farmers affected by what is expected to be

one of the driest years since the Project began in 1907, the United States

Department of Agriculture (USDA) announces that most crops in the

affected area are eligible for Federal crop insurance (if it had been

purchased before the sales closing date) or other assistance. . . . For

producers carrying coverage, a portion of their otherwise irrigated crop

losses resulting from the determination announced by the Bureau of

Reclamation may be eligible for prevented planting payments. . . .

Assistance is also provided through the Non-insured Crop Disaster

Assistance Program (NAP) to producers growing crops that are currently

uninsurable.

After the issuance of the Revised 2001 Operations Plan, on April 9, 2001, a group

of Klamath Project water users, including the Klamath and Tulelake Irrigation Districts,

21

filed a lawsuit in the United States District Court for the District of Oregon seeking to enjoin

the Bureau of Reclamation from implementing the Revised 2001 Operations Plan and an

order requiring the Bureau of Reclamation “to release unspecified ‘historic’ amounts of

irrigation water.” See Kandra v. United States, 145 F. Supp. 2d 1192, 1195-96 (D. Or.

2001). Plaintiffs alleged that the Revised 2001 Irrigation Plan “breache[d] their contractual

rights to irrigation water and [was] arbitrary and capricious under the Administrative

Procedure Act (‘APA’), 5 U.S.C. § 706, in that its implementation violate[d] the National

Environmental Policy Act (‘NEPA’), 42 U.S.C. § 4321, et seq., and the Endangered

Species Act (‘ESA’), 16 U.S.C. § 1531, et seq.” Id. at 1196. With respect to their

allegations regarding the Endangered Species Act, the Kandra plaintiffs alleged that a

number of provisions of the FWS and NMFS Biological Opinions violated the Endangered

Species Act, and therefore, that the adoption of the findings of the Biological Opinions as

part of the Revised 2001 Operation Plan rendered the Revised 2001 Operations Plan

arbitrary and capricious. See id. at 1206. The Kandra plaintiffs’ alleged issues with the

Biological Opinions included that “FWS failed to consider scientific evidence of variable

lake elevations and the impact on sucker fish populations” and that “NMFS relied on a

lack of relevant information about the effects of variable flow regimes on salmon and the

salmon's utilization of the Klamath River.” Id. The District Court rejected the Kandra

plaintiffs’ request for a preliminary injunction, holding that they had failed to show a

likelihood of success on the merits of their claims or that they were entitled to injunctive

relief. See id. at 1211. On October 15, 2017, the Kandra plaintiffs filed a notice to

voluntarily dismiss their claims, and the District Court dismissed the case on October 27,

2017. See Notice of Dismissal, Kandra v. United States, No. 01-6124 (D. Or. Oct. 15,

2017); Order of Dismissal, Kandra v. United States, No. 01-6124 (D. Or. Oct. 27, 2017).

D. Effect on Farmers in the Klamath Basin

Ultimately, the delivery of irrigation water from Upper Klamath Lake to the plaintiffs

in the above-captioned cases was totally terminated following the issue of the Revised

2001 Operations Plan in April 2001 until July 2001, when the Bureau of Reclamation

released approximately 70,000 acre-feet of water. At trial, plaintiffs consistently testified

that this late release of water was of very little, or more often, no use. Moreover, some

individual plaintiffs testified that they never received any of this water. For example,

farmer David Cacka testified that the water was of no use to him in July because his crops

had already died due to lack of water. Similarly, Mark Stuntenbeck, the assistant manager

of Klamath Irrigation District in 2001, testified that, in his District, “there were an awful lot

of farmers that had no need for the water at that point” because, “[s]ince they were denied

water early in the irrigation season, a lot of farmers did not plant any crops. And those

that unfortunately did, the crops did not survive without any water.” Even those who

received some water, such as Malin Irrigation District manager Harold Hartman, whose

District received 10% of its normal delivery, described the amount as “not overall

beneficial” because it was “[v]ery difficult to wet the system,” which had dried out due to

lack of water deliveries. At best, in the words of Don Russell, a ditch rider for over forty

years in the Klamath Project, who served the farmers of the Enterprise Irrigation District

22

and the Pine Grove Irrigation District in 2001, 10 for the farmers of the Klamath Basin, the

July 2001 water deliveries were “too little, too late.”

Evidence introduced at trial also indicated that at least some of the plaintiffs

received payments from various federal government programs after water deliveries were

cut off in 2001. Many of the plaintiffs testified that they applied for funds from the Klamath

Basin Water Conservation Program, a federal program administered by the Farm Service

Agency which paid farmers $129.00 per irrigable acre for which no water was received.

Several plaintiffs testified that they received payments under the Klamath Basin

Emergency Operation and Maintenance Act of 2001, Pub. L. No. 107-349, 116 Stat. 2973

(2002), which reimbursed farmers for the operation and maintenance costs they had paid

for water deliveries in 2001. Other plaintiffs testified that they received payments from the

federal government’s crop disaster program, the federal government’s non-insured

assistance program, and for placing cover crops on fields through the Emergency

Conservation Program. Finally, some plaintiffs also received payments from the Risk

Management Agency’s crop insurance program.

III. Procedural History

A. Lonny Baley, et al., v. United States

The procedural history of the above-captioned cases is long and complicated,

including assignment to and review by multiple judges in the United States Court of

Federal Claims and review by the United States Court of Appeals for the Federal Circuit,

which resulted in a remand, and reassignment after the remand, to the undersigned

judge. The plaintiffs in Lonny Baley, et al., v. United States, case number 1-591L, were

initially a mixture of Irrigation Districts and individual water users. The Baley plaintiffs filed

their initial complaint on October 11, 2001, an amended complaint on March 24, 2003,

and a second amended complaint on January 31, 2005. In their second amended

complaint, plaintiffs alleged that the government’s actions in terminating their water

deliveries through the Klamath Project in 2001 constituted a taking of their water rights

without just compensation in violation of the Fifth Amendment to the United States

Constitution, an impairment of their water rights in violation of the Klamath Compact, and

a breach of certain contracts between the Bureau of Reclamation and the named

plaintiffs.

The case was initially assigned to Judge Diane G. Sypolt. On May 10, 2002,

defendant filed a motion requesting that the case be stayed pending completion of the

Klamath Adjudication, discussed above. In its motion, defendant argued that

because a number of the core elements of Plaintiffs’ takings claims turn on

state law – and because these state law issues are presently the subject of

10As Mr. Russell explained, a ditch rider takes water requests from farmers and other

water users and inspects the conditions in canals and other works to ensure that they will

not prevent the delivery of water.

23

the ongoing Klamath Basin Adjudication, in which both sides are

participating – a stay of this case pending final resolution of the Adjudication

is fully justified . . . .

On June 14, 2002, plaintiffs filed a response opposing defendant’s motion in which they

argued that “plaintiffs’ water rights are vested under Oregon law and do not depend upon

the adjudication for recognition.”

To resolve this issue, on May 12, 2003, Judge Sypolt, ordered plaintiffs to

file a motion for summary judgment on the question of whether their water

rights . . . are property that is compensable under the Fifth Amendment . . .

notwithstanding any adverse determination, including a retroactive one,

regarding the existence, extent, or character of such rights by the Hearing

Officer Panel in Case No. 003 of the State of Oregon’s ongoing Klamath

Basin Adjudication.

Accordingly, on September 22, 2003, plaintiffs filed a motion for partial summary

judgment seeking a finding that the property rights determination in the Klamath

Adjudication was irrelevant to plaintiffs’ interest in the litigation, in support of which

plaintiffs stated that, “regardless of the outcome of the Adjudication, plaintiffs will retain

the beneficial interest in the Klamath Project water because plaintiff water users, not the

government, put the water to beneficial use.” On November 3, 2003, defendant filed an

opposition to plaintiffs’ motion for partial summary judgment.

On November 13, 2003, Judge Sypolt, in a very brief and somewhat unclear

motion, granted plaintiffs’ revised motion for partial summary judgment and denied

defendant’s motion to stay, stating that:

It appears from their motion for partial summary judgment that plaintiffs not

only assert no property interest determinable in the Adjudication, but also

concede that they claim no legal title to, but only “vested beneficial interests”

in, the Klamath Basin Project water. Defendant, far from disputing this

assertion, makes it the basis for its cross-motion for summary judgment,

that these beneficial interests consist of contract rights that are not

compensable as takings.

Accordingly, plaintiffs’ motion for partial summary judgment that their water

interests are not property interests at issue in the Adjudication is granted

and defendant’s motion for a stay pending the outcome of the Adjudication

is denied. Based on plaintiffs’ assertion that no rights or interests in this

case are affected by the Adjudication, plaintiffs are barred from making any

claims or seeking any relief in this case based on rights, titles, or interests

that are or may be subject to determination in the Adjudication.

The Baley case was re-assigned to Judge Francis Allegra on December 9, 2004

after Judge Sypolt retired from the United States Court of Federal Claims. Subsequently,

on August 31, 2005, Judge Allegra entered summary judgment in favor of the defendant

24

on the takings and Klamath Compact claims, see Klamath Irr. Dist. v. United States, 67

Fed. Cl. 504, and, on March 16, 2007, summary judgment in favor of the defendant on

the breach of contract claims. See Klamath Irr. Dist. v. United States, 75 Fed. Cl. 677

(2007), rev’d, 635 F.3d 505 (2011). Plaintiffs filed a timely appeal with the United States

Court of Appeals for the Federal Circuit, which, on July 16, 2008, certified three questions

to the Oregon Supreme Court regarding the nature of plaintiffs’ alleged water rights under

Oregon law. 11 See Klamath Irr. Dist. v. United States, 532 F.3d 1376 (Fed. Cir. 2008).

The Oregon Supreme Court issued an opinion answering the certified questions on March

11, 2010. 12 See Klamath Irr. Dist. v. United States, 227 P.3d 1145 (Or. 2010). Thereafter,

11 The three questions certified by the Federal Circuit were:

1. Assuming that Klamath Basin water for the Klamath Reclamation Project

“may be deemed to have been appropriated by the United States” pursuant

to Oregon General Laws, Chapter 228, § 2 (1905), does that statute

preclude irrigation districts and landowners from acquiring a beneficial or

equitable property interest in the water right acquired by the United States?

2. In light of the statute, do the landowners who receive water from the

Klamath Basin Reclamation Project and put the water to beneficial use have

a beneficial or equitable property interest appurtenant to their land in the

water right acquired by the United States, and do the irrigation districts that

receive water from the Klamath Basin Reclamation Project have a beneficial

or equitable property interest in the water right acquired by the United

States?

3. With respect to surface water rights where appropriation was initiated

under Oregon law prior to February 24, 1909, and where such rights are not

within any previously adjudicated area of the Klamath Basin, does Oregon

State law recognize any property interest, whether legal or equitable, in the

use of Klamath Basin water that is not subject to adjudication in the Klamath

Basin Adjudication?

Klamath Irr. Dist. v. United States, 532 F.3d at 1377–78.

12 The Oregon Supreme Court answered the Federal Circuit’s three certified questions as

follows:

1. The 1905 Oregon act did not preclude plaintiffs from acquiring an

equitable or beneficial property interest in a water right to which the United

States holds legal title. Moreover, under the 1905 act, a formal written

release from the United States is not necessary for plaintiffs to have

acquired an equitable or beneficial property interest in the water right that

the United States appropriated.

2. Under Oregon law, whether plaintiffs acquired an equitable or beneficial

property interest in the water right turns on three factors: whether plaintiffs

25

on February 17, 2011, the United States Court of Appeals for the Federal Circuit issued

an opinion vacating Judge Allegra’s Court of Federal Claims decision and remanding the

case back to the Court of Federal Claims for further proceedings. See Klamath Irr. Dist.

v. United States, 635 F.3d 505. With regard to plaintiffs’ takings and Klamath Compact

claims, the Federal Circuit instructed that:

On remand, the Court of Federal Claims should proceed as follows: First, it

should determine, for purposes of plaintiffs' takings and Compact claims,

whether plaintiffs have asserted cognizable property interests. . . . To the

extent the Court of Federal Claims determines that one or more plaintiffs

have asserted cognizable property interests, it then should determine

whether, as far as the takings and Compact claims are concerned, those

interests were taken or impaired. That determination will turn on existing

takings law.

Id. at 519–20 (footnotes omitted). After the remand, on November 22, 2013, Judge Allegra

dismissed the breach of contract claims of three plaintiffs, the Klamath Irrigation District,

the Tulare Irrigation District, and Lonny Baley, on 28 U.S.C. § 1500 (2012) grounds. See

Klamath Irr. Dist. v. United States, 113 Fed. Cl. 688 (2013). On June 3, 2014, Judge

Allegra, at plaintiffs’ request, dismissed all remaining plaintiffs’ contract claims, without

prejudice.

B. John Anderson Farms, et al., v. United States

The plaintiffs in John Anderson Farms, et al. v. United States, case numbers 7-

194C, 7-19401C, 7-19402C, 7-19403C, 7-19404C, 7-19405C, 7-19406C, 7-19407C, 7-

put the water to beneficial use with the result that it became appurtenant to

their land, whether the United States acquired the water right for plaintiffs’

use and benefit, and, if it did, whether the contractual agreements between

the United States and plaintiffs somehow have altered that relationship. In

this case, the first two factors suggest that plaintiffs acquired a beneficial or

equitable property interest in the water right to which the United States

claims legal title, but we cannot provide a definitive answer to the court's

second question because all the agreements between the parties are not

before us.

3. To the extent that plaintiffs assert only an equitable or beneficial property

interest in the water right to which the United States claims legal title in the

Klamath Basin adjudication, plaintiffs are not “claimants” who must appear

in that adjudication or lose the right. As a general rule, equitable or

beneficial property interests in a water right to which someone else claims

legal title are not subject to determination in a state water rights

adjudication.

Klamath Irr. Dist. v. United States, 227 P.3d 1145, 1169 (Or. 2010).

26

19408C, 7-19409C, 7-19410C, 7-19411C, 7-19412C, 7-19413C, 7-19414C, 7-19415C,

7-19416C, 7-19417C, 7-19418C, 7-19419C, 7-19420C, who are all individual water

users, filed their original complaint on March 22, 2007. The cases were initially assigned

to Judge Allegra. Although, initially, the Baley and John Anderson Farms cases were

assigned to separate attorneys in different divisions of the United States Department of

Justice, reporting to different Assistant Attorney Generals, more recently, the Department

of Justice counsel of record responsibilities in both cases were assigned to the above-

listed attorney of record. On August 2, 2007, Judge Allegra stayed the John Anderson

Farms cases pending resolution of the appeal to the Federal Circuit in the then-named

Klamath Irrigation District, et al. v. United States case, number 1-591L. The stay was lifted

on August 25, 2011 and an amended complaint was filed on October 4, 2011. In their

2011 amended complaint, the John Anderson Farms plaintiffs alleged that the

government’s actions constituted breach of contracts between the government and the

plaintiffs and a taking of plaintiffs’ property, in the form of their water rights, without

compensation in violation of the Fifth Amendment to the United States Constitution. On

March 13, 2014, Judge Allegra granted plaintiffs’ motion to voluntarily dismiss all

remaining breach of contract claims with prejudice.

C. The Consolidated Cases Before the Undersigned Judge

On June 25, 2015, after a significant amount of discovery following the remand

had already occurred, the above-captioned cases were re-assigned to the undersigned

judge upon Judge Allegra’s illness and subsequent passing. On July 22, 2015, after

holding a status conference with the parties, the court issued an order, which modified a

previous May 7, 2015 order issued by Judge Allegra. The new order set a trial date and

set various pretrial deadlines. On January 12, 2016, after holding a status conference

with the parties, the court issued an order consolidating the Baley and John Anderson

Farms cases. The parties subsequently filed cross-motions in limine on the issue of

whether plaintiffs’ takings claims should be analyzed as regulatory or physical takings,

which, on December 21, 2016, the court decided. In its December 21, 2016 Opinion, the

court found in favor of the plaintiffs, holding that “the government's actions in the present

cases ‘should be analyzed under the physical takings rubric.’” Klamath Irr. Dist. v. United

States, 129 Fed. Cl. 722, 737 (2016) (quoting Casitas Mun. Water Dist. v. United States,

543 F.3d 1276, 1296 (Fed. Cir. 2008)). The court was careful to note, however, “that in

making this decision, it is in no way making any determinations as to the nature or scope

of plaintiffs' alleged property rights, which remain at issue in the above-captioned cases.”

Id.

The parties subsequently finished discovery, submitted their pretrial filings, and

filed a series of additional motions in limine regarding various issues. The court ruled on

a number of these at a status hearing on January 4, 2017 and at the pretrial conference

on January 10, 2017. On January 5, 2017, plaintiffs filed a renewed motion for class

certification in both the consolidated Baley, case no. 1-591L, and John Anderson Farms,

case no. 7-194C and 7-19401-19419C, cases. Judge Allegra had previously denied,

without prejudice, a class certification request in the Baley case. This court granted the

27

consolidated class certification motion at the January 10, 2017 pretrial conference. 13 The

court granted the renewed motion for class certification in order to ensure that all parties

would be included in the event of a future appeal should either party choose to do so after

this court issues its current, trial opinion. As subsequently modified by the parties, and

approved by this court, the consolidated class in the above-captioned cases is comprised

of:

All owners (or their lessees) of agricultural land who claim an appurtenant

right to receive and put to beneficial use water from the Klamath Project in

2001, and allege a Fifth Amendment taking of their right to receive and use

such water in 2001 and impairment of their water right in violation of the

Klamath River Basin Compact. This includes owners or lessees of land

located within or receiving Klamath Project water from the following districts:

Enterprise Irrigation District

Klamath Basin Improvement District

Klamath Drainage District

Klamath Hills District Improvement Company

Klamath Irrigation District

Malin Irrigation District

13 The January 5, 2017 motion sought to renew an earlier motion to certify a class filed

by the plaintiffs in case number 1-591L on October, 11, 2001, along with their initial

complaint in case number 1-591L. In their October 11, 2001 motion, plaintiffs sought to

certify a class comprised of: “All landowners who possess appurtenant water rights in the

Klamath Basin and who receive their irrigation water from the Upper Klamath lake through

the Link River Dam.” On the same day, October 11, 2001, plaintiffs in case number 1-

591L filed a motion to hold their motion for class certification in abeyance until the issue

of liability was determined. On December 10, 2001, defendant filed an unopposed motion

requesting that the issue of class certification be addressed after the close of discovery.

The earlier motions relating to class certification before Judges Sypolt and Allegra were

apparently not addressed before Judge Allegra decided the issue of liability, the case was

appealed to the Federal Circuit, and then remanded to this court. On June 25, 2014,

plaintiffs filed a motion before Judge Allegra renewing their October 11, 2001 motion for

class certification in case number 1-591L. On October 2, 2014, Judge Allegra denied the

renewed motion for class certification, without prejudice, on the grounds that “such a

certification would require that discovery in this case be reopened, further delaying

resolution of this matter.” In the view of Judge Allegra, “the better course [was] to complete

discovery as to the plaintiffs currently before the court, with the hopes of bringing at least

some of the issues in this case to completion.”

28

Midland District Improvement Company

Pine Grove Irrigation District

Poe Valley Improvement District

Shasta View Irrigation District

Sunnyside Irrigation District

Tulelake Irrigation District

Van Brimmer Ditch Company

Westside Improvement District No. 4

Excluded from the class are landowners (or their lessees) located on the

east side of the Klamath Project who received Klamath Project water in

2001 from Gerber and Clear Lake Reservoirs.[ 14]

On January 10, 2017, plaintiffs filed a motion to amend their amended complaint in the

John Anderson Farms case to include a claim for a violation of the Klamath Compact, in

order to conform the allegations in the John Anderson Farms case with those in the Baley

case. The court granted plaintiffs motion on January 27, 2017.

A trial was held in the above-captioned cases in Washington, D.C. over the course

of ten days, which included an opportunity for a selection of the affected farmers to testify

and be heard. After a separate post-trial hearing on a pre-trial motion filed by defendant

to dismiss the Irrigation Districts as plaintiffs from the Baley case, plaintiffs filed a motion

to voluntarily dismiss the Irrigation Districts as plaintiffs. The court granted the motion,

and, because the previous lead plaintiff in case number 1-591L, Klamath Irrigation

District, was among those dismissed, also ordered that case number 1-591L be re-

captioned from Klamath Irrigation District, et al. v. United States to Lonny Baley, et al. v.

United States. Defendant filed a motion to dismiss, or in the alternative for summary

judgment, on the claims of any shareholders in the Van Brimmer Ditch Company,

including those of named plaintiffs James and Cheryl Moore, which was briefed by the

parties. The issue raised in this motion is addressed in the current opinion.

Just prior to trial, defendant and plaintiffs also filed cross-motions for partial

summary judgment on the nature of plaintiffs’ beneficial interest in the use of Klamath

Project water, and the possible effect of the contracts governing delivery on that interest.

In its motion, defendant asked the court to hold that “plaintiffs’ appurtenant right to receive

14 The class originally proposed by the plaintiffs and approved by the court on January

10, 2017 contained slightly different language. The parties subsequently modified the

class definition to the version quoted above as part of their joint proposed class notice

filed on February 27, 2017, which the court approved on the same day.

29

and use Klamath Project water is defined and limited by the contracts between the

districts and the United States and any individual Warren Act contracts that remain in

place” and that “plaintiffs’ interest in Project water, to the extent it may exist separately

from those contracts, cannot be severed from plaintiffs’ respective ownership of land for

the purposes of the Fifth Amendment.” In their cross-motions, plaintiffs asked the court to

hold that their alleged water rights were “property protected by the Fifth Amendment,

established under Oregon law, and that these property rights were unmodified by contract

in 2001 at the time of the taking.” This motion also is addressed in this opinion.

Defendant, plaintiffs, and third-party intervenor Pacific Coast Federation of

Fisherman’s Associations simultaneously filed post-trial briefs. The Klamath Tribes filed

a motion for leave to file a memorandum as amicus curiae, which was granted by the

court. Defendant, plaintiffs, and third-party intervenor subsequently filed their post-trial

reply briefs, with defendant filing a sur-reply on issues raised for the first time in plaintiffs’

reply brief. On May 22, 2017, plaintiffs filed a third amended complaint that reflected the

class certification approved by the court and the class notice plan subsequently approved

by the court. As noted above, in order to allow plaintiffs to begin the process of perfecting

the class in the event of a favorable decision or an appeal of this court’s decision, along

with their amended complaint, plaintiffs filed an entry of appearance list listing 1,151

landowners or lessees (or their representatives) who had submitted timely entry of

appearance forms. 15

DISCUSSION

As noted above, defendant’s motion to dismiss or for summary judgment as to the

claims of any shareholders of the Van Brimmer Ditch Company was deferred to trial and

remains outstanding. The court will turn to that motion first. The court will then proceed to

the merits of the case, plaintiffs’ claims that the government’s actions in 2001 constituted

takings under the Fifth Amendment to the United States Constitution or, as it relates to

some of the plaintiffs, a violation of the Klamath Compact.

15 At the request of the court, on September 8, 2017, defendant filed a status report

summarizing the initial results of its review of the entry of appearance forms. In its status

report, defendant states that its review of the entry of appearance forms indicates that

there are over 3,600 individual parcels of land identified by the claimants in their entry of

appearance forms. Defendant states that it has no objection to the claims based on 709

of these parcels. Defendant states that there are additional claims for which it does not

object to the initial eligibility of the claimant who submitted the form, but notes that there

is more than one landowner identified for the parcel on the relevant Irrigation District’s

assessment roll. For those claims, defendant states that additional information and

clarification will be required. Finally, defendant notes that it has stated objections to the

initial eligibility to claims based on hundreds of other parcels.

30

I. Claims of Van Brimmer Ditch Company Shareholders

Although defendant’s motion regarding the claims of the Van Brimmer Ditch

Company shareholders is titled as a motion to dismiss or alternatively for summary

judgment, the motion never cites the standard of review for a motion to dismiss under

Rule 12 of the Rules of the Rules of the United States Court of Federal Claims (RCFC)

(2017) or the particular provision of RCFC 12 under which defendant seeks to bring its

motion. Indeed, defendant’s motion never even mentions RCFC 12. Instead, the only

standard of review discussed by defendant in its motion is the standard for summary

judgment under RCFC 56. Moreover, certain evidence defendant cites in support of its

motion, such as a declaration submitted by former Van Brimmer Ditch Company

President Gary Orem, the 1909 contract between the Van Brimmer Ditch Company and

the United States, and even the trial testimony of James Moore, would generally be

inappropriate to consider under a motion to dismiss under RCFC 12. The court, therefore,

will treat defendant’s motion as one for summary judgment under RCFC 56.

RCFC 56 is similar to Rule 56 of the Federal Rules of Civil Procedure in language

and effect. Both rules provide that “[t]he court shall grant summary judgment if the movant

shows that there is no genuine dispute as to any material fact and the movant is entitled

to judgment as a matter of law.” RCFC 56(a) (2017); Fed. R. Civ. P. 56(a) (2017); see

also Alabama v. North Carolina, 560 U.S. 330, 344 (2010); Hunt v. Cromartie, 526 U.S.

541, 549 (1999); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Adickes

v. S. H. Kress & Co., 398 U.S. 144, 157 (1970); Biery v. United States, 753 F.3d 1279,

1286 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2014); Ladd v. United States,

713 F.3d 648, 651 (Fed. Cir. 2013); Minkin v. Gibbons, P.C., 680 F.3d 1341, 1349 (Fed.

Cir. 2012); Noah Sys., Inc. v. Intuit Inc., 675 F.3d 1302, 1309-10 (Fed. Cir. 2012);

Advanced Fiber Techs. (AFT) Trust v. J & L Fiber Servs., Inc., 674 F.3d 1365, 1372 (Fed.

Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2012); Fujitsu Ltd. v. Netgear Inc., 620

F.3d 1321, 1325 (Fed. Cir.), reh’g denied (Fed. Cir. 2010); Consol. Coal Co. v. United

States, 615 F.3d 1378, 1380 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2010),

cert. denied, 131 S. Ct. 2990 (2011); 1st Home Liquidating Trust v. United States, 581

F.3d 1350, 1355 (Fed. Cir. 2009); Arko Exec. Servs., Inc. v. United States, 553 F.3d 1375,

1378 (Fed. Cir. 2009); Casitas Mun. Water Dist. v. United States, 543 F.3d 1276, 1283

(Fed. Cir. 2008), reh’g and reh’g en banc denied, 556 F.3d 1329 (Fed. Cir. 2009); Moden

v. United States, 404 F.3d 1335, 1342 (Fed. Cir.), reh’g and reh’g en banc denied (Fed.

Cir. 2005); Am. Pelagic Fishing Co., L.P. v. United States, 379 F.3d 1363, 1370-71 (Fed.

Cir.), reh’g en banc denied (Fed. Cir. 2004), cert. denied, 545 U.S. 1139 (2005); Mata v.

United States, 114 Fed. Cl. 736, 744 (2014); Leggitte v. United States, 104 Fed. Cl. 315,

317 (2012); Arranaga v. United States, 103 Fed. Cl. 465, 467-68 (2012); Cohen v. United

States, 100 Fed. Cl. 461, 469 (2011); Boensel v. United States, 99 Fed. Cl. 607, 610

(2011).

A fact is material if it will make a difference in the result of a case under the

governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; see also Marriott

Int’l Resorts, L.P. v. United States, 586 F.3d 962, 968 (Fed. Cir. 2009) (quoting Anderson

v. Liberty Lobby, Inc., 477 U.S. at 248); Mata v. United States, 114 Fed. Cl. at 744;

Arranaga v. United States, 103 Fed. Cl. at 467-68; Thompson v. United States, 101 Fed.

31

Cl. 416, 426 (2011); Cohen v. United States, 100 Fed. Cl. at 469. Irrelevant or

unnecessary factual disputes do not preclude the entry of summary judgment. See

Anderson v. Liberty Lobby, Inc., 477 U.S. at 247-48; see also Scott v. Harris, 550 U.S.

372, 380 (2007); Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1257 (Fed. Cir.

2001); Gorski v. United States, 104 Fed. Cl. 605, 609 (2012); Walker v. United States, 79

Fed. Cl. 685, 692 (2008); Curtis v. United States, 144 Ct. Cl. 194, 199, 168 F. Supp. 213,

216 (1958), cert. denied, 361 U.S. 843 (1959), reh'g denied, 361 U.S. 941 (1960).

When reaching a summary judgment determination, the judge’s function is not to

weigh the evidence and determine the truth of the case presented, but to determine

whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S.

at 249; see, e.g., Schlup v. Delo, 513 U.S. 298, 332 (1995); Ford Motor Co. v. United

States, 157 F.3d 849, 854 (Fed. Cir. 1998) (“Due to the nature of the proceeding, courts

do not make findings of fact on summary judgment.”); TigerSwan, Inc. v. United States,

118 Fed. Cl. 447, 451 (2014); Dana R. Hodges Trust v. United States, 111 Fed. Cl. 452,

455 (2013); Cohen v. United States, 100 Fed. Cl. at 469-70; Boensel v. United States, 99

Fed. Cl. at 611; Macy Elevator, Inc. v. United States, 97 Fed. Cl. 708, 717 (2011); Dick

Pacific/GHEMM, JV ex rel. W.A. Botting Co. v. United States, 87 Fed. Cl. 113, 126 (2009);

Johnson v. United States, 49 Fed. Cl. 648, 651 (2001), aff’d, 52 F. App’x 507 (Fed. Cir.

2002), published at 317 F.3d 1331 (Fed. Cir. 2003). The judge must determine whether

the evidence presents a disagreement sufficient to require submission to fact finding, or

whether the issues presented are so one-sided that one party must prevail as a matter of

law. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 250-52; Jay v. Sec’y of Dep’t of

Health and Human Servs., 998 F.2d 979, 982 (Fed. Cir.), reh’g denied and en banc

suggestion declined (Fed. Cir. 1993); Leggitte v. United States, 104 Fed. Cl. at 316. When

the record could not lead a rational trier of fact to find for the nonmoving party, there is no

genuine issue for trial, and the motion must be granted. See, e.g., Matsushita Elec. Indus.

Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Advanced Fiber Techs. (AFT) Trust

v. J & L Fiber Servs., Inc., 674 F.3d at 1372; Marriott Int’l Resorts, L.P. v. United States,

586 F.3d at 968; Am. Seating Co. v. USSC Grp., Inc., 514 F.3d 1262, 1266 (Fed. Cir.),

reh’g en banc denied (Fed. Cir. 2008); Rothe Dev. Corp. v. U.S. Dep’t of Def., 262 F.3d

1306, 1316 (Fed. Cir. 2001); Hall v. Aqua Queen Mfg., Inc., 93 F.3d 1548, 1553 n.3 (Fed.

Cir. 1996). In such cases, there is no need for the parties to undertake the time and

expense of a trial, and the moving party should prevail without further proceedings.

In appropriate cases, summary judgment:

saves the expense and time of a full trial when it is unnecessary. When the

material facts are adequately developed in the motion papers, a full trial is

useless. “Useless” in this context means that more evidence than is already

available in connection with the motion for summary judgment could not

reasonably be expected to change the result.

Dehne v. United States, 23 Cl. Ct. 606, 614-15 (1991) (quoting Pure Gold, Inc. v. Syntex,

(U.S.A.) Inc., 739 F.2d 624, 626 (Fed. Cir. 1984)), vacated on other grounds, 970 F.2d

890 (Fed. Cir. 1992) (citation omitted); see also Vivid Techs., Inc. v. Am. Sci. & Eng'g,

Inc., 200 F.3d 795, 806 (Fed. Cir. 1999) (“The purpose of summary judgment is not to

32

deprive a litigant of a trial, but to avoid an unnecessary trial when only one outcome can

ensue.”); Metric Constr. Co., Inc. v. United States, 73 Fed. Cl. 611, 612 (2006).

Summary judgment, however, will not be granted if “the dispute about a material

fact is ‘genuine,’ that is, if the evidence is such that a reasonable [trier of fact] could return

a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; see

also Long Island Sav. Bank, FSB v. United States, 503 F.3d 1234, 1244 (Fed. Cir.), reh’g

and reh’g en banc denied (Fed. Cir. 2007), cert. denied, 555 U.S. 812 (2008); Eli Lilly &

Co. v. Barr Labs., Inc., 251 F.3d 955, 971 (Fed. Cir.), reh’g and reh’g en banc denied

(Fed. Cir. 2001), cert. denied, 534 U.S. 1109 (2002); Gen. Elec. Co. v. Nintendo Co., 179

F.3d 1350, 1353 (Fed. Cir. 1999); TigerSwan, Inc. v. United States, 118 Fed. Cl. at 451;

Stephan v. United States, 117 Fed. Cl. 68, 70 (2014); Gonzales-McCaulley Inv. Group,

Inc. v. United States, 101 Fed. Cl. 623, 629 (2011). In other words, if the nonmoving party

produces sufficient evidence to raise a question as to the outcome of the case, then the

motion for summary judgment should be denied. Any doubt over factual issues must be

resolved in favor of the party opposing summary judgment, to whom the benefit of all

presumptions and inferences runs. See Ricci v. DeStefano, 557 U.S. 557, 586 (2009);

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. at 587-88; Yant v. United

States, 588 F.3d 1369, 1371 (Fed. Cir. 2009), cert. denied, 131 S. Ct. 69 (2010);

Dethmers Mfg. Co. v. Automatic Equip. Mfg. Co., 272 F.3d 1365, 1369 (Fed. Cir. 2001),

reh’g and reh’g en banc denied, 293 F.3d 1364 (Fed. Cir. 2002), cert. denied, 539 U.S.

957 (2003); Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d at 1257; Wanlass v.

Fedders Corp., 145 F.3d 1461, 1463 (Fed. Cir.), reh’g denied and en banc suggestion

declined (Fed. Cir. 1998); see also Am. Pelagic Co. v. United States, 379 F.3d at 1371

(citing Helifix Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339, 1345-46 (Fed. Cir. 2000)); Dana R.

Hodges Trust v. United States, 111 Fed. Cl. at 455; Boensel v. United States, 99 Fed. Cl.

at 611 (“‘The evidence of the nonmovant is to be believed, and all justifiable inferences

are to be drawn in his favor.’” (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 255)

(citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. at 587-88; Casitas

Mun. Water Dist. v. United States, 543 F.3d at 1283; Lathan Co. Inc. v. United States, 20

Cl. Ct. 122, 125 (1990))); see also Am. Seating Co. v. USSC Grp., Inc., 514 F.3d at 1266-

67; Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d at 807. “However, once a moving

party satisfies its initial burden, mere allegations of a genuine issue of material fact without

supporting evidence will not prevent entry of summary judgment.” Republic Sav. Bank,

F.S.B. v. United States, 584 F.3d 1369, 1374 (Fed. Cir. 2009); see also Anderson v.

Liberty Lobby, Inc., 477 U.S. at 247-48.

The initial burden on the party moving for summary judgment to produce evidence

showing the absence of a genuine issue of material fact may be discharged if the moving

party can demonstrate that there is an absence of evidence to support the nonmoving

party’s case. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); see also Riley &

Ephriam Constr. Co. v. United States, 408 F.3d 1369, 1371 (Fed. Cir. 2005); Crown

Operations Int’l Ltd. v. Solutia Inc., 289 F.3d 1367, 1377 (Fed. Cir.), reh’g denied (Fed.

Cir. 2002); Trilogy Commc’ns, Inc. v. Times Fiber Commc’ns, Inc., 109 F.3d 739, 741

(Fed. Cir.) (quoting Conroy v. Reebok Int’l, Ltd., 14 F.3d 1570, 1575 (Fed. Cir. 1994),

reh’g denied and en banc suggestion declined (Fed. Cir. 1995)), reh’g denied and en

banc suggestion declined (Fed. Cir. 1997); Lockwood v. Am. Airlines, Inc., 107 F.3d 1565,

33

1569 (Fed. Cir. 1997); Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d at 807; RQ

Squared, LLC v. United States, No. 12-527C, 2015 WL 170230, at *6 (Fed. Cl. Jan. 14,

2015). If the moving party makes such a showing, the burden shifts to the nonmoving

party to demonstrate that a genuine dispute regarding a material fact exists by presenting

evidence which establishes the existence of an element essential to its case upon which

it bears the burden of proof. See Celotex Corp. v. Catrett, 477 U.S. at 322; see also

Wavetronix LLC v. EIS Elec. Integrated Sys., 573 F.3d 1343, 1354 (Fed. Cir. 2009); Long

Island Sav. Bank, FSB v. United States, 503 F.3d at 1244; Florida Power & Light Co. v.

United States, 375 F.3d 1119, 1124 (Fed. Cir. 2004); Schoell v. Regal Marine Indus., Inc.,

247 F.3d 1202, 1207 (Fed. Cir. 2001); Am. Airlines, Inc. v. United States, 204 F.3d 1103,

1108 (Fed. Cir. 2000); Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d at 807;

Rasmuson v. United States, 109 Fed. Cl. 267, 271 (2013). However, “a non-movant is

required to provide opposing evidence under Rule 56(e) only if the moving party has

provided evidence sufficient, if unopposed, to prevail as a matter of law.” Saab Cars USA,

Inc. v. United States, 434 F.3d 1359, 1369 (Fed. Cir. 2006).

Even if both parties argue in favor of summary judgment and allege an absence of

genuine issues of material fact, the court is not relieved of its responsibility to determine

the appropriateness of summary disposition in a particular case, and it does not follow

that summary judgment should be granted to one side or the other. See Prineville Sawmill

Co. v. United States, 859 F.2d 905, 911 (Fed. Cir. 1988) (citing Mingus Constructors, Inc.

v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)); see also Marriott Int’l Resorts,

L.P. v. United States, 586 F.3d 962, 968–69 (Fed. Cir. 2009); B.F. Goodrich Co. v. U.S.

Filter Corp., 245 F.3d 587, 593 (6th Cir. 2001); Atl. Richfield Co. v. Farm Credit Bank of

Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000); Chevron USA, Inc. v. Cayetano, 224 F.3d

1030, 1037 n.5 (9th Cir. 2000), cert. denied, 532 U.S. 942 (2001); Bubble Room, Inc. v.

United States, 159 F.3d 553, 561 (Fed. Cir. 1998) (“The fact that both the parties have

moved for summary judgment does not mean that the court must grant summary

judgment to one party or the other.”), reh’g denied and en banc suggestion declined (Fed.

Cir. 1999); Allstate Ins. Co. v. Occidental Int’l, Inc., 140 F.3d 1, 2 (1st Cir. 1998); Massey

v. Del Labs., Inc., 118 F.3d 1568, 1573 (Fed. Cir. 1997); LewRon Television, Inc. v. D.H.

Overmyer Leasing Co., 401 F.2d 689, 692 (4th Cir. 1968), cert. denied, 393 U.S. 1083

(1969); Rogers v. United States, 90 Fed. Cl. 418, 427 (2009), subsequent determination,

93 Fed. Cl. 607 (2010); Consol. Coal Co. v. United States, 86 Fed. Cl. 384, 387 (2009),

aff’d, 615 F.3d 1378, (Fed. Cir.), and reh’g and reh’g en banc denied (Fed. Cir. 2010),

cert. denied, 131 S. Ct. 2990 (2011); St. Christopher Assocs., L.P. v. United States, 75

Fed. Cl. 1, 8 (2006), aff’d, 511 F.3d 1376 (Fed. Cir. 2008); Reading & Bates Corp. v.

United States, 40 Fed. Cl. 737, 748 (1998). The court must evaluate each party’s motion

on its own merits, taking care to draw all reasonable inferences against the party whose

motion is under consideration, or, otherwise stated, in favor of the non-moving party. See

First Commerce Corp. v. United States, 335 F.3d 1373, 1379 (Fed. Cir.), reh’g and reh’g

en banc denied (Fed. Cir. 2003); see also DeMarini Sports, Inc. v. Worth, Inc., 239 F.3d

1314, 1322 (Fed. Cir. 2001); Gart v. Logitech, Inc., 254 F.3d 1334, 1338–39 (Fed. Cir.),

reh’g and reh’g en banc denied (Fed. Cir. 2001), cert. denied, 534 U.S. 1114 (2002);

Oswalt v. United States, 85 Fed. Cl. 153, 158 (2008); Telenor Satellite Servs., Inc. v.

United States, 71 Fed. Cl. 114, 119 (2006).

34

Cross-motions are no more than a claim by each party that it alone is entitled to

summary judgment. The making of such inherently contradictory claims, however, does

not establish that if one is rejected the other necessarily is justified. See B.F. Goodrich

Co. v. United States Filter Corp., 245 F.3d at 593; Atl. Richfield Co. v. Farm Credit Bank

of Wichita, 226 F.3d at 1148; Allstate Ins. Co. v. Occidental Int’l, Inc., 140 F.3d at 2;

Rogers v. United States, 90 Fed. Cl. at 427; Reading & Bates Corp. v. United States, 40

Fed. Cl. at 748.

Defendant moves for the dismissal of the claims of any plaintiffs who are

shareholders of the Van Brimmer Ditch Company on the grounds that such claims are

barred by Judge Sypolt’s November 13, 2003 Order. Among the named plaintiffs, only

James and Cheryl Moore were shareholders of the Van Brimmer Ditch Company,

although the decision on defendant’s motion applies to any and all plaintiff class members

who receive their water as shareholders of the Van Brimmer Ditch Company. According

to defendant, the November 13, 2003 Order remains in effect because it was not

challenged by plaintiffs on appeal and the Federal Circuit ultimately declined to rule on

defendant’s argument that Van Brimmer’s claim was barred by the November 2003 Order.

See Klamath Irr. Dist. v. United States, 635 F.3d at 519 n.10. Defendant argues that both

the claims in the present cases of plaintiffs who are shareholders in the Van Brimmer

Ditch Company and those that were at issue in case 003 of the Klamath Adjudication are

based on the right to use the 50 cfs of water identified in Van Brimmer’s 1909 contract

with the United States. Defendant argues that for plaintiffs who are shareholders of the

Van Brimmer Ditch Company, such as James and Cheryl Moore, their shares in Van

Brimmer Ditch Company stock are the source of their right to receive Klamath Project

water. According to defendant, this means that, unlike other plaintiffs in these cases, the

plaintiffs who are shareholders of the Van Brimmer Ditch Company do not claim a

beneficial interest in Klamath Project waters, but, instead, hold a proportionate share of

the 50 cfs of water that was the subject of the Van Brimmer Ditch Company’s 1909

contract with the United States. According to defendant, these rights are identical to the

rights asserted by the Van Brimmer Ditch Company in the Klamath Adjudication and,

therefore, barred by Judge Sypolt’s November 13, 2003 Order.

Plaintiffs reject defendant’s argument that the November 13, 2003 Order remains

valid and continue to argue that the rights asserted by the Van Brimmer shareholders are

not the same as those that were at issue in the Klamath Adjudication. Plaintiffs argue that

the Judge Sypolt’s November 13, 2003 Order “no longer serves any legitimate purpose”

because “[t]he reason for the 2003 order no longer exists.” According to the plaintiffs, the

purpose of Judge Sypolt’s November 13, 2003 Order was to address defendant’s May

10, 2002 motion to stay the then-titled Klamath Irrigation District case, now identified as

the Baley case, case number 1-591L, until the Klamath Adjudication was decided, and

because the Klamath Adjudication was completed on February 28, 2014, the Order is

“now moot.” Plaintiffs also argue that the claims of the Moores and other plaintiffs who

are Van Brimmer Ditch Company shareholders are not based on their ownership of Van

Brimmer Ditch Company stock, but, instead, are based on their beneficial interests in

Klamath Project waters just like all other plaintiffs in the above-captioned cases.

35

The court turns first to plaintiffs’ argument that Judge Sypolt’s November 13, 2003

Order is “now moot” because it was intended only to address defendant’s May 10, 2002

motion to stay case number 1-591L, pending the conclusion of the Klamath Adjudication.

Initially, the court notes that the plain language of the November 13, 2003 Order contains

no language describing its effects as temporary. Instead, the Order appears to impose,

without qualification, a permanent bar on the types of claims plaintiffs may bring, stating:

“plaintiffs are barred from making any claims or seeking any relief in this case based on

rights, titles, or interests that are or may be subject to determination in the Adjudication,”

clearly referring to the Klamath Adjudication.

Although Judge Sypolt’s Order is extremely short and not the clearest, the

language of the November 13, 2003 Order does not support plaintiffs’ argument that the

only purpose of the Order was to address defendant’s motion so stay. The November 13,

2003 Order decided both defendant’s May 10, 2002 motion to stay the case on the

grounds that issues relevant to the case were the subject of the then ongoing Klamath

Adjudication and plaintiffs’ September 22, 2003 motion for summary judgment that the

property rights determination in the Klamath Adjudication was irrelevant to plaintiffs’

interest in the then-titled Klamath Irrigation District case. After finding, in favor of plaintiffs,

that “it appear[ed]” that plaintiffs in Klamath Irrigation District “assert no property interest

determinable in the Adjudication” and, therefore, denying defendant’s motion to stay the

case and granting plaintiffs' summary judgment motion, the court added language barring

claims subject to the Klamath Adjudication, stating that it was doing so “[b]ased on

plaintiffs’ assertion that no rights or interests in this case are affected by the Adjudication.”

This language from Judge Sypolt’s November 13, 2003 Order indicates that a purpose of

the Order was to prevent plaintiffs from later disavowing their assertion that none of the

rights they asserted in the Klamath Irrigation District case would be affected by the

Klamath Adjudication, the basis on which Judge Sypolt made her decision. To hold now

that the November 13, 2003 Order is no longer binding on the parties would not only be

contrary to its plain language, but also would undermine its apparent intent of holding

plaintiffs accountable for the statements they made in order to receive the benefit of the

court’s decision and avoid the stay sought by defendant. The court, therefore, holds that

the November 13, 2003 Order remains in effect and continues to bar plaintiffs from “from

making any claims or seeking any relief in this case based on rights, titles, or interests

that are or may be subject to determination in the Adjudication.” 16

Having determined that the November 13, 2003 Order remains in effect, the court

now turns to the issue of whether the claims of the Van Brimmer Ditch Company’s

shareholders are “based on rights, titles, or interests that are or may be subject to

determination in the [Klamath] Adjudication” and, thus, are barred by the November 13,

2003 Order. In claims 298, 321-6, and 321-7 of case 003 of the Klamath Adjudication, the

Van Brimmer Ditch Company and the United States brought competing claims based on

16 The court notes that, although the November 13, 2003 Order was addressed only to

plaintiffs in the Klamath Irrigation District case (the John Anderson Farms had not yet

been filed on November 13, 2003), a single class has since been certified for all of the

consolidated cases, Baley and John Anderson Farms.

36

the water rights appropriated by the Van Brimmer brothers in 1883 and 1884, and

subsequently at issue in the 1909 contract between Van Brimmer and the United States.

The Klamath adjudicator granted the Van Brimmer Ditch Company’s claim and denied

the claim of the United States, finding that the Van Brimmer Ditch Company held

appropriative water rights to 50 cfs of water, with a priority date of September 4, 1883,

and that the 1909 agreement limited Van Brimmer’s water rights to 50 cfs, but did not

transfer these rights to the United States. In a July 16, 2003 declaration submitted in case

1-591L in this court, Van Brimmer Ditch Company President Gary D. Orem describes the

water rights held by the Van Brimmer Ditch Company as arising in a virtually identical way

to the water rights the Van Brimmer Ditch Company claimed and was awarded in the

Klamath Adjudication. In his declaration, Mr. Orem describes the Van Brimmer brothers’

1883 and 1884 notices of appropriation of water from Lower Klamath Lake, the

completion of an irrigation ditch and beginning of irrigation in 1886, the conveyance of the

Van Brimmer brothers’ water rights to the Van Brimmer Ditch Company in 1903, and the

1909 contract between the Van Brimmer Ditch Company and the United States, in which

the United States Agreed to deliver 50 cfs of water from Lower Klamath Lake to the Van

Brimmer Ditch Company for irrigation purposes. Mr. Orem alleges, consistent with the

Van Brimmer Ditch Company’s claims in the Klamath Adjudication, that in the 1909

contract the United States “recognized” the Van Brimmer Ditch Company’s “vested right

to the use of fifty second feet of water for irrigation purposed from the water of Lower

Klamath Lake” and that the Van Brimmer Ditch Company’s right to the 50 cfs of water

“was never owned by the United States.” Based on the declaration of its own president,

therefore, the Van Brimmer Ditch Company’s claims in the present case appear to be

based on the same water rights that were at issue in the Klamath Adjudication.

Despite this evidence, plaintiffs argue that plaintiffs who are Van Brimmer Ditch

Company shareholders claims in the present litigation differ from those that were before

the Klamath Adjudication because, in the present cases, these plaintiffs’ claims are based

solely on their beneficial rights to Klamath Project water, rather than on their shares in the

Van Brimmer Ditch Company. The evidence, however, demonstrates that any interests

that the Van Brimmer Ditch Company’s users may have in Klamath Project water are

simply derivative of the Van Brimmer Ditch Company’s water rights. The Van Brimmer

Ditch Company’s articles of incorporation state that its purpose was to use the waters of

Lower Klamath Lake “as has heretofore been appropriated and used” by the Van Brimmer

brothers for irrigation purposes, and that each share was to be distributed for one acre of

irrigable land dependent upon the Van Brimmer Ditch Company ditch for its water supply.

Today, the Van Brimmer Ditch Company continues to distribute water to its users based

on the number of shares they hold in the company, with each share corresponding to the

right to receive water for one acre of irrigable land. Thus, the water rights held by the Van

Brimmer Ditch Company’s users are to a portion of the water rights held by the Van

Brimmer Ditch Company, i.e., to a portion of the water that was at issue in claims 298,

321-6, and 321-7 of case 003 of the Klamath Adjudication. As such, any claims brought

by the Van Brimmer Ditch Company’s users in the present litigation would be based on

water rights that were at issue in the Klamath adjudication and barred by the Judge

Sypolt’s November 13, 2003 Order. Defendant’s motion for summary judgment is granted,

and plaintiffs who are shareholders of the Van Brimmer Ditch Company, such as James

and Cheryl Moore, therefore, are barred from bringing any claims based on their rights to

37

receive Klamath Project water based on these shares. The claims of such plaintiffs are

dismissed.

II. Plaintiffs’ Takings and Klamath Compact Claims

Turning to the merits of the takings and Klamath Compact claims, the remaining

plaintiffs in the class actions allege that the government’s actions in 2001 constituted a

taking under the Fifth Amendment to the United States Constitution of their beneficial

interest in Klamath Project water and an impairment of their right to receive Klamath

Project water in violation of the Klamath Compact, for which they are owed just

compensation. In its February 17, 2011 decision remanding case number 1-591 to this

court, the United States Court of Appeals for the Federal Circuit instructed this court to

proceed with plaintiffs’ takings and Klamath Compact claims using the following two-step

process:

First, it should determine, for purposes of plaintiffs' takings and Compact

claims, whether plaintiffs have asserted cognizable property interests. . . .

To the extent the Court of Federal Claims determines that one or more

plaintiffs have asserted cognizable property interests, it then should

determine whether, as far as the takings and Compact claims are

concerned, those interests were taken or impaired.

Klamath Irr. Dist. v. United States, 635 F.3d at 519-20.

A. Have Plaintiffs Asserted Cognizable Property Interests

The court turns first to the issue of “whether plaintiffs have asserted cognizable

property interests.” Id. at 519. In response to a certified question sent by the Federal

Circuit in case number 1-591, the Supreme Court of Oregon set forth the following three

factor test for determining, “[u]nder Oregon law, whether plaintiffs acquired an equitable

or beneficial property interest in the water right”:

whether plaintiffs put the water to beneficial use with the result that it

became appurtenant to their land, whether the United States acquired the

water right for plaintiffs’ use and benefit, and, if it did, whether the

contractual agreements between the United States and plaintiffs somehow

have altered that relationship. In this case, the first two factors suggest that

plaintiffs acquired a beneficial or equitable property interest in the water

right to which the United States claims legal title, but we cannot provide a

definitive answer to the court’s second question because all the agreements

between the parties are not before us.

Klamath Irr. Dist. v. United States, 635 F.3d at 515 (quoting Klamath Irr. Dist. v. United

States, 227 P.3d at 1169). In its February 17, 2011 decision, the Federal Circuit instructed

that, in determining whether plaintiffs have asserted cognizable property interests, this

court “should direct its attention to the third part of the three-part test set forth by the

Oregon Supreme Court in response to our certified question 2.” Id. at 519. The Federal

Circuit explained:

38

That is because it is not disputed that, in this case, the first two parts of the

three-part test have been met. Specifically, the parties do not dispute that

plaintiffs have put Klamath Project water to beneficial use and that the

United States acquired the pertinent water rights for plaintiffs' use and

benefit.

Id. With regard to the third part of the Oregon Supreme Court’s test, the Federal Circuit

instructed this court to “address whether contractual agreements between plaintiffs and

the government have clarified, redefined, or altered the foregoing beneficial relationship

so as to deprive plaintiffs of cognizable property interests for purposes of their takings

and Compact claims.” Id. The Federal Circuit specified that this court

should give the government the opportunity to demonstrate how plaintiffs’

beneficial/equitable rights to the use of Klamath Project water have been

clarified, redefined, or altered. In that context, it will be the government’s

burden to demonstrate with specificity how the beneficial/equitable rights of

one or more plaintiffs have been clarified, redefined, or altered. After the

government has come forward with its showing, plaintiffs will have the

opportunity to respond.

Id. at 519–20 (footnotes omitted).

As instructed by the Federal Circuit, the court turns to the issue of whether

“contractual agreements between plaintiffs and the government have clarified, redefined,

or altered the foregoing beneficial relationship so as to deprive plaintiffs of cognizable

property interests for purposes of their takings and Compact claims.” Id. at 519.

Defendant argues that plaintiffs’ beneficial rights have been altered by language,

including the various shortage provisions, contained in the various contracts governing

delivery of Klamath Project water, in particular the Form A and B applications, the

repayment contracts with the Klamath Irrigation District and the Tulelake Irrigation District,

the Warren Act contracts, and the leases for lands in the National Wildlife Refuges.

Plaintiffs reject defendant’s assertion that the contracts have altered plaintiffs’ rights, on

the grounds that plaintiffs never signed any of the contracts that allegedly altered their

rights, nor are they in privity with anyone who did.

Initially, the court notes that, throughout its post-trial brief, defendant alleges that

the contracts governing the delivery of water from the Klamath Project “created” any

property rights in the Klamath Project water plaintiffs may have held. As a matter of law,

this is incorrect. Although it is unclear precisely what defendant means by this statement,

the Oregon Supreme Court explained in its March 11, 2010 decision that, “[u]nder Oregon

law, the water right became appurtenant to the land once the persons taking the water

from the Klamath Project applied it to their land and put it to beneficial use.” Klamath Irr.

Dist. v. United States, 227 P.3d at 1163. The Oregon Supreme Court went on to note that

any contractual agreements between plaintiffs and the United States could have “clarified,

redefined, or even altered” the relationship between the United States and the plaintiffs

on whose behalf the United States originally appropriated the waters of the Klamath

Project. Id. at 1165. For instance, such agreements could have caused plaintiffs to have

39

either acquired or lost rights to water that had also been put to beneficial use. See id.

(“For instance, we cannot foreclose the possibility that plaintiffs could have bargained

away any equitable or legal right to the water in return for a reduced payment schedule

or forgiveness of their debt. Conversely, the United States may have granted plaintiffs

either patents, water rights, or contractual rights that would be sufficient, as a matter of

state law, for plaintiffs to have acquired at a minimum an equitable property interest in the

water.”). The contracts, could not, however, by themselves create a right to beneficial use

in water. See id. at 1169 (setting forth the three factors that, under Oregon law, determine

“whether plaintiffs acquired an equitable or beneficial property interest in the water right”).

The court now turns to the specifics of each of the contracts governing the delivery of

Klamath Project water in order to determine if they clarified, redefined, or altered the rights

held by plaintiffs in Klamath Project water. Because the various agreements defendant

alleges affected plaintiffs’ rights differ significantly in history and language, the court

examines each set of contracts separately.

1. Form A and B Applications

The court first reviews the Form A and B applications. These applications for water

rights were used by the United States Department of the Interior in the early days of the

Klamath Project, prior to the establishment of Irrigation Districts. See Laws and

Regulations Relating to the Reclamation of Arid Lands, 45 L.D. 385, 406-8. The Form A

application was to be used by homesteaders settling into reclaimed lands, while the Form

B application was to be used by owners of private lands. Id. Defendant does not allege,

and there is no evidence in the record to suggest, that any of the plaintiffs signed any of

these applications. Instead, defendant argues that, because the terms and conditions of

the contracts continue to run with the land, the plaintiffs who are the successors-in-

interest to the signors of the Forms A and B applications remain bound by these terms

and conditions.

In support of its argument that the terms and conditions of Form A applications run

with the land, defendant points to the provision in the Form A applications which states:

“All of the within terms and conditions, in so far as they relate to said land, shall be a

charge upon said land to run with the title to same.” The meaning of the word “charge” in

this clause appears to be: “An encumbrance, lien, or claim.” Charge, Black’s Law

Dictionary 282 (10th ed. 2014) (“<a charge on property>”). Thus, it would appear, based

on this provision, that all of the applications’ provisions, including the shortage provisions,

were intended to run with the lands the applications concerned, and, therefore, bind the

signors’ successors-in-interest in those lands.

In response to the evidence offered by the defendant, plaintiffs point out that after

homesteaders who signed Form A applications completed the homesteading process,

they were issued patent deeds giving them ownership over the lands they homesteaded.

Such patent deeds were issued for each of properties identified with each of the Form A

applications admitted during trial. These patent deeds conveyed to the homesteaders

the Tract above described [in the patent deed], together with the right to the

use of water from the Klamath Reclamation Project as an appurtenance to

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the irrigable lands in said tract; TO HAVE AND TO HOLD the same,

together with all the rights, privileges, immunities, and appurtenances, of

whatsoever nature, thereunto belonging, unto the said [name] and to his

heirs and assigns forever . . . but excepting, nevertheless, and reserving

unto the United States, rights of way over, across, and through said lands

for canals and ditches constructed, or to be constructed, by its

authority . . . .

(capitalization in original). The patent deeds, thus, conveyed the land and an appurtenant

water right, while reserving the right of the United States to enter the lands for Klamath

Project purposes. Additionally, some of the patent deeds contained clauses reserving to

the United States any “fissionable” minerals contained in the lands or rights of way for the

maintenance of power transmission lines. The deeds make no mention, however, of any

other conditions on the property rights.

Although defendant argues that the “water right” conveyed by these patents “is the

water right described and defined by the Form A contract,” there is no indication in the

patent deeds that they were intended to incorporate the terms of the Form A applications.

“The general rule, long recognized in California, is that ‘“where a deed is executed in

pursuance of a contract for the sale of land, all prior proposals and stipulations are

merged, and the deed is deemed to express the final and entire contract between the

parties.”’” Ram's Gate Winery, LLC v. Roche, 235 Cal. App. 4th 1071, 1079, (Cal. App.

2015) (quoting Bryan v. Swain, 56 Cal. 616, 618 (1880); Riley v. North Star Mining Co.

93 P. 194 (Cal. 1907); Palos Verdes Corp. v. Housing Authority, 202 Cal. App. 2d 827,

836 (Cal. App. 1962)). Similarly, in Oregon, “[t]he general rule is that, when a deed to

property is delivered and accepted, that deed embodies the entire agreement of the

parties to a property sale. Any prior agreements or understandings regarding ‘title,

possession, quantity, or emblements of the land’ merge into the deed and are superseded

by the deed's terms.” Winters v. Cty. of Clatsop, 150 P.3d 1104, 1108 (Or. App. 2007)

(citing City of Bend v. Title & Trust Co., 134 Or. 119, 126-27 (1930); Archambault v. Ogier,

194 Or. App. 361, 369 (2004))). Thus, any obligations that encumbered the lands for

which Form A applications were signed were extinguished by the patent deeds unless

they also were included in the patent deeds. The Form A applications do not, therefore,

alter the plaintiffs’ equitable interests in Klamath Project water.

The Form B application does not contain a provision similar to the Form A

application stating that its conditions run with title to the lands. The only evidence

defendant offers in support of its contention that the provisions in the Form B applications

run with the land is that both the Form A and Form B applications were recorded in the

county records and that a Bureau of Reclamation senior water and land specialist, George

Driscol, testified at trial that the Bureau of Reclamation continues to refer to provisions of

the applications concerning the government’s rights to use the lands for constructing

Klamath Project facilities. It is not obvious why recording a contract with a county recorder

would bind anyone other than the signor of that contract to its terms, nor does defendant

offer an explanation. Further, general statements about the policies of the Bureau of

Reclamation regarding records are not evidence as to the legal significance of those

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records. As such, the court holds that the Form B applications do not alter any plaintiffs’

beneficial interests in Klamath Project water.

2. Repayment Contracts with Klamath Irrigation District and Tulelake

Irrigation District

Defendant also argues that the provisions of the repayment contracts between the

United States and the Klamath Irrigation District and between the United States and

Tulelake Irrigation District, including their shortage provisions, alter the water rights of

plaintiffs who receive water from these Irrigation Districts. Defendant’s reasoning is

essentially identical with respect to both of these contracts. Initially, defendant concedes

that no landowners within the Klamath Irrigation District or the Tulelake Irrigation District

are signatories to the Districts’ contracts with the United States. With regard to

landowners within the Klamath Irrigation District, defendant notes that plaintiffs’

predecessors-in-interest, after filing their Form B applications, formed the Klamath

Irrigation District. Defendant then asserts that, when the Klamath Irrigation District

entered into a contract with the government on November 29, 1954, these landowners

lands, and their appurtenant water rights, became “subject to the terms and conditions

contained in the KID [Klamath Irrigation District] contract.” Similarly, with regards to those

plaintiffs within the Tulelake Irrigation District, defendant notes that plaintiffs’

predecessors-in-interest, after filing their Form A applications, subsequently formed the

Tulelake Irrigation District and included their lands within the Tulelake Irrigation District.

Defendant then asserts that, when the Tulelake Irrigation District entered into a contract

with the government in 1956, these landowners’ lands, and their appurtenant water rights,

became “subject to the terms and conditions contained in the TID [Tulelake Irrigation

District] contract.”

The November 28, 1954 contract between the Klamath Irrigation District and the

United States was signed by these two parties only, and does not purport to bind any third

parties. Similarly, the September 10, 1956 contract between the Tulelake Irrigation District

and the United States is signed by these two parties only, and does not purport to bind

any third parties. Further, the only purposes of the contracts appear to have been to have

the Irrigation Districts assume the costs of repaying the United States for the construction

of the Klamath Project and to transfer to the Irrigation Districts the operation of the

Klamath Project works delivering the water to the lands within the Irrigation Districts. The

preamble to the Klamath Irrigation District’s contract states that the District is

“obligated . . . to repay to the United States that part of the expenditures made by the

United States in the construction of the Project which is properly allocable to the District”

and that “the District . . . desires to enter into an amendatory contract with the United

States, which would provide for the District to take over the operation and maintenance

of certain of the Project works.” Similarly, the preamble to the Tulelake Irrigation District’s

contract states that it is entering into the contract for “furnishing by the United States of a

water supply from the [Klamath] Project works and for the repayment of the construction

charges” of the Klamath Project, and that because both parties wanted to provide “for the

transfer to the District of the operation and maintenance of works and properties used or

useful for the delivery of water to and protection of the lands within the District.” The

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contracts then set forth the respective obligations of the Irrigation Districts and the United

States in operating these works.

Nowhere do the contracts purport to alter or otherwise impact any landowner’s

water rights, which defendant admits were already appurtenant to the lands within the

Klamath Irrigation District and the Tulelake Irrigation District prior to the creation of these

Irrigation Districts. Further, it is not correct to argue that the individual landowners within

the Klamath and Tulelake Irrigation Districts are subject to the terms of the contracts,

which are addressed directly to the Irrigation Districts and relate to activities the Irrigation

Districts would have to carry out in their corporate capacities. For instance, both contracts

require that, “[t]he District shall, at its expense . . . maintain all water measuring and

controlling devices and gauges as have been constructed or installed by the United States

or by the District in connection with the transferred works,” and that, “[t]he District shall,

at its own expense, keep a reasonably accurate record of all crops raised . . . on District

lands.” Nor does defendant provide alternative legal grounds arising outside of the

language of the contracts as to why individual landowners would be bound by their terms.

That the plaintiffs’ predecessors-in-interest created the Klamath Irrigation District and the

Tulelake Irrigation District, does not, as defendant asserts, imply that the plaintiffs’ lands

are “subject to the terms and conditions” of the contracts entered into between these

Irrigation Districts and the United States. Defendant has failed to meet its burden of

demonstrating that plaintiffs’ rights have been altered by the November 29, 1954 contract

between the Klamath Irrigation District and the United States or by the September 10,

1956 contract between the Tulelake Irrigation District and the United States.

3. Warren Act Contracts

Defendant also argues that the rights of plaintiffs who receive their water under

individual Warren Act contracts or from an Irrigation District receiving water pursuant to a

Warren Act contract, are altered by the terms of these contracts, including their shortage

provisions. Warren Act contracts governing the delivery of water to ten Irrigation districts,

the Enterprise Irrigation District, the Klamath Basin Improvement District, the Klamath

Drainage District, the Malin Irrigation District, the Midland District Improvement Company,

the Pine Grove Irrigation District, the Poe Valley Improvement District, the Shasta View

Irrigation District, the Sunnyside Irrigation District, and the Westside Improvement District,

were admitted into evidence at trial. Additionally, three Warren Act contracts governing

the delivery of water to the predecessors-in-interest of two named plaintiffs in the above-

captioned cases were also admitted into evidence at trial. With regard to both sets of

contracts, defendant argues that “the right of the landowner to receive water . . . is defined

and limited by the terms of the applicable Warren Act contract.” Plaintiffs argue that the

Warren Act contracts entered into by the Irrigation Districts cannot affect the rights of

individual plaintiffs because the plaintiffs themselves were not a party to these contracts.

Unlike the contracts entered into between the Klamath Irrigation District and the

Tulelake Irrigation District with the United States, the Warren Act contracts do not focus

only on repayment to the United States for the construction of Klamath Project works and

the operation of these works. Instead, the Warren Act contracts demonstrate an additional

desire of the Irrigation Districts to secure water for their members. For instance, the

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contract with the Malin Irrigation District states that, “the District was organized for the

purpose of securing and distributing water for the irrigation of its lands, and desires the

United States to construct certain irrigation works and supply irrigation water from the

Klamath project for such district lands.” Further, unlike the Klamath Irrigation District and

Tulelake Irrigation District repayment contracts, the Warren Act contracts go beyond

describing the logistics of distributing water to define and set limits on the amount of water

that will be furnished by the United States to the Districts. For instance, the contract of

the Malin Irrigation District specifies the Klamath Project canal through which the United

States will release the water and sets three limits on the amounts that can be released,

stating that the amount: “shall not exceed the amount that can be furnished . . . at a cost

of Thirty-four Dollars ($34.00) per acre”; “nor shall it exceed two acre-feet per acre of

irrigable land during the usual irrigation season”; “and in no event shall it exceed 0.6 acre-

feet of water per irrigable acre in any one month.” Finally, the contracts set a priority for

the water vis-à-vis other Klamath Project appropriators, stating that the use rights

acquired by the contract are inferior to the rights of prior appropriators, such as the

Klamath Irrigation District, the Tulelake Irrigation District, and the Van Brimmer Ditch

Company. These contracts do not, therefore, simply alter the rights the United States was

appropriating on behalf of the Irrigation Districts or the individual contractors, they define

these rights. Because any right in Klamath Project water acquired by plaintiffs who

received water from an Irrigation District with a Warren Act contract could not have been

greater than the rights acquired by the Irrigation District, the water rights of such plaintiffs

are limited by the provisions of the Warren Act contracts.

The individual Warren Act contracts, like the Form A applications, and unlike the

Form B applications, make clear that their terms run with the land, stating: “The terms of

this contract shall inure to the benefit of and be binding upon the successors in interest

and assigns of the parties hereto.” The terms and obligations imposed by the individual

Warren Act contracts, thus, continue to bind the successors-in-interest of the signors of

the contract, including named plaintiffs Daniel G. and Delores Chin and Hill Land & Cattle

LLC. Similar to the Warren Act contracts entered into by Irrigation Districts, for which the

terms are identical or essentially identical to those included in the terms of the individual

Warren Act contracts, these individual Warren Act contracts do not just alter, but also

define, the water rights currently held by these successors-in-interest.

Defendant argues that the shortage provisions contained in the Warren Act

contracts mean that plaintiffs who receive water under an individual or Irrigation District

Warren Act contract “had no right to receive and use any water from the Klamath Project

in 2001.” 17 The shortage provisions in the Warren Act contracts appear in two separate

17Defendant also argues: “The Court should further hold that the ‘beneficial interest’ in

Klamath Project water resulting from the use of Project water delivered under these

Warren Act contracts is not a compensable property right separate and apart from

contracts and that plaintiffs’ claims sound in contract.” Such a conclusion would be

contrary to the Federal Circuit’s binding February 17, 2011 decision. In that decision, the

Federal Circuit quoted the Oregon Supreme Court’s three factor test for determining

whether plaintiffs had acquired a right of beneficial use in Klamath Project water:

44

forms. In the first, the United States is immune from liability resulting from water shortages

caused “[o]n account of drought, inaccuracy in distribution or other cause.” The other

contracts, however, do not include the phrase “other cause,” stating: “The United States

shall not be liable for failure to supply water under this contract caused by hostile

diversion, unusual drought, interruption of service made necessary by repairs, damages

caused by floods, unlawful acts or unavoidable accidents.”

In the circumstances of the present cases, the presence or absence of the two

words “other cause” in a Warren Act contract is dispositive. Although 2001 was a dry year,

the Bureau of Reclamation’s statements in 2001 make clear that the reason the Bureau

refused to supply water to the plaintiffs in 2001 was not because of drought, but because

of what it perceived as the requirements of the Endangered Species Act as set forth in

the FWS and NMFS Biological Opinions and of its tribal trust obligations towards the

Klamath, Yurok and Hoopa Valley Tribes. The Revised 2001 Operations Plan stated that

“water deliveries to farms and refuges within the Project service area” would be “severely

limited” as a result of the “Minimum UKL [Upper Klamath Lake] levels and Klamath River

flows [which] have been specified as a result of ESA consultation on listed species,” and

that these minimum Upper Klamath Lake levels and Klamath River flows “are consistent

with requirements of the ESA and Reclamation's obligation to protect Tribal trust

resources.” Similarly, the Department of the Interior news release announcing the

curtailment of water deliveries issued the same day as the release of the Revised 2001

Operations Plan, April 6, 2001, stated that no water was available for release to farmers

[W]hether plaintiffs put the water to beneficial use with the result that it

became appurtenant to their land, whether the United States acquired the

water right for plaintiffs' use and benefit, and, if it did, whether the

contractual agreements between the United States and plaintiffs somehow

have altered that relationship.

Klamath Irr. Dist. v. United States, 635 F.3d at 515 (quoting Klamath Irr. Dist. v. United

States, 227 P.3d at 1169). The Federal Circuit then concluded that in case 1-591 it was

undisputed that plaintiffs had met the first two parts of the test: “that plaintiffs have put

Klamath Project water to beneficial use and that the United States acquired the pertinent

water rights for plaintiffs' use and benefit.” Id. at 519. Given the undisputed testimony of

the plaintiffs regarding their prior use of Klamath Project water on their land and the

undisputed evidence that the purpose of the Klamath Project was to provide water to

farmers like the plaintiffs, the first two factors of the Oregon Supreme Court’s test remain

undisputed. That leaves only the third factor, “whether the contractual agreements

between the United States and plaintiffs somehow have altered that relationship.” Id.

While a contractual arrangement could certainly serve to entirely eliminate a parties’ right

to beneficial use of Klamath Project water, see Klamath Irr. Dist. v. United States, 227

P.3d at 1165, the Warren Act contracts display no such intent. Indeed, while the contracts

place limits and conditions upon plaintiffs’ water rights, their stated intent is for the United

States to furnish water to plaintiffs.

45

because of the FWS and NMFS Biological Opinions “and the requirements of [the]

Endangered Species Act.” With regard to the Endangered Species Act, the Revised 2001

Operations Plan states:

The Lost River and shortnose suckers, coho salmon, and bald eagles are

listed under the ESA. Reclamation will manage Project water supplies in

accordance with the April, 2001, [sic] biological opinions issued by NMFS

and the U.S. Fish and Wildlife Service (FWS) for this year’s Project

operation. . . .”

With regard to its tribal trust obligations, the Revised 2001 Operations Plan states that

“Reclamation's Plan provides flow regimes and lake levels for protection of tribal trust

resources within the limitations of the available water supply.” The statements in these

contemporary documents are consistent with the testimony heard at trial. Jason

Cameron, who at the time of the trial was the deputy area manager of the Bureau of

Reclamation’s Klamath Basin area office, and who, in 2001, served as a water quality

technician at the Bureau of Reclamation, monitoring water quality related to the

endangered sucker fish, testified that the Bureau of Reclamation’s drought plan for the

Klamath Project, which is triggered when there is “an insufficient water supply,” was not

implemented in 2001 because there was no water supply available. Although Mr.

Cameron did not explain why no water was available, Karl Wirkus, the Area Manager of

the Bureau of Reclamation’s Klamath Basin area office in 2001 and the author of the

Revised 2001 Operations Plan, testified that the reason no water was available in 2001

was because all Klamath Project water was needed to satisfy the satisfy the requirements

of the reasonable and prudent alternatives set forth in the FWS and NMFS Biological

Opinions.

The Bureau of Reclamations’ decision to curtail water deliveries to plaintiffs in

2001, therefore, was, according to its own statements, not caused by a “hostile diversion,

unusual drought, interruption of service made necessary by repairs, damages caused by

floods, unlawful acts or unavoidable accidents.” Therefore, the shortage provisions in the

Warren Act Contracts that do not contain the phrase “other cause” are inapplicable in the

present cases. As such, plaintiffs whose claims arise from water they receive from

Irrigation Districts whose contracts with the United States contain such shortage

provisions, including the Klamath Drainage District, the Malin Irrigation District, the

Klamath Basin Improvement District, the Shasta View Irrigation District, the Sunnyside

Irrigation District, and the Westside Improvement District, hold beneficial rights to receive

Klamath Project water for which they may seek compensation under the Fifth Amendment

or the Klamath Compact. Additionally, the claims of any class members that are based

on parcels for which plaintiffs or plaintiffs’ predecessors-in-interest signed such a Warren

Act contract also hold beneficial rights to receive Klamath Project water for which they

may seek compensation under the Fifth Amendment or the Klamath Compact.

By contrast, the court finds that the phrase “other cause” in certain Warren Act

shortage provisions is broad enough to encompass shortages caused by the United

States’ tribal trust and Endangered Species Act obligations. Therefore, the shortage

provisions in Warren Act contracts which immunize the United States from liability due to

46

“other causes” are applicable in the present case. As such, plaintiffs whose claims arise

from water they receive from Irrigation Districts whose contracts with the United States

contain such shortage provisions, including the Enterprise Irrigation District, the Midland

District Improvement Company, the Poe Valley Improvement District, and the Pine Grove

Irrigation District, have had their beneficial rights to receive Klamath Project water altered

in such a way that they are barred from seeking compensation for a taking under the Fifth

Amendment or an impairment under the Klamath Compact of those rights in 2001.

Additionally, the claims of any class members that are based on parcels for which plaintiffs

or plaintiffs’ predecessors-in-interest signed such a Warren Act contract, including at least

claims for two parcels owned by Daniel G. and Delores Chin and one parcel owned by

the Hill Land & Cattle LLC in 2001, also are barred from seeking compensation for a

taking under the Fifth Amendment or an impairment under the Klamath Compact of those

rights in 2001.

4. Leased Lands in the National Wildlife Refuges

Defendant also argues that the water rights of plaintiffs who received their water

through leases for lands in the National Wildlife Refuges that sit within the Klamath Project

have been altered by the provisions of these leases, including their shortage provisions. 18

Plaintiffs do not attempt to rebut this argument.

These leases entitle their leaseholder to lease a defined parcel of land, “with

privileges and appurtenances,” and, thus, include the water rights appurtenant to the land.

Unlike the Warren Act contracts, the leases do not include any language defining the

leaseholder’s water right. The leases, however, state that they are leases made between

the Bureau of Reclamation and the lessee, and, that “in consideration for the rents and

covenants” contained in the leases, the Bureau of Reclamation will pr

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