Klamath Irrigation District v. United States

WALTERS, J.,

concurring.

The court answers “no” to the restated second question posed by the Federal Circuit: whether, under Oregon law, beneficial use alone is sufficient to acquire a beneficial or equitable property interest in a water right to which another person holds legal title. 348 Or at 40-41. 1 1 agree with that answer and with the majority’s further statement that, even considering additional factors, we cannot reach a definitive answer to a more pointed question — whether plaintiffs in this case acquired a beneficial or equitable property interest in a water right held by the United States. 348 Or at 50.

I write to explain the reasons that the latter, more specific, question is an open one that, in my view, cannot be resolved at this time on this record.

First, this case reaches us in a posture in which the following issues are contested in the Klamath Basin adjudication and have not been decided by any court: (1) whether beneficial use is necessary to the United States’ appropriation of water rights; (2) whether the United States has appropriated the water rights at issue here; and (3) whether plaintiffs also have appropriated water rights and own them independently or jointly with the United States. 348 Or at 36 n 14. In answering the questions posed by the Federal Circuit, we are nevertheless asked to assume that the United States has appropriated and acquired sole ownership of the water rights at issue. See 348 Or at 36-37 (“[W]e assume that the United States appropriated water rights pursuant to the *59 1905 statute and that it acquired and presently holds legal title to use the water for the purposes stated in its notice.”) (footnote omitted); see also 348 Or at 55 (summarizing assumptions used in answering certified questions). In other words, we are asked to assume that the United States has accomplished whatever measures were necessary to perfect appropriation, without deciding whether beneficial use by landowners was one of those measures and without deciding whether plaintiffs also appropriated and acquired ownership of the rights at issue.

When this court previously has considered the nature of the interests of water users or providers, it has done so on the premise that beneficial use is a necessary prerequisite to perfection of appropriation and in the context of discussing perfected (and sometimes certificated and thereby vested) appropriation. As the majority explains, it has been the law in Oregon since at least 1896 that appropriation is perfected “only when the ditches and canals are completed, the water diverted from its natural stream or channel, and actually used for beneficial purposes.” Nevada Ditch Co. v. Bennett, 30 Or 59, 90 , 45 P 472 (1896). Thus, as the court recently stated, in Fort Vannoy Irrigation v. Water Resources Comm., 345 Or 56, 88 , 188 P3d 277 (2008), a joint effort between landowners and irrigation companies or districts has been required to “bring the certificated water rights into existence” and beneficial use has been one action required in that joint effort. 2 When we are asked to assume instead, as we understand that we have been instructed to do, that beneficial use may not be necessary to perfected appropriation, and that plaintiffs do not hold perfected or certificated interests, our precedent, premised as it is on different assumptions, is of little assistance.

Second, the Federal Circuit Court has not defined what it means by the term “beneficial or equitable property interest.” This court’s prior consideration of the nature of the interests held by landowners who apply water to beneficial *60 use has not been for the purpose of determining whether those interests are “property” as that term is used in the United States or Oregon Constitutions or whether the government must pay just compensation if it “takes” those interests. 3 When the court’s prior cases use terms such as “equitable title,” or liken the relationships between the parties to other equitable relationships, they do so not only on the basis of assumptions that are inapplicable here, but also for the purpose of answering legal questions very different from the one that the Federal Circuit poses. A brief survey of the questions addressed in those cases demonstrates my point.

In Eldredge v. Mill Ditch Co., 90 Or 590 , 177 P 939 (1919), this court concluded that a quasi-public irrigation company served as the agent of its stockholders when it delivered water for their use. The court held that equity precluded a third-party judgment creditor from forcing a sale of the company’s interests to the detriment of the stockholders. Id. at 596 .

Re Rights to Waters of Silvies River, 115 Or 27 , 237 P 322 (1925), was a case in which three men posted a notice of appropriation and then formed a corporation to serve as their agent in constructing irrigation ditches and making water available for use. The court held that the priority date for the water right that the corporation acquired related back to the date of the men’s original notice of appropriation. Id. at 98-103 .

In In re Waters of Walla Walla River, 141 Or 492 , 16 P2d 939 (1933), this court reached a different conclusion concerning a disputed priority date. The court held that a private irrigation company that had appropriated water in 1903 was the principal and that landowners who were not shareholders in the company, but who put its water to beneficial use pursuant to rental contracts, served as the company’s agents. When some of the landowners later formed a new irrigation *61 company, the new water rights acquired did not relate back to the earlier 1903 appropriation because the landowners previously had not obtained “any rights in the use of the water supplied by [the original company] except those given by, and to the extent of, their rental contracts.” Id. at 498 .

In Fort Vannoy, the court noted that a statute that required an irrigation district to hold all property it acquired “in trust for * * * the uses and purposes set forth in the Irrigation District Law,” gave rise to a trust relationship between the irrigation district and its members, 345 Or at 85-86 (emphasis omitted), but the court characterized the relationship between the district and the landowners who put the water to beneficial use as one of principal (district) and agents (landowners). Id. at 88-90 . To resolve the particular question before it, the court looked to the statutory allocation of rights and responsibilities between the irrigation district, on the one hand, and its members and water users, on the other hand, and concluded that neither the members nor the users were “holder[s] of any water use subject to transfer.” Therefore, the court held, the members did not have the right to change the point of diversion associated with the water right. Id. at 86-93 .

Although in each of those cases “the water of a public stream [was] eventually applied to a beneficial use, and the general purposes of such appropriations accomplished,” Nevada Ditch, 30 Or at 98 , factors other than intended benefit or use determined the answers to the particular legal questions presented. And, for the most part, those cases involved the rights of third parties vis-a-vis the irrigation districts. Only Fort Vannoy decided the nature of the interests acquired by water users. In that case, it was the statutory allocation of rights and responsibilities, not whether the legislature intended that users benefit by the actions of irrigation districts, that was determinative.

Labels and short-hand descriptions used by the court in particular contexts for particular purposes do not resolve other legal questions, particularly difficult ones. In enacting and proceeding under the Reclamation Act, the United States intended, among other things, to provide some *62 benefit to the lands that it helped to irrigate. Our cases, however, have not decided whether a government’s intent to bestow such a benefit alone creates an interest of legal consequence. Without actually resolving the threshold legal issue of whether beneficial use is necessary to perfected appropriation by the United States, without a clear understanding of the federal standard that a “beneficial or equitable property interest” must meet, and without all the facts necessary to determine whether that standard has been met, we certainly can say that the answer to the Federal Circuit Court’s second question is “no,” but I emphasize that that is all that we can say.

Balmer and Linder, JJ., join in this opinion.

We do not expressly consider the interests of irrigation districts that “receive” water from the Klamath Basin Reclamation Project.

In Fort Vannoy, the water rights at issue were not only appropriated, they were also certificated. As the court explained in that case, “the issuance of a water right certificate is the act that vests a certificated water right in a party. See, e.g., ORS 537.250(3) (describing significance of issuance of water right certificate).” Fort Vannoy, 345 Or at 76 .

As we noted in Doyle v. City of Medford, 347 Or 564 , 570 n 4, 227 P3d 683 (2010), the question whether a state interest amounts to a federally protected property interest (in that case under the Due Process Clause) is a federal question. Although we can describe state interests, the legal conclusion as to whether those interests constitute “vested rights” or “property” is a federal question.