Reply Brief — Kansas v. Colorado

No. 105, Original

A Supreme Court, U.S.

(.*) PILED

In The

Supreme (Court of the United States

October Term, 1997

e

STATE OF KANSAS,

Plaintiff,

STATE OF COLORADO

+

On Exceptions To Second Report

Of The Special Master

+

REPLY BRIEF FOR KANSAS

OPPOSING THE EXCEPTIONS OF COLORADO

December 22, 1997

e

Carta J. STOVALL

Attorney General of Kansas

Joun W. Campsete

Chief Deputy Attorney General

Donato L. Prrts

Assistant Attorney General

Letanv E. Rotpes

Special Assistant

Attorney General

Joun B. Draper

Counsel of Record

Special Assistant

Attorney General

ANpDrew S. MONTGOMERY

Montcomery & ANnprews, P.A.

Post Office Box 2307

Santa Fe, New Mexico 87504-2307

(505) 982-3873

COCHRS LAY SHIR CERITPEG CO. eee 285-4006

OR CALL COLLECT (402) 342-285

an

QUESTIONS PRESENTED

This Court has held that water or money may be

awarded to an aggrieved State for the breach of a com-

pact apportioning an interstate stream. Texas v. New Mex-

ico, 482 U.S. 124, 130 (1987). The Court has determined

that such a breach occurred in this case. The questions

presented are:

1. If the aggrieved State’s remedy includes

money damages, does the Eleventh Amendment

to the United States Constitution preclude those

damages from being measured, in part, by the

value of the water to water users of the

aggrieved State?

2. Does the unliquidated nature of the

aggrieved State’s claim bar the award of pre-

judgment interest as a matter of law?

ii

TABLE OF CONTENTS

GETPOST CUM UTED 5 ccc ccesscccesccccescces

Cee GE Es hoc ccceccevenccccvesesvecss

TABLE OF AUTIIORITERS .....ccccccccccccnscccess

CONSTITUTIONAL PROVISIONS, TREATIES, STAT-

UTES, ORDIINANCES, AND REGULATIONS

EET 6.6: 56060 04 600-0000-ovencenesiondssseece

ET hd an eROEREES hed ednceescusteebeeton

SUMMARY OF ARGUMENT................002000

I 606.060 646-idndascenscdesesesae codes

I. THE ELEVENTH AMENDMENT DOES NOT

_ BAR KANSAS’ CLAIM FOR BREACH OF THE

COMPACT IN THIS PROPER ORIGINAL

PSS 440 bb 6cececenvasesdvnvasenceessosecce

Il. THE UNLIQUIDATED NATURE OF KANSAS’

CLAIM FOR DAMAGES DOES NOT BAR THE

AWARD OF PREJUDGMENT INTEREST AS

PART OF A COMPLETE REMEDY FOR COLO-

RADO’S BREACH OF THE COMPACT........

Ill. COLORADO’S PREDICTIONS OF “FAR-

REACHING AND UNINTENDED CONSE-

QUENCES” ARE UNFOUNDED..............

CPU 6c oe nsnvecnccececrecescosscccesteses

22

iii

TABLE OF AUTHORITIES

Page

Cases

Alfred L. Snapp & Son v. Puerto Rico, ex rel., Barez,

Se GRE Be CR ce ccccccccccsccecscccegeet> Ob OB

American Airlines, Inc. v. Wolens, 513 U.S. 219

ciasddéndqdentansydendecssoscosessesessesess 34

Blatchford v. Native Village of Noatak, 501 U.S. 775

PPPPPPPPPTTTITTITTET TTT TTT TT irri rite ree 7e

> of Milwaukee v. Cement Div., Nat'l Gypsum Co.,

BS US. 16D (BGTB) ..ccccccccccvcccses 22, 23, 24, 26

Colorado v. Kansas, 320 U.S. 383 (1943) ... 14, 20, 30, 33

~~ Cattle Co. v. Great Western Sugar Co., 393 F.

1165 (D. Colo. 1975), aff’d, 544 F.2d 436

adh Cir. 1976), cert. denied, 429 U.S. 1094

ei Gataep i apslai reinstate Cana 27

Georgia v. Tennessee Copper Co., 206 U.S. 230 (1907).. 16, 18

Gorenstein Enters., Inc. v. Quality Care-USA, Inc.,

874 F.2d 431 (7th Cir. 1989)......... cee cece eeneees 25

Hawaii v. Standard Oil Co., 405 U.S. 251 (1972)....... 20

Hinderlider v. La Plata River & Cherry Creek Ditch

Ca., 304 US. G2 (ISSR)... cccccccccsscccess 13, 30, 31

Idaho v. Coeur d'Alene Tribe, 117 S. Ct. 2028 (1997)..... 9

In re Oil Spill by the Amoco Cadiz, 954 P.2d 1279

SY GS PN co oddcvcnccecsccececceccenscasesses 25

Kansas v. Colorado, 206 U.S. 46 (1907)...... 9, 16, 17, 18

Kansas v. Colorado, 514 U.S. 673 (1995) ......... 2, 5, 22

iv.

TABLE OF AUTHORITIES - Continued

Page

Kansas v. Colorado, 118 S. Ct. 39 (1997)............... 2

Martinez v. Continental Enters., 730 P.2d 308 (Colo.

ee hee Ue ded ete eiddduniwdhcueesekeess 27

Maryland v. Louisiana, 451 U.S. 725 (1981)

Apidae chee spdessdddedmionnene 8, 10, 19, 20, 21, 29

New Hampshire v. Louisiana, 108 U.S. 76 (1883)....... 18

North Dakota v. Minnesola, 263 U.S. 365 (1923)....... 18

Oklahoma ex rel. Johnson v. Cook, 304 U.S. 387 (1938) .... 19

Pennsylvania v. New Jersey, 426 U.S. 660 (1976)....... 10

Petty v. Tennessee-Missouri Bridge Comm'n, 359 U.S.

ee is ie Fee id deeb eb adeneeeouns 13

Poole v. Fleeger, 36 U.S. (11 Pet.) 185 (1837).......... 13

Principality of Monaco v. Mississippi, 292 U.S. 313

tint tkten ced ee bE CeeehietheN ey SOCER bees neenee 9

Rhode Island v. Massachusetts, 37 U.S. (12 Pet.) 657

Ph: dutkecgheheknee ess apedaneedeneneeeseceed 9, 13

Texas v. New Mexico, 482 U.S. 124 (1987) ........ passim

West Virginia v. United States, 479 U.S. 305 (1987)

é4peeades eeuse esadsesshedadonbudesdeeareunes 24, 26, 27

West Virginia ex rel. Dyer v. Sims, 341 U.S. 22 (1951) .... 32

Wilkerson v. State, 830 P.2d 1121 (Colo. App. 1992) .... 27

Wyoming v. Colorado, 259 U.S. 419, modified, 260

U.S. 1 (1922), vacated and new decree entered,

Be Fe PP ce ceccccesccncsacccccescccesees 17

Wyoming v. Colorado, 286 U.S. 494 (1932) ............ 17

Wyoming v. Colorado, 298 U.S. 573 (1936) ............ 17

Wyoming v. Colorado, 309 U.S. 572 (1940) ............ 17

Vv

TABLE OF AUTHORITIES ~ Continued

Page

CONSTITUTIONAL PROVISIONS

United States Constitution, Eleventh Amendment .. . passim

STATUTES, TREATISES, AND OTHER AUTHORITIES

Arkansas River Compact, 63 Stat. 145 (1949) .... passim

BOT BAA oc cccvvccccoccoccnscsdesvevencscsncunnn 14

BE Bo 6s so cscntccevccssescssenttiatesssseuen 32

ROUTED Bec cescccccscccesccssccessesessscseucsunee 14

BE FI ones cocvessasesoscsssensiadctsesnnel 2

PP rT 14

Clayton Act § 4, 15 U.S.C. § 15.2.2... cece ee eee eee 21

Ohio River Valley Water Sanitation Compact, 54

BOND, TEs Ge on cccccccessesavescvscesveness 31, 32

Colo. Rev. Stat. § 5-12-102 (1973)..............0.c0e. 27

1949 Colo. Sess. Laws 485, codified at Colo Rev.

a: Pe GNM esc cccscdpceccdncncsesesens 31

1949 Kan. Sess. Laws 829, codified at Kan. Stat.

Sali. B GRP GUND 640.0000 stn0sscecscvsesrensen 31

D. Dobbs, Law of Remedies § 3.5 (1973) ............ 27

D. Dobbs, Law of Remedies § 3.6(3) (2d ed. 1993) .... 25

A. Kronman & R. Posner, The Economics of Con-

ee ee 34

vi

TABLE OF AUTHORITIES - Continued

Page

Restatement (Second) of Contracts § 347(a) (1979) .... 21

Restatement (Second) of Contracts § 33(2), and

EE CPs cccccccccctececesececsesacces 26

First Report of Special Master, Kansas v. Colorado,

No. 105, Orig. (July 1994) ................65, 2 5, 3%

Second Report of Special Master, Kansas v. Colo-

rado, No. 105, Orig. (Sept. 1997) .............. passim

Pee BE OI Dh cence cccccccccccccccccccceecces 9

Comment, State Protection of “ts Economy & Envi-

ronment: Parens Patriae Suits for Damages, 6

Colum. J. L. & Soc. Prob. 411 (1970).............. 21

Malina & Blechman, Parens Patriae Suits for Treble

Damages Under the Antitrust Laws, 65 Nw. U.

ees cc icdde eb beeess eee euceces« 21

Rothschild, Prejudgment Interest: Survey and

Suggestion, 77 Nw. U. L. Rev. 192 (1982) ...... 27, 28

1

REPLY BRIEF FOR KANSAS.

OPPOSING THE EXCEPTIONS OF COLORADO

The State of Kansas submits this Reply Brief in sup-

port of the Second Report‘of Arthur L. Littleworth, Spe-

cial Master, and in opposition to the State of Colorado's

Exceptions and Brief.

®

CONSTITUTIONAL PROVISIONS, TREATIES,

STATUTES, ORDINANCES, AND

REGULATIONS INVOLVED

The Colorado Exceptions involve:

1. The Eleventh Amendment to the United States

Constitution:

“The judicial power of the United States shall

not be construed to extend to any suit in law or

equity, commenced or prosecuted against one of

the United States by Citizens of another State, or

by Citizens or Subjects of any Foreign State.”

2. The Arkansas River Compact, 63 Stat. 145 (1949),

which is set forth in the Appendix to Colorado's Brief In

Support of Colorado’s Exceptions to the Second Report of

the Special Master.

7

STATEMENT

The Special Master submitted his Second Report in_

this proceeding on September 8, 1997, setting forth his.

recommendations to the Supreme Court on matters tried

and briefed since the issuance of the Opinion of the Court

in Kansas v. Colorado, 514 U.S. 673 (1995). The Court

received and ordered filed the Second Report and set the

schedule for filing exceptions and briefs. Kansas v. Colo-

rado, 118 S. Ct. 39 (1997). Colorado has filed two Excep-

tions to the Second Report of the Special Master and a

Brief in Support Thereof (“Colorado Brief”). Kansas has

filed no exceptions to the Second Report.

In this original action Kansas seeks enforcement of

the Arkansas River Compact (Compact) against Colorado.

The Special Master found ir the First Report of Special

Master, Kansas v Colorado, No. 105, Orig. (July 1994) (First

Report) thai “the evidence clearly showed that postcom-

pact well pumping in Colorado had seriously depleted

Arkansas Kiver flows into Kansas in violation of the

compact.” Second Report 1. The Compact requires that

waters of the Arkansas River not be materially depleted

in usable quantity or availability for use to the water

users of Colorado and Kansas. Article !V-D. In its May

1995 Opinion, the Court accepted the Special Master's

conclusion that postcompact well pumping in Colorado

had caused material depletions of usable Stateline flows

in violation of the Compact. Kansas v. Colorado, 514 U.S.

673, 693-694 (1995). Since the Court’s Opinion, trial and

briefing have proceeded before the Special Master

regarding quantification of the depletions in violation of

the Compact for the period 1950-1994, consideration of

Colorado's efforts to show that it has come into current

compliance with the Compact, and consideration of legal

issues related to remedies for past depletions. Second

Report 2. No evidence has yet been taken on the amount

of money damages or on whether repayment should be in

water or money.

As a result of these recent proceedings, the Special

Master has recommended that the Court find that deple-

tions in violation of the Arkansas River Compact for the

period 1950-1985 are the stipulated amount of 328,505

acre-feet’ and that depletions for the period 1986-1994 are

91,565 acre-feet. In addition, he has recommended

approval of his denial of Kansas’ Motion For Injunction,

by which Kansas sought to require Colorado to come into

immediate compliance with the Compact. The Special

Master has determined that, although Colorado has yet to

show that it is in compliance, it is making sufficient

efforts to preclude the need for interim injunctive relief at

this point in time. Further, the Special Master has

requested that the Stipulation between the States regard-

ing credits associated with the Offset Account in John

Martin Reservoir for Colorado Pumping, established by

the Arkansas River Compact Administration jointly with

the U.S. Army Corps of Engineers in 1997, be approved;

that evidence be received on whether the remedy for past

damages be in water or in money; that, if money damages

are awarded, those damages be based upon Kansas’ loss

rather than upon any gain to Colorado, subject to the

overriding consideration that the remedy provide a fair

and equitable solution; that, if the remedy includes

money damages, the Eleventh Amendment to the U.S.

Constitution be determined not to preclude basing the

damages to Kansas, in part, on losses incurred by its

water users, again subject to the overall consideration of

' One acre-foot is 325,851 gallons. The Supreme Court

Courtroom inside the pillars has a volume of approximately 3'/s

acre-feet.

fairness; and that the unliquidated nature of Kansas’

claim not bar the award of prejudgment interest, whether

the remedy includes money damages or water repay-

ment. Second Report 112-114, 4] 1-9.

In the first trial phase, Colorado offered its own

model to quantify the effects of postcompact pumping.

After the 1995 Opinion, Colorado withdrew its own

model in light of the fact that it showed greater deple-

tions than the original Kansas H-I Model. Id., at 7-10, 19.

in his Second Report, the Special Master approved

changes to the Kansas H-I Model that cause it to account

for depletions due to postcompact well pumping that are

considerably greater than those produced in the first trial

phase by the original version of the H-I Model. /d., at 20.

Based on that earlier version of the H-I Model, the States

stipulated that the depletions by Colorado of usable flow

in violation of the Compact, for the period 1950-1985

were 328,505 acre-feet. Id., at 11. The Special Master has

determined, however, that there are “solid indications”

that the H-I Model as used to arrive at the 328,505 figure

“may well underestimate depletions.” Id., at 11, 20. This

conclusion was based on testimony by experts for both

States. See id., at 20. In fact, for the period 1986-1994, the

Kansas EI-I Model approved by the Special Master

showed depletions to usable Stateline flow of 91,565 acre-

feet while the unchanged H-I Model proposed by Colo-

rado calculated usable depletions of only 30,700 acre-feet.

Second Report 46. The ratio of depletions of Stateline

flow to postcompact pumping varies depending on the

time period selected. See, e.g., id., at 19.

The Colorado Statement of the Case asserts that Kan-

sas complained for the first time about postcompact well

development in Colorado in 1984. Colorado Brief 2, 4.

While this is true, Colorado neglects to point out the

Special Master’s conclusion that Kansas was not guilty of

inexcusable delay in making its well-pumping claim and

that Colorado had not been prejudiced by Kansas’ failure

to press its claim earlier. Kansas v. Colorado, 514 U.S., at

687. The Court overruled Colorado’s exception to that

determination. Id., at 687-689. Moreover, as late as 1985,

Colorado officials refused to permit an investigation by

the Arkansas River Compact Administration of well

development in Colorado because, they claimed, the evi-

dence produced by Kansas did not suggest that well

development in Colorado had had an impact on usable

Stateline flow. Id., at 689.

The Colorado Statement also asserts that the Special

Master described Colorado’s compliance efforts as show-

ing “a most impressive record” and “remarkable” pro-

gress. Colorado Brief 3. Actually, the “most impressive

record” referred to by Colorado is taken from this state-

ment of the Special Master: “These reports, and the exten-

sive testimony of the Colorado State Engineer and others,

show a most impressive record in beginning to control

postcompact pumping.” Second Report 47 (emphasis

added). Likewise, Colorado's claim of “remarkable” pro-

gress refers to this statement of the Special Master:

“(Given the ineffectual and frustrating history of Colorado’s

previous efforts to regulate wells, the State’s current pro-

gress is quite remarkable.” Ibid. (emphasis added); see

also, ¢.g., First Report 139 (“Colorado allowed hundreds

of wells to be constructed in the river alluvium without

regard to their impact upon the surface flows of the

Arkansas River, either in Colorado or in Kansas.”). The

Special Master also noted that Kansas has substantial

concerns about the sufficiency of the current efforts,

which is still unproved by Colorado. Second Report 47,

54-56. To date, Colorado has not shown that it has

brought its water users into compliance with the Com-

pact. See Second Report 113, { 4.

S

SUMMARY OF ARGUMENT

With regard to its first Exception, the State of Colo-

rado would have this Court upend much of its jurispru-

dence regarding the status, interpretation, and

enforcement of interstate compacts approved by Con-

gress. Colorado seeks to achieve this goal by asking the

Court to ignore the Court’s precedents with regard to

interstate compacts in favor of Colurado’s arguments

based on cases that did not involve compacts.

Colorado also seeks to avoid this Court’s precedents

by suggesting that Kansas is seeking money damages

owed to Kansas’ water users which could be collected

directly by the water users but for the Eleventh Amend-

ment to the U.S. Constitution. The State of Kansas seeks

nothing of the kind. Kansas simply seeks a contract rem-

edy for breach of the Arkansas River Compact, which is,

after all, a contract. The Special Master has determined

that Colorado has violated its obligations under the

Arkansas River Compact by failing to deliver some

420,000 acre-feet of water for the period 1950-1994. Colo-

rado has filed no exception on that point. Kansas asks for

the value of the water which should have been delivered

to the State of Kansas at the Stateline, and related losses,

including diminution in the value of Colorado’s perfor-

mance occasioned by its delay.

This Court has stated in no uncertain terms that it

has compiete judicial power to provide one State a rem-

edy for the breach by another State of an interstate com-

pact. The effect of adopting Colorado’s position on its

Exceptions would be to eviscerate the remedy the Court

has declared it will provide. Colorado asserts that Kansas

is entitled to recover for its proprietary and quasi-sover-

eign interests so long as Kansas does not recover losses to

its citizens. But there is little recovery left if Kansas’

losses cannot be measured, in part, by the value of water

to the Kansas farmers and other Kansas citizens.

The Colorado argument against allowing “recovery

for losses to Kansas farmers” dissipates when it is real-

ized that the loss to Kansas farmers is merely a measure,

perhaps the best available measure, of a part of the dam-

ages to the State of Kansas. The damages to the State of

Kansas consist in part of the value of some 420,000 acre-

feet not delivered by Colorado in violation of the

Arkansas River Compact between 1950 and 1994.

Appraisals of the value of water at the time that Colorado

illegally withheld it may also be available, and, if reliable,

such evidence would be offered by Kansas in support of

its claim for damages. It is anticipated, however, that for

much of the period of Colorado’s noncompliance the

method of valuing the water illegally withheld will con-

sist of evidence of the value the water would have had in

the hands of Kansas farmers. That is not to say that

Kansas is seeking recovery for its farmers or that it stands

in the shoes of its farmers. Rather, Kansas is seeking

damages in its own right as a sovereign State and party to

the Cumpact, and it expects to measure those damages, in

part, by the value of the water in question to Kansas

farmers in some or all of the years in question.

Further, as explained below, Kansas’ quasi-sovereign

interests provide an independent basis, consistent with

the Eleventh Amendment, for the recovery Kansas seeks.

With regard to Colorado’s second Exception, this

Court has held that the award of prejudgment interest is

in no way punitive, but rather, is a basic-element of a

complete remedy. This Court has long recognized that

claims that are unliquidated when brought should nev-

ertheless normally constitute the basis for awarding inter-

ect to the aggrieved periy for the loss in value resulting

from the defendant's delay in performance. This doctrine

has been recognized not only between private parties, but

also where a State is the defendant. Awarding such inter-

est simply provides the aggrieved plaintiff with a com-

plete remedy for losses suffered.

+

ARGUMENT

I. THE ELEVENTH AMENDMENT DOES NOT BAR

KANSAS’ CLAIM FOR BREACH OF THE COM-

PACT IN THIS PROPER ORIGINAL ACTION

The Special Master determined that a case between

sister States involving sovereignty or quasi-sovereignty is

regarded strictly as state litigation, to which the Eleventh

Amendment does not apply. Second Report 103 (citing

Maryland v. Louisiana, 451 U.S. 725, 745, n. 21 (1981)). The

Special Master relied, in particular, on this Court's pro-

nouncement in Texas v. New Mexico, 482 U.S. 124 (1987),

that “[i]n proper original actions, the Eleventh Amendment is

no barrier, for by its terms, it applies only to suits by citizens

against a State.” Second Keport 102 (quoting Texas v. New

Mexico, 482 U.S., at 130) (emphasis in Second Report).

The Special Master's determination finds strong sup-

port in this Court’s Eleventh Amendment decisions dat-

ing from the time of the Amendment's adoption thraugh

the present day. As this Court most recently emphasized,

the sovereign immunity enacted by the Eleventh Amend-

ment does not extend to cases “where there has been ‘ “a

surrender of this immunity in the plan of the conven-

tion.” °” Idaho v. Coeur d’Alene Tribe, 117 S. Ct. 2028, 2033

(1997) (quoting Principality of Monaco v. Mississippi, 292

U.S. 313, 322-323 (1934) (quoting The Federalist No. 81)).

One of the types of cases in which there has been a

surrender of immunity is suits between sister States.

Blatchford v. Native Village of Noatak, 501 U.S. 775, 782

(1991); Rhode Island v. Massachusetts, 37 U.S. {12 Pet.) 657,

720 (1838). The States, by ratifying the plan of the conven-

tion, consented to this Court’s “complete judicial power

to adjudicate disputes among them” in original actions.

Texas v. New Mexico, 482 US., at 128.2 No such judicial

power could be exercised if the States had reserved their

sovereign immunity to such suits.

In short, this Court’s

“original jurisdiction is not affected by the pro-

visions of the Eleventh Amendment which only

withholds federal judicial power in suits against

2 This surrender of immunity was deemed necessary in the

plan of the convention to effect resolution of disputes between

the States by means other than diplomacy and war. Alfred L.

Snapp & Son v. Puerto Rico, ex rel., Barez, 458 U.S. 592, 601 (1982);

Kansas v. Colorado, 206 U.S. 46, 97 (1907).

10

a State ‘by Citizens of another State, or by Citi-

zens or Subjects of any Foreign State. Thus, an

original action between two States only violates

the Eleventh Amendment if the plaintiff State is

actually suing to recover for injuries to specific

individuals.” Maryland v. Louisiana, 451 U.S. 725,

745, n. 21 (1981).

The Court's qualification is necessary to prevent cir-

cumvention of the Eleventh Amendment “by the simple

expedient of bringing an action in the name of a State” to

redress private grievances; a State may not invoke this

Court’s original jurisdiction “to prosecute purely per-

sonal claims of [its] citizens.” Pennsylvania v. New Jersey,

426 U.S. 660, 665 (1976) (per curiam). Rather,

“a State has standing to sue only when its sover-

cign or quasi-sovereign interests are implicated

and it is not merely litigating as a volunteer the

personal claims of its citizens.” [bid.

The Special Master concluded that Kansas’ suit is no

mere expedient by which to raise private grievances of its

citizens:

“Of course, this action is no mere contrivance by

Kansas to obtain damages for its water users.

Rather, it is the State of Kansas that seeks dam-

ages, which it contends should be measured in

part by the losses suffered by individual

farmers.” Second Report 88.

The Special Master added,

“So long as the suit is not a subterfuge for

recovery by individuals on their individual

claims, quasi-sovereignty militates against rejec-

tion of any relevant evidence of injury.” /d., at

101,

11

Again, the Special Master’s conclusion is well

grounded in this Court’s decisions, including Texas v. New

Mexico in particular. It is unmistakable from that decision

that this Court contemplated a damages remedy based on

losses to water users in the plaintiff State, Texas. In

reference to the question of whe should actually receive

such a remedy, this Court acknowledged,

“It might be said that those users who have suf-

fered the water shortages caused by New Mexico's

underdeliveries over the years, rather than the

State, should be the recipients of damages ...." 482

U.S., at 131 (emphasis added).

This Court also acknowledged Texas’s objection to a mon-

etary remedy on the ground that “a money judgment

might find its way into the general coffers of the State,

rather than benefit those who were hurt.” Id., at 132, n. 7

(emphasis added). This Court ruled, however, that

“the basis on which Texas was permitted to

bring this original action is that enforcement of

the Compact was of such general public interest

that the sovereign State was a proper plaintiff,”

ibid.,

and that Texas accordingly “should recover any damages

that may be awarded, money it would be free to spend in

the way it determines is in the public interest.” Ibid. This

is a determination not that the Eleventh Amendment

precludes evidence of losses sustained by “users who

have suffered the water shortages,” but that the plaintiff

State is the proper party to seek recovery in the general

public interest for a breach of the compact. Referring to

Texas v. New Mexico, the Special Master in this case con-

cluded, “It is the same situation here. Any damages will

12

go to the State of Kansas, to be spent as it decides, and

not to individual water users.” Second Report 89.

Colorado nonetheless insists that Kansas is seeking

“to present and enforce individual claims of its citizens.”

Colorado Brief 9. The Special Master carefully considered

and rejected this contention. Unlike the cases on which

Colorado relies, Kansas’ suit is not a subterfuge for recov-

ery by individuals on their individual claims. Rather, as a

sovereign party to the Arkansas River Compact and the

representative of the general public interest within Kan-

sas, the State of Kansas is asserting both sovereign and

quasi-sovereign interests that it alone can enforce.

Colorado thus misapprehends the nature of Kansas’

claim in this suit. Kansas does not purport “to present

and enforce individual claims of its citizens,” Colorado

Brief 9. Rather, Kansas simply seeks to recover the value

of the water that Colorado failed to deliver to it at the

Stateline. One method of proving that value, and often

the only available method, is to determine the value that

the water likely would have produced for individual

users (as measured in crop yields, for example). Restora-

tion of that value to Kansas is not a recovery on individ-

ual claims, but merely a measure of the damages that

Kansas itself has suffered as a result of Colorado’s breach

of the Compact.

As the Special Master correctly recognized, Kansas

does not act as a collecting agent for individuals’ claims

when it asserts its own claim for breach of the Arkansas

River Compact. Second Report 88. Kansas brings this

action as a sovereign party to the Compact. As such it

asserts a sovereign interest in enforcing its rights under

13

the Compact. Kansas’ demand for recognition of these

rights by another sovereign is an “easily identified” sov-

ereign interest that-is properly asserted in this interstate

action. Alfred L. Snapp & Son v. Puerto Rico, ex rel., Barez,

458 U.S. 592, 601 (1982). The classic example of one

State’s demand for recognition from another is a border

dispute. Ibid.; see, e.g., Rhode Island v. Massachusetts, 37

U.S. (12 Pet.) 657, 725 (1838). Just as a State may demand

another sovereign’s recognition of rights in land divided

by a border, Kansas here seeks Colorado's recognition of

rights in interstate waters divided by the Compact. See

Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304

U.S, 92, 106 (1938) (States’ authority to apportion waters

of interstate stream by compact is equivalent to their

authority to adjust State boundaries by compact, which is

“a part of the general right of sovereignty”) (quoting

Poole v. Fleeger, 36 U.S. (11 Pet.) 185, 209 (1837)).

“ ‘(A] Compact is, after all, a contract.’ ” Texas v. New

Mexico, 482 U.S., at 128 (quoting Petty v. Tennessee-Mis-

souri Bridge Comm'n, 359 U.S. 275, 285 (1959) (Frankfurter,

J., dissenting)). Kansas is one of the two sovereign parties

to that contract, and this Court has stated firmly that it

can and will “provide one State a remedy for the breach

of another,” whether in water or in money. /d., at 128-130.

Kansas does not raise private or personal! claims of indi-

viduals under the Compact for the simple reason that no

such claims exist. As the Special Master recognized, Kan-

sas is the party to the Compact while its water users are

not. Second Report 103. Indeed, Colorado itself asserts

that “Kansas water users do not have a remedy” for

Colorado’s breach of the Compact. /d., at 100; accord

Colorado Brief 23. At Colorado’s request, this Court

14

enjoined Kansas water users from prosecuting individual

claims to water in the Arkansas River in the case that

formed the basis for the Compact. Colorado v. Kansas, 320

U.S. 383, 388, 391 (1943); see Arkansas River Compact,

Article II.

The plain language of the Compact similarly estab-

lishes that Kansas citizens have no claim to waters of the

Arkansas River except under Kansas’ authority. The Com-

pact provides that its references to the State of Kansas

“shall be construed to include any person” claiming

rights to the Arkansas River under the State's authority.

Arkansas River Compact, Article VII-A. Moreover, a

stated purpose of the Compact was to settle controversies

not only between the States of Kansas and Colorado but

also “between citizens of one and citizens of the other

State.” Arkansas River Compact, Article I-A. These terms

confirm that Kansas’ rights under the Compact subsume

the interests of its citizens and that Kansas is the only

party that can seek enforcement of those rights and inter-

ests.*

Colorado contradictorily argues that the Eleventh

Amendment does not bar Kansas’ remedy as long as the

remedy takes the form of water rather than money. Colo-

rado Brief 22; see Second Report 89-90 (observing that

* Colorado argues that although the Compact settles

disputes between one State and the other, and between the

citizens of one State and the citizens of the other, it does not

settle disputes between one State’s citizens and the other State.

Colorado Brief 21. But this fine parsing of Article I-A ignores the

provision in Article VII-A that the term “State” shall be

construed to include its water users.

15

Colorado’s proposed water remedy, which would benefit

individual water users, is inconsistent with its position on

the Eleventh Amendment). Colorado emphasizes, “Water

would be delivered to Kansas. Delivery to, and benefits to,

Kansas water users are matters left to Kansas.” Colorado

Brief 22 (Colorado's emphasis). Of course, the same is

true of money: “Any damages will go to the State of

Kansas, to be spent as it decides, and not to individual

water users.” Second Report 88-89. Kansas merely seeks

recovery of the monetary equivalent of the water that,

under Colorado’s proposal, would be delivered to the

Stateline.

Colorado also contends that the applicability of the

Eleventh Amendment depends “not on how the state

ultimately spends any damages it may recover, but on the

nature and origin of the claims on which damages are

based.” Colorado Brief 19, n. 11. Yet the “nature and

origin of the claim” that Kansas asserts are surely the

same whether recovery on that claim is in the form of

water or money. Kansas’ claim has its nature and origin

in the Compact and the Eleventh Amendment is no bar-

rier to a monetary remedy for such a claim. Texas v. New

Mexico, 482 U.S., at 130.

In sum, Colorado wholly ignores Kansas’ sovereign

interest in rectifying Colorado’s breach, characterizing

Kansas’ interests in this case solely as quasi-sovereign.

Colorado Brief passim. Colorado's failure to recognize

Kansas’ sovereign rights under the Compact leads Colo-

rado to its unfounded assertion that Kansas is overstep-

ping the bounds of its quasi-sovereign interests.

16

Over and above its sovereign interest in enforcing the

Compact, however, Kansas does indeed have quasi-sover-

eign interests that constitute an adequate and indepen-

dent basis for the recovery that Kansas seeks. See Alfred

L. Snapp & Son v. Puerto Rico, cx rel., Barez, 458 U.S., at

601-602 (“[q]uasi-sovereign interests stand apart from”

other interests, such as sovereignty, that the State may

assert). One of this Court's first decisions to recognize the

concept of quasi-sovereignty was Kansas v. Colorado, 206

U.S., at 99, which held, in the absence of an interstate

compact, that Kansas was entitled to invoke this Court's

original jurisdiction over its claim that Colorado had

diverted excessive amounts of water from the Arkansas

River. The Court explained:

“In this respect [Kansas] is in no manner evad-

ing the provisions of the Eleventh Amendment

to the Federal Constitution. It is not acting

directly_and solely for the benefit of any indi-

vidual citizen to protect his riparian rights.

Beyond its property rights it has an interest as a

State in this large tract of land bordering on the

Arkansas River. Its prosperity affects the general

welfare of the State. The controversy rises,

therefore, above a mere question of local private

right and involves a matter of state interest, and

must be considered from that standpoint. Geor-

gia v. Tennessee Copper Co., decided this day, post,

p. 230.” Ibid.

Colorado concedes that here, too, Kansas is not acting

solely for the benefit of its individual citizens but rather

has quasi-sovereign interests that are properly raised.

Colorado Brief 9; see Second Report 86-87 & n. 20. Colo-

rado contends, however, that Kansas’ remedy cannot be

17

based in any measure on losses to individual water users.

Colorado Brief 9-14. The decision in Kansas v. Colorado,

‘206 U.S. 46, itself is to the contrary. This Court analyzed

whether Kansas should receive more water based on

population and crop yields in the areas abutting the

Arkansas River in the two States. /d., at 108-113. It was

precisely the uses made by individual farmers — or the

diminution in such uses - that this Court deemed rele-

vant to the issue of whether Kansas was entitled to relief.

This Court reached the same result more explicitly in

a series of decisions concerning the apportionment of the

Laramie River. Wyoming v. Colorado, 259 U.S. 419, mod-

ified, 260 U.S. 1 (1922), vacated and new decree entered,

353 U.S. 953 (1957); Wyoming v. Colorado, 286 U.S. 494

(1932); Wyoming v. Colorado, 298 U.S. 573 (1936); Wyoming

v. Colorado, 309 U.S. 572 (1940). Under those decisions, a

State‘s interests in the apportionment of an interstate

stream are “indissolubly linked” with the interests of its

water users, 286 U.S., at 509; 259 U.S., at 468, and the

States’ rights under the equitable apportionment decree

in that proceeding were based on the rights of their water

users, 259 U.S., at 468; see 309 U.S., at 579-580. Here, the

Special Master reasoned that if evidence of individual

uses can be the basis of a decree apportioning water

between two States, as in Wyoming v. Colorado, it can

likewise be the basis of a claim for breach of the Compact

apportioning water between two States. Second Report

103.

Colorado seeks to distinguish the Laramie River deci-

sions on the ground that, “[a]lthough the states’ appor-

tionments were based on use by their respective water

users, they were not the same as those individual claims.”

18

Colorado Brief 20 (Colorado’s emphasis). But this asser-

tion actually supports the Special Master’s recommenda-

tion. For although Kansas’ claim for damages is based {in

part) on evidence of the value of water to individuals as a

function of the uses that they would make of it, its claim

is not the same as any individuals’ claims. Kansas’ rights

in the waters of the Arkansas River transcend an aggrega-

tion of its citizens’ simple property rights. Kansas v. Colo-

rado, 206 U.S., at 99; Georgia v. Tennessee Copper Co., 206

U.S. 230, 237 (1907).

The Colorado Brief gives greatest prominence to the

decision in North Dakola v. Minnesota, 263 U.S. 365 (1923).

Colorado Brief 6, 8, 10-12. As the Special Master

observed, however, this Court’s basis for dismissing

North Dakota’‘s claims for damages on behalf of individ-

ual farmers was that “recovery was sought for the claim-

ants themselves.” Second Report 95. The individual

claimants were financing the State’s prosecution of the

case, each claimant expected to share in any award of

damages “in proportion to the amount of his loss,” and it

was “inconceivable that North Dakota [was] prosecuting

this damage feature of its suit without intending to pay

over what it thus recoverjed] to those entitled.” 263 U.S.,

at 375. Simply stated, North Dakota was acting as a

collecting agent for specific individuals. See Second

Report 95.

The other cases on which Colorado principally relies

likewise involved a State’s prosecution of claims as a

collecting agent for identified individuals. In New Hamp-

shire v. Louisiana, 108 U.S. 76, 89 (1883), each of two

plaintiff States was

19

“nothing more nor less than a collecting agent of

the owners of the bonds and coupons, and while

the suits are in the names of the States, they are

under the actual control of individual citizens,

and are prosecuted and carried on altogether by

and for them.”

In Oklahoma ex rel. Johnson v. Cook, 304 U.S. 387, 395-396

(1938), the plaintiff State took legal title to claims against

the stockholders of a private, insolvent bank as a “mere

expedient for the purpose of collection,” and the State

sought recovery “solely for the benefit of the depositors

and creditors of the bank.” It was thus determined that

each of these suits was improper and should be dis-

missed.

As the Special Master observed, more recent deci-

sions applying the concept of quasi-sovereignty only

strengthen the determination that Kansas may properly

seek recovery measured by the harm to its water users.

Second Report 97-98 (noting that in recent years “there

has been some development of the Court's attitude

toward the coupling of private claims with those of a

state suing as quasi-sovereign”). In particular, Maryland v,

Louisiana, 451 U.S., at 739, holds that a State may pursue

its claim in an original action when (1) it alleges substan-

tial and serious injury to its proprietary interests, and (2)

it seeks to represent a great many citizens who are not

“likely” to have the incentive or recourse to assert their

claims individually. Here, Colorado does not dispute that

Kansas properly seeks relief for injury to its own propri-

etary rights. Second Report 86-87 & n. 20. Kansas also

seeks relief measured in part by the value of water to a

great many water users affected by Colorado’s admitted

20

breach of the Compact. Even insofar as such water users

can be identified, they “cannot be expected to litigate”

individual claims, Maryland v. Louisiana, 451 U.S., at 739,

for two reasons in this case: (1) Colorado itself contends

that they are foreclosed from any judicial recourse in

their own right, Second Report 100; Colorado Brief 23; see

Maryland v. Louisiana, 451 U.S., at 739; and (2) at the

request of Colorado, this Court enjoined their prede-

cessors in 1943 from pursuing private actions against

Colorado interests for water from the Arkansas River,

Colorado v. Kansas, 320 U.S., at 388, 391.

Colorado asserts that most quasi-sovereignty deci-

sions have involved claims for injunctive relief rather

than damages and that, although an injunction may prop-

erly benefit private individuals, damages awardable to a

State must neither benefit individuals nor account for

harm to them. Colorado Brief 17. After Maryland v. Louisi-

ana, however, it is clear that a State may recover damages

for harm to its quasi-sovereign interests and that such a

recovery may account for economic harm to a State’s

citizens. This Court upheld several States’ damages

claims on behalf of citizens who were natural gas con-

sumers, where the States’ claims were based on the con-

sumers’ payment of an allegedly unconstitutional state

tax. Maryland v. Louisiana, 451 U.S., at 739. Similarly, as

stated above, Texas v. New Mexico implicitly approves a

State’s recovery of damages measured by harm to the

water users who have suffered shortages. 482-U.S., at

131-132 & n. 7.

The decision in Hawaii v. Standard Oil! Co., 405 U.S.

251 (1972), on which Colorado relies, explicitly disclaims

any determination that the Eleventh Amendment bars a

21

State from seeking damages for harm to its citizens. In

holding that Hawaii could not recover damages under the

antitrust laws for harm to its citizens, this Court empha-

sized,

“The question in this case is not whether Hawaii

may maintain its lawsuit on behalf of its citi-

zens, but rather whether the injury for which it

seeks to recover is compensable under § 4 of the

Clayton Act.” Id., at 259.4

These decisions go further than is necessary in this

case in order to recognize Kansas’ claim under the Com-

pact. Kansas does not seek damages owed to its citizens.

It does not seek recovery of its citizens’ personal claims.

Kansas simply seeks to recover as a contracting party

“the loss in value to [Kansas] of [Colorado’s] perfor-

mance caused by its failure or deficiency,” Restatement

(Second) of Contracts § 347(a) (1979), as measured in part

* One law review article on which Colorado relies

(authored by counsel for the defendants in several parens patriae

antitrust suits) declares that States’ damages claims on behalf of

their citizens “represent a perversion, rather than a consistent

development([,] of the concept” of quasi-sovereignty. Malina &

Blechman, Parens Patriae Suits for Treble Damages under the

Antitrust Laws, 65 Nw. U. L. Rev. 193, 223 (1970). But Maryland

v. Louisiana effectively rejects this view. Another law review

article that Colorado cites actually conflicts with Colorado's

position because, consistent with Maryland v. Louisiana, the

article argues that a State may recover damages for harm to its

quasi-sovereign interests “when the damage is done to the

citizens of a state, but no individual is able to sue because his

injuries are not legally recognizable.” Comment, State

Protection of its Economy & Environment: Parens Patriae Suits

for Damages, 6 Colum. J. L. & Soc. Prob. 411, 417 (1970); cf.

Maryland v. Louisiana, 451 U.S., at 739.

22

by the value that the water would have yielded to water

users in Kansas if it had been delivered as promised. The

Eleventh Amendment does not impair Kansas’ right to a

suitable remedy, whether in water or money, for Colo-

rado’s breach of the Compact. Texas v. New Mexico, 482

U.S., at 130.

Il. THE UNLIQUIDATED NATURE OF KANSAS’

CLAIM FOR DAMAGES DOES NOT BAR THE

AWARD OF PREJUDGMENT INTEREST AS PART

OF A COMPLETE REMEDY FOR COLORADO’S

BREACH OF THE COMPACT

The timing of performance by Colorado of its duties

to deliver water under the Compact is essential: “The

critical matter is the amount of divertible flow at times

when water is most needed for irrigation.” Kansas v.

Colorado, 514 U.S., at 685. It is therefore appropriate that

the Special Master allowed for the possibility of prejudg-

ment interest, recommending:

“That the unliquidated nature of Kansas’ claim

for damages does not bar the award of prejudg-

ment interest, whether the remedy includes

money damages or water repayment; that the

possible award of prejudgment interest will

depend upon the evidence presented in future

trial proceedings.” Second Report 113-114, | 9.

The Special Master supports this recommendation per-

suasively, Second Report 105-111, noting this Court's

observation that “the venerable common-law rule that

prejudgment interest is not awarded on unliquidated

claims . . . has faced trenchant criticism for a number of

years” as stated by this Court in City of Milwaukee v.

23

Cement Div., Nat'l Gypsum Co., 515 U.S. 189, 197 (1995)

(footnote omitted); Second Report 106. The Court

explained: “The essential rationale for awarding prejudg-

ment interest is to ensure that an injured party is fully

compensated for its loss.” 515 U.S., at 195.

City of Milwaukee itself serves to refute most of Colo-

rado’s arguments. As the Special Master noted, this Court

accorded “little weight” to the argument that there was a

good faith dispute over liability. 515 U.S., at 196-197;

Second Report 109. Likewise, Colorado’s arguments that

there was a good-faith dispute over Compact compliance

in this case should also be given little weight. This is

consistent with the Court’s position that the purpose of

prejudgment interest is to compensate the plaintiff for

losses suffered rather than to punish the defendant for

deliberate wrongdoing or bad faith conduct:

“If interest were awarded as a penalty for bad

faith conduct of the litigation, the City’s argu-

ment would be well taken. But prejuc'gment

interest is not awarded as a penalty; it is merely

an element of just compensation.” 515 U.S., at

197.

The Court concluded:

“In sum, the existence of a legitimate difference

of opinion on the issue of liability is merely a

characteristic of most ordinary lawsuits. It is not

an extraordinary circumstance that can justify

denying prejudgment interest.” 515 U.S., at 198.

The Special Master also noted the statement by the

Court in City of Milwaukee that a “denial of prejudgment

interest would be unfair.” Second Report 109 (citing City

24

of Milwaukee, supra, at 199 (emphasis in the Court’s opin-

ion)). Thus, while Colorado asserts that imposition of

prejudgment interest would be unfair when there is a

good faith dispute over liability, City of Milwaukee holds

that, absent exceptional circumstances, denial of prejudg-

ment interest would itself be unfair.

Although City of Milwaukee arose in the admiralty

context, its rationale is far broader. As the Court stated,

“We have recognized the compensatory nature of pre-

judgment interest in a number of cases decided outside

the admiralty context.” 515 U.S., at 195, n. 7 (citations

omitted). The Court's first cited example was West Vir-

ginia v. United States, 479 U.S. 305 (1987), which, like this

case, was an action to enforce a contractual obligation

against a State. The Cuurt awarded prejudgment interest

against West Virginia notwithstanding the absence of a

statute authorizing such an award, on the ground that

“[plrejudgment interest is an element of complete com-

pensation.” Id., at 310 (citation and footnote omitted). The

Court went on to say:

“Prejudgment interest serves to compensate for

the loss of use of money due as damages from

the time the claim accrues until judgment is:

entered, thereby achieving full compensation for

the injury those damages are intended to

redress." Id., at 310, n. 2.

As the Special Master points out, the trend away from the

rule barring interest on unliquidated damages is clear:

“[Tlhe compensatory rationale for prejudgment interest

has emerged as the dominant principle.” Second Report

109-110. Following West Virginia v. United States, Judge

Posner stated:

25

“The areas in which interest is allowed .. . are

diverse. The time has come, we think, to gener-

alize, and to announce a rule that prejudgment

interest should be presumptively available to

victims of federal law violations. Without it,

compensation of the plaintiff is incomplete and

the defendant has an incentive to delay.” Gorens-

tein Enters., Inc. v. Quality Care-USA, Inc., 874

F.2d 431, 436 (7th Cir. 1989).

As the Special Master noted, courts have recognized that,

if prejudgment interest is not awarded, the defendant

may have an incentive to delay payment. Second Report

at 107 (citing D. Dobbs, Law of Remedies § 3.6(3) (2d ed.

1993); accord In re Oil Spill by the Amoco Cadiz, 954 F.2d

1279, 1332 (7th Cir. 1992) (per curiam) (“An injurer

allowed to keep the return on this money has profited by

the wrong.”).

Colorado makes several additional arguments

against an award of prejudgment interest. First it sug-

gests that there must be a clear obligation to pay prejudg-

ment interest before this Court should award it. Colorado

Brief 24. Colorado’s position seems to be that, if the

Compact does not expressly state that interest will be due

for violations of the Compact, then no such interest

should be allowed. Such an approach to the interpreta-

tion and enforcement of interstate compacts would be

contrary, however, to the jurisprudence of this Court. In

Texas v. New Mexico, 482 U.S. 124 (1987), the Court stated,

with regard to enforcement of the Pecos River Compact:

“A court should provide a remedy if the parties

intended to make a contract and the contract's

terms provide a sufficiently certain basis for

determining both that a breach has in fact

26

occurred and the nature of the remedy called

for. Restatement (Second) of Contracts § 33(2),

and Comment b (1981).” 482 U.S., at 129.

Significantly, the Court then went on to hold that the

absence from the Pecos River Compact of any- explicit

remedy provision, let alone « specific provision authoriz-

ing money damages, did not preclude the Court from

providing not only a remedy but a remedy in money

damages (if “fair and equitable”) for past violations of the

Pecos River Compact. Likewise, awarding prejudgment

interest as part of those money damages is well within

the Court’s “complete judicial power . . . to provide one

State a remedy for the breach of another.” Id., at 128.

Colorado also criticizes the Specia) Master's reliance

on cases involving statutory awards of prejudgment

interest. Colorado Brief 25. But as the Court said in City of

Milwaukee:

“Far from indicating a legislative determination

that prejudgment interest should not be

awarded, however, the absence of a statute

merely indicates that the question is governed

by traditional judge-made principles.” 515 U.S.,

at 194. ,

Moreover, this Court has already approved an award of

prejudgment interest on a contractual obligation in an

action against a State in the absence of a statute authoriz-

ing such interest. In West Virginia 0. United States, supra,

this Court approved the award of prejudgment interest

against the State of West Virginia, saying,

27

“In the absence of an applicable federal statute,

it is for the federal courts to determine, accord-

ing to their own criteria, the appropriate mea-

sure of damage, expressed in terms of interest,

for nonpayment of the amount found to be

due.” 479 U.S., at 308-309 (citations omitted).

In West Virginia, the Court noted that the state law of

the defendant State allowed prejudgment interest. 479

U.S., at 312, n. 5. Similarly here, although it is not control-

ling, Colorado law itself recognizes that interest is neces-

sary to provide a complete remedy and that prejudgmertt

interest may be awarded even on unliquidated claims.

See, e.g., Davis Cattle-Co. v. Great Western Sugar Co., 393 F.

Supp. 1165, 1181-1195 (D. Colo. 1975) (applying Colorado

law), aff’d, 544 F.2d 436, 441-442 (10th Cir. 1976), cert.

denied, 429 U.S. 1094 (1977). More recently, the Colorado

Supreme Court has stated: “When a Court appropriately

applies the doctrine of unjust enrichment, the unjustly

enriched party is generally liable for interest on the bene-

fits received.” Martinez v. Continental Enters., 730 P.2d 308,

317 (Colo. 1986) (citing D. Dobbs, Law of Remedies § 3.5

(1973)); see also Rothschild, Prejudgment Interest: Survey

and Suggestion, 77 Nw. U. L. Rev. 192, 204-206 & nn.

74-76, 80 (1982). Colorado statutes now require prejudg-

ment interest to be paid for property wrongfully withheld

whether the amount is liquidated or not. Colo. Rev. Stat.

§ 5-12-102 (1973). The State itself is subject to this rule

when it is a defendant in its own courts. Wilkerson v.

State, 830 P.2d 1121, 1127 (Colo. App. 1992). Thus,

although Colorado urges this Court not to “cast aside”

the rule against awarding prejudgment interest on unli-

quidated claims, Colorado Brief 26, Colorado itself ‘has

already done so for cases brought under Colorado law.

28

In sum, this Court has stated a broad rationale for

awarding prejudgment interest whether or not the under-

lying claim is liquidated. Consistent with this rationale,

the Special Master noted that “a majority of jurisdictions

reject the strict, traditional approach to awarding pre-

judgment interest.” Second Report 107 (citing Rothschild,

supra, at 204). The Court should apply the same rationale

in this case.

Il, COLORADO'S PREDICTIONS OF “FAR-REACH-

ING AND UNINTENDED CONSEQUENCES”

ARE UNFOUNDED

Colorado concludes its Brief by predicting a string of

“far-reaching and unintended consequences,” including

the following: (1) an unprecedented expansion of the

concept of quasi-sovereignty; (2) increased interstate liti-

gation; (3) decreased resolution of interstate disputes

through mutual accommodation and agreement; (4)

increased risk of double recoveries; and (5) increased

delay in enforcing interstate compacts. Colorado Brief

27-30. Each of these predictions is unfounded.

The prediction of an “unprecedented expansion of

the concept of quasi-sovereignty” is simply a restatement

of Colorado’s erroneous position on quasi-sovereignty.

Like the rest of the Colorado Brief, it misses the point that

Kansas is seeking to enforce its sovereign rights under

the Compact, not merely its quasi-sovereign interests.

Colorado argues that, if the Court overrules its excep-

tions, litigation between States in this Court would be

encouraged by “opening the door to recovery for losses

to individuals.” Colorado Brief 29. But Kansas is not

29

pressing its quasi-sovereign rights to recover “losses to

individuals.” Rather, Kansas seeks the appropriate rem-

edy, that is, a complete remedy, for the losses to. the State

of Kansas caused by Colorado’s breach of its obligations

to the State of Kansas under the Compact. Indeed, this

Court has emphasized the need to afford a State a remedy

for past breaches of an interstate water allocation com-

pact. Texas v. New Mexico, 482 U.S. 124, 128 (1987). More-

over, as explained above, allowing recovery for the actual

losses of citizens would be within the accepted doctrine

of quasi-sovereignty as set out in Maryland v. Louisiana,

451 U.S. 725, 739 (1981).

Colorado further asserts that formation of compacts

will be discouraged by a result that would expand the

effect of the Arkansas River Compact beyond its terms

for a violation which was not deliberate or willful, and

for which no statute of limitations has been recognized.

Colorado Brief 28-29. But under essentially similar cir-

cumstances the Court answered a similar argument from

New Mexico in the Pecos River litigation as follows:

“[G]lood-faith differences about the scope of

contractual undertakings do not relieve either

party from performance. . . . There is often a

retroactive impact when courts resolve contract

disputes about the scope of a promisor’s under-

taking; parties must perform today or pay dam-

ages for what a court decides they promised to

do yesterday and did not. In our view, New

Mexico cannot escape liability for what has been

adjudicated to be past failures to perform its

duties under the Compact.” Texas v. New Mexico,

482 U.S. 124, 129 (1987).

30

What Colorado is trying to do is exactly what this Court

would not allow New Mexico to do, that is, to escape the

lion’s share of liability for past failures to deliver water as

required under an interstate compact. In Texas v. New

Mexico, the Court rejected a notion similar to that pro-

pesed here by Colorado:

“We find no merit in [New Mexico}’s submis-

sion that we may order only prospective relief,

that is, requiring future performance of compact

obligations without a remedy for past breaches.

If that were the case, New Mexico’s defaults

could never be remedied. . . . [A] Compact when

approved by Congress becomes a law of the

United States, but ‘[a] Compact is, after all, a

contract.’ It remains a legal document that must

be construed and applied in accordance with its

terms.” 482 U.S., at 128 (citations omitted).

When Colorado entered into the Arkansas River Com-

pact, it fully realized the solemn nature of the obligations

it was undertaking. Ten years before the Arkansas River

Compact negotiations were completed, this Court said:

“Whether the apportionment of the water of an

interstate stream be made by compact between

the upper and lower States with the consent of

Congress or by a decree of this Court, the appor-

tionment is binding upon the citizens of each State

and all water claimants, even where the State had

granted the water rights before it entered into

the compact.” Hinderlider v. La Plata River &

Cherry Creek Ditch Co., 304 U.S. 92, 106 (1938).

The Hinderlider case was decided some five years before

the decision in Colorado v. Kansas, 320 U.S. 383 (1943),

which contained the suggestion to the States of Colorado

31

and Kansas that they resolve the equitable apportionment

of the Arkansas River through compact negotiations. Id.,

at 392 (citing, inter alia, Hinderlider v. La Plata River &

Cherry Creek Ditch Co.). Shortly thereafter, compact nego-

tiations were undertaken by Colorado and Kansas, and

the Arkansas River Compact was agreed to by the nego-

tiators in 1948 and approved by the legislatures and

Congress in 1949. 1949 Colo. Sess. Laws 485, § 1, codified

at Colo. Rev. Stat. § 37-69-101 (1973); 1949 Kan. Sess.

Laws 829, codified at Kan. Stat. Ann. § 82a-520 (1989); Act

of Congress of May 31, 1949, 63 Stat. 145. Thus, Colorado

had unmistakable notice that this Court would enforce

interstate compacts. That notice came from a case involv-

ing Colorado itself - Mr. Hinderlider was the Colorado

State Engineer. Hinderlider, 304 U.S., at 95. Further, if

interstate compacts were essentially unenforceable, as

Colorado, an upstream State, would seem to prefer, there

would be no incentive to undertake the substantial effort

on behalf of the States and Congress in negotiating such

compacts.

When the auditor of the State of West Virginia

refused to issue a warrant for payment of that State’s

contribution required to be paid under the Ohio River

Valley Water Sanitation Compact, 54 Stat. 752 (1940), the

controversy was brought to this Court, where it was

resolved against West Virginia. The Court stated:

“But a compact is after all a legal document.

Though the circumstances of its drafting are

likely to assure great care and deliberation, all

avoidance of disputes as to scope and meaning

is not within human gift. Just as this Court has

power to settle disputes between States. where

32

there is no compact, it must have final power to

pass upon the meaning and validity of com-

pacts. It requires no elaborate argument to reject the

suggestion that an agreement solemnly entered into

between States by those who alone have political

authority to speak for a State can be unilaterally

nullified, or given final meaning by an organ of

one of the contracting States. A State cannot be

its own ultimate judge in a controversy with a

sister State. To determine the nature and scope

of obligations as between States, whether they

arise through the legislative means of compact

or the ‘federal common law’ governing inter-

state controversies, is the function and duty of

the Supreme Court of the Nation.” West Virginia

ex rel. Dyer v. Sims, 341 U.S. 22, 28 (1951)

(emphasis added).

The Court thus required West Virginia to remedy past

failure to comply with the Ohio River Valley Water Sani-

tation Compact, including payment of money, just as

Colorado should be required to comply with the

Arkansas River Compact.

Colorado reteived substantial benefits from entering

into the Arkansas River Compact, including the benefits

to Colorado “arising from the construction, operation and

maintenance by the United States of John Martin Reser-

voir Project for water conservation purposes.” Arkansas

River Compact, Article I-B; see, e.g., First Report 87

(“Absent an agreement between the states, the Corps of

Engineers intended to release [conservation storage water

from John Martin Reservoir}.”). Colorado enjoys many

benefits on the Arkansas River which are protected by the

Arkansas River Compact, but it must also recognize and

33

comply with its rightful obligations under that same

Compact.

Colorado asserts that States are seeking to vindicate

quasi-sovereign interests “with increasing frequency” in

suits against defendants other than States, and that an

increased risk thus exists that such defendants will be

exposed to double liability. Colorado Brief 27. While the

five lower-court cases over two decades cited by Colo-

rado hardly represent an opening of the floodgates of

litigation, Colorado’s asserted concerns about the risk of

double recoveries are irrelevant in any event to the ques-

tions presented here. As the Special Master recognized,

Colorado itself contends that Kansas water users are fore-

closed from asserting individual claims against Colorado,

thus eliminating any such risk in this case. Second Report

100; Colorado Brief 23. Colorado fails to address the

Special Master’s observation that this Court enjoined, at

Colorado’s request, the assertion of claims by Kansas

farmers against Colorado interests on the Arkansas River.

Second Report 100; Colorado v. Kansas, 320 U.S. 383, 400

(1943).

Colorado fears that States will be deterred from

entering into compacts by the prospect of “potentially

enormous damages.” Colorado Brief 29. It also suggests

that States will be encouraged both to litigate (i.e., to seek

too much enforcement) and, contradictorily, to delay liti-

gation ({i.e., to seek too little enforcement). /bid.

These fears are belied by the very purpose of contract

law. Contract law provides a remedy for breach, ranging

from the enormous to the merely nominal, precisely in

34

order to facilitate commercial relations. “Market effi-

ciency requires effective means to enforce private agree-

ments.” American Airlines, Inc. v. Wolens, 513 U.S. 219, 230

(1995). Thus, it is Colorado’s urging to withhold critical

components of a complete remedy, not the Special Mas-

ter’s recognition of the need for such a remedy, that

would upset the stability of a contractual relationship and

would ultimately deter its formation.

“(Contract law’s] basic function is to provide a

sanction for reneging, which, in the absence of

sanctions, is sometimes tempting where the par-

ties’ performance is not simultaneous. . . . The

problem arises because the nonsimultaneous

character of the exchange offers one of the par-

ties a strategic advantage which he can use to

obtain a transfer payment that utterly vitiates

the advantages of the contract to the other party.

Clearly, if such conduct were permitted, people

would be reluctant to enter into contracts and the

process of economic exchange would be retarded.” A.

Kronman & R. Posner, The Economics of Con-

tract Law 4 (1979) (emphasis added).

As for the notion that a complete remedy would encour-

age too much or too little enforcement, a basic principle of

contract law is that the optimal level of enforcement is

precisely that which results in a complete remedy for a

breach. An interstate compact, as a species of contract,

should be enforced in accordance with its terms, Texas o.

New Mexico, 482 U.S., at 128, because “[a] remedy confined

to a contract’s terms simply holds parties to their agree-

ments.” American Airlines, Inc. v. Wolens, 513 U.S., at 229.

+

35

CONCLUSION

The State of Kansas respectfully requests that the

Court accept the Second Report of the Special Master,

overrule Colorado’s Exceptions, and remand the case to

the Special Master fo: proceedings not inconsistent with

the Second Report and the Opinion of the Court.

Respectfully submitted this 22nd

day of December, 1997,

Carta J. STOVALL

Attorney General of Kansas

Joun W. CAMmpseLt

Chief Deputy Attorney General

Donato L. Prrts

Assistant Attorney General

Letanp E, Ro ies

Special Assistant Attorney General

Joun B. Draper

Counsel of Record

Special Assistant Attorney General

Anprew S. MonTGOMERY

Montcomery & Anprews, P.A.

Post Office Box 2307

Santa Fe, New Mexico 87504-2307

(505) 982-3873