Opposition Brief — Kansas v. Colorado

Stpremo Sant TS”

FILED

3 MAR ? 2 2004

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“FICK CF CLE

No. 105, Original | OFFICE OF THE CLERK |

Jn the Supreme Court of the United States

STATE OF KANSAS, PLAINTIFF

.

STATE OF COLORADO

ON ENCKEPTIONS TOTHE FOURTH REPORT

OF THE N . MASTER

BRIEF FOR THE UNITED STATES

IN OPPOSITION TO THE EXCEPTIONS OF KANSAS

THEODORE B. OLSON

Solicitor General

Conusel af Record

THOMAS LL. SANSONE TCE

Assistant Attorney General

Le DWIN S. ANEROLER

Deputy Solicitor Geneval

Irn PL MINE AK

Assestanl lo the Solicitor

Geneval

PATIICEA WEISS

JAMES Dt Bois

Milorncys

Iieutiννilevt of duster

He, 22.0) 20540-0001

C202) 545-2246

QUESTIONS PRESENTED

The United States will address the following

questions:

1. Whether the Court should appoint a “river

master” to resolve computer modeling issues that may

arise after entry of a contemplated decree in this case.

(Kansas Exception 1).

2. Whether Kansas is entitled to prejudgment in-

terest, accruing from 1985 forward, for damages re-

sulting from Compact violations from 1950 to 1985.

(Kansas Exception 2).

TABLE OF CONTENTS

Page

1 — 1

D TID setecccenesececesentertnecsmmensntnosien 3

B. The Arkansas River Compact . . . . . . .. . . 4

C. The current proceedings . . . . . . . 3 7

Introduction and summary of argument . . . . . 9

— 1 11

I. This Court should not appoint a river master to

administer the final deeree . . . . . ... .. 11

II. Kansas is not entitled to prejudgment interest,

beginning in 1985, for damages it suffered from

Compact violations occurring before that date 17

. ————— — — 23

TABLE OF AUTHORITIES

Cases:

Colorado v. Kansas, 320 U.S, 383 (1943) .. 4, 5, 16

Colorado v. New Mexico, 467 U.S. 310 (1984) . . 14

Kansas v. Colorado:

. 2

. 2, 9, 11, 17, 18-19, 20, 21-22

r 2

— . 2

. — — 2,8

. 2, 3, 4, 7, 9

F ccscnsnssnsdtestvnscnseiiiemieinddbandenmicnsinnitnninds 2

e 1

K 1

e — 1

D,. (x( 4

Kansas v. Nebraska, 538 U.S. 720 (2003) . 17

New Jersey v. New York:

„ III sinciicsctundanstieinndiiiniaindindensadsdctenmmniensegneion 13

. — . 13

(IIT)

IV

Cases—Continued:

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

Vermont v. New York, 417 U.S. 270 (1974) . .

Wisconsin v. Hinois, 281 U.S. 179 (1980) . . .

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

Constitution and statute:

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Act of May 31, 1949, (Arkansas River Compact),

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III cess ennecersestepnmesnensmnnnmnanan

In the Supreme Court of the Anited States

No. 105, Original

STATE OF KANSAS, PLAINTIFF

Vv.

STATE OF COLORADO

ON EXCEPTIONS TO THE FOURTH REPORT

OF THE SPECIAL MASTER

BRIEF FOR THE UNITED STATES

IN OPPOSITION TO THE EXCEPTIONS OF KANSAS

STATEMENT

The State of Kansas brought this original action

against the State of Colorado to resolve disputes under

the Arkansas River Compact, Act of May 31, 1949, ch.

155, 63 Stat 145 (Compact). This Court granted Kansas

leave to file its complaint, Kansas v. Colorado, 475 U.S.

1079 (1986), and the Court appointed the Honorable

Wade H. McCree, Jr., to serve as the Special Master.

478 U.S. 1018 (1986). Upon Judge McCree’s death, the

Court appointed Arthur L. Littleworth as the Special

Master, 484 U.S. 910 (1987). Special Master Little-

worth granted the United States’ unopposed motion for

leave to intervene in the action, conducted a trial

iimited to questions of liability, and submitted a report,

(1)

2

which recommended that the Court find that Colorado

had violated the Compact in certain respects. 513 U.S.

803 (1994). This Court overruled the exceptions of both

Kansas and Colorado to the Master's First Report. 514

U.S. 673 (1995).

The Master subsequently submitted a Second Report

that addressed preliminary issues respecting a remedy,

and the Court invited the parties to file exceptions. 522

U.S. 803 (1997). Colorado filed two exceptions, which

were overruled without prejudice to Colorado’s right to

renew those exceptiuns at the conclusion of the remedy

phase of the case. 522 U.S. 1073 (1998). After further

proceedings, including a trial on the appropriate

remedy for Colorado’s violations of the Compact, the

Master issued a Third Report, containing his recom-

mended remedy for Colorado’s violations of the Com-

pact. 531 U.S. 921 (2000). Both Kansas and Colorado

filed exceptions to the recommended remedy. The

Court sustained, in part, one of Colorado’s exceptions,

pertaining to the calculation of prejudgment interest,

and recommitted the case to the Master. 533 U.S. 1

(2001).

The Master conducted further trial proceedings and

has now submitted his Fourth Report, which addresses

the outstanding issues respecting an appropriate

remedy. See 124 S. Ct. 951 (2003). Kansas has filed six

exceptions to that report. The United States submits

this brief to address two of Kansas’s exceptions,

pertaining to the appointment of a “river master” and

calculation of prejudgment interest for the period from

1950 to 1985, and the United States urges that those

exceptions be overruled. The United States takes no

position on the remaining exceptions, which involve

remedial issues of principal concern to Kansas and

Colorado.

3

A. The Arkansas River Basin

The Arkansas River originates on the east slope of

the Rocky Mountains in central Colorado and flows

south and then east across Colorado and into Kansas.

It receives significant in-flows from the Purgatoire

River, its major tributary in Colorado, which originates

in the Sangre de Cristo mountains in southern Colorado

near the New Mexico border. The Purgatoire River

flows in a northeasterly direction to join the Arkansas

River about 60 miles west of the Kansas border, at Las

Animas, Colorado. See Kansas v. Colorado, 514 U.S. at

675-676.

The United States has constructed three water

storage projects on this river system. The John Martin

Resérvoir, located immediately east of the juncture of

the Purgatoire and Arkansas Rivers in Colorado, is

operated by the Army Corps of Engineers to control

floods and to provide storage water in accordance with

the Arkansas River Compact. It has a storage capacity

of approximately 700,000 acre-feet. 514 U.S. at 677.

The Pueblo Reservoir, located on the Arkansas River

about 150 miles upstream of the Kansas border near

Pueblo, Colorado, is managed by the Department of

the Interior’s Bureau of Reclamation as part of the

Fryingpan-Arkansas Project. It has a storage capacity

of approximately 357,000 acre-feet. Jbid. The Trinidad

Reservoir, located on the Purgatoire River near Trini-

dad, Colorado, is jointly managed by the Army Corps of

Engineers and the Bureau of Reclamation to control

floods and to provide storage water for use by the

Bureau of Reclamation’s Trinidad Project. It has a

storage apacity of approximately 114,000 acre-feet.

Ibid.

4

Twenty-three canal systems in Colorado divert water

from the Arkansas River below Pueblo Reservoir for

irrigation. Fourteen of those systems are located

upstream from John Martin Reservoir, and four of

those systems have associated privately-owned, off-

channel water storage facilities. Six canal systems in

Kansas operate between the Colorado border and

Garden City. See 514 US. at 677.

B. The Arkansas River Compact

The Arkansas River Compact apportions the

Arkansas River between the States of Kansas and

Colorado. The Compact was an outgrowth of two

original actions that the States had filed in this Court

disputing their respective entitlements to use of the

Arkansas River. See 514 U.S. at 678. In each of those

cases, the Court denied Kansas’s request for an equit-

able apportionment. See Kansas v. Colorado, 206 U.S.

46, 114-117 (1907); Colorado v. Kansas, 320 U.S. 383,

391-392 (1943). 9

In the first suit, Kansas sought to enjoin water di-

versions in Colorado, but the Court denied relief on the

ground that Colorado’s depletions of the Arkansas

River were insufficient at that time to warrant

injunctive relief. Kansas v. Colorado, 206 U.S. at 114-

117. In the second suit, Colorado sought to enjoin lower

court litigation brought by Kansas water users against

Colorado water users, while Kansas sought an equitable

apportionment of the Arkansas River. The Court

concluded that Colorado was entitled to the injunction

it sought, but the Court concluded once again that

Kansas had failed to show sufficient injury to warrant

an equitable apportionment of the Arkansas River.

Colorado v. Kansas, 320 U.S. at 391-392; see Kansas v.

Colorado, 514 U.S. at 678.

5

In denying Kansas’s second request for judicial relief,

the Court suggested that a dispute such as the one

between Kansas and Colorado calls for “expert admini-

stration rather than judicial imposition of a hard and

fast rule,” and it observed that the controversy “may

appropriately be composed by negotiation and agree-

ment, pursuant to the compact clause of the Federal

constitution.” Colorado v. Kansas, 320 U.S. at 392.

Soon thereafter, the States approved, and Congress

ratified, the Arkansas River Compact, Act of May 31,

1949, ch. 155, 63 Stat. 145. The Compact was intended

to “[sJettle existing disputes and remove causes of fu-

ture controversy” between the States and their citizens

over the use of the Arkansas River. To that end, the

Compact was designed to

ſelquitably divide and apportion between the States

of Colorado and Kansas the waters of the Arkansas

River and their utilization as well as the benefits

arising from the construction, operation and main-

tenance by the United States of John Martin Reser-

voir Project for water conservation purposes.

Art. I, 63 Stat. 145. The Compact accomplishes those

goals through two basic mechanisms.

First, the Compact protects the States’ respective

rights to continued use of the Arkansas River through a

limitation on new depletions. Article 1V-D of the

Compact allows new development in the form of

dams, reservoirs, and other water-utilization works in

Colorado and Kansas, provided that the “waters of the

Arkansas River” are not thereby “materially depleted

in usable quantity or availability for use to the water

users in Colorado and Kansas under this Compact.” 63

Stat. 147. The Compact defines the term “waters of the

Arkansas River,” Art. III-B, 63 Stat. 146, but it does

6

not expressly define what constitutes a “material”

depletion or a “usable” quantity.'

Second, the Compact regulates the storage of water

at John Martin Reservoir and specifies the criteria

under which each State is entitled te call for water

releases from that reservoir. Article V of the Compact,

which provides the “basis of apportionment of the

waters of the Arkansas River,” prescribes the timing of

storage at the reservoir and the release criteria. 63

Stat. 147-149. Basically, between November 1 and

March 31, in-flows to the John Martin Reservoir are

stored, subject to Colorado’s right to demand a limited

amount of water. Between April 1 and October 31, the

storage of water is largely curtailed, and either State

may call for releases at any time in accordance with the

flow rates set out in the Compact. Jbid.

The Compact creates an interstate agency, the

Arkansas River Compact Administration, to administer

the Compact. Art. VIII, 63 Stat. 149-151. The Compact

Administration consists of a non-voting presiding

officer designated by the President of the United States

and three voting representatives from each State. It is

' The full text of Article IV-D states as follows:

This Compuct is not intended to impede or prevent future

beneficial development of the Arkansas River basin in

Colorado and Kansas by Federal or State agencies, by private

enterprise, or by combinations thereof, which may involve

construction of dams, reservoirs, and other works for the pur-

poses of water utilization and control, as well as the improved

or prolonged functioning of existing works: Provided, that the

waters of the Arkansas River, as defined in Article III, shall

not be materially depleted in usable quantity or availability

for use to the water users in Colorado and Kansas under this

Compact by such future development or construction.

63 Stat. 117.

7

empowered to adopt by-laws, rules, and regulations,

prescribe procedures for the administration of the

Compact, and perform functions to implement the Com-

pact. See Arts. VIII-B, VIII-C, 68 Stat. 149, 150

Article VIII-H of the Compact directs that the Admini-

stration shall “promptly investigate[]” violations of the

Compact and report its findings and recommendations

to the appropriate state official. 63 Stat. 151. That

Article further states that it is “the intent of this

Compact that enforcement of its terms shall be

accomplished in general through the State agencies and

officials charged with the administration of water

rights.” bid.

C. The Current Proceedings

Kansas brought this action in 1985 to enforce the

provisions of the Arkansas River Compact. Special

Master Littleworth filed his initial report with the

Court in July 1994 addressing issues of liability. He

recommended that the Court find that post-Compact

well pumping in Colorado had violated Article IV-D of

the Compact and that Colorado be held liable for that

violation. The Master also recommended that the

Court find no violation of the Compact with respect to

Kansas’s claims arising from the operation of the Trini-

dad Reservoir and the Winter Water Storage Program

that utilizes excess storage capacity at the Pueblo

Reservoir. The Court adopted all of the Master’s

recommendations and remanded for determination of

the unresolved issues—primarily relating to what

remedy, if any, Kansas was entitled to as a result of

Colorado’s breach. Kansas v. Colorado, 514 U.S. at

694; see Fourth Report 2-3.

On recommittal, the Master conducted further pro-

ceedings and issued a Second Report providing his

8

preliminary recommendations on the issues of: (a)

quantifying the depletions in flows of the Arkansas

River at the Colorado-Kansas border (stateline flows)

for the period 1950-1985; (b) quantifying depletions for

the period subsequent to 1986; (c) bringing Colorado

into current compliance with the provisions of the

Compact; and (d) a remedy for past depletions. The

Court invited the parties to file exceptions to the

recommendations contained in the Master’s Second

Report. See 522 U.S. 803 (1997). Kansas and the

United States did not file any exceptions. Colorado

challenged the Master’s conclusions that (1) if the

remedy includes money damages, the Eleventh Amend-

ment of the United States Constitution does not bar an

award of money damages based, in part, on losses

incurred by Kansas’s water users; and (2) the un-

liquidated nature of Kansas’s claim for damages does

not, in and of itself, bar the award of prejudgment

interest. The Court overruled Colorado’s exceptions

without prejudice to Colorado’s right to renew those

exceptions at the conclusion of the remedy phase of the

case. 522 U.S. at 1073-1074; see Fourth Report 3.

After conducting further proceedings, including a

trial on the appropriate remedy for Colorado’s viola-

tions of the Compact, the Master issued his Third

Report, dated August 2000, containing his recom-

mended remedy. The Master’s Third Report calculated

the total depletions of stateline flow for the period from

1950 to 1996 (428,005 acre-feet); it recommended that a

suitable remedy for Kansas could include money dam-

ages based upon the economic losses of Kansas’s water

users; and it recommended that Kansas should be

entitled to prejudgment interest, but only for those

damages sustained after 1969, when Colorado knew or

should have known that groundwater wells were

9

depleting streamflows. The Court overruled all of

Kansas’s and Colorado’s exceptions but one: with re-

spect to the calculation of prejudgment interest, the

Court ruled that, as a matter of equity in thir case,

prejudgment interest should begin to accrue in 1985,

when Kansas filed its complaint. See 633 U.S. at 15-16.

Upon recommittal, the Special Master conc.cted

further trial proceedings and issued his Fourth Report,

which contains 13 recommendations that, if accepted by

the Court, would allow for entry of a final decree in this

case. See Fourth Report 137-140. The Master has

recommended a final measure of money damages and

prejudgment interest and has proposed the adoption of

various rules, credits, and measurement and modeling

criteria for assessing future compliance. Id. at 137-139.

In addition, the Master has recommended that the

Court reject Kansas’s proposals that the Court reopen

issues respecting the Winter Water Storage program

(which was addressed in the Master’s First Report), id.

at 187, that the Court establish an “Offset Account” to

ensure Colorado’s future compliance, id. at 139, and

that the Court appoint a “river master” to administer

the final decree in this case, ibid. Kansas alone has filed

exceptions to the Master’s Fourth Report.

INTRODUCTION AND SUMMARY OF ARGUMENT

The State of Kansas brought this action to enforce its

rights under the Arkansas River Compact, which

apportions the flow of the Arkansas River between

Kansas and Colorado. This Court resolved the issues of

liability in its earlier decision in Kansas v. Colorado,

514 U.S. 673 (1995), which accepted the Master's recom-

mendation that Colorado be held liable for violations of

Article IV-D of the Compact resulting from post-Com-

pact well pumping in Colorado. In the subsequent

10

proceedings, the Master has focused on an appropriate

remedy for those violations. The United States, which

intervened in this action to address Kansas’s challenges

to the operation of federal projects on the Arkansas

River, has played a diminished role in proceedings

concerning an appropriate remedy for the post-Com-

pact well pumping, which is a matter of primary

concern for the States. The United States nevertheless

has a significant institutional interest in the proper

administration and enforcement of interstate compacts,

and it participated in briefing and argument on several

issues (including prejudgment interest) the last time

the case was before the Court on exceptions to recom-

mendations by the Master. The United States submits

this brief to provide the Court with the federal govern-

ment’s perspective on two issues that bear on federal

interests—whether the Court should appoint a “river

master” to administer the final decree; and whether

Kansas is entitled to prejudgment interest, beginning

in 1985, for damages it suffered from Compact viola-

tions occurring before that date.

I. The Court should reject Kansas’s request for the

appointment of a river master to resolve anticipated

issues respecting the use of a computer model mea-

suring Colorado’s future compliance with the Compact.

This Court, on rare occasions, has appointed a river

master to administer interstate water rights decrees,

but that unusual step is not necessary in this case.

Congress and the compacting States have created the

Arkansas River Compact Administration, composed of

representatives from Kansas and Colorado and chaired

by a non-voting federal representative, to administer

the Compact. The Administration is the appropriate

body to resolve complex technical issues respecting

the computer model that will be used to measure

11

Colorado’s compliance with its Compact obligations.

The States should employ that body, as Congress

envisioned, to provide expert administration and re-

solve disputes through consensual mechanisms. Ap-

pointment of a separate river master is not appropriate

in these circumstances, and would likely promote con-

tinued adversarial proceedings and prolong this

litigation. |

II. The Court should also reject Kansas’s approach.to

the calculation of prejudgment interest, which would

subject damages accruing before 1985 to prejudgment

interest commencing in that year. This Court deter-

mined in its 2001 decision that Kansas was entitled to

prejudgment interest only from 1985 forward. See

Kansas v. Colorado, 633 U.S. at 14-16.. In reaching that

conclusion, the Court relied on the States’ prior deter-

mination that prejudgment interest would not be

applied to damages accruing before the date the“ pre-

judgment interest began to run. The Master correctly

concluded that he should retain that calculation

methodology, which reflected the understanding of the

States and this Court in the prior proceedings. That

approach, which would result in an award to Kansas of

approximately $29 million for damages from 1950 to

1994 (measured in 2002 doliars) provides a fair result in

light of the equities in this case.

ARGUMENT

I. THIS COURT SHOULD NOT APPOINT A RIVER

MASTER TO ADMINISTER THE FINAL DECREE

The Special Master and the parties have determined

that Colorado’s future compliance with the Arkansas

River Compact should be determined, in part, by use of

a computer program, known as the Hydrologic-Insti-

tutional Model (H-I Model), which was developed for

12

purposes of this litigation. The H-I Model estimates the

flow of the Arkansas River that would have occurred in

the absence of post-Compact well pumping. That esti-

mated streamflow is then used to determine whether

Colorado has met its obligation under Article IV-D of

the Compact of ensuring that-any new water develop-

ment in Colorado has not materially depleted the

Arkansas River’s flow at the Colorado-Kansas ‘border.

As the Master explained, the task of modeling the

Arkansas River Basin is extraordinarily complex.

Fourth Report 109-110. The Master found that, despite

continuing refinements, the H-I Madel is not accurate

on an annual basis or short-term basis. /d. at 109-115.

He therefore adopted Colorado’s proposal that the H-I

Model results be applied over a ten-year period to

average out errors. Id. at 116-120. He also anticipated

that there would be a continuing need to update the H-I

Model as experience revealed opportunities for improv-

ing it, but that the States might disagree on what

changes should be made. Id. at 121-124. In response,

Kansas proposed that the Court should appoint a river

master to resolve those disputes on a continuing basis.

See id. at 125. Colorado objected to that proposal on

the ground that the result would be “to continue this

litigation indefinitely.” Jbid. The Master rejected

Kansas’s proposal, concluding that such an appointment

was not appropriate in this case. See id. at 125-136.

Kansas excepts from the Master’s recommendation.

Kan. Br. 10-25.

The United States agrees with the Special Master’s

recommendation that appointment of a river master is

not appropriate in the circumstances presented here.

2 Kansas has excepted from that recommendation. See Kan.

Br. 35-45. The United States takes no position on that exception.

13

As the Master acknowledged, this Court appointed a

river master in Texas v. New Mexico, 482 U.S, 124, 134-

135 (1987), to apply a formula for apportioning the

Pecos River’s flows, and in New Jersey v. New York,

347 U.S. 995, 1002-1004 (1954), to make flow calculations

in administering a decree respecting the Delaware

River. See Fourth Report 125-128, 129-130. But as a

genera] matter, the Court has “taken a distinctly

jaundiced view of appointing an agent or functionary to

implement [its] decrees.” Texas v. New Mexico, 482

U.S. at 134. See Vermont v. New York, 417 U.S. 270,

274-277 (1974).

The Court has appointed a river master with con-

tinuing authority to administer a decree only in in-

stances in which there was a clear need or desirability

for such an appointment. In Texas v. New Mexico, the

Court appointed a river master, at the suggestion of the

special master, because, otherwise, “the natural

propensity of these two States to disagree if an

allocation formula leaves room to do so” would lead to

“a series of original actions to determine the periodic

division of the water flowing in the Pecos.” 482 U.S. at

134. In New Jersey v. New York, the Court appointed a

river master, as recommended in the report of the

special master, 347 U.S. at 995-996, to perform what the

Court has since characterized as essentially “ministerial

acts,” Vermont v. New York, 417 U.S. at 275.

3 As the Master explained, the Court has rejected the appoint-

ment of a river master or similar agent in Wisconsin v. Illinois, 281

U.S. 179, 198 (1930); New Jersey v. New York, 283 U.S. 805 (1931);

Wyoming v. Colorado, 298 U.S. 573, 586 (1936); and Vermont v.

New York, 417 U.S. at 277. See Fourth Report 130-131.

14

In this case, by contrast, the Master concluded that

the appointment of a river master vo resolve computer

modeling issues could be counter-productive:

None of the interstate water cases supports the

appointment of a River Master with authority to

decide the kinds of issues that may still arise with

respect to continued compliance with the Arkansas

River Compact. Any such issues are not likely to be

simply “ministerial” in nature. If a River Master is

appointed with sufficiently broad authority to

resolve modeling issues, it simply becomes easier to

continue this litigation. But it is in the opposite

direction that movement is needed.

Fourth Report 135-136.

The Master’s reluctance to recommend appointment

of a river master charged with deciding complex,

technical issues of computer-based streamflow model-

ing is understandable for additional reasons bearing on

this Court’s responsibility to supervise such agents. If

the Court elected to review the river master’s deter-

minations with the same care that it examines a special

master’s findings of fact, see Colorado v. New Mexico,

467 U.S. 310, 317 (1984), the Court would need to de-

vote its limited resources to reviewing highly technical

scientific and engineering issues of limited national

significance. Alternatively, if the Court elected to defer

broadly to the river master’s determinations, it would

put in place a quasi-judicial officer with indefinite

tenure who would exercise largely unreviewable dis-

cretion. It is only in the “rare case” that the Court

creates such an office. See Vermont v. New York, 417

US. at 275.

More fundamentally, the appointment of a river

master is neither desirable nor necessary because there

15

is an available and preferable alternative. The Arkan-

sas River Compact establishes the Arkansas River

Compact Administration to administer the Compact, to

adopt rules and regulations and prescribe procedures

for that purpose, and to “[pJerform all functions re-

quired to implement this Compact and to do all things

necessary, proper, or convenient in the performance of

its duties.” Art. VIII-B, 63 Stat. 149-150. The Compact

further provides that violations of any provisions of the

Compact “or other actions prejudicial thereto” shall be

promptly investigated by the Administration. Art.

VIII-H, 63 Stat. 151. The Administration, which has

been charged by Act of Congress and agreement be-

tween the States with responsibility for implementing

the Compact, is the appropriate body to resolve issues

’ respecting any necessary modifications of the H-I

Model, which will be utilized specifically to determine

Colorado’s compliance with its obligations under the

Compact.

Kansas has objected to enlisting the Compact Ad-

ministration’s assistance based on its prediction that

the Administration, which is composed of a non-voting

federally appointed chairman and three representatives

from each State, would inevitably deadlock, as was the

situation in the case of the Pecos River Compact Com-

mission. See Kan. Br. 12-14, 24-25; see also Texas v.

New Mexico, 482 U.S. at 133, 134. The Master con-

cluded that this prediction was not warranted, stating:

To be sure, the Compact Administration can act

only by unanimous vote. But the climate may be

changing. The Compact Administration, under the

chairmanship of the United States’ representative,

may again be seen as the best way to administer the

compact and settle issues. After some thirteen

16

years of litigation, the major issues between the

states have already been determined or will be

determined as a result of this Report. If there are

future issues, it is to be hoped that the parties will

have a greater appreciation for the Court’s oft-

stated admonition that litigation of these cases “is

obviously a poor alternative to negotiation.” Texas

v. New Mexico, 462 U.S. 554, 567, fn.13, and 575,

citing numerous cases.

Fourth Report 136.

Congress and the States created the Compact Ad-

ministration to provide the “expert administration”

that this Court envisioned in Colorado v. Kansas, 320

U.S. at 392. They required the Compact Admini-

stration to act by unanimous vote because they recog-

nized the value of resolving interstate disputes by

consensus. They also presumably recognized that con-

sensus would sometimes be difficult to achieve, but that

is no reason for failing to undertake the effort to reach

agreement through the procedures that the Compact

provides. Indeed, the Compact specifies an optional

mechanism for breaking deadlocks:

In a case of a divided vote on any matter within the

purview of the Administration, the Administration

may, by subsequent unanimous vote, refer the

matter for arbitration to the Representative of the

United States or other arbitrator or arbitrators, in

which event the decision made by such arbitrator or

arbitrators shall be binding upon the Administra-

tion.

Art. VIII-D, 63 Stat. 150. Additionally, the Compact

does not preclude the parties from engaging in other

mechanisms of alternative dispute resolution, such as

non-binding mediation, which was successfully em-

17

ployed in Kansas v. Nebraska, No. 126, Original, to

negotiate a comprehensive resolution of that case. See

Kansas v. Nebraska, 538 U.S. 720 (2003) (decree ap-

proving final settlement stipulation); Second Report of

the Special Master (Final Settlement Stipulation),

Kansas v. Nebraska, No. 126, Original (Apr. 15, 2003).‘

The United States accordingly urges that the Court

overrule Kansas’s proposal for the appointment of a

river master to administer the anticipated decree in

this case. Instead, the Court should direct the Master

to propose a decree, with the assistance of the parties,

that would provide that the parties may seek resolution

of disputes over the revision of the H-I Model through

recourse to the Compact Administration.

II. KANSAS IS NOT ENTITLED TO PREJUDG-

MENT INTEREST, BEGINNING IN 1985, FOR

DAMAGES IT SUFFERED FROM COMPACT

VIOLATIONS OCCURRING BEFORE THAT

DATE

In the prior p.oceedings, the Court faced the

question whether, and to what extent, Kansas was

entitled to prejudgment interest on the money damages

that it will receive on account of Colorado’s past

violations of the Compact. See Kansas v. Colorado, 533

US. at 9-16. The United States addressed that issue in

response to Kansas’s and Colorado’s competing excep-

As the Master recognized, in recent interstate water disputes,

the States have increasingly employed alternative means of

dispute resolution to resolve pending or anticipated disputes. See

Fourth Report 132-135. The United States has encouraged the use

of such techniques in original actions, such as Nebraska v.

Wyoming, No. 108, Original, and Kansas v. Nebraska, No. 126,

Original, as a means to defuse or resolve interstate disputes that

might otherwise lead to motions for leave to invoke this Court’s

original jurisdiction.

18

tions, urging that this Court may award prejudgment

interest as a matter of discretion based on the equities

of the case. Because Kansas and Colorado now disagree

on the proper interpretation of the Court’s 2001

decision, the United States offers its perspective on

what the Court decided.

In its 2001 decision, the Court determined that it may

award prejudgment interest in an original action

arising from an interstate compact, even if the money

damages at issue are unliquidated at the time of suit.

Kansas v. Colorado, 533 U.S. at 9-11. The Court also

decided for what. years prejudgment interest would

accrue. Kansas argued that the accrual of interest

should begin in 1950, when Colorado’s violations com-

menced, while Colorado argued that any prejudgment

interest should not begin to accrue until 1985, when

Kansas first filed its complaint. The Master concluded

that prejudgment interest should begin to accrue in

1969, when, according to the Master, Colorado knew or

should have known that it was violating the Compact.

See id. at 12.

The Court ultimately rejected the Master’s recom-

mendation and concluded that prejudgment interest

should begin to accrue in 1985, rather than 1969. The

Court explained:

The choice between the two dates is surely debat-

able; it is a matter over which reasonable people

can—and do—disagiree. After examining the equi-

ties for ourselves, however, a majority of the Court

has decided that the later date is the more appropri-

ate.

19

533 U.S. at 15 (footnote omitted). The Court addition-

ally stated:

Given the uncertainty over the scope of damages

that prevailed during the period between 1968 and

1985 and the fact that it was uniquely in Kansas’

power to begin the process by which those damages

would be quantified, Colorado’s request that we

deny prejudgment interest for that period is rea-

sonable.

Id. at 16. The Court accordingly sustained Colorado’s

exception “insofar as it challenges the award of interest

for the years prior to 1985.” Ibid.

On recommittal of the case to the Special Master,

Colorado argued that the Court’s 2001 decision entitled

Kansas to prejudgment interest only on those damages

that accrued after 1985. Kansas, by. contrast, argued

that the Court’s 2001 decision also entitled it pre-

judgment interest, beginning in 1985, on the damages

that accrued during the period from 1950 through 1985.

The difference in those positions has a substantial

impact on the amount of damages. Under Colorado’s

approach, the total damage award for the 1960 to 1994

period, adjusted for inflation, is $28,998,366 (in 2002

dollars), while under Kansas’s approach, the total

6 The Court explained in an accompanying footnote that

Justices O’Connor, Scalia, and Thomas believed that no award of

prejudgment interest was appropriate, while the Chief Justice and

Justice Kennedy believed that prejudgment interest should run

from the date of filing the complaint. 633 U.S. at 15 n.5. Justices

Stevens, Souter, Ginsburg, and Breyer agreed with the Special

Master that prejudgment interest should run from 1969, but “{iJn

order to produce a majority for a judgment, the four Justices who

agree with the Special Master have voted to endorse the position

expressed in the text.” Ibid.

20

damage award for that period is $52,879,927 (in 2002

dollars). See Fourth Report 7. The Master concluded

that Colorado’s caiculation correctly implements this

Court’s decision. See ibid.; id. at App. 7-15. The United

States agrees.

As the Master explained, in the proceedings leading

up to the Court’s 2001 decision, both Kansas and

Colorado demonstrated an understanding that pre-

judgment interest would be applied only to those dam-

ages that accrued after the date on which prejudgment

interest commenced. See Fourth Report App. 12. In

particular, the Master directed the States to calculate

the total amount of damages under the Master’s recom-

mendation that prejudgment interest commence in

1969. The States concluded that the total damages for

the period from 1950 to 1994 was approximately $38

million (in 1998 dollars), and that information was

conveyed to this Court. bid. In reaching that con-

clusion, the States “treated damages for the period

irom 1950-68 as being completely exempt from any

interest reflecting lost investment opportunities.”

Fourth Report App. 13. For that period, Kansas was to

receive only an adjustment of the damages to account

for inflation, which Colorado had always proposed. /d.

at 10; see 533 U.S. at 9 n. 2. “In essence, the states

followed the methodology now urged by Colorado,

except they were dealing with 1969 instead of 1985.”

Ibid. In filing exceptions to the Master’s Third Report,

Kansas did not challenge the use of that methodology if

the Court concluded (contrary to Kansas’s submission)

that prejudgment interest should accrue in 1969 or

1985.°

© In opposing the States’ exceptions, the United States shared

their understanding that the Master had recommended imposition

21

The Master properly concluded that, when this Court

determined that prejudgment interest would commence

in 1985, rather than in 1969, the Court did not intend to

change the method by which the States had determined

to calculate the interest award. As the Master recog-

nized:

Clearly there was no sentiment on the Court to

increase damages, including prejudgment interest,

over the amount recommended in my Third Report.

Indeed, the final action of the Court was to reduce

my recommended award.

Fourth Report App. 14. The damage award that would

result from the application of the Master’s proposed

approach—approximately $29 million for the period

from 1950 to 1994 (in 2002 dollars)—is consistent with

the amount of damages that the Court envisioned

would be awarded in this case. See Kansas v.

Colorado, 533 U.S. at 9 n.2.

Kansas suggests that the Master’s approach is incon-

sistent with the methods used in calculating prejudg-

ment interest in other cases, outside this Court’s

original jurisdiction, in order to compensate fully the

plaintiff for the delay in payment by the defendant.

Kan. Br. 28-29. But even if that is so, this original

of prejudgment interest only on damages accruing after 1968. See

Brief for the United States in Opposition to the Exceptions of

Kansas and Colorado, Kansas v. Colorado, No. 105, Original (Jan.

2001), at 27 (“Based on his finding that by 1968 Colorado knew, or

should have known that post-compact wells were causing material

depletions of usable stateline flows, the Master recommended that

Kansas be awarded actual damages for the period from 1950 to

1968, adjusted for inflation only. For the period from 1969 to the

date of judgment, the Master recommended that Kansas be

awarded prejudgment interest.”).

22

action, with its unique history and equities, is sui

generis. See Kansas v. Colorado, 533 U.S. at 13-16.

The Court has considerable discretion to award or

withhold prejudgment interest based on the equities of

a particular case. Consistent with that approach, the

Court’s prior decision in this case rejected Kansas’s

arguments based on a “rigid theory of compensation for

money withheld,” id. at 15, and reflects an intention to

retain the methodology that the parties had employed

for calculating prejudgment interest in the wake of the

Master's Third Report, while providing that prejudg-

ment interest would commence in 1985. See id. at 16

(Wie sustain [Colorado’s] objection insofar as it chal-

lenges the award of interest for the years prior to

1985.”).

The United States accordingly urges the Court to

overrule Kansas’s exception respecting the Master’s

calculation of prejudgment interest. The Master was

justified in concluding that the Court intended to

exempt all damages occurring before the suit was filed

from prejudgment interest reflecting lost investment

opportunities. See Fourth Report App. 14. Damages

occurring before that date remain subject to an

adjustment for inflation, to which Colorado has always

agreed. See id. at 11. That result is fair, particularly in

light of the uncertainties attending the availability of

money damages and prejudgment interest as a remedy

for violation of an interstate compact at the time the

Arkansas River Compact was negotiated. See 533 U.S.

at 20-26 (O’Connor, J., concurring in part and dissenting

in part).

23

CONCLUSION

The exceptions of Kansas respecting the appointment

of a river master and the award of prejudgment

interest should be overruled.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

THOMAS L. SANSONETTI

Assistant Attorney General

EDWIN S. KNEEDLER

Deputy Solicitor General

JEFFREY P. MINEAR

Assistant to the Solicitor

General

PATRICIA WEISS

JAMES DuBOoIS

Attorneys

MARCH 2004