Amicus Curiae Brief — Ariyoshi v. Robinson

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No. 85-406 MAY 28 1966

caveman see.

In the Supreme Court of the Ynitet States —

OCTOBER TERM, 1985

GEORGE A. ARIYOSHI, GOVERNOR OF HAWAII, ET AL.,

PETITIONERS

v.

SELWYN A. ROBINSON, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE

CHARLES FRIED

- Solicitor General

F. HENRY HABICHT II

Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

EDWIN S. KNEEDLER

Assistant to the Solicitor General |.

PETER R. STEENLAND, JR.

ANNE S. ALMY

Attorneys

Department of Justice

Washington, D.C. 20580

(202) 633-2217

QUESTIONS PRESENTED

1. Whether a 1973 decision of the Supreme Court of

Hawaii constituted final governmental action that could

be a “taking” of respondents’ rights to waters of a river

in that State, notwithstanding a subsequent decision of

the Supreme Court of Hawaii that contemplates further

proceedings in state court on matters pertaining to re-

spondents’ right to divert water from the river.

2. Whether the rejection by the Supreme Court of

Hawaii of respondents’ petitions for rehearing, which

contended that that court’s 1973 decision resulted in a

taking of respondents’ property without just compensa-

tion or due process, constituted a final determination of

the federal claims that cannot be reviewed in these sepa-

rate proceedings in federal court.

3. Whether the Hawaii Supreme Court’s rejection of,

or failure to address, respondents’ taking claim at the

time of the consideration of their rehearing petitions de-

prived them of due process of law, on the ground that

respondents were not afforded un adequate opportunity to

be heard on the taking question.

(I)

TABLE OF CONTENTS

Page

ELITES OA ITC TL SER RI WEE Re 1

Nt NR ein ORR SRP PR ose Ba He. 9

Ea sre MORE Le RS TRO LE TED ETERS 20

TABLE OF AUTHORITIES

Cases:

Aginse V. Tiburon, 447 U.S. 266 ....................-..-......-- 10, 16

Andrus V. Allard, 444 U.S. 511 ..................................... 18

Arizona V. California, 460 U.S. 605 -.....000202222e. ee. 16

Bellotti V. Baird, 428 U.S. 182 ......................ccc.ccccsceeees 13

Carter v. Territory, 24 Hawaii 47 ...........................--- 3

Connolly v. Pension Benefit Guaranty Corp., No.

IE III, | UE cece cee peeeesinccosetecueeie 10

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469........ 16

Danforth v. United States, 308 U.S. 271 ................... 16

Demorest v. City Bank Co., 321 U.S. 36.................... 13

District of Columbia Court of Appeals v. Feldman,

ee TES GE en SOE, PON Oe 19

Gibson V. Berryhill, 411 U.S. 564 .................2.2...0.2. 11

Glover v. Fong, 42 Hawaii 560................0002002222.---..- 15

Harrison y¥. NAACP, 360 U.S. 167 ................------0---0- 13

Hawaii Housing Authority v. Midkiff, 467 U.S.

(SSA ae a SE BI PSI EN 11

Hodel v. Virginia Surface Mining & Reclamation

i MI a I cecicecic ds a ccehecinind nents adetans 10

Hughes v. Oklahoma, 441 U.S. 322 000.0000... 17

Hughes v. Washington, 389 U.S. 290 ......................--- 13

Kaiser Aetna Vv. United States, 444 U.S. 164 _........... 2,18

Kirky Forest Industries, Inc. v. United States, 467

eG Ca ITI EEN atx cE Cee ee eee 7 UR OE en 16

Marrese Vv. American Academy of Orthopaedic Sur-

geons, No. 83-1452 (Mar. 4, 1985) _....................... 19

McBryde Sugar. Co. v. Robinson, 54 Hawaii 174,

504 P.2d 1380. appeal dismissed and certs. de-

me QR RB Pe. eee enone 1

Middlesex Ethics Committee v. Garden State Bar

cE Sol ae REP ERROR cian re ree 11

IV

Cases—Continued : Page

Bicnmaen 0. Titel, BG EE, BEG cassis cssesciesecnecsecscesesceee 12

Nevada v. United States, 463 U.S. 110 -.........---.-.. 14

Parsons Steel, Inc. v. First Alabama Bank, No. 84-

Be Ss Sa: MII eicccctewtiavce cick cacascantinciicedeneersionect 19

Penn Central Transp. Co. v. New York City, 438

EG” SER apc ee cand eee RR TREY Red TO 10-11, 14, 18

PruneYard Shopping Center v. Robins, 447 U.S.

, SRA AaB Recs NR SR EN RIN SOT Dee ERE oC 12

Rooker v. Fidelity Trust Co., 263 U.S. 413 -............. 11, 19

Sporhase v. Nebraska ex rel. Douglas, 458 U.S.

Ba cocpetuain eee el ose eo 17

Territory V. Gay, 31 Hawaii 376, aff’d, 52 F.2d 356,

ee ey Ce 3

Toomer V. Witsell, 334 U.S. 385 .....................----eeeee0 17

United States v. Riverside Bayview Homes, Jnc.,

Ne 66-701 (Oe. 6 tee) oe 14, 17

Williamson County Regional Planning Comm’n V.

Hamilton Bank, No. 84-4 (June 28, 1985) ........ 2, 10, 11,

12, 14, 16, 18, 19, 20

Constitution and statutes:

U.S. Const. :

Amend. V (Just Compensation Clause) .......... 6,14

Amend. XIV (Due Process Clause) .................. 6

OO ie I sacccassctacinctscesesiessantanenaceebeptaciei sokitasnanimaiicintantets 19, 20

Ms cicaccheks Goa pateiicteniessrcalse taht tet cetacalite eed. 19

Hawaii Rev. Stat. §§ 234-30 to 234-36 (1955)........ 11

Iu the Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-406

GEORGE A. ARIYOSHI, GOVERNOR OF HAWAII, ET AL.,

PETITIONERS

Vv.

SELWYN A. ROBINSON, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE

This brief is submitted in response to the Court’s in-

vitation to the Solicitor General to express the views of

the United States.

STATEMENT

This case involves the definition of rights to the use of

the waters of the Hanapepe River on the Island of Kauai

in Hawaii. The court of appeals held that the decision

of the Supreme Court of Hawaii in McBryde Sugar Co.

v. Robinson, 54 Hawaii 174, 504 P.2d 1380 (1973), ap-

peal dismissed and certs. denied, 417 U.S. 962 and 1976

(1974), deprived respondents of “vested” water rights

established by prior law and thereby resulted in an un-

constitutional taking of respondents’ property without

the payment of just compensation. In our view, how-

ever, the subsequent decision by the Supreme Court of

Hawaii on questions certified to it by the court below

(Pet. App. 14a-55a) makes clear that the decision in

McBryde was not a final determination of respondents’

(1)

2

rights that can give rise to a ripe taking claim under

Williamson County Regional Planning Comm’n v. Ham-

ilton Bank, No. 84-4 (June 28, 1985).

1. The watershed of the Hanapepe River is about 15

miles long and from two to five miles wide. The north-

erly portion of the watershed reaches up toward Mount

Waialeale, where the annua! rainfall of 400 to 500 inches

is among the heaviest in the world. The lower portion,

by contrast, receives relatively little rainfall. About half-

way down the watershed, the Koula and Manuahi streams

join to form the Hanapepe River. The volume of water

in the watershed generally ranges between 32 and 145

million gallons per day (gpd). Pet. App. 200a, 202a, 216a.

In the Great Maheie or division of Hawaiian lands in

the mid-Nineteenth Century (see Kaiser Aetna v. United

States, 444 U.S. 164, 166-167 (1979)), the Ahupuaa of

Hanapepe,' roughly equivalent to the watershed of the

Hanapepe River and its tributaries, was designated as

crown land (Pet. App. 200a). The portion of the water-

shed above the confluence of the Manuahi and Koula is

comprised of lesser divisions of land, known as the ilis

kupono of Manuahi and Koula, which are now owned by

respondents Robinson, et al. Respondent McBryde Sugar

Co. owns land in the Ahupuaa of Hanapepe below the

confluence of the Manuahi and Koula (id. at 201a, 207a).

The Robinsons, McBryde and the other respondents

(known as the small owners), as well as the State, are

successors in interest to the owners of ancient taro plots

in the watershed that were cultivated at the time of the

Great Mahele (id. at 224a).

2. Beginning in 1891, Gay and Robinson (G&R) built

a dam and a system of ditches to deliver water from the

Koula stream to lands outside the Hanapepe Valley in the

Makaweli watershed (Pet. App. 203a-208a). In the late

1920’s, a dispute arose between the Territory of Hawaii

and G&R concerning the latter’s diversions. The Terri-

1 An ahupuaa is the largest division of land under the ancient

Hawaii system. See Kaiser Aetna, 444 U.S. at 167.

3

tory, as the owner of the Ahupuaa of Hanapepe, claimed

that it was the owner of all or part of the surplus waters

of the stream, and it sought an injunction barring G&R

from diverting water in derogation of that right. The

parties stipulated to the existence of “normal daily sur-

plus of waters” in the Hanapepe. Territory v. Gay, 31

Hawaii 376, 377, 381 (1930), aff’d, 52 F.2d 356 (9th

Cir.), cert. denied, 284 U.S. 677 (1931).

The Supreme Court of the Territory dismissed the

crritory’s bill in equity, holding thet G&R, as owner of

the ili kupono of Koula, was the owner of the “normal”

surplus waters (those not needed to satisfy other rights)

arising on that land. 31 Hawaii at 388. The Chief Judge

would have gone further and included “storm and

freshet”’ surplus water under this rule, overruling the

holding in Carter v. Territory, 24 Hawaii 47 (1917),

that “storm and freshet” surplus water is to be appor-

tioned according to the doctrine of riparian rights. 31

Hawaii at 403. A dissenting justice was of the view

that both “normal” and “storm and freshet” surplus

water should be governed by the doctrine of riparian

rights urder the rationale of the Carter decision. 31

Hawaii at 408-417. The Court of Appeals for the Ninth

Circuit declined to disturb the judgment of the Supreme

Court of the Territory on these questions of local prop-

erty law (52 F.2d 356 (1931)), and this Court denied

certiorari (284 U.S. 677 (1931) ). .

3. a. In the period from 1945 to 1949, G&R and its

lessee, respondent Olokele Sugar Co., Ltd., constructed

new delivery works that increased the amount of water

G&R was able to divert from the Hanapepe watershed

(Pet. App. 209a). This diminished the amount of water

available to McBryde. Accordingly, in 1959, McBryde

commenced an action against G&R in state court, seeking

an adjudication that it had appurtenant, prescriptive or

riparian rights to 11 million gpd from the Hanapepe and

an injunction barring G&R from diverting water in a

manner that interfered with McBryde’s rights (Pet. App.

316a-317a). The State and the small owners also ap-

peared as defendants (id. at 197a-198a).

4

The trial court quantified the appurtenant water rights

of each of the parties for ancient taro lands.’ It further

held that G&R was the owner of all of the surplus water

flowing in the Koula and Manuahi streams. The court

recognized that the Supreme Court of the Territory had

held in Carter v. Territory that “storm and freshet”

surplus water was to be apportioned according to the

doctrine of riparian rights (Pet. App. 250a) and that

the subsequent decision in Territory v. Gay held only that

the “normal” surplus water belonged to the owner of the

land on which the water arose (Pet. App. 250a-251a).

However, the court questioned whether Carter was “still

the law of Hawaii” and believed that Gay “‘invite[d]

reconsideration of the [Carter] rule’ (Pet. App. 251la-

252a) .®

b. On January 10, 1973, the Supreme Court of Hawaii

affirmed the award of appurtenant rights for ancient

taro lands (Pet. App. 175a-178a), although it held that

those rights apply only to the land to which they are

appurtenant and do not extend to the transportation of

water to another watershed (id. at 178a).

The Supreme Court reversed the judgment of the trial

court in all other respects. It first rejected the trial

court’s holding that G&R, as owner of the ilis of Koula

and Manuahi, owned all of the surplus water that arose

on that land (Pet. App. 167a-174a). Quoting the prin-

ciples adopted by the Land Commission and approved by

the legislature in 1846, the Supreme Court held that at

2 The court found the following acres of ancient taro lands and

corresponding water rights: McBryde (98.21 acres; 4,915,400 gpd) ;

the State (83.27 acres; 4,167,650 gpd); the small owners (29.11

acres; 1,456,950 gpd); G&R, for lands below Koula and Manuahi

(30.68 acres; 1,533,050 gpd). Pet. App. 218-233a, 246a-250a,

259a-260a.

3 The only exception to the trial court’s award of all surplus water

to G&R was for 2,084,600 gpd that the court concluded McBryde had

acquired as against G&R by way of prescription (Pet. App. 214a-

215a, 246a, 253a-257a). The Hawaii Supreme Court reversed that

award (id. at 186a-187a), and it is not directly at issue here (see

id. at 108a-109a, 266a-267a).

5

the time of the Great Mahele, the King did not convey

any of his sovereign rights, including the right “ ‘to en-

force the usufruct of lands for the common good’” (id.

at 172a, 173a). Because the right to water is one of

the most important usufructs, the right to water was

reserved “for the people of Hawaii for their common

good in all of the land grants” (ibid. (footnote omitted) ).

Accordingly, the Supreme Court declared that the State

is the owner of the water in the Koula and Manuahi

streams and Hanapepe River (id. at 174a). The Su-

preme Court recognized that this conclusion was incon-

sistent with Territory v. Gay, at least as regards “nor-

mal” surplus water (Pet. App. 167a). But it concluded

that the relevant statements in two of the early decisions

upon which the Territorial Supreme Court had relied in

Gay were dicta and that Carter v. Territory, although

applying riparian principles only to “storm and freshet”

surplus water, was broader in its reasoning (Pet. App.

168a-169a). The court also overruled Carter v. Terri-

tory. holding that “storm and freshet” surplus water

likewise was reserved to the State (Pet. App. 187a).

The Supreme Court further held that McBryde, the

State, G&R, and other owners of land in the Hanapepe

Valley have riparian water rights under an 1850 Act of

the Hawaiian legislature, which provides that “[t]he

people shall also have a right to drinking water, and

running water, and the ‘right of way” (Pet. App. 179a-

180a & n.17). Id. at 178a-185a. The court explained that

these owners are permitted to use the water flowing in

the river without prejudicing the rights of others, al-

though this right appertains only to land adjoining the

water course (id. at 185a).

Finally, the Supreme Court concluded that the judg-

ment in Territory v. Gay was res judicata as between

the State and G&R, the only parties to that case (Pet.

App. 164a-166a). However, the Court observed that the

holding in Territory v. Gay was based only on an assump-

tion, not a finding, that there actually would be “normal”

surplus waters, because there had been no determination

of the superior rights of others in the Hanapepe Valley.

6

In view of its recognition in McBryde of riparian rights

to the flow of water without substantial diminution, the

court found that there is no “normal” surplus to which

G&R would be entitled under Territory v. Gay (Pet.

App. 186a-187a).

ce. McBryde, G&R, and the small owners petitioned

for rehearing, challenging the Supreme Court’s state-law

rulings and contending that the decision violated their

rights under the Just Compensation and Due Process

Clauses. See, e.g., Pet. App. 353a-38la. After supple-

mental briefing on two state-law issues and oral argu-

ment, the Supreme Court, with two dissents (id. at 113a-

162a), reaffirmed its original judgment (id. at i12a-

113a). This Court denied review. 417 U.S. 962 and 976

(1974).

4.a. While respondents’ appeal and certiorari petitions

were pending in this Court, the Robinson respondents

commenced the present action in the United States Dis-

trict Court for the District of Hawaii (Pet. App. 271a-

276a). McBryde, the small owners, and others inter-

vened as plaintiffs. The complaint alleged that the deci-

sion in McBryde was “directly contrary” to the settled

law of Hawaii and violated the Due Process and Just

Compensation Clauses of the Fifth and Fourteenth

Amendments. The district court rendered a decision in

favor of respondents on October 26, 1977 (Pet. Apv. 56a-

110a), concluding after an extensive analysis of the

Hawaii Supreme Court precedents (id. at 64a-75a) that

the McBryde decision constituted an abrupt change in the

law (Pet. App. 107a). The court held that respondents’

ownership of surplus waters and their right to transport

water out of the watershed under pre-McBryde law were

“vested” property rights and that enforcement of the

decision in McBryde would result in an unconstitutional

taking of those rights. The court accordingly enjoined

petitioners from enforcing the judgment in McBryde

(Pet. App. 266a-267a).

b. On petitioners’ appeal, the court of appeals certified

six questions to the Supreme Court of Hawaii concern-

ing “the proper interpretation” of the McBryde decision

7

(Pet. App. 414a-415a). After briefing and oral argu-

ment, the Supreme Court issued an opinion explaining

that the McBryde holding that the State owns the sur-

plus water in the Hanapepe River did not refer to

“ownership in the corporeal sense where the State may

do with the property as it pleases” (Pet. App. 5la).

Instead, it contemplated only the State’s “retention of

* * * authority to assure the continued existence and

beneticial application of the resource for the common

good” (ibid. (footnote omitted) )—i.e., a public trust as

reflected in the 1850 State statute declaring the rights

of the people to “running water” (id. at 52a-54a).

The Supreme Court also stressed that by recognizing

riparian rights and limiting water rights generally to the

land to which they are appurtenant, MyBryde “did not

actually enjoin or explicitly prohibit the diversion of

water from the watershed” (Pet. App. 19a). Instead,

McBryde merely stated that the “private usufructory

interests” in water were “not so broad as to include any

inherent enforceable right to transmit water” beyond the

appurtenant lands (Pet. App. 19a). Accordingly, Mc-

Bryde was not “conclusive of the circumstances” in which

a transfer might be enjoined, especially since such an

action would be subject to the equitable doctrines of

estoppel, laches, and public use (Pet. App. 19a-20a).

The court made clear in this regard that “diversions will

be restrained only after a careful assessment of the

interests and circumstances involved indicates a need

for restraint” (id. at 20a-21a).

With respect to the res judicata consequences of Mc-

Bryde in any such action to enjoin diversions by respond-

ents, the Supreme Court first held that “McBryde in its

current posture has no bar and merger effect,” because

no final judgment: has yet been entered in that case (Pet.

App. 23a). Similarly, the court held that “issue preclu-

sion would be confined to the quantification of appurte-

nant water rights [for ancient taro lands],” because only

that portion of the state trial court’s judgment was af-

firmed in McBryde (Pet. App. 23a-24a). The court ac-

knowledged that McBryde also had confirmed the exist-

8

ence of riparian rights, delineated limitations on the

transportation of water, and declared the State to be the

owner of surplus water (Pet. App 23a). But these rul-

ings, the court explained, would only be the “law of the

case” in the “continuation of the case at the trial level”

(id. at 24a). Moreover, the court stated that it would be

necessary, “prior to any final judgment respecting the

distribution of the waters of the Hanapepe,” to resolve

certain “factual and legal issues,” including, “most sig-

nificantly[,! the nature and scope of any remedies to be

afforded the parties” (id. at 24a-25a). The Supreme

Court likewise held that McBryde would not preclude an

independent action by respondents in state court with

respect to issues left unresolved by the McBryde opinion,

including the application of the principles of McBryde

to “existing diversions” (Pet. App. 42a). The court

stressed that McBryde did not determine whether the

cessation of any given diversion would constitute a “‘tak-

ing” (Pet. App. 42a).

Finally, the Supreme Court advised the court of ap-

peals that state law prior to McBryde was unsettled and

confusing (Pet. App. 42a-50a). In its view, only tliree cases

addressed “surplus” waters in the 125 years between the

Great Mahele and McBryde; in each, surplus water was

treated differently, and “in none of them did the court

even attempt to clearly define or quantify the nature of

this right” (Pet. App. 47a-48a). The court also explained

that these prior cases recognized that “surplus” water

was a residual category, to which the undefined interests

of other users were superior (id. at 49a).

In sum, the Supreme Court interpreted its McBryde

decision as a reassertion of the sovereign authority to

“enforce the usufructs of the land for the common good’ ”

(Pet. App. 54a) and a rejection of respondents’ assertion

of “absolute and exclusive” control over the use of waters

in the watershed (id. at 55a). The McBryde opinion,

however, was only the beginning of “a necessary defini-

tion of the parameters of the State’s authority,” which

would proceed on a case-by-case basis (Pet. App. 55a).

ce. After the Supreme Court of Hawaii answered the

certified questions, the court. of appeals nevertheless held

—- =

9

that the decision in McBryde resulted in an unconstitu-

tional taking of respondents’ property (Pet. App. la-13a).

The court of appeals found that respondents had “vested”’

property rights to divert water because they had relied

on the decree in Territory v. Gay and constructed diver-

sion works (Pet. App. lla, 12a), and it held that Mc-

Bryde could not “divest rights that were vested before the

court announced the new law” (Pet. App. 12a). Al-

though the court of appeals referred to the answers to

the certified questions (id. at 5a), it did not address the

substance of those answers, including the availability of

means by which respondents could contest any attempt by

the State to halt diversions. However, because petitioners

had taken no steps to interfere with respondents’ diver-

sions, the court of appeals vacated the injunction that

barred petitioners from seeking to enforce the decision in

McBryde and affirmed only the district court’s declara-

tory judgment (Pet. App. 13a).

ARGUMENT

There are lurking in this case a number of difficult and

potentially important questions concerning (i) the respec-

tive roles of the state and federal courts in the ascertain-

ment and enforcement of property rights created by

state law, and (ii) the authority of a federal district

court to entertain a suit raising issues of federal law that

are intertwined with questions that previously were dis-

posed of by the highest court of the State. The super-

imposition of these procedural questions on evolving and

novel principles of Hawaiian water law makes this case

one of extraordinary complexity. But as we see it, there

is no occasion for the Court to explore those issues here.

In its current posture, this case raises one legal issue that

overshadows all else.and suggests a simple and straight-

forward disposition.

The opinion of the Supreme Court of Hawaii in re-

sponse to the questions certified to it by the court of ap-

peals makes clear that the McBryde decision did not

finally determine respondents’ entitlement under state

law to divert water from the Hanapepe River and its

10

tributaries. The decision in McBryde therefore was not

the sort of “final” action by the State that could give rise

to a ripe taking claim under this Court’s decision in

Williamson County Regional Planning Comm’n v. Hamil-

ton Bank, No. 84-4 (June 28, 1985). Because the judg-

ment of the court of appeals constitutes a substantial in-

trusion into the state court proceedings in McBryde and

may inhibit the development of state water law more

generally, we suggest that the Court should grant the

petition for a writ of certiorari, vacate the judgment, and

remand the case to the court of appeals for further con-

sideration in light of Williamson County.

1. In Williamson County, the Court held that a claim

that a taking of property has been effected by zoning reg-

ulations is not ripe until the responsible administrative

agency “has arrived at a final, definitive position regard-

ing how it will apply the regulations at issue to the

particular land in question.” Slip op. 17. The Court

found this finality requirement to be “compelled by the

very nature of the inquiry required by the Just Compen-

sation Clause” (ibid.), under which the Court has en-

gaged in “ad hoe, factual inquiries into the circumstances

of each particular case.” Connolly v. Pension Benefit

Guaranty Corp., No. 84-1555 (Feb. 26, 1986), slip op. 13.

To assist in this assessment, the Court typically considers,

inter alia, the “economic impact of the challenged action”

and “the extent to which it interferes with reasonable

investment-backed expectations.” Williamson County, slip

op. 17; Connolly, slip op. 13-15. “Those factors simply

cannot be evaluated” until the administrative agency

“has arrived at a definitive position on the issue that

inflicts an actual, concrete injury” (slip op. 17, 19). The

Court further held in Williamson County that in order

for the finality requirement to be satisfied, the landowner

must invoke available procedures for obtaining a vari-

ance, which might enable him to develop his property to

the extent necessary to obviate any “taking” claim. Slip

op. 14-17. Accord, Hodel v. Virginia Surface Mining &

Reclamation Ass’n, 452 U.S. 264, 297 (1981); Agins v.

Tiburon, 447 U.S. 255, 260 (1980); Penn Central

11

Transportation Co. v. New York City, 438 U.S. 104,

136-137 (1978).

This case involves an alleged taking not as a result of

the acticn of a state administrative agency, as in Wil-

liamson County, but as the result of a decision rendered

by a state court that assertedly worked a radical change

in state property law and upset settled expectations. But

this distinction does not undermine the applicability of

the finality requirement of Williamson County and re-

lated cases. For where the State has assigned to its

courts the responsibility for defining and regulating prop-

erty rights,‘ it is only after the courts have taken defini-

tive action with respect to particular rights that the

economic impact of the judicially fashioned rules and the

extent of their interference with reasonable investment-

backed expectations could be considered by this Court on

direct view or by a federal district court considering a

taking claim in a separate suit (if the latter would not

be barred by the doctrine of Rooker v. Fidelity Trust Co.,

263 U.S. 413 (1923), discussed at note 7, infra).

Application of the finality rule in this case also fur-

thers the principles of comity that underlie the require-

ment that federal courts abstain from adjudicating fed-

eral questions that arise out of and could be presented

in ongoing proceedings in state court. See, e.g., Hawaii

Housing Authority v. Midkiff, 467 U.S. 229, 237-239

(1984) ; Middlesex Ethics Committee v. Garden State Bar

Ass’n, 457 U.S. 423, 4382-437 (1982) ; Gibson v. Berryhill,

411 U.S. 564, 577 (1973). The interest in comity is at

its zenith where, as here, the premise of the taking claim

is that a state court’s interpretation or application of

judicially fashioned principles of state law affecting prop-

erty interests was allegedly erroneous and a sharp de-

parture from prior law. In such a case, the state courts

should have every opportunity, before rendering a final

judgment, to correct or explain their rulings on questions

4 The state trial judge in McBryde exercised authority vested in

him as commissioner of private ways and water rights under

Hawaii Rev. Stat. §§ 234-30 to 234-36 (1955). See Pet. App. 197a.

12

of state law, to consider any claim that those state-law

rulings would give rise to a taking of property in certain

circumstances (see Pet. App. 42a), and otherwise to ac-

commodate competing interests. Premature intervention

into this process by the federal courts on a taking theory

could have the untoward effect of freezing the evolution

of state law. Cf. PruneYard Shopping Center v. Robins,

447 U.S. 74, 82-85 (1980); id. at 92-93 (Marshall, J.,

concurring) ; Munn Vv. Illinois, 94 U.S. 113 (1877).

2. When the irstant suit was commenced in federal

district court in 1974, it might have appeared that the

finality requirement of Williamson County was satisfied.

The decision of the Supreme Court of Hawaii in Mc-

Bryde had declared the State to be the owner of all

surplus water in the Hanapepe watershed and seemed to

bar the holders of appurtenant or riparian water rights

from using water on other lands. Moreover, although

G&R had been held in Territory v. Gay to be the owner

of all “normal” surplus water, the recognition of riparian

rights in McBryde apparently left no water in that

residual category. Nor could prescriptive rights be rec-

ognized for the benefit of respondent McBryde because

prescription does not run against the State. See pages

4-6, supra. Standing alone, these rulings might have

been understood to be a conclusive determination under

state law of the nature and extent of respondents’ rights

to divert water from the Hanapepe and its tributaries for

use both within and without the watershed. In that

event, the finality requirement of Williamson County and

related cases would have been satisfied.

3.a. The answers to the certified questions rendered

by the Hawaii Supreme Court in 1982, however, dispelled

whatever air of finality had surrounded the decision in

McBryde. Those answers, in the form of a _ published

opinion rendered after briefing and oral argument by

the parties, must be regarded as the dispositive exposition

of the meaning and consequences of the McBryde deci-

sion as a matter of state law. Indeed, the court of ap-

peals’ express purpose in making the certification was to

obtain an authoritative construction of the McBryde opin-

13

ion (see Pet. App. 414a), “ ‘which might avoid in whole

or in part the necessity for federal- constitutional ad-

judication, or at least materially change the nature of

the problem.’” Bellotti v. Baird, 428 U.S. 182, 147

(1976) (quoting Harrison v. NAACP, 360 U.S. 167,

177 (1959)). Yet when it received the answers to the

questions, the court of appeals failed to appreciate their

significance to the “taking” inquiry, and instead essen-

tially ignored them. For example, the court of appeals

failed even to mention, much less rebut, the Hawaii

Supreme Court’s explanation, given in direct response -

to one of the court of appeals’ questions, that the law of

Hawaii with regard to the ownership of surplus water

was unclear prior to McBryde (Pet. App. 44a-5la).®

But the court of appeals nevertheless held that respond-

ents had “vested” rights based on state law prior to

McBryde (Pet. App. 10a-12a).°

5 The courts below appear to have applied an essentially de novo

standard of review to the state court’s determination of the content

of state property law (see Pet. App. 98a-103a). We believe that

approach fails to accord sufficient deference to the state court. The

court of appeals relied on the concurring opinion of Justice Stewart

in Hughes v. Washington, 389 U.S. 290, 296-297 (1967), which

steted that “[w]hether [a state court] decision * * * worked an

unpredictable change in state law * * * inevitably presents a federal

question for the determination of this Court.” But that statement

did not mean that federal courts may freely impose their own views

on the content of state property law. Indeed, Justice Stewart would

have restricted the scope of the federal court’s inquiry to whether

the state court’s pronouncements were “reasonable.” Jd. at 296.

The inquiry has been described in a related context as whether the

state decision has “fair support” or a “fair and suhstantial basis.”

Demorest v. City Bank Co., 321 U.S. 36, 42-48 (1944). If so, the

federal court will not “substitute its own view of what should be

deemed the better rule, for that of the state court” (id. at 42 (foot-

note omitted) ).

6 The court of appeals identified the actions that rendered the

water rights ‘‘vested” as the decree in Territory v. Gay (Pet. App.

12a) and the construction of diversion works and past use of waier

(id. at 1la). The court apparently believed that any disturbance

of those “vested” rights would of necessity effect an unconstitutional

taking. In our view, this formulation of the circumstances in which

a taking of respondents’ asserted rights in water would occur is too

14

b. For present purposes, however, the importance of

the Hawaii Supreme Court’s answers to the certified

questions is in their description of the issues of state law

affecting respondents’ rights that remain to be resolved

after the Supreme Court’s decision in McBryde—and

simplistic, at least without a much firmer foundation in the law of

Hawaii than is exhibited by the court’s opinion. Cf. Williamson

County, slip op. 18-19 n.12.

We do not dispute that the judgment of a court may vest a prop-

erty right under governing law—as, for example, in the general

adjudications that are conducted in many western States to settle

all of the rights to the use of the waters of a particular stream.

See Nevada v. United States, 463 U.S. 110, 130-134, 138-141 (1983).

However, Territory v. Gay was not a general adjudication of all

rights to the waters of the Hanapepe River, and it did not even

quantify the respective rights of the Territory and G&R, the only

parties to the case. Although the judgment in Territory v. Gay

nevertheless has a certain res judicata effect as between those

parties (see Pet. App. 28a-31la), it is not clear, as a matter of state

law, that the judgment actually “vested” any property rights in

G&R, much less in the other respondents in this case. Similarly,

although the building of diversion works and the beneficial applica-

tion of water may be important events in the “vesting” of water

rights in those States that recognize the doctrine of prior appropri-

ation (see Nevada v. United States, 463 U.S. at 123-126), those

events are not necessarily determinative of the particular water

rights claimed in this case, which are based in large measure on the

mere ownership of certain land (ancient taro lands and ilis

kupono).

We agree that, in the absence of a noxious use or similar adverse

impact on others, past and présent uses of property ordinarily must

be respected if the implementation of a new regulatory program is

to avoid giving rise to a taking of property within the meaning of

the Just Compensation Clause. See Penn Central, 438 U.S. at 136;

id. at 144-145 (Rehnquist, J., dissenting). Nevertheless, the Court

has held that, in certain circumstances, even an existing use may be

proscribed without effecting a taking. See id. at 125-126. At the

same time, a prohibition against the future exercise of a previously

uninvoked incident of ownership may, in the proper case, effect a

taking. See United States v. Riverside Bayview Homes, Inc., No.

84-761 (Dec. 4, 1985), slip op. 4. Thus, to the extent the decision

of the court of appeals is based on concepts of “vesting” that are not

rooted in state law, it results in a declaration regarding the circum-

stances in which a taking will be found that is potentially both

under- and over-inclusive.

15

that apparently remain open in further proceedings in

McBryde itself. First, contrary to what appears to have

been the parties’ prior understanding (see, e.g., Pet. App.

39a n.22), the answers to the certified questions now

make clear that the decision in McBryde did not con-

stitute the final disposition of that case (Pet. App. 23a-

24a). The only determination with res judicata effect

was the quantification of the appurtenant water rights

for ancient taro lands, which was affirmed in McBryde

and is not at issue here. The Supreme Court’s reversal

of the remainder of the trial court’s judgment simply

rendered that remainder void, thereby permitting a “con-

tinuation of the case at the trial level’ with regard to

all aspects of the case except the quantification of ap-

purtenant water rights for ancient taro lands (Pet. App.

24a).

The Supreme Court recognized that it also had ad-

dressed other issues in its opinion in McBryde: it “con-

firmed the existence of riparian rights, delineated limita-

tions on the right to transport appurtenant and riparian

waters, and found that the State was the owner of sur-

plus waters” (Pet. App. 23a). But because it did not

give instructions to the trial court on these questions or

exercise its own authority to render a final judgment, the

court’s rulings on these questions have only the status

of the “‘law of the case’” in the further proceedings

that must take place in the trial court before a final

judgment is entered (id. at 24a). The Supreme Court

explained that those rulings would “serve as a founda-

tion” for such further proceedings but “would not neces-

sarily be completely dispositive’ of them, because the

doctrine of the law of the case is “ ‘not subject to the

inflexibility of res judicata’” (id. at 24a & n.9, quoting

Glover Vv. Fong, 42 Hawaii 560, 578 (1958)). Thus, al-

though the Supreme Court has expressed its opinion at

an interlocutory stage of the proceedings on questions of

law that might eventually affect respondents’ property

rights, it has not incorporated those rulings into a final

judgment that has a binding effect on respondents. And

16

until it does so, the Supreme Court presumably retains

the authority to alter its rulings. Compare Arizona V.

California, 460 U.S. 605, 618-619 (1983).

This case therefore is in the same posture in which the

administrative proceedings in Williamson County would

have been if the Planning Commission had expressed its

opinion on certain legal issues but had not yet denied the

developer’s subdivision application. In that event, the

developer clearly would not have obtained the requisite

“final decision” regarding if and how it would be per-

mitted to develop the land, and it therefore would not

have a ripe taking claim. Williamson County, slip op. 17.

So here, until judicial proceedings are “complete” (id. at

22), the responsible state entity has not rendered its

“final decision” that binds respondents and has concrete

legal consequences for them. At least until that time,

respondents may continue to divert water. In short, the

mere rendering of a legal opinion at an interlocutory

stage of proceedings in state court concerning respond-

ents’ rights does not constitute a “taking” of their prop-

erty. Kirby Forest Industries, Inc. v. United States, 467

U.S. 1, 15 (1984); Agins, 447 U.S. at 263 n.9; Danforth

v. United States, 308 U.S. 271, 285 (1939).

Nor is this an instance in which further proceedings in

state court would have no effect on respondents’ taking

claim. Cf. Cox Broadcasting Corp. v. Cohn, 420 U.S. 469,

477-487 (1975). To the contrary, the Hawaii Supreme

Court’s answers to the certified questions establish that

the decision in McBryde did not eradicate all bases for

protection of respondents’ diversions and that a number

of issues bearing on that protection remain to be decided

in state court.

For example, although the McBryde decision declares

the State to be the owner of all surplus water in the

Hanapepe watershed (Pet. App. 162a-174a), the answers

to the certified questions make clear that McBryde did

not have reference to ownership in the corporeal sense,

under which the State could dispose of the water entirely

as it pleases, but rather contemplated the retention by

17

the State of authority “to assure the continued existence

and beneficial application of the resource for the common

good” (Pet. App. 5la (footnote omitted)). As this

Court has recognized, the public ownership theory is

“but a fiction expressive in legal shorthand of the im-

portance to its people that a State have power to pre-

serve and regulate the exploitation of an important re-

source.’” Sporhase v. Nebraska ex rel. Douglas, 458

U.S. 941, 951 (1982) (quoting Hughes v. Oklahoma,

441 U.S. 322, 334 (1979), and Toomer v. Witsell, 334

U.S. 385, 402 (1948)). See also Sporhase, 458 U.S. at

951-954. But this Court has “made it quite clear that the

mere assertion of regulatory jurisdiction by a govern-

mental body does not constitute a regulatory taking.”

United States v. Riverside Bayview Homes, Inc., No.

84-701 (Dec. 4, 1985), slip op. 4-5.

Beyond this, McBryde and the answers to the certified

questions establish only that the Robinson respondents

do not own the surplus water in the sense of having the

unfettered right to use it in any manner they choose,

and that none of the respondents has “absolute and ex-

clusive” interests in the water, including an “inherent

enforceable right’ to transmit water beyond the land

to which their usufructory interests appertain (Pet. App.

19a, 55a). But the Supreme Court of Hawaii authori-

tatively held in the answers to the certified questions that

the application of the general principles in the McBryde

opinion to any particular diversions and the circumstances

under which any existing diversions may continue were

not addressed or decided in McBryde, even as the law of

the case. Pet. App. 19a-2la, 23a-25a, 42a. The Supreme

Court made clear, in fact, that diversions would be barred

“only after a careful assessment of the interests * * *

involved indicates a need for restraint” (id. at 2la) and

that any action to restrain diversions would require con-

sideration of the equitable doctrines of laches, estoppel,

and public use (id. at 19a-20a). These questions appar-

ently remain open in further proceedings in McBryde

itself, since the answers to the certified questions state

that among the “unresolved factual and legal issues” in

18

that case are “the nature and scope of any remedies to

be afforded the parties” (Pet. App. 25a). They also may

be addressed in an independent action brought in state

court by either petitioner or respondent (id. at 19a-21la,

42a).

These procedures in state court by which respondents

may be permitted to divert water afford the possibility

for the very protection that the court of appeals held to

be constitutionally compelled for what it termed respond-

ents’ “vested rights’ (Pet. App. 10a-12a). Resort to

state judicial procedures, either in McBryde itself or in

an independent acticn, therefore is directly analogous to

the application for a variance or similar administrative

relief that this Court held in Williamson County (slip op.

12-18) and Virginia Surface Mining (452 U.S. at 297)

might serve to permit uses of property to the extent nec-

essary to obviate any taking problem. Thus, until the

state courts have “arrived at a final, definitive position”

(Williamson County, slip op. 17) regarding existing di-

versions, it cannot be determined whether respondent’s

interests will be so substantially impaived by an actual

prohibition as to preclude “economically viable uses” of

their alleged rights under pre-McBryde law (Riverside

Bayview Homes, slip op. 5) or to undermine substan-

tially their “investment backed expectations’ (Kaiser .

Aetna, 444 U.S. at 175). See also Penn Central, 438 U.S.

at 130-131; Andrus v. Allard, 444 U.S. 51, 66 (1979).

4. In sum, we believe it is quite clear on the basis of the

answers to the certified questions that no final action

that could amount to a “taking” of respondents’ property

has yet occurred in the McBryde case. Accordingly, this

federal suit should be dismissed, so that any necessary

state court proceedings may run their course and thereby

perhaps obviate any taking claim, or at least sharpen the

inquiry into the various factors that are relevant to such

a claim. We recognize, however, that the decision of the

court of appeals in this case was rendered before Wil-

liamson County, which greatly clarified the role of final-

ity as a prerequisite to a taking claim. The Court there-

fore might wish to vacate the judgment below and

19

remand the case to the court of appeals for further con-

sideration in light of Williamson County. in any event,

the Court should grant the petition in order to eliminate

the substantial intrusion by the courts below into the liti-

gation in state court with regard to water rights in the

Hanapepe watershed and, more generally, into the case-

by-case development of state water law by the Supreme

Court of Hawaii.’

7If, as we submit, the appropriate disposition is for this case to

be dismissed for lack of final action by the State that could give

rise to a taking claim, the other issues presented by petitioners are

of no moment here. Petitioners contend (Pet. 20-22; Pet. Reply

Br. 6-8) that the Hawaii Supreme Court’s decision in McBryde

precludes respondents from bringing their taking claim in federal

district court, because “‘a United States District Court has no

authority to review final judgments of a state court in judicial

proceedings. Review of such judgments may be had only in this

Court’” (Pet. 20, quoting District of Columbia Court of Appeals v.

Feldman, 460 U.S. 462, 482 (1983)). See Rooker v. Fidelity Trust

Co., 263 U.S. 413 (1923). However, it now is clear in light of the

answers to the certified questions that the decision in McBryde

was not a “final judgment or decree” of the Supreme Court of

Hawaii chat was subject to review by this Court under 28 U.S.C.

1257, because important questions remained to be decided in that

case that would have a direct bearing on respondents’ taking claim.

The defect in the judgment below therefore is that it intrudes into

non-final state court proceedings—a subject addressed not by Feid-

man and Rooker, but by the abstention doctrine as a general matter

(see Pet. Reply Br. 9-10) and by the finality requirement of Wiiliam-

son County in the particular context of a taking claim.

Petitioners’ related contention (Pet. 24-26) that the full faith

and credit statute, 28 U.S.C. 1738, bars relitigation of respondents’

tahing claim in this case is misplaced for similar reasons. As peti-

tioners acknewledge, that statute “ ‘requires a federal court to look

first to state preclusion law in determining the preclusive effects of

a state court judgment’” (Pet. 24 (quoting Marrese v. American

Academy of Orthopaedic Surgeons, No. 83-1452 (Mar. 4, 1985), slip

op. 7)). See also Parsons Steel, Inc. v. First Alabama Bank, No. 84-

1616 (Jan. 27, 1986). In this case, the Hawaii Supreme Court held

in its answers to the certified questions that because no final judg-

ment has been entered in McBryde on any issue other than the

quantification of appurtenant water rights (which is not at issue

here), the decision in McBryde has no bar-andc-merger or issue-

preclusion effect that is relevant to this case. At present, the

20

CONCLUSION

The petition for a writ of certiorari should be granted,

the judgment of the court of appeals vacated, and the

case remanded to the court of appeals for further consid-

eration in light of Williamson County Regional Planning

Commission Vv. Hamilton Bank, No. 84-4 (June 28, 1985).

Respectfully submitted.

CHARLES FRIED

Solicitor General

F. HENRY HABICHT II

Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

PETER R. STEENLAND, JR.

ANNE §S. ALMY

Attorneys

MAY 1986

McBryde rulings regarding riparian rights, the transportability of

water, and State ownership of surplus water, are merely the law of

the case (Pet. App. 23a-24a). Thus, until a final judgment is

entered in McBryde on other issues that relate directly to respond-

ents’ taking claim, neither the doctrine of res judicata nor the full

faith and credit statute is the source of the bar to litigation in

federal court. By the same token, when a final judgment is entered

in McBryde, respondents will be free to present to this Court on

direct review under 28 U.S.C. 1257 any constitutional objections to

the effect that the actions of the state courts might have on their

property rights—including their claim that the decision in McBryde,

either on its face or as applied in future proceedings, results in an

unconstitutional taking of their property without just compensation

(see Pet. App. 42a).

* U. S. GOVERNMENT PRINTING OFFICE; 1986 421507 20231