Amicus Curiae Brief — Phelps Dodge Corp. v. United States

MOTION FILED (5)

MAY 2.1, 2001,

No. 00-1464

In the

Supreme Court of the United States

-

PHELPS DODGE CORPORATION and

ARIZONA PUBLIC SERVICE COMPANY,

Petitioners,

v.

THE UNITED STATES, et al., ~

Respondents.

+

On Petition for Writ of Certiorari to

the Supreme Court of the State of Arizona

>

MOTION FOR LEAVE TO FILE

BRIEF AMICUS CURIAE AND BRIEF

AMICUS CURIAE OF PACIFIC LEGAL

FOUNDATION IN SUPPORT OF PETITIONERS

4-

OF COUNSEL M. REED HOPPER

DAVID E. HADDOCK Counsel of Record

Pacific Legal Foundation Pacific Legal Foundation

10360 Old Placerville Road, 10360 Old Placerville Road,

Suite 100 Suite 100

Sacramento, California 95827 Sacramento, California 95827

Telephone: (916) 362-2833 Telephone: (916) 362-2833

Facsimile: (916) 362-2932 Facsimile: (916) 362-2932

Counsel for Amicus Curiae Pacific Legal Foundation

oe

Vfe

i

QUESTION PRESENTED

Does a sudden, unpredictable and retroactive change in

judicial precedent that revokes vested property rights in ground-

water constitute a taking of private property without just com-

pensation in violation of the Fifth Amendment to the United

States Constitution?

il

MOTION FOR LEAVE TO FILE BRIEF

AMICUS CURIAE IN SUPPORT OF PETITIONERS

Pursuant to Supreme Court Rule 37, Pacific Legal

Foundation (PLF) respectfully moves this Court for leave to

submit the attached brief amicus curiae in support of

Petitioners, Phelps Dodge Corporation, et al.' Written consent

for amicus participation in this case was granted by Arizona

Public Service Company; Bella Vista Ranches, LLP; Bella

Vista Water Co., Inc.; Central Arizona Irrigation and Drainage

District; City of Pheonix; City of Tempe; Cortaro-Marana

Irrigation District; Cortaro Water Users Assoc.; Helm & Kyle,

Ltd.; Maricopa County Water Conservation District No. 1, et

al.; New Magma Irrigation and Drainage District; Phelps Dodge

Corporation; Rigby Water Co., Inc.; Roosevelt Irrigation

District; The United States; Town of Gilbert; Town of Wicken-

burg; Valencia Water Co., Inc. Letters indicating consent have

been lodged with the clerk of this Court. Written consent was

denied by the Gila River Indian Community; San Carlos

Apache Tribe; Tonto Apache Tribe, et al.; Yavapai Apache

Nation, and the remaining parties have not responded.

INTEREST OF AMICUS CURIAE

Pacific Legal Foundation is the largest and most

experienced nonprofit, public interest law foundation of its kind

in America. Founded in 1973, PLF provides a voice in the

courts for mainstream Americans who believe in limited

government, private property rights, individual freedom, and

free enterprise. PLF litigates nationwide in state and federal

courts with the support of thousands of citizens from coast to

coast. PLF is headquartered in Sacramento, California, and has

' Pursuant to Supreme Court Rule 37.6, Amicus Curiae Pacific Legal

Foundation affirms that no counsel for any party in this case

authored this brief in whole or in part; and, furthermore, that no

person or entity has made a monetary contribution specifically for

the preparation or submission of this brief.

ill

offices in Miami, Florida; Honolulu, Hawaii; Bellevue,

Washington; and a liaison office in Anchorage, Alaska. PLF

has a long history of advocacy before this Court and has

participated in numerous cases involving the Takings Clause of

the Fifth Amendment to the United States Constitution. For

example, earlier this term, PLF attorneys represented

Mr. Palazzolo in Palazzolo v. Rhode Island (99-2047) (decision

pending). PLF attorneys represented the Nollans in Nollan v.

California Coastal Commission, 483 U.S. 825 (1987); and

Mrs. Suitum in Suitum v. Tahoe Regional Planning Agency,

520 U.S. 725 (1997).

PLF seeks to augment the arguments of Petitioners by

discussing the concept of judicial takings as a significant federal

issue that has not been resolved by this Court. PLF believes its

public policy perspective and litigation experience will provide

an additional viewpoint on the legal issues presented.

For the foregoing reasons, the motion of Pacific Legal

Foundation to file a brief amicus curiae should be granted.

DATED: May, 2001.

Respectfully submitted,

OF COUNSEL M. REED HOPPER

DAVID E. HADDOCK Counsel of Record

Pacific Legal Foundation Pacific Legal Foundation

10360 Old Placerville Road, 10360 Old Placerville Road,

Suite 100 Suite 100

Sacramento, California 95827 Sacramento, California 95827

Telephone: (916) 362-2833 Telephone: (916) 362-2833

Facsimile: (916) 362-2932 Facsimile: (916) 362-2932

Counsel for Amicus Curiae Pacific Legal Foundation

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TABLE OF CONTENTS

Page

Ce STEED hvac eu ccnp dss ecenneusennceens i

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE IN SUPPORT OF PETITIONERS ................ il

INTEREST OF AMICUS CURIAE ....... cc ccc cc sccncees ii

RES Ce PP REE 6 6b oh ee edhe hh dees teretekanes Vv

RRR EEE GE BOS hc occ c addon snnddnnadancins l

SUMMARY OF THE ARGUMENT ..................465 2

PRN Te Fe yr rye CTT eT Pree TET EEL ere 4

I. THE SCOPE OF ANY CONSTITUTIONAL

LIMITATION ON SO-CALLED “JUDICIAL

TAKINGS” IS AN IMPORTANT QUESTION OF

PRE a nd buc's S4NChSUNEN Reaeekbe seb ees 4

ll. THIS COURT HAS NOT ADDRESSED THE

SCOPE OF “JUDICIAL TAKINGS” ................ 7

Ill. THIS COURT SHOULD ADDRESS THE SCOPE

OF “JUDICIAL TAKINGS” IN THIS CASE

BECAUSE OF THE IMPACT THE CONCEPT IS

HAVING ON STATE AND FEDERAL COURTS

AND BECAUSE THE ARIZONA SUPREME

COURT HAS REDEFINED STATE PROPERTY

LAW SO DRAMATICALLY THAT PRIVATE

eto tpg oR hy ¢ |, Re 1]

A. Despite the Lack of Guidance from

This Court, Courts Throughout the

Nation Are Applying the Concept of

“Judicial Takings” with Mixed Results .......... 11

B. This Case Presents a Good Opportunity for

Resolving the Problem of “Judicial Takings,”

Because the Changes in Precedent Are Clear,

and the Impacts on Property Are Severe ......... 15

TR OE Fre Hor HAAN a etre nr 20

v

TABLE OF AUTHORITIES

Page

Cases

Bonelli Cattle Co. v. Arizona,

SIR Rs Sar HOTee 45 ce ioe ocak cba veknakanes ll

Bott v. Natural Resources Comm'n,

SOT Bh. W sa OO CI ROD i wtk toa ndanteateaks 13

Bouie v. City of Columbia, 378 U.S. 347 (1964) ......... 6

Brinkerhoff-Faris Trust & Savings Co. v.

GRNlg MOR Wis OTP CRON 85 0065 h 45 6s cn eeb een ee 8-9

Bristor v. Cheatham, 255 P.2d 173 (Ariz. 1953) ......... a

Broad River Power Co. v. South Carolina,

Bet UR Doe ASOD has cee ennnsa eee 4-5

Buah v. ah, C20 SA Gao Gee kk nw bk veeiwes 5-6

Butner v. United States, 440 U.S. 48 (1979) ............ 4

Cantwell v. Connecticut, 310 U.S. 296 (1940) .......... 7

Chicago, Burlington & Quincy Railroad

Co. v. Chicago, 166 U.S. 226 (1897) ............... 5

City of Los Angeles v. Pomeroy,

SF Fs es PED ec bbb bb ew chase keneeta oa

Corp. of Presiding Bishop of the Church

of Jesus Christ of Latter-Day Saints v.

Hodel, 830 F.2d 374 (D.C. Cir. 1987) ............. 12

Dolphin Lane Assoc. v. Town of Southampton,

339 N.Y.S.2d 966 (1971), aff'd, 351 N.Y.S.2d

364 (1973), modified, 37 N.Y.2d 292 (1975) ......... 13

Hawaii v. Zimring, 566 P.2d 725 (Haw. 1977) ...... 13-14

Hughes v. Washington, 389 U.S. 290 (1967) ....... 3, 9-11

vi

TABLE OF AUTHORITIES—Continued

Page

In re General Adjudication of All Rights

to Use Water in the Gila River System

and Source, 9 P.3d 1069 (Ariz. 2000)........... 18-19

In re General Adjudication of All Rights

to Use Water in the Gila River System

and Source, 989 P.2d 739 (Ariz. 1999) ............. 16

In re General Adjudication of All Rights

to Use Water in the Gila River System

and Source, 857 P.2d 1236 (Ariz. 1993)......... 16, 19

In re Rights to the Use of the Gila River,

i. Fo: PPP er error ee 5

Lucas v. South Carolina Coastal Council,

505 US. SRP CHSUE é.cnstaccsanbsnsuccseeuseue 6

Marbury v. Madison, 5 U.S. (1 Cranch)

157 COGGES 0 6:00:02 00800004600h4staseeeeeeeee 7

Maricopa County Municipal Water

Conservation District No. 1 v. Southwest

Cotton Co., 4 P.2d 369 (Ariz. 1931) ............ 15-19

McKenzie v. Moore, 176 P. 568 (Ariz. 1918) .......... 17

Muhlker v. New York & H. R. Co.,

597 U.S. SOCCISSGD 6ckcvecs nednceseaedaneen 7-8

National Association for the Advancement

of Colored People v. Alabama ex rel.

Patterseh, 357 UB. FD GRD sc iveccticenicesdene 6

Nollan v. California Coastal Commission,

4635 UB. GIS CPST. ccctvcevicdvisanvnaniedeunns 6

Oregon v. Corvallis Sand & Gravel Co.,

429 US. SGB GTI) seiccnksandssesadaedewe 11,13

Vii

TABLE OF AUTHORITIES—Continued

Page

Oregon v. Corvallis Sand & Gravel Co.,

ae de Ae ee BOTT 6ncdn sd cerbasacnassnees 13

Robinson v. Ariyoshi, 753 F.2d 1468 (9th Cir.

1985), vacated, 477 U.S. 902 (1986) .............. 13

Shelley v. Kraemer, 334 U.S. 1 (1948) ................ 7

Sotomura v. County of Hawaii,

460 F. Supp. 473 (D. Haw. 1978) .............. 12-13

Town of Chino Valley v. State Land Dept.,

ie got Be )6=6LPPPPPrrrrrTrrrirriri: y 5

United States v. Gerlach Live Stock Co.,

FOO Us TAO CRE b.6d00h00easndaedadseans ieee 5

Van Ness v. Borough of Deal,

TS AZESTE GER. TOUED ci ncracdsccccansssveadves 13

United States Constitution

OS. Comet. GRE. V fi vccdeia cca ctdecditsawnes 5, 11

Statute

Ariz. Rev. Stat. § 45-101 (2000) .................... 17

SEU cuvncssdadaewcsdsusuwnet i aceneaes 17

Miscellaneous

Arthur D. Hellman, By Precedent Unbound:

The Nature and Extent of Unresolved Intercircuit

Conflicts, 56 U. Pitt. L. Rev. 693 (1995) ........... 14

Barton H. Thompson, Jr., Judicial Takings,

76 Va. L. Rav. BORD CIGD oo cccccccesccecascsece 10

I

STATEMENT OF THE CASE

In 1974, a general adjudication ofall rights to use water on

the Gila River System was initiated in the State of Arizona.

This adjudication is still continuing. It involves more than

66,000 claims by more than 24,000 claimants, and is one of the

most complex legal proceedings ever adjudicated in the United

States. Ultimately, this case will decide the amount of water to

which users are entitled for farming, domestic, and other uses.

Since Arizona has such an arid climate, the allocation of water

is a very serious matter.

In the course of framing issues that would determine the

future course of the adjudication, the trial court held hearings

on the relationship between groundwater and surface water.

This relationship is extremely important because of the nature

of Arizona’s water supply and the differences between surface

water and groundwater in Arizona water law. Under Arizona

law, surface water may be appropriated, but groundwater may

not. Instead, landowners have a right to use the groundwater

below their land for reasonable beneficial purposes without

having to submit to the regulatory scheme that controls

appropriation. This is significant because the water supply of

the Gila River System is over appropriated. In other words,

water users have appropriative rights to use more surface water

than the system can supply. Thus, if the Arizona courts are

permitted to redefine appropriable surface water to include

water that was previously considered groundwater, landowners

who rely on groundwater will lose their long-held right to

reasonable use of such waters.

Water appropriation is governed by the principle of “first

in time, first in right.” Those who appropriate earlier have a

higher right that is paramount over those who appropriate later.

Thus, in times of shortage (which in Arizona is essentially all

the time), later appropriators will not get as much water as prior

appropriators. Since, in the past, groundwater use was not

2

governed by the law of appropriation, users of groundwater may

have no priority to use surface water. Therefore, some ground-

water users whose water is redefined to be appropriable surface

water will be left without any right to use water whatsoever.

Unfortunately, this is exactly what has happened. The trial

court that is overseeing the adjudication determined that surface

water includes any water from the “subflow” zone of a stream.

The “subflow” zone is very large and includes water being

pumped and utilized miles away from the stream itself.

Arizona law has never interpreted surface water to extend so

far. Now, landowners who have been pumping groundwater for

years with the understanding that Arizona law protects as

property their right to use the water under their land must

submit to an adjudicatory proceeding that threatens to entirely

eliminate their rights.

On September 22, 2000, the Arizona Supreme Court

affirmed the trial court’s definition of surface water. Groundwater

users argued before the Arizona Supreme Court that the trial,

court’s definition of surface water redefined their property right so

dramatically that it constitutes a taking of that nght in violation of

the Fifth Amendment. The Arizona Supreme Court rejected that

argument in a single paragraph, asserting for the first time that

there is no property right in the use of groundwater. The

Petitioners have asked the United States Supreme Court to

review the case because they claim the adjudication has resulted

in their private property being taken for public use without just

compensation in violation of the Takings Clause of the Fifth

Amendment.

SUMMARY OF THE ARGUMENT

This case presents an important question of federal law

that has not been, but should be, settled by this Court. Since the

Fifth Amendment, through the Fourteenth Amendment, is a

constitutional limitation on the power of the states, alleged

infringements by states of the Fifth Amendment right not to

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have one’s private property taken for public use without just

compensation are questions of federal law. This Court has

often examined state acts to determine whether they go too far

in violating constitutional provisions. This Court has speci-

fically required such an inquiry when the issue is whether

property has been taken in violation of the Fifth Amendment.

The United States Supreme Court has not explained

whether the Fifth Amendment places any limitation on the

power of state courts to redefine the nature of property. Never-

| theless, earlier decisions of this Court, along with an important

concurrence by Justice Stewart in Hughes v. Washington, 389

U.S. 290 (1967), have encouraged state and federal courts at

every level to modify their decisions in order to avoid “judicial

takings.” In contrast, however, many courts, like the state court

in this case, have issued decrees which change long-held

property rights without regard for constitutional implications.

Therefore, this Court should determine whether a court may

take private property without the payment of just compensation

by means of judicial fiat.

The case at bar raises the important federal question of

“judicial takings” clearly. The Arizona Supreme Court has

abandoned a narrow rule defining surface water that has been

in effect for 70 years. By eliminating the requirement that

appropriable underground water travel in water courses with

well-defined banks, the Arizona Supreme Court has permitted

changing principles of hydrology to extend the effective

boundaries of the surface stream many miles away from the

stream itself, far beyond what the law ever allowed previously.

Consequently, wells that have been thought to pump ground-

water, now risk being redefined as wells pumping surface

water. As a result, many farmers who depend upon a source of

groundwater that they thought was a legal right appurtenant to

their title in land, will be deprived of the very font of their

livelihood.

4

ARGUMENT

I

THE SCOPE OF ANY

CONSTITUTIONAL LIMITATION ON

SO-CALLED “JUDICIAL TAKINGS” IS AN

IMPORTANT QUESTION OF FEDERAL LAW

The United States Supreme Court has recognized that

“{p]roperty interests are created and defined by state law.”

Butner v. United States, 440 U.S. 48, 55 (1979). Nevertheless,

when rights defined by state law are protected by the United

States Constitution, the infringement of those rights becomes a

question of federal law that is properly resolved by this Court.

This is so even when the infringement is allegedly accom-

plished by state courts. In 1930, this Court explained:

Whether the state court has denied to nights

asserted under local law the protection which the

Constitution guarantees is a question upon which the

petitioners are entitled to invoke the judgment of this

Court. Even though the constitutional protection

invoked be denied on non-federal grounds, it is the

province of this Court to inquire whether the

decision of the state court rests upon a fair or

substantial basis. If unsubstantial, constitutional

obligations may not be thus evaded.

Broad River Power Co. v. South Carolina, 281 U.S. 537, 540-

41 (1930) (citations omitted).

The property interest at issue in this case is the right to use

water. The Arizona Supreme Court has acknowledged that the

right to use groundwater is a property right. See Bristor v.

Cheatham, 255 P.2d 173 (Ariz. 1953) (explaining that “many

and large investments have been made in the development of

ground waters. Under these circumstances: the court’s

announcement of the rule becomes a rule of property, and rights

4

5

acquired thereunder should not be disturbed . . . ; when a

decision does become a rule of property, the rights acquired

thereunder are entitled to protection under the law as

declared”’);-Town of Chino Valley v. State Land Dept., 580 P.2d

704, 709 (Ariz. 1978) (recognizing that interests in the use of

groundwater “are property rights”); and see also In Re Rights to

the Use of the Gila River, 171 Ariz. 230, 235 (1992) (“Water

rights are property rights.”). As property, these water rights are

protected by the Fifth Amendment to the United States

Constitution and may not be “taken for public use without just

compensation.” U.S. Const. amend. V; see United States v.

Gerlach Live Stock Co., 339 U.S. 725, 752-54 (1950) (holding

that owners of riparian water rights were entitled to

compensation when a federal project deprived them of the use

and flow of a stream); see also Chicago, Burlington & Quincy

Railroad Co. v. Chicago, 166 U.S. 226 (1897) (finding that the

Fifth Amendment applies to the states through the Fourteenth

Amendment). Consequently, whether the courts of Arizona

denied the protection the Constitution guarantees to these water

rights is a proper question for this Court.

Although this Court may not “substitute its own view” of

the state rule that defines property, the Court has repeatedly

emphasized that it is proper “to inquire whether the decision of

the state court rests upon a fair or substantial basis.” Broad

River Power Co. v. South Carolina, 281 U.S. at 540-41. As the

Chief Justice, along with Justices Scalia and Thomas, recently

explained,

[t]hough we generally defer to state courts on the

interpretation of state law-see, e.g., Mullaney v.

Wilbur, 421 U.S. 684, 44 L. Ed. 2d 508, 95 S. Ct.

1881-(1975)}+there are of course areas in which the

Constitution requires this Court to undertake an

independent, if still deferential, analysis of state law.

6

Bush v. Gore, 121 S. Ct. 525, 535 (2000) (Rehnquist, C. J.,

concurring). More particularly, where constitutional nights have

been an issue, this Court has searched the decisions of state

courts to determine whether the holdings of state courts could

be reconciled with state law precedent or, instead, whether the

scope of state law had been suddenly, unconstitutionally

broadened. See, e.g., Bush v. Gore, 121 S. Ct. at 535 (Rehnquist,

C. J., concurring) (discussing Bouie v. City of Columbia, 378

U.S. 347 (1964), and National Association for the Advancement

of Colored People v. Alabama ex rel. Patterson, 357 U.S. 449

(1958)).

This practice of searching state law has particular meaning

in the context of the Takings Clause of the Fifth Amendment.

As Chief Justice Rehnquist, and Justices Scalia and Thomas,

explained, the Supreme Court’s

jurisprudence requires us to analyze the “background

principles” of state property law to determine whether

there has been a taking of property in violation of the

Takings Clause. That constitutional guarantee would,

of course, afford no protection against state power if

our inquiry could be concluded by a state supreme

court holding that state property law accorded the

plaintiff no rights.

Bush v. Gore, 121 S. Ct. at 535 n.1 (Rehnquist, C. J., con-

curring). Consequently, this Court has reviewed the legislative

and regulatory acts of state and local governments to determine

whether they violate property rights and require just

compensation for property owners. See, e.g., Lucas v. South

Carolina Coastal Council, 505 U.S. 1003 (1992) (involving

South Carolina’s Beachfront Management Act); Nollan v.

California Coastal Commission, 483 U.S. 825 (1987) (con-

cerning permit conditions imposed by a regulatory agency).

However, the Court has said very little about any constraints the

Fifth Amendment may place on the acts of state courts.

eee

7

Nevertheless, it seems clear that the judiciary is just as capable

of violating constitutional rights as are the legislative and

executive branches of government. See Shelley v. Kraemer,

334U.S. 1, 20-21 (1948) (prohibiting the courts from enforcing

racial discrimination); Cantwell v. Connecticut, 310 U.S. 296,

306 (1940) (prohibiting courts from restraining freedom of

speech pursuant to statute). But, this Court has offered little

guidance as to how far a court may go in defining and

redefining property rights.

Since “[i]t is emphatically the province and the duty of the

judicial department to say what the law is,” Marbury v. Madison,

5 U.S. (1 Cranch) 137, 177 (1803), it falls to this Court,

ultimately, to say what limitations, if any, the Fifth and Four-

teenth Amendments place on the power of state courts to

redefine the nature of property.

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THIS COURT HAS NOT ADDRESSED

THE SCOPE OF “JUDICIAL TAKINGS”

In Muhlker v. New York & H. R. Co., 197 U.S. 544 (1905),

this Court confronted the problem of retroactive changes in

state property law made by state courts. The New York Court

of Appeals had denied compensation to landowners when

elevated railroads had been constructed over their property,

rejecting judicial precedents that guaranteed compensation. In

addressing this problem, four members of this Court exclaimed:

When the plaintiff acquired his title those cases were

the law of New York, and assured to him that his

easements of light and air were secured by contract

as expressed in those cases, and could not be taken

from him without payment of compensation.

And this is the ground of our decision. We are

not called upon to discuss the power or the

limitations upon the power, of the courts of New

8

York to declare rules of property or change or

modify their decisions, but only to decide that such

power cannot be exercised to take away rights which

have been acquired by contract and have come under

the protection of the Constitution of the United

States.

Muhlker, 197 U.S. at 570. This language suggests that the Fifth

Amendment prohibits state courts from modifying state

property law in a way that takes away vested rights. But, it is

only the opinion of four justices. In contrast, a dissent from

Justice Holmes took the opposite view and also represented the

views of four justices. According to Justice Holmes, the nature

of property rights is so thoroughly a question of state law that

the Court is “bound by the distinctions and the limitations of

those rights declared by the local courts,” and state courts can

change the nature of property rights without being constrained

by the Constitution. Muhlker, 197 U.S. at 572-77. Since each

view commanded an equal number of votes, it is unclear from

Muhlker what, if any, constraints the Fifth and Fourteenth

Amendments place on the power of judges to retroactively

change the nature of property.’

Unfortunately, in the 96 years since Muhlker, the problem

of “judicial takings” has not become more clear. To the con-

trary, this area of jurisprudence has produced only doubtful pre-

cedent. For example, this Court has never overturned a judicial

change in state property law on Fifth Amendment grounds, or

required just compensation, even if the change had a significant

impact on vested rights. Rather, some cases even suggest that

the Constitution cannot restrict changes in the common law

because the common law is by its nature changing. See, e.g.,

Brinkerhoff-Faris Trust & Savings Co. v. Hill, 281 U.S. 673

? Justice Brown concurred with the justices that found a taking, but

only in the result. No group of justices commanded a majority as to

the basis for the decision.

9

(1930). Nevertheless, in 1967, Justice Potter Stewart wrote a

concurrence in Hughes v. Washington, 389 U.S. 290, that has

seemingly given life to the concept of “judicial takings.”

In Hughes v. Washington, the owner of oceanfront

property in the State of Washington brought suit against the

state to determine whether the right to accretions was controlled

by state or federal law. Under federal law, accretions belonged

to the owner, but under state law, they belonged to the state.

The Supreme Court of Washington had found that state law

controlled and interpreted the state’s constitution to deny the

owners of oceanfront property in the state any further rights in

future accretions. The United States Supreme Court reversed,

holding that the question was governed by federal, not state,

law, and that under federal law, the property owner, who traced

her title to a federal grant prior to statehood, was the owner of

accretions. However, Justice Stewart’s concurring opinion has

become more significant than the opinion of the majority.

In concurrence, Justice Stewart proclaimed that states

cannot take property by simply redefining it. When a state makes

a decision about the nature of property that

arguably conforms to reasonable expectations, we

must of course accept it as conclusive. But to the

extent that it constitutes a sudden change in state

law, unpredictable in terms of the relevant

precedents, no such deference would be appropriate.

For a State cannot be permitted to defeat the consti-

tutional prohibition against taking property without

due process of law by the simple device of asserting

retroactively that the property it has taken never

existed at all.

Hughes v. State of Washington, 389 U.S. at 296-97 (Stewart, J.,

concurring).

10

Since Hughes, this Court has declined to address the

question of “judicial takings,” despite opportunities to do so.

According to Professor Barton Thompson, “the Court has so far

declined all offers to revisit the issue.”

Indeed, the Court treated the one judicial takings

case that it has heard since Hughes as a traditional

takings challenge—never mentioning the difficult

issue of whether judicial changes in the law may

violate the takings protections. . . . Pruneyard

[Shopping Center v. Robins, 447 U.S. 74 (1980)]

was a judicial takings case.... Yet the United

States Supreme Court entirely ignored the question

of whether judicial changes in the law are even

subject to the takings protections. Instead, the Court

treated the case as presenting a conventional takings

question and concluded that, although there had

“literally been a ‘taking’” of property, the taking did

not unreasonably impair the value or use of the

shopping center and thus was not unconstitutional.

Barton H. Thompson, Jr., Judicial Takings, 76 Va. L. Rev.

1449, 1469-70 (1990).

Although this Court has not addressed the “judicial

takings” question, it has cited Justice Stewart’s concurrence in

Hughes with approval. In Hughes, Justice Stewart stated:

Although the State in this case made no attempt to

take the accreted lands by eminent domain, it

achieved the same result by effecting a retroactive

transformation of private into public property—

without paying for the privilege of doing so.

Because the Due Process Clause of the Fourteenth

Amendment forbids such confiscation by a State, no

less through its courts than through its legislature,

and no less when a taking is unintended than when it

is deliberate, I join in reversing the judgment.

11

389 U.S. at 298. This language found its way into the Court’s

opinion in Bonelli Cattle Co. v. Arizona, 414 U.S. 313 (1973).

Although this Court found the issue “unnecessary to decide,” it

offered Justice Stewart’s statement for the proposition that

recognizing Arizona’s sudden claim to a portion of submerged

riverbed “would raise a serious constitutional issue as to

whether the State’s assertion of title is a taking without

compensation.” Bonelli, 414 U.S. at 331. Although Bonelli was

subsequently overruled, and Hughes limited by Oregon v.

Corvallis Sand & Gravel Co., 429 U.S. 363 (1977), the Court’s

inclusion of this passage gives added weight to the notion that

the Constitution does indeed place limits on the ability of state

courts to redefine property.

Despite these many clues about the meaning of the Fifth

Amendmentas a constraint on judicial action, this Court has not

resolved the issue. At present, there is significant uncertainty

as to how, if at all, the Takings Clause limits state courts. This

Court should grant the petition for writ of certiorari in this case

in order to clearly define these limits.

iil

THIS COURT SHOULD ADDRESS

THE SCOPE OF “JUDICIAL TAKINGS”

IN THIS CASE BECAUSE OF THE IMPACT

THE CONCEPT IS HAVING ON STATE AND

FEDERAL COURTS AND BECAUSE THE

ARIZONA SUPREME COURT HAS REDEFINED

STATE PROPERTY LAW SO DRAMATICALLY

THAT PRIVATE PROPERTY WILL BE TAKEN

A. Despite the Lack of Guidance from This Court,

Courts Throughout the Nation Are Applying the

Concept of “Judicial Takings” with Mixed Results

The District of Columbia Circuit summed up the problem

when it declared in 1987 that “the question of whether courts,

as opposed to legislative bodies, can ever ‘take’ property in

12

violation of the Fifth Amendment is an interesting and by no

means a settled issue of law.” Corp. of Presiding Bishop of the

Church of Jesus Christ of Latter-Day Saints v. Hodel, 830 F.2d

374, 381 (D.C. Cir. 1987). Despite the fact that the issue is

unsettled, federal and state courts throughout the United States

are deciding cases based upon the scant precedent that exists.

In Sotomura v. County of Hawaii, 460 F. Supp. 473

(D. Haw. 1978), the District Court of Hawaii held that the

Supreme Court of Hawaii had taken beach property from the

owners by ruling that the seaward line that separated public

from private property was located at the vegetation line rather

than the mean high tide line. Sotomura, 460 F. Supp. at 482.

Specifically, the court held that

[t]he Hawaii Supreme Court’s retroactive application

of the Ashford standards to locate the seaward

boundary of property at the vegetation line,

following erosion, ignoring vested property rights

and without determining the extent of actual erosion,

was so radical a departure from prior state law as to

constitute a taking of the Owners’ property by the

State of Hawaii without just compensation in

violation of rights secured to them by the Fourteenth

Amendment to the United States Constitution.

Id. at 482-83. The Sotomura court even declared that

[iJn an appropriate case, it now appears that the

United States Supreme Court today would probably

vote with Mr. Justice Stewart in ruling that a taking

of private property through a radical and retroactive

change in state law, effected by judicial decision, is

an unconstitutional taking. Justices Marshall and

White, the dissenters in Oregon, might even agree

since they stated there:

13

Stare decisis should be more than a fine

sounding phrase. . . . Accordingly,

“(a) substantial departure from precedent

can only be justified . . . in the light of

experience with the application of the rule

to be abandoned or in the light of an

altered historic environment” (Quoting

from Mitchell v. W. T. Grant Co., 416

U.S. 600 at 634-635, 94S. Ct. 1895, 40 L.

Ed. 2d 406). Such admonitions are even

more salient where land titles are

concerned.

Id. at 481 (quoting Corvallis Sand, 429 U.S. at 394-95). The

United States Court of Appeals for the Ninth Circuit reached a

similar conclusion in Robinson v. Ariyoshi, holding that a state

must bring condemnation proceedings before it may interfere

with vested rights. 753 F.2d 1468, 1475 (9th Cir. 1985),

vacated, 477 U.S. 902 (1986).

Justice Stewart’s concept of judicial takings has grown to

have influence not only in federal courts, but also in state

courts. Numerous state courts have refused to overrule prior

precedents out of concern that doing so might violate the

provisions of the Fifth Amendment. See, e.g., Bott v. Natural

Resources Comm'n, 327 N.W.2d 838, 849-53 (Mich. 1982)

(refusing to expand public access to waterways); Oregon v.

Corvallis Sand & Gravel Co., 582 P.2d 1352, 1363 (Or. 1977)

(refusing to change rules concerning ownership of riverbeds in

case of avulsion); and Dolphin Lane Assoc. v. Town of

Southampton, 339 N.Y .S.2d 966, 975 (1971) (refusing to change

dividing line between public and private beach), aff'd, 351

N.Y.S.2d 364 (1973), modified, 37 N.Y.S.2d 292, 3 (1975). In

contrast, where state courts have suddenly modified state

property law, dissenting judges have complained using takings

arguments. See, e.g., Van Ness v. Borough of Deal, 393 A.2d

571, 577-78 (NJ. 1978) (Mountain, J., dissenting); and Hawaii v.

14

Zimring, 566 P.2d 725, 756 (Haw. 1977) (Vitousek, J., dis-

senting).

Plainly, the notion of “judicial takings” has had a real in-

fluence on our nation’s courts. Both federal and state courts are

unclear as to how they should proceed. Some federal courts

have found “judicial takings,” while many state courts, wary of

violating Justice Stewart’s opinion, have failed to act. Other

state courts have acted to change state property law in the face

of dissents claiming that the decisions are unconstitutional

under Justice Stewart’s rule.

When the meaning of a provision of the Constitution is so

unclear that courts throughout the nation don’t know how or if:

the rule applies, providing clarity should be an urgent concern

of this Court. As Professor Hellman has explained, “the fact

that a federal statute has been enacted, or a constitutional

provision adopted, tells us that the American people have made

a decision that a matter should be dealt with in the same way

throughout the nation.” Arthur D. Hellman, By Precedent

Unbound: The Nature and Extent of Unresolved Intercircuit

Conflicts, 56 U. Pitt. L. Rev. 693, 757 (1995).

Rather than deal with “judicial takings” “in the same way

throughout the nation,” each court seems to choose its own rule,

or ignore the question altogether. This must be wrong. Either

the Fifth Amendment limits the power of state courts to

suddenly change state property law, or it does not. Only this

Court can decide whether, and how, the Fifth Amendment

applies to these cases. Therefore, this Court should provide a

clear rationale for distinguishing permissible judicial modifi-

cations to property from the impermissible. This case provides

a good opportunity for the Court to do this.

15

B. This Case Presents a Good Opportunity for

Resolving the Problem of “Judicial Takings,”

Because the Changes in Precedent Are Clear,

and the Impacts on Property Are Severe

The traditional principles governing Arizona groundwater

law were defined by the Arizona Supreme Court in Maricopa

County Municipal Water Conservation District No. 1 v. South-

west Cotton Co., 4 P.2d 369 (Ariz. 1931), in which the court

ruled that, with narrow exceptions, groundwater was not subject

to appropriation with surface water. It is clear that the

Southwest Cotton court understood the magnitude of its task to

clearly define water rights. The court explained:

The case is one of the most important which

has ever come before this court, involving as it does

not only property interests of the value of many

millions of dollars, but also a declaration of legal

principles which will in all probability determine and

govern to a great extent the course of future agri-

cultural development within the arid regions of

Arizona. ... We think, however, this case is proof

that the time has come when it is necessary for the

protection and guidance of future agricultural

development in the state that these principles should

be enunciated as clearly and definitely as possible, so

that our citizens may know how to guide their future

procedure.

Southwest Cotton, 4 P.2d at 372.

The Southwest Cotton court believed that a clear

enunciation of legal principles was necessary to protect future

agricultural development in the state. Moreover, the court

decided the differences between surface water and groundwater

with the understanding, and expectation, that the rule it declared

would be relied upon. Unfortunately, after the decision by the

16

Arizona Supreme Court in this case, Southwest Cotton no

longer governs.

In In re General Adjudication of All Rights to Use Water

in the Gila River System and Source, 989 P.2d 739 (Ariz. 1999),

the Arizona Supreme Court said it perceived its role as

“interpreting Southwest Cotton, not refining, revising,

correcting, or improving it.”” Jd. at 744 (quoting Jn re General

Adjudication of All Rights to Use Water in the Gila River

System and Source, 857 P.2d 1236, 1243-47 (Ariz. 1993)). Yet

in this case, the Arizona Supreme Court has made significant

revisions in the rules announced by Southwest Cotton, rules that

had been in place for 70 years. Specifically, the Arizona

Supreme Court has abandoned any requirement that appro-

priable groundwater be confined in “well-defined channels.”

From the earliest point in Arizona law, which derived

from the rules of Mexican law that were in existence at the time

Arizona became a state, the state could authorize the appro-

priation of underground waters only if they ran in definite

channels. See Southwest Cotton, 4 P.2d at 374. In furtherance

of this policy, the Legislature adopted Article 22 of the Bill of

Rights, which permitted the Legislature to allow appropriation

of “‘[a]ll streams, lakes, and ponds of water capable of being

used for the purposes of navigation or irrigation.’” Jd. at 373.

In Southwest Cotton, the Arizona Supreme Court made it clear

that if this power over appropriation is to extend to under-

ground ‘waters, it must include only those underground waters

that are similar to “streams, lakes and ponds.”

We hold, therefore, that article 22 of the Bill of

Rights applies only to surface rivers, lakes and

ponds, as the words are ordinarily understood, and to

subterranean waters of a similar character, and that

its effect was to establish the doctrine of prior

appropriation for such waters, and for them only,

17

leaving percolating subterranean waters of all kinds

untouched thereby.

Id. at 374 (emphasis added). The court made especially clear

that the power of appropriation was not to extend to those

waters that would be difficult to define as surface water by the

regular people who would actually use the water.

It is unreasonable to attribute to the legislature in

1864 a purpose to use nontechnical language to

express an idea which would not be anticipated by

the men who were to be governed in their actions by

that language; and to assume that in the use of words

“rivers, creeks or streams,” and “rivers, lakes or

ponds” it intended to include something which by

common understanding was given an entirely

different classification would be absurd.

Id. Accordingly, appropriation of underground water was only

permissible where the water flowed in “definite underground

channels.” Section 3280, Revised Code of 1928. The same

rule applies today, or would apply today but for the Arizona

Supreme Court’s decision in this case. See, e.g., Ariz. Rev.

Stat. § 45-101 (2000) (specifying that “[g]roundwater does not

include water flowing in underground streams with

ascertainable beds and banks,” and defining “surface water” to

include water flowing in “definite underground channels’’).

Traditionally, the water “flowing in natural channels between

well-defined banks,” with known boundaries was subject to

appropriation. Southwest Cotton, 4 P.2d at 376 (quoting

McKenzie v. Moore, 176 P. 568 (Ariz. 1918)). But water that

does not flow between well-defined banks would not be subject

to appropriation.

This basic rule was preserved by the Arizona Supreme

Court in Southwest Cotton. The Southwest Cotton court con-

sidered one of the “essential characteristics of a watercourse” to

be “a channel, consisting of a well-defined bed and banks.” Jd.

ii 00

18

at 376. While many different factors could be considered in

determining the location of underground channels, each of

them,

when examined, must be such as to afford clear and

convincing proof to the satisfaction of a reasonable

man, not only that there are subterranean waters, but

that such waters have a definite bed, banks and

current within the ordinary meaning of the terms.

Id. at 377. Despite this requirement, the same court has aban-

doned this rule in the present case. Instead, the rule imposed by

the Arizona courts depends entirely upon whether “drawing off

the subsurface water tend[s] to diminish appreciably and

directly the flow of the surface stream.” Jn General Adjudi-

cation of All Rights to Use Water in the Gila River System and

Source, 9 P.3d 1069, 1074 (Ariz. 2000). If taking groundwater

does affect the surface stream, the Arizona court considers it

surface water, regardless of whether it flows in “a channel,

consisting of a well-defined bed and banks.”

The Southwest Cotton court viewed its rule as being so

narrowly drawn that “[i]n almost all cases the so-called subflow

is found within, or immediately adjacent to, the bed of the

surface stream itself.” Southwest Cotton, 4 P.2d at 381. The

Southwest Cotton court referred to a California case, City of Los

Angeles v. Pomeroy, 57 P. 585 (Cal. 1899), to describe the

extreme outer boundary of how broadly it believed the rule it

declared could be applied. In Pomeroy, the San Fernando

Valley of California had at its lower end “a gorge, about two

miles wide, through which all the waters of the valley

eventually flow[ed].” Southwest Cotton, 4 P.2d at 381.

Because all the water of the valley flowed through the gorge,

the water course had defined banks. The evidence showed that

the water claimed to be subflow “lay substantially beneath the

surface of the bed of the Los Angeles River.” /d. The

Southwest Cotton court found that in this situation, where the

19

water passage was two miles wide, with defined banks, and the

water flowed substantially underneath the surface stream, “the

doctrine of subflow ha[d] been extended as far as it [could]

reasonably be carried.” Jd.

The Arizona Supreme Court has gone much farther than

the narrow rule of Southwest Cotton would allow. Where

Southwest Cotton found a two-mile wide water course to be the

outer boundary of what would be permissible, in this case,

appropriable surface water could be as far as six miles away

from the “subflow zone” that the trial court defined, which is

even farther from the river itself. Petition for Writ of Certiorari

of Phelps Dodge Corporation and Arizona Public Service

Company at 15. Where Southwest Cotton would require well-

defined banks for underground streams, in this case, the banks

of the stream are irrelevant—no reference to them is made in the

Arizona Supreme Court’s new rule. Whereas the Southwest

Cotton court would require subflow to be substantially beneath

the surface stream, in this case, subflow can be many miles

from the surface stream.

Rather than recognize the legal rights defined in Southwest

Cotton, the Arizona courts in this case have endeavored to

conform those rights to what science sees as “hydrological

reality.” Jn re the General Adjudication of All Rights to Use

Water in the Gila River System and Source, 9 P.3d at 1073.

The Arizona Court acknowledged that “even though Southwest

Cotton may be based on an understanding of hydrology less

precise than current theories, it would be inappropriate to undo

that which has been done in the past.” Jn re General Adjudi-

cation of All Rights to Use Water in the Gila River System &

Source, 857 P.2d at 1243. Nevertheless, the Arizona court has

approved a new rule that will permit the contours of property to

change with every scientific advancement. As hydrologists

become more capable of detecting the influence of distant wells

on surface streams, the property rights of groundwater users

will continually shrink.

lle

20

By abandoning the requirement that appropriable under-

ground water be in well-defined banks substantially beneath the

surface stream, the Arizona Supreme Court has changed the

way surface water is distinguished from groundwater.

Consequently, some of those who formerly pumped

groundwater will be considered to be pumping surface water

and will lose their property nghts in water in the course of this

adjudication.

+

CONCLUSION

Because this case involves an important question of

federal law that has not been, but should be, settled by this

Court, the petition for writ of certiorari should be granted.

DATED: May, 2001.

Respectfully submitted,

OF COUNSEL M. REED HOPPER

DAVID E. HADDOCK Counsel of Record

Pacific Legal Foundation Pacific Legal Foundation

10360 Old Placerville Road, 10360 Old Placerville Road,

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Telephone: (916) 362-2833 Telephone: (916) 362-2833

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