Amicus Curiae Brief — Grant County Black Sands Irrigation District v. United States Bureau of Reclamation

on

Supreme Court, US

FILED

(2 ; AUG 2 3 2010

Y

OFFICE OF THE ¢ |

; ett!

" :

No 10-116

In the

Supreme Court of the Gnited States

—>

GRANT COUNTY BLACK

NDS IRRIGATION DISTRICT, et al

On Petition for Writ of Certiorar!

to the United States Court of Appeal

for the kKederal Circult

+

BRIEF AMICI CURIAE OF SAN LUIS SG

DELTA-MENDOTA WATER AUTHORITY

WESTLANDS WATER DISTRICT,

AND SAN LUIS WATER DISTRIC'1

IN SUPPORT OF PETITIONERS

.

11

TABLE OF CONTENTS

QUESTION PRESENTED ..

TABLE OF AUTHORITIES ...

INTEREST OF AMICI CURIAE

SUMMARY OF ARGUMENT ........

REASONS FOR GRANTING THE WRIT ..

I. THE FEDERAL CIRCUIT'S DECISION

WILL HAVE NATIONWIDE IMPACT ..

A. The Federal Circuit's Decision

Unjustifiably Treats All Section 9(e)

Contracts Alike, and Improperly

Characterizes the Obligations of

Section 9(e) Contract Holders

B. The Federal Circuit's Decision

Gravely Mischaracterizes the

Nature of the Payments Made

by Both Short- and Long-Term

Section 9(e) Contract Holders

Il. THE FEDERAL CIRCUIT'S DECISION

CREATES MUCH UNCERTAINTY FOR

FEDERAL WATER CONTRACT

HOLDERS, PARTICULARLY IN

CALIFORNIA, BY INCREASING THE

RISK THAT THESE CONTRACT

HOLDERS WILL LOSE IMPORTANT

RIGHTS UNDER STATE LAW ...

CONCLUSION

Page

16

TABLE OF AUTHORITIES

Cases

Arizona v. California, 460 U.S. 605 (1983)

Cent. Delta Water Agency v. United States,

306 F.3d 938 (9th Cir. 2002)

Consol. Delta Smelt Cases, 2010 U.S. Dist.

LEXIS 62006 (E.D. Cal. May 27, 2010)

lvanhoe Irrigation Dist. v. All Parties &

Persons, etc., 350 P.2d 69 (Cal. 1960) .

Ivanhoe lrrigation Dist. v. McCracken,

357 U.S. 275 (1958)

Kidd v. Laird, 15 Cal. 161 (1860)

Latino Issues Forum v. EPA.

558 F.3d 936 (9th Cir. 2009) .

Nevada v. United States. 463 U.S.

State Water Resources Control Board Cases.

136 Cal. App. 4th 674 (2006)

Tehama-Colusa Canal Auth. v.

2010 U.S. Dist. LEXIS 64213

(E.D. Cal. June 28, 2010)

United States v. Gerlach Live Stock Co..

339 U.S. 725 (1950)

United States Statutes

Endangered Species Act,

16 U.S.C. §§ 1531-1544

lV

TABLE OF AUTHORITIES—Continued

43 U.S.C. § 371, et seq.

- &

» 485a(d)

. 485h-1(2)

§ 485h-1(3)-(4)

. 485h-1(6) ..

7

§ 485h-1 to 485h-6 ..

‘

S

Public Law 99-546, 100 Stat. 3051-52

California Statutes

Cal. Water Code

$§ 1702, 1706, 1707, 1725, 1736

§ 34000, et seq.

Miscellaneous

U.S. Bureau of Reclamation, The CVP Today,

available at www.usbr.gov/mp/cvp/about.html

(last visited Aug. 19, 2010)

The San Luis & Delta-Mendota Water Authority

(“Water Authority”), Westlands Water District

(“Westlands”) and San Luis Water District (“San Luis”)

respectfully submit this brief amici curiae in support of

the petition for writ of certiorari filed by Grant County

Black Sands Irrigation District and Williamson Land

Company. '

INTEREST OF AMICI CURIAE

The issues presented in this case, dealing with the

interpretation and application of water contracts

executed under 43 U.S.C. § 485h(e) (Section 9(e)

contracts), are critically important to entities

throughout the Western United States that contract

with the United States for water from federal

reclamation projects. The Federal Circuit’s decision

considers whether Reclamation must afterd the

benefits of Section 9(d) and long-term Section 9(e)

contracts to those who have short-term Section 9(e)

contracts. Pet. App. 9a. In holding that short-term

Section 9(e) contracts enjoy few if any of the benefits

accorded Section 9(d) and long-term Section 9(e)

contracts, the Federal Circuit made a number of

characterizations of Section 9(e) contracts generally

that are inconsistent with federal reclamation law and

threaten substantially to undercut Section 9e)

* Pursuant to Supreme Court Rule 37, Amici Cunmae state that

counsel for both parties have consented 1n writing to the filing of

this bnef. Letters evidencing such consent have been filed with

the Clerk of the Court Counsel of record for all parties received

notice of the intent of the Amici to file a brief at least ten days

prior to the bnefs filing No counsel for any party authored this

brief in whole or in part, and nocounsel or party made a monetary

contribution intended to fund the preparation or submission of

this brief. No person or entity, other than Amici, made

monetary contribution to its preparation

contract holders’ rights. Among these entities are

Amici, which contract or represent interests that

contract for water developed by the federal Central

Valley Project (CVP), the largest federal reclamation

project located within the State of California.

The United States Department of the Interior’s

Bureau of Reclamation (“Reclamation”) owns the CVP,

which brings water from areas of California where

supply is plentiful but demand low, to regions where

demand is great but supphies lacking. United States v.

Gerlach Live Stock Co., 339 U.S. 725, 728-29 (1950).

The CVP was originally conceived as a State of

California project. Because of the Great Depression,

the State was unable to finance the project. Most of

the water development envisioned by the State was

accomplished by the federal CVP, beginning with the

project's initial authorization in 1935. Work began on

the CVP in 19387 and its last major facility was

completed in 1979. See State Water Resources Control

Board Cases, 136 Cal. App. 4th 674, 691-92 (2006).

The CVP is comprised of 20 dams and reservoirs, 11

powerplants, and 500 miles of major canals as well as

conduits, tunnels, and related facilities. Cent. Delta

Water Agency v. United States, 306 F.3d 938, 943 (9th

Cir. 2002); see also U.S. Bureau of Reclamation, The

CVP Today, available at www.usbr.gov/mp/cvp/

about. html (last visited Aug. 19, 2010). CVP water is

now used by hundreds of long-term Section 9(e)

contractors that put the water to agricultural use on

thousands of farms covering millions of acres. See

State Water Resources Control Board Cases, 136 Cal.

App. 4th at 692.

The Water Authority, formed in 1992 under

California law as a joint powers authority, consists of

twenty nine public agencies, twenty seven of which

contract with Reclamation for CVP water. Twenty two

of the Water Authority’s member agencies hold

long-term Section 9(e) contracts. Reclamation conveys

CVP water available under those long-term

Section 9(e) contracts primarily through the

Sacramento-San Joaquin River Delta (“Delta”) region

of California. As required by Section 105 of Public

Law 99-546, 100 Stat. 3051-52, each of the Section 9(e)

contracts held by the Water Authority's member

agencies includes a provision to ensure Reclamation

recovers the capital investment in the CVP by the year

2030.

CVP water made available to the Water

Authority’s member agencies supports approximately

1.2 million acres of agricultural lands, as well as

51,500 acres of private waterfowl habitat, in

California’s Central Valley. The member agencies’

CVP water also supplies municipal and industrial uses

in Silicon valley, as well as 1 million townfolk in the

Silicon Valley and the Central Valley.

Westlands and San Luis, members of the Water

Authority, are California water districts formed

pursuant to California Water Code section 34000, et

seq. Westlands and San Luis use CVP water for

irrigation of approximately 550,000 acres on the west

side of the Central Valley in Fresno, Kings, and

Merced Counties, California, as well as for municipal]

and industrial purposes within those counties.

Farmers within Westlands and San Luis produce more

than 60 high-quality commercial food and fiber crops

sold for the fresh, dry, canned, and frozen food

markets, both domestic and export. More than 50,000

people hve and work in the communities that are

4

dependent on the water supply available to Westlands

and San Luis, and the agricultural economy resulting

therefrom, based on existing Section 9(e) water

contracts.

The Federal Circuit’s decision, which analyzes the

rights of all contracts executed pursuant to

Sections 9(e) and QO(d), 43 U.S.C. § 485h(d), thus

creates grave and serious implications to federal water

contract holders throughout the West.

SUMMARY OF ARGUMENT

It is a longstanding principle of reclamation law

that “the beneficial interest in the rights confirmed to

the Government resided in the owners of the land

within the Project.” Nevada v. United States, 463 U.S.

110, 126 (1983). In this case, the Federal Circuit

violated that principle, allowing Reclamation to

assume the role of a “water utility” provider. In so

doing, the Federal Circuit has created uncertainty over

important rights accorded under reclamation law to

holders of Section 9(e) contracts, such as Amici and

those they represent.

In the Reclamation Act of 1902, Pub. L.

No. 57-161, 32 Stat. 388, as amended, 43 U.S.C. § 371,

et seq., Congress authorized Reclamation to enter into

contracts with water users whereby the federal!

government would construct the works and deliver the

water, and the water users would pay for the water

and the construction costs over a set term. Once the

construction costs had been paid, certain conditions on

the use of water developed by a federal reclamation

project would be lifted and the contractors would

obtain permanents right to their share of the project's

water yield. Owing to the Great Depression, however,

vo

many water users were unable to pay off the

construction charges.

Hence, in the Reclamation Project Act of 1939,

Pub. L. No. 76-260, 53 Stat. 1187, codified at 43 U.S.C.

£ 485h(e), Congress restructured the 1902 Act’s

repayment-type contracts to permit greater flexibility

in the repayment period, while still allowing for the

transfer of ownership. These contracts became known

as “Section 9(d)” contracts. Also in the 1939 Act,

Congress created a new type of contract, the

Section 9(e) contract, which allowed water users to

contract for water with Reclamation even when the

total construction cost (to be passed on to the water

users) was not yet known. Section 9(e) contracts came

in two types: short-term (with a contractual period of

ten years or less) and long-term (with a contractual

period of more than ten years). In the years following

the 1939 Act’s passage, confusion emerged regarding

whether and to what extent a Section 9(e) water

contract provided the same benefits as a Section 9(d)

contract.

To disperse this confusion and allay the fears of

water users, Congress passed the Reclamation Act of

1956, Pub. L. No. 84-6438, 70 Stat. 483, codified at

43 U.S.C. §§ 485h-1 to 485h-6, the clear intent of which

was to reject Reclamation’s efforts to use Section 9(e)

contracts to preclude water users from repaying

construction costs and obtaining a permanent right to

project water. But the Federal Circuit’s decision

threatens radically to upset the common

understanding of the rights of Section 9(e) contract

holders established by the 1956 Act, for several

reasons.

6

First, the Federal Circuit’s analysis contains

unjustifiably broad statements that purport to

minimize the rights of long-term Section 9(e) contracts.

Perhaps most importantly, the court’s decision refers

to Section 9(e) contracts as “merely . . . contract[s] to

receive project water.” Pet. App. 13a, 17a. In so doing,

the decision raises significant doubt as to whether

long-term Section 9(e) contract holders have a

permanent right to obtain the wter developed by a

federal reclamation project o.ce the _ project’s

construction costs have been paid.

To interpret a Section 9(e) contract as solely a

contract to receive project water is entirely inconsistent

with the purpose of the 1956 Act namely, to make clear

that long-term Section 9(e) contractors have the

obligation to pay a rate component for construction

costs, as well as a right to have their capital payments

credited against their obligation to repay such costs.

43 U.S.C. § 485h-1(6). The Act also provides long-term

Section 9(e) contractors with the right to enter into a

Section 9(d) contract, with credit for payments made,

“at such time as the ... remaining amount of

construction cost which is properly assignable for

ultimate return by it can probably be repaid to the

United States within the term of a contract under said

subsection (d).” Jd. § 485h-1(2). This requires, for the

CVP at least, a determination that the project is

complete so that the portion relative to irrigation

assignable to each contractor is capable of calculation.

Id. Most critically, contractors under both Section 9(d)

and (e) contracts have the same rights to crediting of

capital payments and for establishing a right to a fixed

share of the “project’s available water supply for...

irrigable lands.” Jd. § 485h-1(3)-(4). But the Federal

Circuit’s determination that Section 9(e) contractors do

not have repayment contracts because they are not

required to repay construction costs is simply not

reconcilable with the 1956 Act.

In fact, the 1956 Act repeatably characterizes

repayment contracts as available under’ both

Sections 9(d) and 9(e). See, e.g., 43 U.S.C. § 485h(e)

(“In lieu of entering into a repayment contract

pursuant to the provisions of subsection (d)); 43 U.S.C.

§ 485f(b) (“repayment contract .. . in accordance, as

near as may be, with the provisions [of sections 9(d) or

9(e)]”). Strangely enough, the Federal Circuit’s

decision recognizes that Congress passed the 1956 Act

with the express purpose of assuaging water users

fears that, without legislative action, Reclamation

would treat long-term Section 9{e) contracts as just

“utility” contracts containing no assurances to

permanent water rights. Pet. App. 15a-16a. Yet, the

Federal Circuit’s decision creates those fears anew by

casting Section 9(e) contracts as qualitatively different

from and inferior to Section 9(d) contracts

Second, the Federal Circuit’s decision compounds

the fears of those who have Section 9(e) contracts by

holding that such contracts do not encompass

“construction charges” and cannot, for that reason,

enjoy the benefits of a Section 9(d) repayment contract

under the 1939 and 1956 Acts. The court’s discounting

of the significant construction charges that all

Section 9(e) contract holders pay not only subverts the

1956 Act’s ameliorative purpose, it threatens to nullify

Section 9(e) contract holders’ substantial, multi-year

payments intended specifically to repay the costs of

Reclamation projects.

Third, the significant uncertainty that the Federal]

Circuit’s decision creates for all Section 9(e) contract

holders does not stop with federal reclamation law

State water law provides protections to water users,

protections that, in the case of a federal reclamation

project, are contingent upon the rights accorded under

contracts executed pursuant to Sections 9(d) and 9(e)

The Federal Circuit’s decision, because it could be

interpreted to undermine existing rights held by

Section 9(e) contractors, might also undermine existing

protections under state law and thus have devastating

impacts to Amici and the interests they represent

Given the large amounts of reclamation water

delivered pursuant to long-term Section 9(e) contracts

for agricultural, domestic, and industrial use

throughout the West (and particularly in California),

and the critical imperative of having a sure and sound

right to that water, the Federal Circuit’s decision

interpreting the rights and obligations of Section 9(e)

contract holders merits review in this Court

REASONS FOR GRANTING THE WRIT

J

THE FEDERAL CIRCUIT'S DECISION

WILL HAVE NATIONWIDE IMPACT

Shortly after Congress passed the 1956 Act to

allay water-users’ concerns regarding Reclamation‘:

misuse of Section 9(e) contracts, this Court granted

certiorari in lvuanhoe Irrigation Dist. v. McCracken,

357 U.S. 275 (1958), to determine the rights of

would-be Section 9(e) contract holders in California’s

Central Valley. In its opinion, the Court observed

As to the rights and duties of the United

States under the [Section 9(e)] contract

these are matters of federal law on which

this Court has final word. Our construction

of the contract might dispel any feature

thereof found offensive

ld. at 289 (citation omitted)

More than half a century later, the matters now

before the Court on writ of certiorari are of capital

significance to thousands of California farmers, wate

users, and countless others throughout the Nation that

reap the benefit of the Central Valley’s productivity

The stakes could not be higher. While the water wor

present in California in the 1950s were no doubt

serious, see /uanhoe Irrigation Dist. v. All Parties &

Persons, etc., 350 P.2d 69, 76-77 (Cal. 1960). they pale

In comparison to today’s trouble

In ongoing litigation challenging water delive)

restrictions to the Central Valley purportedly required

by the Endangered Species Act l6 = US.C

$$ 1531-1544, Judge Wanger of the Eastern District of

California has repeatedly noted the serious impacts of

water shortages on the people of the Central Valley

See generally Consol. Delta Smelt Cases, 2010 U.!

Dist. LEXIS 62006, at *94-*109 (K.D. Cal. May 27

2010). For example, the court has found that current

water delivery cutbacks could cause or have already

caused: (1) a loss of urban water supply sufficient t

meet the annual needs of 2.6 million people, id. at *99

(2) a loss of almond production of 140,000 acre La

at *99-*100; (3) an increased reliance on permanent

crops, which puts farmers at greater economic ris]

than row crops, id. at *101; (4) a sharp increase in thi

percentage of land left fallow, leading to an increase it

dust and particulate matter and a concomitant

reduction in air quality, id. at *102; (5) losses of

thousands of agricultural job ind reductions in farn

worker VNape id. at *103-*04: and (6) vnilicant

increases in groundwater pumping (potentially leading

to overdraft), requiring increased energy, and causing

land subsidence, id. at *105-*06—all of which have led

the court to conclude that “the harms |caused by wate.

hortayes| to the affected human communities [are|

ereat. Id. at *14# Added to thi continuing

30c10-economic turmoil is the Federal Circuits decision

which could — be interpreted to undercut the

expectations ol Section 9(e) contract holde: the ame

contract holder who must upply the beleaguered

larme} and townstfol} of the (Centra Valle WI!

NATO)

Belo \mic) explain how the |]! l if (ircult

decision will raise uncertainty tor all Section Y(

contract holder na way that can only exacerbate the

economikt and ocial agaistre urré | | m7ulli

California Central Vall

\. The Federal Circuit’s Decision

Unjustifiably Treats All Section 9(c)

Contracts Alike, and Improperly

Characterizes the Obligations of

Section 9(e) Contract Holders

l rie prim Ipal ] ue addre ed t)\ Lie rede!

decision } whether Reclamation must alflord

the benefit of Section 9(d) and lonv-term Section %9(e)

contract to those who have hort-term ection ¥Y(e)

contract Pet App Ja In holding that nort-term

ection Ye) contract emoyv few if any of the benefit

accorded Section 9(d ana lony tern ection Vt

contract the Kederal Circuit made number

chnaracterizations of Section Y(e) contract renerally

that ars nconsistent with federal reclamation IW ans

Ol

lal

re

|

Qi

;

Ait

COM!

proposit

WuULCI

erthe

it attempt t differentiats

Mme) cont ict Prom ction Yd) contract !

(circuit ¢ x pre ed the } vy tha

56 Act nere|l made it ) ie f

PF8ecreLa!l Ol tne Interior } ippl

called Vat ervice nd it | Lyre

imract Le neet rye hayon) ! thy

adowne? vith rs 1) | tf } ( boatae

ijt mi i! perma crt VALE) } yt

Ile) ntract Lira ito be treats

Vater ryvice r “utilitv-tyvpe tra

tinct ly 4G contract ad {

nent-ty] | l | t

Vo

P pl '

nou red (oir p) crt

ed thatthe 1956 Act was intended to reject the

Ion that ect ry mitract ur mer

rvie ntract t} yur der 7

l¢ repre ited! relay | ( | (¢*) mtract

, Vater se! ) itility-type ntract

doubt CLIO) G(d) contract re quiere)

t ) Yic) contract it the federal Cay (

| itl ect it ryt Te | np!

Da precedent

LTVL pie th (> ( } ‘ | 1

» YO) « itract [ ryt ist thy (]

pear) f 7 ’ , harve |

12

the delivery of irrigation water.” Pet. App. 24a

(emphasis added). The assertion is plainly incorrect:

Section 9(e) contracts can and often do assume hability

for much more than a variable annual charge for the

delivery of irrigation water. Indeed, under the 1956

Act, Reclamation can assign a fixed charge for capital

costs (distinct from operation and maintenance costs).

See 43 U.S.C. § 485h(e).

In fact, in accordance with the CVP Irrigation

Ratesetting Policy, approved by Reclamation in 1988,

Section 9(e) contractors within the CVP, including

Amici Westlands, San Luis, and others represented by

Amicus Water Authority, pay water rates that contain

components designated by Reclamation as “operation

and maintenance” and “capital” costs, the latter

comprised primarily of the costs of construction.

Moreover, federal law governing the CVP requires

CVP Section 9(e) contractors to pay capital

construction costs. As noted above, Section 104 of

Public Law 99-546 (Oct. 27, 1986), provides:

The Secretary of the Interior shall include in

all new or amended contracts for the delivery

of water from the Central Valley Project a

provision providing for the automatic

adjustment of rates by the Secretary of

Interior if it is found that the rate in effect

may not be adequate to recover the

appropriate share of the existing Federal

investment in the project by the year 2030.

Reclamation’s policy and federal law omit any

distinction between Section 9(e) and Section 9(d) in the

requirement that the investments—the capital

~~

construction costs—of the federal government be

repaid through contract rates.

Thus, within the CVP, no statute differentiates

between those costs appropriated through a

Section 9(e) contract (whatever its term length) and

any other Reclamation water contract.”

B. The Federal Circuit’s Decision

Gravely Mischaracterizes the

Nature of the Payments Made

by Both Short- and Long-Term

Section 9(e) Contract Holders

The Federal Circuit’s decision concludes that

Section 9(e) contracts do not require the payment of

construction charges and, for that reason, do not merit

the benefits conferred by Section 9(d) contracts. Pet.

App. 25a-26a, 33a. In reaching that conclusion, the

Federal Circuit failed to recognize that Section 9(e)

contracts can and do include capital cost components

similar or in some cases identical to cost components in

Section 9(d) contracts.

The court also afforded too much significance to

how a Section 9(d) contract, as opposed to a

Section 9(e) contract, incorporates a general obligation

to repay construction costs. For example, the decision

observes that the “1939 Act expressly states that 9(d)

repayment contracts include a “general repayment

Further, the Federal Circuit's statement that the holder of a

Section 9(e) contract “assumes habuility for only a variable annual

charge” cannot be reconciled with the court’s characterization of

the 1956 Act’s purpose to confer the mght to “cease paying the

‘construction component’ of the total use charge when the

payments in excess of the governments operation and

maintenance charge equaled the construction cost of the project ”

Pet. App. 16a.

14

obligation.” Pet. App. 27a. True enough, but the

statutory benefits that Section 9(d) contracts enjoy

derive from their being “repayment contracts.” See

43 U.S.C. §§ 485h(e), 485h(d). It is of course

reasonable to conclude that contracts containing a

“general repayment obligation,” like those executed

under Section 9(d), should be categorized as

“repayment contracts.” But it does not follow that only

such contracts should be so characterized, especially

where contracts executed under Section 9(e) require

the payment of “an appropriate share of such fixed

charges” that Reclamation deems necessary to pay for

“that part of the cost of construction of works connected

with water supply and allocated to irrigation.”

43 U.S.C. § 485h(e). This charge, practically speaking.

amounts to the same thing as a general repayment

obligation."

A“repayment contract” is defined as “any contract

providing for payment of construction charges to the

United States.” 43 U.S.C. § 485a(e). In turn,

“construction charges” are defined as “the amounts of

principal obligations payable to the United States.” Id.

§ 485a(d). It is undisputed that Section 9(e) contracts

of all stripes contemplate payment of construction

charges. Yet the Federal Circuit held that, although

construction costs paid to Reclamation under the rubric

of Section 9(d)’s “general repayment obligation” are

cognizable as “construction costs” for a “repayment

Reclamation law also expressly refers to Section 9(e) contracts

as a species of repayment contract. See, e g.43 U.S.C. § 485f(b)

(“For any project . in connection with which a repayment

contract has not. been executed, a repayment contract may be

negotiated, 1n the discretion of the Secretary, ...1n accordance, as

near as may be, with the provisions in subsection 9(d) or Me) of

this Act.”) (emphasis added).

15

contract,’ construction charges that are paid to

Reclamation by virtue of Section 9(e)’s “fixed charges”

obligation are not “construction costs” paid pursuant to

a “repayment contract.” Thus, the Federal Circuit's

decision could be interpreted to afford substantial

benefits to one class of water contract holders but to

deny those same benefits to another class of water

contract holders, even though Reclamation receives the

same benefits and the contract holders incur the same

obligations. Such a result would not only be unjust,

but, for the reasons noted above, would run counter to

the CVP Irrigation Ratesetting Policy and Public Law

99-546. The mechanism for collecting such costs is

more on the order of utility-type charges, but these

charges nevertheless comprise the repayment of

construction costs and fit within the = statutory

definition of repayment contracts. In multi-facility

projects like the CVP. a fixed repayment obligation has

not been found capable of calculation due to ongoing

constructions activities, and rates under Section 9(e)

contracts have provided the practical resolution to the

recapture of the federal investment.

we KEKE

If left to stand, the Federal Circuit’s ruling could

be interpreted in a manner that deprives Section 9(e)

contractors of important rights currently afforded them

under federal reclamation law, a result that would

cause instability in an already troubled region that, for

now at least, produces a significant percentage of this

country’s food supply. See Latino Issues Forum v. EPA,

558 F.3d 936, 949 (9th Cir. 2009) (“The San Joaquin

Valley is one of the nation’s top producing agricultural

areas, sometimes referenced as ‘the nation’s salad

bowl"); see also Tehama-Colusa Canal Auth. v. United

16

States DOT, 2010 U.S. Dist. LEXIS 642138, at *4 (E.D.

Cal. June 28, 2010). The court’s decision not only

threatens the water rights of Amici and those they

represent, it also raises the specter of a significant

injustice, by suggesting that Reclamation is authorized

to charge Amici, those they represent, and others for

the cost of a benefit that they will never receive.

Il

THE FEDERAL CIRCUIT'S DECISION

CREATES MUCH UNCERTAINTY FOR

FEDERAL WATER CONTRACT

HOLDERS, PARTICULARLY IN

CALIFORNIA, BY INCREASING THE

RISK THAT THESE CONTRACT

HOLDERS WILL LOSE IMPORTANT

RIGHTS UNDER STATE LAW

“Certainty of rights is particularly important with

respect to water rights in the Western United States.”

Arizona v. California, 460 U.S. 605, 620 (1983). The

doctrine of prior appropriation, the prevailing law in

the Western States, is itself largely a product of the

compelling need for certainty in the acquisition and

use of water nghts. /d. Having a clear statement of

the rights of Section 9(e) contract holders is especially

important in California, because the state’s application

and determination of water remedies involving the

CVP is contingent upon federal law.

17

For example, California has codified a common

law “no injury” rule, whereby a water user is permitted

to change use so long as the change does not injure

other water users’ rights of use. See Cal. Water Code

§§ 1702, 1706, 1707, 1725, 1736; Kidd v. Laird, 15 Cal.

161, 181 (1860) (“[I}n all cases the effect of the change

upon the rights of others is the _ controlling

consideration, and that in the absence of injurious

consequences to others, any change which the party

chooses to make is legal and proper.”). Under

California’s articulation of the “no injury” rule, only

those “others” who had “rights” to the water involved

can claim “injury,” and these can show “injury” only by

demonstrating an injurious effect on their “rights” to

the water involved in the change.

Unhike other states, California has determined as

a matter of law that users of CVP water are

contemplated to have “rights” within the scope of the

“no injury” rule. In the semina! State Water Resources

Control Board Cases, 136 Cal. App. 4th 674 (2006), the

California court of appeal held that the “no injury” rule

apphed “to all “legal user[s] of the water involved” in

the change request, including those who lawfully use

water under contract with the appropriator.” Id.

at 805. In other words, California gives protection to

Section 9(e) water users because these users have a

“right” to their water. The Federal Circuit’s decision,

characterizing Section 9(e) contracts as the disfavored

cousins of Section 9(d) contracts and arguably defining

the rights of Section 9(e) contract holders as mere

recipients of water service, obfuscates the true rights

accorded by the 1956 Act, mnghts that include, upon

repayment of construction costs, a permanent right to

water that is protected by the “no injury” rule. The

ambiguity caused by such a strained interpretation

1S

could undermine the protections accorded under state

law to Section 9(e) contractors. Until now, there was

no ambiguity in the law—these contract holders could

rely on the salutary effects of the “no injury” rule to

keep other waters users from harming their interests.

Thus, because the Federal Circuit’s decision could

be read as depriving all Section 9(e) contract holders of

the power to acquire water rights from Reclamation, it

could complicate and interfere with water users’

erstwhile rights under state law. If that were the

result, the adverse impacts of the Federal Circuit’s

decision would be felt in a particularly harmful way by

Section 9(e) contract holders in California, among them

the Amici, as well as those they represent.

CONCLUSION

For decades, this Court has resolved important

questions of water rights. As water becomes scarcer

and demand increases, the long-term certainty of water

provided by Reclamation is of paramount import not

only to Amici and their respective members but also to

vast numbers of Americans who benefit from the use of

Reclamation water. Whether it is through the

immense economic development made possible by

Reclamation water, or the everyday necessity of food,

millions of people can be affected by a decision creating

uncertainty in the long-term water rights of

Reclamation water. The Federal Circuit’s decision

needlessly and wrongfully creates this injurious

LY

uncertainty. Amici urge the Court to grant the petition

for writ of certiorari.

DATED: August, 2010

Respectfully submitted

KILEEN M DIEPENBROCK *DAMIEN M SCHIFF

JON D RUBIN *Counsel of Record

ANTHONY J. CORTEZ Pacific Legal Foundation

Diepenbrock Harrison, P.¢ 3900 Lennane Drive

400 Capitol Mall Suite 200

Sacramento, CA 95814 Sacramento, CA 95834

Telephone (916) 492-5000 Telephone (916) 419-7111

Facsimile (916) 446-4535 Facsimile (916) 419-7747

ediepenbrock@diepenbrock.com dms@pacificlegal org

GARY SAWYERS

sawyers & Holland, LLP

652 W Cromwell Ave , Ste 101

Fresno, CA 93711

Telephone (559) 438-5656

gsawyers@sawyerslaw.com

Counsel for Amici Curiae San Luis & Delta-Mendota Water

Authority, Westlands Water District, & San Luis Water Distru