BROADWATER-MISSOURI WATER USERS'ASS'N v. MONTANA P. CO.

• Decision Date: 04 January 1944
• Docket Number: No. 10350.,10350.
• Parties: BROADWATER-MISSOURI WATER USERS' ASS'N et al. v. MONTANA POWER CO.
• Court: U.S. Court of Appeals — Ninth Circuit

139 F.2d 998 (1944)

BROADWATER-MISSOURI WATER USERS' ASS'N et al. v. MONTANA POWER CO.

No. 10350.

Circuit Court of Appeals, Ninth Circuit.

January 4, 1944.

R. V. Bottomly, Atty. Gen., C. J. Dousman, of Helena, Mont., E. Ben Johnson and Burcham & Blair, all of Spokane, Wash., Edmond G. Toomey, of Helena, Mont., and Willard W. Gatchell, Atty., Federal Power Commission, of Washington, D.C., for appellants State Water Conservation Board and others.

Wellington D. Rankin, of Helena, Mont., and Frank T. Hooks, of Townsend, Mont., for appellant, Broadwater Missouri Water Users' Ass'n.

W. H. Hoover, R. H. Glover, John V. Dwyer, and J. E. Corette, Jr., all of Butte, Mont., for appellee.

Before GARRECHT, DENMAN, and HEALY, Circuit Judges.

HEALY, Circuit Judge.

The Montana Power Company, incorporated in New Jersey, is engaged in the business of generating and distributing electric power in the state of Montana. It brought suit in the federal court for Montana against the State Water Conservation Board, the individual members thereof, and the Broadwater-Missouri Water Users' Association (an organization of the settlers in the Broadwater-Missouri irrigation project).

In its complaint the Power Company asserted the right by prior appropriation to the use of all the waters of the Missouri River and its tributaries for the purpose of operating certain hydro-electric plants — seven in number — located on the upper reaches of that stream. It alleged that on June 28, 1938, the defendant State Water Conservation Board had filed a notice of appropriation of 400 second feet of the waters of the Missouri for the purpose of irrigating lands in Broadwater County and for other beneficial purposes; that the Board had completed plans for the construction of a dam and irrigation works to divert the amount of its appropriation at a point above the dams and hydroelectric plants of the plaintiff, and had let or was proceeding to let contracts for, and to construct, a diversion dam across the river with the design of conducting water from the stream for the irrigation of seasonal crops; all of which conduct was alleged to be in derogation of the rights of the plaintiff. There was a prayer that the plaintiff's title to the use of the water of the river be quieted as against the defendants and that they be permanently enjoined from constructing and maintaining the dam and diverting water, or from interfering in any manner with the flow of the stream and plaintiff's use thereof.

The State Water Conservation Board and its members interposed a motion to dismiss on the jurisdictional ground that the action was one against the state of Montana and not one between citizens of different states. The motion was denied, the defendants answered, and after extensive hearings before a special master a decree was entered confirming in the Power Company the right to the use and control of the waters of the Missouri up to a stated maximum flow necessary to operate the power plants of that Company, plus the flow requisite to keep its storage reservoirs filled. The decree permanently enjoined the defendants from diverting, storing, or using the waters of the river except at times when the prior demands of the plaintiff have been satisfied.

The appeal presents a number of important questions of local law affecting the merits of the adjudication. One of these relates to the claimed right of the state Board to bring down to its diversion dam and there divert water previously stored by it on a tributary of the Missouri, and to the Board's right, claimed under the provisions of the act creating it, to the return flow or seepage from previous use. Others relate to the propriety of the court's having allowed the reservoir storage rights of appellee to be supplied from the normal flow of the stream rather than limiting the same to flood and waste waters as said to be provided by statute, and to questions relating to the adjustment or accommodation of rights as between irrigation and power users, it being asserted by the appellants that the decree unnecessarily gives to the Power Company a monopoly of the river. We mention these matters preliminarily since they disclose some of the serious questions of state practice and policy here involved.

At the outset, however, we are confronted with the problem of jurisdiction. The complaint presents no federal question. If, as contended, the State Water Conservation Board is the alter ego of the state of Montana in acquiring the water rights and in the erection and operation of the diversion works inspiring the suit, then it is plain that jurisdiction is not present. A state is not a citizen and, absent a federal question, the district courts are not possessed of jurisdiction of suits by or against a state. Postal Telegraph Cable Co. v. State of Alabama, 155 U.S. 482, 15 S.Ct. 192, 39 L.Ed. 231; Judicial Code § 24, as amended, 28 U.S.C.A. § 41(1).

The act creating the State Water Conservation Board was adopted in 1933 and has several times been amended or amplified. The legislation is found in Chapter 35 of the Political Code as embodied in the Revised Codes of Montana of 1935, §§ 349.1 to 349.38. The Governor and the state engineer are ex-officio members of the Board. The three remaining members, who are required to be qualified electors, are appointed by the Governor for terms of six years and are removable by him at any time. Like state officers generally, the appointive members are required to take, subscribe, and file with the Secretary of State the oath prescribed by the Constitution. The Governor is chairman of the Board, and the Attorney General is made its legal advisor. The compensation of the appointive members is payable from funds provided by legislative appropriation. § 349.3. No compensation, other than their regular salaries, is provided for the ex-officio members or for the Attorney General.

The object of the Act is stated in § 349.1 as follows: "It is hereby declared that the public interest, welfare, convenience and necessity require the construction of a system of works, in the manner hereinafter provided, for the conservation, development, storage, distribution and utilization of water. The construction of said system of works, is, and is hereby declared to be, a single object; and the construction, operation and maintenance of said system of works, as herein provided for, is hereby declared to be in all respects for the welfare and benefit of the people of the state, for the improvement of their prosperity and living conditions; and the state water conservation board hereinafter created shall be regarded as performing a governmental function in carrying out the provisions of this act."

The act is responsive to what was felt by the Legislature to be "a state-wide need" for a comprehensive program of water conservation. § 349.5. To the extent necessary to carry out its provisions, "the board shall have full control of all the water of the state not under the exclusive control of the United States and not vested in private ownership, and it shall be its duty to take such steps as may be necessary to appropriate and conserve the same for the use of the people." § 349.15. In acquiring rights and in administering the act, the Board is not limited to the terms of the statutes relating to water rights theretofore enacted, "but, in addition thereto, may initiate a right to the waters of this state by executing a declaration in writing of the intention to store, divert or control the unappropriated waters of a particular body, stream or source, * * *." § 349.18.

Section 349.22 bestows upon the Board broad administrative powers in respect of the control and division of the natural flow of streams, and provides that when exercising the authority given it the Board "shall be deemed to be exercising a police power of the state of Montana." It is declared in § 349.23 that the Board "shall be a body corporate and politic with perpetual existence, and as such, it shall be deemed to be an agency of the state of Montana." By § 349.10 and § 349.13 direct legislative appropriations were made both for the administration fund and for a conservation revolving fund. In addition, all moneys paid or repaid the Board are, with certain exceptions, re-appropriated to the Board. Laws of Montana 1937, pp. 688-690.¹

The Board is authorized to issue "water conservation revenue bonds of the state" for the purpose of paying the cost of public works and projects, but these bonds "shall not constitute or be a debt, liability or obligation of the state," and shall be secured only by revenues from operation and by funds from the sale of water or disposition of the works and facilities acquired. § 349.6. Title to property purchased or condemned is to be taken in the name of the Board. § 349.4. The Board may sue and be sued, § 349.3, and the statute authorizes it to sue in the state or federal courts for the purpose of acquiring and holding title to property for dam sites, etc., and it may prosecute actions for the adjudication of water rights on any stream. § 349.15. The Board is further authorized to exercise its powers in any adjoining state or country, subject to the laws thereof or of the United States. § 349.5.

The act has been construed by the Montana court in State ex rel. Normile v. Cooney, 100 Mont. 391, 47 P.2d 637. The complainant in that proceeding sought to enjoin the Board from constructing an irrigation and flood control project under the terms of a loan-grant agreement with the United States, it being asserted that the enabling statute violates provisions of the State Constitution. In refuting the objection that the act delegates legislative powers, the court said that "the water conservation board does not make the law, but in the execution of it as a public agency and as the agency of the lawmaking department, it is for the board to ascertain and declare the event upon which the expressed will of the...