287 F.3d 212 (1st Cir. 2002), 01-2124, U.S. v. Puerto Rico

Docket Nº:01-2124
Citation:287 F.3d 212
Party Name:U.S. v. Puerto Rico
Case Date:April 24, 2002
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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287 F.3d 212 (1st Cir. 2002)

UNITED STATES of America, Plaintiff, Appellee,


Commonwealth of PUERTO RICO, et al., Defendants, Appellants.

No. 01-2124.

United States Court of Appeals, First Circuit

April 24, 2002

Heard March 5, 2002.

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Roberto J. Sánchez-Ramos, Solicitor General, and Salvador J. Antonetti-Stutts, Director, Federal Litigation Division, Puerto Rico Department of Justice, with whom Vanessa Lugo-Flores, Deputy Solicitor General, Daniel Riesel, Elizabeth Read, and Sive, Paget & Riesel, were on brief, for appellants.

Katherine J. Barton, Attorney, Environment & Natural Resources Division, United States Department of Justice, with whom John C. Cruden, Acting Assistant Attorney General, William B. Lazarus, Attorney, Environment & Natural Resources Division, Guillermo Gil, United States Attorney, Isabel Munoz Acosta, Assistant United States Attorney, and John Tew, Office of General Counsel, United States Department of the Navy, were on brief, for appellee.

Before TORRUELLA, Circuit Judge, COFFIN, Senior Circuit Judge, and SELYA, Circuit Judge.

SELYA, Circuit Judge.

In 1952, Congress enacted the McCarran Amendment, 43 U.S.C. § 666, a law that waived the sovereign immunity of the United States in suits for the general adjudication or administration of water rights. This appeal turns on the scope of that waiver.

The underlying litigation flows from Puerto Rico's efforts to impose restrictions on the extraction of water from a river known as the Rio Blanco. The Commonwealth asserts that the McCarran Amendment divests the United States of its sovereign immunity in respect to the compelled participation of the United States Navy in administrative proceedings concerning that subject, commenced pursuant to Puerto Rico's Law of Waters, 12 P.R. Laws Ann. §§ 1501-3015. Disagreeing with this assertion, the Navy asked

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the United States District Court for the District of Puerto Rico for surcease. The district court stayed the administrative proceedings pending final resolution of the suit. In due course, the court found the McCarran Amendment inapplicable and granted the Navy sanctuary. See United States v. Puerto Rico, 144 F.Supp.2d 46, 53 (D.P.R.2001).

Although our reasoning differs significantly from the district court's, we too hold that the McCarran Amendment does not waive the sovereign immunity of the United States with respect to the administrative proceedings here at issue. The McCarran Amendment speaks of "suits," and the local proceedings, instituted by the Commonwealth's Department of Natural and Environmental Resources (DNER) under the Law of Waters, cannot be so characterized.


Insofar as pertinent here, the facts are uncontroversial. During World War II, the Navy began construction of the United States Naval Station at Roosevelt Roads (NSRR). To ensure an adequate fresh-water supply, the Navy obtained a permit (the 1942 permit) from the Puerto Rico Public Service Commission to withdraw up to ten cubic feet per second from the Rio Blanco. The Navy then proceeded to construct a primary water intake in the tailrace of a privately-owned hydroelectric power plant and an emergency intake just upstream of the plant. Shortly thereafter, a federal agency acquired title to the hydroelectric plant and conveyed it to the Puerto Rico Water Resources Authority (PRWRA). In consideration of the conveyance, the PRWRA issued a permit (the 1944 permit) granting the federal government the right "to continue the use, operation, and maintenance" of the water supply system free of charge for as long as the NSRR remained operational. 1

Puerto Rico enacted the Law of Waters in 1976. The statute directs the Secretary of the DNER to formulate an integrated plan for conservation, development, and use of the Commonwealth's water resources, 12 P.R. Laws Ann. § 1505(a), set water consumption priorities, id. § 1505(e), and establish and administer a system that allocates water based on those priorities, id. § 1505(j). The statute contemplates the issuance of permits for the drilling of water wells and the granting of franchises for the utilization of surface waters. Id. § 1509.

The statutory regime further provides that when a body of water lacks sufficient volume to meet the demands that are made upon it, the Secretary may institute a process to allocate the available water among competing claimants. Id. § 1515. The statute grants affected parties the right to a hearing before the Secretary--a hearing that incorporates the right to counsel, the right to present evidence, and similar procedural protections. Id. § 1519. Although the statute terms such hearings "quasi-judicial," no court officer is involved; the details of the process are spelled out in the DNER's regulations, and the Secretary's decision is final unless an aggrieved party seeks review within thirty days in a court of first instance. Id. § 1520.

In 1986, the DNER, acting under the Law of Waters, admonished the Navy that it needed to update its franchise for diverting water from the Rio Blanco. Thinking this a mere formality, the Navy submitted

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a renewal application. The Secretary never acted upon the application, claiming that it was incomplete.

The matter remained on the back burner until July 7, 1999, when the DNER served the Navy with a "cease-and-show-cause" order. This order rested on the premise that the Navy was withdrawing water from the Rio Blanco without a valid franchise (and thereby transgressing the Law of Waters). After some intermittent contacts, marked chiefly by bureaucratic wrangling, the Secretary issued a second order, dated October 29, 1999, directing the Navy to (1) initiate a franchise request for the primary and emergency water intake locations, (2) install metering devices to measure water extraction from both intakes, (3) reimburse the Commonwealth for prior water consumption, and (4) pay provisional user fees until its water rights claims were administratively determined. This order informed the Navy, in no uncertain terms, that it was obliged to participate in franchise application proceedings, and that the DNER might ultimately grant or deny a franchise, taking into account "the needs of the entire community of the area."

Dismayed by the DNER's dismissive attitude toward its rights under the 1942 and 1944 permits, the Navy sued the Commonwealth and the Secretary. Its complaint asked the federal district court both to enjoin the defendants from enforcing the DNER's orders, and to confirm the Navy's right to withdraw water from the Rio Blanco as provided in the 1942 and 1944 permits. The Navy advanced a golconda of arguments in support of these prayers for relief, alleging, inter alia, that the 1944 permit bestowed an affirmative right to withdraw water from the Rio Blanco free of charge, and that the Secretary's efforts to plunge the Navy into administrative water use proceedings infringed the sovereign immunity of the United States. The defendants took a much dimmer view of the combined force and effect of the Navy's permits. In addition, they maintained that the ongoing DNER proceedings fell within the waiver of sovereign immunity...

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