Central Arizona Water Conservation Dist. v. U.S.
| Decision Date | 03 November 1998 |
| Docket Number | No. Civ. 95-625-TUC-WDB-EHC.,No. Civ. 95-1720-PHX-EHC.,Civ. 95-625-TUC-WDB-EHC.,Civ. 95-1720-PHX-EHC. |
| Citation | 32 F.Supp.2d 1117 |
| Parties | CENTRAL ARIZONA WATER CONSERVATION DISTRICT, a municipal corporation of the State of Arizona, Plaintiff, v. UNITED STATES of America, et al., Defendants. United States of America, Counterclaimant, v. Central Arizona Water Conservation District, Counterdefendant. |
| Court | Arizona Supreme Court |
John J. Bouma, Snell & Wilmer LLP, Phoenix, AZ, Stuart Leslie Somach, De Cuir & Somach, Sacramento, CA, for plaintiff.
Richard Glenn Patrick, U.S. Attorney's Office, Phoenix, AZ, J. Christopher Kohn, John T. Stemplewicz, Phillip M Seligman, U.S. Dept. of Justice, Washington, DC, Andrea J Larry, U.S. Dept. of Justice, Washington, DC, for defendants.
Scot C. Stirling, Marvin S. Cohen, Sacks Tierney & Kasen PA, Phoenix, AZ, for Tucson, City of, counter-defendant.
Jesse W. Sears, Roderick Gregory McDougall, Office of the City Attorney, Phoenix, AZ, for Phoenix, City of, intervenor.
Cynthia J. Haglin, Chandler City Attorney's Office, Chandler, AZ, Paul G Ulrich, Thomas F. Ames, Ulrich Kessler & Anger PC, Phoenix, AZ, William H Anger, Ulrich Kessler & Anger, Phoenix, AZ, for Chandler, City of, intervenor.
James M. Flenner, Office of the City Attorney, City of Glendale, Glendale, AZ, Paul G Ulrich, Thomas F. Ames, Ulrich Kessler & Anger PC, Phoenix, AZ, William H Anger, Ulrich Kessler & Anger, Phoenix, AZ, for Glendale, City of, intervenor.
James H. Oeser, Phoenix, AZ, Paul G Ulrich, Thomas F Ames, Ulrich Kessler & Anger PC, Phoenix, AZ, William H Anger, Ulrich Kessler & Anger, Phoenix, AZ, Ronald L Keyser PC, Phoenix, AZ, for Goodyear, City of, intervenor.
Stephen Joseph Burg, Mesa City Prosecutor's Office, Mesa, AZ, Paul G Ulrich, Thomas F Ames, Ulrich Kessler & Anger PC, Phoenix, AZ, William H Anger, Ulrich Kessler & Anger, Phoenix, AZ, for Mesa, City of, intervenor.
Paul G. Ulrich, Thomas F. Ames, Ulrich Kessler & Anger PC, Phoenix, AZ, William H Anger, Ulrich Kessler & Anger, Phoenix, AZ, Stephen Mark Kemp, City of Peoria Assistant City Attorney, Peoria, AZ, for Peoria, City of, intervenor.
Barbara R. Goldberg, Scottsdale City Attorney's Office, Scottsdale, AZ, Paul G Ulrich, Thomas F. Ames, Ulrich Kessler & Anger PC, Phoenix, AZ, William H. Anger, Ulrich Kessler & Anger, Phoenix, AZ, for Scottsdale, City of, intervenor.
William Kent Foree, Tempe City Attorney, Tempe, AZ, Karen Sinodis Gaylord, City of Tempe City Attorneys Office, Tempe, AZ, for Tempe, City of, intervenor.
Daniel James Quigley, Quigley Tang & Whitehill PLC, Tucson, AZ, for Tohono O'Odham Nation, intervenor.
M Byron Lewis, Salmon Lewis & Weldon PLC, Phoenix, AZ, for Salt River Project Agricultural Improvement and Power District, intervenor.
M Byron Lewis, Salmon Lewis & Weldon PLC, Phoenix, AZ, for Salt River Valley Water Users Association, intervenor.
This action for declaratory and injunctive relief was initiated to resolve a series of disputes arising out of the construction, operation and maintenance of the Central Arizona Project, a 335-mile long, water conveyance system designed to divert an average of 1,500,000 acre-feet of water annually from the Colorado River to central and southern Arizona.
Because of the numerous and complex issues presented, the Court entered a pretrial order providing for trial in six phases. The trial of Phase One has been completed, and this Order is directed to the disposition of the issues presented in that phase.
The primary dispute in Phase One concerns two provisions in the 1988 Amended Master Repayment Contract between the United States and the Central Arizona Water Conservation District ("CAWCD") relating to the maximum amount that CAWCD is obligated to repay to the United States for "reimbursable construction costs" as defined in the 1988 repayment contract. At issue is whether the parties intended to create a $2.0 billion or a $1.781 billion repayment ceiling. The United States contends that the parties negotiated a fixed $2.0 billion ceiling. CAWCD, on the other hand, urges that the parties agreed to have a variable repayment ceiling which would be reduced from $2.0 billion to $1.781 billion if the Gila River Indian Community subsequently executed a water delivery contract with the Secretary of Interior, which it did on October 22, 1992.
A number of related issues were also tried in the Phase One trial. The United States argues that CAWCD has waived the repayment ceiling or is estopped from asserting it. The United States also argues that CAWCD is obligated to repay reimbursable costs above the ceiling under implied-at-law contract theories of quantum meruit and unjust enrichment. The United States further argues that CAWCD must repay all reimbursable construction costs, regardless whether the repayment ceiling in the 1988 Agreement is $2.0 billion or $1.781 billion. CAWCD denies liability for any costs above the repayment ceiling, and maintains that it is not responsible for such costs in the absence of an amendatory contract.
An issue is also presented concerning CAWCD's right to continue using Central Arizona Project facilities without paying reimbursable costs incurred by the United States in excess of the repayment ceiling, if, in fact, reimbursable costs have exceeded the repayment ceiling. The United States contends that the 1988 Agreement permits it to restrict CAWCD from using CAP facilities unless and until an amendatory contract has been executed to cover any excess reimbursable costs.
A bench trial was held on August 4-11, 1998. After considering the testimony of the witnesses, the admitted exhibits and the arguments of counsel, the Court renders the following decision.
A detailed discussion of the procedural history that eventually led to the present posture of this consolidated action is not pertinent to any issues to be considered in this Order. For the purposes of this Order, it is sufficient to note that two separate actions, the first filed by CAWCD against the United States as the principal defendant, and the second filed by the United States against CAWCD, have been consolidated, with the United States being realigned as a party defendant and counterclaimant in the consolidated action.
Plaintiff and counterdefendant CAWCD is a political subdivision and municipal corporation of the State of Arizona. It is a tax levying, public improvement district formed pursuant to Arizona law to provide water supply benefits within Maricopa, Pinal and Pima Counties, exclusive of the Indian lands included in their boundaries. CAWCD was formed for the express purpose of entering into a contract with the United States providing for the construction of the Central Arizona Project ("CAP").
As previously stated, the United States is the principal defendant and sole counterclaimant. Also named as defendants in the Consolidated Action are the United States Department of Interior and the Bureau of Reclamation ("Reclamation"), an agency within the Department of Interior; Bruce Babbitt, the Secretary of the Department of the Interior (the "Secretary"); Patricia Beneke, the Assistant Secretary of the Department of Interior; Eluid L. Martinez, the Commissioner of the Bureau of Reclamation and successor to Daniel P. Beard (his name is substituted for Beard's pursuant to Fed. R.Civ.P. 25(d)); and Robert Johnson, the Regional Director of the Lower Colorado Region of the Bureau of Reclamation and successor to Lawrence F. Hancock (his name is substituted for Hancock's pursuant to Fed. R.Civ.P. 25(d)).
Intervenors include the Tohono O'odham Nation, a Federally-recognized Indian tribe organized under Section 16 of the Indian Reorganization Act of 1934; the Central Arizona Irrigation and Drainage District ("CAIDD"), a political subdivision and municipal corporation of the State of Arizona; and the Arizona cities of Chandler, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Tempe, and Tucson.
In 1902, Congress passed the Reclamation Act, 43 U.S.C. §§ 391, et seq. The primary purpose of the Reclamation Act was to encourage and facilitate the development of arid and semi-arid lands in the western United States by constructing and maintaining irrigation works for the storage, diversion and development of water for family-sized farms. (Undisputed Fact ("UF") ¶ A1).2 In 1922, the seven Colorado River Basin states signed the Colorado River Compact, which divided the Colorado River Basin into an Upper Basin and a Lower Basin. The Compact apportioned 7.5 million acre-feet of water annually to the states of the Lower Basin (Arizona, Nevada, and California) and an equal amount of water to the Upper Basin states (Colorado, Utah, New Mexico, and Wyoming).3
All of the Colorado River Basin states except Arizona ratified the Colorado River Compact in 1923. (UF ¶ A2). Arizona subsequently ratified the Colorado River Compact in 1944 and signed a contract with the Secretary for its 2.8 million acre-feet annual allotment of Colorado River water. (UF ¶ A4).
The Boulder Canyon Project Act of 1928 parceled water among the Lower Basin states, allotting Arizona 2.8 million acre-feet annually. See 43 U.S.C. § 617. California was allotted 4.4 million acre-feet annually, and Nevada 300,000 acre-feet annually. The Act gave the Secretary broad administrative authority over the water, including the power to apportion water within the states. See id.
In 1963, the United States Supreme Court confirmed the Lower Basin apportionment in Arizona v. California, 373 U.S. 546, 83 S.Ct 1468, 10 L.Ed.2d 542 (1963). The case established Arizona's right to an annual allotment of 2.8 million acre-feet of Colorado River water. (UF ¶ A7).
Of particular importance to this litigation, the Colorado River Basin Project Act was enacted in 1968. 43 U.S.C. §§ 1501-1556. The Basin Project...
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