Clear Creek Cmty. Servs. Dist. v. United States, 10-420C

• Decision Date: 17 May 2017
• Docket Number: No. 10-420C,10-420C
• Parties: CLEAR CREEK COMMUNITY SERVICES DISTRICT, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: Court of Federal Claims

CLEAR CREEK COMMUNITY SERVICES DISTRICT, Plaintiff,
v.
THE UNITED STATES, Defendant.

No. 10-420C

United States Court of Federal Claims

May 17, 2017

RCFC 12; Motion to Dismiss; RCFC 56; Motion for Summary Judgment; Breach of Contract; Statute of Limitations; Accrual Suspension; Fifth Amendment Takings Claim

Walter Patterson McNeill, Redding, CA, for plaintiff.

Igor Helman, United States Department of Justice, Washington, DC, for defendant.

OPINION AND ORDER

SWEENEY, Judge

Before the court is defendant's combined motion to dismiss pursuant to Rules 12(b)(1) and (6) of the Rules of the United States Court of Federal Claims ("RCFC") and motion for summary judgment pursuant to RCFC 56. Plaintiff, Clear Creek Community Services District ("plaintiff" or "the District"), is a local government agency that provides water service to the Clear Creek watershed, which is located in Shasta County, California. Second Am. Compl. ¶¶ 2, 5. Defendant is the United States, acting through the United States Department of the Interior's Bureau of Reclamation ("BOR"). Plaintiff asserts three counts: (1) "breach of contract," (2) "inverse condemnation," and (3) "declaratory relief." Id. ¶¶ 31-63. The court deems oral argument unnecessary and, for the reasons set forth below, grants in part and denies in part defendant's combined motion.

I. BACKGROUND A. Factual Background

In support of its combined motion to dismiss and for summary judgment, defendant submitted proposed findings of uncontroverted fact, to which plaintiff responded. See Def.'s

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Proposed Findings; Pl.'s Resps. & Objs. to Def.'s Proposed Findings. The court's statement of material facts is derived from both parties' submissions and from the record before it.

1. 1963 Contract

On May 14, 1963, plaintiff entered into a contract (Contract 14-06-200-489A) with defendant. Def.'s Proposed Findings A218-73. Pursuant to the contract, defendant agreed to construct a water distribution system, transfer that system to plaintiff, and then provide water to plaintiff via that system. In turn, plaintiff agreed to operate and maintain the water distribution system upon its transfer. See generally id.

The contract contains thirty-nine articles and is divided into three parts: Part A (Articles 2-10), Part B (Articles 11-15), and a final collection of uncaptioned provisions (Articles 16-39). Id. at A218-19. Part A consists of nine articles, each of which relates to the provision of water:

1.	Article 2	"Effective Date of Contract—Term of Part A"
2.	Article 3	"Transfer of Operation and Maintenance [("O&M")] of; Project Works to the District"
3.	Article 4	"Water to be Furnished to District"
4.	Article 5	"Water Use Schedules"
5.	Article 6	"Rates and Method of Payment for Water"
6.	Article 7	"Adjustments"
7.	Article 8	"Need of District for More Water than Agreed; Quantity"
8.	Article 9	"Point of Delivery—Maintenance of Flows and; Levels—Measurement and Responsibility for; Distribution of Water"
9.	Article 10	"United States Not Liable for Water Shortage"

Part B consists of five articles, each of which relates to the construction of a distribution system:

1.	Article 11	"Construction of Works and Limit of Expenditures; Therefor"
2.	Article 12	"Payment by District"
3.	Article 13	"Computation of Cost"
4.	Article 14	"Development Period"
5.	Article 15	"Transfer of Operation and Maintenance of; Distribution System to the District"

The last section consists of twenty-four articles, which address a variety of additional items related to the relationship between the two parties:

1.
Article 16
"Operation, Inspection, and Retransfer of Transferred
Works—United States to be Held Harmless"

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2.	Article 17	"Accumulation and Use of Reserve Fund for Operation; and Maintenance"
3.	Article 18	"Estimated Cost of Operation and Maintenance of; Works to be Paid in Advance"
4.	Article 19	"District to Pay Certain Miscellaneous Costs Relating; to Transferred Works"
5.	Article 20	"Drainage Studies and Facilities"
6.	Article 21	"Agreed Charges a General Obligation of the District"
7.	Article 22	"All Benefits Conditioned Upon Payment"
8.	Article 23	"Levy of Taxes and Assessments—Fixing of Rates and; Tolls"
9.	Article 24	"Refusal of Water in Case of Default"
10.	Article 25	"Penalty Upon Delinquency in Payment"
11.	Article 26	"District to Keep Books and Records and Report Crop; and Other Data"
12.	Article 27	"Inspection of Books and Records"
13.	Article 28	"Changes in Organization of [Plaintiff]"
14.	Article 29	"Land Not to Receive Service or Water Until Owners; Thereof Execute Certain Contracts"
15.	Article 30	"Valuation and Sale of Excess Lands"
16.	Article 31	"Excess Lands"
17.	Article 32	"Amendment of Federal Reclamation Laws"
18.	Article 33	"Title to Remain in the United States"
19.	Article 34	"Contingent Upon Appropriations or Allotment of; Funds"
20.	Article 35	"Officials Not to Benefit"
21.	Article 36	"Notices"
22.	Article 37	"Assignment Prohibited—Remedies Under Contract; Not Exclusive—Waivers—Opinions and; Determinations"
23.	Article 38	"Assurance Relating to Validity of Contract"
24.	Article 39	"Equal Employment Opportunity"

a. Explanatory Recitals

Generally, the contract provides:

[T]he United States is constructing and operating the Central Valley Project [("CVP")] for flood control, for the diversion, storage, carriage, and distribution for irrigation, municipal, domestic, industrial, and other beneficial uses of water of the Sacramento River, the Trinity River, the American River, the San Joaquin River and their tributaries for generation and distribution of electric energy, for navigation and other purposes;

* * *

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[T]he District and the United States desire to contract, pursuant to the Federal reclamation laws and the laws of the State of California, for the furnishing by the United States of a supplemental water supply from the Central Valley Project and for the construction of a general distribution and lateral system by the United States for the District upon the terms and conditions hereinafter set forth;

* * *
[T]he United States proposes to construct the Clear Creek South Unit as a feature of the Central Valley Project in order to furnish water to the District pursuant to the terms of this contract;

* * *
[I]t is intended that the District, subject to the terms and conditions contained herein, will operate and maintain the Clear Creek South Unit and said distribution system.

Id. at A220-22.

b. Water Service

The contract provides that plaintiff is to receive, and pay for, a specified quantity of water from the Central Valley Project. Id. at A221-22, A225-28. Part A, Article 2 of the contract states: "Insofar as it relates to the furnishing of water, this contract shall terminate on December 31, 1994." Id. at A224. Under Part A, Article 4, the contract contains the following disclaimer: "[T]he United States shall not be obligated to furnish more than fifteen thousand three hundred (15,300) acre-feet of water during any such year." Id. at A226.

c. Transfer of O&M of the Conduit

Part A, Article 3 of the contract provides that "the Contracting Officer will furnish to [plaintiff] a written notice announcing the initial delivery date and stating the time of transfer to [plaintiff] for operation and maintenance during the term of Part A of this contract of the completed Project works." Id. at A225. The contract defines the term "project works" as the "Muletown Conduit[, a pipe that distributes water,] extending from the outlet works of Whiskeytown Dam to the eastern edge of the service area, and all necessary lands and related facilities and structures located thereon." Id. at A223. Thus, the contract states that during the term of Part A, plaintiff is to assume the operation and maintenance of the conduit following its completion.

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d. Construction and O&M of the Distribution System

Part B, Article 11 of the contract provides that defendant is to construct a distribution system, id. at A239-44, and that "[s]aid distribution system shall not include the Project works," id. at A240. Furthermore, Part B, Article 14 states that "[t]he development period for the lands in the District is hereby fixed at ten (10) years from and including the year in which the initial delivery date occurs." Id. at A244. Lastly, Part B, Article 15 notes:

On the date of the commencement of the development period, pursuant to Article 14, or such earlier date as may be agreed upon by the Contracting Officer and [plaintiff], [plaintiff] shall take over and at its own expense during the term of Part B of this contract operate and maintain the distribution system or any part thereof described in a written transfer notice to be furnished to [plaintiff] by the Contracting Officer.

Id.

e. Transfer of O&M Responsibilities

The last section of the contract, Articles 16-39, details the parties' O&M obligations with respect to, inter alia, both the conduit and distribution system. Id. at A245-73. The contract broadly defines O&M as "all operation, maintenance, and replacements necessary to keep the Project works and distribution works in a safe and proper operating condition." Id. In addition, Article 16 states: "[Plaintiff] agrees to accept . . . the care, operation, and maintenance of the transferred works, and thereafter, without expense to [defendant] . . . in such a manner that said works will remain in good and efficient condition." Id. at A245. The contract defines "transferred works" as "project works" or "distribution works," or both. Id. at A223. Although the contract does not define the term "distribution works," the contract defines the term "distribution systems" as "the general distribution and lateral system, surface drainage, and other related works...