Elephant Butte Irr. Dist. v. Dept. of Int.

• Citation: 538 F.3d 1299
• Decision Date: 24 July 2008
• Docket Number: No. 06-2282.,06-2282.
• Parties: ELEPHANT BUTTE IRRIGATION DISTRICT OF NEW MEXICO, and El Paso County Water Improvement District No. 1, of Texas, Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF THE INTERIOR; Dirk Kempthorne, Secretary of the Interior; William E. Rinne, Acting Commissioner of Reclamation; Rick Gold, Regional Director of the Bureau of Reclamation, Anita Lockwood, Secretary of the State of New Mexico; and Garrey Carruthers, Governor of the State of New Mexico, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

538 F.3d 1299

ELEPHANT BUTTE IRRIGATION DISTRICT OF NEW MEXICO, and El Paso County Water Improvement District No. 1, of Texas, Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF THE INTERIOR; Dirk Kempthorne, Secretary of the Interior; William E. Rinne, Acting Commissioner of Reclamation; Rick Gold, Regional Director of the Bureau of Reclamation, Anita Lockwood, Secretary of the State of New Mexico; and Garrey Carruthers, Governor of the State of New Mexico, Defendants-Appellees.

No. 06-2282.

United States Court of Appeals, Tenth Circuit.

July 24, 2008.

Steven Hernandez, Lee E. Peters, Beverly J. Singleman, Hubert & Hernandez, Las Cruces, NM, Timothy J. Deyoung, Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, NM, James M. Speer, Jr., United States Department of the Interior, El Paso, TX, for Plaintiffs-Appellants.

John A. Bryson, Kathryn E. Kovacs, United States Department of Justice, Washington, DC, John W. Zavitz, Office of the United States Attorney, Christopher D. Coppin, Assistant Attorney General, Office of the Attorney General, Albuquerque, NM, Edward J. Apodaca, NM Energy, Minerals and Natural Resources Dept., Santa Fe, NM, for Defendants-Appellees.

Before KELLY, SEYMOUR, and MURPHY, Circuit Judges.

SEYMOUR, Circuit Judge.

Plaintiffs Elephant Butte Irrigation District of New Mexico and El Paso County Water Improvement District No. 1 of Texas (collectively the Districts) appeal the district court's final judgment on the only remaining count in this case, Count II of the complaint. On a summary judgment motion, the court held in favor of defendants, the United States Department of the Interior and various federal officials (collectively DOI). For the reasons explained below, we affirm.

I

The facts of this case have been set forth thoroughly in both Elephant Butte Irrigation Dist. v. Dep't of the Interior, 160 F.3d 602 (10th Cir.1998) ("EBID I"), and Elephant Butte Irrigation Dist. v. Dep't of the Interior, 269 F.3d 1158 (10th Cir.2001) ("EBID II"). In particular, EBID II describes the historical and legislative background of reclamation law and the authorization of the project at issue. We discuss only those facts relevant to our consideration of Count II.

The Districts filed a complaint in 1990, challenging, inter alia, DOI's distribution of certain revenues from the Rio Grande Reclamation Project (the project). As relevant here, Count I alleged that the Districts were entitled to the revenues listed in Section 4-I of the Fact Finder's Act of 1924, 43 U.S.C. § 501 (Section 4-I). Count II challenged DOI's lease of project lands to the State of New Mexico for recreational purposes and sought an order reforming the lease to provide the Districts with profits generated under the lease pursuant to Section 4-I. Count VI similarly alleged that a Memorandum of Understanding by which DOI leased project lands to the Bureau of Land Management for grazing was unlawful because it would return no profit to the Districts.

The district court granted summary judgment in favor of the Districts on Count I, and in favor of DOI on Count VI. The district court also granted the Districts' motion for partial summary judgment on Count II, but held that disputed issues of fact remained to be decided. It then entered final judgment on Counts I and VI under FED.R.CIV.P. 54(b). This Court affirmed on both Counts I and IV, holding that the Districts were entitled under Section 4-I to profits from the leasing of project grazing and farm land, but that the Bureau of Reclamation (BOR) had no duty "to administer and manage the water project lands in such a way that profits are generated." EBID II, 269 F.3d at 1166.

After the decision in EBID II and the death of the presiding district judge, the district court invited DOI to renew its motion for summary judgment on Count II. Thereafter, the court granted in part and denied in part DOI's renewed motion for summary judgment on Count II, holding that the Districts are entitled under Section 4-I to any profits arising from the recreation lease, but that the recreation lease had yielded no profits. The court further concluded that under the holding of EBID II, DOI has no obligation to generate such profits. The court issued an order reforming the recreation lease with the State of New Mexico to provide the Districts with any profits generated by the lease. After an accounting, the court entered a final judgment for the Districts in the amount of $9,009.19, representing the net profit it determined they were owed.

The Districts filed a motion for reconsideration, asking the district court to review Count II under their theory that the recreation lease violated the United States' covenants of good faith and fair dealing in the contracts it had entered into with the Districts in 1937 (1937 Contracts). The court declined to address the contract theory, concluding the Districts had failed to timely raise the issue. The court denied a further attempt to raise the contract argument in the Districts' follow-up motion for clarification of the court's order denying reconsideration.

On appeal, the Districts' contend the district court erred in refusing to consider their contract theory of recovery for Count II and in holding that DOI has no duty to generate profits from the recreation lease. They also maintain that disputes of fact and the law of the case doctrine precluded the district court from deciding the merits of Count II on summary judgment.

II

We review the district court's denial of the motion to reconsider for abuse of discretion.¹ See Geddes v. United Staffing Alliance Employee Med. Plan, 469 F.3d 919, 928 (10th Cir.2006) ("Whether to allow supplemental briefing on a newly-raised issue is a `supervision of litigation' question we review for abuse of discretion."); Price v. Philpot, 420 F.3d 1158, 1167, 1167 n. 9 (10th Cir.2005) (reviewing denial of motion for reconsideration for abuse of discretion). "A district court abuses its discretion where it commits a legal error or relies on clearly erroneous factual findings, or where there is no rational basis in the evidence for its ruling." Nova Health Sys. v. Edmondson, 460 F.3d 1295, 1299 (10th Cir.2006) (internal quotations omitted). We review de novo both the district court's statutory interpretation, Paper, Allied-Industrial, Chemical & Energy Workers v. Continental Carbon Co., 428 F.3d 1285, 1293 (10th Cir.2005), and its grant of summary judgment, Occusafe, Inc. v. EG&G Rocky Flats, Inc., 54 F.3d 618, 621 (10th Cir.1995).

Contract Claim

We explained the genesis of the 1937 contracts in EBID II:

In 1937, Congress enacted a law authorizing the Secretary of the Interior to contract with the water districts for the purpose of terminating their leases of power privilege. See Interior Department Appropriations Act of 1938, ch. 570, Pub.L. No. 75-249, 50 Stat. 564, 593. Leases of power privilege had previously been granted by the Secretary to the water districts pursuant to an earlier Act of Congress. In these leases, the federal government gave the water districts the right to build power facilities and to use the proceeds from those facilities to repay their construction obligations. However, the water districts never executed their rights to build power facilities on water project lands. The 1937 Act was designed to return to the federal government the right to build power facilities while giving the water districts a distinct benefit: relief from the obligation to repay their outstanding construction costs. Both El Paso and the Elephant Butte Irrigation District entered into contracts with the Secretary of the Interior in accordance with the 1937 Act.

EBID II, 269 F.3d at 1162. On appeal, the Districts claim "[t]he terms of the 1937 Contracts created duties that prevent the Secretary [of DOI] from arbitrarily destroying the Districts' right to credits under Subsection I. The Subsection I benefits were an essential element of the consideration running to the Districts[,] and the Contracts cannot now be interpreted as if the Subsection I rights do not exist...." Aplt. Br. at 25. To support their contention that their contract claim is not new, the Districts cite to a number of pleadings in which the 1937 Contracts were referenced. However, a close review of each of those pleadings, other than the complaint, clearly shows that the arguments relating to the contracts were statutory and not contractual in nature. As for the complaint, the District failed to pursue any contract claim they may have asserted there.

In the pretrial order, for example, the Districts contended that the recreation lease violated the government's fiduciary duty to them, exceeded DOI's statutory mandate, failed to confer any benefit to the project's beneficiaries, and that they had standing to challenge the lease because they had vested rights to revenues. While they made some general assertions of breach of contract, they made no claim that the lease constituted a breach of the covenants of good faith and fair dealing in the 1937 contracts. The Districts were obliged to spell out any breach of contract claim "with specificity and clarity" in the pretrial order. See Wilson v. Muckala, 303 F.3d 1207, 1216 (10th Cir.2002). This is so because "`the pretrial order is treated as superceding the pleadings and establishing the issues to be considered at trial.'" Id. at 1215 (quoting 6A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, FEDERAL PRACTICE & PROCEDURE § 1522); FED.R.CIV.P. 16(e) (the pretrial order "controls the course of the action unless the court modifies it").

The Districts passed up additional opportunities to expressly raise a contract theory during the extensive summary judgment briefing. While the Districts are correct that they mentioned the 1937 contracts in the first round of summary judgment briefing on Count II in 1994, their only theory of recovery was that the DOI did not have statutory authority to give revenues...