Kansas v Colorado

• Court: U.S. Supreme Court
• Writing for the Court: Stevens
• Citation: Kansas v Colorado, 533 U.S. 1, 121 S.Ct. 2023, 150 L.Ed.2d 72 (2001)
• Decision Date: 11 June 2001
• Docket Number: 105
• Parties: STATE OF KANSAS, PLAINTIFF v. STATE OF COLORADOrig. SUPREME COURT OF THE UNITED STATES

533 U.S. 1

121 S.Ct. 2023

150 L.Ed.2d 72

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press

STATE OF KANSAS, PLAINTIFF v STATE OF COLORADO

No. 105, Orig

SUPREME COURT OF THE UNITED STATES

Argued March 19, 2001

Decided June 11, 2001

Syllabus

The Arkansas River rises in Colorado and flows through Kansas and several other States before emptying into the Mississippi River. In 1949, Congress approved the Arkansas River Compact (Compact), which Colorado and Kansas negotiated, and which provided in Article IV-D that, inter alia, future development of the river basin could not materially deplete the usable quantity or availability to other users of the river's waters. In 1986, Kansas filed a complaint alleging that Colorado had violated the Compact. In his first report, the Special Master found that post-Compact increases in groundwater well pumping in Colorado had materially depleted the waters in violation of Article IV-D; in his second report, he recommended that damages be awarded to Kansas; and in his third report, he recommended that such damages be measured by Kansas' losses attributable to Compact violations since 1950, be paid in money not water, and include prejudgment interest from 1969 to the date of judgment. Colorado has filed four objections to the third report, Kansas has filed one, and the United States submits that all objections should be overruled.

Held: 1. The recommended damages award does not violate the Eleventh Amendment. Thus, Colorado's first exception is overruled. Colorado contends that that the Amendment precludes damages based on losses sustained by individual Kansas farmers, as the Report recommends. Kansas has unquestionably made the required showing that it has a direct interest of its own and is not merely seeking recovery for the benefit of individuals who are the real parties in interest. Oklahoma ex rel. Johnson v. Cook, 304 U.S. 387, 396. This is but one of several proceedings in which Kansas' own interest in preventing upstream diversion of the river has justified the exercise of this Court's original jurisdiction. Kansas has been in full control of this litigation since its inception, and its right to control the disposition of any recovery of damages is unencumbered. The injury to individual farmers is but one component of the formula adopted by the Special Master to quantify damages here. When a State properly invokes this Court's original jurisdiction, neither the measure of, nor the method for calculating, damages can retrospectively negate that jurisdiction. Nor would jurisdiction be affected by Kansas' postjudgment decision about whether to deposit the money recovered in its general coffers or use the money to benefit those who were hurt by the violation. Pp. 3-6.

2. The unliquidated nature of Kansas' money damages does not bar an award of prejudgment interest. Thus, Colorado's second exception is overruled. This Court has long recognized that the common-law distinction between liquidated and unliquidated damages is unsound, Funkhouser v. J. B. Preston Co., 290 U.S. 163, 168, and that a monetary award does not fully compensate for an injury unless it includes an interest component, see, e.g., Milwaukee v. Cement Div., National Gypsum Co., 515 U.S. 189, 195. The Special Master acted properly in declining to follow this long-repudiated common-law rule. Pp. 6-9.

3. The Special Master determined the appropriate rate for the prejudgment interest award and determined that interest should begin running in 1969. Colorado's third exception is overruled insofar as it challenges the interest rates and sustained insofar as it challenges the Special Master's recommendation that the interest should begin to accrue in 1969. Kansas' exception that the interest should begin to accrue in 1950 is overruled. Pp. 9-14.

(a) Because this Court has decided that Kansas could measure a portion of its damages by individual farmers' losses, the interest rates applicable to individuals in the relevant years, rather than the lower rates available to States, may properly be used to calculate damages. Pp. 9-10.

(b) The Special Master concluded that interest should be awarded according to fairness considerations rather than a rigid theory of compensation for money withheld. Kansas' argument that this Court has effectively foreclosed that equities-balancing approach has some merit, but this Court cannot say that by 1949 the Court's case law had developed sufficiently to put Colorado on notice that prejudgment interest would automatically be awarded from the time of injury for a Compact violation. Therefore, the Special Master acted properly in analyzing this case's facts and awarding only as much prejudgment interest as was required by balancing the equities. The equities support an award beginning on a date later than the date of first violation. The factors the Special Master considered-that no one thought that the pact was being violated in the early years after it was signed and that a long interval passed between the original injuries and these proceedings, as well as the dramatic impact of compounding interest over many years-fully justify his view that prejudgment interest should not be awarded for any years before either party was aware of the excessive pumping. Colorado suggests that prejudgment interest should begin to accrue in 1985, the year the complaint was filed, rather than 1969, when Colorado knew or should have known that it was violating the Compact. Though the issue is close, the equities favor the later date. In overruling Colorado's exceptions to the second report, this Court held that Kansas was not guilty of inexcusable delay in failing to complain more promptly about the post-Compact pumping because the nature and extent of the violations were unclear even years after the violation became obvious. That conclusion is a double-edged sword. Both States' interests would have been served had the claim been advanced promptly after its basis became known, and it was clear that once the proceedings started they would be complex and protracted. Given the uncertainty over the damages' scope that prevailed from 1968 and 1985 and the fact Kansas had the power to begin the process by which those damages would be quantified, Colorado's request that the Court deny prejudgment interest for that time is reasonable. Pp. 10-13.

4. The Special Master properly determined the value of the crop losses attributable to Compact violations. Thus, Colorado's fourth exception is overruled. Kansas and Colorado disagreed as to how much additional crop yield would have been produced with the missing water. Kansas' experts relied upon the hypothesis of a generally linear relationship between water available for use and increased crop yields. Colorado, whose own expert recanted an alternative proposal for calculating damages, attempts to poke holes in Kansas' methodology through a speculative application of economic theory. That attack is unpersuasive, given Colorado's inability to mount an effective challenge to Kansas' experts on their own terms and its complete failure to provide a plausible alternative estimate of crop damage. Pp. 14-17.

Colorado's exceptions sustained in part and overruled in part; Kansas' exception overruled; and case remanded.

ON EXCEPTIONS TO REPORT OF SPECIAL MASTER

Stevens, J., delivered the opinion of the Court, Parts I, IV, and V of which were unanimous, and Parts II and III of which were joined by Rehnquist, C. J., and Kennedy, Souter, Ginsburg, and Breyer, JJ.

Opinion of the Court

Justice Stevens delivered the opinion of the Court.

The Arkansas River rises in the mountains of Colorado just east of the Continental Divide, descends for about 280 miles to the Kansas border, then flows through that State, Oklahoma, and Arkansas and empties into the Mississippi River. On May 20, 1901, Kansas first invoked this Court's original jurisdiction to seek a remedy for Colorado's diversion of water from the Arkansas River. See Kansas v. Colorado, 185 U.S. 125, 126 (1902) (statement of case). In opinions written during the past century, most recently in Kansas v. Colorado, 514 U.S. 673, 675-678 (1995), we have described the history and the importance of the river. For present purposes it suffices to note that two of those cases, Kansas v. Colorado, 206 U.S. 46 (1907), and Colorado v. Kansas, 320 U.S. 383 (1943), led to the negotiation of the Arkansas River Compact (Compact), an agreement between Kansas and Colorado that in turn was approved by Congress in 1949. See 63 Stat. 145. The case before us today involves a claim by Kansas for damages based on Colorado's violations of that Compact.

The Compact was designed to "[s]ettle existing disputes and remove causes of future controversy" between the two States and their citizens concerning waters of the Arkansas River and to "[e]quitably divide and apportion" those waters and the benefits arising from construction and operation of the federal project known as the "John Martin Reservoir." Arkansas River Compact, Art. I, reprinted in App. to Brief for Kansas A-1, A-2. Article IV-D of the Compact provides:

"This Compact is not intended to impede or prevent future beneficial development of the Arkansas River basin in Colorado and Kansas by Federal or State agencies, by private enterprise, or by combinations thereof, which may involve construction of dams, reservoir, and other works for the purpose of water utilization and control, as well as the improved or prolonged functioning of existing works: Provided, that the waters of the Arkansas River, as defined in Article III, shall not be materially depleted in...