Klamath Water Users Protective Assoc. v. Patterson
| Decision Date | 12 July 1999 |
| Docket Number | No. 98-35708,98-35708 |
| Citation | 191 F.3d 1115 |
| Parties | (9th Cir. 1999) KLAMATH WATER USERS PROTECTIVE ASSOCIATION; KLAMATH DRAINAGE DISTRICT; SAM HENZEL; HENZEL PROPERTIES, LTD., Plaintiffs-counter defendants-Appellants, v. ROGER PATTERSON, Regional Director, Mid-Pacific Region, U.S. Bureau of Reclamation; KARL E. WIRKUS, Area Manager, Klamath Irrigation Project, U.S. Bureau of Reclamation; ELUID MARTINEZ, Commissioner of Reclamation, U.S. Department of the Interior; PATRICIA BENEKE, Assistant Secretary for Water and Science, U.S. Department of the Interior; BRUCE BABBITT, Secretary of the Interior; THE UNITED STATES BUREAU OF RECLAMATION; UNITED STATES OF AMERICA, Defendants-Appellees, and PACIFICORP, Defendant-counter claimant-Appellee, and NORTH COAST ENVIRONMENTAL CENTER; PACIFIC COAST FEDERATION OF FISHERMENS ASSOCIATION; INSTITUTE FOR FISHERIES RESOURCES; KLAMATH FOREST ALLIANCE; MAZAMAS; OREGON NATURAL RESOURCES CENTER; THE WILDERNESS SOCIETY; WATER WATCH OF OREGON; YUROK TRIBE, Defendant-Intervenors-Appellees |
| Court | U.S. Court of Appeals — Ninth Circuit |
Paul S. Simmons, De Cuir & Somach, PC, Sacramento, California, for the plaintiffs-counter-defendants-appellants.
Jeffrey C. Dobbins, Environment & Natural Resources Division, Department of Justice, Washington, DC, for the defendants-appellees.
Richard S. Gleason, Stoel Rives LLP, Portland, Oregon, for the defendant-counter-claimant-appellee.
Curtis G. Berkley, Alexander & Karshmer, Berkeley, California, for defendant-intervener-appellee Yurok Tribe.
Appeal from the United States District Court for the District of Oregon; Michael R. Hogan, District Judge, Presiding, D.C. No. CV-97-3033 MRH.
Before: Betty B. Fletcher, Warren J. Ferguson, and A. Wallace Tashima, Circuit Judges.
This appeal involves a basic contract issue: whether the Klamath Water Users Protective Association and other irrigators in the Klamath Basin (collectively, the "Irrigators") are third-party beneficiaries to a 1956 contract (the "Contract") between the United States Bureau of Reclamation ("Reclamation" or "United States") and the California Oregon Power Company ("Copco") that governs the management of the Link River Dam (the "Dam") in the Klamath Basin (the "Project"). We hold that they are not. The district court concluded that the Irrigators do not have third-party beneficiary water rights under the Contract. It granted a declaratory judgment to Reclamation and PacifiCorp, Copco's successor in interest that now operates and maintains the Dam under the Contract, holding that PacifiCorp is not liable to the Irrigators for implementing Reclamation's water allocation decisions for the Project. See Klamath Water Users Ass'n v. Patterson, 15 F.Supp.2d 990, 997 (D.Or. 1998) ("Klamath "). We have jurisdiction under 28 U.S.C. S 1291, and we affirm.
The Project, located within the Upper Klamath and Lost River Basins in Oregon and California, was authorized by Congress in 1905 pursuant to the Reclamation Act of 1902, ch. 1093, 32 Stat. 388 (1902). In 1905, in accordance with state water law and the Reclamation Act, the United States appropriated all available water rights in the Klamath River and Lost River and their tributaries in Oregon and began constructing a series of water diversion projects.
In 1917, the United States and Copco entered into an agreement under which Copco would construct the Dam and then convey it to the United States. In return, Copco and the United States entered into a fifty-year contract (1917-1967) that gave Copco the right to operate the Dam. The Contract was amended in 1920 and 1930, and was renewed in 1956 for an additional fifty years (1956-2006). The United States and Copco are the only named parties to the Contract. The Contract, as renewed in 1956, remains in effect and is the subject of controversy here. The Contract states that it was entered into pursuant to the Reclamation Act and "acts of Congress relating to the preservation and development of fish and wildlife resources."
The parties do not dispute that the Dam was built to help the United States satisfy its contractual obligations to water users in the basin, including the Irrigators. However, the project served other federal purposes, such as impounding water to flood the adjacent wildlife refuges. Copco's interest related primarily to controlling the flow of water to the Copco-owned hydroelectric facilities downstream from the Dam.
Operation of the Dam is also subject to the requirements of federal statutes, such as the Endangered Species Act ("ESA.") The coho salmon of the lower Klamath River has been listed as threatened, and two species of sucker fish, the Lost River and short nose suckers, located in and around the Project, are listed as endangered. In 1992, the United States Fish and Wildlife Service issued a Biological Opinion that required certain minimum elevations for Upper Klamath Lake to avoid jeopardizing these protected species. In addition, the Secretary of the Interior has recognized that a number of Oregon tribes, including the Klamath, Yurok and Hoopa Valley tribes (the "Tribes"), hold fishing and water treaty rights in the basin.
In recognition of the federal government's various obligations related to the Project, Reclamation initiated a public process to establish a new operating plan for the Dam. For the next several years, Reclamation intends to issue one-year interim plans while formulating a long term plan for water distribution. Pursuant to this policy, in April, 1997, Reclamation circulated to interested parties a draft of its proposed 1997 interim plan for the Project. In May, 1997, Reclamation issued its final 1997 interim plan. Soon thereafter, PacifiCorp stated it would not implement the plan because the required flow levels would force it to violate its Federal Energy Regulatory Commission ("FERC") license. PacifiCorp's FERC license required FERC flows 1 in September at 1,300 cubic feet per second ("cfs"), while Reclamation's 1997 plan allowed for only 1,000 cfs.
Reclamation and PacifiCorp agreed upon a short-term modification to the Contract. The modification directed PacifiCorp to implement the 1997 plan, contingent upon FERC concurrence. The Irrigators were not included in the negotiations that led to this modification.
The Irrigators filed this action claiming, among other things, breach of the Contract based on their alleged third party beneficiary status. In response, PacifiCorp filed a counterclaim, seeking a declaration of rights with respect to the Irrigators' standing under the Contract. The parties then filed cross-motions for summary judgment.
The district court denied the Irrigators' motion for summary judgment and granted PacifiCorp's and Reclamation's motions for summary judgment on PacifiCorp's counterclaim. See Klamath, 15 F. Supp. 2d at 997. The Irrigators appeal.
The Irrigators argue that under the plain language of the Contract, they are third-party beneficiaries and thus entitled to enforce the Contract's existing terms. We review the district court's grant of summary judgment de novo. See Tri-State Dev. v. Johnston, 160 F.3d 528, 529 (9th Cir. 1998). Because the facts are not in dispute, the only question we must decide is whether the district court correctly applied the relevant law in concluding that the Irrigators are not third-party beneficiaries under the Contract. See id. The interpretation of a contract is a mixed question of law and fact subject to de novo review. See O'Neill v. United States, 50 F.3d 677, 682 (9th Cir. 1995). In particular, the determination of whether contract language is ambiguous is a question of law. See id.
Federal law controls the interpretation of a contract entered pursuant to federal law when the United States is a party. See id. For guidance, we look to general principles for interpreting contracts. See Kennewick Irrigation Dist. v. United States, 880 F.2d 1018, 1032 (9th Cir. 1989). Before a third party can recover under a contract, it must show that the contract was made for its direct benefit -that it is an intended beneficiary of the contract. See Williams v. Fenix & Scisson, Inc., 608 F.2d 1205, 1208 (9th Cir. 1979).
A written contract must be read as a whole and every part interpreted with reference to the whole, with preference given to reasonable interpretations. See Kennewick, 880 F.2d at 1032. Contract terms are to be given their ordinary meaning, and when the terms of a contract are clear, the intent of the parties must be ascertained from the contract itself. See Hal Roach Studios, Inc. v. Richard Fenier & Co., Inc., 896 F.2d 1542, 1549 (9th Cir. 1990). Whenever possible, the plain language of the contract should be considered first. See Textron Defense Sys. v. Widnall, 143 F.3d 1465, 1469 (Fed. Cir. 1998); Leicht v. Bateman Eichler, Hill Richards, Inc., 848 F.2d 130, 133 (9th Cir. 1988). The fact that the parties dispute a contract's meaning does not establish that the contract is ambiguous; it is only ambiguous if reasonable people could find its terms susceptible to more than one interpretation. See Kennewick, 880 F.2d at 1032.
When distinguishing between intended and incidental beneficiaries, the Restatement of Contracts explains:
(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and . . . (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.
Restatement (Second) of Contracts S 302 (1979) ("Restatement").
To sue as a third-party beneficiary of a contract, the third party must show that...
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Case summaries.
...Water Users Protective Assoc. v. Patterson, 203 F.3d 1175 (9th Cir. 2000). (135) Klamath Water Users Protective Assoc. v. Patterson, 191 F.3d 1115, 1123 (9th Cir. 1999), amended and superceded by, 204 F.3d 1206 (9th Cir. 2000), amended by, 203 F.3d 1175 (9th Cir. (136) Klamath Water Users P......