Orff v. U.S.

• Decision Date: 23 June 2005
• Docket Number: No. 03-1566.,03-1566.
• Parties: ORFF ET AL. <I>v.</I> UNITED STATES ET AL.
• Court: U.S. Supreme Court

545 U.S. 596

125 S. Ct. 2606

162 L. Ed. 2d 544

ORFF ET AL.

v. UNITED STATES ET AL.

No. 03-1566.

Supreme Court of United States.

Argued February 23, 2005.

Decided June 23, 2005.

Petitioner California farmers and farming entities purchase water from respondent Westlands Water District, which receives its water from the United States Bureau of Reclamation under a 1963 contract between Westlands and the Bureau. In 1993, Westlands and other water districts sued the Bureau for reducing their water supply. Petitioners, though not parties to the 1963 contract, intervened as plaintiffs. After negotiations, all parties except petitioners stipulated to dismissal of the districts' complaint. Petitioners pressed forward with, as relevant here, the claim that the United States had breached the contract. They contended that they were third-party beneficiaries entitled to enforce the contract and that the United States had waived its sovereign immunity from breach of contract suits in a provision of the Reclamation Reform Act of 1982, 43 U. S. C. § 390uu. The District Court ultimately held that petitioners were neither contracting parties nor intended third-party beneficiaries of the contract and therefore could not benefit from § 390uu's waiver. The Ninth Circuit affirmed in relevant part.

Held: Section 390uu does not waive the United States' sovereign immunity from petitioners' suit. The provision grants consent "to join the United States as a necessary party defendant in any suit to adjudicate" certain rights under a federal reclamation contract. (Emphasis added.) A waiver of sovereign immunity must be strictly construed in favor of the sovereign. See, e. g., Department of Army v. Blue Fox, Inc., 525 U. S. 255, 261. In light of this principle, § 390uu is best interpreted to grant consent to join the United States in an action between other parties when the action requires construction of a reclamation contract and joinder of the United States is necessary. It does not permit a plaintiff to sue the United States alone.

This interpretation draws support from § 390uu's use of the words "necessary party," a term of art whose meaning calls to mind Federal Rule of Civil Procedure 19(a)'s requirements for joinder of parties. The interpretation also draws support from the contrast between § 390uu's language, which speaks in terms of joinder, and the broader phrasing of other statutes, e. g., the Tucker Act, that waive immunity from suits against the United States alone. Petitioners' suit, brought solely against the United States and its agents, is not an attempt to "join the United States as a necessary party defendant" under § 390uu. Pp. 601-604.

358 F. 3d 1137, affirmed.

THOMAS, J., delivered the opinion for a unanimous Court.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.

William M. Smiland argued the cause for petitioners. With him on the briefs were Theodore A. Chester, Jr., and Hal S. Scott.

Jeffrey P. Minear argued the cause for respondent United States. With him on the brief were Acting Solicitor General Clement, Assistant Attorney General Sansonetti, Deputy Solicitor General Kneedler, and Todd S. Aagaard.

Stuart L. Somach argued the cause for respondent Westlands Water District. With him on the brief were Andrew M. Hitchings, Robert B. Hoffman, Daniel J. O'Hanlon, William T. Chisum, and Donald B. Ayer. Michael Rubin, Linda Lye, Hamilton Candee, and Michael E. Wall filed a brief for Intervenors-Respondents Natural Resources Defense Council et al.^*

JUSTICE THOMAS delivered the opinion of the Court.

Petitioners are individual farmers and farming entities in California who purchase water from respondent Westlands Water District (Westlands or District). Westlands receives its water from the United States Bureau of Reclamation (Bureau) under a 1963 contract between Westlands and the Bureau. Petitioners contend that the Bureau breached the contract in 1993 when it reduced the water supply to Westlands. Although petitioners are not parties to the contract, they claim that they are entitled to enforce it as intended third-party beneficiaries; that the United States waived its sovereign immunity from suits for breach of contract in a provision of the Reclamation Reform Act of 1982, § 221, 96 Stat. 1271, 43 U. S. C. § 390uu; and hence that they may sue the United States in federal district court for breach of the 1963 contract. We conclude that, in enacting § 390uu, Congress did not consent to petitioners' suit.

I

The Reclamation Act of 1902 set in motion a massive program to provide federal financing, construction, and operation of water storage and distribution projects to reclaim arid lands in many Western States. California v. United States, 438 U. S. 645, 650 (1978). The California Central Valley Project (CVP), a system of dams, reservoirs, levees, canals, pumping stations, hydropower plants, and other infrastructure, distributes water throughout California's vast Central Valley. United States v. Gerlach Live Stock Co., 339 U. S. 725, 733 (1950).

The Bureau, located in the Department of the Interior, administers the CVP. In accordance with its standard practice for federal reclamation projects, the Bureau holds permits to appropriate water from the relevant state agency, here the California State Water Resources Control Board. See California, supra, at 652, and n. 7. The Bureau distributes the water in accordance with its statutory and contractual obligations. It contracts with state irrigation districts to deliver water and to receive reimbursement for the costs of constructing, operating, and maintaining the works.

In 1963, the United States agreed to a 40-year water service contract with Westlands, a political subdivision of the State of California. The 1963 contract provided, among other things, that the United States would furnish to the District specified annual quantities of water, App. 34-36, and that the District would accept and pay for the water at a maximum rate of $8 per acre-foot, id., at 38. Since 1978, the contract has generated extensive litigation. See Barcellos & Wolfsen, Inc. v. Westlands Water Dist., 899 F. 2d 814, 817 (CA9 1990); O'Neill v. United States, 50 F. 3d 677, 681 (CA9 1995); 358 F. 3d 1137, 1141 (CA9 2004) (case below). In 1982, Congress enacted the Reclamation Reform Act, which included 43 U. S. C. § 390uu, the waiver of sovereign immunity at issue here.

The present case arose from water delivery reductions in the early 1990's. Those reductions stemmed from environmental obligations imposed on the Bureau by the 1992 enactment of the Central Valley Project Improvement Act (CVPIA), 106 Stat. 4706. The CVPIA directed the Secretary of the Interior to "operate the [CVP] to meet all obligations under . . . the Federal Endangered Species Act" (ESA), § 3406(b), and to dedicate annually a certain amount of CVP water to implement fish, wildlife, and habitat restoration, § 3406(b)(2). In the early 1990's, the National Marine Fisheries Service listed the Sacramento River winter-run chinook salmon as a threatened species under the ESA, see 55 Fed. Reg. 46523 (1990); 50 CFR § 227.4(e) (1991); and, in 1993, the United States Fish and Wildlife Service listed the delta smelt as a threatened species, see 58 Fed. Reg. 12854-12855; 50 CFR § 17.11. The Bureau concluded that pumps used to deliver water south of the Sacramento-San Joaquin Delta could harm these species. Brief for United States 10-11, and n. 7. To avert possible harm to these species and other wildlife, the Bureau concluded that it needed to reduce the water delivery. In the 1993-1994 water year, the Bureau reduced by 50 percent the contractual delivery of CVP water to water districts south of the Delta, including Westlands. Id., at 10; see also O'Neill, supra, at 681.

In 1993, Westlands and several other water districts challenged the Bureau's 50-percent delivery reduction under the Administrative Procedure Act, the ESA, the National Environmental Policy Act of 1969, and the Due Process and Takings Clauses of the Fifth Amendment. Westlands Water Dist. v. United States Dept. of Interior, Bureau of Reclamation, 850 F. Supp. 1388, 1394-1395 (ED Cal. 1994). Petitioner landowners and water users intervened as plaintiffs. Respondent Natural Resources Defense Council and other fishing and conservation organizations intervened as defendants. Id., at 1394. Ultimately, following negotiations among the State of California, the Federal Government, and urban, agricultural, and environmental interests, the water districts and all parties except petitioners stipulated to the dismissal of the districts' complaint. 358 F. 3d, at 1142; App. to Pet. for Cert. 25a; Brief for United States 11.¹

Petitioners pressed forward with numerous claims. The District Court dismissed some of them and granted summary judgment for the Government on others, see 358 F. 3d, at 1142, leaving only the claim at issue here: that the United States had breached the 1963 contract by reducing the delivery of water and was liable for money damages. Petitioners contended that the United States had waived its sovereign immunity from their suit in the Reclamation Reform Act, 43 U. S. C. § 390uu. The District Court initially held that petitioners were intended third-party beneficiaries and that the language of § 390uu was broad enough to allow their suit, App. to Pet. for Cert. 26a, but on reconsideration changed its view. It held that, in light of intervening Circuit authority, Klamath Water Users Protective Assn. v. Patterson, 204 F. 3d 1206 (CA9 1999), petitioners were neither contracting parties nor intended third-party beneficiaries of the 1963 contract, and therefore could not benefit from § 390uu's waiver. App. to Pet. for Cert. 27a-34a.

The Court of Appeals affirmed in relevant part. It agreed with the District Court's reading of the 1963 contract and § 390uu in light of Klamath. 358 F. 3d, at 1144-1147. The Court of Appeals noted that its...