San Carlos Irr. and Drainage Dist. v. U.S.
| Decision Date | 01 April 1997 |
| Docket Number | Nos. 95-5105,95-5091,s. 95-5105 |
| Citation | 111 F.3d 1557 |
| Parties | SAN CARLOS IRRIGATION AND DRAINAGE DISTRICT, Plaintiff-Appellant, v. The UNITED STATES, Defendant/Cross-Appellant. |
| Court | U.S. Court of Appeals — Federal Circuit |
Riney B. Salmon II, Salmon, Lewis & Weldon, P.L.C., Phoenix, AZ, argued for plaintiff-appellant. With him on the brief was Mark A. McGinnis.
Jeffrey P. Kehne, Attorney, Environment & Natural Resources Division, Department of Justice, Washington, DC, argued for defendant/cross-appellant. With him on the brief were Lois J. Schiffer, Assistant Attorney General, Martin W. Matzen and Glen R. Goodsell, Attorneys. Of counsel on the brief was Robert Moeller, Office of the Regional Solicitor, U.S. Department of the Interior, Phoenix, AZ.
Before MICHEL, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and SCHALL, Circuit Judge.
San Carlos Irrigation and Drainage District ("SCIDD") appeals from the February 24, 1995 revised final judgment of the United States Court of Federal Claims, San Carlos Irrigation and Drainage District v. United States, 32 Fed. Cl. 200 (1994) () awarding damages on certain of SCIDD's claims and denying others. The United States (the "government") cross appeals the award of damages. The appeals were submitted for our decision following oral argument on October 10, 1996. Because the Claims Court 1 grant of summary judgment against certain claims was proper and because it correctly interpreted the contract between SCIDD and the government with respect to the other claims and correctly determined damages, we affirm.
The facts giving rise to the litigation are set out in detail in the prior published opinions in this case. See San Carlos Irrigation and Drainage Dist. v. United States, 15 Cl.Ct. 197 (1988) ("SCIDD I") (), rev'd and , 877 F.2d 957 (Fed.Cir.1989) ("SCIDD II"), proceedings following remand, 23 Cl.Ct. 276 (1991) ("SCIDD III") (), further proceedings, 26 Cl.Ct. 229 (1992) ("SCIDD IV") (), further proceedings, 32 Fed. Cl. 200 (1994) ("SCIDD V") (). The history and facts relevant to the present appeal are summarized below.
Congress authorized the construction of the Coolidge Dam across the Gila River in Arizona in 1924 as part of the San Carlos Irrigation Project ("Project"), so as to provide irrigation to the Pima Indian Reservation, as well as to the public and private lands in the area without diminishing the water supply for Indian lands. See Act of June 7, 1924, ch. 288, § 1, 43 Stat. 475 ("1924 Act"). The Dam created a reservoir sufficient to irrigate eighty percent of the Project lands, with the balance receiving water from other sources, mainly underground pumped water. Under the 1924 Act, the government entered into a "Repayment Contract" (the "Contract") with SCIDD, a district embracing both the publicly owned and privately owned lands. 1924 Act § 4. The off-reservation irrigators initially were to repay roughly half the Project's construction debt, based on their share of the total acreage, over twenty years, although later legislation essentially forgave this debt. See 59 Stat. 469 (1945). The 1924 Act also required off-reservation irrigators to pay a proportionate share of annual operation and maintenance ("O & M") expenses, to be paid annually in advance. 1924 Act § 3. 2
Four years later, Congress authorized the Secretary of the Interior ("Secretary") to develop power at the Dam. See Act of June 30, 1928, ch. 138, 45 Stat. 200, 210-11 ("1928 Act"). The 1928 Act authorized the Secretary, again following execution of a repayment contract, to construct a hydroelectric power plant at the Dam. Construction costs for the power plant were to be repaid as part of the Project. The O & M costs for the power plant were to be paid for through the sale of power. The Secretary was authorized to sell, according to the Contract, "surplus" power and apply the "net revenues" from such sale to (i) reimbursement of the costs of developing power, (ii) reimbursement of the costs of the Project and (iii) O & M charges (for irrigation operations) and repairs on the Project. While initially this was an ordinal ranking, later acts merely provided a list of permissible uses for the net revenues. See Act of August 7, 1946, ch. 802, § 3, 60 Stat. 895. The 1928 Act also required the Secretary to furnish power for agency facilities, school buildings and irrigation pumps on the San Carlos Reservation at low rates. The surplus power, however, was available for the Secretary to sell on "such terms and for such price as he shall think best." 1928 Act, 45 Stat. at 211.
In 1931, SCIDD entered into the Contract with the Secretary. The Contract outlined the repayment scheme, and contained separate provisions relating to the Project's water and power operations. With respect to water, both "stored and pumped," the Contract stated that the Secretary was required to distribute water "as equitably as physical conditions permit." SCIDD agreed to pay O & M charges, including those for the pumps, as "fixed from time to time by the Secretary," but the obligation of the government to deliver all or some of the water held in the Dam is contested by the parties. It is, however, not contested that any profit from the sale of "excess water," as that term appears in the Contract, was to be applied to reduce O & M charges.
With respect to power, the Contract states the Secretary is to supply at-cost power to buildings and pumps on the San Carlos Reservation, and use any "net" revenues from sale of "surplus" power "in accordance with the plan of [the 1928 Act to] reduce the sum to be paid" by the beneficiaries of the Project. The Contract otherwise did not place any limitations on the Secretary.
In June of 1938, the Assistant Secretary of the Interior executed a Joint Works Order defining the Joint Works to include the Coolidge Dam, San Carlos Reservoir and the electrical generating system. The Order provides that the costs of operating and maintaining the works, except for the electric generation plant at the Dam and the power transmission and distribution system, shall be paid by the Project landowners as provided in the Contract.
The Joint Works operated essentially without moment under these agreements until 1983. Only minor problems were encountered before that time. The Power Division, in addition to generating power, also purchased low cost power from other federal hydroelectric projects and slightly higher priced power from the Arizona Public Service Corporation. However, because of excessive pumping during the life of the Project, the water table had fallen, and thus the demand increased for power to operate pumps to provide irrigation to the lands not covered by the water storage in the Reservoir. The government presented evidence that the demand for groundwater pump power was exceeding the total output of the Coolidge Dam in the years preceding the incidents giving rise to the present litigation.
However, the Dam broke, literally, in October of 1983. On October 1, 1983, a storm caused the San Carlos Reservoir to spill over the spillways, and the gates located in the spillways were inoperable. If the spillway gates had functioned properly, the Reservoir would have held additional water. Also, the spilled water caused the foundation under the electric switchyard to settle, and Project officials were forced to shut down power In May 1982, the Area Director of Interior set O & M rates for fiscal 1984 that incorporated charges for power to operate the pumps. See 47 Fed.Reg. 21,926-01 (1982) (notice). Such a proposal had previously been suggested as early as 1953 in a General Accounting Office ("GAO") audit and subsequently in formal opinions of the Comptroller General and Interior employees, but was rejected on instructions from the Senate Finance Committee.
operations. Small spills continued from 1983 to 1985. While the Department of the Interior ("Interior") undertook a major rehabilitation of the power plant, it continued to deliver power by purchasing preferred-rate federal hydro-power ("Parker-Davis" power from dams on the Colorado River) and commercial power, purchased principally from the Arizona Public Service Company.
Charges for pumping power during fiscal 1984 through fiscal 1990 were based on estimates of what it would have cost to produce power at Coolidge Dam and to purchase additional power. 3 The 1991 and 1992 rates were based primarily on the cost of Parker-Davis power which at those times was lower than the Coolidge imputed cost rate.
SCIDD filed suit on July 28, 1986 seeking damages for loss of water and hydroelectric power. The Claims Court dismissed the complaint, SCIDD I, 15 Cl.Ct. at 203-04, and a panel of this court reversed, determining there was a contractual duty on the part of the government to keep the Dam, spillways, and power generation system in good repair. SCIDD II, 877 F.2d at 959-60. On remand the Claims Court held that the government was not liable as a matter of law for the loss of any storable water, on a theory that SCIDD received its "contractual" allocation of water during each year in question. SCIDD IV, 26 Cl.Ct. at 230. On the power issue, the Claims Court noted that the government had conceded that SCIDD had an entitlement to "at-cost" pumping power. Id. Following a trial, the Claims Court entered judgment for SCIDD in the amount of $667,021 on a claim of $4,673,834 for overcharges. SCIDD V, 32 Fed. Cl. at 202. The award was later revised...
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