U.S. v. Westlands Water Dist., CV-F-89-172 OWW.

• Citation: 134 F.Supp.2d 1111
• Decision Date: 13 March 2001
• Docket Number: No. CV-F-89-172 OWW.,CV-F-89-172 OWW.
• Court: U.S. District Court — Eastern District of California
• Parties: UNITED STATES of America, Plaintiff, v. WESTLANDS WATER DISTRICT, Defendant. Westlands Water District, Counter-claimant, v. United States of America, Counter-defendant.

Page 1111

134 F.Supp.2d 1111

UNITED STATES of America, Plaintiff, v. WESTLANDS WATER DISTRICT, Defendant.

Westlands Water District, Counter-claimant, v. United States of America, Counter-defendant.

No. CV-F-89-172 OWW.

United States District Court, E.D. California.

March 13, 2001.

COPYRIGHT MATERIAL OMITTED

Barry M. Hartman, U.S. Dept. of Justice, Land and Natural Resources Div., Washington, DC, Maria A Iizuka, United States Dept. of Justice, Environment and Natural Resources Div., Sacramento, CA, for U.S. on Behalf of U.S. Small Business Admin., Department of Interior.

Thomas William Birmingham, Kronick Moskovitz Tiedemann and Girard Sacramento, CA, for Westlands Water Dist.

Jerry E Henry, Fresno, CA, for Hubert Beene and Sons, Gary Hughes.

William M Smiland, Theodore A Chester, Jr., Smiland and Khachigian, Los Angeles, CA, for Boston Ranch Co.

Denslow B Green, Green Green and Rigby, Madera, CA, for Sharon Combs, Micah Combs, Fortune #1, Houlding Farms #2, Houlding Farms #3, Houlding

Farms #4, Houlding Farms Inc., Dennis H. O'Neill, Jr., VF Farms.

William M Smiland, Smiland and Khachigian, Los Angeles, CA, for South Boston Co., S. Stamoules and Co., Westhaven Farming Co.

Vicky Seasholtz, Fresno, CA, pro se.

J O Seasholtz, Fresno, CA, pro se.

George J Seasholtz, Fresno, CA, pro se.

AMENDED MEMORANDUM DECISION AND ORDER RE: JULY 3, 2000, CROSS-MOTIONS FOR SUMMARY JUDGMENT AND FOR RECONSIDERATION

WANGER, District Judge.

This decision and order amends the decision and order filed March 2, 2001 (Doc. 346).

INTRODUCTION

This matter is before the Court on the cross-motions for summary judgment submitted by Plaintiff and the Boston Ranch Parties¹ (who are Defendants, Counterclaimants, and Third-Party Plaintiffs) as to the disposition of $9,679,000 held by the Court in escrow, see Doc. 328 ¶ 1 (government's statement of undisputed facts in support of motion for summary judgment).² Oral argument was held on Monday, August 28, 2000.

I. THE CLAIMS

The dispute underlying this action concerns: (1) the price per acre-foot the United States Department of the Interior ("Interior"), Bureau of Reclamation ("Bureau"),³ is permitted to charge water-users who take water from the San Luis Unit of the United States Central Valley Project ("CVP"); and (2) a drainage-charge component. Interior argues 43 U.S.C. § 390ww(h), enacted in 1987, which requires the Secretary of the Interior to collect the "full cost" for providing all federal (including CVP) water, establishes the price. See Doc. 1. The water-users are members of Westlands Water District ("Westlands"),⁴ interpled into this action by defendant Westlands, and contend that the price was fixed at $8.00 per acre-foot by a 1963 water-service contract between Westlands and the Bureau ("1963 Contract"), authorized by the Reclamation Act of 1902, 32 Stat. 388, former 43 U.S.C. §§ 371-616 (1902), which authorizes Interior and the Bureau to contract with water districts (not individual water-users) for water service from a federal reclamation project. See, e.g., 43 U.S.C. § 485h(e) (2000).

The United States brought this action against Westlands on February 27, 1989, after Westlands refused to pay "full cost" for CVP water furnished under the 1963 Contract. It sought: (1) a declaratory judgment that Westlands violated 43 U.S.C. § 390ww(h) "as a result of its failure to pay full cost to the United States for federal reclamation project irrigation water delivered to certain lands located within Westlands Water District which are encumbered by extended recordable contracts," Doc. 1 ¶ 1; and (2) "a money judgment for the difference between the applicable full cost rate and the rate paid by the Westlands Water District for federal reclamation project irrigation water delivered to such lands encumbered by extended recordable contracts," id. Westlands collects water charges by assessments on its member water-users, and remits payment to the United States according to ¶¶ 6(a) & (b) of the 1963 Contract.

The water-users object to paying more than the "Contract" price for water services by counterclaims and a third-party complaint against the federal parties, alleging nine causes of action for declaratory relief, see Doc. 48, and seeking a refund of any payments made for drainage service after 1986. These claims advance legal theories that 43 U.S.C. § 390ww(h)'s full-cost provision does not apply to the water-users.

In their November 4, 1991, opposition to the government's Motion for Order to Enter Final Judgment, the water-users raised many issues, including whether the term "service" in the 1963 Contract and recordable contracts includes "providing drainage service to recipients." Doc. 141 17:28-18:3 (quoting Barcellos & Wolfsen, Inc. v. Westlands Water Dist., 899 F.2d 814, 823 n. 14 (9th Cir.1990) (hereinafter "Barcellos")); see also id. at 38:17-39:10 ("The Original Westlands Landowners Are Not Precluded By The Prior Decision From Litigating The No-Drainage Issue.").

An April 16, 1993, decision on the government's motion for final judgment notes: "the drainage provided by the United States to Westlands has been greatly attacked. To the Court's knowledge, no case had considered the effect upon the respective rights and duties of the parties under the various agreements." Doc. 178 at 15:17-22. By April, 1993, only two triable issues of fact remained: (1) "appropriate issues relating to drainage," id. at 15:23-24; and (2) "any issues pertaining to the calculation of the sum owed to the United States, and the calculation of the interest to be paid [to whomever the fund belongs]," id. at 16:3-4.

The current cross-summary judgment motions were filed July 3, 2000. See Docs. 324-26. The water-users seek summary judgment:

(1) for restitution against the United States, of such amounts equal to the payments by the water-users for drainage service and facilities not provided by the United States;

(2) that the United States breached its contract by failing to perform contractual water-pricing obligations, and that the water-users are entitled to such amounts equal to the water surcharges they paid into the interpled fund; and

(3) they are entitled to interest earned on interpled funds.

See Doc. 324 at vii:9-14 (water-users' memorandum in support of partial or summary adjudication of issues). On April 3, 1997, summary judgment was granted against the water-users and for the United States on the second issue (contractual price of water). See Doc. 278 at 25:18-27:13. The water-users now move for reconsideration of that decision "in light of the Ninth Circuit's recent Summer Peck decision [and] for other changes of circumstances." Doc. 324 at vii:16-17.

The government seeks summary judgment, alleging the water-users "are not entitled to any of the funds" because:

1. The monies in escrow represent the difference between the contract rate for water deliveries and "full cost," as that term is defined under federal law, and federal law does not vest the Bureau with discretion not to collect full cost for federal water.

2. Regardless whether the counterclaims have a basis in law, there is no independent jurisdiction for the water-users' assertion against the United States, given the Orff decision.

3. Firebaugh Canal Co. v. United States, 203 F.3d 568 (9th Cir.2000), underscores that compliance by the United States with the San Luis Act did not require construction of the interceptor drain, the action that the water-users asserted was the quid pro quo for their having to pay for drainage.

See Doc. 327 at 2:3-14 (government's opening brief).

II. FACTUAL AND PROCEDURAL BACKGROUND

This suit arises from the Bureau's administration of the San Luis Unit, a division of the CVP. The CVP is the nation's largest federal reclamation project, spanning "the length of California's Central Valley, from Shasta Dam, in the north, to the Friant-Kern Canal, in the south." Firebaugh Canal Co., 203 F.3d at 570. It "is a multipurpose federal reclamation project consisting of dams, hydroelectric power plants, transmission lines, and irrigation canals." City of Santa Clara v. Watkins, 984 F.2d 1008, 1010 (9th Cir.1993). "The grand design of the Project was to conserve and put to maximum beneficial use the waters of the Central Valley of California," Dugan v. Rank, 372 U.S. 609, 612, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963), which comprises approximately one-third of California's territory, see id.⁵

Construction of the San Luis Unit was authorized by the San Luis Act.⁶ The "principal purpose" of the San Luis Unit is to furnish irrigation to land in Merced, Fresno, and Kings counties, California. See Firebaugh Canal, 203 F.3d at 570. Westlands is the largest contractor for water from the San Luis Unit. See id. at 572. In 1963, Westlands entered into the 1963 Contract with the Bureau to purchase CVP water from the San Luis Unit at a subsidized maximum rate of $8.00 per acre-foot. See Barcellos, 899 F.2d at 816; Doc. 141 exhibit B 12:13-16. This rate included a $0.50 drainage service component. See Doc. 141 exhibit B 12:14-15. The 1963 Contract is impacted by additional considerations:

First, Section (a) of the San Luis Act requires the Government to provide drainage service to Westlands. "Any water project that brings fresh water to an agricultural area must take the salty water remaining after the crops have been irrigated away from the service area." Firebaugh Canal, 203 F.3d at 571.

Second, "[t]he 1963 Contract prohibits the District from furnishing Project water to an owner who wishes to use the water to irrigate his `excess lands,' or lands in excess of 160 acres, unless the owner agrees in a separate, recordable contract with Interior to certain significant restraints on his rights to the excess lands." Barcellos, 899 F.2d at 816 (footnote omitted). Between 1969 and 1974, each of the Third-Party Defendants (Boston Ranch Company,⁷ S. Stamoules & Co., South Boston Co., and Westhaven Farming Co.⁸) executed...