US v. Orr Water Ditch Co.

• Citation: 600 F.3d 1152
• Decision Date: 07 April 2010
• Docket Number: No. 07-17001.,07-17001.
• Parties: UNITED STATES of America, Plaintiff, and Pyramid Lake Paiute Tribe of Indians, Petitioner-Appellant, v. ORR WATER DITCH CO., Defendant, Nevada State Engineer, Respondent-Appellee, and Grand Slam Enterprises, LLC; Tri Water and Sewer Company, Real-parties-in-interest-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

600 F.3d 1152

UNITED STATES of America, Plaintiff, and Pyramid Lake Paiute Tribe of Indians, Petitioner-Appellant, v. ORR WATER DITCH CO., Defendant,

Nevada State Engineer, Respondent-Appellee, and

Grand Slam Enterprises, LLC; Tri Water and Sewer Company, Real-parties-in-interest-Appellees.

No. 07-17001.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 15, 2009.

Filed April 7, 2010.

Don Springmeyer and Christopher W. Mixson, Wolf, Rifkin, Shapiro, Schulman & Rabkin, LLP, Las Vegas, NV, for the petitioner-appellant.

Michael Louis Wolz, Office of the Nevada Attorney General, Reno, NV, Ross E. de Lipkau, Parsons Behle & Latimer, Reno, NV, for the respondents-appellees.

Brent T. Kolvet, Thorndal, Armstrong, Delk, Balkenbush & Eisinger, Reno, NV, for Real-parties-in-interest-Appellees.

Before: CYNTHIA HOLCOMB HALL, W. FLETCHER and RICHARD A. PAEZ, Circuit Judges.

WILLIAM A. FLETCHER, Circuit Judge:

This case concerns the extent of the federal courts' subject matter jurisdiction over the administration of water rights adjudicated in the Orr Ditch Decree ("the Decree"). The Decree allocates rights to water in the Truckee River. See United States v. Orr Water Ditch Co., Equity No. A3 (D.Nev.1944). The river begins at Lake Tahoe and runs most of its course in Nevada, ultimately flowing into Pyramid Lake, northeast of Reno. The Pyramid Lake Paiute Tribe of Indians ("the Tribe") alleges that Nevada State Engineer Ruling 5747, allocating groundwater in the Tracy Segment Hydrographic Basin ("the Basin"), adversely affects its water rights under the Decree. The Tribe appealed the decision by the Nevada State Engineer ("State Engineer" or "Engineer") to the federal district court for the District of Nevada. Appellees contended that, whatever the effect of the Engineer's allocations of groundwater on the Tribe's decreed water rights, the district court did not have jurisdiction over the appeal because the Decree adjudicated only rights to surface water in the river. The district court agreed and dismissed the appeal for lack of subject matter jurisdiction.

We reverse and remand. If the Tribe's allegations are true, the groundwater taken from the Basin pursuant to the Engineer's groundwater allocations will adversely affect the Tribe's decreed water rights. We hold, first, that the Orr Ditch Decree forbids groundwater allocations that adversely affect the Tribe's decreed rights to water flows in the river. We hold, second, that the federal district court has jurisdiction over an appeal from groundwater allocations by the Engineer that are alleged to have such an adverse effect.¹

I. Background

The Truckee River is the principal source of water for Pyramid Lake. The lake is "widely considered the most beautiful desert lake in North America." Nevada v. United States, 463 U.S. 110, 114, 103 S.Ct. 2906, 77 L.Ed.2d 509 (1983) (quoting S. Wheeler, The Desert Lake 90 (1967)). "When first viewed by Captain John Fremont in early 1844, Pyramid Lake was some 50 miles long and 12 miles wide. Since that time the surface area of the Lake has been diminished by about 20,000 acres." Id. at 115, 103 S.Ct. 2906. The lake is situated entirely within the boundaries of the Pyramid Lake Paiute Tribe Reservation.

The history of the Orr Ditch Decree goes back over one hundred years. The Supreme Court recounted some of that history in Nevada v. United States. Id. at 113-18, 103 S.Ct. 2906. We recounted it briefly in United States v. Orr Water Ditch Co. (Orr Ditch I), 914 F.2d 1302, 1304 (9th Cir.1990):

The Reclamation Act of 1902 ... authorized the federal government to pursue efforts to reclaim arid lands in certain western states. In one of these efforts, the Newlands Reclamation Project, the government planned to irrigate an area of western Nevada with water from the Truckee and Carson Rivers, which flow through and around Lake Tahoe and Reno, Nevada. Because private landowners and the Indians of the Pyramid Lake Indian Reservation had already-established water rights, the United States filed an action in 1913 to quiet title to all water rights in the Project area. The resulting legal activity became known as the Orr Ditch litigation.

An appointed Special Master held hearings, then issued a report and recommended a proposed decree in 1924. Two years later, the district court issued a temporary restraining order enforcing the proposed decree. In 1934, after a lapse of interest in the litigation, a drought prompted more activity. In 1935, the major parties to the litigation signed an agreement similar to the proposed decree that had been in effect on a "temporary" basis. Finally, in 1944, the district court entered its final decree that approved and incorporated the settlement.

Under the Decree, the Tribe owns Claims No. 1 and 2, the two most senior water rights on the Truckee River. A substantial portion of the water held under these rights was recently transferred "temporarily" from irrigation to in-stream use in order to allow the water to flow into the Pyramid Lake. United States v. Orr Water Ditch Co. (Orr Ditch III), 391 F.3d 1077, 1079 (9th Cir.2004).

In November 1998, the Nevada State Engineer granted the Tribe the right to all of the water remaining in the river after the Orr Ditch Decree rights and other rights were satisfied. We are informed by the parties that, at the time of briefing to this court, an appeal of this ruling was pending in Nevada state court. The Tribe's rights under the Engineer's 1998 ruling are based on Nevada law rather than the Orr Ditch Decree.

We have consistently interpreted the Orr Ditch Decree, as well as the related Alpine Decree, to provide for "federal district court review of decisions of the State Engineer regarding applications to change the place of diversion or manner or place of use of water rights derived from the Alpine and Orr Ditch Decrees." United States v. Alpine Land & Reservoir Co. (Alpine II), 174 F.3d 1007, 1011 (9th Cir. 1999). Over the past thirty years, numerous decisions of the Engineer pertaining to rights under these two decrees have been appealed to the federal district court and then to us. See, e.g., United States v. Alpine Land & Reservoir Co. (Alpine I), 878 F.2d 1217 (9th Cir.1989); Alpine II, 174 F.3d 1007; United States v. Orr Water Ditch Co. (Orr Ditch II), 256 F.3d 935 (9th Cir.2001); United States v. Alpine Land & Reservoir Co. (Alpine III), 341 F.3d 1172 (9th Cir.2003); Orr Ditch III, 391 F.3d 1077; United States v. Truckee-Carson Irrigation Dist., 429 F.3d 902 (9th Cir.2005); United States v. Alpine Land & Reservoir Co. (Alpine IV), 510 F.3d 1035 (9th Cir. 2007).

The appeal now before us arises out of an allocation by the State Engineer of groundwater rights in the Tracy Segment Hydrological Basin. The Basin lies between the towns of Sparks in the west, Fernley in the east, and Virginia City in the south. The northern border runs roughly parallel to Interstate 80 between three and five miles north of the highway. At its northeastern tip, the Basin abuts the Pyramid Lake Paiute Tribe Reservation. A thirty-mile stretch of the Truckee River runs through the Basin on its way to Pyramid Lake. According to a study published by the United States Geological Survey in 2006 and relied upon by the State Engineer, the Truckee River is a gaining stretch as it runs through the Basin, receiving an average net gain of about 11,000 acre-feet per year from the Basin's groundwater unless there has been an over-allocation of that water.

Between 1998 and 2003, several parties applied for new groundwater allocations in the Basin. The Tribe and Churchill County opposed the majority of the applications, contending that the groundwater of the Basin was already fully appropriated and that the requested allocations would reduce the base flow of the Truckee River. They contended that this reduction would interfere, inter alia, with decreed water rights under the Orr Ditch Decree.

In June 2007, in Ruling 5747, the State Engineer granted most of the groundwater applications. The Engineer noted that the United States Geological Survey had previously estimated that the "perennial yield" of the Basin is approximately 6,000 acre-feet per year resulting from groundwater recharge from precipitation. Even before the current applications were considered, groundwater allocations of 7,976 acre-feet per year had been granted. If the estimate of 6,000 acre-feet per year perennial yield is accurate, groundwater in the Basin was thus already over-allocated. After considering a wide range of estimates, the Engineer revised upward the estimated perennial yield of the Basin to approximately 11,500 acre-feet per year. Based on the revised estimate, the Engineer granted some of the new applications, concluding that they would not result in over-allocation of the groundwater in the Basin.

The Engineer concluded further that even if the new allocations were to result in over-allocation of the groundwater and a diminution of the base flow of the Truckee River, this would not conflict with any of the decreed rights to water in the river. Quoting an earlier Engineer ruling, the Engineer concluded "that the ground-water discharge to the Truckee River should not be counted as part of the Tribe's surface-water rights in the Truckee River... established under Claims No. 1 and 2 of the Orr Ditch Decree." The Engineer wrote that "there is nothing in the Orr Ditch Decree that indicates possible groundwater discharge to the Truckee River was even contemplated by the decree court as part of the water of the river." The Engineer also concluded that the ground-water discharge to the river should not be counted as part of the Tribe's rights established under the 1998 ruling in which the Tribe was granted, as a matter of state law, rights to the remaining flow of the river after all of the decreed water rights were satisfied.

The Tribe appealed the Engineer's ruling to the federal district...