Westlands Water Dist. v. United States

• Decision Date: 15 January 2013
• Docket Number: No. 12-12 C,12-12 C
• Parties: WESTLANDS WATER DISTRICT, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

WESTLANDS WATER DISTRICT, Plaintiff,

v.THE UNITED STATES, Defendant.

No. 12-12 C

United States Court of Federal Claims

E-Filed: January 15, 2013

Breach of Contract Claims;

Declaratory Judgment;

Motion to Dismiss Under

RCFC 12(b)(1) and 12(b)(6)

Lawrence W. Treece, Denver, CO, for plaintiff. Mark J. Mathews and Lauren E. Schmidt, Denver, CO, and David L. Bernhardt, Washington, DC, of counsel.

Katy M. Bartelma, Trial Attorney, with whom were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Bryant G. Snee, Deputy Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, for defendant. Shelly Randel and Amy Aufdemberge, Office of the Solicitor, United States Department of the Interior, Washington, DC, of counsel.

OPINION AND ORDER

HEWITT, Chief Judge

Westlands Water District (plaintiff or Westlands), a water district in the state of California, buys and distributes water from the San Luis unit of the Central Valley project, which is administered by the Bureau of Reclamation of the Department of the Interior (Interior). Compl., Docket Number (Dkt. No.) 1, ¶¶ 2, 5, 12. Westlands brings this action alleging various breaches of a purported contractual obligation of the United States government (defendant or the government) to provide drainage to Westlands, based on the government's failure to provide water drainage facilities and services. See id. ¶¶ 5-7.

Specifically, plaintiff states six claims for relief. The first two claims present alternative breach of contract theories: (1) past breaches of express contractual drainage obligations, Compl. ¶¶ 131-36; or, in the alternative, (2) past breaches of implied contractual drainage obligations, id. ¶¶ 137-42. The third, fourth and fifth claims are dependent on the court's finding a contractual duty to provide drainage: (3) past breaches of implied contractual obligations of good faith and fair dealing, id. ¶¶ 143-50; (4) total breach of contract regarding drainage obligations, id. ¶¶ 151-56; and (5) anticipatory breach of contract regarding drainage obligations, id. ¶¶ 157-63. Finally, plaintiff states an alternate claim for relief, should the court find neither a total nor anticipatory breach of contract, as alleged in claims four and five, respectively: (6) declaratory judgment adjusting any amounts due by Westlands pursuant to present and future repayment contracts so that Westlands will not have to repay the government higher actual costs of construction under those contracts, as a result of inflation, than it would have had to pay if construction had not been delayed. Id. ¶¶ 164-76. In connection with (and as a condition of) its claims for total breach and anticipatory breach, plaintiff also seeks a declaration of the severability of defendant's contractual obligation to provide water service from defendant's purported contractual obligation to provide drainage. Id. ¶¶ 156, 163; Corrected Response to Motion to Dismiss (plaintiff's Response or Pl.'s Resp.), Dkt. No. 29, at 46.

Now before the court, in addition to plaintiff's Complaint, are: Defendant's Motion to Dismiss, (defendant's Motion or Def.'s Mot.), Dkt. No. 12, filed May 21, 2012, and Appendix to Defendant's Motion to Dismiss (defendant's Appendix or Def.'s App.), Dkt. Nos. 12-1,-2; plaintiff's Response to Motion to Dismiss, Dkt. No. 18, filed August 20, 2012, which was superseded by plaintiff's Response, filed September 26, 2012; and Defendant's Reply in Support of Our Motion to Dismiss (defendant's Reply or Def.'s Reply), Dkt. No. 32, filed October 12, 2012. Plaintiff also filed an Appendix in Support of Response to Motion to Dismiss, Dkt. Nos. 18-1 to 18-4, filed Aug. 20, 2012, which was superseded by plaintiff's Appendix in Support of Corrected Response to Motion to Dismiss (plaintiff's Appendix or Pl.'s App.), Dkt. Nos. 29-1 to 29-7, filed September 26, 2012.

Defendant argues that all six of plaintiff's claims must be dismissed pursuant to Rule 12 of the Rules of the United States Court of Federal Claims (RCFC), asserting that, under RCFC 12(b)(1), this court lacks jurisdiction over all of plaintiff's claims except claim five (anticipatory breach) and that, under RCFC 12(b)(6), plaintiff has failed to state a claim upon which relief can be granted with respect to all six claims. Def.'s Mot. 1.

For the reasons set forth below, defendant's Motion is GRANTED.

I. Background¹

A. Creation of the San Luis Unit as Part of the Federal Reclamation Program

1. Relevant Federal Reclamation Laws²

In 1902, Congress created a "'reclamation fund'" in the Treasury--to be funded by public land sales--for "the construction and maintenance of irrigation works" to reclaim arid and semiarid lands in the western United States for productive use. Reclamation Act of 1902 (1902 Act), ch. 1093, § 1, 32 Stat. 388 (codified as amended in scattered sections of 43 U.S.C.). The Secretary of the Interior (the Secretary) received authority to contract for construction of such irrigation projects and to pay for them out of the newly created reclamation fund. Id. § 4, 32 Stat. at 389. However, these expenditures were meant to be reimbursed: pursuant to the 1902 Act, equitably apportioned charges would be levied upon irrigated lands "with a view of returning to the reclamation fund the estimated cost of construction of the project." Id. After a "major portion" of the construction costs were paid, "management and operation of [the] irrigation works" would then "pass to the owners of the [irrigated] lands." Id. § 6, 32 Stat. at 389. "[T]itle to and the management and operation of the reservoirs . . . [would] remain in the Government until otherwise provided by Congress." Id., 32 Stat. at 389.

Congress supplemented the 1902 Act with the Reclamation Project Act of 1939 (1939 Act), ch. 418, 53 Stat. 1187 (codified as amended at 43 U.S.C. §§ 485-485k (2006)), "to provide a feasible and comprehensive plan for the variable payment of construction charges on United States reclamation projects," id. § 1, 53 Stat. at 1187. Specifically, the 1939 Act described two different contract schemes: repayment contracts and water service contracts. Id. § 9(d)-(e), 53 Stat. at 1195-96 (codified as amended at 43 U.S.C. § 485h(d)-(e)). Generally, organizations contracting for water would be required to enter a repayment contract with the United States before any water could "be delivered for irrigation of lands in connection with any new project." Id. § 9(d), 53 Stat. at 1195. These repayment contracts would treat actual construction costs allocated to irrigation as "a general repayment obligation" to the United States. Id. § 9(d)(3), 53 Stat. at 1195. Repayment would "be spread in annual installments, of the number and amounts fixed by the Secretary, over a period not exceeding forty years." Id. "[T]he first annualinstallment for any project contract unit" would accrue "on the date fixed by the Secretary, [either] in the year after the last year of the development period," or if there was no development period, "in the calendar year after the Secretary announce[d] that the construction contemplated in the repayment contract is substantially completed or . . . advanced to a point where delivery of water can be made to substantially all of the lands" in the contract unit. Id. § 9(d)(4), 53 Stat. at 1196.

In addition, the Secretary had discretion under the 1939 Act to enter water service "contracts to furnish water for irrigation purposes" for up to a forty-year period, "at such rates as in the Secretary's judgment will produce revenues at least sufficient to cover an appropriate share of the annual operation and maintenance cost and an appropriate share of such fixed charges as the Secretary deems proper." Id. § 9(e), 53 Stat. at 1196. Under a water service contract, payments would be due in advance of water delivery. Id. "[T]he costs of any irrigation water distribution works constructed by the United States in connection with the new project" would be covered by a separate repayment contract. Id.

2. Construction of the San Luis Unit

Congress authorized the Secretary to construct the San Luis unit of the Central Valley project by passing the San Luis Act of 1960 (San Luis Act), Pub. L. No. 86-488, 74 Stat. 156; see Compl. ¶ 18. The San Luis unit was created with the "principal purpose of furnishing water for the irrigation of approximately five hundred thousand acres of land in Merced, Fresno, and Kings Counties, California." San Luis Act § 1(a), 74 Stat. at 156. As "an integral part of the Central Valley project," it would be subject to federal reclamation laws with respect to its construction, operation and maintenance. Id.

Under the terms of the San Luis Act, one condition precedent to construction of the San Luis unit was that the Secretary must have made adequate drainage provisions for the unit, either by securing a commitment from the State of California to provide for a master drainage outlet or by providing for construction of an interceptor drain by the federal government. See id. (stating that construction shall not commence until the Secretary has "received satisfactory assurance from the State of California that it will make provision for a master drainage outlet and disposal channel for the San Joaquin Valley, . . . which will adequately serve, by connection therewith, the drainage system for the San Luis unit or has made provision for constructing the San Luis interceptor drain to the delta designed to meet the drainage requirements of the San Luis unit"); Compl. ¶ 18. Initially, the State of California planned to collaborate with the federal government on a master drainage outlet to serve "the drainage needs of the San Luis Unit and other surrounding areas." Compl. ¶ 51. However, when the State of California later notified Interior that it would not construct a master drainage outlet, Interior agreed to construct an interceptor drain. Id. ¶¶ 19, 51; Def.'s Mot. 7.

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