Ninth
Circuit.
and
Pyramid
v.
ALPINE LAND &
RESERVOIR COMPANY, a corporation,
Defendant,
and
v.
Alpine Land &
Reservoir Company, a corporation, Defendant,
and
Rambling River Ranches, Inc.,
Appellee,
Larry Fritz; Gaylord Blue
Equity Trust, Applicants-Appellees.
v.
Alpine Land &
Reservoir Company, a corporation,
Defendant,
and
Rambling River Ranches, Inc.,
Appellee,
Larry Fritz; Gaylord Blue
Equity Trust; Herbert Lohse, Applicants-Appellees.
Nos. 00-15688, 00-15690,
00-15692.
Argued and Submitted
Filed
Appeal from the
Katherine J. Barton, United States Department
of Justice, Washington, District of Columbia, for plaintiff-appellant United
States of America.
Robert S. Pelcyger, Fredericks,
Pelcyger & Hester, LLC, Louisville, CO, for appellant-cross-appellee
Pyramid Lake Paiute Tribe of Indians.
Craig A. Pridgen, McQuaid, Metzler, Bedford
& Van Zandt, LLP, San Francisco, CA, for appellee Herbert Lohse and
cross-appellant-appellee Wayne Whitehead.
Steven D. King, Mackedon, McCormick
& King, Fallon, NV, for applicants- appellees Larry Fritz and Gaylord Blue
Equity Trust.
Laura A. Schroeder,
Michael L. Wolz, Deputy Attorney General,
Before: MICHAEL DALY HAWKINS and A.
WALLACE TASHIMA, Circuit Judges, and CLAUDIA WILKEN, District Judge.
The Honorable Claudia Wilken,
United States District Judge for the Northern District of California, sitting
by designation.
OPINION
TASHIMA, Circuit Judge.
*1 In the mid-1980s, a number of
landowners in the Newlands Reclamation Project (Project) in
I. BACKGROUND
A. The
In 1859, the United States Secretary of the
Interior (Secretary) set aside nearly half a million acres in western
Government actions subsequent to the establishment
of the Reservation impinged upon the flow of
B. Orr Ditch Decree
In 1913, the
FN1. From 1927 to 1969, the
Project was operated by the Truckee- Carson Irrigation District (TCID) under a
delegation of authority from the
*2 The status of
C. Alpine I
During the long pendency of the Orr Ditch
litigation, the
"A water duty is the maximum amount of water that a property is
entitled to receive from the Project, expressed in terms of acre feet per acre
(afa)."
The
D. Alpine II
After
FN3. In our description of
the water rights regime, we noted that the initial
rights of properties to receive Project water were based on contracts and
certificates issued by either the Secretary or TCID. Alpine II, 878 F.2d at 1221.
Most of the transfer applications at issue in the case dealt with properties
that, at the time, were under irrigation without water rights secured by such
contracts or certificates.
FN4. The United States
Department of the Interior, Bureau of Reclamation, intervened in this case as
an unaligned party in interest.
*3 In ruling on the 25 transfer
applications, the Engineer concluded that the landowners had not forfeited or
abandoned their water rights under
FN5. Nev.Rev.Stat. § 533.060 was amended in 1999. The pre-
amendment version, however, applies in this case. See
On appeal, the district court approved the
Engineer's rulings on the ground that
This Court reversed. We first looked to the
language of § 8 of the Reclamation Act,
which provides that "[n]othing in this Act shall be construed as affecting
or intended to affect or in any way interfere with the laws of any State or
Territory relating to the control, appropriation, use, or distribution of water
used in irrigation, or any vested right acquired thereunder. ..." 43
U.S.C. § 383. Applying this
provision, we concluded that it was the Reclamation Act, not Alpine I,
"that established that
We further determined that the
district court erred by suggesting that it did nothing "more than approve
transfers that already had been informally transferred with the permission of
the United States or the TCID," because "[n]either of these parties
has any power to transfer water rights, informally or otherwise, unless such
transfers accord with Nevada law."
E. Alpine III
On remand, the district court upheld the
Engineer's ruling that the use of water by Project landowners was sufficient to
find the absence of intent to abandon the water rights appurtenant to the
transferor properties. With respect to forfeiture, the district court concluded
that the Engineer's determination that Nev.Rev.Stat. § 533.060 was inapplicable was
"eminently correct" because the landowner's water rights vested in
1902. The Tribe appealed.
*4 With respect to abandonment, we
concluded that the Engineer had abused his
discretion in finding that the Project landowners who made the original 25
transfer applications lacked the requisite intent to abandon their water
rights.
With respect to the issue of forfeiture, we
determined that the
district court erred by
assuming that all the water rights in question vested when the United States
obtained water rights for the Project in 1902. This amalgamation of water
rights, obtained by the
F. Engineer Rulings Nos. 4411 and 4591
Pursuant to this Court's
directive, [FN6] the district court
remanded the remaining transfer applications from the original group of 25 to
the Engineer to make findings on the issues of perfection, abandonment, and
forfeiture. The Engineer issued Ruling on Remand No. 4591, [FN7] in which he made a series of
findings of fact and conclusions of law that provide the basis for the present
appeal. In General Finding of Fact I, the Engineer ruled that the burden of
producing evidence of abandonment always resides with the protestant.
FN6. In Alpine III,
this Court left to the district court's discretion whether to conduct the
factual determinations itself or to refer the matter to either the Engineer
or a federal Water Master. Alpine III, 983 F.2d at 1497 n. 11.
FN7. Prior to issuing Ruling
on Remand No. 4591, the Engineer issued Interim Ruling No. 4411, in which he
concluded inter alia that Nevada law did not shift the burden of proving
lack of abandonment to the applicants upon the protestant's showing of an
extended period of non-use.
*5 In addition to these rulings, the
Engineer made parcel-specific water use findings that are now in dispute. With
respect to the applications of appellees Larry Fritz (No. 48468) and Gaylord
Blue Equity Trust (Blue) (No. 48668), the Engineer concluded that all water
rights were initiated prior to 1913 and, therefore, the forfeiture provisions
of § 533.060 did not apply.
The Engineer then evaluated
cross-appellant/appellee Wayne Whitehead's application (No. 48647). In his
Conclusions of Law, the Engineer stated that, regarding forfeiture, all water
rights were initiated prior to 1913 and therefore were exempt from the
FN8. Furthermore, the
Engineer concluded that Whitehead's parcel one involved a pre-Project vested
water right not subject to forfeiture.
In his analysis of appellee Herbert Lohse's
application (No. 48672), the Engineer concluded that the Tribe "did not
prove intent to abandon, particularly in light of the evidence that the water
right holder continued to pay the assessment
for the water and did not know he owned the water until 1983."
With respect to the application of Rambling
River Ranches, Inc. (
G. Alpine IV
The
FN9. The Engineer's findings
on 14 of the original 25 transfer applications were before the district court. See
*6 Concerning abandonment, the district
court: (1) upheld the Engineer's holding that a rebuttable presumption does not
arise under
The district court then turned to the issue of
whether evidence of a prolonged period of non-use of water on a particular
parcel combined with an improvement that precludes irrigation would demonstrate
abandonment. While the district court generally agreed that such evidence would
be sufficient to show abandonment, it stated that "these findings must be
considered in the context of this federal reclamation project."
In addition to creating this intrafarm
exemption, the district court also set forth a standard for evaluating evidence
of abandonment. In particular, it held that "[w]here there is evidence of both
a substantial period of nonuse, combined with evidence of an improvement which
is inconsistent with irrigation, the payment of taxes and assessments, alone,
will not defeat a claim of abandonment."
On the basis of this analysis, the district court:
(1) affirmed the Engineer's findings regarding the Lohse (parcel one) and
Rambling River applications; (2) held that all future transfer applications
that concern an intrafarm transfer of a water right would not be subject to
principles of forfeiture or abandonment; (3) remanded the Fritz, Blue, and
Whitehead applications to the Engineer on the issue of forfeiture to make
findings as to when the water rights were initiated; and (4) remanded the
Fritz, Blue, Whitehead, and Lohse (parcel two) applications on the issue of
abandonment.
H. Supplemental Ruling on Remand No. 4750
On remand, the Engineer made parcel-specific
findings on the outstanding transfer applications. With respect to the Fritz
application, the Engineer found that water rights had been forfeited on parcel
one; the transfers on parcels two, three, and six were intrafarm and thus
exempt from forfeiture; and parcels four and
five were pre-Project vested water rights, as well as intrafarm transfers, not
subject to forfeiture.
*7 Regarding Whitehead's application,
the Engineer found that parcel one had been forfeited while parcel two had not
been based on the original contract.
On
FN10. In its
order, the district court misidentifies some of the applications with respect to which the Engineer
made rulings on the intrafarm transfer issue. This appears to be an error in
drafting and we assume that the district court intended to affirm the Engineer's
ruling it is entirety.
FN11. These
appeals were consolidated for hearing.
II. STANDARD OF REVIEW
The Alpine Decree, in accordance with
III. ANALYSIS
A. Application of Orr Water Ditch
At the outset, it is important to clarify what
remains at issue in this appeal in light of our recent opinion in United
States v. Orr Water Ditch Co., 256 F.3d 935 (9th Cir.2001) (Orr Water
Ditch ). In their briefs, the parties made three main arguments. First,
they argued that the district court improperly evaluated different evidentiary
factors in determining abandonment. Second, they asked this Court to reconsider
our ruling in Alpine III regarding the priority date for water rights
under the state forfeiture statute. Finally, they contended that the district
court erred in exempting intrafarm transfers from state forfeiture and
abandonment law. After briefing was completed, this Court decided Orr Water Ditch,
which directly disposed of the first two issues on appeal. [FN12]
FN12.
Appellees Fritz and Blue, after almost two decades of litigation, object to
these entire proceedings on the ground that the Engineer lacked jurisdiction to
hear challenges to water rights in an administrative transfer application
hearing. As Alpine II clearly established that the Engineer properly
considered issues of abandonment and forfeiture in the transfer application
proceedings, this argument lacks merit.
First, with respect to the evidentiary issues
related to abandonment, the United States and the Tribe argued that the
district court erred in affirming the Engineer's determination that a prolonged
period of non-use of water rights does not
create a rebuttable presumption that a landowner intended to abandon those
rights. See Alpine IV, 27 F.Supp.2d at 1242. We rejected
this argument in Orr Water Ditch, holding that, although a prolonged
period of non-use may raise an inference of intent to abandon, it does not
create a rebuttable presumption. 256 F.3d at 945. The Tribe further
argued that the district court erred in holding that a landowner's payment of
Project operation and maintenance assessments is evidence of a lack of intent
to abandon. Again, this issue is controlled by Orr Water Ditch, in which
we concluded that "abandonment is to be determined 'from all the
surrounding circumstances,' and those circumstances certainly include the
payment of assessments and taxes."
FN13. With
respect to the Tribe's argument regarding the sufficiency of the evidence on
abandonment, the record does not support its suggestion that the Engineer
improperly relied on evidence of payment of assessments to negate the intent to
abandon of specific transfer applicants. In fact, in Supplemental Ruling on
Remand No. 4750, the Engineer only relied on evidence of continued payments in
granting appellee Whitehead's application. In so doing, the Engineer looked to
the payments only as one factor among others bearing on Whitehead's intent.
Specifically, the Engineer referred both to the payment of assessments and the
fact that the landowner had taken affirmative steps to transfer the property
during the 1970s as evidence of a lack of intent to abandon.
*8 Second, regarding the priority date
question, cross-appellant/appellee Whitehead, joined by appellees Engineer,
Fritz, Blue, and Rambling River, asked this Court to reconsider our ruling in Alpine
III to the extent it held that 1902 was not the relevant priority date for
determining the application of the Nevada forfeiture statute. [FN14] Orr Water Ditch
reaffirmed our holding in Alpine III that landowners cannot claim 1902
as the date their water rights were initiated, but rather had to demonstrate
that they took "affirmative steps"
to appropriate water prior to 1913 to be exempted from the state forfeiture
statute. In light of Orr Water Ditch, we reject the request to
reconsider Alpine III and uphold the district court to the extent it
affirmed the Engineer's parcel-specific application of the state forfeiture
statute. [FN15] Therefore, given that
our decision in Orr Ditch Water has disposed of two of the three main
issues raised by the parties, we turn our attention to addressing the
outstanding issue on this appeal--whether the district court's broad
application of an intrafarm exemption constituted reversible error.
FN14. In
connection with his Combined Opening and Responsive Brief, Whitehead filed a
petition for initial en banc consideration of the forfeiture holding in Alpine
III. Because two separate panels of this Court have held that the relevant
date for determining the application of Nev.Rev.Stat. § 533.060 is not 1902, but rather the date
that individual acts of water right appropriation were initiated, see Orr
Water Ditch, 256 F.3d at 943; Alpine III, 983
F.2d at 1496, we deny Whitehead's petition. A petition for rehearing en
banc on the identical issue has already been rejected in Alpine III. See
Orr Water Ditch, 256 F.3d at 944. Moreover, this issue does
not meet the Ninth Circuit's criteria for rehearing en banc--its
resolution is not necessary to secure uniformity of decisions or to decide a question of
exceptional importance. See
FN15. We
also reject
B. Equitable Relief for Intrafarm Transfers
The
FN16.
Appellee Lohse suggests that the
As part of its analysis, the district court
identified the following factors supporting its decision:
First, there is evidence in
the record that the procedures to transfer water changed at least three times
over the years. At one point, an applicant was told that transfers were not
allowed. Further, when the farmers were finally told
by TCID that they were required to file a transfer application, they complied.
More importantly, the individual who was legally entitled to use the water
continued to beneficially apply the water to his land, albeit in a different
location than what might have been described in the contract, to the extent the
location was described in the contract. Finally, there is no evidence that any
of the landowners making intrafarm transfers used more water than the amount
granted by contract with the government. Accordingly, the Engineer did not err
in concluding that the water rights subject to intrafarm transfers will not be
deemed to have been forfeited or abandoned.
*9
Appellants first argue that the district
court's application of equity to exempt intrafarm transfers is foreclosed by Alpine
II. In Alpine II, we rejected the district court's conclusion that
it would be inequitable to apply the Nevada law of forfeiture and abandonment
retroactively to water rights "informally transferred" prior to the
1983 decisions in Alpine I and Nevada, which established that
state law governed transfer proceedings. See Alpine II, 878
F.2d at 1222-24. We therefore disagreed with the district court's reasoning
that, because the government had acquiesced to informal transfers under which
landowners used Project water without the contractual rights to do so, it could
not find subsequent to 1983 that those rights had been abandoned or forfeited
by the original holders. In doing so, we specifically
held that exempting pre 1983 rights would completely undermine the Alpine
Decree, which would be rendered inapplicable to all "informal
transfers" made before 1983.
Appellants contend that the district court
erred in granting equitable relief to intrafarm transfers premised on the same
assumption that we rejected in Alpine II--namely, that the government
and TCID had either explicitly or tacitly approved these transfers prior to the
landowners' submission of formal transfer applications. Appellees attempt to
distinguish Alpine II, arguing that it dealt only with the transfer of
water rights from legitimate right holders to applicants without any
contractual or other rights to water. See id. at 1228 (stating that the
court's analysis "was premised on the contractual rights of the farmers to
receive Project water in some amount, rights
the appellees simply do not have").
[FN17] Appellees argue that the situation here is different, since, unlike
the transfer applicants discussed in Alpine II, intrafarm applicants
have the contractual right to use water and have applied the water to
beneficial use, albeit in a location different from the original place of use. [FN18] This distinction, however, does
not withstand scrutiny. It is clear that Alpine II dealt with all the
applications at issue here, so the suggestion that it should be deemed
controlling only with respect to transfers for value is unavailing.
FN17. See
also footnote 3, supra.
FN18. The
parties make much of this issue of location. For instance, the Engineer
contends that the location of the applicants' water rights cannot be segmented
and compartmentalized into specific geographic confines within the legal
description contained in their contracts. Fritz and Blue make a similar
argument, claiming that the water rights contracts do not identify a specific
place of use within a particular property, so it is false to suggest that there
was ever a particular water righted area from which a landowner could transfer
rights to a different location. Under this view, because the place of use is
appurtenant to the entire area designated in an individual water right
contract, there was never any need to file a transfer
application. Fritz and Blue claim that they were essentially tricked into
filing by the
Appellees' arguments
regarding location are misplaced. It is clear that under both federal and state
law, a water right is appurtenant to the land irrigated. See 43
U.S.C. § 372; Nev.Rev.Stat.
§ 533.040. Therefore, as a matter of
law, it is correct to say that the water rights in question attached to the
specific parcel to which water was beneficially applied, rather than the entire
property under contract.
Fritz and Blue's allegations of
a government scheme to defraud simply lack merit. There is no question that the
We also reject a related
contention by Fritz and Blue that the Engineer improperly used existing maps in
determining the location of the water rights at issue. The record shows that
the Engineer, after a careful analysis of the quality and character of the maps
in question, acted reasonably in determining that they constituted the most
accurate evidence of water right location,
and that they were necessary to resolve the disputes regarding whether specific
rights had been forfeited or abandoned.
*10 Appellees' main argument is thatthe
district court's decision was a reasonable one in light of fact that the
intrafarm applicants are merely applying water that they validly own to new
places of use on the same farm due to the fact that historically irrigated
existing places of use have ceased to be suitable for agriculture. In addition,
they stress that the application of forfeiture or abandonment would work an
injustice under the circumstances of this case, since until 1983 the applicants
did not know they owned the water rights and there were no legal means for them
to move water within their farms because of a government-imposed moratorium on
transfers. Further, they claim that equity is proper here because the
These are precisely the arguments, however,
that this Court rejected in Alpine
II. If the transfer applicants moved water within their farm without
complying with state transfer requirements, they did so "at their own
risk" under Alpine II, since the Reclamation Act made it clear that
state law applied to these actions. Thus, Alpine II forecloses the
argument that the landowners did not know
that they possessed ownership rights subject to the transfer requirements. The
fact that the
The argument that the government-imposed
moratorium on transfers supports the blanket application of an equitable
exemption from forfeiture or abandonment is also misplaced. [FN19]
FN19.
According to the
This is because many of the parcels at issue
in the transfer applications-- including
parcels two and four in the Fritz application, parcel one in the Blue
application, parcels one and two of the Whitehead application, and parcel two
of the Lohse application--do not involve periods of non-use that coincide with
the moratorium period. Therefore, equity should not be used to justify a
generalized equitable exemption divorced from the facts of each particular
case.
Although, under this analysis, a blanket
equitable exemption of intrafarm transfers is contrary to Alpine II,
equitable relief might be appropriate on a case-by-case basis to prevent
individual transfer applicants from losing their water rights. Thus, as
appellees argue, equity might be appropriate to limit the harsh consequences of
*11 Appellants respond that equity is
unnecessary here, since the factors that the district court discussed in
supporting its decision actually are more appropriately
used to analyze whether landowners meet the state law requirements for
forfeiture or abandonment. In particular, in explaining its decision to invoke
equity, the district court emphasized that the applicants had attempted to
comply with the transfer procedures, continuously applied their water rights to
beneficial use (albeit in a different location), and did not use more water
than authorized. Alpine IV, 27 F.Supp.2d at 1244. These
factors, the
We agree with appellants that, with respect to
abandonment, rather than supporting equitable relief, the factors noted by the
district court more appropriately bear on whether the landowners formed the
requisite intent to abandon their rights. If the landowners attempted to
transfer rights prior to filing their applications in this case and were
thwarted by the government or TCID, that would most likely demonstrate their
lack of intent to abandon. Appellants' argument, however, does not work with
respect to forfeiture. This is because, under the forfeiture statute in
operation at the time this case was filed, there was no intent requirement. See
Nev.Rev.Stat. § 533.060; see
also In re Manse Spring, 108 P.2d 311, 315 (Nev.1940).
Therefore, the fact that a landowner might have been prevented from filing a transfer
application would do nothing to alter a finding of non-use for the statutory
period. In addition, a showing that the water was applied beneficially
elsewhere on the property would be
unavailing, since Alpine II requires compliance with state law. To
completely remove the possibility of equitable relief for those landowners who
would otherwise technically forfeit their properties through non-use, but who
made efforts to comply with the transfer requirements during the moratorium
period, would be inconsistent with equitable principles. Given that the law
abhors a forfeiture, see Town of
We therefore reverse the district court's
order to the extent that it provided blanket equitable relief for intrafarm
transfers without requiring an individualized factual showing with respect to
each transfer applicant. Specifically, we conclude that the district court
erred in granting equitable relief to those landowners facing abandonment
because the landowners may demonstrate that they did not abandon their water
rights as a matter of law. See Las Vegas Valley Water Dist.
2652 v. Curtis Park Manor Water Users Ass'n, 646 P.2d 549, 551
(Nev.1982) (per curiam) (holding that the district court lacked authority
to grant equitable relief, since there was an adequate remedy at law). On
remand, the district court is instructed to make factual findings, or to remand
to the Engineer to do so, [FN20] in
order to determine whether each individual landowner had the requisite intent
to abandon in light of the factors noted in the district court's opinion. At a
minimum, proof of continuous use of the water right should be required to
support a finding of lack of intent to
abandon. In addition, each landowner should be required to present evidence
that he or she attempted unsuccessfully to file for a change in place of use,
or at least inquired about the possibility of a transfer and was told by the government
or TCID that such a transfer was not permitted.
FN20. See
Alpine III, 983 F.2d at 1497 n. 11 ("We again leave to
the district court's discretion the decision of the appropriate fact
finder.").
*12 With respect to forfeiture, we
reverse the district court's application of a blanket equitable exemption.
Unlike with abandonment, however, we conclude that equity may be appropriate on
a case-by-case basis in the forfeiture context if a landowner can show that
steps were taken to transfer water rights during the period of non-use, but
that those steps were thwarted by the government or TCID. [FN21]
FN21. The
Tribe argues that any equitable determination by the district court must balance
the hardships to the Tribe, something the court did not do in its previous
decision. We agree that, on remand, in making its equitable determinations, the
district court should balance the negative
consequences to the Tribe resulting from any increased diversions.
IV. CONCLUSION
Based on our decision in Orr Water Ditch,
we affirm the evidentiary standard that the district court applied in making
its parcel-specific rulings on abandonment. Following Orr Water
Ditch, we also affirm the district court's determination that 1902 was not
the relevant priority date for determining the application of
We reverse the district court's general
equitable exemption of intrafarm transfers from the state law of forfeiture and
abandonment. Although we conclude that equity is inappropriate in the
abandonment context, where individual landowners may demonstrate that they
lacked the requisite intent to abandon as a matter of law, equity may be
appropriate in the forfeiture context, if the landowners can show on a
case-by-case basis that they were prevented from complying with transfer
requirements.
The judgment of the district court is
therefore AFFIRMED IN PART, REVERSED IN PART and REMANDED. Each party
shall bear its or his own costs on appeal.
END OF DOCUMENT