The McCarran Amendment

A current Ninth Circuit Case could upset pre-1952 water rights adjudications in certain circumstances!

Enacted by Congress in 1952, the McCarran Amendment, 43 U.S.C. § 666, waives the United States’ sovereign immunity in state court water rights adjudications. The Amendment acknowledges the power of a state to regulate ownership and use of the waters within its boundaries. This allows the federal government to be joined as a defendant in a suit to determine ownership and priority of water rights from a particular source.

But, what happens in the circumstance where vested water rights were adjudicated before the McCarran Amendment was enacted? If the federal government could have joined state adjudication proceedings in the past, and chose not to, can they still assert reserved water rights to the fully adjudicated water source?

The Challenge

That is precisely the issue that arose in the Nevada federal court case Backer Ranches, Inc. v. Haaland. In Baker Ranches, owners of decreed water rights to Baker and Lehman Creeks sued the United States for interfering with their water rights to the creeks.

The state court adjudication establishing the owner’s water rights to Baker and Lehman Creeks occurred in 1934, before the McCarran Amendment. Because the federal government had sovereign immunity to state court proceedings concerning water rights at the time, the federal government was not a party to the adjudication, though it was informed and provided with updates about the proceedings.

Years later, the federal government allegedly began to divert the flows of the creeks, interfering with the plaintiffs’ decreed water rights and triggering the lawsuit. The federal government moved to dismiss the case, claiming that it had reserved water rights superior to the plaintiffs and that the court lacked subject matter jurisdiction because the federal government was not a party to the 1934 adjudication and had sovereign immunity.

Plaintiffs argued that the McCarran Amendment waived federal sovereign immunity and that the state adjudication should control ownership and use of the water at issue. The court ultimately sided with the federal government, noting that the waiver of sovereign immunity found in the McCarran Act only applied to circumstances where the adjudication of water rights is comprehensive – i.e. when all parties asserting water rights are able to participate in the adjudication.

District Court Findings

The court found that the federal government’s reserved water rights were not part of the 1934 adjudication and that the federal government had not waived its sovereign immunity. Hence, the court dismissed the case, finding that it lacked subject matter jurisdiction. The court’s decision to dismiss the case is currently being appealed to the Ninth Circuit Court of Appeals.

If the court’s decision in Baker Ranches is upheld it has the potential to upset what has been considered settled priorities for water use throughout the arid western United States. If upheld, the federal government will have the ability to assert reserved water rights to a water source that has already been adjudicated in state court if the adjudication occurred before the passage of the McCarran Amendment and the federal government was not a party. In certain circumstances, the result could be as drastic as the complete loss of an individual’s water use.

Schroeder Law Offices is happy to review your circumstances with you.

In 2019, we previously posted a blog on the Public Trust Doctrine in Nevada which you can find here. Since then, the Nevada Supreme Court made its decision in Mineral Cty. v. Lyon Cty., 136 Nev. 503, 473 P.3d 418 (2020). We provide a brief recap of the Public Trust Doctrine and an update on the status of the doctrine in Nevada.

The Nevada Supreme Court formally recognized the Public Trust Doctrine in 2011 in Lawrence v. Clark County. However, the Court in Lawrence only recognized the doctrine in the context of navigable waters. In Mineral County, the Court later clarified that the doctrine applies to all waters within the state, whether navigable or non-navigable. The Court also adopted the position that the Public Trust Doctrine has been in place in Nevada since statehood, despite the doctrine not being formally acknowledged until Lawrence.

What is the Public Trust Doctrine?

The public trust doctrine “generally acts as a restraint on the state in alienating public trust resources.” Id. at 509. However, arguably the doctrine has broader implications than only the alienation of public resources by the State. The doctrine enshrines the principle that the public trust resources are owned by the State, and the State cannot use them for just any purpose. Rather, the State acts as a fiduciary. This means the State must use and maintain public trust resources for the benefit of the public. Therefore, because the State owns all the water of the State and holds those waters in trust for the public, the State has a duty to protect the water from misuse or contamination. As an acting fiduciary, the State’s protection is for the benefit of current and future residents of the State.

How does the decision in Mineral County affect your water rights?

The Court in Mineral County found that even though the Public Trust Doctrine “applies to all waters within the state, including those previously allocated under prior appropriation,” the doctrine does not allow for the reallocation of rights settled under the doctrine of prior appropriation. Id. at 506. The Court reasoned that the “state’s statutory water scheme [which is based on the doctrine of prior appropriation] is consistent with the public trust doctrine by requiring the State Engineer to consider the public interest when allocating and administering water rights.” Id. / The Court went on to explain, “in recognizing the significance of finality in water rights, our Legislature has expressly prohibited reallocating adjudicated water rights that have not been otherwise abandoned or forfeited in accordance with the state’s water statutes.” Id.

Due to the Mineral County decision, courts in Nevada will recognize the Public Trust Doctrine as it applies to the disposition of water rights by the State under the state’s statutory scheme. The Court in Mineral County cautioned “that rights holders must continually use water beneficially or lose those rights.” Id. at 518. If you need assistance ensuring your water is placed to beneficial use, research attorneys that can help you comply with State regulations.

Conjunctive management recognizes there may be a hydrological connection between groundwater and surface water within an area. This means, drawing down groundwater may affect the availability of surface water, and vice versa. In prior appropriation states like Nevada, where senior water rights have priority, surface water rights will generally trump groundwater right. In January 2024, the Nevada Supreme Court weighed in on Nevada’s conjunctive management law.

Points of Contention

With limited water availability in the arid west, it is increasingly necessary to manage both groundwater and surface water as a single management unit to protect senior water rights. However, there is an understandable reluctance on the part of some junior water rights holders to curtail water use that has gone unchecked for decades.

One point of contention is whether the best available science supports the curtailment of a junior water right– does the best available science support finding a specific groundwater use is depleting the source of a senior surface water right? How much can a junior water rights holder still use and not affect the senior water rights? The Nevada State Engineer will determine what constitutes “best available science.”  Is it a full-blown scientific model, or will something less suffice?

A second point of contention has been whether the State Engineer has the authority to manage the waters of the State conjunctively. We finally have the answer: In January 2024, the Nevada Supreme Court issued its decision in Sullivan v. Lincoln County Water District recognizing the power of the State Engineer to conjunctively manage surface waters and groundwater. Case Nos. 84739, 84741, 84742, 84809, 85137, 2024 Nev. LEXIS 4 (Jan. 25, 2024).

The Court’s Decision

In reaching their decision, the Court primarily relied on provisions of the Nevada Revised Statutes (NRS) (state.nv.us) prohibiting the impairment of vested/existing water rights, “regardless of the water source.” The Court noted that “[a]ll statutorily granted water rights in Nevada are given subject to existing rights” and “[b]ecause vested water rights by definition exist prior to the grant of statutorily granted water rights… no statutorily granted water right may impair vested water rights.” Id. (citations omitted). In sum, the Court found that no matter the source, ground or surface water, the State Engineer must not allow any impairment of vested water rights. Hence, the State Engineer must have the power to conjunctively manage both sources of water in Nevada.

The Court’s decision also recognizes the legislative policy declared at NRS 533.024 “which require the State Engineer to ‘consider the best available science in rendering decisions concerning the available surface and underground sources of water’ and ‘[t]o manage conjunctively the appropriation, use and administration of all waters.” As such, the Court notes these policy declarations support the finding that the State Engineer has power to conjunctively manage the waters of the State of Nevada, decisively settling years of litigation over the matter.

What’s Next?

For years the State Engineer attempted to conjunctively manage but was hamstrung by scientific uncertainty regarding the hydrological connection between groundwater and surface water sources, leading to exhaustive litigation concerning the State Engineer’s management orders. The new Model on the Humbold River, reportedly nearing completion, will be integrated into the State Engineer’s future orders that will likely be further tested in the courts. Likewise, submission of Scientific Reports in the Lower White River Flow system were presented to the Nevada Court that will now determine if these reports are sufficient substantial evidence to support the State Engineer’s regulation orders.  It will be interesting to follow the litigation to see what level of “best available science” will withstand the scrutiny of the courts.

You might be interested in this article about Nevada Water Law.