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WATER LEGAL NEWS o ECE 737,
Colorado Wider Congress• 1390 Logan St., Rm.312 • Denv P I (303) 837-0812
Legal News Editor, Greg Hobbs GREELEY. coLO. U y 20, 1983
1. The Colorado Supreme Court (Justice Lohr) has ruled in the "Huston case"
that nontributary ground water is "not subject to appropriation under Colo. Const.
Art. XVI, Sections (5) and (6) , or to adjudication or administration under the 1969
Act. " Rather:
Rights to nontributary ground water not located in a designated
basin may be obtained only through application for a well permit
from the state engineer under Section 37-90-137 of the 1965 Act.
Section 37-90-137(4) (Senate Bill 213) provides that 1) only the quantity of
water underlying the land owned by the applicant, or by the consent of the owners of
land to be served, is available for use; 2) the minimum useful life. of the aquifer is
one hundred years assuming that there is no substantial artificial recharge within
that period, and 3) no material injury to vested water rights would result from the
issuance of the permit. Under this same provision the State Engineer may adopt rules
and regulations regarding construction of wells and administration of the nontributary
water.
The Court made its ruling prospective only "so as not to upset vested rights."
However, the Court declined to express its opinion as to the nature of the rights
obtained by those 1) who previously had obtained water court decrees for withdrawal
of nontributary ground water, or 2) who had drilled wells for the withdrawal of non-
tributary water prior to the 1965 Act:
The questions of the nature of the rights resulting from such
development, the protections to be accorded to the persons who
have obtained water from such wells, relying on judicial decree,
local custom or administrative acquiescence, and the effect of
Section 37-90-137 upon those rights, are not before us. Undoubt-
edly the common law and the statutes in effect from time to time
will provide a reservoir of principles adequate to resolve these
issues as they may arise.
The Court plainly invites further regarding such questions:
The subject of judicial recognition of rights to nontributary
water outside designated basins and the principles to be
applied in establishing the rights of users and adjustment of
conflicts among users might benefit from further legislative
attention.
The Court dismissed all pending water court proceedings for rights in non-
tributary ground water but also held that the water court is the proper forum for
determining whether ground water is tributary or nontributary:
We believe that, by necessary implication under the 1969 Act,
the water court can entertain a proceeding to establish whether
water outside the boundaries of designated ground water basins
is tributary, so that rights may be obtained by appropriation
and confirmed by adjudication under the 1969 Act, or nontribu-
tary, so that the well permit criteria of 37-90-137(4) apply. u 3095
4'G % /7/3
WATER LEGAL NEWS -2- July 20, 1983
The Court invited legislation to resolve the potential of conflicting determinations
of tributariness under the well permit procedures and the 1969 Act.
With respect to tributary ground water, the Court held that an appropriator need
not obtain a well permit from the State Engineer prior to filing in water court. A
water court filing may be made to preserve a priority date, but the water court may
not adjudicate the water right until the Stat Engineer has taken action on the well
permit application, or six months has expired since application for the well permit.
We do not read this statute (37-92-302[2] ) to require the
applicant to obtain the well permit prior to filing an applica-
tion in water court. The claimant may file in the water court
to protect his priority date while an application to construct
a well is pending before the State Engineer. The water court
is merely prohibited from entering a final decision on that
application before the State Engineer' s decision is rendered
or that official fails to grant or deny a permit within six
months after application is made.
With respect to water in designated ground water basins, the Court observed
that the legislature had determined to apply a modified doctrine of prior appropria-
tion, and rights to such water must be obtained in accordance with the law applicable
to designated ground water management.
The Court held that any affected party who is dissatisfied with the State Engineer's
decision regarding a nontributary well application should take an appeal to the district
court pursuant to the Administrative Procedure Act, if the State Engineer's decision was
made prior to the effective date of House Bill 1310, approved June 10, 1983. The Court
declined to say what review procedure is applicable after that date.
The Court's opinion contains a scholarly discussion of the origin and development
of Colorado water law, and its relationship to federal law, from pre-statehood, passage
of the Mining Act of 1866 and the Homestead Law of 1870, through the Desert Land Act of
1877 and the McCarran Amendment of 1952:
[I]n a series of acts providing for disposition of parts of the
public domain, Congress accorded . ormal recognition to water
rights acquired through local laws and customs and "rejected the
alternative of e general federal water law. "
". . . Congress intended to establish the rule that for the
future the [public] land should be patented separately; and
that all non-navigable waters thereon should be reserved for
the use of the public under the laws of the states and terri-
tories named. "
* *
The federal reserved rights doctrine and the prohibition against
interference with the navigability of any navigable waters have
been recognized as limitations on the right of the states to de-
velop their own water law (citations omitted). In addition, the
WATER LEGAL NEWS -3- July 20, 1983
United States Supreme Court recently held that federal deference
to state water law does not indicate that Congress wishes to re-
move the federal constitutional constraint against the states
placing unreasonable burdens on interstate commerce (citing
Sporhase v. Nebraska).
The Court also traced the history of the Colorado constitutional provision and
statutes relating to "waters of the state" anu concluded that the Colorado Constitu-
tion and the 1969 Act are applicable only to water in or tributary to natural streams.
But the Court also said that the title to nontributary water is not vested in or
owned by the overlying landowner. The Court observed that Congress had not conveyed
any water, tributary or nontributary, with land grants, but, rather, recognized in
the states "broad authority to provide for the use of non-navigable waters within
their borders. " The Court observed that Colorado use of such authority over nontri-
butary water was almost minimal until the 1965 Act, but that:
The legislative action reflected in the 1965 Act and Section
37-90-137(4) is fully sanctioned by the long-continuing policy
of Congress to allow the states to develop their own water law,
and is not constrained by any claimed private rights of owner-
ship derived under federal patents.
The Court held that nontributary water, as well as tributary water, is governed
by the principle that water must be put to beneficial use. The Court said that dust
control and mined land reclamation are beneficial uses of water in this state, in
light of the Colorado Air Quality Control Act, Colorado Mined Land Reclamation Act,
and Colorado Surface Coal Mining Reclamation Act.
With respect to the "blue pond" filings, the Court noted that those claims in-
volve tributary waters captured by glacial morraine which creates underground dams
just beneath surface streams. As such, these waters are to be considered part of
the surface stream and are subject to adjudication under the 1969 Act. The Court
remanded the "blue pond" claims to the various water courts for further proceedings,
observing that no evidence had been taken and therefore it could not be said that such
claims were "infeasible" or "speculative. " (State of Colorado v. Southwestern Colorado
Water Conservation District, P. 2d ,Colo. Sup. Ct. No. 79SA38, announced
TOY 18, 1983). —�
Comments on the legal newsletter and suggestions for inclusion should be addressed
to Greg Hobbs, P.O. Box 185, Denver, Colorado 80201 (phone: 303/892-9400) .
WATER LEGAL NEWS
Colorado Water Congress • 1390 Logan St., Rm. 312 • Denver, Colorado 80203 • Phone: (303) 837-0812
Legal News Editor, Greg Hobbs July 15, 1983
A SUMMARY OF CURRENT LEGAL DEVELOPMENTS AND
PENDING CASES OF INTEREST TO COLORADO WATER USERS
1. The United States Supreme Court (Justice Brennan) has determined that the
McCarran Amendment requires federal courts to defer to state adjudication of federal
reserved water rights claims brought by Indian tribes.
Previously, in Colorado River Water Conservation District v. United States (1976)
(the "Mary Akin" case) , the Court required federal court deference to concurrent
state adjudication of reserved rights claims which had been brought by the United
States in federal court.
The Indian tribes argued that the McCarran Amendment does not apply when the
Tribes, rather than the United States , filed suit in federal court for determination
of water rights for Indian reservations.
Also at issue were the disclaimer clauses contained in the Arizona and Montana
Enabling Acts. At the time these and a number of other western states (excluding
Colorado) were admitted to the Union, a clause was in use disclaiming state juris-
diction over Indian lands. The U.S. Court of Appeals for the Ninth Circuit had cited
these disclaimer clauses as a basis for keeping the Indian water claims in the federal
courts.
However, the Supreme Court said that:
. We are convinced that, whatever limitation the Enabling
Acts or federal policy may have originally placed on state court
jurisdiction over Indian water rights, those limitations were
removed by the McCarran Amendment.
To hold otherwise, observed the Court, would restrict Congressional intent to
have the McCarran Amendment apply to all states equally. The Court ruled that each
state must decide whether it had jurisdiction to adjudicate Indian water claims under
its own laws. The Court went on to note that:
If the state proceedings have jurisdiction, as appears to be
the case, then concurrent federal proceedings are likely to
be duplicative and wasteful , generating "additional litigation
through permitting inconsistent dispositions of property." •
The McCarren Amendment, as interpreted in Colorado River,
allows and encourages state courts to undertake the task 5?
�• n
of quantifying Indian water rights in the course of compre- 1 --
hensive water adjudication. ,
o cn
o ,`_, ,
[W]ater rights adjudication is a virtually unique type of
proceeding, and the McCarran Amendment is a virtually unique
federal statute, and we cannot in this context be guided by
general propositions.
WATER LEGAL NEWS -2- July 15, 1983
The Court concluded its opinion with an admonition to state courts, reminding
them that federal reserved Indian water rights are created and protected by federal
law, and must be given full effect in state water adjudications:
Moreover, any state court decision alleged to abridge Indian
water rights protected by federal law can be expected to
receive, if brought for review before this Court, a particu-
larized and exacting scrutinty comr.ensurate with the powerful
federal interest in safeguarding these rights from state
encroachment.
(Arizona v. San Carlos Apache Tribe of Arizona, U.S. , 51 U.S.L.W. 5095,
decided July 1, 1983) .
2. The United States Supreme Court (Justice Rehnquist) has held that the
doctrine of res judicata prevents the United States and the Pyramid Lake Paiute tribe
from reopening the 1944 Orr Ditch decree.
The Court said that the 1944 decree was a final water rights adjudication re-
garding allocation of water from the Truckee River to the Indians and to the Newlands
Reclamation Project. To allow the decree to be reopened would, in the Court's words:
do away with half a century of decided case law relating to
the Reclamation Act of 1902 and water rights in the public
domain in the West.
[E]veryone involved in Orr Ditch contemplated a compre-
hensive adjudication of water rights intended to settle
once and for all the questions of how much of the Truckee
River each of the litigants was entitled to.
Simply put, the doctrine of res judicata provides that
when a final judgment has been entered on the merits of a
case "[i]t is a finality as to the claim or demand in con-
troversy, concluding parties and those in privity with
them, not only as to every matter which was offered and
received to sustain or defeat the claim or demand, but as
to any other admissible matter which might have been offered
for that purpose. "
The United States and t1e Pyramid Lake Tribe argued that the 1944 decree dealt
only with the Indian right to irrigation water for the reservation and not with the
federal reserved right for maintenance and preservation of Pyramid Lake and the main-
tenance of the lower reaches of the Truckee River as a spawning ground for fish.
Historically, native cutthroat trout and cui-ui migrated from Pyramid Lake into
its source, the Truckee River, during the spawning season. Reduction in the size of
Pyramid Lake, presumably because of Truckee River diversions, resulted in the forma-
tion of a delta at the mouth of the Truckee, preventing fish migration into the
spawning grounds. In recent years, a fish hatchery has been opened to stock the lake
with cutthroat and cui-ui , and the Marble Bluff Dam and Fishway was completed, enabling
fish to bypass the delta to their spawning grounds in the Truckee River.
WATER LEGAL NEWS -3- July 15, 1983
In addition to arguing that the 1944 decree did not adjudicate all Indian claims,
the Pyramid Lake tribe asserted that the United States had breached its trust obliga-
tions by not pursuing a larger federal reserved rights claim in the original proceed-
ing and by representing both the Indians and the beneficiaries of the Newlands Recla-
mation Project in the original proceedings.
But the Court held that the federal reserved rights claim could not be pursued
piecemeal and, in fact, was intended to be fully adjudicated in the 1944 decree. More-
over, the United States was empowered to act for both the Indians and for the reclama-
tion project beneficiaries in the original proceeding:
Today, particularly from our vantage point nearly half a century
after the enactment of the Indian Reorganization Act of 1934,
ch. 576, 48 Stat. 984, 25 U.S.C. Section 461 et seq. , it may well
appear that Congress was requiring the Secretary of the Interior
to carry water on at least two shoulders when it delegated to him
both the responsibility for the supervision of the Indian tribes
and the commencement of reclamation projects in areas adjacent to
reservation lands. But Congress chose to do this, and it is
simply unrealistic to suggest that the Government may not perform
its obligation to represent Indian tribes in litigation when Con-
gress has obliged it to represent other interests as well . In
this regard, the Government cannot follow the fastidious standards
of a private fiduciary, who would breach his duties to his single
beneficiary solely by representing potentially conflicting in-
terests without the beneficiary's consent. The Government does
not "compromise" its obligation to one interest that Congress
obliges it to represent by the mere fact that it simultaneously
performs another task for another interest that Congress has obli-
gated it by statute to do.
The Court emphatically states that the water rights for a reclamation project
are to be in conformity with State law pursuant to Section 8 of the 1902 Reclamation
Act, that the Government holds "mere title" to the water rights for the purpose of
securing the agreed upon repayment for the project, and that the beneficial owner-
ship of the water rights resides not in the United States but in those who put the
project water to beneficial use under State 'aw:
[T]he Government seems wholly to ignore . . . the obligations
that necessarily evolve upon it from having mere title to water
rights for the Newlands Project, when the beneficial ownership
of these waters resides elsewhere.
[W]e conclude that the Government is completely mistaken if it.
believes that the water rights confirmed to it by the Orr Ditch
decree in 1944 for use in irrigating lands within the Newlands
Reclamation Project were like so many bushels of wheat, to be
bartered, sold or shifted about as the Government might see fit.
The Court said that finality of judgment is particularly important in matters in-
volving the ownership of land and water. The Court added that successors in interest
of parties who were not adverse parties in a stream adjudication are nevertheless bound
WATER LEGAL NEWS -4•- July 15, 1983
by a decree establishing priority' of rights in a stream. This is because a stream
adjudication necessarily involves the relationship of all priorities, whether or not
all affected persons are formal parties to the proceeding.
Regarding the Indian assertion that the United States breached its trust to the
Tribe, the Court said that the appropriate remedy for a proven breach of duty is
against the United States for damages, not against third parties. In a concurring
opinion, Justice Brerean stated that "In the final analysis, ove decision today is
that thousands of small farmers in northwestern Nevada can rely on specific promises
made to their forebearers two and three generations ago, and solemnized in a .judicial
decree, despite strong claims on the part of the Pyramid Lake Paiutes. " (Nevada v.
United States, U.S. 5 U.S, LW. 4974, decided June 24, 1983).
3. While the Nevada v. Uvted States suit was pending before the United States
Supreme Court, Judge Solomon of the United States District Court for the District of
Nevada ruled that the Secretary of the Interior must operate Stampede Dam and Reser-
voir first for conservation of the endangered Pyramid Lake cutthroat and cui-ui and,
then, for the congressionally authorized purposes of flood control , recreation, irri-
gation, power generation, and municipal water supply.
Stampede Dam, authorized pursuant to the 1956 Washoe Reclamation Project Act,
was completed in 1970 on the Little Truckee River, a tributary to the Truckee' River
above Pyramid Lake. In 1967, the Secretary of Interior had declared the Pyramid Lake
cui-ui fish to be an endangered species, and in 1975 the Secretary determined that the
Lahotan cutthroat trout was threatened with extinction. The Washoe Project Act in-
cludes "development of fish and wildlife resources" as an authorized project purpose
and provides that the cost of facilities for restoration of the Pyramid Lake fishery
shall be non-reimbursable, but limits expenditures for this purpose to $2,000,000.00.
Congress authorized a total of $43,700,000 for construction of the Washoe project.
Carson-Truckee Water Conservancy District, Sierra Pacific Power Company, and the
State of Nevada sued the Secretary of Interior to compel the Secretary under the Washoe
Project Act to enter into reimbursement contracts for the delivery of water for bene-
ficial use. The plaintiffs conceded that the Secretary's obligations to the tribe and
under the Endangered Species Act took precedence over his obligation to store water
or municipal and irdustrial use but argued that only the mini hum emount of water nec-
esery to avoid ,jeopardizing the survival of the species need be provided fo.r the
fishery purpose.
The Government and the Tribe, on the other hand, claimed that .the entire yield
of Stampede Reservoir, authorized by Congress to hair storage capacity of ,175,000 acre-
feet, was needed in order to "supply ,he fishery with sufficient water to get the
species off the threatened and endangered lists. "
The Court agreed with the Government and the Tribe, stating that the Endangered
Species Act "gives endangered species the highest priority over all federal projects":
In my view . . . the Secretary is required to give the Pyramid
Lake fishery priority over all other purposes of Stampede until
the cui-ui fish and Lahotan cutthroat trout are no longer classi-
fied as endangered or threatened.
The Court added that the amount of water necessary for the fishery is to be de-
termined by the Secretary of Interior. The Court concluded that "It.is .not.feasible. •
to operate Stampede for both N and I and fishery purposes. " (Cason-Truckee Water Con-
servancy District v, Watt, F.Supp. , 19 Environment Kepor er Cases 11bb,U`-
Nev. decided October 4, 19827-
WATER LEGAL NEWS -5- July 15, 1983
4. The United States Supreme Court (Justice Brennan) has determined that an
interstate river compact, when ratified by Congress, is a "law of the United States",
and the Court may not order relief inconsistent with the compact's express terms.
Consequently, the Court set aside the Special Master' s recommendation that a "tie-
breaker" voting member be appointed to resolve disputes between Texas and New Mexico
which arise before the Compact Commission under the 1949 Pecos River Compact.
The Pecos River Compact provides that Texas is to receive deliveries from New
Mexico in a quantity equivalent to that which Texas received in 1947.
The "1947 Condition" was described in an engineering report which, subsequently,
proved to be in error. Texas and New Mexico have been unable to agree upon a suitable
methodology to calculate New Mexico's delivery requirements.
The Special Master (Judge Breitenstein of the Tenth Circuit, U.S. Court of Appeals)
recommended that the two man Pecos River Compact Commission be made a three man commis-
sion to resolve disputes. But the Supreme Court held that the Court does not have
jurisdiction to modify the terms of the Compact.
New Mexico argued that matters involving compact enforcement could be reviewed
by the Court only after a decision by the Commission. But the Court pointed out that
agreement of both the New Mexico and Texas commissioners is required for Commission
action. Therefore, New Mexico could effectively prevent enforcement of the Compact,
contrary to the jurisdiction of the Court to interpret and enforce an interstate com-
pact which has been ratified by Congress.
Texas, for its part, sought to have the Court approve an inflow-outflow model
which would favor Texas in calculating New Mexico's delivery requirements.
The Supreme Court, however, returned the case to the Special Master with direc-
tions to arrive at a fair method for determining the entitlement of Texas under the
Pecos River Compact and, then, to enforce the provisions of the Compact.
The Court concluded by strongly urging Texas and New Mexico to settle their dis-
pute rather than pursuing the litigation. (State of Texas v. State of New Mexico_, No.
65 Original , U.S. , 51 U.S.L.W. 4805, decided June 17, 1983).
5. The United States District Court for the Northern District of California
(Judge Ingram) has struck down the Carter Administration's designation of certain wild
and scenic river segments in Northern California. The designations were signed by
Interior Secretary Andrus the day before President Carter left office.
The Court held that the thirty day notice of filing requirement applicable by
regulation to final environmental impact statements did not run until one day after
President Reagan took office. Consequently, the wild and scenic river designations
are void.
The Council of Environmental Quality regulations at issue provided that no
decision upon a final environmental impact statement can be made by any federal agency
until thirty days after the notice of filing has been published in the Federal Register.
The notice cannot be published in the Federal Register until the statement has been
made available to commenting agencies and the public and filed with EPA. The Federal
Register notice is to appear the week after filing the EIS with EPA. The Court found
that the earliest date of Federal Register publication, had the regulations been fol-
lowed, would have been December 22, 1980. Thus, the thirty day waiting period had not
expired when Secretary Andrus signed the wild and scenic river designations on
January 19, 1981.
WATER LEGAL NEWS --6- July 15, 1983
The Government argued that non-compliance with the regulation was harmless error,
but the Court said that:
[I]n administrative proceedings procedural safeguards which assure
public access to a decision-maker should be vigorously enforced.
The Court pointed out that, intentionally or not, an affidavit filed with EPA on
December 12, 1980 incorrectly verifies that co,nplete distribution of the EIS was made
on December 12, 1980, whereas plaintiffs did not receive a copy of the statement until
December 17, 1980.
The Court held that the County of Del Norte had standing to challenge the wild
and scenic river designations, because the County had alleged that the wild and scenic
river designations would cause injury consisting of loss of tax revenues from diminished
timber harvesting and inability to "plan for adequate facilities to meet future water
supply and flood protection , and impairment of ability to furnish water for public
water supplies. " (County of Del Norte v. United States, F. Supp. , 19 Environ-
ment Reporter Cases 1138, N.D. Calif. , decided February 13983).
Comments on the legal newsletter and suggestions for inclusion should be addressed
to Greg Hobbs, P.O. Box 185, Denver, Colorado 80201 (phone: 303/892-9400).
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