UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

Transcription

1 WEST/CRS UNTED STATES COURT OF APPEALS FOR THE FEDERAL CRCUT KLAMATH RRGATON DSTRCT, TULELAKE RRGATON DSTRCT, KLAMATH DRANAGE DSTRCT, POE VALLEY MPROVEMENT DSTRCT, SUNNYSDE RRGATON DSTRCT, KLAMATH BASN MPROVEMENT DSTRCT, KLAMATH HLLS DSTRCT MPROVEMENT CO., MDLAND DSTRCT MPROVEMENT CO., MALN RRGATON DSTRCT, ENTERPRSE RRGATON DSTRCT, PNE GROVE RRGATON DSTRCT, WESTSDE MPROVEMENT DSTRCT NO. 4, SHASTA VEW RRGATON DSTRCT, VAN BRMMER DTCH CO., FRED A. ROBSON, ALBERT J. ROBSON, LONNY E. BALEY, MARK R. TROTMAN, BALEY TROTMAN FARMS, JAMES L. MOORE, CHERYL L. MOORE, DANEL G. CHN, DELORS D. CHN, WONG POTATOES, NC., MCHAEL J. BYRNE, DANEL W. BYRNE, and BYRNE BROTHERS, U.g. Ce,/.3; n _n_ v. 0 _" 2,; 2001 JLh' _-.:0;7_,-,LY Ct_/.:{ UNTED and STATES, Plantffs-Appellants, Defendant-Appellee, PACFC COAST FEDERATON OF FSHERMEN'S ASSOCATONS, Defendant-Appellee. Appeal from the Unted States Court of Federal Clams n 01-CV-591, 0-CV-5910 through 0l-CV-59125, Judge Francs M. Allegra. TODD D. TRUE Earth justce 705 Second Avenue, Sute 203 Seattle, WA (206) (206) [FAX] CORRECTED BREF OF DEFENDANT-APPELLEE Attorney for Defendant-Appellee Pacfc Coast Federaton of Fshermen's Assocatons

2 !! UNTED STATES COURT OF APPEALS FOR THE FEDERAL CRCUT KLAMATH RRGATON DSTRCT, TULELAKE RRGATON DSTRCT, KLAMATH DRANAGE DSTRCT, POE VALLEY MPROVEMENT DSTRCT, SUNNYSDE RRGATON DSTRCT, KLAMATH BASN MPROVEMENT DSTRCT, KLAMATH HLLS DSTRCT MPROVEMENT CO., MDLAND DSTRCT MPROVEMENT CO., MALN RRGATON DSTRCT, ENTERPRSE RRGATON DSTRCT, PNE GROVE RRGATON DSTRCT, WESTSDE MPROVEMENT DSTRCT NO. 4, SHASTA VEW RRGATON DSTRCT, VAN BRMMER DTCH CO., FRED A. ROBSON, ALBERT J. ROBSON, LONNY E. BALEY, MARK R. TROTMAN, BALEY TROTMAN FARMS, JAMES L. MOORE, CHERYL L. MOORE, DANEL G. CHN, DELORS D. CHN, WONG POTATOES, NC., MCHAEL J. BYRNE, DANEL W. BYRNE, and BYRNE BROTHERS, UNTED V. and STATES, Plantffs-Appellants, Defendant-Appellee, PACFC COAST FEDERATON OF FSHERMEN'S ASSOCATONS, Defendant-Appellee. Appeal from the Unted States Court of Federal Clams n 01-CV-591, 01-CV-5910 through 01-CV-59125, Judge Francs M. Allegra. TODD Earthjustce D. TRUE 705 Second Avenue, Sute 203 Seattle, WA (206) (206) [FAX] CORRECTED BREF OF DEFENDANT-APPELLEE Attorney for Defendant-Appellee Pacfc Coast Federaton of Fshermen's Assocatons

3 CERTFCATE OF NTEREST Counsel for the defendant-appellee, Pacfc Coast Federaton of Fshermen's Assocatons, certfes the followng: 1. The full name of every party or amcus represented by me s: Pacfc Coast Federaton of Fshermen's Assocatons (defendant-appellee). also represent nsttute for Fsheres Resources, The Wlderness Socety, Klamath Forest Allance, Oregon Wld, WaterWatch of Oregon, Northcoast Envronmental Center, and Serra Club as amcus. 2. The name of the real party n nterest represented by me s: Pacfc Coast Federaton of Fshermen's Assocatons. 3. All parent corporatons and any publcly held companes that own 10 percent or more of the stock of the party or amcus curae represented by me are: None. 4. [] There s no such corporaton as lsted n paragraph The names of all law frms and the partners or assocates that appeared for the party or amcus now represented by me n the tral court or agency or are expected to appear n ths court are: Todd D. True, Earthjustce, and Robert B. Wygul edth (Mr. Wygul wll not be appearng n ths court). December, 2007 dyof 705 Second Avenue, Sute 203 Seattle, WA (206) A ttorneyfor Defendant-Appellee

4 !!! TABLE OF CONTENTS STATEMENT OF RELATED CASES... 1 STATEMENT OF THE SSUES PRESENTED FOR REVEW... 2 STATEMENT OF T-E CASE... 2 STATEMENT OF FACTS THE RRGATORS ARE THE BENEFCARES OF SGNFCANT GOVERNMENT SUBSDES... 4 A. The rrgators Receved Constructon Cost Subsdes... 5 B. Appellants Have Receved, and Contnue to Receve, Subsdzed Electrcal Power THE ENDANGERED SPECES ACT AND THE BEST AVALABLE SCENCE COMPELLED THE FEDERAL GOVERNMENT TO LEAVE WATER N THE KLAMATH RVER N A. The ESA and Klamath Project Operatons B. ESA Ltgaton Over Klamath Project Operatons SUMMARY OF THE ARGUMENT ARGUMENT THE RRGATORS DO NOT OWN ANY WATER RGHTS THAT HAVE BEEN TAKEN BY THE BUREAU'S ACTONS A. The Unted States Owns the Water Rghts Assocated Wth the Klamath Project B. Even Under Oregon Common Law, the Unted States Holds the Water Rghts... 21

5 !!!. C_ The Unted States Dd Not Take Any Alleged Property Rghts of the rrgators' Based on Patent Deeds, the Klamath Basn Compact, Pre Clams, or Post Permts The Patent Deeds Dd Not Create Property Rghts n Water and Even f They Dd, These Junor Rghts Were Not nfrnged by the Bureau's Actons The Klamath Basn Compact Dd Not Create New Water Rghts The rrgators' Cursory Asserton of a Water Rght Clam and Permts Should Be Rejected EVEN F THE RRGATORS HAVE ANY WATER RGHTS, THE BUREAU'S ACTONS DD NOT CONSTTUTE A TAKNG A Plantffs' Alleged Rghts, Whether Based on Property or Contract Theores, Are Lmted by Background Prncples of State and Federal Law B. There s No Bass for the rrgators' Physcal-T_kng Theory C. The Extensve Government Subsdes Provded.to the rrgators Foreclose Any Takngs Clam THE RRGATORS MAY NOT RELTGATE HERE THE SCENTFC BASS FOR THE BUREAU'S DECSONS CONCLUSON... 44

6 ! TABLE OF AUTHORTES CASES Allegrett & Co. v. County of mperal, 42 Cal.Rptr.3d 122, (Cal. Ct. App. 2006), revew dened, 2006 Cal. LEXS 9142 (Cal. July 26, 2006), cert. dened, 127 S. Ct. 960, 166 L.Ed.2d 706 (2007) Alsea Valley Allance v. Lautenbacher, No HO, 2007 WL (D. Or. Aug. 14, 2007) Anthony v. Veatch, 220 P.2d 493 (Or. 1950) Bennett v. Spear, 520 U.S. 154 (1997) Buldn_ ndustral Assocaton of Southern Calforna v. Norton, 247 F.3d 1241 (D.C. Cr. 2001) Calforna v. Unted States, 438 U.S. 645 (1978)... 3, 19, 38, 39 Cantwell v. Unversty of Massachusetts, 551 F.2d 879 (lst Cr. 1977) Castas Muncpal Water Dstrct v. Unted States, 76 Fed. C (2007)... 1, 40 n re Determnaton of the Relatve Rghts of the Waters of the Klamath Rver, a Trbutary of the Pacfc Ocean, Lead Case No E1 Dorado rrgaton Dstrct v. State Water Resource Control Board, 48 Cal. Rptr. 3d 468, 490 (Cal. Ct. App. 2006) Esplanade Propertes, LLC v. Cty of Seattle, 307 F.3d 978 (9th Cr. 2002) v

7 Felds v. Wlson, 207 P.2d 153 (Or. 1949) Fsher v. Bar Harbor Bakng & Trust Co., 857 F.2d 4 (1st Cr. 1988) Harvey E. Yates Co. v. Powell, 98 F.3d 1222 (10th Cr. 1996) ckes v. Fox, 300 U.S. 82 (1937) vanhoe rrgaton Dstrct v. McCracken, 357 U.S. 275 (1958) John Anderson Farms v. Unted States, No C... 1 Josln v. Marn Muncpal Water Dstrct, 429 P.2d 889 (Cal. 1967) Kandra v. Unted States, 145 F. Supp. 2d 1192 (D. Or. 2001)... 12, 13, 43 Klamath rrgaton Dstrct v. Unted States, 75 Fed. C. 677 (2007) Klamath rr_aton Dstrct v. Unted States, 67 Fed. C (2005)... passm Klamath Water Users Protectve Assocaton v. Patterson, 204 F.3d 1206 (9th Cr. 1999) Lehman Brothers v. Schen, 416 U.S. 386 (1974) Lucas v. South Carolna Coastal Councl, 505 U.S (1992)... 33

8 ! n re McLnn, Monroe 744 F.2d 677 (9th Cr. 1984)... : v. Wthycombe, 165 P. 227 (Or. 1917) Monsanto Co. v. Scruggs, 459 F.3d 1328 (Fed. Cr. 2006) Natonal Audubon Socety v. Superor Court of Alpne County, 658 P.2d 709 (Cal. 1983)... 34, 36 Natonal Cycle, nc. v. Savoy Rensurance Co., 938 F.2d 61 (7th Cr. 1991) Nevada Dffch Co. v. Bennett, 45 P. 472 (Or. 1896)... 17, 22, 23, 24 Neves v. Unversty of Puerto Rco, 7 F.3d 270 (1st Cr. 1993) Oregon Shores Conservaton Coalton v. Oregon Fsh & Wldlfe Commsson, 662 P.2d 356 (Or. Ct. App. 1983) Pacfc Coast Federaton of Fshermen's Assocatons v. Unted States Bureau of Reclamaton, 138 F. Supp. 2d 1228 (N.D. Cal. 2001)... 11, 12 Pacfc Coast Federaton of Fshermen's Assocatons v. Unted States Bureau of Reclamaton, 226 Fed. Appx. 715 (9th Cr. 2007) Pacfc Coast Federaton of Fshermen's Assocatons v. Unted States Bureau of Reclamaton, 426 F.3d 1082 (9th Cr. 2005)... 14, 43 Penn Central Transportaton Co. v. New York Cty, 438 U.S. 104, 98 S. Ct. 2646, 57 L. Ed. 2d 631 (1979) v

9 People v. Glenn-Colusa rrgaton Dstrct, 15 P.2d 549 (Cal. Dst. Ct. App. 1932) People v. Murrson, 124 Cal. Rptr. 2d 68 (Cal. Ct. App. 2002) People v. Truckee Lumber, 48 P. 374 (Cal. 1897)... 35, 36 Perkns v. Clark Equpment Co., 823 F.2d 207 (8th Cr. 1987)..., Rothe Development Corp. v. Department of Defense, 413 F.3d 1327 (Fed. Cr. 2005) Smth v. FCX, nc., 744 F.2d 1378 (4th Cr. 1984) State Water Resource Control Board Cases, 39 Cal. Rptr. 3d 189 (Cal. Ct. App. 2006)... 36, 38 Stockton East Water Dstrct v. Unted States, No Tahoe-Serra Preservaton Councl v. Tahoe Regonal Plannng Agency, 535 U.S. 302 (2002) Teel rrgaton Dstrct v. Oregon Water Resources Department, 919 P.2d 1172 (Or. 1996) Tulare Lake Basn Water Storage Dstrct v. Unted States, 49 Fed. C (2001) n re Untah Basn, 133 P.3d 410 (Utah 2006) Unted States v. Adar, 723 F.2d 1394 (9 th Cr. 1983)... 30, 37 v

10 Unted States v. Poneer rrgaton Dstrct, 157 P.3d 600 (daho 2007) Unted States v. State Water Resources Control Board, 227 Cal. Rptr. 161 (Cal. Ct. App. 1986) Unted States v. Wnstar Corp., 518 U.S. 839 (1996)... 3 n re Water Rghts of Deschutes Rver and Trbutares, 286 P. 563 (Or. 1930) n re Waters of the Umatlla Rver, 168 P. 922 (Or. 1917)... 19, 20 n re Waters of Walla Walla Rver, 16 P.2d 939 (Or. 1932)... 17, 23, 24 Yankee Atomc Electrc Co. v. Unted States, 112 F.3d 1569 (Fed. Cr. 1997) , 4 STATUTES 16 U.S.C. 1536(a)(2) U.S.C. 1536(c)(1) Pub. L. No , 71 Stat. 497 (Aug. 30, 1957)... 28, 29, 30 Or. Rev. Stat Reclamaton Act of 1902, ch. 1093, 32 Stat. 388 (codfed at 43 U.S.C. 391 et se%) Water Law of 1891, 1891 Or. Laws at 52, codfed at Or. Rev. Stat (1) Vlll

11 REGULATONS 43 C.F.R. Part MSCELLANEOUS Fed. R. App. P. 28(a)(9)(A) Fed. R. App. P Fed. Reg. 27,130 (July 18, 1988) Fed. Reg. 65,692 (Dec. 16, 1993) Fed. Reg. 18,491 (Apr. 19, 1994) Fed. Reg. 37,160 (June 28, 2005) Fed. Reg. 24,588 (May 6, 1997) Carl S. Parobek, Of Farmers' Takes and Fshes' Takngs: Ffth Amendment Compensaton Clams When the Endangered Speces Act and Western Water Rghts Collde, 27 Harv. Envtl. L. Rev. 177 (2003) Charles A. Wrght, e t al., 17A Federal Practce & Procedure Melnda Harm Benson, The Tulare Case: Water Rghts, the Endangered Speces Act, and the Ffth Amendment, 32 Envtl. L. 551 (2002) Mchael C. Blumm & Lucus Rtche, Lucas's Unlkely Legacy: The Rse of Background Prncples as Categorcal Takngs Defenses, 29 Harv. Envtl. L. Rev. 321 (2005) Natonal Academes of Scence, Endangered and Threatened Fshes n the Klamath Rver Basn: Causes of Declne and Strateges for Recovery (2004)... 14, 15, 16 x

12 STATEMENT OF RELATED CASES Pursuant to Rule 47.5 of the Federal Crcut Rules, counsel for defendantntervenor appellee Pacfc Coast Federaton of Fshermen's Assocatons ("PCFFA") _ states that there have been no pror appeals to ths Court or any other court from the fnal judgment n ths case, No L. However, there are pendng cases that wll be drectly affected by ths Court's decson n ths appeal. n partcular, two appeals pendng before ths Court, Stockton East Water Dstrct v. Unted States, No , and Castas Muncpal Water Dstrct v. Unted States, No , also nvolve clams that restrctons on water delveres that were compelled by complance wth the Endangered Speces Act consttuted takngs of appellants' water rghts and breaches of contract. Another case pendng n the Court of Clams, John Anderson Farms v. Unted States, No C, also presents these ssues and has been stayed pendng the outcome of ths appeal. Counsel for PCFFA also represents a number ofamc n ths case: WaterWatch of Oregon, The Wlderness Socety, Klamath Forest Allance, Oregon Wld (formerly Oregon Natural Resources Councl), Northcoast Envronmental Center, nsttute for Fsheres Resources, and Serra Club. n order to avod duplcatve brefng, these amc adopt PCFFA's bref as ther amcus bref. They also seek leave pursuant to Federal Rule of Appellate Procedure 29 to partcpate as amc n ths appeal for the reasons set forth n ther memorandum n support of ther Moton to ntervene as Defendants fled n the court below. J.A

13 !! STATEMENT OF THE SSUES PRESENTED FOR REVEW PCFFA concurs n the descrpton of the thrd ssue before the Court dentfed n Appellants' bref. PCFFA dsagrees, however, wth the Appellants' characterzaton of the frst and second ssues. Appellants' descrpton of the ssues presents contested ssues as matters of fact. Appellants' second ssue s also better characterzed as a subset of the frst ssue. Those ssues are more properly descrbed as a sngle tem, as follows: 1. Was the tral court correct n holdng that the Plantffs-Appellants do not have consttutonally-protected property rghts n water from the Klamath Project? STATEMENT OF THE CASE As drected by Local Rule 28(b), PCFFA lmts ths Statement to specfc areas of dsagreement wth Appellants' statement of the case. n partcular, Appellants' Statement s erroneous n the followng respects: n concludng that the Unted States was the owner of the Klamath Project water rghts under a 1905 Oregon statute, the Court of Clams dd not "reject[] an unbroken lne of Supreme Court precedent," rrgators' Bref at 4, but nstead properly appled the Supreme Court's concluson that, under the Reclamaton Act, "state water law

14 would control n the appropraton and later dstrbuton of the water." Calforna v. Unted States, 438 U.S. 645,664 (1978). The Court of Clams correctly concluded the soveregn acts doctrne s an ndependent defense and not a mere prelude to the applcaton of the common law mpractcablty doctrne. The pluralty opnon n Unted States v. Wnstar Corp., 518 U.S. 839 (1996), does not represent bndng authorty, as recognzed by ths Court n Yankee Atomc Electrc Co. v. Unted States, 112 F.3d 1569 (Fed. Cr. 1997). The Bureau's decson to allow more water to reman n the Klamath Rver durng the drought condtons n 2001 was compelled by the Endangered Speces Act's requrement that federal actons must avod jeopardy to lsted speces and that federal agences act based on the best avalable scence, a result confrmed by an unbroken strng of decsons n the courts of the Nnth Crcut. Fnally, the rrgators have never repad the real costs of the constructon, operaton, and mantenance of the Klamath Project, but have nstead been the benefcares of massve government subsdes. STATEMENT OF FACTS To avod duplcaton of the statement of facts provded by the federal

15 appellees, PCFFA addresses only two ssues n ths statement of facts. 2 Frst, PCFFA explans that the rrgators have receved sgnfcant government subsdes throughout the operaton of the Klamath Project and that they contnue to receve subsdes to ths day. Second, PCFFA outlnes the hstory of the ltgaton n the Nnth Crcut over what the Endangered Speces Act requres n the context of the Klamath Project. n that ltgaton, the courts have unequvocally held that the Bureau of Reclamaton ("BOR" or "the Bureau") must leave enough water n Upper Klamath Lake and the Klamath Rver to avod jeopardy to threatened and endangered fsh.. THE RRGATORS ARE THE BENEFCARES OF SGNFCANT GOVERNMENT SUBSDES An mportant frame for the rrgators' appeal s the clam that they "have pad the costs of constructng, operatng and mantanng the Klamath Project for nearly a century," rrgators' Bref at 8, and that the decson below unfarly robs them of ths long-standng nvestment, d.; see also d. at (rrgators "have long snce repad ther porton of the allocated cost of constructng the Klamath Project facltes"). Ths frame s not accurate. As documented n studes by the Government Accountablty Offce and acknowledged by the Court below, the federal 2 PCFFA otherwse reles on the federal appellees' Statement of Facts.

16 government has not sought to recoup all of ts costs for the Klamath Project and, ndeed, Bureau of Reclamaton water customers have receved - and contnue to receve - substantal economc subsdes from the government. Klamath rrgaton Dst. v. Unted States, 67 Fed. C1.504, 508 (2005) (ctng GAO, Rep. No. GAO/RCED , Bureau of Reclamaton: nformaton on Allocaton and Repayment of Costs of Constructng Water Projects (1996) [herenafter "1996 GAO Report"]) (avalable at: GAO Rep. No. PAD-81-07, Federal Charges for rrgaton Projects Revewed Do Not Cover Costs ( 1981 ) (avalable at: http ://archve.gao.gov/f0102/ pdf)). PCFFA focuses here on two knds of subsdes that the rrgators have receved: project constructon cost subsdes and electrcal power subsdes. A. The rrgators Receved Constructon Cost Subsdes The rrgators assert that they "have long snce repad ther porton" of the cost of constructng the Kamath Project. rrgators' Bref at 14. Ther contracts wth the Bureau, however, allowed them to repay these constructon costs over a perod of decades wthout nterest. As any home mortgage holder knows, by far the largest cost n repayng a major captal nvestment over a long perod of tme s nterest. Contrary to the rrgators' clam, they have not, n fact, repad the government for the real cost of constructng the Klamath Project. Rather, they have repad a small fracton of those costs, what they characterze as "ther

17 porton." Accordng to the GAO, the federal government spent $53 mllon to buld the Klamath Project. See 1996 GAO Report, Appendx V. The benefcares of the Project were allocated responsblty for repayng some of these costs. The terms of the repayment contracts vared, wth the repayment perod rangng from 15 years 3 to 40 years. 4 All oft he contracts provded, however, that the dstrcts would repay ther share of the costs wthout nterest. The repayment schedules provded, n effect, nterest-free loans to the dstrcts, costng the publc a substantal porton of the tme Value of the money nvolved. As analyzed by Rchard W. Wahl n a declaraton submtted to the court below, the dstrcts' "no nterest" subsdy ranged from 1.92% to 48.54% of the total constructon costs allocated to each dstrct. J.A Some of the dstrcts' repayment terms were also modfed n other ways that effectvely ncreased ther subsdes. Frst, the government has at tmes provded the rrgators wth moratora even on the lmted repayment oblgatons they have. See Bureau of Reclamaton, U.S. Department of the nteror, Repayment of 3 See, e..,pne Grove rrgaton Dstrct contract, art. 7 (J.A ); Enterprse rrgaton Dstrct contract, art. 7 (J.A ); Maln rrgaton Dstrct contract, 15 (J.A ). 4 See, e.g_., Tulelake rrgaton Dstrct contract, 3(b) (J.A ); Shasta Vew rrgaton Dstrct 1972 contract, 10(b) (J.A ).

18 Reclamaton Projects, at 199 (1972). J.A Second, the government has elected not to enforce certan delnquency payments. Se e, e.a., Klamath Dranage Dstrct 1943 contract, 12 (J.A ). Thrd, the government provded drect subsdes to Project users, ncludng (1) $431,000 n "rrgaton assstance," "payments made wth revenues from power or a project's other sources... because the amounts allocated to rrgators have been determned to exceed ther ablty to pay," 1996 GAO Report at 58, 64; (2) $915,000 n "charge-offs," legslatvely provded debt forgveness, d, at 59, 66; and (3) $2.4 mllon n other dscounted government loans, d, at 36, 59. The hstory of the Klamath Project, ts costs, and ther lmted repayment by the rrgators reveal that the rrgators are not hapless vctms of government overreachng but the very fortunate benefcares of consderable government largess over a long perod of tme. B. Appellants Have Receved, and Contnue to Receve, Subsdzed Electrcal Power. ndeed, the government's generosty to the rrgators contnues to ths day: they have also receved - and contnue to receve - sgnfcant electrcal power rate subsdes. n 1917, BOR and the Calforna-Oregon Power Company (the predecessor of PacfCorp) entered nto a 50-year contract that, among other thngs, requred the utlty to supply electrcty to Klamath Project water users at low, fxed rates. Se e n re PACFCORP, A , , (Decson

19 034) (Cal. P.U.C. Apr. 13, 2006), at 3 (avalable at: [herenafter "Cal. PUC Decson "]. Followng the Federal Energy Regulatory Commsson's decson to ssue a lcense for the Lnk Rver Dam n 1954, BOR and PacfCorp extended ths agreement untl d. at 4. As electrcty rates have ncreased n the regon, Klamath Project rrgators have pad an ncreasngly small proporton of prevalng market rates. n 2006, the rrgators were payng essentally the same rate for power that they had pad 90 years earler; that rate was less than one-tenth the rates pad by other PacfCorp customers. See d. at 4-5 (comparng Klamath rrgators' rate of $0.006 per klowatt-hour to PacfCorp rrgaton Schedule PA-20 tarff rate of $ /kwh); see also n re Pacfc Power & Lght, UE 170 (Order No ) (Or. P.U.C. Apr. 12, 2006), at 2, 6 (avalable at: [herenafter "Or. PUC Order No "]. Now that the 1956 Contract has expred, these rates no longer apply, but the rrgators are stll payng less than other PacfCorp customers and were payng much less n 2001 whle the 1956 Contract was stll n effect. n Calforna, pursuant to a "transton plan," ther rates are gradually beng ncreased untl they wll pay full applcable tarff rates n Aprl See d., App. A at 2; see also n re PACFCORP, A , , (Decson ) (Cal. P.U.C. Dec. 14, 2006) (avalable at:

20 The estmated value of ths "transton perod" subsdy alone s $7.4 mllon, the cost of whch wll be borne by other PacfCorp customers. Cal. PUC Decson at 18. n Oregon, Klamath Basn rrgators have been granted a seven-year transton to full tarff rates. See Or. PUC Order No at 24. Ths transton perod represents a subsdy of approxmately $1.7 mllon. d :. at 25. The value to the rrgators of decades of remarkably cheap power has not been calculated. The smple fact s that the rrgators have receved extraordnary economc benefts from the government through the constructon and operaton of the Klamath Project, benefts for whch they have not pad.. THE ENDANGERED SPECES ACT AND THE BEST AVALABLE SCENCE COMPELLED THE FEDERAL GOVERNMENT TO LEAVE WATER N THE KLAMATH RVER 1N 2001 The rrgators seek to complement the naccurate clam that they have pad dearly and fully for "constructng, operatng and mantanng the Klamath Project for nearly a century," rrgators' Bref at 8, wth the equally msleadng argument that "nothng n the [Endangered Speces] Act made t mpossble for Respondent to supply water to Appellants n accordance wth the terms of ther contracts," d :. at 52. Lke the clam that they have pad fully for the Klamath Project, ths argument too depends on a selectve presentaton of the facts, ncludng a descrpton of a report prepared by the Natonal Academes of Scence that s both

21 naccurate and ncomplete. See d. at 6-7, 52. Moreover, they gnore altogether the extensve ltgaton that has occurred n the Nnth Crcut over precsely what the ESA requred n 2001 and stll requres today n the context of the Klamath Project- ltgaton n whch many of the rrgators have fully partcpated. A. The ESA and Klamath Project Operatons The ESA requres that, before takng any acton, a federal agency must determne whether any threatened or endangered speces mght be present n the area of the proposed acton. 16 U.S.C. 1536(c)(1). f t concludes that such speces mght be present and, n a bologcal assessment, determnes that the proposed acton s lkely to adversely affect the speces, then the agency must engage n formal consultaton wth ether the Fsh and Wldlfe Servce ("FWS") (for terrestral and freshwater speces) or the Natonal Marne Fsheres Servce ("NMFS") (for marne and anadromous speces). d.; d. at (a)(2). n the formal consultaton, FWS or NMFS must prepare a bologcal opnon, or BOp; whch dentfes the effects that the proposed acton wll have on the lsted speces and ts crtcal habtat. d.. at (b)(3)(a). f the Servce concludes that the acton mght cause jeopardy to a lsted speces or adversely modfy ts crtcal habtat, then t must propose "reasonable and prudent alternatves," f any exst, to the proposed acton that would avod jeopardy or adverse modfcaton. d. The agences are requred to use "the best scentfc and commercal data avalable" when 0

22 completng ths consultaton. d. at (a)(2). FWS lsted two speces offsh that nhabt Upper Klamath Lake and ts trbutares, the Lost Rver and shortnose suckers, as endangered n Fed. Reg. 27,130, 27, (July 18, 1988). NMFS lsted Southern Oregon/Northern Calforna Coast ("SONCC") coho salmon as a threatened speces under the ESA n Fed. Reg. 24,588, 24,592 (May 6, 1997). 5 SONCC coho spawn n several streams and rvers n southern Oregon and northern Calforna, ncludng the Klamath Rver and ts trbutares. NMFS completed ts frst BOp addressng the effects of BOR's operaton of the Klamath Project on SONCC coho n Pacfc Coast Federaton of Fshermen's Assocatons v. Unted States Bureau of Reclamaton, 138 F. Supp. 2d 1228, 1233 (N.D. Cal. 2001) ("PCFFA "). The BOp concluded that the 1999 Annual Operatons Plan for the Project would adversely affect SONCC coho, but that t was not lkely to jeopardze the contnued exstence of the speces. d. n the meantme, the Department of the nteror commssoned Dr. Thomas Hardy of Utah State Unversty to revew the status Of anadromous fsh, ncludng 5 Ths lstng was reaffrmed n See Endangered and Threatened Speces: Fnal Lstng Determnaton of 16 ESUs of West Coast Salmon, and Fnal 4(d) Protectve Regulatons for Threatened Salmond ESUs, 70 Fed. Reg. 37,160, 37,193 (June 28, 2005). A federal dstrct court recently upheld the lstng. Alsea Valley Allance v. Lautenbacher, No HO, 2007 WL , at * 1 (D. Or. Aug. 14, 2007). 11

23 SONCC coho, n the Klamath. d. at Dr. Hardy released hs Phase report on August 5, d. Ths report ncluded nterm recommendatons on the flow levels necessary to avod harm to SONCC coho and other speces n the Klamath. d. at B. ESA Ltgaton Over Klamath Proect Operatons The Bureau dd not consult wth NMFS before mplementng ts 2000 Annual Operatons Plan for the Klamath Project, a falure that n early 2001 a dstrct court found to be a volaton of the ESA. PCFFA, 138 F. Supp. 2d at Consequently, the court enjoned the Bureau from delverng rrgaton water to the Klamath Project when Klamath Rver flows dropped below the mnmum flows recommended n the Hardy Phase report untl t completed ESA consultaton. d. at n mposng ths njuncton, the court specfcally concluded that the Hardy Phase report was "the best scence currently avalable." d. at The Bureau promptly consulted wth FWS and NMFS on ts 2001 Annual Operatons Plan. Kandra v. Unted States, 145 F. Supp. 2d 1192, (D. Or. 2001). n ths consultaton, both FWS and NMFS concluded that operaton of the Project as proposed by the Bureau would jeopardze the contnued exstence of the lsted fsh n upper Klamath Lake as well as the SONCC coho. d :. at draft BOps, these agences recommended mnmum water levels for Upper 12 n

24 ! Klamath Lake and mnmum flows for the Klamath Rver below ron Gate Dam. d :. The Bureau nformed the agences that the forecasted water supples for 2001 were nadequate to meet these requrements. d. n other words, even wthout water dversons for rrgaton, the water flows and levels would be less than the agences concluded the lsted fsh requred. FWS and NMFS subsequently compromsed wth BOR and released fnal BOps wth lower flows and lake water levels, concludng that whle these RPAs would stll harm the lsted fsh, they would avod jeopardy to these speces. d :. The Bureau then released ts fnal operatons plan, whch, n order to comply wth the ESA, adopted the flow requrements of the reasonable and prudent alternatves n the BOps under the extremely dry condtons that prevaled n Ths decson resulted n the Bureau delverng sgnfcantly less water to ts customers, ncludng the rrgators. Wthn days, several rrgators, ncludng appellants Klamath rrgaton 1 Dstrct and Tulelake rrgaton Dstrct, challenged the Bureau's decson to mplement the RPAs n the FWS and NMFS BOps n court. The court dened the plantffs' moton for a prelmnary njuncton n that case, holdng, among other thngs, that they were unlkely to preval on ther ESA clam. d. at plantffs had argued - as they apparently attempt to do agan here - that the flow recommendatons n the BOps were not based on the best avalable scentfc evdence. d :. at The court rejected ths argument, fndng that plantffs had 13 The

25 not shown "that NM2FS or FWS faled to consder relevant, avalable, scentfc data" and that "plantffs smply dsagree[d] wth the scentfc conclusons reached by FWS and NMFS." d. at The rrgators subsequently fled the case n the Court of Clams that s the subject of the present appeal. Later n 2001, the Department of the nteror asked the Natonal Research Councl ("NRC") to "ndependently revew the scentfc and techncal valdty of the government's bologcal opnons" that were at ssue n PCFFA and Kandra. Pacfc Coast Federaton of Fshermen's Assocatons v. Unted States Bureau of Reclamaton, 426 F.3d 1082, 1087 (9 th Cr. 2005). The NRC Report was not released untl 2002 and was not (ndeed, could not have been) before the Bureau when t adopted the 2001 Annual Operatons Plan n response to the jeopardy bologcal opnons. The Report dd not fnd scentfc support for the flow recommendatons n NMFS' salmon BOp, although the NRC later clarfed that t "dd not conclude that NMFS must be wrong n ts recommendatons on man-stem flows. ''6 d. The NRC commttee also dd not consder the fndngs of a second 6 The NRC's subsequent 2004 Report also dsagreed wth the agency's 2001 conclusons, though t noted that: The lstng agences have been crtczed for usng pseudoscentfc reasonng ("junk scence") n justfyng ther requrements for the protecton of speces n the upper Klamath basn. The commttee dsagrees wth ths crtcsm. The ESA allows the agences to use a wde array of nformaton sources n protectng lsted speces. The agences can be expected, when nformaton s scarce, to extend ther 14

26 report from Dr. Hardy, the Hardy Phase report, even though t was avalable to the Commttee n draft form, whch determned that "flows lower than approxmately 1000 cubc feet per second (cfs) durng the later summer would lkely expose the SONCC coho to dangerously hgh water temperatures, thereby ncreasng the rsk of harm to the speces." d_=at The BOR's Annual Operatons Plan for 2001, based on the 2001 BOps' reasonable and prudent alternatves, had requred late summer flows of at least 000 cfs, whch s consstent wth the Hardy Phase recommendatons. The Bureau subsequently completed a Operatons Plan for the Klamath Project and engaged n ESA consultaton regardng ts et:fects. NMFS prepared yet another BOp addressng the effects of the new plan on SONCC coho. NMFS agan concluded that the plan would cause jeopardy to the coho. n reachng ths concluson, NMFS expressly consdered the NRC Report, but dd not adopt the NRC's conclusons. nstead, "NMFS attrbuted the conclusons of the NRC Report to 'lack of nformaton on dstrbuton and abundance of coho... and the lack of studes focused on coho and factors lmtng ts populaton n the recommendatons beyond rgorously tested hypotheses and nto professonal judgment as a means of mnmzng rsk to speces. Natonal Academes of Scence, Endangered and Threatened Fshes n the Klamath Rver Basn: Causes of Declne and Strateges for Recovery 9 (2004). l 15

27 ! Klamath Rver Basn.'" d. at , NMFS adopted nstead the conclusons of the Hardy Phase report regardng the effect of summer flows of less than 1000 cfs on coho salmon. d. at Nevertheless, NMFS establshed an RPA that would not requre provdng such flows untl 2010 and even then would hold BOR responsble for only 57 percent of the flows. d. at The Nnth Crcut rejected ths approach as arbtrary and caprcous and upheld an njuncton requrng the BOR to provde the mnmum flows dentfed by NMFS n the BOp. d. at 1095; Pacfc Coast Federaton of Fshermen's Assocatons v. Unted States Bureau of Reclamaton, 226 Fed. Appx. 715, 716 (9 th Cr. 2007). n summary, the federal agences consdered all of the avalable scentfc evdence when ssung both the 2001 and B Ops. Furthermore, every court that has revewed the BOps and operaton plans for the Klamath Project has concluded that the mnmum flow requrements establshed n 2001 were scentfcally justfed and, ndeed, requred by the ESA. SUMMARY OF THE ARGUMENT The tral court correctly found that the Unted States owns the appropratve water rghts for the Klamath Project. As explaned n more detal n the Unted States' bref, the Unted States acqured these rghts under a 1905 Oregon statute. The Reclamaton Act defers to state law governng the acquston and ownershp of water rghts, so long as state law s not nconsstent wth federal law. Here, 16

28 Oregon's statute does not contradct any congressonal drectve and thus ts assgnment of water ownershp controls. For ths reason, the decsons on whch the rrgators rely - all of whch nterpret the laws of states other than Oregon - do not govern the outcome of ths case. Furthermore, even f the Unted States dd not acqure the water rghts under the 1905 statute, t would stll have been the owner of the rghts under contemporary Oregon common law. Under Nevada Dtch Co. v. Bennett, 45 P. 472 (Or. 1896), and ts progeny, an approprator can be the owner of appropratve water rghts even f someone else puts the water to benefcal use. The Unted States, lke the rrgaton company n n re Waters of Walla Walla Rver, 16 P.2d 939 (Or. 1932), approprated the water and developed the project and only later, by contract, agreed to provde the rrgators wth water. Under these crcumstances, the Unted States would have been consdered the owner of the Klamath Project's appropratve water rghts even under Oregon common law. Nor do any of the rrgators' other alleged sources of property rghts help them. Frst, the patent deeds that the Unted States granted to certan of the rrgators conveyed no more than contract rghts to water because these were the only rghts avalable to be transferred to ndvdual rrgators at the tme the deeds were ssued. Second, any cause of acton created by the Klamath Basn Compact s unavalng to the rrgators because they dd not have any pre-exstng property 17

29 rghts to enforce through that cause of acton. Nor dd the Compact create any new property rghts for the rrgators. Thrd, the rrgators' passng references to a pre clam and permts from the 1970s and 1980s are nsuffcent to properly rase these ssues on appeal and they have therefore waved these arguments. n any event, the clam s not properly before ths Court because t s beng adjudcated n Oregon state proceedngs n the Klamath Basn Adjudcaton and the permts are not vested rghts (and are junor to the Unted States' and ndan water rghts). Furthermore, even f the rrgators had property rghts n Klamath Project water, those rghts would be lmted by background prncples of state and federal law. n ths case, the relevant prncples nclude the publc trust doctrne, Oregon and Calforna's ownershp of wldlfe wthn ther borders, and the senor water rghts of ndan Trbes. The rrgators' rghts therefore could not have ncluded the rght to dvert water from the Klamath Rver and Upper Klamath Lake even when water levels were so low as to jeopardze the contnued exstence of the suckers and coho. The rrgators' takngs clams also fal because there s no legal support for ther theory that the regulaton of water dversons from a Reclamaton project s a per se "physcal" takng of property and because the government's extensve subsdes to the rrgators leave t free to subject ther access to water to approprate regulatons wthout facng lablty for a takng. 18

30 Fnally, the rrgators' attempts to challenge the scentfc underpnnngs of the Bureau's decson gnore the legal requrements of the ESA. ARGUMENT. THE RRGATORS DO NOT OWN ANY WATER RGHTS THAT HAVE BEEN TAKEN BY THE BUREAU'S ACTONS A. The Unted States Owns the Water Rghts Assocated Wth the Klamath Proect The Unted States, not the rrgators, s the owner of the appropratve water rghts assocated wth the Klamath Project. Ths concluson follows unavodably from the followng facts: The Reclamaton Act of 1902, ch. 1093, 32 Stat. 388 (codfed, as amended, at 43 U.S.C. 371 et se%), was not ntended to overrule or change state water law, so long as the state laws were consstent wth congressonal drectves. On the contrary, the Unted States Supreme Court has held that "the Act clearly provded that state water law would control n the appropraton and later dstrbuton of the water." Calforna v. Unted States, 438 U.S. 645,664 (1978). The Oregon Act of 1905, Or. Gen. Laws, 1905, Ch. 228, 2, p. 401, as authortatvely nterpreted by the Oregon Supreme Court n n re 19

31 Waters of the Umatlla Rver, 168 P. 922 (Or. 1917), vests the ownershp of these water rghts n the Unted States] 7 Ths Court should deny the rrgators' request to certfy a queston to the Oregon Supreme Court regardng the nterpretaton of the 1905 statute. See rrgators' Bref at 2 n.2. Frst, the factual predcate of ths argument--that the Oregon Supreme Court has not nterpreted the 1905 statute--s ncorrect. That court has n fact already construed the statute n Umatlla Rver, 168 P. at 925, and concluded that the Unted States s the owner of the Klamath Project water rghts. Second, even f the Oregon Supreme Court had not addressed ths queston, certfcaton would stll be napproprate because the Court of Clams has already resolved the queston. Whle federal courts have broad dscreton to certfy questons to state supreme courts where permtted by state law, see Lehman Bros. v. Schen, 416 U.S. 386, 391 (1974); Or. Rev. Stat , t s well settled n at least sx of the federal crcuts that, absent extraordnary crcumstances, appellate courts should deny a certfcaton request brought by a party subject to an adverse rulng by the dstrct court, see, e.., Harvey E. Yates Co. v. Powell, 98 F.3d 1222, 1229 n.6 (10 th Cr. 1996); Neves v. Unversty of Puerto Rco, 7 F.3d 270, 278 n.15 (1 st Cr. 1993); Natonal Cycle, nc. v. Savoy Rensurance Co., 938 F.2d 61, 64 (7 th Cr. 1991); Perkns v. Clark Equpment Co., 823 F.2d 207, (8 th Cr. 1987); Smth v. FCX, nc., 744 F.2d 1378, 1379 (4 th Cr. 1984); n re McLnn, 744 F.2d 677, 681 (9 th Cr. 1984); see.also Charles A. Wrght, et al., 17A Federal Practce 8,: Procedure 4248 ("[T]he falure of a party to suggest certfcaton untl a late stage n the proceedng consderably weakens hs nsstence on certfcaton."). Ths rule promotes judcal effcency and farness, preventng a party from "tak[ng] two btes at the cherry by applyng to the state court after falng to persuade the federal court." Cantwell v. Unversty of Massachusetts, 551 F.2d 879, 880 (1 _t Cr. 1977). Fnally, certfcaton of a queston to the Oregon Supreme Court s partcularly napproprate here because the rrgators already had an opportunty to have the Oregon courts resolve ther rght to Klamath water before proceedng wth ths ltgaton. See Fsher v. Bar Harbor Bakng & Trust Co., 857 F.2d 4, 8 (1 st Cr. 1988) (dsfavorng certfyng questons when plantff n dversty sut had choce of ether ltgatng ssue n state or federal court); Wrght et al., su_rp_la. ("[T]he should be slow to honor a request for certfcaton from a party who chose to nvoke federal jursdcton."). At the outset of ths case, the Unted States sought a stay pendng the resoluton of a state water rghts adjudcaton for the Klamath. The rrgators, however, preferred to proceed wthout the beneft of the state court 20 court

32 As a result, the cases on whch the rrgators rely - ckes v. Fox, 300 U.S. 82 (1937), and ts progeny - are all dstngushable. Those cases dealt wth water rghts n other states that dd not have laws analogous to Oregon's 1905 statute. n order to avod duplcatve brefng, however, PCFFA wll not elaborate on these ponts but nstead jons n the Unted States' bref on appeal as to these ssues. 8 B. Even Under Oregon Common Law, the Unted States Holds the Water m_hts As the Unted States has establshed n ts bref and as summarzed above, the Act of 1905 supplanted Oregon's common law of appropraton and under that statute the Unted States owns the water rghts assocated wth the Klamath Project. Even f the Court were to dsagree that ths statute changed the common law (and t should not), the outcome would be the same. Under pre-1909 Oregon common law, the Unted States would stll have been the owner of the water rghts. rulng. Havng chosen to force the Court of Clams to resolve ther rght to Klamath water, the rrgators should not now be allowed to engage n an eleventh hour attempt to resusctate ther case by askng the Oregon Supreme Court to resolve an ssue that has already been settled, further delayng ths seven-year-old ltgaton. 8 PCFFA also beleves the legal arguments nvolvng the soveregn acts and unmstakablty doctrnes are adequately addressed by the brefs fled by the Unted States and amcus curae Natural Resources Defense Councl, and PCFFA adopts the legal arguments n those brefs. 21

33 Before Oregon adopted ts Water Code n 1909, the appropraton of water rghts n that state was governed by common law. Under Oregon common law, an approprator could acqure a water rght even f someone other than the approprator put the water to benefcal use. A vald common-law appropraton conssted of three elements: (1) the ntent to approprate water for a benefcal use; (2) a dverson of water from ts natural channel; and (3) the applcaton of water wthn a reasonable tme to a benefcal use. n re Water Rghts of Deschutes Rver and Trbutares, 286 P. 563,567 (Or. 1930). One ssue that arose n the elaboraton of ths common law framework by the courts was whether one must make an appropraton wth the ntent to use the water oneself, or whether t s suffcent to have the ntent that others wll use the water. The Oregon Supreme Court unequvocally concluded that "an appropraton may be made for the future use of another; and for the future use upon lands whch the approprator does not then own, or whch he does not contemplate ownng, and whch he never does own." d :. at 574; see als oo Nevada Dtch Co. v. Bennett, 45 P. 472, 482 (Or. 1896) ("We take t, therefore, that the bona fde ntenton whch s requred of the approprator to apply the water to some useful purpose may comprehend a use to be made by or through another person, and upon lands and possessons other than those of the approprator. Thus the approprator s enabled to complete and fnally establsh hs appropraton through the agency of the user."). The Unted States could acqure a 22

34 vald water rght under Oregon common law by appropratng the waters of the Klamath Rver wth the ntenton that ndvdual farmers would eventually put the water to benefcal use. The Unted States would also have been the owner of these water rghts. The Oregon cases show that whether the fnal ownershp of the water rght rests n the approprator or the rrgator depends on the specfc relatonshp between the partes. Thus, n tn re Waters of the Walla Walla Rver, 16 P.2d 939 (Or. 1932), the Oregon Supreme Court held that "a corporaton organzed for proft for the purpose of supplyng water to all persons whose lands le wthn reach of ts dtch, for general rental... becomes the owner of the use of the water approprated, and the rrgator becomes ts agent to apply the water suppled to a benefcal use," d. at 941; see also Nevada Dtch Co., 45 P. at 482 ("[]t would seem that he who desgned the scheme and made the dverson was the prncpal, rather than the user, who apples the result of the former's labor to hs benefcal purpose."). 9 By contrast, "a mutual corporaton organzed for the purpose of carryng the water 9 The background for ths concluson was the Water Law of 1891, 1891 Or. Laws at 52, codfed at Or. Rev. Stat (1). Ths statute made the rental, sale, or dstrbuton of water to landowners adjacent to or wthn reach of a company's dtch or canal a franchse subject to rate regulaton. See d. The Oregon Supreme Court nterpreted ths statute to mean that "[w]hen a publc corporaton comples wth all of the provsons of ths statute, t, and not the owner of the land suppled, acqures the rght to the use of the water." n re Waters of the Walla Walla Rver, 16 P.2d at

35 approprated by ts mutual stockholders... s smply the agent of the approprator to carry hs water to where he makes the benefcal use." n re Waters of the Walla Walla Rver, 16 P.2d at 941. More generally, the Court suggested that the fnal ownershp of the water rght was the subject of agreement between the approprator and the user. Nevada Dtch Co., 45 P. at 482 ("As to who, n general, would own the appropraton when completed, t s not necessary for us to say at ths tme. We are of the opnon, however, that t s the subject of contract between the person who ntates the appropraton and the user."). The Bureau's development and operaton of the Klamath Project paralleled that of a publc utlty company: t approprated the water, developed the proj ect and, as the rrgators are fond of pontng out, requred anyone recevng water that the government had developed to pay the Bureau for ts nvestment and servce as calculated by the government. The Bureau and the project came frst, then the rrgators. By contrast, a mutual company organzed by the water users follows development of the water and facltates ts delvery. Some of the ndvdual plantff rrgaton dstrcts may more nearly resemble such a mutual company but the Bureau does not. Moreover, as the court below held, and the rrgators do not contest, the contracts between the Unted States and the rrgators do not transfer the Unted States' water rghts to the rrgators. See Klamath rr_aton Dstrct, 67 Fed. C. at , 539. Therefore, under the common law applcable at the tme 24

36 the Bureau approprated Klamath Rver waters and began constructng the Klamath Project, the Unted States, as the approprator of the water, would have been the owner of the water rghts assocated wth the Project. l C. The Unted States Dd Not Take Any Alleged Property Rghts of the rrgators' Based on Patent Deeds, the Klamath Basn Compact, Pre Clams, or Post-1953 Permts Besdes ther man argument that the Klamath Project water rghts orgnally vested n them, rather than the Unted States, the rrgators make a varety of subsdary clams. None of them has any mert. _0The rrgators rely, n part, on recent decsons by the daho and Utah Supreme Courts. See rrgators' Bref at 21-22, (ctng Unted States v. Poneer rrgaton Dstrct, 157 P.3d 600 (daho 2007) and n re Untah Basn, 133 P.3d 410 (Utah 2006)). Ths relance s msplaced. Frst, as both of these decsons recognze, the ownershp of reclamaton project waters s prmarly a matter of state, not federal, law. Poneer rrgaton Dstrct, 157 P.3d at 604, 608; Untah Basn, 133 P.3d at 415. Therefore, these decsons, based on daho and Utah law, have no relevance to the controllng questons n ths case regardng the nterpretaton of Oregon's 1905 statute and the Oregon common law of appropraton. n addton, the daho Supreme Court's decson s partcularly unpersuasve. The court rejected several of ts own precedents that held that "the project owner holds the water rghts where an entty approprates water for storage or rrgaton project[s]." 157 P.3d at 608. ts only reason for dong so was that "none of these cases deals wth the BOR or the Reclamaton Act" - an explanaton drectly contradcted by the court's statement, earler on the same page, that "daho law determnes ownershp, and the Reclamaton Act does not ndependently def'me ownershp rghts." d. at 608. Gven the nconsstency of ths reasonng, the daho Supreme Court's decson should not be accorded any persuasve value even f t were relevant (whch t s not). 25

37 !! 1. The Patent Deeds Dd Not Create Property Rghts n Water and Even f They Dd, These Junor Rghts Were Not nfrnged by the Bureau's Actons The rrgators argue that the Unted States conveyed ts water rghts to the rrgators by patent deeds. rrgators' Bref at Ths argument s unavalng for at least two reasons. Frst, the rrgators do not even attempt to rebut the Court of Clams' concluson that any such rghts would be junor to those of the Unted States and therefore could not have been nfrnged by the Bureau's actons. Klamath rrgaton Dstrct, 67 Fed. C1. at 539. They have therefore waved ths ssue and should not preval for that reason alone. n addton, however, ther argument fundamentally msconstrues the nature of the relatonshp between ndvdual homesteaders and the Unted States. The rrgators are correct that the typcal patent conveyed "the tract above descrbed, together wth the rght to the use of the water from the Klamath Reclamaton Project as an appurtenance to the rrgable lands n sad tract." rrgators' Bref at 43-44; J.A They are ncorrect, however, n concludng that these patents conveyed anythng more than a contractual rght to water. The homesteaders' rghts to water derved from ther flng of a Form A "Applcaton for a Permanent Water Rght." These Form A contracts set forth the rght s and oblgatons of the Unted States and the homesteader. J.A The homesteader's benefcal use set a cap on the quantty of water to be delvered 26

38 to the homesteader. n addton, however, the contracts left t to the project manager to determne the actual amount of water to be delvered and lmted the lablty of the Unted States for water shortages, whether from drought or other causes. J.A ("On account of drought, naccuracy n dstrbuton, or other cause, there may occur at tmes a shortage n the water supply, and whle the Unted States wll use all reasonable means to guard aganst such shortages, n no event shall any lablty accrue aganst the Unted States, ts offcers, agents, or employees, for any damage, drect or ndrect, arsng therefrom."). Moreover, these contracts provde for the ongong payment oblgatons of the homesteaders and state that the contractual rght to water delvery s termnated f the land s transferred to nonagrcultural uses. J.A These condtons are nconsstent wth a vested property rght. The "rghts to the use of water" referenced n the patent deeds were these Form A contract rghts. See Klamath rrgaton Dstrct, 67 Fed. C1. at 512 (notng that to obtan a patent deed, homesteaders had to fle a Form A and an affdavt statng that they had put the water to benefcal use). At the tme the patent deeds were ssued, contract rghts were the only "rghts" to use water avalable to be transferred. Bureau regulatons orgnally contemplated ssung water rghts certfcates to ndvdual rrgators, but ths approach had been supplanted by the 27