Argued
and Submitted August 30, 2017 Pasadena, California
Appeal
from the United States District D.C. No.
3:73-cv-00125-RCJ-WGC Court for the District of Nevada Robert
Clive Jones, District Judge, Presiding
Don
Springmeyer (argued) and Christopher Mixson, Wolf Rifkin
Shapiro Schulman & Rabkin LLP, Las Vegas, Nevada; Jamie
Morin, Mentor Law Group PLLC, Seattle, Washington; for
Petitioner-Appellant National Fish and Wildlife Foundation.
Micheline Noel Nadeau Fairbank (argued) and Bryan L.
Stockton, Senior Deputy Attorneys General; Adam Paul Laxalt,
Attorney General; Office of the Attorney General, Carson
City, Nevada; for Respondent-Appellant State of Nevada.
Gordon
DePaoli (argued) and Dale E. Ferguson, Woodburn and Wedge,
Reno, Nevada, for Defendant-Appellant Walker River Irrigation
District.
Simeon
Herskovits (argued), Advocates for Community &
Environment, El Prado, New Mexico; Sean A. Rowe, Mineral
County District Attorney, Hawthorne, Nevada; for
Plaintiff-Intervenor-Plaintiff-Appellant Mineral County and
Defendant-Appellant Walker Lake Working Group.
Wes
Williams Jr., Law Offices of Wes Williams Jr. P.C., Schurz,
Nevada, for Intervenor-Plaintiff-Appellant Walker River
Paiute Tribe.
Karen
A. Peterson (argued), Justin M. Townsend, Kyle A. Winter, and
Willis M. Wagner, Allison MacKenzie Ltd., Carson City,
Nevada, for Participant-Appellee United States Board of Water
Commissioners.
Elizabeth Ann Peterson, David L. Negri, Andrew
"Guss" Guarino, Katherine J. Barton, David C.
Shilton, and William B. Lazarus, Attorneys; John C. Cruden,
Assistant Attorney General; United States Department of
Justice, Washington, D.C.; for Amicus Curiae United States of
America.
Jan
Zabriskie, Deputy Attorney General; Annadel A. Almendras and
Tracy L. Winsor, Supervising Deputy Attorneys General; Robert
W. Byrne, Senior Assistant Attorney General; Office of the
Attorney General, Sacramento, California; for Amicus Curiae
California State Water Resources Control Board.
Before: A. Wallace Tashima, Raymond C. Fisher, and Jay S.
Bybee, Circuit Judges.
SUMMARY[*]
Water
Rights
The
panel reversed the district court's judgment and remanded
in an action brought by farmers who alleged injury to their
water rights arising from state agency approval of
modifications to a water rights leasing program in the Walker
River Basin.
The
Nevada district court has maintained in rem jurisdiction over
the waters of Walker River in accordance with the Walker
River Decree of 1936, which governs the water rights in the
Walker River Basin. In 2009, Congress established the Walker
Basin Restoration Program, which allocated funding to be
administered by the National Fish and Wildlife Foundation to
acquire water and water rights for the purpose of restoring
and maintaining Walker Lake, the terminus of the Walker
River. Under the program, the Foundation leases or purchases
flow and storage rights from willing sellers, and uses those
rights to convey water downstream to feed the Lake.
The
Foundation and the Walker River Irrigation District both
submitted applications seeking modifications to their decreed
water rights. The Foundation requested changes to the place
of use where water was diverted, and changes to the purpose
of use from irrigation to wildlife purposes. The Nevada State
Engineer approved the Foundation's application, finding
that no party would suffer injury from the changes because
the Foundation agreed to limit its in-stream water use to the
historic consumptive use portion of its decreed water rights,
the amount actually used and consumed by agriculture, and to
dedicate to the non-consumptive portion to mitigate
hydrological system loss.
The
California State Water Control Board approved the separate
application of the Irrigation District to temporarily change
its decreed water storage rights, finding that the farmers
who objected to the proposed changes failed to demonstrate
any right to the stored water that would be injured. The
district court rejected the state agency rulings, refused to
grant the change applications, and remanded to the state
agencies after finding that the proposed modifications would
injure the water rights of farmers.
The
panel held that (1) it had jurisdiction over the action
because the district court's remand order was
sufficiently final, (2) state law applied, (3) it would
review the district court's decision de novo, and (4) the
district court was required to afford the same level of
deference to the state agencies as the state courts would.
The
panel held that the district court failed to defer to the
findings and conclusions of the state agencies. The panel
considered the record before the Nevada State Engineer, and
concluded that the Engineer properly found that a transfer to
the Foundation limited to the consumption portion would avoid
conflict and injury to other existing water rights. The panel
held that the findings were supported by substantial evidence
and that the Engineer applied the correct legal rule. The
panel held that to the extent the district court made its own
findings of fact, those findings were clearly erroneous. The
panel further held that the California State Water Control
Board's finding that the changes proposed by the
Irrigation District "would not injure any legal use of
the water" was consistent with the Walker River Decree
of 1936 and in accord with California law.
The
panel held that Walker Lake is part of the Walker River
Basin. Consequently, the panel held that dedicating water
from the Walker River to Walker Lake did not violate the
Decree's prohibition on delivering water outside of the
basin of the Walker River. The panel reversed the district
court's judgment, vacated the district court's
opinion and remanded for approval of the change applications.
OPINION
BYBEE,
CIRCUIT JUDGE.
Water
was plentiful when the first settlers arrived in northwestern
Nevada ten thousand years ago. Massive Lake Lahontan spread
from the Sierra Nevada to the Carson Sink, the Black Rock
Desert, and as far as California and Oregon. "The world,
" they said, "was all water."[1] Lake Lahontan has
slowly vanished over the years, and now survives only in the
form of a few desert lakes, including the subject of this
case, Walker Lake, the terminus of the Walker River.
Walker
Lake has suffered since the 1860s, when the River's
waters were first diverted for agriculture, and the
Lake's volume has plummeted precipitously in recent
years. In response, federal, state, tribal, local, and
private organizations and authorities have banded together to
save the Lake. The federal program at issue in this case is a
voluntary water rights leasing program managed by the
National Fish and Wildlife Foundation ("NFWF") to
convey water from Walker River downstream to the Lake as part
of the federal Walker Basin Restoration Program. Like duck
stamps and emissions markets, NFWF's program proposes to
employ free market forces to restore a natural balance
between the competing demands of agriculture and
conservation.
The
Nevada State Engineer and the California State Water
Resources Control Board approved change applications for
NFWF's program over the objections of farmers ("the
Farmers") who claim injury to their water rights. The
Farmers brought their complaints to the district court which,
as the Decree court, has maintained in rem jurisdiction over
the waters of Walker River since 1902 in accordance with the
Walker River Decree of 1936. The Decree court rejected the
state agency rulings, and found that the program, as
proposed, would injure the Farmers' water rights.
We
examine two questions. First, did the Decree court properly
reject the state agency rulings-that NFWF's program would
not cause any cognizable injury to the Farmer's water
rights-based on its de novo review of the Walker River
Decree? Second, does the export restriction of the Walker
River Decree prohibit delivering water to Walker Lake because
it is "outside of" the Walker River Basin? We
answer both questions in the negative, reverse the judgment
of the Decree court, and remand for approval of the change
applications.
I.
FACTS AND PROCEDURAL HISTORY
A.
The River and the Lake
The
Walker River consists of two forks that begin in California
and end in Nevada. The West Walker River springs from the
Emigrant Wilderness of Stanislaus National Forest, and flows
through Topaz Lake and north into Nevada's Smith and
Mason Valleys. The East Walker River springs from the Hoover
Wilderness, passes through Bridgeport Reservoir and into
Nevada east of the Wovoka Wilderness and Bald Mountain,
before streaming into Mason Valley. The forks join by
Yerington and flow north to Wabuska, before turning
southeasterly through the land of the Walker River Paiute
Tribe ("the Tribe"). See United States v.
Walker River Irrigation Dist., 11 F.Supp 158, 161 (D.
Nev. 1935). From there, the River flows through Weber
Reservoir and Schurz, and into Walker Lake. See id.
at 160-62.
Walker
Lake is about 13 miles long by 5 miles wide, tucked against
the east side of the Wassuk Range in Mineral County, Nevada.
It is one of the last few puddle remnants of ancient Lake
Lahontan.[2] For centuries, the Lake served an
important ecological role as fishery for the native Lahontan
Cutthroat Trout-the state fish of Nevada-and as home and
resting grounds for hundreds of species, including fish,
insects, migratory birds, and wild horses.[3] Human life at the
Lake is quite ancient as well, dating back to the spearheads
in Mastodon bones and the petroglyphs carved by the
Lake's northern shores.[4]
By the
early 1860s, miners looked to the mountains of the Walker
River Basin, seeking the same silver bonanzas unearthed in
the Comstock Lode near Lake Tahoe. Following expanded mining
operations, innovators in irrigation technology arrived to
make the desert bloom. They succeeded. The Smith and Mason
Valleys soon became the picturesque and fertile agricultural
region they are today. More than half of the valley farmland
is dedicated to alfalfa, Nevada's cash crop.
As
agriculture boomed, water flows to Walker Lake diminished.
See DRI Report, supra note 3, at 7. Between
1882 and 2007, the Lake's volume plummeted from nine
million to two million acre feet and its salinity rose from
2, 500 mg/L total dissolved solids (TDS) to 16, 000 mg/L
TDS.[5]
Just a few years later in 2013, salinity exceeded 20, 000
mg/L TDS.[6] Lahontan cutthroat trout die in such a
saline environment; they and many other Lake residents have
vanished. With the death of its aquatic life, migratory birds
have begun to abandon the Lake. Even the midges, side
swimmers, and damselflies have disappeared from the Lake on a
search for a more hospitable habitat.[7] A scum now lines the
Lake's receding shores.
B.
The Decree and River Administration
The
action before us was filed in 1924, but traces its history
even further back, to 1902, when two cattle kings realized
that the Walker River Basin wasn't big enough for the two
of them. Miller & Lux, the sprawling ranching enterprise
owned by Henry Miller, the "Cattle King of California,
" filed a quiet title action in Nevada district court
against 150 defendants, including arch-rival Rickey Land
& Cattle Co. owned by Thomas Rickey, the "Cattle
King of the West." Miller & Lux sought a declaration
of appropriative water rights to a flow of 943.29 cubic-feet
per second (cfs) of the Walker River for use on its Nevada
lands. Miller & Lux v. Rickey, 127 F. 573,
575-76 (C.C.D. Nev. 1902). Rickey in turn sued Miller in
California state court, seeking his own appropriative rights
to a flow of 2, 079 cfs for use on his California lands. For
years the parties disputed the Nevada district court's
jurisdiction over California water rights, pleading
deficiencies, and application of the now-extinct local action
doctrine.
The
Nevada district court granted an antisuit injunction in
Miller's favor, and we affirmed. Rickey Land &
Cattle Co. v. Miller & Lux, 152 F. 11, 22 (9th Cir.
1907). Because any given usufructory right to a flow has an
inherent connection to all other such rights in the same
stream, appropriative rights are conclusively established
only by reference to all other competing rights. We held that
this naturally requires exclusive jurisdiction over the
entire res of the Walker River. Id. at 14-19. The
Supreme Court agreed. Rickey Land & Cattle Co. v.
Miller & Lux, 218 U.S. 258 (1910) (Holmes, J.).
After a decade of factfinding and hearings, the district
court issued a final decree settling the rights to the River.
Pac. Livestock Co. v. Thomas Rickey, In Equity No.
731, Final Decree (D. Nev. 1919) ("the Rickey
Decree"). Under the Rickey Decree, the district court
retained ancillary jurisdiction to resolve future disputes
over rights to Walker River.
The
Walker River Irrigation District ("WRID") was
established in 1919. It built two reservoirs in 1919 and
1921: Topaz on the West Walker River, and Bridgeport on the
East Walker River.[8] In 1924 the United States filed an
action-In Equity No. C-125-to quiet title to water rights to
the Walker River as trustee for the Tribe. After another
decade of service of process, the appointment of two Special
Masters, factfinding, and hearings, the court issued a final
Decree on April 14, 1936, amended in 1940 in ways not
relevant here.
Article
I of the Decree recognizes the implied reserved rights of the
United States as trustee to the Tribe. See Winters v.
United States, 207 U.S. 564, 576-78 (1908). Article II
recognizes in their entirety the rights established in the
1919 Rickey Decree. Articles III-VII and IX provide for the
flow and storage rights of new private parties. Article VIII
recognizes WRID's storage rights in the Topaz and
Bridgeport reservoirs with respective priority dates of 1919
and 1921, and the attendant authority to distribute the water
stored there. Article X permits rightsholders to change the
manner, means, place or purpose of use, or the point of
diversion in the manner provided by law "so far as they
may do so without injury to the rights of other parties
hereto, as the same are fixed hereby." Articles XI-XII
provide that no party may relitigate a claim to water rights
in the Walker River Basin, in the Nevada District Court or
any other court, that was litigated in the original case as
of April 14, 1936. Article XIII permits rightsholders to
rotate their use of water, i.e., collectively or individually
rotate water usage for improved efficiency, so long as no
other rights are thereby injured. Article XIV establishes the
district court's continued jurisdiction "for the
purpose of changing the duty of water or for correcting or
modifying this decree; also for regulatory purposes,
including a change of the place of use of any water user,
" but stipulates that "no water shall be sold or
delivered outside of the basin of the Walker River . . .
." Article XV permits the Decree court to designate a
water master, which it did in 1937 by creating the U.S. Board
of Water Commissioners ("the Water
Commissioners")-a six-member board overseen by a Water
Master who apportions and distributes the River's waters.
Finally, Article XVI sets the irrigation season, which is
today set at March 1 to October 31. By establishing its
continued jurisdiction over the action and the river, the
district court became the "Decree court."
C.
The Walker Basin Restoration Program
In
2002, Congress began to allocate funds for desert terminal
lake conservation. In 2009, it established the Walker Basin
Restoration Program "for the primary purpose of
restoring and maintaining Walker Lake." Pub. L. No. 111-
85, §§ 207-08, 123 Stat. 2845, 2858-60 (2009); 16
U.S.C. § 3839bb-6. The Program is designed as a
voluntary water rights acquisition, trading, and leasing
scheme to be jointly administered by NFWF and WRID. Under the
program, NFWF leases or purchases flow and storage rights
from willing sellers, and uses those rights to convey water
downstream to feed the Lake. NFWF negotiated the program
details with the Tribe and WRID. WRID thereafter adopted a
regulation permitting rightsholders along the River to
participate in the program by leasing their claims for
in-stream use.
NFWF
purchased a number of claims with priority dates from 1874 to
1906, which cumulatively provide for 7.745 cfs.[9] In an effort to
avoid injury to other rightsholders, NFWF entered into
stipulations with WRID, Lyon County, the Tribe, the U.S.
Department of the Interior Bureau of Indian Affairs, and
several private rightsholders. Per these stipulations, NFWF
agreed that program water would be limited to the consumptive
use portion of its decreed claims: 4.122 cfs out of 7.745
cfs.
The
consumptive use portion of a water right reflects the amount
of water that is actually used and consumed by agriculture.
When an upstream user appropriates water for irrigation, some
portion of the water-the non-consumptive use portion-is not
consumed by the crop and returns as runoff to the river, and
for another rightsholder's use downstream. For example,
if Farmer A calls for a constant flow of 10 cfs, some
variable non-consumptive portion returns to the river, say 4
cfs; the difference (6 cfs) is Farmer A's consumptive use
portion. The 4 cfs that returns to the river is then
available for Farmer B's use. Effectively, Farmer A has
the right to call for 10 cfs, but is consuming only 6 cfs.
The consumptive and non-consumptive use portions of any given
water right will vary depending on crop type, volume of
irrigation water, and environmental factors. In this example,
if Farmer A seeks to change the claim's use by removing
the entirety of the 10 cfs from the river, Farmer B's
right is injured through deprivation of the non-consumptive 4
cfs runoff. Determining whether a change to Farmer A's
use will injure Farmer B's right thus requires
determining how the change will affect the disposition of the
non-consumptive portion of Farmer A's water right.
Here,
NFWF acquired the rights to call for 7.745 cfs. NFWF's
hydrologists calculated a historic consumptive use portion at
a flow rate of 4.122 cfs. The difference, 3.623 cfs, is the
river runoff that was historically available to downstream
rightsholders. So as not to injure these downstream claims,
NFWF stipulated that it would call for program water only in
the flow amount of 4.122 cfs over the course of the
irrigation season, that is, approximately 53 percent of its
total appropriative rights to 7.745 cfs. NFWF further
stipulated that the non-consumptive use portion of its
claims-a flow of 3.623 cfs-would be administered by the Water
Commissioners "in [their] discretion . . . to avoid
conflict with and injury to existing water rights . . . and
to mitigate hydrologic system losses."
D.
State Agency Rulings
Under
Article X of the Decree, as well as the 1953 Rules and
Regulations and the 1996 Administrative Rules and
Regulations, both of which were approved by the Decree court,
change applications-meaning any proposed changes in purpose
or place of use-must first be presented to the state agencies
for their approval.[10] Applicants with Nevada water rights
submit applications with the Nevada State Engineer, and
applicants with California water rights submit applications
to the California State Water Resources Control Board
("the California Control Board").[11]
1. The
Nevada Ruling
In
2011, NFWF applied with the Nevada State Engineer for
approval of two changes to its claims to a cumulative 7.745
cfs. First, NFWF requested changing the place of use to
"within the Walker River from the Weir Diversion
Structure through the USGS Wabuska Gauge, then through Weber
Reservoir into and including Walker Lake." The previous
rightsholders had diverted the flow from the Weir Diversion
Structure into the West Hyland Ditch, downstream from
Yerington. Second, NFWF requested changing the purpose of use
from irrigation to wildlife purposes. See Nev. Rev.
Stat. § 533.023. Effectively, NFWF sought approval not
to remove the water obtained through exercise of its water
rights, so that water acquired from prior rightsholders may
flow, as it naturally would, into Walker Lake. Appropriative
rights in Nevada may be applied for a beneficial use
in-stream, regardless of whether the water flows to areas not
owned by the rightsholder. Nev. Rev. Stat. § 533.040(2);
State Bd. of Agric. v. Morros, 104 Nev. 706, 766
(1988).
The
Water Commissioners and a group of private parties ("the
Farmers") objected to both change applications. The
objecting Farmers hold so-called New Land Stored Water
Rights. That is, they operate farms on acres lacking
associated decreed claims, and instead have contractual
arrangements with WRID. They pay assessments to WRID, which
provides them with surplus reservoir water from Topaz and
Bridgeport. In other words, these are nondecreed rights to
reservoir water, not appropriative flow or storage rights.
The
Water Commissioners and Farmers pressed two arguments. First,
they argued that the changes would impermissibly injure their
New Land Stored Water Rights. NFWF expects to call
continuously for water during the irrigation season when in
priority, whereas the farmers who previously owned the claims
would on certain days occasionally not call for water, such
as on harvesting days, which permitted the flow claims to be
redirected by the Water Master for reservoir storage. As
such, the Farmers argued that a continuous call would
impermissibly injure their rights, because it would
ultimately decrease the amount of reservoir water later
available to meet their irrigation needs. Second, they argued
that Walker Lake lies ...