U.S. v. Walker River Irrigation Dist., 890 F.3d 1161 (9th Cir. 2018) (holding that: (i) the U.S. District Court of Nevada retained continuing jurisdiction to modify a water rights decree, and (ii) the district court erred in characterizing counterclaims under the decree as a new action and then dismissing them on res judicata grounds).

            This case involves an appeal of a decree for water rights that was created in 1936.  The decree precludes claims for new water rights but allows for modification of already adjudicated rights.  Thus, the appellants here sought modification of their existing water rights that were delineated in the decree.

            The Walker River (“River”) starts in the Sierra Nevada Mountains in California and ends at Walker Lake in Nevada.  The River flows through the Walker River Paiute Reservation (“Reservation”), which was established in 1859 for the benefit of the Walker River Paiute Tribe (“Tribe”).

            In 1919, 151 parties of the Walker River Basin (“Basin”) sought adjudication of their water rights in a lawsuit.  As a result, the Nevada District Court issued the Rickey Decree, which apportioned the relative surface-water rights among the parties.  Importantly, the Rickey Decree also recognized a state law-based irrigation water right for the Reservation even though neither the United States nor the Tribe were participants in that lawsuit.

Then, in 1924, the United States sued hundreds of parties on behalf of the Tribe in the District of Nevada to establish federal water rights in the Walker River Basin for the Reservation.  The district court then entered another decree in 1936 (the “Decree”) that incorporated the parties’ newly adjudicated rights and rights from the Rickey Decree but denied water rights for the Reservation, claiming that the Tribe’s water rights were based on principles of prior appropriation.  However, the 9th Circuit Court of Appeals reversed that holding in 1939 and held that the Tribe had implicitly reserved water rights under the Winters doctrine.  On remand, the district court amended the Decree to recognize water rights for the Reservation.

The amended Decree provided that all parties to the suit and their successors-in-interest were precluded from claiming new water rights to the River.  However, paragraph XIV provided that the Nevada District Court retain jurisdiction over the Decree for the “purpose of changing the duty of water or for correcting or modifying this decree. . . .”

In 1991, the Walker River Irrigation District (“WRID”) filed a petition in the Nevada District Court invoking the court’s continuing jurisdiction over the Decree and sought to enjoin the California Water Board from issuing restrictions on WRID’s California water licenses.  The Tribe answered WRID’s petition in 1992 and filed counterclaims regarding its own water rights of the River, and the United States also made counterclaims in 1997 on behalf of the Tribe.  The district court ordered the Tribe and the United States to serve all claimants whose rights could be affected.

In 2013,  the district court  scheduled  briefings on potential motions to dismiss for lack of jurisdiction but expressly prohibited briefings arguing dismissal on res judicata grounds.  WRID filed a brief arguing that the district court lacked continuing jurisdiction to modify water rights under the Decree and that the United States and the Tribe were required to file new actions.  The court granted WRID’s motion to dismiss but disagreed that it lacked continuing jurisdiction; instead, it ironically dismissed the United States’ and the Tribe’s counterclaims on res judicata grounds, holding that they were new actions.  The United States and the Tribe appealed.

On appeal, the 9th Circuit determined the district court correctly held that it retained jurisdiction to modify water rights under the Decree but that it erred in dismissing the counterclaims on res judicata grounds.

First, the Court reasoned the word “modify” in paragraph XIV of the Decree allowed the district court to retain continuing jurisdiction over it by empowering the court to adjudicate unlitigated water rights and alter a party’s existing rights under the Decree.  The Court applied the canon of noscitur a sociis by interpreting “modify” in the context of the rest of the paragraph’s language, particularly its juxtaposition with “correcting,” which implies that the words were deliberately chosen and have distinct meanings.  The Court also relied on Arizona v. California, a case in which the Supreme Court similarly interpreted a water rights decree with nearly identical jurisdictional language.  For these reasons, the Court determined that no party may relitigate a claim to water.

Second, the Court held it was error for the district court to classify the United States’ and the Tribe’s counterclaims as new actions and dismiss them on res judicata grounds because (1) the counterclaims did not have an independent administrative existence; (2) the counterclaims were brought under the same caption as the 1924 action; and (3) the parties were never given an opportunity to be heard on the issues.

Accordingly, the Court reversed the district court’s order and remanded the case for further proceedings consistent with its opinion.

A.B. 1668, S.L. Reg. Sess. 2017-18 (CA 2018) (amending existing law to further regulate water supply and drought planning).

California Assembly Bill 1668 (“A.B. 1668”) imposes several new or expanded requirements on state water agencies and suppliers. This bill would  require the State Water Resources Control Board (“SWRCB”) and the Department of Water Resources (“DWR”) to establish long-term urban water use efficiency standards. These bodies would have to adopt efficiency regulations, outline requirements for water suppliers, specify penalties for violations, and conduct studies to make necessary recommendations to the State Legislature. The main sponsors of the bill are lead author Assemblyperson Laura Friedman, with Coauthors Ben Allen, Bob Hertzberg, Nancy Skinner, and Scott Wiener. This bill was signed into law by Governor Brown on May 31, 2018.

California experienced the worst drought on record from 2012-2016, the driest in the last 450 years. Current climate change models predict that severe droughts will become a more common occurrence. This drought forced Governor Brown to issue an Executive Order in 2014, declaring  a state of emergency and requesting a voluntary reduction in urban potable water use. In April 2015, the SWRCB implemented a mandatory 25% reduction in urban potable water use, followed by additional increased regulations by the SWRCB.

In May 2016, Governor Brown signed Executive Order B-37-16 which required the DWR and SWRCB to work together to develop a water conservation framework. This Executive Order aimed to “make water conservation a way of life” in California, with the goals of using water more wisely, eliminating water waste, strengthening local drought resilience, and improving agricultural water use efficiency and drought planning.

Prior to A.B. 1668, the Urban Water Management Act required urban water suppliers to produce an urban water management plan every five years. This plan must describe and evaluate supply sources, reasonable and practical efficient uses, reclamation, and demand management activities. The Agricultural Water Management Act similarly requires agricultural water suppliers to produce agricultural water management plans every five years. These plans describe and evaluate supply sources and various efficient water management practices.

A.B. 1668, Senate Bill 606, and Executive Order B-37-16 have paved the way for specific recommendations for  long-term improvements to water supply management, which in turn support water conservation. A.B. 1668, along with Senate Bill 606, jointly create new long-term urban water use standards. These bills would require the SWRCB and DWR to establish  new urban water use standards by June 30, 2022. Such  uses include indoor residential water use, outdoor residential water use, outdoor irrigation of landscape areas with dedicated irrigation meters in connection with Commercial, Institutional, and Industrial (CII) water use, and a volume for water loss standard. These bodies are also tasked with conducting studies to make recommendations on guidelines and methodologies for the SWRCB to adopt. These guidelines will specify how an urban retail water supplier will calculate its urban water use objective.

A.B. 1668 will establish an indoor water use standard of 55 gallons per capita daily (GPCD) until January 1, 2025. From January 1, 2025, the standard will drop to 52.5 GPCD until January 1, 2030, and 50 GPCD until January 1, 2035. The bill allows for the SWRCB and the DWR to jointly recommend to the California State Legislature different standards that would more appropriately reflect the best practices for indoor water use than the ones established in this bill, based on their studies over the years.

A.B. 1668 also requires the DWR and SWRCB to conduct studies and propose standards for outdoor residential water use. These standards are required to incorporate the principles of the model water efficient landscape ordinance, which states that landscape design, installation, maintenance and management can, and should be, water efficient. These bodies are required to supply urban retail water suppliers with data the suppliers  can use to reasonably apply  those standards. However, if urban retail water suppliers find an alternative method for calculating their outdoor water use data, they may use those alternative methods if they demonstrate that their data is equivalent or superior to that of the DWR.

For CII water use, the DWR and SWRCB must conduct studies and investigations and recommend water use standards by no later than October 1, 2021.

A.B. 1668 establishes liability and methods for notification of any regulatory violations. Liability starts at $1,000 per day for a violation of orders or regulations on the long-term standards after November 1, 2027. This liability will increase to $10,000 per day if there is a drought emergency declared by the Governor or during a critically dry year that has been preceded by two or more below average rainfall years.

A.B. 1668 also modifies Agricultural Water Management Planning (AWMP). These revisions would require AWMP suppliers to quantify measures to increase the efficiency of agricultural water use, create annual water budgets, describe their water management strategy, and include a  plan describing  drought preparedness. However, this bill also requires the DWR to provide tools to these agricultural water suppliers in developing and quantifying components necessary to a water budget.

Finally, this bill requires that the DWR propose to the Governor and Legislature drought and water shortage contingency plans for small water suppliers and rural communities by January 1, 2021, to prevent rural communities from relying on trucked or bottled water for protracted periods of time.

This bill offers many incentives for water reuse. There is a 10% bonus incentive for urban retail water suppliers who deliver potable reuse water. This means that the urban retail water providers can exceed their urban water use objective by up to 10%. This incentive can increase to 15% for urban retail water suppliers who operate existing facilities that are producing potable reuse water by January 1, 2022. 

A.B. 1668 did not come without its fair share of concerns. Earlier versions of the bill  required reductions in potable or recycled water sales. Concern stemmed from how recycled potable water use would factor into the bill’s “urban water use targets.” This term was defined as “the urban retail water supplier’s targeted future daily per capita use.” The current bill has changed its language to reflect “an estimate of aggregate efficient water use for the previous year.” The bill now focuses on efficient water use, not water conservation. This allows the use of recycled and water reuse to continue, without the original required reductions.

Most of the opposition to this bill stems from the use of recycled water. The 10% bonus for those who use potable reuse or recycled water has been deemed unfair by opponents to this bill. Potable reuse projects are expensive. Therefore, communities who cannot afford to fund these projects are barred from accessing  this bonus. Those communities who can afford potable recycled water projects can use more water than is reasonable.

Supporters of the bill recognize that water powers California’s economy. The water supply is under pressure from climate change and an increasing population. Based on volumetric and financial needs, Californians need to use water as efficiently as possible. This new framework creates fair but flexible efficiency standards, recognizing that each community has different and unique needs. This bill does not create rigid standards for all Californians, but adjusts to each community, allowing them to use the water they need efficiently.

This bill also updates and modernizes the reporting process, creating an easier method of submitting plans and reports. In turn, this enhances compliance with the regulations in this bill, improves accountability, and ultimately the enforcement of the California Water Code.

Ultimately, A.B. 1668 looks to advance the goals set forth by Executive Order B-37-16, making water conservation and efficient water use “a way of life” in California. A.B. 1668 will allow the state  to set higher standards for  efficient water use, helping to ensure a future for  California’s economy, communities, and environment.