Aransas Project v. Shaw, 756 F.3d 801 (5th Cir. 2014) (per curiam) (holding: (i) The Aransas Project had standing to bring action under the Endangered Species Act (“ESA”); (ii) the district court did not abuse its discretion by declining to abstain from exercising federal jurisdiction; (iii) the district court’s finding that twenty-three endangered whooping cranes died was not clearly erroneous; (iv) the district court erred in excluding the admission of defendants’ survey after trial, but the error was harmless because the district court concluded the survey lacked importance; (v) the district court’s application of the incorrect test for causation was clear error; and (vi) the district court failed to find that a future harm was “certainly impending,” and thus the grant of an injunction was an abuse of discretion).

The Aransas National Wildlife Refuge (“Refuge”) sits adjacent to San Antonio Bay in Texas. The San Antonio and Guadalupe Rivers provide freshwater inflows to this area, also known as the Guadalupe Estuary. The Refuge is the winter home of the Aransas-Wood Buffalo (“AWB”) flock— a flock consisting of approximately 300 birds. The freshwater inflows in the Guadalupe Estuary provide critical habitat for the flock. Texas owns the surface waters of the state and the Texas Commission on Environmental Quality (“TCEQ”) administers the capture and use of those waters through its permitting and regulatory powers.

During the winter of 2008-2009, the Refuge’s biologist recovered four crane carcasses and determined another nineteen missing cranes had died, a claimed loss of twenty-three cranes. Over the previous seventy years, authorities recorded the deaths of only twenty cranes. The whooping crane is an endangered species under the ESA. After the media publicized the crane deaths, a group of concerned citizens formed The Aransas Project (“TAP”), a non-profit dedicated to protecting the whooping cranes’ habitat. TAP sued the TCEQ, pursuant to the ESA’s citizen suit provision, alleging that TCEQ’s actions and omissions in managing the waters of the Guadalupe and San Antonio River Systems had harmed the flock and ultimately caused the death of twenty-three cranes. TAP sought declaratory and injunctive relief that would ensure sufficient water resources for the AWB flock.

TAP alleged a lengthy chain of events leading to liability: (i) TCEQ’s permitting and regulatory practices significantly reduced the amount of freshwater in the estuary; (ii) the reduction in available freshwater increased salinity in the estuary which decreased available food supplies; (iii) the reduction in available food led to emaciation and predation among the cranes; (iv) these conditions combined to cause the deaths of twenty-three cranes in the winter of 2008-2009; and (v) these deaths constituted illegal “takings” under the ESA.

Before trial, the U.S. District Court for the Southern District of Texas (“district court”) granted motions to intervene for the Guadalupe-Blanco River Authority, the Texas Chemical Council, and the San Antonio River Authority (“intervenor defendants”). The district court conducted an eight-day bench trial, took testimony from nearly thirty witnesses, and issued a 124-page opinion concluding that TCEQ’s permitting effected a taking under the ESA. The district court enjoined TCEQ from issuing any new permits, unless required for the public’s continued health and safety, until the agency applied to the U.S. Fish and Wildlife Service (“FWS”) for an Incidental Take Permit (“ITP”). ITPs allow an exception to the ESA’s prohibition on both purposeful and incidental harm and harassment of endangered species. ITPs require the development of a “Habitat Conservation Plan” to “minimize and mitigate” the impacts of incidental takings. TCEQ and the intervenor defendants appealed.

The U.S. Court of Appeals for the Fifth Circuit (“Court”) first addressed whether TAP had standing. On appeal, WDEQ challenged TAP’s standing for the first time. The Court spent little time addressing the issue, concluding that TAP’s allegations satisfied federal requirements for standing; TAP alleged an injury (crane deaths), a theory of causation (regulatory actions resulted in reduced water flows), and future deaths attributable to an ESA violation (continued crane deaths if not corrected).

The Court then discussed whether the district court erred by not abstaining to exercise federal jurisdiction. While the Court reviews an abstention decision under an abuse of discretion standard, it reviews de novo whether the elements of an abstention doctrine were satisfied. Courts may decline to exercise jurisdiction over a particular case, or abstain, if doing so would be prejudicial to the public interest—including cases involving basic issues of state policy that the federal courts should avoid. The Court analyzed five factors pursuant to the Burford abstention doctrine: (1) whether the cause of action arises under federal law; (2) whether the case requires inquiry into unsettled issues of state law or into local facts; (3) the importance of the state interest involved; (4) the state’s need for a coherent policy in that area; and (5) the presence of a special state forum for judicial review.

The Court found that factors one, two, and five weighed against abstention The ESA is a federal law, no “skein of state law” had to be untangled before resolving the federal case, and neither the TCEQ nor the Texas state courts had authority to provide a remedy. With respect to remedy, the Court found: (i) the Texas Water Code expressly prohibited granting water rights for environmental reasons; (ii) TCEQ was likely prohibited from providing water for cranes during an emergency (e.g., a drought); and (iii) Texas law provided no cause of action under which TAP could sue TCEQ in the state courts. The Court considered factor three – the importance of the state interest involved – a tossup. Although Texas had a strong interest in managing its natural resources, especially water, the federal interest in endangered species was equally strong. The only factor the Court found to weigh in favor of abstention was number four, the state’s need for a coherent policy in the management of its finite natural resources. Here, TCEQ administered the Texas Water Code pursuant to a regulatory scheme that balances water rights and stakeholder interests. The Court concluded that “[f]ederal intervention could easily upset that delicate balancing.” After balancing all five factors, the Court concluded the federal courts could avoid entanglement in Texas state law by “treading carefully.” Accordingly, the district court did not abuse its discretion in declining to abstain.

The Court then turned its attention to the district courts’ findings of fact and its imposition of liability upon the state defendants. Chief among its findings of facts, the district court, relying mainly on the Refuge biologists’ testimony, concluded that twenty-three whooping cranes died during the winter of 2008-2009 in the Refuge. The biologist made this determination by conducting fly-overs of the Refuge. He noticed nineteen known birds missing from their usual, territorial positions. Additionally, he found four crane carcasses. Because postmortem examinations of two of these birds indicated emaciation as a cause of death, the biologist concluded that twenty-three cranes died during the winter of 2008-2009. He opined that lower water levels adversely impacted the flock’s habitat. Despite the district court’s finding that the biologist’s opinions were reliable, the Court noted many problems with the methods and data used to conclude that twenty-three cranes had died. Despite this, the Court concluded that the district court’s finding that twenty-three cranes had died was not clearly erroneous.

The ultimate issue confronting the Court was whether TCEQ’s issuance of permits to take water from the Guadalupe and San Antonio Rivers was the proximate cause of the twenty-three whooping crane deaths during the winter of 2008-2009. In order to affix liability for a taking under the ESA, the effect of the defendant’s actions must be foreseeable. The ESA does not impose strict liability. The Court noted that causation requires more than mere fortuity; it cannot rest upon “remote actors in a vast and complex ecosystem.” The Court emphasized that the requirement of foreseeability acts as a limitation upon liability where, even if the links in the chain of causation can be connected, at some point liability becomes too remote.

The Court cited several cases where a sufficiently close connection existed between certain regulatory acts and violations of the ESA to satisfy the foreseeability test. In one case, the U.S. Forest Service permitted the removal of an excessive number of trees that were the home for red cockaded woodpeckers. In another case, right whales were “taken” because a state agency authorized fisherman to use gillnets and lobster traps in certain areas, and these devices were known to cause harm to the whales. In each of these cases, the government agency was held liable for a “direct” taking under the ESA.

In this case, the Court took issue with the district court’s finding that “‘[p]roximate causation exists where a defendant government agency authorized the activity that caused the take.’” The Court found the district court’s opinion lacking in findings of fact sufficient to show causation and prove liability under the ESA, and chastised the district court for finding causation “without even mentioning concepts of remoteness, attenuation, foreseeability, or the natural and probable consequences of actions.” Moreover, the Court found the district court expressly disregarded other circumstances that clearly weighed against a finding of causation. Chief among these other circumstances was a drought during the winter of 2008-2009 that experts considered an “outlier” among Texas’ cyclical drought conditions. Other variables included constantly changing weather, tides, and temperature, as well as varying degrees of water use by permittees. Ultimately, the Court concluded that a “fortuitous confluence” of “multiple, natural, independent, unpredictable and interrelated forces” caused the deaths of the whooping cranes in the Refuge. Calling this set of circumstances “the essence of unforeseeability,” the Court found causation lacking as a matter of law and vacated the district court’s finding of liability against the state defendants.

Last, the Court addressed the district court’s grant of an injunction. The Court held the district court erred in three ways in granting injunctive relief. First, the district court improperly based injunctive relief upon an improper proximate cause analysis. Hence, the Court’s vacation of the state defendants’ liability “commanded” the quashing of the injunction. Further, assuming arguendo that TCEQ’s actions did proximately cause the crane deaths, the district court erred in applying a “relaxed” standard for granting injunctions under the ESA and by finding a real and immediate threat of future injury to the cranes.

The district court had determined that a “relaxed” standard existed for granting injunctions under the ESA. The Court noted that, while this is true in that the balance of equities favor protecting wildlife under the ESA, an injunction still requires a showing of “certainly impending” future harm. Additionally, the Court found that even if the district court had applied the correct standard, it did not make sufficient factual findings to support that conclusion. The Court noted that, after 2008-2009, substantial evidence existed to the contrary, including: no evidence of unusual deaths, no evidence of dangerous salinity levels, no evidence of deficient blue crabs or wolfberries, no evidence of lack of a drinking water shortage in the Refuge, and no evidence of emaciated birds or extreme behavioral patterns. The Court concluded that “[i]njunctive relief for the indefinite future cannot be predicated on the unique events of one year without proof of their likely, imminent replication.”

Accordingly, the Court reversed the district court’s finding that TCEQ caused the whooping crane deaths and denied TAP’s request for injunctive relief.

 

The title picture features the Aransas National Wildlife Refuge and is licensed to Larry D. Moore under a Creative Commons Attribution-Sharealike 3.0 License. The owner of the image does not endorse this blog.


Joe McClaren Ranch, L.L.C. v. Neb. Pub. Power Dist. (In re 2007 Admin. of Waters of the Niobrara River), 851 N.W.2d 640 (Neb. 2014) (holding that: (i) the legislative history of the statutes governing the procedures by which the Nebraska Department of Natural Resources cancels water rights was not relevant to the issues of common law abandonment or statutory forfeiture, but its improper admission by the Department was harmless; (ii) NPPD’s failure to call for administration of the Niobrara River prior to 2007 was not evidence of an intent to abandon its water rights; (iii) forfeiture of water appropriations through nonuse is governed by the period of limitations relating to real estate, and the Department’s factual findings demonstrated that NPPD did not statutorily forfeit its appropriations; (iv) the Department’s policy of allowing senior appropriators to place a call for the full amount of its water despite the existence of subordination agreements is not arbitrary, capricious, or unreasonable; and (v) the Department’s determination that it conducted a futile call analysis where appropriate was not arbitrary, capricious, or unreasonable).

Joe McClaren Ranch (“McClaren”) applied for an appropriation to divert water from the Niobrara River in 2006. Weinreis Brothers Partnership (“Weinreis”) held five water rights with priority dates between 1969 and 2006. The Nebraska Public Power District (“NPPD”) held three water appropriations for hydropower generation at its Spencer plant with priority dates of 1896, 1923, and 1942. The NPPD’s three appropriations for the Spencer plant amounted to a total water discharge of 2,035 cubic feet per second (“cfs”). The Spencer plant is located approximately 145 miles downstream from the McClaren and Weinreis properties.

In early 2007, the water resources manager at NPPD placed a call for administration on the Niobrara because he learned that the Nebraska Department of Natural Resources (“Department”) was not proactively administering the portion of the Niobrara near Spencer. On April 30, 2007, the Department took a measurement roughly ten miles upstream from the Spencer plant showing a discharge of only 1,993.73 cfs.

On May 1, 2007, the Department issued closing notices to approximately 400 junior appropriators, including McClaren and Jack Bond, Weinreis’s successor in interest, directing them to cease water diversions from the Niobrara. The junior appropriators filed a request for a hearing with the Department. After the hearing, the Department found that the administration of the Niobrara was proper.

The junior appropriators appealed to the Nebraska Supreme Court (“Court”). The Court reversed and remanded, finding that the Department had improperly excluded the issues of abandonment and statutory forfeiture from nonuse. After the second hearing on remand, the Department again found that the administration of the Niobrara was proper, and NPPD had not abandoned or statutorily forfeited its appropriations. The junior appropriators appealed.

On appeal, the Court first considered whether the Department erred by relying on evidence from the hearing officer, who took judicial notice of the legislative history L.B. 302, an amendment to Neb. Rev. Stat. § 46-229. First, the Court noted that the Administrative Procedure Act permits agencies to take judicial notice of legislative history. For a court or agency to inquire into a statute’s legislative history, the statute must be open to construction. The Court had previously held that L.B. 302 is unambiguous; that by its plain language, it addresses only the procedure by which the Department must abide in order to terminate an owner’s appropriation right and does not address the common law theories of abandonment or nonuse. Therefore, the legislative history was irrelevant to the issues being considered on remand. However, because no relevant evidence was excluded, and the Department made findings of fact supported by other relevant evidence, the Court concluded that the decision to admit the legislative history was harmless.

Next, the Court considered whether the Department erred in finding that the junior appropriators failed to prove NPPD abandoned its appropriations in whole or in part. The junior appropriators argued that NPPD failed to call for administration of the river, or enter into more subordination agreements before 2007, demonstrating intent to abandon its appropriations. The Court found no Nebraska case law establishing that a failure to call for administration demonstrates intent to abandon. Instead, the Court found persuasive a Colorado Supreme Court case, which held that there is no requirement that a senior appropriator must place a call for administration of the river in order to effectuate its water rights. The Court explained that the emphasis is on whether there is evidence demonstrating intent to abandon a right, rather than on whether there is evidence showing that the user acted to preserve its rights. In finding that NPPD did not intend to abandon its appropriations, the Department noted that the Spencer plant had been in operation since 1927; NPPD had spent a significant amount of funds to staff, operate, and maintain the facility; and the water resources manager at NPPD was under the assumption that the Niobrara was proactively administered by the Department.

The Court then considered whether the Department erred in finding the junior appropriators failed to prove NPPD statutorily forfeited its appropriations in whole or in part. The Department applied the cancellation proceedings provided for in Neb. Rev. Stat. §§ 46-229 through 46.229.05. The Court stated that the issue on appeal was common law nonuse, which is governed by Neb. Rev. Stat. § 25-202, the period of statutory limitations relating to real estate. Under § 25-202, a lack of beneficial use for over ten years may result in the loss of an appropriation. The Court concluded that though the Department relied on the incorrect statute, it made factual findings that did not support a finding of nonuse. For example, in 2006 NPPD used its full 2,035 cfs. Based on the factual findings, the Court concluded that there was no ten-year nonuse period and NPPD did not statutorily forfeit its appropriations.

The Court next considered whether the Department erred in issuing closing notices without taking into account the subordination agreements and express limitations in NPPD’s appropriations. A subordination agreement allows junior appropriators to pay a fee to the senior appropriator in exchange for the right to continue to divert water out of priority. The junior appropriators argued that the Department’s policy of allowing a senior appropriator to place a call for its full amount of water, while having subordination agreements with junior appropriators, allows senior appropriators to collect both money and water. However, a field office supervisor for the Department testified that NPPD’s subordination agreements were taken into account, and the Department’s policy was to not send closing notices to junior appropriators who have a subordination agreement. Therefore, “a senior appropriator is not allowed to simultaneously enforce its right against, and collect compensation from, the same junior appropriator.” Accordingly, the Court held that the Department’s policy was not arbitrary, capricious, or unreasonable, and the Department was entitled to deference for its technical expertise in this area.

Finally, the Court considered whether the Department erred in failing to conduct a futile call analysis. The junior appropriators asserted that it is the duty of the administrative officers, prior to issuing closing notices, to determine whether or not a usable amount of water can be delivered. In this case, the evidence showed that the Department did not conduct a futile call analysis because the Niobrara is a “wet river.” The Court held that the Department is entitled to deference in this area, and the Department’s determination that it conducted futile call analyses where appropriate was supported by competent and relevant evidence.

Accordingly, the Court upheld the Department’s determination that administration of the Niobrara was proper, and that NPPD had not abandoned or statutorily forfeited its appropriations in whole or in part.

Connolly, J., Dissenting.

Justice Connolly argued that the Niobrara has too many appropriations, and the Department’s method of administration is fundamentally flawed. Connolly noted that, based on recorded historical flows, the Department would be able to shut down junior appropriators for about 97 percent of the time from July to January, and almost 87 percent of the time from February to June. He argued that to permit NPPD to shut down these junior appropriators in 2007, after not having done so for sixty years, would be unjust and contrary to the nature of its permits.

Connolly also argued that NPPD had forfeited the right to demand 550 cfs under its 1942 appropriation. NPPD’s 1942 appropriation had a limitation in it allowing for water to be denied during times of scarcity. Connolly noted that since 1942 the Department had approved over 400 new surface appropriations. NPPD failed to object to the majority of the applications, despite its knowledge that the river was over appropriated and of the conditional clause contained in its permit. Accordingly, Connolly argued that NPPD’s acquiescence to the Department’s activities should have constituted a forfeiture of its right to demand the 550 cfs under the 1942 appropriation.

 

The title picture features the Niobrara River Norden Chute in Nebraska. The owner of this image released it to the public domain. 


Telford Lands LLC v. Cain, 303 P.3d 1237 (Idaho 2013) (holding that (i) the servient landowners were not denied due process, (ii) there was reasonable necessity for condemnation of an easement, (iii) the beneficial use of water allowed irrigators to exercise eminent domain, (iv) the required good faith effort to purchase property must only be made prior to filing a lawsuit, and (v) the district court erred in dismissing the servient landowners’ counterclaim for trespass).

This case involved three ranchers: Telford Lands LLC (“Telford Lands”), Mitchell D. Sorensen, and PU Ranch (collectively, “the Ranchers”). In 2009, the Ranchers collectively constructed pipelines to carry water from their respective wells to a ditch in an unused portion of the Moore Canal, which conveyed the water to the Ranchers’ farmlands. One of the pipelines, disputed here, crossed a one-hundred-foot-wide strip of land owned by Donald and Carolyn Cain (“the Cains”). The Ranchers contended that the Cains gave them oral permission to run the pipeline across their property, but the Cains protested the pipeline’s location in August of 2009. After unsuccessful attempts to negotiate a purchase of an easement, in May of 2010 the Cains dug up the pipeline, punctured a hole in it to disable its flow, and sent a letter to the Ranchers informing them of their actions. Thereafter, the Ranchers filed an action against the Cains seeking damages, condemnation of an easement across the Cains’ property for the pipeline, and specific performance pursuant to the Cains’ oral agreement. The Cains subsequently filed an answer and a counterclaim for trespass.

The Ranchers filed a motion for partial summary judgment regarding the condemnation claim, which the Cains matched with their own motion for summary judgment seeking the dismissal of all of the Ranchers’ claims. The Seventh Judicial District of Butte County (“district court”) granted the Ranchers’ motion for summary judgment regarding the condemnation claim, and dismissed the Ranchers’ remaining claims. The Cains appealed.

On appeal, the Supreme Court of Idaho (the “Court”) first reviewed whether the Cains were denied due process of law. The Cains argued that they were denied due process of law when the Ranchers constructed a pipeline across their property before paying just compensation. The Cains further argued that because the Ranchers were in possession of the Cains’ land before initiating a condemnation proceeding, the district court should have granted the Cains’ trespass claim. The Court, however, concluded that because the Cains did not raise the issue of due process in district court but waited until after the district court entered a judgment for condemnation, the Cains thereby waived their right to raise the issue.

Second, the Court reviewed whether the district court erred in holding that there was a reasonable necessity for condemning an easement. The Cains argued that Telford Lands and PU Ranch voluntarily gave up their respective transport agreements and should not be able to create the necessity for condemning an easement by giving up the alternative means for transporting their water; that Mr. Sorensen should not be able to condemn an easement where another method of transporting his water was available; and finally, that the Ranchers’ transport agreements for other water rights indicated that the Moore Canal was a reasonable and available alternative to the disputed pipeline for transporting the water. The Court held that the Moore Canal was not reasonably adequate or sufficient for the Ranchers’ conveyance needs, and that the Idaho Constitution, article 1, section 14, therefore authorized the taking of private land for public use. In so concluding, the Court validated the district court’s determination that the Ranchers were failing to receive their full proportionate share and that the disputed pipeline would eliminate loss. The Court noted that the Ranchers’ use of the Moore Canal would result in a conveyance loss ranging from 35-40 percent and that the disputed pipeline did not have a material effect on the Cains’ use of their property. Therefore, the Court concluded that the Ranchers’ utilization of reasonable measures to reduce conveyance loss was in support of the State of Idaho’s strong policy to secure the maximum use and benefit of its water resources. The Cains argued that the district court ignored conditions placed on Telford Lands’s and PU Ranch’s water rights requiring them to transport water via the Moore Canal and, according to the Cains, displaying an already-existing means to transport water from the Ranchers’ wells. The Court upheld the district court’s finding that the condition’s language was merely for descriptive purposes and had no binding effect on the Ranchers’ condemnation claim.

Third, the Court reviewed whether the Ranchers were entitled to exercise the right of eminent domain while their lands were under irrigation. The Court found no language, in the case the Cains cited or in any constitutional provisions or statutes, supporting the Cains’ desired restrictions. Pursuant to Idaho law, the Court limited the issue to whether the Ranchers would put the water to a beneficial use after it traveled through the disputed pipeline. Finding that the Ranchers would put the water to beneficial use, the Court rejected the Cains’ argument and held that the Ranchers were entitled to exercise eminent domain.

Fourth, the Court reviewed whether the Ranchers’ complaint was facially deficient. The Cains argued that the Ranchers’ complaint was deficient because it did not contain a legal description of the property and it did not adequately allege a good faith attempt to purchase the property. As to the first argument of deficiency, the Court noted that the Cains did not raise this issue until after the district court’s judgment and therefore declined to address it. As to the second argument of deficiency, the Cains argued that good faith negotiations to purchase must have been made prior to the pipeline’s installation, and that the Ranchers’ construction of the pipeline before obtaining a determination and executing a payment of just compensation made their complaint deficient. The Court, however, pointed to the Idaho Code section 7-707(7), which states that good faith negotiations must take place only prior to the filing of the lawsuit. After the Cains were not able to present authority suggesting the contrary, the Court rejected the Cains’ argument and determined the Ranchers’ complaint was not facially deficient.

Fifth, the Court reviewed whether the district court erred in failing to dismiss Telford Lands as a party. The Cains argued that Telford Lands lacked standing to pursue a claim for condemning a right-of-way across their property. The Court found that the district court properly dismissed the Cains’ motion to dismiss Telford Lands as a party to the condemnation claim. In so concluding, the Court upheld the district court’s finding that Telford Lands shared in costs with the other Ranchers, Telford Lands’s well produced the most water and was necessary to produce a sufficient flow, and Telford Lands had a two-year lease to use water from the Old Moss Well, which flowed through the disputed pipeline. On appeal, the Cains contended that temporary leaseholders do not have the private power of eminent domain. The Court cited Idaho Constitution article 1, section 14, in finding that an easement for temporary use can be condemned. However, the Court noted that easements for temporary use must be limited to the time that the party can use the land burdened by the condemned easement. Because the district court’s judgment did not limit the right of Telford Lands to use the disputed pipeline only for the duration of its two-year water lease, the Court remanded this issue.

Lastly, the Court reviewed whether the district court erred in dismissing the Cains’ counterclaim for trespass. The Court noted that there was conflicting evidence as to whether the Ranchers installed the disputed pipe with the Cains’ permission. There was also nothing in the record to suggest that the Cains intended to abandon the claim, and the Ranchers never addressed the district court’s dismissal of the Cains’ counterclaim. The Court therefore vacated the district court’s dismissal of the Cains’ counterclaim and remanded the case for further proceedings regarding this issue.

Accordingly, the Court vacated and remanded the portions of the district court’s judgment that dismissed the Cains’ counterclaim and provided Telford Lands with a perpetual easement, but affirmed the remainder of the judgment granting the condemnation of an easement across the Cains’ property.

The title image is a file created by an employee of the United States Department of Agriculture as part of an official duty and as such is part of the public domain. The USDA does not endorse this blog. 

 


Noble v. Dep’t of Fish & Wildlife, 326 P.3d 589 (Or. 2014) (holding that the Department of Fish and Wildlife implausibly interpreted the fish passage rule, which requires that fishways provide fish passage at all flows within the design streamflow range, and erroneously decided that it was unnecessary to calculate the design streamflow range for channel-spanning fishways).

Property owners (“Petitioners”) expended significant resources improving fish habitat on their portion of a stream feeding into Beaver Creek, which historically supported cutthroat trout and other migratory fish. Petitioners challenged the Oregon Department of Fish and Wildlife’s (“ODFW”) approval of “channel-spanning fishways” associated with two dams downstream from their property. The dams at issue were constructed long ago, without any water rights or permits, and obstructed the stream, creating small ponds. The dam owners later obtained permits through the state Water Resources Department (“WRD”) allowing them to store up to one acre-foot of water during certain months of the year. The permits required that: (i) the owners pass all live flow outside of the defined storage season; (ii) no water be appropriated for any out of reservoir uses, or for the maintenance of water levels or fresh water conditions; and (iii) the owners install outlet pipes to evacuate water to satisfy prior downstream water rights. Additionally, the dam owners were required to provide adequate fish passage as determined to be necessary by ODFW.

The dam owners, having committed to providing year-round fish passage, installed channel-spanning fishways, which were subsequently approved by ODFW. Channel-spanning fishways provide fish passage only when water is moving over the top of the dam. Petitioners sought reconsideration of ODFW’s fishway approvals.

Or. Rev. Stat. § 509.585(2) prohibits the construction or maintenance of any artificial obstruction across “waters of [the] state that are inhabited, or historically inhabited, by native migratory fish without providing passage” for those fish. Or. Admin. R. 635-412-0035(2)(a) requires that such fishways provide fish passage at all flows within the design streamflow range; meaning the entire range of flows within the obstructed stream, except the highest and lowest five percent. However, ODFW did not calculate the stream’s “design flow range,” or determine when fish passage was required, prior to approving the fishways. ODFW determined that it was unnecessary to calculate a design flow range because the fishways used the entire flow of the stream and provided fish passage whenever water flowed past the dam. The Petitioners argued that this approach did not account for water leaving the ponds as a result of evaporation, seepage, or the evacuation of water through the outlet pipes. ODFW argued that these waters were not in the stream and, thus, would not be considered “streamflow.”

After a hearing, the administrative law judge determined that ODFW had complied with all applicable statutes and rules in approving the fishways. ODFW affirmed the administrative law judge’s conclusion and issued a final order announcing that “fish passage is required ‘year-round’ only where there is adequate flow to allow migration through the fishways.” Further, the agency concluded that “streamflow” meant only that water which passed over the dams and did not include water lost to evaporation, seepage, or evacuation.

Upon judicial review, the Court of Appeals determined that ODFW plausibly interpreted the terms “year-round fish passage” and “streamflow,” rejected the Petitioners’ argument that ODFW’s interpretations were inconsistent with Or. Rev. Stat. § 509.585(2), and affirmed ODFW’s final order. The Supreme Court of Oregon (“Court”) accepted the Petitioners’ petition for review to consider ODFW’s interpretation and application of its own rules.

To resolve the drafters’ intent and interpret an administrative rule, the Court considers the text of the rule and the rule’s regulatory and statutory context. According significant deference to the agency’s interpretation, the Court is required to affirm the agency’s interpretations so long as it constitutes a “plausible” reading of the rule.

The Court began its analysis by interpreting the meaning of Or. Admin. R. 635-412-0035(2)(a), which requires that fishways “provide fish passage at all flows within the design streamflow range.” The Court first addressed ODFW’s final order assertion that the definition of “design streamflow range” limits the agency’s calculation of streamflows to the period that native migratory fish require fish passage. Because the dam operators in this case chose to provide year-round fish passage, the Court concluded that a determination as to when fish passage was required was irrelevant.

The Court then addressed Petitioners’ argument that dam owners must provide “year-round fish passage” at all flows in the stream—not the fishway—falling within the design streamflow range. ODFW construed the phrase “year-round fish passage” to mean only that the channel-spanning fishway structure must always be “on,” making fish passage available whenever there was enough water flowing over the dam, within the fishway, to allow for fish migration. ODFW asserted that channel-spanning fishways provide fish passage “as a matter of law” whenever sufficient streamflow exists for fish to migrate. However, as Or. Admin. R. 635-412-0035(2)(a) was adopted with traditional diversion-style fishways in mind, as opposed to channel-spanning fishways, the Court determined that the phrase “year-round fish passage” must have a meaning that was plausible within that context. Traditional fishways were not always “on,” but operated as a result of purposeful diversion of water into the fishway. Thus, the Court determined that, when ODFW adopted the rule, it intended “year-round fish passage” to mean fish passage throughout the year, whenever the flow “within the stream” falls within the “design streamflow range.”

Having resolved the proper meaning of “year-round fish passage,” the Court turned its attention to ODFW’s interpretation of the term “streamflow.” ODFW had not promulgated a definition of the term “streamflow,” but had defined the terms “stream” and “channel,” both of which contemplate waters moving within a defined bed. ODFW argued that, in the case of channel-spanning fishways, the “stream” is the water that flows over the dam. This does not include water stored behind the dam that later evaporates, or water that is released downstream through outlet pipes, because these waters do not move within a defined bed. In evaluating the plausibility of ODFW’s interpretation, the Court looked to the rule’s context and contemplated the mandate, set forth in Or. Admin. R. 635-412-0020(1), which states that “[n]o person shall construct or maintain any artificial obstruction across any waters of this state that are inhabited, or were historically inhabited, by native migratory fish without providing passage for native migratory fish.” The Court also considered Or. Admin. R. 635-412-0005(18), which provides that the “fish passage” required by Or. Admin. R. 635-412-0020(1) is passage that meets the biological/life cycle needs of historically present native migratory fish.

The Court determined that, under ODFW’s interpretation, where “streamflows” would only include water flowing over the dam, the necessity for providing fish passage would be determined only by the height of the dam and configuration of outlet pipes, and not by the biological needs of the fish. Applying ODFW’s definition, a high dam would meet the requirements of the fish passage rule if all outflow passed through the outlet pipes and no water passed over the dam at all. The Court found that ODFW’s interpretation of “streamflows” conflicted with the requirement that operators provide fish passage that meets the biological and life cycle needs of fish and, therefore, ODFW’s interpretation was implausible. Recognizing that ODFW might argue that its approach to “design streamflow range” requirements differed for large dams with fish ladders, the Court noted that ODFW was free to engage in proper rulemaking procedures to issue different rules for various categories of dams and fishways. However, until it did so, the agency was bound by the promulgated rules.

The Court next considered ODFW’s argument that its interpretation was necessitated by conflicting statutory obligations. ODFW argued that its interpretation struck a balance between its obligation under the fish passage statute, and its obligation to protect the right of property owners to maintain small ponds on their property, even where dams, which might interfere with fish passage, created those ponds. The Court noted that the statutes referred to by ODFW created such rights only so long as they did not injure other water rights or existing fish resources. Further, the Court determined that, as the right of property owners to maintain small ponds did not conflict with the requirement that such artificial obstructions provide fish passage, these statutes did not create conflicting obligations on the part of ODFW.

Lastly, the Court considered ODFW’s contention that, because the authority to control the existence and design of dams was delegated to WRD, it must accept the existence and configuration of any WRD-permitted dam. ODFW argued that it had no authority to regulate when water flows through the dam’s outlet pipes, and therefore it must consider that water unavailable for fish passage and base its fish passage requirements on only the “streamflow” that passes over the dam. The Court, unpersuaded by this argument, pointed out that ODFW really has “no control over any aspect of streamflow,” and determined that this did not relieve the agency of its duty to require dam owners to provide fish passage within a “design streamflow range.”

Accordingly, the Court concluded that ODFW implausibly interpreted Or. Admin. R. 635-412-0035(2)(a). And because ODFW relied upon this interpretation as the basis for its determination not to calculate the design streamflow range, the Court held that the agency’s determination was erroneous. The Court reversed the decision of the Court of Appeals and the Final Order on Reconsideration of the ODFW, and remanded the case back to ODFW to determine the design streamflow range and determine whether the fishways in question provide passage at all flows within that range during the period of time that ODFW determines fish passage is required.

 

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California ex rel. Imperial Cnty. Air Pollution Control Dist. v. U.S. Dep’t of Interior, No. 12-55856, 2014 WL 3766720 (9th Cir. May 19, 2014) (holding the plaintiffs had standing to sue and that the Secretary of the Interior did not violate the National Environmental Policy Act or the Clean Air Act when she filed an environmental impact statement on the effects of water transfer agreements on the Salton Sea in Southern California).

Plaintiffs Imperial County and the Imperial County Air Pollution Control District (“Imperial”) sued the Secretary of the Interior (“Secretary”), claiming that the environmental impact statement (“EIS”) filed by the Secretary did not comply with the National Environmental Policy Act (“NEPA”) or the Clean Air Act (“CAA”). Several California water districts, parties to the proposed transfer agreement, intervened as defendants. The United States District Court for the Southern District of California (“district court”) granted summary judgment to the defendants, finding that Imperial did not have standing to sue, and in the alternative, that the Secretary did not violate NEPA. Imperial appealed.

As a result of conservation efforts in California, water districts in the state agreed to transfer some Colorado River water from the Imperial Valley to areas in Southern California. In 2001, the Secretary prepared an EIS, which, in part, analyzed the potential consequences of the transfers on the Salton Sea. After detailing potential environmental consequences, the Secretary filed both a Final Implementation Agreement EIS and a Draft Transfer EIS in 2002. The Final Implementation Agreement EIS did not discuss subsequent minor changes to the proposed master implementation agreement—the Colorado River Water Delivery Agreement (“CRWDA”)—or changes to proposed environmental mitigation measures. After the Secretary prepared an environmental evaluation of the modifications and determined that a supplemental EIS was unnecessary, she issued a final record of decision.

First, the United States Court of Appeals for the Ninth Circuit (“court”) reviewed the district court’s determination that Imperial lacked standing to sue. Imperial asserted that the Secretary violated NEPA and the Council on Environmental Quality (“CEQ”) regulations. Imperial further argued that the Secretary should have made a CAA conformity determination because the proposed transfers would expand the Salton Sea’s shoreline, increasing airborne levels of small particulate matter. Because both of the plaintiffs’ alleged injuries were procedural, the court required Imperial to show that the Secretary violated procedural rules designed to protect Imperial’s concrete interests and that the challenged action would threaten those same interests. The court held that Imperial had standing to bring its claims. The court reasoned that the Secretary’s action sufficiently threatened Imperial’s concrete interests in land management and that both NEPA and the CAA were designed to protect Imperial’s interests.

Next, the court reviewed the district court’s finding that the Final Implementation Agreement EIS complied with NEPA and that no supplemental EIS was required. This review required the court to determine whether the Secretary reasonably evaluated the facts and took a “hard look” at the environmental impacts of the proposed transfers. Imperial first argued that it was not clear whether the Final Implementation Agreement EIS incorporated the state Transfer Environmental Impact Report (“EIR”) or the federal Transfer EIS, and that the Final Implementation Agreement EIS improperly cited the EIR. The court held that Imperial was incorrect on both claims. The court reasoned that Imperial did not identify relevant material that was solely discussed in the EIR nor significant information that the Secretary incorrectly excluded from the Transfer EIS. Further, the court determined that the Secretary’s minor mistake of citing the Transfer EIS and EIR as a single document did not prejudice the court’s review.

Imperial next argued that the Final Implementation Agreement EIS improperly tiered to nineteen non-NEPA documents. The non-NEPA documents consisted of federal statutes, state environmental impact assessments, and other Colorado River EISs. The court held that the Secretary properly tiered to these documents in the Final Implementation Agreement EIS. The court determined that the documents were cited to provide a road map of previous Colorado River projects, and the decision to tier the documents did not violate the Secretary’s obligations pursuant to NEPA.

Imperial further argued that the Secretary violated her obligations under NEPA because she cited to the Coachella Valley Water Management Plan, which was not released for public review during the comment period for the Final Implementation Agreement EIS. Imperial also claimed that the Secretary improperly stated that the Final Implementation Agreement EIS was tiered to non-NEPA documents. First, the court noted that a final EIS may include information not cited in a draft and that recirculation is only required if there are significant new circumstances or new information relating to the proposed action. The court reasoned that there were none requiring the Secretary to recirculate the Final Implementation Agreement EIS. Second, the court conceded that it would be improper for the Secretary to tier to state environmental reports in the Final Implementation Agreement EIS. However, the court held that the “tiers to” language in the Final Implementation Agreement EIS was merely a “scrivener’s error,” and that the Secretary properly incorporated by reference, and did not tier, the non-NEPA documents.

In addition, Imperial claimed the Secretary improperly incorporated by reference discussions of environmental impacts instead of providing those discussions in the text of the Final Implementation Agreement EIS, and also relied too heavily on indirect impact analysis when discussing the environmental impacts to the Salton Sea. Imperial relied on Pacific Rivers Council v. United States Forest Service to assert these claims. The court pointed out that the Pacific Rivers opinion was vacated as moot, and alternatively, distinguished the facts of Pacific Rivers from the Secretary’s actions in the present case. The court held that the Secretary acted properly because the text of the Final Implementation Agreement EIS thoroughly considered the CRWDA’s potential environmental impacts on the Salton Sea.

Imperial next argued that the Secretary improperly segmented the Quantification Settlement Agreements by preparing two EISs. The court applied the “independent utility” test to determine whether multiple actions are so connected as to mandate consideration in a single EIS, and held the Secretary did not act arbitrarily by preparing a Transfer EIS and a Final Implementation Agreement EIS. The court reasoned that the Final Implementation Agreement EIS analyzed on-river effects, while the Transfer EIS considered a separate water-transfer agreement among the districts and proposed habitat conservation programs.

Imperial also argued that the Secretary abused her discretion by finding that a supplemental EIS was unnecessary. Imperial argued that a supplemental EIS was necessary because the water districts had altered their proposed conservation strategies, but the Final Implementation Agreement EIS failed to discuss them. The court held that the Secretary did not abuse her discretion because the Final Implementation Agreement EIS reasonably considered the consequences of providing the Salton Sea with no mitigation water at all, thereby qualitatively considering the water district’s changed conservation strategies. Additionally, the court held that the Secretary’s decision to discuss only one alternative, a no-action alternative, was not arbitrary and capricious. The court cited NEPA regulations that require an EIS to rigorously explore and evaluate all reasonable alternatives, but do not detail a minimum number of alternatives. The court reasoned that there was no benefit for the Final Implementation Agreement EIS to discuss other hypothetical alternatives because the transfer plans were carefully negotiated agreements between the parties.

Finally, even though the district court did not address the claim, the court considered Imperial’s argument that the Secretary should have conducted a CAA conformity determination. Imperial claimed that such a determination was necessary because the planned transfers would increase the Salton Sea’s shoreline, thus increasing the amount of particulate matter with a diameter of ten microns or less (“PM10”) in the atmosphere. The court held that the Secretary did not violate the CAA by not performing a conformity determination. The court reasoned that neither state nor federal rules mandate the form an agency must use when announcing that a it will not conduct a full-scale conformity determination. In this case, the Secretary announced that she believed a conformity determination was unnecessary in the Final Implementation Agreement EIS, and the court agreed that the CAA did not require a stand-alone document. Both federal and state rules require a full-scale conformity determination when both direct and indirect emissions exceed the mandated level. The court held the Secretary did not abuse her discretion by concluding that the project would neither directly nor indirectly cause PM10 emissions. The project would not directly increase PM10 emissions at the Salton Sea because the proposed action would occur at diversions at the Parker and Imperial Dams—far from the Salton Sea. The court reasoned that the project would not indirectly cause an increase in PM10 emissions because the Secretary could not practicably control any resulting emissions. Rather, the State of California and Imperial would ultimately be responsible for the allocation of water to the Salton Sea, thus indirectly causing any subsequent PM10 emissions.

Accordingly, the court affirmed the judgment of the district court and held that the Secretary did not violate NEPA or CAA regulations.

 

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Nelson v. Brooks

Nelson v. Brooks, 329 P.3d 558 (Mont. 2014) (holding that (i) the claimants’ motion to amend a Statement of Claim was not a repudiation of the originally filed water rights claim; (ii) a claim of an existing right is prima facie proof of its contents; (iii) a water court’s determination of the type of water right should be reviewed for harmless error; and (iii) ownership of the land containing the water source is not dispositive of ownership of the water right related to that source).

This case involved a dispute over the water rights to a well (“Disputed Well”) located in the southeast quarter of a tract of Section 5 in Beaverhead County, Montana. Minerals Engineering originally drilled the Disputed Well in the 1950s, along with other wells in the area. During that time, Carl Kambich (“Kambich”) owned a ranch immediately adjacent to the Minerals Engineering site. In 1953 Minerals Engineering and Kambich entered a contractual agreement (“the Indenture”), which granted Kambich the exclusive right to a water well on “Minerals No 3 mill site mining claim.” The Indenture contained no other description of the well or its location. In 1982 Kambich filed a Statement of Claim to the Disputed Well for existing water rights. The Statement of Claim listed a priority date of January 1, 1954, a pump as the means of diversion, a flow rate of 100 gallons per minute (“gpm”), and its purpose of use as stock water. Attached to the claim was the Indenture and a copy of a 1963 Declaration of Vested Rights originally recorded by Minerals Engineering for the Disputed Well.

The Brooks bought the Kambich Ranch in 1990. Kambich filed a notice of transfer of water right for the claim to the Brooks the same year. The Brooks maintained that, beginning in 1990, the Disputed Well provided water to a barn located on the ranch. The Brooks used the water for a bathroom, kitchen, and as stock water. Later in 2006 or 2007, the Brooks converted the barn into a home for their son, and the Disputed Well is no longer its water source. The same year, the Brooks constructed a new home located in the same southeast quarter of Section 5; the Disputed Well is the water source for this home. The Brooks never filed a request to change the place of use, but claimed they had been using the Disputed Well at this location since 1993, at a trailer, while they were building their home.

In 1976 Minerals Engineering stopped its mining operations. In 2002, Apex Abrasives (“Apex”), a company organized by objector Ernest Nelson (“Nelson”), purchased the minerals interest in the land. In 2007 Nelson received a permit for mining operations on the site and later discovered the Brooks’ use of the Disputed Well. In 2011 the Brooks filed a motion to amend Kambich’s Statement of Claim. Their motion sought: (i) to amend the place of use to the current location; (ii) to change the priority date to June 15, 1953; (iii) to amend the type of right to “use” rather than “filed;” and (iv) to change the flow rate to 10 gpm. A DNRC specialist accepted all amendments, and the matter proceeded to a hearing with the Water Master. The Water Master found that the claim belonged to the Brooks, and agreed that the Brooks’ amendments should be accepted.

Pursuant to Nelson’s objection, the Montana Water Court (“water court”) reviewed the case. The water court found that the Indenture referenced a well in a different section, not Section 5, and did not convey title of the Disputed Well to Kambich. However, the water court concluded that, even though the Indenture did not convey title to Kambich, it did not affect the Brooks’ ownership of the water right. The water court found that Nelson failed to meet his burden of proof in contesting the prima facie evidence of the filed claim, and the “slight discrepancy” in the legal descriptions for the well was not determinative of ownership.

On appeal, the Montana Supreme Court (“Court”) first addressed whether Nelson ever held an adjudicated right to the Disputed Well. Nelson argued, based on two claims he held for wells in Section 5, that he had a prior adjudicated right to the Disputed Well. The Court dismissed this argument, and upheld the water court’s determination that Nelson’s previously adjudicated claims were for two different wells located on another tract of land.

The Court then addressed whether the Brooks’ motion to amend the Statement of Claim served as repudiation of the originally filed claim. Nelson argued that the Brooks repudiated the original Statement of Claim by filing a motion to amend the claim’s priority date, place of use, and amount of use. The Court, however, stated that Nelson failed to present a valid argument as to why the filing of such a motion would serve as repudiation. The Court noted that an originally filed claim is considered prima facie proof of its contents, but that the claimants have the burden to prove the requested amendments by a preponderance of the evidence. Accordingly, the Court rejected Nelson’s argument and held that the Brooks’ motion to amend did not serve as a repudiation of the original claim.

The Court then addressed whether the water court erred by relying on the Brooks’ Statement of Claim as prima facie evidence of the water right. The Court noted that a claim of an existing right “constitutes prima facie proof of its contents until the issuance of a final decree, and that an objector has the burden to prove by a preponderance of the evidence that the elements of the original claim do not reflect the actual beneficial use of the water, as it existed prior to July 1, 1973.” Nelson’s argument relied on the inference that since the mine was in operation until 1976, Minerals Engineering was likely using the Disputed Well until that time. The Court dismissed this argument, and held that the water court correctly concluded that such inferences are not sufficient to overcome the prima facie proof of a filed Statement of Claim.

The Court next addressed whether the water court erred by concluding that it did not need to consider whether the Brooks’ claimed right was a “use” right or a “filed” right. A “use right” is defined as putting water to a beneficial use without written notice, filing, or decree, whereas a “filed right” is defined as a right that has been filed and recorded prior to July 1, 1973. The Court then upheld the water court’s determination that it need not consider what type of right was in question because, as the Court concluded, in this case the type of right was immaterial because both require proof of beneficial use, and the amount of use, priority date, and purpose of use are not related to the type of right

Finally, the Court addressed whether the water court erred by concluding that ownership of the point of diversion for the claim was not dispositive of the ownership of the water right. Nelson claimed that the water court incorrectly disregarded evidence as to Apex’s ownership of the mining claim where the Disputed Well was located. The Court held that a water right is a usufructory right, rather than a physical ownership right, and therefore, “ownership of land where water has its source does not necessarily give exclusive right to such waters so as to prevent others from acquiring rights therein.” Therefore, Nelson’s claim of ownership of the mining claim where the Disputed Well was located was not dispositive of the issue of ownership of the Disputed Well’s water.

Accordingly, the Court affirmed the water court’s determination that the claim belonged to the Brooks, and that Nelson failed to prove by a preponderance of the evidence that the Brooks’ use of the Disputed Well did not accurately reflect the use as it existed prior to 1973.

 

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Natural Res. Def. Council v. Jewell, 749 F.3d 776 (9th Cir. 2014) (holding that, because the Bureau of Reclamation had some discretion in renewing water contracts in a way that would benefit the threatened delta smelt, section 7(a)(2) of the Endangered Species Act required the agency to consult with the Fish and Wildlife Service prior to renewing the contracts).

In 2008, the Natural Resources Defense Council and the Metropolitan Water District Southern California (collectively, “environmental groups” or “groups”), filed a complaint in the United States District Court for the Eastern District of California (“district court”) alleging that the Bureau of Reclamation (“Bureau”) violated section 7(a)(2) of the Endangered Species Act (“ESA”). The environmental groups argued that the Bureau failed to consult with the Fish and Wildlife Service (“FWS”) regarding the impact of various water contracts on the delta smelt, a threatened species living in the California River Delta. The environmental groups asked the district court to invalidate the forty-one contracts they deemed most harmful to the delta smelt.

The Bureau manages California’s Central Valley Project (“Project”), which diverts water from the California River Delta through a number of long-term contracts dating from the 1960s. In 2004, two sets of these contracts, the Bureau’s Delta-Mendota Canal Unit Water Service Contracts (“DMC Contracts”) and Sacramento River Settlement Contracts (“Settlement Contracts”) (collectively, “the Contracts”), had expired or were nearing expiration. In compliance with section 7(a)(2) of the ESA, the Bureau consulted with the FWS regarding its proposed Operations and Criteria Plan (“Plan”) to renew the Contracts. In 2004 and 2005, the FWS issued separate biological opinions finding that the Plan would not jeopardize the delta smelt. The district court later invalidated both opinions, and the Bureau did not appeal.

The Bureau prepared its own biological assessment during 2004 and 2005. It also concluded that renewing the Contracts would not adversely affect the delta smelt. The Bureau consulted with the FWS through a series of letters, and the FWS concurred with the Bureau’s conclusion. Based on the FWS’s concurrence, the Bureau renewed 159 of the Contracts. However, in 2008, the FWS issued a revised biological opinion, finding that the Plan would jeopardize the delta smelt and adversely modify its critical habitat. Thereafter, the environmental groups filed a complaint challenging the renewed Contracts’ validity.

The environmental groups asked the district court to invalidate the forty-one renewed Contracts they deemed most harmful to the delta smelt. The district court found that the environmental groups did not have standing to challenge the DMC Contracts and that the ESA’s consultation provision did not apply to the Settlement Contracts. On appeal, the United States Court of Appeals for the Ninth Circuit (“court”) considered (i) whether the FWS’s 2008 revised biological opinion mooted the case, (ii) whether the environmental groups had standing to challenge the DMC Contracts, and (iii) whether section 7(a)(2) of the ESA required the Bureau to consult with the FWS.

The court first considered whether the 2008 biological opinion mooted the environmental groups’ suit. The Bureau argued that the FWS letter correspondence led to the 2008 revised biological opinion, and that the Bureau had therefore fulfilled its consultation obligation. The court held that the 2008 opinion did not moot the appeal because the environmental groups’ requested relief—requiring the Bureau to consult the FWS and renegotiate the challenged Contracts based on the FWS assessment—was still available. Significantly, the 2008 revised biological opinion only considered the Plan’s general effects, and the letters did not represent a consultation with the FWS concerning the impact of the renewed Contracts themselves. Accordingly, the court held that the environmental groups’ claims were not moot.

Second, the court determined that the environmental groups had procedural standing to challenge the DMC Contracts. The district court held that the environmental groups lacked standing because any injury to the delta smelt would not have been traceable to the Bureau’s contract renewal process. The district court reasoned that the Bureau could not have negotiated stronger protections for the delta smelt because the DMC Contracts already contained a “shortage provision” that exempted the Bureau from liability for contractual provisions it might violate when acting to meet legal obligations­ like those in section 7(a)(2) of the ESA. This provision, the district court held, severed the causal link between the environmental groups’ injury and the Bureau’s action. The court rejected the district court’s reasoning. Under section 7(a)(2) of the ESA, the environmental groups only needed to show that prior consultation between the Bureau and the FWS could have led to DMC Contracts that better protected the groups’ interest in the delta smelt. The court found that the shortage provision did not protect the delta smelt to the greatest extent possible because it did not require the Bureau to take protective actions. The court also noted that the shortage provision only concerned the quantity of water made available under the DMC Contracts, and that the Bureau could have contracted to benefit the delta smelt in other ways.

Finally, the court evaluated whether the ESA required the Bureau to consult with the FWS before it renewed the Settlement Contracts. Under section 7(a)(2) of the ESA, a federal agency engaging in a discretionary action must consult with the FWS or the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service before taking an action that could affect an endangered or threatened species. The district court found that section 7(a)(2)’s consultation provisions did not apply because provisions in the Settlement Contracts prohibited renegotiating water quantity and allocation, substantially constraining the Bureau’s discretion. However, the court found this rationale unconvincing. The court reasoned that the ESA consultation provision applies wherever an agency retains “some discretion” in taking action to protect a listed species. Here, the court determined that the Bureau had some discretion to aid the delta smelt: nothing required the Bureau to renew the Settlement Contracts, and even if the Bureau was required to renew the Settlement Contracts, it retained discretion to negotiate terms other than water quantity and allocation. The court pointed specifically to the Bureau’s ability to renegotiate the Contracts’ pricing scheme or the timing of water distribution.

The court therefore held that the Bureau was required to consult with the FWS prior to renewing its Contracts, and accordingly reversed and remanded the district court’s decision.

 

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Skelton Ranch, Inc. v. Pondera Cnty. Canal & Reservoir Co., 328 P.3d 644 (Mont. 2014) (holding that the water court (i) properly admitted historical documents, prepared in anticipation of litigation, pursuant to the ancient documents exception to the hearsay rule; (ii) correctly rejected the Water Master’s findings as to the capacity of a flume on the Thomas ditch, and did not improperly substitute its own view of the evidence; (iii) correctly determined that portions of claimant’s water rights had been abandoned or never perfected; and (iv) correctly concluded that the claimants did not acquire any water rights by adverse possession).

Claimants Gregory Duncan, Sherri Donovan, Terry Dougherty (collectively “Duncan”) and Skelton Angus Ranch, Inc. (“Skelton”) filed statements of claim for existing water rights based on notice of appropriations (“NOAs”) filed between 1895 and 1913.  These claims shared a single point of diversion from the South Fork of Dupuyer Creek in Two Medicine River Basin, through the Thomas ditch, and into both Duncan and Skelton’s land.  Pondera County Canal and Reservoir Company (“Pondera”) filed a notice of intent to appear in the adjudication of Skelton and Duncan’s claims; Pondera also diverted water from the South Fork of Dupuyer Creek through the Thomas ditch.  Following a hearing, the Water Master (“Master”) quantified and assigned priority dates to the claimed water rights.  The Montana Water Court (“water court”) amended and then adopted the Master’s Report (“Report”) as amended.  Duncan and Skelton then appealed the decision of the water court to the Supreme Court of Montana (“court”).

The court considered four issues on appeal.  First, the court addressed whether the water court properly admitted documents that Pondera produced in the early 1900s, documenting the water rights in the area.  Pondera originally prepared these documents in order to determine the viability of obtaining land under the Federal Carey Land Act.  Duncan and Skelton argued that the documents were self-serving hearsay evidence, prepared in anticipation of litigation, and that Pondera had a motive for misrepresentation when the documents were created.  The court held that the statements were properly admitted under the ancient documents exception to the hearsay rule.  The court defined an ancient document as “a document in existence for twenty years or more, the authenticity of which is established.”  In this case, Duncan and Skelton had conceded that the documents were in existence for over twenty years and were authentic.  Additionally, the court noted that the Master was convinced the documents had “sufficient circumstantial indicia and trustworthiness for admission,” and both the Master and the water court had acknowledged the scarcity of purely objective data concerning the water rights at issue.

Second, the court addressed whether the water court correctly rejected the Master’s findings regarding certain variables used to determine the historical capacity of the Thomas ditch flume (“flume”).  The flume was originally built in 1912 after the Thomas ditch washed out in 1908.  In 1931 the flume was rebuilt, and was significantly larger than the 1912 flume.  In his Report, the Master concluded that certain water rights were limited to the capacity of the 1912 flume, and the construction of the 1931 flume resulted in the creation of new “implied” water rights to be distributed among the parties.

The Master then performed independent calculations to determine the flow rates for both the 1912 flume and the 1931 flume.  The flow rates that resulted from these calculations were much higher than the estimated flow rates submitted by the parties’ expert witnesses. The water court rejected the Master’s findings concerning the capacity of the 1912 flume because the Master used the slope measurement from the 1912 flume, but the overall dimensions were based on a 1920 flume structure.  The water court also rejected the Master’s findings concerning the capacity of the 1931 flume, holding that the Master committed clear error by relying on Manning’s formula, which depends heavily on slope, when the factual record contained no slope measurement for the 1931 flume.

The water court relied on testimony from the parties’ experts when calculating the 1912 flume’s capacity.  The testimony of the parties’ experts revealed that the maximum capacity of the 1912 flume was likely 4.6 cubic feet per second.  The water court then determined that because the flume did not carry its maximum capacity at all times, the right should be limited to 4.5 cubic feet per second.  The water court avoided using Manning’s formula when calculating the capacity of the 1931 flume, instead relying on the expert witnesses’ calculations for an inlet-controlled structure, and concluded that the flume’s capacity was twenty cubic feet per second.  The court held that the water court correctly determined that the Master committed clear error when calculating the flume’s capacities.  The court also held that the water court did not substitute its own view of the evidence for the Master’s, because the evidence did not support the Master’s findings.

Third, the court addressed whether the water court correctly determined that portions of Duncan and Skelton’s water rights had been abandoned or never perfected.  Duncan and Skelton claimed additional water rights under 1895, 1902, and 1913 NOAs.  The Master determined that Duncan and Skelton’s predecessors abandoned these additional water rights because of the flume’s limited capacities.  The water court held that Duncan and Skelton never had rights to the 1895 claim, and adopted the Master’s finding that the Duncan and Skelton’s predecessors had abandoned the 1902 and 1913 water rights.  Duncan and Skelton argued that the 1895 right was perfected in the original ditch that washed out, and that their predecessors lacked the requisite intent to abandon the other rights.

Addressing the 1895 NOA, the court concluded that the water court correctly held that neither Duncan nor Skelton had perfected the 1895 NOA. The court noted that none of the lands mentioned in the 1895 NOA were currently owned by Skelton, and the lands owned by Duncan that were subject to the 1895 NOA were conveyed in a chain of title that did not reference the 1895 NOA.  Accordingly, both Duncan and Skelton lacked the requisite contractual relationship with the original appropriator.

The court then addressed the 1902 and 1913 NOAs, and held that the water court was correct in finding that Duncan and Skelton abandoned any water they claimed to have used that exceeded the flume’s capacities.  The court reasoned that the flume’s capacity limited how much water could be put to a beneficial use for eighteen to twenty-nine years, a period of time sufficient to raise a presumption of abandonment.  Duncan and Skelton argued that their predecessors’ continuous struggle to repair and expand the original flume demonstrated an intention to maintain the rights.  The court found this unpersuasive, holding that those efforts merely signaled an intention to continue to use the amount of water carried by the original 1912 flume.  Accordingly, the court held that the Master and water court did not err in finding that claimed water in excess of the flume’s capacities had been abandoned.

Finally, the court addressed whether the water court correctly adopted the Master’s conclusion that neither Duncan nor Skelton acquired any water rights by adverse possession.  Duncan and Skelton argued that if they did lose their interest in the 1895 appropriation, they or their predecessors reacquired ownership of that right through adverse possession.  The court stated that in order for Duncan or Skelton to prove adverse use, they had to provide evidence that they, or their predecessors, used the water “at a time when the owner of the right to use the water had need of it, used it in such a substantial manner as to notify the owner that it was being deprived of water to which it was entitled; and that during all of that period, the owner could have maintained an action against him for so using the water.”

The Master determined that Skelton was not entitled to any portion of the 1895 appropriation based on adverse possession because Duncan’s predecessors, as upstream users, used all of the water right carried in the 1912 flume before Skelton could attempt to use it.  The Master then determined that Duncan did not provide sufficient evidence to support an adverse possession of either the 1895 or 1902 appropriations.  The court agreed with the Master’s determination that neither Duncan nor Skelton were entitled to claim any water from the 1895 appropriation based on adverse possession.

Accordingly, the court affirmed the water court’s opinion on all four issues raised by the claimants.

 

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