United States v. Walker River Irrigation District

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.