United States v. Tulare Lake Canal Company

No. 72-2322 (9th Cir. April 5, 1976)

ELR Digest

The Ninth Circuit holds that federal reclamation laws apply to the Pine Flat Dam in the San Joaquin River Basin and that landowners in the federally-sponsored Kings River project must sell excess lands at ante-project prices in order to receive project irrigation water. The Pine Flat Dam was authorized by the Flood Control Act of 1944, 58 Stat. 887, and construction was completed in 1954. In 1957, the Secretary of Interior refused to approve a contract calling for the repayment of dam construction costs by landowners receiving water from the impoundment, since the contract would have relieved landowners holding more than 160 acres from the requirement under § 46 of the Omnibus Adjustment Act of 1926, 44 Stat. 649, as amended, 43 U.S.C. § 423e, that they execute recordable contracts to dispose of their excess lands. In a suit brought by the government to enjoin the defendant from delivering project water to such landowners because they are in violation of this provision, the district court denied relief, 340 F. Supp. 1185 (E.D. Cal. 1972). This decision must be reversed.

Pine Flat Dam is subject to the reclamation laws. Tumer v. Kings River Conservation District, 360 F.2d 184 (9th Cir. 1966), held that § 8 of the Flood Control Act of 1944 authorized the Secretary to operate the Pine Flat project under the "Federal reclamation laws," including § 7 of the Reclamation Act of 1902, 43 U.S.C. § 421. Thus § 46, as part of the reclamation laws, must also apply to the Pine Flat project.

The legislative history of § 8 makes clear that the excess land provision was the principal issue in controversy, and leaves no doubt that the 160-acre limitation of § 46 was intended to apply to the Kings River-Pine Flat Dam project. Appellees argue that the Kings River project was impliedly exempt from the acreage limitation. The Supreme Court has disapproved of such implied exceptions from the reclamation laws. Ivanhoe Irrigation District v. Mc-Cracken, 357 U.S. 275 (1968). Also, Congress expressly considered, but declined to pass, an acreage limitation exemption for the Pine Flat Dam. The Roosevelt Administration was concerned with the social purposes to be achieved by the acreage limitation, namely, dispersion of the public subsidy, speculation curtailment, and provision of family farms, especially for soon-to-be returning veterans of World War II. Although Congress provided that the Army Corps of Engineers would construct the Pine Flat Dam for Flood control purposes, it specified that the irrigation aspects of the project would be administered by the Secretary of Interior under existing reclamation law. Congress thus implicitly rejected the substantial efforts of large landholders in the Kings River project to escape the acreage limitations of the reclamation laws by giving the Corps jurisdiction over irrigation projects. Congress made this choice with full knowledge of the almost complete appropriation of Kings River water under existing agreements.

Neither the statutory language of § 46, the purpose and legislative history of the section, nor Interior's administrative practice support appellees' theory that, by repaying construction charges, owners of excess lands may avoid their obligation under § 46 to execute recordable contracts with Interior to sell their excess lands at pre-project prices. The statutory language isunequivocal: "no such excess land so held shall receive water from any project . . . if the owners thereof shall refuse to execute valid recordable contracts for the sale of such lands . . . at prices not to exceed those fixed by the Secretary. . . ." 43 U.S.C. § 423e.

The goals of the reclamation laws are to create family-sized farms in areas irrigated by federal projects, to distribute widely the subsidy from such projects, and to limit speculative gains resulting from such projects. Acreage limitations play a vital role in achieving these goals. Ivanhoe, supra. Avoidance of acreage limitations by mere repayment of construction charges, which would never exceed the benefits accruing to the irrigated excess lands, including non-attributable gains such as flood control and salinity prevention, would frustrate these congressional purposes. Thus, windfalls to large speculators are prevented by sale of their excess lands at prices that do not reflect the added benefits of the irrigation project.

The notion of a "payout" exception is contrary to 75 years of legislation in this area. The issue is whether a payout of construction costs can avoid the initial breakup of large holdings, not whether a landowner, having divested himself of excess lands, may thereafter acquire additional lands with appurtenant fully vested water rights. The alienability of such rights is not here at issue. The 1902 Reclamation Act, 43 U.S.C. §§ 416, 419, 432, 434, allowed applications only for 160-acre parcels for each applicant. Furthermore, applicants were required to join a water users' association, which required them to sell excess lands or execute a trust deed for their sale. The 1912 Act, 43 U.S.C. § 541, allowed entryment to obtain title to reclamation land before final payment in order to use the land as security for bank loans, after construction charges were paid. The 1912 Act does not, however, allow initial retention of excess lands, but speaks to the acquisition of additional lands once the entryman had reduced his holdings. In 1914, Congress specifically excluded large existing landholdings from sharing in federal reclamation projects without sale of excess lands. 43 U.S.C. § 418. Following an Interior report finding that the anti-speculation goal of the earlier reclamation acts was not being achieved, Congress in § 46 of the 1926 Act required divestiture of excess lands from all owners in reclamation projects, not merely from federal grantees, before project water could be delivered. The proviso in § 46 allowing sale of excess lands after half the construction costs were paid cannot be read to imply that such sale could take place at speculative prices.

Until 1926, administrative practice did not even consider the possibility that repayment of construction charges could serve to avoid acreage limitations. For the practice up until the 1940's appellees rely on Interior memoranda that are concerned with purchase of vested rights by persons who already had divested themselves of excess lands. Following a series of legislative defeats in the 1940's to obtain exemption from the acreage limitations, the Kings River water users turned to Interior to obtain their payout exception. Appellees' base their theory on an Interior memorandum, the "Cohen opinion," prepared in 1947 that fallaciously concluded that § 46 must be read in conjunction with the 1912 Act, which frees the land from acreage limitations. This document ignores the distinction between initial breakup of excess lands and subsequent acquisition of vested rights. The Cohen opinion was issued hastily in order to allow Interior to show a critical Congress a record of compliance with the acreage limitations, albeit by avoidance through payment of construction charges. Proposed contracts drawn pursuant to this policy were repudiated in 1961 by the Department's Solicitor. This brief interlude in an otherwise consistent administrative policy cannot support appellees' theory. The District Court judgment is reversed.

The full text of this opinion is available from ELR (87 pp. $11.00, ELR Order No. C-1047).

Counsel for United States
Douglas King
Lands and Natural Resources Division
Department of Justice
Washington DC 20530
(202) 739-2639

Counsel for Tulare Lake Canal Company
Alvin J. Rockwell
Brobeck, Phleger & Harrison
111 Sutter St.
San Francisco CA 94104
(405) 434-0900

Counsel for Amicus Curiae
J. Thomas Crowe
Crowe, Mitchell & Crowe
107 S. Church St.
Visalia CA 93277
(209) 733-1125

Browing, J., for himself, Duniway & Wallace, JJ.

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]