United States v. California

No. 75-3554 (558 F.2d 1347, 10 ERC 1623) (9th Cir. August 12, 1977)

By applying for unappropriated water in California for use in a federal reclamation project, the federal Bureau of Reclamation is not subject to conditions imposed by the State Water Resources Control Board even though the Bureau is assignee of an application originally filed by the State Department of Finance. Because the assignment was of an application rather than a permit, the applicant obtains only a priority of right over later applicants. The Department filed the application only to obtain for the Bureau a priority right as appropriator. When the Bureau became assignee of the priority, it then was applying in its own name under congressional legislation, and its rights arose under federal law, not pursuant to the assignment or subject to state-imposed conditions.

Counsel for Plaintiff-Appellee
Dwayne Keyes, U.S. Attorney
2058 Capitol Mall, Sacramento CA 95815
(916) 440-2331

Counsel for Defendants-Appellants
Evelle J. Younger, Attorney General
555 Capitol Mall, Sacramento CA 95814
(916) 445-9555

Paul A. Stewart
Collette & Erickson
555 California St., San Francisco CA 94104
(415) 788-4646

Before DUNIWAY, CARTER and WALLACE, Circuit Judges.

[7 ELR 20801]

DUNIWAY, Circuit Judge:

In its petition for a rehearing, California relies upon an argument that it made, but did not emphasize, in its briefs on appeal, an argument that we overlooked. It points to the fact that certain of the permits involved in this case had their origin in two applications filed by the State Department of Finance. These applications were then assigned by the Department to the Bureau of Reclamation. The State points out that its Department of Finance, had it prosecuted the applications to the obtaining of permits, would certainly have been bound by whatever conditions the State Board might impose. It follows, says the State, that the Bureau, assignee, is also subject to those conditions because, as assignee, it could acquire no greater rights than its assignor. The argument is superficially appealing, but, on reflection, we reject it.

The argument overlooks two considerations. The first is that the assignment was of an application, not of a permit containing conditions. The second is that the assignee was the Bureau, a Federal agency exercising powers conferred upon it by the Congress of the United States, whose valid enactments are "the supreme Law of the Land" (U.S.Const. Art. VI, cl. 2).

Under California law, an application for a permit to appropriate surplus or unappropriated water confers nothing upon the applicant as against the state; all that it confers is a priority over later applicants if the application is granted. Cal.Water Code § 1450 states:

Any application properly made gives to the applicant a priority of right as of the date of the application until such application is approved or rejected. Such priority continues only so long as the provisions of law and the rules and regulations of the board are followed by the applicant.

Cal.Water Code § 1455 then adds: "The issuance of a permit continues in effect the priority of right as of the date of the application . . . ."

The Supreme Court of California interpreted these provisions in Madera Irrigation District v. All Persons, 1957, 47 Cal.2d 681, 690, 306 P.2d 886, 891 rev'd on other grounds, Ivanhoe Irrigation District v. McCracken, 1958, 357 U.S. 275, 78 S. Ct. 1174, 2 L. Ed. 2d 1313. There the court stated:

The filing of an application under the present law is comparable and of like effect to the posting and recording of notice or commencement of actual construction work under the rules which had previously prevailed. . . . The Water Code provides that the effect of filing an application confers, for all practical purposes, a priority only.

To the same effect, see United States v. Fallbrook Public Utility District, S.D. Cal., 1958, 165 F. Supp. 806, where Judge James M. Carter stated (at 855):

Until the application to appropriate is acted upon by the State Water Rights Board favorably to the applicant, and the issuance of a permit is directed, the applicant has no property right of any kind as against the state. He has an inchoate, incipient, conditional right of procedural priority over later applicants. . . .

That is all that the State Department of Finance had, and all that it could assign to the Bureau.

When the Bureau became the assignee of that "inchoate, incipient, conditional right," it was acting in the same capacity as when it filed its own applications. It was acting under the same Federal laws, and, absent those laws, it would have had no right to appropriate any water. Its substantive rights arose from the Congressional legislation, not from the assignment. There is no contention that the assignment was expressly conditioned upon acceptance of whatever permit conditions the State might impose. On the contrary, the State's briefs make it clear that the State Department of Finance filed the applications for one purpose only, to obtain, not for itself, but for the Bureau when the project finally went forward, a priority date as appropriator.¹

We conclude that the Bureau, as assignee of an application, is no more subject to the imposition of conditions by the Board than it is as an original applicant.

The petition for a rehearing is denied.

1. Originally, the Central Valley Project, of which New Melones is a part, was to be constructed and operated by the State. Therefore, as California told us in its opening brief, its Department of Finance began in 1927 filing applications for permits to appropriate water for the Central Valley Project,

so that the State — in anticipation of State construction of the CVP — could obtain a prior right to the use of water, as against private appropriators who submitted later applications; . . . .

(Brief, page 5)

As noted earlier, Decision 1422 approved the assignment of two applications to the Bureau, and issued permits to the Bureau on the basis of these applications; these applications had originally been filed by a State agency for the purpose of obtaining an early priority date.

(Brief, pages 83-84)

There is a similar assertion in California's Reply to Response to Petition for Rehearing, page 6:

[T]he State Department of Finance, in applying for water rights in 1927, did not apply for the purpose of ultimately encumbering the Bureau's water rights. Rather, it applied because it was expected that the State rather than the federal government would build and operate the Central Valley Project, and the State wanted to obtain the earliest possible priority dates in its own water rights. (footnote omitted)

It was apparent in 1944 that New Melones was to be built and operated as a Federal Project. It was authorized in the Flood Control Act of 1944, 58 Stat. 887. See also § 203 of the Flood Control Act of 1962, 76 Stat. 1191. Thus, when the State applied for water rights for New Melones in 1952, its purpose was, as it says, to obtain early priority dates, and its intent must have been to do what it ultimately did, to assign its applications to the Bureau of Reclamation, which was to build and operate the project.

[7 ELR 20802]

WALLACE, Circuit Judge, concurring in part:

I concur in part. Concluding that the first of Judge Duniway's reasons to deny the petition is more than adequate ("the assignment was of an application, not of a permit containing conditions"), I would not reach the constitutional issue. See Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 341, 56 S. Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring).