United States v. Ben Adair

In 1975 the United States filed suit in district court, pursuant to 28 U.S.C. Sec. 1345 (1976), for a declaration of water rights within an area whose boundaries roughly coincide with the former Klamath Indian Reservation. The suit named as defendants some 600 individual owners of land within the former reservation. The Klamath Tribe intervened as a plaintiff and the State of Oregon as a defendant.

After a trial on stipulated facts, supplemented by exhibits and affidavits, the district court issued an opinion declaring: (1) the Tribe and its members have water rights sufficient to maintain their treaty rights to hunt and fish on the former reservation; (2) individual Indian landowners have water rights, subject to the paramount rights of the Tribe, sufficient to maintain agriculture on their lands; and, (3) individual non-Indian landowners could acquire the water rights of their predecessor Indian landowners. The State of Oregon and the individual landowners filed a timely appeal from the district court decision, as did the United States and the Tribe.

Our jurisdiction rests on 28 U.S.C. Sec. 1291 (1976). We modify the district court's judgment in part, and as modified, affirm.

* BACKGROUND

A. History of the Litigation Area.

This suit concerns water rights in a portion of the Williamson River watershed. The Williamson River is part of the larger Klamath River watershed of Southern Oregon and Northern California. That part of the Williamson River watershed involved in this litigation drains an area of low, forested mountains, flat, grassy valleys and marshes east of the Cascade Range in south-central Oregon. The average rainfall in the area is low; summers are dry and winters are severe.

The major feature of the subject area is a large flat valley historically known as the Klamath Marsh. As the Williamson flows into the north end of this valley, it spreads out and soaks into the porous, pumice soil. During the wet months of the year, open water and aquatic vegetation cover the lower portion of the valley, the water to a depth of a few feet. The remainder of the valley is grassland. During dry summer months, as the water recedes, the grassland in the valley increases. This fluctuating marsh has been an important feeding and resting area for migratory ducks, geese and other waterfowl for thousands of years. In addition, the Marsh has always supported a variety of other indigenous wildlife. More recently, large parts of the Klamath Marsh have been used for grazing cattle.

The Klamath Indians have hunted, fished, and foraged in the area of the Klamath Marsh and upper Williamson River for over a thousand years. In 1864 the Klamath Tribe entered into a treaty with the United States whereby it relinquished its aboriginal claim to some 12 million acres of land in return for a reservation of approximately 800,000 acres in south-central Oregon. This reservation included all of the Klamath Marsh as well as large forested tracts of the Williamson River watershed. Treaty between the United States of America and the Klamath and Moadoc Tribes and Yahooskin Band of Snake Indians, Oct. 14, 1864, 16 Stat. 707. Article I of the treaty gave the Klamath the exclusive right to hunt, fish, and gather on their reservation. Id.; Kimball v. Callahan, 493 F.2d 564, 566 (9th Cir.), cert. denied, 419 U.S. 1019, 95 S.Ct. 491, 42 L.Ed.2d 292 (1974) (Kimball I.) Article II provided funds to help the Klamath adopt an agricultural way of life. 16 Stat. 708.

For 20 years, until 1887, the Klamath lived on their reservation under the terms of the 1864 treaty. In 1887 Congress passed the General Allotment Act, ch. 119, 24 Stat. 388 (1887) (current version at 25 U.S.C. Secs. 331-34, 348, 349, 381 (1976)), which fundamentally changed the nature of land ownership on the Klamath Reservation. Prior to the Act, the tribe held the reservation land in communal ownership. Pursuant to the terms of the Allotment Act, however, parcels of tribal land were granted to individual Indians in fee. Under the allotment system, approximately 25% of the original Klamath Reservation passed from tribal to individual Indian ownership. Over time, many of these individual allotments passed into non-Indian ownership.

The next major change in the pattern of land ownership on the Klamath Reservation occurred in 1954 when Congress approved the Klamath Termination Act. Act of Aug. 13, 1954, c. 732, Sec. 1, 68 Stat. 718 (codified at 25 U.S.C. Secs. 564-564w (1976)). Under this Act, tribe members could give up their interest in tribal property for cash. A large majority of the tribe chose to do this. In order to meet the cash obligation, in 1961, the United States purchased much of the former Klamath Reservation. The balance of the reservation was placed in a private trust for the remaining tribe members. See Kimball I, 493 F.2d at 567 (describing termination process); Klamath and Modoc Tribes v. United States, 436 F.2d 1008, 1010-13 (Ct.Cl.) (same), cert. denied, 404 U.S. 950, 92 S.Ct. 271, 30 L.Ed.2d 267 (1971). In 1973, to complete implementation of the Klamath Termination Act, the United States condemned most of the tribal land held in trust. Payments from the condemnation proceeding and sale of the remaining trust land went to Indians still enrolled in the tribe. This final distribution of assets essentially extinguished the original Klamath Reservation as a source of tribal property.

Even though the Klamath Tribe no longer holds any of its former reservation, the United States still holds title to much of the former reservation lands. In 1958 the Government purchased approximately 15,000 acres of the Klamath Marsh, the heart of the former reservation, to establish a migratory bird refuge under the jurisdiction of the United States Fish and Wildlife Service. Pub.L. No. 85-731, 72 Stat. 816 (1958) (codified as amended at 25 U.S.C. Sec. 564w-1 (1976)). In 1961 and again in 1973, the Government purchased large forested portions of the former Klamath Reservation. This forest land became part of the Winema National Forest under the jurisdiction of the United States Forest Service. 25 U.S.C. Secs. 564w-1(d), 564w-2 (1976). By these two purchases, the Government became the owner of approximately 70% of the former reservation lands. The balance of the reservation is in private, Indian and non-Indian, ownership either through allotment or sale of reservation lands at the time of termination.

B. Proceedings in the District Court.

In September of 1975, the United States filed suit in federal district court seeking a declaration of water rights within the Williamson River drainage above the "reef" near Kirk, Oregon.1 In January of 1976, the State of Oregon initiated formal proceedings under state law to determine water rights in the Klamath Basin including that portion of the Williamson River drainage covered by the Government's suit. See Or.Rev.Stat. Secs. 539.010-539.110 (1979). Later in 1976, the State of Oregon moved to intervene as a defendant in the United States suit. The Klamath Tribe also moved to intervene in the federal suit as a plaintiff. Both motions were granted. Subsequently, the State, joined by the individual defendants, moved for dismissal of the federal court water rights adjudication in favor of the state proceeding under the rule announced by the Supreme Court in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). The district court in effect denied the defendants' motion to dismiss when on November 14, 1977, it entered a Pretrial Order to govern the conduct of the federal suit.

This order, in listing the issues to be decided, significantly limited the nature of the federal proceeding. The district court did not agree to decide any question concerning the actual quantification of water rights. The questions listed fell within three basic categories: (1) whether water rights had been reserved for the use of Klamath reservation lands in the 1864 treaty; (2) whether such rights passed to the Government and to private persons who subsequently took fee title to reservation lands; and (3) what priorities should be accorded the water rights of each of the present owners and users of former reservation lands. Although the district court agreed to specify the proper method for measuring the reserved water rights originally attached to the reservation, it declined to quantify that measure. Rather, it declared that "[a]ctual quantification of the rights to the use of waters of the Williamson River and its tributaries within the litigation area will be left for judicial determination, consistent with the decree in this action, by the State of Oregon under the provisions of 43 U.S.C. Sec. 666 [the McCarran Amendment]."

Pursuant to the terms of the Pretrial Order, the district court determined the priority of water rights among the litigants as follows: (1) the Klamath Tribe Indians have a water right, with a priority date of time immemorial, "to as much water on the Reservation lands as they need to protect their hunting and fishing rights," United States v. Adair, 478 F.Supp. 336, 345 (D.Or.1979); (2) this Indian water right is coterminous with the water right claimed by the United States as a successor land owner, and therefore renders it unnecessary to determine whether the right has been transferred to the United States, id. at 347; (3) those lands now owned by the United States outside the former reservation carry a water right, with priority from the date of withdrawal from the public domain, sufficient to meet the forest purposes of the withdrawal, id. at 348; (4) individual Indians who still own former reservation lands have water rights, with priority dating from the 1864 treaty, "to use water essential to their agricultural needs ... subject to the superior right of other Indians to use the water for the preservation of hunting and fishing ...," id. at 346; and, (5) individual non-Indians who own former reservation lands have a water right "to water for the actual acreage under irrigation when [they received] title from [their] Indian predecessor[s]. The priority date of that right is 1864. [These individual non-Indians also acquired] a right, with an 1864 priority date, to water for additional acreage which ... with reasonable diligence, may [be] place[d] under irrigation." Id. at 349.

The State of Oregon and the individual defendants appeal from the district court's decision. They argue, first, that the district court should have dismissed the federal suit, and second, that the district court erroneously awarded water rights to the Tribe and the United States as the Tribe's successor. The United States and the Tribe also appeal; they argue that the district court erroneously awarded water rights to non-Indian successors of Indian landowners.

We first consider whether the district court should have dismissed this suit under the Colorado River doctrine.

A. Background: The Colorado River Doctrine.

In Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), the Supreme Court upheld a district court's dismissal of an action for federal adjudication of water rights in favor of a contemporaneous state adjudication. In Arizona v. San Carlos Apache Tribe of Arizona, the Court, following Colorado River, made clear its view that in most cases a federal court should defer to a contemporaneous and comprehensive state water rights adjudication because "water rights adjudication is a virtually unique type of proceeding, and the McCarran Amendment is a virtually unique federal statute." --- U.S. at ----, 103 S.Ct. at 3216. See Arizona v. San Carlos Apache Tribe of Arizona, --- U.S. ----, ----, 103 S.Ct. 3201, 3216, 77 L.Ed.2d 837 (1983). The course of our review and analysis in this case is necessarily determined by the factors found controlling in those two cases.

Plainly, the district court had jurisdiction. Federal courts have jurisdiction under 28 U.S.C. Sec. 1345 (1976) to adjudicate the water rights claims of the United States. Cappaert v. United States, 426 U.S. 128, 145-46, 96 S.Ct. 2062, 2072-73, 48 L.Ed.2d 523 (1976). While the Court in Colorado River pointed out that "state court[s] [have] jurisdiction over Indian water rights under the [McCarran] Amendment," 424 U.S. at 809, 96 S.Ct. at 1242, this statement does not imply that state courts have exclusive jurisdiction over such rights. In fact, the Colorado River Court made this point explicit when it held that "the McCarran Amendment in no way diminished federal-district-court jurisdiction under Sec. 1345 and ... the District Court had jurisdiction to hear this case." Id. In San Carlos Apache Tribe, the Supreme Court reaffirmed that the McCarran Amendment did not do away with federal jurisdiction over water rights claims brought under section 1345 or section 1362. See --- U.S. at ---- & n. 10, 103 S.Ct. at 3210 & n. 10.2

The Colorado River doctrine is an exception to the general rule that where a district court has statutory jurisdiction, it has a "virtually unflagging obligation" to exercise that jurisdiction. Colorado River, 424 U.S. at 817, 96 S.Ct. at 1246; see England v. Board of Medical Examiners, 375 U.S. 411, 415, 84 S.Ct. 461, 464-65, 11 L.Ed.2d 440 (1964).3 We read Colorado River and San Carlos Apache Tribe to counsel abstention in the interest of "wise judicial administration," despite that obligation, in the majority of water rights adjudications.4

The Court, however, has emphasized that its decision in Colorado River was not intended to preclude all adjudication in federal court of water rights arising under federal law. See San Carlos Apache Tribe, --- U.S. at ----, 103 S.Ct. at 3215. The Court recognized in Colorado River that the circumstances justifying dismissal of a federal suit for reasons of wise judicial administration "are considerably more limited than the circumstances appropriate for abstention." 424 U.S. at 818, 96 S.Ct. at ----.5 The Court concluded: "No one factor is necessarily determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counselling against that exercise is required." Id. at 818-19, 96 S.Ct. at 1247; accord Moses H. Cone Memorial Hospital v. Mercury Construction, --- U.S. ----, 103 S.Ct. 927 at 937, 74 L.Ed.2d 765. In San Carlos Apache Tribe, the Court's analysis emphasized the importance, in making this judgment, of avoiding "the possibility of duplicative litigation, tension and controversy between federal and state forums, hurried and pressured decisionmaking, and confusion over the disposition of property rights." Slip op. at 22. With these policies in mind, we turn to a review of the district court's "carefully considered judgment" in light of the facts presented to the court.

Our review is limited to a determination of whether the district court abused its discretion in proceeding to decide rather than dismiss this case.6 In Will v. Calvert Fire Insurance Co., 437 U.S. 655, 664, 98 S.Ct. 2552, 2558, 57 L.Ed.2d 504 (1978), the Supreme Court stated that the decision to dismiss for reasons of wise judicial administration is one "largely committed to the discretion of the district court." See also Moses H. Cone Memorial Hospital v. Mercury Construction, 103 S.Ct. at 938; Cf. Brillhart v. Excess Insurance Co. of America, 316 U.S. 491, 495, 62 S.Ct. 1173, 1175-76, 86 L.Ed. 1620 (1942) (decision whether to abstain from exercising federal jurisdiction in light of pending state proceeding is committed to district court's discretion). In the present case, therefore, we will not set aside the district court's decision to exercise its jurisdiction unless we have a definite and firm conviction that the district court committed a clear error of judgment in concluding that exceptional circumstances requiring dismissal were not presented.7 Anderson v. Air West, Inc., 542 F.2d 522, 524 (9th Cir.1976). Accord, Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir.1981); United States v. Sumitomo Marine & Fire Insurance Co., 617 F.2d 1365, 1369 (9th Cir.1980). We conclude that the district court did not abuse its discretion by choosing to determine the federal law priorities among water rights in this suit.

The state of Oregon and the individual defendants argue that the district court's exercise of jurisdiction fragments the adjudication of water rights in the Williamson River, contrary to the policy of the McCarran Amendment. The United States and the Tribe argue that the district court decision addresses a discrete water rights issue in a context that does not fragment the state general stream adjudication. They argue further that the district court judgment easily can be integrated into the state proceeding with no loss of efficiency.

Because of the posture in which this case has reached us, and because the chief goal of abstention under the Colorado River doctrine is the conservation of state and federal judicial resources, see San Carlos Apache Tribe, --- U.S. at ----, 103 S.Ct. at 3215, we hold that, on the facts of this case, the district court did not abuse its discretion by proceeding to decide, rather than dismiss, the federal law questions presented to it by the United States' suit. Indeed, were we to rule otherwise, and erase the district court's careful and time-consuming consideration of the federal water rights questions presented by this suit, thereby necessitating relitigation of the same issues in state court, we would, in effect, "throw the baby out with the bath" and create precisely the duplication and waste of judicial effort that Colorado River abstention and the McCarran Amendment are designed to avoid.

The Supreme Court stated in San Carlos Apache Tribe that:

Colorado River, of course, does not require that a federal water suit must always be dismissed or stayed in deference to a concurrent and adequate comprehensive state adjudication. Certainly, the federal courts need not defer to the state proceedings if the state courts expressly agree to stay their own consideration of the issues raised in the federal action pending disposition of that action. Moreover, it may be in a particular case that, at the time a motion to dismiss is filed, the federal suit at issue is well enough along that its dismissal would itself constitute a waste of judicial resources and an invitation to duplicative effort. See Colorado River, 424 U.S. at 820 [96 S.Ct. at 1247-1248]; Moses H. Cone Hospital, 460 U.S. at ---- [103 S.Ct. at 937]. Finally, we do not deny that, in a case in which the arguments for and against deference to a state adjudication were otherwise closely matched, the fact that a federal suit was brought by Indians on their own behalf and sought only to adjudicate Indian rights should be figured into the balance.

--- U.S. at ----, 103 S.Ct. at 3215 (emphasis added). In its present posture, this case, in our view, presents the kind of circumstances recognized by the Supreme Court as features of a particular suit that tip the balance against dismissal of a federal adjudication of Indian water rights even in the face of a contemporaneous but nascent state proceeding.

1. "Stay" of State Proceedings.

At the time the United States filed this action in the district court in September of 1975 there was no contemporaneous state proceeding of any kind to adjudicate water rights in the upper Williamson River watershed. Some months after the United States filed its suit in federal court, however, the Oregon State Water Resources Director issued a notice announcing that on Sept. 1, 1976, he would "begin an investigation of the flow and use of waters of the Klamath River and its tributaries ...." Under the Oregon scheme for adjudicating water rights, such a notice of investigation is one of the prerequisites to a state court determination of water rights. In addition, the Water Resources Director, after investigation, must decide that the "facts and conditions justify" making a determination of water rights. See Or.Rev.Stat. 539.020 (1981). At the time the district court ruled on defendants' motion to dismiss the federal suit, none of the preliminary steps in the Oregon adjudication had been completed.8

Of equal or greater importance to our decision in this case, however, is the fact that even at this time, some seven years after the Oregon Water Resources Director issued his notice of investigation, the state determination of water rights in the Klamath Basin has not proceeded beyond administrative investigation. Indeed, the information-gathering stage of the procedure is not yet complete. In effect, the state proceeding has been stayed during the pendency of this federal suit. See San Carlos Apache Tribe of Arizona at ----, 103 S.Ct. at 3215.9

2. Duplication and Waste of Judicial Resources That Would be Occasioned by Dismissal of the Federal Suit.

As the Supreme Court in San Carlos Apache Tribe warned, "in a particular case ... the federal suit at issue [may be] well enough along that its dismissal would itself constitute a waste of judicial resources and an invitation to duplicative effort." At ----, 103 S.Ct. at 3215.10 It is our opinion that this case presents precisely such a situation. First, we note that the district court carefully tailored its exercise of jurisdiction to decide only the priority among water rights created under federal law. See infra Section II(C)(1)(c); see also Moses H. Cone Memorial Hospital v. Mercury Construction, 103 S.Ct. at 941. Second, the contemporaneous state proceeding for adjudicating water rights was, and still is, nascent. Finally, the district court has taken evidence, heard extensive argument from all of the parties, and developed a multi-volumed record on which to base its decision of the water rights questions presented by this case. Both the individual defendants as well as the intervenor, State of Oregon, have been offered, and have taken, a full opportunity to participate in all aspects of this litigation. The district court's determination of water rights is more than "well enough along," it is complete. Given this factual setting, it is clear to us that neither the policies of the McCarran Amendment, nor the interest of wise judicial administration would be served by a decision from this court reversing and vacating the district court's judgment without reaching the merits. See San Carlos Apache Tribe, at ----, 103 S.Ct. at 3214.

3. The District Court's Adjudication of Indian Water Rights.

In its Pretrial Order, the district court carefully outlined the issues it would decide and those it would leave to subsequent state adjudication. The court limited its determination to ordering the priority among reserved water rights arising under federal law. The district court explicitly anticipated that "[a]ctual quantification of the [reserved] rights to use of the waters of the Williamson River and its tributaries within the [federal] litigation area will be left for judicial determination, consistent with the decree in this action, by the State of Oregon under the provisions of [the McCarran Amendment]."

In so limiting its exercise of jurisdiction, the district court avoided passing on questions of state water law and indeed ruled only on those questions involving application of the federal Indian law doctrine of reserved water rights. Far from improperly intruding on the role of the state court, we find that in exercising federal jurisdiction in this fashion the district court coordinated its adjudication of water rights with adjudication by the state court so as to allow each forum to consider those issues most appropriate to its expertise.11

In addition, while this case was not filed initially by the Klamath Tribe under the provisions of 28 U.S.C. Sec. 1362, the Tribe intervened on its own behalf shortly after the United States filed suit. Such intervention was quite proper since, had the Tribe not intervened, the United States could have been in the difficult position of representing competing interests in the same law suit. See infra Section III(C); see also Nevada v. United States, --- U.S. ----, 103 S.Ct. 2906, 2917, 77 L.Ed.2d 509 (1983) (recognizing problems faced by Government when it is given the duty to represent competing interests). Once the Tribe intervened, in light of the district court's limited exercise of jurisdiction, the case presented, for all practical purposes, a suit to adjudicate Indian water rights on behalf of an Indian Tribe. See San Carlos Apache Tribe, --- U.S. at ----, 103 S.Ct. at 3214.

4. Summary.

The district court limited its exercise of jurisdiction to a determination of the priority among federal water rights on lands roughly within the boundaries of the former Klamath Indian Reservation. It did not undertake a general stream adjudication. Proceeding in this fashion, it avoided the duplication of any state water rights adjudication and, we think, the pitfalls of piecemeal determination of water rights. In fact, the district court considered those factors identified as "secondary" in Colorado River, see 424 U.S. at 820, 96 S.Ct. at 1247-48, and found, correctly we think, that they did not counsel dismissal.12 Under these circumstances we cannot say that the district court abused its discretion. Because the district court had statutory jurisdiction to act as it did, and because we believe it would be an exercise in unwise and wasteful judicial administration inconsistent with the Supreme Court's decision in San Carlos Apache Tribe to vacate and cast aside the district court's carefully considered judgment in these matters, we proceed to a review of the merits of the district court's decision.

The district court declared reserved water rights within the litigation area to the Klamath Tribe, the Government, individual Indians, and non-Indian successors to Indian land owners. Each of the parties appeals from a different aspect of the district court's judgment. We address, first, the State and individual defendants' appeal from the court's declaration of water rights to the Tribe.

A. A Reservation of Water to Accompany the Tribe's Treaty Right to Hunt, Fish, and Gather.

Article I of the 1864 treaty with the Klamath Tribe reserved to the Tribe the exclusive right to hunt, fish, and gather on its reservation. 16 Stat. 707, 708; Kimball I, 493 F.2d at 566. This right survived the Klamath Termination Act, 25 U.S.C. Secs. 564-564w (1976). See Kimball v. Callahan, 590 F.2d 768, 775 (9th Cir.), cert. denied, 444 U.S. 826, 100 S.Ct. 49, 62 L.Ed.2d 33 (1979) (Kimball II ); Kimball I, 493 F.2d at 569. The issue presented for decision in this case is whether, as the district court held, these hunting and fishing rights carry with them an implied reservation of water rights.

1. Reservation of Water in the 1864 Treaty.

In Winters v. United States, 207 U.S. 564, 576-77, 28 S.Ct. 207, 211-12, 52 L.Ed. 340 (1908), the Supreme Court held that the treaty creating the Fort Belknap Indian Reservation contained an implied reservation of water to irrigate the arid Indian lands. More recently, in Cappaert v. United States, 426 U.S. 128, 96 S.Ct. 2062, 48 L.Ed.2d 523 (1976), and United States v. New Mexico, 438 U.S. 696, 98 S.Ct. 3012, 57 L.Ed.2d 1052 (1978), the Supreme Court addressed the scope and nature of Winters doctrine water rights on federal lands other than Indian reservations. In Cappaert, the Court upheld a lower court determination that, in setting aside the Devil's Hole National Monument, the United States had reserved a quantity of water sufficient to meet the purposes for which the Monument was established. The Court stated:

In determining whether there is a federally reserved water right implicit in a federal reservation of public land, the issue is whether the Government intended to reserve unappropriated and thus available water. Intent is inferred if the previously unappropriated waters are necessary to accomplish the purposes for which the reservation was created.

426 U.S. at 139, 96 S.Ct. at 2070. In New Mexico, the Supreme Court clarified the scope of the reserved water rights doctrine in the course of determining whether the United States had reserved water for use on the Gila National Forest in New Mexico. The Court indicated that water may be reserved under the Winters doctrine only for the primary purposes of a federal reservation. 438 U.S. at 702, 98 S.Ct. at 3015. Hence, even though the Supreme Court agreed that hunting, fishing, and recreation are among the purposes for which the National Forest System is maintained, it determined that these purposes are secondary to the purposes of "securing favorable conditions of water flows," and furnishing "a continuous supply of timber." 16 U.S.C. Sec. 475 (1976), quoted in United States v. New Mexico, 438 U.S. at 706-07