ELR Citation: ELR 20672
No(s). 89-15098 (9th Cir. Mar 16, 1990)

The court holds that §224(h) of the 1982 Reclamation Reform Act does not deprive landowners with recordable contracts for water on excess lands of a property right within the meaning of the Fifth Amendment and that Congress did not violate the principle of separation of powers in enacting §224(h). Pursuant to §224(h), the Department of the Interior issued a final rule that provides that landowners under extended recordable contract must pay the full-cost rate rather than the contract rate for water. The court holds that §224(h) applies to all recordable contracts, including those Congress did not explicitly mention and those incorporated into judgments. The court holds that under the water contracts, the right to receive water on excess lands for more than 10 years does not follow from the right to own lands for more than 10 years. Although Interior's regulations created reasonable expectations that the landowners would be able to receive subsidized water for the extended period of time, it did not create constitutionally protected expectations where there is a rational basis for repeal. Thus, landowners never had a contractual right to receive more than 10 years of water for their excess lands and therefore suffered no deprivation of a property right within the Fifth Amendment.

In addition, the court holds that Congress did not invade the province of the judiciary and violate the principle of separation of powers when it enacted §224(h). Landowners' prior judgment, which inter alia settled priorities among various water users, did not address the price of water for excess lands under extended term contracts. Therefore, §224(h) did not change the prior judgment and usurp judicial authority.

One dissenting judge would hold that landowners have a contractual right to reasonably priced water. The landowners' could not sell their land after 10 years as required in the contract because they could not get approval from the Secretary because he was enjoined for failure to follow the Administrative Procedure Act. When the contracts were renewed, there was no reason for the landowners' to renew the provisions governing rights to water. Congress' extension of the period to dispose of the land presumes an extension of the right to water at the contract rate. Thus, the Secretary should not profit from his own delay and the landowners' are entitled to the original contract price for the water. The consent judgment required the contract to be carried out. Congress, in enacting §224(h), overturned that result. In applying the provision to the landowners, the Secretary usurped judicial powers.

Counsel for Plaintiffs-Appellants
William M. Smiland
Donnelly, Clark, Chase & Smiland
One Bunker Hill, 12th Fl., 601 West Fifth St., Los Angeles CA 90071
(213) 891-1010

Counsel for Defendant-Appellee
Robert L. Klarquist
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-2731

Fletcher (before Ferguson and Fernandez, JJ.):