Montana v. Wyoming and North Dakota (137, Orig.)

Oral argument: Jan. 10, 2011

Original Jurisdiction: On Motion of Montana Excepting the First Interim Report of the Special Master

DOCTRINE OF APPROPRIATION, BENEFICIAL USE, YELLOWSTONE RIVER COMPACT, WATER LAW

In a case that could impact water rights throughout the Yellowstone River system, Montana accused Wyoming of violating the Yellowstone River Compact by consuming water in excess of the amount allotted to it. A Special Master, appointed by the Supreme Court, concluded that Montana had asserted valid claims, but recommended that the Court deny Montana’s claim that Wyoming’s use of improved irrigation techniques violates the Compact, and further recommended that Montana show that it lacks an intrastate remedy before calling on Wyoming to adjust usage. Montana argues that the Compact’s stated purpose to prevent controversy is undermined if upstream appropriators can use more efficient irrigation methods to reduce return flows at the downstream appropriators’ expense, and the need to prove a lack of intrastate remedies places disproportionate burdens on Montana. In response, Wyoming contends that its usage does not conflict with any limits set forth in the Compact, and that public policy supports allowing appropriators to reap the benefits of increased efficiency, especially in dry western regions.

[Questions presented]
[Issues]
[Facts]
[Discussion]
[Analysis]

Questions presented

1. Whether the Special Master correctly concluded that Montana’s increased-efficiency allegation does not state a claim for breach of the Compact.

2. Whether the Special Master correctly concluded that, to show that Wyoming has breached the Compact and caused Montana injury, Montana must show that its water users lack an intrastate remedy under Montana law.

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Issues

1. Whether, under the Yellowstone River Compact, pre-1950 water users in Wyoming are allowed to implement improved irrigation techniques on their lands that reduce the amount of water available to downstream users in Montana.

2. Whether Montana must offer its water users intrastate remedies before holding Wyoming liable for Montanan water shortages under the Compact.

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Facts

The Tongue and Powder Rivers, two tributaries of the 700-mile-long Yellowstone River, are an important source of water for agricultural users in Wyoming, Montana, and North Dakota. See First Interim Report of the Special Master at 3–4. Both tributaries originate in the Big Horn Mountains of Wyoming and then travel into Montana, where they ultimately join the main stem of the Yellowstone River. See Id. at 4. The waters of these tributaries are used primarily for irrigation. See Id.

The rights to the Tongue and Powder Rivers are governed by the Yellowstone River Compact (“the Compact”), which apportions the waters of the Yellowstone River system. See First Interim Report of the Special Master at 1, 6. Congress approved the Compact in 1951, following a year of internal negotiation within the Yellowstone River Compact Commission, a special entity comprised of representatives from Wyoming, Montana, North Dakota, and a number of federal agencies. See Id. at 8. The Compact follows a three-tiered framework: The first tier adopts the doctrine of “prior appropriation,” which generally holds that the first people to put water to a beneficial use retain a continuing right to the water. See Id. at 4–5, 10. Thus, under the Compact, water users in Wyoming and Montana who diverted water from the Tongue and Powder Rivers prior to January 1, 1950 would continue to enjoy identical appropriative rights in the tributaries after the Compact was approved. See Id. at 10. The second tier of the Compact concerns the “unused and unapportioned” waters of interstate tributaries, and permits each state to divert amounts of water to supplement first-tier appropriation rights. See Id. at 10–11. Finally, the third tier of the Compact gives each state a specified percentage of any remaining “unused and unapportioned” water, the percentages to be calculated annually. See Id. at 11.

In 2008, Montana filed a Bill of Complaint against Wyoming, claiming that Wyoming had breached the Compact by consuming water in excess of the amount allotted to it as of January 1, 1950. See First Interim Report of the Special Master at 5, 12. Specifically, Montana asserted that a number of post-1950 activities in Wyoming—including the construction of new storage reservoirs, irrigation of new acreage, and reduction of water flow through groundwater pumping—significantly lowered the amount of water available downstream in Montana. See Id. at 12. Montana further contended that, by adopting improved irrigation techniques (such as sprinklers), several pre-1950 water users in Wyoming had exacerbated the Montanan water shortage. See Id. at 3, 12.

Under Article III of the Constitution, the Supreme Court has original jurisdiction over disputes that arise between the states. See U.S. Const., Art. III § 2; 28 U.S.C. § 1251. Exercising its jurisdictional authority, the Court appointed Professor Barton H. Thompson as a Special Master to hear Montana’s complaint as well as Wyoming’s motion to dismiss. See First Interim Report of the Special Master at 14. Though the Special Master concluded that Montana had asserted valid claims with regard to Wyoming’s post-1950 activities, he also recommended that the Court deny Montana’s last claim regarding the use of improved irrigation techniques. See Id. at 14–15. The Special Master reasoned that the Compact aimed to regulate the diversion, not the consumption, of water from the Yellowstone tributaries. See Id. at 60–61. He further noted that, under the water laws of both Montana and Wyoming, prior appropriators were free to increase the consumption of water on existing acreage through improved irrigation techniques. See Id. at 86–87.

In addition, the Special Master rejected the Anadarko Petroleum Corporation’s (“Anadarko”) attempt to intervene in the action. See Id. at 97. Though the Special Master acknowledged that Anadarko’s enterprise— extracting natural gas from the basin of the Powder River—gave rise to a strong interest in the action, Anadarko failed to prove that its interests would not be properly represented by Wyoming. See Id. at 103, 109.

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Discussion

In a case that could impact water rights throughout the Yellowstone River system, Montana accuses Wyoming of violating the Yellowstone River Compact (“the Compact”) by consuming water in excess of the amount allotted to it under the Compact. See First Interim Report of the Special Master at 4. Montana argues that the Compact limited Wyoming’s use of water from the Tongue and Powder Rivers to the amount consumed in 1950, creating a fixed allocation of water among the States. See Montana’s Exception and Brief at 13. Wyoming, however, contends that the Compact concerned the mere diversion of water, not its consumption, forcing Montana to address any intrastate water shortages with intrastate remedies. See Wyoming’s Reply to Montana’s Exception at 29–30, 44.

The Northern Cheyenne Tribe is concerned about protecting its water rights in the Yellowstone River system. See Brief of Amicus Curiae Northern Cheyenne Tribe in Support of Montana’s Exceptions at 4. The Tongue River forms the eastern boundary of the Northern Cheyenne Tribe’s 444,000 acre reservation in southeastern Montana, and is the main source of the Tribe’s water rights. See Id. at 1–2. Arguing against the Special Master’s conclusion that pre-1950 water users in Wyoming are free to adopt improved irrigation techniques, the Northern Cheyenne Tribe points out that downstream water users often rely on the availability of “return flows,” or non-consumed runoff, from upstream irrigation. See Id. at 7. In fact, the Tribe notes that, at the end of irrigation season in southeastern Montana, it is not unusual that the only water available to downstream users comes from upstream return flows. See Id. Though the Northern Cheyenne Tribe agrees with the Special Master that more efficient irrigation techniques may promote water conservation, the Tribe also observes that similar goals of efficiency, conservation, and utility may be met by maximizing the number and extent of water uses. See Id. at 8.

On the other hand, in its amicus brief, the United States concurs with the Special Master’s decision to deny Montana’s improved-irrigation theory. See Brief for the United States as Amicus Curiae Opposing Plaintiff’s Exception at 14. The United States argues that Montana’s theory undermines the dynamic nature of appropriative water rights, which not only prevent waste and hoarding, but also ensure that appropriators cannot assert a right to more water than they need or can use. See Id. at 18. According to the United States, a dynamic doctrine of appropriation would both allow for water rights to lapse when appropriators abandon the beneficial use of diverted water, and for water rights to expand when appropriators work with “reasonable diligence” to put their water to a planned beneficial use. See Id. at 23.

Additionally, the United States agrees with the Special Master that, before it holds Wyoming liable for breach of the Compact, Montana must attempt to address its own water shortages with intrastate solutions. See Brief for the United States at 31. In the United States’ view, a decision that did not require Montana to apply intrastate measures would ultimately harm innocent Wyoming water users who had nothing to do with the water shortages of their downstream neighbors. See Id. at 32. Furthermore, Wyoming adds that adopting Montana’s interpretation of the Compact would lead to significant administrative and logistical problems because, instead of simply measuring divertible flows at the head-gates, the states would be required to monitor all upstream appropriation of water. See Wyoming’s Reply to Montana’s Exception at 43.

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Analysis

With this decision, the Supreme Court will determine how the water rights shared by Wyoming, Montana, and North Dakota will be protected under the Yellowstone River Compact of 1950 (the “Compact”). Montana filed exceptions to two of Special Master Barton Thompson’s conclusions. See Montana’s Exception and Brief at 1. Montana asserts that it has a cause of action because Wyoming’s switch from its previous irrigation method of flooding to a more efficient sprinkler method reduced the return flows to levels which violate pre-1950 water rights. See Id. Montana also objects to the Special Master’s finding that Montana must attempt to resolve water shortages through intrastate means prior to requesting Wyoming adjust its use of the Yellowstone tributaries. See Id. Wyoming replies that Montana has fundamentally misinterpreted the clause it uses to support its claims. See Wyoming’s Reply to Montana’s Exception at 5. Wyoming also suggests that Montana waived its right to raise the curtailment conditions issues before the Court when it did not address these concerns following an opportunity to do so with the Special Master. See Id. at 6.

Beneficial Use

Article V of the Compact creates a tiered water allocation system. See First Interim Report of the Special Master at 18. Montana argues that Section V(A) protections supersede Section V(B) protections because Section V(A) pre-1950 appropriative rights “shall continue to be enjoyed” whereas Section V(B) post-1950 appropriative rights only protect divertible flows for the “unused and unappropriated” water following Section V(A) enforcement. See Montana’s Brief at 17. Montana points out that “beneficial uses” is a defined term that recognizes depletions as a necessary component to deriving the benefit. See Id. at 18. Therefore, Montana contends that Wyoming cannot so deplete the argued-over tributaries such that Montana’s Section V(A) beneficial uses go unprotected. See Id. at 19. According to Montana, the violation occurs because Wyoming switched to a more efficient sprinkler irrigation system, which increased its consumption of the water to a point where Montana’s enjoyment fell below that enjoyed before 1950. See Id. Montana complains that the Special Master’s ruling appears to replace the Compact’s definition of “beneficial uses” with an incompatible common law analysis. See Id. at 27. Moreover, Montana questions the logic of separating irrigation techniques from three other forms of consumptive use where the Special Master ruled in Montana’s favor. See Id. at 22. Montana adds that it does not matter that Wyoming honors the percentage limits placed on divertible flows by Section V(B), because Section V(A) protections supersede Section V(B). See Id. at 19. Moreover, Montana insists that neither Wyoming nor the Special Master may rely on policy arguments of efficiency where the Compact language is unambiguous, because the Congressionally-approved Compact has the force of law. See Id. at 12, 19.

Wyoming, on the other hand, argues that Montana has confused the meaning of “beneficial uses” for a quantity of water rather than a limitation on how an irrigator uses the water once appropriated. See Wyoming’s Reply at 21. Wyoming suggests that Montana has substituted “beneficial uses” for the true subject of Section V(A), “appropriative rights,” the use of which demonstrates the drafters’ intention to incorporate the doctrine of appropriation into the Compact. See Id. at 18. Wyoming contends that nothing in Section V(A) protects Montana’s pre-1950 rights from ways that Wyoming can legitimately exercise its own Section V(A) rights. See Id. at 16, 20. Wyoming stresses that if the drafters had intended to include an express cap on Section V(A) usage they could have done so simply, as many contemporaneous compacts impose limitations with specified methodologies. See Id. at 23–25, 27–28. In sum, Wyoming argues that the only consumptive limits specified in Article V are those in Section V(B), and that Montana’s issue is with reduced return flows, which the Compact drafters did not circumscribe through the imposition of any quantity measures. See Id. at 29–31.

Doctrine of Appropriation

Montana argues that the analysis conducted by the Special Master to determine whether Wyoming’s diversion methods violate the doctrine of appropriation fails for two reasons. See Montana’s Brief at 32. First, Montana contends that the doctrine of appropriation was not included to govern interstate appropriation, but intrastate appropriation once Section V(A) protections were honored. See Id. at 33. Montana questions the logic of an interpretation that allows Wyoming appropriators to reduce return flows to zero but where Montana’s appropriators “shall continue to enjoy” water rights. See Montana’s Sur-Reply at 4. According to Montana, the Compact is an agreement allocating water between sovereigns, and any interpretation that places allocations at the mercy of an individual user completely undermines the Compact’s express purpose. See Id. at 18–19. Second, Montana argues that the Special Master’s analyses conflated two forms of capturable water. See Montana’s Brief at 36. The Special Master relies on case law with a focus on seepage flows rather than return flows, but this distinction is critical because seepage never reaches a natural watercourse whereas return flows do, such that a downstream appropriator can rely upon it. See Id. at 35.

Wyoming argues that Section V(A) provides absolute protections to Montana’s pre-1950 appropriations under the doctrine of appropriation, but that the correct interpretation of the doctrine of appropriation was applied by the Special Master. See Wyoming’s Reply at 37–38. Under western water law, where an upstream appropriator alters his method of appropriation such that it qualifies as a “cardinal change”—a change in the place of use, type of use, or point of diversion— a “no injury” rule applies to protect a downstream appropriator. See Id. However, the “no injury” rule does not apply where an upstream appropriator has merely diverted a volume of water within his appropriative rights, but a change to a more efficient irrigation method has reduced return flows to a downstream appropriator. See Id. Wyoming explains that before appropriation, water is public, but becomes private once appropriated; ownership provides the appropriator the opportunity to consume this water for a beneficial use, even if the downstream appropriator enjoys no return flow. See Id. at 42–43.

Intrastate Administration Pre-Conditions

Montana argues that the Special Master’s condition to ensure that diversions do not reduce Montana pre-1950 rights compromises Montana’s protections under the Compact. See Montana’s Brief at 37. Montana contends that this conclusion places a heavy burden on Montana to justify all intrastate water administration before the Compact can be enforced. See Id. at 38. Moreover, Montana notes that this places an obligation on the downstream right-holder, whereas the upstream right-holder, Wyoming, has none. See Id. at 39. Montana also complains that this conclusion creates an enforcement responsibility on Montana which conflicts with the purpose of the Compact to remove controversy where state obligations exist regardless of the other’s actions. See Id. at 38–39.

Wyoming argues that Montana waived its right to this argument when it failed to raise it before the Special Master. See Wyoming’s Reply at 45. Furthermore, Wyoming believes that this conclusion places no undue burden on Montana because it should be able to prove a lack of intrastate remedy simply with evidence gathered during normal water management administration. See Id. at 51–52. Additionally, the United States defends Wyoming, suggesting that a correct reading of Section V(A) indicates that if Montana can satisfy pre-1950 uses through intrastate means then there has been no breach for which Montana can state a claim for relief. See Brief for the United States as Amicus Curiae Opposing Plaintiff’s Exception at 10. In reply, Montana has agreed to table this exception for subsequent proceedings. See Montana’s Sur-Reply at 21.

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Conclusion

With this decision, the Supreme Court will determine how the Yellowstone River Compact of 1950 protects the water rights shared by Wyoming, Montana, and North Dakota. Both parties rely on a plain reading of the relevant sections of the Compact but come to incompatible interpretations. Montana argues that the Compact’s stated purpose of preventing controversy is undermined if upstream appropriators can use more efficient irrigation methods to reduce return flows at the downstream appropriators’ expense. In response, Wyoming contends that its usage does not conflict with any limits set forth in the Compact, that Montana’s interpretation creates an amorphous and impractical limitation the drafters never intended, and that public policy supports a reading which allows Wyoming to reap the benefits of increased efficiency, especially in dry western regions. While currently the controversy only involves the Tongue and Powder Rivers, the Court’s decision here may impact other rivers regulated by this Compact.

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