Title: THE GENERAL ADJUDICATION OF ALL RIGHTS TO USE WATER IN THE BIG HORN RIVER SYSTEM AND ALL OTHER SOURCES, STATE OF WYOMING PHASE III

State: wyoming

Issuer: Wyoming Supreme Court

Document:

THE GENERAL ADJUDICATION OF ALL RIGHTS TO USE WATER IN THE BIG HORN RIVER SYSTEM AND ALL OTHER SOURCES, STATE OF WYOMING PHASE III2004 WY 2185 P.3d 981Case Number: 02-239Decided: 03/10/2004
OCTOBER TERM, A.D. 2003

                                                                                                            

IN 
RE:  THE GENERAL 
ADJUDICATION

OF 
ALL RIGHTS TO USE WATER IN THE

BIG 
HORN RIVER SYSTEM AND ALL

OTHER 
SOURCES, STATE OF WYOMING

PHASE 
III

JOHN 
MAX STUTZMAN and ROBERTA

LEE STUTZMAN,
 

Appellants(Petitioners/Intervenors).

 

Appeal from the District Court of Washakie County

The Honorable Gary P. Hartman, Judge

 

Representing Appellant:

            
S. Joseph Darrah and Christopher M. Brown of Darrah & Darrah, P.C., 

Powell, Wyoming.  Argument by Mr. Darrah.

 

Representing the State of Wyoming:

            
Patrick J. Crank, Attorney General; Jenifer E. Scoggin*, 
Assistant Attorney General; and Keith S. Burron, Special Assistant Attorney 
General, of Associated Legal Group, LLC.  Argument by Ms. Scoggin.

 

Representing the United States:

            
Thomas L. Sansonetti, Assistant Attorney General, Environment & 
Natural Resources Division, and John L. Smeltzer, Attorney, Department of 
Justice, Washington, D.C.; Matthew H. Mead, United States Attorney, and Carol 
Statkus, Assistant United States Attorney, Cheyenne, Wyoming.  Argument by Mr. 
Smeltzer.

            
 

Before LEHMAN, KITE, and VOIGT, JJ.; BURKE and KAUTZ, 
DJJ.

 

* Order granting request to withdraw filed 
12-31-03.

 

KITE, Justice.

 

[¶1]      John Max Stutzman and 
Roberta Lee Stutzman, individual irrigators within the Shoshone Reclamation 
Project, claimed rights to use a proportionate share of the water stored in the 
Buffalo Bill Reservoir, which is owned and operated by the federal Bureau of 
Reclamation, and sought to have those rights adjudicated in the Big Horn River 
general adjudication.  
We hold the district court properly dismissed the Stutzmans' claims as 
untimely.  

 

[¶2]      The Stutzmans present 
the following issues:

 

1.  Whether the Petition for Intervention requests 
an adjudication of contract claims or asserts a claim for the quantification, 
prioritization, and recognition of vested property rights?

 

            
2.  Whether the district court erred in finding that the 
Appellants' request for adjudication of the right to beneficially use water 
stored in Buffalo Bill Reservoir was barred under the doctrine of res judicata?

 

            
3.  Whether the doctrine of laches was improperly applied to a 
W.R.C.P. § 12(b)(6) Motion to Dismiss Appellants' Petition For Intervention for 
the purposes of adjudicating the Appellants' right to beneficially use stored 
water when no evidence was presented to support the doctrine of laches by the 
district court?

 

            
4.  Whether Appellants' constitutional right to due process of 
law was violated when the district court failed to recognize Appellants' vested 
water rights which were purchased and conveyed from the United States by the 
issuance of patents as well as the issuance of Buffalo Bill Reservoir permits by 
the State Engineer containing conditions that the stored water was to be used on 
Shoshone Reclamation Project lands?

 

[¶3]      Appellee, state of 
Wyoming, presents the following issues:

 

            
1.  Whether the District Court correctly determined that all 
rights to use water from Buffalo Bill Reservoir were fully adjudicated in this 
general adjudication in 1985 and therefore Appellants' efforts to revisit the 
adjudication of those rights are barred.

 

            
2.  Whether the District Court correctly determined that 
Appellants' claims based on federal water right applications, patents and 
contracts are not properly before the court in this general 
adjudication.

 

            
3.  Whether Appellants have been denied due process in the 
adjudication of rights to use water in Buffalo Bill Reservoir.

 

[¶4]      Appellee, United 
States of America, presents the following issues:

 

            
1.  Whether the district court properly denied Appellants' 
motion to intervene on the grounds that Appellants seek to litigate a contract 
dispute with the United States that is not within the district court's 
jurisdiction under this general stream adjudication; and

 

            
2.  Whether the district court properly denied Appellants' 
motion to intervene on the basis of statutory limitations and laches.

 

FACTS

  

[¶5]      This appeal arises out of the continuing, comprehensive 
adjudication of the water rights in the Big Horn River system initiated in 1977 
pursuant to Wyo. Stat. Ann. § 1-37-106 (LexisNexis 2003) and the McCarran 
Amendment, 43 U.S.C. § 666 (1976).  The adjudication's primary purpose was to 
determine what water rights the federal government reserved for the Wind River 
Indian Reservation's benefit.  See In re General Adjudication of All Rights to Use Water in 
the Big Horn River System, 899 P.2d 848, 850 (Wyo. 1995) (Big Horn V).   We have summarized the vast factual and 
legal background of this litigation in prior appeals to this Court.  See In re General 
Adjudication of All Rights to Use Water in the Big Horn River System, 803 P.2d 61 (Wyo. 1990) 
(Big Horn 
II); In re 
General Adjudication of All Rights to Use Water in the Big Horn River 
System, 
835 P.2d 273 (Wyo. 1992); 
In re General 
Adjudication of All Rights to Use Water in the Big Horn River System, 753 P.2d 76, 83-86 (Wyo. 
1988), cert. granted 
in part, 488 U.S. 1040, aff'd 
sub nom., 
Wyoming v. 
United States, 
492 U.S. 406 (1989) (Big Horn I).   The case as a 
whole was divided into three phases: Phase I, Indian reserved water rights; 
Phase II, non-Indian federal reserved water rights; and Phase III, state water 
rights evidenced by a permit or certificate.  Big Horn I, 753 P.2d  at 85.  

 

[¶6]      This appeal falls in 
Phase III of the adjudication.  The Stutzmans' farmland is located within the 
Shoshone Reclamation Project in Park County, Wyoming.  Specifically, the 
Stutzman property is located in the Garland Division of the project, and they 
are members of the Shoshone Irrigation District.  The Shoshone Reclamation Project is a federal reclamation 
project constructed and operated by the federal Bureau of Reclamation (BOR) 
pursuant to the Reclamation Act of 1902, 43 U.S.C. § 371 et seq., (as amended), and 
governing regulations.  
See, e.g., 43 C.F.R. § 426.1 et seq.  The project lies on the Shoshone River, a 
tributary of the Big Horn River, and its centerpieces are the Buffalo Bill Dam 
and Reservoir, approximately 6 miles west (upstream) of Cody.  Through the 
operation of the reservoir, the BOR provides water for irrigation, power 
generation, municipal supply, recreation, and other beneficial uses.  With respect to 
irrigation, the BOR provides reservoir water to four irrigation districts  the 
Shoshone, Deaver, Willwood, and Heart Mountain  under contracts with each 
district.  The 
irrigation districts, in turn, supply water under terms and conditions set out 
in contracts, to individual users like the Stutzmans.

[¶7]      The Shoshone 
Reclamation Project dates back to 1899.  In that year, the state of Wyoming issued a 
direct-flow permit (Permit 2111) to William "Buffalo Bill" Cody and Nate 
Salisbury, authorizing the diversion of Shoshone River water through the "Cody 
and Salisbury Canal" for the irrigation of a 60,000-acre tract of land adjacent 
to the Shoshone River that the United States had segregated to the state.  See United States v. Ide, 277 F. 373, 375 (8th Cir. 1921).  After Congress 
enacted the Reclamation Act in 1902, Wyoming relinquished the segregated land 
back to the United States  along with the rights granted in Permit 2111  to 
allow the United States to construct a reclamation project on the land.  Id.  Section 8 of the Act provides, "Nothing in 
this Act shall be construed as affecting or intended to affect or to in any way 
interfere with the laws of any State or Territory relating to the control, 
appropriation, use, or distribution of water used in irrigation, or any vested 
right acquired thereunder, and the Secretary of the Interior, in carrying out 
the provisions of this Act, shall proceed in conformity with such (state water) 
laws."  The 
courts have consistently noted that Section 8 imposed "upon the United States . 
. . a duty to obtain water rights for reclamation projects."  Nevada v. United States, 463 U.S. 110, 142 
(1983).  
Consistent with that requirement, in 1904, the United States applied for 
a permit (Permit 492R) to construct a dam and reservoir on the Shoshone 
River.  In 1905, 
the United States applied for a second permit (Permit 751R) to allow enlargement 
of the dam and reservoir described in the prior permit.  

[¶8]      The state engineer 
approved both permits.  
In approving Permit 492R with a priority date of 1904, he authorized the 
construction of a reservoir to hold 159,000 acre feet of water and observed that 
"[t]he Water to be stored in the reservoir herein described [is] to be used on 
the lands described in [an] enlargement of permit 2111."  In approving Permit 
751R with a priority date of 1905, the state engineer authorized an increase in 
storage capacity to 456,600 acre feet with no reference to the lands upon which 
the water would be used.  Both permits provided that the proposed 
reservoir was to store water for "irrigation, the development of power for 
irrigation purposes, domestic purposes, and other beneficial uses."  By 1910, the United 
States completed the initial construction of the dam and reservoir under the 
authority granted in Permits 492R and 751R.  

[¶9]      In that same year, the 
United States filed an application for a permit (Permit 10138) to divert water 
from the Shoshone River via the Corbett Dam and Garland and Frannie Canals for 
the irrigation of 90,000 acres of land within the Shoshone Reclamation Project, 
including certain lands not designated in Permit 2111.  This permit, 
approved by the state engineer as a "secondary" permit, stated that the source 
of the water supply was the Shoshone River supplemented by the storage in 
Shoshone (now Buffalo Bill) Reservoir.  Under the statutes effective at that time, 
permits for the application of water impounded under reservoir permits were 
required and were deemed "secondary" permits.  W.S.C. § 744 (1910).  The United States 
completed construction of the bulk of the Garland Division by 1917.  See United States v. Ickes, 
70 F.2d 771, 772 (D.C. Cir. 1934) (describing project).  Thereafter, in 1920, 
the United States filed an application for another secondary permit (designated 
Temporary Filing No. 11 2/388 E) for use of Buffalo Bill Reservoir waters on an 
additional 96,264.86 acres in the Shoshone Reclamation Project from the Canyon, 
Heart Mountain, Willwood, Garland, and Frannie Canals.      

 

[¶10]   As the various stages of the Shoshone 
Reclamation Project were completed, the United States conveyed project lands to 
individual settlers under the terms of the Reclamation Act.  See, generally, Ickes, 70 F.2d  at 772; Ide, 277 F.  at 376-77.  To acquire land, 
settlers were required, among other things, to complete a "water-rights 
application."  
Through these applications, settlers acquired from the United States the 
right to use the stored water.  The applications did not relate to a state 
water right.  A 
typical patent from the United States conveyed to an approved applicant, and his 
or her heirs, a designated tract of land together with "the right to use the 
water from the SHOSHONE Reclamation Project as an appurtenance to the irrigable 
lands in said tract; to HAVE AND HOLD the same, together with all rights, 
privileges, immunities, and appurtenances, of whatsoever nature . . . forever; 
subject to any vested and accrued water rights for mining, agricultural, 
manufacturing, or other purposes, and right to ditches and reservoir used in 
connection with such water rights, as may be recognized by local customs, laws, 
and decisions of courts."  The Stutzmans alleged that their predecessors 
in interest acquired project lands through such applications and patents.  As consideration for 
the patents, the Stutzmans' predecessors in interest agreed to pay a per-acre 
fee to defray project construction costs.  However, the fee did not cover all project 
construction expenditures.  See, e.g., Ickes, 70 F.2d  at 772.

 

[¶11]   In 1926, the United States entered into 
a contract with the Shoshone Irrigation District, a corporation organized under 
the laws of Wyoming, to transfer operation and maintenance of the Garland 
Division irrigation works to the district.  Under the terms of the contract, the district 
assumed responsibility for delivering project water to individual landowners and 
for collecting applicable fees.  In turn, the United States agreed, among other 
things, to supply water to the irrigation district from the Buffalo Bill 
Reservoir and to extend the schedule for repayment of construction costs.  As to water 
deliveries, the contract provided that "[t]he water to be delivered to the 
District . . .  
from the Shoshone [now Buffalo Bill] reservoir shall be turned out as 
ordered by the District at a rate not in excess of the District's pro rata 
share."  The 
Shoshone Irrigation District ultimately completed repayment of its share of the 
construction costs in 1979.  The contract also stated that "water rights 
[to] which the project lands are now entitled remain unchanged" and that such 
lands remain "entitled to the same water rights which they would be entitled to 
under all existing contracts and water-rights applications."     

 

[¶12]   In 1963, the State Board of Control 
issued certificates of construction to the United States for the Buffalo Bill 
Reservoir which perfected and adjudicated the state rights granted under Permits 
492R and 751R.  
The certificates specifically confirmed the right of the BOR to "store 
water" in the Buffalo Bill Reservoir, with priority dates of 1904 and 1905, in 
"such an amount as shall be beneficially used . . . for irrigation, power, 
domestic, municipal, industrial, recreation, fish and wildlife use."  The certificates 
also confirmed a combined storage capacity under both permits of 456,600 acre 
feet.  

[¶13]  In 1964, the BOR filed a petition to cancel 
the secondary portion of Permit 10138 and to cancel Temporary Filing No. 11 
2/388 E, the application for a secondary permit which had never been 
approved.  The 
state engineer granted both requests, amending Permit 10138 to eliminate the 
reference to secondary storage and canceling the application in Temporary Filing 
11 2/388 E. 1 

[¶14]   The Big Horn River general adjudication 
was filed on January 24, 1977.  In 1985, Phase III of the litigation began 
which was dedicated to the adjudication of all state water rights evidenced by a 
permit or certificate.  
Big Horn 1, 753 P.2d  at 86-87.  The Shoshone 
Irrigation District filed an answer on behalf of its members, which included the 
Stutzmans, in that phase of the adjudication.  The district sought the judicial confirmation 
of Permits 492R and 751R which were previously administratively adjudicated and 
for which certificates of construction had issued.  The United States 
was also a party to the litigation.

 

[¶15]   The district court adopted Big Horn 
River Adjudication Phase III Procedures in which it summarized the remaining 
work to be done and established explicit procedures for accomplishing the 
same.  The 
logical approach taken by the district court was to first deal with previously 
adjudicated rights and then proceed to address the approximately 3900 other 
permits that needed to be cancelled or adjudicated.  First, the 
procedures required the state to report all certificates, which represented 
administratively adjudicated rights, issued prior to January 1, 1977.  The court noted, 
"[a]s no certificates have been issued during the pendency of this action, after 
January 1, 1977, none will be reported."  The state complied with the court's order and 
compiled and reported all certificates in a "Tab Book."  By separate order on 
May 24, 1985, the district court confirmed all the listed certificates.  The procedures then 
required all challenges to adjudicated certificates be filed prior to December 
31, 1985.  No 
objections were filed to any of the Shoshone Reclamation Project water.  With regard to the 
unadjudicated permits, the Phase III procedures provided that only permits 
applied for and received by the state engineer prior to midnight December 31, 
1984, "shall be adjudicated in this action."  The Phase III procedures contemplated the 
entire adjudication would be completed by December 31, 1988.

 

[¶16]   On January 4, 2001, the Stutzmans filed 
a petition to intervene in the Big Horn River general adjudication claiming an 
individual, proportionate right to use the stored water in the Buffalo Bill 
Reservoir.  In 
particular, the Stutzmans claimed "implied" secondary rights by and through the 
reservoir permits, and ownership of a "pro-rata" or "proportionate" share of 
water stored in the Buffalo Bill Reservoir by virtue of the federal land 
patents, water rights applications, repayment contracts, and the Reclamation Act 
of 1902.  The 
district court asked the parties for briefing on two issues: 1) whether the Big 
Horn River general adjudication was a proper forum for the Stutzmans' claims; 
and 2) whether the Stutzmans' claims were barred by the doctrine of 
laches.

 

[¶17]   The United States and the state of 
Wyoming filed separate motions to dismiss the petition.  After reviewing the 
briefs and hearing argument, the district court granted the motions to dismiss 
finding the state law claims were barred by the doctrines of laches and res 
judicata and it lacked jurisdiction over the claims based upon the patents and 
the Reclamation Act, characterizing them as "contract disputes" involving 
federal law.  
The Stutzmans appealed that order.

            

STANDARD OF REVIEW

            

[¶18]   This Court's standard for reviewing an 
order of dismissal under W.R.C.P 12(b)(6) is as follows:

 

When claims are dismissed under W.R.C.P. 12(b)(6), this Court accepts the facts stated 
in the complaint as true and views them in the light most favorable to the 
plaintiff. Such a dismissal will be sustained only when it is certain from the 
face of the complaint that the plaintiff cannot assert any facts that would 
entitle him to relief. Story v. State, 2001 WY 3, P19, 15 P.3d 1066, P19 (Wyo. 
2001). Dismissal is a drastic remedy and is sparingly granted; nevertheless, we 
will sustain a W.R.C.P. 12(b)(6) dismissal 
when it is certain from the face of the complaint that the plaintiff cannot 
assert any set of facts that would entitle that plaintiff to relief. Robinson v. 
Pacificorp, 10 P.3d 1133, 1135-36 
(Wyo. 2000).

 

Van Riper v. Oedekoven, 2001 WY 
58, ¶ 24; 26 P.3d 325, ¶ 24 (Wyo. 
2001).

 

[¶19]   Jurisdictional matters, on the other 
hand, are not subject to judicial discretion.  Weller v. Weller, 960 P.2d 493, 495 (Wyo. 
1998).  Subject 
matter jurisdiction either exists or it does not, as a matter of law, and a 
court should be satisfied that it possesses subject matter jurisdiction before 
it makes a decision in a case.  Id.  On issues of law such as are involved in the 
application of res judicata and interpretation of 
statutes, we review the district court's order de 
novo.  Peters v. West Park Hospital, 2003 WY 117, 76 P.3d 821 (Wyo. 
2003).  
Application of the equitable doctrine of laches and interpreting and 
applying scheduling orders of the district court are within the sound discretion 
of the court. Thompson v. Board of County Commissioners 
of Sublette County, 2001 WY 
108, 34 P.3d 278 (Wyo. 2001). 
 Judicial 
discretion has been described as:  "a composite of many things, among which are 
conclusions drawn from objective criteria; it means a sound judgment exercised 
with regard to what is right under the circumstances and without doing so 
arbitrarily or capriciously."  Shryack v. State of 
Wyoming ex rel. Wyoming Workers' Safety and Compensation Division, 3 P.3d 850 (Wyo. 2000), quoting Byerly v. Madsen, 41 Wn. App. 495, 704 P.2d 1236 (1985).  

  

DISCUSSION

Jurisdiction

 

[¶20]   All parties agree that the certificates 
to store water in Buffalo Bill Reservoir were properly issued to the BOR, 
adjudicated by the state, and confirmed by the district court.  This dispute arises 
because the Stutzmans are dissatisfied with the manner in which the stored water 
has been administered by the BOR. Specifically, they allege the BOR improperly 
released stored water during the winter for the state's in-stream flow permit 
which carries a much more recent priority date (1975) than the BOR's 
certificates (1904 and 1905) through which they claim implied secondary 
rights.  The 
Stutzmans claim the release resulted in less "stored water available in the 
irrigation season."  
We note the Stutzmans do not allege that they were denied any specific 
amount of water to which they were entitled under their patents and federal 
contracts.  
Rather, they raise the broader question of who owns or controls the water 
stored in a federal reclamation project.  The answer to that complex question depends 
upon the context in which it is addressed and a variety of facts and 
circumstances.  
See, Reed D. Benson, Whose Water Is It? Private Rights and Public Authority Over 
Reclamation Project Water, 16 Va. Envtl. L.J. 363 (1997).  As the Benson 
article described it,

The entire package of rights in reclamation project water 
can be thought of, as with other property rights, as a "bundle of sticks." In 
most cases, the sticks of the project water bundle are divided among at least 
four entities: the federal government, the state, the district, and the end 
user.

 

Id. at 366.

 

[¶21]   The Stutzmans' assertion that they have 
the right to control a proportionate share of the stored water involves two of 
the sticks in the bundle - one over which the district court had jurisdiction, 
and one over which it did not.  To the extent the Stutzmans sought to enforce 
their rights against the United States pursuant to the federal patents and 
contracts, the district court lacked jurisdiction.  The McCarran 
Amendment provides only limited consent to the exercise of state court 
jurisdiction over the United States.  Specifically, the amendment waives the federal 
government's right to plead that state laws are inapplicable or that it is not 
subject to such laws by reason of its sovereignty, but only in cases involving 
the adjudication and administration of water rights where the United States is 
the owner of such rights and is a necessary party to the action.  43 U.S.C. § 
666(a).  The 
amendment does not give consent to claims against the federal government for 
enforcement of contracts to which the United States is a party.  The district court 
properly found it had no jurisdiction over the Stutzmans' claims to the extent 
they sought to enforce such contracts.

 

[¶22]   However, the district court had 
jurisdiction to determine whether the Stutzmans had a legitimate claim of a 
state water right.  
Some of the facts relative to their status as individual irrigators in a 
federal reclamation project could be relevant to the determination of their 
state water right claims.  If so, the district court certainly could 
consider those facts in the application of state law.

 

[¶23]   When the Stutzmans became dissatisfied 
with the BOR's administration of the Buffalo Bill Reservoir, they initially 
asked the state engineer to issue a secondary permit for their individual share 
of the stored water and urged the Shoshone Irrigation District to request a 
secondary permit administratively or pursue such a permit judicially.  The state engineer's 
position on the request was that the Stutzmans must first obtain the cooperation 
of the BOR, which owned the reservoir permits, before the state would consider a 
secondary permit.  
The BOR refused such cooperation until all four irrigation districts 
within the boundaries of the Shoshone Reclamation Project met certain demands, 
including a re-survey of irrigable lands, which allegedly the districts could 
not afford.  The 
Shoshone Irrigation District also declined to take the action urged by the 
Stutzmans.

 

[¶24]   Finding themselves unable to obtain the 
relief they desired through the Shoshone Irrigation District, the state 
engineer, or the BOR, the Stutzmans went to the district court seeking a 
declaratory judgment that they had implied secondary rights and these rights 
should be adjudicated in this general adjudication with the same priority date 
as the reservoir permits.  They based their claim for implied secondary 
rights on our opinion in Condict v. Ryan, 333 P.2d 684 (Wyo. 1958) 
where we held, under the circumstances of that case, that water stored in a 
reservoir was intended to be used on certain lands and, therefore, the owners of 
those lands had an implied secondary right.  The Stutzmans claim they have similar vested 
state water rights that both the BOR and the state have refused to recognize 
and, consequently, it is proper under the McCarran Amendment and the Wyoming 
general adjudication statute for the district court to adjudicate those rights 
in this general adjudication. 

 

[¶25]   The state and United States respond by 
arguing that all the water in the Buffalo Bill Reservoir was adjudicated by the 
state administratively in 1963 through the BOR reservoir permits, and confirmed 
by the court in the Big Horn general adjudication in 1985 and, consequently, the 
Stutzmans' claims are barred by operation of statute, res judicata, and 
laches.   
With regard to the merits of the claims, the state and the United States 
contend no such rights existed under state law and the state court lacked 
jurisdiction to determine whether such rights existed pursuant to the federal 
contracts, statutes, and patents.

 

[¶26]   The district court found the Stutzmans' 
failure to challenge the reservoir certificates within the time "unequivocally 
set" in the Phase III procedures barred their claims under the doctrines of 
laches and res judicata. Thus, the district court 
dismissed their petition on the ground that they failed to state a claim upon 
which relief could be granted.

 

[¶27]   The Stutzmans argue the district court 
erred in finding they had to object to confirmation of the reservoir 
certificates in 1985 because the certificates did not extinguish their claimed 
implied secondary rights.  Thus, they assert, they had no reason to 
object either to the adjudication of those certificates by the state in 1963, or 
the confirmation by the district court in 1985.  Further, they argue the issues related to 
their implied secondary rights are different and distinct from those involved in 
adjudicating the reservoir permits and, therefore, res judicata cannot 
apply.  Finally, 
they contend laches does not apply absent evidence of prejudice which has not 
been adequately alleged, and, in any event, is a question of fact militating 
against dismissal.   

 

[¶28]   We agree with the district court that 
the Stutzmans' claims are untimely and, therefore, barred.  However, we reach 
that result by a slightly different route.  To determine whether the statutes, the district court's 
Phase III Procedures, res judicata, or laches bar the Stutzmans' 
claims brought, for the first time, thirty-seven years after the reservoir 
permits were adjudicated and fifteen years after they were confirmed by the 
district court, we must first examine the nature and scope of those claims.  

 

[¶29]   Under administrative procedures adopted 
by Wyoming, water rights are perfected in three steps.  First, a prospective 
user must apply for a permit to divert or impound state waters.  See Wyo. Stat. Ann. § 41-4-501 (LexisNexis 2003) 
(direct-flow permits) and § 41-3-301 (reservoir 
permits).  
Second, if the permit application is approved (upon a finding that water 
is available and other requirements are met), the applicant is authorized to 
construct diversion and/or storage structures, and to appropriate water through 
such structures, in accord with the permit's terms.  See Wyo. Stat. Ann. §§ 41-4-503 and 41-4-504 (LexisNexis 
2003).  Finally, 
upon presentation of proof of appropriation for beneficial use under a 
direct-flow permit or proof of construction under a reservoir permit, the 
Wyoming State Board of Control will issue a certificate formally confirming 
rights acquired under the permit, with a date of priority relating to the filing 
of the original permit application.  See Budd v. Bishop, 543 P.2d 368, 372 (Wyo. 1975); Wyo. 
Stat. Ann. §§ 41-3-321 & 41-4-512 (LexisNexis 2003). 

 

[¶30]   With regard to reservoirs, the statutes 
have historically provided for a primary permit to construct a reservoir and 
secondary permit to apply the stored water to particular lands.  Trelease and Lee, "Priority and Progress  Case Studies in the Transfer of 
Water Rights," 1 Land and Water Law Review, 1, 47 (1966).  From 1909 to 1921, 
the statute required secondary permits unless the owner of the reservoir was the 
same person using the water.  Wyo. Stat. Ann. § 41-27 (1957).  In 1921, the 
statutes were modified to establish that the owner of the reservoir was the 
owner of the right to impound, sell or lease the stored water, which right did 
not attach to any particular land except by deed.  Wyo. Stat. Ann. § 41-34 (1957).  The statute was 
again amended in 1939 to clearly state that secondary permits were permissive, 
and that version of the statute was in effect at the time the reservoir permits 
in this case were adjudicated and remains so. Wyo. Stat. Ann. § 41-27 
(1957).  It 
provides, "any party or parties desiring to appropriate [reservoir] water to 
particular lands may file . . . an application for 
permit to be known herein as the secondary permit" and the relevant 
administrative requirements for permits only apply "[i]n the event [such a] 
secondary permit may be desired."  See Wyo. Stat. Ann. 
§ 41-3-302 (LexisNexis 2003) (emphasis added).

[¶31]   Reservoir owners have the right to 
allocate stored waters for beneficial uses apart from those rights created by 
statutes or permits.  
Indeed, current statutes also provide that: (1) reservoir owners need not 
enumerate lands to be irrigated from reservoirs; Id.; 
(2) "[t]he use of water stored under [reservoir permits] may be acquired under 
such terms as shall be agreed upon by and between the parties in interest," see Wyo. Stat. Ann. § 41-3-303 (LexisNexis 2003); (3) a 
reservoir owner shall "be held to be the owner of the right to impound . . . 
water, and the right to sell or lease a portion or all his right to the 
impounded waters," see Wyo. Stat. Ann. § 41-3-320 
(LexisNexis 2003); and (4) reservoir water need not "attach to any particular 
lands" and "may be sold, leased, transferred and used in such manner and upon 
such lands as the owner . . . may desire."  See Wyo. Stat. Ann. 
§ 41-3-323 (LexisNexis 2003); see also Wyo. Stat. 
Ann. § 41-3-101 (n. 7, infra) (LexisNexis 2003).   

[¶32]   The Stutzmans' claim to a state water 
right, boiled down to its essence, is that they have an "implied" secondary 
right under Wyoming common law based on Condict, 333 P.2d 684, which, they 
argue, has not yet been adjudicated because only the right to store water under 
the reservoir permits was adjudicated administratively in 1963 and confirmed 
judicially in 1985.  
Because the Stutzmans' claim of a common law, implied secondary right 
relies so heavily on Condict, a detailed analysis of 
that case is warranted.  

 

[¶33]   Condict 
involved a reservoir owned in equal shares by two brothers, Edwin and Cecil 
Ryan.  In 1910, 
Edwin Ryan acquired a permit for construction of a reservoir for the purpose of 
providing additional water for a permitted irrigation ditch that served adjacent 
farmlands owned by the brothers separately.  The brothers did not apply for secondary 
permits despite the fact such permits were required by statute at that time.2  Edwin Ryan subsequently mortgaged his 
farmlands as security for various loans.  In 1926, after he defaulted on the loans, 
Winthrop Condict acquired Edwin Ryan's lands through foreclosure of the 
mortgages and a sheriff's sale.  One year later, in 1927, Edwin Ryan purported 
to assign his one-half interest in the reservoir to his brother, Cecil.  Condict did not 
learn of the assignment until 1954, when Cecil Ryan sought a certificate of 
construction for the reservoir claiming exclusive ownership.3  Id.  After learning of the request, Condict lodged 
an objection with the State Board of Control.  This Court's ruling in Condict arose from an appeal of the State Board of 
Control's order on the contested certificate of construction.  Id.  

 

[¶34]   The ultimate question in Condict with respect to the adjudication of the 
reservoir permit was who owned the reservoir.  Id. Although the 
mortgages granted by Edwin Ryan did not expressly include his one-half interest 
in the reservoir, this Court held that his attempted assignment of the interest 
to his brother was invalid because the interest in the reservoir had impliedly 
transferred with the farmlands as a result of the foreclosure.  Id. at 690.  In so ruling, this Court noted: (a) the Ryan 
brothers intended to apply the reservoir waters to designated lands that they 
separately owned, including the lands conveyed to Condict; (b) the reservoir 
permit was granted with the specific condition that the reservoir waters be used 
on such lands, as described in a prior direct-flow permit; and (c) Edwin Ryan 
gave no indication that he did not intend the value added by his share of the 
reservoir permit to be part of the security offered for the mortgage loans.  Id. at 688-691.  

 

[¶35]   The state and the United States point 
out several distinctions between the facts in this case and those in Condict, arguing the Condict 
holding does not operate to provide the Stutzmans the secondary rights they 
seek.  Those 
distinctions include the fact that the reservoir permits in this case were not 
similarly conditioned4, the statute in effect in 1910 when the Ryan 
reservoir permits were granted required secondary permits for the use of stored 
waters, unlike the applicable statutes in this case which make secondary permits 
permissive, and the dispute in Condict was over 
ownership of a reservoir while the dispute here is between a reservoir owner and 
an individual water user.  

 

[¶36]   While the Stutzmans recognize 
differences between their situation and what occurred in Condict, they contend their argument that the parties 
here intended the stored water to be utilized on their land is even stronger 
than in Condict.  As evidence of that intent, the Stutzmans 
point to 1) conditions on reservoir Permits 492R and 751R, which they claim 
indicate the intent that the stored water be used solely for irrigation on 
particular lands, including theirs; 2) patents issued by the United States which 
conveyed the land "together with the right to use the water from the Shoshone 
Reclamation Project as an appurtenance to the irrigable lands in said tract;" 3) 
"water rights applications" which the federal government required from the 
Stutzmans' predecessors in interest  establishing that the "measure of the water 
right of said lands is the quantity of water which shall be beneficially used 
for irrigation, but in no case exceeding the share, proportionate to irrigable 
acreage, of the water supply actually available;" and 4) the repayment contract 
between the United States and the Shoshone Irrigation District as Trustee for 
the water users within the boundaries of the Shoshone Irrigation District.  On the basis of 
these facts and the Condict case, the Stutzmans 
contend they have an implied secondary right, which gives them, not the BOR, the 
power to control their proportionate share of the stored water.  They further contend 
the stored water was intended "for the single purpose" of irrigating their 
lands. 

 

[¶37]   As all of the parties acknowledge, the 
facts upon which the Stutzmans rely to claim an implied secondary right are 
substantially different than those in Condict.  Despite the many 
differences, we look to Condict and the principles 
established therein to determine whether the Stutzmans' claim is of a nature 
that it should have been pursued in 1963 or 1985, and is, therefore, 
untimely.  In 
considering the timeliness issue, however, we do not decide whether the 
Stutzmans are legally entitled to an implied secondary right. The Stutzmans have 
consistently claimed throughout these proceedings that they have an implied 
secondary right to use the water stored under the BOR's reservoir permits which 
carries with it the right to demand a proportionate share of the stored water, 
and that such implied right is necessarily superior to any right of the BOR to 
control the use of project water.5  Accepting that as the basis for their claim 
under state law, we turn to the question of whether it was timely filed. 

 

[¶38]   The state and the United States contend 
the reservoir permits were fully adjudicated in 1963 and the applicable statutes 
bar the Stutzmans' late filed claims.  The statutes provide for the opportunity for 
"any person . . . claiming any interest" in the water being adjudicated to 
contest the adjudication.  Wyo. Stat. Ann. §§ 41-4-312 and 41-4-511 
(LexisNexis 2003).  
The Board of Control's order on the reservoir certificates noted the 
absence of any challenge to the adjudication.  The statutes also provide the Board of 
Control's order can be appealed to the district court in conformity with the 
Administrative Procedure Act, and the Rules of Appellate Procedure.  Wyo. Stat. Ann. § 
41-4-517 (LexisNexis 2003).  Wyoming Rule of Appellate Procedure 12.04(a) 
requires any appeal of an administrative action must be filed within thirty 
days.  Department of Revenue and Taxation  v. Irvine, 589 P.2d 1295 (Wyo. 1979); 
Sheridan Retirement Partners v. City of Sheridan, 950 P.2d 554 (Wyo. 
1997).  Neither 
the Stutzmans nor their predecessors in interest appealed the Board of Control's 
order as provided in W.R.A.P. 12.04.

 

[¶39]   The Stutzmans contend their interests 
were not adverse to the BOR's concerning the adjudication of the certificates 
and they had no reason to challenge the same.  They claim the only issues decided by those 
proceedings related to the construction of the reservoir.  Their position, 
however, does not comport with their assertion that they have always had an 
implied secondary right with the same priority date as the reservoir permits, 
1904 and 1905, and they, not the BOR, have always had the right to control their 
proportionate share of the stored water. The Stutzmans and their predecessors in 
interest are charged with knowledge of the statutes in effect at the time the 
reservoir certificates were adjudicated.   Those statutes provided a secondary 
permit would not be granted unless the applicant demonstrated an agreement 
existed with the reservoir owner to impound the necessary water.  Section 
41-3-302.  Both 
historically, and at all times relevant to the Stutzmans' claims, the statutes 
contemplated reservoir owners would control how the water was used, subject, of 
course, to the rights of senior appropriators and the overarching requirement of 
beneficial use. See § 41-3-101.6  Consequently, if a 
water user was not also a reservoir owner, a natural adversity of interest 
existed between the user and the reservoir owner.  Given the Stutzmans' claim that they are 
entitled to demand their pro rata share of the water stored in the Buffalo Bill 
Reservoir irrespective of the BOR's other commitments and desires, that 
adversity of interest existed in 1963 the same as it does today.  

 

[¶40]   Condict 
evidences that same adversity of interest between the reservoir owner and 
the water user.  
The statute then in effect is similar in one important aspect to the 
statutes applicable to Permits 482R and 751R in that for the secondary permit to 
issue, the applicant had to demonstrate "documentary evidence that he had 
entered into an agreement with the owners of the reservoir for a permanent and 
sufficient interest in said reservoir to impound enough water for the purposes 
set forth in said application."  Condict, 333 P.2d  
at 687, citing Ch. 59 W.C.S. 1910, § 744.  Of particular note, Condict raised his claim 
of right to the stored water by contesting the issuance of the certificate of 
construction to Ryan for all of the rights to the reservoir.  Had he not done so, 
query whether he could have still objected, and claimed a latent "implied" 
secondary right years later after the reservoir certificate was administratively 
adjudicated.  
Not even in Condict can we find an inference 
that a claim adverse to the reservoir owner's permitted rights can be raised 
after the reservoir permit has been fully and unconditionally 
adjudicated.

 

[¶41]   In adopting the statutory scheme for the 
administration of state water rights, we believe the legislature intended fully 
adjudicated certificates to be final and complete statements of the holder's 
rights, subject only to later claims of abandonment.  In fact, the entire 
system is built upon reliance by all affected persons on final, adjudicated 
rights.  
Consequently, we hold the failure to challenge such a certificate, if one 
claims rights superior to those of the certificate holder, constitutes a bar to 
such claims. 

 

[¶42]   We note the Stutzmans also claim the 
original reservoir permits were conditioned upon use of the water solely for 
irrigation of particular lands and that condition carried over into the 
certificates as issued.7  However, the certificates, which represented 
the final state action with regard to the control of the water stored in Buffalo 
Bill Reservoir, simply provide that the right to store the water is limited only 
by the capacity of the reservoir and to the broadened purposes of "irrigation, 
power, domestic municipal, industrial, recreation/fish and wildlife."  Even if the 
Stutzmans are correct that the original permits were conditioned upon the stored 
water being used only for irrigation on certain lands, the state engineer and 
the Board of Control expanded those allowed uses in the final certificates, and 
that expansion went unchallenged.

 

[¶43]   Even if the statutes which establish the 
procedural requirements for adjudication of water rights bar the Stutzmans' 
claims under ordinary circumstances, they argue those statutes are superceded by 
the general adjudication statute which is more recent and specific and provides 
an alternative means to obtain judicial recognition and adjudication of their 
interest in the stored water.  The Stutzmans suggest that the general 
adjudication statute should be read to expand the court's jurisdiction and allow 
their late filed claims because the statute directs the court to "determine the 
extent and priority date of and adjudicate any interest in or right to use the 
water of the river system and all other sources not otherwise represented by the 
aforedescribed decrees, certificates, or permits."  Section 
1-37-106(a)(i)(A)(IV).  
The state and the United States contend 1) that provision was intended to 
cover Indian reserved rights and not interests such as those claimed by the 
Stutzmans which are derived, under their theory, from the reservoir permits in 
question, and 2) the statute only allows the court to "confirm" previously 
adjudicated rights, which infers the court does not have jurisdiction to further 
"adjudicate" those rights as it does with regard to uncancelled permits.8  Section 1-37-106(a)(i)(A)(III).  We conclude that 
only the interpretation urged by the state and the United States gives effect to 
all of the provisions of the general adjudication statute as required by the 
rules of statutory construction.  Wyodak Resource 
Development Corp. v. Wyoming Dept. of Revenue, 2002 WY 181, 60 P.3d 129 (Wyo. 
2002).  To adopt 
the Stutzmans' view would require an overly broad reading of one provision that 
would necessitate ignoring the import of another.  The statute read as a whole clearly 
contemplates that certificates are final and not subject to challenge, except, 
of course, in a petition for abandonment which is necessarily premised upon 
action or inaction occurring after adjudication and can result in the loss of a 
right.

 

[¶44]   To preserve their argument that they had 
implied secondary rights which derived from the reservoir permit and allowed 
them, rather than the reservoir owners, to control the use of a pro rata share 
of the stored water, the Stutzmans were required to challenge the issuance of 
the unconditional certificate to BOR.  They failed to do so, and their claim was 
barred by operation of statute.

[¶45]   The state and the United States 
argue the Stutzmans' claims likewise are barred by the terms of the district 
court's Phase III procedures governing the remaining aspects of the Big Horn 
general adjudication.  
Those procedures established deadlines by which the parties were required 
to act to preserve their rights.  In interpreting and applying these procedures, 
it is helpful to understand the purpose of the litigation initiated by the state 
in 1977.  The 
Special Master's Report (the Roncalio Report) contains an interesting and 
informative discussion concerning the historical background of the 
litigation.  It 
describes the history of the Winters doctrine, which 
established that the United States reserved certain water rights for the benefit 
of the Indian tribes thereby placing in jeopardy any state water rights located 
on or downstream from an Indian reservation.  The report states, "[i]t was obvious that an 
adjudication was at last necessary which would once and for all quantify, 
define, and integrate the rights of all people, Indian and non-Indian, to the 
use of waters in Water Division 3."

[¶46]   The original complaint filed in the 
general adjudication contains broad, sweeping language describing the scope of 
the litigation, claiming: 

 

1. This is a suit for the general adjudication of the nature, extent, and relative priority of the water rights of 
all persons in the Big Horn River System . . . and all other sources in 
Water Division  
Number Three. . . .

. . .

5. The more than one thousand (1,000) persons, . . . in 
Appendix A . . . comprise all persons or entities now know to the State Engineer 
which have previously obtained, which are in the process of obtaining, which 
have previously asserted some interest in, or which are now asserting some interest in, rights to the use of water of the River 
System. . . .

. . .

10. In addition to those persons described in paragraphs 5, 
7, and 8, above, there may be other unknown and unnamed 
persons owning or asserting an interest in the right to the use of water in the 
River System.

11. All of other persons described in paragraphs, 5, 7, 8, 
and 10 above, are necessary parties to this suit. 

. . .

13. Until the relative priority, 
nature, content, scope and extent of the water rights of all persons are 
established, the State Engineer is unable to perform his constitutional and 
statutory responsibilities with respect to the administration and distribution 
of the waters of the River System.

 

[¶47]   The district court addressed first the 
Indian reserved rights, and then faced the daunting task of confirming and 
adjudicating the many thousands of state permits and certificates.  Logically, the 
district court began that process by looking initially at previously adjudicated 
certificates and confirming them as directed by the statute.  To assist with that 
process, the Phase III procedures required the State Board of Control to report 
a list of all certificates issued prior to January 1, 1977 to the Special 
Master, a list referred to as the "Tab Book."  Over 27,000 adjudicated permits were 
included.  The 
district court entered its order confirming those previously adjudicated permits 
on May 15, 1985.  
The Special Master then issued an order requiring all parties of record 
to identify challenged certificates by December 31, 1985.  After that deadline, 
hearings were held on all contests. The procedures then required all outstanding 
permits that had not been converted to certificates by administrative 
adjudication to be adjudicated by the board and the Special Master in batches as 
they matured. Those permits numbered approximately 3900.  The procedures 
reflect the district court's understanding that additional permits could be 
filed at any time and, consequently, a cutoff date was needed in order for the 
general adjudication to be capable of completion.  To that end, the district court provided, "All 
permits applied for, that is, received by the State Engineer, prior to midnight 
December 31, 1984 shall be adjudicated in this action."  While the district 
court did not, and could not, prevent permits from being filed after that 
deadline, it did act to prevent any such permits from being adjudicated in this 
general adjudication and it had the inherent authority to do so.  The procedures 
anticipated that the adjudication would be finally concluded by December 31, 
1988.9

 

[¶48]   Without question, the district court 
required clear, defined deadlines in order to process in an orderly manner the 
massive volume of certificates, permits and claims that existed across the 
breadth of this river system.  The irrigation district represented the 
Stutzmans in this litigation and answered on their behalf.  Neither the district 
nor the Stutzmans took any action in the proceeding to establish an interest in 
secondary rights to the stored water.10  While nothing in the 
original complaint or the Phase III procedures directly addressed claims for 
"implied secondary rights" such as those made here by the Stutzmans, without 
question the language and intent of both was to sweep in any and all claims, of 
any kind whatsoever, to use of these waters.  At numerous stages in the litigation, broad 
notices by publication were issued intending to reach anyone who might have a 
claim.   

 

[¶49]   The Stutzmans had many opportunities to 
assert their claim.  
First, they could have challenged confirmation of the previously 
adjudicated permit by December 31, 1984.  While such a challenge may have faced the 
argument discussed above that an earlier administrative challenge was 
statutorily required, the district court may have instead treated such a 
challenge as alleging an "interest" in the certificate, i.e. a secondary 
permit.  The 
Stutzmans' second opportunity to have their claim resolved in this adjudication 
was to file an application for a secondary permit by the December 31, 1984 
deadline for new permits.  The Stutzmans argue neither action was 
necessary because, under their theory, their rights had already vested and they 
were not required to challenge the reservoir permits or seek additional 
permits.  This 
argument misses the point.  To be considered in this general adjudication, 
the Stutzmans had to file something to have their 
claim recognized and adjudicated.  Certainly, any such filing would have 
preserved their argument that they were entitled to a secondary permit because 
their rights had already vested.  Of course, nothing prevents them from filing 
such an application today, but they do not have the right to have such a claim 
considered in this adjudication without having conformed to the court's 
scheduling order. 

 

[¶50]   The district court was clearly loath to 
consider the Stutzmans' petition at this late date stating, "This Court cannot 
allow the Stutzmans to re-open the confirmation process and thereby set aside 
years of progress in the Big Horn River general adjudication, not to mention the 
uncertainty and instability of water rights such action would engender.  The Adjudication 
must move forward to its lawful conclusion in due course and not look 
backward."   

 

[¶51]   For our judicial system to operate 
efficiently, courts must have authority to establish scheduling orders governing 
litigation before them.  Ekberg v. Sharp, 2003 WY 123, ¶ 12, 76 P.3d 1250, ¶ 12 (Wyo. 
2003).  A 
court's finding that a filing fails to meet the deadlines established by such 
orders is within the sound exercise of its discretion.  Id.  We find no abuse of discretion in the district 
court's conclusion that the Stutzmans' petition was untimely under its Phase III 
procedures.

 

[¶52]   The district court held the Stutzmans' 
claims were barred by res judicata because they 
failed to challenge the confirmation of reservoir certificates in 1985 pursuant 
to the Big Horn General Adjudication Phase III Procedures.  Res judicata bars the relitigation of previously litigated 
claims or causes of action.  Slavens v. Board of 
County Commissioners for Uinta County, 854 P.2d 683, 686 (Wyo. 
1993).  Four 
factors are examined to determine whether the doctrine of res judicata applies: 
"(1) identity in parties; (2) identity in subject matter; (3) the issues are the 
same and relate to the subject matter; and (4) the capacities of the persons are 
identical in reference to both the subject matter and the issues between 
them."  Id., Polo Ranch Co. v. City of 
Cheyenne, 2003 WY 15, ¶ 12, 61 P.3d 1255, ¶ 12 (Wyo. 
2003).  We held 
in an earlier case involving this general adjudication that an order within the 
case can give rise to res judicata. Big Horn II, 803 P.2d  at 69.  While we agree with the Stutzmans that the 
subject matter and issues involved in their claims are different from those 
actually litigated in the adjudication of these reservoir permits, it is 
axiomatic, as noted above, that such issues could have been raised and all other 
elements of res judicata are present.  Res judicata applies not only when issues have 
been previously litigated, but when they should have been.  Stoneking v. Wheatland Rural Electric Assoc., 2003 WY 81, ¶ 10, 72 P.3d 272, ¶ 10 (Wyo. 2003).  
As we discussed above, the Stutzmans had ample opportunity, and, in fact, 
the obligation to raise their claims with regard to the reservoir certificates 
and the extent of their control over the use of a proportionate share of the 
stored water during the general adjudication in accordance with the Phase III 
scheduling order.  
Failing to do so, their claims were barred by res judicata.

 

[¶53]   As an additional basis for the 
dismissal, the district court cited the doctrine of laches, a form of equitable estoppel that operates to bar suit 
where there has been "inexcusable delay" in seeking a judicial determination and 
the recognition of jurisdiction would cause prejudice to the opposing 
party.  Thompson, ¶¶ 6, 7.  A "claim of laches is comprised of two 
elements - inexcusable delay and injury, prejudice or disadvantage to the 
defendants or others."  
Dorsett v. Moore, 2003 WY 7, ¶ 9, 61 P.3d 1221, ¶ 9 (Wyo. 
2003).  However 
the lengthy delay is viewed in this case, whether it was thirty-seven years or 
fifteen years, no excuse is offered and none is available.  The only question 
remaining is whether prejudice to others can be shown.

 

[¶54]   Given the very nature of water rights 
("first in time is first in right"), the complexity of a general stream 
adjudication such as this one, and the limited nature of the resource itself,11 we can presume prejudice to others competing for 
water on this river system.  The very purpose of the general adjudication 
was to provide certainty and predictability in the administration and 
distribution of the waters of the Big Horn River system.  On this river, water 
rights holders are constricted even more than others by the recognized and 
adjudicated reserved rights of the Indian tribes.  A water right holder's claim to a senior right 
necessarily affects all other junior appropriators and, consequently, finality 
in water adjudications is key.  See Nevada v. United States, 463 U.S.  at 129, n. 10 
(1983).

 

[¶55]   The BOR has necessarily administered the 
water in Buffalo Bill Reservoir with the understanding that it had the authority 
to make commitments, exchanges, and planning decisions without regard to implied 
secondary rights.  
Likewise, the state engineer and the Board of Control have treated the 
BOR as the entity having control over the delivery of the stored water and the 
record discloses they have approved innumerable exchanges of the stored water 
and related petitions, changes in points of diversion, and other permits to 
appropriate water.  
The status of each of these transactions would be in question if a 
secondary right with a 1904 or 1905 priority date was recognized at this point 
in time.  We 
have no difficulty finding sufficient prejudice on the face of the Stutzmans' 
petition to warrant application of the doctrine of laches 
to bar their claims.

 

[¶56]   The Stutzmans argue that the application 
of laches is inappropriate in cases involving "legal title."  While that may be 
the general rule, see Morad v. 
Brown, 549 P.2d 312, 317 (Wyo. 
1976), this case does not involve legal title in the usual sense, but concerns 
instead the question of who controls the water stored under adjudicated 
reservoir permits.  
Under Wyoming law, the water users do not "own" the water, but are only 
granted rights by the state to use the water; all water is the property 
of the state and is subject to control by the state engineer and the Board of 
Control.  Wyo. 
Const., art. 8, §§ 1, 2.

 

[¶57]   In addition, we long ago recognized that 
laches bars claims similar to those alleged by the Stutzmans.  Anderson v. Wyoming Development Co. 154 P.2d 318 (Wyo. 1944) 
was similar in many respects to this case and supports the district court's 
decision to dismiss the Stutzmans' claims as untimely.  Anderson involved claims by individual water users 
against a private development company that held the reservoir permits and 
provided water to the users.  The individuals claimed a proportionate right 
to the stored water and argued that the permit holder failed to recognize their 
rights.  The 
district court dismissed their claims on the pleadings finding, among other 
things,  

 

The plaintiffs or their predecessors in interest have stood 
by and observed these acts of the Industrial Company and their grantees, in 
their attempts, through the expenditure of money and labor, to transform arid 
waste land into productive fields, all to the benefit of the state and its 
citizens, over a period of many years and far beyond the ten years statutory 
limitation of action period.  So, aside from what has been said above 
regarding this matter, we think that the doctrine of laches may properly be 
invoked against this alleged cause of action as appearing from the face of its 
averments.

 

Id. at 490.       

 

[¶58]   We hold the district court properly 
found the Stutzmans' petition was also barred by the doctrine of laches.

 

[¶59]   The Stutzmans claim the district court's 
dismissal of their petition for failure to object to the adjudication of the 
reservoir certificates in 1963 and confirmation of those certificates in 1985 
constituted a denial of their right to due process.  In essence, they 
claim they had vested property rights that were taken without proper notice 
because the 1963 and 1985 procedures dealt only with rights to store water and 
not the right to use it.  Consequently, they say, they could not have 
known their claimed right to use the water would be affected by these 
actions.  

 

[¶60]   The due process clauses of the United 
States and Wyoming Constitutions protect citizens against deprivation of 
property without due process of law. U.S. Const. Amend. XIV.12  A party claiming 
infringement "has the burden of demonstrating that infringement by first showing 
the existence of a protected property interest and then showing the interest has 
been affected in an impermissible way."  Pfeil v. Amax Coal 
West, Inc., 908 P.2d 956, 961 (Wyo. 
1995).  The 
Stutzmans cannot demonstrate their interest in the right to use the stored water 
was affected in any impermissible way.  With regard to the 
1963 adjudication, no claim is made that the proper procedures regarding notice 
and opportunity to object were not followed.  The Stutzmans simply argue they had no reason 
to object to the reservoir certificates because those certificates did not 
specifically address any secondary right to use the stored water.  In reality, what 
most likely occurred is that the Stutzmans or their predecessors in interest 
simply had no disagreement with the BOR regarding the manner in which the 
reservoir was being administered at that time and thus, no motivation to argue 
they had a secondary right which gave them control over their proportionate 
share of the water. 

 

[¶61]   Irrespective of the 1963 adjudication, 
no question exists that the fundamental purpose of the Big Horn River general 
adjudication was to address all claims of any kind to the use of water in the 
Big Horn River system and that all proper notice was given to those with 
potential claims in that system.  As we recognized in Big 
Horn II, 803 P.2d  at 65,  

 

It was intended that all claimants to the use of such water, 
whether potential or then existing, would be joined 
as parties defendant.  
The United States of America, the Shoshone and Arapaho Tribes, and the 
State of Wyoming were named specifically. In accordance with §1-37-106, W.S. 
1977, service of process was made upon a list of unnamed defendants, known and 
unknown. Service was made upon several thousand known water rights holders by 
certified mail, return receipt requested. Unknown defendants were served by 
publication.  
The summons contained a statement to the effect that a default judgment 
would be entered against the claimant if the claimant did not file an answer 
within twenty days if a resident of Wyoming, or within thirty days if a 
non-resident."  
803 P.2d 61,65 (Wyo. 
1990).  
(emphasis added).

                       

[¶62]   The Stutzmans admit that service was 
made upon their irrigation district, which then filed an answer on their 
behalf.  They 
cannot persuasively argue that enforcement of the court's deadline for filing a 
claim of their own or for contesting the BOR's reservoir certificates somehow 
impermissibly affected their rights.  Neither do they provide any authority for the 
proposition that the right to due process includes immunity from the application 
of the doctrine of laches.  Inherent in that 
doctrine is the suggestion that one to whom it is applied loses his rights by 
failing to take certain action.  See Moncrief v. Sohio Petroleum Co.,  775 P. 
2d  1021, 
1026 Wyo. 1989).  

 

[¶63]   Furthermore, by dismissing their 
petition to intervene in this adjudication, the district court did not hold that 
the Stutzmans are completely without vested rights to use the stored water.  The court's ruling 
did not affect the irrigation district's confirmed direct flow rights, on behalf 
of the individual landowners, under permit 2111.  Nor did it affect in any way the vested 
rights the Stutzmans may claim under the patents and federal contracts.  Instead, the court 
simply held that they did not have a right to have their claim to an implied 
secondary right, a state water right, decided in this general adjudication.  The district 
court's action did not violate the Stutzmans' right to due process.

 

CONCLUSION

 

[¶64]   Whether or not the BOR has complied 
with its contracts with the irrigation districts or with individual patentees is 
beside the point.  
Nothing we do here will limit the Stutzmans' ability to pursue their 
contract rights against the BOR.  However, the existence of those rights did 
not require the district court to ignore its long established procedures and 
jeopardize the very certainty and finality sought by this extended, expensive 
and complicated judicial effort.

 

[¶65]   Affirmed. 

 

FOOTNOTES

 

1While initially the 
Stutzmans relied upon these secondary permits to support their claims, they 
state in their brief that, "During the course of the proceedings before the 
district court, [they] conceded the issues pertaining to the previous 
cancellation of the Permits 10138 and 11 2/388 by the state. [Stutzmans] 
therefore posited their entire case around reservoir storage permits 492 and 751 
and water rights flowing from the patents issued." Footnote 2, 
p.9.

 

2Even though the statutes 
at that time required secondary permits, that requirement was often ignored in 
practice especially by owners of small reservoirs who desired flexibility. 
However, the BOR filed secondary applications for all its reservoir projects, as 
it did for Buffalo Bill Reservoir.  See, Trelease and Lee, Priority and Progress  Case Studies in the Transfer of 
Water Rights,  1 Land and Water Law Review, 1 
(1966).

 

3The statutory procedures 
for adjudication of permits required public notice and an opportunity for "any 
party claiming an interest in any water right" to contest the proposed 
adjudication. Wyo. Stat. Ann. § 41-4-312 and 41-4-511 (LexisNexis 2003).  Presumably, Condict 
learned of the proposed adjudication through such publication.

 

4The initial reservoir permit (permit 492R) did state that 
the stored waters were to be used on the lands described in the enlargement of 
direct-flow permit 2111.  Nevertheless, the second reservoir permit 
(permit 751R), which authorized a substantial increase in the reservoir's 
capacity, did not include such language, and both permits indicated that the 
impounded water was to be put to beneficial purposes other than irrigation.  In addition, the 
certificates contained no such conditions and broadened the allowed uses beyond 
irrigation to power generation, domestic, municipal, industrial, and 
recreation/fish and wildlife. Under these circumstances, at a minimum, a 
question of fact exists whether the parties intended that impounded waters be 
used only for irrigation on particular lands.   

 

5The Stutzmans variously 
refer to their interests as "ownership" and "right to use" the stored 
water.  
Likewise they cite to authority for the proposition that the ultimate 
water users "own" the beneficial interest in reclamation project waters. See Nevada v. United States, 463 U.S.  at 126.  We find the 
question of who "owns" the water of less relevance than who has the right to 
control its use.  
As the esteemed water law expert, Frank Trelease, said in his own 
inimitable style, with regard to concepts of ownership in the context of water 
law, "It must always be remembered that when we say "alakazam," or "state 
ownership," or "the state holds in trust," no genie out of a bottle brings us a 
beautiful maiden draped in pearls, and no magical solution is provided for 
difficult problems of adjusting the relations of an individual  to the state or of 
the state to the federal government in the complex field of development of water 
resources." Frank. J. Trelease, Government Ownership and 
Trusteeship of Water, 45 Cal. L.Rev. 638,654 (1957).

 

6The Stutzmans claim the 
Reclamation Act, the patents,  the federal "water rights applications," and 
the various federal contracts constituted their "agreement" with the BOR.  Their claim 
certainly raises a question of fact that such an agreement existed, however, 
that does not avoid the necessity of raising that claim in a timely 
fashion.

 

7See footnote 
four.

 

8We note with interest 
that Special Master Roncalio's comments concerning the effect of judicial 
confirmation suggest he believed the court could not alter previously 
adjudicated rights when he stated, "I have failed to find, through many hours of 
research, how an adjudicated water right within the State of Wyoming can be made 
any stronger by having been confirmed by an act of a District Court."  Supplemental and 
Final Roncalio Report, p. 95.

 

9Obviously, the 
adjudication was not completed by 1988.  While the record contains no information 
concerning the current status of the litigation, we presume the process is 
continuing and permits filed prior to December 31, 1984 are still being 
adjudicated.

 

10While BOR had the 
obligation in the adjudication to preserve and protect the reservoir permits it 
held on behalf of the individual irrigators, it did not have the further 
obligation to obtain secondary permits on their behalf, especially when those 
permits were not statutorily required. The Solicitor of the Interior directly 
addressed this issue in Filings of Claims for Water 
Rights in General Stream Adjudications, 97 I.D. 21; 1989 I.D. Lexis 101, and 
provided a helpful review of the legal issues involved in the relationship 
between the federal government and the individual irrigator in a federal 
reclamation project.

 

11Even as early as 1905 
when 751R was granted, the state engineer indicated the waters of the Shoshone 
River were largely appropriated.

 

12On appeal the Stutzmans 
also claim a due process violation under the Wyoming Constitution. Wyoming 
Const., art. 1 § 6.  
However, they do so with little analysis as required by our clear 
precedent and they made no such argument before the district court.  Consequently, we 
will not address that issue.