Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-07-17001/USCOURTS-ca9-07-17001-0/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff,

and

PYRAMID LAKE PAIUTE TRIBE OF

INDIANS,

Petitioner-Appellant,

No. 07-17001

v.

D.C. No.

ORR WATER DITCH CO.,  CV-73-00018-LDG

Defendant,

OPINION

NEVADA STATE ENGINEER,

Respondent-Appellee,

and

GRAND SLAM ENTERPRISES, LLC;

TRI WATER AND SEWER COMPANY,

Real-parties-in-interest-Appellees. 

Appeal from the United States District Court

for the District of Nevada

Lloyd D. George, District Judge, Presiding

Argued and Submitted

July 15, 2009—San Francisco, California

Filed April 7, 2010

Before: Cynthia Holcomb Hall, William A. Fletcher and

Richard A. Paez, Circuit Judges.

Opinion by Judge William A. Fletcher

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COUNSEL

Don Springmeyer, ANGIUS & TERRY, Las Vegas, Nevada,

Stephanie Zehren-Thomas, HESTER & ZEHREN, Louisville,

Colorado, for the petitioner-appellant.

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Michael Louis Wolz, OFFICE OF THE NEVADA ATTORNEY GENERAL, Reno, Nevada,Ross E. de Lipkau, PARSONS BEHLE & LATIMER, Reno, Nevada, for the

respondents-appellees.

OPINION

W. FLETCHER, Circuit Judge:

This case concerns the extent of the federal courts’ subject

matter jurisdiction over the administration of water rights

adjudicated in the Orr Ditch Decree (“the Decree”). The

Decree allocates rights to water in the Truckee River. See

United States v. Orr Water Ditch Co., Equity No. A3 (D. Nev.

1944). The river begins at Lake Tahoe and runs most of its

course in Nevada, ultimately flowing into Pyramid Lake,

northeast of Reno. The Pyramid Lake Paiute Tribe of Indians

(“the Tribe”) alleges that Nevada State Engineer Ruling 5747,

allocating groundwater in the Tracy Segment Hydrographic

Basin (“the Basin”), adversely affects its water rights under

the Decree. The Tribe appealed the decision by the Nevada

State Engineer (“State Engineer” or “Engineer”) to the federal

district court for the District of Nevada. Appellees contended

that, whatever the effect of the Engineer’s allocations of

groundwater on the Tribe’s decreed water rights, the district

court did not have jurisdiction over the appeal because the

Decree adjudicated only rights to surface water in the river.

The district court agreed and dismissed the appeal for lack of

subject matter jurisdiction.

We reverse and remand. If the Tribe’s allegations are true,

the groundwater taken from the Basin pursuant to the Engineer’s groundwater allocations will adversely affect the

Tribe’s decreed water rights. We hold, first, that the Orr Ditch

Decree forbids groundwater allocations that adversely affect

the Tribe’s decreed rights to water flows in the river. We

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hold, second, that the federal district court has jurisdiction

over an appeal from groundwater allocations by the Engineer

that are alleged to have such an adverse effect.1

I. Background

The Truckee River is the principal source of water for Pyramid Lake. The lake is “widely considered the most beautiful

desert lake in North America.” Nevada v. United States, 463

U.S. 110, 114 (1983) (quoting S. Wheeler, The Desert Lake

90 (1967)). “When first viewed by Captain John Fremont in

early 1844, Pyramid Lake was some 50 miles long and 12

miles wide. Since that time the surface area of the Lake has

been diminished by about 20,000 acres.” Id. at 115. The lake

is situated entirely within the boundaries of the Pyramid Lake

Paiute Tribe Reservation.

The history of the Orr Ditch Decree goes back over one

hundred years. The Supreme Court recounted some of that

history in Nevada v. United States. Id. at 113-18. We

recounted it briefly in United States v. Orr Water Ditch Co.

(Orr Ditch I), 914 F.2d 1302, 1304 (9th Cir. 1990):

The Reclamation Act of 1902 . . . authorized the

federal government to pursue efforts to reclaim arid

lands in certain western states. In one of these

efforts, the Newlands Reclamation Project, the government planned to irrigate an area of western

Nevada with water from the Truckee and Carson

Rivers, which flow through and around Lake Tahoe

and Reno, Nevada. Because private landowners and

the Indians of the Pyramid Lake Indian Reservation

had already-established water rights, the United

States filed an action in 1913 to quiet title to all

1

In a separate memorandum disposition filed today, we address the

cross-appeal of Tahoe Reno Commercial Center, LLC. United States v.

Orr Water Ditch Co., No. 07-17021. 

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water rights in the Project area. The resulting legal

activity became known as the Orr Ditch litigation.

An appointed Special Master held hearings, then

issued a report and recommended a proposed decree

in 1924. Two years later, the district court issued a

temporary restraining order enforcing the proposed

decree. In 1934, after a lapse of interest in the litigation, a drought prompted more activity. In 1935, the

major parties to the litigation signed an agreement

similar to the proposed decree that had been in effect

on a “temporary” basis. Finally, in 1944, the district

court entered its final decree that approved and

incorporated the settlement.

Under the Decree, the Tribe owns Claims No. 1 and 2, the

two most senior water rights on the Truckee River. A substantial portion of the water held under these rights was recently

transferred “temporarily” from irrigation to in-stream use in

order to allow the water to flow into the Pyramid Lake.

United States v. Orr Water Ditch Co. (Orr Ditch III), 391

F.3d 1077, 1079 (9th Cir. 2004).

In November 1998, the Nevada State Engineer granted the

Tribe the right to all of the water remaining in the river after

the Orr Ditch Decree rights and other rights were satisfied.

We are informed by the parties that, at the time of briefing to

this court, an appeal of this ruling was pending in Nevada

state court. The Tribe’s rights under the Engineer’s 1998 ruling are based on Nevada law rather than the Orr Ditch Decree.

We have consistently interpreted the Orr Ditch Decree, as

well as the related Alpine Decree, to provide for “federal district court review of decisions of the State Engineer regarding

applications to change the place of diversion or manner or

place of use of water rights derived from the Alpine and Orr

Ditch Decrees.” United States v. Alpine Land & Reservoir Co.

(Alpine II), 174 F.3d 1007, 1011 (9th Cir. 1999). Over the

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past thirty years, numerous decisions of the Engineer pertaining to rights under these two decrees have been appealed to

the federal district court and then to us. See, e.g., United

States v. Alpine Land & Reservoir Co. (Alpine I), 878 F.2d

1217 (9th Cir. 1989); Alpine II, 174 F.3d 1007; United States

v. Orr Water Ditch Co. (Orr Ditch II), 256 F.3d 935 (9th Cir.

2001); United States v. Alpine Land & Reservoir Co. (Alpine

III), 341 F.3d 1172 (9th Cir. 2003); Orr Ditch III, 391 F.3d

1077; United States v. Truckee-Carson Irrigation Dist., 429

F.3d 902 (9th Cir. 2005); United States v. Alpine Land & Reservoir Co. (Alpine IV), 510 F.3d 1035 (9th Cir. 2007).

The appeal now before us arises out of an allocation by the

State Engineer of groundwater rights in the Tracy Segment

Hydrological Basin. The Basin lies between the towns of

Sparks in the west, Fernley in the east, and Virginia City in

the south. The northern border runs roughly parallel to Interstate 80 between three and five miles north of the highway.

At its northeastern tip, the Basin abuts the Pyramid Lake Paiute Tribe Reservation. A thirty-mile stretch of the Truckee

River runs through the Basin on its way to Pyramid Lake.

According to a study published by the United States Geological Survey in 2006 and relied upon by the State Engineer, the

Truckee River is a gaining stretch as it runs through the Basin,

receiving an average net gain of about 11,000 acre-feet per

year from the Basin’s groundwater unless there has been an

over-allocation of that water.

Between 1998 and 2003, several parties applied for new

groundwater allocations in the Basin. The Tribe and Churchill

County opposed the majority of the applications, contending

that the groundwater of the Basin was already fully appropriated and that the requested allocations would reduce the base

flow of the Truckee River. They contended that this reduction

would interfere, inter alia, with decreed water rights under the

Orr Ditch Decree.

In June 2007, in Ruling 5747, the State Engineer granted

most of the groundwater applications. The Engineer noted

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that the United States Geological Survey had previously estimated that the “perennial yield” of the Basin is approximately

6,000 acre-feet per year resulting from groundwater recharge

from precipitation. Even before the current applications were

considered, groundwater allocations of 7,976 acre-feet per

year had been granted. If the estimate of 6,000 acre-feet per

year perennial yield is accurate, groundwater in the Basin was

thus already over-allocated. After considering a wide range of

estimates, the Engineer revised upward the estimated perennial yield of the Basin to approximately 11,500 acre-feet per

year. Based on the revised estimate, the Engineer granted

some of the new applications, concluding that they would not

result in over-allocation of the groundwater in the Basin.

The Engineer concluded further that even if the new allocations were to result in over-allocation of the groundwater and

a diminution of the base flow of the Truckee River, this would

not conflict with any of the decreed rights to water in the

river. Quoting an earlier Engineer ruling, the Engineer concluded “that the ground-water discharge to the Truckee River

should not be counted as part of the [Tribe’s] surface-water

rights in the Truckee River . . . established under Claims No.

1 and 2 of the Orr Ditch Decree.” The Engineer wrote that

“there is nothing in the Orr Ditch Decree that indicates possible ground-water discharge to the Truckee River was even

contemplated by the decree court as part of the water of the

river.” The Engineer also concluded that the ground-water

discharge to the river should not be counted as part of the

Tribe’s rights established under the 1998 ruling in which the

Tribe was granted, as a matter of state law, rights to the

remaining flow of the river after all of the decreed water

rights were satisfied.

The Tribe appealed the Engineer’s ruling to the federal district court. The Tribe argued broadly that the district court had

jurisdiction to review the Engineer’s ruling, both as it affected

its rights under the Decree and as it affected its rights under

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the Engineer’s 1998 ruling. The Engineer moved to dismiss

for lack of subject matter jurisdiction.

The district court granted the motion to dismiss, writing:

At its essence, the issue before this court is

whether appellate jurisdiction over the rulings of the

State Engineer is determined by reference to the

water right[s] of the applicant, or by reference to any

water rights that might be affected by the State Engineer’s ruling, including that of the applicant . . . As

recognized by the Tribe, this court has exclusive

jurisdiction over the Truckee River waters. See

United States v. Alpine Land & Reservoir Co., 174

F.3d 1107, 1011 (9th Cir. 1999). Section 540.450(1)

[of Nev. Rev. Stat.] itself recognizes that, on stream

systems on which a decree has already been entered,

exclusive jurisdiction rests in the court issuing that

decree.

If exclusive jurisdiction is determined by reference to any water rights affected by a State Engineer’s ruling, such “exclusive” jurisdiction could

conceivably rest in two or three or more courts. An

applicant seeking to appropriate water rights from a

decreed stream system could be protested by an

owner of water rights in a different decreed stream

system, placing “exclusive jurisdiction” of the

appeal in two different courts. Or, an applicant seeking water from a non-decreed system could be protested by two persons, each having water rights on

different decreed water systems. Or, an applicant

could be protested by a single entity having water

rights on different decreed water systems. Again, in

either latter case, two different courts would have

“exclusive” jurisdiction to hear the appeal to the detriment of the other. The potential for such absurd

results is avoided entirely if appellate jurisdiction is

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determined by reference to the applicant’s water

rights.

The Tribe timely appealed.

II. Standard of Review

We review de novo a dismissal for lack of subject matter

jurisdiction. Marceau v. Blackfeet Hous. Auth., 455 F.3d 974,

978 (9th Cir. 2006). We review a district court’s factual findings for clear error. Coyle v. P.T. Garuda Indonesia, 363 F.3d

979, 984 n.7 (9th Cir. 2004). “The party asserting federal

jurisdiction has the burden of establishing it.” Miguel v.

Country Funding Corp., 309 F.3d 1161, 1164 (9th Cir. 2002).

III. Discussion

There are essentially two questions before us. First, does

the Orr Ditch Decree forbid an allocation of groundwater by

the State Engineer that has an adverse effect on the Tribe’s

decreed rights to water in the Truckee River? Second, if the

Decree forbids such an allocation of groundwater, does the

district court have subject matter jurisdiction over an appeal

from a ruling of the Engineer that allegedly conflicts with the

Decree? We answer “yes” to both questions.

A. Extent of the Tribe’s Decreed Rights

The State Engineer concluded that the Tribe’s water rights

under the Orr Ditch Decree could be diminished by groundwater allocations without violating the Decree. In the view of

the Engineer, the Decree granted the Tribe rights only to the

surface water flowing in the Truckee River. In his view, the

Decree provided no protection against allocations of groundwater that would diminish the amount of surface water and

thereby adversely affect the Tribe’s decreed rights. For the

reasons that follow, we disagree.

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The Decree provides:

IT IS HEREBY ORDERED, ADJUDGED AND

DECREED AS FOLLOWS:

That the parties, persons, corporations, intervenors, grantees, successors in interest and assigns and

substituted parties above and hereinafter named and

their successors in interest and assigns are, and each

of them is, as against every other one, hereby

adjudged to be the owners of the water rights hereinafter specified and set forth and entitled and allowed

to divert and use, from the Truckee River and its

tributaries and from the streams, springs, drain and

waste waters hereinafter mentioned[.]

Decree at 10 (emphasis added). The Tribe is one of the parties

named in the Decree.

The Decree granted the Tribe the two most senior rights to

water from the Truckee River, Claims No. 1 and 2. Both

claims provide water to the Tribe for use on the reservation.

The Decree describes in Claim No. 1 the history leading to the

grant of the rights conferred in the two claims:

By order of the Commissioner of the General

Land Office made on December 8, 1859, the lands

comprising the Pyramid Lake Indian Reservation

were withdrawn from the public domain for use and

benefit of the Indians and this withdrawal was confirmed by order of the President on March 23, 1874.

Thereby and by implication and by relation as of the

date of December 8, 1859, a reasonable amount of

the water of the Truckee River, which belonged to

the United States under the cession of territory by

Mexico in 1848 and which was the only water available for the irrigation of these lands, became

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reserved for the needs of the Indians on the reservation.

Id. (emphasis added).

[1] We recognize that there is no language in the Decree

explicitly protecting the Tribe’s decreed rights in Claims No.

1 and 2 from diminution of the flow of the river resulting

from allocation of groundwater to other users. But the Engineer overstated the matter when he wrote that “there is nothing in the Orr Ditch Decree that indicates possible groundwater discharge to the Truckee River was even contemplated

by the decree court as part of the water of the river.” The

Decree indicates that the water rights granted to the Tribe in

Claims No. 1 and 2 were intended to fulfill the purpose of the

United States in withdrawing land from the public domain for

the Tribe’s reservation and reserving “a reasonable amount of

water” for use on the reservation. It is inconsistent with that

purpose to allocate water to other users if that allocation

diminishes the Tribe’s reserved water supply. 

[2] Surface water contributes to groundwater, and groundwater contributes to surface water. The reciprocal hydraulic

connection between groundwater and surface water has been

known to both the legal and professional communities for

many years. The Supreme Court wrote in Kansas v. Colorado,

206 U.S. 46, 114-15 (1907), “If the bed of a stream is not

solid rock, but earth, through which water will percolate, . . .

undoubtedly water will be found many feet below the surface,

and the lighter the soil the more easily will it find its way

downward and the more water will be discoverable by wells

. . . .” The Court wrote in Snake Creek Mining & Tunnel Co.

v. Midway Irrigation Co., 260 U.S. 596, 598 (1923), “The

waters intercepted and collected . . . are percolating waters,

which . . . found their way naturally . . . through the rocks,

gravel, and soil of the mountain into open springs near the

stream, and thence by surface channels into the stream.” In a

law review article published two years before the entry of the

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Orr Ditch Decree, the authors emphasized the importance of

the hydraulic connection: “The significance of the fact that

ground water never occurs as a stationary water body should

be stressed. Ordinarily, the subsurface reservoir is continuously receiving additions by influent seepage from rainfall

and surface water bodies and is always discharging water by

natural processes. In the subsurface reservoir ground water is

percolating toward the discharge area; no static ground-water

bodies are known to exist.” C.F. Tolman & Amy C. Stipp,

Analysis of Legal Concepts of Subflow and Percolating

Waters, 21 Or. L. Rev. 113, 129 (1942).

[3] The district court entering the Orr Ditch Decree would

have known about the relationship between surface water and

groundwater. The Decree expressly states that Claims No. 1

and 2 fulfill the purpose of the United States in establishing

the Tribe’s reservation. In the words of the Decree, that purpose was to withdraw from the public lands “the lands comprising the Pyramid Lake Indian Reservation,” and to

“reserve” a “reasonable amount of water of the Truckee

River” to meet the “needs of the Indians on the reservation.”

This statement of intent to reserve a reasonable amount of

water makes clear that the proper construction of the Decree

is that the water rights granted in Claims No. 1 and 2 cannot

be defeated by allocation of water to others—whether by allocation of surface water or groundwater.

Even without such an explicit statement, we would come to

the same conclusion based on Winters v. United States, 207

U.S. 564 (1908), which dealt with water rights on the Fort

Belknap Indian Reservation. The Court in Winters held that

sufficient water was reserved to serve the needs of the Indians, despite the absence of clear words so specifying in the

agreement establishing the reservation. The Court invoked a

rule of interpretation that would further the purpose of the

agreement:

By a rule of interpretation of agreements and treaties

with the Indians, ambiguities occurring will be

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resolved from the standpoint of the Indians. And the

rule should certainly be applied to determine

between two inferences, one of which would support

the purpose of the agreement and the other impair or

defeat it. On account of their relations to the government, it cannot be supported that the Indians were

alert to exclude by formal words every inference

which might militate against or defeat the declared

purpose of themselves and the government[.]

Id. at 576-77.

[4] We therefore hold that the Decree protects the Tribe

from allocations of groundwater that would adversely affect

its decreed water rights under Claims No. 1 or 2.

B. Jurisdiction of the District Court

[5] The district court’s subject matter jurisdiction over

appeals from decisions of the State Engineer is an odd amalgam. The court’s jurisdiction is based on the ability of a court

of equity to enforce and administer its decrees. As we wrote

in Alpine I:

[T]he federal district court acts as an appellate

court for decisions of the state Engineer. Needless to

say, such jurisdiction is highly extraordinary.

We specifically approved of this jurisdictional

arrangement in United States v. Alpine Land & Reservation Co., 697 F.2d 851, 858 (9th Cir. 1983), cert.

denied, 464 U.S. 863 (1983). The district court’s

jurisdiction is established as an adjunct to its jurisdiction over the quiet title action originally filed by

the United States. . . . The district court’s equity

jurisdiction was properly invoked to review the

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tion of the admitted federal interests in the operation

of federal reclamation projects.” Id. at 858.

878 F.2d at 1219 n.2 (some citations omitted).

[6] Nevada law also recognizes this unique jurisdictional

arrangement. Specifically, it provides:

Any person feeling himself aggrieved by any

order or decision of the State Engineer . . . when the

order or decision relates to the administration of

determined rights . . . may have the same reviewed

by a proceeding for that purpose, insofar as may be

in the nature of an appeal, which must be initiated in

the proper court of the county in which the matters

affected or a portion thereof are situated, but on

stream systems where a decree of court has been

entered, the action must be initiated in the court that

entered the decree.

Nev. Rev. Stat. § 533.450(1) (emphasis added); see also Orr

Ditch I, 914 F.2d at 1309 n.8 (“Nevada law thus supports the

system adopted by the federal courts for appeals of Engineer

decisions on federal-court-decreed water rights.”); Alpine II,

174 F.3d at 1011 (“[W]e have interpreted Nevada law, which

provides for jurisdiction of appeals from decisions of the State

Engineer ‘in the court that entered the decree,’ as providing

for federal court review under the Orr Ditch Decree.”).

[7] We hold today that the Decree protects the Tribe’s

water rights under Claims No. 1 and 2 from diminution resulting from allocation of groundwater rights. This holding necessarily means that any allocation of groundwater rights by the

State Engineer that allegedly diminishes the Tribe’s decreed

water rights comes within the clause of Nev. Rev. Stat.

§ 533.450(1) that provides for appellate review “in the court

that entered the decree.” The decree in this case was entered

by the federal district court for the District of Nevada. We

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therefore hold that the district court has subject matter jurisdiction over the Tribe’s appeal from Ruling 5747 insofar as

that ruling may adversely affect the Tribe’s decreed rights

under Claims No. 1 and 2.

[8] We note, however, that the district court does not have

jurisdiction over the Tribe’s appeal from that ruling insofar as

it may adversely affect the Tribe’s rights under the Engineer’s

1998 ruling granting the Tribe the right to water remaining in

the Truckee River after decreed and other rights have been

satisfied. The district court does not have jurisdiction because

the Engineer’s 1998 ruling was based on state law. The part

of the Engineer’s current ruling allegedly affecting the Tribe’s

rights under his 1998 ruling has no effect on the Tribe’s rights

under the Decree.

The district court accurately foresaw that practical difficulties would result from a conclusion that it has jurisdiction

over an appeal from an Engineer’s ruling allocating groundwater from the Basin. But the appeal will be limited, and the

practical difficulties will be manageable. The district court

was asked to decide only one question on appeal: Will the

Engineer’s allocation of groundwater rights adversely affect

the Tribe’s rights under the Decree? If the court concludes

that the allocation will have an adverse effect on the Tribe’s

decreed rights, it will instruct the Engineer to reduce the

amount of allocated groundwater rights by an amount necessary to eliminate that effect. If the court concludes that the

allocation will not adversely affect the Tribe’s decreed rights,

it will simply affirm the Engineer’s ruling. In neither case will

the district court have the authority in the Tribe’s appeal to

tell the Engineer how to allocate groundwater rights among

the various applicants. To the extent that groundwater may be

allocated consistent with protection of the Tribe’s decreed

rights, the amount of the allocations and the distribution

among the applicants are of no concern to the district court in

the Tribe’s appeal.

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The district court also accurately stated that the exercise of

subject matter jurisdiction by the federal courts would be

inconsistent with the general principle of water law that a single court should have exclusive jurisdiction over an interrelated system of water rights. See, e.g., State Eng’r v. S. Fork

Band of the Te-Moak Tribe of W. Shoshone Indians of Nev.,

339 F.3d 804, 809 (9th Cir. 2003) (referring to the “ancient

and oft-repeated . . . doctrine of prior exclusive jurisdiction—

that when a court of competent jurisdiction has obtained possession, custody, or control of particular property, that possession may not be disturbed by any other court” (citation

omitted)). But that principle, while valid and important, is not

an inviolable rule. 

Indeed, we have seen already an exception to the general

principle in this very matter. As noted above, the State Engineer in 1998 granted to the Tribe the right to take any water

remaining in the Truckee River after decreed and other rights

have been satisfied. It is undisputed that, as a general proposition, decisions of the State Engineer allocating the surface

waters of the Truckee River are appealable to the district

court. This is so because the district court administers the Orr

Ditch Decree, which adjudicated rights to water in the river.

But the appeal of the Engineer’s 1998 ruling did not go to the

district court even though the ruling allocated rights to water

in the river. Rather, it appropriately went to the Nevada state

courts, for that ruling was based on state law and did not

affect any rights under the Decree.

Conclusion

[9] For the foregoing reasons, we hold that the Tribe’s

decreed rights to water from the Truckee River under the Orr

Ditch Decree may not be adversely affected by allocations of

groundwater in the Tracy Segment Hydrographic Basin. We

hold, further, that the district court has subject matter jurisdiction to hear the Tribe’s appeal from the State Engineer’s Ruling 5747 insofar as the allocation of groundwater rights is

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alleged to affect adversely the Tribe’s decreed water rights

under Claims No. 1 and 2.

REVERSED and REMANDED.

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