## United States Court of Appeals for the Federal Circuit

2008-1354 GRANT COUNTY BLACK SANDS IRR IGATION DISTRICT (GCBSID) and WILLIAMSON LAND COMPANY, Plaintiffs-Appellants,

v. UNITED STATES, BUREAU OF RECLAMATION, KEN SALAZAR, Secretary of the Interior, ROBERT W. JOHNSON, in his capacity as Commissioner of the Bureau of Reclamation, J. WILLIAM MCDONA LD, in his individual capacity, and J. WILLIAM MCDONALD, in his capacit y as Regional Director of the Pacific Northwest Region of the Bureau of Reclamation, Defendants-Appellees.

Ronald Ady , Christensen Law Group, L.P., of Salt Lake City, Utah, argued for plaintiffs-appellants. Wi th him on the brief was Ronald K. Christensen

. Allen M. Brabender , Trial Attorney, Environment and Natural Resources Division, United States Department of Justice, of Washington, DC, argued for defendantsappellees. With him on the brief was Ronald J. Tenpas , Assistant Attorney General. Appealed from: United States District Court for the Eastern District of Washington Chief Judge Robert H. Whaley

## United States Court of Appeals for the Federal Circuit

2008-1354 GRANT COUNTY BLACK SANDS IRR IGATION DISTRICT (GCBSID) and WILLIAMSON LAND COMPANY, Plaintiffs-Appellants,

v. UNITED STATES BUREAU OF RECLAMATION, KEN SALAZAR, Secretary of the Interior, ROBERT W. JOHNSON, in his capacity as Commissioner of the Bureau of Reclamation, J. WILLIAM MCDONA LD, in his individual capacity, and J. WILLIAM MCDONALD, in his capacit y as Regional Director of the Pacific Northwest Region of the Bureau of Reclamation, Defendants-Appellees.

Appeal from the United States District Court for the East ern District of Washington in case no. 06-CV-204, Chief Judge Robert H. Whaley.

___________________________ DECIDED: September 2, 2009

___________________________ Before SCHALL, BRYSON, and LINN, Circuit Judges

. BRYSON, Circuit Judge

. I In 1937, Congress authorized a multipurpose reclamation project known as the Columbia Basin project, which was designed to irrigate farml and in central Washington with water drawn from the Columbia River. Over time, water that seeped into the ground from the surface irrigation created significant quantities of artificially storedgroundwater in the Quincy Basi n area. The Washington De partment of Ecology began managing the Quincy Basin groundwater in 1973 but later accepted the federal government’s claim to owner ship of that water. See Flint v. United States , 906 F.2d 471, 473–74 (9th Cir. 1990); Jensen v. Wash. Dep’t of Ecology , 685 P.2d 1068, 1070 (Wash. 1984). The Bureau of Reclamati on, an agency within the United States Department of the Interior, subsequently issued a standard fo rm contract authorizing private landowners to use t he Quincy groundwater. The contracts were executed under the authority of section 9(e) of the Reclamation Project Act of 1939 (“the 1939 Act”), Pub. L. No. 76-260, 53 Stat. 1187, codified at 43 U.S.C. § 485h(e ). Since 1975, the withdrawal of Quincy groundwater by privat e landowners has been conditioned on the execution of the Bureau’s sectio n 9(e) contract and on the re ceipt of a state permit from the Washington Department of Ecology. There are currently 292 land owners in the Quincy Basin that have entered into a water supply agreement with t he Bureau of Reclamation. They include the Williamson Land Company (“Williamson”) and the member s of the Grant County Black Sands Irrigation District (“GCBSID”). In consideration for a “license to withdraw and use its artificially stored ground water,” the Bu reau charges the landowners an annual “[p]ayment for water” consisting of a va riable charge for operation and maintenance, and a fixed charge of $1.70 per acre “forparticipation in Pr oject construction repayment.” The Bureau’s stan dard form contract also states that the license “shall continue for a period of 10 year s” and “shall be extended . . . fo r an additional like period without further notice provided the State permit . . . has been extended for a similar period.”

2008-1354 2Initially, the Washington state permits issued to the Quincy groundwater users had 10-year terms. In 1983, the Washington Department of Ecology eliminated the 10- year term limitation. The state permits ar e now automatically renewed subject only to the Department’s authority to modify or te rminate the permits “at any time for good cause.” Wash. Admin. Code 173-134A-080(2)(i) (2009); see also Wash. Rev. Code. § 90.40.100 (2009). While the landowners’ contracts with the Bureau have been renewed several times, the material terms and provisions of the current contracts are identical in all respects to the standard fo rm water service contract promulgated by the Bureau in 1975. In July 2006, the appell ants brought this suit as a class action in the United States District Court for the Eastern Distric t of Washington. T he action was brought on behalf of all landowners locat ed within the GCBSID that hold water service contracts for the withdrawal of Quincy ground water. The complaint sought injunctive and monetary relief against the Bureau of Re clamation. The appellants’ theory of the case was that they were entitled to the st atutory benefits accorded to holder s of “repayment contracts” and “long-term water service contracts” under re clamation law. T he appellants filed two motions for partial summary judgment, and the government filed a motion to dismiss the complaint for lack of subject matter jurisdicti on or, in the alternativ e, to render judgment on the pleadings. The district court rejected the appellant s’ statutory theory and dismissed the complaint. The court canvassed the statutory provisions cit ed in the parties’ briefs and concluded that the contracts at issue ar e “short-term water service contracts,” not “repayment contracts” or “long-term water serv ice contracts,” and that the appellants are

2008-1354 3not entitled to the same stat utory benefits accorded to holders of the latter two types of contracts. The court denied the appellants’ motions for summary judgment as moot. Grant County Black Sands Irri gation Dist. v. United States , 539 F. Supp. 2d 1292, 1298–99 (E.D. Wash. 2008). 1 The appellants then took this appeal. II At the outset, the parties disagree about whether this c ourt has jurisdiction over the appeal. The appellants argu e that their claim for $10,000 in damages constituted a claim under the “Little Tucker Act,” 28 U.S.C. § 1346(a)(2). Because the jurisdiction of the district court was based in part on that Act, the appellants submit that this court has appellate jurisdiction under 28 U. S.C. § 1295(a)(2). The gov ernment responds that in substance this is an appeal fr om the denial of a request for equitable relief and that the jurisdiction of the district court was in voked under the Administrative Procedure Act

1 Although the district court’s ana lysis is largely directed at demonstrating why the appellants’ claims fail on the merits, the court at one point stated that because the plaintiffs had “failed to establish a clai m under the APA, they ar e not entitled to an APA waiver of sovereign immunity.” Based on that language in the district court’s order, the government argues that the court dismissed t he complaint for want of jurisdiction. In fact, the court’s order is more properly char acterized as a dismissal on the merits. The complaint set forth statute-based claims tha t, if accepted, would have justified relief either in the form of damages or an orderaffecting the parties’ rights under their contracts, or both. That was sufficient to confer ju risdiction on the di strict court. See Jackson Transit Auth. v. Local Di v. 1285, Amalgamat ed Transit Union , 457 U.S. 15, 21 n.6 (1982); Bell v. Hood , 327 U.S. 678, 680–81 (1946). T he government’s argument that the district c ourt had no jurisdiction under the APA focuses on the merits of the appellants’ statutory claims and is predicated on the erroneous notion that a court does not have jurisdiction to address a claim that is incorrect on the merits. Accordingly, to the extent that it ma y be pertinent in any future proceedi ngs, we treat the dismissal as having been on the merits ratherthan on jurisdictional grounds. See Lewis v. United States , 70 F.3d 597, 604 (Fed. Cir. 1995).

2008-1354 4(“APA”), 5 U.S.C. §§ 701 et seq., not the Little Tucker Act. For that reason, the government contends, appellate jurisdiction lies in the Ninth Circuit, not in this court. It is certainly true that much of the relief sought by the appellants was equitable in nature. However, this court has jurisdic tion over an appeal as long as the jurisdiction of the district court was based “in whol e or in part” on the Little Tucker Act. Wopsock v. Natchees , 454 F.3d 1327, 1331 (Fed. Cir. 2006). The question for us is not whether the main thrust of the action in the district co urt was equitable, but whether the district court’s jurisdiction was based, even in part, on section 1346(a)(2). The complaint listed the Little Tucker Act as one of the bases for the district court’s jurisdiction and sought “specific monetary relief for illegal overch arges imposed on them by the Bureau of Reclamation.” We therefor e focus on the appellants’ all egations with respect to the water use charges assessed by the Bureau of Reclamation. The appellants’ theory of the case proceeded from the pr emise that the contracts of the landowners they represent are not cont racts to purchase water, but contracts to repay the federal government for their share of the construction costs of the irrigation projects. Both in the complaint and in va rious pleadings before the district court, the appellants cited a number of st atutory provisions and court decisions as support for the proposition that any administrative overchar ges assessed by the Bureau of Reclamation must be credited toward that repayment ob ligation or be refunded to the landowners. The complaint alleged that t he Bureau of Reclamation had overcharged the landowners for the operation and mainte nance of the irrigation wor ks and that if those excess charges had been properly credi ted to repayment, the landowners’ contractual payment obligations would have ended several years ago. The “monetary relief” sought by the

2008-1354 5appellants was a refund of t he alleged overcharges for operation and maintenance, or alternatively a credit in the amount of the alleged excess charges toward the landowners’ repayment obligati on. In that regard, the prayer for relief included a request for judgment that the landowners are entitled to “receive an aggregate total sum of $10,000 in damages against the United States for the . . . advance collection of administrative charges for administrati on of the Quincy Ground Water Subarea Artificially Stored Ground Water Pr ogram from the Plaintiff class.” 2 That theory of relief in effect see ks damages for an unlawful exaction. See United States v. Testan , 424 U.S. 392, 401–02 (1976); Norman v. United States , 429 F.3d 1081, 1095 (Fed. Cir. 2005); Telecare Corp. v. Leavitt , 409 F.3d 1345, 1348 (Fed. Cir. 2005); Aerolineas Argentinas v. United States , 77 F.3d 1564, 1582–73 (Fed. Cir. 1996). Under that theory, the tr ial court had Little Tucker Ac t jurisdiction because if the appellants’ theory of the case were accepted on the merits, the relief to which the landowners would be entitled would include up to $10,000 in damages by way of a refund of previous administrative overcharges. See, e.g. , Brazos Elec. Power Co-op., Inc. v. United States , 144 F.3d 784, 787 (Fed. Cir. 1998) (“Whether this refund is paid directly . . . or whether it is credited towa rds other money . . . owe[d] to the federal government is irrelevant to our analysis.”).

2 One of the statutory benef its claimed by the appella nts was the right to operate and manage the irrigat ion works through a water users’ association or an irrigation district, such as the GCBSID. See, e.g. , 43 U.S.C. §§ 498–501. Thus, the complaint further specified t hat the $10,000 award shall be “in the form of payment to GCBSID . . . in the year in which the GCBSID takes over the administration and management of the program.”

2008-1354 6Notwithstanding the referenc e to the Little Tucker Act in the complaint, the government argues that the appellants waived that claim. It is true, as the government contends, that the appellants’ response to t he government’s motion to dismiss in the district court contained no ex press reference to the Little Tucker Act. But because the district court’s jurisdiction could readilybe sustained on other grounds, such as the APA, it is not surprising that the appellants focused thei r attention on those other grounds for opposing the motion to dismiss. In an effort to pres erve their APA claim before the district court, the appellants argued that the limitations on equitable remedies under the Tucker Act precluded complete and adequate relief in the Court of Federal Claims. See, e.g. , Nat’l Ctr. for Mfg. Scis. v. United States , 114 F.3d 196, 200–02 (Fed. Cir. 1997). By emphasizing th e equitable relief sought in th e complaint, however, the appellants did not waive their claim to a re fund under the Little Tucker Act. They made clear that even if the district court were to dismiss the APA claim, the action would survive “at least as to that part of th e Plaintiffs’ claims which seeks refund of overcollections assessed against them by BOR.” Moreover, the appellants’ filings in the district court further demonstr ate that they did not abandon their Little Tucker Act claim; in a pleading filed pursuant to the dist rict court’s scheduling order, the appellants asserted that they “have made a Little Tuck er Act Claim,” citing the paragraph in the complaint seeking $10,000 in damages for adm inistrative overcharges that they claim the landowners should not have had to pay. Bec ause the jurisdiction of the district court was based at least in part on the Little Tu cker Act and because the appellants did not waive their Little Tucker Act cl aim in the district court, we have jurisdiction over this appeal.

2008-1354 7III On the merits, the central issue in this appeal is whether t he Secretary of the Interior committed legal error in denying t he appellants the statut ory benefits that are accorded to holders of “repayment contracts” and “long-term” water service contracts. The appellants present three grounds for com pelling the Secretary to grant them those benefits: (1) their contracts are “long-term” wa ter service contracts, within the meaning of section 9(e) of the 1939 Act, and they are entitled to the statutory benefits accorded to holders of such contracts; (2) their contracts are “repayment cont racts,” as defined in section 2(e) of the 1939 Act, 43 U.S.C. § 485a(e), and they ar e entitled to the statutory benefits accorded to holders of such contracts; and (3) the Secretary, acting through the Bureau of Reclamation, has already granted the appellants the benefits due to holders of repayment and long-term water service contracts, and cannot now revoke those benefits. Before we address the merits of those arguments, we briefly review the general principles of reclamat ion law and the different types of contracts for the delivery of project water. Modern reclamation law has its roots in the Reclamation Act of 1902, Pub. L. No. 57-161, 32 Stat. 388, as amended, 43 U.S.C. §§ 371 et seq., which laid the groundwork for a vast and ambitious federal program to irrigate the arid lands of the western states. Under the 1902 Act, the Secretary of the Interior was charged with building dams, canals, and other irrigation facilities to be financed through the sale of federally owned lands. 43 U.S.C. §§ 391, 411. It was expect ed that the owners of the newly irrigated lands would repay their share ofthe construction costs of t he reclamation projects over a 10-year period. Reclamation Act of 1902, § 4, 32 Stat. 388, 389 (current version at 43

2008-1354 8U.S.C. §§ 419, 461). The oper ation and maintenance costs of the projects, however, were to be the responsibility of the fe deral government until such time as the construction payments had been made for the majo r portion of the lands irrigated by the projects, at which point the management and operation of the projects would pass to the landowners. 43 U.S.C. § 498. It soon became clear that the landowners’ repayment obligations far exceeded their ability to pay. Congress therefore extended the repayment peri od to 20 years in 1914 and to 40 years in 1926. 43 U.S.C. §§ 423e, 475; see S.T. Harding, Background of California Wate r & Power Problems , 38 Cal. L. Rev. 547, 557 (1950). In light of the repayment extensions, Congress required t he landowners to reimburse the federal government for their share of the annual operation and ma intenance costs of the projects. 43 U.S.C. §§ 492, 493. The Secr etary of the Interior, however, was granted discretionary authority to trans fer the operation and maintenance of all or any part of the irrigation project works to a water users’ association or an irrigation district. Id. § 499. In the wake of the Great Depression, as landowners became increasingly unable to meet their repayment obligations, Cong ress enacted the Reclamation Project Act of 1939. The goal of the 1939 legi slation was to restructur e the landowners’ repayment obligations on the basis of ability to pay, while still pr otecting the federal government’s financial investment in the reclamation projects. See 43 U.S.C. § 485. To that end, the 1939 Act addressed the Secretary’ s contracting authority in two respects that are of particular relevance to this appeal. First, in section 9(d) of the 1939 Act Congress authorized the Secretary of the Interior to enter into the classic repayment-type contract contemplat ed by the 1902 Act.

2008-1354 9Such contracts, typically called “9(d) contra cts,” were made available only to irrigation districts, water users’ associations, and ot her organizations “satisfactory in form and powers to the Secretary.” 43 U.S.C. § 485h(d). Under a 9( d) contract, the organization would receive project water in exchange for assuming a “general repa yment obligation,” which had to be repaid “over a peri od of not more than 40 years.” Id. § 485h(d)(3). The repayment obligation was defined in the 1939 Act as that “ part of the construction costs allocated by the Secretary” to the organization. Id. § 485h(d)(2). Thus, the 9(d) contract was in form and substance a stra ightforward application of the repayment principle that governed reclamat ion law prior to the 1939 Act. Second, in section 9(e) of the 1939 Act Congress cr eated a new source of contracting authority for the Se cretary, known as a “9(e) contract.” Section 9(e) provided that, “[i]n lieu of entering into a r epayment contract pursuant to the provisions of subsection (d),” the Secretary had discretion to enter into “either short- or long-term contracts to furnish water for irrigation purposes.” The water supplied under 9(e) contracts was supposed to be provided “at su ch rates as in the Secretary’s judgment will produce revenues at least sufficient to cover an appropriate share of the annual operation and maintenance cost and an appropriate share of such fixed charges as the Secretary deems proper.” Alth ough 9(e) contracts were descr ibed as either “short-term” or “long-term,” the 1939 Act did not define t hose terms or indicate that any legal consequences would turn on the “short-te rm/long-term” distinction. 43 U.S.C. § 485h(e). The principal difference between 9(d) and 9(e) contracts under the 1939 Act was that under a 9(d) contract, the irrigation district or water us ers’ association assumed an

2008-1354 10obligation to repay the construction cost s of the project wo rks in fixed annual installments over a predetermi ned period of time. By cont rast, a 9(e) contract was merely a contract to receive project water at an annual rate set by the Secretary. The 9(e) contract was also more limited in its applic ation than a 9(d) contract, because the Secretary was statutorilyprohibited from using a 9(e) cont ract to charge landowners for the fixed costs of “irrigation water distribut ion works,” such as canals and laterals. See Alfred R. Golze, Reclamation in t he United States 107 (1961) (section 9(e) applies to “water supply works,” such as dams and reservoirs); Arthur A. Maass, Administering the CVP , 38 Cal. L. Rev. 666, 6 72 (1950); Bureau of Re clamation, Dep’t of the Interior, Repayment of Reclamation Projects xiii, xli, xlii (1972); see also Ivanhoe Irrigation Dist. v. McCracken , 357 U.S. 275, 286–87 (1958). The legislative history of the 1939 Act does not provide a clear account of Congress’s reasons for authorizi ng the Secretary of the Inte rior to enter into 9(e) contracts. Although the co mmittee reports on the 1939 Act indicate that Congress was generally focused on “introducing flexibility into the contra cts under which water users repay to the Government the cost of construc tion of Federal reclamat ion projects,” there is little by way of explanation for why Congr ess thought section 9(e) was necessary to accomplish that goal. H.R. Rep. No. 76-995, at 1 (1939); S. Rep. No. 76-758, at 1 (1939). The 1939 Act was based in part on the findings of a special commission charged with studying the factors and conditions affecting the repayment of construction charges. See H.R. Rep. No. 76-995, at 2 ( 1939). One of the commission’s recommendations was that “w ater should be delivered on a rental basis” to certain specified projects for which the landowners we re unable to pay even the operation and

2008-1354 11maintenance costs. H.R. Doc. No. 75-673, at 20, 38 (1938). It may be that Congress decided to adopt the commission’s recommendat ion for a broad class of reclamation projects, such as dams, reservoirs, and other large-scale wo rks for which the landowners could not be expected to repay the construction costs. In part, section 9(e) codified the Bureau of Reclamation’s pre-existing practice of taking a “water rental” approach when the total costs of the project could not be determined until after the pr oject had been completed. See Harry P. Glassman, The Validity of the 9(e) Contract , 38 Cal. L. Rev. 739, 741 n.9 (1950); see also H.R. Doc. No. 75-673, at 11 (1938). Several comm entators suggested, however, that the introduction of 9(e) contracts constituted a departure from the r epayment model insofar as the new contracts permitted the federal government to take on the role of a public utility, rather than a contra ctor of last resort for reclamation projects. See Harding,
supra , at 569 (“Under the 9e contract the Bu reau of Reclamation becomes a public utility selling service instead of a construction agency selling constructed projects to their users.”); Roy E. Huffman, Irrigation Development & Public Water Policy93 (1953) (“This type of contract places the Bureau of Reclam ation very much in the category of a public utility.”); Maass, supra , at 671 (holders of 9(e) cont racts essentially “purchase a utility service in the same sense that a citi zen anywhere purchases electric power at an agreed rate”); see also S.V. Ciriacy-Wantrup, Natural Resource Economics 189–192 (1985); Glassman, supra , at 739–45; Water Res. Policy Comm’n, Ten Rivers in America’s Future 248–49 (1950). Whatever the reasons for Congress’s decis ion to authorize 9(e) contracts, the Bureau of Reclamation soon began entering into 9(e) c ontracts in connection with a

2008-1354 12number of existing and newly constructed reclamation projects. Irrigation districts and landowners, particularly in t he San Joaquin Valley of Cali fornia, vigorously contested the use of such utilit y-type contracts, arguing that t he Bureau of Recl amation was not authorized to enter into wa ter rental contracts. See Sheridan Downey, They Would Rule the Valley243 (1947). The Bureau of Reclamat ion also encountered considerable resistance to its standard form water rental contracts, which did not guarantee any permanent water rights or grant any credit to ward repayment of the construction costs of the project. See Ciriacy-Wantrup, supra , at 189–192; Downey, supra , at 226–29, 243–46; Huffman, supra , at 93; Raymond Moley, What Price Federal Reclamation? 20– 22 (1955); Robert de Roos, The Thirsty Land 154–58 (1948). In 1956, Congress took up the landowners’ cause and supple mented sections 9(d) and 9(e) of the 1939 Act. See Pub. L. No. 84-643, 70 St at. 483 (1956) (codified at 43 U.S.C. §§ 485h-1 to 485h-6). It did so pr incipally by confe rring new benefits on holders of “long-term” 9(e) cont racts, which were defined as 9(e) contracts having a term of more than 10 years. 43 U.S.C. § 4 85h-3. Those benefits included (1) the right to renew the contract on “terms and conditions mutually agreeable to the parties,” (2) the right to convert the contract into “a contract under [section 9(d)],” and (3) the right to cease paying the “construction component” of the total use charge when the payments in excess of the government’s operat ion and maintenance charges equaled the construction cost of the project. Id. § 485h-1. Thus, although the “short-term/long-term” distinction predated t he 1956 legislation, Congress for the first time added meaning to that distinction. Signific antly, the 1956 Act contained no reference to extending benefits

2008-1354 13to short-term 9(e) contracts similar to th ose that were extended to long-term 9(e)
contracts. As the committee reports on the 1956 Act make clear, the purpose of the legislation was to address the landowners’ concerns (1) that no assurance can be given in t he contract itself or in any other document binding upon the Government that the c ontract will be renewed upon its expiration; (2) that the water users who have this type of contract are not assured that t hey will be relieved of paym ent of construction charges after the Government has recovered its entire irrigation investment; and (3) that the water us ers are not assured of a “permanent right” to the use of water under this type of contract. S. Rep. No. 84-2241, at 2 (1956); H. R. Rep. No. 84-1754, at 2 (1956); see also Ivanhoe , 357 U.S. at 297–98 (the 19 56 Act “answered most ofthe objections lodged against” the requirements of se ction 9(e) of the 1939 Act) . It was equally clear, however, that Congress did not intend for the 1956 legislat ion to repudiate the Bureau of Reclamation’s general view that the “so- called water service or utility type contracts as authorized by the Reclam ation Project Act of 1939 r epresented an innovation in reclamation law.” S. Rep. No. 84-2241, at 2 (1956). T he 1956 Act merely made it “possible for the Secretary of the Interiorin approving so-called ‘water service’ and ‘utility type’ contracts to meet objections” of the landowners with res pect to renewability, crediting, and permanent water rights. Id. Thus, 9(e) contracts continued to be treated as “water service” or “utility-type” contra cts, distinct from 9(d) contracts and the repayment-type contracts envisioned by the 1902 Act. See 4 Robert E. Beck, Water & Water Rights 39-58 n.245, 39-59 n.247 (1991) (“Contracts under § 9e are not really repayment contracts, but ratherwater supply contracts that may take into consideration project costs, but do not purport to collect full payment in any set period of time”); Frank

2008-1354 14J. Trelease & George A. Gould, Cases & Materials on Water Law697 (4th ed. 1986) (section 9(e) contracts have been “likened to the arrangement made by a public utility furnishing water to consumers”); see also Reed D. Benson, Whose Water Is It? Private Rights and Public Au thority Over Reclam ation Project Water , 16 Va. Envtl. L.J. 363, 371 (1997) (“The repayment contra ct is analogous to a mortgage, while a water service contract is more like a lease.”); Golze, supra , at 247, 256. With that historical and statutory context in mind, we turn to the appellants’ challenges to the government’s position with respect to their contract rights. IV We begin by addressing the narrowest of the appellants’ grounds for relief, namely that the contracts at issue are long -term contracts under section 9(e) of the 1939 Act, 43 U.S.C. § 485h(e). T he appellants assert that if we were to accept their characterization of the contracts as long-te rm contracts, they w ould be entitled to the renewal, conversion, and repayment credit right s set forth in the 1956 Act and codified at 43 U.S.C. § 485h-1. As noted, a long-term contract is defined as any contract to furnish water “the term of which is more than ten years.” 43 U. S.C. § 485h-3. Articl e 6 of the landowners’ contracts states, in pertinent part: TERM. This license shall be effective on the date hereof and . . . shall continue for a period of 10 years, oruntil the termination date of the Landowner’s State permit if it is earlier, and shall be extended . . . for an additional like period without furthernotice provided the State permit referred to in Article 3 has been extended for a similar period with a new termination date therefor . . . . During the initial 10-year term of their cont racts, the landowners were required to pay only a percentage of the annual water user charge calculated by the Bureau of

2008-1354 15Reclamation. With respect to the amoun ts due after the initial 10-year term, the contracts state that “[r]enew als will be billed at 100 percen t.” Because the contracts “continue for a period of 10 years, ” albeit with the possibility ofrenewal, they are not, on their face, “long-term” contracts as thatterm is defined in section 485h-3.
A The appellants make two arguments as to why their contracts are “contracts for more than ten years” despite th e explicit 10-year term set fort h in Article 6. First, they argue that the contracts ar e permanent and uninterruptible because the underlying state permits do not expire after a term of years. While the appellants acknowledge that the state permits may be terminated for good caus e by the Washington Department of Ecology, they contend that Congress has pr eempted the field of reclamation law and that the state of Washington is therefore required to exerci se its authority to terminate the permits in conformity with federal law. Under the appellants’ theory, the good cause requirement for terminating the appellants’ st ate permits is essentially a nullity—the circumstances justifying the termination of t he permits are the same as those that would trigger a termination of the contract itself. Since the appellants co ntend that renewal is automatic, they regard the c ontracts as having a perpetual term that is necessarily greater than 10 years. We need not decide the precise contours of the good cause requirement under Washington law, because the a ppellants’ argument is based on the flawed assumption that the “term” of the contra cts necessarily includes any peri ods of renewal following the expiration of the contracts’ designated duration of a “period of 10 years.” That argument is contrary to the most natural meaning of the word “term,” as it is used in the contracts,

2008-1354 16and it is also contrary to the parties’ expre ssed intentions as to the matter and to the statutory and regulatory backdr op of the contractual arrangements at issue in this case. The essence of the appellants’ argument is that the “term” of t he contract should be interpreted to include the renewal periods, in which case the contract “term” would be indefinite or perpetual. That interpretation is contrary to the ordinary meaning of the word “term,” which is “a period of time with some definite termination.” Black’s Law Dictionary1470 (6th ed. 1990). Moreover , interpreting the word “t erm” in the contract to include the renewal periods would render m eaningless the “shall continue for a period of 10 years” clause in the contracts. If t he parties intended to create a contractual relationship of indefinite duration, they coul d simply have provided that the contracts would remain in effect until either the landowners or the Bureau of Reclamation exercised their termination rights under Article 12. In order to give full effect to the parties’ expressed intentions on the matter, the contracts must be understood as limited to 10-year “terms.” The relevant provisions of the 1956 Act support the c onclusion that the “term” of a 9(e) contract does not refer to the comb ination of the stated term and any potential renewal periods. One of the objections to the utility-type contracts under section 9(e) was that the landowner could not be assur ed of a stable water supply because there was no guarantee that the Bureau of Recl amation would rene w the contract upon expiration. See S. Rep. No. 84-2241, at 2, 5 (1956); H.R. Rep. No. 84-1754, at 2, 4 (1956). Responding to that concern, C ongress provided in the 1956 Act that the Secretary of the Interior s hall, upon request of the private contractor, include in any long-term 9(e) contract a prov ision for renewal of the c ontract “under stated terms and

2008-1354 17conditions mutually agreeable to the parties.” 43 U.S.C. § 485h-1(1). Congress also provided for long-term contract holders to rece ive certain water rights “during the term of the contract and of any renewal thereof.” Id. § 485h-1(4). In distinguishing between the “term of the contract” and any subsequent periods of “renewal ,” that language reflects that Congress did not regard renewal periods as being incl uded within the contract’s “term” as that word wa s used in the statute. Elsewhere in the 1956 Act, the word “te rm” is similarly used to refer to the duration of a repayment contract under section 9(d) of the 1939 Act. See 43 U.S.C. § 485h-1(2) (“within the term of a contract under subsection (d) of section 485h of this title”). Because the Bureau of Reclamatio n is generally prohibited from entering into 9(d) contracts that do not have fixed terms, see id. § 485h(d)(3), the use of the word “term” in connection wit h 9(d) contracts is consistent with the understandi ng that “term” refers to a fixed and designated period of time, not an open-ended, indefinite period. See Bankamerica Corp. v. United States , 462 U.S. 122, 129 (1983) (the same terms in the same statute should be interpreted in conjunction with each other). The appellants’ construction of the stat ute also fails to accord with the joint purposes of the 1956 legislatio n—to provide some assurance that landowners could count on a long-term supply of water, while preserving the Secretary’s flexibility to employ short-term water service contracts. Under the appellants’ interpretation of the word “term” in the statute, the Bureau of Reclamation could not enter into a short-term water service contract with a renewal clause that would assure the landowner of a stable water supply for a period greater t han 10 years. Such a contract, in the appellants’ view, would automatically become a long-term contract convertible to a

2008-1354 18repayment contract. If that interpretation of the statute were correct, it would foreclose the Secretary from using short-term water se rvice contracts while at the same time providing some form of assurance to the hol ders of such contracts that their access to water would not terminate after 10 years. In directing the Secretary of the Interior to address the concern of long-term contract hol ders regarding the stability of their water supply, it is unlikely that Congress intended to strip the Secretary of any authority to provide similar assurances to holders of s hort-term water service contracts. We therefore hold that the word “term” in the appellants’ contra cts refers to the designated 10-year term set forth in the contracts an d does not include any periods of renewal following that initial 10-year term.
B The appellants’ second argument for disr egarding the 10-year limitation is that the word “term” in the contracts is not a reference to the contract term per se, but instead refers to the period within which the government expects to recoup its fixed costs. The annual per-acre charge paid by t he appellants consists of a construction component, which remains fixed, and an oper ation and maintenance component, which varies from year to year. The Bureau of Reclamation calculated the annual construction component ($1.70 per acre) by amortizing t he total construction cost per acre of irrigated land ($85 per acre) over a 50-year per iod. The appellants ar gue that the “term” of their contracts is 50 years because that is the period within which the government will have recovered the construction costs apportioned to the appellants. The problem with that argum ent is that the appellants’ contracts do not in any way tie the contract “term” to the government’s recovery of construction costs. Article 6

2008-1354 19clearly provides that the contracts “shall continue for a period of 10 years,” with the possibility of being renewed for “additional lik e periods.” Although the contracts set the annual construction component at $1.70 per acre, they omit anymention of the total per acre construction costs that were apportioned to the appellants. Since the contracts themselves do not admit of anymethod for calculating the r epayment period, there is no basis for concluding that the parties intended the contra ct “term” to be a 50-year repayment period. Similarly, there is no indication t hat Congress intended the “term” of a 9(e) contract to be equal to the num ber of years it would take t he Bureau of Reclamation to recover its construction costs. For 9(d) contract s, the contract term is closely tied to the repayment period because the stat ute expressly requires the i rrigation district or water users’ association to assume a “general repay ment obligation” that “shall be spread in annual installments . . . over a period of not more than 40 years.” 43 U.S.C. § 485h(d)(3). Under a 9(e) contract, by c ontrast, the landowner assumes liability only for a variable annual charge for the delivery of irrigation water. The only temporal limitation on 9(e) contracts to furnish water is that [e]ach such contract shall be for such period, not to exceed forty years, . . . as in the Secretary’s judgment wil l produce revenues at least sufficient to cover an appropriate share of the annual operat ion and maintenance cost and an appropriate share of such fixed charges as the Secretary deems proper . . . .

Id. § 485h(e). Because there is no reference to a repayment obligation in section 9(e), the period within which the go vernment may recover its costs is not relevant to determining the “term” of any contract s executed pursuant to that provision.

2008-1354 20Accordingly, we conclude that the ap pellants’ contract s are not long-term contracts within the meaning ofsection 485h-3 and are ther efore not entitled to the benefits accorded to such cont racts under section 485h-1. V We next turn to the appellants’ theory that even if their contracts are short-term contracts, they nonetheless sh ould be treated as “repayment c ontracts,” as that term is used in the 1939 Act. If their contracts are repayment contracts, the appellants assert that they are entitled by statute to operate and manage t he irrigation works and to receive credit toward their general repaym ent obligation for any past overcharges. According to the appellants, a repaym ent contract is any contractual arrangement in which the United States recoups the construction costs of a reclamation project. Because the water use charges in the appellants’ contracts include a construction component, the appellants argue t hat their contracts must be repayment contracts. More broadly, they contend that because both sections 9(d) and 9(e) direct the Secretary to set water rates in part bas ed on project construction costs, contracts under both sections 9(d) and 9(e) are all repayment contracts. The first problem with the appellants’ theory is that it is contrary to the very first sentence of section 9(e). That subsection begins, “In lieu of entering into a repayment contract pursuant to the provisions of subsecti on (d) . . . the Secretary, in his discretion, may enter into either short- or long-term contracts to furnish water for irrigation purposes.” The effect of t hat sentence is to identify 9( d) contracts as “repayment contracts” and 9(e) contracts as water service contracts.

2008-1354 21That straightforward reading of the st atute is consistent with the legislative background. Prior to 1956, i rrigation districts and landowners voiced their concern that section 9(e) seemed to be a departure from t he general principle of reclamation law that landowners would acquire statutory management and water rights when the construction costs of the pr oject had been repaid. While C ongress was mindful of those concerns when it enacted the 1956 legislation, the committee reports confirmed that the “so-called water service or utility type cont racts as authorized by the Reclamation Project Act of 1939 represented an innovati on in reclamation law” and that “the principles of the two sections [9(d) and 9(e) ] are generally accepted.” S. Rep. No. 84- 2241, at 2 (1956). The reports further explained that the 1956 Act was merely “directed toward perfecting the basis for the administration” of sections 9(d) and 9(e) of the 1939 Act, while “avoid[ing] any amendment to the text” of those sections. Id . Although Congress supplemented section 9( e) in several material respects in the 1956 Act, it clearly did not discard the water service or ut ility-type contract that was embodied in that section. The 1956 Act carefully set forth a series of statutory benefits that apply to “longterm” contracts, which are defined as contract s having a term of greater than 10 years. 43 U.S.C. §§ 485h-1 to 485h-3. In many respects, those benefits were designed to replicate the features of c ontracts under section 9(d) of the 1939 Act, which are clearly repayment contracts. Significantly, howev er, Congress did not simply relabel “longterm” contracts as “repayment contracts”; no r did it extend repayment-type benefits to holders of short-term 9(e) contracts.

2008-1354 22Excluding 9(e) contracts from the class of “repayment contracts” is not inconsistent with the various statutory provisions cited by the appellants as support for their argument. A “repayment contract” is defined as “ any contract providing for payment of construction charges to the Un ited States.” 43 U. S.C. § 485a(e). “Construction charges” are defined, in turn , as “the amounts of pr incipal obligations, payable to the United States.” Id. § 485a(d). The 1939 Act expressly states that 9(d) repayment contracts include a “ general repayment obligation.” Id. § 485h(d)(3). Holders of 9(e) contracts, however, are not required to a ssume a “general repayment obligation” or any other “principal obligation.” Instead, their payments reflect “an appropriate share of such fixed charge s as the Secretary deems proper, due consideration being given to that part of the cost of construction of works connected with water supply and allocated to irrigation.” Id. § 485h(e). The use of the term “fixed charges” in section 9(e), rather than “constr uction charges,” “principal obligation,” or “general repayment obligation,” indicates that Congress did not intend 9(e) contracts to be classified as repayment contracts. As we noted above, in calculating the am ount of the “fixed c harge,” the Secretary is required to give “due consideration . . . to that part of the cost of construction of works connected with water supply and allocated to irrigation.” 43 U.S.C. § 485h(e). As with any utility-type contract, however, the consumer does not assume an obligation to repay the construction costs of the utility merely bec ause the utility takes into account its fixed infrastructure costs in setting the price for it s commodity service. The direction to the Secretary to account for “the cost of constr uction” simply reflects Congress’s judgment as to the amount of rev enue that ought to be generated by9(e) contracts.

2008-1354 23The appellants point to section 7(b) of the 1939 Act, 43 U.S. C. § 485f(b), as support for the proposition that any contract executed purs uant to section 9(e) is a repayment contract. Section 7( b) authorizes the Secretary of the Interior to enter into a “repayment contract . . . in accordance, as near as may be, with the provisions [of sections 9(d) or 9(e)]” for any project underconstruction on the effective date of the 1939 Act. In the appellants’ view, it would be inconsis tent with the text of section 7(b) to hold that 9(d) contracts are repayment contracts but 9(e) c ontracts are not. Section 7(b) does not, as t he appellants contend, implic itly define t he nature of any contracts executed under the authority of se ctions 9(d) and 9(e). The references to sections 9(d) and 9(e) merelyspecify the various provisi ons in the 1939 Act that the Secretary must consider when relying on se ction 7(b), which constitutes an independent source of the Secretary’s author ity to enter into a repayment contract. Although section 9(e) generally sets forth the statutory basis for the Secretary’s aut hority to enter into water service contracts, and not repayment c ontracts, that subsection also provides that: In the event such contracts [under section 9(e)] are made for furnishing water for irrigation purposes, the costs of any irrigation water distribution works constructed by the United States in connection with the new project, new division of a project, or supple mental works on a project shall be covered by a repayment contract entered into pursuant to subsection (d) of this section. 43 U.S.C. § 485h(e). In light of that passage, the referenc e to section 9(e) simply confirms that the Secretary, when using his authority under secti on 7(b), should use a repayment contract in connection with “irrigat ion water distribution works,” such as canals and laterals, just as section 9(e) dire cts him to do for such projects generally.

2008-1354 24The appellants argue that short-term contracts were already “repayment contracts” under the 1939 Act and that their status as such was unaffected by the 1956 Act, notwithstanding that the later-enacted statute exte nded a number of repaymenttype benefits to long-term 9(e) contracts. Itwould be incongruous, however, to attribute to Congress the intent to provide greater benefits to short-term contracts than to longterm contracts. For example, one of the bene fits conferred by the 1956 Act is that longterm contracts may be converted to 9(d) contracts “under stated terms and conditions mutually agreeable to the parties.” 43 U.S.C. § 485h-1(2). Under the appellants’ theory, short-term contracts ar e entitled to be treated as 9( d) contracts even absent an agreement with the Secret ary of Interior. It is clearthat in the 1956 Act Congress intended to grant certai n benefits to long-term contract hol ders that were not previously available. Congress’s silenc e on the subject of short-te rm 9(e) contracts compels the conclusion that those contra cts were not intended to have benefits comparable to those of long-term 9(e) contracts, much less those of 9(d) contracts. In addition to the language of section 9( e) itself, there is ample contextual support in the 1956 Act for the distinction bet ween short-term 9(e) contracts, on the one hand, and 9(d) and long-term 9(e) c ontracts, on the other. For example, Sect ion 1(4) of the 1956 Act provides in pertinent part that the other party to any cont ract entered into pursuant to [section 9(d)] or to any long-term contract entered into pursuant to [section 9(e)] shall . . . have a first right (to which right the rights of the holders of any other type of i rrigation water contract shall be subordinate) to a stated share or quantity of the project’s available water supply for beneficial use on the irrigable lands within the boundaries of, or owned by, the party . . . . 43 U.S.C. § 485h-1(4). Congre ss clearly contemplated a re sidual category of “irrigation water contracts” that would not be entitled to the same wa ter rights as 9(d) contracts

2008-1354 25and long-term 9(e) contracts. In the absence of any specific exclusion for short-term 9(e) contracts, there can be little doubt that short-term 9( e) contracts fall within the category of “irrigation water cont racts” that were intended to be treated differently from 9(d) contracts and long-term 9(e) contracts. The appellants further argue that the di stinction between short-term and longterm contracts under section 9(e) mirrors the distinction between “to ll-charge” contracts and repayment contracts under section 9(d). The 1939 Act authorized the Secretary of the Interior to provide for a “ development period” of up to 10 years before triggering the landowners’ repayment obligat ion under a 9(d) contract. 43 U.S.C. § 485h(d)(1). During the development period, the landowners were expected to pay a “toll charge” for the delivery of project water. Id. According to the appellant s, the Secretary of the Interior lacks the authority to enter into a short-term 9(e) contract except for the purpose of a development period; they argue that when a short-term 9(e) contract is in place for more than 10 years it must be converted into a long-term 9(e) contract. While it is true that C ongress has chosen 10 years as the maximum allowable duration for both development peri ods and short-term contracts, that fact standing alone does not justify the inference that the appellants pr ess upon us. Nothing in either the text or legislative history of the 1939 Act suggests that Congress intended short-term 9(e) contracts to serve only as analogues to the toll-c harge contracts authorized under section 9(d) for development periods. We t herefore reject the suggestion that the Secretary cannot execute a short-term contract under section 9(e) except for the period authorized for a “development per iod” toll-charge contract.

2008-1354 26The appellants next contend that the United States is collaterally estopped from denying that their contracts are repayment contracts becaus e the Ninth Circuit already decided that issue in Flint v. United States , 906 F.2d 471 (9th Cir. 1990). In Flint , landowners in the Quincy Basin area ch allenged the operation and maintenance charges in their water service contracts, whic h are identical to the contracts at issue in this appeal. The Flint court held that: (1) the amounts charged by the Secretary of the Interior were committed to hi s discretion; (2) the Secretary did not exceed his authority under state law in assessing the charges; and (3 ) the plaintiffs had no property interest in the artificially stored groundw ater that could be taken by the United States. 906 F.2d at 476–77. While the court in Flint referred to the contracts as “repayment contracts,” there is no indication that t he issue of the character of t he contracts was briefed by the parties or that the court int ended to address that legal issue. Accordingly, we conclude that the question whether the app ellants’ contracts are repay ment contracts was neither litigated nor decided in the prior proceeding and that the court’s characterization of the contracts is therefore not binding on the government in this case. See, e.g. , Killeen v. Office of Pers. Mgmt. , 558 F.3d 1318, 1323 (Fed. Cir. 2009). We therefore reject the appellants’ argum ent that their cont racts are “repayment contracts,” as defined in section 2(e) of the 1939 Act, 43 U.S.C. § 485a(e).
VI The appellants next argue t hat even if their contracts do not include an obligation to repay the government’s construction costs, the Bureau of Reclam ation is constrained by its earlier determination that their cont racts are entitled to the statutory benefits reserved for repayment contracts and long-term 9( e) contracts. Because the appellants’

2008-1354 27assertions in that regard focus on the Bu reau’s enforcement of ex cess land limitations, we briefly recount the historical development of those limitations in reclamation law. As part of a general policy to encour age settlement in t he western states, Congress designed the Reclamation Act of 1902 to provide federa lly subsidized water to small, family-sized farms. To promote th at objective, Congress provided in section 5 of the 1902 Act that “[n]o right to the use of water . . . sha ll be sold for a tract exceeding 160 acres to any one landowner.” 43 U.S.C. § 431. Congress later directed that project water would be withheld from any lands in excess of 160 acres in single ownership unless the owner executed a re cordable contract to sell ex cess land at a discount price that did not reflect the apprec iation in value attributable to the availability of project
water. Id. § 423e. Over time, the Bureau of Reclamation came to accept certain practices that were designed to avoid th e 160-acre limitation, such as executing recordable contracts under a trust or limit ed partnership arrangement and increasing the acreage serviced by project water by leas ing irrigated property that exceeded 160

acres. See, e.g. , Peterson v. Dep’t of the Interior , 899 F.2d 799, 801–02 (9th Cir. 1990); 4 Robert E. Beck, Water & Water Rights 41-19 (1991); Trelease & Gould, supra , at 697. In the Reclamation Reform Act of 1982, Ti tle II of Pub. L. No. 97-293, 96 Stat. 1261, codified at 43 U.S.C. §§ 390aa–390zz (“RRA”), Congres s closed several of the loopholes that landowners had prev iously used, while it also increased the total number of acres, whether owned or leased, to which project water could be delivered on a subsidized, or “non-full cost,” basis. Hol ders of excess lands could nonetheless receive project water if they execut ed recordable contracts disposi ng of the excess lands within a reasonable time or if they were willing to pay “full cost” for water delivered to those

2008-1354 28lands. 43 U.S.C. §§ 390ee, 390ii. The most controversia l provision of the RRA was the so-called “hammer clause,” which put landow ners with existing water supply contracts to a choice: They either had to amend their contracts to conform to the requirements of the RRA or continue to accept project water under their current contracts but pay the government’s “full cost” of delivering water to leased lands in excess of 160 acres. See id. § 390cc(b); Peterson , 899 F.2d at 801. The appellants point out t hat the Bureau of Reclamat ion has repeatedly required them to execute short-term 9( e) contracts incorpor ating all of the exce ss land limitations in the RRA and pre- 1986 reclamation law. Because those limitations have been enforced against the appellants, they argue that the Bureau has e ffectively deemed their contracts sufficient to trigger the st atutory benefits granted to repayment contracts and long-term 9(e) contracts. The appell ants’ argument depends on the assumption that the RRA and the pre-1986 excess land limitations apply only to repayment contracts and long-term 9(e) contracts. As we have already decided, however, the appellants’ contracts are short-term 9(e) contracts because they have 10-year terms and because they do not cont emplate a “general repayment obligation.” Thus, the appellants are essentially argui ng that the Bureau erred in applying the excess land limitations to their contract s, but that having done so the Bureau must extend to them the benefits of repayment contract s and long-term 9(e) contracts. We need not decide whether the RRA and pre-1986 excess land limitations apply to short-term 9(e) contracts, because it is clear that applying thos e provisions to the appellants’ contracts did not a ffect either the 10-year term of their contracts or their obligation to pay a water rental charge. The appellants do not co ntend that the RRA

2008-1354 29and pre-1986 excess land limitations require the execution of a repayment contract or a long-term 9(e) contract, at least where such c ontracts were not already in effect. Nor do they contend that the excess land statutes grant the Secretary of the Interior discretionary authority to enter into a repayment contract or a long-term 9(e) contract where none existed before. See, e.g. , 43 U.S.C. §§ 390cc(d), 390ee(b). To be sure, both the RRA and pre-1986 excess land laws give rise to legal consequences that depend on the type of contra ctual arrangement entered into by the parties. By way of example, the RRA app lies only to a “repayment or water service contract between the United States and a district prov iding for the payment of construction charges to the United States including normal operation, maintenance, and replacement costs pursuant to Federal recl amation law.” 43 U.S. C. § 390bb(1). Also under the RRA, the ownership and “full cost” limitations cease when “the obligation of a district for the repayment of the construction costs of the project facilities used to make project water available for delivery to such lands shall have been discharged by a district.” Id. § 390mm(a). However, while the issue the appellants raise may go to what their obligations are under the RRA, that i ssue does not affect the nature of their contracts with the Bureau of Reclamation. It may be that the Bureau of Reclamation erred in enforcing t he excess land laws against the appellants’ contracts. But the a ppellants have not squarely presented that issue to us, nor did they present it to the dist rict court; it is therefore not before us, and we do not decide that question. See Novosteel SA v. United States , 284 F.3d 1261, 1273–74 (Fed. Cir. 2002). Because we are c oncerned only with w hether the appellants are entitled to the statutory benefits accorded to repayment contracts and long-term 9(e)

2008-1354 302008-1354 31 contracts under the 1939 and 1956 Acts, and bec ause those benefits turn on whether the appellants’ contracts incl ude a principal repayment ob ligation or have a contract term greater than 10 years, it is sufficient to note that t he RRA and the pre-1986 excess land limitations do not change the fact that th e appellants hold short-te rm 9(e) contracts. Accordingly, we affirm the district court’s decision grant ing the government’s motion to dismiss the action. VII The appellants have also challe nged the district court’s denial of their motion to strike certain affidavits that were attached as exhibits to the government’s opposition to their motions for summary judgment. After granting the government’s motion to dismiss, the district court denied “all otherpending motions,” incl uding the appellants’ motion to strike, as moot. Because we affirm the district court’s dismissal on the merits, and because the district court did not rely on any of the c ontested affidavits that were the subject of the motion to strike in connection with the dismissal order, we need not address the appellants’ contenti on that the district court should not have denied their motion or should not have treated it as moot. Each party shall bear its own costs for this appeal.
AFFIRMED

.