Opinion ID: 783261
Heading Depth: 4
Heading Rank: 1

Heading: Equitable Relief and Forfeiture

Text: 42 Although we reject the district court's application of a blanket equitable exemption for intrafarm transfers, we also recognize that equity may be appropriate on a case-by-case basis in the forfeiture context if a landowner can show that steps were taken to transfer water rights during the period of non-use, but that those steps were thwarted by the government or TCID. Id. at 1078. Under Nevada state law, water rights that are not used for five consecutive years are subject to loss through statutory forfeiture to the extent of non-use. See Nev.Rev.Stat. § 533.060(2) (amended 1999) (surface water) 8 and Nev. Rev.Stat. § 534.090 (ground water). However, Nevada law provides that the forfeiture law does not apply to water rights that were vested or for which water right appropriations were initiated before the passage of the forfeiture act in 1913. Nev. Rev.Stat. § 533.085. Defendant landowners argue that state forfeiture law does not apply to water rights in the Project because the water rights vested in 1902, the year the United States obtained Project-wide rights with the creation of the Project. 43 However, we have repeatedly rejected the idea that all of the rights to water in the project vested in 1902. See, e.g., Alpine III, 983 F.2d at 1496 ([T]he individual rights at issue ... did not vest in 1902 when the United States obtained Project-wide rights.). In Alpine III we remanded for an individualized determination for each parcel at issue of whether and when the right vested. Id. In Orr Ditch we explained why, given the purpose of Nevada Revised Statute section 533.085 to protect water right-holders who had obtained or initiated appropriations of their water rights on the understanding that those rights would not be subject to forfeiture, the terms initiated appropriation in section 533.085 could not refer to 1902, the date that the United States initiated water rights for the entire Newlands Project. Such a reading would protect water-right holders who had done nothing at all to acquire water rights as of the date of the forfeiture statute.... [T]here was no reason to protect individuals who began the process of acquiring water rights after the effective date of the statute, because they did so with notice that any water rights they acquired would be subject to forfeiture. Orr Ditch, 256 F.3d at 942-43. 44 We adhere to the requirement we have consistently maintained, that landowners cannot claim 1902 as the date their water rights were initiated, but rather ... [must] demonstrate that they took `affirmative steps' to appropriate water prior to 1913 to be exempted from the state forfeiture statute. Alpine V, 291 F.3d at 1073 (reaffirming Alpine III holding). Because the State Engineer's determination of the contract dates for the water rights at issue conformed to these requirements, and substantial evidence supports his determination as to the relevant contract date for each water right at issue, we uphold the district court's judgment to the extent that it affirmed the Engineer's rulings regarding the calculation of contract dates. 45 Once we accept the State Engineer's determination of the relevant contract dates, we must decide whether equitable considerations should apply in the individual applications at issue in these consolidated appeals. The State Engineer, however, did not make all of the necessary findings that would allow us to make this determination and we must therefore remand so that either the district court or the State Engineer can make all necessary factual determinations. On remand, the district court or State Engineer must apply the equitable exemption principles as set forth in Alpine V, and any equitable considerations must be balanced against the negative consequences to the Tribe resulting from any increased diversions of water. Id. at 1078 n. 21. 9 Because the State Engineer failed to apply this balancing test when he granted an equitable exemption for intrafarm transfers, the district court's judgment must be reversed to the extent it affirmed the State Engineer's application of a blanket equitable exemption of intrafarm transfers from Nevada's forfeiture law. See id. at 1078. 10