Opinion ID: 783261
Heading Depth: 3
Heading Rank: 1

Heading: Intrafarm Transfers

Text: 30 The Tribe and the United States appeal the same ruling in this case that they appealed in Alpine V — the district court's determination in Alpine IV that intrafarm transfers of water rights are exempt from the operation of Nevada's forfeiture and abandonment laws on the basis of equitable considerations. See Alpine IV, 27 F.Supp.2d at 1244. In Alpine V, we rejected the district court's decision to grant an equitable exemption to intrafarm transfers. In Alpine IV, the district court identified several factors to support its equitable determination that intrafarm transfers should be exempt from Nevada's forfeiture and abandonment laws and that principles of equity should apply: (1) the procedures to transfer water rights changed at least three times over the years; (2) the farmers filed transfer applications when finally told to do so by TCID; (3) the individuals were legally entitled to use the water on one part of their land and continued to beneficially apply the water to their land (albeit in a different location than described by the original contract); and (4) there was no evidence that any of the landowners seeking an intrafarm transfer used more water than the amount granted by the original contract. Id. 31 In Alpine V, we rejected these arguments (the same arguments raised in the present case) because they rested in part on an erroneous assumption that the government and TCID had either explicitly or tacitly approved these transfers prior to the landowners' submission of [their] formal transfer applications. Id. at 1075. Although Alpine II dealt with transfers for value that altered the use of a water right by transferring it to a different property, while intrafarm transfers alter the use of a water right within the same property, in Alpine V we determined that the distinction did not alter our reasoning. We explained: 32 It is clear that under both federal and state law, a water right is appurtenant to the land irrigated.... Therefore, as a matter of law, it is correct to say that the water rights in question attached to the specific parcel to which water was beneficially applied, rather than the entire property under contract. 33 Id. at n. 18 (internal citations omitted). 34 The transfer applicants here make several arguments identical to those they made in Alpine V. See id. at 1075-76. First, they argue that they were simply applying water that they validly owned to new places of use on the same farmland, and that application of state law principles of forfeiture or abandonment would be unjust because until 1983 the applicants did not know that they owned the water rights. Furthermore, the applicants here and in Alpine V claimed that there was no legal way for them to transfer the water within their farms because of the government-imposed moratorium on transfers. Finally, they argue that an equitable exemption was appropriate because the United States knew or should have known about the existence of these intrafarm transfers before landowners began to file transfer applications. The Alpine V court reaffirmed that 35 Alpine II forecloses the argument that the landowners did not know that they possessed ownership rights subject to the transfer requirements.... [S]ince the United States never had the authority under the Reclamation Act to approve such transfers, the fact that they occurred has no hearing on whether state law principles of forfeiture and abandonment should now be applied. To hold otherwise would exempt all informal intrafarm transfers from the strictures of the Alpine Decree — an outcome that Alpine II specifically rejected. 36 Id. at 1076, citing Alpine II, 878 F.2d at 1222-23. 37 The Alpine V court also specifically addressed the applicant appellees' argument that the government-imposed moratorium on transfers supports the blanket application of an equitable exemption from forfeiture or abandonment. Id. Because many of the parcels at issue in the transfer applications did not involve a period of non-use that coincided with the moratorium, we rejected that argument, concluding that equity should not be used to justify a generalized equitable exemption divorced from the facts of each particular case. Id. However, we noted that equitable relief might be appropriate on a case-by-case basis to prevent individual transfer applicants from losing their water rights. Id. 38 To allow for individual consideration of each transfer application, we reversed the district court's grant of equitable relief to those landowners facing abandonment claims and remanded for further consideration 39 because the landowners may demonstrate that they did not abandon their water rights as a matter of law. On remand, the district court is instructed to make factual findings, or to remand to the Engineer to do so, in order to determine whether each individual landowner had the requisite intent to abandon in light of the factors noted in the district court's opinion. At a minimum, proof of continuous use of the water right should be required to support a finding of lack of intent to abandon. In addition, each land-owner should be required to present evidence that he or she attempted unsuccessfully to file for a change in place of use, or at least inquired about the possibility of a transfer and was told by the government or TCID that such a transfer was not permitted. 40 Id. at 1077 (internal citations omitted). 41 For the same reasons as we articulated in Alpine V, we reverse the district court's ruling to the extent that it granted a blanket equitable exemption of intrafarm transfers.
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
46 As to abandonment, equitable principles do not apply, even on a case-by-case basis, because transfer applicants may demonstrate that they did not have the intent to abandon and that they therefore did not abandon their water rights as a matter of law. 11 Thus, as in Alpine V, we direct the district court on remand to make factual findings (or to remand to the Engineer) to determine whether each individual landowner had the requisite intent to abandon. Alpine V, 291 F.3d at 1077.