FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ARTHUR W. BELL, IV; PERALDO
BROTHERS; CHRISTINE L. MATLEY
FAMILY TRUST; RAY CONLAN;
FRANCIS E. DUBOIS, III; FALLON
PAIUTE SHOSHONE INDIAN TRIBE;
CITY OF FALLON; FREY RANCH
PARTNERSHIP; DEBRA S. FREY; No. 05-16154
CHARLES P. FREY, JR.; CALVIN R.
MOFFITT; STATE OF NV DIV OF L, D.C. No.
Division of Lands; STATE OF CV-95-00757-HDM
NEVADA PAROLE DEPT., Division of
Wildlife; STILLWATER FARMS, INC.;
THE LARRY FRITZ FAMILY TRUST;
TOWN OF FERNLEY,
Defendants,
and
BOARD OF DIRECTORS OF TCID
(TRUCKEE IRRIGATION DISTRICT),
Defendant-Appellant.
5843
5844 UNITED STATES v. BELL
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v.
ARTHUR W. BELL, IV; PERALDO
BROTHERS; CHRISTINE L. MATLEY
FAMILY TRUST; RAY CONLAN;
FRANCIS E. DUBOIS, III; FALLON
PAIUTE SHOSHONE INDIAN TRIBE;
CITY OF FALLON; FREY RANCH
PARTNERSHIP; DEBRA S. FREY;
CHARLES P. FREY, JR.; CALVIN R. No. 05-16157
MOFFITT; STATE OF NV DIV OF L, D.C. No.
Division of Lands; STATE OF CV-95-00757-HDM
NEVADA PAROLE DEPT., Division of
Wildlife; STILLWATER FARMS, INC.;
THE LARRY FRITZ FAMILY TRUST;
TOWN OF FERNLEY,
Defendants,
and
BOARD OF DIRECTORS OF TCID
(TRUCKEE IRRIGATION DISTRICT)
Truckee-Carson Irrigation District,
Defendant-Appellee.
UNITED STATES v. BELL 5845
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ARTHUR W. BELL, IV; PERALDO
BROTHERS; CHRISTINE L. MATLEY
FAMILY TRUST; RAY CONLAN;
FRANCIS E. DUBOIS, III; FALLON
PAIUTE SHOSHONE INDIAN TRIBE;
CITY OF FALLON; FREY RANCH
PARTNERSHIP; DEBRA S. FREY;
CHARLES P. FREY, JR.; CALVIN R. No. 05-16158
MOFFITT; STILLWATER FARMS, INC.; D.C. No.
THE LARRY FRITZ FAMILY TRUST; CV-95-00757-HDM
TOWN OF FERNLEY; BOARD OF
DIRECTORS OF TCID (TRUCKEE
IRRIGATION DISTRICT), Truckee-
Carson Irrigation District,
Defendants,
and
STATE OF NEVADA, DIVISION OF
LANDS; STATE OF NEVADA DIVISION
OF WILD LIFE,
Defendants-Appellants.
5846 UNITED STATES v. BELL
UNITED STATES OF AMERICA,
Plaintiff,
v.
ARTHUR W. BELL IV; PERALDO
BROTHERS; CHRISTINE L. MATLEY
FAMILY TRUST; RAY CONLAN;
FRANCIS E. DUBOIS, III; FALLON
PAIUTE SHOSHONE INDIAN TRIBE;
CITY OF FALLON; FREY RANCH
PARTNERSHIP; DEBRA S. FREY;
CHARLES P. FREY, JR.; CALVIN R. No. 05-16187
MOFFITT; STATE OF NV DIV OF L, D.C. No.
Division of Lands; STATE OF CV-95-00757-HDM
NEVADA PAROLE DEPT., Division of
WILDLIFE; STILLWATER FARMS, INC.;
THE LARRY FRITZ FAMILY TRUST;
TOWN OF FERNLEY,
Defendants,
and
BOARD OF DIRECTORS OF TCID
(TRUCKEE IRRIGATION DISTRICT)
Truckee-Carson Irrigation District,
Defendant-Appellee.
UNITED STATES v. BELL 5847
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ARTHUR W. BELL, IV,
Defendant,
FRANCIS E. DUBOIS, III; FALLON
PAIUTESHOSHONE INDIAN TRIBE,
Defendants,
FREY RANCH PARTNERSHIP; DEBRA
S. FREY; CHARLES P. FREY, JR.,
Defendants,
STATE OF NV DIV OF L, Division of
Lands; STATE OF NEVADA PAROLE
DEPT., Division of Wildlife;
STILLWATER FARMS, INC.,
Defendants,
5848 UNITED STATES v. BELL
TOWN OF FERNLEY; BOARD OF
DIRECTORS OF TCID (TRUCKEE
IRRIGATION DISTRICT), Truckee-
Carson Irrigation District,
Defendants,
and
PERALDO BROTHERS; CHRISTINE L. No. 05-16189
MATLEY FAMILY TRUST; RAY D.C. No.
CONLAN, CV-95-00757-HDM
Defendants-Appellants,
CITY OF FALLON,
Defendant-Appellant,
CALVIN R. MOFFITT,
Defendant-Appellant,
THE LARRY FRITZ FAMILY TRUST,
Defendant-Appellant.
UNITED STATES v. BELL 5849
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ARTHUR W. BELL, IV; PERALDO
BROTHERS; CHRISTINE L. MATLEY
FAMILY TRUST; RAY CONLAN;
FRANCIS E. DUBOIS, III; FALLON
PAIUTE SHOSHONE INDIAN TRIBE;
CITY OF FALLON; FREY RANCH
PARTNERSHIP; DEBRA S. FREY; No. 05-16909
CHARLES P. FREY, JR.; CALVIN R.
MOFFITT; STATE OF NV DIV OF L, D.C. No.
CV-95-00757-HDM
Division of Lands; STATE OF
NEVADA PAROLE DEPT., Division of OPINION
Wildlife; STILLWATER FARMS, INC.;
THE LARRY FRITZ FAMILY TRUST;
TOWN OF FERNLEY,
Defendants,
and
BOARD OF DIRECTORS OF TCID
(TRUCKEE IRRIGATION DISTRICT
Truckee-Carson Irrigation District,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Nevada
Howard D. McKibben, District Judge, Presiding
Argued and Submitted
October 8, 2009—San Francisco, California
Filed April 20, 2010
5850 UNITED STATES v. BELL
Before: Mary M. Schroeder and Marsha S. Berzon, Circuit
Judges, and Milton I. Shadur,* District Judge.
Opinion by Judge Schroeder
*The Honorable Milton I. Shadur, Senior United States District Judge
for the Northern District of Illinois, sitting by designation.
5854 UNITED STATES v. BELL
COUNSEL
Katherine J. Barton, Washington, D.C., for plaintiff-
appellee/appellant United States of America.
Don Springmeyer, Las Vegas, Nevada, for intervenor-
appellee/appellant Pyramid Lake Paiute Tribe of Indians.
Michael J. Van Zandt, San Francisco, California, for
defendant-appellant/appellee Board of Directors of Truckee
Irrigation District.
Michael L. Wolz, Reno, Nevada, for defendants-appellants
State of Nevada.
Michael F. Mackdon, Fallon, Nevada, for defendants-
appellants State of Nevada.
OPINION
SCHROEDER, Circuit Judge:
BACKGROUND
The long, divisive history of this and related litigation over
the waters of the Truckee and Carson Rivers, and the decline
UNITED STATES v. BELL 5855
of Pyramid Lake, is best reflected in Nevada v. United States,
463 U.S. 110 (1983), and in several landmark opinions of this
and other courts. See, e.g., Pyramid Lake Paiute Tribe of Indi-
ans v. Hodel, 882 F.2d 364 (9th Cir. 1989) (“Tribe v. Hodel”);
Truckee-Carson Irrigation Dist. v. Sec’y of Dep’t of Interior,
742 F.2d 527 (9th Cir. 1984) (“TCID v. Secretary”); United
States v. Alpine Land & Reservoir Co., 697 F.2d 851 (9th Cir.
1983); Pyramid Lake Paiute Tribe of Indians v. Morton, 354
F. Supp. 252 (D.D.C. 1973) (“Tribe v. Morton”). Congress
had passed the Reclamation Act in 1902, creating projects to
reclaim otherwise arid western lands for farming. See Recla-
mation Act of 1902, Pub. L. No. 57-161, 32 Stat. 388. One of
the projects created by the Reclamation Act, the Newlands
Project (“Project”), controls diversions from the Truckee and
Carson Rivers. The Truckee-Carson Irrigation District
(“TCID”) has managed the Project under a contract with the
federal government for decades. This particular case concerns
the United States’ effort to recoup excess diversions TCID
permitted over many years.
The Nevada district court originally established the amount
of water that could be diverted for agricultural uses from the
Truckee River in a 1944 order known as the Orr Ditch decree,
Equity No. A-3 (D. Nev. 1944). The court did not issue a final
order on rights to the Carson until 1980, in United States v.
Alpine Land & Reservoir Co., 503 F. Supp. 877 (D. Nev.
1980) (“Alpine decree”).
In the mid-20th Century, concerns grew over the adverse
effect of the diversions on Pyramid Lake’s unique fish popu-
lations. See Nevada, 463 U.S. at 119 n.7 (noting surface area
of Pyramid Lake decreased by 20,000 acres between 1920 and
1940). Water from the Truckee naturally flows to Pyramid
Lake which is under the control of the Pyramid Lake Paiute
Tribe (“the Tribe”). The Secretary of the Interior
(“Secretary”) responded to the concerns about Pyramid Lake
fish in 1967 by imposing operating criteria and procedures
5856 UNITED STATES v. BELL
(“OCAPs”) limiting the maximum diversions from the
Truckee and Carson.
Unhappy with the OCAPs as too generous to the farmers,
the Tribe successfully challenged them in the District of
Columbia. The D.C. district court in Tribe v. Morton, 354 F.
Supp. at 256, ordered the Secretary to implement a more
restrictive OCAP. Known as the “1973 OCAP,” it was chal-
lenged by TCID in this court. We upheld it in TCID v. Secre-
tary, 742 F.2d at 532, yet TCID has refused to follow it.
In 1990, Congress stepped in to attempt a resolution of the
ongoing dispute between the Tribe and TCID by enacting the
Fallon Paiute Shoshone Indian Tribes Water Rights Settle-
ment Act of 1990, Pub. L. No. 101-618, 104 Stat. 3289
(“Settlement Act”). The Settlement Act, as relevant to this
case, provides:
The Secretary shall henceforth ensure compliance
with all of the provisions of the operating criteria
and procedures referenced in paragraph (2) of this
subsection or any applicable provision of any other
operating criteria or procedures for the Newlands
Project previously adopted by the Secretary, and
shall, pursuant to subsection 709(h) or judicial pro-
ceeding, pursue recoupment of any water diverted
from the Truckee River in excess of the amounts
permitted by any such operating criteria and proce-
dures.
Settlement Act § 209(j)(3). The Settlement Act also states that
it should not be read in such a manner as to conflict with the
Orr Ditch and Alpine decrees. See Settlement Act
§ 210(b)(13).
Five years after the enactment of the Settlement Act the
United States instituted this case by filing a complaint against
TCID, its board members, and all water users in the Project
UNITED STATES v. BELL 5857
as a class, seeking to recoup over one million acre-feet (“af”)
of water diverted in excess of applicable OCAPs from 1973-
1988. The Tribe intervened as a plaintiff.
After lengthy evidentiary proceedings, the district court in
2003 issued its decision holding that TCID had willfully
failed to comply with the 1973 OCAP. Nevertheless, although
the government had sought over a million af of water as
recoupment, the district court awarded just under 200,000 af.
The court credited the report of TCID’s expert and concluded
that the government was only entitled to recoupment for
excess diversions in 1974, 1975, 1978 and 1979; the court
also awarded recoupment for spills of water in 1979 and
1980. The court held that the government, and not TCID, was
responsible for excess diversions after 1980, because the gov-
ernment had failed to revise the OCAPs to reflect the water
duties in the 1980 Alpine decree.
With respect to interest on the water TCID owed the gov-
ernment by virtue of its decision, the court initially denied
both prejudgment and postjudgment interest. The reasons it
gave were the government’s delay in bringing this action and
the government’s having inadvertently destroyed certain
records relevant to the litigation. The district court later modi-
fied this decision and awarded postjudgment water interest. It
ruled TCID must repay two-percent each year on the balance
of water remaining to be recouped for replenishing the waters
of Pyramid Lake.
TCID now appeals the district court’s ruling that the gov-
ernment under the Settlement Act can pursue any claim for
past excess diversions. It also appeals the award of post-
judgment interest on water yet to be recouped and, on behalf
of water rights holders (“farmers”), it appeals the denial of
attorneys’ fees under the Equal Access to Justice Act
(“EAJA”). Nevada, a party to the case because it owns some
of the irrigated land, appeals the denial of its claim for costs.
5858 UNITED STATES v. BELL
The government and the Tribe cross-appeal the denial of
prejudgment interest. They also appeal the district court’s
rejection of the government’s position that more recoupment
should have been ordered as a result of gauge error in measur-
ing the excess diversions and the denial of recoupment for
diversions and spills occurring between 1980 and 1984.
Because the district court’s judgment followed a bench
trial, this court reviews the district court’s findings of fact for
clear error and its conclusions of law de novo. Crockett &
Myers, Ltd. v. Napier, Fitzgerald & Kirby, LLP, 583 F.3d
1232, 1236 (9th Cir. 2009). We vacate the district court’s rul-
ings with respect to interest and remand for the court to
explain the legal basis for its unprecedented award of interest
that must be repaid in water. We also reverse the denial of the
government’s claim that gauge error was not properly
accounted for. We otherwise affirm the district court’s judg-
ment.
DISCUSSION
I. This Action Was Properly Maintained Pursuant to the
Settlement Act.
TCID’s fundamental position is that Congress, in passing
the Settlement Act, did not intend to create a judicially
enforceable cause of action to allow the government to recoup
excess diversions for past violations of OCAPs. TCID’s posi-
tion is not supported by the language, history, or purpose of
the Act.
Congress passed the Settlement Act to encourage settle-
ment of litigation and pending claims, to fulfill its trust obli-
gations to the Tribe, and to promote the recovery of Pyramid
Lake. See Settlement Act § 202(d)-(f). Congress optimisti-
cally envisioned the possibility of TCID and the government
achieving these goals through a settlement. This is evidenced
in Settlement Act § 209(h)(1) which provides that certain pro-
UNITED STATES v. BELL 5859
visions of the Act would not go into effect “unless and until
the Truckee-Carson Irrigation District has entered into a set-
tlement agreement with the Secretary concerning claims for
recoupment of water diverted in excess of the amounts per-
mitted by applicable operating criteria and procedures.” To
facilitate settlement, the Act includes a provision allowing the
Secretary to cancel certain TCID repayment obligations. See
Settlement Act § 209(g). Given the years of contentious litiga-
tion surrounding Pyramid Lake, however, Congress recog-
nized that such a settlement might not occur.
[1] Accordingly, Congress included Section 209(j)(3) in
the Settlement Act. It directs the Secretary to “ensure compli-
ance with all of the provisions of the [OCAPs]”, and
expressly refers to compliance with “previously adopted”
OCAPs. See Settlement Act § 209(j)(3). That section in turn
directs the Secretary to “pursue recoupment of any water
diverted from the Truckee River in excess of the amounts per-
mitted by any [OCAP]” and to do so “pursuant to . . . [a] judi-
cial proceeding.”
[2] TCID contends the statute merely permits the Secretary
to prevent future violations of the OCAPs. But the statutory
language is mandatory, and the purpose of the Act was to
remedy past violations. Section 202 declares the purpose of
the Act to promote the “recovery of the Pyramid Lake fish-
ery.” The stated purpose demonstrates that Congressional
intent was to restore the Lake, not to maintain the status quo.
[3] Moreover TCID is mistaken in suggesting the court
was somehow imposing a new and not clearly authorized duty
with respect to past misconduct. See Landgraf v. USI Film
Prods., 511 U.S. 244, 270 (1994) (noting legislation may be
applied retroactively only where Congressional intent is
clear). The court acted pursuant to express Congressional
authority to redress past violations of the limits that were in
effect when the excess diversions took place. Thus, the dis-
trict court did not err in finding the Settlement Act unambigu-
5860 UNITED STATES v. BELL
ously authorizes the government to seek recoupment for
TCID’s prior violations of OCAPs via this action.
II. The District Court’s Decision Does Not Conflict With
the Water Decrees.
[4] TCID, joined by Nevada, also argues that even if a
cause of action exists, the district court’s decision allowing
recoupment conflicts with the Orr Ditch and Alpine decrees,
essentially because there is not enough water both to satisfy
the requirements of the decrees and to restore Pyramid Lake.
TCID is correct that the Settlement Act itself recognizes that
it is not intended to affect the rights of farmers under the
decrees. See Settlement Act § 210(b)(13). The district court
recognized that replenishing the water of Pyramid Lake while
still providing farmers with the water they are due will prove
a difficult task because of the substantial water duties the
decrees established for agriculture.
The Orr Ditch and Alpine decrees set the water duty for
Newlands farmers at 3.5 acre feet per acre (“afa”) for bottom
lands, and 4.5 afa for bench lands. This allowance, however,
is limited by the principle of beneficial use. 43 U.S.C. § 372;
see also Ickes v. Fox, 300 U.S. 82, 90 (1937). We have
described beneficial use as “a dynamic concept, which is vari-
able according to conditions, and therefore over time.” Alpine
Land & Reservoir Co., 697 F.2d at 855 (internal quotation
marks and citation omitted). It is not a hard and fast unit of
measurement. The district court’s decision here made it clear
that it was reserving for the future the annual calculation of
the actual amounts to which each farmer would be entitled
applying the concept of beneficial use. Therefore we do not
yet know how much water the government will recoup in any
given year. We also do not know how much water will be
available to meet the competing demands. Conservation may
increase the supply. At oral argument counsel for the Tribe
explained, for example, that TCID can implement water con-
servation measures that create “credit water.” If so, TCID can
UNITED STATES v. BELL 5861
send this “credit water” to Pyramid Lake, rather than to farm-
ers, in satisfaction of the judgment. Indeed, we were told this
process has already begun.
[5] Even if it proves difficult, TCID has not convinced us
that the district court’s recoupment order will be impossible
to implement. It is for the district court in administering the
order to ensure the recoupment process remains consistent
with the Orr Ditch and Alpine decrees. Given TCID’s past
record of noncompliance, it is for TCID to make a good faith
effort to maximize the supply of water to meet the competing
demands.
III. The 1973 OCAP Is Valid and Enforceable.
TCID makes a related argument that the 1973 OCAP,
which the district court found to have been violated between
1973 and 1980, was not valid. The 1973 OCAP was directed
by the court in Tribe v. Morton and embodied in a regulation
promulgated by the Secretary. It remained in effect through
1984. This OCAP’s maximum diversions were premised on
the Carson’s then-existing water duty of 2.92 afa. The 1980
Alpine decree raised this water duty to 3.5 afa/4.5 afa for bot-
tom and bench lands respectively. TCID thus argues that the
increased water duties created in the Alpine decree invalidated
the 1973 OCAP, making it unenforceable as a basis for
recoupment.
[6] The Settlement Act again forecloses this argument by
declaring that “[a]ll actions taken heretofore by the Secretary
under any operating criteria and procedures are hereby
declared to be valid.” Settlement Act § 209(j)(2). The Act
thus validates the 1973 OCAP, as it became a regulation pro-
mulgated by the Secretary acting at the direction of the court
in Tribe v. Morton. The Settlement Act even expressly
requires the Secretary to “act in a manner that is fully consis-
tent with the decision in the case of [Tribe v. Morton].” See
5862 UNITED STATES v. BELL
Settlement Act § 209(j)(1). The district court did not err in
ordering the 1973 OCAP to be enforced.
IV. TCID’s Remaining Challenges to the Recoupment
Order.
[7] TCID’s several additional attempts to sidestep account-
ability under the Settlement Act have no merit. TCID con-
tends the district court was without power in equity to order
the transfer of water from TCID to the government or Tribe
because neither has any relevant water rights. TCID does not
dispute that it controls all diversions of water from the
Truckee and Carson Rivers, and the Settlement Act is clear in
its mandate for recoupment of excess diversions to protect the
Tribe’s enjoyment of Pyramid Lake. Thus, the requirements
of the Settlement Act may only be accomplished by the
court’s order requiring TCID to manage the recoupment pro-
cess.
TCID also contends the district court’s recoupment order in
effect constitutes a civil contempt order or penalty because it
orders TCID to account for violations of the 1973 OCAP and
that it cannot constitute a valid contempt order because the
1973 OCAP is no longer in effect. The district court, how-
ever, entered a judgment in an action maintained pursuant to
the Settlement Act. The court did not impose a penalty or hold
TCID in contempt for violating a judicial order. See FTC v.
Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999) (not-
ing that a party is in contempt only when it first violates a
judicial order).
Estoppel does not preclude the government from bringing
this suit, despite TCID’s claim that it relied on the govern-
ment’s statements decades ago that it would not enforce the
1973 OCAP. Even if the government took a different position
in the past, the “[g]overnment may not be estopped on the
same terms as any other litigant.” Heckler v. Cmty. Health
Servs. of Crawford County, Inc., 467 U.S. 51, 60 (1984). For
UNITED STATES v. BELL 5863
the government to be estopped, TCID must establish that the
government engaged in “affirmative misconduct,” and that the
government’s conduct has caused “a serious injustice.” Wat-
kins v. U.S. Army, 875 F.2d 699, 707 (9th Cir. 1989) (en
banc).
TCID contends that the government committed affirmative
misconduct by not enforcing the OCAPs in the past. But affir-
mative misconduct requires an “affirmative misrepresentation
or affirmative concealment of a material fact by the govern-
ment” that “go[es] beyond mere negligence.” Id. The simple
non-enforcement of a regulatory requirement certainly does
not rise to this level. See Western Pioneer, Inc. v. United
States, 709 F.2d 1331, 1339 (9th Cir. 1983).
TCID points to the government’s argument in a 1973 law-
suit by environmental plaintiffs that implementation of the
1973 OCAP by TCID was not imminent. This was not an
instance of affirmative misconduct. TCID has not shown that
the government’s argument was a representation that it would
never enforce the OCAP against TCID, let alone an inten-
tional or reckless misrepresentation to that effect.
[8] We thus hold the district court did not err in finding
TCID liable under the Settlement Act for its violations of
OCAPs. We now turn to the next issue, the extent of TCID’s
liability.
V. The District Court Should Reexamine the Awards of
Pre- and Postjudgment Interest.
[9] The novel issue in this appeal concerns the court’s
acceptance of the concept of interest payable in water. The
judgment orders the return of water, not money, so the district
court ordered interest to be paid in water. The district court’s
original decision denied both pre- and post- judgment interest
to the government because it found that the government
delayed in bringing this suit and accidentally destroyed a
5864 UNITED STATES v. BELL
number of documents relevant to this litigation. The district
court modified this decision without explanation when it
entered judgment, and required that TCID pay postjudgment
water interest in the amount of two percent each year on the
outstanding balance of water due.
The court did not explain the basis for the award of water
interest. TCID contends there is no basis. For the following
reasons, we remand to the district court so that it may explain
the basis in the record for its legal or equitable award of
“water interest” — that is, water over the amount wrongfully
diverted each year.
[10] The purpose of postjudgment interest “is to compen-
sate the successful plaintiff for being deprived of compensa-
tion for the loss of time between the ascertainment of the
damage and the payment by the defendant.” Dishman v.
UNUM Life Ins. Co. of America, 269 F.3d 974, 989 (9th Cir.
2001) (internal quotation marks and citation omitted). Under
the common law there is no postjudgment interest, so the pro-
priety of an award of postjudgment interest “rests solely upon
the statutory provision.” Pierce v. United States, 255 U.S.
398, 406 (1921). The statutory provision governing postjudg-
ment interest in federal court allows such interest only “on
any money judgment in a civil case.” 28 U.S.C. § 1961(a).
TCID thus argues that because Section 1961(a) refers only
to “money judgment[s],” the district court did not have the
authority to award postjudgment interest in the form of water.
TCID also notes that the district court’s award of non-
monetary postjudgment interest appears unprecedented.
The government and Tribe rely on the Supreme Court’s
decision in Texas v. New Mexico, 482 U.S. 124 (1987) as the
authority for postjudgment water interest. In Texas, the Court
considered a dispute regarding apportionment of the waters of
the Pecos River under a compact between the states. Id. at
126-29. The Special Master’s report recommended that New
UNITED STATES v. BELL 5865
Mexico provide Texas with the water it had failed to pay
under the compact, along with postjudgment interest should
New Mexico fail to satisfy the judgment. Id. at 127-28. The
Court remanded the case to the Special Master for consider-
ation of whether a monetary award would be more appropri-
ate, but discussed water interest in a footnote. See id. at 132-
33 & n.8. The Court acknowledged its statement in Pierce
that, “postjudgment interest may not be awarded absent statu-
tory authority,” and acknowledged that no statute explicitly
permits water interest. Id. However, the Court said it was “not
bound by [Pierce] in exercising [its] original jurisdiction.” Id.
[11] The government contends on appeal that the Court
thereby approved the award of water interest in circumstances
like this. This, however, is not a case arising between states,
and we are not the Supreme Court exercising original jurisdic-
tion. The district court did not cite any authority to support an
award of water interest. It did not discuss Pierce and its reli-
ance on a statute that is not applicable here. Because neither
case authority nor statutory authority authorize the district
court’s award of water interest, there appears to be no legal
basis for an award. We do not foreclose the possibility of an
equitable basis for such an award. See Texas, 482 U.S. at 132
n.8 (“We are unpersuaded . . . that ‘water interest’ . . . should
be awarded unless and until it proves necessary.”). But we do
not believe that water interest is appropriate unless there is
some factual basis for awarding more water than was origi-
nally taken so as to provide complete relief. Moreover, we do
not have any explanation for why the court chose to award
interest at the rate of two-percent as opposed to some other
amount. The government’s and Tribe’s post-trial briefs before
the district court requested this rate, but they gave no reason
why this particular amount was appropriate. None has been
provided to us.
[12] Because the award of postjudgment water interest is
unprecedented in the lower courts, and because the district
court did not explain the factual basis for the award, we
5866 UNITED STATES v. BELL
vacate the award of postjudgment interest and remand for fur-
ther consideration by the district court. See Gov’t Employees
Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998) (en
banc) (noting remand is appropriate where the district court
fails to “make a sufficient record of its reasoning to enable
appellate review”). On remand, the district court should deter-
mine whether water interest is necessary to “compensate [the
government and Tribe] for being deprived of [water] for the
loss of time between the ascertainment of the damage and the
payment by [TCID].” See Dishman, 269 F.3d at 989. The dis-
trict court should explain the basis, if any, for an award of
postjudgment water interest, and then, if appropriate, explain
the reason for selecting a particular rate.
[13] The district court denied prejudgment interest.
Awards of prejudgment interest, however, “ensure that an
injured party is fully compensated for its loss.” City of Mil-
waukee v. Cement Div., Nat’l Gypsum Co., 515 U.S. 189, 195
(1995). There are no statutory restraints on awards of prejudg-
ment interest. Unlike postjudgment interest, such awards are
“governed by traditional judge-made principles.” Id. at 194.
Courts have further recognized that “a monetary award does
not fully compensate for an injury unless it includes an inter-
est component.” Kansas v. Colorado, 533 U.S. 1, 10 (2001).
[14] The district court denied the government and Tribe
prejudgment interest because it found the government’s delay
in bringing this suit was unreasonable, and that the delay, cou-
pled with the government’s accidental destruction of relevant
documents, warranted the denial of interest. The district
court’s determination that the government unreasonably
delayed in bringing this lawsuit, however, is not supported by
the record. Congress did not create the government’s cause of
action under the Settlement Act until 1990. See Settlement
Act §§ 101, 209(j)(3). As envisioned by the Act, the govern-
ment and TCID attempted to settle this dispute, because the
government was supposed to pursue settlement efforts before
instituting judicial proceedings. See Settlement Act
UNITED STATES v. BELL 5867
§ 209(h)(1). Only when these negotiations failed did the gov-
ernment initiate the present action. The negotiation under-
standably could have continued even more than five years,
given the length and bitterness of the underlying disputes.
Thus we conclude that the government did not unduly delay
filing this action.
[15] As to the accidental loss of certain documents, even
if some of the documents lost may have had some relevance
to this litigation, the district court itself did not deem that loss
sufficient in and of itself to warrant denial of prejudgment
interest. As we have already stated, prejudgment interest is to
ensure parties here, including the Tribe, will be “fully com-
pensated” for their loss. City of Milwaukee, 515 U.S. at 195;
cf. Amoco Prod. Co. v. Village of Gambell, AK, 480 U.S. 531,
542 (1987) (noting that in considering an injunction a court
should consider the interests of “each party”).
[16] We therefore remand this issue to the district court for
it to reconsider, in light of its explanation of the basis for
awarding postjudgment interest, whether it should award pre-
judgment interest. If water interest is appropriate for postjudg-
ment interest, we conclude it should be awarded prejudgment
as well.
VI. Challenges to the Amount of Water Ordered
Recouped.
TCID, the government, and Tribe all appeal the total
amount of water the district court ordered recouped. TCID
contends the amount was too great and lacked support in the
record. The government contends the district court erred in
the other direction by erroneously accounting for gauge error
and not awarding additional water recouped on the basis of
Truckee spills after 1981. The Tribe independently contends
the district court erred by not awarding recoupment for diver-
sions of the Truckee between 1981 and 1984. We reverse the
5868 UNITED STATES v. BELL
district court on the calculation of gauge error, but affirm the
calculations on all other issues.
TCID appeals the district court’s order of recoupment on
the basis of excess diversions of the Carson between 1974 and
1979 and for 1979-1980 spills of the Truckee. The district
court determined that TCID had improperly diverted 45,175
af in 1974, 24,732 af in 1975, 44,168 af in 1978, and 58,946
af in 1979. The court further determined that there had been
spills of the Truckee in the amount of 11,938 af and 12,193
af in 1979 and 1980 respectively.
TCID is not correct in its contention that the district court’s
calculations have no support in the record. In fact the calcula-
tions were based upon TCID’s own expert’s report. The dis-
trict court’s decision clearly stated that it credited the
testimony of TCID’s expert witness, Charles Binder, over that
of the government’s expert. Binder’s reports on excess diver-
sions of the Carson and spills of the Truckee reflected the
exact values stated in the district court’s decision. It is thus
evident that the district court accepted Binder’s calculations,
and “we will not second guess its determination which was
based on extensive testimony from experts for both sides.”
U.S. v. Gila Valley Irrigation Dist., 31 F.3d 1428, 1434 (9th
Cir. 1994).
[17] While we do not disturb the district court’s general
acceptance of TCID’s expert witness evidence, we find the
district court erred in accepting such evidence in one respect:
the manner in which this expert report accounted for gauge
error. The parties agree that the number of af in any diversion
is based upon measurement of flow read from a gauge and
that, for a variety of reasons, the actual flow may be more or
less than measured flow. The parties thus agree that the gov-
ernment flow data based on these gauge measurements
includes some margin of error, represented by a “confidence
interval.” As the district court implicitly found, the flow data
UNITED STATES v. BELL 5869
was sufficiently reliable for the government to meet its burden
of proving damages with reasonable certainty.
[18] Nevertheless, the district court accounted for statisti-
cal uncertainty in the flow data by subtracting the confidence
interval from the published quantities, effectively assigning
all of the uncertainty against the Tribe. There was no evidenti-
ary basis for preferring values at the lower bound of the mar-
gin of error to the government’s published quantities, which
were already adjusted to take account of river condition, and
which TCID never showed to be skewed in the Tribe’s favor.
We therefore remand for the district court to recalculate the
amount of the diversions based on the government’s pub-
lished quantities and without regard to the confidence inter-
vals.
[19] Both the government and Tribe want more recoup-
ment for 1981-1984, the government contending recoupment
should have been awarded for spills and the Tribe for diver-
sions. The district court denied recoupment for any 1981-
1984 spills or excess diversions, because it found the govern-
ment should have modified the terms of the 1973 OCAP in
light of the increased water duties in the 1980 Alpine decree.
The court was correct.
The D.C. court’s order in Tribe v. Morton required the Sec-
retary to ensure that all future OCAPs “give proper weight to
the maximum farm headgate entitlements of both the Orr
Water Ditch and Alpine decrees.” 354 F. Supp. at 260. The
Settlement Act affirms the determinations made in Tribe v.
Morton. See Settlement Act § 209(j)(1). Thus, when the 1980
final Alpine decree raised the water duty of the Carson from
2.92 afa to 3.5 afa/4.5 afa, the amounts of the farmers’ entitle-
ments increased. The Secretary should have changed the 1973
OCAP to reflect the increase. See Tribe v. Morton, 354 F.
Supp. at 260. The Secretary did not do so. In the district court,
however, the government did not show that the diversions
exceeded what the increased allotments should have been.
5870 UNITED STATES v. BELL
Because the post-Alpine OCAP did not conform to the order
in Tribe v. Morton and also because the government failed to
establish that TCID permitted diversions in excess of a prop-
erly calculated OCAP, the government has not shown it is
entitled to recoupment for excess diversions during this
period.
[20] The government is entitled, however, to recoupment
for spills during 1981-84. TCID’s obligation to comply with
the water duties cannot excuse spills, because the water duties
are limited by beneficial use.
VII. The District Court Did Not Err in Denying
Attorneys’ Fees and Costs.
TCID’s final challenge to the district court’s decision per-
tains to the treatment of the farmers. The district court deter-
mined that the farmers did not have any individual liability
under its decision. The court, however, denied their motion to
dismiss them from the suit and entered judgment against them
along with TCID, so that they are bound by the judgment. The
court also denied subsequent requests for attorneys’ fees and
costs because it found the farmers were not prevailing parties.
TCID argues that the district court erred “as a matter of
law” by refusing to dismiss the farmers from this suit after
finding they had no individual liability. However, in EEOC v.
Peabody Western Coal Co., 400 F.3d 774 (9th Cir. 2005), this
court rejected a similar argument. There, the EEOC chal-
lenged a company’s policy of favoring individuals from the
Navajo Nation in its hiring. Id. at 776-78. The government
sought to add the Navajo Nation as a party to ensure it would
be bound by whatever judgment the court issued. Id. at 780.
This court recognized a “judgment w[ould] not bind the Nav-
ajo Nation in the sense that it w[ould] directly order the
Nation to perform, or refrain from performing certain acts.”
Id. However, including the Nation would “preclude [it] from
UNITED STATES v. BELL 5871
bringing a collateral challenge to the judgment.” Id. The court
thus concluded the Nation was a necessary party. See id.
[21] The same logic applies here. The district court’s
refusal to dismiss the farmers prevents their collateral chal-
lenge to the recoupment order. This is important given the
history of this litigation, where collateral challenges have not
been uncommon. See TCID v. Secretary, 742 F.2d at 532
(rejecting TCID’s collateral attack on Tribe v. Morton); see
also Tribe v. Hodel, 882 F.2d at 367 (recognizing that TCID
v. Secretary was a collateral challenge to the decision in Tribe
v. Morton). The district court’s determination that the farmers
had no liability did not require the court to dismiss them from
the lawsuit and put them in a position to collaterally attack the
judgment. See Peabody Western Coal Co., 400 F.3d at 780.
TCID also argues the district court abused its discretion in
denying the farmers’ attorneys’ fees under the EAJA as pre-
vailing parties. See 28 U.S.C. § 2412(d). Nevada raises the
related argument that the district court abused its discretion in
denying costs. See 28 U.S.C. § 2412(a). We agree with the
district court because the farmers/water rights holders, includ-
ing Nevada, were not prevailing parties.
Under 28 U.S.C. 2412(a), a “prevailing party” in an action
brought by the government is entitled to its costs. A “prevail-
ing party” in such a case is also entitled to attorneys’ fees “un-
less the court finds that the position of the United States was
substantially justified or that special circumstances make an
award unjust.” 28 U.S.C. § 2412(d)(1)(A). To qualify as a
prevailing party, a litigant must obtain “a material alteration
in the legal relationship of the parties [that is] judicially sanc-
tioned.” Poland v. Chertoff, 494 F.3d 1174, 1186 (9th Cir.
2007). This requires that a party “ha[ve] been awarded some
relief by the court.” Id. at 1186-87 (internal quotation marks
and citation omitted). We review denial of fees for abuse of
discretion. Lewis v. Barnhart, 281 F.3d 1081, 1083 (9th Cir.
2002).
5872 UNITED STATES v. BELL
Here the district court did not abuse its discretion in deter-
mining that the farmers had failed to obtain the requisite “ju-
dicially sanctioned” and “material alteration” in the
relationship of the parties, so as to be considered a prevailing
party. As the district court explained “judgment in this case
was entered solely in favor the United States and the [Tribe],”
so the government and Tribe were “the prevailing parties in
this action.”
[22] The farmers contend they nevertheless were prevail-
ing parties because the district court did not impose individual
liability on them. The dispute is about water, not money, and
TCID, as the cause of the diversions, must effectuate the judg-
ment. The district court’s decision bars the farmers from any
collateral challenge to the judgment in order to obtain greater
rights and requires that farmers cooperate in the recoupment
process. The district court’s judgment was entered pursuant to
Congressional directive in the Settlement Act to compensate
the Tribe for the excess diversions TCID permitted that bene-
fitted farmers. The farmers are not prevailing parties in this
case.
We affirm the judgment as to attorneys’ fees and costs.
CONCLUSION
[23] For the foregoing reasons, the judgment of the district
court with respect to prejudgment and postjudgment interest
is vacated and remanded for further consideration. The judg-
ment with respect to amounts of recoupment for excess diver-
sions in 1974, 1975, 1978, 1979, and spills in 1979 and 1980
is vacated and remanded for recalculation of the effect of
gauge error. The judgment with respect to spills from 1981-84
is vacated and remanded for a determination of the amount of
water spilled during those years. The judgment of the district
court is otherwise affirmed.
AFFIRMED in part, VACATED in part, and
REMANDED. Each party is to bear its own costs.