[00:00:00] Speaker 04:
So with that, counsel, you want to step up?

[00:00:09] Speaker 04:
Oh, last thing, and Mr. Orr, you're not splitting time, correct? And you're the only one arguing today? Co-counsel's not arguing. Okay, got it. Thank you.

[00:00:21] Speaker 01:
May it please the Court, good afternoon, Your Honors. John Smeltzer for the United States. Your Honors, the final decree in the Snake River Basin Adjudication, or SRBA, confirmed the United States' ownership of thousands of state law water rights for livestock use on federal grazing lands. The United States filed this suit and this appeal to protect those water rights and their senior priority dates for Idaho ranchers who utilize federal grazing lands.

[00:00:52] Speaker 01:
The forfeiture of such rights under Idaho's new stock water forfeiture statute, Idaho Code Section 42-224, would result in a loss of priority for the Idaho ranchers who use those lands and other adverse impacts on the grazing program. The United States acknowledges that its state law stock water rights are subject to loss under Idaho's longstanding rule of forfeiture for non-use.

[00:01:21] Speaker 01:
The termination of grazing use on any allotment with appurtenant state law water rights would constitute a non-use for purposes of the forfeiture statute. But Idaho's new stock water forfeiture statute aims to divest the United States of decreed water rights notwithstanding ongoing use by federal permittees, the same use under which the rights were perfected, maintained, and adjudicated.

[00:01:50] Speaker 02:
Counsel, the SRBA, it didn't, of course, explicitly say that the United States decreed stock water rights were based in its permittees beneficial use.

[00:02:04] Speaker 02:
So, I mean, how can we really be sure what the basis was for that adjudication? And does it matter at this point?

[00:02:14] Speaker 01:
Your Honor, two responses. First, it's the only beneficial use, right, during the time. These are state law stock water rights. So they can only exist if they were perfected by use and if they were maintained by use. The SRBA court, the decree court, could not have confirmed the United States ownership of these rights without determining that there was a beneficial use, right, under which they were perfected around the time of the priority dates. and that those rights were maintained by beneficial use for the period up until the rights were decreed.

[00:02:52] Speaker 01:
The rights were confirmed as existing on the date of the decree. So if you're in 2001 when the rights are decreed in the partial decrees, the court has to determine first that they were vested back on the time of the priority date, but also that they were maintained for that entire time. There's no dispute that the United States wasn't running its own cattle, right, its own livestock on these lands. These were always lands that were dedicated to permitted use. There's no other use that qualifies as permitted use.

[00:03:24] Speaker 01:
We think relatively straightforward to understand by necessary implication that's the only use under which the rights could have been decreed.

[00:03:32] Speaker 00:
Counsel, I take your point because my understanding is it's undisputed the U.S. never owned its own cattle. And then the U.S. tried to argue that it could qualify beneficial use through wildlife and through ownership and management of lands, and those bases were rejected. And so I think you're saying by implication then the only thing that was left was permittee use as agents required.

[00:04:01] Speaker 00:
of the United States.

[00:04:02] Speaker 01:
Right here, we're only talking about livestock rights, right?

[00:04:05] Speaker 00:
Right. Livestock use, permittee watering of livestock. And then I think your argument has to be that they were impliedly agents of the U.S. during the relevant time period. Right.

[00:04:17] Speaker 01:
They were authorized users. There was an agency relationship in that sense. But ultimately, our argument also, Your Honors, is that Even if the state is right that we can't look behind the decree at all, we just have to look at the face of the decree, there's no dispute that the United States was confirmed the owner of the water rights.

[00:04:39] Speaker 00:
Correct. I'm not done with my question, though. Please. So I understand the SRBA decreed the U.S. these stock water rights, and your contention is the only possible factual basis is is through the permittees watering of their livestock and that I assume you have to argue that there was an implied agency relationship between the U.S. and the permittees. Is that correct? Was there any express agency agreements predating the 2017 SRBA decree?

[00:05:12] Speaker 01:
No, the idea of express agency agreements came out of the mandate in the state law.

[00:05:20] Speaker 00:
Okay, so before 2017, or before the Joyce decision, or before the SRBA final decree in 2014, there was no U.S. policy or practice of obtaining express agency agreements from It's permittees.

[00:05:38] Speaker 01:
That's correct.

[00:05:39] Speaker 00:
Is that in the record or is that undisputed at this point?

[00:05:43] Speaker 01:
I believe it's undisputed, Your Honor. I'm not, I mean, I can't point to any agency agreements that predate, right, because it's not something we would do.

[00:05:52] Speaker 00:
I know that the state has pointed us to express agreements, but they all seem to post-date the amendments at issue and Essentially, the U.S. seems to be going out and getting them.

[00:06:06] Speaker 01:
My understanding is that sense of need was an abundance of caution in relation to this statute. But the other point I wanted to make is with respect to ownership. Once ownership is established, right, proving beneficial use by the owner is straightforward and simple. And the court didn't even necessarily go back to the determination of the beneficial use that was required to prove ownership, right? Because under a forfeiture statute or an administration context, you're not going back and relitigating ownership, or at least you shouldn't be.

[00:06:41] Speaker 01:
I mean, that's part of the problem with this case. The state is trying to go back and litigate ownership. But with respect to use, you have to start with the undisputed fact that the United States owns the water right. And that makes a difference.

[00:06:55] Speaker 00:
I just want to make sure I understand your argument. Because under Joyce, it's very clear that acquiring the stock water right has to be done either through the U.S. watering its own livestock or the permittee acting as its agent. Are you arguing that once it was acquired...

[00:07:14] Speaker 00:
there didn't need to be an agency relationship anymore?

[00:07:18] Speaker 01:
No, that's not what we're saying, Your Honor, is Joyce was a case about water rights acquisition, about ownership.

[00:07:27] Speaker 01:
What the Idaho Supreme Court held in Joyce was that the use of water by a private rancher on the public domain before there was a permitting program was a use that was in favor of the private rancher obtaining a water right so then the private rancher has a water right and then the united states starts a permit program right and so that in that context when the united states manages the the regulated grazing of the the joyce ranch they already have a water right they're using right what we're saying in in the context of a permit program where the water use comes after the permit, you can apply the agency then.

[00:08:11] Speaker 00:
I understand your argument that Joyce is different because Joyce acquired their water right before they were a permittee. And you're saying for ranchers who did not have an independently acquired water right, When they became a permittee, that was the first time they started watering their stock on U.S. land. Then in that case, there's an implied agency relationship.

[00:08:34] Speaker 01:
Well, that was the basis on which they were adjudicated. But we're also saying that ownership was adjudicated. And even if you assume that you can't look behind the facts... and that the only thing you could take from the decree is the United States owns its rights. Suppose the United States watered its own livestock and got a right. What we're saying is under Joyce, it's clear you could still use your right through an authorized agency relationship.

[00:09:01] Speaker 01:
So if you're the owner of a water right, you always have the ability to authorize somebody to use it. And in that context... the default rule is in favor of the owner. There's no suggestion that if the owner, the United States owns the land. The United States owns the impertinent water right. In that context, where we permit a grazing use on the land, forget about how we acquired our water rights, but if we own the water rights, we own the land, and we're permitting the use of the land, that's use.

[00:09:31] Speaker 01:
That's all you need to know. Thank you.

[00:09:33] Speaker 02:
That's what I was asking. You're getting at the answer to my question now.

[00:09:37] Speaker 00:
Thank you. Sorry, I just wanted to make sure. So you're saying once the U.S. owned the right, it could allow its permittees to use its right, and that would qualify as beneficial use whether they were arguing, whether they were acting as an agent or not?

[00:09:56] Speaker 01:
Well, what I'm saying is there's an agency relationship in the permit relationship, right?

[00:10:01] Speaker 00:
So you're implying the agency relationship from the permit relationship.

[00:10:05] Speaker 01:
What I'm saying is you don't need subjective intent of the permittee, right? You don't need them to say, we agree we're using your water right, right? All you need is the United States authorizing use. That is use. And authorized use of property is a use of water. Now, the state has argued that the decree itself limits the use to the United States because the United States is the title owner of the water right. They argue in the brief that you've got the decree saying that BLM holds the rights on BLM lands or the Forest Service holds the rights on Forest Service lands.

[00:10:42] Speaker 01:
Therefore, only the United States can use this water right. That's not property law. That's not the way property law works. I hold title to my house. I can let other people use it. I hold title to my car. I can let other people use it. When they use it under my authorization, they are exercising my right of ownership. So with respect to the decree itself, it doesn't limit rights, and there's no Idaho law that supports the idea that that an appropriator cannot let somebody else use the water.

[00:11:14] Speaker 01:
That's contrary to Joyce itself. The state cites a couple cases, Albreson v. Wood River Land Company and Aberdeen-Springfield Canal Company. Both of those cases are cases that say the appropriator must use the water right or will forfeit it, or something to that extent. And so Idaho seizes on the idea that the cases use the word appropriator to say, aha, it's got to be the appropriator, and in this case, it's got to be the United States. But those cases aren't agency cases, right?

[00:11:46] Speaker 01:
They're just setting out the general law of forfeiture, and they're saying that the appropriator must use the water right. They don't say you can't use it through an agent.

[00:11:54] Speaker 00:
I didn't really understand the state to be arguing that you couldn't allow a permittee to use the U.S. water right as an agent of the U.S. I understood them to be arguing that they weren't your agents.

[00:12:05] Speaker 01:
Well, if you look at their argument on prior exclusive jurisdiction, Your Honor, they're saying that the decree itself, by saying United States, means that if anybody else uses it, it's not a use of the water right. And they also cite the case of the Pioneer Irrigation District, which was a case where there was a remark placed on the right where it says the United States holds rights for the benefit of others, for the benefit of the landowners in that case. And that's a limitation on the United States' rights.

[00:12:35] Speaker 01:
If there were that limitation on United States rights here, it would mean the United States couldn't graze its own cattle. But because the rights were named or adjudicated in the name of the United States, that's as broad as you can get. It means we can utilize the rights. The state also points, again, to Joyce and to a case called McInturff v. Shippey for the idea that...

[00:13:02] Speaker 01:
you know, a tenant or a landlord that lets a tenant use water, that's not a, doesn't establish an agency relationship. But Mac and Turf, just like Joyce, was a case about ownership, right? It was a case about what you can imply in the context where you don't know who owns the water, right? And you have a, a party using water on somebody else's land. What we're saying is once ownership is established, there's really nothing more you need to show. And Idaho law doesn't stand for the proposition that you need to show anything more. Idaho law stands for the proposition that it's difficult to forfeit water rights.

[00:13:36] Speaker 01:
You know, forfeiture is disfavored. And here, in this case, we clearly have a situation where the United States has authorized permittees to use the land and the impertinent water rights. That's enough to maintain the water rights as they were decreed. Now you have the state stepping in with this new forfeiture statute, which has a new substantive rule that says you need federal livestock or you need a express agency agreement. And the court, or Idaho said when they enacted the statute, what we're trying to do is make sure that we can have forfeiture, right, of water rights that were acquired, in Idaho's view, contrary to Joyce.

[00:14:16] Speaker 01:
What they're trying to do is to go back and relitigate the ownership, right? They're trying to get back to that ownership issue by using this new standard and by reopening Joyce. When they were reopening these water rights to relitigation under the Joyce standard. And, you know, they told you specifically that that's what they're intending to do with respect to their...

[00:14:43] Speaker 01:
with their statute, that's in the statement of intent.

[00:14:48] Speaker 01:
And as we described in the brief, there's really no non-discriminatory reason for this. The reason they enacted the statute at this time was as a package because the Idaho legislature decided that because Joyce followed the adjudication of these water rights in the preliminary decrees, that there wasn't an opportunity for those rights to be litigated.

[00:15:19] Speaker 01:
So they had to create a mechanism to go back and relitigate this question of ownership, which is exactly what they did through the statute. It's discriminatory against the United States.

[00:15:29] Speaker 02:
Russell, if we were to agree with you that 42224 violates the statute, to reach any other issues concerning that statute, or does that portion of the case, would that portion of the case end with that determination?

[00:15:48] Speaker 01:
Your Honor, we raise four grounds where we think the statute violates contract clause, retroactivity clause, the Idaho Constitution, and the Karen Amendment. If this court wants to take the simple route and just determine it's discriminatory under the Supremacy Clause, we're good with that.

[00:16:05] Speaker 01:
If the court finds for some reason that the supremacy clause doesn't apply here, you know, we would ask, obviously, that you.

[00:16:12] Speaker 00:
They're each independent grounds for.

[00:16:14] Speaker 01:
Each independent.

[00:16:16] Speaker 01:
Okay.

[00:16:17] Speaker 04:
Thank you. Thank you, counsel. And Ms. Dodds, we'll go ahead with five minutes for him.

[00:16:21] Speaker 04:
And we may give you a little more depending on what happens over here.

[00:16:29] Speaker 03:
Thank you, Your Honor. Michael Lohr for the state of Idaho and the Idaho Department of Water Resources. Matthew Weaver in his official capacity as director of the department. We're appellees and cross-appellants, as you know, and as are the Idaho legislature and several Idaho ranchers who are going to be directly impacted by the outcome of this case. Joyce Livestock Company, the LU Ranching Company, and the Pickett Ranch and Sheep Company. I plan to reserve five minutes for rebuttal.

[00:17:01] Speaker 03:
Your Honor, this court recognized in the Board of Water Commissioners case 893F3-578 that there is no federal water law.

[00:17:11] Speaker 03:
Fundamental principles of federalism vest control of water rights in the state and decreed rights are administered according to state law. In this case, the United States argues that the Idaho law governing water right forfeiture discriminates against the United States and retroactively impairs its decreed water rights. The United States is wrong.

[00:17:31] Speaker 03:
Now, the District Court issued a mixed decision, so I'll summarize our position in these appeals. First, the District Court correctly held that Idaho Code Sections 42, 222, and 224 are facially constitutional.

[00:17:47] Speaker 03:
But the District Court lacked jurisdiction over the United States' claims that these two statutes unconstitutionally impair the decreed stock order rights, 68 of them, that are at issue in this case.

[00:17:59] Speaker 03:
The district court correctly declined to address the United States sovereign immunity claim, and the district court erred in holding that Idaho Code section 42-1132B is facially unconstitutional.

[00:18:11] Speaker 00:
And I think I can address... Counsel, I think because there's a lot to cover and limited time, I think we understand your position on each of the district court's rulings, so I'm going to fast forward to a question that I have about the U.S.'s... I mean, excuse me, about your position. And on the...

[00:18:31] Speaker 00:
I understand from your brief that you agree there could be an agency relationship between the U.S. and the permittees and one way they could demonstrate that is through an express agreement, written agreement establishing an agency relationship. You argue in your brief that it's not impossible for the U.S. to show an implied agency relationship. What is your position? Can the U.S. establish an implied agency relationship through the permit alone?

[00:19:01] Speaker 03:
Not through the permit alone unless the permit has something in it that would qualify as agency language. But the United States isn't arguing that here, at least not as I understand it, and the permits aren't in the record.

[00:19:14] Speaker 00:
Well, I guess the permit relationship. Can that be an implied agency relationship for this purpose?

[00:19:19] Speaker 03:
For a federal grazing permit? Not insofar as the permit simply allows access to federal land. Use of federal land is not the same thing as using water. The Supreme Court severed federal lands from water a long time ago, and the state law controls the water. Now, that's why McInturphy-Shipby is so critical here, because the Idaho Supreme Court expressly addressed that point and said merely allowing the tenant to use the water on the land is not sufficient to establish an agency relationship between the tenant and the landowner.

[00:19:50] Speaker 03:
And that applies directly here where the United States is arguing, I believe council just said, hey, we let them on the land, that's all that matters. Now they're our agents. That's contrary to Idaho law. Now there may be some other evidence the United States could develop if this case was allowed to go forward, showing an agency relationship, fair enough, but that should be allowed to develop in the appropriate proceedings before IDWR or in the Twin Falls District Court. But to argue here that the permittees are acting as agents, that's just contrary to controlling Idaho law.

[00:20:27] Speaker 00:
And what is your authority for that?

[00:20:30] Speaker 03:
I'm sorry, Your Honor.

[00:20:31] Speaker 00:
What would you cite for that?

[00:20:33] Speaker 00:
To say that the permit, they cannot imply the agent's relationship based on the permit relationship.

[00:20:40] Speaker 03:
Oh, I don't know if it's impossible. But what I hear the United States saying is the mere fact that we allow them on the land through a permit establishes that agency relationship. Now, as far as whether the language of the permit, an individual permit, is sufficient to do that, that's a factual question that would have to be developed in each individual case.

[00:20:59] Speaker 00:
Well, if there was express language, then it would be expressed. So I guess then there's a possibility of implied agency language.

[00:21:07] Speaker 03:
Correct, if there was, but that's not in the record, and that's not what the United States is arguing here.

[00:21:13] Speaker 03:
Repeatedly in their brief, they're saying, and I believe Mr. Smeltzer said here, we let them on the land, that's it. They're using our water right because we let them on the land. That's not the way Idaho water law works.

[00:21:26] Speaker 00:
Okay, if they are, I thought he argued that they are their implied agents.

[00:21:32] Speaker 00:
If they are arguing that, you would say that's incorrect, though, as a matter of law.

[00:21:38] Speaker 03:
I'm sorry, Your Honor, I'm old and I'm not.

[00:21:40] Speaker 00:
I understood him to be arguing that the permittees are implied agents of the United States when they are permitted to graze their livestock on the U.S. land. Assume for the moment they are making that argument. You are arguing that's incorrect as a matter of law.

[00:22:04] Speaker 00:
Are you arguing that they cannot have an implied agency relationship with their permittees?

[00:22:13] Speaker 03:
I'm not saying they cannot.

[00:22:17] Speaker 00:
Can they prove that through the permit and the relationship alone? What else are you saying they need more?

[00:22:25] Speaker 03:
They could possibly prove it if that evidence was in the record or even through testimonial evidence of the permittees saying, yeah, we're acting as agents, we're maintaining their rights. But that's not what the United States is arguing here. They're saying just the fact that we allow them onto the land, which they do through a permit, that's enough. It doesn't matter what the permit says. It's the fact that we let them on the land. And that is not enough under McInturff v. Shippey.

[00:22:50] Speaker 04:
Council, if you were going to summarize what the purpose behind 42-224 is. What is the purpose of that law?

[00:23:00] Speaker 03:
Well, as the District Court held, it's a procedural statute. It lays out an orderly procedure to address allegations that a stock water right has been lost to forfeiture pursuant to the substantive standards of Section 222.

[00:23:14] Speaker 03:
Now, the United States is arguing, as I understand it, that Section 224 discriminates because it creates, quote, a new substantive standard for forfeiture of its stock water rights, that is, a standard different from the one that was in effect when the rights were decreed.

[00:23:31] Speaker 03:
Now, I'll note the United States has never identified what that allegedly old standard was, but that doesn't matter here because Section 224 expressly incorporates the substantive forfeiture statute 222, which is over a century old, which the United States no longer challenges.

[00:23:50] Speaker 03:
And under Section 222, and this is express language of the Idaho Supreme Court, The question is whether, quote, the appropriator claiming under the decree, which in this case is the United States, fails to apply the water to beneficial use. And that's from the Albertson case, Mr. Smeltzer reference, 231 Pacific Reporter, page 422. Now, that was law long before commencement of the SRBA. It was Idaho law when the United States claimed its stock water rights and when they were decreed in the SRBA.

[00:24:22] Speaker 03:
Nothing in 224 changed that longstanding rule.

[00:24:27] Speaker 03:
Now, in addition to that, Idaho law has also long recognized that the use of water by an agent of the appropriator constitutes use by the appropriator.

[00:24:38] Speaker 03:
Now that's clear from Joyce Livestock's discussion of the 1930 Idaho Supreme Court decision in First Security Bank of Blackfoot, the state, 291 Pacific Reporter 1064. And nothing in Section 224 changed that rule either.

[00:24:57] Speaker 04:
Now, let me jump in just real quick just to help me understand. I get what you're saying that this is always the law effectively and that 224 is just another way of executing it, I think is the argument you're making. Then why did the Idaho legislature need to pass 224?

[00:25:15] Speaker 04:
If it was always what the law was, why did that come into play?

[00:25:22] Speaker 03:
Well, I think, as the district court pointed out, it establishes a procedure. It's a way to address an issue. The legislature can do that. It has plenary authority to do that.

[00:25:33] Speaker 03:
Now, that doesn't change the substantive law. Forfeiture could have still been addressed outside of that procedure. But the legislature has the authority, plenary authority, to establish procedure for a statutory cause of action, which is what forfeiture is.

[00:25:47] Speaker 04:
I'm following what you're saying. This helps me understand. But it seems to me that before 224...

[00:25:55] Speaker 04:
The United States could lose an interest in land one way, but then after 224, they could lose land in a different way. And if I'm right about that, then why wouldn't that be a substantive change? Because literally there's another way they could lose the land, the rights to the land, I should say.

[00:26:14] Speaker 03:
First of all, Your Honor, this has nothing to do with land. This is about water. Fair enough. But there's grazing land which is attached to the water, so the water rights.

[00:26:24] Speaker 03:
They are not attached to the water rights. The Supreme Court, and this is in Joyce Livestock, the United States Supreme Court said that in 1877, Congress severed the public domain from the waters.

[00:26:37] Speaker 04:
And I may have used the wrong terminology. The point, though, is the same, is that whatever the right was, there was one way they could have lost it before, and now there's more than one way they can lose it. So there's a right involved, and now Idaho is saying, now you can lose it this other way. If they can lose a right... differently now than before, why isn't that a substantive change to the law?

[00:26:57] Speaker 03:
There's no difference. It's the same substantive standard. It's a procedural difference. And as we cited in our brief, I think it's the Idaho Supreme Court's Griffith case.

[00:27:08] Speaker 03:
In that case, the court said no one has a vested right in a particular mode of procedure so long as there's due process provided. And this statute does. It provides it through the IDWR process, through the judicial process. And if they don't like what they get from the Twin Falls District Court, they can appeal to the Idaho Supreme Court and on to the US Supreme Court.

[00:27:31] Speaker 03:
It's just a procedural difference. It doesn't change the way in which the right is forfeited. It still has to be lost for failure of the decreed appropriator or an agent of the decreed appropriator to use water during that five year period and in the absence of any applicable defenses.

[00:27:51] Speaker 00:
Council, Joyce was decided in 2007, right? I think that's right. Joyce said the U.S. cannot claim constitutional stock water rights based on its ownership and management of the land. And it can only acquire constitutional stock water rights through permittee's use if the permittee was acting as an agent of the United States. And it said the U.S. wasn't arguing that Joyce was acting as its agent, so therefore it wasn't in that case.

[00:28:27] Speaker 00:
I don't think it went into the issue much more than that, other than noting the U.S. did not argue there was an agency relationship. Is that correct?

[00:28:36] Speaker 03:
I think so, as I understand it, Your Honor.

[00:28:38] Speaker 00:
So between 2007 and 2014, when the SRBA decrees were finalized...

[00:28:48] Speaker 00:
Did Idaho or any of the ranchers at issue in this case challenge the U.S. 's constitutional stock water rights claims on the ground that no one was using the water, no permittee was using the water as an agent of the United States?

[00:29:11] Speaker 03:
Well, Your Honor, I'll say first, I don't think that's in the record, but to my knowledge, there was no formal legal action taken, but there was a lot of talk between the U.S. and the state during that period, I'll be honest.

[00:29:22] Speaker 00:
But there was, you cannot point me to an objection, a challenge, a case that was filed between 2007 and 2014?

[00:29:35] Speaker 03:
Again, it's not in the record, but as I stand here, I can't think of any, no. Okay.

[00:29:43] Speaker 03:
If I can maybe turn to subsection 4 of 224 again. That's the one the United States really focuses on. And another allegation here is that that subsection discriminates against the United States by requiring, quote, a written agency agreement in order to avoid forfeiture.

[00:30:03] Speaker 03:
I'll submit that the plain language of this provision is That's contrary to the plain language. All it does is it forbids the director from issuing a show cause order when he has written evidence of an agency relationship between a governmental landowner and a lessee or a permittee using the land. It imposes no burdens on the United States. What it does is it provides a procedure for weeding out early in the administrative portion of the proceedings.

[00:30:31] Speaker 00:
We've read the statute, counsel, and I'll be honest, I think part of the difficulty here, what your opposing counsel argues is we have to read that provision in the context of the statutory scheme, which includes... Section 501, it includes the provisions that were struck down as unconstitutional by the district court in this case. And it seems to me that the purpose of this statutory scheme as a whole was to divest the U.S. of these stock water rights that the state contends were essentially mistakenly decreed to it.

[00:31:08] Speaker 00:
And it says that a rancher is not unwittingly acting as an agent of a federal agency simply by grazing livestock. So it seems to me that if the U.S. were to go through these forfeiture petition proceedings with what everyone acknowledges, never having grazed its own livestock and never having obtained an express agency agreement beforehand, essentially the orders to show cause were issued, that the inevitable result would be that they would be divested of these stock water rights.

[00:31:44] Speaker 03:
Well, Your Honor, there's a lot there. I'll try to address it. It's not inevitable. That's established by the record. There were about 120 stock water rights challenged. Only 68 of them were the subject of show cause orders.

[00:31:58] Speaker 00:
Well, some of them were found to be based on federal law, and some were found to be outside of the area. But the ones that were actually at issue were granted based on the state constitutional acquisition method.

[00:32:14] Speaker 03:
So were some of the ones that were dismissed, for which show cause orders were not. But anyway, turning to 501, the statement that the ranchers don't act as unwitting agents is what McInturphy Shippey says. There's nothing there that isn't solidly grounded in McInturphy Shippey. where you don't say someone's an agent just because they happen to be on your land. It doesn't work that way.

[00:32:43] Speaker 03:
Now, in 501, the legislature also said forfeitures should be pursuant to 222 and 224 Idaho law. That was exactly what the Twin Falls District Court said. In the final unified decree, if you look at the first volume of our supplemental excerpts of record at page 216, it says these rights are subject to forfeiture under Idaho law. There's nothing different there. And then finally, if you look at 222 and 224, taking it in context, there's no reference to 501 at all.

[00:33:14] Speaker 03:
It plays no role in a forfeiture proceeding. It's an inoperative statute. statement of legislative intent, but when we look to what the legislature intended in the forfeiture proceedings, we look to the language they actually enacted, not some allegations of illicit motive to talk about the O'Brien case the district court talked about.

[00:33:35] Speaker 03:
Now, I don't think that it's necessarily inevitable that any stock water rights will be forfeited here. The United States will have the opportunity to show that there's an agency relationship through documents other than a written signed agreement and through testimony. They could, and if that doesn't exist now, they can go out and get them. There's nothing to prevent them from doing that. Forfeiture is not inevitable, but this does establish an orderly procedure for addressing the question.

[00:34:06] Speaker 03:
Pursuant to the decree, and it's not, I'm going to reserve the rest of my time in a minute here. We're not challenging ownership. The water rights were decreed in the name of the United States and the United States alone. They're valid rights, but they have to be maintained in accordance with Idaho law, which requires the decreed appropriator or an agent to make use of them.

[00:34:30] Speaker 04:
I'm going to give you a little bit more time. Did you want to talk about your cross-appeal now? Because otherwise he won't really have a chance to respond to it.

[00:34:37] Speaker 04:
And I'll give you more time, so don't worry too much about the time.

[00:34:42] Speaker 03:
I think we might have covered part of it, Your Honor, so let me go through it here quick.

[00:34:46] Speaker 03:
Okay.

[00:34:48] Speaker 03:
The United States as applied challenges, that's our cross appeal, that the district court lacked jurisdiction over that because it raises questions of the nature and substance of the water rights.

[00:34:59] Speaker 03:
The United States claims that they were decreed for the use or benefit of federal grazing permittees and therefore not subject to forfeiture so long as permittees use the water. And as I think some of your questions pointed out, the decrees just don't back that up. There's nothing about the permittees in the decrees themselves. You would have to imply something into the decrees, something beyond the four corners.

[00:35:22] Speaker 03:
And under Black Letter Idaho Water Law, and I'm referencing cases that are cited in our briefs such as the Black Canyon case, the Rangan case, City of Blackfoot case, the Whitaker case, the decree defines the right. And if you argue there's something in the right that's not in the decree, that's a collateral attack by definition. And the reason it's so important in water law is because the whole point is to finalize the decrees and end these fights, which have been going on for decades.

[00:35:53] Speaker 03:
So in this case, what the United States is doing is it's stressing its claims about the nature of the water rights, stressing them up in constitutional livery in order to obtain jurisdiction in this court.

[00:36:07] Speaker 03:
But under the Timoak case, I'm sorry, Timoak case, Once a state court has acquired jurisdiction, the federal court can't interfere and exercise jurisdiction over that same race. The race here that we've been arguing about almost this whole time here is the United States decreed stock water rights.

[00:36:32] Speaker 03:
The Twin Falls District Court first acquired jurisdiction over them, issued partial decrees, and retained jurisdiction to resolve any question about the nature of those water rights. It has exclusive jurisdiction over these questions here.

[00:36:46] Speaker 00:
Does this address your arguments about 113? 113, well, in brief, Your Honor,

[00:36:56] Speaker 03:
The district court held it was facially unconstitutional because it only applies to in-stream stock water rights associated with federal lands. That's exactly what Joyce held, that in-stream stock water rights associated with federal lands and owned by grazing permittees are pertinent to their properties as a matter of Idaho law.

[00:37:14] Speaker 03:
Now, the district court held that that's discriminatory, but if you look at Joyce, it was based on longstanding federal and state law. It didn't discriminate against the United States in any way at all. It just settled a question that had arisen under Idaho law.

[00:37:30] Speaker 03:
The United States did not appeal that case, and it's binding. It's binding authority. Section 113.2b memorializes at least one aspect of that holding, that privately-owned stock water rights associated with federal lands are pertinent to the ranchers properties. And because it can be constitutionally applied in that instance, the statute is facially constitutional. It doesn't matter what other applications may exist. And there has been no as-applied challenges to that statute.

[00:38:03] Speaker 03:
Now, we also argued that the district court erred by holding that statute has adverse impacts on federal grazing programs.

[00:38:12] Speaker 03:
That determination was based on a fundamental legal misconception about what a water right is. A water right doesn't constitute ownership of the water, control of the water source, doesn't give the water right holder any right to exclude others from using it, to prevent other permittees from using it. but that's what the district court assumed was going on, and that's just wrong. That was explained in choice livestock because the United States made exactly that argument, that, hey, this is going to interfere with our grazing programs and result in a monopolization of the water supply on federal lands.

[00:38:46] Speaker 03:
The Idaho Supreme Court said, no, you just don't understand water law and went through why that was wrong.

[00:38:53] Speaker 03:
So I think that hopefully encapsulates why we believe Section 1132B is constitutional.

[00:39:01] Speaker 04:
So what we'll do then, we'll give you five minutes for rebuttal and also to respond for rebuttal as to his arguments to the extent he makes any regarding your cross-appeal. Thank you, Your Honor.

[00:39:12] Speaker 03:
I appreciate it. And I'll just say we would ask you to deny the United States appeal and grant the cross-appeal. Thank you, counsel.

[00:39:25] Speaker 01:
Your Honor, I'll start with the cross-appeal on Section 113.2b.

[00:39:32] Speaker 01:
That section specifically provides that all stock water rights, quote, on federally owned or managed lands, unquote, that are established under this constitutional method, you know, diversion to beneficial use, quote, shall be appurtenant to the base property.

[00:39:49] Speaker 01:
What that says is essentially that there's not going to be any federal water rights on federal land, right? It doesn't say if a private landowner acquires a water right, it shall be appurtenant to the base property. It just says there shall be none, right? And this is a mirror image of Section 502, which was also struck down, and it was assumed to be, when the Idaho legislature adopted this, right, they assumed Section 502 was part of their package, right? This is just another

[00:40:19] Speaker 00:
statute that's that's governing who gets to own water rights on federal land if i understand you correctly the way you interpret this statute it would not just apply to the joyce livestock situation but it would take the srba decreed rights that were granted to the u.s and essentially make them a pertinent to the permittees land if this statute were if it were applied to

[00:40:48] Speaker 01:
backwards, retroactively. The district court said it's applying prospectively only. And what we are saying is, yes, it probably was intended to apply retroactively, including in adjudications in Idaho, where the Joyce issues have not been worked out, right? There are five other adjudications where there are water rights still to be adjudicated. So the statute could be And what we think it was intended to be was to influence those rights that haven't yet been adjudicated. Rights that have been adjudicated, it's not clear you can automatically undo them by legislation.

[00:41:22] Speaker 01:
But with respect to prospective operation, if you assume that it's only being applied prospectively, it's not an if-then proposition. The state reads the statute as saying, well, it's only prospective. They say that in the brief. And then they say what it means that if a private owner acquires a water right on federal land, then that will be a pertinent to base property. That's Joyce Livestock. We're fine with that.

[00:41:49] Speaker 00:
Okay.

[00:41:50] Speaker 01:
Right? But that's not what the statute says, and that's not what the legislature says the statute says. If you look at the legislature's brief on page 11, they say United States can't acquire a water right without their own cattle.

[00:42:03] Speaker 01:
And if you also look at the district court's determination, the district court enjoined the statute as applied to the United States. If the state is right, it's prospective only, and it only applies if a private owner gets a water right, and that's all you're looking at, and the statute doesn't influence that decision, then it's not being applied against the United States. So I'm not even sure what they're appealing. But what the district court struck down was application to the United States where it's a mirror image of Section 502 And it's saying, United States, you can't acquire water rights.

[00:42:37] Speaker 01:
With respect to the other part of the cross-appeal, what Mr. Orwell was talking about was the argument of prior exclusive jurisdiction.

[00:42:48] Speaker 01:
And quickly, we're not challenging the decree. We're happy with the decree. We didn't write a statute that attempts to attack the decree, right? What we're trying to do is... is eliminate these proceedings that are unfair reopeners of the decree, right? Leave the decree be, we're good with it.

[00:43:08] Speaker 01:
The state argues that just because we've raised issues of decree interpretation that somehow we're trying to attack the decree. As I mentioned earlier, In my opening argument, the decree issues are relatively straightforward. There's only one way the decree rights could have been adjudicated, and that's based on permitted use. And ownership can't be in dispute. And with respect to ownership not being in dispute and the state continually coming back to the argument under McInturff v. Shippey, that's just fundamentally different context.

[00:43:41] Speaker 01:
If the first thing you're trying to figure out is an appropriator on land that he's allowed to be on appropriating water in that context, and there's no agreement between the appropriator and the landowner, in that context, McInturphy, Shippey, Joyce, they favor the appropriator. They say in that context, unless there's some more evidence to show that the right belongs to the landowner based on express agreement or some other indication that we're going to favor the appropriator.

[00:44:16] Speaker 01:
But that You have to look at the facts differently, right, when you start with the United States being the owner of the right. If you start with owning the right, the default rule is in favor of the owner because the owner is doing what the owner needs to do to use the right. In that context, the subjective intent, you know, express agreement by a permittee is unnecessary. If choice teaches us anything, it's the subjective intent doesn't matter at all. But if it does matter, it's got to be the intent of the water rights owner.

[00:44:45] Speaker 01:
And we're not just putting people on land. We're permitting them to graze land. You put livestock on land, they're going to drink the water. Everybody knows that. We're permitting them to use the water in exactly the way it was decreed to us, from the same points of appropriation, same amount, everything the same. We're putting cattle on the land for it to be used. That's our intent. That's a use. They can't get to that through the regular forfeiture statute of forfeiture for non-use 222 because we're using the water.

[00:45:16] Speaker 01:
We're doing everything we can to use the water. What they want to do is get back to the ownership issue. They needed a different statute to get it back before the courts.

[00:45:26] Speaker 04:
Thank you, Your Honor. Unless there are any further questions? No further questions? Thank you, counsel.

[00:45:31] Speaker 04:
Five minutes.

[00:45:35] Speaker 03:
Thank you, Your Honor. It's Michael Lohr again. I heard Mr. Smeltzer just say we're permitting them to use the water. The United States doesn't have any authority to permit water use. The United States has decreed water rights that under Idaho law it can use or an authorized agent can use. So the only way the permittees can be using the water under the United States water rights is as agents. And there's just nothing in the record saying they are. There may be if this case goes forward.

[00:46:07] Speaker 03:
Now, as far as McInturf, I know the United States argues it's not applicable. So what I'm seeing here is the United States says, yeah, we respect Idaho water law except when it cuts against us, then there's some reason not to apply it. And we just have to go to general principles of property law that you're free to apply. But this is about Idaho water rights and Idaho water law. If it is so obvious, as the United States argues, that these rights were intended for the use of the permittees, use and benefit of the permittees, the Twin Falls District Court will rule on that.

[00:46:37] Speaker 03:
You can be assured of that. It's got unparalleled expertise and experience in Idaho water law.

[00:46:48] Speaker 03:
Now, with respect to getting back to the purpose of 224, providing a procedure, I think you asked, Judge Owens, the Idaho Supreme Court has noted that forfeiture is not self-effectuating. That was in the Sage Willow case versus IDWR.

[00:47:08] Speaker 03:
I believe that's referenced in both of our briefs on both sides. So it's just providing a procedure for a non-self-effectuating aspect of Idaho water law.

[00:47:19] Speaker 03:
Now, subsection four, if it impacts forfeiture in any way, it just acknowledges that there is a defense to it.

[00:47:29] Speaker 03:
that it can be avoided through an agency relationship. But again, that was in Idaho law long before the SRBA law.

[00:47:45] Speaker 03:
I think council also argued that 113 prevents the federal government from owning water rights on federal land because of Idaho Code Section 42502.

[00:47:55] Speaker 03:
I'll note the district court struck that statute as invalid. We have not appealed it. We're not saying the United States has to own livestock to have stock water rights on its own land. That's not Idaho law. And to read that into 113 is to go way beyond the statutory language. And this is a question of facial constitutionality, what the statute says.

[00:48:18] Speaker 03:
And finally, I'll say the United States argues we're not attacking the degrees. I completely disagree.

[00:48:26] Speaker 03:
I 100% disagree. That is the entire basis of our cross appeal. The United States is going after its water rights and it wants this court to make rulings about its water rights.

[00:48:39] Speaker 03:
If this court were to grant the relief the United States asked for on the as-applied claims, it would necessarily, unavoidably, be concluding that the decrees are not final, that federal courts can revisit the substance and nature of water rights that were decreed by state courts under state law and construe those decrees in such a way as to read into them language that does not appear in them.

[00:49:04] Speaker 03:
If we go down that road, then the McCarran Amendment becomes a dead letter and the SRBA was pointless. And all the investments, the state of Idaho and the water users, including the ranchers in this case, made in the SRBA become what the Idaho Supreme Court called wasteful expenditures in the Black Canyon case. So this is critically important to us.

[00:49:26] Speaker 03:
All we're saying is that there is a court where this type of claim belongs, and it's not here. And it can be completely and fairly adjudicated in the Twin Falls District Court, which has prior exclusive jurisdiction over those questions.

[00:49:47] Speaker 03:
Well, I have 50 seconds left, but I think I've covered what I meant to cover. So unless the court has further questions, I'll stand on the briefs.

[00:49:55] Speaker 04:
All right. No further questions. I want to thank all the counsel in this case. Complicated case, interesting case. We appreciate its importance, and we appreciate your time today and moving it to 1.30. We also appreciate that. With that, this matter is submitted. This particular panel is adjourned. Judge Song and I will be back tomorrow at 9 a.m. Thank you.

[00:50:14] Speaker 00:
Thank you.

[00:50:16] Speaker 00:
All rise.