Page 93 IID I ER A century ufserm'ce. Since 191 March 27, 2018 BOARD AGENDA MEMORANDUM Information SUBJECT IID Response Letter to Lowell Sutherland Letter DEPARTMENT Legal PRESENTER Joanna Smith Hoff, deputy general counsel Background On March 13, 2018, MD directors and staff received the attached letter from Mr. Lowell Sutherland dated March 8, 2018. In that letter, Mr. Sutherland identifies some statements made by the general manager and me that he states have raised concerns. His letter concludes with four questions. Attached is the response letter that was sent to Mr. Sutherland answering those four questions. Financial Impact None at this time. Recommendation This item is provided to the board for information and discussion. Page 94 SUTHERLAND a GERBER A Professional Corporation Telephone: Attorneys at Law Facsimile: (760) 353-4444 2299 West Adams Avenue, Suite 102 {760) 352-2533 El Centro, California 92243-2818 March 8, 2018 Board of Directors, Imperial Irrigation District 333 E. Barioni Blvd. PO. Box 937 Imperial, CA 92251 RE: Water Rights Ladies and Gentlemen of the Board: As you know our ?lm represents a number of landOWners who are bene?ciaries of the Trust assumed by the IID and confirmed by the United States Supreme Court in Bryant v. Yellen. Your failure to respond to my two earlier letters causes doncern. Since those two letters were sent, we have observed two events which deepen our concern. The ?rst was a letter signed by Ms. Joanna Smith Hoff sent to IVHZO in response to an inquiry by that organization regarding the intent of the board. In that letter Ms. Hoff referred to rights of the Imperial This caused us concern because the water right is not owned by ?The Valley". It is owned by the landowners. In the words of the Supreme Court as a matter of state law, not only did the District?s water right entitle it to deliver water to the farms in the District regardless of size: but also the right was equitably owned by the bene?ciaries to whom the District was obligated to deliver water.? (447 US. 352, 37l) This may be mere carelessness, but it is your obligation to correct this error because it is a violation of your trust to recognize any bene?ciaries other than the landowners. The second event occurred at the open comment portion of the meeting of February 20, 2018. Mr. Ron Leimgruber was addressing the board and referred to Bryant v. Fallen. The general manager, Mr. Kelly, stated ?Are you referring to the Yellen case? I would suggest you read that real close. Why don?t we have it read out loud. Maybe that will refresh your memory. Come on up.? Whereupon Joanne Smith Hoff came to the podium and read the ?rst sentence of footnote 23. ?As beneficiaries of the trust, the landowners have a legally enforceable right, appurtenant to thcir lands, to continued service by the District.? Page 95 Board of Directors Imperial Irrigation District March 8, 2018 Page 2 After Ms. Huff?s performance, Mr. Kelly stated: ?Did you catch that last part?? Since this event was so clearly staged by Mr. Kelly and Ms. Hoff, we are led to believe that Mr. Kelly and Ms. Hoff believe that the duties of the trustee are limited to service by the District. No one could honestly come to that conclusion after reading the all of Bryant v. Fallen. The balance of footnote 23 states: The District is obligated not only to continue delivery, but also to apportion water distributed for irrigation purposes ratably to each landowner in accordance with his share of the total assessments in the District. Cal. Water Cede Ann. 22250. It is important to you keep in mind that this quote from Bryant 12. Yellen did not spring spontaneously from the Supreme Court. The court adopted its position because the IID asked it to. In its brief before the Supreme Court, the Imperial Irrigation District stated: Thus, the equitable ownership of the present perfected rights which the Secretary must satisfy under 6 of the Act is vested in the landowners, not in the District. And the landowner consequently has a statutory right to use a de?nite, proportional share of the water distributed by the district. (Opening Brief pp 52- 54.) Furthermore, in its reply brief IID stated: The District's present perfected rights are those created by the irrigation of the very lands now in jeopardy, to which those rights are appurtenant as real property, under both state and federal law. The landowners, as the equitable owners of the present perfected rights, have a constitutionally protected interest The District, as the legal owner and trustee, has no power to take perfected rights from the present owner of the lands to which they are appurtenant, and give them to other bene?ciaries 0r transfer their appurtenancy to other (Reply brief pages 18-19.) Because of the delay in responding and above events, we must ask the following questions. 1 . Has the HD board changed the position of the IID regarding its duties as a trustee of the water right? 2. Does the IID believe that its duties as trustee are limited to providing ?continued service?? 3. Does the staff of the IID believe that the trust reSponsibilities of the IID to its bene?ciaries is limited to providing ?continued service? to the landowners? Page 96 Board of Directors Imperial Irrigation District March 8, 2018 Page 3 4. Does the or any members of the board recognize any bene?ciaries of the trust other than landowners? The is bound by both case law and statute to respond to any legitimate inquiries by the bene?ciaries. Please do so within a reasonable time. Very truly yours, SUTHERLAND GERBER A Professional Corporation Lowell F. Sutherland LFS :mg cc: Clients Page 97 idr om A ternary ofsavica Since March 22, 2018 VIA EMAIL AND U.S. MAIL Lowell F. Sutherland Sutherland Gerber 2299 West Adams Avenue, Suite 102 El Centro, California 92243?28 1 8 Re: Imperial Irrigation District Response to March 8, 2018 Letter Dear Mr. Sutherland, As an attorney, you are well aware that the Imperial Irrigation District cannot discuss matters in existing litigation nor can it discuss any issues relating to ongoing settlement negotiations. Moreover, you state that IID is bound by the law to respond to any inquiries, which you know is simply untrue and other than the production of documents under the Public Records Act, IID has no such obligation to reSpond. Even so, you raise speci?c questions that warrant a response. Your ?rst question is ?Has the IID board changed the position of the IID regarding its duties as a trustee of the water right?? The answer is no, the board has not changed its position. A letter dated August 20, 2014 to the Farm Bureau addresses this same issue, a copy of that correspondence is attached for your convenience. You reference the case of Bryant v. Yellen, 447 US. 352 (1980), throughout your letter. You reference footnote 23 of the decision and you reference briefs ?led in the case. While the IID board has not changed its position since it provided the August 20, 2014 letter to the Farm Bureau relating to this case, the Bryant v. Yellen decision was issued in 1980. Since the ?ling of those briefs by the then-existing IID Board, many laws have been created and changed, several court decisions have been issued (including the Bryant v. Yellen decision), numerous elections have come and gone and countless agreements and policies have been approved and adopted. Bryant v. Yellen is among many case decisions recognizing that it is IID that is the water right holder. (Bryant v. Yellen at p. 371 ?It may be true, as the Court of Appeals said, that no individual farm in the District has a permanent right to any speci?c proportion of the water held in trust by the District?; p. 372 ?These were important characteristics of the District?s water right as of the effective date of the Project Act?) In truth, the holding of Bryant v. Yellen is narrow and does not address any of the important issues relating to the discretion of the IID Board to adoption of a particular form of an equitable distribution plan. (Id. at p. 373, ?We consequently hold that the perfected water right decreed to the District may be exercised by it without regard to the land limitation provisions of 46 of the 1926 Act or to any similar provisions of the reclamation laws?) It is disingenuous to rely on briefs ?led in 1980 and say that the IID Board has changed its position since then not taking into account the many things that have occurred in the intervening four decades. IID has been under siege from external political and legal forces, but continues to remain strong in its role as the trustee. The IID Board has worked tirelessly to IMPERIAL IRRIGATION GENERAL COUNSELS OFFICE . 333 E. BLVD . PO BOX 93/ . IMPERIAL, CA 92251 TELEPHONE UGO) 3399504 FAX (9'60) 339 9062 Mr. Lowell Sutherland Page 2 March 22,2018 Page 98 protect the water right it holds in trust and the rights of its bene?ciaries to receive water delivered by the district. The IID is of the view there is a permanent, legally enforceable, vested equitable right to receive water service from IID. That right is not to a speci?c amount of water every year, as it may vary annually depending upon cropping patterns, weather conditions, conservation programs and other related factors, but it is a legally enforceable right, provided that the water is applied in a manner consistent with the constitutional doctrine of reasonable and bene?cial use. An optimal method for apportioning water should accommodate all of these variables. Your second and third questions seem to be the same question asked differently. First, ?Does the IID believe that its duties as trustee are limited to providing continued service?? Second, ?Does the staff of the IID believe that the trust responsibilities of the IID to its bene?ciaries [are] limited to providing ?continued service? the landowners?? The answer is no to both, the popularly elected IID board and the staff do not believe the district?s duties as trustee are limited to providing continued service. IID has never taken this position and no director or staff member has ever stated or implied this. Further, IID is necessarily vested with broad discretion in carrying out its powers and duties and it is precisely because Judge Anderholt took the position that the district did not have that discretion by mandating the method for apportionment, that the IID Board is obligated to challenge his decision. As an attorney regularly dealing with and ?ling lawsuits against IID, you are aware of the vast statutory powers and duties conferred upon the district by the California Legislature. This statutory responsibility is in addition to the many powers and duties imposed upon IID through the Law of the River, case law and the many applicable federal, state and local laws under which IID must operate and carry out its duties. As you are also aware, the California Supreme Court has recognized the broad powers exercised and the essential services rendered by IID such that a voter who does not own property within the district cannot be deprived of the right to vote in an election for director of IID. (Choudhry v. Free, 17 Cal.3d 660, 655?656 and 668 (1976).) Indeed, the court found that electors who do not own land, nonetheless have ?an appreciable stake in the affairs of the district.? (Id. at 668.) Further, there is simply no denying that the footnote 23 in Bryant v. Yellen expressly states: ?As bene?ciaries of the trust, the landowners have a legally enforceable right, appurtenant to their lands, to continued service by the District.? (Emphasis added, p. 371.) While you quote the remainder of footnote 23, it does not change this sentence in any way. IID has done nothing to expand or change this statement and has only continued to recognize that this is still the law under the United States Supreme Court. Your fourth and ?nal question is, ?Does the IID or any members of the board recognize any bene?ciaries of the trust other than landowners?? This suggests that you are of the View that the bene?ciaries must be limited to the agricultural landowners and providing water to domestic customers, within the meaning of the Colorado River Compact, the Boulder Canyon Project Act and the Decree in Arizona v. California, 376 US. 340 (1964), is illegal or prohibited under the law if they are not agricultural landowners. IID does not agree with this suggestion and the answer is yes, there are bene?ciaries of the trust other than agricultural landowners and to say that others cannot receive the bene?t of the use of Colorado River water would be absurd. Page 99 For IID, as a trustee, to deny water service to all who seek it for uses that support the Imperial County by providing jobs and protecting the environment, among other things, would be inconsistent with the history of lID?s water right and would be counter to applicable federal and state laws. As I am sure you are aware, as of about 1904, the California Development Company (the predecessor to the IID) was distributing water for agricultural, municipal and industrial uses under the authority of its then existing diversions. The 1922 Compact, Article Il(h), made clear that the de?nition of ?domestic use? shall include ?the use of water for household stock municipal, mining, milling. industrial, and other like purposes, but shall exclude the generation of electrical power.? That de?nition was then carried through the Boulder Canyon Project Act and Arizona v. California, all of which still apply to IID today. Moreover, Bryant v. Yellen speci?cally provides that IID ?is empowered to distribute and otherwise administer water for the bene?cial use of its (Emphasis added.) (Id. at 356, fn. The pre-l9l4 water rights acquired by IID served municipal and industrial uses, along with the agricultural use, and nothing provides that it has become illegal for the delivery of water to these uses since then. Furthermore, the trust of IID is speci?cally de?ned in the California Water Code section 22437, which states that the ?title to all property acquired by a district is held in trust for its uses and purposes? and the ?district may hold, use, acquire, manage, sell, or lease the property? as set forth in the irrigation district law. And Water Code section 20529 de?nes property to include ?all real and personal property, including water, water rights, works, franchises, concessions and rights.? While the trust as de?ned under the irrigation district law is limited through the law itself, all government agencies are imbued with a trust duty to act for the bene?t of the public. As you have pointed out, IID has a ?duciary duty and that duty is to everyone it serves. There is no reason to suggest that providing water to municipal and industrial uses will cause harm to the agricultural community, which currently receives approximately 97 percent annually of the water, while the domestic/industrial sector receives less than 3 percent annually. The actual consequence to the agricultural community of allowing that sector to receive water seems nominal. Even though the consumption is small, the value of promoting industry, jobs, additional tax base for the Imperial county and additional revenue for schools is signi?cant and vital. There is a bigger issue here. It is of the greatest bene?t to the Imperial Valley as a whole to ensure that every drop of water that is diverted by IID is put to productive bene?cial and reasonable uses. There should not be con?ict among water users, agriculture, domestic, industrial and municipal customers. This weakens the Imperial Valley as a community. History teaches us that failure to use the water available each year within the Imperial Valley would allow that water to be delivered outside the Valley. IID plans to develop an optimal apportionment plan in the future that will maintain full bene?cial and reasonable use of annual entitlement and welcomes your participation. Sincerely, ?dg??mw rank A. Oswalt, General Counsel Cc: IID Board of Directors Kevin Kelley, general manager Page 100 A century August 20, 2014 Mr. Don Emanuelli, President Imperial County Farm Bureau 1000 Broadway El Centro, CA 92243 Dear President Emanuelli: Subject: June 10, 2014 Letter Regarding Bryant v. Yellen, 447 U.S. 352 (1980) This letter is in response to your letter dated June 10, 2014 in which the Imperial County Farm Bureau requests the position of the IID Board of Directors regarding the United States Supreme Court case, Bryant v. Yellen, 447 US. 352 (1980). The IID Board of Directors reviewed this Supreme Court case and on August 19, 2014, it voted to take the following position regarding Bryant v. Yellen: 1. The IID Board of Directors recognizes Bryant v. Yellen as valid Supreme Court case law that applies to IID and the Imperial Valley; and 2. The IID Board of Directors agrees with the statement in Bryant v. Yellen, footnote 23, ?As beneficiaries of the trust, the landowners have a legally enforceable right, appurtenant to their lands, to continued service by the District.? (447 US. 352, 371 (1980).) The IID Board of Directors appreciates the Opportunity to have this exchange with the Farm Bureau. Sincerely, ng James C. Hanks President, Board of Directors cc: Board of Directors Kevin E. Kelley, IID General Manager Ross G. Simmons, IID General Counsel IMPERIAL IRRIGATION DISTRICT 333 E. BARIONI BLVD., IMPERIAL, CA 92251 760.339.9477