## Facts

- Strawberry Water Users Association (Strawberry) and Strawberry High Line Canal Company were project beneficiaries of the federally built Strawberry Valley Project, which stores water in Strawberry Reservoir and delivers it through a transbasin tunnel for use primarily in southern Utah County.
- Strawberry and the United States Bureau of Reclamation (United States) entered into an agreement that guaranteed Strawberry annual water deliveries from the reservoir.
- Over time, Strawberry filed three change applications with the Utah State Engineer seeking to (1) update and correctly reflect current points of diversion and places of use for project water and (2) add municipal and industrial uses.
- Strawberry’s proposed uses included irrigating small residential lots (such as lawns and gardens) in addition to traditional irrigation uses.
- The United States urged the State Engineer to dismiss or delay action on the change applications until Utah courts resolved who owned or held the relevant water rights.
- The United States also asserted that Strawberry’s contract barred changes in use without the consent of the Secretary of the Interior.
- Related disputes over the project and the contracts were being litigated in federal district court, and the United States argued that the controversy belonged exclusively in federal court as a contract dispute.
- Strawberry filed a petition within Utah’s long-running Uintah Basin general adjudication seeking an interlocutory decree to determine the nature and extent of the Strawberry Valley Project water rights, including rights in imported water.
- The state district courts declined to proceed as Strawberry requested, effectively accepting the United States’ position that the matter should be resolved in federal court.
- Strawberry and the canal company appealed to the Utah Supreme Court.

## Issues

1. Whether Utah state courts, sitting in a statutory general adjudication, have jurisdiction to determine the nature and extent of Strawberry’s claimed rights to Strawberry Valley Project water when the United States is a party.
2. Whether Strawberry’s claimed interests are solely contract rights against the United States (requiring federal-court adjudication), or water-right property interests governed by Utah water law (suitable for determination in the state adjudication).
3. Whether the existence of federal reclamation contracts and parallel federal litigation requires Utah courts to refrain from deciding the state-law water-right questions presented in the adjudication.

## Decision

- The Utah Supreme Court reversed the district courts and remanded for further proceedings in the Utah general adjudication.
- The court held that Utah courts have authority in the general adjudication to determine the existence, scope, and attributes of the water rights at issue under Utah law, even though the United States is involved.
- The court rejected the argument that the dispute could be characterized as purely contractual in a way that would remove state-court jurisdiction over water-right determinations.
- The court recognized that some disagreements may involve interpretation or enforcement of federal contracts, but those contract questions do not prevent Utah courts from deciding the underlying Utah water-right issues in the comprehensive adjudication.

## Legal Principles

- Federal reclamation projects and contracts operate against a backdrop of state water law; federal involvement does not, by itself, convert a claimed water right into an exclusively federal contract entitlement.
- Utah’s general adjudication statutes provide a forum designed to determine all rights to use water within the relevant drainage, including claims involving imported project water to the extent state law governs the water-right attributes being determined.
- The McCarran Amendment permits the United States to be joined and bound in comprehensive state-court water-right adjudications, allowing state courts to adjudicate competing claims that include federal interests.
- A court should distinguish between (a) determining water-right status and attributes under state law (quantity, priority, place and nature of use, and related incidents) and (b) resolving independent claims for contract interpretation or contract remedies; the presence of the latter does not defeat state jurisdiction over the former.
- State adjudications should not be fragmented by labeling water-right questions as contract disputes when the requested relief requires determination of water-right interests governed by state law.

## Conclusion

Strawberry Water Users Association v. Bureau of Reclamation holds that Utah courts must proceed, within Utah’s general adjudication, to determine the nature and extent of Strawberry Valley Project water rights under Utah law even though the United States is a party and even though federal contracts and parallel federal litigation exist; contract-based disputes may be addressed separately, but they do not strip Utah courts of jurisdiction to decide the state-law water-right questions needed for a complete adjudication.


Strawberry Water Users Association v. Bureau of Reclamation, 133 P.3d 410 (2006)