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No. 105, Original
The State of Kansas brought this original action against the State of Colorado
to resolve disputes under the Arkansas River Compact (Compact), Act of May
31, 1949, ch. 155, 63 Stat. 145. This Court granted Kansas leave to file
its complaint, Kansas v. Colorado, 475 U.S. 1079 (1986), and the Court appointed
the Honorable Wade H. McCree, Jr., to serve as the Special Master. 478 U.S.
1018 (1986). Upon Judge McCree's death, the Court appointed Arthur L. Littleworth
as the Special Master, 484 U.S. 910 (1987). Special Master Littleworth granted
the United States' unopposed motion for leave to intervene in the action, conducted a trial limited to questions
of liability, and submitted a report, which recommended that the Court find
Colorado had violated the Compact in certain respects. 513 U.S. 803 (1994).
This Court overruled the exceptions of both Kansas and Colorado to the Master's
First Report. 514 U.S. 673 (1995).
The Master subsequently submitted a Second Report that addressed preliminary
issues respecting a remedy, and the Court invited the parties to file exceptions.
522 U.S. 803 (1997). Colorado filed two exceptions, which were overruled
without prejudice to Colorado's right to renew those exceptions at the conclusion
of the remedy phase of the case. 522 U.S. 1073 (1998).
After further proceedings, including a trial on the appropriate remedy for
Colorado's violations of the Compact, the Master issued a Third Report,
dated August 2000, containing his recommended remedy for Colorado's violations
of the Compact. 121 S. Ct. 294. Both Kansas and Colorado have filed exceptions
to the recommended remedy. The United States files this brief to provide
the Court with the federal government's perspective on the parties' exceptions
to the Master's Third Report.
1. The Arkansas River Basin
The Arkansas River originates on the east slope of the Rocky Mountains in
central Colorado and flows south and then east across Colorado and into
Kansas. It receives significant in-flows from the Purgatoire River, its
major tributary in Colorado, which originates in the Sangre de Cristo mountains
in southern Colorado near the New Mexico border. The Purgatoire River flows
in a notheasterly direction to join the Arkansas River about 60 miles west
of the Kansas border, at Las Animas, Colorado. See Kansas v. Colorado, 514
U.S. 673, 675-676 (1995).
The United States has constructed three water storage projects on this river
system. The John Martin Reservoir, located immediately east of the juncture
of the Purgatoire and Arkansas Rivers in Colorado, is operated by the Army
Corps of Engineers to control floods and to provide storage water in accordance
with the Arkansas River Compact. It has a storage capacity of approximately
700,000 acre-feet. 514 U.S. at 677. The Pueblo Reservoir, located on the
Arkansas River about 150 miles upstream of the Kansas border near Pueblo,
Colorado, is managed by the Department of the Interior's Bureau of Reclamation
as part of the Fryingpan-Arkansas Project. It has a storage capacity of
approximately 357,000 acre-feet. Ibid. The Trinidad Reservoir, located on
the Purgatoire River near Trinidad, Colorado, is jointly managed by the
Army Corps of Engineers and the Bureau of Reclamation to control floods
and to provide storage water for use by the Bureau of Reclamation's Trinidad
Project. It has a storage capacity of approximately 114,000 acre-feet. Ibid.
Twenty-three canal systems in Colorado divert water from the Arkansas River
for irrigation. Fourteen of those systems are located upstream from John
Martin Reservoir, and four of those systems have associated privately-owned,
off-channel water storage facilities. Six canal systems in Kansas operate
between the Colorado border and Garden City. See 514 U.S. at 677.
2. The Arkansas River Compact
The Arkansas River Compact apportions the Arkansas River between the States
of Kansas and Colorado. The Compact was an outgrowth of two original actions
that the States had filed in this Court disputing their respective entitlements
to use of the Arkansas River. See 514 U.S. at 678. In each of those cases,
the Court denied Kansas's request for an equitable apportionment. See Kansas
v. Colorado, 206 U.S. 46, 114-117 (1907); Colorado v. Kansas, 320 U.S. 383,
In the first suit, Kansas sought to enjoin water diversions in Colorado,
but the Court denied relief on the ground that Colorado's depletions of
the Arkansas River were insufficient at that time to warrant injunctive
relief. Kansas v. Colorado, 206 U.S. at 114-117. In the second suit, Colorado
sought to enjoin lower court litigation brought by Kansas water users against
Colorado water users, while Kansas sought an equitable apportionment of
the Arkansas River. The Court concluded that Colorado was entitled to the
injunction it sought, but the Court concluded once again that Kansas had
failed to show sufficient injury to warrant an equitable apportionment of
the Arkansas River. Colorado v. Kansas, 320 U.S. at 391-392; see Kansas
v. Colorado, 514 U.S. at 678.
In denying Kansas's second request for judicial relief, the Court suggested
that a dispute such as the one between Kansas and Colorado calls for "expert
administration rather than judicial imposition of a hard and fast rule,"
and that the controversy "may appropriately be composed by negotiation
and agreement, pursuant to the compact clause of the federal Constitution."
Colorado v. Kansas, 320 U.S. at 392. Shortly thereafter, the States approved,
and Congress ratified, the Arkansas River Compact, Act of May 31, 1949,
ch. 155, 63 Stat. 145. The Compact was intended to "[s]ettle existing
disputes and remove causes of future controversy" between the States
and their citizens over the use of the Arkansas River. To that end, the
Compact was designed to
[e]quitably divide and apportion between the States of Colorado and Kansas
the waters of the Arkansas River and their utilization as well as the benefits
arising from the construction, operation and maintenance by the United States
of John Martin Reservoir Project for water conservation purposes.
Compact Art. I, 63 Stat. 145. The Compact accomplishes those goals through
two basic mechanisms.
First, the Compact protects the States' respective rights to continued use
of the Arkansas River through a limitation on new depletions. Article IV-D
of the Compact allows new development in the form of dams, reservoirs, and
other water-utilization works in Colorado and Kansas, provided that the
"waters of the Arkansas River" are not thereby "materially
depleted in usable quantity or availability for use to the water users in
Colorado and Kansas under this Compact." 63 Stat. 147. The Compact
defines the term "waters of the Arkansas River," Art. III-B, 63
Stat. 146, but it does not expressly define what constitutes a "material"
depletion or a "usable" quantity.1
Second, the Compact regulates the storage of water at John Martin Reservoir
and specifies the criteria under which each State is entitled to call for
water releases. Article V of the Compact, which provides the "basis
of apportionment of the waters of the Arkansas River," prescribes the
timing of storage at the reservoir and the release criteria. 63 Stat. 147-149.
Basically, between November 1 and March 31, in-flows to the John Martin
Reservoir are stored, subject to Colorado's right to demand a limited amount
of water. Between April 1 and October 31, the storage of water is largely
curtailed, and either State may call for releases at any time in accordance
with the flow rates set out in the Compact. Ibid.
The Compact creates an interstate agency, the Arkansas River Compact Administration,
to administer the Compact. Art. VIII, 63 Stat. 149-151. The Compact Administration
consists of a non-voting presiding officer designated by the President of
the United States and three voting representatives from each State. It is
empowered to adopt by-laws, rules, and regulations, prescribe procedures
for the administration of the Compact, and perform functions to implement
the Compact. See Arts. VIII-B, VIII-C, 63 Stat. 149, 150. Article VIII-H
of the Compact directs that the Administration shall "promptly investigate"
violations of the Compact and report its findings and recommendations to
the appropriate state official. 63 Stat. 151. That Article further states
that it is "the intent of this Compact that enforcement of its terms
shall be accomplished in general through the State agencies and officials
charged with the administration of water rights." Ibid.
3. The Current Proceedings
Kansas brought this action in 1985 to enforce the provisions of the Arkansas
River Compact. Special Master Littleworth filed his initial report with
the Court in July 1994 addressing issues of liability. He recommended that
the Court find that post-Compact well pumping in Colorado had violated Article
IV-D of the Compact and that Colorado be held liable for that violation.
The Master also recommended that the Court find no violation of the Compact
with respect to Kansas's claims arising from the operation of the Trinidad
Reservoir and the Winter Water Storage Program that utilizes excess storage
capacity at the Pueblo Reservoir. The Court adopted all of the Master's
recommendations and remanded for determination of the unresolved issues-primarily
relating to what remedy, if any, Kansas was entitled to as a result of Colorado's
breach-in a manner not inconsistent with the Court's opinion. Kansas v.
Colorado, 514 U.S. at 694.
On remand, the Master conducted further proceedings and issued a Second
Report providing his preliminary recommendations on the issues of: (a) quantifying
the depletions in flows of the Arkansas River at the Colorado-Kansas border
(stateline flows) for the period 1950-1985; (b) quantifying depletions for
the period subsequent to 1985; (c) bringing Colorado into current compliance
with the provision of the Compact; and (d) a remedy for past depletions.
See Second Report 2, 112. The Court invited the parties to file exceptions
to the recommendations contained in the Master's Second Report. See 522
U.S. 803 (1997). Kansas and the United States did not file any exceptions.
Colorado challenged the Master's conclusions that (1) if the remedy includes
money damages, the Eleventh Amendment of the United States Constitution
does not bar an award of money damages based, in part, on losses incurred
by Kansas's water users; and 2) the unliquidated nature of Kansas's claim
for damages does not, in and of itself, bar the award of prejudgment interest.
The Court overruled Colorado's exceptions without prejudice to Colorado's
right to renew those exceptions at the conclusion of the remedy phase of
the case. 522 U.S. 1073 (1998).
After conducting further proceedings, including a trial on the appropriate
remedy for Colorado's violations of the Compact, the Master issued his Third
Report, dated August 2000, containing his recommended remedy. The Master's
Third Report recommends, in essence, that:
(1) depletions of usable stateline flow for the 1995-1996 period be determined
to be 7935 acre-feet, bringing the total depletions for 1950-1996 to 428,005
(2) the Court confirm the Master's determination that if a suitable remedy
includes money damages, those damages should be based upon Kansas's loss
rather than upon any gain to Colorado;
(3) the Court confirm the Master's conclusion that if a remedy includes
money damages, the Eleventh Amendment does not preclude damages awarded
to Kansas from being based, in part, upon losses incurred by its water users;
(4) the Court confirm the Master's ruling that the unliquidated nature of
Kansas's claim for damages does not bar the award of prejudgment interest;
(5) the remedy be money damages, rather than repayment of the historical
shortage by additional water deliveries in the future;
(6) the amount of Kansas's damages be determined on the basis of the analyses
used by Kansas's experts;
(7) the categories of Kansas's damages be calculated as provided in the
(8) Kansas's damages include prejudgment interest as provided in Section
XI of the Third Report;
(9) the Master's March 22, 2000, order regarding mitigation of damages be
(10) the Master's May 1, 2000, order regarding Colorado's objection to expert
testimony on secondary economic damages be confirmed.
Third Report 119-120.
As relevant here, the core of the Master's recommendation is that money
damages be awarded to Kansas for water losses beginning in 1950, with prejudgment
interest awarded for the period from 1969 to the present. Kansas has filed
an exception to the Master's determination that prejudgment interest should
be awarded only from 1969 forward. Colorado has filed a number of exceptions,
including a renewal of its exceptions to include the losses of Kansas's
water users in the calculation of damages, and to any award of prejudgment
INTRODUCTION AND SUMMARY OF ARGUMENT
The State of Kansas brought this action to enforce its rights under the
Arkansas River Compact, which apportions the flow of the Arkansas River
between Kansas and Colorado. This Court resolved the issues of liability
in its earlier decision in Kansas v. Colorado, 514 U.S. 673 (1995), which
accepted the Master's recommendation that Colorado be held liable for violations
of Article IV-D of the Compact resulting from post-Compact well pumping
in Colorado. On remand, the Master heard evidence and prepared a thorough
report addressing a number of issues, including what potential remedies
might be available for Colorado's breach. The Court overruled Colorado's
exceptions to that report without prejudice and remanded the case to the
Master for further proceedings. 522 U.S. 1073 (1998). Following resolution
of a number of other issues related to Compact compliance and modeling,
the Master conducted a trial on the appropriate remedy for Colorado's past
violations of the Compact. Following that trial, the Master submitted his
Third Report documenting his ultimate recommendations with respect to the
appropriate remedy for Colorado's violations of the Compact.
The Master recommended that Kansas be awarded money damages for all losses
that have occurred as a result of Compact violations, including the aggregate
losses to past and future Kansas water users, and that prejudgment interest
be awarded on damages from 1969 to the present. The Master's proposed remedy
raises two questions of first impression in this Court: (1) how to calculate
an award of money damages against a State as a remedy for a violation of
a compact apportioning the waters of an interstate river; and (2) the availability
of prejudgment interest on such an award. The United States submits that,
under the circumstances of this case, the Master's recommended remedy falls
within the Court's broad discretion to fashion a fair and equitable remedy
for Colorado's violation of the Arkansas River Compact.
I. Colorado contends that the Eleventh Amendment bars an award of money
damages that is calculated, in part, based on injuries to individual water
users in Kansas that resulted from groundwater pumping in Colorado. Under
this Court's cases, however, the Eleventh Amendment bars a suit by a State
only if it is appearing as a nominal party for purposes of advancing the
private claims of individual citizens of the State against another State.
Here, Kansas sued to protect its sovereign interests as a party to an interstate
compact and its quasi-sovereign interests in the health and economic well-being
of its citizens. This Court held in Texas v. New Mexico, 482 U.S. 124, 130-132
& n.7 (1987), that an award of money damages can be an appropriate remedy
in such a case and is not barred by the Eleventh Amendment. Nothing in the
Eleventh Amendment bars the Court from calculating the amount of those damages
by reference to the injuries sustained by the individual water users who
comprise the general population that Kansas has a legitimate quasi-sovereign
interest in protecting.
II. The Master recommends that prejudgment interest be awarded for the period
from 1968 to the present. Colorado objects to that award, urging the Court
to adopt a categorical rule barring an award of prejudgment interest for
violation of an interstate compact apportioning the flows of an interstate
river. Colorado relies on the traditional rule at common law that prejudgment
interest is not owed where damages are unliquidated. In cases within its
original jurisdiction, however, the Court has broad discretion to fashion
appropriate principles of decision, and it has not been bound by statutory
or common law rules that may be applicable in other settings. Here, the
Master identified sound reasons for not adopting the categorical rule that
Colorado proposes. In the first place, the common rule was never absolute,
and it is no longer followed in a number of jurisdictions. Moreover, this
Court has repeatedly observed that the distinction between liquidated and
unliquidated damages for these purposes is inconsistent with the goal of
affording adequate compensation, and that a strict rule barring prejudgment
interest where damages are unliquidated has been subject to substantial
criticism for that reason. We therefore support the Master's recommendation
that the common law rule generally barring an award of prejudgment interest
on unliquidated damages not be imported into the jurisprudence of suits
between States within this Court's original jurisdiction.
After rejecting a categorical rule barring the award of prejudgment interest,
the Master carefully evaluated all of the circumstances of the case and
the respective equities of the two States that bear on the appropriateness
of an award of prejudgment interest, and concluded that such an award is
proper but only from 1968 forward. Kansas has filed an objection, contending
that prejudgment interest should be awarded all the way back to 1950. Colorado,
on the other hand, contends that if prejudgment interest is not altogether
foreclosed, it should be awarded only beginning in 1985, when Kansas first
filed a formal complaint concerning the groundwater pumping. In our view,
however, the Master reasonably balanced the relevant factors in awarding
prejudgment interest beginning in 1969, when, the Master found, Colorado
first knew or should have known that groundwater pumping in that State was
depleting stateline flows of the Arkansas River.
I. THE CALCULATION OF DAMAGES FOR INJURIES TO KANSAS'S QUASI-SOVEREIGN INTEREST
IN THE ECONOMIC HEALTH AND WELFARE OF ITS RESIDENTS IN PART ON THE BASIS
OF INJURIES SUFFERED BY PAST, PRESENT, AND FUTURE KANSAS WATER USERS DOES
NOT VIOLATE THE ELEVENTH AMENDMENT
In the Supreme Court of the United States
STATE OF KANSAS, PLAINTIFF
STATE OF COLORADO
ON EXCEPTIONS TO THE THIRD REPORT
OF THE SPECIAL MASTER
BRIEF FOR THE UNITED STATES IN OPPOSITION
TO THE EXCEPTIONS OF KANSAS AND COLORADO
SETH P. WAXMAN
Counsel of Record
LOIS J. SCHIFFER
Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
JEFFREY P. MINEAR
Assistant to the Solicitor General
Department of Justice
Washington, D.C. 20530-0001
The United States will address the following questions:
1. Whether a money damages remedy based, in part, on the aggregate losses
incurred by past, present, and future Kansas water users due to Colorado's
depletion of stateline flows of the Arkansas River violates the Eleventh
Amendment. (Colorado Exception No. 1).
2. Whether the Special Master erred in recommending that a money damages
remedy include prejudgment interest beginning in 1969. (Colorado Exceptions
Nos. 2 & 3; Kansas Exception).
In the Supreme Court of the United States
No. 105, Original
STATE OF KANSAS, PLAINTIFF
STATE OF COLORADO
ON EXCEPTIONS TO THE THIRD REPORT
OF THE SPECIAL MASTER
BRIEF FOR THE UNITED STATES IN OPPOSITION
TO THE EXCEPTIONS OF KANSAS AND COLORADO
The Court has previously held, in Texas v. New Mexico, 482 U.S. 124, 130-132
(1987), that money damages may be awarded against a State as a remedy for
its violation of an interstate compact that apportions the flow of a river
between two States, and it subsequently entered a stipulated judgment in
that case ordering New Mexico to pay $14 million to Texas. See 494 U.S.
111 (1990). See also Virginia v. West Virginia, 246 U.S. 565 (1918) (enforcement
of judgment for money damages for violation of interstate compact to assume
debt); South Dakota v. North Carolina, 192 U.S. 286 (1904) (suit to recover
on bonds); United States v. Michigan, 190 U.S. 379 (1903) (suit to require
Michigan to account for surplus moneys from sale of land to fund construction
Because the parties reached a settlement regarding the amount of damages
to be paid in Texas v. New Mexico, this case presents the first occasion
for the Court to determine the appropriate amount of a monetary remedy for
a violation of an interstate compact apportioning the flow of an interstate
stream. The Master, in a thorough report detailing his analysis of the applicable
law and exploring the potential remedies Kansas may obtain as a result of
Colorado's breach of the Compact, recommended a monetary award based, in
part, on evidence of the injuries to Kansas's water users as a result of
Colorado's breach. Colorado contends that the Eleventh Amendment bars a
State, acting in its parens patriae capacity, from recovering money damages
based on losses to individual water users that occurred as a result of a
violation of an interstate compact. See Colo. Excp. Br. 10-25. We disagree.
The Eleventh Amendment provides, in relevant part, that "[t]he Judicial
power of the United States shall not be construed to extend to any suit
in law or equity, commenced or prosecuted against one of the United States
by Citizens of another State." U.S. Const. Amend. XI. The Eleventh
Amendment prevents a State from suing another State where it is essentially
a nominal party and appears as a "trustee" seeking to enforce
only the personal rights or claims of individual citizens who could not
themselves sue the defendant State. See New Hampshire v. Louisiana, 108
U.S. 76 (1883); North Dakota v. Minnesota, 263 U.S. 365 (1923). The Eleventh
Amendment does not, however, bar a suit brought by a State acting as parens
patriae to its citizens "to prevent or repair harm to its 'quasi-sovereign'
interests." Hawaii v. Standard Oil Co., 405 U.S. 251, 258 (1972). As
the Court stated in North Dakota:
The right of a State as parens patriae to bring suit to protect the general
comfort, health, or property rights of its inhabitants threatened by the
proposed or continued action of another State, by prayer for injunction,
is to be differentiated from its lost power as a sovereign to present and
enforce individual claims of its citizens as their trustee against a sister
263 U.S. at 375-376; see also Maryland v. Louisiana, 451 U.S. 725, 745 n.21
(1981) ("[A]n original action between two States only violates the
Eleventh Amendment if the plaintiff State is actually suing to recover for
injuries to specific individuals."); Hawaii v. Standard Oil Co., 405
U.S. at 259 n.12 ("An action brought by one State against another violates
the Eleventh Amendment if the plaintiff State is actually suing to recover
for injuries to designated individuals.").
The New Hampshire and North Dakota decisions illustrate the circumstances
in which a suit by a State is barred by the Eleventh Amendment because the
State appears only as a nominal party in presenting personal claims of its
citizens, and not as parens patriae seeking to protect the general interests
of the State and its inhabitants. In New Hampshire, citizens of New Hampshire
and New York held bonds issued by the State of Louisiana, payment of which
was in default. The individual holders assigned the bonds to their respective
States, which brought an original action in this Court to recover the amount
due on the bonds. The Court concluded that the States' action was barred
by the Eleventh Amendment because it was a mere subterfuge for recovery
on behalf of the individual bondholders. The States, according to the Court,
were "nothing more nor less than * * * mere collecting agent[s] of
the owners of the bonds and coupons, and while the suits are in the names
of the States, they are under the actual control of individual citizens,
and are prosecuted and carried on altogether by and for them." New
Hampshire, 108 U.S. at 89.2
In North Dakota, the Court ruled that the Eleventh Amendment barred North
Dakota from bringing a damages claim against Minnesota seeking $1 million
"for its inhabitants whose farms were injured and whose crops were
lost" as a result of flooding allegedly caused by Minnesota's use of
the Mustinka River. 263 U.S. at 374. The Court observed:
The evidence discloses that nearly all the Dakota farm owners whose crops,
lands and property were injured in these floods, contributed to a fund which
has been used to aid the preparation and prosecution of this cause. It further
appears that each contributor expects to share in the benefit of the decree
for damages here sought, in proportion to the amount of his loss. Indeed
it is inconceivable that North Dakota is prosecuting this damage feature
of its suit without intending to pay over what it thus recovers to those
Id. at 375. Relying on its decision in New Hampshire v. Louisiana, the Court
ruled that North Dakota was acting, not as parens patriae, but as a trustee,
seeking to present and enforce private claims of its individual citizens.
Ibid. See also Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S.
592, 600 (1982) ("if the State is only a nominal party without a real
interest of its own-then it will not have standing under the parens patriae
The rule that emerges from this Court's cases, then, is that while a State
is not "permitted to enter a controversy as a nominal party in order
to forward the claims of individual citizens," a State may "act
as the representative of its citizens in original actions where the injury
alleged affects the general population of a State in a substantial way."
Maryland v. Louisiana, 451 U.S. at 737. The interests of a State that may
be vindicated in an original action against another State "embrace
its 'quasi-sovereign' interests which are 'independent of and behind the
titles of its citizens, in all the earth and air within its domain.'"
Oklahoma ex rel. Johnson v. Cook, 304 U.S. 387, 393 (1938) (quoting Georgia
v. Tennessee Copper Co., 206 U.S. 230, 237 (1907)). And, as the Court held
in Texas v. New Mexico, the Court may properly award money damages as a
remedy for injury to those interests. See 482 U.S. at 130, 132 n.7.
The Court, in accepting this case as a proper exercise of its original jurisdiction,
determined that Kansas had appropriately commenced the current action to
protect its sovereign and quasi-sovereign interests under the Arkansas River
Compact, and was not acting simply as a trustee for individual Kansas citizens.
Indeed, in Oklahoma ex rel. Johnson v. Cook, supra, this Court specifically
pointed to Kansas's prior suit against Colorado to prevent diversions of
water from the Arkansas River as an example of a proper suit to protect
a State's "quasi-sovereign" interests. See 304 U.S. at 393-394
(citing Kansas v. Colorado, 206 U.S. at 95, 96.). And in this case, unlike
in its earlier suit against Colorado, Kansas's suit also advances its sovereign
interests as a formal party to an interstate compact with Colorado. See
Alfred L. Snapp & Son, Inc., 458 U.S. at 601.
The Master concluded, and Colorado does not dispute, that Kansas is seeking
recovery for injuries to its legitimate quasi-sovereign interest in the
general economic well-being and property of its citizens, interests which
are "independent of and behind the titles of its citizens." Georgia
v. Tennessee Copper Co., 206 U.S. at 237. Accordingly, Colorado's Eleventh
Amendment challenge does not question whether Kansas is properly acting
as parens patriae in bringing
this suit; rather, Colorado asserts that the Eleventh Amendment bars a State
properly acting as parens patriae from being awarded damages that are based,
in part, on the aggregate losses suffered by the State's residents. The
applicability of the Eleventh Amendment, however, depends on the nature
and origin of the claim, and not on the measure of damages in an otherwise
proper monetary award. If the Court determines that a complaint presents
a proper action by a State to protect its sovereign and quasi-sovereign
interest in the general health and welfare of its residents, the calculation
of the amount of money damages to be paid as a remedy for the injury to
the general population of the State cannot convert a proper action between
two States into an impermissible action by citizens of one State against
another State in violation of the Eleventh Amendment.
The Master found that a large area of southwestern Kansas (almost 800,000
acres) suffered from Colorado's violations of the Compact, that the groundwater
resources of Kansas have been permanently damaged, and that increased costs
and lost farm income in the region have caused secondary economic impacts
throughout the State. Third Report 12. The Master, defining the injuries
to the general economic well-being of Kansas's residents as including the
regional increases in farm costs and reduced crop yields, recommended a
damages remedy consisting of the sum of 1) the additional pumping costs
required to replace depletions of usable stateline flow from the Arkansas
River; 2) the historic and projected future cost increases due to the permanent
damage to groundwater resources; 3) the historic crop production losses
due to surface water depletions; 4) the historic and projected future secondary
economic damages to the State as a whole; and 5) the state income taxes
that would have been paid on increased farm income absent depletions. Id.
at 17-86. The recommended damages award was reduced by the amount of federal
income taxes that would have been paid on the lost farm net income due to
depletions. Id. at 35-36.
Colorado argues that the inclusion of the aggregate of individual damages
in the recommended monetary award allows the State to "recover damages
for the benefit of individuals" in violation of the Eleventh Amendment.
Colo. Excp. Br. 19. Colorado misconstrues the Master's reference to injuries
sustained by farmers in calculating the recommended monetary award to Kansas.
The Master did not recommend that a money damages award include a recovery
for any personal claims individual farmers may have in their own right based
on upstream diversions of water, with the proceeds to be paid directly to
those farmers. If Kansas were appearing only as a nominal party in presenting
such private claims, those claims would be essentially the same as those
the Court found to be barred in North Dakota v. Minnesota, supra.
Rather, Kansas is advancing a claim of its own, in its sovereign and quasi-sovereign
capacities, that is based on Colorado's alleged violation of the Compact
and is distinct from any personal claims of individual Kansas citizens.
After this Court held that Colorado had violated the Compact, the Master
determined that damages should be paid to Kansas based on the injury to
Kansas's quasi-sovereign interest in the economic health and welfare of
its residents. The Master calculated those damages as the sum of the damages
for injuries to Kansas's residents, including the direct injuries suffered
by water users-past, present, and future-in the southwestern region of Kansas
as a result of Colorado's violation.
The Eleventh Amendment does not bar a State from recovering full compensation
for injuries to its quasi-sovereign interest in the economic health and
welfare of its residents. In this case, the Master calculated those injuries
to Kansas, in part, by aggregating the direct injuries suffered by past,
present, and future water users in the State. The Master's recommended award
is consistent with the Court's broad discretion in formulating a fair and
equitable remedy in cases under the Court's original jurisdiction and does
not violate the Eleventh Amendment. See Texas v. New Mexico, 482 U.S. at
130 (the Constitution entrusts the Court with sufficient judicial power
to "order a suitable remedy, whether in water or money," and
"the Eleventh Amendment is no barrier, for by its terms, it applies
only to suits by citizens against a State"). Colorado's exception to
the Master's Third Report based on the Eleventh Amendment should be overruled.4
II. IT IS WITHIN THE COURT'S SOUND DISCRETION TO AWARD PREJUDGMENT INTEREST
IN AN ORIGINAL ACTION
In his Third Report, the Master determined that Kansas was injured as a
result of Colorado's depletion of an aggregate of 428,005 acre-feet of usable
stateline flows over the years from 1950 to 1996. Third Report 1, 8-9, 12,
120. The Master recommended an award of money damages to Kansas to compensate
for those injuries. The Master further recommended that prejudgment interest
be granted on the damages from 1969 to the time of judgment. The Master
determined, however, that, because from 1950 to 1968 neither Kansas nor
Colorado was aware that material depletions of the Arkansas River's usable
stateline flows were occurring, the damages for that period should be adjusted
for inflation but should not include an interest rate adjustment for the
lost time value of money.
Kansas has filed an exception to the Master's denial of prejudgment interest
for the period from 1950 to 1968. Colorado has filed an exception to the
award of any prejudgment interest. Colorado asserts that due to the complexity
of determining depletions to usable stateline flows and the fact that there
is no time limitation on actions for violation of an interstate compact,
the Court should apply the common law rule, which generally barred an award
of prejudgment interest on unliquidated claims, absent bad faith or other
exceptional circumstance. Colo. Excp. Br. 28. In the alternative, Colorado
contends that if prejudgment interest is awarded, interest should begin
to run only from 1985, when Kansas first made a formal complaint.5 Id. at
The Court has never directly addressed the issue of prejudgment interest
in the context of interstate original actions. The United States' liability
for interest in original actions, like its liability in other cases, is
governed by the usual principles respecting federal sovereign immunity.6
The liability of the individual States, however, remains an open question.
Prejudgment interest is intended to compensate injured parties for both
the time value of lost money and the effects of inflation. "[P]rejudgment
interest is not awarded as a penalty; it is merely an element of just compensation."
City of Milwaukee v. Cement Division, National Gypsum Co., 515 U.S. 189,
197 (1995). Nonetheless, under the traditional common law approach, "prejudgment
interest could not be awarded where damages were unliquidated, absent bad
faith or other exceptional circumstances." See, e.g., General Motors
Corp. v. Devex Corp., 461 U.S. 648, 653 (1983); see Duplate Corp. v. Triplex
Safety Glass Co., 298 U.S. 448 (1936); Tilghman v. Proctor, 125 U.S. 136
(1888). We do not believe, however, that the common law approach supports
Colorado's contention that this Court should adopt a categorical rule prohibiting
prejudgment interest in original actions between States.
In the first place, the common law rule itself was not absolute; prejudgment
interest was allowed in instances of "bad faith or other exceptional
circumstances." General Motors, 461 U.S. at 653. Moreover, courts have
not always felt bound to follow even that formulation. In fact, it appears
that a majority of jurisdictions have now rejected the traditional, restrictive
approach to awarding prejudgment interest. See Third Report 94; id. App.
Exh. 4. This Court, too, has repeatedly noted that the distinction between
liquidated and unliquidated damages for these purposes is questionable,
and that the rule against prejudgment interest is inconsistent with the
goal of full compensation. Indeed, more than 65 years ago, in Funkhouser
v. J.B. Preston Co., 290 U.S. 163 (1933), the Court stated:
It has been recognized that a distinction, in this respect, simply as between
cases of liquidated and unliquidated damages, is not a sound one. Whether
the case is of the one class or the other, the injured party has suffered
a loss which may be regarded as not fully compensated if he is confined
to the amount found to be recoverable as of the time of breach and nothing
is added for the delay in obtaining the award of damages. Because of this
fact, the rule with respect to unliquidated claims has been in evolution,
* * * and in the absence of legislation the courts have dealt with the question
of allowing interest according to their conception of the demands of justice
Id. at 168-169. See City of Milwaukee, 515 U.S. at 197 ("[T]he liquidated/unliquidated
distinction has faced trenchant criticism for a number of years.");
General Motors Corp., 461 U.S. at 655-656.
In admiralty, where this Court has traditionally felt free to fashion rules
suited to the particular exigencies in that area, the common law rule has
not governed. Instead, in suits in admiralty, prejudgment interest historically
has been recoverable except in "peculiar" or "exceptional"
circumstances. See City of Milwaukee, 515 U.S. at 195 (collecting cases).7
We think the Court similarly should not import the common law rule into
the jurisprudence of suits between States, especially given the criticism
of that rule in other settings. This Court has broad discretion in cases
within its original jurisdiction and is not bound by statutory or common
law rules developed in other contexts. For example, in Texas v. New Mexico,
the Court rejected New Mexico's contention that it was precluded from awarding
post-judgment interest in the absence of any statute authorizing such interest.
482 U.S. at 133 n.8. New Mexico had relied in part on the Court's opinion
in Pierce v. United States, 255 U.S. 398, 406 (1921), which, after noting
the common law rule that judgments do not bear interest, held that post-judgment
interest may not be awarded in the absence of statutory authority. Emphasizing
its broad discretion in original jurisdiction cases, the Court declared
that "we are not bound by this rule in exercising our original jurisdiction."
482 U.S. at 133 n.8. What was true of the common law rule respecting post-judgment
interest in Texas v. New Mexico is true of the common law rule respecting
pre-judgment interest here.
Based on his review of the applicable law, the Master concluded that the
unliquidated nature of Kansas's money damages should not, in and of itself,
bar an award of prejudgment interest. Third Report App. 43. We agree. Because
prejudgment interest is awarded not as a penalty, but as an element of compensation,
application of the traditional common law rule could result in substantial
unfairness to a State that was unquestionably injured by a violation of
an interstate compact, if the amount of the damages was not readily ascertainable
prior to judgment. A strict rule against the award of prejudgment interest
in such cases could also result in an unjustified windfall for the offending
State and undermine a potentially important incentive for States to comply
with the requirements of an interstate compact.
After rejecting Colorado's argument for a categorical rule barring an award
of prejudgment interest, the Master proceeded to determine if "considerations
of fairness," Board of County Comm'rs v. United States, 308 U.S. at
352, suggested that the Court should exercise its discretion to award prejudgment
interest under the circumstances of this case. Following a careful analysis
of all of the equities regarding an award of prejudgment interest, the Master
was convinced that "prejudgment interest adjusting for inflation and
for the loss of use of funds owed should be included in any damage award
for violation of an interstate water compact." Third Report 102.
The Master concluded, however, that an award of prejudgment interest for
the entire period of the violation in this case would not be fair and just.
He relied principally on the lack of knowledge by both parties in the early
years about pumping in Colorado and its impacts along the Arkansas River,
as well as the difficulty of determining the impact of groundwater pumping
on usable stateline flows. Third Report 106 ("Neither state in the
early years saw any wrongdoing, or thought that Kansas was not receiving
its compact share of usable flows of the Arkansas River."); ibid. (Depletions
during this period were discovered only "with hindsight and the benefit
of sophisticated computer modeling."). Based on his finding that by
1968 Colorado knew, or should have known, that post-compact wells were causing
material depletions of usable stateline flows, the Master recommended that
Kansas be awarded actual damages for the period from 1950 to 1968, adjusted
for inflation only. For the period from 1969 to the date of judgment, the
Master recommended that Kansas be awarded prejudgment interest. Id. at 103,
The Master's recommendation concerning an award of prejudgment interest
is based on a thorough evaluation of the relevant considerations of fairness
and justice. The nature of this Court's original jurisdiction and its broad
discretion in formulating fair and equitable remedies in such cases, see
Texas v. New Mexico, 482 U.S. at 130, permits the Court to fashion an appropriate
remedy, including an award of prejudgment interest. The United States believes
that the Master has provided a sound basis for an award of prejudgment interest
that reasonably balances the equities of each State.
The exceptions of Colorado and Kansas to the award of prejudgment interest
and the exception of Colorado to the calculation of the amount of damages
due based on the Eleventh Amendment should be overruled.
SETH P. WAXMAN
LOIS J. SCHIFFER
Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
JEFFREY P. MINEAR
Assistant to the Solicitor General
1 The full text of Article IV-D states as follows:
This Compact is not intended to impede or prevent future beneficial development
of the Arkansas River basin in Colorado and Kansas by Federal or State agencies,
by private enterprise, or by combinations thereof, which may involve construction
of dams, reservoir, and other works for the purposes of water utilization
and control, as well as the improved or prolonged functioning of existing
works: Provided, that the waters of the Arkansas River, as defined in Article
III, shall not be materially depleted in usable quantity or availability
for use to the water users in Colorado and Kansas under this Compact by
such future development or construction.
63 Stat. 147.
2 Among other things, the individual owners were required to fund all costs
and expenses of the litigation, and state law required that all moneys collected
be kept by the State's attorney general, as special trustee, in a separate
account. Those moneys were to be paid over to the owners of the bonds after
the litigation costs were deducted. New Hampshire, 108 U.S. at 89. In the
case of New Hampshire, the individual bondholders also had the right to
choose their own counsel to pursue the claims, and their consent was required
before the claims could be settled. Ibid. Based on those facts, the Court
declared that "[n]o one can look at the pleadings and testimony in
these cases without being satisfied, beyond all doubt, that they were in
legal effect commenced, and are now prosecuted, solely by the owners of
the bonds and coupons." Ibid.
3 In South Dakota v. North Carolina, 192 U.S. 286 (1904), by contrast, a
private bond holder donated his bonds outright to the State of South Dakota.
The Court observed that there could be no "question respecting the
title of South Dakota to these bonds," since "[t]hey [we]re not
held by the State as representative of individual owners, * * * for they
were given outright and absolutely to the State." Id. at 310 (citing
and distinguishing New Hampshire v. Louisiana, supra). The Court concluded
on that basis that the suit was properly regarded as "an action brought
by one State against another to enforce a property right" and was therefore
permitted to go forward. Id. at 318; see Oklahoma ex rel. Johnson v. Cook,
304 U.S. 387, 392-393 (1938) (discussing New Hampshire and South Dakota).
4 There is no requirement in the Master's remedy here, just as there was
not in Texas v. New Mexico (see 482 U.S. at 131-132 & n.7), that any
money awarded to Kansas be paid over to individual farmers who were injured
by upstream diversions in Colorado.
The United States and its agencies and officers are authorized to bring
suits for violations of federal statutes under which private individuals
are also authorized to sue, and the relief ordered in the government's suit
includes the payment of monetary relief to individual victims. In such a
suit, the federal government is advancing its interests, distinct from those
of the individuals who may have personal claims, in enforcing its own laws.
See, e.g., General Tel. Co. v. EEOC, 446 U.S. 318, 326 (1980) ("When
the EEOC acts, albeit at the behest of and for the benefit of specific individuals,
it acts also to vindicate the public interest in preventing employment discrimination.").
The Court made clear in Alden v. Maine, 527 U.S. 706 (1999), that the Eleventh
Amendment is no bar to such a suit by the federal government against a State.
See id. at 759 (discussing 29 U.S.C. 216(c), which allows suits by the Secretary
of Labor to compel the payment of unpaid compensation owed under the Fair
Labor Standards Act). See 527 U.S. at 755 ("In ratifying the Constitution,
the States consented to suits brought by other States or by the Federal
Government."); West Virginia v. United States, 479 U.S. 305, 311 (1987)
("States have no sovereign immunity as against the Federal Government.").
5 The Master noted that Colorado agreed that a "fair and equitable
remedy" would adjust all damages for inflation. Third Report 107. Colorado
appears to be challenging only the award of an adjustment to the damages
for the lost time value of money.
6 This Court has held that "in the absence of constitutional requirements,
interest can be recovered against the United States only if express consent
to such a recovery has been given by Congress." United States v. New
York Rayon Importing Co., 329 U.S. 654, 658-659 (1947). See also Library
of Congress v. Shaw, 478 U.S. 310 (1986).
7 We note as well the general rule that prejudgment interest is due on debts
owed to the federal government, including debts owed by state and local
governments. See, e.g., United States v. Texas, 507 U.S. 529, 533-534 (1993);
Board of County Comm'rs v. United States, 308 U.S. 343, 350-353 (1939).