In January 2001, the case of United States v. State of Washington, was filed in the U.S. District Court for the Western District of Washington (No. C01-0047Z). The case was assigned (and remains assigned) to Judge Thomas S. Zilly in Seattle. The United States filed the case on behalf of the Lummi Nation seeking a determination that the Treaty of Point Elliott reserved to the Nation certain rights to surface water on and groundwater under the Lummi and Sandy Point Peninsulas. Water associations, property owners, Whatcom County, and the Washington Department of Ecology were defendants, and the Lummi Nation also intervened.

After years of litigation, a Settlement Agreement Regarding Uses of Groundwater on Lummi Peninsula was negotiated among the major parties. The Settlement Agreement was approved by Judge Zilly in 2007. The Settlement Agreement establishes the position of Water Master to fulfill dispute resolution and other functions specified in the Agreement.