The following article was written by Matthew Jensen, a partner at Smith Hartvigsen, PLLC, for the Water & The Law newsletter that our firm publishes on a quarterly basis. If you would like to receive an email version of the newsletter, please click here to join our mailing list.
The 2012 General Session of the Utah Legislature runs from Monday, January 23, 2012 through Thursday, March 8, 2012. As a result of some major water-related decisions this past summer from the Utah Supreme Court, there will likely be some significant water bills considered during the session. Because of an apparent bottleneck in legislative research and drafting, many of the proposed bills have not yet been formally processed and do not have a bill number assigned. The following legislative preview is divided into three groups: (1) bills addressing significant policy issues; (2) bills proposing technical or minor revisions, refinements, and/or clarifications to the existing laws; and (3) bills that have been discussed but not released for public review and which may or may not surface during the session.
Bills Addressing Significant Policy Issues
S.B. 11 - Department of Environmental Quality Boards Adjudicative Proceedings - This bill, sponsored by Senator Margaret Dayton, creates a distinct type of review proceedings for permits decisions made by five divisions within the Department of Environmental Quality (i.e., Water Quality, Drinking Water, Air Quality, Radiation Control, and Solid & Hazardous Waste). S.B. 11 provides that a permit order may be reviewed by an administrative law judge (ALJ) on the record. Specifically, only issues raised in the initial permit review process may be addressed on review. The ALJ submits a proposed order to the relevant board, which then makes the final decision on the review. The Board's decision can then be appealed to the Court of Appeals for a review of the decision on the record. The Natural Resources, Agriculture, and Environment Interim Committee recommended passage of this bill.
S.B. 21 - Department of Environmental Quality Boards Revisions - This bill, also sponsored by Senator Dayton, revises many attributes and powers of the various boards associated with the Department of Environmental Quality (DEQ). Specifically, the bill assigns executive functions to the division directors rather than the boards. It also changes the composition of the boards and identifies qualifications of individual members. It requires compliance with attendance and conflict of interest standards. And it transfers some powers and duties previously assigned to the boards to the respective directors of the division in DEQ. This bill is currently 187 pages long and represents a significant shift in how decisions are made within DEQ. The Natural Resources, Agriculture, and Environment Interim Committee recommended passage of this bill.
H.B. 67 - Stormwater Capture Amendments - This bill, sponsored by Rep. Fred C. Cox, amends Utah Code section 73-3-1.5, the rainwater harvesting section, to allow for beneficial use of up to 2,500 cubic feet per parcel (18,701 gallons or 0.057 acre-feet) of water without a water right if the primary purpose of capturing the water is stormwater management or pollution control. A person must first submit a simple form to the State Engineer before beneficially using any captured precipitation. This bill was somewhat of a surprise to the water community and was not discussed by either the Water Coalition or the Executive Water Taskforce.
Bills Making Minor Changes or Technical Revisions
Water and Irrigation Amendments - This bill, which has not yet been made public, will be sponsored by Rep. Neal Hendrickson, and is believed to effect a number of largely technical changes proposed by the State Engineer including the following: (1) an amendment of section 73-1-4 that removes a virtual forfeiture exemption for the sometimes-decades-long period between when the State Engineer issues a proposed determination and when a final decree is issued by the court; (2) an amendment of section 73-2-1 that makes rulemaking related to sewage effluent reuse discretionary for the State Engineer; (3) an amendment of section 73-2-22 that updates the name of the Emergency Management Administration Council; (4) an amendment of section 73-3-12 to further define how the State Engineer should assess proof extensions for wholesale electrical cooperatives beyond fifty years; (5) an amendment of section 73-3-16 that removes the requirement that a submission of proof have both a professional engineer stamp and a notary stamp; (6) an amendment of section 73-3-20 that allows small exchange applications that have lapsed to be reinstated with a later priority date; and (7) an amendment to sections 73-4-3, 73-4-4, and 73-4-11 that provides that notices in general adjudications be completed by the Division of Water Rights rather than the court clerk.
Bills That May Surface During the Session
Change Applications I - For the last four years, the State Engineer has requested that the scope of his review of historical beneficial use in acting upon change applications be more clearly defined by statute. This past summer, the Utah Supreme Court issued the Jensen v. Jones opinion that concluded that the State Engineer lacks authority to consider nonuse of a water right when ruling on a change application. As a result, the Water Coalition and Executive Taskforce have recommended approval of a bill that will give the State Engineer statutory authority to consider nonuse and deny or limit a change application if there is nonuse, using a framework that gives the applicant additional notice and protections.
Change Applications II - During 2011, the Utah Supreme Court issued the Salt Lake City v. Big Ditch Irrigation Co. opinion that determined that a water user may be able to file a change application on a water right even if he is not the record owner of the right. As a result, the Water Coalition and Executive Taskforce have recommended approval of a bill that will allow a change application to be filed only by (1) the record owner of the right, (2) one who has permission from that record owner, or (3) a water company shareholder under Utah Code section 73-3-3.5. This proposed amendment will likely be considered as a consolidated bill with the amendment discussed above as Change Application I.
Change Applications III - As an additional response to the Salt Lake City v. Big Ditch Irrigation Co. case, there has been a proposal to amend Utah Code section 73-3-3 to require that a change application on a water right owned by the federal government as part of Bureau of Reclamation project must be signed by both the federal government and the local sponsor of that project.
State Water Development Commission Amendments - This bill, which has not yet been made public, will be sponsored by Senator Margaret Dayton, and is believed to seek conversion of the commission into a permanent legislative task force or commission that addresses water needs of the state.
Other Bill Request Topics - Navajo Water Rights Compensation Account (C. Watkins), Safe Drinking Water Disclosure Act (R. Barrus), Special District Amendments (J. Stevenson)
Saturday, January 21, 2012
Are You Ready for the Canal Safety Plan Deadline?
The following article was written by David Hartvigsen, a partner at Smith Hartvigsen, PLLC, for the Water & The Law newsletter that our firm publishes on a quarterly basis. If you would like to receive an email version of the newsletter, please click here to join our mailing list.
In response to the tragic loss of life when a landslide breached the Logan & Northern Canal in Logan on July 11, 2009, the Utah State Legislature passed two canal safety bills - 2010 House Bill 298, Land Use Authority Notification of Canal Development, and 2010 House Bill 60, Water Conveyance Facilities Safety Act (Act). The Utah Association of Conservation Districts (UACD) has helped the Logan & Northern Irrigation Company (LNIC) and the Logan, Hyde Park and Smithfield Canal Company (which is allowing LNIC to use part of its canal to get water around the breach) complete a joint Safety Plan on their canal systems. Though a confidential and protected document under the Act, it follows the template plan that is now available to all irrigation companies through UACD and the Utah Division of Water Resources (DWRe).
The purpose of House Bill 298 was to ensure that residential construction projects within close proximity to a canal do not proceed until the canal owner has been given an opportunity to review the project. Thus the canal owner can protect the integrity of the canal system and assist homeowners and developers to safeguard adjacent water structures. Canal owners had until July 1, 2010 to provide a general description of their canal, including contact information, to each county or municipality in which the canal operates. If you haven't provided this information yet, the sooner the better, because a homeowner or developer could argue that damages or losses could have been avoided if this information had been timely provided.
The purpose of House Bill 60 was to encourage canal owners to identify the risks associated with their canal systems and to develop solutions to reduce or eliminate those risks. This information is to be documented in a Water Conveyance Facility Safety Management Plan ("Safety Plan") by no later than May 1, 2013. As a means of promoting compliance with the Act, DWRe may only provide financial assistance to canal companies that have met this deadline, with some limited exceptions. If your canal company has not yet started on the inspections needed for the Safety Plan, you should be including funding in this year's budget and assessments to get that work done because this summer is the last summer before the deadline to do the inspections and field work. It is very difficult to assess site conditions and certain of the risk factors when the canal is under a blanket of snow.
In January 2011, UACD partnered with various state, federal, and private organizations, including the Strawberry-Highline Canal Company, DWRe, and the U.S. Bureau of Reclamation, to produce a Safety Plan template. Canal companies can use this template as they develop their own Safety Plan. The template, as well as the full text of House Bills 60 and 298, are available online here.
The main canal risk factors that must be addressed in the Safety Plan are slope instability and storm water. Subsection 4 of House Bill 60 places the responsibility on the municipalities to identify storm water inlets into canals and estimate the maximum flow that could occur at each inlet. As canal companies have sought to obtain this information from local governments, it has become apparent that many cities do not have accurate data nor up-to-date maps of their storm water drainage systems. On canals with multiple storm water inlets, canal operators have faced the task of balancing water levels so that there was adequate capacity for storm water each time a large rainfall occurred. However, city governments and canal companies have begun to work more closely together for comprehensive storm water management.
A water company may be exempt from the requirement of adopting a Safety Plan depending on the type of water conveyance facility owned by the company. Natural channels and pipelines are not considered water conveyance facilities according to House Bill 60. In addition, since the bill was meant to address the risks to population and infrastructure, canals that don't have any potential risk locations may also be exempt. A potential risk location is defined as a segment of a water conveyance facility that, if it were to fail, would create a high probability of causing loss of human life or extensive damage to infrastructure. To determine if their canals have potential risk locations, canal companies must consider the following parameters: location, elevation, soil conditions, structural instability, water volume or pressure, or other conditions. Each parameter must be evaluated in relation to existing and future urban development.
As water companies continue to implement House Bill 60, there will be additional issues and concerns that come forth. A recent request was made to DWRe to consider different canal systems within a single company as separate entities. The canal company determined that one canal system had no potential risk locations and was therefore exempt from adopting a Safety Plan, even though other canal systems owned by the company, once they have been fully evaluated, may still require the adoption of a Safety Plan. DWRe will evaluate these types of requests on an individual basis.
In response to the tragic loss of life when a landslide breached the Logan & Northern Canal in Logan on July 11, 2009, the Utah State Legislature passed two canal safety bills - 2010 House Bill 298, Land Use Authority Notification of Canal Development, and 2010 House Bill 60, Water Conveyance Facilities Safety Act (Act). The Utah Association of Conservation Districts (UACD) has helped the Logan & Northern Irrigation Company (LNIC) and the Logan, Hyde Park and Smithfield Canal Company (which is allowing LNIC to use part of its canal to get water around the breach) complete a joint Safety Plan on their canal systems. Though a confidential and protected document under the Act, it follows the template plan that is now available to all irrigation companies through UACD and the Utah Division of Water Resources (DWRe).
The purpose of House Bill 298 was to ensure that residential construction projects within close proximity to a canal do not proceed until the canal owner has been given an opportunity to review the project. Thus the canal owner can protect the integrity of the canal system and assist homeowners and developers to safeguard adjacent water structures. Canal owners had until July 1, 2010 to provide a general description of their canal, including contact information, to each county or municipality in which the canal operates. If you haven't provided this information yet, the sooner the better, because a homeowner or developer could argue that damages or losses could have been avoided if this information had been timely provided.
The purpose of House Bill 60 was to encourage canal owners to identify the risks associated with their canal systems and to develop solutions to reduce or eliminate those risks. This information is to be documented in a Water Conveyance Facility Safety Management Plan ("Safety Plan") by no later than May 1, 2013. As a means of promoting compliance with the Act, DWRe may only provide financial assistance to canal companies that have met this deadline, with some limited exceptions. If your canal company has not yet started on the inspections needed for the Safety Plan, you should be including funding in this year's budget and assessments to get that work done because this summer is the last summer before the deadline to do the inspections and field work. It is very difficult to assess site conditions and certain of the risk factors when the canal is under a blanket of snow.
In January 2011, UACD partnered with various state, federal, and private organizations, including the Strawberry-Highline Canal Company, DWRe, and the U.S. Bureau of Reclamation, to produce a Safety Plan template. Canal companies can use this template as they develop their own Safety Plan. The template, as well as the full text of House Bills 60 and 298, are available online here.
The main canal risk factors that must be addressed in the Safety Plan are slope instability and storm water. Subsection 4 of House Bill 60 places the responsibility on the municipalities to identify storm water inlets into canals and estimate the maximum flow that could occur at each inlet. As canal companies have sought to obtain this information from local governments, it has become apparent that many cities do not have accurate data nor up-to-date maps of their storm water drainage systems. On canals with multiple storm water inlets, canal operators have faced the task of balancing water levels so that there was adequate capacity for storm water each time a large rainfall occurred. However, city governments and canal companies have begun to work more closely together for comprehensive storm water management.
A water company may be exempt from the requirement of adopting a Safety Plan depending on the type of water conveyance facility owned by the company. Natural channels and pipelines are not considered water conveyance facilities according to House Bill 60. In addition, since the bill was meant to address the risks to population and infrastructure, canals that don't have any potential risk locations may also be exempt. A potential risk location is defined as a segment of a water conveyance facility that, if it were to fail, would create a high probability of causing loss of human life or extensive damage to infrastructure. To determine if their canals have potential risk locations, canal companies must consider the following parameters: location, elevation, soil conditions, structural instability, water volume or pressure, or other conditions. Each parameter must be evaluated in relation to existing and future urban development.
As water companies continue to implement House Bill 60, there will be additional issues and concerns that come forth. A recent request was made to DWRe to consider different canal systems within a single company as separate entities. The canal company determined that one canal system had no potential risk locations and was therefore exempt from adopting a Safety Plan, even though other canal systems owned by the company, once they have been fully evaluated, may still require the adoption of a Safety Plan. DWRe will evaluate these types of requests on an individual basis.
Thursday, December 29, 2011
Berman v. Yarbrough
The Utah Supreme Court recently issued its opinion in Berman v. Yarbrough. Mr. Berman owns water rights in both Utah and Wyoming that he uses on property in Uinta County, Wyoming. In the early 2000s, Wyoming water officials determined that part of Mr. Berman’s Utah water rights were not properly documented according to Wyoming procedure, and therefore began delivering only a portion of Mr. Berman’s Utah water rights.
Mr. Berman filed suit in Utah district court, seeking (1) to have his Utah water rights quantified and (2) to have the court require the Wyoming water officials to deliver the water he is entitled to under his Utah water rights. The court issued an order that quantified Mr. Berman’s Utah water rights, but did not order the Wyoming water officials to take any action with respect to the Utah water rights.
A few years later, Wyoming water officials again refused to deliver all of Mr. Berman’s Utah water rights. Mr. Berman filed a Motion to Enforce with the Utah district court, in which Mr. Berman asked the court to force the Wyoming water officials to deliver the water he was entitled to under the court’s prior order. The court denied the Motion to Enforce, holding that it did not have jurisdiction to tell Wyoming water officials how to interpret the order. Mr. Berman appealed the court’s decision to the Utah Supreme Court.
The Supreme Court began its analysis by noting that Motions to Enforce are appropriate only when a party fails to comply with his or her legal obligations under a court order or a binding settlement agreement. The Supreme Court also noted that the court order must contain an unequivocal mandate in order for a Motion to Enforce to be appropriate. In this case, the Utah court’s order quantifying Mr. Berman’s Utah water rights did not contain any mandate for Wyoming water officials, let alone an unequivocal mandate. Accordingly, the Utah Supreme Court determined that the Motion to Enforce was procedurally improper, and therefore properly denied.
To read the full opinion, click here.
Mr. Berman filed suit in Utah district court, seeking (1) to have his Utah water rights quantified and (2) to have the court require the Wyoming water officials to deliver the water he is entitled to under his Utah water rights. The court issued an order that quantified Mr. Berman’s Utah water rights, but did not order the Wyoming water officials to take any action with respect to the Utah water rights.
A few years later, Wyoming water officials again refused to deliver all of Mr. Berman’s Utah water rights. Mr. Berman filed a Motion to Enforce with the Utah district court, in which Mr. Berman asked the court to force the Wyoming water officials to deliver the water he was entitled to under the court’s prior order. The court denied the Motion to Enforce, holding that it did not have jurisdiction to tell Wyoming water officials how to interpret the order. Mr. Berman appealed the court’s decision to the Utah Supreme Court.
The Supreme Court began its analysis by noting that Motions to Enforce are appropriate only when a party fails to comply with his or her legal obligations under a court order or a binding settlement agreement. The Supreme Court also noted that the court order must contain an unequivocal mandate in order for a Motion to Enforce to be appropriate. In this case, the Utah court’s order quantifying Mr. Berman’s Utah water rights did not contain any mandate for Wyoming water officials, let alone an unequivocal mandate. Accordingly, the Utah Supreme Court determined that the Motion to Enforce was procedurally improper, and therefore properly denied.
To read the full opinion, click here.
Thursday, December 22, 2011
Liston v. Liston
The Utah Court of Appeals recently issued its decision in Liston v. Liston. Although primarily a divorce case, a portion of the opinion addresses an issue of water law.
In the case, the husband and wife went through divorce proceedings. One of their assets was a home. The couple also had four shares of stock in Holliday Water Company. As part of a mediation agreement, the wife agreed to quitclaim her interest in the home to the husband for $10,000. The husband later asserted that the four shares were appurtenant to the home, and therefore belonged to him pursuant to the mediation agreement and the quitclaim deed from the wife. The trial court disagreed, and held that only one share was necessary to supply water for the home, and that this share therefore went to the husband along with the home. The trial court further held that the other three shares were not appurtenant to the home, and therefore the husband and wife were each entitled to half of the value of the shares, which was determined to be $5,000 per share.
In the appeal, the husband asserted that the trial court was incorrect in its conclusions regarding the three shares. The Court of Appeals, however, affirmed the trial court's holding. The Court of Appeals noted that Utah Code section 73-1-11(4) provides that shares of stock in a mutual water company are not deemed appurtenant to land. Accordingly, the Court of Appeals concluded that the three shares could not have passed with the home when the wife quitclaimed her interest in the home to the husband. Thus, the wife was entitled to $7,500, representing half of the value of the three shares.
As an interesting note, the Court of Appeals included a footnote in its opinion that points out that the parties in the case had confused water shares and water rights. The Court of Appeals made it a point to clarify the difference between a water share and a water right.
In the case, the husband and wife went through divorce proceedings. One of their assets was a home. The couple also had four shares of stock in Holliday Water Company. As part of a mediation agreement, the wife agreed to quitclaim her interest in the home to the husband for $10,000. The husband later asserted that the four shares were appurtenant to the home, and therefore belonged to him pursuant to the mediation agreement and the quitclaim deed from the wife. The trial court disagreed, and held that only one share was necessary to supply water for the home, and that this share therefore went to the husband along with the home. The trial court further held that the other three shares were not appurtenant to the home, and therefore the husband and wife were each entitled to half of the value of the shares, which was determined to be $5,000 per share.
In the appeal, the husband asserted that the trial court was incorrect in its conclusions regarding the three shares. The Court of Appeals, however, affirmed the trial court's holding. The Court of Appeals noted that Utah Code section 73-1-11(4) provides that shares of stock in a mutual water company are not deemed appurtenant to land. Accordingly, the Court of Appeals concluded that the three shares could not have passed with the home when the wife quitclaimed her interest in the home to the husband. Thus, the wife was entitled to $7,500, representing half of the value of the three shares.
As an interesting note, the Court of Appeals included a footnote in its opinion that points out that the parties in the case had confused water shares and water rights. The Court of Appeals made it a point to clarify the difference between a water share and a water right.
Wednesday, November 30, 2011
What Is a Pending Adjudication Claim?
According to the Utah Division of Water Rights, a Pending Adjudication Claim "is a water user claim submitted to the Division as part of a general adjudication, with no other basis for the claim in [the Division's] records, and without the benefit of being published in a proposed determination and affirmed by the district court."
The most common Pending Adjudication Claim is demonstrated by the following example (based on a real matter that I worked on):
Farmer Jones owns 20 acres of land that he irrigates with water from a small creek, just like his family has done since the 1890s. Although Farmer Jones has a valid water right based on diligence (i.e., pre-1903 water use), no diligence claim has ever been filed to put the water right on record. In the early 1970s, the Utah Division of Water Rights initiates a general adjudication in the area. Farmer Jones fills out and submits a Water Users Claim, under which he seeks to establish the 1890 right to divert water from the creek for the irrigation of 20 acres. Unfortunately, however, the general adjudication process is never completed, and no proposed determination or decree is ever published.
The Division of Water Rights would classify Farmer Jones' claimed water right as a Pending Adjudication Claim. Note that it is a "claimed" water right, as the Division does not recognize it as a fully-established water right. The Division of Water Rights will not allow Farmer Jones to take certain actions on his water right (like file a Change Application) until the water right is fully established, which requires that either (1) Farmer Jones files a diligence claim, or (2) a proposed determination or decree is published in the general adjudication. The likelihood of #2 occurring is very low, since it has been 40 years since the general adjudication began. Thus, Farmer Jones would need to file a diligence claim to establish the water right.
Water rights that are classified as Pending Adjudication Claims will also have a large warning on the water rights database that states "Please be aware that the claim under this Water Right has NOT been established in accordance with statute and its validity is in question. Therefore, CAUTION is advised when relying upon this record." For this reason, it may be difficult to sell a Pending Adjudication Claim unless the water right has been established by the filing of a diligence claim.
The most common Pending Adjudication Claim is demonstrated by the following example (based on a real matter that I worked on):
Farmer Jones owns 20 acres of land that he irrigates with water from a small creek, just like his family has done since the 1890s. Although Farmer Jones has a valid water right based on diligence (i.e., pre-1903 water use), no diligence claim has ever been filed to put the water right on record. In the early 1970s, the Utah Division of Water Rights initiates a general adjudication in the area. Farmer Jones fills out and submits a Water Users Claim, under which he seeks to establish the 1890 right to divert water from the creek for the irrigation of 20 acres. Unfortunately, however, the general adjudication process is never completed, and no proposed determination or decree is ever published.
The Division of Water Rights would classify Farmer Jones' claimed water right as a Pending Adjudication Claim. Note that it is a "claimed" water right, as the Division does not recognize it as a fully-established water right. The Division of Water Rights will not allow Farmer Jones to take certain actions on his water right (like file a Change Application) until the water right is fully established, which requires that either (1) Farmer Jones files a diligence claim, or (2) a proposed determination or decree is published in the general adjudication. The likelihood of #2 occurring is very low, since it has been 40 years since the general adjudication began. Thus, Farmer Jones would need to file a diligence claim to establish the water right.
Water rights that are classified as Pending Adjudication Claims will also have a large warning on the water rights database that states "Please be aware that the claim under this Water Right has NOT been established in accordance with statute and its validity is in question. Therefore, CAUTION is advised when relying upon this record." For this reason, it may be difficult to sell a Pending Adjudication Claim unless the water right has been established by the filing of a diligence claim.
Tuesday, October 4, 2011
Utah Stream Access Coalition - Motion for Summary Judgment
A quick update on the Provo River stream access lawsuit between Utah Stream Access Coalition and ATC Realty Sixteen Inc.
First, there have been a few changes in the parties to the lawsuit. The State of Utah has agreed to intervene and defend against the Coalition's constitutional challenges to House Bill 141 passed by the Utah Legislature in 2010. In exchange, the Coalition has agreed to dismiss the Utah Division of Wildlife Resources, the Utah Division of Parks and Recreation, and Sheriff Todd Bonner as defendants.
Second, the Coalition has filed a Motion for Summary Judgment (in essence, a motion for the court to rule in the Coalition's favor without going through a trial). In the Motion, the Coalition argues that HB 141:
"Violates the public's constitutional right to use Utah's natural waters for all recreational activities that use the water and to touch the privately-owned beds of such water in ways incidental to those uses."
"Violates Article XX, Sect. 1 of the Utah Constitution" (public lands held in trust for the people)
"Violates Article V of the Utah Constitution" (distribution of powers between the three branches of government)
"Violates the public trust doctrine" (the principle that public resources should be managed by the government for the benefit of the people)
I have a copy of the Motion for Summary Judgment, and I would be happy to email a copy to anyone who is interested. Click here for my email address.
First, there have been a few changes in the parties to the lawsuit. The State of Utah has agreed to intervene and defend against the Coalition's constitutional challenges to House Bill 141 passed by the Utah Legislature in 2010. In exchange, the Coalition has agreed to dismiss the Utah Division of Wildlife Resources, the Utah Division of Parks and Recreation, and Sheriff Todd Bonner as defendants.
Second, the Coalition has filed a Motion for Summary Judgment (in essence, a motion for the court to rule in the Coalition's favor without going through a trial). In the Motion, the Coalition argues that HB 141:
I have a copy of the Motion for Summary Judgment, and I would be happy to email a copy to anyone who is interested. Click here for my email address.
Wednesday, August 10, 2011
Montana v. Wyoming
The following article was written by Matthew Jensen, a partner at Smith Hartvigsen, PLLC, for the Water & The Law newsletter that our firm publishes on a quarterly basis. If you would like to receive an email version of the newsletter, please click here to join our mailing list.
It is somewhat rare that the U.S. Supreme Court delves into the world of western water law, but it recently did so in a case between the states of Montana and Wyoming. This case is not an appeal of any decision by a lower court, because when one state sues another, the case goes directly to the U.S. Supreme Court for determination. The central issue in the case is whether Wyoming violated the Yellowstone River Compact because Wyoming water users had converted from flood irrigation to sprinkle irrigation, which increased the consumption of water in Wyoming beyond historic (pre-1950) levels.
Wyoming, Montana, and North Dakota entered into the Yellowstone River Compact in 1951, and Congress then ratified the Compact. The Compact provided that beneficial users of water on the Yellowstone River system with priority dates before January 1, 1950 "shall continue to be enjoyed in accordance with . . . the doctrine of appropriation." Montana claimed, among other claims, that more efficient irrigation practices were consuming more water on the Wyoming (upstream) side, which left less water for the pre-1950 Montana water rights. Montana based its claims first on general principles of the prior appropriation doctrine, and second on the Compact's definition of "beneficial use."
The Court concluded that, although "the law of return flows is an unclear area of the appropriation doctrine," the general rule allows a water user to increase his irrigation efficiency even if that harms downstream users. First, the injury that a change in water use cannot injure other water users does not apply to changes in crop type or irrigation method, but applies to changes in points of diversion, or place or purpose of use. Second, most western states allow an appropriator to recapture and reuse water on the same acreage as long as it remains on the property and within the water user's control. Thus, the general rule already allows increased consumption through recapture.
The Court also rejected Montana's second claim that the compact itself strictly limited Wyoming to a maximum amount of depletion. The Court indicated that other compacts like the Colorado River Compact expressly limit depletion amounts, but the Yellowstone River Compact does not. Therefore, the Court concluded that the Compact's definition of beneficial use simple acknowledged a preference for consumptive uses rather than nonconsumptive uses.
Ultimately, this case is not binding on any state court, including Utah courts. The Supreme Court specifically acknowledged that state courts control the doctrine of prior appropriation. Nevertheless, the discussion found in the case is instructive of general principles of western water law.
(Click here to read the full text of the Supreme Court's Opinion)
It is somewhat rare that the U.S. Supreme Court delves into the world of western water law, but it recently did so in a case between the states of Montana and Wyoming. This case is not an appeal of any decision by a lower court, because when one state sues another, the case goes directly to the U.S. Supreme Court for determination. The central issue in the case is whether Wyoming violated the Yellowstone River Compact because Wyoming water users had converted from flood irrigation to sprinkle irrigation, which increased the consumption of water in Wyoming beyond historic (pre-1950) levels.
Wyoming, Montana, and North Dakota entered into the Yellowstone River Compact in 1951, and Congress then ratified the Compact. The Compact provided that beneficial users of water on the Yellowstone River system with priority dates before January 1, 1950 "shall continue to be enjoyed in accordance with . . . the doctrine of appropriation." Montana claimed, among other claims, that more efficient irrigation practices were consuming more water on the Wyoming (upstream) side, which left less water for the pre-1950 Montana water rights. Montana based its claims first on general principles of the prior appropriation doctrine, and second on the Compact's definition of "beneficial use."
The Court concluded that, although "the law of return flows is an unclear area of the appropriation doctrine," the general rule allows a water user to increase his irrigation efficiency even if that harms downstream users. First, the injury that a change in water use cannot injure other water users does not apply to changes in crop type or irrigation method, but applies to changes in points of diversion, or place or purpose of use. Second, most western states allow an appropriator to recapture and reuse water on the same acreage as long as it remains on the property and within the water user's control. Thus, the general rule already allows increased consumption through recapture.
The Court also rejected Montana's second claim that the compact itself strictly limited Wyoming to a maximum amount of depletion. The Court indicated that other compacts like the Colorado River Compact expressly limit depletion amounts, but the Yellowstone River Compact does not. Therefore, the Court concluded that the Compact's definition of beneficial use simple acknowledged a preference for consumptive uses rather than nonconsumptive uses.
Ultimately, this case is not binding on any state court, including Utah courts. The Supreme Court specifically acknowledged that state courts control the doctrine of prior appropriation. Nevertheless, the discussion found in the case is instructive of general principles of western water law.
(Click here to read the full text of the Supreme Court's Opinion)
Tuesday, July 5, 2011
Water Rights Addendum
Beginning July 1 of this year, a person submitting a deed to a county recorder's office may also submit an attached "Water Rights Addendum" (also commonly referred to as a "Deed Rider"). These Water Rights Addenda were originally approved by House Bill 314, passed by the Utah legislature in 2010, which added Section 57-3-109 to the Utah Code.
There are two different forms. The Water Rights Addendum to Land Deeds allows the seller of real estate to specify what water rights (if any) are being conveyed with the land. The Water Rights Addendum to Water Deeds allows the seller of a water right to include additional specification about the water right (or portion of water right) conveyed.
The Water Rights Addenda will be an invaluable tool in clarifying water rights conveyed as part of a real estate transaction. Oftentimes in real estate transactions, there is little or no thought given to the water rights conveyed. Many of the water rights disputes I deal with could have been prevented if the buyer and seller had thought about and specified the water rights conveyed (or not conveyed). The Addenda will go a long way in reducing disputes associated with appurtenance and unclear ownership of water rights--if the Addenda are used correctly.
Even though the Addenda are not required, any buyer or seller of land or water rights will want to use the Addenda, and all real estate agents, title agents, and others involved in real estate transactions should understand and utilize the Addenda. If you are buying or selling land or water rights, it would be wise for you to insist on a Water Rights Addendum being included with the deed.
As a note, an additional bonus of the Addenda is that they can save you the cost of a Report of Conveyance. Under the statute, each county recorder is to forward recorded Addenda to the Division of Water Rights' title department. If the water right owner on the Division's records is the same person as the grantee in the Addendum, the Division will update title without having to file a Report of Conveyance.
There are two different forms. The Water Rights Addendum to Land Deeds allows the seller of real estate to specify what water rights (if any) are being conveyed with the land. The Water Rights Addendum to Water Deeds allows the seller of a water right to include additional specification about the water right (or portion of water right) conveyed.
The Water Rights Addenda will be an invaluable tool in clarifying water rights conveyed as part of a real estate transaction. Oftentimes in real estate transactions, there is little or no thought given to the water rights conveyed. Many of the water rights disputes I deal with could have been prevented if the buyer and seller had thought about and specified the water rights conveyed (or not conveyed). The Addenda will go a long way in reducing disputes associated with appurtenance and unclear ownership of water rights--if the Addenda are used correctly.
Even though the Addenda are not required, any buyer or seller of land or water rights will want to use the Addenda, and all real estate agents, title agents, and others involved in real estate transactions should understand and utilize the Addenda. If you are buying or selling land or water rights, it would be wise for you to insist on a Water Rights Addendum being included with the deed.
As a note, an additional bonus of the Addenda is that they can save you the cost of a Report of Conveyance. Under the statute, each county recorder is to forward recorded Addenda to the Division of Water Rights' title department. If the water right owner on the Division's records is the same person as the grantee in the Addendum, the Division will update title without having to file a Report of Conveyance.
Tuesday, June 28, 2011
Salt Lake City v. Big Ditch Irrigation Company
Today, the Utah Supreme Court issued its opinion in the case of Salt Lake City v. Big Ditch Irrigation Company. The case centers on a 1905 water exchange agreement (“the Agreement”) between Salt Lake City (“the City”) and Big Ditch Irrigation Company (“Big Ditch”). The Agreement states that Big Ditch “grants, bargains and sells” its right to water from Big Cottonwood Creek, and in return, the City would “perpetually and continuously deliver” water suitable for irrigation to the head of Big Ditch’s canal. Big Ditch and the City have operated under the Agreement for over 100 years. However, the amount of water Big Ditch has received from the City has declined over the years, as residential and commercial development in Big Ditch’s historic service area has reduced the number of irrigated acres.
In 2006, Big Ditch and some of its shareholders filed change applications to modify their use of the exchange water received from the City. The City protested, asserting that Big Ditch and its shareholders did not own the water rights, and were therefore not entitled to file change applications. The City then filed suit against Big Ditch and the shareholders, asserting that (1) under the Agreement, the City holds title to the Big Cottonwood Creek water rights and the exchanged water; (2) that Big Ditch and its shareholders do not have a right to file a change application on the exchanged water; (3) that the City is not in breach of its delivery obligations under the Agreement; and (4) that Big Ditch and its shareholders have the contractual right to receive only the amount of water necessary to satisfy the irrigation needs of Big Ditch shareholders whose lands are served by the Big Ditch system. Big Ditch and the shareholders filed counterclaims against the City, asserting among other things that the City was in violation of the Utah Antitrust Act.
In a series of decisions, the district court ruled in favor of the City. Specifically, the district court (1) denied the individual shareholders’ motion to dismiss the City’s claims against them; (2) held that the City holds title to all of the water under the Agreement; (3) held that Big Ditch did not have the right to file change applications on the exchanged water; (4) held that Big Ditch was barred from demanding the full amount of water to which it was entitled under the Agreement; and (5) dismissed the counterclaim against the City for violation of the Utah Antitrust Act.
The district court’s rulings were appealed to the Utah Supreme Court (“the Court”). The Court reviewed each of the five issues outlined above, ultimately concluding that the district court was correct on some issues, but erred on other issues. The Court’s conclusions on each of the five issues are discussed below.
First, the Court held that the district court erred when it denied the individual shareholders’ motion to dismiss the City’s claims against them. The Court noted that the district court had used the wrong legal standard when reviewing the motion to dismiss. Additionally, the Court noted that the shareholders’ rights were derivative of the corporation (Big Ditch), and that the corporation—and not the individual shareholders—were parties to the Agreement. Accordingly, the Court held the individual shareholder had no privity of contract with or duty to the City. Thus, the Court ruled that the individual shareholders were not properly named as defendants and that the district court should have dismissed all of the City’s claims against the individual shareholders.
Second, the Court affirmed the district court’s ruling that the City holds title to the water under the Agreement. The Court noted that under the Agreement, Big Ditch “grants, bargains and sells” its right to Big Cottonwood Creek water to the City. The Court noted that this was conveyance language that passed title of the water rights from Big Ditch to the City. On the other hand, the City agreed to “perpetually and continuously deliver” water to Big Ditch. The Court noted that this was not conveyance language, and therefore did not transfer title to the exchanged water from the City to Big Ditch. In sum, Big Ditch conveyed its water right to the City in exchange for a contractual commitment by the City to deliver water to Big Ditch. Thus, the Agreement vested in the City title to all of the water rights at issue.
Third, the Court held that the district court erred in its conclusion that because Big Ditch had failed to take the full amount of water to which it was entitled under the Agreement in prior years, Big Ditch was estopped from now demanding the full amount of water. The Court concluded that the legal doctrine of equitable estoppel did not apply because there was no inconsistency in Big Ditch’s conduct of taking less than its entitled amount of water in prior years and then later demanding the full amount of water to which it was contractually entitled. Thus, the Court held that the Agreement as originally drafted remains in force, meaning that Big Ditch may take the full amount of water to which it is entitled and that its use of the water is not limited to irrigation use or to use in Big Ditch’s historic service area.
Fourth, the Court held that the district court erred in its conclusion that because Big Ditch was not the appropriator or owner of the exchanged water, Big Ditch was not entitled to file a change application on the water. The Court distinguished prior cases that focused on ownership of the water right, and noted that “one with an entitlement to use water may file a change application,” as long as their right to use the water is not “subsumed to other competing interests.” The Court concluded that because Big Ditch is contractually entitled to receive the exchanged water from the City in perpetuity, Big Ditch is a “person entitled to the use of water” under Utah Code section 73-3-3, and therefore entitled to file change applications on the exchanged water.
Finally, the Court held that the district court properly dismissed the counterclaim against the City for violation of the Utah Antitrust Act. The Court noted that the Act exempts “the activities of a municipality to the extent authorized or directed by state law.” Because municipalities are expressly permitted to acquire water rights and operate water systems, the Court concluded that the City was exempt from the Antitrust Act.
As a final note, although the Court held that Big Ditch may file change applications based on the exchanged water, the Court specifically stated that it was offering no opinion on whether or not the change applications should be approved by the State Engineer. Each change application will still have to go through the administrative process and be reviewed under the applicable standards. It will be interesting to see how these change applications proceed through the change application process and if they will ultimately be approved.
To read the full opinion, click here.
Sunday, June 19, 2011
Jensen v. Jones
This week, the Utah Supreme Court issued its opinion in the case of Jensen v. Jones (formerly known as Hamblin v. Olds and Hamblin v. Clayton). The question answered by the Court was whether the State Engineer can declare forfeiture of a water right as the basis for denying a change application.
The underlying facts of the case are that Ms. Hamblin owned a water right from Spring Creek, a tributary to the Provo River. Ms. Hamblin filed a change application, seeking to move the water right to wells in Highland City. The State Engineer rejected the change application based on his determination that the water right had not been used for over 20 years. Ms. Hamblin filed a petition for judicial review with the district court. The district court upheld the State Engineer's rejection of the change application, concluding that the water right had been automatically lost to forfeiture long before the change application was filed. The district court also held that recent changes to Utah's forfeiture statute--which require court action before a water right is adjudicated forfeited--did not apply retroactively. (To read the full text of the district court's decision, click here.)
The district court's decision was then appealed to the Utah Supreme Court. Ms. Hamblin argued (1) that the State Engineer lacks the authority in the context of a change application to determine that a forfeiture has occurred; and (2) that the water right was not forfeited because there has been no judicial determination of forfeiture. On the other side, the State Engineer argued that the water right had been forfeited automatically many years ago due to nonuse and that the amendments to Utah's forfeiture statute were not retroactive. The Court ultimately agreed with Ms. Hamblin's argument that the State Engineer cannot consider non-adjudicated forfeiture when reviewing a change application, and therefore did not answer the question of whether the amendments to the forfeiture statute apply retroactively.
The Court noted that the State Engineer is an executive officer tasked with administering and supervising the appropriation of water in the state, and that he acts in an administrative capacity only and has no authority to adjudicate water rights. The Court also noted that in the context of evaluating a change application, the State Engineer is limited to applying the criteria contained in Utah Code section 73-3-8, which do not include forfeiture. Further, the Court noted that in previous cases, the State Engineer had conceded that a forfeiture determination was beyond the State Engineer's authority in approving or rejecting a change application. In sum, the Court concluded that the State Engineer exceeded his authority by rejecting Ms. Hamblin's change application on a determination of forfeiture, and therefore reversed the district court's affirmance of the State Engineer's rejection.
It is important to note that the Supreme Court did not determine whether Ms. Hamblin's water right has or has not been forfeited, as it was beyond the scope of the appeal.
To read the full text of the Supreme Court's opinion, click here.
The underlying facts of the case are that Ms. Hamblin owned a water right from Spring Creek, a tributary to the Provo River. Ms. Hamblin filed a change application, seeking to move the water right to wells in Highland City. The State Engineer rejected the change application based on his determination that the water right had not been used for over 20 years. Ms. Hamblin filed a petition for judicial review with the district court. The district court upheld the State Engineer's rejection of the change application, concluding that the water right had been automatically lost to forfeiture long before the change application was filed. The district court also held that recent changes to Utah's forfeiture statute--which require court action before a water right is adjudicated forfeited--did not apply retroactively. (To read the full text of the district court's decision, click here.)
The district court's decision was then appealed to the Utah Supreme Court. Ms. Hamblin argued (1) that the State Engineer lacks the authority in the context of a change application to determine that a forfeiture has occurred; and (2) that the water right was not forfeited because there has been no judicial determination of forfeiture. On the other side, the State Engineer argued that the water right had been forfeited automatically many years ago due to nonuse and that the amendments to Utah's forfeiture statute were not retroactive. The Court ultimately agreed with Ms. Hamblin's argument that the State Engineer cannot consider non-adjudicated forfeiture when reviewing a change application, and therefore did not answer the question of whether the amendments to the forfeiture statute apply retroactively.
The Court noted that the State Engineer is an executive officer tasked with administering and supervising the appropriation of water in the state, and that he acts in an administrative capacity only and has no authority to adjudicate water rights. The Court also noted that in the context of evaluating a change application, the State Engineer is limited to applying the criteria contained in Utah Code section 73-3-8, which do not include forfeiture. Further, the Court noted that in previous cases, the State Engineer had conceded that a forfeiture determination was beyond the State Engineer's authority in approving or rejecting a change application. In sum, the Court concluded that the State Engineer exceeded his authority by rejecting Ms. Hamblin's change application on a determination of forfeiture, and therefore reversed the district court's affirmance of the State Engineer's rejection.
It is important to note that the Supreme Court did not determine whether Ms. Hamblin's water right has or has not been forfeited, as it was beyond the scope of the appeal.
To read the full text of the Supreme Court's opinion, click here.
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