**NOTE - This decision was withdrawn by the Utah Supreme Court and
replaced with an amended decision.
The Utah Supreme Court recently issued its decision in the case of
Rocky Ford Irrigation Company v. Kents Lake Reservoir Company. The case focuses on the issues of water efficiency savings, impairment of others' water rights, and obligations to measure water diversions.
Rocky Ford and Kents Lake are two irrigation companies on the Beaver River system. Both irrigation companies have various direct flow water rights and storage water rights with varying priority dates. In 1931, the Fifth District Court issued the Beaver River Decree, which divided the Beaver River system into an upper portion and a lower portion. Upper water users were allowed to divert water prior to lower water users, despite a later priority date, in part because the lower water users benefitted from return flows from the upper water users' flood irrigation. The Decree also required that all points of diversion be equipped with measuring devices.
In the 1930s and 1940s, Kents Lake filed applications with the State Engineer to construct Three Miles Reservoir in the upper portion of the Beaver River system. Rocky Ford protested the applications, but the State Engineer ultimately approved the applications. In 1953, Rocky Ford and Kents Lake entered into an agreement in which Rocky Ford agreed not to protest future change applications associated with Three Mile Reservoir, and Kents Lake agreed not to oppose Rocky Ford's expansion of its reservoir located in the lower portion of the Beaver River system. Kents Lake later filed a change application, and Rocky Ford did not protest it. Kents Lake later certificated this change application with the State Engineer.
Beginning in the 1970s, Beaver River water users began converting from flood irrigation to sprinkler irrigation. Rocky Ford alleged that it was being harmed due to the reduced return flows from upper water users and due to Kents Lake storing the "saved" water from the efficiency gains in its reservoir. In 2010, Rocky Ford filed a lawsuit against Kents Lake alleging water right interference, conversion of water rights, and negligence. Rocky Ford asserted that its water rights had been impaired by the actions of Kents Lake, including the storage change application and the failure to measure water diversions. Following a trial, the district court ruled in favor of Kents Lake. Rocky Ford then appealed the case to the Utah Supreme Court.
The Court first reviewed Rocky Ford's claims of impairment. The Court determined that even though Kents Lake had filed change applications in the 1950s, the water rights retained their (much earlier) original priority dates. And the Court rejected the "hybrid priority approach" that the priority date of the change applications is relevant to impairment, but the original priority is relevant to distribution. The Court then determined that parties cannot "claim impairment in perpetuity" and that "an impairment claim must be raised during the protest period before the State Engineer." Interestingly, the Court also implied that impairment protests can and should be raised at the proof stage, despite the fact that there is no public notice or protest period when proofs are filed or certificates are issued. Based on these determinations, the Court concluded that Rocky Ford had "failed to participate in any administrative proceedings" and therefore cannot claim impairment now.
The Court next examined whether Kents Lake is allowed to store the water it saves through increased irrigation efficiency. The Court determined that the lower water users "have no claim on runoff before it reenters the stream" and therefore "have no claim against upper water users requiring them to create a return flow." Based on these determinations, the Court concluded that "Rocky Ford has no claim to Kents Lake's efficiency gains."
The Court next examined Kents Lake's obligations to measure its water diversions. Kents Lake asserted--and the district court had agreed--that even though Kents Lake did not measure all of its diversions, it was compliant because it did all measuring required by the State Engineer. But the Court noted that both Utah law (
Utah Code section 73-5-4) and the Beaver River Decree require Kents Lake to measure all of its diversions. Thus, the Court reversed the district court on this point.
The Court finished its opinion by determining that the district court had properly concluded that the 1953 Agreement between Rocky Ford and Kents Lake should not be rescinded, and determining that the district court had erred in granting an award of attorney fees to Kents Lake.
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