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.
Thursday, December 29, 2011
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 published in the Water & The Law newsletter, which 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.
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.
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.
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.
Wednesday, June 1, 2011
Rules to Remember When Purchasing Water Rights
Below is an article that I recently wrote for Western AgCredit's FenceLines magazine. A PDF copy of the full magazine can be seen by clicking here.
As an attorney whose practice focuses primarily on Utah water law, I often receive phone calls and questions about water rights. The most common questions I receive are about title to water rights: How is a water right properly conveyed? How do I know if the water right I am buying is valid? Is there paperwork I need to fill out with the Utah Division of Water Rights? The purpose of this article is to provide five general rules to remember when purchasing a water right (or land that includes a water right) in Utah.
1. Research Title to the Water Right
Before purchasing a water right, you should research the true ownership of the water right. In other words, does the seller really have title to the water right that they are trying to sell you? A printout from the Division of Water Rights’ database or a copy of the deed the seller received from a prior owner are not sufficient to establish ownership. Title research must be done in the records at the county recorder’s office and at the Division of Water Rights. If proper title research is not done, you run the risk of paying the seller for something that he/she does not own.
2. Consider Purchasing Water Right Title Insurance
When purchasing land, people almost always buy title insurance. However, people don’t generally think of buying title insurance for water rights. Water right title insurance is now available in Utah, and may be an option to consider if you are spending a lot of money to purchase water rights and/or want some assurance regarding the title to the water rights.
3. Research the Status of the Water Right
You should research the water right’s status and history. In other words, is the water right a valid, recognized water right that will allow you to use it in the manner represented to you? There are a lot of potential issues that a water right may have that can only be discovered by a thorough review of the documentation, maps, decrees, etc. on file with the Division of Water Rights.
4. Have the Water Right Conveyed by DeedThe proper way to convey a water right is by deed. As a buyer, you should request that the deed be a warranty deed rather than a quit-claim deed. If you are purchasing land and the water right, both can be conveyed in the same deed, but the deed should clearly state the water right that is being transferred. I prefer to use language such as: “Together with Water Right No. 33-1452, as identified of record with the Utah Division of Water Rights, including all change applications and other applications pertaining thereto.” You may also use the Water Rights Deed Addendum form, which is available on the Division of Water Rights’ website. The deed must be recorded with the County Recorder’s Office in the county where the water is diverted and the county where the water is used (which are generally the same).
5. File a Report of ConveyanceAfter the deed has been conveyed, you need to update the title with the Utah Division of Water Rights by filing a Report of Conveyance. The Division maintains a database of all water rights and associated information, which includes the name(s) of the owner(s) of each water right. Any notices or correspondence that affect a water right will be sent to the owner of record on the Division’s database. The Division does not, however, actively monitor any transfers of water rights; rather, the Division relies on each water right owner to file a Report of Conveyance to notify the Division when ownership transfers.
Water rights are a valuable asset and a vital resource in most farming operations. Unfortunately, however, people purchasing water rights oftentimes do not spend the time necessary to research and evaluate the water rights prior to the purchase. Following the five steps outlined in this article can go a long way in ensuring that you get what you pay for in your next water rights
purchase.
As an attorney whose practice focuses primarily on Utah water law, I often receive phone calls and questions about water rights. The most common questions I receive are about title to water rights: How is a water right properly conveyed? How do I know if the water right I am buying is valid? Is there paperwork I need to fill out with the Utah Division of Water Rights? The purpose of this article is to provide five general rules to remember when purchasing a water right (or land that includes a water right) in Utah.
1. Research Title to the Water Right
Before purchasing a water right, you should research the true ownership of the water right. In other words, does the seller really have title to the water right that they are trying to sell you? A printout from the Division of Water Rights’ database or a copy of the deed the seller received from a prior owner are not sufficient to establish ownership. Title research must be done in the records at the county recorder’s office and at the Division of Water Rights. If proper title research is not done, you run the risk of paying the seller for something that he/she does not own.
2. Consider Purchasing Water Right Title Insurance
When purchasing land, people almost always buy title insurance. However, people don’t generally think of buying title insurance for water rights. Water right title insurance is now available in Utah, and may be an option to consider if you are spending a lot of money to purchase water rights and/or want some assurance regarding the title to the water rights.
3. Research the Status of the Water Right
You should research the water right’s status and history. In other words, is the water right a valid, recognized water right that will allow you to use it in the manner represented to you? There are a lot of potential issues that a water right may have that can only be discovered by a thorough review of the documentation, maps, decrees, etc. on file with the Division of Water Rights.
4. Have the Water Right Conveyed by DeedThe proper way to convey a water right is by deed. As a buyer, you should request that the deed be a warranty deed rather than a quit-claim deed. If you are purchasing land and the water right, both can be conveyed in the same deed, but the deed should clearly state the water right that is being transferred. I prefer to use language such as: “Together with Water Right No. 33-1452, as identified of record with the Utah Division of Water Rights, including all change applications and other applications pertaining thereto.” You may also use the Water Rights Deed Addendum form, which is available on the Division of Water Rights’ website. The deed must be recorded with the County Recorder’s Office in the county where the water is diverted and the county where the water is used (which are generally the same).
5. File a Report of ConveyanceAfter the deed has been conveyed, you need to update the title with the Utah Division of Water Rights by filing a Report of Conveyance. The Division maintains a database of all water rights and associated information, which includes the name(s) of the owner(s) of each water right. Any notices or correspondence that affect a water right will be sent to the owner of record on the Division’s database. The Division does not, however, actively monitor any transfers of water rights; rather, the Division relies on each water right owner to file a Report of Conveyance to notify the Division when ownership transfers.
Water rights are a valuable asset and a vital resource in most farming operations. Unfortunately, however, people purchasing water rights oftentimes do not spend the time necessary to research and evaluate the water rights prior to the purchase. Following the five steps outlined in this article can go a long way in ensuring that you get what you pay for in your next water rights
purchase.
Saturday, May 28, 2011
Utah Stream Access Coalition v. Park
The Utah Stream Access Coalition has filed a second lawsuit seeking access to rivers and streams for recreation. The first lawsuit centered on the Provo River, and was a constitutional challenge to the 2010 stream access law passed by the Utah Legislature. This second lawsuit centers on the Weber River, and was filed in Summit County.
The complaint alleges that the Weber River was navigable when Utah became a state and, therefore, that the bed of the Weber River belongs to the State and not to the landowners adjoining the river. The complaint further alleges that the defendants, who are adjoining landowners, have wrongfully posted 'No Trespassing' signs, erected barbed wire fences across the river, and otherwise attempted to prevent members of the public from accessing the bed of the river. The Coalition is asking the court for a judgment declaring that the bed of the Weber River belongs to the State and for an injunction prohibiting the defendants from denying the public access to the river bed.
The complaint alleges that the Weber River was navigable when Utah became a state and, therefore, that the bed of the Weber River belongs to the State and not to the landowners adjoining the river. The complaint further alleges that the defendants, who are adjoining landowners, have wrongfully posted 'No Trespassing' signs, erected barbed wire fences across the river, and otherwise attempted to prevent members of the public from accessing the bed of the river. The Coalition is asking the court for a judgment declaring that the bed of the Weber River belongs to the State and for an injunction prohibiting the defendants from denying the public access to the river bed.
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