In re Nevada State Eng’r Ruling No. 5823, 277 P.3d 449 (Nev. 2012) (holding that jurisdiction over the appeal of a decision by a state water engineer is not limited to the county where the applicant’s water rights lie, but rather could be heard by a court in the county where a party was affected by the decision).

State Engineer Ruling 5823 allocated groundwater rights in the Dayton Valley Hydrographic Basin (“Basin”) located in Lyon County.  Churchill County and the Pyramid Lake Paiute Tribe (“Appellants”) believed that the Basin was already over-appropriated and the new allocations would negatively affect their interests.  They filed appeals in the Third Judicial District Court in Churchill County (“District Court”), invoking Nev. Rev. Stat. § 533.450(1) which provides judicial review “in the nature of an appeal” to anyone who is affected by a decision of the State Water Engineer.

The statute also provides that an appeal “must be initiated in the proper court of the county in which the matters affected or a portion thereof are situated.”  The State Engineer demanded the venue change from Churchill to Lyon County asserting improper venue, but Appellants believed that Nev. Rev. Stat. § 533.405(1) allowed for more than one possible forum and that either court was proper.

The Pyramid Lake Paiute Tribe filed a separate appeal in federal court, United States v. Alpine Land & Reservoir Co., Case Subfile No. 3:73 cv 00203 LDG (D.Nev. 2008), making similar arguments to those in their District Court appeal.  The federal court case, which was decided before the District Court case began, ruled against the Pyramid Lake Paiute Tribe and dismissed their appeal.

The District Court then heard this case.  It held that it is the location of the water rights of the applicant that determines which court has jurisdiction to hear an appeal from a State Engineer’s decision.  Therefore, it lacked subject matter jurisdiction, and could not change the venue.

After Appellants filed this appeal, the Ninth Circuit Court of Appeals vacated Alpine, based on United States v. Orr Water Ditch Co., 600 F.3d 1152 (9th Cir. 2010) (“Orr Water Ditch”) which rejected the proposition that the location of the applicant’s water rights determines jurisdiction under Nev. Rev. Stat. § 533.450(1).  Then, the Supreme Court of Nevada (“Court”) reviewed this case de novo to determine whether the District Court had subject matter jurisdiction in light of the Ninth Circuit’s decision to vacate Alpine.

The Court analyzed the language of Nev. Rev. Stat. § 533.450(1), in particular the phrase “matters affected or a portion thereof.”  It held that the phrase signifies multiple potential forums and that if “a portion” of the “matters affected” are located in a certain county then it is a proper forum for all of the “matters affected.”  The Court further held that Respondents view that “matters affected” only refers to their interests, not those of the Appellants, is unreasonable.

The Court followed the Orr Water Ditch decision and stated that potential problems could occur if only the court of the county where the applicant’s water rights lie had jurisdiction.  The Court noted that the District Court’s decision was at odds with Orr Water Ditch, which, while not mandatory precedent, was persuasive.  The Court then concluded that subject matter jurisdiction was not limited to the location of an applicant’s water rights and the District Court erred in dismissing Appellant’s appeals for lack of subject matter jurisdiction.

Accordingly, the Court vacated and remanded the judgment of the District Court.


Background

Hydraulic fracturing, commonly referred to as “fracking,” is a process used in gas mining, where large amounts of water and some chemicals are pumped into shale rock formations in order to break the shale and release trapped gas. Throughout the past decade, industry has increasingly used fracking in gas production in the United States. Anthony Cugini, Director of National Energy Technology Laboratory, U.S. Department of Energy (“DOE”), estimates that gas production from fracking operations will grow almost fourfold between 2009 and 2035. Currently, several states have gas mining operations that utilize fracking technology, with many more states preparing for future fracking operations. Along with the economic opportunities and the new-found supply of gas, there are increasing concerns about the many impacts of fracking operations. DOE recognized that an increase in fracking brings with it concerns about impacts on both air quality and water quality. DOE has documented five stages where fracking impacts water and water quality: 1) water acquisition; 2) the actual drilling and fracking; 3) collecting the water after it has been used; 4) storing and processing used water; and 5) treatment and disposal. Of particular concern, to many private citizens, is the possible pollution of lakes, streams, and especially drinking water, as a result of fracking operations.

Efforts to Find Water Quality Impacts

In 2011, researchers from Duke University published a peer-reviewed study that linked fracking operations in Pennsylvania to increased methane contamination of drinking water. The study speculated as to three possible reasons for the increased methane contamination: 1) it is the result of natural processes; 2) fracking is releasing methane through the new cracks produced in shale formations; or 3) problems exist with either the equipment used or the procedures followed in the fracking operation. The study suggested that additional research should be conducted to gain a better understanding of the relationship between fracking and water contamination. In addition to a better knowledge of the process, the study suggested that there may be a need for future regulations to govern the fracking process in a way that protects water resources.

In March 2011, at the direction of President Obama, DOE formed a subcommittee of the advisory board on natural gas to examine environmental issues associated with fracking. Five months later, in August 2011, the subcommittee released its initial ninety-day report explaining its findings. As part of the report, the subcommittee presented recommendations that, if implemented, would reduce the environmental impacts from shale gas production. The subcommittee recommended that, in light of the methane contamination study, additional studies be done to establish the validity of the initial study and the degree to which fracking can contaminate drinking water. Additionally, the subcommittee recommended that fracking operations should adopt best practices in development and construction and that measurements and data regarding water use should be publicly reported. Moreover, the initial ninety-day report suggested that agencies should use regulatory authority to inspect and enforce development requirements and to create rules protecting drinking water. Finally, the report recommended that fracking operations be required to disclose what chemicals operators add to the water to make up the fracking fluid.

In its second, and final, ninety-day report, released in November 2011, the subcommittee acknowledged that some of its recommendations, from the previous report, could be immediately implemented while others required more effort before they could be achieved. The subcommittee recognized that both requirements for publicly reported water usage and best practices in development and construction were recommendations that state governments would largely implement. Conversely, the subcommittee explained in its final report that federal agencies should be the primary point of implementation for regulating the disclosure of fracturing fluid composition and for ensuring the completion of new water quality impact studies. As such, DOE initiated a new study to examine whether or not fracking fluids can contaminate drinking water. In the Duke study, researchers found some methane contamination; however, they did not record any fracking fluid contamination of drinking water. A new DOE case study, taking place in the Marcellus Shale in Pennsylvania, is being performed to ascertain whether or not other contaminates, besides methane, are migrating from fracking operations to drinking water. This study will entail adding trace elements to fracking fluids and then, through follow-up monitoring, determining where those fluids move once they are in the ground. Once the case study is completed, DOE will have a better idea of the degree to which hydraulic fracturing can impact water quality.

Conclusion

The DOE subcommittee astutely recognized the need for additional information and studies regarding water quality impacts as a result of fracking. As fracking operations continue to multiply as estimated, it will compound any impacts on water quality. As such, it is imperative that agencies, operators, and citizens understand the implications of fracking operations on water supplies. The DOE is not the only agency trying to better understand the effects of fracking on water quality. The Environmental Protection Agency is currently conducting a study to “assess the potential impacts of hydraulic fracturing on drinking water resources and to identify the driving factors that affect the severity and frequency of any impacts.” Ultimately, studies such as those conducted by DOE and other agencies will prove invaluable in future attempts to regulate fracking and gas production operations in order to protect the nation’s water resources.


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Cal. Pines Prop. Owners Ass’n v. Pedotti, 141 Cal. Rptr. 3d 793 (Cal. Ct. App. 2012) (holding that Pedotti, acting in accord with typical practices of a rancher in Modoc County, acted within the definition of “best efforts,” defined by the court as the diligence of a reasonable person under comparable circumstances).

Robert Pedotti is the owner of the 1,761-acre Diamond C Ranch (“Ranch”) and California Pines Property Owners Association (“Association”) owns land nearby where Donovan Reservoir is located. In 1960 and 1972 the Ranch obtained two licenses for irrigation and other water purposes from the Rye Grass Swale, a source of water for both the Ranch and Donovan Reservoir. Both Pedotti and the Association are assignees of a 1986 water storage agreement (“1986 agreement”) between previous owners. In the 1986 agreement, the previous owner of Donovan Reservoir allowed the Ranch to divert water out of the reservoir for Ranch use. The 1986 agreement required that Pedotti use “best efforts” to maintain the water level of Donovan Reservoir at 4,353 feet above sea level. Since 1993 Pedotti irrigated the Ranch using flood irrigation ditches to divert water from the Reservoir.

Pedotti prevailed in the initial water diversion dispute over the Association. The Association alleged that Pedotti took more water then permitted and failed to use best efforts while maintaining the water level of Donovan Reservoir. Appealing the decision to California’s Third District Court of Appeals (the “court”), the Association made five assertions: (1) the term “best efforts” required fiduciary diligence by Pedotti; (2) the trial court should have considered extrinsic evidence; (3) some findings by the trial court are not supported by the evidence; (4) a showing of breach of contract is not required; and (5) Pedotti’s interest does not have priority over the Association’s. The court, however, only published its decision regarding the first assertion.

On appeal the Association had the burden to affirmatively demonstrate reversible error. The Association argued that the contractual duty Pedotti had, stemming from the 1986 agreement, required more then the trial courts finding of reasonably diligent efforts. The duty owed by Pedotti should be stronger and more akin to a fiduciary duty according to the Association. The 1986 agreement clause only required Pedotti to maintain the water level of Donovan Reservoir with “best efforts,” without defining best efforts. The court, however, disagreed with the Association’s argument.

The court analyzed the “best effort” clause by first looking at what other courts have done in the past. In non-binding but persuasive jurisdictions, the court found opinions holding that a “best efforts” clause does not solely create a fiduciary relationship because the promisor is not acting purely for the benefit of the promisee. Persuasive jurisdictions have instead defined “best efforts” to be “diligence of a reasonable person under comparable circumstances.” No courts in California, however, have explicitly defined the term “best efforts.” In California, courts have construed “best efforts” by using individual facts, while also reconciling the “best effort” clause with the contractual agreement as a whole. The court ultimately agreed that when the contractual language does not speak to the “best effort” requirement, the term “best effort” should mean “diligence of a reasonable person under comparable circumstances.” The court noted that “best efforts” should not require every conceivable effort and does not require performance of actions that will incur substantial losses to the promisor.

The court then looked back to the trial court’s findings to see if it applied an erroneous standard. The trial court explicitly stated that the “best efforts” clause does not create a fiduciary duty and found that using good or typical efforts satisfied the “best efforts” standard. The trial court looked mainly to the best practices of a rancher in the area and Pedotti’s own actions. In Modoc County, where the Ranch was located, flood irrigation was typical. The trial court found that Pedotti would check the irrigation system on a daily basis to make sure not to waste water while irrigating. Pedotti would also irrigated during the winter further ensuring efficiency because water would stay in the soil to the spring. Pedotti also on occasion irrigated when livestock were in the field. The court noted that although a typical practice in Modoc County, this is not necessarily a best practice. Livestock typically compact non-established soil, causing ponding when irrigating, and the court held that fields on the Ranch were established and would not encounter damage. Pedotti also measured the volume of water used so as to not overdraw water. Additionally, Pedotti took less water from the reservoir then his licenses permitted and in 2009 took no water from the reservoir at all because of a low water level. The court found that this evidence supported a “best effort” finding under the “diligence of a reasonable person under comparable circumstances” standard.

Accordingly, the court affirmed the determination that Pedotti acted within the “best efforts” clause of the 1986 agreement because the Association did not demonstrate reversible error.


This summer the country experienced its most widespread drought in 60 years. The nation was hit by triple-digit temperatures and reduced rainfall. The drought affected not only farmers, whose crops were damaged and livestock was threatened, but also the energy system.

The energy system is highly dependent on water and uses even more than the agriculture sector. About half of the water the United States uses daily is solely for cooling power plants.

This connection has already proved problematic. In 2008 power plants came within days of shutting down due to lack of water when a drought struck the Southeast. Additionally, reduced water levels behind dams in the West have lowered energy output and famers in the Midwest must compete against power plants for much needed water.

As per capita consumption increases and global climate change causes more periods of drought, the energy system’s reliance on water will become even more dangerous. The United States should implement a number of solutions in order to alleviate the strain on the limited supply of water and ensure that the energy system is stable and reliable.

The most important and simplest solution is conservation. This applies to both household and agricultural use. Individual households can conserve in many ways from using low water appliances, to watering outside plants efficiently, to simply turning off the tap when they are not using the water. Agriculture can conserve by using irrigation systems that reduce the amount of water lost to evaporation and runoff.

Another solution is to increase the use of certain renewable energy sources. Wind and solar photovoltaic energy use very little water and can potentially supply the entire country with all the energy it needs. The systems for this are not in place yet, but the potential is certainly there. While the private sector has been slow to make the necessary changes, the implementation of stricter carbon emissions standards is a way the government can help encourage the use of renewables, which will in turn save water.

Eating lower on the food chain can also save a great deal of water. Eating less meat and dairy is one of the easiest ways to conserve water. Meat and dairy require not only water for the animals to drink, but also water to grow the animal’s feed. If you are going to eat meat choosing grass-fed, rather than grain-fed, can reduced the amount of water required to produce your meal.

By implementing the suggestions above we can reduce our dependence on such large quantities of water and perhaps lessen the competition between the energy sector and private consumption.


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Garber v. Wagonhound Land and Livestock Co., 279 P.3d 525 (Wyo. 2012) (holding that evidence was sufficient to establish that a transfer of reduced water right would not exceed historic consumption or diversion under existing use or diminished return flow; transfer would not injure other lawful appropriators; and Wyoming State Board of Control reasonably reduced the right available for transfer by four percent to account for loss of tributary inflow resulting from transfer).

In the fall of 2007, VenJohn and Wagonhound (“Petitioners”) petitioned the Wyoming State Board of Control (“Board”) to change the place of use, point of diversion, and means of conveyance for water appropriations on 174.8 acres held by VenJohn for use on Wagonhound’s property. Intervening landowners (“Objectors”) objected to the petition, and the Board held a contested hearing. The Board voted to approve the transfer of water rights attached to 152.5 acres, which included reductions to account for lands VenJohn historically irrigated with contract reservoir water and a four percent loss of tributary inflow as a result of the transfer. Objectors appealed the Board’s decision to the District Court of Converse County, Wyoming. The district court upheld the Board’s decision, and Objectors appealed to the Supreme Court of Wyoming. The Wyoming Supreme Court (“court”) affirmed.

Wagonhound’s property is located approximately 30 miles upstream from VenJohn on the North Platte River. Two tributaries, LaBonte Creek and Wagonhound Creek, enter the North Platte between the historic and proposed points of diversion. These creeks are subject to low or no flow during the late summer. Wagonhound planned to use the addition of VenJohn’s water rights to irrigate crops under three central pivot sprinklers—a system very similar to the system VenJohn historically used.

Objectors first argued that granting the petition would violate the statute governing changes in place of use of water rights, Wyo. Stat. § 41-3-104, which prohibits the transfer of water rights that results in an increase in either the quantity of water used or the rate of diversion under the existing use. Objectors based their claim on the assumption that Wagonhound would divert at the maximum allowable rate under the right for the entire irrigation season and thereby exceed VenJohn’s historic diversion and use by 328 acre-feet. The court applied the substantial evidence standard of review and rejected this assumption, noting that such maximum diversions would be highly unlikely or impossible. The court held that the Board correctly determined the amount available for transfer based on the acreage VenJohn historically irrigated consistent with the duty of water.

Objectors next argued that the transfer would violate the § 41-3-104 prohibition against increasing the historic amount consumptively used under the existing use. Objectors based their claim on the fact that Wagonhound’s complex irrigation system could apply water from the VenJohn right to any of the fields fed by the system, regardless of whether the land was attached to a VenJohn right. The court rejected Objector’s argument as speculative and dismissive of the ability of authorities to regulate water resources. Instead, the court held that on-the-ground factors such as climate and soil type provided evidence to support the Board’s decision.

Objectors further argued that transfer of the VenJohn right would violate § 41-3-104 by reducing return flows. Objectors supported their argument by claiming that Wagonhound diverted water into lined ponds that would allow less return flow than VenJohn’s unlined ponds. The court held that the Board’s decision was reasonable, considering evidence that both VenJohn and Wagonhound’s systems allowed similarly low amounts of return flows.

Objectors also argued that the transfer would violate § 41-3-114 by causing injury to the rights of other appropriators. Objector’s claimed that any negative change in flow resulting from the transfer would injure junior appropriators by increasing the likelihood of an allocation year and regulation of junior rights. The court upheld the Board’s decision that, based on expert testimony, the transfer would not result in measureable changes to the flow of the North Platte that could injure other appropriators.

Objectors also argued that the transferred right should be reduced by 7.6 percent to account for lost tributary inflow resulting from the transfer, as opposed to the four percent reduction approved by the Board. The Objectors based their reduction calculation on an historic average of annual flows at VenJohn’s diversion point, while Petitioner’s expert consultant espoused a calculation based on historic median flow to better account for the disparity between dry months and flood events. The Court deferred to the Board’s expertise and applied a 4 percent reduction, noting the complexity involved in such inflow calculations.

Finally, Objectors argued that the court should reverse the Board’s decision to allow amendment of the petition to meet the §41-3-114 requirement that a petition fully identify ownership of an appropriation or establish sole ownership by the petitioner. The original petition failed to identify the ownership interests of three individuals, and the Board directed Petitioners to amend the petition maps to reflect these omitted interests. The court upheld the Board’s decision, noting that Objectors failed to explain how the Board’s process was inappropriate, in violation of statutory or Board rules, or injurious to other landowners.

Therefore the court rejected Objectors’ arguments and affirmed the decision of the Board allowing for the transfer of the VenJohn right to Wagonhound.


The Water Law Review is excited to be publishing the following scholarly articles in Volume 16, Issue 1 (fall).

Opening the Floodgates and Draining the Great Lakes One Bottle at a Time: How Privatizing Water Resources Threatens the Great Lakes
Rhonda L. Ross

Water, Oil, and Gas: A Legal and Technical Framework
Kent Holsinger and Peter Lemke

Interpreting Water Conservation Standards in Waukesha, Wisconsin: A Local Internalization of International Norms?
Sarah E. Sharp

The diversion exception to the Great Lakes Compact—and its requisite conservation plan—is undergoing its first true test in the form of its inaugural diversion applicant: the city of Waukesha, Wisconsin.  The purpose of this Article is twofold.  First, to describe the process through which Waukesha committed to and devised a conservation plan in response to norms that were developed through the multi-lateral processes of state and province parties to the Great Lakes Compact.  Second, to analyze how the process through which Waukesha developed its plan fits within the theory of transnational, or transboundary, legal process.

To achieve these aims, this Article will provide an overview of Waukesha’s proposed water conservation plan and briefly describe transnational legal process theory.  Next, it will introduce alternative approaches to water conservation employed around the globe.  Finally, it will analyze Waukesha’s proposed plan in light of the other conservation approaches to illustrate how this ostensibly domestic process transcends geographic boundaries and the role it plays in the international conversation about water conservation norms.

The Public Trust Doctrine: What it is, Where it Came From, and Why Colorado Doesn’t (and Shouldn’t) Have One
Stephen H. Leonhardt and Jessica J. Spuhler

A ballot initiative was proposed in 2012 that would have adopted, by constitutional amendment, a “public trust doctrine” for all water in Colorado.  Since 1994, Richard Hamilton and others have proposed a series of similar initiatives to add a public trust doctrine to the state’s constitution.  Several other states, building on common law and state constitutions, have recognized a public trust doctrine (at least in its limited traditional form), and some (most notably California) have extended it as a limitation on water rights.  Colorado, however, has held that its constitutional provisions on water are inconsistent with such a doctrine.

This article reviews the roots and evolution of the public trust doctrine under common law, and the U.S. Supreme Court’s recognition of the doctrine as a question of state law (most recently in the 2012 PPL Montana decision).  It discusses the Colorado Supreme Court’s rejection of the doctrine as inconsistent with legally established water appropriation rights, and the contrasting expansion of the doctrine in some other western states to encompass new elements and uses, including its application to limit water rights.  The article concludes by examining the proposed Colorado public trust ballot initiatives in this framework, including the question of “takings” of water rights and riparian landowners’ rights when such a doctrine is newly applied.

Reconciling Water Law and Economic Efficiency in Colorado Water Administration
Charles W. Howe

SUMMARY: Colorado water law has proven to be adaptable over time as supply and demand conditions have changed. Still, administration of our appropriations (priority) doctrine can result in economically  inefficient patterns of water use. The enforcement of priorities on the South Platte River in 2006 resulted in shutting down 400 highly productive  (but junior)irrigation wells and curtailment of diversions by upstream urban areas. The economic costs of enforcing priorities clearly exceeded any benefits to the parties who put the call on the river. How could situations like this exist  in the presence of active water markets  that should be expected to shift the more senior rights into the more productive uses?

For active water markets to be economically efficient in reconciling such problems, at least two conditions must exist: (a) costs resulting from the transfer process  (transaction costs)must  be kept low and (b) the legal framework must  allow a wide  and imaginative range of transactions to take place, i.e the market must have sufficient “ scope”.  In Colorado, transaction costs remain high because required water court review processes are costly and time consuming  and because  excessive and inconsistent application of the “anti-speculation” doctrine  limits water market scope.

This article concentrates on problems with the anti-speculation doctrine and the closely-linked issue of “beneficial use.”  The purchase of water rights to be packaged and held for future sale to large buyers has been found to be speculative and non-beneficial, resulting in a “chicken and egg” problem in which sellers can’t apply for change in use without a definite buyer but  also in which buyers won’t commit without assurance of change in use. At the same time, some egregious types of speculation  continue to be permitted under  State water law.

Increased efficacy of the water court review process and consistent definition and monitoring of speculation are needed.  In addition, increased flexibility in the allocation of supplies should be enhanced through the adoption of new forms of water transfer institutions such as water banks, land fallowing   and quick “drought lease-outs.”