Rand Props., LLC v. Filippini, No. 66933, 2016 WL 1619306 (Nev. Apr. 21, 2016) (holding that: (i) a person who has acquired a right to a quantity of water from a stream may take it at any point of the stream and may change the character of use as long as it does not affect the rights of others; (ii) stock water rights on public lands pass by chain of title in Nevada; and (iii) a private party may convey a stock water appropriation certificate).

On June 7, 2011, Daniel and Eddyann Filippini (“Filippini”) filed a complaint to adjudicate stock and irrigation water rights on Trout Creek against Julian Tomera Ranches, Inc. (“Tomera”), and Rand Properties, LLC. (“Rand”). The Sixth Judicial District Court, Lander County adjudicated the case on April 8, 2013, and established priority dates for each party’s stock and irrigation water rights. Rand appealed to the Supreme Court of Nevada on grounds that the district court erred in its finding of priority dates, stock water rights title passage, and conveyance of a stock appropriation certificate.

First, Rand asserted that its priority date began in 1869, and that the district court erred by finding that Rand’s priority date began in 1901. The district court found that a change in the place of use on Trout Creek by Rand’s predecessors in interest created a new appropriation instead of a continuation of the chain of title because it occurred before statutory enactment of a law allowing for one to change the place of use. By setting a later priority date, the district court did not rule on whether Rand had proper title to its claim dating to 1869.

The Court overturned the district court, finding it relied on an erroneous conclusion of law. The Court looked to Nevada common law and held that a person who has acquired a right to a quantity of water from a stream may take it at any point of the stream, and he may change the character of its use at will as long as it does not affect the rights of others. The Court then vacated and remanded the issue for further proceedings as to Rand’s connection to the chain of title.

Second, Rand argued that the district court did not sufficiently explain its decree that Filippini’s priority date began in 1871 through a connection by title to a predecessor in interest named James Hughes and lacked the evidentiary support of a conveyance. The petitioner claimed that Filippini did not offer evidence that established a connection of title between 1891 and 1897. The Court concluded the district court’s ruling relied upon was insufficient. Under the district court’s ruling, it did not need to rule on the connection of title because it held that Rand’s priority date did not predate 1897. Accordingly, the Court vacated and remanded for further proceedings on the issue.

The Court then turned to the district court’s finding that a predecessor in interest named J.R. Bradley established the domestic stock water priority date held by Filippini in 1862 because Bradley’s outfit drank and diverted water from Trout Creek. The district court found that federal grazing permits acted as a proxy for establishing stock water rights and that proof of a chain of title is unnecessary for stock water rights on public lands owned by the United States and that each party held federal grazing permits. The Court disagreed, finding that stock water rights on public domains pass by chain of title in Nevada and that federal grazing rights and water rights are separate issues. Subsequently, the Court vacated and remanded to the district court to find on the issue of the party’s current rights to the disputed stock water that had passed by a chain of title.

Finally, the Court overturned the district court’s decision to prohibit the conveyance of a grazing certificate to Rand. Leroy Horn originally secured the certificate, certificate 12160, by building the Trout Creek pipeline to water his 600 cattle on a federal grazing allotment in 1979. In 1989, Horn agreed to sell his grazing preferences to Tomera and to sell Badger Ranch to Filippini in a three-way contract. The contract included the federal grazing privileges and all water rights, including stockwatering rights used in connection with the land. However, when Rand purchased Trout Creek Ranch from Broughton in 2009, the deed purported to convey certificate 12160 to it. On appeal, Rand argued that, because a Nevada statute requires conveyance of water rights by deed, Tomera cannot be the proper owner, and Rand was a bona fide purchaser nonetheless.

The district court relied on a Nevada statute prohibiting conveyance of stock water appropriation certificates to conclude that Rand could not own certificate 12160. The district court found that Rand could not put the water to beneficial use under the statute since it did not possess a grazing preference for 600 cattle at the place of use. The Court concluded that the district court erred in determining that the statute prohibited the conveyance to Rand; although the statute prevents issuance of a certificate from the State Engineer, it does not prohibit conveyance of certificates by a private party. Nevertheless, the Court found that Tomera could be the proper owner, since the conveyance occurred prior to the enactment of the statute requiring a person to obtain title to a certificate by deed. The Court then vacated and remanded to the district court to properly review Rand’s bona fide purchaser defense.

Accordingly, the Court reversed the judgment of the district court and remanded for further proceedings.

 

Dalton Kelley

A stock watering tank in Nevada. Flickr user Thure Johnson, Creative Commons.


Lingenfelter v. Lower Elkhorn Natural Res. Dist., 881 N.W.2d 892 (Neb. 2016) (holding that (i) a farmer’s uncontroverted claim that he had received approval to irrigate his land did not constitute approval by a Natural Resource District to irrigate those lands; (ii) a Natural Resources District’s cease-and-desist order against the farmer was proper because the district created a rule that prohibited farmers from irrigating undesignated land without obtaining approval; and (iii) the district’s rules of land designation were not arbitrary and capricious and did not violate the farmer’s due process or equal protection rights).

The Nebraska Ground Water Management and Protection Act (“Act”) created twelve Natural Resources Districts (“NRDs”) within the state. NRDs have authority to regulate ground water. The NRDs’ legislative purpose is to develop, manage, utilize, and conserve groundwater and surface-water. NRDs set limits on total ground water usage, require practices that promote the efficiency of ground water usage, and “limit or prevent the expansion of irrigated acres.” This authority allows NRDs to protect groundwater quantity and quality. State legislators deemed this protection as “essential to the general welfare.” Since the Act’s adoption in 1975, NRDs have gained increasingly more authority to regulate Nebraska’s groundwater. By 1996, the NRDs’ authority was extended to regulate surface water that was hydrologically connected to groundwater.

The Lower Elkhorn Natural Resources District (“District”) is the NRD that regulates groundwater in northeastern Nebraska. The District has the authority to require reports and issue cease-and-desist orders in order to “administer and enforce” the Act and its goals. The District designates two types of lands that may be irrigated. First, it designates “Historically Irrigated Acres” as lands that were irrigated for at least one year between 1999 and 2008 or that are enrolled in a conservation plan. The second designation, “New Groundwater Irrigated Acres” covers other irrigated lands. The District sets rules that govern other irrigated lands. District Rules 13 and 15, promulgated in 2009, prohibited irrigators from receiving a certification for New Groundwater Irrigated Acres without a variance. Rule 14 outlines the certification process and requires either approval by the District’s board of directors or a “look-back” acknowledgement by the District that the land was irrigated between 1999 and 2008.

Lingenfelter, a farmer, purchased Rehfeld farm, located within the District, to use its well to irrigate the nearby Dunaway Farm. Prior to purchasing the farm, Lingenfelter met with a District employee. At this meeting, Lingenfelter and the employee calculated the amount of water available at the Rehfeld Farm. After purchasing the farm, Lingenfelter used the Rehfeld Farm well to irrigate the Dunaway Farm until 2013, when he received a cease-and-desist letter from the District. The letter explained that his irrigated land, which hydrologically connected ground water from the Rehfeld well to surface water on his other land, would likely be prohibited irrigation of New Groundwater Irrigated Acres under Rules 13 and 15.

Lingenfelter requested a hearing with the District over the cease-and-desist letter and sought the District’s certification of his water use. Before the hearing, he received a preliminary decision that the District would not approve his water use and that to continue irrigating, Lingenfelter had to obtain a variance. At the hearing, Lingenfelter could not show that he irrigated that land between 1999 and 2008, nor could he show that the land was certified. The District upheld the cease-and-desist demand, and Lingenfelter appealed to a district court.

Lingenfelter appealed under two causes of action. First, he requested judicial review of the District’s cease-and-desist order. Second, Lingenfelter requested a declaratory judgment that the District’s Rule 14, as well as its rule that defined Historically Irrigated Acres, violated his rights under the Nebraska Constitution and exceeded statutory authority.

Under the APA, the district court reviewed the District’s decision de novo. Under the first cause of action, Lingenfelter argued that the cease-and-desist order was not supported by the facts Lingenfelter presented. Lingenfelter first argued that he received approval to irrigate the Dunaway Farm in the meeting with a District employee and thus the district court should estop the District’s cease-and-desist order. He also argued that the District misapplied its own rules in determining the Dunaway Farm was not “irrigated acres.” Finally, he argued that Rule 14’s look-back provision was arbitrary and capricious.

The district court rejected all of these arguments. First, it stated that Lingenfelter could not prove that the District employee approved his project beyond his subjective assumption that irrigating the Dunaway Farm was “not an issue.” Second, the district court determined that the District did not misapply its own rules when it abstained from deciding whether Lingenfelter’s land constituted irrigated acres. The district court found that this analysis was not relevant because the District issued a cease-and-desist order because Lingenfelter had failed to ask for a variance and not because he was irrigating an area without a Historic Irrigated Acres designation. Third, the district court rejected Lingenfelter’s Rule 14 argument as convoluted and misplaced and because the record was insufficient for review of an administrative rule.

Under Lingenfelter’s second cause of action, he requested that the district court issue a declaratory judgment that Rule 14 violated the Nebraska Constitution’s equal protection and due process clauses. He claimed that because the rule was arbitrary and capricious, it violated his rights to due process. The district court ruled that the District’s rules had a purpose of responding to recent drought conditions, and therefore they could not be arbitrary.

Lingenfelter appealed all of the district court’s decisions to the Nebraska Supreme Court, arguing the district court failed to estop the District’s cease-and-desist order, erroneously found his land to not be irrigated acres, and misunderstood his arbitrary and capricious argument, among other procedural complaints.

Lingenfelter argued to the Court that under the APA, the district court should have viewed the evidence in favor of the plaintiff and estopped the District’s cease-and-desist order.   To this point, Lingenfelter stated that if the district court had viewed the evidence in his favor then it would have understood his meeting with a District staff member as a confirmation that he could irrigate the Dunaway Farm with water from the Rehfeld Farm.

The Court disagreed and stated that because this was an administrative appeal, rather than a complaint to a district court, that the APA did not require the district court to view evidence in favor of the plaintiff. The Court also found that because Lingenfelter’s belief that he could irrigate the Dunaway Farm using water from Rehfeld Farm was contradicted, the district court properly abstained from finding in his favor under Nebraska case law.

The Court also upheld the District’s decision not to apply one of the two irrigation classifications, Historically Irrigated Acres and New Groundwater Irrigated Acres, to Lingenfelter’s land. The Court concluded that because the District chose to not apply one of the designations to the land, it was likely forcing irrigators to seek certification so that it could ensure the water would be used properly. Furthermore, Lingenfelter never offered any evidence that his land had been irrigated between 1999 and 2008. Therefore, the District’s decision was consistent with rules that prohibited New Groundwater Irrigated Acres and prevented any land that was not certified or Historically Irrigated from being irrigated.

The Court also addressed Lingenfelter’s request under the APA for a declaratory judgment that Rule 14 was arbitrary and capricious, and therefore unconstitutional. The Court first noted that causes of action under the APA’s declaratory judgment provision only apply to agencies. The APA’s declaratory judgment provision was inapplicable here because NRDs were not agencies, but rather statutorily created as political subdivisions. Therefore, Lingenfelter could not use the APA to request a declaratory judgment against the District.

Instead of opining on constitutional issues through Lingenfelter’s declaratory judgment, the Court reviewed the district court’s summary judgment on constitutional issues in favor of the District. The Court first reviewed Lingenfelter’s argument that Rule 14 violated his substantive due process rights.

Under the Nebraska Constitution, substantive due process inquiries require a determination of “whether a right in which the plaintiff has a legitimate property interest” was unconstitutionally taken from the plaintiff. A property interest is unconstitutionally taken if the government acted in a way that has no substantial relation to the general welfare. Lingenfelter argued that using water to irrigate the Dunaway Farm was a legitimate property interest and that Rule 14 arbitrarily and capriciously took that interest away. The Court rejected this argument, finding that Rule 14 was reasonably related to ensuring adequate groundwater supplies in Nebraska.

Lingenfelter’s next constitutional argument stated that violated his right to equal protection because it “divides landowners ‘into winners and losers based upon an arbitrary calendar date.’” Nebraska’s equal protection provision is identical to the United States Constitution’s provision. The Court approached this claim under a rational basis test because no suspect class was involved. The Court found Rule 14 was rational because it was driven by a policy that established a baseline of acres historically irrigated in order to conserve groundwater. Accordingly, the Court rejected both of Lingenfelter’s constitutional arguments.

Finally, the Court rejected Lingenfelter’s last three arguments that the District’s authority to make rules was “fundamentally unfair,” that there was insufficient evidence to determine whether Rule 14 was rationally related to the availability of groundwater, and that the district court misunderstood his arguments against the District’s adoption of Rule 14. The Court rejected the first argument because NRDs are statutorily authorized to make such rules. It rejected the second argument because it Act specifically refers to preventing droughts and because the Court properly reviewed the question de novo. The Court rejected the third argument because Lingenfelter did not explain how this error prejudiced the result.

Accordingly, the Court affirmed the district court’s decision and allowed the District to issue its cease-and-desist order without resistance.

Travis Parker

Image: A field in Nebraska. Flickr user Richard Hurd, Creative Commons.


Granite Cnty. Bd. Of Comm’rs v. McDonald, 383 P. 3d 740 (Mont. 2016) (holding the Water Court did not err in its interpretation of a 1906 decree stating a reservoir owner must release not less than 1200 miner’s inches of water for senior downstream appropriators during irrigation season, while also enjoining downstream users from demanding more than the natural flow of the creek above the dam in times of shortage).

This case came before the Supreme Court of Montana as an appeal from a decision of the Water Court regarding the decree from a 1906 case, the interpretation of which clarified disputed water rights between Granite County (“the County”) and McDonald, a private party.

The rights under dispute in is case arose from the terms of the 1906 Decree in Montana Water, Electric and Mining Co. v. Schuh, decided by the United States District Court for the District of Montana. That court granted Montana Water, Electric and Mining Company (“the Company”), the predecessor to Granite County, water rights associated with storage of Flint Creek water in the Georgetown Lake reservoir for the purposes of generating hydro-electric power. McDonald, who is a successor to one of the defendants in that case, objected to the County’s water right claims, two of which arise out of the Schuh Decree.

The root of the controversy in Schuh is the Decree’s seemingly conflicting language. The Decree states that during irrigation season, the Company must cause to flow into the channel of Flint Creek “not less than 1200 miner’s inches” of water below its electric plant, enjoining the Company from diverting water from the creek decreed to downstream users. At the same time, the Decree recognized downstream user’s rights were limited to the natural inflow of the creek. As a result, the Company was prohibited from releasing any amount exceeding that of the “average natural flow” which, during the irrigation season, does not “exceed 1200 miner’s inches” of water.

For purposes of this case the Water Court defined “natural inflow” as that amount of water that would pass through the creek without interference from the dam and defined “storage water” as water from the natural flow of the creek that was impounded for use during times of low natural flow.

Applying the analysis in Schuh, the court had to determine whether the Decree intended that the reservoir release 1200 miner’s inches of storage water throughout the irrigation season, or whether Granite County was only required to release to downstream users that amount equivalent to the natural inflow of the creek above the dam. McDonald argued that the wording in Schuh required the County to maintain a constant flow of not less than 1200 miner’s inches of water for senior downstream appropriators to use at all times during irrigation season regardless of the natural flow of the creek into the reservoir. The County contended it was only required to release the natural inflow of Flint Creek, and not to release storage water from the reservoir when the natural inflow from the creek fell below 1200 miner’s inches.

The Water Court looked to other decisions of the Montana Supreme Court, explaining that limiting downstream users to the natural conditions of a stream at the time of appropriation and not considering storage water as part of the natural flow of a creek was consistent with established Montana Law. The Water Court further explained that Montana case law has recognized that downstream appropriators may not demand release of storage water exceeding the natural inflow of the creek. Though the Schuh Decree did not state this explicitly, the language of the Decree implicitly recognizes this principle. The Schuh court’s decision was consistent with the law as it applies to storage rights, which recognizes natural flow may only be impounded for storage purposes when there is enough water to satisfy rights of senior downstream appropriators. However, a reservoir is not required to release lawfully impounded storage water to downstream appropriators in times of low natural flow.

In interpreting seemingly conflicting statements in the Schuh Decree, the Water Court determined the Schuh court did not intend for downstream users to receive a benefit that the law did not provide; in this case, the mandatory release of storage water is the unintended benefit. Instead, the Schuh court’s instruction that the Company release 1200 miner’s inches “at all times” was designed to ensure that the water that was used in the hydroelectric plant was returned to the creek and not diverted elsewhere. It was not meant to be interpreted that the Company release 1200 miner’s inches at all times during irrigation season regardless of natural flow levels of Flint Creek. The Water Court held this was consistent with the County’s contention that it was not required to release storage water for downstream appropriators to use during times of shortage.

The Supreme Court affirmed the Water Court’s decision, concluding that the Schuh Court did not intend for downstream appropriators to have a right to water stored behind an upstream dam as long as the dam operator released that amount of water which would naturally flow through the stream without the interference of the dam.

The final issue the Water Court contemplated was McDonald’s assertion that principles of claim preclusion estopped the County from contending that it was not required to release 1200 miner’s inches of water at all times during irrigation season. The Water Court dismissed a res judicata argument on grounds that both parties agreed the point under dispute was the interpretation of rights the Schuh Decree already recognized, and interpreting a decree is not the same as re-litigating issues of fact already decided in it. The Water Court next considered McDonald’s claim of judicial estoppel. The court dismissed the claim, finding her argument failed because she showed no evidence the County intended to commit fraud or abuse the judicial process, thus failing to demonstrate all the elements of judicial estoppel.

The Supreme Court affirmed the Water Court’s dismissal of McDonald’s estoppel argument, holding the Water Court properly applied the principles of claim preclusion upon which McDonald relied.

In a specially concurring opinion, Justice McKinnon agreed with the opinion of the court that downstream appropriators have no right to water stored behind an upstream dam as long as the dam operator releases that amount of water which would naturally flow through the stream without the interference of the dam. She concurred specially to opine that the Schuh Decree established a quantity of natural flow above the dam only, and this did not enjoin senior downstream appropriators from using in excess of 1200 miner’s inches when the natural inflow of the Flint Creek exceeded 1200 miner’s inches. Similarly, the Decree did not require the Company to draw from its reservoir to supplement inflow rates when they dropped below 1200 miner’s inches.

Megan McCulloch

Image: Flint Creek in Montana. Flickr user Tim Gage, Creative Commons.


People v. Davis

People v. Davis, 3 Cal. App. 5th 708 (2016) (holding that the State of California could not convict a criminal defendant of simple larceny for capturing flowing water from a natural stream, because the state did not hold a superior possessory interest in water).

In September 2009, Kenneth Davis’s neighbor told the sheriff that Davis diverted water from a stream to irrigate medical marijuana. The neighbor showed authorities a makeshift well and a 2,500 gallon tank buried nearby on a railroad company’s property. The tank captured water that Davis used to irrigate his fields. In February 2010, the California Department of Fish and Game found that Davis’s irrigation system drew from a stream that was part of the state’s water system. Davis did not receive approval from the landowner or the state to create the diversion. As a result, prosecutors charged Davis with illegally diverting the natural course of a stream, as well as petty theft of water.

At trial, the jury found Davis guilty of both charges and a judge placed him on informal probation conditioned upon a ninety-day jail term. Davis sought review by the Appellate Division of Butte County, which affirmed the lower court’s holding but later certified the case for transfer to the Court of Appeals at the defendant’s request. On appeal, the court only considered whether a court could properly convict a criminal defendant of petty theft of water.

The court first discussed whether any party held complete ownership or a superior interest in the disputed water. To bring a larceny claim, the state must show that a party stole personal property subject to ownership. Larceny claims in California require that the victim has a possessory interest in the stolen property that is superior to the defendant’s. In California, the public holds a collective vested interest in the state’s water. This collective ownership of water is a legal fiction, called the public trust doctrine, in which the state is the public trustee of its resources for use by its people. Consequently, ownership rights are usufructuary and incorporated with the needs of others to use the available water resources. Further, because the state holds water in public trust, it is legally inalienable. The state cannot grant property rights to water. However, water can be owned if it is lawfully captured. If the captured water is then released, it again becomes part of the state’s resource trust. Therefore, in common law, water could not be the subject of larceny because it would not be anybody’s personal property.

The court found that the state had not demonstrated that it, nor any other entity, had ownership of the water that was superior to the defendant’s ownership interest. Therefore, the charge was insufficient to support larceny. The railroad company who owned the land that the tank was placed on did not possess a superior interest because it made no attempt to capture the water and thus had not claimed ownership of the water. The court also rejected the state’s argument that its regulatory powers under the public trust doctrine created a superior possessory interest. The court found that, while Davis may have violated California’s regulatory powers, the state could not bring a larceny charge against him because its regulatory responsibility did not create a possessory interest in the water. Therefore, Davis’s conviction was inappropriate because the state failed to meet the ownership or superior interest requirement of a larceny charge.

The court next addressed the state’s claim that it could establish Davis’s ownership through severance of the water from the property. The court stated that water may be held as personal property once it is severed from the land through capture and storage. However, water that is diverted for irrigation is not considered to have been severed and does not qualify as personal property. The prosecution claimed that a larceny charge could be brought according to precedent regarding the severance of oil. Severance of oil converted it to personal property and subjected it to a valid claim of larceny. However, the court found that Davis used the water from the tank for irrigation, which did not create a severance of the water and did not convert the water into personal property. Therefore, the prosecution’s alternate claim was insufficient to bring a larceny charge.

Accordingly, the court reversed Davis’s conviction for petty theft, with instructions to dismiss the count. It otherwise affirmed the judgment against Davis, and ordered an amended probation order.

Ryan Hull

 

Image: Marijuana plants grow in a field. Flickr user Digital Aesthetica, Creative Commons.

 


Agua Caliente Band of Cahuilla Indians v. Coachella Valley Water Dist., 849 F.3d 1262 (9th Cir. 2017) (holding: (i) the United States impliedly reserved a water right when establishing the Agua Caliente Reservation; (ii) the Tribe’s implied federal reserved water right extended to groundwater; and (iii) the Tribe’s state water entitlements to groundwater did not disqualify its implied federal reserved water right).

The Agua Caliente Band of Cahuilla Indians (“Tribe”) inhabited the Coachella Valley prior to California’s Admission to the Union in 1850. Two Presidential Executive Orders issued in 1876 and 1877 established the majority of the Agua Caliente Reservation. Today, the United States holds a series of lands that that are “interspersed in a checkerboard pattern” in trust for the Tribe.

The Coachella Valley contains an arid southwestern dessert. Rainfall averages three to six inches per year and the Whitewater River System, the only source of surface water, produces a fluctuating annual supply between 4,000 and 9,000 acre-feet that primarily occurs in winter months. Currently, the Tribe receives surface water from the Whitewater River System consistent with the Whitewater River Decree, a 1983 California Superior Court adjudication that addressed state-law water rights for river system users. The adjudication resulted in a state court order that allotted water for the Tribe’s benefit, primarily because the United States, as holder of partial Agua Caliente Reservation lands in trust, participated in the adjudication on the Tribe’s behalf. However, the adjudication reserves only a minimal amount of water for the Tribe, providing enough to irrigate nearly 360 acres of the reservation’s approximately 31,369 acres. Additionally, the river system peaks in the winter months, which leaves the allotment filled outside of growing season.

This inconsistent and “virtually nonexistent” surface water supply causes the Tribe to predominantly rely on groundwater for all consumptive use on the reservation during the year. Therefore, almost all regional water is sourced from the Coachella Valley Groundwater River Basin, the aquifer underlying the valley. The Tribe, however, does not pump groundwater on its reservation, but purchases groundwater from the Coachella Valley Water District and the Desert Water Agency (“water agencies”).

Over concern for diminishing groundwater resources, the Tribe filed an action for declaratory and injunctive relief against the water agencies in the United States District Court for the Central District of California. The Tribe requested a declaration that it had a “federally reserved right and an aboriginal right to the groundwater underlying the reservation.” The district court later granted the United States’ motion to intervene as a plaintiff to support the Tribe’s allegation that it had a reserved right to groundwater.

The parties divided the litigation into three phases. With respect to Phase I, the only phase relevant for this case, the district court held that “the reserved rights doctrine applied to groundwater and that the United States reserved appurtenant groundwater when it established the Tribe’s reservation.” Subsequently, the district court certified its order for interlocutory appeal and the water agencies petitioned the Ninth Circuit Court of Appeals for permission to hear the appeal. The court, on de novo review, addressed the only issue on appeal: whether the Tribe had a federal reserved right to the groundwater underlying its reservation. In so doing, the court approached its analysis in three steps.

First, the court determined whether the United States impliedly reserved water when establishing the Agua Caliente Reservation. This question is two-pronged: (1) whether water is reserved if a reservation’s primary purpose anticipates water use; and (2) if so, whether the Agua Caliente Reservation’s primary purpose contemplated water use.

The court began its analysis by examining the Winters doctrine, and found that it established that “federal reserved water rights are directly applicable ‘to Indian reservations and other federal enclaves, encompassing water rights in navigable and nonnavigable streams.’” However, the Winters doctrine is limited to certain situations; it reserves water necessary to accomplish the purported means of the reservation and reserves water if it is appurtenant to the withdrawn land. Following that understanding, the court differentiated the parties’ and the district court’s application of the Winters doctrine that specifically addressed whether the Tribe’s reserved right extended to groundwater from the more overarching issue concerning whether the mere existence of a federal reserved right depended on the Agua Caliente Reservation maintaining an implicit right to use water.

The court then evaluated the first prong when addressing the Tribe’s implied reserved right to water. The court invoked United States v. New Mexico and reasoned, “the federal purpose for which land was reserved is the driving force behind the reserved rights doctrine.” Further, that the New Mexico Court patterned a consistent conclusion whenever the reserved water rights doctrine is raised—an insufficient water supply defeats the purposes of the reservation. Therefore, the court adopted New Mexico’s holding that water is reserved when the reservation’s primary purpose foresees water use. The court then evaluated the second prong, whether the Tribe’s primary purpose contemplated water use. To answer this question, the court synthesized the Executive Orders establishing the Agua Caliente Reservation and Supreme Court precedent to conclude that “the primary purpose underlying the establishment of the reservation was to create a home for the Tribe, and water was necessarily implicated in that purpose.” Therefore, the United States impliedly reserved water for the Tribe.

Second, the court addressed whether the Tribe’s implied reserved water right extended to the Agua Caliente Reservation’s underlying groundwater. The court reiterated the Winters doctrine requirements and determined that although the Tribe met the first requirement that the reservation’s purported means necessitated water use, the second requirement that unappropriated water must be appurtenant to the reservation remained. To find a resolution, the court reasoned that appurtenance is not limited to surface water and extrapolated from Supreme Court precedent that the United States can protect groundwater and, along that vein, impliedly reserved water may include appurtenant groundwater. Further, the court considered the Tribe’s reliance on groundwater when reasoning that the minimal surface water availability conditions the Tribe’s survival on groundwater access. From this line of reasoning, the court clarified that the Winters doctrine purported to provide sustainable livelihoods to Tribes inhabiting reservations in arid areas, like the Agua Caliente Reservation, and included access to both appurtenant surface water and groundwater. Therefore, the Tribe’s implied reserved water right included groundwater.

Third, the court addressed whether the above two holdings withstood the water agencies’ arguments that: (1) the Tribe received water pursuant to California’s correlative rights doctrine; (2) the Tribe did not need a federal reserved right to groundwater in light of its allotted surface water from the Whitewater River Decree; and (3) the Tribe never drilled for groundwater on its reservation. The court rejected each in turn. First, federal water rights, such as the implied federal reserved water right, preempt state water rights. Second, New Mexico did not inquire into the current necessity of water, it focused on whether the reservation’s inception purported such a necessity. Third, lacking historical access to groundwater on the reservation did not foreclose the Tribe’s current access to groundwater. Therefore, compounded with the federal primacy of reserved water rights, the Tribe’s implied federal water right to groundwater remained intact.

Accordingly, the court affirmed the district court holding that the United States impliedly reserved appurtenant groundwater when creating the Agua Caliente Reservation.

                                                                                                        Gia Austin

Image: Santa Rosa and San Jacinto Mountains National Monument, California. Flickr User Bureau of Land Management, Creative Commons.


Silver v. Pueblo Del Sol Water Co., 384 P.3d 814 (Ariz. Ct. App. 2016) (holding: (i) that the Arizona Department of Water Resources’ (“ADWR”) interpretation of “legal availability” was valid under the statute defining “adequate water supply”; (ii) that ADWR must consider an unquantified federal reserved water right for the purposes of an Adequate Water Supply Designation (“AWSD”); and (iii) that ADWR was not required to separately consider the impact of pumping on a conservation area and the local surface or groundwater).

In 1988, the United States Congress designated roughly thirty-six miles of the San Pedro River basin (“Basin”) as a national conservation area (“Conservation Area”), and simultaneously created a federal reserved water right for the Conservation Area “in a quantity sufficient to fulfill the purpose” of protecting the public lands surrounding the River. The Bureau of Land Management (“BLM”) manages the Conservation Area. Since 1989, the BLM has filed three statements of claim for the Conservation Area covering surface and groundwater.

The General Stream Adjudication for the Gila River System (“Gila Adjudication”), active for approximately 40 years, has exclusive jurisdiction to adjudicate the conflicting claims and water rights for the Basin. BLM federal reserved rights are part of the the Gila Adjudication. The Gila Adjudication will determine whether BLM “has a reserved right to the groundwater ‘where other waters are inadequate to accomplish’” the reservation’s purpose and the minimum amount necessary to achieve that purpose.

Pueblo Del Sol Water Company (Pueblo) is a private water company. Pueblo serves an area five miles from the San Pedro River. In June 2011, Pueblo applied for an AWSD, which would allow it to pump groundwater to a planned community subdivision and other projects. Pueblo’s application included its Certificate of Convenience and Necessity (“CC&N”), a certification provided by the Arizona Corporation Commission to public utilities. Pueblo sent its application to ADWR, the agency that reviews AWSD applications. Ariz. Rev. Stat. § 45—108 requires subdivision developments outside active water management areas to show the existence of an adequate water supply as designated by ADWR. Under ADWR’s regulations, an adequate supply requires continuously legally and physically available water to satisfy the proposed needs for at least one hundred years. BLM objected to the Pueblo’s application, citing failure to properly analyze availability of water under ADWR’s regulations.

ADWR rejected the objection and accepted Pueblo’s application. BLM appealed to the Superior Court of Arizona, which reversed ADWR’s decision. The lower court held that ADWR abused its discretion because ADWR failed to meet its statutory duty to ensure that the water source will be available for at least 100 years. The lower court found that ADWR’s definition of “legal availability” erroneously allowed a decision to be based solely on whether the applicant had a CC&N. ADWR and Pueblo appealed the judgment.

On appeal, the Court of Appeals of Arizona decided three issues: (1) whether ADWR’s interpretation of “legal availability” under the statute defining adequate water supply was valid; (2) whether ADWR should have considered BLM’s unquantified reserved water right in its AWSD determination; (3) and whether ADWR was required to consider the impact of pumping on the Conservation Area and local surface and groundwater.

First, BLM argued that ADWR failed to make a valid determination of legal availability when it accepted Pueblo’s application without initially considering the federal government’s senior, unquantified federal reserved right. The court disagreed with BLM, finding that ADWR’s interpretation of legally available was valid when the statutes and regulations were read together.

Legal availability is a two step determination under ADWR’s interpretation of A.R.S. § 45–108(I)(1). First, ADWR must find that the water company is using the water for a reasonable and beneficial use. Second, ADWR must find that the water company has a legal means of delivering the water. ADWR has determined under R12–15–718(C) that the second step means a private water company has a CC&N.

The court agreed with ADWR that Pueblo’s planned use of the water was reasonable and beneficial because they planned to supply a subdivision with the water, thus satisfying the first step. The court also agreed with ADWR that Pueblo demonstrated a legal means of delivering the water because it had a CC&N, thus satisfying the second step. The court explained that ADWR’s determination that the second step requires the company to have a CC&N should be given great weight because the Director is an expert in the field vested with broad powers to achieve groundwater conservation. The court explained further that the department’s requirement that a water company have a CC&N kept with the consumer protection purposes of the statute because it requires the utility to be sufficiently financially viable to deliver, store, and treat such water.

The court also noted that in addition to determining mere legal availability, the Director of the ADWR has a more involved duty to determine whether adequate water is available. To make this determination, the Director is obligated to consider physical availability, which required the director to consider the water already commited to approximately 200 users. The ALJ determined that the Director considered Pueblo’s proposed water source and the demands from other users, and that Pueblo demonstrated that sufficient water would be available for 100 years.

Second, BLM argued that ADWR should consider its unquantified federal reserved water right, which has priority over Pueblo’s. ADWR countered by arguing that determination of those water rights fell under the exclusive jurisdiction of the Gila Adjudication and could not be adjudicated by ADWR in this proceeding. The court agreed with BLM, finding that ADWR not only had jurisdiction to consider the BLM’s claimed right, but had a duty to do so.

The court interpreted the language of R12–15–716(B), which requires the Director to consider the existing uses of groundwater, to include the consideration of the BLM’s federal reserved right. The court found that requiring ADWR to consider BLM’s right was in keeping with the intent of the groundwater statutes to protect Arizona’s economy and welfare, and to provide a comprehensive framework for the management and regulation of grounrwate, without compromising the preservation of the conservation area.

The court stated ADWR could use its expertise and knowledge to create an educated estimate of BLM’s quantified water right. However, the court distinguished ADWR’s duty to consider BLM’s claim from quantifying it. The court explained that quantification was the exclusive domain of the Gila Adjudication.

Finally, BLM argued that Pueblo’s proposed pumping might interfere with the Conservation Area and local surface or groundwater. The court found that ADWR was not required to separately consider the impact of pumping on the Conservation Area and local surface or groundwater. The court did not want to impose an obligation beyond ADWR’s obligation to consider adequate water.

Accordingly, the court vacated the judgment of the superior court, and remanded the action to ADWR with instructions to consider the BLM’s water rights claim in its evaluation of Pueblo’s application.

Trevor C. Lambirth

Image: Snow above the San Pedro River valley. Flickr user Lon&Queta, Creative Commons.


Clark Fork Coal. v. Tubbs

Clark Fork Coal. v. Tubbs, 380 P.3d 771 (Mont. 2016) (holding that the Montana Department of Natural Resources and Conservation’s (“DNRC”) rule that required groundwater developments to be physically connected was inconsistent with the plain language of the statutory “combined appropriation” exception to the exemption of certain groundwater developments from the permit requirement).

Montana uses a comprehensive permit system for water appropriation.  Groundwater appropriations of less than thirty-five gallons per minute and ten acre-feet per year can be exempt from the permit requirement.  The law also contains an exception to this exemption.  Under the Act, groundwater appropriators must acquire a permit if the “combined appropriation” from two or more wells or developed springs that draw from the same source exceeds thirty-five gallons per minute and ten acre-feet per year.  Over time, the DNRC promulgated rules to further define “combined appropriation.”  The first of these rules (“the 1987 rule”) explained that groundwater developments need neither to “be physically connected nor have a common distribution system to be considered a ‘combined appropriation.”  The DNRC replaced this rule in 1993 with a rule (“the 1993 rule”) that instead requires a physical connection to exist between appropriations to count as combined.  Using the Act and the 1993 rule, exempt appropriations of groundwater rose by about 3,000 each year, totaling about 113,000.  These appropriations consume large quantities of water.

In response, the Clark Fork Coalition (the “Coalition”), senior water users affected by this consumption, petitioned the DNRC to declare the 1993 rule inconsistent with the statute.  After the DNRC refused, the Coalition petitioned the First Judicial District Court, Lewis and Clark County to invalidate the 1993 rule as inconsistent with the Act and to reinstate the 1987 rule.  The lower court agreed with the Coalition, reinstated the 1987 rule, and further directed the DNRC to initiate rulemaking to develop a new rule consistent with this ruling.  While the DNRC did not appeal the decision, the Montana Well Drillers Association, the Montana Association of Realtors, and the Montana Building Industry Association (the “Well Drillers”) did.  On appeal, the Montana Supreme Court considered whether the lower court erred when it invalidated the 1993 rule, reinstated the 1987 rule, and directed the DNRC to initiate a new rulemaking.

The Court broke the first question into two parts: whether the rule was inconsistent with the plain language of the statute and whether the legislature’s subsequent amendments adopted the interpretation of the 1993 rule.  The Court explained that, when deciding if a rule is inconsistent with statutory language, it must first ascertain the plain language meaning of the statute.  If a statute does not have a plain language meaning, then it is ambiguous.  Once the Court determines whether there is a plan language meaning, it will determine whether a rule is inconsistent or in conflict with the statute.  If it determines there is an inconsistency or conflict, then the rule is invalid.  The Court explained that an agency’s “subsequent inconsistent rules” do not create ambiguity in a statutory terms.  Then the Court explained that statutory amendments do not change the intent of unchanged language.

Applying these rules, the Court examined the plain language meaning of “combined appropriation” using dictionary definitions and grammar rules.  First, it explained that “appropriation” refers to a quantity of water removed.  Second, the Court explained that because “combined” precedes “appropriation,” “combined appropriation” means a combined quantity of water, not a physically combined groundwater development.  This placement does not allow “combined” to modify anything but “appropriation.”  Because the term refers to quantity, and not method of removal, the Court determined that the 1993 rule “effectively swallow[s] up the underlying exception” because it limits the exception to structurally combined appropriations by enabling groundwater appropriators to pump beyond the statutory limit as long as they did not physically combine their pumping systems.  This contradicts the intent of the legislature because it allows combined appropriations of a greater quantity than authorized by statute.  The Court went on to explain that the legislature’s amendments, which continually lowered the quantity allowed for exempt ground developments but left the combined appropriation language untouched, did not adopt the 1993 rule interpretation of the term because it did not modify the combined appropriation language.  Therefore, the intent of the combined appropriation language remained the same, consistent with the plain meaning of the original words and unchanged by the 1993 rule’s interpretation.  The Court rejected DNRC’s 1993 rule.

The second question, whether the lower court erred by reinstating the 1987 rule, appeared to the Court as a question of first impression.  The Court first looked to federal Administrative Procedure Act (“APA”) case law that replaced an invalidated rule with the previous valid rule.  Then it compared this approach to the similar approach for invalidated statutes and looked through the Montana APA for potential inconsistencies. Finding no inconsistencies, the Court adopted the federal approach to invalidated rules and held that lower court did not err by reinstating the 1987 rule.

Finally, the Court considered the Well Driller’s argument that the lower court could not require the DNRC to initiate rulemaking consistent with the order.  The Court reasoned that, because courts have the authority to “pronounce a judgment and carry it into effect,” the lower court could require rulemaking to be consistent with its order.  However, the Court agreed that the District Court could not compel DNRC to initiate a new rulemaking.  Because it is the DNRC’s responsibility to adopt necessary rules, it is the DNRC’s decision whether or not to keep the reinstated 1987 rule.

Accordingly, the Court partially affirmed the lower court’s decision invalidating the 1993 rule.

Justice Jim Rice, dissenting.

Justice Rice dissented.  He did not find the plain language of the statute “clear on its face.” He found it strange that the Court’s ruling implied that the “DNRC inexplicably misinterpreted and misapplied a clear statute for the past 23 years.”  Rather, he thought the Court found the significant increase in exempt appropriations startling and acted as a legislative body to correct a perceived policy failing.

             N. Rioux Jordan

Image: The Clark Fork River, which runs through Montana. Flickr User Micah Sheldon, Creative Commons.


State Eng’r of New Mexico v. Diamond K Bar Ranch, LLC, 385 P.3d 626 (N.M. 2016) (holding: (i) waters diverted from an out-of-state river into New Mexico by ditch remained unappropriated waters of New Mexico subject to the regulatory authority of the New Mexico State Engineer; and (ii) the landowners’ use of water in excess of existing permitted water rights was an illegal use of surface water).

The Animas River flows south from Colorado into New Mexico.  The Ralston Ditch, located in southern Colorado, diverts water from the Animas River into New Mexico.  The Echo Ditch Decree (“Decree”) established the rights of Petitioner, Diamond K Bar Ranch, LLC (“Diamond”) to water diverted by the Ralston Ditch.  The State Engineer of New Mexico (“State Engineer”) brought suit against Diamond for using river waters in excess of the permitted quantity under the Decree.

Diamond claimed it was entitled to appropriate more water than provided in the Decree and filed a motion to dismiss alleging (1) that the State Engineer lacked the regulatory and constitutional authority to enjoin them from the use of river waters when the water was transported by a ditch from Colorado into New Mexico and (2) that the Ralston Ditch was exempt from permitting requirements because it was a “community ditch.”  A district court denied Diamond’s motion to dismiss but certified its ruling for interlocutory appeal.  The appellate court quashed Diamond’s interlocutory appeal and the New Mexico Supreme Court granted Diamond’s petition for writ of certiorari.

The Court first considered Diamond’s argument that the Ralston Ditch was not a “natural watercourse” that flowed into New Mexico and thus not subject to the State Engineer’s authority because the water became private at the point of diversion.  The Constitution of the State of New Mexico broadly granted the State Engineer the authority to regulate the unpermitted appropriation of water of “every natural stream” within the state of New Mexico.  Diamond primarily relied on Turley v. Furman, in which the court found that the New Mexico State Engineer did not have the jurisdictional authority to grant a permit for the construction of a new diversion in Colorado.  Distinguishing Turley v. Furman, the Court noted that the State Engineer made no attempt to exercise authority over the appropriation of out of state waters or the construction of a new out of state ditch, but instead regulated the appropriation of New Mexico surface waters for use on lands in New Mexico.

The Court also recognized that New Mexico allows only a usufructuary right to water and that a person cannot have a private ownership in the corpus of the water.  Accordingly, the Ralston Ditch alone could not create a water right.  The Court rejected Diamond’s argument that waters diverted into New Mexico by ditch conveyance was “by artificial means” and thus rendered its use private because the water never flowed “in a natural stream” within the state of New Mexico.  The Court held that the waters diverted from the Animas River into the Ralston Ditch remained natural, unappropriated waters, subject to the regulation of the State Engineer.

The Court next addressed Diamond’s argument that it was not required to obtain a permit to divert water from the Ralston Ditch waters because it was an existing community ditch.  Community ditches are early New Mexico diversion that do not require a diversion permit pursuant to N.M.S.A. Section 72-5-2.  The Court recognized that the Ralston Ditch was a community ditch constructed in the 1880s and that Diamond’s pre-1907 water rights did not require a permit for the under N.M.S.A. Section 72-5-2.  However, citing several New Mexico statutes, the Court recognized that the exemption applied only to the place of diversion and not to the quantity of water appropriated, and that community ditch users remained subject to the regulation by the State Engineer.  The State Engineer alleged that Diamond had used an amount of water that exceeded its permitted right and that Diamond had used the water to irrigate lands not appurtenant to such rights.  The State Engineer also had authority to regulate Diamond’s water consumption because the Decree stated that “the State Engineer must approve any change” in water use, regardless of whether the ditch is a community ditch.  The Court acknowledged that the Ralston Ditch to the Decree.  The Court held that although Diamond had a vested water right as a community ditch user, they were still subject to regulation by the State Engineer.

Accordingly, the Court affirmed the district court’s denial of Diamond’s motion to dismiss and remanded the case for trial.

Reggie Norris

Image: A New Mexico ditch. Flickr User Mike Tungate, Creative Commons.