Alaska Wilderness League v. Jewell, 788 F.3d 1212 (9th Cir. 2015) (affirming the district court’s ruling that: (i) the Bureau of Safety and Environmental Enforcement’s approval of the challenged oil spill response plans was not arbitrary and capricious; (ii) the Endangered Species Act did not require the Bureau of Safety and Environmental Enforcement to consult with any environmental agencies before approving oil spill response plans; (iii) the Bureau of Safety and Environmental Enforcement was entitled to Chevron deference for its interpretation of the Oil Pollution Act; and (iv) the National Environmental Policy Act did not require the Bureau of Safety and Environmental Enforcement to do an environmental impact statement before approving an oil spill response plan).

The Outer Continental Shelf Lands Act (“OCSLA”) outlines the procedure for exploration and development of oil and gas resources offshore. This process has four stages. First, the Secretary of Interior creates a five-year leasing program under which operators may search and mine for oil and gas. Second, the Secretary must approve the leases under agreed upon terms and conditions. Third, the lessee must provide the Secretary with a plan of exploration and an Oil Spill Response Plan (“OSRP”) pursuant to the Clean Water Act (“CWA”). Fourth, after searching for oil and gas, and successfully finding either, the lessee has must submit a production and development plan to the Secretary for approval.

At the third stage, the Secretary of the Interior has delegated its power to the Bureau of Safety and Environmental Enforcement (“BSEE”) to approve OSRPs to prevent and respond to oil spills. The CWA requires these plans at four levels: national, regional, local, and individual. At the individual level, owners and operators must propose an OSRP for approval that outlines their response to a potential “worst case discharge” of oil or some other hazardous substance.

Shell Gulf of Mexico Inc. and Shell Offshore Inc. (collectively “Shell”) acquired three leases for offshore exploration and production—two leases in the Beaufort in 2005 and 2007, and one in the Chukchi Seas in 2008. Shell complied with all regulations at the time for intended exploration, but due to the Deepwater Horizon oil spill in 2010, the Secretary of the Interior placed a temporary moratorium on all offshore drilling. The United States Department of Interior required owners and operators to provide new information in all OSRPs after the moratorium ended. To comply with the new criteria, Shell updated its OSRPs for its three leases. BSEE approved the updated Beaufort and Chukchi Seas OSRPs.

Alaska Wilderness League, a coalition of environmental groups, sued Secretary of Interior, Sally Jewell, in her official capacity because of the approval of Shell’s three OSRPs. Shell intervened as a co-defendant. On cross-motions for summary judgment, the United States District Court for the District of Alaska (“district court”) ruled in favor of Jewell and Shell. Alaska Wilderness League appealed to the United States Court of Appeals, Ninth Circuit (“Court”). The Court reviewed the granting of summary judgment de novo and reviewed the record of the agency’s action under the arbitrary and capricious standard.

First, Alaska Wilderness League argued BSEE’s approval of the OSRPs was arbitrary and capricious because Shell assumed it would be able to recover ninety to ninety-five percent of any oil spilled in either of the seas via mechanical means. A figure that Alaska Wilderness League claimed was unrealistic and that Shell failed to support with any evidence. The Court did not agree with Alaska Wilderness League’s interpretation, finding instead that Shell could store, not recover, ninety to ninety-five percent of any spilled oil. Further, the Court found that BSEE did not rely on this information in approving Shell’s OSRPs. Therefore, the Court found that the record did not support Alaska Wilderness League’s argument. Accordingly, the Court concluded BSEE’s approval of the OSRPs was not arbitrary and capricious.

The Court next addressed Alaska Wilderness League’s argument that BSEE failed to consult with other agencies in order to comply with the Endangered Species Act (“ESA”). The Court disagreed. The Court reasoned that ESA only triggers consultation when the agency’s involvement is discretionary, and, in this case, BSEE’s approval of the OSRPs was non-discretionary. Therefore, the Court held that ESA did not require BSEE to do a consultation.

The Court then went through a two-step Chevron deference analysis to assess BSEE’s interpretation of the applicable sections of the CWA. At step one of its Chevron analysis, whether the statute in question is ambiguous, the Court found that the CWA was ambiguous in both its structure and its language. The Court found the CWA has ambiguous language because of three pertinent sections: (i) 33 U.S.C. § 1321(j)(5)(A)(i) requires an operator to “prepare and submit . . . a plan for responding, to the maximum extent practicable, to a worst case discharge;” (ii) § 1321(j)(5)(D) lists six requirements that the OSRP “shall” meet; and (iii) § 1321(j)(5)(E)(iii) states that if the OSRP meets all six requirements, then BSEE “shall” approve it.

Specifically, the Court found the text ambiguous as to whether BSEE has the discretion to consider any additional environmental factors in making its determination of an OSRP. The Court found that the “maximum extent practicable” language in § 1321(j)(5)(A)(i) suggested the agency had discretion in its approval of an OSRP. However, the Court also found §§ 1321(j)(5)(D) and 1321(j)(5)(E)(iii) to be a laundry list of requirements that an OSRP must meet. If an OSRP meets those requirements, then BSEE must approve the plan; removing any agency discretion. Additionally, the Court found the statute’s structure ambiguous because of the discretionary language in one section, and the rigid language in the one following it. The Court found this difference created “a statute whose halves do not correspond to each other – giving rise to ambiguity that calls for Chevron deference.” Under this finding of ambiguity, the Court found it must defer to BSEE’s interpretation of the statute as long as its interpretation is reasonable.

The Court then underwent the second step of the Chevron analysis to determine whether BSEE’s interpretation was reasonable. Courts must defer to an agency’s interpretation of an ambiguous statute as long as that interpretation is reasonable. The Court found that BSEE’s interpretation of the statute was reasonable. BSEE argued that § 1321(j)(5)(A)(i) mandated it to promulgate regulations that help operators follow the OSRP requirements listed in § 1321(j)(5)(D). Then, separately, § 1321(j)(5)(D)-(E) lists exactly what the OSRP shall include and the agency shall approve. The Court agreed with BSEE’s interpretation that the statute mandated the agency to publish regulations to outline how operators can comply with the list. The Court also agreed with BSEE’s interpretation that it could not consider anything more than the list when granting an OSRP. The Court, having found BSEE’s interpretation to be reasonable, deferred to the agency’s interpretation.

The Court also found that BSEE’s interpretation was consistent with longstanding agency policy. The Court explained how BSEE has a history of regulating in conformity with the goals of the Oil Pollution Act that amended the CWA. The legislative history of the Oil Pollution Act suggests that Congress meant to create specific requirements of OSRPs, not guidelines open to interpretation by the courts or agencies.

Lastly, the Court addressed Alaska Wilderness League’s four additional arguments. First, Alaska Wilderness League argued that the similarity in language between the requirements listed in § 1321(j)(5)(E) and the section of the statute governing federal response plans to spills subjected the approval of OSRPs to ESA consultation. However, the Court disagreed with this interpretation. Under the sections of the statute governing federal response plans, an ESA recommendation may prompt agency action, but the plan “shall include, but not be limited to” a number of factors. This federal response plan requirement, unlike that in § 1321(j)(5)(E), does not limit the factors to those listed.

Second, Alaska Wilderness League argued that the regulations contain no language to support approval of the OSRPs just because they address the clean up plan to some degree. The Court quickly dismissed this argument. The Court found that the statute states that the purpose of the OSRP is to prepare a response plan for an accident at sea resulting in release of oil, and that Congress ordered these plans be in compliance with “the Oil Pollution Act’s amendments to the Clean Water Act.” The Court deferred to BSEE’s interpretation that the OSRPs were sufficient and justly approved, despite any explicit language governing BSEE’s decision.

Third, Alaska Wilderness League argued that BSEE had discretion over whether OSRPs met the criteria in § 1321(j)(5)(E), thus triggering ESA consultation. The Court found this argument to be at odds with previous Supreme Court’s rulings. The Supreme Court previously held that “ESA cannot defeat an agency’s nondiscretionary statutory directive.” The Court held that BSEE’s act of granting OSRPs was nondiscretionary, and so it did not trigger any interagency review under ESA.

Lastly, Alaska Wilderness League claimed that BSEE violated the National Environmental Policy Act (“NEPA”) by failing to do an environmental impact statement (“EIS”) before approving the OSRPs. Under NEPA, all federal agencies must conduct an EIS before conducting any “major Federal action” that significantly affects the environment. However, the Court noted that there is an exception to this requirement when the environmental impact is the result of a decision over which the agency had no discretion. The Court ruled that because BSEE had no discretion over the approval of the OSRPs under the statute, it also had no discretion over the environmental impacts, making BSEE exempt from performing an EIS.

Accordingly, the Court affirmed the district court’s ruling.

D.W. Nelson, Senior Circuit Judge, dissenting.

Senior Circuit Judge Nelson agreed with the majority’s ruling that BSEE acted appropriately when it approved the OSRPs in question, but dissented to all other aspects of the majority opinion. Specifically, the dissent agreed with Alaska Wilderness League’s contention that BSEE’s action was discretionary, triggering an ESA consultation.

The dissent also disagreed with the majority’s finding that BSEE was exempt from performing a NEPA analysis. The dissent did not agree with the majority’s interpretation of the NEPA exception. The dissent argued that as a regulator of environmental consequences “the [BSEE] did in fact possess the kind of discretion that necessitated NEPA review.”

William James Tilton

Image: Deepwater Horizon oil spill, Gulf of Mexico. Flickr user Green Fire Productions, Creative Commons.


Askins v. Ohio Dep’t of Agric., 809 F.3d 868 (6th Cir. 2016) (holding that i) the Clean Water Act’s citizen suit provision does not apply to notification requirements; ii) the Clean Water Act’s notification requirement is not a condition of a National Pollutant Discharge Elimination System permit; iii) the Clean Water Act does not permit a cause of action against non-polluting regulators for violations of procedural regulations; and iv) the U.S. Environmental Protection Agency’s decision not to hold a hearing was not a failure to perform a non-discretionary duty, and as such was not actionable under the Clean Water Act).

This was an appeal from The United States District Court for the Northern District of Ohio, which dismissed all of appellants’, Larry and Vickie Askins (“Askinses”), claims.  The Ohio Environmental Protection Agency (“Ohio EPA”) administers the National Pollutant Discharge Elimination System (“NPDES”) under the U.S. Environmental Protection Agency’s (“U.S. EPA”) approval.  In 2001, the Ohio legislature authorized the Ohio Department of Agriculture (“ODA”) to apply to the U.S. EPA to transfer authority from Ohio EPA to ODA, so that ODA could administer part of the state-NPDES program.  The Clean Water Act (“CWA”) permits such a transfer, but requires the U.S. EPA’s permission prior to transfer.  The Askinses alleged that the transfer took place in 2001, while the Ohio EPA didn’t seek permission until some five years later.  As such, the Askinses sued under the CWA’s citizen suit provision, alleging various violations of the CWA.

The lower court held that the Askinses failed to state a claim under the CWA, the U.S. EPA did not fail to perform a non-discretionary duty under the CWA, and the U.S. EPA, the Ohio EPA, and the ODA did not violate the CWA.  The Askinses appealed to the Sixth Circuit Court of Appeals (“Court”), arguing that the CWA’s citizen suit provision permitted their cause of action.

First, the Court considered whether the Askinses could maintain a citizen suit action for a violation of the CWA’s notice requirement under Section 1314.  The Court reasoned that the notice requirement at issue is not an enumerated provision requiring compliance, and as such, the citizen suit provision does not encompass alleged violations of the requirement.

Next, the Court considered whether the notification requirement was a “condition.”  The Court concluded that the notification requirement serves as a timing mechanism, which triggers a state’s ability to apply to administer the NPDES program, as opposed to a substantive requirement.  Further, the notification requirement referred to EPA approval of a state’s permit program, not a state’s approval of individual permits.  Finally, the Court concluded that the Askinses’ reading of the notification requirement as a condition was contradictory to NPDES requirements, specifically that state and federal permit conditions be the same.  As such, the Court held that the CWA’s notification requirement is not a permit “condition.”

Third, the Court determined whether there existed a private cause of action against regulators for violations of procedural regulations.  The Court concluded that if Congress intended the citizen suit provision to permit the Askinses’ claim, it would have included language in the explicitly enumerated circumstances permitting suit.  Further, if the citizen suit provision were so expansive as to permit this claim, the provision’s remedies would give it more teeth than the U.S. EPA itself has, by way of the provision’s shorter notice period and availability of civil penalties and costs.  This is not the case because Congress intended the citizen suit provision to supplement the regulators’ authority.  Finally, cases that considered other, identical citizen suit provisions reached the same conclusion as this Court.  Therefore, the Court held, the CWA citizen suit provision did not permit a private right of action against a non-polluting regulator for procedural violations.

Finally, the Court considered whether the U.S. EPA failed to perform a non-discretionary duty.  The Court held that the CWA does not require the U.S. EPA to hold a hearing.  Should the U.S. EPA choose to hold a hearing, the CWA requires it to withdraw approval of a state-NPDES program after hearing, proper notice, and time to address the issue.  That is to say, the CWA does not require a hearing in the first place; therefore it is not a non-discretionary duty.  The U.S. EPA did not hold a hearing in the present case, so no non-discretionary duties arose.  Thus, the CWA did not permit the Askinses’ citizen suit.

Accordingly, the Court affirmed the lower court’s dismissal for lack of subject-matter jurisdiction.

Tim Berrier


Forbes v. Forbes

Forbes v. Forbes, 341 P.3d 1041 (Wyo. 2015) (holding: i) water rights are real property that parties must disclose during discovery proceedings; and ii) trustees cannot transfer water rights to individual trust members because it is not in the best interest of all beneficiaries).

Six members of the Forbes family formed the Beckton Ranch Trust (“BRT”) in 1920. The trust holds certain parcels of land with water and ditch rights in Sheridan County, Wyoming. Presently, the BRT has nineteen beneficiaries, and William “Cam” Forbes (“Cam”) is the acting trustee. Some time in 2009 or 2010, the Wyoming Board of Control (“WBC”) asked Cam to correct discrepancies between permitted water rights and actual water usage on BRT land. Acting as trustee, Cam filed four petitions for changes in place of use. In 2012, the WBC granted the petitions transferring the water rights onto Cam and his sister’s, Julia Forbes (“Julia”), land. Cam did not notify any of the other trust beneficiaries of the transfer. Citing other issues with his siblings’ management of the BRT, Cam’s brother, Waldo E. “Spike” Forbes (“Spike”) resigned as trustee and sued to remove the remaining trustees, alleging that they breached their duty of loyalty to the trust. Spike sought removal of his siblings as trustees of BRT. During discovery, Cam did not disclose the water rights transfers. Spike learned of them from another source during pretrial proceedings.

After the Sheridan County District Court removed Cam and Julia as trustees, the siblings appealed to the Wyoming Supreme Court (“Court”). Cam and Julia argued that the trial court erred in removing them as trustees and finding that they profited from the transfer.

The Court held in favor of Cam and Julia because Spike did not include the water rights transfers in his original complaint for breach of loyalty, and he failed to amend his complaint to include the specific water rights claim. He thus did not give fair notice that the water rights were at issue. Because the trial court used the water rights exhibits as part of its decision to remove Cam and Julia as trustees, the Court found that the trustees did not have sufficient notice. The Court noted that the parties could have resolved the issue by asking for a continuance on the basis of the surprise evidence. Even though the defendant trustees did not ask for a continuance, they made numerous objections to the inclusion of the water rights transfers in evidence. The Court found this argument against their removal as trustees persuasive.

The Court did find that Spike should have disclosed the water rights transfers during discovery. The interrogatory that called for “details of all transactions of real property” included information regarding water rights of the BRT. The Court did not find that there was enough specificity in the pleading regarding the water rights to properly sanction Cam and Julia under the Wyoming Rules of Civil Procedure 37(c). Therefore, it declined to remove them as trustees of the BRT.

Next, the Court considered whether Cam’s transfer of water rights on behalf of himself and sister breached his duty of loyalty to the BRT beneficiaries. Because of the trust’s specific language, and Cam’s failure to distinguish between his own property and property held by the BRT, he did not manage the trust in the sole interest of the beneficiaries. The Court concluded that that self-dealing alone constituted a breach of the duty of loyalty. However, the Court noted that Cam’s breach of duty of loyalty did not warrant his removal as a trustee of the BRT.

Accordingly, the Court reversed the district court’s order removing Cam and Julia as trustees of the BRT.

Sarah Rice

Image: Thermopolis, Wyoming.  Flickr user m01229, Creative Commons.


I. INTRODUCTION

Before Wolfe v. Sedalia, the standard for quantifying water rights, where the rights had been changed from one use to another in a prior change case, was not clear. In Wolfe v. Sedalia, the Colorado Supreme Court addressed for the first time the issue of quantification in a second change case. It held that issue preclusion bars re-quantification of historical consumptive use in most subsequent change cases, but a water court “should take any evidence and legal argument offered by the parties” where there is a change in circumstances since the first change decree, such as an extended period of unjustified nonuse. If a water court “finds there has been prolonged unjustified nonuse of the water right between entry of the prior change decree and the pending decree application, it may conclude that this constitutes a changed circumstance calling for the selection of a revised representative period of time for calculating the annual average consumptive use amount” available for the subsequent change.

Not more than three months later, the Colorado legislature passed a bill that essentially overturns the Court’s key finding in Wolfe v. Sedalia. Senate Bill 15-183 (“SB 15-183”) codifies existing case law by requiring quantification of a water rights’ historical consumptive use based on actual historical use of the water right during a representative period. Such period shall include wet years, dry years, and average years, but must not include undecreed use and need not include every year of the history of the subject water right. More importantly, the bill also prohibits reconsideration or re-quantification of historical consumptive use that has already been quantified in a previous change decree.

Thus, in subsequent change cases, the prevailing law is a bright-line rule. Water right holders with a previous change decree are entitled to rely on the quantification of the subject water right’s historical consumptive use. For waters right holders without a previous change decree, or the determination of historical beneficial consumptive use, the actual historical use of the water right during a representative period remains the standard. In Wolfe v. Sedalia, the Court correctly balanced the underlying policy objectives on water law when it decided the case. However, the legislature provided important predictability and stability for many water rights holders.

II. CHANGE DECREES IN WATER LAW

In Colorado, a water right is “a right to use waters of the natural stream … when water would be naturally available to it in order of priority,” at its decreed location of diversion, and in the amount of its decreed beneficial use. The value of a water right is primarily determined by its priority. Thus, water rights established for irrigation and mining purposes in the 1880’s are among the most senior and valuable rights in Colorado. Recently, municipal entities started acquiring these historical rights and converting them for municipal use, including use in augmentation plans.

A Colorado water right historically used for one purpose may be changed to another purpose, including a change “in the type, time, and place of use.” Upon the filing of an application, a change decree is adjudicated in water court and is typically approved so long as it will not injure the existing water rights of another. Importantly, the volume of water available for use or change from a senior water right is limited to the amount of historical beneficial consumptive use actually made of the water right over an historic period of time, “not the amount diverted or decreed.” Thus, when a water right is acquired for an alternative use, the law values it by both its priority date and volume of historical beneficial consumptive use.

Courts determine historical beneficial consumptive use by a number of factors, including the selection of a representative period of time in which to analyze the historic records of actual beneficial use. When water rights are historically used for irrigation purposes, the quantification includes the type of crops historically irrigated, the irrigated acreage, actual diversions of water made, and amount of water consumptively used. However, prior to Wolfe v. Sedalia, any water rights holders in Colorado who wished to submit or challenge a second change decree, especially where the water right had not been used to its full benefit, remained uncertain about the proper standard of quantification.

III. WOLFE V. SEDALIA

In 1883, a water right (the “Ball Ditch water right”) with an 1872 priority date obtained a decree for a diversion rate of 3 cubic feet per second (“cfs”) of water from West Plum Creek in the South Platte River system. In 1976, the District Court for Water Division No. 1 decreed Stephen Sump No. 1 as an alternative point of diversion, primarily for irrigation, for 0.4286 cfs of the 3 cfs originally decreed.

The Owens Brothers Concrete Co. (“Owens Concrete”) later acquired an interest in 27.1% of the 0.4286 cfs of the Stephen Sump No. 1/Ball Ditch water right (“water right”). It filed an application to change the water right from irrigation use to augmentation plan use with a well that it had not yet drilled. The State and Division Engineers (“Engineers”) participated in the proceeding. This change proceeding required quantification, for the first time, of the historical consumptive beneficial use of the water right. In 1986, the water court entered a stipulated decree, concluding that Owens Concrete’s interest in the water right was historically used to irrigate 8.1 acres and the average historical consumptive use was 13 acre-feet of water per year. The water court determined that Owen’s Concrete was entitled to claim this amount as augmentation credit each year, and the water court changed the place of use from the irrigated farmland to the company’s well. However, Owens Concrete never used the well as intended. Pursuant to its augmentation plan, it left the 13 acre-feet of historical consumptive use water in the West Plum Creek for twenty-four years, but never claimed credit for anticipated depletions.

In 2009, Sedalia Water and Sanitation District (“Sedalia”) acquired the water right from Owens Concrete. It filed a change decree in 2010 and sought to change the purpose again from augmentation use to municipal use in its own augmentation plan. Its intention was to replace out-of-priority depletions from well pumping, which were located along a different part of the stream than the Owens Concrete’s intended well. In the change proceeding, Sedalia sought approval to use the same credit amount previously decreed in 1986, in Owens Concrete’s augmentation plan. However, the Engineers, also participating in this proceeding, insisted that the water court re-quantify the annual average historical consumptive use of the water right to include the period of nonuse between 1986 and Sedalia’s application. In a motion for partial summary judgment, Sedalia argued that issue preclusion bars the Engineers from relitigating the water right’s average annual historical consumptive use. The water court agreed with Sedalia and ruled that issue preclusion applies. The water court also found that abandonment, rather than the re-quantification of water rights, was the applicable standard for the facts in this case.

On appeal, the Colorado Supreme Court (“Court”) considered whether “in a third successive change of the Ball Ditch water right, its historical use should be quantified based on the average annual historical use last quantified by the second change decree and twenty-four years of subsequent nonuse.” The Court affirmed the water court’s holding in part and reversed in part. It affirmed that issue preclusion applies in water adjudications and prevents the Engineers from relitigating the historical beneficial consumptive use allocated to the water right for the 1872 to 1986 period. However, it reversed the water court’s finding that issue preclusion prevents inquiry into Owens Concrete’s twenty-four years of nonuse after the 1986 decree determination.

On appeal before the Court, Sedalia took the position that, once historical beneficial consumptive use is quantified under the original appropriation, “it is fixed and carries through to all future change cases.” The Engineers, on the other hand, argued that a water right under a change decree “must be re-quantified each and every time another change decree is sought.” The Court determined that this case could be resolved without adopting either position or a “cosmic pronouncement.” It analyzed both issue preclusion application in water cases, and quantification of beneficial consumptive use where there has been a change in circumstances since the previous decree.

In addressing these arguments, the Court first determined that the doctrine of issue preclusion serves an important role in water cases, and typically bars re-quantification of historical consumptive use in most subsequent change cases. However, in this case, the court found that Sedalia had not met two elements of the issue preclusion inquiry for the post-decree nonuse occurring between 1986 and Sedalia’s change application. First, the Court held that the present issue before the water court was not identical to the issue actually litigated and necessarily adjudicated in the prior action because the actual historical beneficial consumptive use that the court and parties examined in the 1986 change case did not include the twenty-four year period of nonuse. Second, the Court found that the party against who estoppel is sought, the Engineers, did not have a full and fair opportunity to litigate the issues, since it could not consider the effect, if any, that an “unjustified period of nonuse” has on the volume of consumptive use water available to Sedalia. Thus, the Engineers could not contest the amount allocated between 1872 and 1986 period, but it could contest the post-decree period from 1986 to Sedalia’s change application.

The Court then turned to the issue of when re-quantification of beneficial consumptive use may be justified in a subsequent change decree. It held that, “[p]rolonged unjustified nonuse of a water right between entry of a prior change decree and application for a successive change decree may constitute a changed circumstance,” because “it calls into question the appropriate representative period of time for calculating the annual average consumptive use.” The Court found that since the representative time period determines the amount of water available for the subsequent change decree, a change in circumstances that includes the twenty-four year period of nonuse may substantially reduce the volume of consumptive use water available to Sedalia.

The Court did not make an ultimate determination as to the appropriate representative period in this case, because, the lower could, among other things, did not make a factual finding as to whether Owens Concrete’s nonuse was justified. It only held that the lower court erred by applying issue preclusion to the alleged period of nonuse after entry of the 1986 change decree. Thus, on remand, the Court instructed the water court to determine whether it is appropriate to use a different representative period to calculate the amount of historical consumptive use in addition to taking “any evidence and legal argument offered by the parties” on the issue of the alleged period of post-1986 nonuse. In making this determination, the Court suggested that the water court consider the General Assembly’s intent to not consider every year of actual use “in order to promote other objectives of the water law.” Additionally, the Court pointed to case law that excuses periods of nonuse, such as the results beyond a user’s control. Since water law does not require a rigid examination of every year that a water owner does not use a right, the Court reminded, “under appropriate circumstances, the water court has discretion to select a representative period of time of the water right’s exercise in calculating the amount of consumptive use water available for inclusion to the changed water right.”

IV. COLORADO SENATE BILL 15-183

Not more than ten days after the Court decided Wolfe v. Sedalia, several legislators introduced SB 15-183 in the Colorado Senate. The bill addressed two key aspects of water law: (1) the test for quantification of historical consumptive use; and (2) the finality of a decision regarding historical consumptive use that had previously been quantified.

More specifically, the bill requires that quantification of historical consumptive use be based on actual historical use of a water right, during a representative period. The representative period will include wet years, dry years, and average years, but must not include undecreed use and need not include every year of the history of the subject water right. The bill also prohibits reconsideration or re-quantification of historical consumptive use that had already been quantified in a previous change decree; although, it does permit a water judge to impose terms and conditions on an applicant’s future consumptive use to keep it from exceeding the previously quantified historical consumptive use.

Most of the proposed language codifies existing case law, but the latter part directly conflicts with the Court’s holding Wolfe v. Sedalia. The bill’s supporters contend that it would reduce litigation and provide much needed certainty in water change cases. Municipal entities especially supported the bill because it would provide certainty in the water rights they own and allow them to determine how much water they can count on having available in the future.

Colorado Governor John W. Hickenloooper signed SB 15-183 into law on May 4, 2015. The changes appear in Colorado Revised Statutes section 37-92-305(3)(d)–(e), “[S]tandards with respect to rulings of the referee and decisions of the water judge.” The changes apply to future change applications, and applications currently pending before a water judge or referee.

V. JUSTIFICATIONS FOR THE PREVAILING LAW

The Court correctly balanced water law’s underlying policy objectives when it decided Wolfe v. Sedalia, but the legislature provided important predictability for water rights holders in passing SB 15-183. The underlying policy objectives of water law, as identified by the Court, are to provide security, assure reliability, and cultivate flexibility. In its holding the Court adhered to these objectives in two ways. First, it maintained that “issue preclusion will prevent relitigation of the historical beneficial use of previously changed water rights in many cases,” which prevents needless relitigation and “promote[s] the integrity of the judicial system” by allowing parties to rely on judicial decrees. Second, the Court allowed flexibility in the law by finding that a prolonged period of unjustified nonuse may be a legal basis for a water court to determine that the circumstances have changed. The Court’s holding merely “calls into question” the appropriate representative period of time, but it does not require a water court to re-quantify historical consumptive use.

Flexibility is necessary in a water system that experiences periods of drought and has historically been over-allocated. In finding that issue preclusion applies, the Court pointed to Farmers High Line as a controlling case in applying preclusion doctrines in water cases. Reiterating its analysis in Farmers High Line, the Court stated that due to the unique nature of water law, water courts must tailor the traditional preclusion analysis to the specific context of water decrees, and not close the door to “petitioners who allege new injury as a result of another’s enlarged use.” Essentially, the rule works to prevent possible injury to junior water rights holders who have come to rely on available water. In its decision, the Court also pointed out that control should not be ridged over such a scarce and valuable resource. However, this flexibility left ambiguity in the law as to what facts might constitute “prolonged unjustified nonuse.”

In response to some of these concerns, the legislature passed SB 15-183. The policy objectives of security and reliability in judicial decrees are especially important in Colorado where the population is growing, and streamflows can fluctuate from extreme highs to extreme lows resulting from periods of drought. Municipalities using augmentation plans need to be able to rely on these judicial decrees, as they acquire rights but do not always use the full amount. Such municipal entities include water districts, parks and recreation departments, and fire departments. Under the rule in Wolfe v. Sedalia, water rights holders run the risk of having a significant reduction in their water rights if they filed a subsequent change decree after a period of nonuse. Additionally, by allowing an objector to challenge any change in circumstances in a change application, the Court increases both court time and costs in change decree cases. Understanding these important concerns, interested parties filed multiple amici briefs with the Court in favor of Sedalia’s position.

In sum, Wolfe v. Sedalia answered an important question in water law, but the legislature quickly overturned it in favor of a bright-line rule. The prevailing law is that water right holders with a previous change decree are entitled to rely on previous quantification of that water right’s historical consumptive use. However, for water rights holders without a previous change decree, or the determination of historical beneficial consumptive use, actual historical use of the water right during a representative period remains the standard, as now codified by the legislature.

Featured image is of Dillon Reservoir in Colorado and is part of the public domain.


Sources:

Wolfe v. Sedalia, 343 P.3d 16, 29 (Colo. 2015).

S.B. 15-183, 17th Gen. Assemb., 1st Reg. Sess. (Colo. 2015).

Gregory Hobbs, The Public’s Water Resource: Articles on Water Law, History, and Culture 202 (2d ed. 2010).

COLO. REV. STAT. § 37-92-103(5) (2015).

Leonard Rice, Engineering and Hydrologic Issues in Changing Water Uses, in TRADITION, INNOVATION AND CONFLICT: PERSPECTIVE ON COLORADO WATER LAW 163 (Lawrence J. MacDonnell ed., 1985).

Daniel S. Young & Duance D. Helton, Developing a Water Supply in Colorado: The Role of an Engineer, 3 U. DENV. WATER L. REV. 373, 377 (2000).

Oral Arguments, Wolfe v. Sedalia, 343 P.3d 16 (Colo. 2015) (No. 2014SA12), https://www.courts.state.co.us/Courts/Supreme_Court/Oral_Arguments/Index.cfm?year=2014&month=&Submit.

Order Re: Sedalia’s Motion for Summary Judgment and the State and Division Engineers’ Cross Motion for Summary Judgment, Case No. 2010CW261 (Water Div. 1 Nov. 24, 2013).

Senators: Hodge, Sonnenberg, Crowder, Guzman, Ulibarri, & Woods; Representatives: Arndt, Becker J., Lebsock, & Pettersen; see Colo. S.B. 15-183.

Senate Bill 15-183 – Official City Position, Westminster City Council, approved on March 5, 2015, http://www.ci.westminster.co.us/Portals/0/Repository/Documents/CityGovernment/SB%2015-183%20Official%20City%20Position.pdf.

Water Rights–Historical Consumptive Use-Quantification, 2015 Colo. Legis. Serv. Ch. 157 (S.B. 15-183) (May 4, 2015).

COLO. REV. STAT. § 37-92-305(3)(e) (2015).

Farmers High Line Canal & Reservoir Co. v. City of Golden, 975 P.2d 189 (Colo. 1999).


This December, the United States Supreme Court will consider simultaneously Decker v. Northwest Environmental Defense Center and Georgia-Pacific West, Inc. v. Northwest Environmental Defense Center, two appeals resulting from the Ninth Circuit case of Northwest Environmental Defense Center v. Brown, 630 F.3d 1063 (9th Cir. 2011).  The case centers on stormwater runoff resulting from logging operations in state forests in Oregon and whether it falls within certain permitting requirements under the Clean Water Act (“CWA”).  In the past, the Environmental Protection Agency (“EPA”) has determined that runoff resulting from logging operations does not fall within these requirements.  However, the Ninth Circuit below in Brown held that the stormwater runoff collected and discharged by a system of ditches, culverts, and channels alongside the roads used by the logging companies is a point source discharge that requires a National Pollutant Discharge Elimination System (“NPDES”) permit.  Both state forestry officials (“Decker”) and private companies (“Georgia-Pacific”) filed petitions for writ of certiorari with the Supreme Court, which will hear oral arguments on December 3, 2012.

Logging companies contracted with the state use a system of roads to remove harvested trees from the state forests.  The sloped roads used by the companies’ trucks and equipment utilize a system of ditches, culverts, and channels to handle stormwater runoff and extend the duration of the roads.  This system collects not only water but a substantial amount of sediment as well, which is considered a pollutant.  The water and sediment eventually finds its way to the rivers, leading to the argument by the Northwest Environmental Defense Center (“NEDC”) that this system is point source discharge and is subject to NPDES permits.  Decker and Georgia-Pacific both argued in their respective writs for certiorari that a permit was not required because the drainage system was a non-point source discharge, fell under the silvicultural exemption, or at the very least an amendment to the CWA in 1987 excused the requirement.  These arguments stem from 33 U.S.C. § 1342(p), which requires NPDES permits for stormwater discharges resulting from industrial activities.  However, it was left to the EPA to decide what exactly constituted “industrial activity.”  The EPA passed its own regulation, 40 C.F.R. § 122.26(b)(14), which determined that stormwater runoff from logging activities and other silvicultural activities is non-industrial and does not require an NPDES permit. Additionally, both Decker and Georgia-Pacific argued that with the two-step process required by the 1987 Amendment to the CWA, the EPA intentionally refused to list logging operations as “industrial activity” that would require a NPDES permit for stormwater runoff.

The Supreme Court granted certiorari and will be considering two distinct issues.  The first is whether the Ninth Circuit improperly determined that the stormwater runoff resulting from logging operations is industrial runoff, subject to NPDES.  This holding, argues Decker and Georgia-Pacific, goes against the longstanding determination of the EPA and its regulations, the apparent intention of Congress in the 1987 amendment to the CWA, as well as decisions made by several other circuits that deferred to EPA decisions.  The second issue is the manner in how NEDC originally brought the suit.  Decker argues the Ninth Circuit allowed NEDC to bypass judicial review of the NPDES permitting rule and challenge the validity of the rule directly in a citizen suit to enforce the CWA.  This argument stems from countering statutes, 33 U.S.C. § 1365 and 33 U.S.C. § 1369.  The Supreme Court must decide whether or not the decision to allow the citizen suit under § 1365 was proper and not precluded by § 1369, which says EPA rulings cannot be challenged in any civil or criminal enforcement proceeding, as the Ninth Circuit apparently allowed.

Should the Supreme Court uphold the Ninth Circuit’s decision (stormwater runoff from logging operations is industrial runoff), logging companies would be required to apply for and receive a NPDES permit for all the roads they use during operations, rather than utilizing best management practices.  This would result in time consuming litigation and reallocation of resources for the companies.  State governments may even be required to alter their well-established road drainage system requirements in order to reduce NPDES permitting.  Most importantly, however, is if the Court were to uphold it would approve the Ninth Circuit’s decision to break thirty-five years of precedent and overrule the EPA and its interpretation of its own regulations.  This may very likely require a revisit to Chevron.


Sources:

  • Nw. Envtl. Def. Ctr. v. Brown, 640 F.3d 1063 (9th Cir.)Petition for Writ of Certiorari, Decker v. Nw. Envtl. Def. Ctr., No. 11-338 (U.S. Sept. 13, 2011), 2011 WL 4352279.
  • Petition for a Writ of Certiorari, Georgia-Pacific W., Inc. v. Nw. Envtl. Def. Ctr., No. 11-347 (U.S. Sept. 13, 2011), 2011 WL 4352287.
  • Respondent’s Brief in Opposition, Decker v. Nw. Envtl. Def. Ctr., Nos. 11-338, 11-347 (U.S. Nov. 10, 2011), 2011 WL 55487721.