CALIFORNIA WATER RESOURCES
ASSIGNMENT 15
Instream Water Rights and Other Protections for In Situ Uses
“Eventually, all things merge into one, and a river runs through it. The river was cut by the world’s great flood and runs over rocks from the basement of time. On some of the rocks are timeless raindrops. Under the rocks are the words, and some of the words are theirs. I am haunted by waters.”
Norman Maclean, A River Runs Through It (1976).
Reading:
Empire Water & Power Co. v. Cascade Town Co.
Brian E. Gray, A Reconsideration of Instream Appropriative Water Rights in California
California Trout v. State Water Resources Control Board
Notes and Questions:
1. As Empire Water & Power illustrates, the courts historically have had a difficult time providing for instream flows as part of the prior appropriation systems of the western states. Although the Court of Appeals had no difficulty determining that preservation of stream flows through Cascade Canyon was important to the local community (and therefore qualified as a beneficial use under Colorado law), it struggled over two questions:
a. Whether protection of the natural stream flow was reasonable in light of the defendant's competing use of the water for generation of hydroelectric power; and
b. Whether the plaintiff could protect instream flows without an “appropriation” of water for that purpose.
The courts and legislatures of the western states grappled with these questions throughout the 20th Century.
2. As the excerpt from my article describes, California has been at the forefront of providing for preservation of instream flows, employing a combination of statutory guarantees, common law protections, and regulatory directives that at a minimum require the State Water Resources Control Board to consider the effects on instream uses of the water rights subject to its jurisdiction. Until recently, however, California’s portfolio of instream flow protections has not included water rights held for the primary purpose of leaving the water in place to serve instream beneficial uses.
3. The states of Colorado, Idaho, Montana, Oregon, Utah, and Wyoming, allow state agencies to acquire and to manage appropriative rights for the purpose of protecting fish, wildlife, recreational uses, aesthetics, and aquatic habitat. See Lawrence MacDonnell, Teresa Rice & Steven Shupe, eds., Instream Flow Protection in the West, 2d ed. (U. Colorado 1992). Arizona law authorizes private individuals as well as the state to appropriate water for "recreation [and] wildlife, including fish." Ariz. Rev. Stat. Ann. § 45-151A. The Arizona Court of Appeals has held that this statute permits the "in situ appropriation of water" without a physical diversion." McClellan v. Jantzen, 26 Ariz. App. 223, 225, 547 P.2d 494, 496 (1976).
4. In California Trout, did the Court of Appeal correctly decide that the California Water Code does not authorize the appropriation of water without a diversion or impoundment of the water?
5. What was the purpose of the diversion requirement under the common law of appropriative rights? Did the enactment of the permit system in the Water Commission Act of 1913 render that purpose obsolete?
6. Does the majority in California Trout nonetheless correctly decide that Water Code section 1260 requires the applicant to divert water from the stream in order to obtain a permit?
7. How well does the majority respond to Justice Reynoso’s argument that historically “the law views beneficial use [rather than diversion] as the sine qua non of an appropriative right”? Is Justice Reynoso’s conclusion that the California Water Code does not require an appropriator to divert or otherwise physically to control the water?
8. What is the “nay say” problem to which Justice Reynoso alludes in his dissenting opinion?
9. Should California law be changed to permit the appropriation of water for instream purposes? If so, how would you answer the following questions:
a. Should private citizens as well as government agencies be allowed to acquire instream water rights?
b. How would the place of use of the appropriated water be defined?
c. How would the quantity of water appropriated be established?
d. Inasmuch as the instream appropriator would incur no expenses in appropriating the water, wouldn't the recognition of instream water rights lead to monopolization of the rights to the waters of state's rivers by instream users?
e. In light of the extensive development of California's water resources, would instream appropriative rights carrying a relatively junior priority date be worth much?
10. In the Ecology Law Quarterly article, I concluded the section that you have read with the following statement:
The California scheme has many positive attributes. All three branches of government play a part in protecting instream uses—the administrative agencies pursuant to their regulation of water rights, fish and wildlife, and other public resources; the courts through their jurisdiction to prevent waste and unreasonable use of water and to promote the public trust; and the legislature by designating wild and scenic rivers. The role of the State Water Resources Control Board is particularly important, because the Board's authority to protect instream flows extends across all aspects of its jurisdiction and any member of the public may ask the Board to exercise this authority. Indeed, in view of California's diverse system of protecting instream uses, it is reasonable to ask: Why should the state provide the additional protection of private instream appropriative rights?
How would you answer this question?
11. Although California does not recognize new appropriations for instream uses, it now allows an existing water user to devote all or a portion of its water rights to instream use. In 1991, the California Legislature enacted Water Code § 1707, which provides:
(a) Any person entitled to the use of water, whether based upon an appropriative, riparian, or other right, may petition the board . . . for a change for purposes of preserving or enhancing wetlands habitat, fish and wildlife resources, or recreation in, or on, the water.
(b) The board may approve the petition filed pursuant to subdivision (a), subject to any terms and conditions which, in the board's judgment, will best develop, conserve, and utilize, in the public interest, the water proposed to be used as part of the change, whether or not the proposed use involves a diversion of water, if the board determines that the proposed change meets all of the following requirements:
(1) Will not increase the amount of water the person is entitled to use.
(2) Will not unreasonably affect any legal user of water.
(3) Otherwise meets the requirements of this division.
12. The enactment of section 1707 raised several interesting questions that are described in a Postscript to the Ecology Law Quarterly article, which I wrote for the second edition of Instream Flow Protection in the West. See supra note 3.
POSTSCRIPT
In 1991, the California Legislature responded to calls for the recognition of instream water rights by enacting a statute that permits existing water rights holders to dedicate all or a portion of their water rights to instream uses. Section 1707 of the Water Code authorizes any water right holder to petition the State Water Resources Control Board to change its water right "for purposes of preserving or enhancing wetlands habitat, fish and wildlife resources, or recreation in, or on, the water."[1] The Board may grant the petition only if the change will not increase the amount of water the petitioner is entitled to use, and will not "unreasonably affect any legal user of water."[2] The statute applies to riparians and pre-1914 appropriators, as well as to permittees and licensees.[3]
Although section 1707 does not address these issues, the Board has interpreted the law as permitting a water rights holder to dedicate a portion of its rights to instream uses and has construed the statute as authorizing revocable, time-limited instream transfers.[4] In other words, transfers to instream uses need not be permanent dedications of all of the transferor's water rights.
Section 1707 is direct and concise, but its simplicity is an inelegant one. For the authorization of dedications of existing consumptive water rights to instream uses, limited only by the criteria that the change neither increase the user's rights nor unreasonably harm others, raises a number of questions to which there are no obvious answers.
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First, how do instream dedications affect the amount of water that the state has set aside for instream uses pursuant to laws such as Water Code sections 1243 and 1258, the reasonable use and public trust doctrines, water quality statutes, and the Wild and Scenic Rivers Act? Do the proprietary instream water rights recognized by section 1707 augment the water reserved for instream uses by the regulatory process? Or, does the protection of instream uses by water right simply free-up an equivalent amount of water (previously reserved from consumptive uses) for new appropriations or for the satisfaction of senior rights?
Many of the regulatory protections of instream uses are based on ambient water quality standards and minimum flow requirements. These include restrictions on diversions, release requirements for dams, and limits on the discharge of pollutants that are invoked only under specified water quality or flow conditions. Thus, if instream water rights are not counted as additions to the regulatory protections—if they are instead subsumed within the existing instream protection structure—the dedication of water rights to instream purposes would simply reduce the obligation of those users that are subject to the regulatory requirements to provide water (or to reduce pollutant loading) to meet the ambient standards. There would be no net enhancement of water quality or increase in instream flows from the instream dedication.
Second, section 1707 does not define how the Board should consider instream dedications when it subsequently establishes water quality standards and related flow requirements. Should the Board credit the water provided by instream water rights holders toward the amount required to provide "reasonable" protection for instream uses? Or, must the Board establish the regulatory protections for instream uses without considering the water supplied by instream water right holders? The answer to these questions turns on whether the Legislature intended to recognize instream water rights as additions to the existing regulatory protections or simply as another means of achieving the same level of water quality and instream flows as afforded by the prior law.
Third, who is protected by the proviso that transfers to instream uses shall not "unreasonably affect any legal user of water"? The limitation clearly applies to other water right holders whose own rights would be "unreasonably" diminished by the proposed change. But does it also apply to those who have been relying on the continued existence of surplus water that the petitioner proposes to put to an instream use? In other words, may a downstream user of surplus water, the rights to which are held by the petitioner, block a change under section 1707 because the dedication of the surplus to instream uses would deprive the downstream user of the surplus supplies? As with a decision of a water rights holder to begin using more of its entitlement, which may take water away from others who have been appropriating the surplus, the answer to these questions presumably would be "no." The Legislature's choice of the terms "any legal user" of the water dedicated to instream uses suggests, however, that the Board might be permitted to deny the petition on the ground that the proposed instream use would unreasonably deprive a downstream appropriator of the use of the petitioner's water.
Fourth, may a water rights holder that has rights to more water than it needs for consumptive uses avoid a forfeiture of its rights for lack of due diligence by dedicating the surplus water to instream purposes? Inasmuch as section 1243.5 of the Water code declares that instream uses are "beneficial" within the meaning of Article X, Section 2 of the state constitution, the answer to this question would appear to be "yes." Nonetheless, the Board could deny a petition to change an existing water right under section 1707 on the ground that the water the petitioner proposes to dedicate to instream uses is surplus to the petitioner's needs as set forth in its existing permit or license and therefore is not part of the petitioner's water rights.
Fifth, in a manner similar to the creation of a conservation easement, may a water right holder permanently dedicate a portion of its rights under section 1707 and claim an income tax deduction for a charitable contribution and a reduction in property taxes for the diminished value of the land previously served by the dedicated water? If so, the tax benefits associated with the conservation easement laws could create a powerful incentive to existing users to avail themselves of section 1707. Yet, the Legislature did not explain the relationship between section 1707 and the state and federal tax laws that govern charitable contributions and property tax assessments.
Finally, does section 1707 overrule Fullerton and California Trout? To the extent that the cases decided that no one may hold a water right for instream purposes, they obviously are no longer good law. The Court of Appeal's judgment that new appropriators may not acquire a permit for instream uses would seem to survive the enactment of section 1707, however, because the Legislature authorized only the conversion of an existing water right from consumptive to instream uses. Yet, the statutory recognition of instream water rights casts doubt on the courts' determination that the diversion or impoundment of water is the sine qua non of the appropriative right and therefore is essential to the acquisition of a new water right in California.[5] For the Legislature has now declared that a water right may exist notwithstanding the absence of a diversion of or physical control over the appropriated water.