Instream rights & invisible hands: prospects for private instream water rights in the Northwest.

• Author: Sterne, Jack
• Position: Symposium on Northwest Water Law

1. INTRODUCTION

   As fish and wildlife populations in the Columbia River Basin plummet, a diverse collection of individuals, groups, and governments dedicates an increasing amount of resources to an ever-worsening problem.(1) Despite these expenditures of time, energy, and money, many salmon runs continue to crash, and many water-dependent species waver precariously on the brink of extinction.(2) The reasons for this decline are myriad,(3) but a central problem is the lack of flowing water.(4) Salmon and trout require cold, clean, fast--moving water to survive,(5) and water development in the last century has steadily depleted this vital resource.(6) Water development takes many forms-agricultural use that reduces many streams to a trickle, dams that slow the migration of young anadromous fish to the sea, cities that seek to ensure high quality drinking water for an exploding populace--but all deprive fish of enough water flowing instream at the right time and speed to support their basic needs.

   To improve instream flows, some have suggested that private groups and individuals should be allowed to "hold"(7) rights to water that would remain instream for the benefit of fish and other nonconsumptive(8) users. This practice is currently barred by the water laws of the four Columbia River Basin states--Idaho, Montana, Oregon, and Washington.(9) Advocates of private holding assert that, despite the apparently impressive array of legal means by which state, federal, and tribal governments can protect instream flows, salmon and other fish species still suffer from inadequate water supplies.(10) Because water law is largely a creature of state law, state agencies have primary responsibility for acquiring and enforcing instream rights.(11) The laws of all four Northwest states give agencies a variety of means by which to safeguard instream flows.(12) Unfortunately, the agencies seem to lack the will, the resources, and, often, the legal means to acquire and protect truly effective instream rights. Federal and tribal rights, although potentially powerful, are either poorly defined or as yet unquantified. The public trust doctrine(13) is largely untested in the Pacific Northwest as a means of securely protecting instream flows.(14) Part of the solution, these advocates say, is to enter the water market and acquire by purchase, lease, or donation private senior water rights for conversion to instream rights.

   To understand the appeal of a market solution, it is important to review some basic principles of western water law and the prior appropriation system. The most often repeated maxim of western water law is "first in time, first in right."(15) This simple concept carries with it significant consequences for fish. Water rights established first have nearly absolute priority over all other junior rights, including those of the state. In times of scarcity, senior appropriators possess the right to cut off junior appropriators. Because most rivers in the Northwest are overappropriated, especially during the critical summer months, rivers can be completely dewatered, regardless of the effects on fish.(16) Even in Oregon, which established minimum streamflows in 1955,(17) fish are frequently at the mercy of senior appropriators, whose rights often carry a much earlier priority date.(18) Indeed, none of the instream rights established by state agencies or legislatures in the Northwest carry a priority date earlier than 1925,(19) and the vast majority postdate 1955.(20)

   Further, when the prior appropriation doctrine first came into use in the mid-1800s, the needs of fish and wildlife were far from the minds of most lawmakers. "Manifest destiny" demanded that men develop the West, and "development" usually meant consumptive use.(21) Accordingly, custom recognized only those water rights that required a physical diversion of water.(22) When the Northwest states first passed water codes in the early part of the century, "fish and wildlife" were not among the uses that legislators declared "beneficial" and therefore were not considered worthy of legal recognition.

   In recent years, Northwest lawmakers have made increasing attempts to protect instream flows.(23) For the most part, these approaches offer only junior rights.(24) Moreover, they depend on the good will of state agencies that historically have regulated primarily consumptive uses, and thus are frequently uncomfortable attempting to manage for instream flow.(25) In addition, the instream rights that have been created lack legal "equivalency" with appropriative rights because they generally operate outside the traditional water rights system(26) or as a cumbersome and ill-fitting addition to it. Finally, the highly bureaucratic process of establishing public rights in instream flows is often slow, contentious, and expensive.(27)

   In an era of shrinking budgets and general antipathy towards costly government programs, states that wish to effectively protect minimum streamflows have limited alternatives. One option is modification of state water laws to allow any person, group, or government entity to acquire, file for, and hold instream water rights. Such a change could significantly supplement state efforts to protect instream flows. This Article explores the arguments for and against that option and offers guidance to Northwest policy makers considering whether privately held instream rights can offer benefits to salmon and other fish populations suffering from a lack of available water. Part II of the Article surveys the instream flow laws of the four Northwest states. Part III explains the shortcomings of publicly held instream rights. Part IV makes the case for allowing privately held instream rights and refutes some of the persistent myths employed by opponents of those rights. Part V studies the policies of Arizona and Alaska, two of only three Western states(28) that permit private holding of instream rights. considers the elements necessary for an effective instream flow statute, and offers a model for integrating privately held instream rights into the prior appropriation system. Part VI concludes by assessing the potential benefits of such legislation.

2. A SURVEY OF INSTREAM RIGHTS IN THE NORTHWEST

   All four of the Columbia Basin states have passed legislation aimed at protecting instream flows. Most of these programs have relied on administratively set "minimum flows," which generally offer only junior rights, although Oregon and Washington have allowed private parties to donate senior rights to the state. This Part surveys the instream flow protection programs of each Northwest state, beginning with Washington, the first state to give its water agency the authority to condition permits to protect instream flows. The Part then examines the laws of Idaho and Montana, and concludes with a detailed look at Oregon's statute, which differs from that of the other three in several significant respects.

   1. WASHINGTON

      The first broad attempt to protect instream flows in the West occurred in 1949, when the Washington legislature gave the state water agency the authority to condition or deny new permits based upon their potential effects on fish populations.(29) Under this provision, the state water agency has conditioned or denied water rights on approximately five hundred streams.(30) Legislation passed in 1969 gave the Washington Department of Ecology (WDOE) authority to set affirmative minimum stream flow levels.(31) The Water Resources Act of 1971 requires WDOE to create water resource management plans.(32) Under the current statute, WDOE has "exclusive"(33) authority to "establish minimum water flows or levels for streams, lakes or other public waters for the purposes of protecting fish, game, birds or other wildlife resources, or recreational or aesthetic values of said public waters whenever it appears to be in the public interest to establish the same."(34)

      WDOE establishes new instream flows as a result of rulemaking, with notice, comment, and hearings for interested parties.(35) Instream flows take only the priority date of their establishment, rather than the date of filing,(36) and because these flows are set by rule, they can be modified by rule.(37) A 1993 Washington Supreme Court decision determined that WDOE can set minimum flows at the "optimum" level necessary to support fish populations,(38) but the state has yet to use this authority.

      Another statutory method by which Washington protects instream flows is the state's trust water rights program.(39) Under the program, water rights holders can donate, lease, or bequeath water rights to the state.(40) The program also requires the beneficiaries of water conservation projects to convey to the state the "net water savings"(41) generated by the project.(42) However, because the Washington legislature has refused to appropriate money for WDOE to run the program, no trust water rights have been established to date, despite a great deal of interest in the program.(43)

      WDOE thus has a high level of discretion in protecting instream flows for fish. Most instream advocates believe that WDOE has not pursued either the minimum flow program or the trust water rights program with sufficient zeal to protect fish fully, which is largely attributable to the legislature's failure to appropriate money for the programs.(44) The programs are so poorly funded and disorganized that WDOE has not established any new instream flows since 1988.(45) Instream advocates in Washington are considering establishing a water trust to acquire and protect instream rights, but fear that their efforts will be fruitless unless the legislature changes the law to authorize private holding.

   2. IDAHO

      Idaho was the first state to actually appropriate(46) water for in-place uses, when in 1925 the legislature designated several lakes for protection and "[t]he associated water right was issued to the governor to be held in trust for the...