MINERAL RESOURCE DEVELOPMENT WATER NEEDS--WATER RIGHTS CONSIDERATIONS
| Jurisdiction | United States |
(Sep 2012)
MINERAL RESOURCE DEVELOPMENT WATER NEEDS--WATER RIGHTS CONSIDERATIONS
Welborn Sullivan Meck & Tooley, P.C.
Denver, Colorado
JAMES M. NOBLE is an attorney in the Denver, Colorado office of Welborn Sullivan Meck & Tooley, P.C. Jim graduated cum laude from the University of New Mexico School of Law in 2002. After law school, he served as a law clerk for a Justice of the Supreme Court of New Mexico. He then practiced water law in Arizona for two years before moving to Colorado. His practice focuses on all aspects of water rights law including litigation in water courts, general river basin adjudications, purchase and sale transactions, leases, and administrative approvals of changes to water rights. Jim works with mining companies, public utilities, municipalities, and landowners regarding water rights matters. He is licensed in New Mexico, Colorado, Arizona, and Oklahoma.
I. Introduction
Access to a sufficient supply of water is a crucial component of the mining and mineral development process. Without substantial amounts of water, no mining project could succeed. At the mine site, water is needed for dust control and for domestic purposes. If the mine is to generate its own power, then water will be needed for cooling the power plant. Water may be needed to transport the ore from the mine to the processing facilities via a slurry pipeline. Once the ore reaches the processing facilities, water is needed to facilitate every step of the refining process. The ore is usually crushed in a mill, which uses water to control dust within the process. Water can be used to create a slurry after the ore is crushed, to transport it to the next phase in the process. The ore can then be processed further through a "flotation" process, where chemicals and physical processes are used to refine it further. Then, the ore may be sent to a smelter, where it is melted and the desired mineral are separated out. Alternatively, the desired minerals can be "leached" out of the concentrated ore, by a process in which water and chemicals are applied to a large stockpile of the ore. The liquid solution then percolates through the leaching stockpile, separating the minerals into a solution that is then captured at the bottom of the stockpile. The resulting solution is then "electro-refined" by using electrical
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current to finally obtain the final product. Water is a key ingredient of the process from beginning to end.1
Many mines recirculate and recycle their water as much as possible. No matter how efficient the system, water losses will occur throughout the process. For example, most mines must send their tailings from the processing facilities to a tailings dam or stockpile. The tailings are usually delivered through a slurry pipeline, in a mixture made of mostly water. Once delivered to the tailings facility, substantial amounts of water will evaporate from the top of the facility, where a lake is formed. Much of the water can be recaptured if it seeps into the tailings stockpile, through recapture wells. However, mining operations need to continually add water to their process circuits to "make-up" for the lost process water. This water that is continually added to the system is therefore referred to as "make-up water." Mines need a reliable, continuous supply of make-up water on a year-round basis, to keep their operations running.
This presents a challenge for mining in the American West. Our rocky mountains are rich with minerals needed in society. However water that his legally and physically available is scarce, and becoming scarcer as different demands compete for the same finite resource. New mining projects must seriously consider their water needs from the inception, and consider both physical and legal availability issues. Otherwise, a project that may seem promising in all other aspects may have a fatal flaw of an insufficient water supply.
II. Background of Western Water Rights
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In the United States, state law governs the right to use water. There is no general federal water law,2 except in relation to Federal reservations3 and interstate water allocations.4 Therefore, one must look to the water law of the state in which a proposed mining project will be located, to determine the applicable legal regime. At least with respect to surface water, such as the waters of streams and lakes, most western states follow the "prior appropriation" doctrine.
a. Surface Water
The bedrock principle of the prior appropriation doctrine is that water rights that are "first in time are first in right." Water rights are assigned priority dates based on the date they were first initiated.5 Senior water rights are entitled to full use of their water before any junior water right can receive its entitlement. If a downstream senior water right does not receive enough water, it can place a "priority call" on the river, which results in water rights with junior priorities being required to stop diverting. Therefore, the priority date of a water right is one of the most fundamental and important attributes of a surface water right, which will significantly affect its availability.6 For example, in 2012, which has been an abnormally dry year, in the South Platte River basin in Colorado even relatively senior water rights have been out of priority
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for much of the irrigation season.7 In other western states, priority administration of water rights may be enforced with varying degrees of severity, but the basic principle still applies.
One key principle of the prior appropriation doctrine is that beneficial use is the "basis, measure and limit" of a water right.8 In other words, actual use of water determines the extent of a water right. Initially, the scope of a water right will be set out by a court decree (such as in Colorado), or by an administrative permit (as in New Mexico and Arizona). This initial document will not necessarily be the final determination of the authorized scope of the water right, however. For example, in Colorado, water rights are first decreed as "conditional." Within six years after the water right is first decreed, the owner is required to file a subsequent application to the water court, either seeking that the water right be made "absolute" because it has been put to beneficial use, or seeking that the conditional water right be continued for another six years while the owner continues to attempt to develop the water right.9 In New Mexico, a water right is first evidenced by a permit issued by the state engineer. The permit will include a condition requiring the owner to file "proof of beneficial use" within a specified time period.10 The amount actually put to beneficial use will become the basis for a final license, which will establish the limits on the water right going forward.11
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A corollary to the principle that water rights are based on beneficial use is that water rights can be lost due to non-use over time. For example, in New Mexico, water rights can be lost due to the common-law doctrine of abandonment. Under this doctrine, water rights can be lost if the owner forsakes the right with the intent to abandon it.12 Water rights can also be lost due to statutory forfeiture. Under New Mexico law, if all or part of a water right is not used for four years, the state engineer can deliver a "notice and declaration of nonuser" to the water right owner. If the water right is not used for one year after this notice is issued, the water right will be forfeited.13 The major difference between the concepts of forfeiture and abandonment is that water rights can be subject to forfeiture, regardless of whether the owner intended to abandon them. Arizona applies similar concepts of abandonment and forfeiture,14 while Colorado law does not distinguish between forfeiture and abandonment. In Colorado, if a water right has not been used for ten years, this creates a rebuttable presumption that the water right has been abandoned, and the state engineer places the water right on an abandonment list.15 If the owner of the water right disputes this determination, a water court process will be used to determine the continued validity of the water right.16
b. Groundwater
The western states do not all apply the same basic principles with respect to groundwater. Each state's groundwater laws are quite unique. Some states, such as New Mexico, apply the same legal principles to groundwater and surface water. Under this legal
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regime, groundwater rights have priority dates, just like surface water rights, and beneficial use is the basis for these water rights. Other states, such as Arizona, apply a "reasonable use" standard to groundwater. Under this standard, a landowner may pump as much water as can be put to reasonable use on the overlying land without liability to adjoining landowners.17 However, whether a particular well actually withdraws water legally categorized as "groundwater," or whether it is actually "subflow" of a surface stream, to which the law governing surface water would apply, can be a difficult issue to determine.18 Colorado applies different legal standards depending whether a particular groundwater source is "tributary,"19 "nontributary," "not nontributary,"20 or water within the boundaries of a designated groundwater basin. Still other states apply completely different standards.21 Suffice it to say that it is difficult to generalize regarding the groundwater laws of the various states, and one needs to seriously examine those laws when considering the use of groundwater resources.
III. Physical Considerations for Mining Uses
Mines have unique water needs that set them apart from other major water users, such as municipal water providers and agricultural users. For example, cities...
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