Out-of-priority Water Use: Adding Flexibility to the Water Appropriation System

• Publication year: 2021

83 Nebraska L. Rev. 485. Out-of-Priority Water Use: Adding Flexibility to the Water Appropriation System

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Lawrence J. MacDonnell*

Out-of-Priority Water Use: Adding Flexibility to the WaterAppropriation System

TABLE OF CONTENTS

I. Introduction ...................................................... 485
II. Legal Mechanisms for Out-of-Priority Water Use ................... 494
A. Voluntary Exchanges ........................................... 494
B. Involuntary Exchanges or Substitute Water
Supplies ...................................................... 502
C. Physical Solutions ............................................ 514
III. Issues in Review and Administration of Out-of-Priority
Water Uses ...................................................... 524
A. Overview of State Approaches .................................. 524
B. Meeting the NoInjury Requirement .............................. 529
1. Water Quantity ............................................. 529
2. Water Quality .............................................. 532
3. Implementation and Administration .......................... 537
IV. Conclusion ....................................................... 539

I. INTRODUCTION

The concept of priority is fundamental to the prior appropriation doctrine.(fn1) Since Irwin v. Phillips,(fn2) courts in the western states have used the principle of firstintime, firstinright to determine respective rights of competing appropriators from the same source of water. Priority provides an objective basis for allocating a limited resource.(fn3)

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Given the typically highly variable supply of water in most western streams, priority adds a measure of certainty and security to water uses that would otherwise be lacking. Courts have emphasized the importance of the priority element of a water right: "The uncertain nature of the property right in water is evidence that its primary value is in its relative priority and the right to use the resource and not in the continuous tangible possession of the resource."(fn4) As streams reach and exceed full appropriation, priorities become increasingly important for the administration of water uses among competing claimants.

Priority is, however, a purely temporal basis for establishing rights. It says nothing about the nature of the use, its economic or social value, its importance in relation to other existing or potential uses of the water source, or its effects on the ability of subsequent appropriators to use that source. It rewards the first to use water with a perpetual right to continue that use to the full extent of the appropriation, dependent on availability of water. It results in a strict hierarchy, with senior appropriators motivated to make the fullest possible use of their appropriation to protect their interests.(fn5)

Moreover, the historical function of prior appropriation lawto make an initial allocation of the West' water resources among potentially competing claimantshas been largely completed. Little unallocated surface water remains; and the costs of its development, both financial and environmental, have grown sharply. It is difficult, if not impossible in many places, to meet new demands for a secure supply of water by seeking a 2004 appropriation.(fn6) There is simply no water available for those at the end of the priority line.

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Thus, those wanting to make a new use requiring water must look to those already holding water allocations. Most commonly, reallocation occurs by acquiring an existing water right through voluntary means and going through a changeofuse proceeding to ensure the new use will not harm existing users.(fn7) Now widely accepted as a mechanism for meeting new water demands, socalled "water marketing" is driving changes not only in the traditional water allocation structure, but also in the understanding of a water right and the transferable interest it represents.

Consider the evolution of western water law. The initial imperative in this unsettled region was to encourage individuals to do what was necessary to put the region' limited surface waters to work while building an economy. The existing common law principles applying to water were quickly rejected as unsuited to the task.(fn8) Appropriation, on the other hand, acknowledged and rewarded the selfinitiated effort of the appropriator. As a rule of capture, it was simple and easily understood.(fn9) It staked out a definable interest in a limited common resource, measured by the actual capture and control of some portion of waterin effect putting boundaries around this water by removing it from its commons. As mentioned, priority provided an objective method for sorting out relative rights of competing appropriators to the same source of water.

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Under appropriation principles, one' claim to water is demonstrated by physical controlmeasured for surface water most readily by the size of the headgate and the capacity of the ditch.(fn10) Presumably a prudent appropriator would not spend the time and money necessary to construct and maintain facilities larger than needed. Yet apparently it was common for appropriators to do just that, perhaps because of overestimating the actual usable supply of water or being overly optimistic about the extent and quality of the lands to be irrigated.(fn11) Or perhaps it reflected something in human nature that wants to have control over something valuable when it is available, whether or not it is needed.(fn12)

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In reaction, prior appropriation law added a third element to appropriation and priorityuse or, more familiarly, beneficial use. The addition of use to the doctrine of capture not only reflected the purpose of making an appropriation, it also provided a means by which to more carefully define and measure the amount of water required under a water right.(fn13) In its most common formulation, beneficial use became "the basis, the measure, and the limit" of the water right.(fn14) 490Thus, the legal interest established under prior appropriation law is a singularly narrow one: it protects a particular use of water as against interference from others whose uses are established subsequent in time.(fn15) The definitional elements of a water right include: (1) water must be diverted at a specific, identifiable point from a particular source (a stream, lake, or aquifer), (2) water may be diverted at no more than a certain rate of flow, (3) water must be used at a specified location, (4) water must be used for a specified purpose, (5) its use must be "beneficial," and (6) there must not be an unjustified cessation of use for some specified period of time.(fn16) By so circumscribing a prior appropriation right, individual uses of a public resource (water) are limited in a manner that allows its benefits to be widely shared.(fn17) Correspondingly, public supervision is required to ensure claims for use of water are legitimate to fix the legal description, to ensure that actual use is within the legal authorization, and to resolve disputes.

Under this approach, the purpose of a water right is to enable a particular waterdependent use to occur. By definition, water is essential to the use. But it is the use that is legally protected, along with the continued ability to accomplish the use without interference from other (junior) users of the water.(fn18) The most likely source of interference is with the amount of water reasonably necessary to the use, but it could also take the form of a change in the timing with which water has been available or in the quality of water available for use.(fn19) Some would have preferred water rights to remain perma

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nently tied to their original use.(fn20) Indeed, most western states have been ambivalentat least until relatively recentlyabout allowing transfers of water rights to parties intending to change the historical use of water.(fn21)

Increasingly, however, water law is moving in the direction of viewing water rights as giving the holder legal control (if not ownership) of some portion of water. The broad measure of that water is historical beneficial use, but the measure for transfer purposes usually is historical consumptive usethat amount of water permanently removed from the hydrologic system under the right, and therefore

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unavailable to others.(fn22) Under this approach, the particular use to which the water is put is primarily a decision for the holder of the right to make, subject to the limitation that the use not harm other water rights. Such a view facilitates voluntary transfer of water rights to meet new demands for water by clearly acknowledging that consumptively used water has been commoditizedtaken out of the general supply of water that supports public, nonexclusive benefits such as navigation, recreation, and fisheries, and potentially permanently committed to that part of the supply serving nonshared, exclusive uses.(fn23) Thus, we are gradually acknowledging that a portion of our water supply has been de facto privatized. It is this portion we are making available to the market, at the discretion of the holder of the water right.

Operating on a separate but parallel (and sometimes interconnected) track are transactions enabling new, outofpriority water uses. The notion of an "outofpriority" water use appears on its face to be incongruent with the prior appropriation system. Indeed, it does violate the basic prior appropriation principle that new uses must stand in line behind all previous uses before they can have access to the supply of water. For that reason, just as with water transfers, it is an approach to water allocation that finds its rationale in need more than in principle. And, just as with water transfers, it depends entirely on the timehonored standard, "do no harm."(fn24)

Nevertheless, the traditional belief that new uses should come at the...