Environmental, Natural Resources, & Energy Law Blog

WHO WILL OWN OUR WATER? AT WHAT COST?

Brian Brazier, LLM ’24

“Men fight on account of the whiskey; they fight about the water. One is man’s poison; the other, his necessity.”

INTRODUCTION

How much water do you own?

Sincerely, how much water do YOU OWN?

If you are like most people, this is a question that you rarely, if ever, ask yourself. You turn on a faucet, water comes out, and you receive a monthly bill based on usage. In many cases, the cost of water is even included in the lease price for a property. For most people, unless their livelihood depends on the availability of plentiful water of adequate quality, they largely take their water supply for granted. However, there will come a day when, because of inevitable population pressures and the probable consequences of climate change, there will not be enough water to satisfy all of the competing interests, and government reallocation of water rights will become necessary to maintain the human population.

When there is enough water to meet the collective needs, government meddling in existing water rights is only minimally necessary and involves temporary adjustments of current rights rather than long-term changes. Farmers may complain when their access to “their” water is pinched in times of shortage. Consumers may complain when their water bills are too high, or they are forbidden from watering their lawns, or their golf courses are less green than normal. Those who cherish the environment are concerned that ecosystems are forever changed as the water-dependent food chain is dried up (literally and figuratively). Things get more complicated when the government starts trying to permanently reallocate water rights for what it deems a better use.

The ownership of water is a 21st Century question with 18th and 19th Century answers. Modern issues such as environmental considerations and climate change are not well served by the antiquated system currently in place. This blog will focus on the dominant water rights regime in the Western United States (areas west of the 100th meridian; essentially the states west of the Great Plains) – and the doctrine of prior appropriation.

WATER SHORTAGES AND THE PROBLEMATIC PRIOR APPROPRIATION REGIME

In the American West, under the regime of prior appropriation, the first in time is the first in right. The first to use a fixed amount of water for a “beneficial use,” provided that the water continues to be put to some beneficial use, has a right to that amount of water in perpetuity[1]. If you are late to the game, your water rights are subservient to every “beneficial use” that came before you in time. Forever. Irrespective of changing circumstances or reality on the ground.

What is less clear is what happens when the government decides that one use is more beneficial than another and changes the hierarchy of water rights by legislative or executive fiat. The Fifth and Fourteenth amendments of the US Constitution prohibit the taking of property without just compensation. When the government entirely takes a plot of land, for example, calculating the value of the property for compensation is relatively simple; how much is the land worth in the marketplace? With respect to water, this is more difficult.

Water law in the United States is a miasma of competing considerations, involving the laws of the various states, which are sometimes in conflict, as well as water rights regimes that apply to the federal government and Indian tribes[2]. As such, there may be differences in the real-world applications of the remedies suggested in this blog, but the problems apply everywhere and possible remedies will be broadly similar.

Water rights are generally administered by state water agencies[3]. In determining the scope of these rights, the first consideration is the time when the water right was established for an ongoing beneficial use. Other considerations that come into play are the point of diversion, place of use, manner of use, and the quantity of water used. What makes water trickier than other property rights is the temporal variability of these factors. The rivers do not flow at the same volume year-round. A farmer does not grow his crops in the dead of winter in most places. What is true in January may not be true in July.

The Western United States is on a dangerous and profound collision course with this system of entrenched water rights. Substantial water shortages have already occurred and more and more serious shortages are coming[4]. Serious conversations will be necessary. Water sustains humans, permits agriculture, sustains the domestic and livestock animals that we keep, drives certain industry, and sustains all of the natural environments that we sometimes take for granted. It should also be obvious that a growing population requires more water to sustain itself. Of course, there are conservation measures that can postpone this collision, but this conflict is almost certainly coming, and the conversation should not wait until the problem has overwhelmed us.

The prior appropriation paradigm makes this problem inevitable. As an example, take Arizona. Arizona has year-round warm, sunny weather, and much of the state has extremely fertile soils, making the southern part of the state ideal for agriculture and livestock, both of which are traditional beneficial uses[5]. Because of the doctrine of prior appropriation, the first to use the state’s water resources for a beneficial purpose maintains that right in perpetuity as long as the same amount of water continues to be used for a beneficial purpose. In the early days of non-natives settling in Arizona, many of the state’s water rights were allocated to cattle farmers, and, consequently, crops to feed those cattle. Livestock is a highly water-intensive enterprise, even ignoring the fact that one of the most productive livestock feeds is alfalfa. Alfalfa is near-perfect as livestock feed because it grows quickly and produces multiple crops per year, even in moderate soils, is pest-resistant, is extremely nutritious, and is relatively easy to cultivate and harvest. It is also a sponge in terms of its water needs. Many of Arizona’s water rights were appropriated more than a century ago, and the holders of those rights have continued to engage in these water-intensive activities, as they certainly constitute a “beneficial use.” However, many things have changed in that time. At statehood in 1910, the population of Arizona was just over 200,000; in 2023, it is almost 7.5 million[6]. When initially allocating water rights, the prospect of the population increasing 37-fold was not in the calculus.

Another problem with the current paradigm is that the distribution of water rights has often over-allocated water based on some “good year” for water rather than what is consistently available on an annual basis[7]. When and where this occurs, problems of shortages are already occurring, but mostly at a level that does not change life for most people. Huge caches of water mean that the water does not stop flowing to the average house. Reservoirs, lakes, and aquifers can be noticeably low and consistently declining, but the faucet still works and the price to the average person is not prohibitively high.

All of this comes to a head when the reservoir is empty rather than simply low and declining. One place that has come perilously close to this being a reality is the Colorado River basin. Recently Lakes Mead, Powell, Havasu, and Mohave all approached levels that would cause their respective dams to lose generation capacity because there simply was not enough water to run the turbines. No fewer than thirty-five million people in the US and Mexico (perhaps as many as forty-five) - roughly constituting one in eight U.S. residents and much of the population of Arizona, Nevada, and Utah, and significant populations in California, Colorado, New Mexico, and Wyoming - currently rely on water from the Colorado River watershed for basic survival.

With these shortages, it is only a matter of time before the government needs to reallocate water rights to distribute them differently than it does under current water rights allocations[8]. Purchasing these century-old water rights is a possibility, but only if the holder of the right is willing to sell. At some point, the government will be forced to confront some troubling questions, such as “Who gets to drink, the human or the cow?” This all brings us to the ultimate question: if the government starts reallocating water rights, when does it become a constitutional taking of property?

IS REALLOCATING WATER RIGHTS A “TAKING”? IF SO, WHEN?

A constitutional taking occurs when the government takes private property without just compensation[9]. Takings generally fall into three categories: total takings, total regulatory takings, and regulatory takings. If the government takes the property AND the associated water right, the answer is fairly clear: it is a total taking requiring full compensation, and this is perhaps the simplest avenue for a state to broadly reallocate water resources. Less dramatic, a total regulatory taking occurs when the government does not physically take the property, but rather enacts a law or regulation that effectively deprives the property owner of “all economically beneficial us[e]” of the property[10]. Where things become more complicated is when the government takes away a right to some of a water or takes away the right to use the water for a limited period of time, but falls short of taking the full economically beneficial uses of the water. This scenario presents a regulatory taking, but not a total regulatory taking.

The Supreme Court has established some standards in the case of Penn Central Transp Co. v. New York City[11]. Issues to consider include “[t]he economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations.”[12] Additionally, the court should consider whether the actions involve “some public program adjusting the benefits and burdens of economic life to promote the common good.” [13]

Some threshold questions arise in considering whether a state can re-allocate water rights:

1. Does depriving water from a right-holder constitute a total taking or a regulatory taking?
2. To what extent does the state have prior appropriation priority in all water rights?
3. Can the government redefine what constitutes a “beneficial use?”

Addressing these questions is easier with a factual background. In 2019, the D.C. Circuit heard the case of Baley v. United States[14]. The case involved the water levels in the Klamath River in Oregon and Northern California. The Department of the Interior’s Bureau of Reclamation halted water deliveries to farmers and irrigation districts in order to provide habitat for an endangered fish species. It also addressed an Indian tribe’s fishing access to this specie, which they had previously fished since time immemorial. The farmers challenged this stoppage of their water deliveries as, among other things, an unconstitutional taking of their water rights.

1) On an issue that the D.C. Circuit declined to address, the lower Federal Court of Claims came to a complicated conclusion in finding the action to be a physical taking rather than a regulatory taking[15]. The Court found that regulatory takings involve “restrictions on the use of … property,” but noting that whether such restrictions constitute a compensable taking requires “balancing and complex factual assessments.” [16] By contrast, a physical taking involves “an action that had the effect of preventing plaintiffs from enjoying the right to use water provided by an irrigation project.” [17] Hedging its bets, though, the court stated that “in making this decision, it is in no way making any determinations as to the nature or scope of plaintiffs’ alleged property rights.” [18] In combination, the Court of Claims reasoned that it would perhaps be a regulatory taking if the government dictated how water was used, but that this situation involved a physical taking because the water was taken altogether. Again, though, the court punted on the issue of what the scope of the actual property right was. Whether this general framework will become a more universally recognized construction is an open question, but it seems like a fair likelihood.

2) On the issue of water rights priority, the D.C. Circuit Court found that the farmers’ “water rights were subordinate to the Tribes’ federal reserved water rights.” [19] The tribe possessed federally reserved water rights that were contextually superior to all other rights because they pre-existed all other claims to rights to the water of the river system. If this logic is continued, the various governments (federal, state, tribal) have certain rights to water from their very inception.

3) Where this construction gets “fishy” is on the issue of beneficial use. The court reasoned that the tribes have superior rights because their rights are first in time compared to any other non-government actors. The rights that they have are rights to water of which they have continuously maintained a beneficial use. The Court noted that the “Klamath Tribes have federally-reserved non-consumptive water rights to support fishing on their former reservation.” [20] To continue the logic, the tribes have rights to sufficient water to maintain fish stocks in the rivers to which they have water rights, and since the tribes’ fishing activities predate all other claim to a right to the water, their vested water rights have a meritorious, but not absolute, claim as to all later arrivals.

The farmers had argued that the Klamath Tribes are entitled to only the amount of water that is sufficient to support their hunting and fishing rights as they currently are exercised, and that they do not fish or use the suckers “for any purpose today.” The court rejected this argument and stated that it does “not follow that by not fishing the endangered suckerfish, the Klamath Tribes have abandoned their rights to fish them.” [21]

The issue of the nature and extent of water rights as property is decidedly unsettled. The higher state courts and the US Supreme Court have not squarely addressed the issue with conviction. The existing framework says that the tribe (in this case and with these specific facts) has a right to enough water to keep the existing fish in the rivers where they have always been, as their fishing rights were necessarily first in time.

With respect to the fight between private consumptive uses that have not existed “forever” (agriculture, ranching, domestic use, etc.), the correct approach seems to be to endow those rights with the constitutional status of “property” and require just compensation for taking those rights from one older (but newer than forever) private beneficial use to give to another interest. As between private parties, the prior beneficial use should triumph, but a private interest should not prevail against the interest of state or tribe in defining priority when there is a use that existed before the modern American legal system arrived.

CONCLUSION

Water rights should be thought of as property. Their contours are trickier to define than a piece of land, but they should nonetheless be considered property, and a taking of those rights should require just compensation. The concept of “beneficial use” works in two directions. You must maintain a “beneficial use” of your water right to retain it. You are fully compensated for your loss if a regulatory taking removes “all economically beneficial use” from your property. However, there might be a public “beneficial use” that predates your private beneficial use, and the positions in line might change. The question of where the property right to water begins and ends is still a bit of a legal void, but it currently does (and should) revolve around the concept of beneficial use.

References

[1] Chennat Gopalakrishnan, “The Doctrine of Prior Appropriation and Its Impact on Water Development: A Critical Survey”, The American Journal of Economics and Sociology (1973), at. 32; 61–72.

[2]Samuel C. Wiel,Water Rights in the Western States(Bancroft Whitney 1905) at 92-96, 154-189.

[3] Douglas County v. Sedalia Water and Sanitation District, 343 P.3d 16 (Colo. 2015)

[4] Susie McGovern, “Causes And Effects of Lake Mead and Colorado River Basin Water Shortage” (September 25, 2022), available at https://earth.org/lake-mead-and-colorado-river-basin-water-shortage/.

[5] See, generally, Meredith Haley Whiteley, Miracle on the Salt River: Water, Family & Farming in the Arizona Desert (The History Press 2014); See also, Kira Wakeam et al., “Amid a water crisis, Arizona is using lots of it to grow alfalfa to export overseas,” National Public Radio (August 9, 2023), available at https://www.npr.org/2023/08/09/1192996975/amid-a-water-crisis-arizona-is-using-lots-of-it-to-grow-alfalfa-to-export-overse

[6] https://web.archive.org/web/20210429012609/https://www.census.gov/data/tables/time-series/dec/popchange-data-text.html

[7]Budge Ruffner,All Hell Needs Is Water(University of Arizona Press 1972).

[8] Robin K. Craig, “Drought and Public Necessity: Can A Common-Law ‘Stick’ Increase Flexibility In Western Water Law?”, 6 Tex. A&M L. Rev. 77 (2018), available at https://doi.org/10.37419/LR.V6.I1.4

[9] U.S. Const. Amend. V and XIV.

[10] Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978).

[11] Id.

[12] Id. at 124.

[13] Id.

[14] 942 F.3d 1312 (2019) (cert. denied 141 S.Ct. 133 (2020))

[15] 134 Fed. Cl. 619 (2017)

[16] Id. at 660.

[17] Id. at 644.

[18] Id. at 661.

[19] Baley, 942 F.3d at 1341 (D.C. Cir.).

[20] Id. at 1331.

[21] Id. at 1336.