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Regulation

Permit System

Am I required to use the permit system or is it optional?

Wyoming Hereford Ranch v. Hammond Packing Co., Wyoming, 1925 (p.117 of Gould's 7th ed.)

• Can a lawful of appropriation of water be made without a permit when the state statute requires that after 1890 anyone intending to appropriate public water must first apply for a permit?
• Permit is a condition precedent to the right to divert and appropriate water.
• Opposing argument was that permit is only a way to establish priority to a date before the water is put to a beneficial use; and that one can still acquire a water right without a permit but the priority would date from the time the water is put to a beneficial use. This argument also contends that a statute which requires a permit is unconstitutional.
• The court explained that during the state's constitutional convention, delegates debated whether a water right was established by initiating construction of a water work or at a later time when the water was put to a beneficial use. The delegates did not resolve this question. Instead, it adopted a permitting process.
• There needs to be state supervision with accurate information thus the permit system will be the method of acquiring a water right; but permits will not be denied except if demanded by public interest.

• States adopted a system of water permits to replace the concept that a water right is acquired and notice is provided by diverting water for a beneficial use.
  • Do I need a permit?
• Several states transitioned to a permit system only recently; e.g., Montana in the early 1970s; Idaho had a dual system until the early 1970s; California did not take this step until 1980.
  • Note the "limiting" language of subsection 3 of the Montana statute.
• Colorado uses a court system to administer water rights, rather than an administrative agency. The state is divided according to river basins/systems.
• A permit to store water may be distinct from a permit to use stored water; for North Dakota, see N.D.A.C. § 89-03-01-01.3; also N.D.A.C. §§89-03-01-1.4 and 89-03-01-03.3.

North Dakota permit process

N.D.C.C. §61-04-02 Any person before commencing any construction for appropriating water of the state shall first secure a permit from the state engineer.

• Exception: if the water is for domestic, livestock or fish, wildlife and recreational uses, no permit is required; but the user must notify the engineer of the location and capacity of the work as soon as construction is completed; these users could apply for a permit, however, to clearly establish a priority date.
  • N.D.A.C. §89-03-01-09 Appropriation not requiring water permit -- "a water permit [even though] not required may be obtained from the state engineer to clearly establish a priority date."
• Exception to the exception: regardless of the use, a permit is required prior to constructing an impoundment capable of retaining more than 12.5 acre/feet or a well from which more than 12.5 acre/feet will be annually appropriated.
  • How much water is 12.5 acre/feet?  4.25 million gallons; if used equally throughout a year, it would be 11,645 gallons per day.  If an animal uses 35 gallons per day, 12.5 acre/feet would support about 333 head of livestock for one year.

N.D.C.C. §61-04-6.3 The date of the application will determine the priority of a permit that was issued; and filing corrections to the application within 60 days of notice of errors would not alter the priority date.

• N.D.A.C. §89-03-01-01.1 Priority date
• N.D.A.C. §89-03-01-02 Correction of unsatisfactory application
• N.D.A.C. §89-03-01-03 Amendment of application
• N.D.A.C. §89-03-01-03.1 Transfer of application
• N.D.A.C. §89-03-01-03.2 Assignment of application

N.D.C.C. §61-04-05 After filing application, applicant will be required to notify all landowners within 1 mile from the location of the proposed appropriation site.

• N.D.A.C. §89-03-01-04 Notice of application
• Also see N.D.A.C. §89-03-03-01 for definition of "one-mile radius "
• Also N.D.A.C. §89-03-01-05 Publication of notice of application

N.D.C.C. §61-04-05.1 There will be time for comments before the state engineer makes a recommendation. There will also be an opportunity to request a hearing after the state engineer has made a recommendation.

N.D.C.C. 61-04-06 If the four conditions (criteria) are found, the (conditional) permit will be granted ("state engineer shall issue a permit if the state engineer finds all of the following").

1. Rights of prior appropriator will not be unduly affected.
2. Proposed means of diversion are adequate.
3. Proposed use of water is beneficial.
4. Proposed appropriation is in the public interest; in determining public interest, the state engineer shall consider

a) the benefit to applicant,
b) effect of the resulting economic activity,
c) effect on fish and game resources, and public recreation,
d) effect of loss of alternative uses for the water that might be made within a reasonable time,
e) harm to other resulting from the proposed appropriation, and
f) intent and ability of applicant to complete the appropriation.

Public interest is discussed in several subsequent cases

[Recall N.D.A.C. §89-03-01-07 -- In North Dakota, a permit application may only be considered if works are associated with the proposed application, but also review previous discussion.]

• See N.D.A.C. §89-03-03-01 for definition of "works"

Also see N.D.A.C. § 89-03-01-01.2  Applicant is required to have an interest in the associated land.

Priority among competing applicaitons

• N.D.C.C. §61-04-06.1. Preference in granting permits. When there are competing applications for water from the same source, and the source is insufficient to supply all applicants, the state engineer shall adhere to the following order of priority:

1. Domestic use.
2. Municipal use.
3. Livestock use.
4. Irrigation use.
5. Industrial use.
6. Fish, wildlife, and other outdoor recreational uses.

• N.D.A.C. §89-03-01-11. Competing applications. Applications for conditional water permits from the same source for different uses will be considered competing applications if received by the state engineer within ninety days of each other.
• Note: this statute does not prioritize uses; it only prioritizes among competing permits. For example, if a permit for an industrial use is perfected (or an application is filed at least 90 days) before an application is filed for a municipal use, the industrial use will have priority based on N.D.C.C. §61-04-6.3. In this example, an established industrial use will NOT have to discontinue its use of the water when a municipal need subsequently arises and there is not enough water from the source to fulfill both needs.

If application is not approved

• N.D.C.C. §61-04-07 -- the state engineer's decision to not approve a permit can be appealed to the district court.

N.D.C.C. §61-04-06.2 The permit may contain limitations to protect the rights of others and public interest.

N.D.C.C. §61-04-09 When the water is ready to be put to a beneficial use, the state engineer will have the "works" inspected to determine capacity, safety and efficiency.  When satisfactory, the state engineer shall issue a perfected permit.

We already discussed the length of time the permit holder has to put the water to a beneficial use -- City of Thornton v. Bijou Irrigation Co. and City and County of Denver v. Northern Colorado Water Conservancy District

N.D.C.C. §61-04-26 A water permit may be recorded in the office of register of deeds in the county where the affected land is located.

Emergency/Temporary Permit

N.D.C.C. §61-04-02.1. Emergency or temporary authorization. "The state engineer may
authorize emergency or temporary use of water for periods not to exceed twelve months if the
state engineer determines such use will not be to the detriment of existing rights."

N.D.A.C. §89-03-01-10. Emergency or temporary authorization... the applicant must indicate the reason for the permit, quantity of water needed, proposed point of diversion, type of use, place of use, rate of withdrawal, source of water, dates of proposed use, and applicant’s address. The state engineer will evaluate the request and, if it is granted, the state engineer will list on the temporary authorization conditions that govern the appropriation.

An applicant for emergency use of water, if the situation warrants, may telephone the office of the state engineer requesting immediate use of water. Following an oral request and oral approval by the state engineer for authorization, the above procedures must be completed.

The applicant for temporary or emergency appropriations is responsible for all damages that may be caused to other appropriators and any other individual as a result of an emergency or temporary use of water."

 

Availability of Water

How much water is available? How is unappropriated defined?

Lower Colorado River Authority v. Texas Department of Water Resources, Texas, 1984 (p. 125 of Gould's 7th ed.)

• Unappropriated water means amount of water remaining after taking into account all existing uncanceled permits and filings valued at their recorded level.
• Commission will grant permit only if there is unappropriated water and the appropriation would not impair existing rights or be detrimental to public welfare.
• Based on computer model, the staff study concluded very little water would be available for appropriation; and that the proposed project would adversely impact two downstream lakes.
• Applicant (water district) argued there were uncanceled permits that were not using their water and therefore there was unused (unappropriated) waters.
• The court concluded -- uncanceled permits (unused permits) must still be treated as appropriated water in the amount of the water permit. Unused water is not available for reappropriation until the original permit is canceled.
• Note the concurring opinion and motion for rehearing -- remand the matter, do not reverse the lower court; by remanding this matter, the court preserved the water district's original application and thus preserved that date of priority.

• Nebraska relied on historical uses (assuming that historical use aligns with beneficial use which is the maximum amount for water), rather than amount stated in permit.
• The purpose of the rule to 'grant permits only if there is unappropriated water' is to eliminate permits that will have only a limited likelihood of receiving water.
• Is unappropriated water defined in the year of drought, average moisture, or high moisture? "Fairly continuous and dependable."
• What about prior water rights that have not yet been quantified, such as tribal and federal reserve rights (which we have not yet discussed)? How are they accounted for in determining whether there is any unappropriated water?
• Do not overlook two basic principles -- 1) use water for a purpose consistent with the best interests of the people of the state (NDCC 61-04-01.1 in defining beneficial use), and 2) subordinate users receive their water right aware of and subject to the rights of prior appropriators.

Public Interest

When would a proposed use not be "in the public interest?"

Young & Norton v. Hinderlider, New Mexico, 1910 (p. 133 of Gould's 7th ed.)

• Hinderlider filed for a permit in October 1907 to appropriate 200 second feet of flow and to construct a storage reservoir for 12,000 acre-feet to irrigate 14,000 acres.
• Young and Norton applied for a permit in December 1907 to irrigate 5,000 acres from the same stream, including a reservoir to store 10,000 acre-feet of flood waters.
• Hinderlider's application was rejected because a) it covered considerable public land and Young and Norton's land, b) Hinderlider's project would cost nearly twice as much per acre, and c) there was only enough water to irrigate 5,000 to 6,000 acres.
• On appeal to the Board of Water, Hinderlider was granted the permit because the engineer can reject an application for water permit based on public interest only if the project would be a menace to public health and safety.
• District court affirmed the Board.
• On appeal, the court determined that public interest is broader than just menace to public health and safety; the statutes are to be implemented to secure the greatest possible benefit from the water for the public; it is contrary to public interest to approve a project for which there is not enough water.
• Relative cost of the two projects is a consideration, but is not conclusive; no finding that cost of project was prohibitive (would a finding of a "prohibitive cost" justify not granting a permit?).
• Settlers v. non-resident may have some weight in the consideration but should not outweigh other considerations.
• Remanded with the matter left open to the introduction of any facts bearing on the question of public interest.

• Purpose of public interest review -- address issues that are not resolved due to market failure; the requirement of "public interest" causes administrative agency to consider issues beyond those of concern to appropriators, such as externalities.
  • Externalities -- an economic concept that "many activities have an impact on 'neigbors' who have 'no say' in the decision"
  • The challenge then is to devise a decision making process that considers externalities as well as the concerns of appropriators
• Benefit/cost analysis -- analytical procedure that attempts to identify and quantify all positive and negative impacts of a project or a decision, and then decide to proceed with the project only if the total benefits exceed total costs
  • B/C analysis also allows competing projects to be assessed against one another by comparing the B/C ratios for the projects; the project with the largest B/C ratio would be considered the most desirable
  • how does one analyze future projects, especially projects that have not yet been conceived?
• Opportunity costs -- the benefits forgone when an alternative is pursued; restated, every action has an implicit cost; that is, "what alternative projects cannot be pursued if we decide to pursue 'this' project?"
  • B/C analysis and opportunity cost both assume "there is not enough (water or other resources) to do everything."
• Rather than trying to envision future projects in making a decision about a water application today, how about "be willing to shift water from one use to another when a 'better' use arises in the future?" Would such a strategy cause a problem? 
  • One argument for not using such a strategy is that the first water right would be subject to being discontinued.  This uncertainly would discourage anyone from investing in a long term water project. Thus the law presumes that a water right will not be discontinued; but that leaves us with the problem of how to compare today's proposed projects to future projects that have not yet been envisioned?
• Subordination -- the court upheld the agency decision to grant/enforce a water right that was explicitly subordinated (at the time the right was created) to alternative future uses.
• Beneficial use v. public interest --
  • N.D.C.C. §61-04-06(4) appropriation must be in the public interest.
  • What is the relationship between the definition of beneficial use (N.D.C.C. 61-04-01.1(1)) and the public interest test (N.D.C.C. §61-04-06)?
    • Beneficial use means a use of water for a purpose consistent with the best interest of the people of the state.
    • In determining public interest, the state engineer shall consider a) the benefit to applicant, b) effect of the resulting economic activity, c) effect on fish and game resources, and public recreation, d) effect of loss of alternative uses for the water that might be made within a reasonable time, e) harm to other resulting from the proposed appropriation, and f) intent and ability of applicant to complete the appropriation.
    • does not include availability of "unappropriated water" as a criterion
    • includes impacts on fish/game and recreation as considerations, even though these uses are not allowed to acquire a water right (unless they involve a "works")

What is the definition of public interest?

Shokal v. Dunn, Idaho, 1985 (p. 138 of Gould's 7th ed.)

• Trout Co. was issued a permit for fish propogation and hydropower generation.
• Court remanded the decision because there was inadequate consideration of 1) financial ability of applicant to complete the project, and 2) the local public interest with respect to the project.
• Permit was again granted after changes to the project.
• Court reversed and remanded for a second time.
• Appealed to the state supreme court which upheld the remand.
• Financing issue was adequately addressed by the department.
• Local public interest: affairs of the people in the area directly affected by the proposed use; which means including any locally important factor impacted by the proposed project.
• Statute: Streams be protected against loss of water supply to preserve the minimum stream flows required for protection of fish and wildlife habitat, aquatic life, recreation, aesthetic beauty, transportation and navigation values, and water quality.
• Alaska's statute -- benefit to applicant, economic effect, loss of alternative uses, harm to others, effect on navigation or public waters, and intent and ability of applicant to complete the project.
• Also: minimum flow, discourage waste, and encourage conservation
• But public interest should be read broadly to secure the greatest possible benefit from the waters.
• Relevant elements and weights will vary among local needs, circumstances and interests.
• Design plans should be sufficient to apprise the public of the efficacy of the proposed use and its potential impact.
• The court stated that the statement "appropriator's rights prevail over riparian rights" fails to account for the state's policy of providing for minimum stream flow (public interest and public trust doctrines) -- court appears to be declaring minimum stream flow to be a riparian right; the court does not distinguish between an appropriator's right to divert and the right of a riparian land owner to divert; nor does the court distinguish between a riparian land owner's right to divert and a minimum stream flow.
• Water permit v. water quality issues: Water resources should condition issuance of permit on a showing by the applicant that a proposed facility will meet the mandatory water quality standards. There is authority to withhold a permit until there is a design proposal that appears to comply with water quality standards. Health department has right to be heard in proceedings before the Water Resources.

• Nevada -- state engineer specified guidelines for assessing public interest.
• States include game/fish and recreation as part of public interest criteria.
• Are impacts on the environment and endangered species considerations in determining public interest?
• Imposing conditions in permit is a way to address public interest considerations; see N.D.C.C. §61-04-06.2
• Imposing conditions in permit as an alternative to an in-stream flow appropriation; is this adequate protection for an in-stream flow?
• How are competing public interest considerations weighed against one another?
• Using water to address other issues, such as land-use issues (e.g., the next case).

Does public interest imply a fiduciary responsibility on the state? How is that responsibility fufilled?

United Plainsmen Association v. North Dakota State Water Conservation Commission, North Dakota, 1976 (p. 151 of Gould's 7th ed.)

• United Plainsmen sought to enjoin State Water commission from issuing permit for energy development until there is a comprehensive short- and long-term plan for conservation and development of the state's natural resources.
• Does statute mandate a planning responsibility? Court says no mandate.
• But it is a significant policy statement -- there still is a common law public trust doctrine, and the state cannot abdicate its trust (fiduciary responsibility) over property which the whole people are interested in; the property cannot be left entirely under the use and control of private parties.
• The public trust doctrine is broader than just conveyances of land. Statute defines public waters and this requires at a minimum, a determination of the future water needs of the state, and this determination involves planning. There needs to be evidence of some planning.
• Remanded.

N.D.C.C. § 61-02-01.1, §61-02-28 and §§ 61-01-26, -26.1, and -26.2

• Water plans in other states -- Kansas, California
• Must the plan be adhered to?
• Are preference statutes (e.g., N.D.C.C. §61-04-06.1) a type of "legislative planning" of water use?
• Are agency conditions in permits a type of planning?
• Ecosystem management -- holistic resource management --
  • addresses all resources, not just water;
  • addresses only environment concerns -- not other concerns (such as economic);
  • can ecosystem management address issues for the entire basin, and not be limited to political boundaries?
• Department of Interior -- Water 2025: Preventing Crises and Conflict in the West.
  • Fact sheet (executive summary of the project).

Adjudication and Enforcement

Who determines who holds which water rights? Can an administrative agency address issues that had in the past been resolved through litigation?

Farm Investment Co. v. Carpenter, Wyoming, 1900 (p. 159 of Gould's 7th ed.)

• Plaintiff contends that the 1890 legislation establishing a state board and a procedure for determining water rights is unconstitutional. The argument is that resolving the water rights can only occur in court.
• The court explains that the state constitution provides for a "board of control," the first legislature created such a board, and repealed the legislation authorizing water issues to be adjudicated in the courts.
• The procedure the board must follow includes
  • notice to affected persons,
  • the engineer measures and maps the water sources and water uses,
  • take testimony,
  • receive description of project and open it to the public,
  • interested parties can submit information,
  • the board conducts a hearing, and
  • the board's decision can be appealed to the court.
• The board's action leads to a settlement or adjustment of priorities and the issuance of a certificate indicating relative priority among appropriators. It does not result in a judgment granting damages or the issuance of a writ to prevent the unlawful invasion of a person's rights or privileges, that is for the courts.
• As between a court and administrative board, a board with experience and peculiar knowledge can solve the questions at less expense and with a larger degree of satisfaction, but still give due regard to private and public interests, conduct investigations, and ascertain individual rights.
• The board is making an administrative determination; not a judicial determination. The administrative proceeding secures evidence of title; its does not redress an injury.

Prior to establishing water control boards or similar agencies, states relied on litigation (adjudications) to determine the water rights held by appropriators. However, a decision applied only to litigants, not to the entire water system. Yet the actions of anyone in the water system impacts others throughout the system. A challenge is how to resolve these intertwined issues.

• States began to authorize "general adjudication" (all claimants within a water district are joined) to reduce piecemeal, expensive; adjudications are time consuming and expensive. Also, courts often did not have the necessary expertise or understanding of water resources.
• States then began to establish agencies (with the appropriate expertise) to address water issues.
• Can an agency make a general adjudication or does it need to be made by the courts? The agency has the information and expertise, but the court has the legal authority. See Texas where an agency's general adjudication is subject to a mandatory judicial review.
  • Also see N.D.C.C. §§61-03-16 to -19 -- Suit for adjudication of water rights
• Legislatures must proceed with caution to resolve water disputes or to clarify existing water rights because any statute intended to resolve the questions may be challenged as violating constitutional provisions that protect property rights (including vested water rights).
• Another challenge is to coordinate general adjudications among adjacent jurisdictions.
• How are new rights added to an adjudicated system? Adhere to the permit process.
• Another challenge is gathering the data necessary for an adjudication -- especially data about actual use. See N.D.C.C. §61-04-27 and N.D.A.C. §89-03-01-13.

What is the authority of an administrative agency?

Rettkowski v. Department of Ecology, Washington, 1993 (p. 169 of Gould's 7th ed.)

• Department of Ecology decided that the water rights of ranchers were superior to those possessed by the irrigation farmers, so the department ordered the farmers to discontinue groundwater withdrawals.
• The question is whether the department has the authority to issue such an order.
• An agency may only do that which it is authorized to do by the legislature. An agency cannot modify or amend a statute through its own regulations.
• The department argues that its authority is derived from its enabling statutes; that it is protecting senior water rights from encroachment by junior apppropriators. The department also argues that it "tentatively determined" the relative status of the water rights, and that the final determination would be made by the Pollution Control Hearing Board, which generally hears appeals from the department's decisions.
• Court explains that the department's authority applies to the application process. Once a permit is granted, it is a vested property interest, and the legislature has entrusted the courts with responsibility of resolving conflicts among water users.
• The court also explains that neither the department nor the board has the authority to adjudicate priorities between water users; that is, these entities are forbidden from conducting hearings relating to general adjudication of water rights. The department's role is to initiate the general adjudication process in the courts.
• Department should have initiated a general adjudication in the courts, rather than issue the order.

• Who enforces a water right, the agency or the private user?
  • N.D.C.C. §61-02-44 -- Controlling natural flow of stream deemed police power - Court appointed water commissioners not to deprive state water commission of its authority.
  • N.D.C.C. §61-02-14 Powers and duties of the (state water) commission
  • N.D.C.C. §61-02-23(1)(b) and (2) Power to pursue suits to adjudicate water rights.

• State Water Commission N.D.C.C. §61-02-14 Powers and duties of the commission.
• State Engineer N.D.C.C. §61-03-01 State engineer - Appointment
• Also see N.D.A.C. chap. 89-01-01 Organization of Water Commission
  • State enigneer "assists the commission by coordinating the operations of the commission and relieving the individual commissioners of administrative detail"

 

• N.D.C.C. §61-04-27 mandates annual report by water user; also authorizes state engineer to require measuring device. Also see N.D.A.C. §89-03-01-13: "The form for reporting water usage ... must include ... name of water source, amount of water usage, pumping rate ..."

• Where does the enforcement occur, in the agency or in the courts? 
  • N.D.C.C. §§61-02-42, 43, and 44.
  • "...The commission may police and distribute to the owner of any such recognized appropriation the waters due the owner upon request of such owner and under terms agreed upon." N.D.C.C. §61-02-43.
• Are water rights acquired outside the permit system enforceable? N.D.C.C. §61-04-22
• Does a private party bring an action against the agency, other users, or both?
• Can a court remand issues to the agency? Can the agency request that issues be taken before a court?

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