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Transfer

Can I change my use of the water?

Recall that beneficial use is the basis, measure and limit of a water right. This section of the chapter will cause us to more closely consider the meaning of "limit." For example, am I limited to using the water on just this land, or can I transfer the water to another tract?  Can I transfer the water to another user? Can I change the use? Can I change when I use the water? Can I change the amount that I consume and thus impact the amount that flows back to a watercourse? Can I change the point of diversion?  Can I change the point of discharge? Can I change the quality of the water that returns to the watercourse? 

• What are the limits on how I can use the water?

Remember that one of the basic principles of prior appropriation is that my actions cannot interfere with or harm other appropriators, except if there is not enough water and my right is superior (prior) to the other users'.

These issues reflect our understanding that one use of water impacts other uses of water.

Can I change the use of the water? What are the limits on how I can use the water?

Farmers Highline Canal & Reservoir Co. v. City of Golden, Colorado, 1954 (p. 197 of Gould's 7th ed.)

• City of Golden petitioned for a change in the point of diversion. It had recently purchased irrigation rights and wanted to convert them to municipal uses.
• Water is a property right, it is subject to sale, its point of diversion can be changed, and its use can be changed. But other users from the same source cannot be injured by the change, and the burden of proof is upon the party petitioning for the change.
• Junior appropriators have vested right in the continuation of the stream conditions as they existed when they acquired their appropriation.
• Irrigators (the prior appropriators in this case) cannot waste water, extend the use of their water, or lease (to another user) water they (the irrigators) are no longer using.
• Changes in use of the water right should not injure subsequent appropriators.
• Trial court findings did not align with its order (found no injury if 1.2 cfs were changed but then ordered 1.76 cfs to be changed).
• General injury to the stream does not mean "no injury to the junior appropriators." Instead, if the change would deplete the source, conditions should be imposed to counteract the loss, and if the loss cannot be counteracted, the petition to change the point of diversion should be denied. Quantity of consumptive use and return flows after the change in the point of diversion can be considerations in deciding whether the change will be injurious to junior appropriators.
• It is the purpose of the law to protect all appropriators.

• Transfer raises questions about changing a water right without losing priority.
• Transfers are necessary responses to changing conditions. Should transfers be determined by administrative fiat or market forces?
• What is the criteria for allowing the transfer of water rights? "No injury." We cannot overlook that one use can impact another use; or that changing one use can impact another use. So the issues include can I change the quantity consumed, the amount available as return flow, the dates of use, the timing of use, the quality of remaining water or return flows, etc.
• Is "historic use" the limit of how water can be used in the future? That assures that other users will not be impacted by the change, but it also "locks" the water into its current application and provides little flexibility for it to be changed in response to change needs and changing technology. 
• Does the rule of "no-injury" make economic sense? Does it allow our resources to be put to their "best" use?
• Why do the rules for "transferring" water rights seem more concerned about junior appropriators (those rights that are subordinate to the right being transferred) than about senior appropriators (those rights that are superior to the right be changed)?
• What is the procedure to transfer a water right?

N.D.C.C. §61-04-15 Assignment or transfer of water permit

• N.D.A.C. §89-03-02-08 Assignment to another person
• N.D.A.C. §89-03-02-09 Transfer to another parcel
• N.D.A.C. §89-03-02-10 Change in location of use
• N.D.A.C. §89-03-01-10.1 Temporary water transfer for irrigation
• Also see "Transfer of an application to another parcel" (N.D.A.C. §89-03-01-3.1) and "Assignment of an application to another person" (N.D.A.C. §89-03-01-03.2).

N.D.C.C. §61-04-15.1 Permit holder may change point of diversion without loss of priority date if approved by the state engineer after determining that the change will not adversely affect other appropriators.

• N.D.A.C. §89-03-02-01 Change in point of diversion and change in purpose of use
  • N.D.A.C. §89-03-03-01 Point of diversion defined
• N.D.A.C. §89-03-02-11 Increase in pumping rate

Note: these changes and transfers must be approved by the state engineer (see N.D.C.C. §§61-04-15 and -15.1) and that notice must be given to surrounding landowners as if it was an application for a conditional permit (N.D.A.C. §89-03-02-05). Also note the criteria for granting these changes or transfers.

• "Upon reasonable proof that such assignment or transfer can be made without detriment to existing rights..."
• "... if the state engineer determines that the proposed change will not adversely affect the rights of other appropriators."

Utah statute on conveyance of water right

• Who has the burden of proving no adverse impact -- the party requesting the change (to establish there will be no adverse impact) or the party resisting the change (to establish that the change will have an adverse impact)?
• Rules of transfer apply to perfected permits as well as conditional permits (i.e., applications).
• Can I change the amount of water I consume, and thus also impact the amount of water that returns for others to use?
• Do we have the technology to determine the impact of making changes before changes are implemented?
• Should water rights be measured in terms of quantity consumed, rather than quantity diverted?
• Are there adequate facilities to accommodate transfers of many water rights? Is there a practical limit to the transferability of water rights?

What is the criteria the agency must apply when deciding whether to allow a change in the use of the water?

Bonham v. Morgan, Utah 1989 (p. 207 of Gould's 7th ed.)

• Applicants sought change in point of diversion, place and nature of use; plaintiff sued state engineer; case was summarily dismissed for lack of standing; plaintiff appeals.
• Plaintiff claims that applicant's change leads to annual flooding of plaintiff's land and this is would detrimentally impact the public welfare.
• Engineer concluded he could not consider plaintiff's concern since the engineer is limited to considering the impact on vested water rights, and plaintiff does not have any vested water rights in this case.
• Plaintiff argued that state statute (sec 14) gives standing to any person aggrieved by the engineer's decision. Statute (sec 8) requires an evaluation of all damage to public and private property.
• Court ruled that statute (sec 3) did not contemplate sec 8 and the plaintiffs did not fit within sec 14.
• On appeal -- state engineer is required to undertake the same investigation in a permanent change as the statute mandates for an original appropriation; and plaintiffs fall within sec 14.
• Complaint is reinstated.

• Is "public interest" a criterion for a water transfer (like it is in initially deciding whether to grant a water right)?  Consider these sections of code:
  • N.D.C.C. §61-04-15 "can be made without detriment to existing rights"
  • N.D.C.C. §61-04-15.1 "will not adversely affect the rights of other appropriators"
  • N.D.C.C. §61-04-15.1 "Any change in purpose of use may be for a superior use only"
• Are temporary transfers allowed? see N.D.A.C. §89-03-01-10.1 -- transfer water for irrigation from one tract to another tract to accommodate crop rotations.
• How about allowing the market to determine water use?
• Water banking -- appropriators reduced their use so water could be used by others; this was during a drought.  After the drought, original users resumed their prior operations.  Those who drew water from the "bank" during the drought paid and those who "provided" water to the bank received payment.  The "bank" reduced the time and cost it would have taken for buyers to find sellers; the bank operated like a marketplace to reduce transaction costs.  The transfer was more a lease than a sale, that is, a temporary (not permanent) transfer of water use.

Can a municipality force a water user to transfer their water right? Does a city have the power of eminent domain to acquire water rights? Is changing the use of water a local issue or a broader (statewide) issue?

City of Thornton v. The Farmers Reservoir and Irrigation Co., Colorado, 1978 (p. 213 of Gould's 7th ed.)

• City of Thornton brought an action of eminent domain against the Irrigation Company to acquire water and water rights, ditches and ditch rights.
• A 1975 statute allowed municipalities to exercise eminent domain but 1) three commissioners are appointed to determine the necessity of exercising eminent domain, 2) a city cannot condemn water rights for future needs in excess of 15 years, and 3) the city must prepare a community growth development plan to be presented to the three commissioners appointed by the court.
• The district court ordered dismissal.
• The supreme court reversed and ruled the 1975 statute unconstitutional as it applies to Thornton, a home-rule municipality.
• The Colorado constitution delegated to home-rule municipalities full power to exercise the right of eminent domain; and once the city determined a necessity to condemn the water rights, the decision is not reviewable by the judiciary (such as, the three-member commission), absent a showing of fraud or bad faith.
• A legislative statute is superior to an ordinance of a home-rule municipality in the case of a conflict relating to a matter of statewide concern. However, the constitution's explicit grant to home-rule municipalities of power to condemn cannot be denied by a legislative enactment.  Therefore, the statute requiring a three-member commission is unconstitutional.
• DISSENT argues that home-rule has exclusive control over local and municipal matters only; and that matters of statewide concern remain subject to statewide regulation. Exercise of eminent domain over water rights is a matter of statewide concern and therefore is subject to the statute requiring the three-member commission.

• Can the power of eminent domain be used to shift water from one user to another? What are the implications of forcing the former user to give up all their water?
  • June 2005 -- US Supreme Court decided the Kelo case addressing public use.
  • Syllabus: Held: The city’s proposed disposition of petitioners’ property qualifies as a “public use” within the meaning of the Takings Clause...
  • (a) Though the city could not take petitioners’ land simply to confer a private benefit on a particular private party, ... the takings at issue here would be executed pursuant to a carefully considered development plan, which was not adopted “to benefit a particular class of identifiable individuals,” ... Moreover, while the city is not planning to open the condemned land—at least not in its entirety—to use by the general public, this “Court long ago rejected any literal requirement that condemned property be put into use for the . . . public.” ... Rather, it has embraced the broader and more natural interpretation of public use as “public purpose.” ... Without exception, the Court has defined that concept broadly, reflecting its longstanding policy of deference to legislative judgments as to what public needs justify the use of the takings power...
  • (b) The city’s determination that the area at issue was sufficiently distressed to justify a program of economic rejuvenation is entitled to deference. The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue. As with other exercises in urban planning and development, the city is trying to coordinate a variety of commercial, residential, and recreational land uses, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the city has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the plan’s comprehensive character, the thorough deliberation that preceded its adoption, and the limited scope of this Court’s review in such cases, it is appropriate here, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the Fifth Amendment...
  • (c) Petitioners’ proposal that the Court adopt a new bright-line rule that economic development does not qualify as a public use is supported by neither precedent nor logic. Promoting economic development is a traditional and long accepted governmental function, and there is no principled way of distinguishing it from the other public purposes the Court has recognized... Also rejected is petitioners’ argument that for takings of this kind the Court should require a “reasonable certainty” that the expected public benefits will actually accrue. Such a rule would represent an even greater departure from the Court’s precedent ... The disadvantages of a heightened form of review are especially pronounced in this type of case, where orderly implementation of a comprehensive plan requires all interested parties’ legal rights to be established before new construction can commence. The Court declines to second-guess the wisdom of the means the city has selected to effectuate its plan...
• Statement from the opinion: We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power. Indeed, many States already impose “public use” requirements that are stricter than the federal baseline. Some of these requirements have been established as a matter of state constitutional law, while others are expressed in state eminent domain statutes that carefully limit the grounds upon which takings may be exercised.

Also see North Dakota's response to the Kelo decision: ND Const. Art. I, Sec. 16 (second paragraph).

Other North Dakota statutes

• Municipalities may purchase water -- N.D.C.C. §40-33-16; this statute does not expliclity address the authority to purchase a water right
• Municipalities may exercise eminent domain to build and operate a waterwork system -- N.D.C.C. §40-05-01(36); does not explicitly authorize the use of eminent domain to acquire a water right; also see N.D.C.C. §40-05-02(19).

See Colorado statute §37-41-113(3) -- "Such board has the power ... to construct, acquire, purchase, or condemn any canals, ditches, reservoirs, reservoir sites, water, water rights ..."

• Should we allow water to transfer to the highest bidder? 
• Should we force a water user to "sell" their water rights when they do not want to? Does their refusal to sell indicate that the offered price was not high enough? 
• Is water so precious that it should be allocated on the basis of criteria other than who is willing to pay the most?

Last updated February 22, 2007

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