Instream Water Dedications

1. Instream Water Dedications Nicholas A. Jacobs

2. Section 1707 Transfers - Pros • Necessary for permitted or licensed rights • Certainty for the purchaser or donee

3. Section 1707 - Cons • Potentially costly and time consuming SWRCB process • Water right may be conditioned (i.e. reduced in quantity or otherwise limited) • Rights subject to SWRCB jurisdiction may lose value in eminent domain proceedings. (Wat. Code § 1629.)

4. Easements • Water rights are real property. • There is precedent suggesting that California servitudes law is flexible enough to recognize a servitude encumbering an appropriative water right. For example, the Legislature has specifically created “conservation easements” that restrict uses of the servient “tenement” for the purposes of retaining land in its “natural, scenic, historical, agricultural, forested, or open-space condition.” A “conservation easement” differs from most easements in that it is neither appurtenant to a dominant tenement nor is it held personally. (See Civil Code, § 815.2(c) [conservation easement “shall not be deemed personal in nature”].) Thus, in the interest of encouraging environmental preservation, the state has already recognized some flexibility in the definition of “easement,” albeit through specific statutory measures. California law also recognizes certain rights of access to water as servitudes, and it expressly defines them as “easements.” Specifically, both the “right of having water flow without diminution or disturbance of any kind” and “the right of taking water” are recognized as servitudes that may encumber land as easements. (Cal. Civil Code, § 801, subdivs. (5) and (11).) Although the statute again defines the “easement” in terms of its encumbrance on land, it is clear that the real burden of the easement adheres to water rights associated with the land.

5. Fudickarv. East Riverside Irr. Dist. (1895) 109 Cal. 29 • In one case from the late 19th century, the California Supreme Court recognized that a right to receive water via a canal and pipeline was an estate interest in property, and that a litigant’s claim to that right by virtue of the language of a deed could be heard. (Fudickarv. East Riverside Irr. Dist. (1895) 109 Cal. 29). Although the Court never expressly characterized the property interest in the water as an “easement,” the parties themselves frame the question in terms of whether the right conveyed was “an easement in gross” (arguably not transferred to successors in interest) or whether the right to water was a servitude that ran with the land. (See e.g., appellant’s argument at p. 33.) In either case, the court appears to agree that the underlying interest in the water, combined with the property interest in the conveyance pipe, could properly be encumbered by an easement for water.

6. Wright v. Best (1942) 19 Cal.2d 368 • One case appears to expand specifically the scope of California easement law to permit the attachment of an easement to an appropriative water right. Wright v. Best (1942) 19 Cal.2d 368 resolved a dispute over the incompatible uses of water from a creek running near a ranch and several mining claims. The predecessors in interest to the ranch signed an agreement with a mining company that used the creek upstream of the ranch to dispose of mine tailings. Under the terms of the agreement, the mining company acquired “a perpetual right to pollute the waters of [the] creek.” The agreement was recorded, but was never formally assigned or transferred to the mining company’s successors in interest. (See pp. 373-374.) • Notwithstanding the fact that the agreement had not been assigned or transferred to the subsequent owners of the mining company lands, the Wright court nevertheless found that the current mine operators had a right against the successor in interest to the ranch to pollute the creek with mine tailings. It did so by ruling that the agreement effectively created an easement over the appropriative water rights held by the ranch. The court acknowledged that, under its express language, the agreement “may not reasonably be construed as creating an easement upon the land.” (Page 381.) Instead, the “right clearly intended by the agreement is an easement annexed to the appropriative water right enjoyed by [the rancher].” (Page 382.) “Although no authority has been cited,” the court continued, “for or against the proposition that an easement may be attached to a water right, there is no legal or practical objection to the creation of such an incident.” Further, the court found statutory authorization for easements securing “rights similar to the one under discussion,” such as the right to discharge water upon land. (Ibid., citing Civil Code section 801.) It further noted that appropriative rights were interests in realty, and concluded that an appropriative water right “can appropriately serve as a servient estate to which an easement may be annexed.” (Ibid.) The court went on to define the easement as being appurtenant to the claims owned by the mining company at the time of the agreement, rather than being a “personal” easement that could be used to benefit other lands held by the easement owner. (Pages 383-384.)

7. Easements - Pros • 1. For pre-1914 and riparian rights holders, probably more efficient than 1707 process • 2. No conditions imposed or impairment of right by SWRCB • 3. Recordable(?) and running with land

8. Easements - Cons • 1. Not binding on third parties, who may divert water and frustrate purpose of easement • 2. May be considered abandoned or forfeited, if pre-1914 right (and see number 1)

9. Waste Water Dedications • 1210. The owner of a waste water treatment plant operated for the purpose of treating wastes from a sanitary sewer system shall hold the exclusive right to the treated waste water as against anyone who has supplied the water discharged into the waste water collection and treatment system, including a person using water under a water service contract, unless otherwise provided by agreement. Nothing in this article shall affect the treatment plant owner's obligations to any legal user of the discharged treated waste water. Nothing in this article is intended to interfere with the regulatory authority of the board or any California regional water quality control board under Division 7 (commencing with Section 13000). • 1212. The board shall not grant any permit or license to any person other than the treated waste water producer for the appropriation of treated waste water where the producer has introduced such water into the watercourse with the prior stated intention of maintaining or enhancing fishery, wildlife, recreational, or other instream beneficial uses. Holders of existing water rights may not use or claim such water.

10. Status Quo • Pursuant to section 1210, waste water treatment plant operators are increasingly attempting to transfer treated waste water in order to raise funds to offset costs associated with plant operations. • Section 1212 often used by the plant operator to perform environmental mitigation associated with plant operations

11. Future Developments • Pursuant to sections 1210 and 1212, and perhaps bolstered by clarifying legislation, waste water treatment plant operators may begin selling the rights to instream flows for purposes of environmental mitigation • Current legislation may not contain sufficient protections for potential buyers