" Who Owns the Water ? (Caution, it's a trick question):

1. "Who Owns the Water? (Caution, it's a trick question): Understanding the Fundamentals of Water Management Law Russell McGlothlin Brownstein Hyatt Farber Schreck rmcglothlin@bhfs.com (805) 882 1418

2. "Whiskey is for drinking; water is for fighting over."

3. Water Law & Policy • Who/What Gets the Water? • Under What Conditions? • Are Policy and Law in Synch?

4. The Qualifications • Confusing • States Use Different Approaches • Frequent Exceptions to the Rules • The Law is Sometimes Not Well-Suited for the Science • Not Always Logical/Practical • Goal = Introduction. Basic Understanding.

5. “Things should be as simple as possible, but not simpler.” ~ Albert Einstein

6. Water Policy Questions • Who owns the water? The public? Those that have historically used it? • Is there a distinction between water in its natural state, water that has been captured and taken into possession, and a “water right?” • Is water a human right? Does need = right? What are the legal implications? • Should private enterprise play a part in the distribution of water? • What is a water right? Is a water right a “property right?” How do you define a property right? • On what grounds/procedure should a water right be obtained? • Should historical use be relevant to the establishment and maintenance of a water right? • Should landownership be relevant to the establishment and maintenance of a water right? • How should conflicts between competing users/uses of water be resolved? What are the relevant considerations?

7. Water Policy Questions • Should water be defined as subject to the “public trust?” If so, what does that mean and what are the legal implications? • How should conflicts between consumptive uses of water and instream/environmental uses of water be resolved? What are the relevant considerations? • Should the government be able to modify rights over time (e.g., reduce the quantity or timing of allowed withdrawal)? • Should the government be required to pay compensation for requiring modifications or adjustments to water right? If so, under what circumstances? • Is water rights certainty important? Does uncertainty cause social problems? Can a water right ever be truly certain? • What expectations of a water right holder are reasonable? Unreasonable? • What “public” expectations concerning the administration of water are reasonable? Unreasonable? • Should respective private and public expectations concerning water administration inform the analysis of whether the government should be required to compensate for modifications to water rights?

8. Water Policy Questions • Should the manner of water use (i.e., how it is used) be relevant to the right to use water? • Should the type of water use (i.e., to what purpose the water is used) be relevant to the right to use water? Should certain uses be prohibited? • Should bottling of water be prohibited or subject to stricter water laws? • Should water rights be transferrable? Are there advantages of water markets? If so, what are they? • Are there social problems that can result from water transfers? If so, what are they and how should they be managed? • If a water right is not used for a specific period should the right be forfeited? • Should a county or state be allowed to prohibit the export of water out of its jurisdiction? • Is water a good? Is it subject to NAFTA?

9. What Defines Water Use Law in the U.S.? • Mostly State Law (Federal Reserve Rights = Exception) • Three Approaches: Riparianism, Prior Appropriation, and Hybrids • Surface Water vs. “Groundwater” • Who Regulates/Manages? • Groundwater Law is Less Developed and is Still Evolving • Private Water Rights to Use Water – Publicly Regulated

10. Tragedy of the Commons

11. Water is a Unique Resource Because it is Shared and Transient

12. Are Water Rights Property?

13. Public v. Private • CA Water Code section 102: All Water Within the State is the Property of the People of the State, but the Right to the Use of Water May be Acquired by Appropriation in the Manner Provided by Law. • Initiation of Water Use Subject to Public Interest Review and Ongoing Police Power Regulatory Oversight; Inherent Aspect of the Right • Think Zoning • Key Point: Right to Use = Property Right Subject to Regulatory Regime • Debate Over Where to Draw the Line? Public Trust, Regulatory Takings, etc.

14. Beneficial and Reasonable Use Limitation With Few Exceptions, All States Apply Some Form of Beneficial and Reasonable Use Limitation on the Right to Use Water

15. What is Unreasonable/ Non-Beneficial? • Speculation? Water Rights in “Cold Storage?” • Reasonable Efficiency or Optimal Use? (Alfalfa, Golf Courses, Artificial Lakes in the Desert?) • Harm to Environmental and Other Public Trust Considerations? • Is Good Public Policy Served by Allowing Courts to Determine Optimal Use? Legislature? • Alternative: Markets??? Challenges???

16. CA Examples of Unreasonable Methods of Use and Non-Beneficial Purposes of Use • Use of Full Flow of Stream to Maintain Accretion (Sediment Buildup) to Downstream Riparian Land -- Gin Chow v. Santa Barbara (1933); • Flooding of Fields to Kill Gophers --Tulare Irr. Dist. v. Lindsay-Strathmore Irr. Dist. (1935)

17. Three Approaches to Water Law: the Old, the New, and the Ugly • Riparianism (The Old): Land with Water = Riparian Water Rights • Prior Appropriation (The New): Land is Irrelevant – First-in-Time is First-in-Right • Hybrid (The Ugly): Riparianism and Prior Appropriation

18. RiparianismOrigins in English Common Law • Riparian Right - the Right to Divert Water from a Water Body Adjoining Land for Use on Adjoining Land • The Right is an Incident of the Rights to the Land (i.e., Part of the “Bundle” of Rights) • Essentially Two Doctrines: • Natural Flow - Right to the Entire Flow of the Stream - Minor Exceptions • Reasonable Use - Right to Divert for “Reasonable” Uses. Related Doctrines: Correlative Rights Doctrine and 2nd Restatement of Torts

19. Natural Flow Doctrine(Old English Rule) • Riparian Owner Possessed the Right to the “Full” Flow of the Stream “Undiminished as to Quality or Quantity” • “Domestic” Uses Allowed • Pre-Industrial England

20. Reasonable Use Doctrine(New American Rule) • Natural Flow Doctrine Not Well Suited for the Industrial Age • Courts and Legislatures Amend Old English Common Law to Allow for Irrigation and Industrial Uses So Long as Water is Used Reasonably • Correlative Rights Doctrine Adopted in Some States – Riparians Share Supply

21. Riparian Rights • Appurtenant to Land; Right to Use Water from Adjoining Water Body • Traditionally Must be on Riparian Land (Exceptions Apply) • Reasonable Use • Rights May be Correlative (i.e., Riparians Share the Supply) • Right May be Inchoate (i.e., Dormant) - Not Dependent on Historical Use

22. Criticism of Riparian Rights - The Need for Certainty • Unrecorded, Unknown Quantity – Can Preempt Vested, Long-Standing Uses • Uncertainty Deters Long-Term Planning and Investments in Water Rights and Infrastructure • Dormant Rights Impair Administration of Water Rights Because of Uncertainty • Not Well Suited for Water-Scarce Environments

23. Prior Appropriation • Developed in Western Mining Camps Because Riparianism Was Not Well-Suited for Miners (Miners Were Largely Trespassers on Public Lands) • Water Disputes Rapidly Escalate • Perfection of Right Through Posting Notice at Place of Diversion and Commencing Diversion

24. Appropriative Rights • May Apply to Use Off of Riparian Tract • Defined by Historical Quantity of Use • Priority Based Upon First-In-Time, First-in-Right • May be Forfeited (i.e., Lost) by Non-Use • May Require State Permit • California: State Water Resources Control Board • Colorado: Division of Water Resources (State Engineer) • New Mexico: Office of State Engineer • Nevada: Division of Water Resources (State Engineer)

25. Riparianism vs. Prior Appropriation • Riparianism – Mostly in Eastern States and Those Along the Mississippi (the Old) • Prior Appropriation – Mountain and Western States (the New) • Hybrid States – Dual System States. Generally, Recognize Riparian Rights that Vested Before the State Changed to an Appropriative System. (e.g., Kansas, Nebraska, North and South Dakota, Oregon, Texas, Washington) • California – the True Dual System State

26. California Water Law • Riparian Rights are First Priority Rights • Appropriative Rights are Second Priority Rights • Surface Water Regulated by the State • Percolating Groundwater Regulated by Local/Judicial Management if Regulated

27. Riparianism v. Prior Appropriation • Conflict Between Miners (Appropriators) and Landowners Who Possessed Land Under Mexican Land Grants (Riparians) • California Supreme Court Addresses the Conflict in Lux v. Haggin (1886)

28. And the Winner Is . . . We Choose Both!! • Court Reasons that California’s Adoption of the English Common Law Included Adoption of the Riparian Doctrine • However, Court also Acknowledges Prior Appropriation but Renders Appropriative Rights “Junior” in Priority to Riparian Rights

29. Uncertainty fostered in California by riparian/overlying rights • California’s water law is a source of uncertainty because it endorses riparian/overlying rights and appropriative rights, with riparian/overlying rights being senior in priority • Dormant riparian rights are a principal source of uncertainty in California – In re Long Valley

30. QUESTIONS???

31. What About Groundwater? • Often Separate Law Applies • Historically Viewed as an Occult • Groundwater Law Not as Well Developed in Some States

32. What is “Groundwater”? • What’s the Issue? The Demarcating Line Between “Independent” Groundwater and Groundwater That is Surface Water “Dependent” (Feeds or is Fed by Surface Watercourse) • Other Terms - Percolating Groundwater vs. Subterranean Stream; Surface Water Underflow; Groundwater Flowing within Relatively Impermeable Beds and Banks (Known and Defined Channel) • What is at Stake? Who Regulates? Can I Get a Permit? Can I Be Sued or Sue? Other Legal Implications

33. Difficult Issue Because it Pits Countervailing Interests Against One Another • Want Certainty to Support Decisions to Plan and Invest in Water Resources • Want “Rational” System that Appreciates the Hydrologic Connection Between Surface Water and Groundwater

34. Potential Approaches • Rigid Separation – If It’s Under the Surface, It’s Groundwater (e.g., Oklahoma) • Fully Integrated System – It’s All One (e.g., Nebraska Gives Local Districts Authority to Designate Integrated GW/SW Management Areas) • Bright Line – Location of Groundwater (e.g., (1) Within 1,000 ft of Stream and Less than 200 ft Deep; or (2) Colorado - Will Withdrawal Deplete SW Waterbody Within 100 Years by More Than 1/10 of 1% of the Amount Withdrawn?) • Character of Groundwater – Focus on Geology/Hydrogeology (e.g., Groundwater Flowing with Relatively Impermeable Beds and Banks)

35. CaliforniaPercolating Groundwater v. Subterranean Stream • Percolating Groundwater: Vagrant, Wandering Drops Moving By Gravity in Any and Every Direction Along the Path of Least Resistance –City of Los Angeles v. Hunter (1909) • Subterranean Stream (“Groundwater Flowing in Known and Definite Channel”) • Subsurface Channel Present; • Channel Possess Relatively Impermeable Beds and Banks • Course of Channel Capable of Being Known with Reasonable Inference; and • Groundwater is Flowing in the Channel • Beds and Banks Test - Los Angeles v. Pomeroy (1899)

37. Groundwater Law:The Approaches • Absolute Ownership/Rule of Capture • Common Law Reasonable Use • Correlative Rights • 2nd Restatement of Torts § 858 • Prior Appropriation

38. Rule of Capture(Absolute Dominion) • Rule of Capture = Get It and It’s Yours • The Water Hog Doctrine • 8 States Have Adopted or Indicated a Preference for Rule. Texas has the “Most Pure” Capture Rule, But Now Manages by Groundwater Districts

39. Reasonable Use and Correlative Rights • Common Law Reasonable Use - Capture Rule But Water Must be (a) Used on Overlying Land, and (b) Put to Reasonable Use • Correlative Rights – Based Upon Reasonable Use Doctrine - Sharing of Supply Among Overlying Landowners. Share of Supply May be Based on Acres Owned, Water Needs, etc. • At Least 34 States Use Some Form of Reasonable Use Doctrine – Common Law Reasonable Use (25 States), Correlative Rights (6 States), 2nd Restatement of Torts § 858 (3 States)

40. Second Restatement of Torts § 858 • Landowner Can Produce Groundwater Without Liability Unless the Withdrawal: • Harms Neighboring Landowner’s Groundwater Production; • Exceeds Reasonable Share of Supply; or • Has a Direct and Substantial Effect on Watercourse or Lake, Which Unreasonably Harms Person Entitled to Use of Watercourse or Lake • Reasonableness Determined in Reference to Variety of Considerations • 3 States Have Formally Adopted (Michigan, Ohio, and Wisconsin) • Might be Used to Define Reasonableness in Other States

41. Appropriative Rights to Groundwater • Like Appropriative Rights to Surface Water • Defined by Historical Quantity of Use • Priority Based Upon First-In-Time, First-in-Right

42. CaliforniaOverlying Groundwater Rights: Similar to Riparian Rights • Overlying Rights to a Groundwater Aquifer Are Analogous to Riparian Rights to a Surface Water Body • Same Legal Characteristics Apply to Both Forms of Right

43. Riparian/Overlying Rights • Appurtenant to Land; Right to Use Water from Adjoining Surface Water Body/Underlying Aquifer • Use Must be on Riparian/Overlying Land • First Class Right (Senior to Appropriative Rights) • Rights are Correlative (i.e., Equal Legal Footing) with Other Riparians/Overlying Owners; Conflicts Between Riparians/Overlying Land Owners Settled Pursuant to Reasonable Use Considerations • Right May be Inchoate (i.e., Dormant), and Thus is Not Dependent on Historical Use; Only Limited in Quantity by Reasonable and Beneficial Use Criteria

44. CaliforniaThe Water Rights Table

45. Overdraft . . . • Adverse Basin Effects • Prescriptive Rights • Ramp-Down • Doctrine of Intervening Public Use The Rules Change . . . Maybe

47. What is Overdraft? • Groundwater extractions in excess of safe yield • Safe yield defined as “the maximum quantity of water which can be withdrawn annually from a groundwater supply under a given set of conditions without causing an undesirable result.”City of Los Angeles v. City of San Fernando (1975) • “Undesirable results” = water quality degradation, seawater intrusion, land subsidence, or uneconomic use of groundwater • Continual drop in water levels over time, even after wet years, leading to undesirable results - City of Pasadena v. City of Alhambra (1949)

48. What is the Effect of Overdraft on Groundwater Rights? • Overlying Owners Entitled to Enjoin Appropriators (Junior Appropriators Reduced/Eliminated First) • Adversity Commenced for Purposes of Prescriptive Rights • Prescriptive Rights May be Obtained After Satisfaction of the Four Elements of Prescription (Actual, Open and Notorious, Adverse, Exclusive and Continuous for Five Years) • Nuances Apply

50. Legal Rights to Store Water Underground • In California “Developer” of Stored Groundwater Has Exclusive Right to Recapture the Stored Groundwater –Los Angeles v. Glendale (1943) and Los Angeles v. San Fernando (1975) • Overlying Landowners Likely Cannot Exclude Water Developers from Storing Water Under Their Lands so Long as No Harm Occurs (County v. Park County Sportsmen’s Ranch (Colorado 2002)) • In California There is Some Uncertainty Over Who Has Prior Right to Store in the Event of Competition for Storage Space (Central Basin Storage Conflict)