Mabey Wright & James PLLC

Utah Water Takings

jschutz — Tue, 13 Dec 2011 17:22:29 +0000

Article I, section 22 of the Utah Constitution states that “private property shall not be taken or damaged for public use without just compensation.” A taking is “any substantial interference with private property which destroys or materially lessens its value, or by which the owner’s right to its use and enjoyment is in any substantial degree abridged or destroyed.” Governmental entities may regulate what a property owner can do with their property and may have a significant impact on the utility or value of the property, but compensation is only required when governmental action goes too far and is a taking. As always, the issue is how far is too far. A taking will not occur where a government imposes reasonable restraints and regulations necessary to “protect and promote public health, public safety, morals, and general welfare.” Regulation that inconveniences a property owner is not a taking.

The first inquiry in a takings analysis is whether the claimant possesses “a protectable interest in property that is taken or damaged for a public use.” If the party does not have a protectable interest, there cannot be a taking. Because water rights are largely determined by state law, courts will look to state law in determining whether a party has a protectable interest in water rights.

In Utah, a water right is a real property interest. Both the amount of the appropriation and the priority of the appropriation is a property interest. The place of use, purpose of use and point of diversion are also essential characteristics of a water right. Perfected water rights (certificated rights, judicially decreed rights, diligence claims, and adjudicated water users claims) are protectable property interests. Protectable property interests can also include personal, intangible, incorporeal property rights such as contracts and all property rights protected under the Fifth Amendment of the United States Constitution. This could include water shares or water supply contracts.

However, a water right is not a property interest like real property; it is subject to hydraulic variability, reasonable and beneficial use requirements, and priority. All the water of the state belongs to the public, and a water right holder has a right to use the water, as permitted and administered by the State Engineer. A water right holder takes water rights subject to certain constraints and increasing federal and state regulation. For example, all water rights are constrained by forfeiture and beneficial use requirements and municipalities’ water rights are constrained in that they may not “lease, sell, alien or dispose of any waterworks, water rights, or sources of water supply . . .”

A party can establish a taking to all the water that no longer reaches its lands because of governmental action upstream; the taking will not the water that would never have reached the downstream users because of seepage and evaporation. Government action depriving the water user of the use of water can be a taking.

There are many water takings cases that illustrate situations that will not constitute a taking—most cases are unsuccessful and only physical takings of water have been successful in Utah. A water right holder does not have a right to illegally use water; the State Engineer may curtail or cease any illegal diversion without causing a taking. The State Engineer may adjust the priority date of a water right that has not been certificated—this right is considered inchoate—and the applicant did not timely file proof. A landowner does not have a protectable interest in prohibiting upstream water diversions to maintain high river flows to maintain a high water table on land abutting river and acting as a barrier to prevent subsoil drainage back into the river. A taking will not occur where a city requires irrigation company shareholders to dedicate water shares to connect to the city’s secondary water system, but allows non-shareholders to pay money to connect. A party does not have a protectable interest in a particular level of soil saturation. A property owner has no protectable property interest in using their property in a manner that is “per se injurious or obnoxious or a menace to society.”

Development exactions, including water dedication requirements, must be roughly equivalent to the impact they cause, meaning the exaction must be related both in nature and extent to the impact of the development. In Utah, for a taking to occur under a zoning ordinance, the property owner must be deprived of all reasonable use of the property. “Mere diminution of in property value is insufficient to meet the burden of demonstrating a taking by regulation.”

As illustrated above, most of the water takings cases are decided in favor of the government—against there being a taking. The most likely situations where a taking of water rights could occur in the future would be if the State Engineer reduced the priority of a perfected right. A taking could occur if the State Engineer or other state agency curtailed a perfected right to dedicate water to fish flows. If a groundwater management plan reallocated water rights or reduced water rights in a manner other than on priority, this could also be a taking.

If a taking does occur, damages will be in money, and property cannot be substituted in lieu of money unless the condemnee agrees. The amount of compensation should be based on the “inherent value of the property” at issue and its highest and best use, not just the use to which the party put the use historically.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this blog post or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

The information on Mabey Wright & James’ blog and on its website are for informational purposes only. This general information is not a substitute for legal advice, and users should consult with legal counsel for specific advice. In addition, using this information or sending electronic mail to Mabey Wright & James or its attorneys does not create an attorney-client relationship with Mabey Wright & James.

Utah Supreme Court Defines When Water Company Shares Are Appurtenant to Land

jschutz — Fri, 02 Sep 2011 20:00:30 +0000

By Jon Schutz and David Wright

In Sanpete America, LLC v. Willardsen, 2011 UT 48 (issued August 16, 2011), the Utah Supreme Court defined when water shares may be appurtenant to land and pass with land conveyances. David Wright of our office was counsel for Willardsen.

Background

Sanpete involved 110 acres of farmland (the “Land”) owned by Willardsen. In June 1999, Sanpete America and Willardsen executed an option contract for the Land and water rights. Sanpete America was made up of four individuals, including Robert Clyde and Paul Hamilton. Mr. Neeley, the escrow agent and Willardsen’s attorney, stated that he did not know anything about water rights and did not guarantee the conveyance of Willardsen’s water rights. Mr. Hamilton agreed to take care of the legal description of the water rights to be conveyed and of determining what water rights Willardsen owned. Paul Hamilton investigated the water right and concluded that water right 65-920 (WR920) attached to the land and was sufficient to irrigate 200 acres, for a total of 600 acre-feet (af) of water. Sanpete America believed the water was worth about $3,000 to $4,000 an af, or $1.8 to $2.4 million. Sanpete America intended to purchase the Land and WR920 and sell 100 af of water to pay for the $328,350 purchase price of the Land. In researching WR920, Hamilton discovered a reference to 80 shares of stock in South Fork of Ditch 28 Pumping Company (South Fork).

Sanpete and Willardsen executed a Land Purchase Agreement for 109.45 acres, WR920 for a flow of 1.1783 cfs and irrigation of 200 acres, a culinary water well, an irrigation pond, and all other water that was part of the property. Willardsen executed a warranty deed on August 7, 1999, but did not immediately deliver it to Sanpete because it lacked a description of water right 65-918 (WR918) for a smaller culinary well on the Land. Hamilton provided Neeley’s office with a description of WR918, but instead of adding the description of WR918, Neeley’s office replaced the description of WR920 with the description of WR918 . Neeley’s office recorded the warranty deed with only a description of WR918. The warranty deed included a transfer of all appurtenant water. Later, Neeley’s office prepared a deed titled a Warranty Deed, but the language of the deed quitclaimed Willardsen’s interest in WR920 to Sanpete . Neeley sent of copy of this deed to the Division of Water Rights to update its ownership records.

The Division responded by saying WR920 was owned by South Fork, which had issued shares to various individuals. The Division did recognize Sanpete as the owner of sufficient water to irrigate 68.46 acres. South Fork had issued 144 shares. Willardsen’s predecessor in interest owned 80 shares, which he transferred to Willardsen along with the Land by deed. The only other shareholder was Ms. Graser, who held 37 shares. South Fork had functioned as a corporation for decades.

Sanpete borrowed the funds to pay Willardsen and sold portions of the land and WR920 to service that loan..

Sanpete sued Graser, Willardsen, and Neeley. It sought to quiet title against Graser. It sued Willardsen for misrepresentations, breach of the Land Purchase Agreement, and unjust enrichment. It sued Neeley for breach of the escrow contract, professional negligence, and breach of fiduciary duties as escrow agent for not following the escrow instructions. Sanpete reached a stipulated settlement with Graser. This blog post will address only the claims against Willardsen.

Trial Court Decisions

Judge Mower of the trial court dismissed Sanpete’s claims. He ruled that WR920 did not pass by appurtenance. He found that Hamilton had undertaken the responsibility to describe the water rights and Willardsen had relied on Hamilton’s efforts. Judge Mower did rule that Willardsen breached the Land Purchase Agreement by not conveying WR920 by warranty deed, but determined that this did not harm Sanpete.

All the parties filed motions to amend Judge Mower’s findings and conclusions of law. Judge Mower retired and Judge Bagley assumed the case. Judge Bagley granted Willardsen and Neeley’s motion and denied Sanpete’s motion. Judge Bagley determined, among other things, that WR920 was appurtenant to the Land, WR920 was conveyed by appurtenance in the August 7, 1999 warranty deed, Willardsen conveyed clear title on August 7, 1999, Willardsen did not breach the Land Purchase Contract, and Sanpete was not entitled to damages or attorney fees.

Utah Supreme Court Decision

The Supreme Court focused on two issues regarding WR920: (1) whether Willardsen conveyed his portion of WR920 under the warranty deed and, if so, (2) whether Willardsen breached his covenant of warranty by not defending Sanpete ’s title to WR920 in its suit against Ms. Graser. The Court held that Willardsen conveyed his portion of WR920 under the warranty deed and that he did not breach his covenant of warranty. In short, it determined that Sanpete received all of Willardsen’s water rights for the Land and was not harmed, even if it was less water than what it had mistakenly calculated. The Court affirmed on all issues.

The Court held that WR920 was appurtenant to the Land. The Court relied on Utah Code section 73-3-11, which states that a right to use water based on shares is not appurtenant to land. It also stated that this statute creates a rebuttable presumption that a water right represented by shares of stock does not automatically pass to a grantee as an appurtenance. This presumption may be rebutted with clear and convincing evidence that the water right is appurtenant and that the grantor intended the water right to transfer with the land, even though it is not mentioned in the deed. Therefore, the issue for the Court was whether WR920 was appurtenant to the Land and whether Willardsen intended that WR920 be conveyed by the warranty deed.

The Court articulated a test for determining when shares are appurtenant to land: (1) whether the use of the water right on the land greatly increased the land’s value; (2) the length of use upon the land, particularly, the length of use beyond the grantor’s ownership; and (3) the extent of use upon the land. The Court determined that WR920 met each of these criteria and was appurtenant to the Land because (1) the water right had been used on the Land for decades: the well for WR920 was drilled in 1934, and Willardsen acquired the water right in 1967 and used it continually since that time; (2) WR920 was used on all of Willardsen’s 109 acres; and (3) it was implicit that the value of the Land was very little without WR920. The Court determined that Willardsen intended to transfer WR920 Sanpete because both parties conceded this point. Also, the documents at issue, the warranty deed and quit claim deed, show the parties’ intention that WR920 be transferred to Sanpete . Combining its determination that WR920 was appurtenant to the Land and that Willardsen intended to transfer WR920 to Sanpete , the Court held there was clear and convincing evidence to rebut the presumption that WR920 was not appurtenant to the Land.

The Court found that the exceptions to the conveyance of water rights by appurtenance found at Utah Code section 73-1-11 were not applicable. The Court also found that Willardsen did not breach the covenant of warranty.

Conclusion

Sanpete is significant because it establishes that one may rebut the presumption that a water right represented by shares of stock does not automatically pass to a grantee as an appurtenance. The presumption is rebutted with clear and convincing evidence that the water right is appurtenant and the grantor intended the water right to transfer with the land. Sanpete also sets forth the criteria for determining when a water right represented by shares is appurtenant to land.

A copy of the decision is available here.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this blog post or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

Utah Legislature Passes Bill to Address Lost Water Company Share Certificate Process

jschutz — Mon, 27 Jun 2011 09:00:27 +0000

By Jon Schutz

In Senate Bill 25, the Utah Legislature modified Utah law regarding water company shares that are lost, destroyed, or stolen by setting up a process for to replace such shares.

Under the revised statute, the Company must issue a replacement share (1) if the person is the registered owner of the share and notifies the company of the lost share before the company receives notice that the share is owned by a protected purchaser, or, if the person is not the registered owner, and they establish ownership to the Company’s satisfaction; (2) the assessments are current; and (3) the party pays an acceptable indemnity bond or substitute.

Instead of requiring an indemnity bond, the company may follow specific notice and publication requirements before it issues replacement stock certificates. If the Company receives an objection to issuing a replacement stock certificate, it may evaluate the claim and issue the replacement share to the objecting party or the party seeking the replacement share, file an interpleader action in court and join the parties asserting ownership, or require the parties to resolve the matter by agreement. The Company must follow the settlement agreement or court order deciding the matter. The prevailing party and the water company, if acting in good faith, are entitled to costs and reasonable attorney fees. A company’s decision to deny or issue a replacement share is subject to de novo judicial review within thirty days.

If a protected purchaser comes forward to register or transfer the lost share after the replacement share is issued, the Company will register the transfer unless it will cause an overissue. If an overissue would occur, the company may recover the replacement shares, except from a protected purchaser. However, if the Company followed the prescribed notice and publication requirements, the protected purchaser must file an objection or it waives any claim.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this blog post or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

Utah Supreme Court Addresses Recording Priority of Water Right Deeds

jschutz — Fri, 24 Jun 2011 03:11:33 +0000

In Haik et al. v. Sandy City, 2011 UT 26, two parties held deeds to the same water right. Sandy City (“Sandy”) was conveyed the water right via a deed and an “Agreement of Sale” (“Agreement”). It recorded the Agreement in 1977 and the deed in 2004. The Plaintiffs purchased the water right in 2003 and recorded the deed that year. The lower court determined that the Plaintiffs recorded their deed first and in good faith. The Utah Supreme Court determined that the Agreement put the Plaintiffs “on record notice that Sandy had an equitable interest in the water right,” but that the issue was whether record notice of the equitable interest defeated the Plaintiffs’ purchase of the water right in good faith. The Court determined that while notice of an equitable interest can defeat a subsequent conveyance of the property, it did not in this case.

The Agreement was signed by Sandy in 1977. Shortly thereafter, Saunders Sweeney conveyed the water right to Sandy City by deed, which Sandy recorded in 2004. In 1999, Saunders-Sweeney conveyed the same water right to another party who filed a change application on the water right with the State Engineer. Sandy protested the change application, but did not assert ownership of the water right in the change application process. The water right was later conveyed through a number of parties to the Plaintiffs. Before the water right was conveyed to Plaintiffs, a professional title examiner searched the county records. The title examiner did not locate the Agreement because he only went back to 1983. If he had of gone back further, he would have found the Agreement. In 2004, the Plaintiffs filed a change application with the State Engineer. Sandy protested the change application based on the Agreement and earlier deed. Sandy recorded its deed and attempted to update title with the State Engineer. The State Engineer denied Sandy’s attempt to update title. Plaintiffs filed the action to quite title to the water right.

The first issue was whether the Agreement put the Plaintiffs on notice of Sandy’s interest in the water right. The Court determined that the Agreement put Plaintiffs on record notice that Sandy had an equitable interest in the water right. Id. at 5. Because Utah is a race-notice state, the issue became whether record notice of Sandy’s equitable interest was sufficient to negate the Plaintiffs’ claim of taking the water right in good faith. The Court held that the Plaintiffs did take the water right in good faith because they believed they had good title, Sandy waited nearly twenty-seven years to record its interest, and Sandy City did not contest ownership of the water right in 1999 when Plaintiffs’ predecessor-in-interest filed their change application. Id. at 6. In the end, the Court determined that the Plaintiffs owned the water right because they were the first to record their water right deed in good faith.

The full opinion can be found here.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this blog post or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

United States Supreme Court Extends Title VII Retaliation Protection to Third Party Employees

cjames — Tue, 25 Jan 2011 19:30:30 +0000

This month the United States Supreme Court determined that the fiancee of an employee who filed a sex discrimination claim could articulate a retaliation claim under Title VII of the Civil Rights Act of 1964 when he was fired three weeks after the Equal Employment Opportunity Commission informed the company of the charge.

The ruling is a significant sea-change for retaliation law, and reverses several lower courts’ view of the anti-retaliation provisions of Title VII.

In this case the The U.S. Court of Appeals for the 6th Circuit said that the plaintiff was a third-party since he did not file the original sex discrimination complaint, and therefore was not covered under Title VII. The Supreme Court disagreed and held that the plaintiff qualified as an “aggrieved” worker under Title VII and that the lower courts’ interpretation could have a chilling effect on a reasonable employee’s willingness to make a complaint.

What this means: up until now, only the party filing a claim of discrimination or harassment was protected from retaliation. This appears to mean that a company can no longer subject friends, family, or even potential witnesses to any adverse job action that can be linked to the original claim- regardless of who filed the claim. In order to articulate any retaliation claim, an employee must demonstrate that he or she ‘participated in a protected activity’- it will be interesting to see how this new decision affects how that ‘participation’ is defined.

You can read the decision here.

Corper James is a partner at Mabey Wright & James. If you have any questions regarding this blog post or other employment law questions, you can contact him at cjames@mwjlaw.com or 801-359-3663.

United States Supreme Court Hears Interstate Water Case – Flooding to Sprinkler Irrigation Issues

jschutz — Thu, 20 Jan 2011 18:04:26 +0000

Last week, the United States Supreme Court heard arguments from the States of Montana and Wyoming regarding their interests in the Powder and Tongue rivers, which flow from Wyoming into Montana, and are tributaries to the Yellowstone River. The Court has original jurisdiction to hear interstate disputes.

Montana brought the case and alleges that Wyoming is using more water than it is entitled to under a 1951 Compact between Montana, Wyoming and North Dakota. One of the primary issues is whether Wyoming may use modern irrigation techniques, diverting the same quantity of water, but reducing the amount of return flows.

The Court appointed a special master in the case: Barton Thompson of Stanford Law School. Thompson issued a report in February 2010, available here. The United States is not a party to the suit, but filed an amicus brief supporting Wyoming.

The most novel claim for Western law, including Utah Water Law, is Montana’s claim that Wyoming, by switching to more efficient irrigation, is consuming more water than it would under flood irrigation to Montana’s detriment because less water is running back into the river after irrigation. Wyoming was engaged in the same uses on the same acreage, diverting the same amount of water; the only change at issue was the amount of water consumed because of more efficient sprinkler systems. After a lengthy discussion of consumption versus diversion of water, Thompson’s report concluded that the Compact itself “establishes only the amount of water that can be diverted, not consumed.” However, the Compact states that each party’s diversion must be “in accordance with the laws governing the acquisition and use of water under the doctrine of appropriation.” Therefore, Thompson also addressed the issue of whether prior appropriation law addresses whether “(1) an agricultural appropriator, (2) [may] increase his or her consumption of water, (3) on the same irrigated acreage to which the appropriative right attaches, (4) to the detriment of downstream appropriators, (5) in the same water system from which the water was originally withdrawn?” Though he states that no western court has addressed this issue squarely, he concluded that the Compact should not be read to prohibit increased consumption in Wyoming because of irrigation efficiency, even where it harms Montana water users.

Montana also claimed that Wyoming was violating the Compact through “(1) irrigation of new acreage, (2) storage of water in new or expanded reservoirs, and (3) groundwater withdrawals.” Thompson’s report concluded that the Compact protected pre-1950 water rights in Montana from new diversions in Wyoming after 1950 and from new acreages in Wyoming if it harms pre-1950 Montana uses. The report concluded that appropriations for storage, new acreage, or supplemental water supplies must come from “unused and unappropriated water” and must protect pre-1950 water rights in Montana. “Montana, however, cannot demand that Wyoming release water from its reservoirs to meet the needs of pre-1950 appropriators in Montana if the water was stored at a time when the needs of the pre-1950 appropriators were fully met.” Lastly, Thompson’s report determined that some groundwater extractions could violate the Compact if the pumping began after January 1, 1950 and is hydrologically connected to the Yellowstone River or its tributaries. However, he concluded that this issue need not be resolved in this case.

In the end, Thompson recommends that the U.S. Supreme Court deny Wyoming’s motion to dismiss.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this blog post or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

The information on Mabey Wright & James’ blog and on its website are for informational purposes only. This general information is not a substitute for legal advice and may not represent the the latest legal developments. Users should consult with legal counsel for specific advice. In addition, using the information in this blogpost or sending electronic mail to Mabey Wright & James or its attorneys does not create an attorney-client relationship with Mabey Wright & James.

Utah Stream Access Coalition Files Suit Challenging Public Waters Access Act

jschutz — Tue, 23 Nov 2010 05:15:44 +0000

On November 12, the Utah Stream Access Coalition filed suit in Wasatch County challenging the Public Waters Access Act, enacting Utah Code sections 73-29-101 through 73-29-208. The Utah legislature passed this act in 2010.

The suit names Victory Ranch, Silver Creek-Robert Larsen Investors, Wasatch County Sheriff Todd Bonner, and the Utah Division of Wildlife Resources as defendants.

The case seeks the following relief:

1. Judgment declaring that Utah’s public waters are owned by the people of Utah for their benefit; that the public has an easement, right-of-way and servitude to use Utah’s public waters for recreation and other lawful purposes; and that private landowners may not prevent Coalition members or the public from accessing public waters;

2. Judgment declaring that the Act is unconstitutional;

3. An injunction barring defendants from preventing public access to public waters;

4. An injunction barring the Division of Wildlife Resources and the County Sheriff from penalizing the public for accessing public waters.

A copy of the complaint can be found here. An article about the suit can be found here.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this blog post or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

Great Salt Lake Minerals Reduces Diversion Request From Great Salt Lake

jschutz — Mon, 22 Nov 2010 04:32:24 +0000

Great Salt Lake Minerals originally filed a water rights application for 353,000 acre-feet. Recently, it reduced this request to 150,000 acre-feet, asserting that new technologies have increased the company’s efficiency by 60 percent. An article about the reduced request can be found here and here.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this blog post or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

California Water District Case Could Set Precedent for Water Rights Takings Claims

jschutz — Mon, 08 Nov 2010 09:00:35 +0000

By Jon Schutz

Last week oral argument continued in the Casitas Municipal Water District (Casitas) takings case. Casitas is arguing that the federal government must compensate it $87.3 million because NOAA Fisheries required the district to dedicate a portion of its water rights to endangered fish flows. This case may be very consequential to water law, including Utah water law.

Background

Casitas operates a federal reclamation project on behalf of the Bureau of Reclamation (BoR) pursuant to the Reclamation Act of 1902. The project involves two dams and reservoirs and a canal and conveyance system on the Ventura River in California. The BoR owns the facilities, Casitas operates them pursuant to operating criteria and regulations adopted by BoR, and Casitas possesses a valid water right from the California State Water Resources Control Board entitling it to divert a specified amount of water.

In 1997, the NOAA Fisheries listed the West Coast steelhead trout as an endangered species under the Endangered Species Act (ESA). As a result of this listing, NOAA Fisheries issued a Biological Opinion (BiOp) requiring Casitas to install a fish passage facility and fish screens to prevent the take of the listed species. NOAA Fisheries also issued revised operating criteria for the project that required Casitas to leave up to 3,200 acre feetof water in the river for fish migration and downstream fish habitat.

Trial Court—U.S. Court of Federal Claims[1]

Casitas argued that the new operating criteria constituted a physical per se taking of its water rights by NOAA Fisheries because they permanently reduced the amount of water Casitas could divert from the project by 3,200 acre-feet annually. Casitas argued the reduced water diversion should be analyzed as a physical per se taking because water presented a unique taking situation in that, unlike land, any restriction on the use of water entirely deprives the owner of the use of that water. The government argued that because the restrictions did not deny Casitas all economical use of its water that any taking here should be treated as a regulatory taking and analyzed under the Penn Central factors. The court acknowledged that the operating criteria amounted “to a transfer of value through which [Casitas’] right of use is diminished and the public right is simultaneously enlarged.”[2] However, relying on Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (2002) 535 U.S. 302, the court determined that a taking did not occur because it felt that this case involved only a governmental restraint on Casitas’ water right and did not amount to a government takeover of the water right.[3] The court determined that a per se physical taking had not occurred because Casitas was not deprived of all economical use of its water and water rights. Therefore, the court rejected Casitas’ attempt to grant water special status in takings jurisprudence and instead evaluated the action as a regulatory takings.

U.S. Court of Appeals for the Federal Circuit[4]

In 2008, the U.S. District Court for the Federal Circuit Court reversed, determining that the BiOp’s requirement for Casitas to release about 3,200 acre feet for water that would otherwise be used constitutes a physical taking for public use. The court stated

“In this case, in contrast, the water that is diverted away from the Robles-Diversion Canal is permanently gone. Casitas will never, at the end of any period of time, be able to get that water back. The character of the government action was a physical diversion for a public use—the protection of an endangered species. The government-caused diversion to the fish ladder has permanently taken that water away from Casitas. This is not temporary, and it does not leave the right in the same state it was before the government action. The water, and Casitas’ right to use that water, is forever gone. Unlike Tahoe-Sierra, the government, in this case, directly appropriated Casitas’ water for its own use–for the preservation of an endangered species. The government requirement that Casitas build the fish ladder and divert water to it should be analyzed under the physical takings rubric.”[5]

The Court then reversed the Court of Claims’ holding in favor of the United States with regard to the Fifth Amendment taking.

Latest Proceedings

Oral argument is occurring again before Judge Weise in the U.S. Court of Federal Claims to apply the holding of the Court of Appeals. The Court of Federal Claims is now required to apply the reasoning in the Court of Appeals in determining the ultimate issue of whether a taking has occurred in this case, and if so, the amount of compensation.

Conclusions

The holding of this case could be very significant because the federal government has required fish flows for endangered species from water projects all over the country. The holding of this case could also affect Utah water law as Utah itself is struggling with how to meet its interstate commitment to avoid jeopardizing fish listed under the ESA while also trying to fully utilize its full Colorado River allocations. This case could hold that compensation is necessary anytime government requires fish flows that reduce one’s water right entitlement. Such a holding would significantly limit the ability of state and federal governments to address fish flows.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this article or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

[1]Casitas Mun. Water Dist. v. United States (2007) 76 Fed. Cl. 100; seehttp://www.uscfc.uscourts.gov/sites/default/files/WIESE.CASITAS032907.pdf.

[2]Id.

[3]Id. at 106.

[4]Casitas Municipal Water Dis.t v. United States, 543 F3d 1276 (2008); see http://www.cafc.uscourts.gov/images/stories/opinions-orders/07-5153.pdf.

[5]Id. at 1296.

Utah Mine Asked to Treat Groundwater Indefinitely

jschutz — Wed, 03 Nov 2010 03:09:45 +0000

By Jon Schutz

In August 2007, Crandall Canyon mine collapsed killing six miners and collapsed again ten days later killing three rescuers. After the mine collapse, the mine filled with groundwater and since 2008 has spilled from the mine’s entrance. State officials say the water spills at about 500 to 1,000 gallons a minute and contains iron.

The mine owners are currently spending $325,000 annually. Recently, the Utah Board of Oil, Gas and Mining demanded that the owner of the mine guarantee to treat the water in perpetuity through a reclamation bond. Counsel for the mine argues that perpetual funding for water treatment in an active mine is unprecedented in Utah. Mine owners would have to pay $33 million into an interest bearing fund to continue the treatment in perpetuity.The Utah Board of Oil, Gas & Mining is considering holding hearings to resolve the issue.

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Jon Schutz is an attorney at Mabey Wright & James. If you have any questions regarding this article or other water law questions, you can contact him at jschutz@mwjlaw.com or 801-359-3663.

The information on Mabey Wright and James’ blog and on its website arefor informational purposes only. This general information is not a substitute for legal advice, and users should consult with legal counsel for specific advice. In addition, using this information or sending electronic mail to Mabey Wright & James or its attorneys does not create an attorney-client relationship with Mabey Wright & James.