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Water Law Annotations (Agricultural Law and Tax)

Posted October 16, 2016

Court Construes Water Rights Involving Non-Indians on Tribal Lands. The plaintiff, a Montana limited liability company owned by three non-Indian siblings, owns allotment lands located in Big Horn County, Montana within water basin 43P and within the boundaries of the Crow Indian Reservation. The lands were formerly held in trust by the United States for the benefit of an allottee of the Crow Reservation’s federally reserved water right and a member of the Crow Tribe. The allottee died in 1997. The United States issued fee patents and converted the lands to fee status in 2006. The plaintiffs purchased the lands from an heir of the allottee in 2010 and in 2012. The plaintiffs filed a petition for adjudication of existing water rights in July 2016, asserting that its claims were exempt from claim filing requirements because they were for stock or individual domestic use. The plaintiff asked the Water Court to declare that it possessed “Walton” rights. Walton rights are private water rights held by a non-Indian successor to allotment lands that are derived from the allottee’s share of the federally reserved water right for the reservation—as appurtenances to the lands. Shortly after the plaintiff filed its petition, the Water Master contacted the plaintiff’s counsel by telephone and recommended that counsel file the matter with the Department of Natural Resources and Conservation under the exempt claims filing procedures. The plaintiff responded by filing a motion for a ruling on its petition for adjudication. The Water Court held a hearing on the plaintiff’s petition in September 2016 and denied the plaintiff’s petition on the basis that the plaintiff’s water rights were appurtenant to an allotment, and that the allottee’s water rights were part of the Tribal Water Right that they could share in. As a result, the Water Court concluded that the plaintiff’s water rights did not require separate adjudication. The plaintiff moved to alter or amend the judgment and for relief from final judgment or order. It urged the court to hold that its Walton rights were not part of the Tribal Water Right and that they should instead be subject to the jurisdiction of the State of Montana. The court denied the plaintiff’s motions in December 2016. The plaintiff appealed. Under federal law, the creation of an Indian reservation impliedly reserves the tribe water rights on that reservation necessary to fulfill the purposes of the reservation, with the priority date being the date of the reservations creation. The Montana Supreme Court held that non-Indian successors to Indian allotment lands acquire Walton rights—a right to share in reserved waters. Because the plaintiff is a nonmember of the Crow Tribe and the lands it acquired are not held in trust by the United States the court held that the plaintiff’s claims are recognized under state law and are not part of the Tribal Water Right under the Crow Compact. In addition, the court determined that the plaintiff’s claims were subject to the July 1, 1996 deadline for existing water rights. Thus, the Water Court was barred from hearing the plaintiff’s petition. However, the court also pointed out that because the lands were held in trust by the United States until 2006, the plaintiff’s claimed water rights had not been conveyed out at the time of the filing deadline and were still part of the federally reserved Indian water right. Therefore, the plaintiff could not have timely filed claims for existing right be the general adjudication deadline. The court therefore determined that the plaintiff and owners in similar circumstances should filed their exempt claims by the June 30, 2018. As a result, the court reversed the Water Court’s order denying the plaintiff’s petition for adjudication and remanded with instructions that it dismiss the petition without prejudice so that the plaintiff may timely file an exempt claim. Scott Ranch, L.L.C., 2017 MT 230 (2017).

Posted October 6, 2017

Attorney’s Fees Improperly Awarded In Statutory Groundwater Challenge. The Montana Water Use Act (WUA) exempts certain new groundwater appropriations from permitting requirements. In part, the WUA exempts appropriations outside of stream depletion zones that do not exceed 35 gallons per minute and 10 acre-feet per year except that a combined appropriation from the same source by two or more wells or developed springs exceeding 10 acre-feet, regardless of the flow rate, requires a permit. The Montana Department of Natural Resources and Conservation (DNRC) promulgated a rule in 1987 specifying that groundwater developments need not be physically connected nor have a common distribution system to be considered a combined appropriation. DNRC issued a new rule in 1993 that defined a combined appropriation as “an appropriation of water from the same-source aquifer by two or more groundwater developments, that are physically manifold into the same system.” In 2009, the plaintiff (an environmental activist group) filed a petition for declaratory ruling with the DNRC asking it to invalidate the 1993 rule. The DNRC ultimately denied the petition. The plaintiff then filed a petition for judicial review with the trial court challenging the validity of the 1993 Rule and the petition denial. The trial court invalidated the 1993 Rule, reinstated the 1987 Rule and required the DNRC to develop a new rule consistent with its order. The Montana Well Drillers Association appealed and the Montana Supreme Court affirmed. Before the Supreme Court’s decision, the plaintiffs had moved for fees under the private attorney general doctrine and the trial court granted that motion. The DNRC appealed, and the Montana Supreme Court determined that Montana follows the American Rule under which a party in a civil action is generally not entitled to attorney fees absent a specific contractual or statutory basis. However, there are limited equitable exceptions to this doctrine one of which is the private attorney general doctrine. The private attorney general doctrine applies when the government fails to properly enforce interests which are significant to its citizens. The Supreme Court determined that the trial court’s decision invalidating the administrative rule was statutory based. In addition, the issue addressed was purely an issue of statutory interpretation - whether or not the DNRC’s rule conflicted with the WUA. In addition, the Supreme Court pointed out that the case did not address whether the rule conflicted with any constitutional provisions. The plaintiff argued that the act itself implemented the mandates of the Montana Constitution. However, the Supreme Court found that the DNRC’s rule was a step removed because the litigation did not directly implement constitutional provisions, but centered around the construction of the WUA. For these reasons, the Supreme Court held that the trial court abused its discretion in concluding that the plaintiff could recover fees under the private attorney general doctrine and the order granting the plaintiff’s motion for attorney’s fees was reversed. The Clark Fork Coalition v. Tubbs, 2017 MT 184 (2017).

Posted September 30, 2017

Drain Tile Impermissibly Interfered With Flow of Surface Water. A landowner filed a drainage complaint against the plaintiff alleging that the plaintiff was partially blocking drainage of an intermittent watercourse which flowed through both properties. The landowner claimed that when the plaintiff built a drain tile just beyond the outlet of a culvert, the blockage caused water to back up onto his property. The neighbor also hired an engineering company to prepare a site map and determine the elevation in the properties. The maps showed that there was a downslope for natural drainage from the neighbor’s property onto the plaintiff’s. However, the map also showed that the area where the crushed rock and dirt was placed for the plaintiff’s drain system had an approximately 15-inch rise in elevation. The County Board of Commissioners (Board) held a hearing. At the hearing, the plaintiff claimed that the reasonable use rule applied to surface water damage and allowed him to make reasonable use of his land, even though the flow of the surface water is altered and caused harm to the neighbor. The Board ruled against the plaintiff, applying the civil law rule. Under that rule, a lower property owner cannot interfere with the natural flow of surface water to the detriment of an upper property owner. The plaintiff appealed Board’s decision. However, the trial court affirmed. The plaintiff appealed, relying as he did before the Board, on the reasonable use rule in surface water drainage law. On appeal, the Supreme Court determined that the governing rule for surface water drainage depends on whether the drainage occurs on rural or urban property. For rural surface water drainage, South Dakota follows the civil law rule and for urban drainage of surface water the court has adopted the reasonable use rule. As a result, the court determined that the civil rule controlled because rural property was involved and the plaintiff’s claim was without merit. In the alternative, the plaintiff argued that an increased elevation on his land pre-dated installation of the drainage system. He presented multiple forms of evidence, but the court noted that the aerial photographs of the area indicated that the watercourse flowed from the culvert in years before the construction of the drain. The Supreme Court determined that the plaintiff’s evidence created a factual dispute regarding the 15-inch increase in elevation. As a result, the trial court was the proper judge of the dispute and the conflicts in evidence must be resolved in favor of the trial court’s findings. Consequently, the Supreme Court affirmed the Board’s decision that the plaintiff impermissibly altered the flow of the water. Surat Farms, L.L.C. v. Brule County Board of Comm’rs, 2017 S.D. 52 (2017).

Posted August 31, 2017

Court Upholds BLM Plan To Deliver More Water to Las Vegas. In 2013, the Southern Nevada Water Authority (SNWA) granted a right-of-way for approximately 300 miles of pipeline and pumps to move water from northeast Nevada to Las Vegas. The plaintiff represented itself and other environmental groups sued in 2014 claiming that the defendant violated various environmental laws and tribal trust obligations in its review of the project in its multi-year review of the project. The SNWA joined the suit later in 2014 on the defendant’s side. The plan ultimately proposes to pump up to 84,000 acre-feet of water annually to Las Vegas without tapping the rural valleys north of Las Vegas until at least 2035. The court noted the possible threat to the environment in the areas the water would be transferred from and the need for water in Las Vegas. Thus, while the court approved the plan for the proposed groundwater withdrawals, it determined that the defendant did not adequately explain what should be done to replace wetlands and other habitat that the project might destroy. Accordingly, the court ordered the defendant to “address these narrow deficiencies” in an amendment to its environmental impact statement for the pipeline right-of-way. Center for Biological Diversity v. United States Bureau of Land Management, No. 2:14-cv-00226-APG-VCF, 2017 U.S. Dist. LEXIS 137089 (D. Nev. Aug. 23, 2017).

Posted July 10, 2017

Injunction For Maintaining Dike Expires After Twenty Years. An injunction was issued in 1977 against a railroad directing it to reconstruct a dike designed to channel creek water under a bridge and away from the adjacent farmland. In 2008, the plaintiff purchased the railroad right-of-way and bridge. In 2013, a drainage district filed an application to show cause and asked the court to hold the plaintiff in contempt for willfully violating the injunction. Iowa Code section 614.1(6) places a twenty-year time limit on actions founded on a court judgement. The court concluded that 1977 injunction was an action founded on the court judgment. As a result, the time period for the drainage district’s application to show cause expired in 1997. Consequently, the injunction was valid and the drainage district’s application was denied. Dakota, Minn. & E. R.R. v. Iowa Dist. Court for Louisa County, No. 15-1456 2017 Iowa Sup. LEXIS 76 (Iowa Sup. Ct. Jun. 30, 2017).

Posted June 19, 2017

Old Water Rights Can Be Forfeited. Litigation in the early 1900s resulted in an agreement governing Gila River water rights that the San Carolos Apache Tribe of Arizona held along with the Gila River Indian Community, with the federal government as trustee. Landowners in the Upper Gila River were also part of the agreement. In 1993, the federal court overseeing the agreement adopted a rule that established procedures governing the severance and transfers of a party’s existing water rights to new land. The procedures prevented the transfer of a right that had been forfeited or abandoned, and obligated the party seeking to transfer and sever a right the burden to establish a prima facie case that doing so will not injure the rights of other parties to the agreement. In 2007, the court approved a settlement resolving claims of the Gila River Indian Community, the federal government and an irrigation district that Upper Gila River Valley landowners were unlawfully pumping water from the river to irrigate their land. The settlement allowed the landowners to file applications to sever and transfer water rights to certain lands that had been irrigated but were not covered by the decree, and more than 400 applications were filed. The federal government and the tribe objected on the basis that many of the rights had been forfeited or abandoned. The trial court withdrew all of the applications that hadn’t already been withdrawn on the basis that state (AZ) forfeiture law did not apply and that there had been a partial abandonment of water rights. The appellate court affirmed on the basis of failure to prove lack of injury to the other parties to the agreement and abandonment. United States v. Gila Valley Irrigation District, No. 14-1942, 2017 U.S. App. LEXIS 10477 (9th Cir. Jun. 13, 2017).

Posted May 28, 2017

Change in Diversion Point Eliminated Right To Divert Water From Ditch. The plaintiff sought to run a water pipeline across an irrigation ditch meandering alongside the South Platte River, but the defendant had an easement from an early 1900’s easement associated with a water right. The defendant claimed that the plaintiff could not establish the pipeline without committing a trespass on its easement. However, the present holder of the water right changed the point of diversion in 2014 pursuant to the state (CO) simple change statute which now required the holder of the water right to divert water from the river via a downstream pump that was beyond the end of the ditch. The water court found that the change in the diversion point eliminated the right to divert water from the ditch thereby eliminating the right to divert water from the old ditch and mooting the defendant’s trespass claim. On further review, the Colorado Supreme Court agreed. The Court noted that a water right is only a usufructuary right that allows the holder to use an enjoy water associated with structures and diversion points defined in the right. An actual water right is not conveyed and the decree defines the scope of the right. The Court noted that the 2014 decree was plain on its face in naming a single diversion point – the pump. It detailed the pump’s location by legal description. There were no other points of diversion denoted. As such, there was no longer any right to divert water from the ditch and the easement was eliminated. Select Energy Services, LLC v. K-LOW, LLC, No. 16SA166, 2017 Colo. LEXIS 371 (Co. Sup. Ct. May 15, 2017).

Posted April 25, 2017

Water Management District Not Immune From Takings Suit. The plaintiff’s dam on their farm eroded after significant rainfall and the defendant sought an injunction against the plaintiff on the basis that the plaintiff needed to obtain a permit to repair the dam. A permanent injunction issued in 2007 barring the plaintiff from continuing the repair the dam and finding that the dam repairs had been done without anyone having any formal training in the construction and repair of dams. The injunction required the plaintiff to drain the dam to the lowest possible level and within 60 days provide certification of the dam and appurtenant works and an operation and maintenance plan. The injunction also ordered that the plaintiff was not to impound water to its full capacity behind the dam until the defendant provided written approval and certified the operation and maintenance plan. The plaintiff appealed the injunction order, but the court affirmed. The plaintiff did not comply with the injunction and the defendant repeatedly inspected it and found it to be deficient and sought to have the plaintiff drain the water. Numerous times the parties returned to court and the court issued numerous contempt orders. The plaintiff then filed a takings claim alleging that the defendant’s action flooded 60 acres of their farm and denied then beneficial and viable use of their land without compensation. The plaintiff sought an order against the defendant ceasing the flooding and compensatory damages of at least $1 million. The trial court granted summary judgment for the defendant, and the plaintiff appealed. The appellate court reversed on the basis that the defendant did not have quasi-judicial immunity because the defendant’s action was not part of a judicial process or comparable to the work of judges. Hill v. Suwannee River Water Management District, No. 1D16-3343, 2017 Fla. App. LEXIS 5263 (Fla. Ct. App. Apr. 18, 2017).

Posted April 16, 2017

State Agency Cannot Allow Access to Flooded Waters or Ice Over Private Property. Landowners sued the state (SD) Department of Game, Fish and Parks (GFP) for declaratory and injunctive relief concerning the public’s right to use the waters and ice overlying the landowners’ private property for recreational purposes. In 1993, excessive rainfall submerged portions of the landowners’ property. In accordance with instructions from the United States Surveyor General’s Office, commissioned surveyors surveyed bodies of water in SD in the late 1800s. Pursuant to those survey instructions, if a body of water was 40 acres or less or shallow or likely to dry up or be greatly reduced by evaporation, drainage or other causes, surveyors were not to draw meander lines around the body of water but include it as land available for settlement. When originally surveyed, the lands presently in question were small sized sloughs that were not meandered. Thus, the landowners owned the lakebeds under them. The 1993 flooding resulted in the sloughs expanding in size to over 1,000 acres each. The public started using the sloughs in 2001 and established villages of ice shacks, etc. In the spring and fall, boats would launch in to the waters via county roads. After the landowners complained to the GFP, the GFP determined that the public could use the waters if they entered them without trespassing. In 2014, the landowners sued. The trial court certified a defendant class to include those individuals who have used or intend to use such floodwaters for recreational purposes, appointing the Secretary of the GFP as the class representative. On cross motions for summary judgment, the trial court entered declaratory and injunctive relief against the defendants. The trial court held that the public had no right of entry onto the water or ice without a landowner’s permission, and entered a permanent injunction in favor of the landowners. On appeal, the appellate court upheld the trial court’s decision to certify the class and include non-residents in the class. The appellate court also upheld the trial court’s determination that the landowners had established the elements necessary for class certification and that the GFP Secretary was appropriate as the class representative. The appellate court also upheld the trial court’s grant of declaratory relief to the landowners, noting that prior caselaw had left the matter up to the legislature and the legislature had not yet enacted legislation dealing with the issue. The legislature had neither declared that the public must obtain permission from private landowners, nor declared that the public’s right to use waters of the State includes the right to use waters for recreational purposes. The appellate court remanded the order of declaratory relief to order the legislature to determine whether the public can enter or use any of the water or ice located on the landowners’ property for any recreational use. As for the injunctive relief, the appellate court modified the trial court’s order to state that the GFP was barred from facilitating public access to enter or use the bodies of water or ice on the landowners’ property for any recreational purpose. Duerre v. Hepler, No. 27885, 2017 S.D. LEXIS 29 (S.D. Sup. Ct. Mar. 15, 2017).

Posted March 25, 2017

Water Right Permit Could Not Be Amended to Allow More Withdrawals. The plaintiff owns 261 acres along the Lampasas River and filed an application with the state (TX) for a water permit authorizing him to divert and use 130 acre-feet annually for irrigation purposes. The plaintiff was granted a water use permit as a 10-year permit. Under the permit, the plaintiff was authorized to withdraw 130 acre-feet of water from the Lampasas River. Later, the plaintiff made application to extend the term of the permit an additional 10 years or to convert his right to a perpetual right. The plaintiff also sought the authorization to withdraw 20 additional acre-feet of water per year, and be allowed to irrigate an additional 31 acres of land. The executive director of the Texas Commission on Environmental Quality (TCEQ) recommended that the application be denied because the director had determined there was “little to no water” available at the plaintiff’s point of diversion on the Lampasas River. An administrative law judge agreed, finding that the director acted within the scope of the director’s authority and that the director’s water availability model was reliable and there was not unappropriated water available for appropriation. The TCEQ adopted the ALJ’s finding and denied the plaintiff’s application. Upon judicial review, the trial court affirmed the TCEQ’s final order and the plaintiff appealed. The appellate court affirmed, finding that the TCEQ’s order was supported by substantial evidence and because the TCEQ did not have any mandatory duty to allocate water to him from return flows. The appellate court noted that the plaintiff only had a “term” permit which conferred only a temporary right to use waters already appropriated to another that would otherwise be unused are is subordinate to any senior appropriative water rights. Ware v. Texas Commission on Environmental Quality, No. 03-14-416-CV, 2017 Tex. App. LEXIS 1797 (Mar. 3, 2017).

Surface Water Irrigators Not Damaged by State Action Limiting Their Withdrawals. In 2013 and 2014, the state (NE) Department of Natural Resources (DNR) issued orders and sent closing notices to holders of surface water permits for natural flow and storage in the Republican River Basin consistent with the Republican River Compact also involving Colorado and Kansas. Various farmers, as a class, that appropriated water for crop irrigation purposes sued, claiming an unconstitutional taking of their private property without just compensation against the state and the DNR. The trial court ruled against the farmers. The DNR under state law, must conduct an annual forecast to determine whether the state’s projected water supply from the Basin and projected consumption is sufficient to comply with the Compact. The reviews conducted in January of 2013 and January 2014 indicated that NE’s consumption would exceed its allocation under the Compact. Thus, for those years, the DNR issued a “Compact call” in the Basin and issued closing notices on all natural flow and storage permits. The farmers claimed that the result of the calls was to divert the use of the water in which they had a property right away from them and to the public use to satisfy Nebraska’s obligation to the state of Kansas under the Compact. The suit named Kansas, Colorado, Nebraska and the U.S. as parties, and alleged damages from the loss of water. The farmers claimed that compliance with the Compact was an inferior use of water rights to those that had been given to the farmers as appropriators. Thus, depriving them as water resulted in a deprivation of a beneficial economic use of the water without compensation. The farmers also claimed that the water was taken from them as a result of the DNR’s failure to stop excessive groundwater pumping that had depleted the basin’s streams. The trial court ruled for the state dismissing the case and the farmers appealed. On appeal, the Nebraska Supreme Court affirmed. The court noted that the farmers’ arguments were based on an assumption that the appropriators had compensable property rights in the water they were permitted to appropriate. However, the Court concluded that there is no vested property right in an appropriative water right based on Spear T Ranch, Inc. v. Knaub, et al., 269 Neb. 177 (2005), where the Court held that a “right to appropriate surface water” is merely a right to use water and not a right of ownership. Likewise, based on Spear T Ranch, the Court held that the DNR has no authority to regulate groundwater, but that the state Natural Resource Districts have jurisdiction over groundwater. The Court also determined that the Compact is a matter of federal law and, as such, is superior to NE water law on the issue of water allocations. In addition, the Court determined that the DNR was obligated to ensure that Nebraska remained within its allocation under the Compact, and that the state has a right to place restrictions on water usage during water short periods based on its decision in Bamford v. Upper Republican Natural Resource District, 245 Neb. 299, 512 N.W.2d 642 (1994), cert. den., 115 S. Ct. 201 (1994), and did so in a manner that was not arbitrary, capricious or unreasonable. The Bamford decision, the court noted, did not mean that the inability to withdraw enough water to grow crops constituted the deprivation of all of the economic use of an appropriator’s land. There was no evidence that the DNR’s conduct converted the farmers’ land into permanent dryland. On the farmers’ claim that the DNR’s failure to regulated groundwater pumping resulting in a taking, the Court noted that the DNR has no authority to regulate groundwater, no duty to regulate groundwater so as to protect surface water users, and that a rule of reasonable use applies. Hill v. State, 296 Neb. 10 (Neb. Sup. Ct. 2017).

Posted February 6, 2017

Court Enters Injunction Against Junior Water Rights Holders. The plaintiff owns a senior, vested (pre-1945) groundwater right which depends on the same local source of groundwater supply as two neighboring and junior groundwater rights held by an oil and gas production company. In 2005, the plaintiff filed an impairment complaint with the Kansas Department of Agriculture’s Division of Water Resources (DWR), so that the DWR could investigate and resolve the dispute according to K.A.R. §5-4-1a, which sets forth a detailed procedure for addressing impairment complaints for water from Ogallala Aquifer water sources. The plaintiff withdrew the complaint in 2007, but later in 2012 sued to obtain an injunction against the defendant’s pumping, claiming a senior water right under the Kansas Water Appropriation Act (“KWAA”). In November of that year, the trial court appointed the DWR as a fact-finder pursuant to the limited reference procedure set forth at K.S.A. § 82a-725. The DWR filed its first report on April 1, 2013, which found that the plaintiff’s well was being impaired by the two wells of the defendant. Based on the DWR’s uncontested finding of impairment, the plaintiff obtained a preliminary injunction shortly thereafter. After several rounds of motion pleading, the DWR issued its second report on March 27, 2014, also finding impairment, and the court issued a second temporary injunction on May 5 of that year, ordering the curtailment of pumping from the defendant’s two wells. The defendants timely filed an interlocutory appeal to reverse the temporary injunction. In 2015, the Kansas Court of Appeals affirmed the district court’s granting of the injunction and remanded the case back to the trial court. The issue on remand centered on the two distinct definitions of “impairment” under the KWAA. Within the context of reviewing new applications for water rights pursuant to K.S.A. §§82a-711 and 82a-711a, the DWR uses one definition: “impairment shall include the unreasonable raising and lowering of the static water level . . . at the [senior] water user’s point of diversion beyond a reasonable economic limit (emphasis added). However, when the DWR is called upon to protect senior water rights from impairment by already-existing junior water rights, that impairment standard does not include the “beyond a reasonable economic limit” qualifier. K.S.A. §§ 82a717a, 82a-716. Because this dispute concerned the latter situation, the Court of Appeals declined defendant-appellant’s efforts to apply the former definition of impairment, and upheld the injunction. On remand at the trial court, and before a different judge, central to the record in the case were the findings by both the Kansas Geological Survey and the DWR that groundwater levels were declining in the area, and that the defendants’ junior groundwater pumping was responsible for substantially impairing the plaintiffs’ senior right. With these principal conclusions established in the record, the court applied the standard test for permanent injunctions, and found that a permanent injunction should issue in this case. In making that finding, the trial court judge followed the “ordinary definition of impair” [pursuant to K.S.A. §§ 82a-716 and 82a-717] which the legislature intended should apply in situations such as this, where the senior right holder seeks injunctive relief to protect against diversions by junior water right holders, when the diversion “diminishes, weakens, or injures the prior right.” In deciding that an injunction against the defendant’s junior rights should issue, the court declined to adopt a remedy suggested by the DWR in its second report—that the junior water rights surrounding the plaintiff’s (including those owned by non-parties) could be allowed to operate on a limited and rotating basis. In declining to adopt that remedy, the court stressed that it “does not wish to draft an order that would micro-manage future use” by the junior rights. Garetson Bros. v. Am. Warrior, Inc., 347 P.3d 687, 51 Kan. App. 2d 370 (2015), rev. den., No. 14-111975-A, 2016 Kan. LEXIS 50 (Kan. Sup. Ct. Jan. 25, 2016), remand decision at Haskell Co. Dist. Ct. No. 2012-CV-09 (Feb. 1, 2017).

Posted July 5, 2016

Road Cannot Block Natural Water Flow. A landowner owned land north of a county road and claimed that the road was blocking the natural drainage of the water from his tract to the south. The landowner filed a drainage complaint with the defendant, and it was discovered that old structures that allowed water to pass under the county road had been removed over time and the road level raised. The defendant’s drainage attorney advised the board that state (IA) law specified that a road cannot block the natural flow of water and recommended the defendant hire an engineer to review the matter and advise. The defendant hired an engineer who recommended the installation of two culverts under the road to allow the natural drainage flow of water and that the landowner on the south side of the road (the plaintiff in the case) would need to make adjustments to manage the additional water that would again flow onto the plaintiff’s property. The plaintiff’s filed a mandamus action objecting to the proposed construction of the culverts, claiming that Iowa Code §314.7 applied to the matter because it governed drainage of surface water across roads. The defendant approved the construction of a culvert and the plaintiffs sought injunctive relief complaining that upstream and downstream landowners were entitled to notice and an opportunity to be heard under Iowa Code §468.600, et seq. The defendant later approved the construction of two culverts, and filed a motion to dismiss the plaintiffs’ case, and the trial court dismissed the case. The appellate court agreed, noting that the statutes the plaintiffs cited involved private drainage actions which imposed no duty on the defendant. While the defendant could have advised the landowner to file an application to begin private drainage actions, the defendant was not required to proceed in that manner. Indeed, the private engineering study recommended culverts under the road as a solution to the drainage problem. Knoer, et al. v. Palo Alto County Board of Supervisors, No. 15-0742, 2016 Iowa App. LEXIS 703 (Iowa Ct. App. Jun. 29, 2016).

Posted July 4, 2016

Court Says Groundwater and Oil/Gas Sufficiently Similar That Same Legal Principles Apply. The plaintiff is a 26,000-acre cattle ranch with some irrigated cropland. The ranch sits atop the Ogallala aquifer in northwest Texas. The defendant bought groundwater rights from the plaintiff in 1953 and the plaintiff deeded its groundwater to the defendant with the reserved right in the plaintiff to use groundwater for domestic wells, livestock watering, oil and gas production and irrigation for agricultural purposes. The defendant had the right of ingress and egress to drill water wells and test existing wells. The defendant also had the right to use as much of the ranch as necessary to take, produce, treat, transmit or deliver groundwater. The defendant also had the right to construct water lines, fuel lines, power lines, access roads and anything else incidental to accessing and making use of its water right. For those rights, the defendant was to pay rent for any surface area that its facilities occupied. The defendant also was required to pay for surface property damages it caused and was required to install gates and cattle guards for roads. In 2012 the defendant announced its intent to drill 20 test wells and up to 60 additional wells on the ranch. Until that time, the defendant had only drilled seven wells. The plaintiff sought to enjoin the defendant from drilling more wells on the basis that, under common law, the defendant could only use so much of the surface that was reasonably necessary to its operations and then only with due regard to the plaintiff’s rights with respect to the surface – the “accommodation” doctrine. The defendant asserted that its rights under the deed language controlled and that the accommodation doctrine only applied to mineral owners (e.g., oil and gas) as opposed to water. The trial court applied the accommodation doctrine and issued the injunction. The result was that the defendant had to stop drilling test wells without going over potential negative impacts on the ranch with the plaintiff. The defendant was also enjoined from erecting power lines to proposed well fields. On appeal, the court of appeals reversed, noting that the accommodation doctrine had never been extended to groundwater. The plaintiff appealed. The Texas Supreme Court reversed the appellate court and held that the accommodation doctrine applied to groundwater. Thus, the doctrine would apply in situations where the owner of the groundwater impairs an existing surface use, the surface owner has no reasonable alternative to continue surface use, and the groundwater owner has a reasonable way to access and produce water while simultaneously allowing the surface owner to use the surface. The Court held that the deed language governed the rights of the parties, but that the deed didn’t address the core issues presented in the case. For example, the Court determined that the deed was silent on the issue of where drilling could occur and the usage of overhead power lines and facilities associated with water development. The Court determined that water and minerals were sufficiently similar such that the accommodation doctrine should also apply to water – both disappear, can be severed, subject to the rule of capture, etc. The court also concluded that groundwater estates severed from the surface estate enjoy an implied right to use as much of the surface as is reasonably necessary for the production of groundwater. The Court also extended the accommodation doctrine to the owner of the groundwater right. Thus, unless the parties have a written agreement detailing all of the associated rights and responsibilities of the parties, the accommodation doctrine would apply to resolve disputes and sort out rights. The Court lifted the injunction that had been imposed against the defendant. A concurring opinion believed that the deed language was clear as to the location of well drilling and the accommodation doctrine would not apply as to well location. However, as to access roads and power lines, the concurrence opined that the deed was unclear and the accommodation doctrine would apply. Coyote Lake Ranch, LLC v. City of Lubbock, No. 14-0572, 2016 Tex. LEXIS 415 (Tex. Sup. Ct. May 27, 2016).

Posted April 1, 2016

Public Interest Test Applies Only To New Water Appropriations and Not Water Transfers. In 2010, a corporation filed applications with the plaintiff, state water resources department, to transfer surface water rights that had been used on a ranch in a particular county to a mining complex in a different county. A portion of the water rights were proposed to also be used within the ranch's county to support a conservation program associated with a river. The ranch's county objected to the transfer, claiming that the transfer would negatively impact county residents and would violate the public interest. The plaintiff rejected the county's objections on the basis that the county lacked standing to challenge the transfer because the county didn't have any water rights or other interest protected under Ariz. Rev. Stat. Sec. 45-172 (the water transfer statute). The county appealed, and the state Supreme Court agreed. The court held that the water transfer statute allows the plaintiff to consider only limited factors when deciding whether to approve a transfer of surface water rights and the county did not claim that any violation of the factors and did not possess any vested water rights of its own. The Court also rejected the notion that a water transfer is subject to a public interest test similar to the one imposed on new water appropriations. Instead, the Court noted that water rights can be transferred without state oversight if they don't impact other water users. While the term "interested person" is not statutorily defined, the court held that it meant an owner of a vested water right that might be affected by the transfer. Thus, the county had no standing because it did not hold a vested water right and was simply trying to challenge the transfer on the basis of the interests of its citizens. Arizona Department of Water Resources v. McClennen, 360 P.3d 1023 (Ariz. 2015).


State Proves Navigability of Portion of River. The defendant, State Land Board, made a declaration of ownership over 89 miles of the Rogue River in accordance with the process established by state law. In making such a declaration, the defendant could either get a court to find that the watercourse at issue is navigable or simply make the declaration. Here, the defendant made the declaration after going through the state-prescribed procedures, including public notice of the watercourse at issue. Multiple landowners adjacent to the 89-mile segment sought judicial review, challenging the state's assertion of ownership. Some of the landowners claimed that they own property that is now dry land because the river shifted by avulsion in 1859. The trial court held that the defendant failed to provide sufficient evidence to establish navigability, and noted that the defendant's procedure would have exchanged dry river channel for flowing river channel with the result that some of the plaintiffs' homes on dry land would be located where the river once flowed and would be within the defendant's ownership determination. The trial court awarded the property owners attorney fees and legal costs of over $150,000. On appeal, the court reversed, in part, and remanded the case. The court noted that the defendant's determination of navigability was based on a public notice that didn't provide enough specificity to allow interested persons to discover what land the defendant was actually claiming. However, with respect to a 57.5 mile segment of the river at issue, the court held that evidence of log drives at the time Oregon was admitted to the Union along with post-statehood recreational use that did not differ materially from the type of use at the time of statehood permitted a conclusion that this portion of the river was susceptible to being used as a highway for commerce - the test for navigability. The appellate court also reversed the trial court ruling that the defendant's navigability declaration violated state law because it claimed dry land. The appellate court also vacated the trial court award of legal fees and costs. The fee/cost issue and the navigability issue were both remanded. Hardy, et al. v. State Land Board, 274 Ore. App. 262, 360 P.3d 647 (2015), rev. den., 358 Ore. 550 (2016).


Court Applies Common Enemy Rule to Surface Groundwater. The parties owned adjacent residential tracts and had a dispute over several water drainage issues. The plaintiffs claimed that the defendants constructed an earthen berm that obstructed the flow of water in a drainageway which caused the water to back-up onto their property. The plaintiffs also claimed that the defendants altered the course of another drainageway in a manner that moved it closer to the plaintiff's property line which would create problems when a major weather event occurred. The defendants sought to enjoin the plaintiffs from pumping water onto the defendants' property through a pipe from a sump pump in the plaintiffs' basement, and an award of money damages for loss of trees due to excessive water as a result. The discharge pipe was connected to another pipe beneath the defendant's property, but the system failed and the plaintiffs then discharged water at the property line. The defendants sought and obtained a permit to build a second culvert and an earthern berm at the point of the discharge onto their property and installed a pipe through the berm to facilitate drainage. This caused the water to back-up onto the plaintiffs' property, but the problem was eliminated when the plaintiffs stopped using their dewatering well. The trial court denied the plaintiff's request for injunctive relief and the defendants' counterclaim for tree damage/loss and denied an injunction that would bar the plaintiffs from discharging water via the dewatering well. That ruling was upheld on appeal. The court applied the common enemy rule to the groundwater and held that the defendants, as owners of the servient estate, could, within reason, do whatever they wanted to get rid of the excess water. The court determined that the defendants' conduct was reasonable under the circumstances and the plaintiffs could not get an injunction on that issue. The court also found that the defendants were not entitled to money damages for tree loss due to lack of causal proof. The defendants were also not entitled to injunctive relief that would stop the plaintiffs from using the dewatering well. Kobza v. Bowers, 23 Neb. App. 118 (2015).