Trading Water as a Commodity

Unappropriated water has long been considered a public resource. It is subject to private ownership rights and development, to be sure. But the law generally treats water differently compared to commodities like consumer goods or other natural resources like lumber. The UN recognized water’s essential role in the public commons in Resolution 64/292. It declared a “human right to water” and acknowledged “clean drinking water and sanitation as a human right that is essential for the full enjoyment of life and all human rights.” However, recent developments in water markets could signal a shift in long-held perspectives. In early December, California water futures contracts began trading on stock exchanges for the first time ever, bringing water in line with other commodities like gold and oil.

At its most basic level, a futures contract is an agreement to buy or sell a commodity at a future date. The price and amount is set at the time of the contract. This gives cost certainty to buyers in volatile markets, but also invites outside speculation. The water futures here are tied to the Nasdaq Veles California Water Index, which tracks the spot market for water in California. The index has doubled in value over the past year. Tying futures contracts to the index allows buyers to “lock in” a price long before they will actually purchase water.

Pros and Cons

Proponents of the venture claim that the futures will add price certainty and transparency to the traditional spot water markets. Spot markets typically bring high prices and uncertainty for water users in dry times. Farmers, municipalities, manufacturers, and energy producers can look to the futures market for data on current and past prices. They can use that information to make informed decisions about what future prices might look like in dry times down the road. This allows water users to enter into futures contracts to offset the higher cost of water in the future.

However, some detractors fear placing water futures on the open market undermines water’s value as a basic human right. Pedro Arrojo-Agudo, a UN expert on water, worries that the futures market poses a risk to individual water users. This is because “large agricultural and industrial players and large-scale utilities are the ones who can buy, marginalizing and impacting the vulnerable sector of the economy such as small-scale farmers.” Additionally, trading futures on stock exchanges invites speculation from outside investors like hedge funds and banks. Speculation could lead to bubbles like we saw in 2008 with the housing and food markets. After all, western states that regulate water under the Prior Appropriation Doctrine prohibit water speculation. This fear may be far from realization, though. Analysts believe that water is currently too abundant worldwide to become a highly sought after commodity on global financial markets.

Looking Forward

Though brand new, California’s water futures trading represents an interesting experiment in water market innovation. Currently, spot water markets are the dominant avenue to buy and sell water. Some entities, like the Western Water Market, are trying to make the process easier. These futures are another step in that direction. In Schroeder Law Office’s webinar, “Buying and Selling Water Rights,” we noted the difficulties in developing water markets. For example, water isn’t fungible, water rights include specific conditions and restrictions, and the transfer process is often lengthy, limited in allowable scope, and expensive. On top of that, scarcity issues abound. Although the new water futures trading will not solve those particular problems, it is worth keeping an eye on. Water futures may successfully help California water users better manage prices. If so, futures trading could spread throughout other western states.

Stay tuned to Schroeder Law Offices’ Water Law Blog for more water news!

This blog was drafted with assistance from law clerk Drew Hancherick, a student at Lewis & Clark Law School.

The State of the Water Industry Survey

In the June 2020 issue of Opflow, the American Water Works Association published a survey of 3,351 water industry professionals. The State of the Water Industry (SOTWI) survey identifies challenges to the water industry and seeks to understand their causes.

Several issues regarding water resource management made the top ten concerns of the industry professionals surveyed. “Long-term water supply availability” was the third-highest ranked issue on the list at #3, followed closely by “watershed/source water protection” (#5) and “groundwater management and over-use’ (#10).

Water Demand

Specifically, 57 percent of surveyed respondents indicated that their utilities could meet anticipated long-term water demand. However, about 12 percent of respondents claim that it will be challenging to meet future supply needs. This uncertainty creates reverberating effects throughout the industry. Uncertainty affects many other aspects of water resource management and quality, including the other issues mentioned in the survey. Future supply shortfalls will lead to increased price and competition as well as the potential for more frequent litigation over water rights.

Source Water Protection

In addition, source water protection was another critical issue for water resource managers. 76 percent of utility respondents to the survey said that they had implemented or were implementing a source water protection program. When considering only large utility respondents, that share increased to 89 percent. Clearly, utilities focus on strong source water protection programs. These programs are often cost-effective ways to protect and improve both water quality and quantity. Further, states are generally responsible for implementing water quality standards under the Safe Drinking Water and Clean Water Acts for drinking water. Recently, the AWIA, America’s Water Infrastructure Act amended the Safe Drinking Water Act, signed into law in 2018.

Groundwater

Finally, this was the second consecutive year that groundwater issues were front and center in the survey. 2019 California drought and wildfire conditions stressed groundwater resources, bringing those issues to the front of many survey respondents’ minds. Those issues show no signs of abating, as drought and wildfires continue to ravage the West.

In conclusion, many of the challenges highlighted by survey respondents are similar to those faced by water resource managers throughout the years. While there may be some cause for concern in certain areas, overall the survey shows a positive outlook for the future. Utilities are using existing water resources more efficiently as they comply with the AWIA, protect their water sources, and engage in asset management planning. The water industry has poised itself to meet its challenges with resilience.

This blog was drafted with the assistance of Drew Hancherick, a current law student attending Lewis and Clark Law School.

In a previous blog, we looked into who owns an aquifer: does it belong to private individuals or the public? Under the ad coelum doctrine, the surface owner holds the ground itself – rocks, dirt, and the like – as private property, owned all the way down to the Earth’s core. On the other hand, the public collectively owns water, taken for private use through the rule of capture, or the ferae naturae doctrine.^[1] Because an aquifer is a “body of permeable rock which can contain or transmit groundwater,”^[2] the rules related to aquifers are a complex combination of the two competing doctrines. In our previous update, we highlighted a California district court case, Agua Caliente Band of Cahuilla Indians v. Desert Water Agency, et al, that seeks an answer to the question of aquifer pore space ownership.^[3]

Background

The Agua Caliente Band of Cahuilla Indians (“Tribe”) sued the Coachella Valley Water District and Desert Water Authority (“Defendants”) to protect the aquifer under its reservation from groundwater depletion and water quality degradation. The Tribe argued that the pore spaces within the aquifer are its property under the ad coelum doctrine. The Defendants believe that the public owns pore spaces. The court has not yet addressed the question of whether the pore spaces are public or private property. However, the case has progressed since our last post and we are due for an update.

The Tribe and Defendants agreed to split the litigation into three phases when the Tribe first filed the case in 2013. Phase 1 was to decide whether the Tribe had a reserved right to groundwater in principle. Thereafter, Phase 2 would resolve if this reserved right contained a water quality component, the method of quantification of a reserved groundwater right, and if the Tribe owned pore spaces within the aquifer. Phase 3, if necessary, would quantify the Tribe’s reserved groundwater right and ownership of pore space.

In Phase 1, the court granted summary judgment to the Tribe on its groundwater right claim. The decision essentially declared without a trial that the Tribe did in fact have a reserved right to groundwater. Phase 2 was delayed while the Defendants unsuccessfully appealed to the 9th Circuit and then unsuccessfully sought Supreme Court review.

Update

Like Phase 1, Phase 2 proceeded to summary judgment. The court ruled that the Tribe can seek a declaration that it has an ownership interest in sufficient pore space to store its groundwater. However, the Tribe did not argue that it owns the pore space as a “constituent element” of its land ownership in its initial complaint, and the court could not consider it. Recently, the Tribe submitted an amended complaint including its pore space as “constituent element” of land ownership argument, which is now before the court.

The question of whether the Tribe has ownership of the pore space beneath its reservation is the only item left for the court to decide in this phase; the answer could have a real impact on groundwater issues, as it may be one of the first cases to directly address the pore space question. Another controversy is bubbling over pore spaces in North Dakota, starting with the case Mosser v. Denbury Res., Inc., 2017 ND 169 (2017), passage of H.B. 2344, and legal challenges to the bill by the NW Landowners. Keep an eye on the blog for our next update on this case that could affect you!

This blog was drafted with the assistance of Drew Hancherick, a current law student attending Lewis and Clark Law School.

^[1] https://en.wikipedia.org/wiki/Cuius_est_solum,_eius_est_usque_ad_coelum_et_ad_inferos

^[2] Oxford Online Dictionary, https://en.oxforddictionaries.com/definition/aquifer

^[3] The case is presently before the United States District Court for the Central District of California, Docket No. ED CV 13-00883-JGB-SPX. Plaintiffs filed the complaint on May 14, 2013.

The Public Trust Doctrine is seeping to California’s aquifers, bringing something like conjunctive surface water and groundwater management to the state. Conjunctive management is a legal approach to managing surface water and groundwater as an interconnected resource. Often states separate the regulation of groundwater from surface water. Conjunctive management attempts to reconnect the regulation of surface water and groundwater to better match real-world hydrological effects.

            Groundwater often supplies water to rivers, called “baseflow” within a “gaining reach,” and pumping can reduce groundwater’s contribution to surface streams. (See https://water.usgs.gov/edu/rivers-contain-groundwater.html). Likewise, surface water recharges aquifers in “losing reaches.” Regulating surface water and groundwater together is a relatively new development in water law, as legal systems catch up to modern scientific understanding. California has never adopted a groundwater code, let alone explicitly adopt conjunctive management.

            The passage of California’s Sustainable Groundwater Management Act in 2014 ushered in new planning and review scheme for groundwater use and management in the State. (https://www.water-law.com/groundwater-sustainability-plan-regulations/ ). The legislation attempts to prevent “undesirable effects” of groundwater overconsumption and bring groundwater use into a sustainable pattern. Cal. Water Code § 10721(x)(1)-(6).

            Regulation of surface water in California has been affected by the Public Trust Doctrine. Nat’l Audubon Soc’y v. Superior Court explicitly recognized that the Public Trust Doctrine would supplement statutes governing surface water. 33 Cal. 3d 419 (1983) (“Audubon”). (The Public Trust Doctrine is a well-established principle in California that the State hold certain resources in trust for the benefit of the public, and must take these principles into account when making natural resource decisions.) The case dealt with diversions from non-navigable streams flowing into Mono Lake that is “navigable” under state law. The Court found support for the application of the Public Trust Doctrine to non-navigable tributaries in previous cases like Audubon, showing that the doctrine can reach upstream to prevent harms to downstream navigable streams and lakes.

            In the recent decision Environmental Law Foundation v. State Water Resources Control Board, California’s Third District Court of Appeals held that the Public Trust Doctrine can apply to groundwater that is hydraulically connected to navigable surface waters, like a “tributary” to the surface stream. 237 Cal. Rptr. 3d 393 (2018) (“Control Board”). (Interestingly, this application of the Public Trust Doctrine implicitly favors surface water over groundwater sources, since the reasoning does not support finding surface water as “tributary” to groundwater sources).

            Until Control Board, the courts did not apply the Public Trust Doctrine to groundwater, likely on the basis that aquifers are non-navigable. The court, using the reasoning found in Audubon, found groundwater extraction in the region near the Scott River would reduce surface flows and harm public trust interests in the navigable river. In effect, the Public Trust Doctrine would extend to any groundwater source that provides water, or has stopped providing water, to a navigable surface water body.

            This follows a trend in applying surface water laws and regulations to groundwater. In Hawaii Wildlife Fund. v. County of Maui, the Ninth Circuit decided that discharges into groundwater could be regulated by the Clean Water Act. 881 F.3d 754 (9th Cir. 2018). Typically, the Clean Water Act does not apply to groundwater. See 80 Fed. Reg. 37054, 37099 (June 29, 2015). But since the aquifer was hydraulically connected to the Pacific Ocean, the aquifer was a “conduit” transporting pollutants to the sea. For more information, see: https://www.water-law.com/ninth-circuit-upholds-groundwater-conduit-theory/. Like the Public Trust Doctrine in Audubon, the Clean Water Act has begun to seep into aquifers as courts attempt to wrestle with modern hydrogeological science.

            Will these rules seep into aquifer pore spaces as well? As discussed in previous blog posts, California courts are currently deciding if aquifer pore spaces are public or private property. (See https://www.water-law.com/who-owns-an-aquifer/). The Control Board decision adds another layer to the aquifer questions in California: Is there a public trust aspect to aquifer pore spaces that potentially hold (or held) groundwater? Or does the doctrine remain confined to the groundwater alone? Keeping the doctrine out of the pore spaces would be difficult, as aquifers are complex systems of transresources. (Transresource systems are interconnected, yet distinct, resources in a dynamic relationship, see https://www.water-law.com/new-associate-attorney-jakob-wiley-defends-collective-aquifer-governance-agreements/.) Scientifically, aquifers and groundwater are in a constant dynamic relationship. The legal question remains open whether aquifer pore spaces are public, like water, or private, like the land and geological materials that make up aquifers.

            As the Public Trust Doctrine sinks into the aquifer, California courts and agencies may face pressure to implement “backdoor conjunctive management” through litigation and planning for Groundwater Sustainability Plans related to the Public Trust Doctrine. Groundwater Sustainability Agencies in California will likely have to take the Public Trust Doctrine into account as they develop and review Groundwater Sustainability Plans and make land use decisions for groundwater development. (See https://californiawaterblog.com/2018/10/07/the-public-trust-and-sgma/ ). While never adopting a groundwater code or conjunctive management regulations, California may then begin to regulate surface water and groundwater as a connected resource.

Make sure to stay tuned to Schroeder Law Offices’ Water Blog for more news that may affect you!

            Are aquifers public or private property? The question is more complicated than it first appears! To answer the question, one must dive down into the fundamental origins of our legal system, fraught with complicated Latin phrases, just like the dangers of the deep itself!

            Aquifers are scientifically defined as a “body of permeable rock which can contain or transmit groundwater.”[1] However, the word, in its common use, refers to the groundwater, not the permeable rock that actually makes up the aquifer. Traditionally, rocks, soil, and dirt are considered private property under the ad coelum doctrine, making them private property owned by the overlying landowner.[2] Ownership under this doctrine reaches from the atmosphere above to the center of the Earth, shaped like vertical column. However, water is traditionally seen as commonly owned by the public, available for private use under the ferae naturae doctrine. Under this doctrine, water is commonly owned, like wild animals, but can be captured and privately used, like by hunting and capturing it. The various water doctrines, including prior appropriation, the rule of capture, and riparianism, all derive from a negotiation between these two doctrines.

            The law continues to navigate the paradox of aquifer ownership: Is the aquifer the water or the rocks holding it? At least one court is now facing this challenge. The California case Agua Caliente Band of Cahuilla Indians v. Desert Water Agency, et al places this question at the heart of the litigation.[3] The Agua Caliente Band of Cahuilla Indians (“Tribe”) filed a suit to protect the aquifer underlying their reservation from groundwater use that threatened to cause subsidence, contamination degrading water quality, and aquifer recharge activities that filled storage space with foreign water. As part of the Tribe’s claim, they assert that the Tribe owns pore spaces (storage) within the aquifer that are being permanently destroyed by subsidence. The Tribe argues under property principles that the pore spaces are a part of the reservation under principles of the ad coelum doctrine. The opposing parties argue that the pore spaces are publicly owned, and the Tribe cannot claim injury to something they never owned or, in the opposing argument, “captured” under the ferae naturae doctrine. While the trial is still ongoing, the court will eventually have to face the core question: Are aquifer pore spaces public or private property?

            While the debate over ancient Latin phrases, injury, and rocks may seem like an uninteresting legal squabble, the results of the case could have real ramifications for many groundwater issues! For example, could an artificial recharge project seeking to replenish depleted aquifers actually be trespassing, if aquifers are privately owned? Or, if publicly owned, can a neighbor to the recharge project whose land is inundated with water have shaky ground to make a claim, since they do not own the pore spaces? Courts will likely have to wrestle with these questions for many years to come.

Stay tuned to Schroeder Law Offices’ Water Law Blog for more news that may affect you!

[1] Oxford Online Dictionary,https://en.oxforddictionaries.com/definition/aquifer

[2] https://en.wikipedia.org/wiki/Cuius_est_solum,_eius_est_usque_ad_coelum_et_ad_inferos

[3] The case is presently before the United States District Court for the Central District of California, Docket No. ED CV 13-00883-JGB-SPX. The complaint was filed on May 14, 2013.

On October 23, 2018, President Trump signed America’s Water Infrastructure Act (“AWIA”), also known as the Water Resource Development Act, into law. This bipartisan bill, which previously passed the House of Representatives on September 13, 2018 and the Senate on October 10, 2018, aims to improve dams, levees, ports, and waterways throughout the United States. It also amends the Safe Water Drinking and allocates funds toward more efficient and sustainable water quality control and management, particularly in underserved communities.

As its name might suggest, one of AWIA’s main goals is to improve America’s water systems. Under AWIA, the U.S. Army Corps of Engineers will receive around $3.7 billion to plan, study, and develop water projects to alleviate strain on existing infrastructure. In the Northwest, the Port of Seattle is specifically slated to undergo construction to improve navigation channels, as are several other key ports around the United States. AWIA also has specific provisions that focus on flood protection measures on the Snake River and levee improvements in Clatsop County, Oregon, among others.

One of the most notable aspects of AWIA is how it addresses the ongoing water shortages in Northern California/Southern Oregon’s Klamath Basin. AWIA provides a much-needed $10 million annuity to the Bureau of Reclamation to address ongoing water issues in the Klamath Basin, and provides avenues for farmers to make use of Klamath Project canals to deliver water to their farms. AWIA also focuses on increasing efficiency and sustainability of hydropower and delivery of affordable electricity to those same farmers.

Stay tuned to Schroeder Law Offices’ blog for more updates on AWIA’s progress and impacts on water in the Northwest and the United States!

Incoming J.D. Paralegal (Attorney upon Bar passage) Jakob Wiley attended the University of California Cooperative Extension’s regular Rice Production Workshop held at Lundberg Family Farms in Richvale, California. The seminar was attended by farmers, local businesses, and water district personnel, providing a broad overview of rice production and the challenges faced by producers.

Water in rice production isn’t just about irrigation. Water serves a critical role in temperature regulation, weed control, and field management. For example, water is used to prevent excessive cooling of the rice flowers, which inhibits pollination. Exposure of the flower to cool temperatures can “blank” the rice (prevent the grain of rice from forming) and reduce yields. Water also acts as a blanket, keeping the flowers warm during cool nights. Careful management of water also ensures the safe use of pesticides and herbicides (and avoids costly fines). Water plays a critical role in the growth, development, and success of a rice field.

More information about rice production can be found in the 2018 Rice Production Workshop Manual available at http://rice.ucanr.edu/Reports-Publications/Rice_Production_Workshop_Manual/.

Jakob will add his new knowledge about rice production to his background in cattle ranching and alfalfa production to better assist with your water needs!

Stay tuned to Schroeder Law Offices’ Water Law Blog for more news that may affect you!

Authored by: Valley Urricelqui

Reno Office summer intern, Valley Urricelqui is a Beef Ambassador. A “Beef Ambassador” promotes and helps shine a brighter light on the Beef Industry. A Beef Ambassador is a knowledgeable public figure of the Beef Industry that informs the public of the health benefits of beef as well as helps to gain support throughout the community.

In California, the Beef Ambassador program invites those across the state of California to compete and showcase their knowledge as an advocate for the beef industry for the coming year. Valley earned her place at the state competition as the 2018-2019 Shasta County Beef Ambassador. Contestants competed in four main events, including a mock interview, mock consumer demonstration, issue response and social media presence. These categories aim to evaluate contestants’ overall knowledge of the beef industry, agricultural issues, marketing, education and animal welfare.

In April 2018, Valley received the title of California State Beef Ambassador representing the North State. In this position she represents the State of California as a voice for the Beef Industry and is helping to spread positivity about the agriculture industry as a whole in efforts to gain more support from the public. Her goal is to present in elementary classrooms to educate our youth about where their food comes from, the hard work and processes necessary for raising livestock and producing food supplies, and the nutritional health benefits our food provides. Making the “farm-to-fork” connection is an important mission for Valley. Being named California Beef Ambassador has been a goal for Valley from a young age, and she aims to educate people within and outside of the agricultural industry.

As a California Beef Ambassador, Valley hopes to serve as a pillar for educating consumers. As a fifth-generation cattle rancher in Northeastern California, her roots run deep. “I want people to understand that you don’t have to have an agricultural background to support agriculture,” she said. “We are a dying breed and it’s more important now than ever for people to understand where their food comes from and that it is safe, wholesome and nutritious.”

As California Beef Ambassador, Valley will travel across the state to represent the beef industry in order to educate people on the nutritional, economic, and environmental benefits of beef. Valley will also take her knowledge and enthusiasm into the classroom and educate youth on the importance of the livestock industry. Her goal is to shine a brighter light on the beef industry.

Already this year Valley has attended the Mid-Year Cattleman’s meeting held in Redding CA, as well as some local county fairs spreading the good word about the beef industry and how to better promote the industry. At the Mid-Year meeting she presented to Cattlewomen on Social Media and how it can be used to promote ranching and farming operations as well as the agriculture industry as a whole. She shared examples as to how we can positively promote agriculture by using hashtags in posts. Valley taught ways for accessing online information more easily.

Today’s youth access social media more than any other age group, with more than 98% using social media on a daily basis. About 30% spend more than six hours a week on social media websites and apps. With these stats being so high it tells the agriculturalists that using social media to spread positive agriculture views is a must!

During her time as Beef Ambassador, Valley wants to attend as many events across the state as possible, and continue to present on matters related to the beef community and the agriculture industry. After this year, Valley plans to run for the National Beef Ambassador Team. If lucky enough to join this team, she will continue to promote the agriculture industry in a positive light across the Nation.

Authored by: Valley Urricelqui

Did you know that an animal’s performance is based, in part, on their water intake?

Water is the most essential component for livestock’s proper growth, development and performance.

How much water do you think cattle drink each day? Well there are a lot of different factors that lead up to that. It all depends on what type of cattle we are talking about, the weather (What is the temperature outside? Is it summertime or wintertime?) as well as the stage in life the animal is currently in. But it is always important to  remember that, generally speaking, when it comes to watering cattle, the heavier the cattle, the higher the water intake.

Cattle should consume 1-2 gallons of water per 100 pounds of body weight. So if you have a 1500 pound cow, she should be drinking about 15-30 gallons of water on an average day.

Below is a list of the amount of water cattle drink each day:

For more detailed information visit: https://www.grass-fed-solutions.com/cattle-water.html

*Fun Fact: Did you know that cattle have 4 stomachs? The Rumen is the largest and can hold up to 50 gallons of feed!

*Fun Fact: The average cow can drink as much as 30-50 gallons of water on a hot summer day! For pairs to get through the summer time heat, they may need to drink 2x the amount of water.

*Fun Fact: Did you know what I mean by “a pair”? A pair is defined as a momma cow and her baby calf.

As the temperatures begin to increases over 40 degrees – cattle generally require an additional gallon of water for every 10 degree increase in temperature.

Water is crucial for the life of livestock, just as all mammals. In order for livestock owners to maintain healthy and happy livestock they must assure that the animals are properly taken care of. A large part of that starts with maintaining our livestock’s water supply.

Today is World Food Day and we see many promoting their initiatives to fight hunger as they celebrate October 16, 1945 – founding day of the Food and Agriculture Organization of the United Nations.

One of Schroeder Law Offices’ missions is to support people feeding the world. We do this by offering legal services for those farmers and ranchers out there who are growing crops to feed the world, or otherwise contributing to the food and fiber industries in this and other countries.

Just this summer, we toured our clients’ properties learning how they are using technology and advancements to increase their crop yields on the same acreage with the same water use. We also learned how our clients are working with nutritionists to feed cattle in the optimal fashion to raise beef and other meat sources. We are proud that we can support our clients’ water needs in their pursuit to sustainably feed the world!

What are you doing for World Food Day?

In February 2017, the town of Oroville, California was in for quite the surprise! Butte County Sherriff’s Office issued a mandatory evacuation notice as the full reservoir (Oroville Lake) above Oroville threatened to wash out residents. The reservoir’s dam spillways were severely damaged by increased water flow caused by the seemingly unceasing rains. Now the question is when will it be fixed, and what happens next?

Many residents have noticed the hustle and bustle of workers and heavy machinery at the Oroville Dam and are wondering what is actually going on.  Rumors abound. According to the San Francisco Chronicle, some say the work must be a secret effort to mine undiscovered gold, or some suspect a missile is taking shape…not a new spillway. Regardless of what the rumor mill might be stirring, one question is on everyone’s mind – Will it be done in time for the winter and spring rains in 2018?

Officials say that they want the spillways to be operational by November 1^st, 2017 in case the lake fills up by then. Final touches, on the other hand, will have to wait until next summer. Some residents fear that the work is only a patch job and not a permanent fix, and skeptics are not going to wait around to be proven right or wrong.

One thing is for sure, the California Department of Water Resources is required to make sure that the dam is safe before it is fully operational. Arguably, residents should receive assurance of that the dam is safe before the 2018 rains hit and the lake fills up.

In the meantime, assignment of blame for the 2017 disaster continues. State officials are investigating the spillways and looking into the possibility that poor management is to blame for their damage. One official says that he expects the team’s findings to have implications for other dams in California, and beyond.

Co-Authored By: Attorney Therese Ure & Lisa Mae Gage

In August 2015 the United State Environmental Protection Agency (“EPA”) and the U.S. Army Corps of Engineers (“Corps”) put their stamp of approval on the Waters of the United States (“WOTUS”) final rule. The WOTUS rule significantly expanded the definition of “waters of the United States” under the Clean Water Act, granting federal regulatory control over virtually all waters in the United States. Many groups opposed this rule, arguing that it expands federal jurisdiction, resulting in the imposition of burdensome requirements on agricultural producers.

On February 28, 2017, President Donald Trump signed an executive order directing the Administrator of the EPA and the Assistant Secretary of the Army for Civil Works to review the WOTUS rule to ensure the nation’s navigable waters are protected, as well as to promote economic growth and show due regard for the roles of Congress and the States. See https://www.whitehouse.gov/the-press-office/2017/02/28/presidential-executive-order-restoring-rule-law-federalism-and-economic.

President Trump also directed the administrators, along with the heads of all executive departments and agencies, to consider interpreting the term “navigable waters” as it is defined in 33 U.S.C. 1362(7), and consistent with the opinion of late Justice Antonin Scalia in Rapanos v. United States, 547 U.S. 715 (2006). Considering these interpretations, one might construe “navigable waters” as waters in the United States, including the territorial seas, that are “navigable in fact” or readily able of being so.

This executive order was preceded by a House Resolution . See https://www.congress.gov/bill/115th-congress/house-resolution/152/text. The Resolution states WOTUS should be withdrawn or vacated as the EPA and Corps did not follow proper procedural steps and claimed expansive jurisdiction that infringes upon State authority.

Several agricultural groups are strongly supporting the House Resolution and the Executive Order. As water is a valuable resource to all, regulation upon it must be closely scrutinized and controlled. According to the agricultural community, President Trump’s executive order and the House Resolution regarding WOTUS is a welcomed relief.

New studies have shown that a large number of older farmers are concerned with their ability to find a successor who is able to afford to buy their land, thus putting their plans for retirement at risk. Currently, the average age of the American farmer is 58 years old. Only less than 6% of American farmers are 35 years old or younger. With the vast majority of farmers nearing the average American retirement age, it is not surprising that over 60% of farmland is ready to be passed onto the next generation of farmers.

The problem is that the younger generation of farmers is losing the battle of being able to afford the land. According to a recent study by American Farmland Trust (”AFT”), land values are set too high for prospective landowners. This puts the land at risk while the banks, equity firms, and larger corporate farms take advantage of these opportunities to snatch up the land that the younger farmers cannot afford. A recent report by the U.S. Department of Agriculture (“USDA”) has shown that 2 of the biggest hurdles faced by the next generation of farmers are accessing credit for, and finding affordable farmland. Being bought out by larger corporations, or even just the threat of the possibility, along with stress of qualifying for a loan and finding affordable land, has led to a large number of younger farmers leaving the farming industry.

How Can You Help?

So, how do we help? The USDA and the AFT are working on programs to assist beginning farmers and ranchers enter the field and help pay farmers for the development rights to their land. But there are ways we all can help. Some examples include: buying direct, purchasing produce from farmers’ markets, or joining community supported agriculture programs.  For more information, please see http://civileats.com/2016/08/05/digested-farm-together-now/

Rights-of Way on Public Lands and Administrative Avoidance

Century old rights-of-way uses of public lands can only be confirmed through a long, expensive federal court process. Because the Bureau of Land Management (BLM) and U.S. Forest Service (USFS) cannot determine the validity of water delivery and road rights-of-way on public lands, farmers, ranchers, and local governments may face an uphill battle to legally confirm and adjudicate these long-standing uses.

Revised Statutes (RS) 2477 and 2339 were components of the Mining Law of 1866, also called H.R. 365. This Act recognized the activities of settlers and miners occupying the West and encourage development of federal lands.

RS 2477 recognized roads and highways on public lands not already withdrawn from entry. RS 2339 protects the use of water infrastructure used for mining, agriculture, manufacture, and other purposes in place prior to the lands being withdrawn as well. These road and ditch laws honored development protocols and uses based on the local custom and laws at the time of early settlement.

While these laws are no longer in effect with the passage of the Federal Land Policy and Management Act (FLPMA), these self-granting rights-of-ways created while the law was in effect have not disappeared.  FLPMA recognizes existing rights on public lands prior to its passage. See: http://www.blm.gov/ca/dir/pdfs/2003/ib/CAIB2003-023ATT2.pdf

Without a way for agencies to definitively determine RS 2477 and RS 2339 rights-of-way claims, federal courts are currently the only venue to address these issues.  For more information, see: http://nvbar.org/articles/content/rs-2477-public-rights-way-era-administrative-avoidance

Make sure to stay tuned to Schroeder Law Offices’ Water Blog for more news that may affect you!

This article was drafted with the assistance of Law Clerk Jakob Wiley, a concurrent student at Oregon State University’s Water Resources Policy and Management graduate program and a law student at the University of Oregon School of Law.

California Water Right Ownership Updates Required

The State of California wants to know when you sell or transfer water rights. As part of any land use transaction involving water rights, regulations require landowners to provide notice to the Water Resources Control Board (WRCB) when water rights transfer to new owners.

The WRCB will accept any change of ownership unless the change is challenged. If so, the WRCB will wait to update ownership listings until the dispute is settled outside of the agency.

Notification to WRCB should include information like the application number for the water right, name, and address of the new owner. The notice must also be signed by the previous owner. The process is easy. Forms are available at: http://www.waterboards.ca.gov/water_issues/programs/ewrims/ownership/. The forms may be sent electronically, by mail, or fax. Questions regarding the forms may be sent to: changerequest@waterboards.ca.gov.

For other states’ recording procedures and requirements, see: http://www.water-law.com/water-rights-articles/water-right-assignment-and-ownership/.

Make sure to stay tuned to Schroeder Law Offices’ Water Blog for more news that may affect you!

This article was drafted with the assistance of Law Clerk Jakob Wiley, a concurrent student at Oregon State University’s Water Resources Policy and Management graduate program and a law student at the University of Oregon School of Law.

California’s Sustainable Groundwater Management Act Regulations Issued

California’s Sustainable Groundwater Management Act (“SGMA”) was passed in 2014. The SGMA requires local agencies to bear the burden of creating, implementing, and enforcing Groundwater Sustainability Plans (“GSP”) in certain groundwater basins to manage the aquifer in a “sustainable” manner. The California Department of Water Resources (“CDWR”) recently issued regulations that help clarify the requirements of the GSPs, but also include some information about how the law will impact local agencies and groundwater users in the State. However, the regulations fail to satisfy some fundamental questions raised by the SGMA.

The new regulations were issued on May 18, 2016 by CDWR provide some insights into how the agency plans to implement the Sustainable Groundwater Management Act. A copy of the regulations may be found at: http://water.ca.gov/groundwater/sgm/pdfs/Proposed_GSP_Regs_2016_05_10.pdf. Under the regulations, the agency set out the requirements for plan contents, including administrative information, a description of the basin, sustainable management criteria, a description of the monitoring network, and projects associated with the plans.

The administrative information section must include general information about the region, description of the local agency developing the plan, and the agency decision-making process with public engagement.

The basin setting section must thoroughly describe the basin’s hydro-geologic conditions and must create a “water budget” that describes all the surface and groundwater movement into and out of the basin. Under this section, the local agency must estimate the “sustainable yield” of the basin.

Sustainable Management Criteria have also been outlined by the regulations. These criteria require local agencies to set a sustainability goal that eliminates undesirable results of groundwater use within 20 years of the statutory deadline. CDWR will evaluate sustainability goals based on the achievement of minimum thresholds established by the local agency. The minimum thresholds expand on the statutory language for “undesirable results.” For example, a significant and unreasonable reduction in groundwater storage levels will be evaluated based on the locally defined “undesirable results,” supported by the “sustainable yield” of the basin. The local agency must also include a measuring system and “measurable objectives” that are revisited every five years.

The regulation also outlines the procedure that CDWR will use to evaluate plans, timelines for approval and reporting, and how local agencies can amend their plans. It also sets out the procedure for interagency agreements and addresses adjudications and alternatives to GSPs.

The real impact will come from the local agencies’ interpretation of the word “sustainable.” The new regulations use the term throughout, defining the quantity of water in the water budget available and defining allowable groundwater depletions. Traditionally, sustainable yield is considered the amount of water that can be withdrawn in balance with recharge. At first glance, the definition makes sense. The meaning, however, simplifies a more complex concept. When water is pumped from an aquifer, three results can occur: a reduction in stored water stored in the aquifer, capture of surface water (like rain or seepage from a river), or a reduction in discharge (like a spring or river baseflow), or any of these effects in combination depending on the specific aquifer. Ponce, Victor M., Sustainable Yield of Groundwater, (available at: http://ponce.sdsu.edu/groundwater_sustainable_yield.html). It remains to be seen how “unreasonable” and how “significant” the undesirable effects have to be in order to become unsustainable.

Make sure to stay tuned to Schroeder Law Offices’ Water Blog for more news that may affect you!

This article was drafted with the assistance of Law Clerk Jakob Wiley, a concurrent student at Oregon State University’s Water Resources Policy and Management graduate program and a law student at the University of Oregon School of Law.

On April 6, 2016, amendments to the Klamath Hydroelectric Settlement Agreement (KHSA) and the new Klamath Power and Facilities Agreement (KPFA) were signed at a ceremony at the mouth of the Klamath River on the Yurok Indian Reservation. These changes come in the wake of the Congress’s decision not to pass legislation for the Klamath Basin Restoration Agreement (KBRA). Negotiations between the signatories of the new agreements in the Klamath Basin were kept secret, the results of their discussions can be seen in these new agreements, available at: https://www.oregon.gov/owrd/Pages/adj/index.aspx.

The amended KHSA’s purpose is to establish a process for removal of Iron Gate, Copco 1, Copco 2 and J.C. Boyle dams under the Federal Energy Regulatory Commissions relicensing procedures. The decision to remove the dams was made based on a cost-benefit analysis that was not released to the public. The amended agreement will also shield PacificCorp and its customers from liability for damages associated with dam removal. The amended agreement transfers the ownership of the dams to the Klamath River Renewal Corporation. The new corporation will conduct the dam removal, while PacificCorp will operate the dams until their decommissioning. The dams are expected to be removed in 2020. The U.S. Department of the Interior, the U.S. Department of Commerce, California and Oregon States, and PacificCorp were parties to the agreement.

The KPFA is an agreement designed to mitigate economic and regulatory issues facing users of water and land in the Klamath Basin. Oregon and California States, the Klamath Water Users Association, public interest groups (including American Rivers, Trout Unlimited, and Sustainable Northwest), the U.S. Department of the Interior, and the National Marine Fisheries Service were parties to the agreement. The KPFA stipulates that the signing parties must meet and confer when there is an unforeseen circumstance related to the fishery restoration and regulatory impacts on the local economy. It also obligates the U.S. Bureau of Reclamation (“BOR”), upon transfer of the operation of Link River and Keno Dams, to operate the dams without adding any associated costs to water users for the maintenance of infrastructure. The BOR will operate those dams consistent with existing contracts for irrigation and flood control, and attempt to prevent salmon from entering irrigation canals and ditches. Funding for projects preventing salmon entry into irrigation infrastructure will come from a variety of sources, including irrigation districts, federal, state, and private parties. The agreement also requires the signing parties to support and defend the KHSA, refrain from making statements in opposition to the KHSA, and support the KHSA in administrative and judicial forums. Notably, representatives of the local landowners that will be affected were not included in negotiations, and are not signatories to the agreement.

In short, after many years of receiving a clear message from Congress that it was not going to fund the KBRA’s dam removal plan, the proponents are moving forward without Congress’s approval, or the approval of the local residents that will be most affected. Rather than retrofit the dams to allow fish passage and other updates, the negotiating parties are removing the dams. Along with the dams, the negotiating parties are doing away with inexpensive power, jobs, and water storage for increased reliability within the basin, in a proverbial “flushing the baby with the bathwater” situation. It remains to be seen how severe the impacts from dam removal will be on top of the other stresses that the Klamath Basin has suffered since the administrative phase of the Klamath Basin Adjudication was completed, and since the region has suffered from severe drought for several years.

Make sure to stay tuned to Schroeder Law Offices’ Water Blog for more news that may affect you!

This article was drafted with the assistance of Law Clerk Jakob Wiley, a concurrent student at Oregon State University’s Water Resources Policy and Management graduate program and a law student at the University of Oregon School of Law.

On May 9, 2016, Governor Jerry Brown of California signed an executive order making certain water conservation measures permanent. The measure is meant to build on temporary emergency water restriction in place since last year. Brown’s office reports that “between June 2015 and March 2016, Californians reduced water use by 23.9 percent compared with the same months in 2013 – saving enough water to provide 6.5 million Californians with water for one year.”

The executive order primarily implements long term planning solutions for local drought and directs the California State Water Resources Control Board to develop further emergency provisions should the drought continue. This new action is summarized in the Governor’s plan to “Make Conservation a California Way of Life.”

More specifically, the plan requires additional monthly reporting by urban water suppliers, requiring information on use, conservation, and enforcement. The provisions further claim to eliminate water waste, prohibiting hosing off sidewalks, driveways, at home washing of autos using hoses not equipped with nozzles, and watering lawns in manner that causes runoff.  The Water Board will also work to minimize system leaks responsible for wasting more than 700,000 acre-feet of water per year. While already strictly regulated, agriculture use is also heavily considered, updating the requirements for Agricultural Management Plans allowing irrigation districts to quantify customers’ use and appropriately plan for shortages.

While water restrictions and regulations are becoming more permanent, Californians will continue to face heavier scrutiny. It is ultimately the user who will face the increased burden, however, the hope is that the systems themselves will promote efficiency, providing a better use of water across all systems and types of use.

For more information on the executive order and its full text, please visit https://www.gov.ca.gov/news.php?id=19408.

In the Northwest, a substantial percentage of our power comes from hydroelectric projects. California’s new legislation requires utilities to provide electricity from 50% renewables by 2030, and Oregon’s new legislation requires the same by 2040. The hydro power industry is viewing these renewable standards as creating continuing demand for hydro power, but several trends are creating serious hurdles for the hydro power industry.

More large projects are going through FERC re-licensing than those large projects that would seek first-time licenses. The result is that older projects are becoming subject to new instream flow and fish passage requirements. The older projects going through re-licensing are usually required to make facility upgrades, and regulate the projects to send more water downstream.

Additionally, climate change means that water patterns are also changing. Scientists predict that more precipitation will fall during the winter, with less flows from snow pack runoff and precipitation in the spring and summer. Predicted changes will create a large burden on facilities that provide flood control, possibly exceeding the amounts of water the facilities were designed to withstand. Further, flows released to meet instream flow requirements in the spring could mean that water is not available for power production and water users later in the season when there is a larger demand.

Moreover, new in-stream storage projects often meet substantial opposition from environmental groups.  Therefore, some innovative hydroelectric developers are constructing out-of-stream projects. For example, the Snohomish Public Utility District in Washington is reviewing an opportunity to construct the Sunset Fish Passage and Energy Project, http://www.snopud.com/?p=1956. An underwater intake structure would divert water from the South Fork Skykomish River, and would flow one-half mile through an underground tunnel to the PUD powerhouse, thereafter emptying back into the river. The PUD would also update the Washington State Department of Fish & Wildlife’s trap-and-haul facility as part of the project. In this way, the PUD proposes an innovative way to create hydro power while satisfying those who are typically opposed to new projects.

Schroeder Law Offices is assisting a client to develop a closed-loop hydro power project using existing agricultural groundwater use rights. It is the first of its kind in Oregon, and will not have undesired effects on surface water streams or fish passage. These types of innovative hydro power designs will need to be used more and more if hydro power is to keep a foothold in renewable energy portfolios in the West.

Stay tuned to Schroeder Law Offices, PC’s Water Law Blog for water news that could affect you!

Schroeder Law Offices is proud to announce Portland’s Managing Attorney, Sarah Liljefelt, has been promoted to Junior Partner.  Sarah has been with the firm since 2009 as a law clerk, and joined the firm full time after receiving her Juris Doctorate and Certificate in Environmental and Natural Resources Law from Northwestern School of Law of Lewis and Clark College in 2010.

Sarah’s practice focuses in the areas of water rights, real property law, and litigation, licensed in both Oregon and California.  As a member of the Oregon State Bar Environmental and Natural Resources Law Executive Committee, Sarah has published extensively on natural resources law and related topics.

In addition to her focused practice areas, Sarah is active in the Portland community.  She is currently a Vice President of Oregon Cattle Women, and competes on the Oregon Women Lawyer’s “Dragonflies” dragon boat team.

Sarah was born and raised in California during a time of serious drought and is passionate about the importance of water resources for people, animals, and the production of food in the face of supply variations.