Retired Reclamation Commissioner John Keyes passing is sad news. I first “engaged” Reclamation with John at the helm in the Boise Regional office in 1992 when working for the Teel Irrigation District. We were dealing with issues surrounding “water spreading” then making headlines in the Umatilla Project by Water Watch of Oregon. Over the years, we kept in close touch on various Reclamation issues. Most recently, John assisted me in obtaining a position with the USAID working in Armenia. He was a southern gentleman in the best way. Kind and considerate always interested in a balance between what was best for the individual as well as the public. He told me that retirement to him meant a chance to spend more time flying.

Focusing on the soon to be launched adjudication in north Idaho, water and real estate lawyers gathered in Coeur d”Alene, Idaho May 15 and 16, 2008.

As in other McCarran adjudications in which we are involved, issues expected to be included will be federal including Indian, Forest Service and Reclamation issues; instream including hydro, water quality, and endangered species issues; and state issues including municipal, water district, and individual claims. It is likely that in all adjudications, the best water attorneys will be picked up early and conflicted out quickly. Speaker Steven C. Moore, a staff attorney for the Native American Rights Fund out of Boulder, Colorado, quoted Professor Drew Kershen at the University of Oklahoma College of Law stating “A good water rights case can be willed to your kids.”

We suggest that our clients and potential clients contact us early to prepare and review potential claims BEFORE the claim is filed.

The Federal Court made its decision on the jurisdictional question by sending the case back to Lyon County District Court last week. See http://www.kesq.com/Global/story.asp?S=8229832 for more information.

Interestingly, many farmers have still not received water that is due to them as insufficient flows continue in the Truckee-Carson Canal. Crops are being stressed and damaged.

Many meetings are taking place in Fernely and Fallon with the Bureau of Reclamation to help resolve these issues. Obviously, if enough water is not diverted from the Truckee River over to the Carson River via the Canal, the amount of water allocated to Fallon side water users in the project, as well as those in Fernley will diminish. With the “water year” already at 90% of the allocation, there may not be enough water to fulfill the allocation if Truckee water is not available.

We encourage your attendance to voice your concerns at these meetings! The next meeting is scheduled for Thursday, May 1, 2008, from 6:00 – 9:00 PM at the Lahontan Elementary School, Multi-Purpose Room,1099 Merton Drive, Fallon.

In the aftermath of the January 2008 flood after the Truckee-Carson Canal break, many lawsuits have been filed.  These suits have been filed in both state and federal courts in Nevada and present many questions as to which Court holds jurisdiction to hear these issues.  Proper jurisdiction depends on the parties to the lawsuit as well as the subject matter of the action.

Recently, an action for an injunction to stop certain amounts of water from flowing down the Truckee-Carson Canal was filed for fear that the higher water levels and amounts of water would cause additional damages to them and potentially cause another ditch break.  While this action was limited to the parties involved and served in the pending lawsuit, this caused an uproar by Newlands Project water users.  Many users have contemplated intervening in this action as the reduced amount of water going over to the project has and will directly affect project water deliveries to the users on the Canal itself, and downstream in the project.

The action for an injunction has questionable subject matter jurisdiction because it was not filed with the Decree Court that administers the water deliveries affected. How can a Court that does not have subject matter jurisdiction of the waters affected make any affective order?

The Alpine and Orr Ditch were Decreed in Federal Court and that court retains jurisdiction to administer the Decree that defines exactly how much water each user is entitled to receive and where that water is to be delivered. Thus, presumably an action to limit the amount of water delivered down the Canal should be brought in the Decree Court. The problem is that those seeking the injunction may not have standing in the Decree Court because they have no water rights issued by the Decree Court.

An interesting question still to be decided.

Guest post by James Carver

I’ve worked for over thirty years in the field of water law in the office of the State Engineer and the Water Resources Department.  During those years I served as head of the Water Rights Division and later as Deputy State Engineer under Chris Wheeler.  I also presided over administrative hearings pertaining to water law for the State Engineer and his successor, the Director of the Water Resources Department.

Around the turn of the 19th century, Oregon saw a need for a system to document water use.  Recognizing that an orderly system for recording and prioritizing water rights would be necessary as water uses grew, the legislature, in 1909 adopted Oregon’s first comprehensive water code.  The code held priority and beneficial use as the standard for distributing water to growing agricultural and domestic needs.

Over the years, the Oregon legal system has fleshed out the scope of water rights and defined them as property rights akin to land.  The Oregon Supreme Court concluded that a perfected water right is a property right and an appurtenance to the real property on which it is used.  The legislature has also recognized new practices that satisfy beneficial use.  These include leaving water instream to ensure minimum stream flows exist to support various fish species.

Unfortunately, there is now a growing movement to distribute water based on a public benefit analysis without regard to priority.  Believers in this new distribution system argue that water rights holders have been given access to public water without a requirement for payment in return.  Therefore, they should be subject to losing the water if it is needs for the public good.  Since users never “owned” the water, it can be taken from them without compensation.  However, there are major drawbacks to such as system.

A water distribution system constantly subject to alterations based on nebulous concepts, such as the public good, will likely result in a great devaluation of land with water rights attached.  For example, lending institutions will become more hesitant to finance projects involving water because the water on which the project is based may disappear without compensation if the state decides the public good is better served by taking it.

The doctrine of prior appropriation is well established in Oregon and any departure from the current system may carry with it economic consequences that far outweigh possible benefits gained from applying more water to uses in the public good.

An historic agreement has been reached in a dispute over water in the Rio Grande Project. It has taken 29 years in a process stagnated by several lawsuits to prepare an operating agreement negotiated between the Bureau of Reclamation, Elephant Butte Irrigation District (EBID), and the El Paso County Water Improvement District No. 1. No previous operating agreement has been signed by either of these districts. Rather, they have been complying with the Bureau’s requests and procedures on a yearly basis. In working to negotiate the new operating agreement, EBID used the “Managing for Excellence” report prepared by the Bureau of Reclamation to guide settlement discussions.

The Managing for Excellence Plan was created in response to a comprehensive report regarding the Bureau’s construction and infrastructure, prepared by the National Research Council and the National Academy of Sciences. Ultimately, the principles outlined in the Managing for Excellence report helped to develop an agreement which aims to increase transparency, cost effectiveness, and efficiency while allowing irrigation districts some independence in their operation. The agreement will also allow regional issues to be addressed and will allow for carryover of conserved water to be stored in project reservoirs on a yearly basis, promoting recreation and allowing upstream storage of water. The agreement is notable not only for resolving this long standing dispute, but also for establishing an interstate agreement between New Mexico and Texas, which could be used as a model for other states.

To read the full operating agreement visit http://ebid-nm.org/static/pdf/opag/opag.pdf.
To learn more about other water issues like this visit the Family Farm Alliance at http://www.familyfarmalliance.org/ and click on the Water Review Link.

The government of Armenia is inaugurating a new president on Wednesday, April 9, at 2 in the afternoon. Large crowds are expected in the downtown area in connection with the official events, which will include a military procession through Freedom Square and evening festivities at Republic Square.

It is not expected that much dramatic change will occur in Armenia with the inauguration. However, the Presidential election process, has substantially delayed our efforts to complete the revisions to the water code and place it before the legislative assembly for adoption.

In addition to the process delay, the State Committee has “filibustered” revisions to the water code involving sections of the water code related to dam inspection and safety, the transfer of the water system use permit, and the authorities of the Public Services Regulatory Commission (PSRC) as to the issuance of the water system use permit (WSUP). The WSUP permit is issued in Armenia to those operators who hold management or lease contracts with the State Committee acting through a joint stock company for operations of the water system. In most cases, the joint stock ownership is 51% to the State Committee and 49% to the local government “owning” the water system facilities.

Thus, the State Committee does not want revisions to the Water Code that would make it “beholding” in the sense of WSUP requirements or conditions for system inspections, control of tariff setting (and therefore “income” to the Operator), or other regulatory controls necessary to protect the public that the PSRC would hold if the water code revisions were adopted. If the State Committee continues to “filibuster” these changes, a ministry level committee is in charge of resolving any remaining issues to the revisions. This committee is scheduled to meet April 18th.

Armenia’s current water code requires a water system use permit (WSUP) without exception for any system of facilities. The WSUP is issued by the Public Services Regulatory Commission (PSRC). It has been suggested municipalities and small community water associations that own and operate their own domestic water delivery system should be exempt from the requirement for a WSUP. The major reason for the exemption would be to prevent dual regulation, ie regulation by the locals and also by the state through the PSRC. In addition, where access to the local person operating the water system can be made by “visiting with the neighbor across the street”, consumer and often times operator are one and the same. In such circumstances over arching state regulation is not required.

Since the PSRC has not enforced the WSUP requirement against the locals, the need for changes in the present water code may be overlooked at present. The real reason in fact may be that very few local delivery schemes exist (except rurally). Armenia’s urban population receives water services by conveying their water facilities to the State in return for a 49% in a joint stock company controlled by the State which owns a 51% share. The stock company then contracts with a third party operator for water services.

These Company-Operator contracts are “issues of public importance.” As such, the Prime Minister of Armenia appoints a Commission to develop and approve these contracts. Since the Yerevan Jur contract is up for tender in October 2008, it is expected that a Commission will be appointed soon. This Commission may well set the stage for the four other water companies who exist in Armenia who will also need new tenders in the near future. This process of developing the new contract for Yerevan Jur may well set the stage to move further into water sector privatization or not.

In Armenia, domestic water supply and sewer services are supplied either by local municipalities or State owned stock companies. There are five State owned stock companies in Armenia, the State owns 100% of the shares in Armenian Water, Nor Akung and Yerevan. The State owns 51% of the stock in Lori and Shirak while the other 49% is owned by the local government (Marz or County).

Two private operators exist in Armenia: (1) “SAUR” SA Company (France) which operates pursuant to a management agreement with Armenian Water; and (2) Veolia dba as Yerevan Jur (Armenian Company) operates Yerevan through a lease of assets.

Interestingly, many commentators have noted that water facility ownership is in a state of confusion. Understandably so. When Armenia declared its independence from the Soviet Union some 15 years ago, ownership became a question as to all of the “commons” including large apartment buildings, collective farms, and water facilities.

Since little capacity existed then (and now) locally, the State initially took ownership of these “commons.” Eventually, the ownership of apartment buildings and collective farms was divided by a combination of “historical use” and a lottery. Unfortunately, this division failed to identify the ownership of any remaining “commons” such as the water and sewer pipes in the apartment buildings. This same confusion carried forth to local water delivery and sewer systems where local governments were either non-existent or without sufficient capacity to manage and operate these facilities.

Solutions are not easy. After 15 years the State is invested in maintaining its “ownership.” The State cites its need to retain control because local governments continue to lack capacity, particularly in the ability to finance any large scale improvements, repairs, and even in some cases, the day to day operations and maintenance. The State’s argument is compelling.

One report issued in conjunction with the State suggests that moving toward privatization of all water facilities is the answer to the financing issue. However, such privatization in this case means to turn over the ownership of Armenian water facilities to French companies. It is also requires that ALL water services will be delivered via private companies. While there is no doubt that the French companies have capacity to manage these water systems, there are many public concerns particularly as to consumer cost.

The State’s report in support of its privatization conclusion makes an all or nothing conclusion: In order to provide efficient and cost effective water services to all Armenia, private companies should provide water throughout Armenia, both in urban and rural areas. While the report recognizes that individuals can be self supplied by wells, it fails to mention or address the effectiveness of self-regulated and owned small community water associations.

Likely the State’s argument against incorporating individual supply and small community water associations in the Armenian mix of water delivery services, is again “capacity.” In general, this means that the population of Armenia maintain a “Russian” mentality preferring to allow the State to take the responsibility. However, given the very certain realities of the escalating costs to consumers under privatization, Armenians may well be interested in alternatives. Preserving flexibility as Armenian sorts out the ownership of the “commons” relative to water delivery and sewer facilities will be challenging.

The final topic of discussion on the OWRC conference call addressed changing start card fees for constructing wells.

Start card fees, fees paid along with the notification of new well construction, partially fund the OWRD staff payroll. The fee is currently $125.00. OWRD is concerned that the fee is no longer sufficient to sustain the well inspection program and would like to establish a schedule to raise the fees moderately and frequently (as opposed to large increases every 5 or more years).

Once again, this topic generated a number of comments. The WaterWatch representative suggested that OWRD’s current cost recovery of roughly 30% through fees was not high enough and that a goal of nearly 100% recovery would be preferable. She called attention to increasing fees for issuing limited licenses and adding an additional fee for water right permit applicants who protest an OWRD order.

The Committee members expressed some agreement with the idea that OWRD should move towards a more comprehensive fee based structure with a goal of 50% cost recovery. Other attendees believed that water users would support increased fees because added revenue could allow OWRD to augment staff and work through application backlogs.

Personal service means just what it says! On March 28, 2008, in United States v. Alpine Land and Reservoir Co., Judge Lloyd D. George reaffirmed that only those 281 individual water right holders who returned their acknowledgement of service must defend the Pyramid Lake Paiute Tribe’s suit challenging the existence of their water rights. The Court’s recent order went on to confirm that those 1300 water right holders who had determined not to mail back an acknowledgment of the Tribe’s mailed service are dismissed.

Importantly, Judge George recognized our continued attempts in the last decade to dismiss the suit for lack of prosecution. Because of those efforts made by Schroeder Law Offices, PC on behalf of its clients, the Court determined that purchasers of lands with challenged water rights who had been served, ie mailed in the acknowledgements, are not bound by the currently filed petition. So the best news might be that of the 281 acknowledged individuals, those that sold the property along with the challenged water rights can also be dismissed.

Unless the Tribe refiles its petition against those dismissed, the number of individuals with challenges to the existence of their water rights is becoming quite small. Good news for Newlands Farmers! The end IS in sight!

Like most former soviet countries, Armenia continues to confront law and regulation of its natural resources from the top down. USAID through PA Consulting requested my consulting assistance approximately 16 months ago to assist it in redrafting and de-centralizing the approach to water management. I am currently on my fourth “mission.”

Many important laws and regulations have met agency approval some months ago. However, there are a few issues including dam inspection and safety which are yet unresolved. Perhaps it is simply a matter of communication between the agencies and, as usual, they are wrangling over the extent of each agency’s authority.

It is my opinion, and that of others, that Armenia quite desperately needs an overhaul of its water code as it pertains to its hydro technical structures because the present code provides no protection for any citizen against failure. Hopefully, a new code will provide security to the people of Armenia through routine dam inspections, maintenance, and clear statements of owners’ rights and responsibilities.

The next topic in the OWRD legislative concepts discussion is the creation of a water development fund.

OWRD discussed updating statutory language found in ORS 541.700-541.855 addressing financial aid to communities constructing water supply projects. OWRC members expressed some concern with this item because it involved project funding. Director Ward suggested that discussion of monitory issues could be postponed until the OWRC meeting taking place in Burns, OR on May 29 and 30 because there will be a more defined draft budget in place at that time.

There should be more lengthy discussions on this topic in the near future.

Good morning! The third part in my series of posts addresses some proposed changes to irrigation district transfer rules.

Currently, when an individual transfers the place of use of a water right any supplemental rights must be transferred with it or canceled. However, the statutes controlling irrigation districts do not explicitly allow for transfer of supplemental rights when primary rights are transferred. OWRD would like to update the irrigation district statutes, specifically ORS 540.570 and 540.580 to bring them in line with other transfer statutes.

The attendees had few substantive comments and generally agreed that a change in statutory language would be appropriate.

The second topic addressed during the OWRC teleconference was modifying language pertaining to statewide mitigation banks.

OWRD wants to modify statutory language to give itself explicit authority to create statewide mitigation banks. These mitigation banks can be used to offset effects of new water supply projects.

This proposed statutory change drew a few comments from attendees. A representative from WaterWatch expressed her organization’s concern that new statutory language must be precise so as to avoid creating loopholes that allow users to access water without adhering to the monthly rate limitations placed on the source permits. However, a representative from Special Districts Association of Oregon expressed a need for greater flexibility across regions so as to allow different water needs to come together.

The Oregon Water Resources Commission (“OWRC”) had its monthly conference call on Monday. In attendance were a majority of the OWRC members including: Ray Williams, Jay Rasmussen, Susie L. Smith, Dan Thorndike and Charles Barlow. Oregon Water Resources Department (“OWRD”) Director, Phil Ward, and a handful of his staff members were in attendance. Those attending the call at the OWRD offices in Salem included Kimberley Priestley (WaterWatch), Anita Winkler (Oregon Water Resources Congress), Katie Fast (Oregon Farm Bureau Federation) and Amanda Rich (Special Districts Association of Oregon).

The agenda covered legislative concepts that OWRD will be developing during the 2009 and 2011 sessions. I will post short summaries on each concept over the course of the next week. Today I’m going to talk about the first topic that OWRC addressed: instream leasing.

Currently instream leasing is not an option for a holder of a water right claim involved in an adjudication. A final decree must be issued before instream leases can occur. OWRD would like to open instream leasing to claims in an adjudication as soon as a final order is issued so water right holders can lease water and show beneficial use during seasons when the user does not need the water.

There wasn’t significant discussion on this topic. Tomorrow I’ll be talking about statewide mitigation banks.

Our work in Armenia involves reviewing contracts between the State and a couple of the largest water purveying companies in the world, Veolia and Suez, which are headquartered in France.

Interestingly, we have found that these French companies, through their subsidiaries Veolia Water North America and United Water, also have contracts in Oregon, Washington, and Idaho. Examples include Operation and Maintenance contracts between Veolia and the cities of Wilsonville, OR and Vancouver, WA, and contracts between United Water and Boise, ID.

Links to these companies can be found at www.veoliawaterna.com and www.unitedwater.com.

In the world of water law, we often receive calls from clients and potential clients that live many miles away from our Portland office, and sometimes hundreds of miles from the nearest major airport. In many cases, a site visit to the client’s land is necessary to get a lay of the land, or a sense of the facts on the ground. But the reality is that a site visit isn’t always practical right away. In those cases, a resource like Google Earth can be invaluable. And when the land you are looking for is far away from any urban center, a little tool that we found at www.earthpoint.us is a great time saver. With Earth Point you can enter a Township and Range and it will fly you the appropriate place on Google Earth. There are also some other options on the site that look equally useful.

Yesterday, I had the privilege of teaching a Water Law Bootcamp for Water for Life. Over forty people attended at the Baker County Fairgrounds in Baker City Oregon. Unlike previous presentations, attendees focused their questions primarily on due diligence water rights review in real estate transactions and valuations of water rights when lending on water righted properties. Apparently in these economic times, realtors and lenders are giving much more scrutiny to what water rights exist on the property subject to a transaction.

Armenia’s Presidential election unrest may delay our next mission to assist the government in a review and updating of contracts between the State and the French contractors now purveying water to Yerevan and a few other cities in Armenia.

In preparing for this work, Katherine Thomas has found many cities in the West that also contract with American subsidiaries of these same French contractors. The world is small–or the French contractors are big!