On October 3, 2013, the Washington State Supreme Court ruled in Swinomish Indian Tribal Community v. Wash. Dept. of Ecology (No. 87672-0, Wash. Oct. 3, 2013) that the Department of Ecology exceeded its authority by applying the state water code’s “overriding considerations of the public interest” (OCPI) exception to justify reservations of water for future beneficial uses that would impair existing minimum instream flow rights.  Notwithstanding Ecology’s determination that allowing these uses would be in the public interest and would not significantly impact fish, the court rejected Ecology’s position as being “inconsistent with the statutory context and the entire statutory scheme.”

The court’s 6-3 decision raises many questions and does not provide clear guidance regarding the circumstances under which the OCPI exception may be lawfully invoked.  For example, although the decision addresses Ecology’s improper use of the exception to reserve water for future beneficial uses through rulemaking, the decision also appears to limit Ecology’s ability to use the exception to grant new individual water rights.  At the least, the decision increases the likelihood that Ecology will require water right applicants to demonstrate that any impairments to minimum instream flows will be mitigated to the fullest extent possible before a new water right can be authorized. 

Skagit River Basin Instream Flow Rule and Ecology’s OCPI Finding

Under RCW 90.22.010, Ecology is authorized to—and in some circumstances must—set minimum instream flows to protect fish, game, birds or other wildlife resources, or recreational and aesthetic values.  Once issued, a minimum flow rule constitutes a water right with a priority date that is the same as the effective date of the rule.  As an existing water right, the instream flow is protected by the “first in time, first in right” principle of Western water law, which prohibits impairment by subsequent appropriators.  There is an exception, however, in RCW 90.54.020(3)(a), which provides that withdrawals of water that conflict with minimum instream flows may be authorized “only in those situations where it is clear that overriding considerations of the public interest will be served.”  This exception is commonly referred to as the OCPI exception.

In 2001, Ecology issued its “Skagit River Basin Instream Flow Rule,” which established minimum instream flows for the river basin.  Skagit County challenged the rule, arguing that it would prevent future residential, industrial and agricultural development by making future water uses interruptible during times of low flow.  In 2006, as part of a settlement agreement with the county, Ecology amended the rule to establish small “reservations” of water for future development.  The amendment provided that these future beneficial uses would be allowed to continue even if the existing instream flow requirements were not being met.

Water reservations by Ecology are appropriations of water by rule, which create a water right with a priority date as of the reservation date.  See RCW 90.03.345; 90.54.050.  Once Ecology issues a reservation for a future beneficial use, individual applicants may apply for a permit to obtain the right to put water to the specified beneficial use.  The priority date for the permit is the date of the reservation, rather than the date that the permit application was made.  Like other new water rights, a new water right reservation must satisfy a four-part test before it may be authorized:  Ecology must affirmatively find that (1) water is available, (2) for a beneficial use, and that (3) appropriation will not impair existing rights, or (4) be detrimental to the public welfare.

Here, Ecology acknowledged that the Skagit reservations would impair existing instream flow rights and that water was legally unavailable.  Nonetheless, Ecology concluded that it could still authorize the reservations under the OCPI exception.  Key to Ecology’s decision was that the economic benefits of authorizing the future beneficial uses, $32.9 to 55.9 million over 20 years, outweighed the small monetary loss to fisheries, $5.3 million over 20 years.  Ecology also concluded that providing uninterruptible water to residents, businesses and farms served an important public interest and that the impairment of instream flows would not cause significant harm to fish and wildlife.  Applying a “balancing test,” Ecology found that these and other considerations established a clear showing of overriding consideration of public interest.

“Inconsistent with the Statutory Context and the Entire Statutory Scheme”

The Swinomish Indian Tribal Community objected to Ecology’s use of the OCPI exception to authorize the reservations and brought suit.  On appeal, the Washington State Supreme Court invalidated the 2006 amendment, holding that Ecology’s application of the OCPI exception in these circumstances was “inconsistent with the statutory context and the entire statutory scheme.”  Although the decision provides a litany of reasons for why Ecology “got it wrong” in this particular case, it provides little concrete guidance for how the OCPI exception should be applied in the future, and the full import of the decision is sure to be debated.  A few of the most important takeaways are highlighted below.

• The OCPI exception is a “very narrow” exception that requires “extraordinary circumstances” and “overriding” considerations of public interest.  A simple “balancing” of costs and benefits is insufficient.  Proposed beneficial uses should be considered individually; aggregating potential benefits is inappropriate because the need for water for population growth would always trump environmental values.  The proposed use must also serve public interests, as opposed to private interests.  Because “the retention of waters instream is as much a core principle of state water use as the other goals, including economic well-being,” the “best use of water does not necessarily mean economically beneficial use,” and “economic gains alone do not justify using RCW 90.54.020(3)(a) to reallocate water” from instream flows.
• The OCPI exception is not an alternative appropriation process.  The OCPI exception is not to be used “as an alternative method for appropriating water” when the four-part test for a new water right under RCW 90.03.290(3) cannot be satisfied.  Even seemingly insignificant uses cannot not be allowed to “jump to the head of the line” in priority through the use of reservations.  “[T]here are hardships attendant to any water right with a later priority date and too little water available to satisfy all rights,” and this does not justify an “end-run around the normal appropriation process.”
• Minimum instream flow rights are not a “lesser class” of water rights.  Minimum flow rights are “equivalent to other existing water rights that cannot be impaired by a subsequent appropriation.”  They are not subject to reallocation simply because Ecology “decides that reservations for other beneficial uses would make better use of the state’s water.”  Rather, under the existing statutory scheme, “subsequent rights cannot impair existing flow right[s], and permits to appropriate water from streams with minimum flows set by rule must be conditioned to protect the minimum flows.”  Policy determinations regarding reallocating water from minimum flows to other beneficial uses are determinations for the legislature.