Nat'l Ski Areas Ass'n, Inc. v. U.S. Forest Serv.

Decision Date19 December 2012
Docket NumberCivil Action No. 12–cv–00048–WJM.
Citation910 F.Supp.2d 1269
PartiesNATIONAL SKI AREAS ASSOCIATION, INC., Plaintiff, v. UNITED STATES FOREST SERVICE, an agency of the United States Department of Agriculture, United States Department of Agriculture, and Harris Sherman, Under Secretary for Natural Resources and Environment of United States Department of Agriculture, Defendants.
CourtU.S. District Court — District of Colorado

OPINION TEXT STARTS HERE

Christopher Stephen Mills, Ezekiel J. Williams, Ducker, Montgomery, Lewis & Bess, P.C., Denver, CO, for Plaintiff.

Barclay T. Samford, U.S. Department of Justice–Co–Environmental Enforcement, Denver, CO, for Defendants.

ORDER

WILLIAM J. MARTÍNEZ, District Judge.

I. INTRODUCTION

This matter is before the Court on Plaintiff National Ski Areas Association, Inc.'s (“NSAA” or Plaintiff) Amended Complaint (“Complaint”). (ECF No. 8.) The Complaint seeks judicial review of the March 6, 2012 directive (the 2012 Directive”), promulgated by the United States Forest Service (“Forest Service” or Defendants).1

The matter has been fully briefed (ECF Nos. 15, 37, 40), and Defendants have submitted the administrative record to the Court (ECF Nos. 13, 14). The Court also heard arguments of counsel at a hearing on November 15, 2012. Having reviewed the briefs and the relevant materials from the record, the Court vacates the 2012 Directive and enters the limited injunctive relief described below.

II. JURISDICTION

The Court has jurisdiction over this matter under 28 U.S.C. § 1331 (federal question), and 5 U.S.C. §§ 701–706 (the Administrative Procedure Act (“APA”)).

III. BACKGROUND2
A. Factual Background

The Defendant Forest Service authorizes ski areas to operate on National Forest System lands pursuant to long-term special use permits (“Ski Area Permits”). These permits are issued under federal law. 16 U.S.C. §§ 497, 497b, 497c. Throughout the United States, there are approximately 121 ski areas on National Forest System (“NFS”) lands. (ECF No. 15–5 ¶ 2.) These ski areas span 13 states. ( Id.)

This case involves Defendant's 2012 Directive—a water rights directive that is inserted into Ski Area Permits when such permits are modified or terminated. (AR 00524–26.) Ski areas rely on water rights for snowmaking, domestic uses, and other purposes. (ECF No. 15–5 ¶ 5). Snowmaking is critical to ski area operations. Most ski areas could not operate in an economic or efficient manner without water rights for snowmaking. (AR 00147; ECF No. 15–5 ¶ 5.)

Forest Service Ski Area Permits do not confer water rights on the permit holder. (AR 00018, 00658, 00664.) Ski Area Permit holders must acquire water rights for use on NFS lands for snowmaking and other purposes under state law at their own expense. (ECF No. 15–56–7; AR 00658, 00660, 00664.) Many ski areas on NFS lands have acquired water rights under state law for use in snowmaking and in other operations. (AR 00141, 00234; ECF No. 15–5 ¶¶ 7–10.) 3

The Forest Service issued special use permits for most ski areas nationwide in the 1960s and 1970s pursuant to Ski Area Permits that did not require ski areas to acquire water rights in the name of the United States. (AR 00608–644.) Nor did these permits transfer water rights to the United States as a condition of the permit. ( Id.)

In 1982, Region 2 of the Forest Service—covering Colorado and Wyoming—adopted a Ski Area Permit clause that provided: “All water rights obtained for use on the area must be acquired in the name of the United States.” (AR 00125.) Region 2 of the Forest Service inserted this clause into some, but not all, Ski Area Permits. (AR 00612–622, 531.)

In 1989, Region 2 adopted a new clause that provides: “All water rights acquired by the Holder during the term of this authorization which involve the diversion of water from National Forest System Lands, to the extent the same are applied to beneficial uses on National Forest System lands, shall be acquired in the name of or transferred to the United States. Such transactions are subject to the holder's right of use.” (AR 00122 (the “Acquire and Transfer Clause”)). Again, Region 2 of the Forest Service inserted this clause into some, but not all, Ski Area Permits. (AR 00612–622.)

In 1997, the Forest Service adopted its first national water rights clause, dubbed “X–99,” which provides: “All water rights obtained by the holder for use on the area authorized must be acquired in the name of the United States.” (AR 00071, 75, 79.) The Forest Service inserted this clause into some, but not all, Ski Area Permits. (AR 00608–644.) The “X–99” clause was controversial.

In April 2002, the White River National Forest (“WRNF”) in Colorado adopted the X–99 clause as a binding standard in its applicable Land and Resource Management Plan (“Forest Plan”), which would give the standard the full force and effect of law under the National Forest Management Act, 16 U.S.C. § 1604(i). (Supp AR 000053.) NSAA members administratively appealed the Forest Plan water standard on the grounds that it was an illegal uncompensated taking and was arbitrary and capricious. (Supp AR 000028–38.)

In September 2004, the Chief of the Forest Service reversed the WRNF Forest Plan “X–99” standard, and directed the WRNF Forest Plan be amended to remove the water standard. (Supp AR 000026–27.) The Department of Agriculture affirmed the Chief's decision in December 2004. (Supp AR 000012–25.)

The record shows that over three decades, the Forest Service did not follow a uniform policy, and did not require federal ownership of water rights in all Ski Area Permits. (AR 00524–526, 531, 608–644.) Lack of federal ownership is reflected by the many ski areas which obtained water rights without naming the United States as owner. (AR 00215–216, 00234.)

B. The 2004 Clause

In response to the controversy over X–99 clause, the Forest Service consulted 4 with NSAA in 2003 and 2004 and adopted a new half-page water rights clause for Ski Area Permits (the 2004 Clause”). (AR 00068–70.) The 2004 Clause provides: [a]fter June 2004, any right to divert water from the permitted National Forest System land where the use of such water is on the same permitted National Forest System land shall be applied for and held in the name of the United States and holder.” (AR 00070.) Under the 2004 Clause, ski areas were free to keep existing water rights they had already acquired and perfected. (AR 00070.)

The Forest Service invited ski areas on Forest Service lands nationwide to incorporate the 2004 Clause into their permits; thus replacing the unenforced prior clauses. (AR 00255 (“The USFS will insert the new clause into existing 1986 Act special use permits upon request by a resort, and the clause will replace existing water clauses in those permits.”).) Approximately 79 NSAA ski areas on Forest Service lands have the 2004 Clause. (AR 00526.) Approximately 32 ski areas have Ski Area Permits that do not require any federal ownership of ski area water rights. (AR 00524–526.)

C. The 2011 and 2012 Directives

On November 8, 2011, the Forest Service Associate Deputy Chief James M. Peña exercised delegated authority of the Chief of the Forest Service and issued the seven page Forest Service Interim Directive 2709.11–2011–3 (2011 Directive”). (AR 00036–44.) The 2011 Directive addressed ownership of water rights used within Ski Area Permit boundaries. (AR 00036.)

Since the Forest Service issued the 2011 Directive on November 8, 2011, the Forest Service issued three ski area special use permits under the 1986 Ski Area Permit Act 4 in connection with the sale and purchase of ski areas. The Forest Service inserted the 2011 Directive language in the three Ski Area Permits without altering the terms of the 2011 Directive. (ECF No. 15–5 ¶ 18; AR 00526.)

D. The 2012 Directive

The 2011 Directive was short-lived because, soon after NSAA filed this lawsuit seeking judicial review of the 2011 Directive, Associate Deputy Chief Peña replaced the 2011 Directive with Interim Directive Number 2709.11–2012–2 (the 2012 Directive”), effective March 6, 2012. (AR 00024–32; ECF No. 53 Exh. 2.) Plaintiff seeks judicial review of the 2012 Directive in this action.

Although the Forest Service made minor changes to the 2011 Directive, the 2012 Directive is substantively the same as the 2011 Directive. ( Cf. AR 00036–44 with AR 00024–32.) The 2012 Directive provides that Forest Service employees must insert the 2012 Directive into ski area special use permits when the permits are reissued or modified. (AR 00024–32; ECF No. 53 Exh. 2.)

Under the 2012 Directive, water rights are treated differently depending on where, when, and how they are acquired. (AR 00024–32.) Relevant clauses of the 2012 Directive that were directly in dispute between the parties can be found in ECF No. 53 Exh. 2.

Although the parties addressed many of the clauses in the 2012 Directive, it is worth summarizing some of the more pertinent clauses that are subject to the present dispute. For instance, paragraph F.2.d provides that when the permit is not reauthorized, the 2012 Directive forces permit holders to “transfer the holder's interest in water rights that are jointly owned .... to the United States.” (AR 00031; ECF No. 15, Exh. 1 ¶ F.2.d.)

In paragraph F.2.e, the 2012 Directive provides that permit holder “grant” the United States a “limited power of attorney.” ( Id. Exh. 1 ¶ F.2.e.) This clause is designed so that the United States may “execute any document necessary to transfer water rights to the succeeding permit holder or the United States”, or to “correct any failure to ensure that water rights [are] jointly held by the United States and the permit holder” (the “Power of Attorney Clause”). (AR 00031; ECF No. 15, Exh. 1 ¶ F.2.e.) 5

The 2012 Directive further provides that: “The holder waives any claims against the United States for compensation for any water rights ... that are transferred, removed, or relinquished as a result of revocation ... of this permit” (the “Waiver...

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