Utah v. Kane Cnty. Water Conservancy Dist.

• Decision Date: 21 July 2016
• Docket Number: No. 20140429–CA,20140429–CA
• Citation: 378 P.3d 1246,2016 UT App 153
• Parties: HEAL Utah, et al., Appellants, v. Kane County Water Conservancy District, San Juan County Water Conservancy District, Blue Castle Holdings Inc., and Kent Jones, Appellees.
• Court: Utah Court of Appeals

378 P.3d 1246

2016 UT App 153

HEAL Utah, et al.¹ Appellants

v.Kane County Water Conservancy District, San Juan County Water Conservancy District, Blue Castle Holdings Inc., and Kent Jones, Appellees.

No. 20140429–CA

Court of Appeals of Utah.

Filed July 21, 2016

John S. Flitton and Christie Babalis, Attorneys for Appellants.

John H. Mabey Jr. and David C. Wright, Attorneys for Appellees Kane County Water Conservancy District, San Juan County Water Conservancy District, and Blue Castle Holdings Inc.

Sean D. Reyes, Julie I. Valdes, and Norman K. Johnson, Salt Lake City, Attorneys for Appellee Kent Jones.

Judge Kate A. Toomey authored this Opinion, in which Judge J. Frederic Voros Jr. and Senior Judge Pamela T. Greenwood concurred.²

Opinion

TOOMEY, Judge:

¶1 In this case we must determine whether the district court properly approved two change applications requesting to change the points of diversion and the nature of use of water already appropriated to Kane County Water Conservancy District and San Juan County Water Conservancy District (collectively, the Districts). We conclude that it did and therefore affirm.

BACKGROUND

¶2 The Districts have leased their existing water rights to Blue Castle Holdings Inc. for the proposed development of a nuclear power plant (the Project) near Green River, in Emery County, Utah. We refer to the Districts and Blue Castle collectively as the Applicants. The Applicants' leases are contingent on approval of the change applications; they also seek approval to store water in a reservoir on the Project's site.

¶3 The Project will require the continuous depletion of nearly all of the Districts' apportioned water to create steam to generate power and to cool the power plant. The Project must be completed in phases and must satisfy certain federal and state regulations to proceed. Blue Castle has already invested approximately $17.5 million of the $15 to $20 billion required to complete the Project, including money spent to secure the necessary water rights from the Districts and to purchase real property for the site. The Applicants seek to move the Districts' approved points of diversion from several small tributaries to a single location on a larger river upstream from the existing points of diversion. Before the Project can proceed, an environmental impact assessment must be conducted and an application must be submitted to the Nuclear Regulatory Commission for an Early Site Permit. Furthermore, to build and operate the Project, any environmental impacts must be resolved.

¶4 Because of the complexity of this case, we provide background information concerning water rights and change applications in Utah, but we recite only those facts relevant to the issues presented on appeal.

I. Change Application Process

¶5 In Utah, water belongs to the public. Utah Code Ann. § 73–1–1 (LexisNexis 2012). This “[p]ublic ownership is founded on the principle that water, a scarce and essential resource in this area of the country, is indispensable to the welfare of all the people.” J.J.N.P. Co. v. Division of Wildlife Res. , 655 P.2d 1133, 1136 (Utah 1982). “[I]t is essential that putting water to the highest and best beneficial use should not only be encouraged, but carefully safeguarded.” Green River Canal Co. v. Thayn , 2003 UT 50, ¶ 28, 84 P.3d 1134 (alteration in original) (citation and internal quotation marks omitted). Accordingly, “the State must therefore assume the responsibility of allocating the use of water for the benefit and welfare of the people of the State as a whole.” J.J.N.P. Co. , 655 P.2d at 1136.

¶6 Like many other arid western states, Utah has adopted the prior appropriation system—a capture system of water allocation—to maximize productive usage of water. Frederic J. Donaldson, Note, Farmer Beware: Water Rights Enforcement in Utah , 27 J. Land Resources & Envtl. L. 367, 370–71 (2007) [hereinafter Donaldson]. “The prior appropriation system has two basic principles: priority and beneficial use.” Id. at 371. “Priority refers to the general system of first in time, first in right. This means senior water right holders are entitled to their full water right before junior water right holders are entitled to any water.” Id. (citations omitted); accord Utah Code Ann. § 73–3–1(5). “The principle of beneficial use means a water right is acquired by diverting water and putting it to beneficial use; most uses, such as irrigation or stock watering are considered beneficial. A right to use water may be abandoned or forfeited by nonuse for a statutory period of time.” Donaldson, at 371 (footnotes omitted).

¶7 Through this system, potential users must apply to the State Engineer for authority to withdraw water from the natural environment. See Utah Code Ann. §§ 73–3–1 to -2. The application must set forth “the nature of the proposed use,” the “quantity of water in acre-feet,” “the time during which it is to be used,” “the name of the stream or other source from which the water is to be diverted,” “the place on the stream or source where the water is to be diverted and the nature of the diverting works,” and any “other facts that clearly define the full purpose of the proposed appropriation.” Id. § 73–3–2(1)(b). But “[a]n appropriation may be made only for a useful and beneficial purpose.” Id. § 73–3–1(4). So, among other duties, the State Engineer must ensure “that the waters of the state are used by appropriators in accordance with their priorities and that diverted waters are used for proper beneficial purposes.” Donaldson, at 371 (footnote omitted); see also Utah Code Ann. § 73–2–1 (explaining that the State Engineer is responsible for “the general administrative supervision of the waters of the state and the measurement, appropriation, apportionment, and distribution of those waters”).

¶8 The State Engineer's “approval of an application to appropriate is only a preliminary step.... It confers upon the applicant no perfected right to the use of water.” Little Cottonwood Water Co. v. Kimball , 76 Utah 243, 289 P. 116, 118 (Utah 1930). Rather, “[i]t merely clothes the applicant with authority to proceed and perfect, if he can, his proposed appropriation by the actual diversion and application of the water claimed to a beneficial use.” Id. ; see also J.J.N.P. Co. , 655 P.2d at 1136 (explaining that an “appropriation does not confer an ownership interest in the water itself”). In other words, it gives an individual only a usufruct in water—the right to use some maximum quantity of water from a specified source, at a specific point of diversion or withdrawal, for a specific use, and at a specific time. See Delta Canal Co. v. Frank Vincent Family Ranch, LC , 2013 UT 69, ¶ 30 (explaining that “the continuing validity of a water right depends on its being used”). Only the amount of water that is actually put to beneficial use vests into a right. Id. ¶ 25 ; accord 78 Am. Jur. 2d Waters § 362 (2016) (“[T]o constitute a valid appropriation of water there must be an intent to appropriate water and apply it to a beneficial use, as well as the actual diversion of the water from its natural channel or other source of supply .... If any of the requisite elements are missing, such as the intent to apply the water to a beneficial use, or the diversion of water, there is no appropriation and no water rights obtained.” (emphasis added) (footnotes omitted)).

¶9 Once a user obtains the right to use unappropriated water, “a water right holder is entitled to change the point of diversion or the place or nature of use of water so long as vested rights are not impaired by the change.” Searle v. Milburn Irrigation Co. , 2006 UT 16, ¶ 23, 133 P.3d 382 ; see also Utah Code Ann. §§ 73–3–1 to -3 (LexisNexis 2012 & Supp. 2015). Utah Code section 73–3–3 requires the State Engineer to “follow the same procedures ... for applications to appropriate water” and “applications for permanent changes of point of diversion, place of use, or purpose of use.” Utah Code Ann. § 73–3–3(5)(a) (2012). Notably, the code requires the State Engineer to approve a change application unless “it impairs any vested right without just compensation.” See id. § 73–3–3(2)(b), (6)(b) ; accord id. § 73–3–8(1). The Utah Supreme Court has explained that the “owner of a water right has a vested right to the quality as well as the quantity which he has beneficially used.” Crafts v. Hansen , 667 P.2d 1068, 1070 (Utah 1983) (citation omitted). Accordingly, the presumption is to approve a change application, but the State Engineer must first determine that the proposed changes will not impair any vested right to the beneficial use of a certain quality and quantity of water. Id.

¶10 Furthermore, although the State Engineer is “the appropriate officer to initially determine whether an application seeking permission to initiate such a change should be approved,” Searle , 2006 UT 16, ¶ 23, 133 P.3d 382, a person aggrieved by the State Engineer's decision “may obtain judicial review in accordance with Title 63G, Chapter 4, Administrative Procedures Act,” Utah Code Ann. § 73–3–14. “District courts have authority to review de novo any final agency action resulting from an informal administrative proceeding, including an action by the State Engineer.” Western Water, LLC v. Olds , 2008 UT 18, ¶ 17, 184 P.3d 578. “[A] district court, when reviewing the state engineer's decision to approve or reject an application, is not sitting in its capacity as an adjudicator of rights, but is merely charged with ensuring that the state engineer correctly performed an administrative task.” Searle , 2006 UT 16, ¶ 35, 133 P.3d 382. Further, the district court may only consider issues “subject to determination by the [State] Engineer because the effect of the court's judgment is the same as it would have been if the Engineer had reached the same conclusion in the first instance.” Western Water , 2008 UT 18, ¶ 18, 184 P.3d 578 (alteration in original) (citation and internal quotation marks...