Western Water, LLC v. Olds

Decision Date22 February 2008
Docket NumberNo. 20060527.,20060527.
Citation184 P.3d 578,2008 UT 18
PartiesWESTERN WATER, LLC, a Utah limited liability company, Plaintiff and Appellant, v. Jerry D. OLDS, Utah State Engineer and Director of the Division of Water Rights, et al., Defendants and Appellees.
CourtUtah Supreme Court

Martin B. Bushman, Asst. Att'y Gen., Salt Lake City, for defendant Div. of Wildlife Res.

Randy Hunter, Asst. Att'y Gen., Salt Lake City, for defendant Utah Dep't of Transp.

Stephen G. Schwendiman, Keli J. Beard, James P. Allen, Asst. Att'ys Gen., Salt Lake City, for defendant Utah Div. of Forestry, Fire & State Lands.

Steven E. Clyde, Edwin C. Barnes, Wendy B. Crowther, Salt Lake City, for defendant Cent. Utah Water Conservancy Dist.

David C. Wright, John H. Mabey, Jr., Salt Lake City, for defendants E. Jordan Irrigation Co., Kennecott Utah Copper Corp., Alpine City, Lehi City, Cedar Fort Irrigation Co., and Lehi Spring Irrigation Co.

Jody L. Williams, Steven J. Vuyovich, Salt Lake City, for defendants Irvine Ranch & Petroleum, Burnham Duck Club, PacifiCorp, E. Fred Walters, and Lower Jordan River Water Users Ass'n.

David B. Hartvigsen, Matthew E. Jensen, Salt Lake City, for defendants W. Glade Berry, Bart D. Berry, and Magna Water Co.

Kevin R. Bennett, American Fork, for defendant American Fork City.

Shawn E. Draney, Scott H. Martin, Salt Lake City, for defendants Cahoon & Maxfield Irrigation Co., Utah Lake Distrib. Co., Metro. Water Dist. of Salt Lake & Sandy, Salt Lake City Corp., Sandy City, and Provo River Water Users Ass'n.

Robert P. Hill, Allan T. Brinkerhoff, Reid E. Lewis, Salt Lake City, for defendant Jordan Valley Water Conservancy Dist.

Joro Walker, Sean Phelan, David H. Becker, Salt Lake City, for defendants Sierra Club, Trout Unlimited, Utah Waters, Utah Wetlands, and Nat'l Audubon Soc'y.

Michael M. Quealy, David Bird, Salt Lake City, for defendants Utah & Salt Lake Canal Co. and North Jordan Irrigation Co.

M. Dayle Jeffs, Provo, for defendant Clinger Family P'ship.

John P. Ashton, Salt Lake City, for defendant New State Inc.

David L. Church, Salt Lake City, for defendant Riverton City.

Richard G. Allen, Lehi, for defendant Saratoga Springs.

Ryan B. Carter, Roger F. Cutler, Jr., West Jordan, for defendant City of W. Jordan.

John H. Geilmann, South Jordan, for defendant S. Jordan City.

Glenn R. Maughan, Ogden, pro se.

PARRISH, Justice:

INTRODUCTION

¶ 1 In 2001, Western Water LLC ("Western Water") submitted applications to appropriate water through a plan that would "salvage and exchange" water that was "spilling" into the Great Salt Lake from Utah Lake and the Jordan River. The appropriation request was massive. It covered 288,107 acre-feet of water per year in various alternative plans to satisfy the 86,000 acre-feet requested. After the State Engineer denied Western Water's applications in a memorandum decision, Western Water filed a request for reconsideration. The request for reconsideration presented a modified plan. The State Engineer took no action on the reconsideration request, resulting in a statutory denial after twenty days. See Utah Code Ann. § 63-46b-13(3)(b) (2004). Western Water then filed suit in the district court against the State Engineer and those who had protested its applications (collectively, "Defendants"), seeking de novo review of the State Engineer's denial of the modified plan. The district court dismissed Western Water's claim for lack of subject matter jurisdiction, finding that Western Water had failed to exhaust its administrative remedies. We affirm on appeal.

BACKGROUND

¶ 2 This case begins with three related water appropriation applications filed by Western Water (collectively, the "Original Application") in 1999 and 2001. The Original Application contained a detailed plan for salvaging water "spilling" into the Great Salt Lake. The Original Application cumulatively covered 288,107 acre-feet1 of water per year from the Utah and Salt Lake valleys, although Western Water emphasizes that several appropriation requests were made in the alternative and that the actual amount of water requested was ultimately limited to 86,000 acre-feet of water per year.

¶ 3 To put the immensity of this request in perspective, 288,107 acre-feet would cover 450 square miles with one foot of water. This much water would cover an area the size of Utah Lake almost three times or fill Salt Lake City with almost four and a half feet of water. If all of this water were put to domestic use, it would provide enough water to meet the needs of 2,304,856 individuals for one year, just under the population of the entire state of Utah.

¶ 4 The parties disagree regarding the size of the appropriation requested in the Original Application. The description of the plan alone required a narrative 85 pages long, a 335-page "Statement of Facts," and 200 pages of exhibits. For this reason, the State Engineer characterized it as "gargantuan and complex" and "grandiose and highly speculative." Western Water disagreed with the State Engineer's characterization, arguing that the Original Application covered a "medium sized project," because some of the application requests were in the alternative. Western Water argued that although the application covered 288,107 acre-feet of water, it sought to appropriate only 86,000 acre-feet of water. Regardless of whether the proposed project was medium sized or grandiose, it is clear that the Original Application covered an immense amount of water.

¶ 5 The plan proposed by Western Water was also complex. It involved, among other things, extensive storage, diversion, and distribution facilities, including 65 miles of transmission pipelines, 10 pumping stations, 27 new or expanded diversion structures, 2 reservoirs, 127 recharge wells, and another 38 miles of pipes to facilitate underground storage. It also listed over 150 separate diversion points. Western Water's plan was to "develop a conservation and storage plan that will allow for water that `spills' into the Great Salt Lake to be salvaged and stored for new and more efficient uses in Utah and Salt Lake counties." The details of this plan are not important to our analysis.

¶ 6 The State Engineer advertised the Original Application pursuant to Utah Code section 73-3-6(1). Seventy-two protests were filed in response. Some of the protesters objected because Western Water anticipated using their property without permission. Many of the protesters claimed that the water in question was already fully appropriated and that the request could not be filled without impairing the rights of existing users. Others expressed concern that the application would harm water quality and quantity as well as the Great Salt Lake ecosystem, endangered species, migratory birds, wildlife, and wetland mitigation investments. Several municipalities protested that Western Water did not have permission to use the municipal facilities it described as part of its plan.

¶ 7 The State Engineer held a prehearing conference on November 15, 2001, to gather additional information, to clarify the project, and to substantiate the applications. An informal hearing was held on the Original Application in November 2002. Following the hearing, Western Water sent the State Engineer a letter supporting its application and suggesting that even if the entire application could not be approved under the statutory criteria, Western Water was entitled to have any smaller part of the application approved.

¶ 8 The State Engineer denied the Original Application after considering protests; basin management plans for Utah, Salt Lake, and Cedar valleys; relevant statutes; technical publications; and an additional statement of facts. The State Engineer justified his decision in a thoughtful memorandum, explaining that the Original Application failed to meet all of the requirements of Utah Code section 73-3-8. First, the State Engineer explained that "all of the waters within the Utah and Salt Lake valleys are fully appropriated by prior rights" and that the Original Application did not provide "adequate evidence or reason to believe that there is unappropriated water available for these applications." Second, because the Original Application requested water in an area that was fully appropriated, the State Engineer also concluded that "approval of these applications would impair existing rights or interfere with the more beneficial use of water." Third, without any evidence of contracts, permission, or support for gaining access to facilities, lands, or customers, the State Engineer found "no reason to believe the project as proposed is physically or economically feasible." Fourth, because of the lack of supporting evidence contained in the Original Application, the State Engineer concluded that Western Water had not provided "reason to believe that the applicants have the financial ability to complete the proposed project." Fifth, the State Engineer concluded that the Original Application was filed for speculation or monopoly because the only proposed beneficial use for the water was a plan to sell it to others. Indeed, the applicants had "no lands, facilities, customers, or contracts." Finally, the State Engineer concluded that the Original Application would "interfere with the beneficial use of prior appropriations," "adversely affect public recreation and the natural stream environment," and ultimately prove "detrimental to the public welfare."

¶ 9 Western Water timely filed a request for reconsideration, arguing that the State Engineer made "very important errors in law and facts." Rather than asking the State Engineer to reconsider the...

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