Tribes and Water Utilities Wade Into Municipal Water Law Litigation

Seven Indian Tribes[1] recently filed the second lawsuit challenging the constitutionality of Washington’s Municipal Water Law (MWL).[2] The claims in the new suit, Lummi Indian Nation v. State of Washington,[3] closely parallel another pending suit, Burlingame v. State of Washington,[4] filed late last year by environmental groups, small-boat fisherman, and individuals. Meanwhile, the Washington Water Utilities Council (WWUC) and the Cascade Water Alliance (Cascade) have intervened as defendants in the Burlingame suit, and Washington State University (WSU) has now moved to do the same. The MWL was intended to strike a balance between keeping water available for future growth and serving existing water rights during increased water scarcity. The Lummi suit and the appearance of two new intervenor defendants in Burlingame further complicate a dispute that threatens to revive the uncertainty that municipal water suppliers faced before the MWL was enacted.

Pre-2003 Municipal Water Law

Washington has adopted the prior appropriation doctrine through common law and legislation.[5] That doctrine makes putting water to “beneficial use” a critical element in perfecting a water right. The Washington courts have consistently described beneficial use as the basis, measure, and limit of the water right.[6] Municipal water rights are a notable exception to the general principle requiring a party to put water to use. Recognizing municipalities’ distinct role in supplying water to the States’ citizens, Washington has long provided water rights claimed for “municipal water supply purposes” with an exemption from the “use it or lose it” principle embodied in the State’s relinquishment statute.[7] Prior to the MWL, Ecology issued water right certificates for municipal uses once the main withdrawal and distribution works had been constructed for using the water, but before all of the water was actually put to use.[8] Under this “pumps and pipes” philosophy, a municipality could establish unused “inchoate” water rights with priority over subsequent water rights and develop its actual use over time.

Despite the municipal water supply exemption, the law remained unclear on such issues as the appropriate place of use for municipal water rights and the nature and extent of municipal water rights where the certificated volume was not historically put to beneficial use. As further discussed below, the Washington Supreme Court’s Theodoratus decision brought these issues into sharper focus and increased uncertainty for municipal water suppliers and other users.

2003 Municipal Water Law

Enacted in part as a response to Theodoratus and in part to address related issues that many municipal water suppliers believed would benefit from additional clarification, the Legislature passed the MWL in order to: (1) clarify where municipal water utilities can use existing water rights; (2) define which systems and suppliers are municipal utilities exempt from Washington’s relinquishment statute; (3) establish new water conservation standards for municipal utilities and those who use their water, and impose a fee to fund conservation activities; (4) require consistency with land use plans and set forth a duty to provide retail water service; (5) establish criteria for changing or transferring municipal water rights; and (6) allow use of water for environmental goals and pilot watershed agreements. The MWL defines “municipal water rights” by defining a “municipal water supplier” as “an entity that supplies water for municipal water supply purposes.”[9] And then, in turn, defines “municipal water supply purposes” to include traditional residential, commercial, industrial, landscape irrigation, and fire flow uses, but also broadly includes the use of water “for any other beneficial use generally associated with the use of water within a municipality.”[10] Most controversially, the definition of municipal water supplier does not require the “entity” to own the water right that authorizes the water use. Contract water operators, therefore, could be vested with the MWL’s benefits.

The Lummi and Burlingame Suits

The Burlingame suit was filed in King County Superior Court in September 2006, shortly after the Washington Attorney General’s Office declined requests from some of the Tribes now Plaintiffs in the Lummi suit[11] and from the Burlingame Plaintiffs for the State to commence litigation challenging the MWL’s constitutionality. The Lummi suit was filed in King County Superior Court in December 2006. The Lummi and Burlingame suits have not been consolidated and are, to date, proceeding separately.

The issues in both suits are whether the MWL deprives junior water right holders of their vested property interests, in violation of both substantive and procedural due process under the Washington and United States Constitutions, and whether the MWL retroactively overrules the Washington Supreme Court’s decision in Department of Ecology v. Theodoratus (holding a private developer’s water system capacity is not a basis for defining beneficial use or determining a water right), in violation of the separation of powers doctrine. The Lummi and Burlingame Plaintiffs each seek declaratory judgments invalidating those MWL sections:

• Defining “municipal water supplier” and “municipal water supply purposes” to include non-municipal entities and, thereby, entitling developers and private entities to protection from statutory relinquishment;[12]
• Establishing that water rights certificates issued based on construction of works for diverting or withdrawing and distributing water (“pumps and pipes” certificates) rather than on putting the water to actual beneficial use are rights in good standing;[13] and
• Permitting municipal water suppliers to define the place of use for their water rights as their Department of Health approved service areas and, thereby, allowing those suppliers to change their place of water use without needing to obtain Ecology’s approval.[14]

The Lummi Plaintiffs also seek a declaratory judgment invalidating those MWL sections:

• Authorizing Ecology to amend water right documents to identify municipal water suppliers’ water rights as rights for municipal supply purposes;[15] and
•  Permitting municipal water suppliers to project the number of service connections or future population sought to be served.[16]

If either the Lummi or Burlingame Plaintiffs are granted the full relief they seek, then:

• “Municipal water suppliers” would be required to put their water to actual beneficial use in order to perfect their water rights;
• Non-municipal entities would no longer qualify as “municipal water suppliers” and their water rights would potentially be subject to statutory relinquishment; and
• “Municipal water suppliers” would find it more difficult to move the place of use of their water rights to accommodate growth.

The Washington State Departments of Ecology and Health have filed Answers substantially denying the Lummi and Burlingame Plaintiffs’ allegations and asking the court to dismiss the suits.[17] The suits raise primarily legal issues and challenge the MWL as enacted but do not challenge any specific State actions applying the MLW. Therefore, the cases are likely to be resolved on summary judgment. The State’s Answers also raise issues which may lead to significant discovery targeted at challenging the Plaintiffs’ standing and could result in motions to dismiss or for summary judgment arguing that the plaintiffs do not have sufficient standing to challenge the MWL.

WWUC and CWA Interventions in Burlingame Suit

In November 2006, the WWUC and the Cascade both moved to intervene as defendants in the Burlingame suit.[18] The WWUC is an association of over 100 Washington water utilities including cities, water districts, public utility districts, mutual and cooperative water utilities, and investor-owned water utilities. WWUC members own and operate water systems that serve approximately eighty (80) percent of Washington’s population. The Washington Public Utilities District Association (WPUDA), a WWUC member, is also urging the Washington State Legislature not to amend the MWL before the Burlingame and Lummi suits are concluded.[19]

Cascade’s members are a group of Western Washington cities and water districts serving approximately 300,000 water users through a contract with the City of Seattle.[20] Cascade is also currently negotiating with Puget Sound Energy to purchase pending water rights that would allow diversions for municipal water supply. In December 2006, the court granted both the WWUC and the CWA motions to intervene.[21]

On February 6, 2007, WSU moved to also intervene as a defendant in the Burlingame suit.[22] WSU holds water rights for domestic supply and for irrigation and stock water related to agricultural education.[23] WSU’s motion is set for hearing on March 9, 2007.

Revisiting Theodoratus

The Washington Supreme Court’s Theodoratus decision figures prominently in the Lummi and Burlingame Plaintiffs pleadings and will play a central role in the cases. In Theodoratus, the Washington Supreme Court held that state statutory and common law does not allow Ecology to determine beneficial use or issue a vested water right based on water system capacity.[24] However, Theodoratus did not involve a municipality, and the Court expressly declined to “address issues concerning municipal water suppliers in the context of this case.”[25] Indeed, the Court specifically recognized that under Washington’s statutes there are significant differences between municipal and other water uses. At the same time, the Court created uncertainty by implying that municipal water suppliers could not rely on system capacity to validate inchoate water rights. The Court also suggested that the municipal water supply exemption from statutory relinquishment may not provide a basis for defining beneficial use differently for municipalities. The Lummi and Burlingame suits now present the courts with seemingly unavoidable decisions about whether the Washington Legislature violated the constitution in enacting the MWL’s broad definition of “municipal” purposes and suppliers, validating “inchoate” municipal water rights, or creating a “flexible” place of use.

Conclusion

With the Tribes challenging the MWL in the Lummi suit and with the WWUC and Cascade intervening in the Burlingame suit, most of the major interests now appear to have waded into litigation over the MWL’s validity. The parties will now participate in deciding a significant chapter in Washington’s future water allocations. It is very likely that the trial court actions are only the first page of this litigation and that the courts will consolidate the cases before they proceed much further.

For more information on the Municipal Water Law litigation, contact Jeff Kray.