Water law, Hageman: Numerous cases from last two years impact water law

Cheyenne – For the first time in several years, CLE International hosted their “Wyoming Water and Energy Law” conference in Cheyenne on March 16-17. The conference delved into a wide variety of topics that implicate water and energy law, which are intimately tied together.

“In the last couple of years since we did this program, there have been so many things that affect water and natural resources in general,” said Harriet Hageman of Hageman Law. “Water can be a broad area in itself, but in light of how we deal with federal and state statutory provisions, air quality and other decisions sometimes have implications.”

“The same principles apply in these areas, and we’ve had some fascinating developments in the last few years in terms of water, natural resources, the Endangered Species Act (ESA), the Clean Water Act (CWA) and the Clean Air Act (CAA),” Hageman added.

Hageman, who also serves as program chair for the conference, delved into case history, noting that several cases that have implications for water vary greatly.

Klamath irrigation

Hageman first looked at a case brought by Klamath Irrigation District against the United States.

“The decision was issued by the U.S. Court of Federal Claims on Dec. 21, 2016,” she explained. “This is a matter I’ve been watching for many years because it’s the intersect between the ESA and takings clause.”

The case evolved when the Bureau of Reclamation (BuRec) told irrigators they could not take water from a reservoir used for irrigation to preserve water for three endangered species of fish.

“There is a battle between Klamath and the U.S. regarding takings,” Hageman explained. “The water diverted from Upper Klamath Lake supplies water to hundreds of farms and hundreds of thousands of acres of ag lands.”

In 2001, BuRec deemed the year as a critically dry year, and irrigators would not be allowed to divert water, per a biological assessment that all three fish would be impacted.

“Essentially, the irrigators who built this project were out of luck for the benefit of the species, and they sued that it was a taking of their water rights without just compensation under the Fifth Amendment,” Hageman said. “The federal claims court found that there was a taking.”

The case was slated to go to trial in January 2017 but appears to have been delayed.

“The issue before the court is, is this a regulatory taking or a physical taking? If it’s a physical taking, then the irrigators win. If the government takes real property, owners are entitled to just compensation,” Hageman explained.

However, if the taking is a regulatory taking, a balancing test must be performed to determine if the taking is significant, if there is public policy associated and if the taking if for public benefit.

“If it is important to protect the fish, the cost should not be borne by the farmers and ranchers alone,” she explained. “Rather, it ought to be borne by society as a whole, and farmers and ranchers ought to be compensated.”

The court held that this was a physical taking, and Hageman believes that landowners will likely prevail and receive compensation, according to the decision.

Impacts

Because of the amount of federal waters in the state of Wyoming, Hageman emphasized that there are implications across the country.

“This could impact Wyoming, as well,” Hageman said. “To the extent that we find there is an endangered species that competes with irrigators, farmers and ranchers, it will be considered a federal taking.”

She added, “I think it is a good decision, especially when there are as many federally controlled and managed reservoirs as we have.”

Navigable waters

Another case that Hageman referred to as “very, very important to Wyoming because of the federal footprint we have,” is U.S. Army Corp of Engineers (Corp) v. Hawkes Co.

“This is another very, very interesting case,” she commented.

The case revolves around the Corps’ ability to determine whether or not waters are defined as navigable, and they also are responsible for deciding whether 404 permits for discharge of pollutants may be issued.

“The Corps has jurisdiction over 270 to 300 million acres of swampy waters, including half of Alaska and an area the size of California in the lower 48 states as it relates to waters that could affect interstate or foreign commerce,” Hageman said. “When property contains such water, the landowners who discharge pollutants risk substantial criminal and civil penalties.”

Obtaining a 404 permit is also a long, expensive progress, said Hageman, citing a study that found the average permit took 788 days to process and over $270,000 in expenses, not including costs related to mitigation or design changes.

Inside the case

In the case, Hawkes Co. sought to mine peat in an area of their private property, and in the course of the mining, they were seeking a permit to discharge material into wetlands also on their property.

“The Corps said the process would be expensive and take years to complete, and they also advised that the applicants would have to submit numerous assessments of various features, which would cost $100,000,” Hageman explained. “Then, the Corps would issue a jurisdictional decision (JD) to determine if they had jurisdiction of the water.”

Ultimately, the Corps decided that they did have jurisdiction, and Hawkes Co. didn’t agree, so they sought judicial review under the Administrative Procedures Act.

At that point, the Corps alleged that the JD was not a final administrative action, which meant that it was not subject to judicial review under the APA and the company did not have the right to appeal.

Hageman added, “The court said that’s not fair, and they determined that a JD is appealable.”

She continued, “This is important for people who deal with resources, who are landowners or looking at developing and constructing.”

Wyoming example

Interestingly, Hageman applied the decision to a case in Wyoming, where David Hamilton was sued by EPA and the Corp, who said he had violated the Clean Water Act.

“When I was hired, I contacted EPA and the Corp asking for his records,” she explained. “I had to do a Freedom of Information Act (FOIA) request. They had a JD, but they didn’t provide it for us because it was ‘a pre-decisional draft not subject to FOIA.’”

“We ended up in a lawsuit, and I received the document in discovery,” Hageman said. “My view is if the JD is done, the landowner should be able to access that. I think, very clearly, the Supreme Court said the same thing. If they have a JD, the agency should disclose it, and it is subject to appeal.”

“From the standpoint of those of us in the western U.S., I think these are important developments for the protection of landowners,” Hageman commented.

Look for more from the CLE International “Water and Energy Law Conference” in future editions of the Roundup.

Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.