Summary of a Recent
Judicial Development in
Water Law

Users of Federal Irrigation Projects' Water Hold Title to the Water,
and Irrigation Districts Act as Trustees

L. Paul Goeringer
National AgLaw Center Research Associate

Summary of Decision

In United States v. Pioneer Irrigation District, 157 P.3d 600 (Idaho 2007), the Idaho Supreme Court found that the Bureau of Reclamation had not put the water in three federal reclamation projects to a beneficial use in order to be given a water right under Idaho state law. The court also found that under Idaho state law, irrigation districts acted as trustees for the landowners in managing their water rights. Finally, the court found that the Snake River Basin Adjudication was not required to list each irrigation district and the amount of water it was entitled to in each federal project. The contracts between the irrigation districts and the Bureau of Reclamation could be used to establish the quantity of water owed to each district.

Background

The Bureau of Reclamation (BOR) filed claims before the Snake River Basin Adjudication (SRBA) for water rights for certain storage activities in three BOR projects, authorized under the Reclamation Act of 1902 (Act). Id. at 602. Irrigation districts with contracts with the BOR for the delivery and storage of water also filed claims for water rights in the same water, consistent with the districts uses. Id. The state's Department of Water Resources recommended that the water rights be in the name of the BOR, rather than the irrigation districts. Id. On cross motions for summary judgment, the SRBA found that the United States held nominal legal to title to the projects' water rights, and the irrigation districts held equitable title in trust for their member landowners. Id. The U.S. appealed, claiming that the SRBA erred in not following the recommendation of the Department of Water Resources. Id. at 603. The irrigation districts also appealed, claiming that the SRBA should have identified each irrigation district and the quantity of water beneficially used by each district. Id.

Arguments

The U.S. argued that the SRBA erred in its legal reasoning and that it held title to the water rights claimed. Id. at 604. The U.S. also argued that under Idaho case law, the irrigation districts had no ownership rights in the BOR projects. Id. at 608. Next, the U.S. argued that the BOR claimed water rights in the projects, would not change the irrigation districts' rights to use the water, and would preserve the status quo as it had been for almost one hundred years. Id. at 609. Finally, because the contracts between the U.S. and the irrigation districts defined the districts that would receive water and the quantity of water from each project, the SRBA did not need to identify each irrigation district and the quantity of water it was to receive. Id. at 610.

The districts disagreed with the United States' claim that by recognizing the U.S. as legal owners of the water rights, the status quo would be maintained. Pointing to recent precedent, the districts argued that without an equitable interest, they would not be able to protect the rights claimed by their users. Id. at 609. Finally, the districts argued that the SRBA should have identified each irrigation district that had beneficial title to the water and the quantity of the water right owned by each district. Id.

Analysis and Holdings

The Act only provides the U.S. with title to the Reclamation project works and a right to manage and operate the projects. See id. at 603. In interpreting the Act, the U.S. Supreme Court had determined that the U.S. retains control of the operation of the projects and distribution of the projects' benefits to ensure that the benefits are not exploited; however, state law would control the appropriation and distribution of the water. Id. at 604. The Idaho Supreme Court then turned to Idaho state law to determine whether the BOR had followed the proper procedures to obtain a water right in the water rights claimed.

Finding Idaho law well settled, the court determined that it is "a well-settled rule of public policy that the right to the use of the public water of the state can only be claimed where it is applied to a beneficial use in the manner required by law." Id. (citation omitted). "Under either the constitutional or statutory method of appropriation, the appropriator must apply the water a beneficial use in order to have a valid water right in Idaho." Id. The court found that the BOR had put none of the water it claimed to a beneficial use; it only managed and operated the projects. Id.

The court next turned to federal case law to determine whether the BOR had any legal title to the water rights claimed. The federal case law made it clear that federal law defers to state law in determining water rights in reclamation projects. Id. Looking at Ickes v. Fox, 300 U.S. 82 (1937), and its progeny, the court found a common theme: "The property right in the water right is separate and distinct from the property right in the reservoirs, ditches, or canals, and was acquired by perfecting an appropriation, i.e., by an actual diversion followed by an application within a reasonable time of the water to a beneficial use." Id. at 606-07 (citations omitted). Finally, the court found that

once these lands were acquired by settlers in the Project, the Government's 'ownership' of the water rights was at most nominal; the beneficial interest in the rights confirmed to the Government resided in the owners of the land within the Project to which these water rights became appurtenant upon the application of Project water to the land.
Id. (citations omitted).

The court found that the BOR had not put the water to a beneficial use and held no legal title to the water rights claimed. Id.

Turning next to the issue of the irrigation districts' ownership of water rights in the projects, the court determined that under Idaho law, the districts act as the trustees of the water rights for the landowners. Citing Idaho Code Ann. § 43-316, the court explained that the districts manage the water rights and stand in for the landowners in cases involving the appropriation of water. Id. Rejecting cases cited by the U.S., the court found "that Idaho law does not require a beneficial user to hold title to water rights." Id. at 608. Looking again to Ickes and its progeny, the court found that the framers of the Act had no intention of depriving the irrigation districts of any equitable interest in the projects' water rights. Id. This argument was significant when noting that the irrigation districts had fully repaid the BOR for the construction of two of the three projects and the continuing operation and maintenance of the projects. Id. at 608-09.

The court rejected the argument by the U.S. that recognition of the BOR's water rights would not reduce any of the irrigation districts' rights to use water and would only preserve the status quo. Id. at 609. Agreeing with the irrigation districts, the court found that the districts had an interest to act on behalf of their water users pursuant to state law, and they had fully repaid the BOR for the costs of the projects. Id. The court remanded to the SRBA to substitute a remark in its order to reflect the Idaho Supreme Court's analysis that the users of the water held title to the water rights claimed. Id.

Finally, the court turned to the irrigation districts' assertion that the SRBA should have identified each irrigation district that had beneficial title to the water and the quantity of the water right owned by each district. Id. Because the districts' interests were based on appropriation and beneficial use, the districts thought this approach would better reflect their interests. Id. The districts cited Idaho case law requiring a specific list of names of water users, priority dates, amounts, and points of diversion in order for the state to efficiently administer the water system. Id. at 609-10. The U.S. argued that such a specific list was not necessary because the contracts with each irrigation district reflected the organizations to receive water and the amount of water they would be entitled to from the three projects. Id. at 610. Finding that the SRBA had properly clarified the issue by stating that "ownership of this water right is derived from law and not based exclusively on contracts between the Bureau of Reclamation and the irrigation organizations," the court rejected the irrigation districts' request for specificity and affirmed the ruling of the SRBA on this issue. Id.

The case was decided on March 9, 2007.