Judge slaps Forest Service over water rights rule

Jan 4, 2013

Ranchers aren’t the only ones who obsess over water rights. Many industries, municipalities and individuals jealously guard their rights to develop, divert, and otherwise use water—often located on public lands—as a lifeline to business and prosperity.

The ski industry is no exception. Like ranchers, many ski resorts own water rights on the national forests, which are critical for snowmaking, hotel and restaurant operation, and other domestic uses.

Like ranchers, ski resorts also hold permits that allow them to operate on the national forests. In this respect, ski resorts, along with ranching, mining, and a handful of other public lands-dependant industries, all operate under a similar calculus: No permit, no water. No business.

So when the U.S. Forest Service released a new rule last year requiring some ski resorts to hand over part ownership of their water rights to the U.S. government or else risk losing their permit, the ski industry sued. On Dec. 19, in the conclusion of this closelywatched case, Judge William Martinez of the Colorado Federal District Court ruled strongly in favor of the ski industry, vacating the controversial Forest Service rule and enjoining its enforcement on existing permits. Martinez also sternly criticized the Forest Service for violating procedural requirements prescribed by the Administrative Procedure Act, the Regulatory Flexibility Act, and the National Forest Management Act.

“This is a great outcome not just for ski areas, but many other water rights owners as well,” said Geraldine Link, director of public policy for the National Ski Areas Association (NSAA), plaintiffs in the case. “Because of the significant percentage of water that originates on National Forest System lands, the agency’s water policy could impact cities and counties, owners of recreation residences and summer resorts, and other businesses such as ranching, mining, or utilities.”

According to an NSAA press release, the court’s decision impacts 121 ski areas operating on National Forest System lands in 13 states, including Arizona, California, Colorado, Idaho, Montana, Nevada, New Hampshire, New Mexico, Oregon, Utah, Vermont, Washington and Wyoming.

At issue is a Forest Service directive detailing a national water policy clause that was supposed to be inserted into future ski area permit renewals or modifications. Among other conditions, the directive required ski areas that had acquired water rights on the National Forest System after 2004 to divide those rights with the U.S.; to relinquish all water rights held jointly with the U.S. to the government if the permit is terminated; to grant “limited power of attorney” to the U.S. to execute documents pertaining to jointly-held water rights; and to waive any claim against the government for compensation of water rights lost through the permit’s language.

Martinez ruled that the Forest Service had violated a number of procedural laws that provide for public notice and comment on new rules. The Forest Service also failed to carry out an economic analysis to gauge the potential impact of the new policy on small businesses.

“The Forest Service adopted the 2012 Directive without involving the public,” concluded Martinez in his decision. “Requiring the Forest Service to involve the public in important decisions regarding the use and administration of federal lands is in the public interest; ever more so where those lands span 13 states nationwide. …In the Court’s view, these deficiencies by Defendants are severe, which cut heavily in Plaintiff’s favor.”

For ranchers with grazing permits on national forest lands, the decision is relevant because the Forest Service has, for a number of years, been sporadically pursuing a similar policy with respect to stock water rights, at least in the Intermountain Region. Although no official language has been written into grazing permits, some ranchers seeking permits to maintain or develop water rights on national forest land in Nevada, Utah, Idaho, Colorado and Wyoming have run up against a hitch: maintenance and development permits will only be issued if the rancher hands over a share of the water rights to the U.S.

Forest Service regional offices are at liberty to pursue regional policies as long as they do not conflict with the national policy, said Charlie Richmond, Forest Service director of rangeland management. The National Forest Service policy is to acquire available stock water rights on federal lands wherever possible, but is silent regarding rights that are already held by other parties.

According to Dustin Van Liew, executive director of the Public Lands Council, the recent ski area ruling comes as a welcome check on what is seen by the grazing industry as a growing trend in the Forest Service to transfer water rights from private holders to the federal government. Doing so is “against the law and against our position as industry,” said Van Liew.

Van Liew also stressed the ruling’s focus on the Forest Service’s failure to follow required federal procedures for rule making. “In fact, they need to go through a full public process on any changes to the regulations as law requires, so the public has the opportunity to comment,” said Van Liew.

Now that the policy has been vacated, the issue has been remanded to the Forest Service; any new water policy they pursue will have to involve the required level of public involvement. According to an interview with the Denver Post, Link said she thought the next rule-making effort would “definitely be a more public process.”

“I think a lot of different entities will weigh in this time,” said Link. “This had much broader issues than just the ski industry. This really threatened the administration of state water law and I would be surprised if the state didn’t weigh in.”

Interestingly, Martinez declined to rule on the substantive claims of the case—essentially the question of whether the vacated water policy itself is legal, as opposed to whether it was created according to mandated procedures. It is therefore an open question, if the Forest Service jumps through all of the procedural hoops and arrives at the same policy, whether that policy is itself subject to challenge.

Given the amount of scrutiny the Forest Service has received on the matter, however, there is little doubt that any new policy will be meticulously reviewed by all industries affected. — Andy Rieber, WLJ Correspondent, andyrieber.com