Leasing Water Rights for Instream Flow Uses: A Survey of Water Transfer Policy, Practices, and Problems in the Pacific Northwest
Crammond, James D., Environmental Law
Water in streams, rivers, and lakes has social, economic, and environmental values that grow increasingly important as water grows more scarce. Local quality of life, cultural and historical assets, tourism dollars, real estate values, commercial ventures, water quality, species diversity and vitality, recreation, and religious values all depend on flowing rivers and healthy lakes. The declining health of the Pacific Northwest's hydrologic resources is this region's "rain forest" crisis. Many important systems have already been irretrievably lost or badly weakened; subjugating riparian ecosystems to narrow, marginally economic uses at the expense of the larger system's health is the region's equivalent of "slash and burn." The situation is improving because of a massive influx of money and resources aimed at salmon recovery, but leasing, and the power of the marketplace, can fill important gaps in underfunded, understaffed, and slow moving programs. This Article focuses on leasing water for instream-flow enhancement in dewatered basins and stream reaches.
This Article discusses the pros and cons of leasing water rights as a strategy to improve instream flow and to identify procedures, problems, and opportunities for improvement in water right leasing.
B. Scope and Definitions
Idaho, Montana, Oregon, and Washington are the states that define the area referred to in this Article as the Pacific Northwest. Surface water rights are of primary interest as sources of leasable water, but the Article briefly discusses ground water, water in storage behind dams, and interbasin transfers because they are often components of a lease arrangement.
Instream flow, for the purposes of this Article, means any nondiversionary, in-place use of water with little or no resulting consumptive use. Although the first century of prior appropriation doctrine rarely recognized any nondiversionary uses except milling and power generation as legitimate and beneficial,(1) many western states have relaxed their strict diversion requirement for water rights appropriation.(2) Most western states now recognize fish, wildlife, and recreation as beneficial uses under state law; some further recognize aesthetics and pollution abatement as beneficial uses.(3)
For the purposes of this Article, a lease is any temporary transfer, for consideration, of actual water to instream flow. The possible permutations of transfer arrangements are limited only by the parties' imaginations. Water leasing includes private contracts, withdrawals from regional or state water "banks,"(4) and other arrangements with private, state, tribal, and federal water managers.
Leasing implies that there is a real property res that changes hands for a term. In this respect, leasing may be an imperfect label for these transactions. Water, ultimately subject to the vagaries of the weather, is not a solid, unchanging, reliable, measurable entity like a piece of land. State property law defines water rights much differently than rights in land.(5) Water rights are usufructuary, allowing the holder to derive benefits from water that actually belongs to all people of the state; these are limited rights, as the user cannot destroy, waste, or injure the water resource.(6) To lease rights for instream flow is, in effect, to contract with a user to ensure that the right will remain unexercised. Measurement, regulation, and enforcement of the right are very important matters during negotiation and over the life of an instream flow lease.(7) Even with the uncertainty latent in water supply, lease arrangements in the Pacific Northwest have managed to put water where it is desperately needed.(8)
Parties with the resources to affect a lease include private individuals, organizations, and public entities. In the Pacific Northwest, the general rule is that only a state agency may acquire and hold instream flow rights. …