J.D. Candidate (2016), McGeorge School of Law
Feb. 2, 2016
Use it or lose it — that is the California way. Or is it? Many practicing California water law attorneys long assumed that forfeiture of a pre-1914 appropriative right could automatically occurred after five years of nonuse. However, a recent state appellate opinion puts this assumption in jeopardy. In Millview County Water District v. State Water Resources Control Board (“Millview”), the court held that forfeiture of a pre-1914 appropriative right continues to be valid unless, and until, there is a “clash of rights.”1 The court stated that until there is a third party claim to the unused water, there is no reason to find forfeiture. Thus, in the wake of Millview, a pre-1914 appropriative right could, in certain circumstances, “spring back” to life after five years of nonuse.
This article will begin by addressing two of several issues discussed by the court. First, the court’s conclusion that a landowner cannot perfect an appropriative water right while simultaneously possessing a riparian water right; and second, the court’s conclusion that forfeiture cannot occur absent a clash of rights. Final thoughts will then address the practical effects of the “clash of rights” prerequisite on the State Water Resources Control Board and junior water rights holders, and whether effective management of California’s water rights system is feasible, especially in dry or critically dry years.
I. Riparian and appropriative rights can be possessed simultaneously.
California’s dual system of water rights distinguishes between riparian and appropriative water right holders, and yet while riparian and appropriative rights are distinct, possession of a riparian right does not preclude perfection of an appropriative right. Riparian rights stem from ownership of the land contiguous to a watercourse and appropriative rights stem from diversions other than those that are riparian.2
A riparian water right holder cannot “double dip” to gain more water than can be put to beneficial use.3 In other words, a riparian water right holder cannot perfect an appropriative right to additional water merely by claiming two bases authorizing use of the same water. Millview stated that because a riparian water right holder cannot obtain an appropriative right to gain more water than could be put to beneficial use, that the riparian owner is precluded from simultaneously obtaining both types of water rights. However, merely because a riparian landowner cannot duplicate his or her rights, it does not necessary follow that that landowner is subsequently precluded from possessing both a riparian and an appropriative right.
A riparian owner may possession both riparian and appropriative rights to the extent that the appropriative right fulfills a beneficial use that cannot be fulfilled by the riparian right.4 For example, a riparian owner may obtain an appropriative right to store water that would otherwise be unauthorized under the riparian right.5 Moreover, a riparian landowner may obtain appropriative water rights for waters that are in excess of the water required to satisfy the riparian right.6 Lastly, a riparian owner may obtain an appropriative right to use water outside of the riparian land.7 Millview states too broadly that possession of a riparian right preludes perfection of an appropriative right. The court’s holding on this point of law should have been narrower and held that possession of riparian rights only precludes perfection of appropriative rights in so far as it would duplicate water used for riparian purposes.
II. Requiring a third party claim to unused water to establish forfeiture conflates the doctrines of prescription and forfeiture without a textual basis in the water code.
The clash of rights requirement to establish forfeiture of a pre-1914 appropriative right elevates the burden on the State Water Resources Control Board (“SWRCB”) in finding forfeiture to that of prescription. Millview stated that because the SWRCB did not analyze a third party claim of right that its conclusion of forfeiture was based on an incorrect legal standard and could not be upheld. However, in the SWRCB’s cease and desist order it did address the “clash of rights” issue. The SWRCB stated that although it was not required to analyze a third party claim under section 1241, it proceeded with the conflicts analysis arguendo. The SWRCB found that both the Mendocino District and the Sonoma County Water District had competing claims on the unused water and therefore, even with a clash of rights requirement, forfeiture could be found. The SWRCB’s arguendo approach was ultimately insufficient to salvage its finding of forfeiture and therefore it appears that it must make actual findings on a claim of right to meet the burden. Addressed in depth in part III of the discussion, this higher standard for forfeiture places undue burden on the SWRCB and also junior water rights holders.
To begin with a forfeiture analysis, the SWRCB or a court should begin with the language of the statute. After all, a basic tenet of statutory interpretation instructs that courts should begin with the plain meaning of the statute. To begin with the statutory language regarding forfeiture, California Water Code section 1241 reads:
“If the person entitled to the use of water fails to use beneficially all or any part of the water … for which a right of use has vested … for a period of five years, that unused water may revert to the public and shall, if reverted, be regarded as unappropriated public water. …”8
Found in the forfeiture statute, there are several useful concepts. First, no “requisite clash of rights” is articulated; and second, after appropriated water goes unused for five years, regardless of a third party competing claim, the unused water may revert back to the state as “unappropriated public water.”
There is little California case law interpreting section 1241. Previous to the Millview opinion, one other appellate court examined forfeiture of a pre-1914 appropriative right. In North Kern Water Storage Dist. v. Kern Delta Water Dist. (“North Kern II”),9 the court examined forfeiture in a factually intense case and stated that a clash of rights was required to establish forfeiture. Due to the factually intense nature of North Kern II, many practicing California water law attorneys believed that the holding was specific to that case. North Kern II did not expressly interpret section 1241, but instead merely stated that a formal notice of a third party claim was required for a claim of forfeiture to be valid.
Millview reiterated and confirmed the requisite clash of rights, but parted ways with North Kern II in regards to the form the “notice” must take. Millview criticized the formal notice requirement articulated in North Kern II stating that a strict notice requirement conflates the theories of forfeiture and adverse possession. Millview states that the difference between the formal notice of North Kern II and Millview’s “more flexible” approach changes the opposing claim from a permissive one to an adverse one. Thus, Millview’s analysis begs the question of whether the only difference between forfeiture and prescription is the presence of a “formal notice.”
Since water rights are a form of property rights, those rights can be lost through the “doctrines of prescription, adverse possession, and abandonment.”10 A riparian right cannot be forfeited due to nonuse, but an appropriator may forfeit all or merely a portion of the appropriative right if the water is not put to beneficial use. Prescription, on the other hand, while also applicable only to appropriative rights, has distinct requirements from those of forfeiture. A prescriptive right arises when there is an actual, open and notorious, hostile and adverse use to the original owner for a continuous and uninterrupted claim of right for the statutory period.11
Generally, formal notice is not required to meet the open and notorious element of prescription; rather the adverse claimant need only put the landowner on reasonable notice of a ripening claim. The additional elements of prescription — actual, hostile and adverse, continuous and uninterrupted–likewise do not require a formal notice. In practice, establishing the “clash of rights” will parallel the elements of prescription. Thus, the claim of right requirement articulated in Millview appears to conflate the two theories regardless of the type of notice required.
In addition to the difficulty with reconciling the textual differences between forfeiture and prescription, the policy rationale articulated is problematic. Millview states that there is no policy reason to have forfeiture absent a clash of rights. The court states that until another user comes along, there is no reason to find forfeiture because the water would not otherwise be used for any other purpose. However, under the statutory language of 1241, forfeited water reverts back to the state and becomes unappropriated water to be apportioned out to another user. Even under prescription, the water at issue becomes the adversary’s water right. Under either approach, the unused water becomes used water as another appropriator can put the water to beneficial use. Millview’s assumption that no one is putting water to beneficial use until a third party claims comes forward is at odds with California water law policy that pushes for every drop of the resource to be put to beneficial use.
Millview’s reasoning appears to set forth a different opinion of what constitutes beneficial use. The court states that the beneficial use arises with a third party claim; however, section 1241 implies that if an appropriative right is not used for five years, regardless of a competing claim, that timeframe of nonuse is unreasonable. It is unreasonable because if the water is not put to beneficial use, then it may be forfeited and appropriated to another user. This makes ample sense given California’s lack of water resources. In addition, the Millview court’s opinion supplants the statutory timeframe of how long nonuse may continue, with a much higher, substantive claim of a third party claim of right. This substantive requirement, compared to a bright-line timeframe, increases the burden on the SWRCB and junior water rights holders. This increased burden leads to difficult question of whether practical water management in California is possible.
III. The clash of rights requirement imposes a high burden on the Board and will lead to an unworkable system of water management.
Adoption of the clash of rights requirement places an undue burden on the SWRCB and on junior water rights holders. While the doctrines of forfeiture and prescription are technically distinct, in practice the two doctrines will merge, and merging the two doctrines increases the burden on the SWRCB to determine the availability of water for appropriation. As evidenced in Millview, an arguendoapproach is insufficient to satisfy the burden and thus the SWRCB must make actual findings of a third party claim. For the SWRCB, this leads to increased enforcement, procedural, and administrative costs.
While the SWRCB’s usually does not staff large enforcement teams to investigate petitioners’ and applicants’ claims, the SWRCB is ultimately responsible for making findings to support the availability of water and to ensure that newly appropriated water rights cause no injury or no harm to other users. This will increase the burden on the SWRCB because it will have to issue additional notices, hold hearings, and make legal and factual findings. This entire process can take several years, even longer since Board findings are often challenged through judicial review, especially in dry or critically dry years. While challenges to SWRCB findings are working their way through the administrative hearings and appellate review, appropriators are unsure about water appropriations and pre-1914 appropriators could continue to sit on water rights without putting water to beneficial use. Essentially the entire system gets put on hold while legal challenges are resolved.
In addition to the increased burden on the SWRCB and increased cost that will be required to conduct more in depth forfeiture claims, junior water rights holders will encounter new hurdles. If forfeiture previously could occur after five-years of nonuse, then junior water rights holders could increase their seniority as their senior water right holder counterparts had their rights reverted back to the state. However, under Millview’s approach, the junior appropriators must wait for the adjudication and legal proceedings to be worked out before knowing which appropriators have claim to water in a particular watershed. This puts an additional strain on both the SWRCB and junior water rights holders to determine how much water is available in a particular system for appropriation.
Moreover, even if there is a third party claim, but the Board does not meet its burden in establishing it, then the rights can still spring back to life after extended periods of nonuse. Requiring a multiyear hearing to establish forfeiture is impractical, especially when there is no basis in the water code for doing so. This imposed requirement on the water board will be made even more difficult because the form that the requisite clash of rights appears to be a flexible one. While the North Kern II opinion required a formal notice, the Millview stated that a formal notice is not required.
Without a more formal notice requirement, the SWRCB would need to quantify an entire water system in order to determine whether there was a clash of rights. While completely appropriated watersheds would be easier to quantify, many watersheds in California are not fully appropriated or are only fully appropriated during certain parts of the years. Quantification becomes especially difficult in dry and critically dry years when the SWRCB could be forced to quantify an entire system during a drought when forfeiture claims are most likely to be brought. This calls into question whether water management is feasible when there are such high standards and costs in carrying out statutory duties for the SWRCB.
The Millview decision begins to create a body of case law in California in which evidence of a third party claim of right is required to establish forfeiture of a pre-1914 appropriative right. Until the clash of rights is established, unused appropriated water cannot be forfeited due to nonuse. This requirement heightens the burden on the SWRCB and junior water rights holders to establish forfeiture and it will result in added procedural and administrative costs to establish forfeiture. The added burden will make it more difficult for the Board to find forfeiture and easier for pre-1914 appropriators to defend against it thereby decreasing the amount of available water in the system.