In this discussion, Dan Haller unpacks the complexities of the state’s municipal water law, exploring the challenges hydropower utilities face when managing their water rights and the implications of recent adjudications.
About the Speaker
Dan Haller, PE, CWRE, is a Senior Principal Water Resources Engineer and a leader in water rights and water resources in Washington. He has worked the state’s largest water banks and water-right transfers in the last 20 years and is the regional lead for environmental impact statement development for a range of storage, watershed recovery, and private development projects in the western United States.
Q&A
Can you describe Washington’s municipal water law?
Municipal water law in Washington is interesting in that the term municipal has been in the statute since 1967, when the relinquishment law was passed. But it wasn’t until the 2003 Municipal Water Law that the legislature actually defined who a municipal water supplier was. In Washington, that’s codified in RCW 90.03.015, and it essentially defines a municipal water supplier in a couple of different ways.
First, if you’re serving 15 houses or 25 people, then you’re generally a municipal water supplier. Additionally, if you’re providing water for a governmental use and you’re one of what’s called the “special six”—a city, town, county, water district, sewer district, or public utility district—then your governmental use of water is also for municipal water supply.
How does the law compare to the policy?
Well, that’s part of the challenge here. Although the 2003 Municipal Water Law was extensive and lengthy, we still have a lot of questions about what the law actually means. There are differences in interpretation between the regulated community and the regulator: in this case, the Department of Ecology.
Ecology has adopted several versions of an interpretive policy to try to bridge that gap. As of 2024, they are in the midst of finalizing yet another modification to that policy. They’ve gone through two rounds of comments about the language and how it should be interpreted, and there is still no consensus on what many of the terms mean.
Considering that confusion and potential debate, what effect does this have on the hydropower industry?
Most hydropower utilities manage a range of assets. These include dams that generate power, obligations for environmental flows or conditions that come out of a FERC license, parks they manage for mitigation, and hatcheries to address impacts to fish. And even though they are public utilities, all of their uses may not be considered municipal.
This distinction is important because in Washington, municipal water rights are exempt from relinquishment, whereas nonmunicipal rights are not. The relinquishment statute in Washington requires water to be used every five years, or it is lost, unless it qualifies for an exception. One of these limited exceptions is municipal water supply.
As a result, if you are in the municipal family of water rights, you have more certainty that your water right will be there for the next generation of uses that you may need it for.
Ecology’s municipal-water-supply policy states that hydropower is not a municipal water supply use. If this interpretation stands and survives legal challenges, it narrows the ability for hydropower utilities to use the relinquishment exemption. Conversely, if Ecology is incorrect and hydropower is considered a municipal use, this would provide more certainty that those uses can be adapted over time.
Washington just launched two new adjudications. What does that mean, and what should power utilities pay attention to?
Adjudications are quiet title actions where a Superior Court evaluates the priority date and extent of water rights in a geographic area. Adjudications are good in many ways; they provide water right holders with certainty about what they own. That said, water right interpretations are complex. You may have a water right certificate that gives you some sense of what you think your authority is, but due to factors like relinquishment law, your certificate may overestimate your actual authorization. Adjudication can provide superseding certificates that update that authority.
It’s important for hydropower utilities to pay attention to adjudications because they will definitively determine water rights. So, if you are in a basin with an adjudication, you definitely need to participate. Even if the adjudication occurs in a different basin, particularly an upstream one, it’s important to understand its implications because those upstream rights and their seniority can affect downstream uses.
Can you give us an example of how this adjudication process can impact hydropower utilities?
In Washington, the Department of Ecology is pursuing two adjudications: one in the Nooksack Basin and one in the Lake Roosevelt watershed. The Lake Roosevelt adjudication is significant for downstream utilities because large water rights holders, such as the Colville Confederated Tribes, are seeking to have their rights adjudicated. This kind of determination, which moves a large, unquantified water right to a quantified and known right will inevitably shake up how the river is managed downstream. The dozen or so dams on the Columbia River below Lake Roosevelt will experience impacts from this priority shift.
For example, if the Colville Confederated Tribes’ rights are confirmed with a large magnitude and senior priority date, it could affect how downstream rights are regulated. Currently, water rights senior to 1980 on the Columbia River are never curtailed, while those junior to 1980 face that risk. Post-adjudication, this line in the sand might shift, affecting how curtailments are judged. Hydropower utilities should closely follow adjudications to understand these risks.
Are there any specific dates or timetables that people in the hydropower utilities industry should be aware of?
First, on the municipal side, Ecology is in the second draft review stage for their municipal policy. The expectation is that a final policy will be created before the end of 2024. It’s unclear whether the policy will be materially the same as the draft or substantially different. Reviewing that policy through the lens of your own water rights will be important when it comes out. Also, periodically, there’s case law that helps shape municipal interpretations. There have already been a couple Supreme Court decisions since the 2003 municipal water law was passed, and they were closely watched, including by hydropower utilities.
On the adjudication front, the process in Nooksack Basin is proceeding faster than at Lake Roosevelt. The Department of Ecology has a robust website that provides updates and timelines, so staying plugged into those updates is crucial.
What are some other actions that people in the hydropower utility industry should take in the meantime?
Historically, hydropower utilities, municipalities, irrigation districts, and large managers of water right assets often took a passive approach to their water right authority. They believed they had the authority and used it without much routine care and attention. Given the complexities of water law now, it’s important to actively manage their portfolios against loss, particularly where interpretations around municipal water law or pending adjudications could reduce their water rights.
We often talk about portfolio management for water rights related to hydropower works, water systems, and hatcheries. In Washington and many other western states, there is a “use it or lose it” standard with a five-year timeline. It’s important to audit your water rights every five years to make sure you are not underusing them. If you are underusing them, there are ways you can adapt, such as by leasing them to a third party, putting them in a trust water rights program, or moving them to other obligations to protect them from relinquishment.
More Information
For more information on hydropower utilities or water rights, contact Dan at Dan.Haller@aspectconsulting.com.
Learn more about Dan: Dan Haller (Geosyntec.com)
