Bounds Vs. New Mexico and Kansas LEMAs

The New Mexico Supreme Court just rendered an interesting decision in the Bounds Vs. New Mexico court case relating to exempt wells.  By way of [brief...very brief] background, Horace Bounds back in 2006 challenged the constitutionality of the New Mexico Domestic Well Statute (DWS), which requires the state engineer to approve domestic water right applications - regardless of whether new water is available for appropriation.  Mr. Bounds has a very senior surface water right on the local river for irrigation, and argued that new appropriations - of any kind - were going to impair his senior water right. Therefore all water uses must be handled under the prior appropriation system.

The State Engineer argued that the DWS was a clear expression of legislative intent to treat certain necessary water uses differently, and in creating that distinction, they articulated a class of uses of public water that was to be exempt from (or outside) the scope of the general scheme of appropriations.

Long story short, the original court found for Bounds, the Appellate Court overturned the original finding and ruled for the State, and finally the State Supreme Court upheld the Appellate Court's decision.  As it stands now, the state engineer's argument is the correct one. 

The Court of Appeals concluded that the New Mexico priority doctrine is not a system of administration that dictates any particular manner of administration of appropriations and/or the use of water, or, how senior water rights are to be protected from junior users in time of shortages.  Also, because the Legislature determined that domestic well permits are to be issued upon application without prior evaluation of water availability or impairment, is not a violation of the priority doctrine or of the Legislature’s constitutional duty to assure that senior water rights are protected under that priority doctrine.  There is actually much more to the Bounds ruling, but this one point is the one I'm most interested in.

I find the main issue of this case interesting because our new LEMA legislation provided for a whole host of local groundwater supply shortage remedies, including some that do not use the prior appropriation system that is also so fundamental to Kansas water law.  In public discussions this issue comes up just about every time, so it's clear that a number of Kansas folks are thinking along the lines of Mr. Bounds.  We have always responded that the Legislature has decided it best to provide other solutions to supply shortages (other than administration by prior appropriation) so we are on solid legal ground. 

Of course, there are many differences between New Mexico water law and Kansas water law, and our State Supreme Courts are different, so there is no way to know if the same ruling would be rendered if our LEMA approach would be challenged.  But, I think we'd be making many of the same arguments, and, referencing the New Mexico Bound's case.   

Exempt Wells - Exasperating Exceptions

OK, let's try our hand at exempt wells in the West.  Kansas has them, as does virtually every other western state.  Should we keep them or not?  First some background. 

In Kansas every water use requires a water right - except domestic.  And every water right is in a priority system - the first in time is the first in right - otherwise called a senior water right.  The question is:  Do new water rights that are exempt from the normal water right review process pose a hydrologic problem to existing, senior, water rights?

The early thinking was that domestic use was too small to regulate and should not be burdened with the formality of a formal water right filing system that is best reserved to the larger wells that had potential to impair or negatively affect earlier (senior) water rights.  Besides, having the ability to regulate domestic wells could provide the regulators a direct opportunity to control or prevent population growth by developing restrictive domestic water right rules.  Can't have that!

However, I don't think that anyone can argue that more and more exempt domestic wells can and will eventually overdevelop any water supply and cause water right problems.  You know...there comes a time when one last sequin ruins the dress.  This has been the issue at hand in many recent discussions, and is the precise issue behind a law suit filed in New Mexico by a senior water right owner named Horace Bounds, Jr. who is claiming that subsequent exempt well development in his area is now impairing his senior water right.  This case is now in the New Mexico Supreme Court.

It is here that I have to admit that Kansas actually has two exempt well issues.  Not only has the state specifically excluded domestic wells from the filing requirements of its water appropriation act, but certain small-use, non-domestic uses have also been exempted by both the state and the local GMDs.  It's a subtle distinction I admit, but whereas just about everyone seems to be OK with domestic uses being exempt, at least initially, why would Kansas compound the issue by exempting ANY non-domestic use?
   
I've heard the justification for the Kansas system posed this way:  Since every exempt water use has a water right and a priority date (even with the state's exemption) they are subject to waste of water and impairment issues just like every other water right in the state.  As such, the water rights administration process can adequately handle their impacts on existing wells, so why go through the tedious filing procedure for the tens (or hundreds) of thousands of these exempt wells?  In other words, just because they're exempt from the filing requirements doesn't mean they're exempt from impairing senior water users. 

The Kansas impairment process will pull any exempt water user into the priority system if and when there is ever a supply problem.  The issue for me now becomes:  If I'm going to put down new roots or build my new house, farm headquarters, business or whatever, I'm pretty sure I want to know more about my water supply than "I hope my unrecorded priority date and quantity can survive an impairment action".  This is taken care of in Kansas as well, because while domestic water uses are currently exempted from filing, they are allowed to file and come into the priority system if they choose to.  A much better choice for many.

Now, do you still think exempt wells are a problem?

If you do, how should they be addressed?

Should the state grandfather in all existing exempt wells and then require, as of a date certain, every future water use to meet the state's development criteria?  New uses would always have access to the market to purchase or lease small portions of existing water rights if no new appropriations can be approved.  When that time comes, would there be willing sellers?  At what price?

Should all currently exempt wells be located and retroactively brought into the current water rights system - knowing that in many locations the most junior of these may not survive an administrative action?  Keep in mind the sheer number of these kinds of wells.  Do you give abandoned wells priority too?
Should we let the courts decide - like is about to happen in New Mexico? Will that decision, whatever it is, spill over eventually to other western states?

While we still have the exempt well issue even here in GMD 4, I'm glad to report that we have addressed one aspect of this dilemma - that of exempt, non-domestic wells.  I have blogged about this earlier here:  small-use exemptions.  We no longer have any non-domestic, exempt water rights. 

Anyone that has solved this problem in mid-stream, I'd like to hear how you went about it.

Emergency Drought Permits in Kansas

Just a few weeks ago the Division of Water Resources announced the offering of an emergency drought term permit for water right owners looking at exceeding their annual water right amounts in order to complete the 2011 crop.  The drought in much of southern and central Kansas has been one for the ages to be sure.  The feeling was to shut off irrigation to stay within the limits of the water right and lose all or a substantial amount of the crop production would be a waste of the state's water resources invested in the production to date, so some mechanism needed to be provided to bring in this crop.

Basically the emergency permits require a water right owner to set aside his or her annual water right and be provided a two-year term permit (2011 and 2012) worth double the amount under the regular water right.  What ever is overpumped this year must be compensated for next year.  The need apparently was there because DWR has now eclipsed 800 term permits in the works - in literally 3-4 weeks time.  There is more to this program, but it clearly is a short-term, attempt to get through this devastatingly dry year.

More funadamentally, however, it could be argued that every water right owner knew on January 1, 2011 how much water he or she had for the year.  The safe decision would always be to plant only the acres and crop populations that could be completed ONLY with the irrigation water (assuming NO rainfall is received).  The problem with this mindset is that in the other 68 years out of 70 they underproduce because they fail to take production advantage of whatever rainfall is received.  When it all boils down, it's an economic and risk management system.  Seems like most producers have economic production goals and a risk tolerance well above the safest levels.  So we tend to operate for the bounty of the moderately dry, average and wet years and scramble for the fixes in the driest of the dry years.  Nothing more than human nature I suspect.  And in the end, the fixes do keep additional water from getting used, so it seems like reasonable business to me.

Small Use Applications in GMD 4

Up until 2006 new groundwater rights for small, non-domestic uses in closed or over-appropriated areas were exempt in all of Kansas.  The amounts varied, in some places applications for 25 AF or less were exempt, and in other places the limit may have been 15 AF, but you could always count on a small use application getting approved under the combination of state and/or local rules.

GMD 4 was the first entity in Kansas to eliminate this practice.  Today, the only way to get a new, small use groundwater right of 15 AF or less in GMD 4 is by having the water you are applying for (plus the consumptive use conversion quantity) dismissed by some other water right owner within 2 miles of your proposed well.  No other location in the state has such a regulation requiring such an offset.  The board's thinking in requesting this new regulation was that "closed" meant "closed".  The regulation is KAR 5-24-10 and only applies to GMD 4.

In addition, the new water right is actually a new water right.  It becomes a brand new priority and must be certified again through actual use rather than retaining the original priority of the water use. When looked at in its entirety, this new regulation is a fairly significant change.