Natural Resources

Water-rights cleanup brings new profits from Idaho's old faucet

Idahoans' water rights were once a tangled mess. Now, after 27 years and millions in legal fees, they're almost all sorted out — producing new businesses and protecting old ones.

rbarker@idahostatesman.comMay 21, 2014 

  • WHAT THE 1984 SWAN FALLS AGREEMENT DID

    • Set a minimum flow of 3,900 cfs on the Snake River in the summer and 5,600 cfs in the winter, as measured at a water gauge near Murphy and the Swan Falls Dam.

    • Balanced all new irrigation projects upstream against their impact on hydropower.

    • Placed water above Idaho Power's minimum flow in a trust controlled by the state and said the priority for use of that water would be for new development that met state criteria. In other words, new irrigation projects - at least 15,000 acres - and projects in place before 1984 had first claim on the water above the 3,900 cfs minimum before Idaho Power could use it for electricity.

    • Started the adjudication, a legal review of all water rights in the Snake River Basin.

Snake River, aquifer work together as one system

The Treasure Valley's balanced water budget

David Tuthill finds new water for Idahoans. He develops creative tools for recharging flood waters into state aquifers so farms and other businesses can put them to use.

Delbert Kohtz of Mountain Home is a broker. He buys and sells water so that people who have more water than they need can turn their excess into income, allowing other businesses to grow.

Tuthill's and Kohtz's businesses are byproducts of a 27-year legal process that is expected to be completed this year. The process, little known outside Idaho's community of large-scale water users and little understood within it, is the confirmation of tens of thousands of water rights in the Snake River Basin, which stretches from Yellowstone National Park to the Oregon border and north to Clearwater Country.

Called the Snake River Basin Adjudication, the process has secured the fortunes of thousands of farmers, who control 93 percent of all water in the basin. It's also secured fortunes for fish processors, dairies and big businesses like Idaho Power Co. and J.R. Simplot Co.

By unleashing forces of the market, the adjudication is not only creating new businesses but also allowing traditional ranchers and farmers to secure their operations by leasing water to improve river flows for endangered salmon and trout. And it has cut a path Idaho can follow toward water conservation.

"I've always looked at the water rights adjudication process to be like the construction of the interstate highway system," says Tuthill, of Boise, a former director of the Idaho Department of Water Resources, which has administered the process. "It enabled the use of water to be more certain, more fair and provide a platform for the future."

The adjudication led to other changes, too. It forced the state and water users to develop science and technology to monitor water use from space, model its flow through the environment and allow easy public access to information about who owns it and how it is used.

Yet it has brought uncertainty to many farmers and communities that pump their water out of the Eastern Snake Plain Aquifer. The Lake Erie-sized reservoir underlies southeast and southern Idaho from Ashton, northeast of Idaho Falls, to King Hill, northeast of Glenns Ferry in Elmore County.

THE BEGINNING

The water-rights cleanup got its start in a lawsuit 37 years ago by Idaho Power customers who feared rate increases.

Farmer and former State Sen. John Peavey of Carey and 31 other customers sued Idaho Power in 1977, demanding that the utility defend its water right at the Swan Falls Dam.

The customers wanted to keep their cheap power. Idaho Power was planning to build a coal-fired power plant, which they worried would increase the cost of power beyond what they could afford.

They won. To defend its right at Swan Falls, Idaho Power was forced to file a lawsuit of its own. The utility sued Idaho and most of the water users on the river.

In 1982, the Idaho Supreme Court ruled that Idaho Power held a water right for 8,400 cubic feet per second of Snake River flows at Swan Falls Dam.

But the river regularly dropped below that level. Idaho Power's right threatened hundreds of thousands of acres of existing upstream farms, including all of those supplied from groundwater wells on the Eastern Snake Plain Aquifer, an underground water source stretching from Elmore County almost to Yellowstone National Park.

So, in 1984, the state and Idaho Power reached a deal that protected existing farms and allowed limited further development. Idaho Power accepted a rate of flow at Swan Falls Dam that was less than half of its legal right. The Legislature and Congress later approved legislation that made the deal work.

The Swan Falls Agreement required the adjudication of water rights. Since then, the department, state courts and eventually the Idaho Supreme Court have reviewed 158,000 separate rights to use water. The process has cost the state more than $93 million. Some rights date to the 1860s.

NOW: A MARKET FOR WATER

The new water-monitoring, modeling and information-sharing technologies mean Kohtz can put together transactions involving six water users, a level of complexity akin to major league baseball clubs' trades. Such deals ensure buyers can get the water they want without other users losing their water.

In southern Idaho's desert, water is practically the definition of a scarce resource. Whoever owns it will find thirsty customers.

"Right now we've got a lot more buyers than we have sellers," Kohtz says.

Water law in Idaho and all of the arid West is based on a simple idea: the first person to use water receives the right to it. Known as the prior appropriation doctrine, this principle of "first in time is first in right" means that the first farmers, canal companies and miners that diverted water for irrigation and industry owned the first, or senior, rights to it.

When the system was tied solely to surface water, it was relatively easy to administer: As water flows dropped during the summer, the users with the newest rights were turned off first. There were exceptions but even in droughts, the prior appropriation doctrine laid out a clear priority system.

FISH FARMS VS. CROP FARMS

The huge boom in the development of croplands by pumping groundwater that began in the 1940s laid the stage for divisive disputes between the people who pump their water from groundwater and those who depend on the springs that flow out of the same source - the Eastern Snake Plain Aquifer.

Previously, groundwater pumpers were allowed to water their crops without limit, even when their neighbors' canals from the Snake River and its tributaries were shut off because of drought.

A new industry, fish farming, emerged in the late 1950s and early 1960s in the Magic Valley as entrepreneurs realized that the cool water flowing from springs east of Twin Falls was ideal for raising trout. But as years passed, the fish farmers watched their flows drop as new acres of cropland irrigated by well water were developed, seepage from the surface declined as farmers shifted from flood irrigation to sprinklers, and the climate shifted into a long-term drought.

As part of the adjudication, these business rights to spring water were recognized as separate from groundwater and surface-water rights.

"Once our water right was determined, that was it," says Larry Cope, president of Clear Springs Foods in Buhl. "But it took us years to get things settled."

Adjudication started the process of meeting the fish farms' needs, but it took a second series of lawsuits and the actions of several state water-resources directors to determine how water for Cope and other users would be delivered.

The courts decided that a senior water-rights owner could make an administrative "call" for its water, and the directors would determine whether it could be reasonably delivered. Then, one or more of the 17 water districts created by the state and groundwater users would prepare a plan to either deliver the water or to offset the senior user's loss.

In Clear Springs' case, groundwater districts bought out several fish farms, transferred one to Clear Springs and rented another to the company. That preserved the future of a business that is now the largest trout processor in the nation.

ADJUDICATION HELPS BANKERS

Cope says it is important that all of the water users and the state have worked together to support recharge programs to offset the dropping spring flows.

"We know today we need to manage it to keep it sustainable," he says.

But calls create uncertainty. Calls by senior rights owners continue as users in different basins and groundwater users work through settlements that balance the rights to use the water with the ability to deliver it economically.

This has been a long, tough process, says Tim Deeg, president of the Ground Water Appropriators Association, which represents groundwater districts. "I think (the adjudication has been) definitely good," Deeg says.

Deeg, who also is chairman of the board of the Ireland Bank, says adjudication has been critical for banks that lend to water-rights owners. There is now a clearer understanding of the value of groundwater rights and the lands and other property tied to them.

"Back 15 to 20 years ago, we didn't have the concern that anyone would be turned off," says Tony Kevan, a loan officer with Farmers National Bank in Twin Falls. "Now we know that is a possibility depending on the snow pack."

Kevan, a farmer himself, lives south of Twin Falls in an especially arid area known as the Salmon Tract. He always has had to decide before each season whether he would have enough water to grow high-value crops like corn that need a lot of water or lower-value crops like hay or dry beans.

Now many groundwater farmers are in the same boat.

UNITED WATER USES AQUIFER STORAGE

Farmers weren't the only water users caught up in the calls. Cities, manufacturers and others who get their water from groundwater also have had to adjust.

In the Treasure Valley, United Water has a program to store water in the aquifer, providing flexibility in its supplies, which come both from groundwater and the Boise River.

"We inject water back into the aquifer to handle peak demand and to improve water quality," says Mark Snider, a United Water spokesman. "For example, we take water during the low-demand winter months and re-inject it into the aquifer, where we can utilize it in the summer."

United Water also has a program to promote water conservation among is customers to protect the groundwater supply.

Irrigation districts, including the Nampa-Meridian Irrigation District, also have promoted groundwater conservation by encouraging developers and existing customers to install pressurized irrigation systems using water carried by canals and ditches from the Boise River.

NONBUSINESS WATER RIGHTS: TRIBES AND FEDERAL LANDS

The adjudication also resolved another conflict: American Indian tribes and the federal government were making claims on water the tribes say were reserved in treaties and the federal government says were set aside as public resources under federal law.

The Shoshone-Bannock Tribes reached an agreement with the state that recognized its claim to more than a million acre-feet of water flowing in rivers, stored in reservoirs and underground. Some of the water is used by farmers on the Fort Hall Reservation. Other water is allowed to flow down the Snake River to help salmon, still a vital part of life for many tribal members.

The Idaho Supreme Court ruled the Wilderness Act of 1964, which preserved federal lands from development, did not reserve for the federal government a right to water to protect wilderness. That means newly designated wilderness areas have reserved rights only for uses developed before designation.

Similar decisions were made for the Hells Canyon National Recreation Area, the Deer Flat National Wildlife Refuge near Nampa and other lands. But state officials say these areas will see little difference in scenery or wildlife-habitat protection as a result.

The court did recognize federally reserved water rights for the Salmon River, which was protected by the 1965 Wild and Scenic Rivers Act. An agreement was reached that did not substantially change existing rights. The agreement means the high flows that boaters love are protected, and new development won't dry up the river.

The most sweeping agreement was reached with the Nez Perce Tribe on its claim to all the waters in the Snake River Basin to protect its right to fish. Under the agreement, the tribe waived a portion of its water rights claims for a package of protections for salmon, minimum instream flows for hundreds of streams, benefits for the tribe and other actions by the state and federal government.

To meet some of the minimum flows, ranchers in the Salmon River basin are leasing water to the state, paid for with federal dollars in market transactions that benefit both ranchers and fish.

Resolving the tribal and federal rights puts Idaho miles ahead of other western states still struggling over these complex issues, says John Rosholt, a Twin Falls attorney who has been involved in Idaho water issues for decades.

"I knew we could never be secure in our water rights until we got the feds' rights defined and decreed," Rosholt says.

FOR LAWYERS, MILLIONS IN LEGAL FEES

Some unresolved issues remain, including how water stored in reservoirs will be counted. But state and judiciary officials are confident the final disputes will be resolved and the final decisions or decrees will be made by the end of this year.

For the state's water lawyers, adjudication has brought a steady, predictable business that has financed retirements and paid for children's college educations.

Deeg says groundwater users have matched the state in the payments they've made as a result of adjudication, including tens of millions of dollars in fees to lawyers. Other payments have bought fish farms and water rights and leased water for senior users, he says.

And administrative issues will persist, keeping water attorneys busy for years. One is the need to determine how communities will have secure supplies to meet future growth. At times, that means tensions between senior and junior water users will still play out in court.

"It's not time to hang the 'Mission Accomplished' banner yet," says Chris Meyer, an attorney with Givens Pursley of Boise, who represents most junior users.

Many members of the state's canal companies and irrigation districts and the lawyers themselves are fatigued after the long battle, says Dan Steenson, who is a part of the Sawtooth Law Firm based in Boise and Challis. The firm represents mostly senior users.

"I hope we're moving more to cooperation and problem-solving than fighting," Steenson says.

INDUSTRIAL, MUNICIPAL WATER USE RISES

Idaho Power, whose lawsuit started the process, still worries that the state will have a problem meeting the minimum stream flow on the Snake River at the Swan Falls Dam of 3,900 cubic feet per second in the summer. Flows on the Snake River have dropped at a rate of 200,000 acre feet a year for decades.

"When you realize how much we gave up on the whole, I'd say we aren't better off," says Mark Stokes, Idaho Power's water and resource planning director.

Most Western states have been forced to dry up thousands of acres of farmland to convert their water rights to industrial and municipal use. The amount of land irrigated in Idaho fell by 200,000 acres from a peak of about 3.5 million acres from 1997 to 2007.

Idaho Power Co. now leases water from farmers when supplies are good, and it brings more water to the basin now through a cloud-seeding program it plans to expand.

Tuthill and his partners at Recharge Development Corp. hope to develop public-private partnerships that recharge the aquifer to address the decline while at the same time capturing even more water that otherwise would go unused.

"Idaho has sufficient water supplies that enable continuing use for agriculture while providing for additional uses through better management," Tuthill says. "As ag products become more valuable we will be able to increase market share while other Western states are losing market share."

Rocky Barker: 377-6484

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