Ski industry wins water rights lawsuit against Forest Service

A judge rules this week that the Forest Service can’t force ski areas to transfer water rights to the federal government. Bob Berwyn photo.

Judge orders Forest Service to go back to the drawing board on developing permit language to govern water originating on national forest lands

By Bob Berwyn

FRISCO — A long-running dispute over water rights at ski areas operating on public land was resolved — at least temporarily — this week, as Federal District Court Judge William Martinez ruled that the U.S. Forest Service violated its own regulations and other federal laws when it adopted a new water rights clause to be added to ski area permits.

Martinez stayed away from the takings issue raised by the ski industry, but slammed the Forest Service for issuing a new rule without providing a chance for formal input and public comment. Read the ruling here.

He vacated the water rights clause, enjoined the Forest Service from enforcing it and remanded the matter back to the agency for further action to be guided by the court ruling. Specifically, Martinez said the Forest Service failed to develop the new water rights clause under formal public processes required under federal regulations.

He also ruled that the Forest Service violated federal regulations because the agency did not evaluate the economic costs of forcing some smaller ski areas to to assign their water rights to the Forest Service without compensation.

“Given how critical and valuable water is to ski area operations, we are pleased that the court has stopped this unreasonable and unlawful policy in its tracks,” said Michael Berry, president of the National Ski Areas Association. “We look forward to working in cooperation with the Forest Service to develop a water policy in the future that respects property rights and state water law.”

At issue is water that originates on public national forest lands and has been developed by ski resorts for snowmaking and other uses. When the Forest Service adopted the water rights clause in 2011, top agency officials said it was an effort to ensure that the water rights stay with the ski areas long term, with the concern that resorts could potentially sell off those rights, leaving some future ski area operator high and dry.

The ski industry said the new clause was a water grab that would require resorts to transfer long-held water rights to the federal government. In testimony to Congress preceding the lawsuit, attorney Glenn Porzak said the water rights are adjudicated under state law and can’t simply be taken under a new Forest Service regulation.

In the lawsuit, the National Ski Areas Association charged that the Forest Service exceeded its legal authority by issuing the water rights directive in violation of the Regulatory Flexibility Act. The NSAA slso claimed that adopting the rule without public notice or input violated the the Administrative Procedures Act and the National Forest Management Act.

The Forest Service first adopted a national water rights clause (X-99) in 1997, requiring: “All water rights obtained by the holder for use on the area authorized must be acquired in the name of the United States.” That clause was contentious from the start, as ski areas saw it as a potential threat to water rights they had acquired and developed under state law.

In 2002, the White River National Forest adopted the 1997 clause as a binding standard in the forest plan.  The ski industry appealed that forest plan standard and prevailed in 2004, when the Forest Service chief directed the WRNF to remove the language from its plan.

In his ruling, Judge Martinez found that the Forest Service has not followed a uniform policy on water rights in the past few decades.

“Lack of federal ownership is reflected by the many ski areas which obtained water rights without naming the United States as owner,” the judge wrote.

Responding to the controversy over the 1997 clause, the Forest Service developed yet another version in 2004 after consultation with the ski industry, requiring ski resorts to apply and hold any future water rights in the name of the United States. Under the 2004 clause, ski areas were free to keep existing water rights they had already acquired and perfected.

The 2012 water rights clause at issue in the lawsuit establishes different categories of water rights, depending on where, when, and how they are acquired, in some cases forcing ski areas to transfer water rights to the federal government if a ski area permit is not re-authorized. According to the court order, ski areas are currently operating under hodgepodge of water rights clauses, with a significant variation in permit terms.


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