"Manner" or "Purpose" - More Confusion from the PCHB in Painted Summer Hills, LLC v. Department of Ecology, PCHB No. 09-006

If you have a water right issued by the Washington Department of Ecology, you may not think very much about whether it is called a water right “permit” or a water right “certificate.” Permit, certificate, isn’t it the same?

Truth be told – No, these documents are not the same, and may be treated very differently under the law, particularly when it comes to applying to Ecology for permission to make changes to the water right.

In general, a water right permit is an intermediate step between the water right application and the water right certificate. After an initial evaluation of an application, Ecology will issue a water right permit that allows the holder to begin developing a water source for a particular use. A maximum quantity for development and a development schedule are included. Once the surface water diversion works or the ground water wells, pumps and pipes are fully developed and the resulting water is put to beneficial use for the allowed purpose (for example, serving a residential subdivision or irrigating a vineyard), and proof of the appropriation is submitted to Ecology, a water rights certificate will be issued. The certificate is evidence that the development schedule is completed and the water has been put to full beneficial use, and is thus “perfected".

Development schedules in water rights permits vary in length depending on the circumstances. Sometimes during the development schedule, for reasons that might include a sale of the property where the water is to be used, or a change in the owner’s plans for using the property, it becomes desirable to apply to the agency to change some aspect of the permit, such as relocating a well or modifying the place of use or even the purpose of the use. Such a change application can present some complex issues for resolution, due to the nature of the Washington water code.

For example, the Washington water code treats an unperfected ground water right permit very differently from a perfected, certificated, water right when it comes to an application to change some attribute of the water right. Under RCW 90.03.380, a perfected water rights certificate is eligible to change, among other attributes, the “purpose” of the use. The Washington Supreme Court held in R.D. Merrill v. Pollution Control Hearings Board, 137 Wn.2d 118, 969 P.2d 458 (1999) that while a certificated water right can qualify for a change in the purpose of use under RCW 90.03.380, changes to a ground water permit (by its nature an unperfected right) can only be accomplished under a separate statute in the ground water code, RCW 90.44.100. RCW 90.44.100 authorizes only a change to the “manner” of the use – not the “purpose”. As the water code has been interpreted in R.D. Merrill, the purpose of use of a ground water right can only be changed under RCW 90.03.380 once the ground water right becomes perfected and certificated.

 The Washington Pollution Control Hearings Board recently added to the body of law on what “manner of use” means in RCW 90.44.100. In Painted Summer Hills, LLC v. Department of Ecology, PCHB No. 09-006 (Order on Summary Judgment, October 6, 2011), the Board held that redesigning a subdivision project from 12 homes to 19 homes without any change to the quantity of water allotted under a ground water permit was only a change in the “manner” of use of the permit, and not a prohibited change to the “purpose” of the use. The Board also held that the requested change was not a prohibited “enlargement” of the groundwater right and did not cause illegal speculation in water rights.

The Board reasoned that because there was no request to increase the instantaneous or annual maximum water quantities allowed to be withdrawn under the permit, and no request to change the type of use proposed (still a residential subdivision), the request to serve additional residences with the same amount of water was a change to the “manner” of use only. The Board noted that “the ‘manner of use’ language within RCW 90.44.100 has resulted in years of confusion for water right holders,” as well as Ecology, the Board and the courts, and admitted that “the Board is unable to set forth a comprehensive definition of ‘manner of use’ at this time.” Nevertheless, the Board determined that the proposed increase from 12 to 19 connections does not alter the original project in a way that changes the purpose of the use. The water right permit would remain a “community domestic water right”.

In a partial concurrence and dissent, Board Chair Kathleen D. Mix took the position that one consequence of the Board’s decision could be to significantly expand other attributes of the water right, due to provisions in the water code intended to govern municipal water rights. These provisions of the so-called Municipal Water Law are among those recently upheld by the Washington Supreme Court against a constitutional challenge in Lummi Indian Nation et al v. State of Washington, 170 Wn.2d 247, 241 P.3d 1220 (2010). The Municipal Water Law adopts a definition of “municipal water supplier” and “municipal water supply purposes” at RCW 90.03.015(3)-(4) that Ms. Mix argued could automatically convert the right for community domestic supply held by Painted Summer Hills LLC into a “municipal” water right. RCW 90.03.015(4) (a) provides that a water right “for residential purposes through fifteen or more residential service connections” is for “municipal water supply purposes.” Under RCW 90.03.015(3), an entity that “supplies water for municipal water supply purposes” is a municipal water supplier.” Municipal water suppliers are entitled to special treatment in a number of cases under the water code, including exemption under RCW 90.14.140(2) (d) from relinquishment for nonuse. Because the Board’s decision allows Painted Summer Hills’ water right to be used for 19 connections, Ms. Mix opined, the right would benefit from a de facto change in “purpose” of use to one for municipal supply purposes.

Following the Board’s decision, the Department of Ecology filed a motion for reconsideration based upon arguments drawn from Ms. Mix’s opinion. Ecology’s motion argues that the Board should reject the request to serve 19 connections as a change to “purpose” rather than “manner” of use, or alternatively that the request should be limited to a total maximum of 14 connections in order to avoid the conversion of the right into a “municipal” water right under RCW 90.03.015. It seems certain that whatever the Board’s decision on the reconsideration request, the issues in the Painted Summer Hills case will be heard in the appellate courts.