1. Water Rights and Water Allocation Land Camp 2015 April 13-15, 2015 Menucha Retreat and Conference Center, Columbia Gorge, OR Duncan Greene with Kelley Beamer, Steven Shropshire, and Jacquelyn Wallace April 14, 2015 Water rights for land trusts in Washington State

2. WATER LAW FUNDAMENTALS ◘Water as a natural resource Public ownership State allocates right to use water (“water right”) ◘Riparian doctrine versus appropriation system Eastern states: riparian doctrine Western states: appropriation system

3. WASHINGTON STATE WATER LAW ◘Now primarily based on appropriation ◘Permit system adopted for new water rights ◘Department of Ecology – regulatory agency ◘Instream flow rules adopted by Ecology

4. NATURE OF WATER RIGHTS ◘Use right – “usufruct” ◘“Perfected” water right is real property interest ◘Not absolute Can be lost through non-use “Relational” rights:  To other rights  Dependent on physical availability

5. “EXEMPT WELL” ISSUE ◘Permit-exempt groundwater use (RCW 90.44.050) ◘Generally, up to 5,000 gpd – domestic, industrial uses ◘No quantity cap for stockwatering ◘Exempt use can establish water rights, but no application process or permit document.

6. TRUST WATER RIGHTS PROGRAM ◘Provides mechanism to “hold” water rights for future uses without relinquishing ◘For instream and out-of-stream uses ◘Temporary or permanent ◘Water right retains original priority date ◘Used to implement implement Ecology’s Water Acquisition and Water Banking programs.

7. WATER RIGHTS DOCUMENTS ◘Permit Process Application – four-part test Permit (“inchoate” water right) ◘Certificate (“perfected” water right) ◘Claims Pre-1917 for surface water Pre-1945 for groundwater

8. ATTRIBUTES OF A WATER RIGHT ◘Priority Date ◘Quantity Annual Quantity (“Qa”) Instantaneous Quantity (“Qi”) ◘Place of Use ◘Point of Withdrawal or Diversion ◘Purpose of Use ◘Season of Use ◘Statute allows applicants to apply for change of some of these attributes.

9. ATTRIBUTES OF A WATER RIGHT

10. WATER RIGHTS APPURTENANCY ◘Perfected rights are appurtenant to land on which they are used ◘Water right certificates specify authorized “place of use” ◘Some tricky ownership questions may arise

11. WATER RIGHTS TRANSACTIONS ◘General rule: perfected water rights conveyed with the appurtenant land unless expressly reserved ◘Title insurance generally not available ◘Stand-alone water rights transactions Private transaction Administrative regulatory approval for change (Ecology)

12. WATER RIGHTS DUE DILIGENCE ◘Title report on appurtenant land ◘Ecology files ◘Actual historical use (objective/subjective sources) ◘Other review, depending on circumstances

13. VALUATION AND APPRAISALS ◘Valuation methods Sales comparison Land price differential Income capitalization Replacement cost ◘Appraisals Formal appraisals can be costly Typically not used in private transactions Informal consultant opinion as alternative

14. ORTING VALLEY FARMS PROJECT ◘The property: Former dairy farm 10 parcels, 100 acres Divided by rural highway Multiple overlapping water rights ◘The situation: Recent death of farmer No continued farming by the family Sale by widow (and possible development) imminent ◘The project: Partnership between PCC Farmland Trust and Pierce County Conservation easements Three new farmers

15. Orting Parcels

16. Orting Water Rights

17. For more information: Duncan Greene 206-623-9372DMG@vnf.com Graphic credit (slide 9): Washington Rivers Conservancy, Landowner's Guide to Washington Water Rights, 2nd Ed. (2009)