REACQUISITION OF WATER RIGHTS BY STATE AGENCIES

OFFICES AND OFFICERS ‑- STATE ‑- DEPARTMENT OF ECOLOGY ‑- WATER ‑- CONDEMNATION ‑- EMINENT DOMAIN ‑- REACQUISITION OF WATER RIGHTS BY STATE AGENCIES

The state department of ecology may not condition a water right permit issued under RCW 90.03.290 by providing, pursuant to an administrative regulation, that once such a permit has been in effect for at least twenty-five years the state, upon giving five years' notice, may utilize a certain prescribed formula for the measurement of damages if it exercises its power of eminent domain to condemn the water right embodied in the permit ‑ in lieu of paying full compensation as ascertained by the court or jury under Article I, § 16 (Amendment 9) of the state constitution.

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                                                                  March 23, 1976

Honorable Max E. Benitz
State Senator, Eighth District
Legislative Building
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1976 No. 22

Dear Sir:

            By letter previously acknowledged you have requested our opinion on a question which we paraphrase as follows:

            May the state department of ecology condition a water right permit issued under RCW 90.03.290 by providing, pursuant to an administrative regulation, that once such a permit has been in effect for at least twenty-five years the state, upon giving five years' notice, may utilize a certain prescribed formula for the measurement of damages if it exercises its power of eminent domain to condemn the water right embodied in the permit ‑ in lieu of paying full compensation as ascertained by the court or jury under Article I, § 16 (Amendment 9) of the state constitution?

            We answer this question in the negative for the reasons set forth in our analysis.

                                                                     ANALYSIS

            Your question, as we understand it, has arisen because of a pending proposal by the state department of ecology to adopt an administrative regulation governing the issuance of permits for the withdrawal and use of public surface waters of the lakes and streams of our state.1/   The particular portion of the proposed regulation with which you are concerned2/ reads as follows:

             [[Orig. Op. Page 2]]

            "(2) A condition shall be included which shall provide that should the state of Washington, in the exercise of its power of eminent domain, successfully condemn the water right embodied in a permit (or a certificate of right issued pursuant thereto), the permit or certificate holder, heirs or successors in interest, shall accept as the measure of damages resulting from said condemnation the cost of capital improvements, reduced by the amount of depreciation thereof, declared for income tax purposes to the Internal Revenue Service as depreciable capital investments in the facilities for the distribution and use of the water and other movable and nonmovable facilities of right holder that lose their utility with the loss of the water right or portion thereof because such facilities are directly dependent upon irrigated agricultural activities which are dependent upon the right of use granted.  The condition shall further provide that the State of Washington, finding the present use of water to be in the public interest, shall not utilize the measure of damages provided in this subsection (2) for a period of twenty-five years from the date of issuance of the permit.  The condition shall further state that the State of Washington shall provide five years' notice of its intent to utilize the measure of damages contained herein.  The State of Washington, when exercising its power of eminent domain, shall first condemn those rights that are junior in priority of time among significant withdrawals provided said rights are of equal utility, location and/or access for the purpose of that condemnation.  This subsection shall not apply to holders of water rights for domestic purposes."

            In asking for our opinion regarding the legality of a regulation such as this you have basically expressed a concern with the constitutionality of the "special formula" which would govern the ascertainment of damages in the event of a condemnation by the state, upon five years' notice, once a particular permit had been in effect for at least twenty-five years.  You have speculated that this aspect of the regulation would seem to be in violation of Article I, § 16 (Amendment 9) of the Washington constitution which states that:

             [[Orig. Op. Page 3]]

            ". . .  No private property shall be taken or damaged for public or private use without just compensation having been first made, or paid into court for the owner, and no right-of-way shall be appropriated to the use of any corporation other than municipal until full compensation therefor be first made in money, or ascertained and paid into court for the owner, irrespective of any benefit from any improvement proposed by such corporation, which compensation shall be ascertained by a jury, unless a jury be waived, as in other civil cases in courts of record, in the manner prescribed by law. . . ."

            In answering your question, however, we need not squarely determine that interesting constitutional issue ‑ although we do note in passing that once a condemnation proceeding has been commenced the parties, under a theory of waiver, have been permitted by the court to stipulate as to compensation under Article I, § 16 (Amendment 9), supra.  See, e.g.,Pearl Oyster Co. v. Seattle & Montana R. Co., 53 Wash. 101, 101 Pac. 503 (1909).  On the other hand, the court has also held that what constitutes full compensation can only be determined in a judicial proceeding.  As stated inDuncan Township v. Stayr, 106 Wash. 514, 521, 180 Pac. 476 (1919),

            ". . .  It has become the settled law of this state, since the adoption of our constitution, that a statute which purports to provide for the determination of the question of damages resulting from the exercise of the power of eminent domain, other than by a judicial proceeding in a court of record, wherein the owners of property are brought into court by an appropriate original process, is unconstitutional.  Const., art. 1, § 16;Peterson v. Smith, 6 Wash. 163, 32 Pac. 1050; Askam v. King County, 9 Wash. 1, 36 Pac. 1097;Snohomish County v. Hayward, 11 Wash. 429, 39 Pac. 652;Seanor v. Board of County Com'rs, 13 Wash. 48, 42 Pac. 552;Adams County v. Dobschlag, 19 Wash. 356, 53 Pac. 339."

             [[Orig. Op. Page 4]]

            But even if the legislature, consistent with the foregoing, could nevertheless prescribe a "special formula" for the ascertainment of compensationby the court in a condemnation of water rights such as would be covered by WAC 173-595-035(2),supra, it has not in fact done so.  Nor has it purportedly authorized the department of ecology to establish such a procedure.  Instead, as we will note below, the legislature has, by statute, imposed a requirement which appears to us to be precisely to the contrary.

            As a state agency, the department of ecology has only those powers which have been granted to it by the legislature, either expressly or by nesessary implication.  State ex rel. Holcomb v. Armstrong, 39 Wn.2d 860, 239 P.2d 545 (1952);State ex rel. Eastvold v. Maybury, 49 Wn.2d 533, 539, 304 P.2d 663 (1956).  An examination of RCW 90.03.290 and related statutes, however, reveals only a power on the part of the department of ecology (as successor to the powers of the supervisor of water resources) to issue a permit for the withdrawal of public surface waters, or if ". . . the appropriation thereof as proposed in the application will . . . impair existing rights or be detrimental to the public welfare, . . .", to deny such a permit on that basis.  While this does not necessarily mean that the department can never impose conditions upon, or limit the term of, such a permit it obviously may not disregard or purport to amend an act of the legislature in the process of doing so.

            The immediate problem with WAC 173-595-035(2) and the practice which it would purport to authorize is that irrespective of their constitutionality, both the rule and the practice would be in conflict with a long existing section of the state water code (chapter 90.03 RCW) governing the condemnation of water rights acquired under its provisions.  We have reference to RCW 90.03.040 which reads as follows:

            "The beneficial use of water is hereby declared to be a public use, and any person may exercise the right of eminent domain to acquire any property or rights now or hereafter existing when found necessary for the storage of water for, or the application of water to, any beneficial use, including the right to enlarge existing structures employed for the public purposes mentioned in this chapter and use the same in common with the former owner, and including the right and power to condemn an inferior use of water for a superior use.  In condemnation proceedings  [[Orig. Op. Page 5]] the court shall determine what use will be for the greatest public benefit, and that use shall be deemed a superior one:  Provided, That no property right in water or the use of water shall be acquired hereunder by condemnation for irrigation purposes, which shall deprive any person of such quantity of water as may be reasonably necessary for the irrigation of his land then under irrigation to the full extent of the soil, by the most economical method of artificial irrigation applicable to such land according to the usual methods of artificial irrigation employed in the vicinity where such land is situated.  In any case, the court shall determine what is the most economical method of irrigation.  Such property or rights shall be acquired in the manner provided by law for the taking of private property for public use by private corporations."  (Emphasis supplied.)

            As we read it, the final sentence of this statute in effect refers us back to Article I, § 16 (Amendment 9), supra, and thus means that whenever a water right is condemned, whether by a public agency or a private party, all of the procedural steps called for by that constitutional provision must be taken ‑ including the payment of "full compensation" to be ascertained by a trial court jury or by the court itself if a jury is waived.  Therefore, even if an alternative means of determining compensation or damages could be provided for by an act of the legislature amending the water code this may not be done by administrative regulation under the existing terms of that code (which is clearly binding upon the department of ecology in the issuance of water right permits) because such a regulation would be in conflict with the code itself.  The regulation would purport to allow a water right to be taken by a state agency through the use of eminent domain in a manner contrary to the mandatory language of RCW 90.03.040,supra, which says that such rights shall be acquired in the manner provided by law (Article I, § 16,supra) for the taking of private property for public use by private corporations.

            Again, we do not necessarily mean to say that the department of ecology may never impose conditions upon, or limit the term of, a water right permit ‑ reserving, for example, a right to terminate that permit upon the occurrence of specified conditions or at a given future point in time.   [[Orig. Op. Page 6]] Conceivably, that could be done for valid reasons under the applicable statutes as they now exist.  But if, instead, what purports to be a perpetual right is recognized by a permit issued by the department it would be contrary to RCW 90.03.040, in our opinion, for the department, at the same time, to attempt to authorize a special means of condemning that right through the exercise, by a state agency, of the power of eminent domain.