Appeals Court Reverses GMHB Ruling re Whatcom County in Hirst Case: Permit-Exempt Wells Not Governed by Nooksack Instream Flow Rule

Whatcom County has won its appeal in a closely watched case at the intersection of water rights and land use law. Division One of the Washington Court of Appeals held that the Western Washington Growth Management Hearings Board erroneously interpreted the Nooksack Basin Instream Flow Rule, Chapter 173-501 WAC, and reversed the Board’s rulings that Whatcom County was out of compliance with the Growth Management Act (GMA).[1] The ruling, in what has become known as the Hirst case, rejected a presumption by the Board that new permit-exempt wells will impair closed streams and minimum flows in basins with instream flow protection rules. The Court of Appeals also rejected the Board’s statutory interpretation that counties must make independent determinations of “legal availability” of groundwater before issuing building permits or approving subdivisions, especially where such determinations could be inconsistent with Department of Ecology interpretations of its own instream flow rules.

The case began with challenges by Eric Hirst and Futurewise to Whatcom County’s comprehensive plan and development regulations on grounds that, among other things, they failed to include adequate provisions to protect ground and surface waters with respect to individual permit-exempt wells. GMA requires counties that plan under GMA to include a rural element consistent with GMA’s goals, including measures to protect critical areas and surface and groundwater resources.[2] In Kittitas County v. E. Wash. Growth Mgmt. Hearings Bd.,[3] the Supreme Court held that Kittitas County’s development regulations violated GMA because they didn’t prevent daisy-chaining of multiple permit-exempt wells for projects under common ownership or a common scheme of development, which allowed developers to violate limitations on the use of permit-exempt wells.[4]  The Supreme Court held that growth management hearings boards have jurisdiction over petitions challenging whether development regulations violate GMA provisions such as the requirement to protect groundwater resources and RCW 19.27.097 and 58.17.110, which require counties to assure adequate potable water is available when issuing building permits and approving subdivisions. While holding that counties are responsible for land use decisions that affect groundwater resources, the Court also recognized the statutory role of Ecology, adding “[Ecology] ought to assist counties in their land use planning to adequately protect water resources.” This assistance is discussed further below.

The primary issue in the Hirst case relates to the significance of Ecology’s instream flow rule for the Nooksack Basin, Chapter 173-501 WAC, and whether it prohibits new exempt well uses that may impair closed streams and minimum flows. The Board interpreted the Nooksack Rule as precluding new permit-exempt uses as a matter of law, and ruled that the County’s measures to protect water availability did not comply with GMA because they allowed the use of permit-exempt wells except “where [Ecology] has determined by rule that water for development does not exist.” The Court of Appeals reversed, holding that the Board erroneously interpreted the law as requiring the County to make its own separate determination of legal water availability. It ruled that the County complied with its statutory responsibility and the Kittitas decision by invoking the assistance of Ecology regarding the availability question. Ecology had advised the County about exempt wells and submitted an amicus curiae brief to the Court of Appeals interpreting the Nooksack Rule as not applying to permit-exempt water uses, thus rendering them legally available for the issuance of building permits in rural areas in the Nooksack basin. The Court also held that the Board erroneously relied upon a December 2011 letter from Ecology to Snohomish County relating to restrictions against permit-exempt wells under a different basin rule with different language, finding that the letter had nothing to do with the Nooksack Rule.

The Hirst and Futurewise appellants argued that the Board’s determination of non-compliance with GMA was consistent with Supreme Court precedent interpreting water availability vis-à-vis instream flow rules. In Postema v. PCHB,[5] the Court held that ground water is not available if its withdrawal would have “any effect” on a stream closed to further appropriation, or if it would impair a minimum flow established by regulation. The Court of Appeals rejected these arguments because Postema addressed issues arising from “applications” for water rights, not permit-exempt withdrawals, and because the appellants’ argument conflicts with Postema by assuming a uniform interpretation of instream flow rules.

Ecology’s interpretation of the Nooksack Rule was key to the result in the Hirst case. The question remains, however, how Ecology will interpret other instream flow rules and whether those interpretations will lead to GMA appeals or rural building moratoriums in other counties. In many of Ecology’s instream flow rules, in-house domestic uses are exempted. In others, Ecology is required to consider the “natural interrelationship between ground and surface waters” with no specific exemption for permit-exempt water uses. In at least eight watersheds, Ecology invoked “overriding considerations of public interest” (OCPI) to reserve water for out-of-stream uses that conflict with instream flows, reservations that are now legally suspect after Swinomish Indian Tribal Community v. Dep’t of Ecology.[6] In the Skagit, Dungeness and Upper Yakima basins, rural property owners are already restricted from obtaining building permits without mitigation, and mitigation through local water banks is not available everywhere it is needed.

Ecology’s Water Resources Program is updating its advice to counties regarding water availability determinations like those made in the Hirst case.  The status of Ecology’s project, which involves a large stakeholder group, can be followed on Ecology’s website[7] or through participation in the Water Resources Advisory Committee. Ecology’s goal is to develop an updated set of water availability guidelines for each watershed by the end of 2015. That guidance could lead to GMA appeals in some counties with the goal of preventing new building permits based on permit-exempt wells. It could also lead to litigation on the key issue in the Hirst case – whether instream flow rules should be interpreted as requiring denial of building permits and subdivision approvals with permit-exempt water supplies.  The impact of that on counties, rural land usage, and property rights would be significant, raising constitutional issues and increasing pressure on the legislature for a solution. The author of this article would not be surprised if the Hirst case is appealed to the Supreme Court, or if other challenges like it pop up in other counties.

[1] Whatcom County v. Western Wash. Growth Mgt. Hearings Bd., Ct. App. Div. 1, Case No. 70796-5-1 (Feb. 23, 2015).

[2] RCW 36.70A.070(5)(c)(iv).

[3] Kittitas County v. E. Wash. Growth Mgmt. Hearings Bd., 172 Wn.2d 144, 256 P.3d 1193 (2011). 

[4] See Dept. of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 43 P.23d 4 (2002) (common project involving division of land can only qualify for one group domestic permit-exempt well for groundwater use up to 5,000 gallons per day).

[5] Postema v. PCHB, 142 Wn.2d 68, 11 P.3d 726 (2000).

[6] Swinomish Indian Tribal Community v. Dep’t of Ecology, 178 Wash.2d 571, 311 P.3d 6 (2013).

[7] http://www.ecy.wa.gov/programs/wr/wrac/rwss-wag.html

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UPDATE on OWL v. KGH: PCHB Won’t Budge on Need for Hearing

Following the PCHB’s July 31, 2014 order (see my August 19, 2014 post), all parties to the case filed a second set of motions in an attempt to avoid a complicated and uncertain hearing on the merits. In an order dated December 12, 2014, the PCHB refused the bait offered by both parties. Its reasons highlight the difficulty in using existing regulatory authorities to resolve the virtual closure of the state’s water supply to new uses as a result of the instream flow regulations adopted by Ecology.  For a discussion of those broader issues, see my article, “How Messed Up is Washington’s Water Allocation System after Swinomish Indian Tribal Community v. Ecology,” published earlier on this blog.

The respondents, Kennewick General Hospital (KGH) and Department of Ecology (Ecology), entered into a conditional stipulation that they were willing to modify the Report of Examination (ROE) to include an additional condition that KGH’s water right permit be subject to and incorporate the regulatory minimum flows at WAC 173-563-040. The stipulation was conditioned on the PCHB’s determination that there were no remaining issues of fact and its dismissal of the appeal, which the respondents sought via a renewed summary judgment motion. By conditioning the permit on both the existing instream flow regulations and the agreed mitigation package in the ROE, the respondents believed that there was no need for a hearing on the PCHB’s remaining issue after its original summary judgment ruling:

“Does the permit provide adequate conditions that will retain base flows to preserve the instream flow values enunciated in RCW 90.54.020(3), and to protect those values from impairment, considering cumulative impacts to the flows of the Columbia River from additional appropriations?”

Given the complexity of the PCHB’s construction of this issue for hearing, it is understandable that the respondents would try to find a cleaner and more certain approach. The PCHB’s issue as framed not only incorporated a new and untested standard (impairment of instream flow “values”) which it described as “unclear and ambiguous,” it also raised a number of potential appellate issues. Does Ecology or the PCHB have authority to consider cumulative impacts to streamflow beyond their basic duty to prevent impairment of senior water rights? Did the legislature mean something different by requiring protection of “base flows” and authorizing (but not requiring) the setting of minimum instream flows by rule? By agreeing to have its permit subject to the applicable instream flow regulations, the respondents assumed that there could no longer be impairment of those minimum instream flows.

The appellants, Okanogan Wilderness League (OWL) and Center for Environmental Law and Policy (CELP), opposed the respondents’ motion and filed their own cross-motion seeking alternative remedies. First, OWL and CELP asserted that if Ecology and KGH reached a settlement it mooted the case, therefore the PCHB was obligated to vacate its July 31, 2014 summary judgment order and remand the matter for processing a new water right decision that would be subject to the right of a new appeal. Alternatively, appellants asserted that if the PCHB denies the respondents’ motion and retains the case, it should issue a final judgment under CR 54(b) on the legal question whether Ecology has authority to utilize out-of-kind mitigation to address impairment of water rights. A CR 54(b) order allows an “interlocutory appeal” of a discreet claim while the remaining issues stay pending before the PCHB.

The PCHB rejected KGH and Ecology’s motion, essentially declaring that the impairment standard for the alternative process of WAC 173-531A-060 (mitigation through consultation) is not the same as (and may be greater than) the adopted minimum instream flows under Chapter 173-563 WAC. It did not help respondents’ renewed summary judgment argument that Ecology officials had earlier testified that the minimum instream flows were “obsolete” and that the mitigation through consultation process was designed to protect higher or different standards resulting from listings under the Endangered Species Act.

The PCHB also rejected appellants’ cross-motion on the basis that an appeal of the out-of-kind mitigation issue would require further factual development and consideration of a record that explains the scope of impairment, the scope and use of out-of-kind mitigation, and the relation between them.

The bottom line is that multiple legal issues and an “unclear and ambiguous” impairment standard remain to be resolved as this first appeal involving the mitigation through consultation process heads toward a hearing before the PCHB. The mitigation flexibility offered to water right applicants and fisheries managers in WAC 173-531A-060 (part of the John Day/McNary Pool regulation) is clearly complicated by the question of Ecology’s statutory authority to allow out-of-kind mitigation and the uncertain standard of what constitutes impairment of an “instream value” and how that impairment can be mitigated. The legislature could help water right applicants, Ecology, fisheries managers, and environmental organizations by defining these standards and/or clarifying Ecology’s authority. The reasons for such legislative action were outlined in my earlier articles.