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Bassett v. State, Department of Ecology

Court of Appeals of Washington, Division 2

April 2, 2019

MAGDALENA T. BASSETT; DENMAN J. BASSETT; and OLYMPIC RESOURCE PROTECTION COUNCIL, Appellants,
v.
STATE OF WASHINGTON DEPARTMENT OF ECOLOGY, Respondent, CENTER FOR ENVIRONMENTAL LAW & POLICY, Intervenor.

          Melnick, J.

         The Dungeness River in the Olympic Peninsula flows 32 miles from the Olympic Mountains north into the Strait of Juan de Fuca. The river and its watershed are home to numerous species of salmon and trout, including endangered Chinook and summer chum salmon, steelhead, and bull trout. Water from the Dungeness watershed has been scarce for decades and critically low stream flows in the summer and fall have proven detrimental to recovery of endangered fish populations.

         In 2005, the Elwha-Dungeness Planning Unit enacted a watershed plan, seeking to address the situation and make water management recommendations to the Department of Ecology (DOE) for regulation of the Dungeness Basin.

         In November 2012, DOE promulgated an administrative rule (Dungeness Rule) that regulated the use and appropriation of all surface and groundwater in the watershed. The Dungeness Rule established minimum instream flows (MIFs) for the Dungeness River and its tributaries, required mitigation and metering for all new water appropriations, including permit exempt wells (PE wells), and closed the basin to new surface water withdrawals for part of the year.

         Clallam County property owners Magdalena Bassett and Denman Bassett, and the Olympic Resource Protection Council (ORPC), [1] a non-profit corporation who seeks to balance environmental protection with private property rights, (collectively "plaintiffs") challenged the Dungeness Rule in superior court, claiming that it failed to meet procedural and substantive Administrative Procedures Act (APA) requirements. The court upheld the rule and the plaintiffs appeal.

         DOE neither exceeded its statutory authority nor violated any required rulemaking procedures. In addition, the Dungeness Rule is not arbitrary and capricious. We affirm.

         FACTS

         I. Dungeness Rule

         In November 2012, DOE filed the Dungeness Rule with an effective date of January 2, 2013. WAC 173-518-010. To protect low stream flows and existing water rights, DOE found that water was not reliably available for new consumptive uses in the Dungeness watershed. WAC 173-518-050. DOE wanted to satisfy present and future human needs, retain natural surface water bodies in the watershed, protect instream values and resources, and implement its obligations under the local watershed plan. WAC 173-518-020.

         The Dungeness Rule established MIFs[2] for the Dungeness River and its tributaries. It also heavily regulated access to surface water and groundwater in the basin. We begin by detailing the primary effects of the rule.

         A. Instream Flows and Reserves

         The Dungeness Rule established MIFs for the Dungeness River and eight smaller creeks in the basin. WAC 173-518-040 & Table II. These MIFs became appropriations of water under the prior appropriation doctrine[3] so that future appropriations could not disturb them. See WAC 173-518-040(3); RCW 90.03.345. DOE based the MIFs on recommendations of the 2005 Elwha-Dungeness Watershed Plan, discussed further below. WAC 173-518-040(1), (2). DOE's objective in establishing MIFs was the protection and preservation of wildlife, fish, scenic, aesthetic, and other environmental and navigational values.

         DOE also established reserves of groundwater, not subject to the MIFs, specifically for domestic use.[4] WAC 173-518-080. DOE found that the public interest in access to domestic water overrode potential impacts to instream resources. WAC 173-518-080. Domestic water users who complied with a list of DOE conditions could use water from the reserves for their domestic needs, despite potential impacts to MIFs. WAC 173-518-080(2). The rule forbade any consumptive use[5]from impacting MIFs unless it came from the groundwater reserve or was subject to mitigation, as discussed below. WAC 173-518-040(5).

         B. Closures and Mitigation

         Because of water scarcity, DOE determined that surface water was not reliably available for new consumptive uses in the basin. The rule closed year-round eight specific tributaries as well as all unnamed tributaries to the Dungeness River. WAC 173-518-050. It also closed the Dungeness River mainstem between July 15 and November 15 every year. WAC 173-518-050.

         Surface water and groundwater sources within the Dungeness watershed are hydraulically connected. WAC 173-518-070(1). Accordingly, the Dungeness Rule closed the watershed to new groundwater appropriations, including new permit-exempt wells, [6] subject to three specific exceptions. WAC 173-518-070. A new prospective groundwater user would be required to either (1) use the water for a nonconsumptive use; (2) demonstrate scientifically to DOE's satisfaction that the use would not adversely affect any closed surface waters; or (3) obtain mitigation.[7] WAC 173-518-070(3).

         To obtain mitigation, the rule established a Dungeness water exchange, through which new users could purchase credits to offset any new consumptive water use. WAC 173-518-070(3)(a)(i). Alternatively, new consumptive users could propose their own mitigation plan. WAC 173-518-070(3)(a)(ii), -075. Mitigation plan requirements included that new consumptive water uses not impair any existing water rights. WAC 173-518-075(2)(a).

         Finally, the rule required metering of all future new surface water and groundwater appropriations in the basin. WAC 173-518-060.

         II. Passage of Rule

         A. Background

         The Dungeness watershed included parts of Clallam and Jefferson counties around the Dungeness River, near Sequim. The Dungeness mainstem averaged a flow of 701 cubic feet per second during June and 171 cubic feet per second in September, the months with the highest and lowest streamflows, between 1924 and 2011. Historically, irrigators diverted up to 80 percent of the Dungeness's natural flow. In 1998, companies and irrigation districts began to voluntarily limit their diversions to no more than 50 percent of the river.

         In January 2012, groundwater levels were declining due to variations in rainfall, changes in irrigation practices, irrigation ditch piping, and increased well withdrawals associated with population growth. Approximately 14, 000 wells and well hookups withdrew about 5.98 million gallons per day (gpd), 2.71 million gpd of which was consumptive. This amount did not include uses for irrigation, golf course, dairy, or industrial water.

         1. Elwha-Dungeness Watershed Plan

         In 2005, the Elwha-Dungeness Planning Unit, consisting of Clallam County, the City of Port Angeles, the Elwha Klallam Tribe, the Jamestown S'Klallam Tribe, the Agnew Irrigation District, and DOE adopted the Elwha-Dungeness Watershed Plan (Plan). The Plan assessed the status of water resources in Water Resource Inventory Area (WRIA) 18, the area ultimately affected by the Dungeness Rule, and addressed competing demands for water within the WRIA.

         The Plan was the result "of a lengthy, collaborative, and consensus-based process involving all key stakeholders in the watershed." Administrative Record (AR) at ECY069806. It addressed water quantity, water quality, habitat, instream flows, stormwater, land use and management, education and outreach, and watershed management.

         The Plan suggested strategies for water management in the Dungeness Basin, including protection of instream flows and limitation of PE wells. It recommended that continued groundwater withdrawals be conditioned on mitigation to surface water impacts and increased regulation of PE wells. It suggested the creation of a groundwater reserve to facilitate land use planning, manage growth, and protect instream flows.

         A "central purpose" of the Plan was "to recommend instream flows for streams and rivers within the WRIA, for use by [DOE] as rule-making discussions beg[a]n." AR at ECY070473. The planning unit found that river flows were critical to fish at all lifestages and that optimal volume and timing of flows provide numerous ecological benefits to fish. The Plan's recommended instream flows intended to condition new water rights in the basin on maintenance of the regulatory instream flow level in the river.

         The Plan recognized the over-appropriation of water in the basin. It observed that some streams had water rights exceeding natural flows in low flow seasons and instructed DOE, "through its rule-making procedure, [to] adopt instream flow levels and then use them in its management of subsequent water rights applications for WRIA 18 streams." AR at ECY070473. It proposed specific instream flow numbers for numerous streams in the basin, including the Dungeness mainstem. These recommended numbers are identical to those DOE ultimately adopted in the Dungeness Rule.[8] WAC 173-518-040, Table II.

         2. Dungeness Rule

         In 2006, DOE began working with the local community in eastern Clallam County to draft the Dungeness Rule's language. It put development of the rule on hold in late 2010 while local water resource managers focused on issues outside the scope of the rule. In February 2011, DOE agreed with Clallam County and the Sequim-Dungeness Water Users Association (WUA) that it would have a rule in place by August 2012.

         DOE filed a proposed version of the Dungeness Rule on May 9, 2012, held a public hearing on the rule on June 28, and left the public comment period open until July 9. In November 2012, DOE filed a concise explanatory statement, describing the rule's effects and responding to each of the hundreds of public comments. DOE published the final rule on November 16. It went into effect on January 2, 2013.

         B. Cost-Benefit and Least Burdensome Alternative Analyses

         Alongside the final rule, DOE published a final cost-benefit analysis (CBA) which determined that, over a 20 year period, the Dungeness Rule would cost between $9.4 million and $26.1 million and provide between $32.1 million and $79.7 million in benefits. DOE maintained that the CBA was optional because the Dungeness Rule was not a significant legislative rule.

         DOE also published a least-burdensome alternatives (LBA) analysis, in which it determined that the Dungeness Rule as written was the least burdensome out of seven alternatives.

         DOE did not perform a separate analysis to determine whether the rule produced the maximum net benefits.

         III. Legal Challenge

         Under the Dungeness Rule, the Bassetts could not obtain a water right for their Clallam County property which reduced its value.

         In January 2014, ORPC formally requested that DOE amend the Dungeness Rule, claiming that the rule was inconsistent with state law and established precedent. Specifically, it attacked DOE's use of the overriding considerations of public interest (OCPI) exception to create reserves of water and DOE's establishment of MIFs in the Dungeness watershed without applying either a maximum net benefits test or the four-part test for new water appropriations. DOE denied the petition on March 18.

         In December 2014, the Bassetts and ORPC filed a petition for a declaratory judgment that the Dungeness Rule was invalid. The Center for Environmental Law and Policy (CELP) intervened as a defendant. In December 2016, the superior court concluded that the plaintiffs had not met their burden to show the Dungeness Rule was invalid and dismissed the petition with prejudice.

         Plaintiffs petitioned for direct review at the Supreme Court. After briefing was complete, the Supreme Court transferred the case to this court.

         ANALYSIS

         I. Legal Principles

         A. Administrative Rule Challenge

         The party challenging a rule has the burden of establishing that it is invalid. Swinomish Indian Tribal Cmty. v. Dep't of Ecology, 178 Wn.2d 571, 580, 311 P.3d 6 (2013). Under the APA, we must declare an administrative rule invalid if "[t]he rule violates constitutional provisions; the rule exceeds the statutory authority of the agency; the rule was adopted without compliance with statutory rule-making procedures; or the rule is arbitrary and capricious." RCW 34.05.570(2)(c). In reviewing administrative action, "we sit in the same position as the trial court and apply the [APA] standards directly to the agency's administrative record." Granton v. Wash. State Lottery Comm'n, 143 Wn.App. 225, 231, 177 P.3d 745 (2008) (footnote omitted).

         Rules that are "'reasonably consistent with the controlling statute[s]'" do not exceed statutory authority, but rules inconsistent with their implementing statutes are invalid. Swinomish, 178 Wn.2d at 580-81 (quoting Wash. Pub. Ports. Ass'n v. Dep't of Revenue, 148 Wn.2d 637, 646, 62 P.3d 462 (2003)). An agency's action is arbitrary and capricious if it "is the result of willful and unreasoning disregard of the facts and circumstances." Providence Hosp. of Everett v. Dep't of Soc. & Health Servs., 112 Wn.2d 353, 356, 770 P.2d 1040 (1989). The majority of plaintiffs' challenges are allegations that DOE exceeded statutory authority or violated statutory rulemaking procedures.

         B. Statutory Interpretation

         We review questions of statutory interpretation de novo. Jametsky v. Olsen, 179 Wn.2d 756, 761, 317 P.3d 1003 (2014). In interpreting statutes, "we give effect to the plain meaning of the language used as the embodiment of legislative intent." Swinomish, 178 Wn.2d at 581. We give effect to the plain meaning of the statute as "derived from the context of the entire act as well as any 'related statutes which disclose legislative intent about the provision in question.'" Jametsky, 179 Wn.2d at 762 (quoting Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 11, 43 P.3d 4 (2002)).

         If a statute's meaning is plain on its face, we give effect to that meaning as an expression of legislative intent. Blomstrom v. Tripp, 189 Wn.2d 379, 390, 402 P.3d 831 (2017). However, if, "after this inquiry, the statute remains ambiguous or unclear, it is appropriate to resort to canons of construction and legislative history." Blomstrom, 189 Wn.2d at 390. Although we generally accord substantial deference to agency decisions, "we do not defer to an agency the power to determine the scope of its own authority." In re Elec. Lightwave, Inc., 123 Wn.2d 530, 540, 869 P.2d 1045 (1994).

         C. Washington Water Law

         Evaluation of statutory provisions concerning water rights "almost always requires consideration of numerous related statutes in the water code." Swinomish, 178 Wn.2d at 582. In this case, we are asked to interpret provisions of the water code, the Water Resources Act of 1971 (WRA), the Minimum Water Flows and Levels Act (MWFLA), the Watershed Planning Act (WPA), and the Regulation of Public Groundwaters. We begin by reviewing the fundamentals of Washington water law.

         1. Prior Appropriation Doctrine

         Washington follows the prior appropriation doctrine of water rights, summarized: "'as between appropriations, the first in time shall be the first in right.'" Fox v. Skagit County, 193 Wn.App. ...


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