Foster v. Department of Ecology

fl — This case involves a challenge to a water right permit issued by the Department of Ecology to *469the city of Yelm. The permit was issued pursuant to RCW 90.54.020(3)(a), which allows Ecology to authorize withdrawals of water that impair minimum flows where it is determined that overriding considerations of the public interest (OCPI) are established by the applicant. The trial court affirmed the Pollution Control Hearings Board’s decision approving the permit. In Swinomish Indian Tribal Community v. Department of Ecology, 178 Wn.2d 571, 311 P.3d 6 (2013), we comprehensively analyzed the statutory provision and held that this provision operates as an exception to the overall prioritization of water rights and that withdrawals of water authorized under the statute cannot permanently impair senior water rights with earlier priority. For many of the same reasons recognized in Swin-omish, we reverse.

Facts and Procedural History

¶2 Yelm filed an application with Ecology for a new municipal water permit to meet the water needs of its growing population. Because this new appropriation would impair the minimum flows of waterways connected to the Deschutes and Nisqually Basins, Ecology conditioned approval of Yelm’s application on an extensive mitigation plan. This mitigation plan would use a variety of devices to offset the impact of the new appropriation. For example, it would retire existing water rights and reintroduce reclaimed water back into the stream system in order to offset new water uses (called water-for-water or in-kind mitigation). Yelm’s mitigation plan also proposed improvements to stream conditions and protection of habitat by stream restoration, historical farmland acquisition, and streamside crib wall construction (called out-of-kind mitigation).

¶3 Ecology approved Yelm’s permit, conditioned on this mitigation plan. The parties do not dispute that even with the mitigation plan, Yelm’s new permit will impair minimum flows, most likely during “shoulder seasons,” which *470are the weeks in April and October that are not covered by the retirement of irrigation water rights. Nevertheless, Ecology argues that there will still be a net ecological benefit resulting from the mitigation plan despite the net loss of water resources. Because of the impairment of minimum flows, Ecology claims authority to approve Yelm’s permit only under the OCPI exception at issue. At the time it approved the permit and mitigation plan, Ecology applied the same three-step balancing test for use of the OCPI exception that was at issue in Swinomish (discussed infra and that we rejected in that case).

¶4 Appellant, Sara Foster, appealed approval of the Yelm permit to the Pollution Control Hearings Board (PCHB), which held an evidentiary hearing and issued findings of facts and conclusions of law. It largely ruled in favor of Ecology and approved the permit. PCHB found that Ecology properly considered all impacts to the minimum flows and mitigated those impacts through the use of in-kind and out-of-kind mitigation. PCHB also concluded that the mitigation plan would clearly benefit fish and wildlife habitat, outweighing any negative effects that would result from the impairment of minimum flows. Finally, although it rejected Ecology’s existing three-step test as not sufficiently stringent, PCHB concluded that Ecology had met the statutory standard under the OCPI exception. PCHB’s conclusion relied on 12 factors that it found supported the use of the OCPI exception. These factors are not part of Ecology’s three-step test; rather, the factors were of PCHB’s own making, drawn from the testimony and data it received during the administrative appeal.

¶5 Foster then appealed PCHB’s decision in Thurston County Superior Court. While this appeal was pending there, we decided Swinomish, where we directly addressed the applicability of the OCPI exception. The superior court considered this case in light of Swinomish and affirmed PCHB’s decision. Foster was granted direct review to this court.

*471Standard of Review

¶6 Foster argues that Ecology exceeded its statutory authority in approving Yelm’s water permit under the OCPI exception. This challenge procéeds under the Administrative Procedure Act, chapter 34.05 RCW, and a court must invalidate any agency rule or order that exceeds the agency’s statutory authority. RCW 34.05.570. Our interpretation of the law is de novo, and our goal is to effectuate legislative intent, giving effect to the plain meaning of ordinary statutory language and the technical meaning of technical terms and terms of art. Swinomish, 178 Wn.2d at 581. We sit in the same position as the superior court and review PCHB’s decision in light of the agency record. Postema v. Pollution Control Hr’gs Bd., 142 Wn.2d 68, 77, 11 P.3d 726 (2000).

Analysis

¶7 In Swinomish, we analyzed Washington’s water statutes and our case law in determining the scope of Ecology’s authority to use the OCPI exception to impair minimum flows. Several foundational principles of water law bear repeating. Minimum flows are established by administrative rule and have a priority date as of the rule’s adoption. These flows are not a limited water right; they function in most respects as any other water appropriation. As such, they are generally subject to our State’s long-established “prior appropriation” and “first in time, first in right” approach to water law, which does not permit any impairment, even a de minimis impairment, of a senior water right. Minimum flows, however, differ from other water appropriations in one respect: “withdrawals of water” that would impair a minimum flow are permitted, but only under the narrow OCPI exception. It reads:

(3) The quality of the natural environment shall be protected and, where possible, enhanced as follows:

*472(a) Perennial rivers and streams of the state shall be retained with base flows[1] necessary to provide for preservation of wildlife, fish, scenic, aesthetic and other environmental values, and navigational values. Lakes and ponds shall be retained substantially in their natural condition. Withdrawals of water which would conflict therewith shall he authorized only in those situations where it is clear that overriding considerations of the public interest will he served.

RCW 90.54.020 (emphasis added). This final sentence is the OCPI exception.

¶8 When evaluating applications for water permits, such as Yelm’s, RCW 90.03.290(3) requires a permit to satisfy four criteria: (1) water is available for appropriation (2) for a beneficial use and (3) an appropriation will not impair existing rights or (4) be detrimental to the public welfare. As we have recognized, “A minimum flow is an appropriation subject to the same protection from subsequent appropriators as other water rights, and RCW 90.03-.290 mandates denial of an application where existing rights would be impaired.” Postema, 142 Wn.2d at 82. Yelm’s water permit will impair the existing minimum flows; therefore, all parties agree that Yelm’s permit application must be denied unless the OCPI exception applies.

¶9 The facts of this case somewhat mirror those in Swinomish. There, Ecology had approved 27 general future reservations of water in the Skagit Basin, which would impair existing minimum flows. Because of this impairment, Ecology could approve these reservations only under the OCPI exception, using a three-step test of its own devising.2 Under this analysis, Ecology determines (1) the extent of the public interests served by the proposed reservations, (2) the extent of any harm to the public interests *473caused by the reservations, and finally (3) whether the public interests served clearly override the harm to public interests—in essence, a simple balancing scheme. Ecology applied its three-step test to the proposed Skagit reservations, concluded that the benefits outweighed the harms, and approved the reservations under the OCPI exception.

¶10 We reversed, rejecting Ecology’s three-step test and its application of the OCPI exception. We reasoned that Ecology’s balancing analysis would nearly always treat beneficial uses as “overriding consideration [s] of the public interest” so long as the benefits outweighed the harm resulting from impairing the minimum flows. Swinomish, 178 Wn.2d at 586-87. This conflicts with the principle that statutory exceptions are construed narrowly in order to give effect to the legislative intent underlying the general provisions. Moreover, we emphasized that the OCPI exception is “not a device for wide-ranging reweighing or reallocation of water.” Swinomish, 178 Wn.2d at 585. Rather, “[t]he [OCPI] exception is very narrow . . . and requires extraordinary circumstances before the minimum flow water right can be impaired.” Swinomish, 178 Wn.2d at 576. Ecology’s use of the exception was an end run around the normal appropriation process, conflicting with both the prior appropriation doctrine and Washington’s comprehensive water statutes.

¶11 Swinomish and the plain language of the OCPI exception—specifically, “withdrawals of water”— largely resolves this case. We presume the legislature intends a different meaning when it uses different terms. State v. Roggenkamp, 153 Wn.2d 614, 625, 106 P.3d 196 (2005). “Appropriation” is a term of art specifically used in the water rights context. For example, Washington’s earliest codification of the water code reads in part:

Subject to existing rights all waters within the state belong to the public, and any right thereto, or to the use thereof, shall be hereafter acquired only by appropriation for a beneficial use and in the manner provided and not otherwise; and, as between appropriations, the first in time shall be the first in right.

*474RCW 90.03.010 (emphasis added). Washington’s other interrelated statutes concerning water rights also use “appropriation” to mean the assignment of a permanent legal water right.

f 12 “Withdrawal,” however, means something different. Generally, “withdrawal” refers to the physical act of removing water. Under the water code, withdrawal is often joined with diversion, emphasizing the physical nature of the term. See RCW 90.03.550 (“Beneficial uses of water under a municipal water supply purposes water right may include water withdrawn or diverted under such a right....”). The water code also refers to “withdrawal rates,” a term that would not make sense if “withdrawal” meant the same as “appropriation.” See RCW 90.03.383(3) (“and further provided that the water used is within the instantaneous and annual withdrawal rates specified in the water right permit”). Finally, the water code uses both “appropriation” and “withdrawal” in the same statutory provision, further indicating that the legislature does not intend the two terms to be synonymous. See RCW 90.03.370(4) (“Nothing in chapter 98, Laws of 2000 changes the requirements of existing law governing issuances of permits to appropriate or withdraw the waters of the state.”). The term “withdrawal,” unlike “appropriation,” carries with it no suggestion that it includes the permanent assignment of a legal water right. The terms have different meanings.

¶13 Washington’s statutory scheme, analyzed as a whole, also supports this conclusion. For example, Ecology is permitted to authorize an emergency “withdrawal” of public surface and ground waters during drought conditions “on a temporary basis.” RCW 43.83B.410(l)(a). Significantly, Ecology is prohibited from “reduc[ing] flows or levels below essential mínimums.” RCW 43.83B.410(l)(a)(iii). Withdrawal authorizations under this statute must also contain a *475provision that terminates the withdrawal if it conflicts with the flows set as essential mínimums. RCW 43.83B.410(l)(b).3

¶14 Reading the language of the OCPI exception together with the emergency drought provision in RCW 43.83B.410, we arrive at two conclusions. First, when the legislature intends for the assignment of a permanent legal water right, it uses the term “appropriation,” and when it intends for only the temporary use of water, it uses the term “withdrawal.” And second, the statutory scheme as a whole rigorously protects minimum flows/essential mínimums by not permitting the temporary withdrawal of water that would impact essential mínimums even in the case of drought. Ecology’s use of the OCPI exception conflicts with both these conclusions.

¶15 We hold that the OCPI exception does not allow for the permanent impairment of minimum flows. If the legislature had intended to allow Ecology to approve permanent impairment of minimum flows, it would have used the term “appropriations” in the OCPI exception. It did not. The term “withdrawals” of water, however, shows a legislative intent that any impairment of minimum flows must be temporary. The plain language of the exception does not authorize Ecology to approve Yelm’s permit, which, like the reservations in Swinomish, are permanent legal water rights that will impair established minimum flows indefinitely.

¶16 This conclusion was also implicit in our holding in Swinomish. We acknowledged that the OCPI exception allows for the impairment of minimum flows. See Swin-omish, 178 Wn.2d at 576. But we did not hold that the exception permits appropriation of minimum flows. Quite the contrary: we held that “[n]othing in the language used *476in RCW 90.54.020(3)(a) says that the overriding-considerations exception is intended as an alternative method for appropriating water when the requirements of RCW 90.03-.290(3) cannot be satisfied for the proposed appropriation” and that “the overriding-considerations exception cannot reasonably be read to replace the many statutes that pertain to appropriation of the state’s water and minimum flows.” Swinomish, 178 Wn.2d at 590, 598. Ecology’s approval of Yelm’s permit and its application of the OCPI exception makes the sort of end run around the appropriation process that we expressly rejected in Swinomish.

¶17 We also disagree with Ecology that Yelm’s mitigation plan presents the sort of “extraordinary circumstances” that we held in Swinomish are required to apply the OCPI exception. Yelm’s proposed plan would mitigate the impairment to the minimum flows by creating a net ecological benefit despite the net loss of water resources. We find, however, that the mitigation plan is largely irrelevant to the analysis. First, the mitigation plan is just that: a plan meant to offset the impairment of the minimum flows. The mitigation plan itself is not the “extraordinary circumstances” meant to justify use of the OCPI exception. Quite the opposite: the reason Yelm seeks a new water permit is to meet its municipal water needs—not improve habitat conditions. And municipal water needs, far from extraordinary, are common and likely to occur frequently as strains on limited water resources increase throughout the state. Second, the mitigation plan does not mitigate the injury that occurs when a junior water right holder impairs a senior water right. The water code, including the statutory exception, is concerned with the legal injury caused by impairment of senior water rights—water law does not turn on notions of “ecological” injury. Our cases have consistently recognized that the prior appropriation doctrine does not permit even de minimis impairments of senior water rights. Postema, 142 Wn.2d at 90. Therefore, we reject the argument that ecological improvements can “mitigate” the in*477jury when a junior water right holder impairs a senior water right.

Conclusion

¶18 We hold that Ecology exceeded its authority by approving Yelm’s water permit under the narrow OCPI exception. The exception, by its terms, permits only temporary impairment of minimum flows. Municipal water needs do not rise to the level of “extraordinary circumstances” that we held are required to apply the OCPI exception, nor can a mitigation plan “mitigate” by way of ecological benefit the legal injury to a senior water right. We reaffirm our holding in Swinomish: the OCPI exception is not an end run around the appropriation process or the prior appropriation doctrine. We reverse the superior court’s and PCHB’s decisions affirming Ecology’s approval of the Yelm permit.