Public Utility District No. 1 v. Department of Ecology

Sanders, J.

(dissenting) — Because the Department of Ecology (Ecology) imposed minimum instream flows which interfered with the existing water rights of Public Utility District No. 1 of Pend Oreille County (District) contrary to state and federal statutory law, I would reverse the portion of the Pollution Control Hearings Board (PCHB) ruling that upheld the conditional water quality certification issued by Ecology. Even if the statutes in question may be interpreted to provide Ecology with such sweeping authority, we are obligated by the principles of statutory construction to construe the statute in a manner consistent with the constitution. See, e.g., Grant v. Spellman, 99 Wn.2d 815, 818-19, 664 P.2d 1227 (1983). The majority’s interpretation of § 401 of the federal Clean Water Act of 1977 (CWA) (33 U.S.C. § 1341) and the Washington Water Pollution Control Act (WWPCA) (chapter 90.48 RCW) violates this fundamental principle.

I also posit the portion of the PCHB ruling concluding the District’s 440 cubic feet per second (cfs) water right is ineligible for change in point of diversion under RCW 90.03.380 is erroneous because the District’s right is held by virtue of a valid permit issued pursuant to Washington’s permitting statute.

I

A. The federal CWA does not impair preexisting state created water rights.

The majority contends Ecology can subject the District to these additional minimum flow conditions under § 401 of the CWA, the WWPCA, or other state law. I disagree.

I posit to correctly construe and apply the federal CWA we must remain faithful to two fundamental principles which inhere in the act:

(1) the act is not designed to defeat preexisting water rights created by a state; and

(2) to the extent the federal act is applicable, it incorporates and substantiates state water quality standards, it does not exceed or trump them.

The CWA, 33 U.S.C. §§ 1251-1387, is a comprehensive water quality statute establishing distinct roles for the federal and state governments. Pub. Util. Dist. No. 1 of Jefferson County v. Wash. Dep’t of Ecology, 511 U.S. 700, 704, 114 S. Ct. 1900, 128 L. Ed. 2d 716 (1994) CElkhorn II)It is designed to “ ‘restore and maintain the chemical, physical, and biological integrity of the Nation’s waters’ ” and attain “ ‘water quality which provides for the protection ... of fish, shellfish, and wildlife.’ ” Id. (quoting 33 U.S.C. § 1251(a)(2)).

Section 303 requires each state, subject to federal approval, to institute water quality standards that establish water quality goals for intrastate waters. 33 U.S.C. § 1313(a)(1). These standards shall consist of “the designated uses of the navigable waters involved and the water quality criteria for such waters based upon such uses.” Id. § 1313(c)(2)(A).

Section 401 establishes the state certification process, which implements these standards and is the subject of this dispute. Under § 401(a), any applicant for a federal license “which may result in any discharge into the navigable waters” must provide the federal agency with a state certification that such discharge complies with state water quality laws. 33 U.S.C. § 1341(a)(1). Section 401(d) provides that certifications “shall set forth any effluent limitations and other limitations ... necessary to assure that any applicant for a Federal license or permit will comply . . . with any other appropriate requirement of State law set forth in such certification, and shall become a condition on any Federal license or permit subject to the provisions of this section.” Id. § 1341(d).

Section 510(2) provides that nothing in the CWA may be “construed as impairing or in any manner affecting any right or jurisdiction of the States with respect to the waters ... of such States.” 33 U.S.C. § 1370(2).

Section 101(g) also preserves state authority on water allocations yet also protects established state water rights. It provides:

It is the policy of Congress that the authority of each State to allocate quantities of water within its jurisdiction shall not be suspended, abrogated or otherwise impaired by this chapter. It is the further policy of Congress that nothing in this chapter shall be construed to supersede or abrogate rights to quantities of water which have been established by any State.

33 U.S.C. § 1251(g) (emphasis added).

The legislative history of § 101(g) confirms Congressional intent to protect existing water rights. Section 101(g) was also known as the Wallop Amendment as it was sponsored in part by Senator Malcolm Wallop. According to Senator Wallop’s comments, Congress added § 101(g) to reassure westerners that state water rights would not be “subverted” by the implementation of the CWA. Comm, on Public Works, 95th Cong., 2d Sess., 3 Legislative History of the Clean Water Act of 1977, Serial No. 95-14 [hereinafter Legislative History], at 531-32 (Comm. Print 1978). Section 101(g) “will reassure the State that it is the policy of Congress that the Clean Water Act will not be used for the purpose of interfering with State water rights systems.” Id. at 531.

Congress added § 101(g) to clarify its policy “concerning the proper role of Federal water quality legislation in relation to State water law.” Id. at 532. “[N]othing in this act will be construed for the purpose of superseding or abrogating rights to quantities of water which have been established by a State.” Id. at 531. Section 101(g) was “designed to protect historic rights from mischievous abrogation by those who would use an act, designed solely to protect water quality and wetlands, for other purposes” Id. at 532 (emphasis added).

On the relationship between legitimate water quality measures and existing rights, the senator explained:

Legitimate water quality measures authorized by this act may at times have some effect on the method of water usage. Water quality standards and their upgrading are legitimate and necessary under this act. The requirements of section 402 and 404 permits may incidentally affect individual water rights. Management practices developed through State or local 208 planning units may also incidentally effect [sic] the use of water under an individual water right. It is not the purpose of this amendment to prohibit those incidental effects. It is the purpose of this amendment to insure that State allocation systems are not subverted, and that effects on individual rights, if any, are prompted by legitimate and necessary water quality considerations.

Id. (emphasis added). Although Senator Wallop specified §§ 208, 402, and 403, he did not include the § 401 certification as a legitimate source of incidental effects on existing individual water rights. Our majority misses this point.

The Supreme Court’s opinion in Elkhorn II, while instructive, does not control the issues before us because it does not involve the imposition of a minimum flow requirement upon an existing right.¹⁴ In Elkhorn II, petitioners proposed to build a hydroelectric project on the Dosewallips River. Elkhorn II, 511 U.S. at 708. They were required to obtain a Federal Energy Regulatory Commission license, and because the project could result in discharges into the Dosewallips, they also had to obtain a state water quality certification. Id. at 709. Ecology issued a certification but imposed a variety of conditions, including minimum instream flow conditions. Id. The petitioners moved for direct review before this court and we affirmed. Dep’t of Ecology v. Pub. Util. Dist. No. 1 of Jefferson County, 121 Wn.2d 179, 849 P.2d 646 (1993) (Elkhorn I).¹⁵ On petition for certiorari, the United States Supreme Court upheld Ecology’s authority to impose a minimum flow requirement as a condition of certification to ensure compliance with state water quality standards. Elkhorn II, 511 U.S. at 723.

Elkhorn II established a number of important rules. First, § 401 certifications are not limited to “discharges,” as § 401(d) refers to “other limitations” in general to assure compliance with the CWA and other appropriate state law requirements. Elkhorn II, 511 U.S. at 711-12. Second, state water quality standards adopted pursuant to § 303 of the CWA are among the “other limitations” in § 401. Id. at 713. The distinction between water quality and water quantity is “artificial.” Id. at 719-20 (finding reduced streamflow “can constitute water pollution” under the definition of pollution in the CWA).¹⁶ Moreover, the Court found the instream flow conditions imposed were permissible state water quality standards necessary to enforce the designated use of the river as a fish habitat. Id. at 714-19.

The petitioner in Elkhorn II argued §§ 101(g) and 510(2) exclude water quantity from the coverage of the CWA. Id. at 720. The Court stated these sections “preserve the authority of each State to allocate water quantity as between users; they do not limit the scope of water pollution controls that may be imposed on users who have obtained, pursuant to state law, a water allocation.” Id. The Court also quoted Senator Wallop’s comments to reinforce its holding. Id. at 721.

The most significant fact distinguishing Elkhorn II from this case, a fact the majority practically ignores, is the petitioner in Elkhorn II had not yet obtained any water rights. The petitioner therefore could not assert § 101(g) protected an established water right. Accordingly the Supreme Court did not focus on the second sentence in § 101(g) stating, “nothing in this chapter shall be construed to supersede or abrogate rights to quantities of water which have been established by any State.” 33 U.S.C. § 1251(g) (emphasis added). Instead the Court considered only the first sentence of § 101(g) regarding the authority of a state to allocate quantities of water.¹⁷

In the current case the PCHB concluded, “the instream flow requirements in the water quality certification are reasonably calculated to protect the existing fisheries habitat in Sullivan Creek within the bypass reach.” Clerk’s Papers (CP) at 197. It correctly concluded, under Elkhorn II, water quantity may constitute pollution and be regulated under § 401.

However the PCHB erroneously concluded, as does our majority, that § 101(g) does not protect existing water right holders. The PCHB quoted the first sentence of § 101(g) that “authority of each State to allocate quantities of water within its jurisdiction shall not be superseded, abrogated or otherwise impaired by this chapter” to support its conclusion that “section 101(g) does not shield a water right holder from compliance with water quality standards.” CP at 171 (citing 33 U.S.C. § 1251(g)). However the PCHB did not address the second sentence that “nothing in this chapter shall be construed to supersede or abrogate rights to quantities of water which have been established by any State,” clearly indicating the limit of federal authority to interfere with existing water rights. 33 U.S.C. § 1251(g).

The PCHB also relied on a truncated rendition of Senator Wallop’s comments during the Senate debate over the adoption of § 101(g), omitting language critical to this case.¹⁸ Significantly, the PCHB states the general proposition that “requirements [of the Act] may incidentally affect individual water rights,” CP at 171 (alteration in original), but it omits Senator Wallop’s reference to “requirements of section 402 and 404 permits.” The PCHB also omitted altogether his next statement that “[mjanagement practices developed through State or local 208 planning units may also incidentally effect [sic] the use of water under an individual water right.” Id. Yet the PCHB relied on this altered version of the quotation to support its conclusion. CP at 171.

Senator Wallop’s comments demonstrate a § 401 certification cannot be allowed to impair existing water rights. His comments specifically identify three sources of “incidental effects” to individual water rights: § 402 (National Pollutant Discharge Elimination System) permits; § 404 (dredged or fill material) permits; and management practices developed under § 208 plans.

However § 401 certification is not among the “incidental effects” to individual water rights that fall outside the protection of § 101(g). Accordingly, § 101(g) precludes Ecology from imposing minimum instream flows on the District’s existing established water right as a condition to certification.

For these reasons, I conclude federal law does not permit states to impose minimum instream flow conditions on a water quality certification that impairs existing water rights.

B. The federal CWA incorporates state law standards.

Even if federal law allowed states to impose minimum instream flow conditions on water quality certifications prejudicing existing rights, Ecology must still possess the requisite state law authority to do so here. State procedures in chapters 90.22 and 90.54 RCW govern the establishment of minimum water flows—procedures which also expressly prohibit Ecology from affecting existing water rights. Moreover, these procedures mandate minimum flows be established, if at all, by rule.¹⁹

Chapter 90.22 RCW authorizes Ecology “to establish, by rule, minimum instream flows or levels to protect fish, game, birds, other wildlife resources, and recreational and aesthetic values.” Postema v. Pollution Control Hearings Bd., 142 Wn.2d 68, 81, 11 P.3d 726 (2000). Establishing minimum instream flows requires public notice and hearing. RCW 90.22.020. However the establishment of minimum instream flows:

shall in no way affect existing water and storage rights and the use thereof, including but not limited to rights relating to the operation of any hydroelectric or water storage reservoir or related facility.

RCW 90.22.030 (emphasis added).

Ecology also can establish a water resources policy and program pursuant to chapter 90.54 RCW. However, if Ecology adopts a program or withdraws water under such a program, it must follow administrative procedures such as providing public notice and opportunity for comment. Additionally RCW 90.54.900 states:

[n]othing in this chapter shall affect any existing water rights . . . nor shall it affect existing rights relating to the operation of any hydroelectric or water storage reservoir or related facility!.]

(Emphasis added.) Similarly RCW 90.54.920(1) mandates “[n]othing in this act shall affect or operate to impair any existing water rights.” (Emphasis added.)

Chapters 90.22 and 90.54 RCW are the only lawful ways Ecology can set minimum instream flows that could affect the District’s water rights, yet under these two schemes Ecology cannot impair existing water rights. RCW 90-.22.030, 90.54.900, .920(1).

The majority opines the procedural requirements in chapters 90.22 and 90.54 RCW do not apply to Ecology’s determination because the agency was setting the instream flow requirements for the District only—not all water right holders or applicants in the basin where Sullivan Creek is located. Because Ecology was not setting instream flows universally applicable, the majority maintains chapters 90.22 and 90.54 RCW are inapplicable. Majority at 818.

The majority’s position makes little sense. Chapters 90.22 and 90.54 RCW are the express statutory schemes for setting minimum instream flows. Both schemes require Ecology to follow the proper rule-making process, affecting all users of the same water equally. Minimum instream flows constitute an appropriation affecting competing claims to the same water. Postema, 142 Wn.2d at 80-82. To accept the majority’s argument, one must believe that Ecology—for the same water—could discriminate amongst water right holders by setting minimum instream flows for one, while allowing others to take as much water as they need, even to the point that flows would be diminished below the minimum set as a precondition for power company usage. Where lies the logic (not to mention due process or equal protection)? How is the public interest served by establishing a minimum flow requirement for a user on one side of the creek which is inapplicable to a user of the same water on the opposite side?

The majority also contends Ecology’s authority to impose minimum instream flows against the District’s existing rights stems from the WWPCA. Majority at 819-20. It argues the state water resources laws (chapters 90.22 and 90.54 RCW) and the WWPCA (chapter 90.48 RCW) are separate spheres of regulation, and the water quality certification differs from establishing minimum instream flows pursuant to the state water resources laws. Id. at 818-19. The majority contends the § 401 certification affects only the District’s rights and has no effect on other water rights. Id. at 818. It maintains Ecology’s authority to set instream flows on a § 401 certification stems from the CWA and the WWPCA. Id. at 818-19.

At the outset, I note neither Ecology nor the PCHB expressly justified its decision to impose instream flow conditions on the WWPCA. In any event, given the majority’s reliance on the WWPCA, I discuss its applicability below.

The WWPCA provides Ecology is the state water pollution control agency for federal CWA purposes and generally can “take all action necessary to secure to the state the benefits and to meet the requirements of” the CWA. RCW 90.48.260. Pursuant to this grant of statutory authority, Ecology has adopted water quality standards to regulate our state navigable waters. Ch. 173-201A WAC. Ecology divides waters into five classes. WAC 173-201A-030. Sullivan Creek is classified AA, as “extraordinary.” WAC 173-201A-120(1). This classification identifies specific designated uses as well as criteria applicable to such waters. WAC 173-201A-030. Here Ecology included instream flow conditions in the § 401 certification to ensure designated uses relating to fish, recreation, and navigation (all listed in WAC 173-201A-030) would not be threatened by the Sullivan Creek Project.

Ecology convinces our majority that because no provision in the WWPCA prevents Ecology from affecting existing rights, Ecology’s authority is not so limited. Majority at 819. Ecology points to other statutes that include savings provisions to protect existing water rights, citing RCW 90.03.030 and 90.44.440. It argues because the Legislature did not include a savings provision in the WWPCA, its authority over parties with existing water rights is unlimited. This position is untenable.

The WWPCA authorizes Ecology to prevent and control water “pollution” in Washington. RCW 90.48.010. Ecology asserts the definition of water “pollution” is at least as broad as the definition in the federal CWA as interpreted by Elkhorn II, thereby implying authority to set instream flow conditions as pollution regulation. The majority is persuaded but provides virtually no analysis. Majority at 819.

However a change in water quantity alone cannot constitute “pollution” under our state law. The WWPCA defines “pollution” as:

such contamination, or other alteration of the physical, chemical or biological properties, of any waters of the state, including change in temperature, taste, color, turbidity, or odor of the waters, or such discharge of any liquid, gaseous, solid, radioactive, or other substance into any waters of the state as will or is likely to create a nuisance or render such waters harmful, detrimental or injurious to the public health, safety or welfare, or to domestic, commercial, industrial, agricultural, recreational, or other legitimate beneficial uses, or to livestock, wild animals, birds, fish or other aquatic life.

RCW 90.48.020 (emphasis added). In the list of “alterations” that constitute “pollution” the Legislature did not include changes in volume or reductions in quantity of water. Rather the reference is to the “physical, chemical or biological properties” of the water. One need not be a rocket scientist (or a marine biologist) to understand a little water does not necessarily have different properties than a lot of water. It may be true a constant discharge of an effluent into a smaller body of water may cause it to have a greater concentration of effluent than a larger body; however, here no effluent is added, rather a portion of the otherwise existing water is merely diverted. Hence, the “properties” of the water are unchanged.

Moreover, two years after it added the “pollution” definition, the Legislature enacted chapter 90.22 RCW which authorized Ecology to “establish minimum water flows [to] protectQ fish, game, birds or other wildlife resources, or recreational or aesthetic values,” RCW 90.22.010, indicating its recognition that volume is distinct from quality. And, significantly, this legislation expressly prohibited Ecology from affecting existing rights when establishing minimum flows. RCW 90.22.030.

The majority also attempts to find authority for Ecology to impair existing water rights by imposing instream flow conditions in a water quality certification under the state watershed planning statutes, chapter 90.82 RCW, enacted in 1997 and 1998. Majority at 820-21. Specifically, it points to RCW 90.82.080(4), which states:

Nothing in this chapter either: (a) Affects the department’s authority to establish flow requirements or other conditions under RCW 90.48.260 or the federal clean water act for the licensing or relicensing of a hydroelectric power project under the federal power act; or (b) affects or impairs existing instream flow requirements and other conditions in a current license for a hydroelectric power project licensed under the federal power act.

The majority’s reliance on this statute is misplaced. RCW 90.82.080(4) provides only that Ecology’s authority in the circumstances enumerated is not reduced; it does not create additional authority to establish instream flow conditions. Further the watershed planning statutes define “minimum instream flow” by reference to chapters 90.03, 90.22, and 90.54 RCW—all of which expressly prohibit impairing existing rights. RCW 90.82.020; see also RCW 90.03.010, 90.22.030, 90.54.900, .920(1). We must also note Ecology does not dispute that no watershed planning has ever occurred in connection with the Sullivan Creek project.

In C.J.C. v. Corp. of the Catholic Bishop, 138 Wn.2d 699, 708, 985 P.2d 262 (1999), we described the basic principles of statutory construction:

We construe an act as a whole, giving effect to all the language used. Related statutory provisions are interpreted in relation to each other and all provisions harmonized.

(Citation omitted.) The majority’s strained statutory interpretation ignores these principles. Under the majority’s view, chapters 90.22, 90.48, and 90.54 RCW cannot be harmonized. If the asserted definition of “pollution” in RCW 90.48.020 permits Ecology to establish minimum instream flows individually for each owner of an existing water right, this statute clearly conflicts with RCW 90.22.030, 90-.54.900, and .920(1), which expressly prohibit Ecology from so acting.

Unlike the majority, I would reverse the PCHB ruling that affirmed Ecology’s conditional water quality certification. Ecology can act only by legislative authorization. Rettkowski v. Dep’t of Ecology, 122 Wn.2d 219, 226, 858 P.2d 232 (1993). Unless Ecology is considering an application for a new water permit under RCW 90.03.290, it must establish minimum instream flows pursuant to chapter 90.22 or 90.54 RCW by the rule-making procedures therein. There is no statute—state or federal—authorizing Ecology to impose instream flow conditions on a water quality certification pursuant to § 401 of the CWA, when such imposition interferes with established existing water rights. To hold otherwise necessarily implicates takings.

C. The court has a duty to construe statutes constitutionally.

We have oft stated and long repeated the maxim of statutory construction that statutes where possible should be afforded a constitutional, rather than an unconstitutional, application.²⁰ See, e.g., State v. Furman, 122 Wn.2d 440, 458, 858 P.2d 1092 (1993); Grant v. Spellman, 99 Wn.2d 815, 827, 664 P.2d 1227 (1983); State v. Collins, 55 Wn.2d 469, 470, 348 P.2d 214 (1960); State ex rel. Davis v. Clausen, 160 Wash. 618, 632, 295 P. 751 (1931).

Water rights in Washington have long been understood to be usufructuary in nature—they constitute only a right to use water, not a possessory right in the actual water itself. See, e.g., Rigney v. Tacoma Light & Water Co., 9 Wash. 576, 583, 38 P. 147 (1894); see Office of the Attorney General, An Introduction to Washington Water Law 1:2 (Jan. 2000). That said, water rights are nonetheless “property,” and are thus protected in this state against unlawful deprivation absent due process and governmental “takings” or “damagings” absent just compensation first made. See Wash. Const, art. I, §§ 3, 16; Dep’t of Ecology v. Grimes, 121 Wn.2d 459, 478, 852 P.2d 1044 (1993); Dep’t of Ecology v. Adsit, 103 Wn.2d 698, 705-06, 694 P.2d 1065 (1985); Bach v. Sarich, 74 Wn.2d 575, 579, 445 P.2d 648 (1968); In re Clinton Water Dist., 36 Wn.2d 284, 287, 218 P.2d 309 (1950); Washington Water Law, supra, at VII:13; 9 Julius L. Sackman, Nichols on Eminent Domain § 34.05[4], at 34-77 (rev. 3d ed. 1999); 2 Sackman, supra, § 5.05 [1], at 5-309 (rev. 3d ed. 1999); David C. Hallford, Environmental Regulations as Water Rights Takings, 6 Nat. Resources & Env’t 13, 13 (1991); Jan G. Laitos, Water Rights, Clean Water Act Section 404 Permitting, and the Takings Clause, 60 U. Colo. L. Rev. 901, 905 (1989).

A governmental abrogation of a preexisting, vested water right is an appropriation of that enhanced minimum flow to a public use and therefore is a taking encompassed in the Fifth and Fourteenth Amendments no matter how minimal the intrusion may be. See Tulare Lake Basin Water Storage Dist. v. United States, 49 Fed. Cl. 313, 319-20 (2001) (discussing United States v. Causby, 328 U.S. 256, 66 S. Ct. 1062, 90 L. Ed. 1206 (1946); Int’l Paper Co. v. United States, 282 U.S. 399, 51 S. Ct. 176, 75 L. Ed. 410 (1931); Dugan v. Rank, 372 U.S. 609, 83 S. Ct. 999, 10 L. Ed. 2d 15 (1963)).

Commentators also agree if the application of water quality regulations conditions an existing water right to maintain minimum instream flows, and the required minimum flows de facto deny the right holder the ability to accomplish the purpose of the right in an economically feasible manner, then application of the regulation constitutes a taking requiring compensation sufficient to acquire an alternative supply means. See, e.g., Laitos, supra, at 919; Gregory J. Hobbs, Jr. & Bennett W. Raley, Water Rights Protection in Water Quality Law, 60 U. Colo. L. Rev. 841, 896-99 (1989).

The District²¹ has maintained the purpose for which it obtained water rights—the construction and operation of a hydroelectric facility—will be entirely frustrated by the imposition of the minimum instream flows required by Ecology. See, e.g., Answer to Mot. for Discretionary Review at 6 (stating Ecology’s requirements would make project “substantially worthless”); id. at 12 (“infeasible”); Br. of Resp’t/Cross Pet’r at 9 (“uneconomic” and would “not be built”); District’s Reply Br. to Ecology’s Arguments on Cross-Appeal at 9 n.10 (“prohibit [s] the District’s use of its water rights”). Additionally, Ecology concedes “there will be certain times of the year when the natural flow of Sullivan Creek will be insufficient to maintain the bypass flows while still permitting the full exercise of the water rights claimed by the District.” Corrected Pet’r Reply Br. at 15. These statements are corroborated in the record.²²

Here Ecology uses the water quality certification process to impose additional minimum instream flow conditions which significantly impair the District’s existing permit rights. The District’s preexisting right to 550 cfs total water rights was previously vested by permit subject only to a 10 cfs minimum flow condition before the Ecology order at issue here. See PCHB Hr’g Ex. of Ecology-231, CP at 164. The new enhanced minimum flow imposed by the water quality certification order however multiplies by 20 times the original minimum flow requirement.

Were the applicable statutes construed to allow this, existing rights in property would be taken in arguable conflict with the federal takings clause as well as the state eminent domain requirement that no property be taken without just compensation having first been made.²³ This presents a problem of constitutional magnitude which could easily be avoided by an appropriate constitutional construction as urged in sections A and B.

II

I also dissent from Ecology’s purported authority to deny the District’s change application for its 440 cfs water right on the basis of nonuse. The PCHB granted summary judgment approving Ecology’s decision to deny the District’s change application for its 440 cfs water right based on the assertion inchoate water rights are not eligible for a change in point of diversion under RCW 90.03.380(1). However, valid permit rights are eligible for a change in point of diversion. The case law on which the majority relies is off point and does not control whether Ecology has authority to consider an application to change the point of diversion for a right like the District’s 440 cfs right—a right issued pursuant to Washington’s current statutory permit system.

The majority relies on Okanogan Wilderness League, Inc. v. Town of Twisp, 133 Wn.2d 769, 947 P.2d 732 (1997). Majority at 790-93. But that case did not involve inchoate water rights at all. The right at issue had been perfected and the main issue was whether it had been abandoned thereafter. Okanogan, 133 Wn.2d at 772-75, 781. The Court stated numerous times that quantification of a water right is needed before a change in point of diversion can be granted. See id. at 777-79. Requiring quantification of use during a change application makes sense in the context of a perfected water right because by definition water already has been used. However Okanogan never addressed whether a permit right is eligible for a change in point of diversion.

The majority also relies on R.D. Merrill Co. v. Pollution Control Hearings Bd., 137 Wn.2d 118, 969 P.2d 458 (1999). Majority at 790-93. But this case does not control either. R.D. Merrill stands for the proposition that Ecology cannot consider a change application when the applicant has no valid water right to change. 137 Wn.2d at 138. The water right in R.D. Merrill concerned application of Washington water law that predates the current statutory permit scheme. Because procedures under that law were not followed, this Court found “no valid right existed to change.” Id. at 138. R.D. Merrill did not consider whether Ecology has authority to consider an application to change the point of diversion for right like the District’s 440 cfs inchoate right issued pursuant to our existing permit scheme.

Ecology can act only pursuant to a grant of authority. Rettkowski, 122 Wn.2d at 226. This authority may be found in RCW 90.03.380 which permits Ecology to consider an application to change the point of diversion for an inchoate right issued pursuant to our existing permit scheme. The second sentence of RCW 90.03.380 authorizes a change of point of diversion of water “for beneficial use” if the change can be made without detriment or injury to existing rights. Here, although the District has not yet completed construction, diverted water, or put water to actual use, the District has a state-issued permit right to divert water “for beneficial use.” Accordingly Ecology has the statutory authority to consider a change application concerning a permit right like the one the District possesses.

Unlike the majority opinion, this construction of RCW 90.03.380 makes practical sense. As pointed out by the District:

when a party is in the process of fully utilizing a water right under a water permit, particularly where large sums of monies would be invested, it is likely that engineering and other considerations will result in changes in some of the details relating to the water right. Here, for example, after many years of studies and engineering and after administrative processes for obtaining permits, it was finally determined that the best plan for the reestablishment of power at the Sullivan Creek Project was to reinstall intake structures at Mill Pond rather than constructing a whole new dam a short distance upstream.

Br. of Resp’t/Cross Pet’r at 41.

The majority’s response is woefully inadequate. Without citing any authority, it claims that “a surface water right, involving as it does withdrawal from a visible source, does not present the engineering and planning difficulties that groundwater withdrawal may present, and this may be one distinction underlying the difference in the surface water and groundwater change statutes vis-a-vis inchoate rights.” Majority at 793. Not only does this statement ignore the fact the District had a valid permit, but it is pure speculation, lacks any supportive data, and does not fit with what actually happened in this case.

The majority’s position overlooks another significant consideration. Ecology can “administratively cancel” a permit when the holder has failed to use the water within a reasonable period of time and can grant extensions upon a showing of good cause. RCW 90.03.320. If Ecology can outright cancel a water permit, why does it not have the lesser authority to merely consider an application for change in point of diversion under a water permit?²⁴

We should distinguish Okanogan and R.D. Merrill by holding inchoate water rights held under our current statutory permit system are eligible for change in point of diversion pursuant to RCW 90.03.380. This construction is consistent with the statutory language, does not conflict with prior case law, and makes good practical sense. Accordingly I would reverse the PCHB ruling that the District’s 440 cfs water right is ineligible for change in point of diversion and remand the case to the PCHB for appropriate proceedings on this issue.

Ill

While the majority opinion may mislead one to believe otherwise, our state’s policy on water quality does have its limits. In addition to the constitutional protections over water rights, see supra Part I, our Legislature has expressed its commitment to industrial development and declaring hydroelectric power production a beneficial use of water as a matter of law. See RCW 90.48.010, 90.54.020(1). Notwithstanding these very legitimate public policy goals, our majority sanctions an overly restrictive, procedurally defective, and substantively unlawful water quality certification order—an agency order which not only illegally interferes with the District’s established property rights but most likely will prevent the District from using its water rights to establish power generation to the public benefit of all in Pend Oreille County.

I would reverse the portion of the PCHB ruling which upheld Ecology’s water quality certification order. I would also reverse the portion which concluded Ecology could not consider the District’s application to change the point of diversion for its permit right.

I therefore dissent.

Alexander, C.J., concurs with Sanders, J.

14 No other cases have interpreted § 101(g) in the certification context.

15 Elkhorn I also held Washington’s antidegradation provisions in the state water quality act require imposing minimum instream flows. Elkhorn I, 121 Wn.2d at 186-87.

16 State law authorizes the regulation of a “discharge” that causes “pollution.” RCW 90.48.090, .095. The District argues that “discharge” is not at issue here, but only withdrawal of water. Elkhorn II states water quantity (and hence use affecting instream flows) may constitute “pollution” under the federal CWA. It nonetheless remains an open question whether “pollution” has the same broad meaning under our state law. I conclude it does not. See infra.

17 Ecology argues “the Supreme Court’s opinion was phrased as if there were previously existing water rights at issue.” Corrected Pet’r Reply Br. at 24. However the facts of Elkhorn II alone did not require the Court to consider a case where a § 401 certification applicant already held a water right. The Court pointed out the affected water at issue was “undiminished by appropriation,” and:

Moreover, the certification itself does not purport to determine petitioners’ proprietary right to the water of the Dosewallips. In fact, the certification expressly states that a “State Water Right Permit must be obtained prior to commencing construction of the project.” The certification merely determines the nature of the use to which that proprietary right may be put under the Clean Water Act, if and when it is obtained from the State.

Elkhorn II, 511 U.S. at 721 (citations omitted). Elkhorn II never addressed whether § 101(g) prevents using the § 401 certification process to restrict diversions of water under an existing water right. Had the Court wanted to discuss this issue, it would have focused on the second sentence of § 101(g).

18 The PCHB decision quotes the following version of Senator Wallop’s comments:

The requirements [of the Act] may incidentally affect individual water rights.... It is not the purpose of this amendment to prohibit those incidental effects. It is the purpose of this amendment to insure that State allocation systems are not subverted, and that effects on individual rights, if any, are prompted by legitimate and necessary water quality considerations.

CP at 171 (ellipsis and alteration in original) (quoting Elkhorn II, 511 U.S. at 721). Cf. supra at 791 (passage quoted in full). Omitted from the text replaced by the bracketed reference “of the Act” are the words “of section 402 and 404 permits.” The majority opinion discusses the legislative history of the act yet does not recognize the PCHB’s error or discuss its implications.

19 Minimum instream flows may be established when a new water permit is issued. RCW 90.03.247, .290. New water permits are not at issue here.

20 The majority ignores the District’s claim that Ecology’s actions exceeded its statutory authority in violation of the state and federal constitutions. See Answer of the Public Utility District to Mot. for Discretionary Review at 16; Br. of Resp’t/Cross Appellant at 31.

21 The District (although a municipal corporation which is in some senses “public”) holds water rights for the production and sale of electricity, a proprietary enterprise. Sundquist Homes, Inc. v. Snohomish County Pub. Util. Dist. No. 1, 140 Wn.2d 403, 410, 997 P.2d 915 (2000); Wash. Pub. Power Supply Sys. v. Gen. Elec. Co., 113 Wn.2d 288, 301, 778 P.2d 1047 (1989); State v. O’Connell, 83 Wn.2d 797, 834, 523 P.2d 872 (1974). Its water rights therefore are its “private property.” See also 2 Julius L. Sackman, Nichols on Eminent Domain § 5.06[8] [a], at 5-440 to 5-444 (rev. 3d ed. 1999); 4A Sackman, supra, § 15.01[2], at 15-9 to 15-10 (rev. 3d ed. 1999); Osborne M. Reynolds, Jr., Handbook of Local Government Law 72 (1982).

22 John Snyder, a principal engineer to the Sullivan Creek Project, testified before the PCHB that the required instream flows are higher than the average natural flows for certain months. Verbatim Report of Proceedings (RP) at 97-100. He also maintained Ecology’s minimum flows “would kill the project’s feasibility from an economics standpoint.” RP at 97. This sentiment is echoed by Larry Weis, general manager for the District, who testified that if the District were required to meet Ecology’s minimum flows, “[t]here is just no way the project could be built, any kind of project could be built.” Id.

23 Under our state constitutional eminent domain provision a taking or damaging of private property which is otherwise legitimate may be accomplished only after, not before, compensation is paid. Anticipated violations of this constitutional mandate must be equitably enjoined. See Brown v. City of Seattle, 5 Wash. 35, 31 P. 313, 32 P. 214 (1892). Here no compensation has been made, so what sense is there to approve certificate conditions which should be enjoined from enforcement? The majority is silent.

24 In spite of Ecology’s current position on the matter, my asserted construction of RCW 90.03.380 appears to accord with how the agency itself operated in this case. In a 1993 letter to the District, Ecology advised:

Surface Water Permit No. S3-2658P allows the diversion of 550 cfs from three points of diversion [one not at issue here] .... The PUD [District] will need to apply to change the point of each diversion to the Mill Pond Diversion structure.

PCHB Hr’g Ex. of Ecology-277.