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Forest Service Water Policy Incites Alarm and Prompts Litigation

February 24, 2012

The Forest Service has implemented a new clause to its Special Uses Handbook that addresses water facilities and water rights utilized by ski areas on National Forest land. The clause has been characterized by some as an unconstitutional taking of property and in conflict with federal law and policy that provide states control over water resources. Despite requests to withdraw the clause, the Forest Service has refused to do so. As a result, the National Ski Area Association, Inc. (NSAA) recently filed a suit challenging the clause.

The new clause, Interim Directive No. 2709.11-2011-3, will be part of every ski area special use permit issued on or after November 8, 2011. The clause addresses the treatment of ski areas water rights, depending on where, when and how the water rights are used. For example, for new water rights diverted and used in the area covered by the permit, the permit holder must jointly apply for the water rights with the United States. The expense for acquiring and maintaining these water rights still falls on the holder of the special use permit. For new water rights diverted from National Forest lands outside the special use area, the United States will have sole ownership. For those diverted from off-site non-Forest Service lands, the rights may be solely in the name of the holder of the special use permit. Any of these water rights can only be transferred, or the type, place, and season of use modified, with the Forest Service’s approval, even if the water is diverted from non-Forest Service lands. All water rights, upon termination or revocation of a special use permit, must be transferred to the succeeding permit holder, or to the United States if the special use is not reauthorized. This is true even if the water rights were purchased by the holder of the special use permit. In short, as a condition of the new special use permit, ski areas are prevented from re-selling or transferring any water rights. The Forest Service has explained that it is trying to ensure the long-term viability of the ski industry by keeping water rights needed for ski area operations tied to the resorts.

NSAA filed a complaint challenging the water rights clause on January 9, 2012. The NSAA has claimed that: (1) the clause was implemented without public notice and an opportunity for public comment and (2) the clause is arbitrary and capricious because it exceeds the Forest Service’s authority, conflicts with state water law, and constitutes a taking of property without just compensation. This lawsuit was filed in the United States District Court of Colorado.

The lawsuit is receiving national attention. The clause not only directly impacts every state with ski areas, but could much broader impacts. As identified in the NSAA’s position statement, this change in policy could impact others who have invested in the development of water rights associated with National Forest lands, including cities and counties, owners of recreation residences, marinas and summer resorts, ranchers, mining interests and utilities. If the court determines the clause is unlawful, the ruling could prevent the Forest Service from applying the clause to ski areas and more broadly.

If you have any questions, please contact me at KMoore@dunncarney.com.

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