Correlated Water Rights

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• Correlated Water Rights

The practical implication of the correlated water rights was that it allocated ground water rights not to the seniority of use, but rather according to a proportional share of the land which was owned above the underground aquifer. So, if a landowner owned 10% of the land above an aquifer, than they were entitled to 10% of the natural replenishment rate of that aquifer. This right being articulated in the correlated rights doctrine created by the California Supreme Court which states:

"Disputes between overlying landowners, concerning water for use on the land, to which they have an equal right, in cases where the supply is insufficient for all, are to be settled by giving to each a fair and just proportion."

While this doctrine was first developed and applied in the 1902 case of Katz v. Walkinshaw, it has since been adopted by a number of States throughout America. The reason why this doctrine evolved in the United States and has not been evident in other nations is related to the nature of property rights in America. Unlike most other nations where underground water resources are considered to be the property of the state, in America they are owned by the surface property owner. So, while in the rest of the world the state usually owns underground water and as such does not need a doctrine to control that use, in America this doctrine is essential.

Precedential case law

In the initial case of Katz v. Walkinshaw, the Supreme Court of Californian were asked to rule on the following facts:

"The action was brought to enjoin defendant from drawing off and diverting water from an artesian belt which is in part on or under the premises of plaintiffs, and to the water of which they have sunk wells, thereby causing the water to rise and flow upon the premises of plaintiffs, and which they ever had constantly so flowed, for 20 years before the wrong complained of was committed by defendant. The water is necessary for domestic purposes, and for irrigating the lands of plaintiffs, upon which there are growing trees, vines, shrubbery, and other plants, which are of great value to plaintiffs. All of said plants will perish, and plaintiffs will be greatly and irreparably injured, if the defendant is allowed to divert the water ... further that defendant is diverting the water for sale, to be used on lands of others distant from the saturated belt from which the artesian water is derived"

It was the plaintiff’s contention that the artesian belt constituted an underground stream, which made them a riparian property owner, which provided them with fundamental right under the riparian water doctrine to a natural flow of water on to their property. Whilst the doctrine allowed for reasonable uses such as; water for households, drinking water for livestock, and irrigation for plants, riparian owners were not allowed the transfer and use of water beyond the bounds of the watershed area, as this would result in the absolute loss of water to downstream riparian rights holders. The rationale for invoking their riparian rights was because the defendant was not using the water that they extracted from their property, on their property. Rather they were selling and shipping the water to other landowners which did not have property overlaying the aquifer, in direct contradiction of riparian restrictions. The difficulty with this contention was that the defendant was not drawing the water from an open source but was drawing the water from an underground source or more particularly drawing water from an underground source that percolating to the surface on their property.

This distinction is important; because while drawing water from an open source would potentially open the defendant up to riparian rights claims, drawing form an underground source could allow the defendants to claim that the proper doctrine which should be applied was an absolutist doctrine which gave property owners the rights to any objects below or above the land that they owned. This absolutist doctrine came into prominence in the 18^th century after the publication of William Blackstone’s, influential legal writings “Commentaries on the Laws of England” in 1766. In these writings Blackstone described the ownership rights of land as follows:

nowiki>Land hath also, in its legal signification, an indefinite extent, upwards as well as downwards. Cujus est solum, ejus est usque ad coelum, is the maxim of the law, upwards; therefore no man may erect any building, or the like, to overhang another's land: and, downwards, whatever is in a direct line between the surface of any land, and the center of the earth, belongs to the owner of the surface; as is every day's experience in the mining countries. So that the word "land" includes not only the face of the earth, but everything under it, or over it. And therefore if a man grants all his lands, he grants thereby all his mines of metal and other fossils, his woods, his waters, and his houses, as well as his fields and meadows"

What the absolutist doctrine fails to recognise is that unrestricted actions of one property owner, can have severely detrimental effects on other property owners. This flaw which was to become known as external effects have been debated by economists and litigated in the courts ever since.

In short in this case the court was adjudicating a disagreement between two parties both claiming rights to water using different doctrinal doctrine. In its decision, the court rejected both doctrines and establishing a new correlated rights doctrine. With respect to the riparian rights the court rejected the plaintiffs claim on both technical and practical grounds. The technical grounds were associated with underground nature of the water. This rejection as enunciated by Judge Temple in his opinion:

"It is quite manifest that this body (if it can be so styled) of percolating water cannot be called an underground water course to which riparian rights can attach.... The plaintiffs, therefore, cannot establish their claim upon a theory of an underground water course to which they are riparian"

From a practical prospective the court took issue with the inevitable consequence of applying a strict interpretation of riparian rights as provide by this observation:

"It is even said that the opposite doctrine (applying to such water the rule as to riparian rights) would amount to total abrogation of the rights of property. It is said one could not clear or cultivate his land or build a house without interfering with percolating water, and, even if rights were admitted to exist, the difficulty of enforcing them would be insurmountable."

This rejection of the riparian doctrine was matched by an equally unequivocal rejection of a technical and practical grounds of the defendant’s claims under the absolutist doctrine. With respect to the technical grounds the court rejected the notion that water was the same as any other mineral or resource located under a property. This rejection being based on the transitory nature of water. In this point Judge Temple wrote:

"It is obvious at once that the analogy between the right to remove sand and gravel from the land for sale, and to remove and sell percolating water, is not perfect. If we suppose a saturated plain, one may remove and sell the sand and gravel from his land without affecting or diminishing the sand and gravel on the lands of his neighbors. If the water on his lands is his property, then the water in the soil of his neighbors is their property. But when he drains out and sells the water on his land, he draws to his land and also sells water which is the property of his neighbor. Mid the effect is similar in other respects. By pumping out the water from his lands, he can, perhaps, deprive his neighbors of water for domestic uses, and in fact render their land valueless."

From a practical prospective Judge Temple took issue with the very negative consequences that applying a strict interpretation of this absolutist doctrine would have on the property concerned. This was noted by referring to the argument made by the counsel for the plaintiff’s when Judge Temple states:

"The learned counsel for the appellants state in their belief that water at San Bernardino is worth $1,000 per inch of flow. Percolating water or water held in the earth is the main source of supply for domestic uses and for irrigation, without which most lands are unproductive. It is also stated that speculators are seeking to appropriate the percolating water by getting title to some part of a watershed or slope, and by running canals and tunnels, and by sinking to obtain water for sale. It is asserted that the lands naturally made moist by percolating water are very productive, and were first settled upon, and have been most highly improved; and he asks whether these lands are to be converted into deserts because speculators may pump and carry away to some distant locality the subsurface waters which rendered the land fertile. Certainly, no such case as this has come before a court or could well exist in England or in the Eastern states."

The rejection of the claims of both plaintiff and the defendant, meant that the court would have to find an alternative way of deciding the case. As part of this process Judge Temple recognised that there was a change in underlying circumstances which he describes as follows:

"We have derived our law, in respect to subterranean waters, as in other respects, mostly from England, but in regard to this matter the first cases are quite modern. Even yet the text-books on water rights have but little to say upon the subject of percolating water. Such law as has been made upon the subject comes from countries and climates where water is abundant, and its conservation and economical use of little consequence, as compared with a climate like southern California.” and “in England and in our Eastern states a more thorough and minute consideration of the equities of parties may not often be required. The ease is very different, however, in an arid country like southern California, where the relative importance of percolating water and water flowing in definite water courses is greatly changed."

Given these changes the underlying circumstances, Judge Temple detailed the development of a more appropriate doctrine. The doctrine itself was developed in three separate stages, in different parts of the opinion. In the first stage Temple discusses the idea that members of the community have a common interest in the water:

"In short, the members of the community, in the case supposed, have a common interest in the water. It is necessary for all, and it is an anomaly in the law if one person can for his individual profit destroy the community, and render the neighborhood uninhabitable."

In the second stage he discusses how riparian water rights are limited by correlative rights of other riparian owners:

"A riparian owner may not divert the water, because he would thereby injure his neighbors who have equal rights in the stream. Still he may take a reasonable amount from the stream for domestic purposes, and that may equal the entire flow, although he thereby injures his neighbors. It is a question of reasonable use, and that applies both to the land of the person disturbing the percolation and to adjoining land. He may cultivate his land, and for that purpose ordinarily may drain it, and plow it or clear it from forests, although all these operations may affect the flow of water to the lower proprietor, both in the water course and by percolation. He was allowed to become the owner for those purposes, and with the understanding that all other proprietors have the same right to use their land. The maxim, "Sic utere," etc., plainly applies as between such proprietors, very much as it does between different riparian proprietors upon the same stream. The title to all land is held subject to this maxim. Such ownership is "but an aggregation of qualified principles, the limits of which are prescribed by the equality of rights, and the correlation of rights and obligations necessary for the highest use of land by the entire community of proprietors." Thompson v. Improvement Co., 54 N. H. 545."

This introduction of the maxim “Sic utere” in conjunction with notions of equality and correlation clearly indicates a definition of property rights that cannot be viewed in isolation, but must also concerned with the property rights of other property owners. Further just as this inclusion nullifies the qualifying statement that a riparian owner may “take a reasonable amount which may equal the entire flow of the stream”, it also nullifies a absolutist use doctrine that would allow one owner the take all the water, injuring the other property owners.

In the final stage he indicated that the same correlative rights that limit riparian rights ought to limit reasonable use rights. This stage was presented in the final part of the opinion which although a little confusing, were as follows:

"Whatever the English rule may be, the American cases either recognize the application of the rule of "Sic utere tuo" to the subject, or they are cases in which it was wholly unnecessary to consider that subject.... Still this court was not called upon to, and did not consider any such question. I think it clear that the American cases do not require us to hold that the maxim, "Sic utere tuo," does not limit the right of the landowner to the use of subsurface water, but, on the contrary, all the cases in which the question has been discussed held or admit that such maxim should limit such right where justice requires it. Such, I think, is the proper rule."

Precedent confirmation

Whatever the intentions of Judge Temple, the implications of this ruling were so great, that a host of water companies jointed together to petition for an appeal of the case.^[15] The Californian Supreme Court granted a rehearing of the case:

"for the purpose of considering more fully, and by the aid of such additional arguments as might be presented by persons not parties to the action, but vitally interested in the principle involved, a question that is novel and of the utmost importance to the application to useful purposes of the waters which may be found in the soil."

In this petition the respondents and their amicus supporters contended; 1) that under common law the plaintiff can only recover from an action based on a subterranean stream, 2) that a plaintiff cannot recover from a different cause of action from that alleged, and 3) that the absolute right to percolating water was settled law. In support of their petition they cited dozens of cases from both California and other states all of which they contended upheld the absolute doctrine in percolation water..

What is clear from this petition was that there were a number of large, more powerful parties who were determined to eliminate correlative property rights in water, before it had a chance to be established as a reliable legal doctrine. However, these parties were in for a huge surprise; as the Supreme Court of California in this rehearing, not only endorsed correlative property rights, they also rejected the notion that the absolute property right doctrine was settled law. Further unlike the earlier ruling, there was nothing confusing about this ruling. In all aspects including; its confirmation of the flexibility of common law, its rejection of that absolute doctrine, and its endorsement of correlative property right were clear and unequivocal.

The confirmation of the flexibility of common law was so poignant and relevant it deserves to be cited in full here:

"The true doctrine is, that the common law by its own principles adapts itself to varying conditions, and modifies its own rules so as to serve the ends of justice under the different circumstances, a principle adopted into our code by section 3510 of the Civil Code: "When the reason of a rule ceases, so should the rule itself.” This is well stated in Morgan v. King, 30 Barb. 16: “We are not bound to follow the letter of the common law, forgetful of its spirit; its rule instead of its principle.... If so, the common law modifies its rules upon its own principles, and conforms them to the wants of the community, the nature, character, and capacity of the subject to which they are to be applied." In Beardsley v. Hartford, 50 Conn. 542, ⁴ the court says: "It is a well-settled rule that the law varies with the varying reasons on which it is founded. This is expressed by the maxim: Cessante ratione, cessat ipsa lex.' This means that no law can survive the reasons on which it is founded. It needs no statute to change it; it abrogates itself. If the reasons on which a law rests are overborne by opposing reasons, which, in the progress of society, gain controlling force, the old law, though still good as an abstract principle, and good in its application to some circumstances, must cease to apply or to be a controlling principle to the new circumstances." Accordingly, in many instances in this country, in states where the common law is held to be in force, some of its rules are held to be not applicable to the conditions different from the place of its origin."

While the petitioners were assuming that the common law relating to water was to be regarded as a static law, unchanging regardless of circumstances, the court took the opposite view. It decided that; if applying old law to new circumstances resulted in an inefficient and unjust outcome, it was the law itself that must change. It should be noted, that court did not take this decision to alter the law lightly. As was clearly stated in the following quote from the opinion written by Judge Shaw:

"An ordinary difference in the conditions would scarcely justify the refusal to adopt a rule of the common law, or one which has been so generally supposed to exist; but where the differences are so radical as in this case, and would tend to cause so great a subversion of justice, a different rule is imperative."

With respect to the specific rejection of the absolute property right doctrine in water, Judge Shaw attempted to highlight the potential injustice and inefficiency of adhering to this doctrine. He did this as follows:

"It is apparent that the parties who have asked for a reconsideration of this case, and other persons of the same class, if the rule [absolutist doctrine] for which they contend is the law, or no law, of the land, will be constantly threatened with danger of utter destruction of the valuable enterprises and systems of water-works which they control, and that all new enterprises of the same sort will be subject to the same peril. They will have absolutely no protection in law against others having stronger pumps, deeper wells, or a more favorable situation, who can thereby take from them unlimited quantities of the water, reaching to the entire supply, and without regard to the place  of use. We cannot perceive how a doctrine offering so little protection to the investments in and product of such enterprises, and offering so much temptation to others to capture the water on which they depend, can tend to promote developments in the future or preserve those already made, and, therefore, we do not believe that public policy or a regard for the general welfare demands the doctrine. "

As can be gleaned from this part of the opinion, the court clearly had little more than contempt for the absolute property right doctrine in water and provide a much clearer and more aggressive rejection of it than had been provided in the previous case. That the petition should have resulted in such scathing reproach was far from certain and once again demonstrates the clear and unequivocal ruling of the court.

Following this rejection of absolute rights, the court then proceeded to provide an explanation of what correlative property rights were, and why justice demanded that it be applied regardless of the judicial challenges inherent in their application. Their description of correlative property rights being so clear and concise it could be enunciated in a single sentence:

"Disputes between overlying landowners, concerning water for use on the land, to which they have an equal right, in cases where the supply is insufficient for all, are to be settled by giving to each a fair and just proportion."

The beauty of this statement is that requires little analysis or interpretation. It is a simple straight forward endorsement of proportionality as the guiding principle of a just system of justice. As to the application of the doctrine the court took note of the petitioner’s concerns and responded as follows in the final paragraphs of the opinion:

"The objection that this rule of correlative rights will throw upon the court a duty impossible of performance, that of apportioning an insufficient supply of water among a large number of users, is largely conjectural. No doubt cases can be imagined where the task would be extremely difficult, but if the rule is the only just one, as we think has been shown, the difficulty in its application in extreme cases is not a sufficient reason for rejecting it and leaving property without any protection from the law."

The inclusion of this statement in the final paragraphs of the opinion are the best evidence of the strong support that the court had for correlative property right. For not only did it state that the court thought it that the doctrine was the “only just one”, it also stated that it its support was not constrained by potential difficulties in its application. When all was said and done; although the petitioners had intended to eliminate the correlative rights doctrine, what they succeeded in doing was to facilitate a much more solid legal foundation by allowing the court to rewrite and strengthen the original ruling. All of which has allowed the doctrine to remain valid for over one hundred years.

More recent case law and legislation

Niles Sand & Gravel Co. v. Alameda County Water Dist. As the names suggest Nile Sand and Gravel the plaintiff) was a commercial sand and gravel operation and Alameda County Water District (the defendant) was a government entity charged with managing the water supply in a district that included San Francisco. As part of its water management operations the defendant ran a ground water replenishment program that involved pumping water sourced from outside the district into the Niles water basin of the district. This replenishment program had two objectives. First, it was a water storage operation that would create a large enough reserve of water during the spring to supply the district during the dry summer months. The other objective was to prevent salt water intrusion into the basin, which was possible because to the immediate proximity of the basin to San Francisco Bay, and which would occur if the water basin dropped below sea level.

The conflict arose because this same replenishment program resulted in fresh water flooding the quarries operated by plaintiff which were below sea level. To access these quarries the company installed pumps and which they use to drain the quarries, with the waste water being pumped into San Francisco Bay. This of course defeated both objective of the replenishment program and resulted in the absurd situation where one party was pumping water into the basin and another pumping it out.

The plaintiff sued the defendant asking for damages on the basis that the flooding of their quarries constituted a “taking” or “damage” to their property by a governmental organization for public use, which ought to be compensated by way of inverse condemnation under the Californian constitution. The defendant sued to enjoin the plaintiff from discharging and wasting its water and to recover damages from them for the loss of water previously wasted over the previous three years.

The plaintiff claims rested upon the argument that they had the “absolute right” to use their land to an unlimited depth below the surface, because the Civil code which vested them with: “the right to the surface and to everything permanently situated beneath it." As such that the flooding of the quarries that resulted from the replenishment program had interfered with their subterranean rights to their land, thereby “taking” or “damaging” their property. They further argued that the defendant's claim that their land was subject to a “public servitude for water and conservation purposes” was just a contrived way of creating a new property interest for the benefit of a public agency, which could allow the district to escape liability to the landowners for damages.

Neither the earlier trial court nor the Supreme Court agreed with their “absolute right” argument and instead invoked the “correlative rights doctrine”. The Supreme court confirming application of the correlative rights doctrine and acknowledging the trial courts proper use of it, before restating its original use in Katz v. Walkinshaw:

"The correlative rights doctrine was first pronounced in a landmark case (Katz v. Walkinshaw (1903) 141 (1903) 141 Cal. 116 [74 P. 766]) in which the Supreme Court, in a decision upon rehearing (see id. at p. 120), developed and reiterated the doctrine as adopted in its original decision. (Id. at pp. 137-138 et seq.) Under the facts presented in Katz, the court was called upon to balance the effect of the common law maxim "Cujus est solum, ejus est usque ad inferos," as to waters percolating below ground, against the realities of the underground water situation in California. (Id. at pp. 120-121, 125-128, 139.) Rejecting the maxim under compulsion of the realities (see id. at p. 143; see also Krieger & Banks, Ground Water Basin Management (1962) 50 Cal.L.Rev. 56, 72-73) the court held that, as between the owners of land overlying strata of percolating waters, the rights of each to the water are limited, in correlation with those of others, to his "reasonable use" thereof when the water is insufficient to meet the needs of all."

The court went on to state:

"The trial court was also correct in using the word "servitude" to connote the obligation imposed by the doctrine upon appellants, as landowners in the basin, to refrain from discharging more than their reasonable share of the underground water therein; the term ("servitude") is commonly used with reference to such obligations when imposed by law, and limiting the use of lands lying in a particular geographical area, where an overriding public interest requires it."

While this case confirms the validity of the correlated rights doctrine some seventy years after it was introduced, it is also notable for three additional reason. First it demonstrates that the doctrine can be applied in cases which involve government agencies and not just applicable in disputes between private land owners. Secondly it indicates that the doctrine is able to withstand a challenge which accused it of being in breach of the California constitution, which like the US Constitution prohibits the government from the taking of property without compensation. Thirdly it indicates that it can be used against mining interests that harm the water supply, not just disproportionate water used. The first makes sense because injuring an entire community is worse than merely injuring a neighbour. The second makes sense because if it is accepted that water below the surface belongs to the surface owner, then all that the correlative rights doctrine does is prevent the appropriation of those rights by neighbouring land owners, as opposed to the appropriation doctrine which facilitated taking of inherently integrated groundwater which belonged to their neighbours. The third makes sense because prioritising mining, over water operations would defeat the purpose of the doctrine.

But it was not only the courts which have supported correlated rights for the last one hundred years. The legislature as provided similar support as evidenced by the administrative law which now regulates the use of water in California. The most recent enunciation of this doctrine being included in the 2011 publication of booklet describing the Water Rights Law which was produced by California State Water Resources Control Board and in which it states:

"California law also recognizes and protects rights to extract and use waters percolating beneath the surface of the land. Again, while the Water Code implies the existence of these groundwater rights, their doctrinal bases and characteristics are essentially the product of the decisions of our courts. (See Katz v. Walkinshaw (1902) 141 Cal. 138, 70 Pac. 663; additional opinion on rehearing (1903): 141 Cal. 116, 74 Pac. 766.)"

References

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