Questions validity of claims, water availability

By Ann McCreary

The Chewuch Canal Company is objecting to a proposed sale of water rights from a ranch on East Chewuch Road to a private water banking company, claiming that the transaction seeks to transfer invalid water rights and could leave the irrigation company’s 180 shareholders with virtually no water.

The objection is in response to a proposal by Crown Columbia Water Resources, LLC, which has entered into an agreement to purchase water rights from Lundgren Limited Family Partnership, which holds a claim to water from the Chewuch River.

Crown Columbia proposes to transfer up to 33 cubic feet per second (cfs) and up to 255.2 acre-feet per year (afy) of water into the state Trust Water Program, which would hold the water rights for potential future use downstream.

The Chewuch Canal Company (CCC) diverts 34 cubic feet per second (cfs) of water from the Chewuch River near Boulder Creek and carries it about 13 miles down the valley to its 180 shareholders. Under a contract drafted when the canal was built in 1910, the same diversion provides water to the property that is currently owned by the Lundgren Limited Family Partnership, which operates a cattle ranch and guest house. The contract provides that CCC will deliver water to the property below the ditch for an annual fee of $1.

The Crown Columbia application to the Washington state Department of Ecology states that the existing use of the Lundgren water right is 33 cfs and 440 afy for 110 acres of irrigation and domestic use. The proposed use is a temporary donation to the water trust of up to 33 cfs and 255.2 afy.

The application proposes that 184.8 afy (the maximum use over a year) would be retained for continued irrigation use at the Lundgren property.

In a letter sent to Ecology, CCC challenges Crown Columbia’s claim that the Lundgren water right allows for use of 33 cfs for continuous domestic use and seasonal irrigation. “Although the amount of water furnished by the CCC to satisfy the Lundgren Water Right is not metered by the CCC, the canal company does not believe that amount of water ever approached the quantities now claimed by Crown Columbia,” said Natalie Kuehler, a Winthrop attorney specializing in water law.

CCC was required to install a fish screen at its diversion 20 years ago, and since that time the maximum amount of water it has been able to divert is 34 cfs, which serves the Lundgren property and the other 180 shareholders. Crown Columbia’s claim that 33 of the 34 cfs diverted into the canal are used on the Lundgren property doesn’t make sense, said Roger Rowatt, CCC president.

“It isn’t 33 cfs. It’s never been … because we wouldn’t be able to deliver water to anyone else,” Rowatt said.

Rowatt said he was approached by an attorney for Crown Columbia last spring and asked to sign a letter certifying that CCC had been delivering 33 cfs to the Lundgren property. “I said I can’t sign this, because it’s not true,” Rowatt said.

Water banking

Crown Columbia describes itself as a “water banking operation” that holds water rights to offset future use downstream. In the application for the Lundgren water rights transfer, Crown Columbia said it plans to place the water in the state Trust Water Program until a need is identified downstream. A primary focus of Crown Columbia is bringing irrigation to dryland farms. The water can be used anywhere from the point of diversion to the Pacific Ocean, according to the application submitted by Crown Columbia to Ecology.

Marc Marquis, a Wenatchee attorney representing the Lundgren Limited Family Partnership, said alarm expressed by CCC over the figures in the application may be premature. He said he considers the water use figures included in the application to be “a starting point” that he expects will change as the application for transfer is processed. That’s because the claim has never been evaluated by the state, he said.

“The water right proposed for transfer originates from a water claim that was filed by the Lundgrens” in 1998, Marquis said Monday (July 9). The Lundgren claim “has never been evaluated by the Department of Ecology. When folks file a water claim often they are doing a best guess about what their water claim is,” Marquis said.

“The extent and validity of the water right will have to be proved up … I will have to demonstrate to the [Water Conservancy] board that a certain amount of water has been used and perfected and maintained. It probably will not be 33 cfs,” Marquis said.

“The number in the application, I understand, can seem alarming to some folks based on the water [34 cfs] going through the canal. The number that may or may not be approved for transfer may be significantly less,” he said.

Kuehler sent a letter on behalf of CCC to Ecology in March, after the canal company became aware of Crown Columbia’s interest in the water rights transfer. She said she is preparing a formal objection that will be submitted to Ecology and transmitted to the Okanogan Water Conservancy Board, which will consider the application before sending it on to Ecology for final determination. A public comment period on the Crown Columbia application is open until July 20.

In her letter to Ecology, Kuehler cited several reasons why CCC believes the “quantity of water actually delivered in connection with the Lundgren Water Right is significantly smaller than the maximum amount the Lundgren’s water claim provides for.”

Kuehler said the Lundgren water right is used only on acreage below the CCC ditch, which is “only a portion of the 110 acres Crown Columbia now claims to be the Water Right’s existing use.” The traditional practice of flood irrigation of the property below the ditch ended long ago, and in the 1990s the Lundgrens converted hand lines and wheel lines to more efficient center pivots.

The Lundgren Family Partnership also owns an additional surface water right claim on nearby Ramsey Creek, which has also been used to irrigate the acreage irrigated under the Chewuch water right claim, Kuehler said. And, several efficient irrigation pivots were installed on the Lundgren property below the CCC ditch and irrigated under the Lundgren water right, Kuehler said.

Limited amount available

In an interview last week, Rowatt and Kuehler said water saved through the installation of the irrigation pivots since 2013 may be the only water from the water right available for transfer into the trust water program. Pivots generally use less water than hand lines, they said.

Washington state water law requires water to be used beneficially within any given five-year period for the water right to remain in good standing, unless a statutory exemption applies, Kuehler said.

Based on publicly available information, water available for banking “appears be limited to the amount of water no longer needed for irrigation because of efficiencies achieved through the installation of two pivots covering approximately nine acres at some point between 2013 and 2017,” she said. The pivots installed after 2013 irrigate about nine acres of the Lundgren property, Kuehler said.

The Lundgrens installed several other pivots on their land, but the other pivots appear to have been installed more than five years prior to submission of the trust application, Kuehler said.

Unless those pivots were installed within the last five years or a statutory exemption applies, any water saved by the remaining pivots would be relinquished, Kuehler said. “Once relinquished, this water becomes available for processing by Ecology and transfer to the next person in line who has applied to Ecology for a water right,” Kuehler said.

Determining the amount of water actually put to beneficial use and not relinquished “is of crucial importance to the CCC, which must deliver – and has been delivering – irrigation water to over 180 shareholders,” Kuehler said in her letter to Ecology. 

If a “disproportionate proportion” of the 34 cfs were allocated to the Lundgrens, it “would directly and irrevocably impair the CCC’s own water right,” Kuehler said.

Marquis said he considers the objections from the canal company to be “standard concerns” that will need to be addressed by the Water Conservancy Board. “My impression is they’re following their due process and making sure the board is aware that they don’t want a transfer to result in any impairments to their other users along the canal,” he said.

“The actual decision that comes out of the Conservancy Board will be real numbers. I have to advocate for the full extent of my client and his claim says 33 cfs and 440 acre-feet,” Marquis said.

Rowatt said water meters on the two newer pivots might be able to provide more precise data on irrigation water use, but CCC has not been able to get those from the water right owner or Crown Columbia. Because Lundgren is not actually a shareholder in CCC, “we have no way to monitor” water use on the property, he said.

Kuehler said the application to Ecology requires signatures of the applicants certifying that the information about the claim “is true and accurate to the best of my knowledge.” The application was signed by Don Lundgren and Frank Walter III, senior managing director of Crown Columbia.

More scrutiny needed

“By filing that application you’re verifying that what information you are putting in the application you believe is correct. They have to do at least a basic review of the facts on the ground,” Kuehler said. “To … seek the whole shebang is quite aggressive,” Kuehler said. “To me it means every single application submitted by these principals needs an extra level of scrutiny.”

“It’s common knowledge these claims [recorded with Ecology] may not reflect reality,” Marquis said. “The numbers in the application are to some degree abstract until the math is done.”

The Crown Columbia application has alarmed some valley residents, who worry water rights used locally for irrigation will be transferred downstream and lost forever for use in the Methow Valley. They fear that the Lundgren application could be the first of many such applications.

An initiative is underway to create a local water bank to offer a way to keep and use water here in the Methow Valley. Organizers are looking for funding to be able to purchase or lease water from local people who are interested in selling water rights, said Mary McCrea, chairman of the Methow Watershed Foundation, a nonprofit organization that funds water projects in the Methow Valley. “I will meet with a couple potential partners in a water bank this week,” McCrea said Monday.

Marquis said he was approached by the Lundgrens about the water sale, which is “the first transfer we’ve done up there. We’re always looking for people” interested in selling, he said. Most of his work has been done in Chelan, Douglas and Okanogan counties, Marquis said.

Crown Columbia controls 50,000 acre-feet of water in the Columbia-Snake River Basin, according to information on its website. The company is registered in Delaware and is a subsidiary of a corporation called Petrus Partners Ltd., based in New York City, which invests in real estate and farmland. About half the firm’s investment capital comes from retired partners of Goldman, Sachs & Co., according to the corporation’s website.

Many applications for water rights sales or transfers into the trust water program go unnoticed by the public, unless there is an objection by organizations like irrigation companies or an adjacent water rights holder, Kuehler said. “This is the tricky thing with these water banking applications. They proceed largely out of the public eye,” she said.

Water banking has provided new mechanisms for moving water use to different areas, including enabling transfers of water rights upstream, according to water consultants and attorneys. Water leases may allow use upstream once a downstream lease has ended, or credits approved by Ecology in a downstream reach could be applied to the same amount of water used upstream.

Rowatt said he questioned whether those scenarios would apply to the Methow Valley. “Where the water is going to go is to the highest-paying client. The ability to move it up here is perhaps true, but if you look at the market forces, it’s not really valid,” he said.

“Crop production in the valley has always been on the fringe,” Rowatt said. “Production isn’t the same as in the Yakima basin. The water’s way more valuable [there] because the crops are more valuable.”