Concerns about permanent loss of usage for the Methow Valley
By Ann McCreary
A proposed sale of water rights from a Winthrop ranch to a private water banking company has raised concerns among some valley residents, who worry that water rights used locally for irrigation will be transferred downstream and lost for use in the Methow Valley.
Rumors of outside companies or individuals trying to buy water rights were circulating even before a legal advertisement of a proposed water rights transfer appeared two weeks ago in the Methow Valley News. Crown Columbia Water Resources LLC of Spokane has entered an agreement to purchase water rights from Lundgren Limited Family Partnership, which owns surface water rights from the Chewuch River.
Crown Columbia proposes to transfer up to 33 cubic feet per second (cfs) and 255.2 acre-feet per year (afy) into the State Trust Water Program, “for the instream flow benefit of the Chewuch River,” according to an application to the Okanogan County Water Conservancy Board.
In a My Turn column that ran in the Methow Valley News on June 6, Mary McCrea warned of “one or more entities … trying to buy water rights to strip them from the land where they are now used and move them out of the valley.” Once transferred downstream, those rights are “gone forever,” said McCrea, who is chair of the Methow Watershed Foundation, a nonprofit organization that funds water projects in the Methow Valley.
Concerns about losing water rights forever may not be as valid today as they were in the past, however, according to an independent water consultant. “The water code is an ever-changing landscape … and new techniques are emerging that make this former ‘truth’ less universal,” said Dan Haller, a consultant with Aspect Consulting in Yakima.
At recent meetings of the Methow Watershed Council, an advisory group that promotes sustainable water supplies, there have been discussions of possible efforts by outside groups to purchase local water rights, said Greg Knott, council chair.
“Rumors have come up from the lower valley,” Knott said last week. “It’s always been a topic of discussion on the Watershed Council. If there’s one thing everyone in the valley agrees on, we don’t want this to happen.”
Watershed Council members Bill Tackman and Mike Fort echoed concerns about possible efforts to purchase local water rights. Aside from the Lundgren transaction that is underway, however, the only person willing or able to confirm being asked to sell water rights was a neighbor of Tackman who lives on McFarland Creek.
Jeff Zwar, said he was approached a “couple of years ago” by a man who came to his home and asked about purchasing his water rights. “It would have been in 2015 or 2016. He was an older fellow who said he was representing somebody with a lot of money. I told him I couldn’t sell them; we have a conservation easement that prohibits selling the water. I wouldn’t have done it anyway. I don’t even know who was being represented,” Zwar said.
Surface water transfer
The water transaction between Lundgren and Crown Columbia proposes a temporary donation of portions of a surface water claim into the State Trust Water Program, where it will be held “for the instream flow benefit of the Chewuch River,” according to an environmental checklist completed for the project. Those rights can serve as mitigation for future water use downstream.
“The place of use for trusted portions of the right shall be from the existing point of diversion on the Chewuck (sic) River to the Methow and Columbia River and then continuing on to the Pacific Ocean,” according to a description in a state Department of Ecology application form for change/transfer of water rights.
Mark Peterson, a Wenatchee water rights attorney representing Crown Columbia, said the company acts as a “water banking operation” that holds water rights to offset future use downstream. “Crown will assemble a portfolio of rights, this being one, that creates mitigation value instream,” he said.
Peterson said the Lundgren transaction was initiated by the water rights owner, Don Lundgren, who operates a cattle ranch and guest house near the end of the East Chewuch Road. “What I understand … is they are modernizing their farm, and the modernization process usually yields more efficient use of water,” Peterson said. Lundgren declined to comment on the transaction when contacted this week by the Methow Valley News.
“He [Lundgren] entered into a relationship with the Crown water banking operation to hold the rights. And Crown will turn around and find a lessee of them to make use of the rights downstream, or even on adjacent properties,” Peterson said.
The 33 cfs proposed to be retained for instream flow in the Chewuch River “is a pretty good chunk of that river,” Peterson said. “If you took the same amount out of the mainstream Columbia (River), you would hardly notice it,” he said. The Chewuch was flowing at about 552 cfs at the Winthrop gauge early this week.
The most likely use of the water rights would be mitigation for water to convert dryland farms to irrigated farms, which is a primary focus of Crown Columbia, Peterson said. “Most farms that use Crown water are already farms — they’re dryland farms. If irrigated, their crop yields go up by a factor of 10.”
Peterson said Crown Columbia’s water banking approach provides long-term leases of 20-25 years of irrigation water to eastern Washington farmers. “Crown sees a niche that nobody’s providing for farmers or existing farmlands … it’s a good solution that’s cost-effective for farmers — a lease option” that doesn’t require as much up-front cost as purchasing water.
Leasing the water rights means that the owner — Crown Columbia — has the option of using them for other purposes after the lease is done. In other words, the water could return to the Methow Valley, Peterson said.
“If we provide to an agriculturist downstream we would probably do it for 20 years,” Peterson said. “If a new demand manifested up in the Methow … the mitigation rights in the portfolio could be remitigated … we could reallocate the Lundgren water back upstream.”
Crown is operating its water bank “more like a financial bank, with water coming in and going out,” he said. “We use the (state water) trust program as essentially a bank vault. You deposit into the trust program — it’s known, its secure, the Department of Ecology tracks them. In Crown’s case it (water rights) will stay there until Ecology authorizes a loan somewhere else,” he said.
“There is a real antipathy toward the sale of water,” Peterson acknowledged. “It tends to be associated with crisis management. I have great hopes for this water bank creating a more gentle and flexible approach to reallocating water and revenue.”
More flexibility
Haller, the Yakima water consultant, said fears of losing local water rights have a good foundation in history. “When water rights are transferred out of basin historically, they have not come back. This has been due to a combination of water law interpretation, policy initiatives, and in some cases lack of foresight by those transferring water,” said Haller, who has worked on a number of water issues in the Methow Valley, including advising the Town of Twisp on municipal water rights.
“However,” he said, “you can’t find a place in the water code where it says, ‘thou shalt not transfer water upstream,’ so it’s never been explicitly prohibited.”
Haller credits an “explosion in water banking over the last decade” for making water transfers more flexible. “I can think of two instances where an upstream transfer is possible. First, if the water right owner is leasing it downstream, it can return to the county of origin with no issue at the end of the lease,” he said. State law provides for such temporary transfers, he said.
“Second, if the water right owner is permanently transferring it downstream, but reserves the right to the credit established in the downstream reach in a water trust agreement with Ecology, then they can transfer that same right, or an equivalent quantity from a different right, back upstream,” Haller said.
When water rights are placed in the State Trust Water Program, “then there are typically mitigation permits issued from that water bank. If you put 100 acre-feet in the trust, you can pull 100 acre-feet out elsewhere,” he said.
A water banking process allowed the Methow Valley Irrigation District to place surplus water, achieved through conserving water by piping its system, into a bank and a portion of that water was transferred to the Town of Twisp for municipal use, he said.
“The whole concept of mitigation trading is based on who owns the credit and letting the market dictate where the commodity should go,” Haller said. He compared it to the “cap and trade” approach for pollution control. “Markets in general favor portability and certainty, so the ability to transfer water in two directions is becoming more recognized by water right practitioners.”
Local water bank planned
Crown Columbia Water Resources is affiliated with a larger corporation called Petrus Partners Ltd., based in New York City, which invests in real estate and farmland. Through its affiliate, Crown West Farm Group, Petrus owns 8,000 acres of farmland, according to the Petrus website.
In 2015, Petrus formed Crown Columbia Water Resources LLC, a government-approved water bank active in the Pacific Northwest. Crown Columbia controls 50,000 acre-feet of water in the Columbia-Snake River Basin, according to the website. About half of the firm’s investment capital has come from retired partners of Goldman, Sachs & Co., the website states.
Crown is continuing to search for opportunities to add new water rights to its portfolio, Peterson said. “We have a lot of water that’s in process … and some water that we’ve acquired that has been placed in the trust program.”
Some local water supply advocates are mistrustful of Crown’s intentions and are working to create a way to keep and use water here in the Methow Valley, said McCrea, of the Watershed Foundation. The foundation is taking the first steps toward setting up a local water bank.
“If you truly want to sell your water rights, we would purchase the water at a fair market value and temporarily transfer the right to the Trust Water Rights Program, where the water would remain instream until another irrigator bought the water to use on land here in the valley,” she said.
“We are going out for grant funding” for money to purchase water rights, she said. “In the interim, we hope that water could be leased” rather than sold. “We are looking for partners who are in a position to lease,” she said.
McCrea said the Methow Watershed Council is planning a series of community meetings in mid-July to discuss water rights sales and water measuring and metering programs. The sessions are planned for July 15 at the Twisp Valley Grange, July 16 in Methow at the community center, and July 17 at the Mazama Community Club, beginning at 6:30 p.m. each evening.
Comment on water rights application
Public comment will be accepted until July 20 on an application to the Okanogan County Water Conservancy Board by Crown Columbia Water Resources LLC to transfer water rights owned by the Lundgren Limited Family Partnership into the State Trust Water Program.
The application proposes to transfer up to 33 cubic feet per second and 255.2 acre-feet/year for instream flow benefit of the Chewuch River.
The application will be on the water conservancy board agenda during regular meetings until the board decides on the application, said Lisa de Vera, clerk for the board. After receiving comments, the board often makes a site visit before deciding, she said. The board meets on the first Wednesday of each month (except the July 4 holiday) at 2 p.m. at 123 Fifth Ave. N., Room 150, Okanogan.
If the board approves the application, it goes on to the state Department of Ecology and a 45-day review period, which is sometimes extended by another 30 days, de Vera said.
Comments on the application can be submitted to the Okanogan County Water Conservancy board at 1205 Ormiston St., Wenatchee, 98801. Protests or objections to the approval of the application may be filed with the Department of Ecology. They must include a detailed statement of the basis for objections and be accompanied by a $50 recording fee and filed with the Department of Ecology Cashiering Unit, P.O. Box 47611, Olympia, WA 98504-7611 within 30 days from June 20.
For more information contact Lisa de Vera by email at ldevera@nwi.com or by phone at (509) 860-7466.
