Local governments object to ‘area-wide’ rights permitting
By Ann McCreary
A private investment company’s effort to acquire water rights throughout the Columbia River basin, including tributaries like the Methow River, has been put on hold by the Washington Department of Ecology.
Ecology, which must approve water rights applications, announced last week that it had “suspended processing” of an application from Crown Columbia Water Resources LLC, a company affiliated with a Wall Street-backed investment corporation.
Crown Columbia proposed a new concept called an “area-wide water permit” that would allow it to buy water rights anywhere in the vast Columbia River basin, hold them in a water bank, and then sell or lease portions of the water permit to mitigate for new downstream water uses.
The idea alarmed local government leaders, who objected to allowing a private company control and profit from a scarce public resource. The Twisp and Winthrop town councils and Okanogan County commissioners said the proposal threatened their communities, which are already struggling to ensure adequate water supplies to meet current and future demands.
“The water supply in the Methow Basin has become increasingly inadequate to meet the local demands of aquatic habitat, agriculture, and community need,” Twisp Mayor Soo Ing-Moody said in a letter from the town to Ecology.
“We believe that the ability for large out-of-state corporations with no interest other than to maximize profits … poses serious and irreversible ramifications, particularly for upstream watersheds like ours and the local communities within them,” Ing-Moody said.
Ecology requested feedback on Crown Columbia’s proposal last month from more than 160 local, state and federal officials, tribal leaders and other stakeholders from communities in Columbia River basin that would potentially be impacted if the water banking concept were approved.
In an email last week to the same group, Ecology noted the “wide interest” in the application. “We recognize the many issues at stake as we consider all the policy aspects of water banking and the future of water management in Washington. We believe it is in everyone’s best interest to allow time to work with tribes, counties, cities, legislators, and stakeholders to engage in these policy discussions together, before making a decision on this permit application,” Ecology said.
In a letter to Ecology, Okanogan County commissioners expressed “concerns regarding applications for water that complicate the resolution of water-related issues in the Methow Valley.”
Okanogan County — and the Methow Valley in particular — has been grappling with issues of both legal and physical access to water for the past couple of years. The county commissioners have imposed moratoriums on new subdivisions and building permits in the Methow Valley that would rely on a well for household water, and Ecology has banned new water withdrawals in some parts of the Methow where streams and lakes are considered over-allocated.
Commissioners urged Ecology to work closely with local government and tribal leaders “to sort out this unprecedented private sector proposal to manage our precious public resources.”
Winthrop’s town council adopted a resolution “supporting locally managed water.” The resolution stated the town opposed “corporate, private and regional control of our precious water resources” and would “actively oppose inappropriate outside attempts to turn the Methow water into a for-profit commodity.
Ecology was in the process of evaluating about 35 comments and protests received regarding the Crown Columbia proposal when the decision was made to suspend processing the application, said spokesperson Joye Redfield-Wilder.
The comments received by Ecology raised concerns about out-of-basin water transfers, water speculation, out-of-state investment in Washington’s water resources, and whether Crown Columbia’s application was complete and provided information required by law, Redfield-Wilder said.
Ecology decided it was “prudent” to suspend further consideration, because Crown Columbia’s application raised broad questions about water banking policy that Ecology has been studying during the past year, Redfield-Wilder said.
At the direction of the Washington state Legislature, Ecology worked last year with an advisory group to develop a report on water trust, banking and water transfers to help guide policy and legislation. The 141-page report was presented to the Legislature in the fall — about the same time the Crown Columbia application was filed, Redfield-Wilder said.
Ecology will work on developing “policy concepts for legislative consideration” in the next legislative session in consultation with tribes and other stakeholders, and “ultimately these discussions will help inform any decision that might come related to the Crown Columbia permit application,” Redfield-Wilder said.
“The greatest observation we’ve learned from the Crown application,” she said, “is that we need to address fundamental approaches to how water banks operate — in the framework of existing laws and in light of questions associated with ownership of water rights, making water available where it’s now difficult to access, and doing so in a way that protects senior water users and counties, and consider areas that worry about water being transferred out of their basin.”
Déjà vu all over again
The area-wide water permit proposition is not the Methow Valley’s first experience with Crown Columbia Water Resources. In 2018 the company was involved in attempting to purchase water rights from a Winthrop rancher, Don Lundgren, who owned surface water rights from the Chewuch River.
Crown Columbia had similar, although smaller scale, plans for that purchase. The company proposed placing the rights in the state’s Trust Water Program (water bank) to be held for future mitigation for new uses downstream. Crown Columbia could then lease or sell mitigation credits for new uses, such as irrigating dryland farms, which would be offset by the water held in the bank.
After widespread and vocal opposition to that application, attorneys for Crown Columbia withdrew the application in 2019.
In its area-wide water permit application, which was filed with Ecology last October, Crown Columbia asked to “to appropriate public waters from all surface water and groundwater in hydraulic continuity with surface water, within the mainstream or tributary of the Columbia River within Washington State at the instantaneous rate of 49.9 cubic feet per second (cfs) for the purposes of irrigation, domestic and municipal water supply,” Ecology said.
The 49.9 cfs equals approximately 36,427 acre-feet per year. At market prices of $2,000-$10,000 per acre-foot, those water rights could be worth between $73 million and $364 million to Crown Columbia, according to Mary McCrea, a retired water attorney and former chairman of the Methow Watershed Foundation.
“The public good and the public’s water resource are not factors driving Crown’s actions. Bottom-line profits are. To Crown, our public water is a commodity to add to the company’s investment portfolio to be sold to the highest bidder,” McCrea said in a statement provided to the Winthrop Town Council.
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 water banking company with an address in Spokane. Crown Columbia controls 50,000 acre-feet of water in the Columbia-Snake River Basin, according to the website. About half of Petrus’ investment capital has come from retired partners of Goldman, Sachs & Co., the website states.
Crown Columbia devised an expansive new approach to water banking in proposing its area-wide water permit for the Columbia River basin in Washington, which occupies the entire south-central portion of the state from the Okanogan Highlands to the Pacific Ocean on the Oregon border.
Ecology, and its Office of the Columbia River (OCR), were considering the area-wide water permit as a way to “streamline access to water supply in the Columbia River Basin,” according to a fact sheet from OCR. The new water banking process “would make water available for long-term loans and leases throughout the Columbia River Basin,” according to Ecology.
Water rights in tributaries in the upper reaches of the Columbia River basin, like the Methow River basin, would be especially attractive under the area-wide permit scenario, because they could be sold as mitigation credits for new uses anywhere downstream to the Pacific Ocean, McCrea said. “Water rights from headwater basins will be a primary target for Crown water right acquisitions,” she said.
That’s a concern for places like the Methow Valley, said Ing-Moody, who guided Twisp through a decades-long effort to regain previously lost water rights. “Upstream communities like ours … have long identified concerns regarding water availability and access to water rights to meet local needs,” Ing-Moody said in her letter to Ecology.
“The decision before the Department of Ecology potentially poses serious and irreversible ramifications, particularly for upstream watersheds like ours and the local communities within them,” Ing-Moody said.