The Supreme Court's Hirst Decision - What Does it Mean to Investors in "Dirt"?

By Doug Owens


By the time you read this, the Legislature will have concluded its third extraordinary session of 2017. As I write this, the Legislature has not agreed on a capital budget in that session because legislators cannot agree on a solution for the Supreme Court's October 2016 Hirst decision on land development in an era of water scarcity.

Water scarcity? In Washington? Yes, as the court indicated what was an environment of aquatic abundance when the first water rights act was adopted at the tum of the twentieth century has, with the expanding population of our state, become a regime of scarcity of water. These twin forces, the expansion of population which generated the Growth Management Act and the recognition over time that surface water (rivers and streams) and groundwater (taken from wells) are connected and that the total water has not expanded with population, gave rise to the dispute that landed in the Supreme Court last fall and has tied up the Legislature this summer.

The genesis of the case was the adoption of a Comprehensive Plan in Whatcom County that provided a mechanism to enable building permits for single family residences and subdivision approvals whose potable water needs would be served by wells that under the statute are exempt from needing a permit because they would each draw less than five thousand gallons per day. The Department of Ecology, which has overall administrative control of the water rights regime, has created Water Rights Inventory Areas, sixty-two of them in the state, in which certain areas are deemed "open" and others "closed" to new water uses. Even the "closed" areas however include "closed to all" and "closed to' all but permit-exempt uses" classifications. This created the seeds far the dispute.

The Whatcom County Comprehensive Plan essentially adopted the "nat closed to' permit-exempt" WRIA classification issued by Ecology as the County's determination that water would be presumptively available far new development in permit-exempt wells. The Growth Management Act says that the local government is required to' evaluate the impact of rural development on the quality and quantity of water that remains available far minimum water flaws to' support fish and other wildlife and importantly, prior legal uses of the water.

The Comprehensive Plan was challenged by water rights holders and the Growth Management Board ruled that the County could not simply adopt the "not closed to'

permit -exempt wells" classification in Ecology's rule as a presumptive determination that water was legally and factually available far new permit-exempt wells. And it is the legal and factual availability of water that the County must :find in order to grant a new residential building permit in rural areas. The Supreme Court noted that in the particular watershed involved, "instream flaws" failed to' meet the minimum required by the regulation approximately one third of the time.

Does this mean that far each single family residential building permit or subdivision to' be served by a permit-exempt well in a rural area the applicant must demonstrate that the well will not tip the balance of water resources and use below the required level? That is a question that the Supreme Court left somewhat apen. The majority opinion indicated that the Growth Management Act required the County to receive sufficient information from applicants far building permits that there is a legally and factually adequate water supply before granting a building permit. There was one justice who wrote in a concurring opinion that it is nat the applicant's jab to' shaw the adequacy of the legal water supply but it is instead the County's jab in conjunction with Ecology. The court actually remanded the case to' the Growth Management Board far further proceedings and so it is possible that some new development in the case will shine a light on this question. Although this case originated in Whatcom County, the Growth Management Act applies statewide and each county has control aver development within its boundaries, Counties are required to' have comprehensive plans that, according to this decision, must make provision far the protection of minimum flaws in surface water and that means taking into account the drain and the total water supply that is imposed by permit-exempt wells drilled in rural areas. In any case, it should be expected that permit reviews for rural residential development that uses permit-exempt wells in counties whose comprehensive plans resemble Whatcom County's plan, will be extended while the counties deal with this new case. The preceding is intended to be educational and should not be considered legal advice.

About the author...

Doug Owens practices real estate law and general business law from his office in Anacortes. He offers a 20% discount far REAPS members and he can be reached at (360) 299-3990 or [email protected]

REAPS is the oldest – and largest - Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you've never attended one of our meetings, just email our office at [email protected] and be our guest for free!"

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