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Utah Court of Appeals Affirms that a Municipality is not Constitutionally Obligated to Serve Residents Outside of its Boundaries and Forfeiting a Water Right

The Utah Court of Appeals has held that consistent with Article XI, § 6 of the Utah Constitution, a municipality is not obligated to provide service to those outside of its service district and has not deprived a resident of any rights in refusing to make sure deliveries. Additionally, the Court of Appeals held that use by another water user is not a defense to forfeiture in the absence of a lease or other agreement. [Salt Lake City Corp. v Haik, 2019 UT App 4 (Ut.App. Jan 10, 2018).]

 

 Factual and Procedural Background

The waters of Little Cottonwood Creek have a long and storied history. The facts in the present case stem from an attempt by several water users with rights in the South Despain Ditch (the Ditch) to move their water rights significantly upstream. Two of these users (Haik and Raty) filed change applications in an effort to obtain water service to lots they owned in the Albion Basin near Alta Ski Resort. The contemplated changes would convert these irrigation rights to year-round domestic rights.

Salt Lake City and Metropolitan Water District of Salt Lake and Sandy (collectively: the City) opposed these change applications as they felt they would interfere with the City’s rights to the overwhelming majority of the flows of Little Cottonwood Creek. Particularly, the City contended that pursuant to an agreement signed in 1934, the Ditch had granted the use of the majority of the non-irrigation and winter water to the City. In light of this agreement, the Utah Division of Water Rights declined to act on those change applications, as it could not interpret the agreement. These change applications remain unapproved.

Subsequently, the City filed a motion for partial summary judgment seeking a declaratory judgment that the subject water rights were forfeited due to non-use. Haik and Raty opposed this motion asserting, among other things, that the water had been used by other parties and that they had no opportunity to use the water at the point of diversion. However, neither Haik nor Raty provided evidence of an agreement or lease allowing some other party to use their allocations.

 

At the Trial Court

The District Court granted the City’s motion declaring that “any portion of the [water right] acquired by [Haik and Raty] has been forfeited by nonuse.” ¶ 16. Further, the court concluded that evidence of “diversion does not equal use, and does not support an inference of use.” ¶ 17. Therefore, absent a lease or agreement, use by others was legally insufficient.Id. Haik and Raty have appealed this ruling.

Additionally, Raty filed several counterclaims asserting that the City had a constitutional obligation to provide her Albion Basin lot with water service. These claims were based upon Article XI, § 6 of the Utah Constitution, which requires municipalities to operate the water it controls for “supplying its inhabitants with water at reasonable charges.” Utah Const. Art XI, § 6. Additionally, she asserted violations of due process and equal protection. See id. Art I, §§ 7 and 24. Finally, she asserted that the City’s provision of water outside of its city limits should be regulated by the Public Service Commission.

The City moved to dismiss these claims asserting that they failed to state a claim upon which relief could be granted. The District Court granted this motion to dismiss. The District Court held that Raty was not an “inhabitant” of Salt Lake City as required to receive protection under Article XI, § 6. Further, the court concluded that Raty had not been unequally treated and did not have a protectable property interest. Finally, the court rejected the theory that the City was subject to public regulation. Raty appealed these decisions.

 

The Court of Appeals’ Decision

 The Utah Court of Appeals reviewed each of the issues on appeal and ultimately affirmed the decision of the District Court. Of particular interest, is the court’s analysis of both the question of forfeiture and also that of the constitutional protections. These decisions have broad implications for water users and also those seeking to obtain water outside of municipal city limits.

 

The Forfeiture Claim

In Utah, a water right is subject to forfeiture:

 

  • . . .[w]hen an appropriator or the appropriator’s successor in interest … ceases to use all or a portion of a water right for a period of seven years…. Utah Code Ann. § 73-1-4-(2)(a).

In the present case, the District Court held that “straightforward facts” showed a complete lack of use from 2003 to the present time. Raty and Haik provided no evidence of their use, but rather relied upon evidence showing that the water right was diverted to the Ditch, and testimony that the diverted water was used by others. ¶ 46.

The Court of Appeals noted that this evidence is “legally insufficient,” because the forfeiture statute states that a right is subject to forfeiture when the unused water is “permitted to run to waste” or “beneficially used by others without right with the knowledge of the water right holder.” Utah Code Ann. § 73-1-4(2)(d)(i)-(ii). Accordingly, the court concluded that use by others will save a water right holder from forfeiture only when such use is:

 

  • . . .according to a lease or other agreement with the appropriator or the appropriators’ successor in interest. Id. at § 73-1-4(2)(e)(i).

Consequently, the lack of actual use or an agreement for use by another water user was fatal to Haik and Raty’s defense. Notwithstanding the foregoing, the court left open the question of whether a water right held by multiple owners may be insulated from forfeiture if one of the parties uses the other’s water without agreement. This is of particular relevance to mutual water companies and/or other associations that hold water for multiple shareholders or owners.

 

The Constitution Claim

Further, the Court of Appeals ruled that Article XI, § 6 of the Utah Constitution does not create a “legal duty to provide water service to all members of the public.” Thompson v. Salt Lake City Corp., 724 P.2d 958, 959 (Utah 1986). Rather, because that provision mentions only “inhabitants”, the duty does not extend to “others beyond the limits of the city.” Platt v. Town of Torrey, 949 P.2d 325, 329 (Utah 1997) (quotation simplified). Raty asserted that she was an “inhabitant” of Salt Lake City, citing to the fact that her lot was “part of [the City’s] established municipal service area.”

In rejecting this argument, the court noted approved change applications near the Raty lot “empowered,” but did not obligate the City to deliver water in that area. Further, in Utah, a municipality’s decision not supply water to non-residents is permissive. Utah Code Ann. § 10-8-14(1)(d). Accordingly, the Court of Appeals held that the City’s decision to supply water to people beyond its city limits does not create a constitutional obligation to serve all those within the approved service area. See,Platt, 949 P.2d at 328 – 330. Ultimately, the court noted that such an obligation would cut against the purpose of Art XI, § 6, which is designed to ensure sufficient water is available for the continued growth of a municipality.

 

Due Process and Equal Protection Claims

Finally, the court analyzed Raty’s due process, equal protection and Public Service Commission claims. The Court of Appeals denied the due process claim as Raty did not have a protectable interest in receiving water (based upon the Article XI, § 6 analysis). As such, she could not have been deprived of that property without due process. Similarly, the court dismissed the equal protection claim because Raty, as a class of one, did not establish that the City had a, requisite, “totally illegitimate animus” towards her. See, Brian Head Dev., LC v. Brian Head Town, 2015 Utah App 100, ¶ 9.

 

Conclusion and Implications

This case addresses two interesting points for water users and water practitioners. First, the Court of Appeals held that in order to protect a water right from forfeiture, an appropriator must take an affirmative step to lease or enter into some other agreement to allow another person the use of her water. Thus, the simple fact that water is diverted and used by a downstream party is insufficient to protect a water right from forfeiture arising from nonuse.

Second, this decision clarifies the obligations of municipalities with regard to the delivery of water outside of its municipal boundaries. This allows municipalities to regulate and limit growth in certain areas, such as critical watersheds. Additionally, it relieves the municipality of the obligation to construct expensive infrastructure necessary to serve individuals outside of its municipal boundaries.

The Utah Court of Appeals Decision may be found at:

https://www.utcourts.gov/opinions/appopin/Salt%20Lake%20City%20Corp.%20v.%20Haik20190110_20170238_4.pdf

(Jonathan Clyde)