The Washington State Supreme Court ruled on petition from the State of Washington’s water resource agency, the Department of Ecology (Ecology), granting discretionary review of a recent State Court of Appeals decision invalidating a portion of Ecology’s instream flows for the Spokane River. [Center for Environmental Law & Policy, et al., v. State of Washington, Department of Ecology (Jan. 8, 2020), accepting review of Center for Environmental Law & Policy, American Whitewater, and Sierra Club v State of Washington, Department of Ecology, 444 P.3d 622 (Ct. of Appeals, Div. II, 2019).]
Background
The state Department of Ecology went through the process for formal adoption of an administrative rule establishing minimum instream flows for portions of the Spokane River in 2015. A collection of environmental groups challenged the validity of a portion of the Rule, calling into question the Agency’s authority and methodology for establishing instream flow rules.
The Spokane River
The Spokane River runs 111 miles from its Lake Coeur D’Alene headwaters in Northern Idaho across the state line into Washington where it flows through the heart of the City of Spokane to its eventual confluence with the Columbia River. The Spokane River is a focal point in an otherwise arid landscape, providing cultural, economic and recreational touch points to a growing population of the Inland Northwest and is home to much fish and wildlife, including trout and mountain whitefish among other species.
The flows of the Spokane River are heavily controlled by hydroelectric dam facilities. From its headwaters to its confluence, there are seven major dams, one owned by the City of Spokane, the rest by Avista, a private utility. Both owner entities operate under licenses issued by the Federal Energy Regulatory Commission (FERC). The Avista licenses were reissued in 2009, with expiration in 2059. The City of Spokane’s license expires in 2031. The 2009 FERC license sets instream flow levels for dam operations in the same reaches as the State issued instream flow rule.
Regulation of Instream Flows in Washington
The case arises from a challenge to instream flows set by rule. Ecology is authorized and directed by various statues to manage the waters of the state for a myriad of purposes, including setting instream flows by regulation. The authority for setting instream flows arises under multiple code sections, adopted and amended over the course of the last fifty plus years. The creation of instream flow rules has become increasingly controversial, as these rules have become the fulcrum in the balance between authorizing new uses of water with protection of flows for fish and senior water rights. Once adopted, the minimum instream flow established by rule becomes an appropriative right within the priority scheme of “first in time, first in right,” which must be protected from injury by junior water uses.
Under the general provisions of the state water code, Ecology has exclusive authority to establish “minimum instream flows” but to do so Ecology must consult with and consider proposals of the State Fish and Wildlife Agency. RCW 90.03.247 (first adopted in 1979, amended in 1980, 1987, 1994, 1996, 2003 and 2018).
Under the Minimum Water Flows and Levels Act (Ch 90.22 RCW, first adopted in 1969, amended in 1987, 1988, 1994, and 1997), Ecology is authorized to establish:
“. . .minimum water flows or levels. . .for the purposes of protecting fish, game, birds or other wildlife resources, or recreational or aesthetic values of said public waters whenever it appears to be in the public interest to establish the same.” RCW 90.22.010.
Again, Ecology must defer to recommendations of the State Fish and Wildlife Agency to protect fish, game or other wildlife or to itself in adopting flows protective of water quality. Note the permissive disjunctive in the purposes list, with the mandatory directive for flows for fish and water quality.
Under the Water Resources Act (Ch 90.54 RCW, adopted in 1971, amended in 1990), the legislature added additional nuance to Ecology’s water management considerations, with such additional goals as directing the agency to allocate water for “the maximum net benefits for the people of the state” while also converting and refining the laundry list of purposes from the Minimum Water Flows and Levels Act including making the list of purposes to be considered conjunctive and obligatory with the use of “shall” and “and” in the contexts of protecting and enhancing the quality of the natural environment, and retaining “base flows” “for preservation of wildlife, fish, scenic, aesthetic and other environmental values, and navigational values.”
The Court of Appeals’ Decision
At the core of dispute at the Court of Appeals is the path which Ecology is to take to thread the needle between and among the various legislative directions, with Ecology taking a narrow read by relying solely on the Minimum Water Flows and Levels Act in setting instream flows levels on the basis of fish needs alone, and the appellants taking a more expansive position that Ecology is required to consider and address all instream flows uses under the direction of the Water Resources Act.
The Court of Appeals ruled certain portions of Ecology’s rule invalid on two of the four Administrative Procedures Act tests for determining rule validity. An agency rule may only be invalidated if it is: 1) unconstitutional; 2) exceeds the agency’s statutory authority; 3) was adopted without complying with the statutory rule making procedures; or 4) is arbitrary and capricious. The court found the rule both exceeded the Agency’s statutory authority and was arbitrary and capricious.
On the finding of exceedance of the agency’s statutory authority, the court attempted to sort through the labyrinth and make its own path of reconciliation, and in doing so determined Ecology did not properly thread the needle. While the court found flows for fish to be a priority under the statutes, flows for fish alone cannot be the only consideration by Ecology in setting flows; and while not going so far as petitioners argued was required—preservation of all instream values—that Ecology must still consider other instream values beyond fish flows in adopting instream flows.
On the finding of arbitrary and capricious, an agency’s action is arbitrary and capricious “if it is willful and unreasoning and taken without regard to the attending facts or circumstances.” The Court of Appeals found Ecology’s efforts at setting instream flows to be lacking substance. The record as cited in the opinion appeared to be narrowly focused on flows for fish as recommended by the State Fish and Wildlife Agency and little else. This inadequacy of the record was found to be so “cursory” as to meet the standard of arbitrary and capricious.
In addition to the Administrative Procedures arguments, the appellants presented a Public Trust Doctrine argument which the Court did not find persuasive. Appellants sought to invalidate the Rule under the Public Trust Doctrine arguing that insufficient minimum instream flows degrade the Public’s interest in the waters of the state. The court rejected this argument upholding previous caselaw that Ecology does not have the authority to assume the Public Trust duties of the state, taking it further to determine that then conversely Ecology does not and cannot have the authority to give up the interest of the public through its rulemaking authorities. The Court echoed again previous caselaw declining to apply the Public Trust Doctrine as a separate canon of authority for interpreting the state’s water code.
Beyond the dispositive rulings, there was a procedural skirmish over whether the agency should have included specific documents in the rulemaking file, and a footnote rejecting any relationship between instream flow rules set by state regulation versus instream flow targets set by FERC.
In the end, while the purposes for which setting instream flows are somewhat discretionary beyond the required consultation with the fish and wildlife agency, the apparent failure to consider flows above the fish and wildlife agency proved fatal to the rule in the Court of Appeals’ eyes. The court held that Ecology exceeded its authority in establishing minimum summer instream flows and therefore that portion of the rule is invalid. Ecology must revisit its analysis and include review of some if not all the water uses enumerated in the Water Resources Act to balance in and out of stream uses. The result of the ruling leaves no clear standard of what Ecology must consider (apparently all instream uses) and to what extent it must then take those considerations into effect (not full use of each but more than none).
This raises the question of whether Ecology must always adopt flows above fish flows to accommodate other uses, and if so, to what level and for which uses. The alternative is that this is a question of preparing the proper record of decision. If Ecology’s record demonstrated consideration of flows for other instream uses regardless of the final level, this rule would have likely met the APA challenge.
Conclusion and Implications
In making its ruling, the Court of Appeals overturned a lower court ruling upholding the instream flow. Appellants initially sought direct review to the Supreme Court. The Supreme Court declined direct review of the rule as valid, resulting in the review defaulting to the Court of Appeals. In now accepting the case for direct review, the Supreme Court has elected to wade back into water cases for the first time since 2016 (Whatcom County v Hirst Et Al, 186 Wash.2d 648, 381 P.2d 1 (2016)).
Of interest from the Supreme Court would be a road map for Ecology in reconciling the many and varied directives on the nature, purpose and extent of considerations in setting instream flows by agency regulation now in statute. Additionally, Supreme Court review has the potential to reopen application of the Public Trust Doctrine as guiding the Agency’s management of water resources. The Court of Appeals’ decision is available online at: https://www.bdlaw.com/content/uploads/2019/01/2019-06-26-CELP-v.-Ecology-Instream-Flow-Rule-Case-D2-51439-7-II-Published-Opinion.pdf
Additional briefing is due in February, with the case ready for possible setting during the Court’s Spring 2020 term.
(Jamie Morin)
