Title: Water Resources and Economic Development of the West
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Abstract: Richard Hamann's Collection - Water Resources and Economic Development of the West
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Full Text




Water Resources and Economic

Development of the West





Report No. 5



Ground Water Economics

and the Law





Conference Proceedings
Committee on the Economics of Water Resources Development
of the
Western Agricultural Economics Research Council
and
Western Regional Research Committee W-42

Berkeley, California
December 20 and 21,1956


~ __1_1_~ __I___FC_ _












WATER RESOURCES AND ECONOMIC

DEVELOPMENT OF THE WEST








Report No. 5








GROUND WATER ECONOMICS

AND THE LAW














Conference Proceedings

Committee on the Economics of Water Resources Development

of the

Western Agricultural Economics Research Council
and Western Regional Research Committee W-42


Berkeley, California


December 20 and 21, 1956


__









Foreword


Over the past few years the Committee on the Economics of Water Re-
source Development has devoted a series of meetings to policy and research
problems associated with water development in the West. This report, "Ground-
Water Economics and the Law, is fifth in a series of proceedings publications
of the Committee.

Other proceedings reports released by this Committee under the general
heading of "Water Resources and Economics Development of the West" are as
follows:

Report No. 1 Research Needs and Problems
Report No. 2 Institutions and Policies
Report No. 3 Benefit Cost Analysis
Report No. 4 Impact and Measurement, Organizational Integration,
Small Watershed Development, and Desert Land Develop-
ment

One of the purposes of these meetings has been to develop promising re-
search projects. One of the projects resulting from Committee discussions is
entitled "Economic Analysis of Ground-Water Laws in the Western States"
(knownbythe.regional code number of W-42). W-42 is financed jointly by the
Federal government and cooperating state agricultural experiment stations.
The project was initiated July 1, 1956, and the first regional meeting was held
in December of that year in Berkeley, California. This meeting was held
jointly with the Committee on the Economics of Water Resource Development.
The papers in this report were presented at that joint meeting.

The purpose of the meeting was to bring about a better understanding of
the relationship of ground-water economics and ground-water law. Legal in-
stitutions are not static; they can and do change. But with a stable government
they change according to certain established procedures. To be most useful,
laws must reflect contemporary economic and social conditions. Yet "econom-
ic efficiency" must be tempered with justice and equity. Economics, on the
other hand, has traditionally emphasized the allocation of resources in order
to achieve certain goals. But, without reference to legal institutions, the eco-
nomics of ground-water usage is sterile. Some understanding of the law is
necessary for the economist operating "within" a given law or suggesting eco-
nomic criteria to be incorporated into legal institutions.

The purpose of the meeting was not to bring about an "integration" of the
two disciplines. Rather, the meeting was designed to acquaint people in each
discipline with the possibilities, the problems, and the concepts that exist in
the other. In this way it was hoped professional work in each field would be
enriched.

Special credit goes to S. V. Wantrup, Stephen Smith, Warren Bailey
and George Barr for their efforts as a committee in the development of the
program and for making other arrangements for the joint meeting.


Emery Castle, Chairman Owen Brough, Jr., Chairman
Western Regional Research Committee on Economics of
Project, W-42 Water Resource Development


_ _~_j_ __









TABLE OF CONTENTS


Page
The Concept of Reasonable Beneficial Use in the Law
of Surface Streams---Frank J. Trelease . . 1

The Concept of Reasonable Beneficial Use in the Law
of Surface Streams---W. E. Code .. .... . ... 21

Reasonable Beneficial Use in the Development of
Ground-Water Law in the West---Wells A. Hutchins . 23

Reasonable Beneficial Use in the Development of
Ground-Water Law in the West---W. B. Anderson. . .. 35

Economic Implications and Appraisal of the Court
Reference Procedure for Allocating Ground
Water---J. Herbert Snyder ................. 37

Economic Implications and Appraisal of the Court
Reference Procedure for Allocating Ground
Water--Helmer Holje......... .. ......... .67

Ground-Water Management in Basins Where Recharge
is Small in Relation to Stock, with Particular
Reference to Legislation in New Mexico---O. P. Blaich . 69

The Role of the Public District in the Integrated Management
of Ground and Surface Water---Stephen C. Smith. . 81

The Role of the Public District in the Integrated Management
of Ground and Surface Water---M. L. Upchurch. . 93

Ground-Water Utilization in Conjunction with the Development
of Public Land Under Federal Law---Clyde E. Stewart 95

Ground-Water Utilization in Conjunction with the Development
of Public Land Under Federal Law---Garland P. Wood. .. 103

The Applicability of Marginal Analysis to Problems of Water
Allocation---E. N. Castle ................. 105

The Applicability of Marginal Analysis to Problems of Water
Allocation--- Irving F. Davis, Jr. . . . ... 115


Roster of Attendance. .


__ ____~__~_ ---117---1-~1-----_ 1_ -_----- .


. 119









THE CONCEPT OF REASONABLE BENEFICIAL USE
IN THE LAW OF SURFACE STREAMS1

Frank J. Trelease2

I. Introduction

In the western law of water use and allocation much emphasis has been
placed on concepts of "reasonable use" or "beneficial use." Economists in-
terested in the best utilization of our water resources necessarily must have
an interest in the meaning of these concepts, for a legal concept may conflict
with an economic concept. In such a case, what might appear to an economist
as an ideal allocation of water to certain uses might conceivably be foreclosed
if the proposed allocation conflicts with the law under which it might be made.
If it can be assumed that the economist has arrived at an allocation pattern
that is better than permitted by existing law, he may play an important part in
the growth of the law, keeping it a living thing in tune with the times. His work
may persuade the people to change the law by legislative processes, or con-
vince a judge that he should accept the new pattern, modifying or overruling
former precedent.

The purpose of this paper is therefore to give the economist some idea
of the law on this subject. From the economist' s point of view the law may be
relevant in several ways. It may be a datum to be considered in forming eco-
nomic premises, a tool to be used in accomplishing a desirable result, or an
obstacle to progress that must somehow be removed.

It is doubtful that much of the law that follows will come as a surprise to
those economists interested in water development, but perhaps some of the de-
tails offered may be of assistance to him. The paper will first cover the vari-
ous uses which the law has approved both under the doctrine of riparian rights
and the law of prior appropriation, and attempt to define the limits of those
uses. It will then proceed to consider the situations in which the law has as-
cribed relative values to competing uses or classes of uses.

II. Reasonable Use in Riparian Law

The riparian law evolved for England and the eastern United States still
has 'some validity in the west coast states, and in that tier of great plains
state~ stretching from North Dakota to Texas on the border between the semi-
arid and the subhumid parts of the country. 3 Under riparian law, it has al-
ways been said that the owners of lands bordering upon or crossed by a stream
have correlative rights to use the water, but the exact nature of those rights
has undergone a change. According to some early authorities, the fundamental
right of a riparian proprietor was to have the stream flow as it was accustomed
to flow in nature, unimpaired in quality and undimished in quantity.4 Of course,

1Copyright 1956, Frank J. Trelease.
2Professor of Law, University of Wyoming, Laramie, Wyoming.
3Trelease, Coordination of Riparian and Appropriative Rights to the Use
of Water, 33 Tex L Rev 24 (1954); Hutchins, History of the Conflict between
Riparian and Appropriative Rights in the Western States (1954) Proceedings,
Water Law Conference, University of Texas, 1954, 106.
4Webb v Portland Manufacturing Co. (1938) 3 Sumn 189, 29 F Cas 506.








the enforcement of such a theory to the ultimate extreme would have prevented
almost all uses of the waters, so that even in its strictest form it has been
modified to permit some use by riparian proprietors although nonriparian uses
of any nature were forbidden under this theory.

But these are words from a dead age. Today, everywhere in the west,
such riparian rights as are recognized at all are based upon the theory that
the fundamental right of the riparian proprietor is to the reasonable use of the
water of the stream and to be free from unreasonable interference with this
use. Under this reasonable use" theory, the interest of the riparian that re-
ceives protection is not in the natural state of the stream but in the use of wa-
ter that is actually enjoyed. As between riparians the western courts have al-
ways applied the rule of reasonable use, recognizing that each riparian owner
has a right to diiniish'theatreamfra his own purposes and that the lower pro-
prietor must show actual damage to his present existing uses in order to get an
injunction against an upper riparian diverter. 5 Even in controversies between
appropriators and riparians, a riparian today can complain only of nonriparian
appropriations that cause an actual loss or injury to his use of water under rea-
sonable methods of use and diversion. 6 With the ghost of the natural flow the-
ory thus laid, let us look at the uses of water which the courts have held might
receive protection when made by a riparian owner.

Natural and Artificial Uses. In a famous early Illinois case, Evans v.
Merriweather,7 the court divided the wants of man in regard to water into two
classifications, "natural" and artificial." Natural wants were said to be
those that it was absolutely necessary to supply for man's survival; artificial
wants are such as increase his comfort and prosperity. The importance of
this classification was that the upper riparian on a small stream might con-
sume all of the water for his natural wants, and a lower proprietor who so
needed the water might insist that upper proprietors curtail their artificial uses
so as to let water down to him. Each proprietor in turn might if necessary con-
sume all the water for his natural uses.8 As for artificial wants, each owner
had a right to participate in the common benefit. The basis of this rule is
apparently the theory that it is better for a few to have water sufficient for their
health and well-being, even at the expense of driving others to making their
homes elsewhere, than that many should suffer from only a partial supply of
water.9

Lux v Haggin (1884) 69 Cal 255, 4 P 919 (1886) 10 P 674; San Joaquin &
Kings River Canal & Irrigation Co. v Fresno Flume and Irrigation Co. (1910)
158 Cal 626, 112 P 182.
6Gin S. Chow v Santa Barbara (1933) 217 Cal 673, 22 P2d 5; Peabody v
Vallejo (1935) 2 Cal 2d 351, 40 P2d 486; Clark v Allaman (1905) 71 Kans 206,
80 P 571; Crawford Ca v Hathaway (1903) 67 Neb 325, 93 NW 781; McDonough
v Russell-Miller Milling Ca (1917) 38 ND 465, 165 NW 504; Smith v Stanolind
Oil & Gas Co (1946) 197 Okla 499 172 P2d 1002; Jones v Conn (1901) 39 Ore 30,
64 P 855, 65 P 1068; Redwater Land & Canal Co v Jones (1911) 27 SD 194, 130
NW 85; Watkins Land Co v Clements (1905) 98 Tex 578, 86 SW 733, 70 LRA
964, 107 ASR 653; Brown v Chase (1923) 125 Wash 542, 217 P 23.
7(1842) 3 Scam (111) 492, 18 AD 106.
8
Evans v Merriweather (1842) 3 Scam (I11) 492, 18 AD 106; Lone Tree
Ditch Co v Cyclone Ditch Co (1902) 15 SD 519, 91 NW 352 (1910) 26 SD 307, 128
NW 596.
9LoneTree Ditch Co v Cyclone Ditch Co (1902) 15 SD 519, 91 NW 352
(1910) 26 SD 307, 128 NW 596.









Natural uses were stated to be those for domestic and stockwatering pur-
poses, and irrigation and manufacturing uses were classified as artificial. The
Illinois court also suggested that irrigation might be a natural want in drier
climes. If this theory has been adopted in states where water is scarce, it
would have given a material advantage to the upper riparian owners, but such
is not the rule in any western state. 10

Several western states have adopted this classification of uses, some-
times using ordinary" and extraordinary" as synonymous with natural"
and "artificial." 1 Others have doubted its validity, as involving somewhat
fanciful distinctions,12 or have expressly repudiated it.13 The principles of
reasonable use would seem adequate to decide most conflicts between domestic
users and irrigators or manufacturers in favor of the householder. However,
some vitality seems to remain in the rule, for while the nomenclature of the
old classification may not be used, a number of jurisdictions give a preference
to the domestic and stockwater demands of riparians over the use of the water
for other purposes.14

Domestic Use. Although it is quite generally held that a riparian propri-
etor may if necessary exhaust the stream for his domestic purposes, there are
few cases that clearly define the exact limits of domestic use. Obviously, it
includes water for drinking, 15 cooking, 16 laundry and sanitation, 17 and the
courts frequently add a catch-all classification such as other household pur-
poses 18 "for the maintenance and austenalice ofi the proprietor and his fam-
ily." 9 In Oregon it has been held that domestic use includes the watering of
such garden and other produce as is reasonably necessary for the riparian' s
domestic consumption, z0 and it is frequently stated that it also includes water
for stock and other domestic animals. 1 But the use of water ZPr swimming,
boating, and for ornamental pools is not classed as domestic.

0Watkins Land Co v Clements (1905) 98 Tex 578, 86 SW 733, 70 LRS
964, 107 ASR 653; Meng v Coffey (1903) 67 Neb 500, 93 NW 713.
11Watkins Land Co v Clements (1905) 98 Tex 578, 86 SW 733, 70 LRS
964, 107 ASR 653; Lone Tree Ditch Co v Cyclone Ditch Co (1902) 15 SD 519, 91
NW 352 (1910) 26 SD 307, 128 NW 596.
12Lux v Haggin (1884) 69 Cal 255, 4 P 919 (1886) 10 P 674.
13Meng v Coffey (1903) 67 Neb 500, 93 NW 713.
14Emporia v Soden (1881) 25 Kans 588, 37 AR 265; Frizell v Bindley (1936)
144 Kans 84, 58 P2d 95; Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781;
Prather v Hoberg,(1944) 24 Cal 2d 549, 150 P2d 405; Hough v Porter (1909) 51
Ore 318, 98 P 1083.
15Meng v Coffey (1903) 67 Neb 500, 93 NW 713.
16Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781.
17Salem Flouring Mills v Lord (1902) 42 Ore 82, 69 P 1033, 70 P 832.
18Meng v Coffey (1903) 67 Neb 500, 93 NW 713.
19Hough V Porter (1909) 51 Ore 318, 98 P 1083.
20
2Ibid.
21Martin v Burr (1921) 111 Tex 57, 228 SW 543; Hough v Porter (1909)
51 Ore 318, 98 P 1083; Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781.
22Prather v Hoberg (1944) 24 Cal 2d 549, 150 P2d 405.









The use for domestic purposes is often thought to involve small quantities
requiring no considerable diversion of water,23 but there are situations in
which a large number of people are entitled to such use and the quantity needed
may be substantial. The fact that human beings are the occupants of hotels,
apartment houses, auto camps, or resorts does not exclude them from the
preferential class of domestic users. 24 State institutions such as penitentia-
ries and insane asylums have been the subject of conflicting holdings, some
courts saying that they may25 and others that they may not26 take water for
the use of large numbers of inmates. Although generally municipalities are
not entitled to riparian rights for the domestic purposes of their inhabitants,27
it has been held in Texas that a city has such a right and that it is superior to
the rights of riparian owners for irrigation. 28 The United States, as the pro-
prietor of a military establishment housing up to 50,000 men, has been likened
to a hotel or resort owner, and has been decreed water for the domestic needs
of the men stationed at the camp. 29

Stock Water. That the use of a stream for the watering of all types of
livestock is a reasonable riparian use does not admit of doubt, but there is
some question as to the extent to which a preference exists for this purpose
over other uses of the water. Stockwatering is frequently listed as a naturalr'
use or a preferential use for which the .tream maybe exhausted without refer-
ence to the needs of others, or else it is included in the definition of domestic
uses. Usually no limitation is put upon the number of cattle or other animals
that may be watered, and fifteen head of cattle and 200 chickens have been held
to be included in domestic use, 30 but in Oregon the court has restricted the
definition of domestic animals to those necessary for the proper sustenance
and maintenance of the proprietor and his family, 31 and in California the court
has questioned whether the exhaustion of a stream by large herds of cattle
ought to be permitted. 32 Since the consumption of water by cattle may be very
substantial in relation to the supply of a small intermittent stream, 33 restrict-
ing the preferential right to the quantity of water needed for an average number

Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781; Emporia v
Soden (1881) 25 Kans 588, 37 AR 265.
24Prather v Hoberg (1944) 24 Cal 2d 549, 150 P2d 405.
25Filbert v Dechert (1903) 22 Pa Super 362.
26Salem Flouring Mills v Lord (1902) 42 Ore 82, 69 P 1033, 70 P 832.
2Emporia v Soden (1881) 25 Kans 588, 37 AR 265.
28Grogan v/ Brownwood (Tex Civ App 1919) 214 SW 532.
29United States v Fallbrook Public Utility District (SD Cal 1951) 101 F Supp
298 (1952) 108 F Supp 722, 109 F Supp 28.
3Church v Barnes (1933) 175 Wash 327, 27 P2d 690.
31Hough v Porter (1909) 51 Ore 318, 98 P 1083.
32Lux v Haggin (1884) 69 Cal Z55, 4 P 919 (1886) 10 P 674.
33Handbook for Better Feeding of Livestock, US Dept of Ag Misc Circu-
lar No. 12, October 1947, states that up to 10 gallons per day should be allowed
for beef cattle and up to 25 for dairy cows. With some allowance for evapor-
ation and seepage, this could amount to as much as one acre-foot of water
every three weeks for 500 cows.









of barnyard animals kept for family use would seem wise, for otherwise the
upstream riparian stockgrower or dairyman would be in a favored position
,over those downstream who desired water for the same purposes. In such
circumstances the application of the rule of reasonable use and an apportion-
ment of the stream between them would seem more fair..

Irrigation. As has been said, in the arid and semi-arid west where irri-
gation is necessary to the successful cultivation of the soil, the doctrine of
riparian rights was necessarily modified or enlarged so as to permit the rea-
sonable use of water for irrigation although such use may appreciably diminish
the flow of the stream. It is now well settled that as between riparian irri-
gators all are entitled, without precedence, to a fair and reasonable share of
the stream34 and that no proprietor may take all of the stream so as to exclude
other riparian owners from the use of the water for irrigating purposes. 5 It
has been held in Nebraska that irrigation is not necessarily a reasonable use
under all circumstances, and that a riparian seeking such use of the stream
must plead and prove that his land is arid and that irrigation is essential. 36

Power. One of the earliest uses of streams was for the generation of
water power for the operation of mills and factories. Today the most impor-
tant application of water power is its conversion into electricity by means of
turbines and dynamos, and the reasonable use of waters of the streams and
rivers for this purpose is recognized as an exercise of riparian rights. How-
ever, certain limitations placed by the courts upon riparian power operations
make sole, reliance upon riparian rights as a source of water undesirable. It
has been held that a definite quantity of water for power purposes cannot be de-
creed in advance, 38 and some states prohibit the storage of water for this pur-
pose39 thus making a firm supply uncertain. There are holdings that it is an
unreasonable use to discharge water from a dam in unusual quantities, prevent-
ing its use by lower riparian irrigators,40 or even to restrain the flow during
the day and release it at night to the inconvenience of riparian irrigators,41
rulings which make it difficult to time releases of water to meet demands for
power.

Soil Conservation. In recent years many small detention dams, gully
plugs, dikes, levees, and stock water reservoirs have been constructed in
order to check runoff, create natural subirrigation, aid in flood protection,
and conserve the soil. Where these are built upon watercourses, they raise

34Frizell v Bindley (1936) 144 Kans 84, 58 P2d 95.
35Harris v Harrison (1892) 93 Cal 676, 29 P 325.
36Slattery v Harley (1899) 58 Neb 575, 79 NW 151.
37Mentone Irrigation Co v Redlands Electric Light & Bower Co (1909)155
Cal 323, 100 P 1082, 22 LRA NS 382, 17 Ann Cas 1222; Southern Nebraska Pow-
er Co v Taylor (1923) 109 Neb 683, 192 NW 317; In re Hood River (1924) 114 Ore
112, 227 P 1065; Lone Tree Ditch Co v Rapid City Electric Co (1903) 16 SD 451,
93 NW 650.
381n re Hood River (1924) 114 Ore 112., 227 P 1065.
39Herminghaus v Southern California Edison Co (1926) 200 Cal 81, 252
P 607.
40Moore v California Oregon Power Co (1943) 22 Cal2d 725, 140 P2d 798.
41Lone Tree Ditch Co v Rapid City Electric Co (1903) 16 SD 451, 93 NW
650.









problems of riparian rights. An important recent Kansas case has recognized
the value of these soil and water conservation measures, and ruled it a reason-
able use to erect small dams, averaging less than one acre-foot in capacity, to
hold the water of a small intermittent stream for the use of cattle and the
spreading of water through subirrigation to alfalfa fields, where the flow of the
stream was not materially reduced.42

Other Uses. There is no fixed category of riparian uses, and almost any
application of water that fulfills a need or desire of man can be considered a
proper use, so long as it is reasonably exercised with due regard to the equal
rights of other riparian proprietors. The courts have upheld many uses of
water that serve some commercial or industrial need; the harvesting of ice is
a use that has been recognized since early time,43 and a railway company own-
ing riparian lands may make reasonable use of the stream for the purpose of
supplying its engines and running its railroad, so long as the rule of fairness
and equality is observed and the quantity taken causes no injury.44 A munici-
pal light and power plant may use substantial quantities of water for cooling its
engines,45 and water may be abstracted from a stream for use in oil drilling
operations. 46

This does not mean that a commercial or industrial application is a neces-
sary attribute to a proper riparian use; the water may be used merely to sat-
isfy a desire for pleasure or esthetic enjoyment. It may be used for a swim-
ming pool,47 or maintenance of a park and fishing resort,48 and broad rights
of boating, bathing, and fishing have been upheld.49 In regard to lakes, where
the chief value of the surrounding lands is for resort purposes and summer
homes, the lake level may not be lowered to the point where the lake is turned
into a mud flat. 50

III. Beneficial Use in Appropriation Law

The concept of beneficial use, that water appropriated must be put to use-
ful and beneficial purposes, is fundamental in western water law. A nonuseful
appropriation is of no effect51 and the application of water to useful and bene-
ficial purposes is the sine qua non of a water right under the doctrine of prior
appropriation. This concept is-frequently expressed in the maxim that bene-
ficial use is the basis, the measure, and the limit of the right to use water
which has been enacted into the statutory law of many of the western states52
and incorporated into the federal reclamation law. 53
4ZHeise v Schultz (1949) 167 Kans 34, 204 P2d 706.
43McDonough v Russell-Miller Milling Co (1917) 38 ND465, 165NW 504.
44Atchison, Topeka & Santa Fe RyCo v Shriver (1917) 101 Kans 257, 166 P 519.
45Fairbury v Fairbury Mill & Elevator Co (1932) 123 Neb 558, 243 NW 774.
46Smith v Stanolind Oil & Gas Co (1946) 197 Okla 499, 172 P2d 1002.
47Sayles v Mitchell (1932) 60 SD 592, 245 NW 390.
48Broady v Furray (1933) 163 Okla 204, 21 P2d 770.
49In re Clinton Water District (1950) 136 Wash 284, 218 P2d 209.
50Martha Lake Water Co v Nelson (1929) 152 Wash 53, 277 Pac 382; Los
Angeles v Aitken (1935) 10 Cal App 460, 52 P2d 585.
51Ide v United States (1924) 263 US 497.
5e. g., Nev Comp Laws #7892 (1929); Wyo Comp Stats #71-401 (1945); N M
Stats #77--102.
53Reclamation Act of 1903, #8.
Reclamation Act of 1903, #8.









Although it is sometimes said that what is a beneficial use is a question of
fact to be decided upon.considering the facts of each case, 54 a number of uses
have received general approval as useful and beneficial, and these will be first
discussed.

Statutory Definitions. No state statute defines beneficial use in general
terms, but in three states the legislatures have listed the purposes for which
water can be appropriated. For instance, in Arizona, these uses are domestic,
municipal, irrigation, stockwatering, water power, wildlife (including fish),
and mining purposes, for direct use by the appropriator, or for delivery to
consumers.55 South Dakota and Texas have similar provisions. 56 On:the face
of these statutes, the lists or definitions of beneficial use seem to be conclusive,
and to exclude other uses that do not come within the classifications set forth.
If this construction should be adopted by the courts, new uses which an advanc-
ing civilization demands, such as air-conditioning and the dilution of wastes to
prevent stream pollution, might be prohibited unless the listed purposes can be
stretched to include them. It is arguable that the statutes only insure that the
listed uses are beneficial, and that other uses are permissible if they fall with-
in the common law concept of beneficial use. No cases have been found which
discuss this problem.

Many other state and federal statutes merely identify certain uses of wa-
ter as beneficial, and clearly do not exclude all other uses as nonbeneficial.
So also the lists of preferences amorig'uses may be said to be legislativedec-
larations that the purposes listed are each beneficial. A few states have laws
defining particular beneficial uses. These statutes will be discussed in con-
nection with those uses.

Domestic, Purposes. All statutory definitions of beneficial use include do-
mestic uses,b and practically every statute giving preference to certain uses
of water places this use at the top of the preferred list. 58 In California, do-
mestic use is described as the highest use of water. 59 These laws are simply
recognition of the elemental fact that water is necessary to sustain the life and
health of man, and that no other demand for water can transcend its use to that
end.

Most of the cases and statutes dealing with the scope of domestic use re-
late to the extent of the preference granted by such statutes. It is said that an
appropriation for domestic purposes is limited to such uses as the riparian
owner has at common law to take water for himself, his family, his stock, and
the like. 60 Drinkin and cooking are of course covered, 61 as are general
household purposes and home and farm use. 63

54Denver v Sheriff (1939) 105 Colo 193 96 P2d 836.
55Ariz Code #75-102 (1939)
56S Dak Code #61.0102; Tex Civ Stats Art 7470 as amended Tex ILaws 1953
c. 354.
57Supra. Notes 53 &: 54. 58See infra notes 154 to 160.
5Cal #105.
60Montrose Canal Co v Loutsenhizer Hitch Co (1896) 23 Colo 233, 48 P 532;
Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781.
61Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781.
62Idaho Code #42-111 (1948). 63Okla Tit. 82 #577.









There are three other problems as to the limits of domestic use. One is
the question of whether it includes any right to irrigate plants. The Kansas
statutes define the term as including the irrigation of lawns and gardens";64
Washington permits domestic water to be used for the irrigation of a "family
garden";65 and in Arizona the irrigation of gardens not exceeding one-half acre
to each family is allowed.66 On the other hand, an Idaho statute construes do-
mestic use as not including any manner of land irrigation, 67 and in Colorado
it is a criminal offense to employ water appropriated for domestic purposes for
irrigation or for application to land or plants in any manner or to any extent. 68

Another problem is whether domestic water may be used to water stock.
The preferential right given to the riparian is limited to the watering of do-
mestic and barnyard animals kept with and for the use of the household, and in
view of the separate recognition of stock watering as a beneficial use, a simi-
lar construction would probably be applied to the domestic preferences given
by appropr nation statutes. An Idaho law so limits the use of domestic water
by animals, but in Kansas the preference perhaps may be extended to all uses
for stock, even for large herds, for in that state the statutes include as do-
mestic the use of water for the watering of livestock and poultry, in addition
to specifying farm and domestic animals.70

The final area of dispute has been on the question of whether the domestic
needs of the inhabitants of a community can be lumped together into a munici-
pal appropriation for "domestic use." It has been uniformly held that such
municipal demands cannot have the preference granted to the individual domes-
tic user. 71 But in several instances, it can be determined from the context
that statutory references to "domestic use" probably include the use of water
for what is more commonly called municipal use. 72

Stock Water. The watering of herds of stock and of all types of domestic
animals is a beneficial use. Stockwatering is included in the statutes of all of
the states that list the specific purposes for which water maybe appropriated,73
and is recognized as a useful and beneficial purpose by the statutes and deci-
sions of all other states.

Municipal Purposes. Appropriations to supply cities and towns are author-
ized in all of the western states, whether made directly by the community or by
a private water company given franchise to supply the municipality and its in-
habitants.

Municipal uses actually encompass a large number of different applications
of water to different beneficial purposes. Some of these are direct uses by the

Kans Gen Stats #82a-701(c) (1949).
6Wash Rev Stat (Rev 1929) #7399. Ariz Code #75-106 (1939).
67Idaho Code #42-914 (1948). 68Colo Rev Stat #147-2-6 (1953).
69Idaho Code #42-111 (1948).
7Kans Gen Stat #82a-701(c) (1949).
71Montrose Canal Co v Loutsenhizer Ditch Co (1896) 23 Colo 233, 48 P
532.
72
e.g. S Dak Code #61.0102 (Supp 1952); Cal Water Code#1460 (1954).
7Supra notes 53, 54.








74
town or city itself as a consumer, such as water for fire fighting, for use in
public buildings, for flushing sewers, 75 for watering parks, 76 and supplying
fountains77 and lakes.78 But most of the so-called municipal purposes are in
fact uses by the inhabitants of the community and the industrial enterprises
there located. Domestic uses, 79 irrigation of lawns and gardens,80 sanitary
purposes, 81 the use in shops and business establishments and for the manu-
facture of goods, 82 the production of steam, 83 cooling and condensing, 84 re-
frigeration, 85 air conditioning, and for laundries86 and railroads87 make up
the bulk of the water use in cities, and the municipality or company appropri-
ating the water is in reality appropriating for purposes of sale to the ultimate
consumer.

Although illustrations of these uses may be found in the statutes and re-
ports, there are few cases directly dealing with the problem of how far a mu-
nicipality may go in using or distributing water for specific purposes. Tech-
nological advances have outmoded some older cases approving the use of water
for horse troughs88 and street sprinkling.89 Most of the more recent decisions
have considered the power of a city to supply water to areas outside the city
limits. The validity of such acts will more often turn on the existence and con-
struction of statutes concerning municipal powers than on the proper interpre-
tation to be given to the phrase "municipal purposes."

Irrigation. The use of water for the irrigation of land in order to supply
the deficiencies of natural rainfall is so widespread in the western United States
that "water law" and "irrigation law" have come to be substantially synonymous
terms, and it has never been questioned that irrigation, in general, is a bene-
ficial use.

Irrigation has been defined as a sprinkling or watering, the causing of wa-
ter to flow over lands for nourishing plants, and in its special sense as used in
statutes relating to irrigation, as the application of water to lands for the

74Holt v Cheyenne (1913) 22 Wyo 212, 137 P 876.
75Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781.
7Denver v Brown (1913) 56 Colo 216, 138 P 44.
77Water Supply Co v Albuquerque (1912) 17 NM 326, 128 P 77, 43 LRANS
439.
78Denver v Brown (1913) 56 Colo 216, 138 P 44.
79Cal Water Code #1460 (1954).
80Denver v Sheriff (1939) 105 Colo 193, 96 P2d 836.
81Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781.
82Wyo Comp Stat #71-402 (1945) Okla Stats tit 82 #577 (1953).
83Ibid. 84Okla Stats tit 82 #577 (1953).
85Wyo Comp Stat #71-402 (1945). 86Ibid. 87Ibid.
88Water Supply Co v Albuquerque (1912) 17 NM 326, 128 P 77, 43 LRANS
439.
89Crawford Co v Hathaway (1903) 67 Neb 325, 93 NW 781.









raising of crops and other products of the soil.90 But it has also been held to
include the use of water for the purpose of growing trees and grass in cities
and cemeteries91 so that it is not strictly limited to agricultural purposes.
While ordinarily the word implies the use of artificial means, as distinguished
from subirrigation, the method of application, by flooding, channeling, or
sprinkling, is immaterial. 92

Generally, the law makes no distinction between the various crops that may
be grown by irrigation. The use of water to grow native hay and other forage
for livestock is on an equal footing with its use for crops of greater immediate
value, 93 and where the irrigation of pasture land causes a great increase in
the amount of grass produced, the use has been held a useful and beneficial one,
and compared with the irrigation of hayland, the difference being only in the
manner in which the grass is fed to stock. 94 If the irrigation produced only
slight plant growth of very little value, it is possible that consideration of rea-
sonableness of the particular use as compared with other uses to which the wa-
ter might be put might lead a court to hold that such a use was not reasonably
beneficial.

Mining. The doctrine of prior appropriation originated when the miners
of the California gold rush days took the waters of the streams on the public
domain to wash the gold from the gravel in which it was found. The use of wa-
ter in placer mining to wash the gold from the gravel and its use in milling gold
ore to run the crushing machinery and separate the gold from the tailings were
thus the earliest beneficial uses that justified the appropriation of water.

The extent of the permissible use in connection with mining operations has
never been judicially defined. Early cases recognized that an appropriation
for mining gave the miner the privilege of encumbering the stream with debris
from placer operations, but it has been held that the Idaho preference for min-
ing and milling does not permit the obstruction of the stream with debris and
its pollution with poisonous wastes from mills. 95 The use of water in drilling
for oil and gas has been permitted in Texas and Oklahoma as a proper riparian
use, 96 and by analogy may be considered a beneficial appropriative use. The
Texas statutes allow appropriations for mining and the recovery of minerals,
and provide for temporary permits of three months duration, 97 which would
seem adequately to provide for such drilling uses.

Manufacturing. The use of water to furnish power to run sawmills was the
second beneficial use to receive judicial recognition as a basis for the appro,-
priation of water. 98 Statutory authority to appropriate for manufacturing pur-
poses has been expressly granted by the federal and some state governments,99
9Platte Water Co v Northern Colorado Irrigation Co (1889) 12 Colo 525,
21 P 711.
91Denver v Brown (1913) 56 Colo 216, 138 P 44.
92Morrow v Farmers' Irrigation District (1928) 117 Neb 424, 220 NW 680.
93Wyoming v Colorado (1922) 259 US 419, 42 SCt 552, 66 LEd 999.
94Sayre v Johnson (1905) 33 Mont 15, 81 P 389.
95Hill v Standard Mining Co (1906) 12 Idaho 223, 85 P 907.
96
9Texas Co v Burkett (1927) 117 Tex 16, 296 SW 273, 54 ALR 1397; Smith
v Stanolind Oil & Gas Co (1946) 197 Okla 499, 172 P2d 1002.
97Tex Civ Stats art 7471 (1948); Tex Laws 1953 c. 355.
98Tartar v Spring Creek Water and Mining Co (1885) 5 Cal 395.
9914 Stat 253 sec 9 (1866); see also notes 53 and 54 supra.









and is to be implied from statutes of other states permitting the use of water
for power or milling purposes. 100

Of course, water may be used in connection with the manufacture of goods
in many ways other than for the production of power to run machinery. An
Oklahoma statute gives preferential status to uses of water in the processes
of manufacture, for the production of steam, for refrigeration, cooling, and
condensing,101 and the Texas legislature has given a like preference to the use
of water in processes designed to convert materials of a lower order of value
into forms having greater usability and commercial value, including the pro-
duction of steam power. 102 These uses are undoubtedly beneficial under the
laws of any state, and the dearth of cases on the exact boundaries of "manu-
facturing purposes" is probably due to the commonly accepted practice of
manufacturers in obtaining their water from municipal supplies, so that not
many direct appropriations are made for manufacturing uses other than power.

Power. The direct use of the power of falling water to run sawmills, flour
mills, and mahinery was one of the earliest uses for which appropriations
were made. 10 Of course, today the principal use of water power is for the
production of electricity to furnish light, heat, and power tolthe public, and
such use is everywhere recognized as useful and beneficial.

Recreation. The use of water for beautifying parks and resorts where
people may rest and enjoy themselves, and for forming pools and lakes for
swimming, boating, fishing, and hunting is an undoubtedly beneficial use, but
the limits of appropriations for these purposes have not been fully explored
or stated by the courts.

The statutes of Kansas and Oklahoma name recreation as a beneficial use
without further description, South Dakota lists "public recreation, and the
Arizona law mentions the use of water for wildlife, including fish. 105 Texas
legislation is the most explicit, listing "public parks, game preserves, recre-
ation and pleasure resorts."106 The Montana court has indicated that the use
of water for a swimming pool and fish pond is beneficial, 107 in New Mexico it
has been said that recreation and fishing are included in the beneficial uses to
which public waters may be put, 108 and in Colorado the irrigation of parks and
the filling of lakes and reservoirs within a city have been held tobe beneficial.109
100
1Lamborn v Bell (1893) 18 Colo 346, 32 P 989, 20 LRA 241.
10Okla Stats tit 82 #577 (1953).
102
0Tex Civ Stat art 7471 (1948).
103Tartar v Spring Creek Water & Mining Co (1885) 5 Cal 395.
104e.g., Lodi v East Bay Municipal Utility District 7 Cal 2d 316, 60 P2
439 (1936); Salt Lake City vSalt Lake City Water & Electrical Power Co (1902)
24 Utah 249, 67 P 672 (1903) 25 Utah 456, 71 P 1069; In re Deschutes River
(1930) 134 Ore 623, 286 P 563, 294 P 1049.
1Supra notes 53 and 54.
106
Tex Civ Stat art 7470 as amended.
107Osnes Livestock Co v Warren (1935) 103 Mont 284, 62 P2d 206.
108State v Red River Valley Co (1945) 51 NM 207, 182 P2d 421.
109Denver v Brown (1913) 56 Colo 216, 138 P 44.









The leading court case involved the owner of a mountain resort who sought
to enjoin a power company from diverting a stream that flowed through the re-
sort and formed a beautiful waterfall. The court held that public health, rest,
and recreation constitute a beneficial use and said:

"Places such as thatdeacribed here, favored by climatic conditions,
improved by the work of man, and designed to promote health by af-
fording rest and relaxation are assuredly beneficial. They are rela-
tively as important as sanitariums and hospitals, and should not be
dismissed by calling them mere resorts for idleness. They are a
recognized feature of the times, are important in their influence upon
health, and multitudes of people avail themselves of them from neces-
sity. "110

The resort owner lost the case, however, for he sought to preserve the
cascade in its natural state, and the court held that no appropriation had been
made by means that were not unnecessarily wasteful or excessive, although it
regretted that natural objects of great beauty such as these falls had not been
preserved by the legislature.

In Oregon this suggestion of the court has been acted upon, and many
streams that form beautiful falls or that are famous fishing waters have been
reserved from appropriation. 111 In Idaho the governor is authorized to appro-
priate the water of certain lakes in trust for the people, and the preservation
of the lakes for scenic beauty, health, and recreation purposes is declared to
be a beneficial use of the water, 112 although in reality this is not an appro-
priation, but like the Oregon laws a reservation of the water to prevent its be-
ing appropriated for more mundane purposes. In the absence of such a special
statute, a private person cannot make an appropriation of a lake or stream in
its natural state for such purposes.

Appropriations for fish and wildlife purposes ordinarily take the form of
reservoirs that provide a habitat for game fish and waterfowl. It is common
practice today to include these purposes in the list of beneficial uses to be
served by reservoir projects, and to the extent that these recreational features
are incidental concomitants of the storage of water for irrigation, power, and
other well-accepted uses, questions as to the validity of the storage of water
for these purposes do not arise. When it is sought to take water solely for
these purposes, however, several problems may crop up. In general, it has
been said that public waters may be impounded for recreation, fishing, 'and
hunting purposes. 113 Whether this may be done, for private or only public
recreation has never been squarely decided. Water fbr a fish pond, :apparently
private, was approved without discussion in Montana., 14 A Texas court has
said in dicta that water appropriated for game preserves and pleasure resorts
may be diverted to private lands and there used to the exclusion of titepublic.115
But a private club in Utah, seeking an appropriation for filling duck ponds and
for growing vegetation attractive to wildfowl, ran afoul of the rule in that state
110
Cascade Town Co v Empire Water & Power Co (d Colo 1910) 181 Fed
1011, rev'd on other grounds, (9 Cir 1913) 205 Fed 123.
1110re Rev Stat ##538. 110 to 538. 300 (1953).
112Idaho Code ##67-4301, 67-4304 (1948).
113
State v Red River Valley Co (1945) 51 NM 207, 182 P2d 421.
114
O4snes Livestock Co v Warren (1935) 103 Mont 284, 62 P2d 206.
115
Diversion Lake Club v Heath (1935) 126 Tex 129, 86 SW2d 441.









that an appropriator must have the exclusive benefit and control over the appro-
priation, and the application was denied, since the land to be flooded was pub.-
lic domain open to all for hunting. 116 In California two cases have denied gun
clubs the right to use well water to flood lands in order to create duck marsh-
es. Regulations forbidding the use of underground water except for certain
named purposes were upheld on the basis that California underground water
law requires the water to be reasonably used in connection with the land from
which it is taken, 117 and it was said that while the maintenance of such duck
ponds would contribute greatly to the enjoyment of those owning the hunting
privileges, it was not a use which was beneficial to the land.

Hunting, fishing, and other recreational activities connected with streams
and lakes constitute major attractions of many parts of the western states,
and millions of dollars are spent by tourists from less attractive areas who
come to enjoy them. Public recreational facilities, when sponsored by public
agencies, are beneficial in a broad sense to a large segment of the population,
and when operated for profit are an important source of wealth. Appropri-
ations of water for such facilities would in most cases be nonconsumptive, ex-
cept for evaporation, once reservoirs are filled, and should receive the rec -
ognition and protection of law. Private facilities, for the benefit of individuals
or of clubs with restricted membership, may constitute property of great value
to their owners. No dogmatic rule should be adopted allowing or forbidding
the taking of water for such private recreation, but each such attempted appro-
priation should be scrutinized and the effect of its allowance upon foreseeable
demands for water for other purposes should be considered.

Miscellaneous Uses. Water has been put to many other uses that have re-
ceived legislative or judicial sanction as beneficial or useful. An early Idaho
case held that the use of water for railway necessities was unquestionably for
a beneficial purpose, 118 and the statutes of Oregon and Wyoming sodeclare.119
Other statutes permit water to be taken for the production of steam120 for re-
frigeration, cooling, and the manufacture of ice, 121 and for maintaining sani-
tary conditions of stream flow by the dilution of sewage and wastes.122 In
California the storage of water underground is a beneficial use if the recharged
ground water is later put to beneficial use. 123

The use of water is indispensable to the operation of fish hatcheries, of
course, and it is self-evident that the water so diverted is devoted to beneficial
use. 124 Such a use has been likened to irrigation, in that its result is to in-
crease the food supply of the population. 125
116Lake Shore Duck Club v Lake View Duck Club (1917) 50 Utah 76, 166
P 309, LRA 1918B 620.
117Ex parte Elam (1907) 6 Cal App 233, 91 P 811; Ex parte Mass (1933)
219 Cal 422, 27 P 2d 373.
118Drake v Earhart (1890) 2 Idaho 750, 23 P 541.
1190re Rev Stat #537.310 (1953); Wyo Comp Stat #71-402 (1945).
1200kla Stat tit 82 #531 (1953; Wyo Comp Stat #71-402 (1945).
121Ibid. 122Okla Stats tit 82 #531 (1953).
123Cal Water Code #1242 (1954).
124Faden vHubbell (1933) 93 Colo 358, 28 P2d 247.
125Ex parte Elam (1907) 6 Cal App 233, 91 P 811.









Not all uses to which man can apply water for some immediate benefit are
classified as beneficial in the legal sense. The drowning of gophers will not
justify an appropriation. 126 Although the use of water to carry debris from a
reservoir to keep it out of turbines would be useful and beneficial to the owner,
it will not be allowed when it would interfere with those of the water for irri-
gation, where other means to control the debris could be devised. 127

IV. Comparative Reasonableness of Use

Up to this point this paper has dealt with whether a particular type of use,
as such, has received court or legislative approval as a "reasonable use" or
rteibne-cial use, and has attempted to point out the limits of the legal definition
of such use. This may seem a sterile approach to an economist, to consider
each use in the abstract and to tag it as reasonable or unreasonable, beneficial
or not beneficial, yet by and large that has been the method of the courts and
legislatures until quite recently. This seemingly one-sided approach has re-
sulted in this list of uses characterized as reasonable or beneficial in general,
and seemingly the courts have merely approved of a particular use that has
come in question if it falls within one of these categories. But actually there
are few absolutes on this list. In fact this one-sidedness is more apparent
than real, at least in the litigated cases. Each case was in fact a dispute be-
tween two people fighting for water that was insufficient to take care of the
needs of both. When one urged that the other's use was not beneficial, he was
usually relying upon the often inarticulate premise that it was not beneficial
because his use was more beneficial. Therefore, most of the cases did actu-
ally amount to a choice by the courts between one use over another, but analy-
sis of the cases in these terms is generally impossible because that is not the
way the courts talked about them. But as competition for the supply grew
fiercer, and as the realization grew upon the courts and legislatures that the
allocation of water involved a problem in the conservation of natural resources,
new concepts evolved, that each use must not only be beneficial in the abstract
sense, but must also be a reasonable and economic use in the light of other de-
mands for the little water remaining to be allocated.

Reasonableness of Riparian Use. It has always been the law that a ripar-
ian's use of the water must be reasonable in the light of the equal rights of all
other riparians on the stream. What is reasonable will vary with the circum-
stances of each case, 128 and in each case the quantity which a particular ri-
parian may take will vary from year to year and from season to season, 129
not only from the varying volume of water flowing down the streams at different
times of the year or at different times of the year of different years, but also
from the amount of land that may have been settled upon and the extent of the
use of the waters by others for irrigation and for the so-called natural pur-
poses. 130 A riparian owner who has been accustomed to use a certain amount
of water on his land may increase the quantity if it is reasonably required for
1Zb
STulare Irrigation District v Lindsay-Strathmore Irrigation District
(1935) 3 Cal2d 489, 45 P2d 972.
127
127In re Deschutes River (1930) 134 Ore 623, 286 P 563, 294 P 1049.
128
Meng v Coffey (1903) 67 Neb 500, 93 NW 713; Jones v Conn (1901) 39
Ore 30, 64 P 855, 65 P 1068.
129
Prather v Hoberg (1944) 24 Cal 2d 549, 150 P2d 405.
3Lone Tree Ditch Co v Cyclone Ditch Co (1902) 15 SD 519, 91 NW 352,
(1910) 26 SD 307, 128 NW 596.









extended irrigation, and, on the other hand, what might be a reasonable use
of water giving no grounds for complaint in good years may become highly un-
reasonable in time of drouth. 132 This flexibility of the riparian right is regard-
ed by some economists as undesirable since it produces an instability in the
water right, but on the other hand it has been praised as providing a flexibility
guaranteeing that a particular use pattern will not become frozen and prevent
changes that progress demands.

The use of water by one riparian proprietor that causes substantial harm
to another has been said to be unreasonable unless the utility of the use out-
weighs the gravity of the harm. 133 Reasonableness is not to be determined
solely by reference to the needs of the user, nor solely from the standpoint of
the person harmed. If there is no injury to the rights of the lower proprietor,
of course there is no liability under the rule of reasonable use, 134 but the
mere fact of damage and substantial inconvenience to other riparians does not
itself make the use unreasonable. 135 For example, it has been held that
where there is a small quantity of water available, far insufficient to meet the
needs of all riparians, a use may be reasonable even though it consumes so
much water that lower riparians may be put to some expense in order to utilize
the remainder. 136 On the other hand, the mere fact of benefit to the user does
not establish the reasonableness of the use. The full flow of the stream cannot
be demanded to the detriment of other irrigators merely because some slight
benefits result from the overflow, such as the depositing of beneficial silt upon
lands or the washing of sale from marshes, or the replenishing of round wa-
ters. 137 And although the use for electric power may be proper, 13 to alter-
nately res.train:and release the ,flow/ of water stored for that purpose so as
seriously to inconvenience irrigators in their use has been held unreasonable.139

Reasonableness of Beneficial Use. The courts early laid down the rule
that no appropriation of water was valid where the water simply weht to waste,
and held that thei appropriator who diverted more than was needed for his actual
requirements and allowed the excess to go to waste acquired no right to the ex-
cess. 140 Also, they have always exercised the power to declare that some
uses were not beneficial or that certain applications of water did not fall with-
in accepted classifications of beneficial uses. 141

In rather recent times these concepts have been merged into a new rule--
that a particular use must not only be embraced within the general class of
uses held to be beneficial, or must not only be of benefit to the appropriator
but it must also be a reasonable and economic use of the water in view of other

31Redwater Land and Canal Co v Reed (1910) 26 SD 466, 128 NW 702.
13Meng v Coffey (1903) 67 Neb 500, 93 NW 713.
33Restatement of Torts, ##851-854.
134
1Fairbury v Fairbury Mill & Elevator Co (1932)123 Neb 558, 243 NW 774.
135
Turner v James Canal Co (1909) 155 Cal 82, 99 P 520, 22 LRA 401,
132 ASR 59.
136Rancho Santa Margarita v Vail (1938) 11 Cal 2d 501, 81 P2d 533.
137Peabody v Vallejo (1935) 2 CalZd 351, 42 Pad 486.
138Lone Tree Ditch Co v Rapid City Electric Co (1903)16 SD451, 93NW 650.
139Broady v Furray (1933) 163 Okla 204, 21 P2d 770.
140Power v Switzer (1898) 21 Mont 523, 55 P 32.
14In re Deschutes River (1930) 134 Ore 623, 286 P 563, 294 P 1049.









present and future demands upon the source of supply. Thus in the Oregon case
of In re Deschutes River, 142 the use of forty second-feet of water during the
irr-igaon season to clean debris from a reservoir and keep it out of electric
turbines was denied, although the benefit of such a use to the appropriator was
admitted. The court pointed out that that quantity of water could otherwise be
used to irrigate 1600 acres of land, and the appropriation was denied as waste-
ful. The difference between absolute waste and economical use was said to be
one of degree only. Similarly, the validity of local regulations permitting the
use of underground water only for irrigation, domestic and fish propagation
purposes has been upheld in denying an appropriation of such water for flooding
land to make duck marshes for private gun clubs, although the benefit to the
members of the clubs was recognized. 143

An amendment to the California constitution expresses the concept in this
fashion: "It is hereby declared that because of the conditions prevailing in this
state the general welfare requires that the water resources of the state be put
to beneficial use to the fullest extent of which they are capable, and that the
waste or unreasonable use of unreasonable method of use of water be prevent-
ed, and that the conservation of such waters is to be exercised with a view to
the reasonable and beneficial use thereof in the interest of the people and for
the public welfare."144 Construing this section, the California court has said
that what may be a reasonable beneficial use where water is present in excess
of all needs would not be a reasonable beneficial use in anarea of great scar-
city and need, and that what is beneficial use at one time may, because of
changed conditions, become a waste of water at a later time. 145

Preferences. In addition to litigation between users in which the relative
value of their beneficial purposes are weighed, there are statutes which give
preference to certain classes of uses over others. These are legislative de-
terminations that one type of use is of relatively greater value than another.

The subject of preferences is too broad to cover exhaustively in this short
space, 146 but we can notice three major types here. The most common of
these gives the preferred user the right to condemn a nonpreferred water
right upon the payment of compensation. 147 The exercise of such a preference
will result in permanently transferring the water right to the new owner, who
succeeds to the right of the former owner. The most common example of such
a preference is the familiar picture of a city condemning an irrigation water
right. The second type of preference is called a "true" preference, which
gives the preferred user a superior right over other users and in effect places
him at the top of the priority list. Statedanother" way, a true preference exists
when the preferred use may be initiated without regard to the fact that the sup-
ply is already fully appropriated for other purposes, and the preferred user
may take water without paying compensation to persons whose uses are there-
by impaired. There are several examples of this second class of preference
on interstate streams. The Colorado River Compact lays down the rule that
142Ibid.
143
Ex parte Elam (1907) 6 Cal App 233, 91 P 811; Ex parte Mass (1933)
219 Cal 422, 27 P2d 373.
144Cal Const Art XIV #3.
145Tulare Irrigation District v Lindsay-Strathmore Irrigation District
(1935) 3 Cal2d 489, 45 P2d 972.
146 See Trelease, Preferences to the Use of Water (1955)27 Rocky Mtn L
Rev 133.
147Colo Const Art XVI #6; Idaho Const Art XV #3; Neb Const Art XV #6;
Wyo Comp Stat #71-402 (1945).









the impounding and use of waters for power shall be subservient to the use and
consumption of water for agricultural and domestic purposes and shall never
interfere with or prevent the use of water for these dominant purposes.148 A
desire to safeguard further development caused the Montana legislature to qual-
ify a grant of permission to flood Montana land by a dam to be built in Idaho,
by giving a preference to future irrigation and domestic appropriations over the
use of generating power at the dam. 149 When plans were made for the almost
complete development of the Missouri river, the upstream states, fearing that
the maintenance of a navigation channel in the downstream reaches of the river
might some day curtail consumptive uses, forced the insertion of the O' Mahoney-
Millikin amendment into the 1944 Flood Control Act that authorized the project.
By that amendment only such use of water can be made for navigation as does
not conflict with present or future beneficial uses for domestic, municipal,
stock water, irrigation, mining, or industrial purposes. 150 This principle is
not now limited to the Missouri river, it has been extended to all waters aris-
ing in the seventeen western states. There are few true preferences in state
law, but in Texas all appropriations made since 1931 are granted subject to
future appropriations for municipal purposes.151

The third type of preference has come with the state statutes regulating
appropriations by requiring permits from state water officials. Several states
expressly give their water administrators the power to choose among several
pending applicants who seek to appropriate the same supply when the available
waters are insufficient for all. Statutes listing the order in which application
should be considered exist in California, Arizona, and Texas.152 In many
states water officials are given the power to choose among applicants or deny
permits on broad grounds involving the exercise of discretion instead of the
application of a fixed list of preferences. In Utah the state engineer is to pre-
fer "the more beneficial use, "153 and there the state engineer has subordi-
nated to a multipurpose project a power appropriation that would have cut the
heart out of the project.154 In Oregon due regard is to be had for conserving
water and for the maximum economic development of the waterl55 while the
Texas water engineers are to give preference to those applications which will
effectuate maximum utilization and prevent the escape of water without con-
tribution to beneficial public service. 156

There is little agreement as to the order in which these uses are to be
preferred. In all of the western states, cities and towns are given the power
to condemn water rights for municipal supplies, and hence have a preferred
right in this sense, although most of the statutes conferring the power are
found in the laws relating generally to municipal government and not in the
water codes.157 In the earlier preference statutes, the typical order set out

14845 Stat 1057 art IV (b) (1928).
149
49Mont Rev Stat 89-895 (1953).
15033 USC 701-lb (1944). 151Tex Civ Stat art 7472.
152
1Cal Water Code #1254 (1954); Ariz Code #75-106 (1939); Tex Civ Stat
art 7471 (1948).
53Utah Code #100-3-8 (1943).
154
1Tanner v Bacon (1943) 103 Utah 494, 136 P2d 957.
155
155Ore Comp Laws #116-601 (1940).
5Tex Civ Stat art 7472c (1948).
157 ease, Preferences to the Use of Water (1955) 7 Rocky Mtn33.
Trelease, Preferences to the Use of Water (1955) 27 Rocky Mtn. L Rev133.









is domestic over all other uses and irrigation over manufacturing, 158 although
in Idaho mining districts mining uses are preferred over irrigation. 159 Wyo-
ming's preference statute perhaps shows the importance of railroading in the
state's economy for "domestic and transportation" purposes are preferred
over all others. 160 More recent statutes have expanded the lists and changed
the order somewhat. Preferences in permission to appropriate Texas waters
are listed in this order: (1) domestic and municipal uses (2) water used in the
process of converting materials into forms having greater usability and com-
mercial value including stream generation of power (3) irrigation (4) mining
and recovery of minerals (5) hydro-electric power (6) navigation and (7) re-
creation and pleasure. 161 Oklahoma conservancy districts in choosing among
applications for water are to give preference, first, to domestic and munici-
pal water supply, and, second, to supplying water for processes of manufac-
ture, production of steam, refrigerating, cooling and condensing, and for main-
taining sanitary conditions of stream flow, and, third for irrigation, power
development, recreation, fisheries, and other uses. 162 Where appropriations
of Kansas water conflict, uses take precedence in the following order: do-
mestic municipal, irrigation, industrial, recreational, and water power
uses. 1

V. Conclusion

The economist will first note from this mass of law that the legal concepts
of reasonable riparian use and beneficial purpose of appropriation act as only
a slight check on water users. It should be remembered that most of this law
was evoitved in the Last.century, in a period of development of water resources in
a pioneer economy when laiss,ez-faire principles dominated the thoughts of
entrepreneurs, legislators, and judges. In pioneer times any use of a resource
could be said to be an economic gain. In riganiian law, the emphasis on the
right of the individual to do as he pleased so long as he did not damage his
neighbor too greatly stemmed from that same philosophy.

Inlthe rather new concept of reasonable beneficial use, the courts are just
beginning to show an awareness of the economic relativity of specific uses,
and the comparative benefits to be realized from different, competing uses.
But it should be noted that the courts have hesitated to set themselves up as
economic planners and have used this power very sparingly up until now, al-
though it may become very important in future decisions as the amount of
available-water dimnii~shes. Up to the present laissez-faire economics have de -
termined the relative desirability of projects and decided which should be built.
Every project precludes some future project by the very nature of the doctrine
of priority. These developments which are feasible and economical enough to
justify the immediate expenditure of the capital necessary to put them into
effect have always received the better right to the water by being first built.
This is still true to a large extent today, although such decisions are subject
to check by administrative officials who may choose between applications of

158See note 145 supra, Utah Code 100-3-21.
159Idaho Const art XV #3.
160
Wyo Comp Stat #71-402 (1945).
16Tex Civ Stat art 7471 (1948).

162Okla Stat tit 82 #577.
63Kans Gen Stat #82a-707 (1949).









projects either on broad public interests grounds or in accordance with a set
list of preferences.

As for the preference statutes, they seem to be in great need of overhaul-
ing. There is a wide variation as to what shall be preferred and how the pref-
erence is to operate. There is general agreement only in that man's personal
needs come first, so that domestic and municipal purposes head every list,
and there seems to be a fairly uniform resolve not to let waters run unused in-
to the seas, with the consequence that power and navigation operations are
generally found near the bottom. But irrigation, manufacturing, mining, and
railroad transportation jockey with each other for preferment in the middle
ground. There is no uniform effect given to preferences even for one particu-
lar purpose; for instance, domestic users are given an absolute preference in
some states, a right to condemn in others, and only a better chance to receive
a permit elsewhere. Many states have not consciously chosen any order of
preference other than that of giving communities the right to condemn a muni-
cipal supply.

A reappraisal of these laws and the policies behind them on both state and
national levels would not be out of place. Archaic laws may shape ultimate de-
velopment in an undesirable fashion or may provide stumbling blocks that re-
tard or discourage progress.

In selecting the values on which a modern system of preferences should be
based, obviously the uses that are directly necessary to human life and health
come first. Second, uses for irrigation and industrial consumption, where
there is no substitute for water, must take precedence over other uses for
which substitutes can be found, such as power and water transportation. 164
New uses may demand a place on the preference list. Only recently recogni-
tion has been given to the importance of maintaining a stream flow adequate
to dilute municipal and industrial wastes and prevent downstream health prob-
lems. Anyone who has spent a summer in Oklahoma might urge that the pref-
erence there given to "refrigeration, cooling and condensing" includes the use
for air conditioning. The industrialization of the west may cause some states
to review their present policies of preferring irrigation over manufacturing.
Where catering to tourists and sportsmen has become a major industry, the
protection of recreational and fish and wildlife value takes on a commerical as
well as an esthetic importance. Lastly, care should be taken that the hands of
future generations should not be too tightly bound.

In such an appraisal of preferences, the extent of the preferment should
be considered and its ultimate effects understood. Whenever water is taken
from one beneficial use and put to another, an economic loss occurs, whether
it is taken under a true preference or by means of eminent domain. The type
of preference merely determines whether the loss falls on the first user or on
the taker. But the total loss may be smaller if a true preference is used in-
stead of condemnation: a city is likely to condemn an early right and put valu-
able land out of production, but a city whose new uses are put at the top of the
priority list will squeeze out the marginal land at the bottom. If policy de-
mands that compensation be paid, the latter solution may present insuperable
obstacles in the computation of damages, since different appropriators will be
affected as stream flow varies. A factor that weighs against the true prefer-
ence, however, is that its potential exercise may prevent development because
investors may refuse to put their money into enterprises dependent upon legal-
ly unstable water rights. Where water uses already approach the maximum

4Missouri: Land and Water 64 (Missouri Basin Survey Commission 1953).







20

level, establishing a system of preferences between future appropriations may
accomplish little. The power to choose the more desirable of pending appli-
cations may be of little effect unless application for major projects happens to
coincide.

Actually the future is more in the hands of economists, engineers, and
administrators than in the hands of lawyers and judges. Sometimes the law
acts as a brake upon new ideas and new schemes, but usually when the appli-
cation of the new idea will hurt somebody. In such cases the courts will try
to strike a balance between progress and protection of rights. Legislators
may be slow to accept new ideas. But by and large western water law has been
the handmaiden of progress, and you may rest assured that it will not now be-
come a clog on development.









THE CONCEPT OF REASONABLE BENEFICIAL USE
IN THE LAW OF SURFACE STREAMS

W. E. Code2

Because of the very late arrival of Professor Trelease's scholarly paper,
it was not possible to prepare a written discussion. I, therefore, can draw
only upon memory items that bear on this subject. There has been time, how-
ever, to verify some of these items subsequently.

Colorado's surface waters have always been administered under the doc-
trine of prior appropriation. As in all Western states, beneficial use or rea-
sonable beneficial use has been the basis and limit of an appropriation. One of
the first things that comes to mind is the action taken by the courts in our ear-
ly adjudidation procedure. There were many claims for water that were found
unreasonable. In many instances these claims stemmed from ignorance in the
measurement of water, crop irrigation requirements, and the capacity of ditch-
es. Upon introduction of evidence in the adjudication, courts frequently re-
duced the claims in accordance with reasonableness.

The priority doctrine probably was the best for Colorado in the begin-
nings of stream administration. Time has shown that it has its defects. Its
strict application can lead to waste. In a number of instances an unwritten
"Law Of the River" has been substituted by mutual consent of the parties con-
cerned. As an illitstration of this, a situation arose on the Purgatoire River
during a period of low flow that disappeared in the sands before reaching a
downstream senior appropriator. An upstream junior appropriator was or-
dered to close his headgate to permit the passage downstream of the meager
flow of water. It never reached the senior appropriator. Since waste was
obvious and no injury alleviated, it was mutually agreed that whenever the flow
was such that it would be lost, the junior right-holder would be permitted to
divert.

Another type of situation has developed in the irrigation of mountain mead-
ows. The value of such lands and crops is often low, and large capital invest-
ments in land preparation and labor for efficient irrigation are not warranted.
As a consequence, large quantities of water are diverted to facilitate distribu-
tion and frequently allowed to cover the land for unnecessarily long periods of
time. Loss by evaporation is low, and a very large percentage of the water re-
turns to the stream either on the surface or underground. Experience has shown
that this practice is not unreasonable, and that it did not cause material injury
to holders of senior rights downstream. By consent this practice has been
permitted to continue.

Much litigation has evolved over the storage of water. As most of you
no doubt know, irrigation on Colorado's eastern slope has been developed en-
tirely by private enterprise. This has resulted in multitudinous ditch systems
and small reservoirs. Appropriations for storage are separate from those for
direct application of water to the land. Theoretically, the direct application of
water has preference over storage. On the lower South Platte, because their
reservoirs are subject to large seepage losses, farmers would rather store

Discussion of paper given by Frank J. Trelease.
Irrigation Engineer, Department of Civil Engineering, Colorado A and
M, Fort Collins, Colorado.









water in the soil by late irrigation. The farmers in the upper valleys have more
efficient reservoirs and prefer to store water in the usual manner after the reg-
ular irrigation season. The upper valley users who represent the greater area
hold the key to the situation. Rather than letting the water go downstream, they
also could put the water directly on the land by reason of their earlier priori-
ties. The argument was settled by agreement on a rather definite date whenwa-
ter could be diverted to storage. The State Engineer announces that date.
There is no doubt that greater beneficial use is made of the water in this man-
ner. Any upstream reservoir seepage loss goes back into the river and canbe
picked up by the downstream water users.

The items discussed are not law, but a means of correcting deficiencies
in the prior appropriation theory of water distribution. The economist, no
doubt, would prefer to have these matters spelled out by statute. It would be
desirable if this could be done. If we could rewrite our water laws, the courts
would be enabled to find a solution to problems involving the best use of the re -
source. Economics would play an important part in such a program.

It might be pointed out that Colorado's unique system of water exchange
permits a more efficient use of water than might be obtained under normal pro-
cedures. In this, reservoirs are needed, and very frequently such reservoirs
are built below the lands of the benefited party. The upper canal diverts water
belonging to a lower canal and. replaces it with stored water. This is permitted
by statute.

The constitution of Colorado states the order of preference of use of wa-
ter of natural streams thus:

1. Domestic,
2. Irrigation,
3. Manufacturing.

As to the preferential status of the domestic water user, he enjoys rights akin
to riparian rights. Residents along a fully appropriated stream assume the
right to take from it what is necessary for household use. Although they have
no appropriative right, they are not disturbed. A change of use from a lower
to a higher preference has been approved by the Supreme Court by condemna-
tion and compensation therefore.









REASONABLE BENEFICIAL USE IN THE DEVELOPMENT
OF GROUND-WATER LAW IN THE WEST1

Wells A. Hutchins2

Reasonable beneficial use of water, in legal parlance, combines the con-
cepts of (1) application of the water to sore purpose recognized as useful or
beneficial, and (2) reasonableness in diverting, conveying, and applying the
water to such purpose in relation to the lawful requirements of other holders
of rights in the same water source. The term has been employed repeatedly
by the California Supreme Court in construing a constitutional amendment,
adopted in 1928, relating to water rights in the state. It may be made appli-
cable to any situation in which rights of the same kind or of different kinds,
but which to some extent are reciprocal, attach to the same supply of water.
Obviously, it can have no application to a situation in which water rights are
based on a legal theory of absolute ownership of the water and, therefore, are
necessarily independent of each other.

The law of ground-water rights in the West relates to water in the ground
that is free to move by gravity and to enter wells, is capable of being extract-
ed from the ground, and is susceptible to practicable legal control, The term
"ground water" as used in this paper relates solely to such water.

Historically, in the jurisprudence of many states, ground water has been
divided into two broad classes: (1) Definite underground streams, the counter-
part of surface watercourses; and (2) percolating waters, comprising all
ground waters other than those in definite streams. Ground-water hydrolo-
gists have decried this distinction as having no scientific basis. Statutes of
some states, in providing for the acquirement of rights of use, have discarded
it. In the West, there is an apparent tendency to minimize the practical im-
portance of this legal distinction and, perhaps, eventually to eliminate it alto-
gether. However, it persists in the jurisprudence of some states, including
California and Texas, which currently have by far the largest total acreages
irrigated solely with pumped ground water. Necessarily, it must be observed
in discussing ground-water law.

Rights to the use of waters of definite underground streams are governed
by the law of watercourses. In some western states, this includes both the
riparian and appropriation doctrines; in others, the appropriation doctrine only.

Rights in percolating waters fall into two broad categories: (1) Those that
are inherent in the ownership of the overlying land, and (2) rights of prior ap-
propriation.

Classification of percolating water rights inherent in landownership pre-
sents some difficulties, owing to the fact that in some states the lines are not

Legal citations for many of the principles discussed in this paper will be
found in an article by the speaker entitled "Trends in the Statutory Law of
Ground Water in the Western States, published in 34 Tex. Law Rev 157 (1955).
The speaker wishes to acknowledge the assistance rendered by Dr. S. V.
Wantrup in reading the first draft of this paper and offering comments. Dr.
Wantrup's comments brought out matters of particular interest to the econo-
mist, and in preparing the final draft, the speaker has endeavored to act upon
them.
2Production Economics Research Branch, Agriculture Research Service,
USDA.









sharply drawn. Probably the most rational classification comprises the three
following groups:

(1) A concept of independent ownership of the water by the overlying land-
owner while it remains in his land. This has been variously termed the Eng-
lish doctrine, the common law doctrine, and the doctrine of absolute owner-
ship. In its original form, this theory accords exclusive property rights in
the water to the landowner; it gives him the right to pump out the water at any
time and in any quantity, for any legitimate enterprise, either on or off the
overlying land. Various courts have imposed qualifications on this unlimited
right, chiefly by way of requiring the water to be used without malice or negli-
gence, or without unnecessary waste. But if the effect of heavy pumping by a
landowner, while engaged in any legitimate enterprise that meets these re-
quirements, is to exhaust the ground-water supply of his neighbor by drawing
all the water from the substrata of the latter's tract into his own heavily
pumped well, it cannot become the ground of an action.

(2) A departure from the English rule, termed the American rule of rea-
sonable use. This doctrine recognizes the right of the overlying owner to ex-
tract ground water from his land and to put it to use, but undertakes to restrict
him to such quantity of water as may be necessary for some useful purpose,
without unnecessary waste, in connection with the land from which the water
is pumped. It prohibits export of water from the area when the water supplies
of other overlying landowners will be thereby impaired--which, it may be re-
membered, is permissible under the English rule. As the American rule does
not restrict the use of water on one's own overlying land, if notwasteful, the
chief difference between these two doctrines probably lies in this matter of ex-
port of the water from the area.

(3) Doctrine of correlative rights. In some western states, this is not
clearly distinguishable from the American rule. The terms "reasonable use"
and "correlative rights" have been used interchangeably in various texts and
court opinions, with the result that there has been some confusion in termi-
nology and uncertainty about the relationships between these two rules. The
essential thing they have in common is the requirement that among owners of
overlying land, use of common supplies of percolating water is permissible
but must be reasonable. Only in California has the correlative doctrine been
litigated, expounded, and established in numerous decisions of the courts. A
half century of such decisions has created a unique feature of western water
law known as the California doctrine of correlative rights.

The California doctrine is an outgrowth of the American rule of reasonable
use. In fact, in the case in which the California Supreme Court broke away
from the English rule--Katz v Walkinshaw, 3 decided early in the present cen-
tury--the actual decision on the established facts was based on the American
rule as it had been stated in much earlier decisions in the East. Admitted in-
jury to the complaining landowners, who had been using the water on their
overlying land for domestic and irrigation purposes for more than 20 years
before the defendant, another overlying owner, began transporting it to distant
lands for sale there, was that the plaintiffs' trees, vines, and other plants of
great value would be destroyed if the defendant were allowed to continue to
divert the water from the area. Under the American rule, this use of water
by the defendant was not reasonable; therefore, it was enjoined. But the su-
preme court went beyond the minimum requirements of the immediate contro-
versy,and stated, in its opinion, various principles that should properly
3Katz v Walkinshaw, 141 Calif 116, 70 Pac. 663 (1902), 74 Pac 766 (1903).









govern the relationships between overlying owners in new situations that would
be expected to arise with expanding uses of ground water. In succeeding cases,
these principles have been explicitly adopted and applied.

The chief features of the California correlative doctrine are these: (1)
Owners of all lands that overlie a common supply of percolating water have
correlative and coequal rights to the reasonable beneficial use of the water of
that supply on or in connection with their overlying lands; (2) in the event of
insufficiency of the water supply for the requirements of all overlying land-
owners, the water may be apportioned by court decree among them all in ac-
cordance with their respective needs; (3) any surplus above the reasonable
beneficial requirements of overlying lands may be appropriated for nonover -
lying uses. Uses held to be nonoverlying comprise those made on lands out-
side the ground-water area, and public utility services either within or without
the area. Rights of overlying owners are part and parcel of the lands; they are
not created by use of the water, nor lost solely by disuse; but they may be lost
by prescription. The right of future use of water is a property right of the
same order as that of present use, and it may be protected by a declaratory
decree against the ripening of a threatened prescriptive right. In many re-
spects, this correlative ground-water doctrine is comparable to the riparian
doctrine of watercourses as recognized and applied by the California courts.

The English rule of absolute ownership was the first to be adopted in this
country with respect to percolating water. The origin of the rule is usually
attributed to an English case decided in 1843, 4 although according to Wiel, a
Massachusetts case decided in 1836 had reached much the same result.5 The
Supreme Court of Texas, in adopting the absolute ownership rule in 1904, 6
quoted with approval the practical arguments for acceptance of the rule that
had been given in an 1861 decision of the Ohio Supreme Court. These were:

In the absence of express contract and a positive authorized legisla-
tion, as between proprietors of adjoining land, the law recognizes
no correlative rights in respect to underground waters percolating,
oozing, or filtrating through the earth; and this mainly from con-
siderations of public policy: (1) Because the existence, origin,
movement, and course of such waters, and the causes which govern
and direct their movements, are so secret, occult, and concealed
that an attempt to administer any set of legal rules in respect to
them would be involved in hopeless uncertainty, and would, there-
fore, be practically impossible. (2) Because any such recognition
of correlative rights would interfere, to the material detriment of
the commonwealth, with drainage and agriculture, mining, the
construction of highways and railroads, with sanitary regulations,
building, and the general progress of improvement in works of em-
bellishment and utility.

Probably the earliest western legislation with respect to ground-water
rights was enacted in 1866 by the Territory of Dakota. This statute, which
related to both surface and ground waters, provided that:7

4Acton v Blundell, 12 Mees & W. 324 (1843).
5Wiel, S. C., "Water Rights in the Western States, vol. II, sec( 1039.
6Houston & Texas Central Ry v East, 98 Tex. 146, 81 SW. 279 (1904).
Terr Dak Civ Code, sec. 255.









The owner of the land owns water standing thereon, or flowing over
or under its surface, but not forming a definite stream. Water run-
ning in a definite stream, formed by nature over or under the sur-
face, may be used by him as long as it remains there; but he may
not prevent the natural flow of the stream or of the natural spring
from which it commences its definite course, nor pursue, nor
.pollute the same.

This section became a part of the statutes of both North Dakota and South Da-
kota, and was copied by the Oklahoma legislature as well. What this statute
did with respect to ground waters was to declare, for subterranean water-
courses, the riparian doctrine, and for percolating water an unqualified rule
of ownership. As to the latter, the legislature stated simply that the land-
owner "owns" subsurface water not forming a definite stream. And in 1932,
the South Dakota Supreme Court declared that there could be no serious con-
tention over the principle that the owner of the soil is the absolute owner of
the percolating water therein. 8

Although interpretations of the English rule by various courts compre-
hended, in the main, some measure of benefit to the overlying landowner from
his handling of the water, none that have come to the speaker's attention
placed any limitation on the quantity of water that he might lawfully take for a
beneficial purpose, without unnecessary waste, whether for use on his own
land or at a far distant point. Unrestrained pumping by one or a few land-
owners, for any purpose they might elect, could and sometimes did result
in monopoly of the water supply and injury to the prospects of other overlying
owners. Aside from questions of malice, negligence, and waste, reasonable-
ness as among those who have rights in a common ground-water supply has
never been a facet of the English doctrine. In some states in which this prin-
ciple was being followed, it was found by time and experience to be unsuitable
and so was replaced by the American rule, the designation of which was a
rule of reasonable use.

Thus, historically, the changeover from the English to the American rule
represented the first significant step toward reasonableness as among holders
of rights in percolating waters. It was only a short step, but a bold one, and
the direction it took was important. The first move in this direction by the
courts was in the East. Forty years after the adoption of the American rule
by the New Hampshire Supreme Court in 1862, 9 that precedent was first fol-
lowed in the West.

The California Supreme Court, as above noted, brought the American
rule west in the key case ofKatz, Walkinshaw--a decision which was destined
to have a profound effect on the state water law. The actual decision in this
case adopted and applied to the issues '"thedbctriineof reasonable use of per-
colating waters," which was adequate for the settlement of the immediate con-
troversy. But as also noted, the supreme:, ourt not only adopted the American
rule, but in.a rather remarkable series of acknowledged dicta, went out of its
way to include some observations on the making of "new applications of old
principles to the new conditions. These statements were not taken from the
eastern decisions. They superimposed upon the American rule what the Cali-
fornia court called "this rule of correlative rights. The term "correlative
rights" was not coined at this time; it had appeared in much earlier eastern
decisions. But for decades it has been used to designate the California
Madison-v Rapid City,i 6 1 S Dak 83, 87, 246 NW 283 (1932).
Basset v Salisbury Manufacturing Co, 43' NH 569 (1862).









doctrine, which consists of both the basic American rule of reasonable use and
the new concepts of coequal interrelationships of landowners. After the ren-
dering of the decision in Katz v Walkinshaw a half century ago, courts of sev-
eral other western jurisdictions, in a very few decisions, adopted what they
variously called "the rule of reasonable use" and/or "the rule of correlative
rights." In the majority of these states, however, the legislatures have since
enacted ground-water statutes based on the appropriation doctrine. It seems
not unlikely that the difficult problem of classifying the judicial doctrines of
percolating water rights in these latter states is well on the way to becoming
academic, chiefly of historical interest.

The California doctrine of correlative rights so expands the concept of
reasonableness among overlying landowners as to limit each owner to a rea-
sonable share of the common water supply at times when there is not enough
for all who wish to use it. Coequality of overlying rights does not mean that
the land proprietors are entitled to equal shares of the total water supply, nor
does it necessarily mean equal shares as among owners of tracts of the same
size. It means that when the reasonable beneficial needs of all holders of
rights in an inadequate water supply who desire to use the water have been de-
termined, the water will be apportioned among them accordingly. This prin-
ciple is valid in the usual case in which rights of overlying landowners and
prior appropriators, if any, have not been impaired by prescription. More
will be said about this later.

The California doctrine holds the overlying landowner to reasonable bene-
ficial use not only as against his neighbors, but also as against appropriators
of any surplus water that may exist above the quantity required to satisfy the
needs of the overlying owners. The rights of the latter are restricted, both by
the state constitution and by decisions of the courts, to the quantities of water
they require for reasonable beneficial use--utilization for purposes that are
useful or beneficial, and not excessive when measured by the generally ac-
cepted standards in the community. These quantities may be determined by
appraisal. They must be determined if a shortage in the ground-water supply
calls for an apportionment. They must also be ascertained if an intending ap-
propriator of water for nonoverlying use seeks to establish his right of appro-
priation. In this latter case, the burden is on the overlying owners to prove
the extent of their reasonable beneficial needs. When that is done, the appro-
priator has the burden of proving that there is a surplus in the supply above
the quantities required for the proved needs of overlying lands. The landown-
ers as such have no rights in this surplus. It is public water of the state, to
which appropriative rights may attach in order of priority. Such appropria-
tive rights, as well as the correlative rights of overlying owners, must be re-
spected while the surplus continues. But the rights of the overlying owners to
the extent of their reasonable needs are paramount. When, therefore, in the
course of development, or in seasons of drought, the surplus ceases to exist,
appropriative rights are in suspense while the shortage continues.

Nearly a half century after the Gatifornia. Supreme Court adopted the
American rule of reasonable use with its correlative rights superstructure,
that court added a new principle to the established doctrine. This was done in
the Raymond Basin case--styled Pasadena v Alhambra. 10 It related to rights
in the waters of a ground-water area that had been overdrawn for many years.
The decision assumed outstanding importance in the ground-water law of Cal-
ifornia. The references that follow will be limited to a few statements of fact
and to the conclusions of the supreme court and the theory on which they were

Pasadena v Alhambra, 33 Calif. (2d) 908, 207 Pac. (2d) 17 (1949).









based. No acceptable discussion of the California doctrine of correlative
rights can be made without some comments on the Raymond Basin case; and
what is said here should not infringe Mr. Snyder's topic.

The litigants in this case comprised most of the users of fairly substantial
quantities of: ground water in the Raymond Basin. The overdraft on the ground-
water supply first occurred in 1913-14; from then until the suit was brought in
1937, the pumpage from the Basin exceeded the safe yield in all except two
years. Nevertheless, all parties continued to pump, and the overdraft and
lowering of the water table continued. The supreme court held that there was
an invasion, to some extent at least, of the rights of the overlying owners and
appropriatbrs when the overdraft first occurred. But the invasion did not
completely oust these original parties; hence, it was only a partial one.
Throughout the entire period, both the original water-right holders and the new
users or wrongdoers, as the cqurt caJlledthem, continued to pump all the water
they needed. But the operations by each group actually interfered with the
other group by producing a continuing overdraft that would make it ultimately
impossible for all to continue pumping at the same rate in the future. Accord-
ingly, it was held that the appropriations that caused the overdraft were in-
vasions of the rights of the original holders, which by the passage of time had
become ,prescriptive against them. However, by their own acts in continuing
to pump water, these original holders of water rights either retained rights or
acquired new rights to continue to take some water in the future. Hence the
prescriptive rights acquired by the wrongdoers were limited by what the orig-
inal water-right holders had done in the way of self-help.

In earlier proceedings in this litigation, this legal development had been
termed" "mutual prescription, but the supreme court did not call it that. On
the contrary, the supreme court carefully refrained from deciding whether
the original water-right holders "retained simply a part of their original over-
lying rights or whether they obtained new prescriptive rights to use water."
In any event, the decision was that all parties be restricted to a proportionate
reduction in the quantities of water they had been pumping, and that the total
annual pumpage from the Basin be limited to the safe yield. The trial court
was ordered to preserve a broad retention of jurisdiction to change its decree
and orders after notice and hearing as the occasion might require.

During the latter part of the period in which California was developing its
correlative doctrine and was applying, by constitutional mandate and court in-
terpretations, the principle of reasonable beneficial use to all kinds of water
rights and all uses of water, Texas experienced a great expansion in ground-
water utilization. In the high plains area alone, ground -water development by
1954 embraced 3, 500, 000 acres, irrigated with the use of 5, 200, 000 acre-feet
of water, pumped from 27, 500 wells. 1

Not the least remarkable aspect of this Texas development was that it was
made under the English doctrine of a solute ownership. This rule the Texas
Supreme Court had adopted in 1904. In 1948, the Texas Court of Civil Ap-
peals undertook to lessen the totality of the absolute ownership rule by stating
that the ownership of percolating water by the overlying landowner does not in-
clude the right to intercept and to waste percolating water to the detriment of
11Hughes, William F., and Magee, A. C., "Changes in Investment and
Irrigation Costs, Texas High Plains, 1950-54, Tex. Agric. Expt. Sta. Bull.
828 (1956).
12Houston & Texas Central Ry v East, 98 Tex 146, 81 SW 279 (1904).









an adjoining landowner. 13 But the supreme court, as recently as 1955, dis-
agreed with that statement and reaffirmed its adherence to the strict rule in
the following language: 14

It thus appears that under the common-law rule adopted in this state
an owner of land could use all of the percolating water he could cap-
ture from wells on his land for whatever beneficial purposes he need-
ed it, on or off of the land, and could likewise sell it to others for
use off of the land and outside of the basin where produced, just as
he could sell any other species of property. We know of no common-
law limitation of the means of transporting the water to the place of
use. Neither do we know of any judicial modification in this state
of the rule of the East case. There is an inference by the Austin
Court of Civil Appeals in Cantwell V. Zinser, 208 SW 2d 577 (1948),
that the common-law rule would be modified in this state to protect
a landowner against waste of percolating water by his neighbor in
permitting escape thereof from an open tank, but that case has no
writ history and there is no basis for such a modification in either
the East case or in the cases cited therein as the Austin Court infers.

A measure aimed at the conservation of ground waters through local con-
trol was passed in 1949 by the Texas legislature. It authorizes the creation
of underground water conservation districts for the purpose of conserving,
recharging, and preventing waste of ground water. The statute recognizes the
ownership and rights of the owner of land in ground water, subject to the rules
and regulations of the district promulgated for the purpose of preventing waste.
In this connection, it provides specifically that priorities and provisions of the
law of surface water shall not apply. But within these limitations, the district
may issue permits to drill wells that will provide water in excess of 100, 000
gallons per day, may provide for thier proper spacing, and may regulate pro-
duction of water from them in order to prevent waste or to minimize the harm-
ful effects of lowered water tables or reduced artesian pressure. The district
may plan and carry out projects for artificially recharging ground-water res -
ervoirs. The significance of this procedure is that while recognizing the own-
ership of water by the overlying landowner, the legislature has made available
to local areas, in which the voters approve, a means of restricting the other-
wise uninhibited extraction of ground water by imposing control over well-drill-
ing and restrictions on wasteful practices. 15 This legislative approach to rea-
sonable use is a departure from the English doctrine as originally recognized
and recently reaffirmed by the supreme' court.

For years prior to the enactment of this Texas law, attempts had been'
made to obtain a ground-water statute capable of overcoming undesirable as-
pects--from the standpoint of the public--of the English doctrine. All propos-
als for state control failed to pass. The only proposal that commanded enough
legislative votes was the foregoing, which provides some measure of control
on a district or "local option" basis. But use of the district in public control

3Cantwell v Zinser, 208 SW (2d) 577, 579 (Tex Civ App 1948).
1Corpus Christi v Pleasanton, 276 SW (2d) 798, 802 (Tex Sup 1955).
1The discussion of the legal basis, operation, management, and possi-
bilities of these districts appears in an article by Duggan, Arthur T., "Texas
Ground Water Law, Proc, Water Law Conferences, University of Texas,
Austin, November 1952 and June 1954, p. 11-29.









of ground-water uses is not confined to Texas. That it has potentialities in
jurisdictions that have progressed beyond the English doctrine is shown by ex-
periences in New Mexico and California. This, however, is Mr. Stephen
Smith's topic.

There remains to be considered the relation of reasonable beneficial use
to the utilization of percolating waters under the appropriation doctrine. In
several western jurisdictions, the appropriation doctrine was first recognized
by the courts with respect to percolating waters independently of statutory au-
thorization, but in most cases the legislatures spoke first. From 1866, when
the brief Dakota statute was passed, to 1927, when both New Mexico and Ore-
gon enacted separate statutes providing for the appropriation of ground water
under state administrative procedures, legislative declarations on the subject
of rights in ground waters were few and scattered. But in 1927 there began
the enactment of a series of more and more comprehensive ground-water stat-
utes which now are effective in the large majority of western jurisdictions.
Most of this legislation consists of separate statutes which supplement the
general statutes relating to the appropriation of water; some is incorporated
in the general statutes by inclusion of words, clauses, or paragraphs. By
1955, statutes in 11 western states had brought rights of use of percolating
waters under the doctrine of prior appropriation. Three others (including Tex-
as, as above mentioned) extend regulation of one kind or another to certain
uses of such waters in areas in which it is particularly needed, but without
basing restrictions on priority of appropriation.

Beneficial use has been a fundamental feature of the appropriative princi-
ple from the start. In general, the term has meant to the courts that the ap-
propriation must be for some useful or beneficial purpose; that is, if the pur-
pose of diverting water was not to serve some purpose useful or beneficial to
at least the appropriator, it could not be the basis of a valid appropriation.
But to what extent have benefits to others than the holder of the water right in
question been taken into account? The economist, in particular, is interested
in knowing how far the concept "beneficial" has been interpreted by the courts.

Early purposes of using water that the courts held to be beneficial includ-
ed mining, propulsion of mills, irrigation, domestic, stock watering, and
municipal uses. To these have been added such uses as industrial, develop-
ment of steam and hydroelectric power, propagation of fish, navigation, rec-
reation and pleasure, and air conditioning.

Certain uses of water have been held not beneficial in the sense that they
can support valid appropriations. Some examples are: Diversion of water
for the sole purpose of drainage; claims to the use of water for no object other
than speculation; extermination of gophers and squirrels during the winter in
an area of great need for water; winter flooding for the purpose of inducing an
ice cap to promote the retention of moisture well into the growing season; and
carrying off debris during months in which the water is needed for irrigation.

Irrigation has been held to be a beneficial purpose with respect not only
to cropped land, but also for the purpose of increasing production of pasture
grasses and wild hay on uncultivated land. But a priority has been denied for
a practice of simply throwing water out over sagebrush land containing native
grasses, the growth of which was not thereby materially increased. In this
connection, the California Water Code (sec. 1004) states that the term "useful
or beneficial purpose" shall not be construed to mean the use of more than Z2
acre -feet per acre annually for irrigation of uncultivated land.









Benefits from irrigation of rice land in California have been called in
question. In once case, litigants contended that "rice -growing requires such
an excessive quantity of water, as compared with any other crop, that it prac-
tically amounts to a waste, and that its cultivation ought not to be tolerated in
California, where water for other crops and uses is so indispensable and so
scarce. "16 The supreme court held, however, that regardless of the merits
of that contention, and whether in the exercise of the police power that use of
water might lawfully be forbidden, it was a legislative question which the court
could not consider. In another case, in which the fitness of certain land with-
in an irrigation district for profitable rice culture was under attack, a district
court of appeal pointed out that "beneficial use of water upon lands, and the
possibility of the landowner making a profit upon the crops raised by means
of irrigation upon his lands, are not one and the same thing, and that inability
of a landowner to profit from raising any particular crop does not limit his
right to use his proportionate share of the district water. 17

With the passage of time after the general principle of beneficial use had
been established, and with the growth of controversies between appropriators,
there came to be added requirements of "economical use" and "reasonable
use." Economy of use meant that the appropriator should divert no more wa-
ter than enough to operate his mine, or run his mill efficiently, or to irrigate
his land adequately. If he diverted more than enough for the purpose of his
appropriation, he should immediately return the excess to the stream for the
benefit of other appropriators. Reasonableness of use meant much the same
thing--that the appropriator should divert and use no more water than neces-
sary to accomplish the maximum benefit from his appropriation, so that later
appropriators might have the benefit of any surplus water not required there-
for.

The purpose of these restrictions, which were developed and restated in a
long series of court decisions, was not only to prevent the unnecessary and un-
conscionable waste of a limited natural resource, but to hold appropriators to
a degree of efficiency in diverting, conveying, and applying water that was con-
sistent with the general standards of the community. That is, if earth ditches
conformed to the custom of the country, irrigators were not required to line
them or replace them with concrete or steel pipe, at their own expense, for
the benefit of junior appropriators. But in specific cases they were required
to keep their works in repair, even at some extra expense, for otherwise their
conduct was held to be not reasonable.

Scarcity of water in the West in relation to areas of good land has led to
many judicial declarations of state policy. Typical expressions are: In an
arid region, water is too precious to be wasted. It is against public policy to
permit any waste of water. The public welfare is greatly concerned with the
largest economical use of water for all useful purposes, and in its conserva-
tion for the purpose of bringing the largest possible area of land under cultiva-
tion. The policy of the law is to require, within reasonable limits, the high-
est possible duty from the waters of the state in the interests of agriculture
and other useful and beneficial purposes. These and other like expressions
of the courts are directed chiefly toward prevention of wasteful practices, so
that other existing and potential users may not be deprived of the water they
need, presently and prospectively.

16Antioch v Williams Irr Dist, 188 Calif. 451, 467-468, 205 Pac 688
(1922).
17Nelson v Anderson-Cottonwood Irr Dist, 51 Calif. App. 92, 96, 196
Pac. 292 (1921).









Some of the western constitutions and statutes likewise contain declarations
of state water policy. These relate, among other things, to the status of ap-
propriative and riparian rights, future needs of municipalities, preferences as
between purposes of use of water, requirements of the public welfare, and pro-
hibition of waste.

On the whole, whether expressly or impliedly, the courts have left to the
legislatures the initiative in ordering preferences in the appropriation of wa-
ter. Once an appropriative right has vested, its superior position with respect
to later rights is impregnable so long as the right is kept in good standing.
That is to say, despite constitutional and legislative declarations that in time
of scarcity one use shall be preferred over others, no court decision that has
come to the speaker's attention has sanctioned the imposition of such a pref-
erence, in disregard of priority of appropriation, without making compensation
to the senior appropriator whose water is taken for the preferred use. But the
power of the legislature to provide for preferences in the making of new appro-
priations is recognized. For example, the State Water Rights BoarcT- Cali-
fornia has, under the Water Code and its construction by the supreme court,
a broad discretion in determining whether the issuance of a permit on an appli-
cation to appropriate water will best serve the public interest; 18 and the board,
in acting on applications to appropriate water, is directed by the legislature to
consider the relative benefit to be derived from all uses of the water con-
cerned. 19 Administrators in a number of western states have specific statu-
tory authority to reject applications the approval of which, in their judgment,
would prove detrimental to the public welfare. In Texas, except with respect
to waters of the Rio Grande, appropriations for other than domestic or muni-
cipal, purposes are to be allowed subject to the right of any municipality to
make further appropriation of such water thereafter without the necessity of
condemnation or payment of compensation. 20

On the whole, the approach of the courts to the requirement of beneficial
use and the necessity of reasonableness and efficiency on the part of appropri-
ators has been conservative. Although courts have made many forceful dec-
larations, there is always, close to or on the surface, the fundamental consti-
tutional policy of protecting vested property rights. This has led in some in-
stances, for example, to caution in ordering restrictions on excessive use of
water-by holders of long exercised water rights. Constitutional and legislative
mandates are invaluable in guiding the judiciary. But whether the courts, of
their own initiative, have led in the improvement of water practices on any:
considerable scale is open to serious question.

For a long time, riparian owners as among themselves have been accord-
ed by the courts the right of reasonable use of water for irrigation and other
so-called commercial uses. But in California, where most of the contests be-
tween riparians and appropriators have been litigated, the riparian owner as
against an appropriator was formerly not limited by any measure of reason-
ableness. In one case, the supreme court made that bald statement.21 This
situation was changed by reason of a constitutional amendment approved in
8Temescal Water Co v Department of Public Works, 44 Calif (2d) 90, 99-
100, 104-105, 280 Pac. (2d) 1 (1955).
1Calif Water Code, sec. 1257.
20
Tex Vernon's Civ Stats, arts, 7472 and 7472a.
21Miller & Lux v Madera Canal & Irr Co, 155 Calif 59, 64, 99 Pac. 502
(1907, 1909).










1928 and by its favorable construction by the supreme court. Now, in Cali-
fornia, the requirement of reasonable beneficial use applies to riparian rights
as against appropriative rights, and indeed to every water right of every kind
as against all others. The correlative doctrine in this state started out on a
different basis. Ever since that doctrine was adopted, nearly all decisions of
the supreme court have held the owner of overlying land to reasonable bene-
ficial use not only as against other landowners, but as against appropriators
as well.

Thus, questions of reasonable beneficial use were considered, and the re-
sulting rules were expounded by the courts in the growth of the doctrine of ap-
propriation of stream waters, and in the now century-old conflict between
riparian and appropriative rights. When the stream-water appropriative prin-
ciple was adapted to the use of percolating water, it carried such aspects of
beneficial use or reasonable use as by that time had been developed. This was
true with respect to both legislative adoption and court approval of the princi-
ple.

The general trend in the West with respect to ground water rights is, first,
toward statutory control, and, second, toward variation in the kind of control
in which priority of appropriation plays a very conspicuous part. Reasonable
beneficial use is implicit in rights acquired under any of the appropriation
statutes, or recognized by court decisions. But even a form of nonappropria-
tion statutory control that places an effective brake on waste and improper
spacing of wells should be a potent factor in reducing unreasonableness of use.
And certainly if and when, as is often visualized, California adopts a system
of administrative control over extractions of percolating water by holders of
valid rights, it is safe to assert that determination and enforcement of reason-
able beneficial use will be a primary object.

Finally, with respect to requirements of reasonable beneficial use, there
is now little distinction in the West between correlative ground-water rights
and appropriative ground-water rights, whether statutory or judicial. Despite
difficulties of accurate definition and practical application, the trend is toward
that concept. Problems that remain include legal declarations in the few
states in which they are still needed, andmore effective means of implement-
ing them.












REASONABLE BENEFICIAL USE IN THE DEVELOPMENT
OF GROUND-WATER LAW IN THE WEST

W. B. AndersonZ

One is inclined to apply the doctrine of res ipsa loquitor to the two pa-
pers presented by Professor Trelease and Mr. Hutchins, both skilled lawyers.
These papers speak for themselves both as to their grasp of the water prob-
lems involved and the quality of analysis.

A neophyte in this area, my views are in harmony with those of Trelease
and Hutchins, and I find no flaws to magnify. However I do desire to under-
score some points made, and perhaps extend the discussion to a somewhat
more controversial area.

Professor Trelease points out that while the courts in the past have treat-
ed each beneficial use as though it were standing alone, the present problem
is becoming more and more a balancing of competing beneficial uses. It is a
matter of comparative reasonableness of various uses. A reasonable benefi-
cial use at one point in time may become, through changed conditions at a lat-
er period, a waste of water. Professor Trelease states: "In the rather new
concept of reasonable beneficial use, the courts are just beginning to show an
awareness of the economic relativity of specific uses, and the comparative
benefits to be realized from different competing uses."

This is an area that beckons for judicial statesmanship. Judges will need
to consult the best professional advice available from agricultural economists
and the other interested disciplines.

It is observed also that legislative or judicial establishment of priori-
ties of users are not uniform among the western states except that all place
domestic and usually municipal uses at the head of the list. Other uses com-
pete for preference ratings.

This matter of priority of uses seems to me to pose a problem for the
future, a future which may soon become the present. Is any system of priori-
ties an adequate answer ?

During the early phase of the war, I served as a junior officer on the
Army-Navy Munitions Board working on priorities. We granted A-i-a priori-
ties for airplanes and other direct items of warfare, while specifying muchlow-
er priorities for such items as clothing and equipage. It was not long until we
realized that planes would be ready to go, but-that pilots would lack flying
clothes for high altitudes. We quickly turned to a balanced program including
all necessary items to equip one unit, and then the next unit.

Should irrigation, or mining, or manufacturing have the highest priori-
ty? It seems to me that we must strive eventually for a balanced economy
where uses will be evaluated in terms of meeting the needs of society. Each
competing use must be integrated into the larger plan for the most effective.
utilization of our natural resources.

Discussion of Papers given by Frank J. Trelease and Wells Hutchins.
2Department of Political Science, Utah State Agricultural College, Logan,
Utah.









Mr. Hutchins indicates that reasonableness of beneficial use of water
includes reasonableness of diverting, conveying, and applying water.

In most of the western states the loss of water in unlined canals is a
problem of major proportions. In my own state we are facing temporary lim-
itations on the development of underground water by the requirement that the
junior appropriator mustprotect the senior appropriator's means of diversion
which includes the right to artesian well pressure or the reimbursement for
pumping costs. Old methods must yield to the imperative demands for full
water utilization.

One final point. Much of the West has grown strong under the doctrine
of prior appropriation. Such a doctrine is well suited to encourage resource
development. However, as the water resources of an area become fully de-
veloped, the doctrine of prior appropriation may need modification. In per-
iods of water shortage the principle of equitable apportionment may prove to
be a more useful guide. On a larger scale and in a different setting, there may
be applied some useful aspects of the notion of "correlative rights" as devel-
oped in California and referred to by Mr. Hutchins.









ECONOMIC IMPLICATIONS AND APPRAISAL OF THE COURT 1
REFERENCE PROCEDURE FOR ALLOCATING GROUND WATER

J. Herbert Snyder2

Introduction

The Raymond Basin and West Coast Basin areas of Los Angeles County in
southern California provide aggregative study situations in which a particular
legal process or institution--the Court Reference Procedure--has been used
to allocate the relatively scarce ground-water resource among the wants and
needs that can be satisfied by its use. Only small segments of the over-all
problem can be presented in this brief paper, which is a preliminary report 3
on research into the area of adjudication of ground-water rights in California.
The central problem is one of scarcity of the natural resource ground water.
The theme of this report is an analysis of the economic implications of ration-
ing a limited natural resource by use of a legal process --the Court Reference
Procedure.

The presentation is divided into three major sections: First, some of the
important physical characteristics of the two ground-water basins that influ-
ence the availability of ground water, its use, and the adjudication of ground-
water rights are presented. Second, the essential features of the legal frame-
work within which the California Court Reference Procedure operates are out-
lined together with a brief comparison of procedures in a few other states.
Third, the discussion turns to a direct evaluation of the Court Reference Pro-
cedure as a means of allocating ground water.

Physical Setting for the Reference Procedure

Climate. The climate of southern California is semi-arid and subtropical.
Average rainfall in these two ground-water basins located on the western flank
of the south coastal plain ranges between 10 and 20 inches per year. Most of
the rain falls during the winter period from October to May. The summer
months are warm and dry, the winter months are mild. The growing season
or number of frost-free days is of sufficient length to permit the growth of
most agricultural crops. But the length of growing season is no longer as im-
portant in these areas as formerly. Transition from agricultural to urban
land use has decreased the significance of the long growing seasons. But they
were of historic importance as far as the development and use of ground water
is concerned, and continue to be of importance to agriculture remaining in the

Constructive comments by S. V. Wantrup, S. C. Smith, C. O. McCorkle,
D. D. Caton, and Wells A. Hutchins are gratefully acknowledged.
2Department of Agricultural Economics, University of California, Davis.
3The final report will be issued as one of the Giannini Foundation Ground-
Water Studies. Earlier studies published are:
Bartz, Patricia McBride. Ground Water in California: The Present State
of Our Knowledge. (With Foreword by S. V. Ciriacy-Wantrup). Giannini Foun-
dation Ground-Water Studies No. 1. University of California, College of Agri-
culture, Berkeley. February, 1950, 2nd Ed. 67p. Processed.
Snyder, J. Herbert. Ground Water in California: The Experience of
Antelope Valley. (With Foreword by S. V. Ciriacy-Wantrup). Giannini Foun-
dation Ground-Water Studies No. 2. University of California, Collge of Agri-
culture, Berkeley. February, 1955. 171p. Processed.









area. The combination of winter rainfall, low annual rainfall, and warm grow-
ing seasons made irrigation necessary from the time of earliest settlement in
the area.

Hydrology. Ground water contained in the alluvial deposits of the Raymond
Basin and West Coast Basin areas does not exist as a single homogenous mass.4
Rather it is contained in distinct sand and water layers--aquifers--in the qua-
ternary deposits laid down in the last million years. The aquifers are usually
separated from one another by relatively impermeable silt and clay deposits.
They may contain ground water under more or less pressure conditions, de-
pending upon the degree of stratification and interconnection of aquifers.

Accumulation of Ground Water. Underlying and surrounding the water-
bearing formations are found the nonwater -bearing formations. These pre-
quaternary deposits form an impermeable barrier to ground-water movement.
Ground water usually moves downward in response to gravity until a barrier
is reached and then laterally. Lateral movement will be restricted where a
barrier is reached.

In the Raymond Basin area the Raymond Fault serves as a barrier to later-
al movement of ground water. Disposal of ground water from the Basin other
than by consumptive use is over or through Raymond Fault: "Escape of water
through the fault is believed to be relatively small."5 Thus, a recharge flow
to ground-water storage with little or no opportunity for escape has created a
ground-water stock behind the Raymond Fault.6 In the West Coast Basin area
the Palo Verde Hills in the southwest portion of the Basin obstruct ground-
water movement in that direction. The action of the barrier is similar to that
of the Raymond Fault--nonwater -bearing strata block the lateral movement of
ground water.

A second type of barrier is found in the West Coast Basin area in the Pa-
cific Ocean. This body of water blocks or impedes outflow of fresh ground
water from the aquifers by the action of a hydraulic gradient. If pressure from
landward is greater, fresh water will flow into the ocean from the aquifers. If
pressure from the ocean is greater, salt-water intrusion can take place. Prior
to development of the ground-water resource, the gradient caused flow to the
sea from the aquifers. Subsequent to development of the ground-water re-
source, the gradient has been reversed and salt-water intrusion has taken
place.

Ground-Water Recharge. Movement of ground water within the Raymond
Basin area is, for the most part, in unconfined aquifers. A small, unimportant

Much of the information relating to the:geology and hydrology in the Ray-
mond Basin is based on a report prepared by Miss Marcia McClain, formerly
Research Assistant, Giannini Foundation of Agricultural Economics.
California. Department of Public Works, Division of Water Resources.
Report of Referee. (In the Superior Court of the State of California in and for
the County of Los Angeles.) City of Pasadena v City of Alhambra, et al. No.
Pasadena C-1323. July 1943. 392p. Hereinafter cited as: Report of Referee.
(Raymond Basin Reference.) Cite at p. 48.
The concepts of stock and flow natural resources are discussed in Ciriacy-
Wantrup, S. V., Resource Conservation, Economics and Policies. Berkeley,
University of California Press. 1952, pp. 35 to 47.
For discussion of the application of these concepts to ground-water re-
sources, see: Snyder, J. Herbert, Ground Water in California: The Experi-
ence of Antelope Valley. Op. cit., pp. 18-34.









pressure zone exists north of Raymond Fault. Some hydrostatic pressure
exists within all aquifers, but interconnection between aquifers and with the
surface created springs and swamp areas that relieved this pressure. In re-
cent years these have ceased to exist except in years of very heavy rainfall
and then only for short periods of time.
The movement of ground water within the Raymond Basin area is primar-
ily in response to gravity. It is the slow movement of two large, unconfined
masses of ground water within rather definitely marked boundaries. For the
most part these boundaries consist of the impermeable formations of the hills
and mountains surrounding the area plus the Raymond Fault.
In the West Coast Basin area the presence of several structural barriers
(primarily faults) coupled with rather complete confinement of the aquifers 8
tends to disrupt hydraulic continuity and inferferewith girund-water movement.
Movement of ground water in the West Coast Basin area as contrasted with
that in the Raymond Basin is in response to pressure. Variation in depth to
ground water is more a result of pressure release than a result of removal of
water from storage per se. Reduction in pressure at any particular location
causes transfer of pressure to the point of pressure release. Some inflow will
result depending upon the degree of transmissibility of the aquifers and the lo-
cation of the extraction. In the past the primary resultant of these factors has
been the east-west movement of ground water- west from the Los Angeles
river basin and east from the Pacific Ocean.
The Raymond Basin area is a distinct hydrographic unit in which natural
recharge to ground water is from percolation of rainfall on the valley floor and
from discharge of streams from the surrounding watershed. Thus measure-
ment of rainfall provides a logical basis for determining ground-water re-
charge. Precipitation and inflow from the surrounding watershed make up the
bulk of the natural recharge to ground water in the Raymond Basin area. Sev-
eral items contributing to ground-water recharge are summarized in Table 1.
(See section on Safe Yield, pp. 44-45 .)9
Recharge to the ground-water stock resource in the West Coast Basin
area is not derived from rainfallior surface inflow. 10 Eliminating deep
Report of Referee. (Raymond Basin Reference) Op. cit., pp. 56-57.
The rather complicated geology of these water-bearing formations of the
West Coast Basin area is described in great detail in: California. Department
of Public Works, Division of Water Resources. Report of Referee. (In the
Superior Court of the State of California in and for the County of Los Angeles.
California Water Service Company, et.al., v City of Compton, et al.; Califor-
iia Water Service Company, et a.1, AlTexander Abercromrnby et ai-, ,No. 506806).
June 27, 1952. 175 p. [Hereinafter citedas: Report of Referee. 7West Coast
Basin Reference)...,] Cite at pp. 15-22.
9These are combined with the items on discharge of ground water to de-
termine the safe yield of the Raymond Basin area.
10Elimination of these items as contributing factors to ground-water re-
charge leaves subsurface inflow and changes in storage of the possible sources
of recharge. Over 98 percent of the ground-water .storage in the West Coast
Basin area is in confined aquifers. Thus, changes in ground-water levels in
this area do not indicate actual changes in volume of ground water in storage.
The referee calculated storage coefficients for aquifers in the area from pump
tests. Total indicated net loss in ground-water storage for the period of analy-
sis (1932: through 1950) was 7, 300 acre-feet--an average of 400 acre-feet per
year. This small value justifies the referee's action in omitting this item from
consideration in his hydrologic analysis. Report of Referee. (West Coast
Basin Reference). P. 30 and P.. 97.









Table 1. Average Annual Ground-Water Recharge, Raymond Basin Areaa

11 Year Average 12 Year Average
1927-28 to 1937-38 1938-39 to 1949-50
Inclusiveb Inclusivec
PRECIPITATION 45, 270 acre-feet 46, 150 acre-feet
INFLOW from Mountains
and Hills 17, 457 acre-feet 22, 280 acre-feet
IMPORTED water sunk
in Wells 114 acre-feet 9, 850 acre-feet

aThis is gross recharge to the area. See Table 5 for Safe Yield estimates.
bReport of Referee (Raymond Basin Reference).
Report of Referee (Review of Determination).



penetration and change in storage as important factors affecting ground-water
recharge in the West Coast Basin area leaves subsurface inflow as the princi-
pal source of recharge. Thus, the determination of recharge and volume of
subsurface inflow become identical objectives. The referee used two methods
to estimate subsurface inflow. The results obtained from these methods are
summarized in Table 2.

Use of Ground Water

Although the earliest known use of the Raymond Basin area water was at
the San Gabriel Mission in 1771, it was not until after the beginning of the
major influx of settlers in Southern California in the 1870's and the 1880's that
greater development of water supplies became necessary. Citrus groves
formed the major portion of early agriculture in this area. But urban uses be-
gan to replace agricultural land uses before the turn of the century. The rela-
tive importance of nonagricultural water use over the years is indicated in
Table 3. This does not tell the entire story because the breakdown for the
areas served outside of Raymond Basin is not available. The role of agricul-
ture in ground-water use within the Raymond Basin area has always been rela-
tively unimportant, and has by now (1956) practically disappeared. This is
somewhat in contrast to the West Coast Basin area.

Agricultural land and water use has dominated in the West Coast Basin
area until recent years. Only after World War II has agricultural water use
become relatively unimportant (see Table 4). Development of a local water
supply dependent upon ground water dates back to the 1870's and arose from
the lack of adequate surface water supplies. Well-development was originally
concentrated in the artesian belt east of the West Coast Basin area. Expansion
of irrigation acreage together with pressure decreases in the artesian areas
resulted in greater dependence on pumped water. There has been an eightfold
increase in annual volume of ground water produced in the West Coast Basin
area from about 10, 000 acre-feet in 1904 to over 80, 000 acre-feet in 1949-50.
Little is known about the period 1904-1932, but nearly two thirds of the increase
since 1932 occurred after the beginning of World War II. 11

Report of Referee. (West Coast Basin Reference). Op. cit., p. 66.









Table 2. Estimates of Ground-Water Underflow, West Coast Basin, California
1932-1950a

Trough Transmissibility
Methodb Methodc
Marine Total Marine Total
Year Intrusion Underflow Year Intrusion Underflow
Acre -feet -Acre -feet
1932 19,932 69,737
1932-33 24, 368 44, 917 33 12,666 50, 306
34 27,747 49,239 34 21,931 56,488
35 26, 168 48,264 35 10, 369 44, 307

1935-36 26,606 46,670 1936 23,238 65,667
37 26, 320 45, 225 37 16, 040 61, 700
38 26,237 45,660 38 14,684 49, 261
39 28,401 50,605 39 17, 962 75, 766
40 28,990 51,660 40 21, 566 73, 145

1940-41 29,617 52,075 1941 32,659 75,870
42 29,682 52,578 42 21,518 54,327
43 34, 146 58, 870 43 17,245 52,828
44 41,684 67,468 44 33,579 74,008
45 46, 761 75, 342 45 27, 077 72,426

1945-46 46, 355 75,361 1946 31, 280 83,842
47 45, 998 74, 744 47 34, 590 75,894
48 50,574 81,257 -8 39, 590 64,898
49 51, 334 80,955 49 36,931 84,555
50 51, 512 80,994 50 33, 391 47,485

Average 35, 750 60, 105 25,903 68,473

aReport of Referee (West Coast Basin Reference) Table 8, Table 9, pp. 98-99.
bThis is the referee's estimate of ground-water recharge (replenishment) for
the West Coast Basin area, 1932-1950.
CAn alternate method of estimating underflow. Not considered as reliable as
the "Trough Method." Given for comparison only.



Location of Extraction. The location of ground-water extractions with-
in a ground-water basin may have important implications. In the Raymond
Basin area the major points of extraction were located near subsurface bar-
riers to ground-water movement. Extractions within a mile of such barriers
have varied from a low of about 65 percent to a high of about 94 percent of the
total ground-water extractions in the Raymond Basin area. These locations
have continued to be the most favorable of the area. The declines in water
level have been less than in more removed areas. Continued successful pro-
duction has been greater from these locations. Costs of extraction have been
lower because of a smaller total pumping lift.

Salt-Water Intrusionm. In the West Coast Basin area, however, the best
original well locations have not always withstood the test of time. Degradation









Table 3. Acreage Using Water in Raymond Basin Areaa

Acres Acres in Urban
Year Authority Irrigated Areas Served
1888 State Engineer 1,560 ---
1904 U.S. Geological Surveyb 2,800 ---
1926 State Division of Water Rights 2, 244 11, 172
1932 State Division of Water Resources 2, 618 15, 130
1938 City of Pasadena 2,453 14,279
1949 Report of Referee, Review of
Dete r minatio n 1, 247 17,666

aBased on Table 2, Report of Referee (Raymond Basin Reference) except for
1904 and 1949 data.
bEstimated from maps of Water Supply Paper 219. U.S. Geological Survey.
CBased on Table 29, Report of Referee (Review of Determination).



Table 4. Acreage Using Water in West Coast Basin Area

Acres Acres in Urban
Year Authority Irrigated Areas Served
1888 State Engineera 800a ---
1905 U.S. Geological Surveyb 4, 000b
1912 California Conservation Commissionc 16,000---
1932 Division of Water Resourcesd 22, 578 34,416
1942 Division of Water Resources 22, 137 39,962
1948 Division of Water Resources 9, 606 47, 778
1950 Division of Water Resources 8,913 51, 659

Estimated from maps of Report of the State Engineer of California, Sacra-
mento, 1888.
bEstimated from maps of Water Supply Paper 138 and Water Supply Paper 139.
U.S. Geological Survey.
Estimated from maps of California Conservation Commission. Report of the
Conservation Commission of the State of California, 1912. Calif. State Print.
Off., Sacramento. 1912. 502p.
dReport of Referee (West Coast Basin Reference). Op. cit. Table 24, p. 113.
Estimates for 1932, 1942, and 1948 are based on actual cultural surveys;
1950 is an extrapolated estimate.


of ground-water quality has occurred and wells have been abandoned. 12 The
earliest, successful producing wells were drilled in the Wilmington-Dominquez-
12
The earliest recorded date of abandonment of a well in this area as a
result of degraded quality was at Redondo in 1912. Ibid., p. 26.









Long Beach area facing San Pedro Bay--an area characterized by swamps and
water levels near the ground surface. The concentration of ground-water ex-
tractions in this area has reversed the land to sea pressure gradient. 13 By
1932, wells had been abandoned all along the Santa Monica and San Pedro bays
because of sea-water intrusion.

It is difficult to appraise accurately the extent of sea-water intrusion in
the West Coast Basin area. Sea-water intrusion is not characterized by a uni-
form, well-defined frontal advance. It is known, however, that the strip facing
the ocean that overlies intruded sea water varies in width from one half to over
two miles in width.

Sea-water intrusion has two major impacts on the ground-water economy
of an area.

First, individual water users are subjected to gradually increasing prob-
lems of degraded water quality. This may arise through locating a well so
close to the body of sea water that pumping of a particular well reduces the hy-
draulic gradient sufficiently to permit seawater intrusion. Another factor as
demonstrated in the West Coast Basin area may be such concentration of ex-
tractions that reduced gradients in the central area causes inflow of sea water
at the ocean margins. In either event, the individual located near a body of
ocean water will suffer from degradation of water quality. Abandonment of the
well must result if intrusion is severe and resort must be made to another
source of water.

Second, sea-water intrusion destroys ground-water storage for an area
as a whole. Once the critical zone of the ground-water storage resource has
been exceeded (in terms of water quality), restoration of the resource may be
physically as well as economically impossible. Water spreading at appropri-
ate recharge points, if known, and restricted pumping combined with importa-
tion of supplemental water may offer a physical solution and restoration of the
resource--but it may not be economic. L5 Accurate measures of the extent of
sea-water intrusion would make more meaningful estimates identifying the
critical zone and the economic feasibility of restoring the ground-water storage
resource to some desired physical (or economic) condition.

Overdraft. Overdraft is a term frequently used to encompass the ground-
water problems of an area. Overdraft is the volume of ground water removed
in excess of recharge from aquifers within a particular geographic area and
for a specifiedrperiod of time.. The differentiation of types of overdraft as an
analytical tool in the investigation of ground-water problems has been present-
ed elsewhere.16

The ground-water basins of Southern California, are, for the most part,
characterized by long-run or secular overdrafts. Long-run overdraft is a

13In 1949-50 the Referee reports that draft in this area amounted to one-
quarter of the total for the West Coast Basin area. Report of Referee. (West
Coast Basin Reference).. Op. cit., p. 102.
4Ibid., p. 25.
Because of the absence of recharge areas in the West Coast Basin area,
corrective action would be limited primarily to restrictive pumping and impor-
tation of supplemental water.
16Snyder, J. Herbert. Ground Water in California: The Experience of
Antelope Valley. Op. cit., pp. 81-97.









result of "mining" the ground-water stock resource. Draft on the resource
has so exceeded recharge that even in periods of heavy rainfall and stream run-
off, cumulative draft exceeds cumulative recharge.

Safe Yield. The physical concept of safe yield is frequently used to quan-
tify overdraft. The referee has defined safe yield in the Raymond Basin area
as "the average annual amount of ground water that could be artificially ex-
tracted from the basin over an indefinitely long period of years. .without
causing a net lowering of water levels during the period. "17 The estimates
for the safe yield of the Raymond Basin area are summarized in Table 5.


Table 5. Comparison of 1938 and 1952 Safe Yield Estimates,
Raymond Basin Areaa

Year Estimates
1952 30, 770 acre-feet per year
1938 21; 900 acre-feet per year
Increase 8, 870 acre-feet per year

aReport of Referee (Review of Determination) Table 35, p. 78.



The physical situation in the West Coast Basin does not lend itself, how-
ever, to such precise evaluation. Safe yield cannot be defined in terms of
changes in storage--in the confined aquifers of this area there has been no
change in storage. In ground-water basins such as the Raymond Basin where
a free water table exists there is usable ground-water storage capacity. In
the West Coast Basin there is no usable storage capacity: "The sole criterion
that governs the amount of water which may be safely withdrawn or diverted
annually fromthe West Coast Basin is that water levels in the basin must be
maintained sufficiently above sea level to prevent sea-water intrusion."18 This
once again brings out the importance of the referee's estimates of sea-water
intrusion in the West Coast Basin area. A definite annual volume of water that
might safely be diverted from the West Coast Basin was not specified. In view
of the estimates of annual fresh-water recharge underflow, however, the ref-
eree suggested that average annual extractions in the area be limited to a total
of 30, 000 acre-feet per year.

Accurate quantitative definition of overdraft was not possible in this area
for the same reason that safe yield could not be specified. Only qualitative ob-
servation--but a most significant one--could be offered: Because the referee's
analysis (1932-1950 base period)showed that total annual production of ground
water has exceeded the annual replenishment of fresh water to the basin in
each year of that period, "there has been an overdraft on the basin since at
least the year 1932-1933 period. "19 This is another example of long-run over-
draft.

1Report of Referee. (Review of Determination).. Op. cit., p. 8.
18Report of Referee. (West Coast Basin Reference). Op. cit., p. 126.
19Ibid., pp. 126-127.
Ibid., pp. 126-127.









Thus, overdraft may be estimated for either free water table, ground-
water basins or for confined ground-water basins. The estimates are prob-
ably more accurate for free water table basins, however. Estimates of safe
yield and overdraft can be made with reasonable accuracy for areas similar
to Raymond Basin. For areas such as the West Coast Basin, estimates of
safe yield and overdraft must rest on heroic assumptions. Location, degree
of concentration of pumping units, as well as volume of extraction act so as to
determine the extent of sea-water intrusion. Protection of ground-water qual-
ity in the basin fronting the ocean depends on prevention of sea-water intrusion
--yet subsurface inflow depends in part upon lowered hydraulic gradient. If
conditions are such that the pressure surface can be reduced to stimulate re-
plenishment, but not enough to drop below sea level, then water quality can be
maintained. The referee's recommended volume of extraction is aimed at
creating this condition.

The Legal Setting of the Reference Procedure

The Court Reference Procedure as applied to ground-water adjudications
has evolved from a water-law setting characterized and determined by court
decisions more than by statutory provisions. The first legislation affecting the
acquisition of water rights is to be found in the state legislation authorizing the
appropriation of water enacted in 1872.20 The first legislative provisions af-
fecting the adjudication of water rights 1$ found in the state legislation creating
the Water Commission Act of 1913, 21 which wa delayed by referendum and
did not go into effect until December 19, 1914. Between these dates, court
action alone provided for the adjudication of water rights. The courts in ar-
riving at their decision relied heavily upon the then currently accepted doc-
trines relating to the use of water. During this time and subsequent to the
legislative provisions for the adjudication of water rights, some of these doc-
trines have undergone modification. Because of limitations on time and space
the status of water-law and related doctrines cannot be presented here.23

There is no statutory provision for appropriation of, or determination of,
the rights to percolating ground water. Court decisions alone have shaped this
portion of California water law. An important element inthe decisions of the
Raymond Basin court reference was the earlier established principle that
rights to the use of percolating ground water may be acquired by adverse use
--prescription--as against the rights of overlying land owners. 4 In all in-
stances, however, it has been consistently recognized that the court may regu-
late and apportion use of percolating ground water in accord with relative
rights.25 Thus, the courts have the power to adopt and enforce a physical so-
lution even if the parties cannot agree upon one.26

20Sections 1410-1422. California Civil Code.
2lChapter 586. Statutes and Amendments to the Codes, California 1913.
California State Printing. Sacramento, 1913, pages 1012-1033.
22Chandler, A. E. Elements of Western Water Law. (Revised Edition).
Technical Publishing Company. San Francisco, California, 1918, page 73.
23Hutchins, Wells A. The California Law of Water Rights. State of
California, Printing Division. Sacramento, 195b. 571p.
24Hudson v Daly, 105 Pac. 748. 156 Calif. 617. and Burr v Maclay
Rancho Water Co., 1ib Pac. 715. 160 Calif. 268.
2Tulare Irrig. District v Lindsay-Strathmore Irrig. District, 3 Cal
(2d) 489.
6Lodi v East Bay Municipal Utility District, 7 Cal (2d) 316.









The reference procedure may be divided into two categories, the Court
Reference Procedure and the Statutory Reference Procedure. Both procedures
have a common origin in California law in the Water Commission Act of 1913
which laid the statutory ground work for the determination of relative water
rights of various claimants.27 Emphasis in this discussion, however, is given
to the Court Reference Procedure.
The Statutory Reference Procedure. The terms of the Water Commission
Act of 1913 permitted statutory adjudication of water rights, excluding perco-
lating ground water, 28 either upon the initiative of the water commission or
upon petition of one or more claimants to the use of water from a particular
source. The procedure outlined for the adjudication of water rights in the 1913
act was not sufficiently precise and proved to be unsatisfactory.' The pro-
cedure as revised and clarified by amendment to the Water Commission Act
in 1917. 0 This amendment was patterned after the Oregon procedure for ad-
judicating water rights.
The next noticeable change in the statutory reference procedure was the
elimination of the provision that the State Water Commission (now State Water
Rights Board) might undertake water-right adjudication procedures on its own
initiative. This was done by legislative amendment in 1935,32 apparently in
an attempt to eliminate duplicative or unneeded investigations. This provision
was dropped only to delete an obsolete portion of the law--no essential change
in legal effect was made. The amendment specifically stated that, "No lan-
guage in this act shall be... a limitation or restriction upon the power or
duty of the said water commission to determine..all rights to water or the
use of water.... 33 Applications to appropriate water must be approved by
the Division of Water Resources (now State Water Rights Board), and, in so
doing, it must make "such investigations of the water resources of the State
as may be necessary for the purpose of securing information needed in con-
nection with applications for appropriations of water. "34 The Board (formerly
Division of Water Resources) has never had to make recourse to this pro-
vision. 35 The Board must be prepared to pass judgment on amounts of avail-
able water, and this implies, at least, the same authority to perform investi-
gations on its own initiative as were previously more explicit.
ZChapter 586. Statutes and Amendments to the Codes, California, 1913.
Op. cit.
28
8Ibid., Sec. 42 of this act specified that the act applies to "surface wa-
ter and subterranean streams flowing in known and definite channels."
29
9Chandler, A. E., Elements of Western Water Law. (Revised Ed.)
Technical Publishing Company, San Francisco, Calif. 1918. p. 73.
3Chapter 153. Statutes and Amendments to the Codes, California 1917.
California State Printing Office, Sacramento, Calif. 1918. pp. 231-239.
3Chandler, A. E., op. cit., p. 73. See also Section 539.020 OregonRe-
vised Statutes, 1953. This sectionprovides for petition to the State Engineer
by one or more claimants to water, requesting determination of the relative
rights of the various claimants to the waters of the stream. This section orig-
inated as Section 11, Chapter 216. General Laws of Oregon, 1909. Contained in
the Report of the 25th Regular Session of the Legislative Assembly of Oregon, 1909.
32Chapter 647. Statutes and Amendments to the Codes, California 1935.
Calif. State Print. Off., Sacramento, 1935. p. 1795.
33Ibid.
3California, State of. Water Code, 1953. Calif. State Print. Div.,
Sacramento Sec. 1251. p. 51. See aiso Sec. 501, p. 69.
35Personal communication from Henry Halsinger, Principal Attorney,
California Division of Water Resources. Nov. 9, 1955.









After the Board receives a petition requesting the determination of the
rights of various claimants to water and it finds the request to be valid, an
order granting the petition is issued and arrangements made to proceed with
the determination. After investigation an order of determination is filed in the
superior courts) of the county(ies) in which the stream system or a part is
situated. Once the order of determination is filed in superior court, the pro-
ceedings follow closely the rules governing civil actions. The action concludes
with a decree of the court determining the rights of all parties affected.36

The statutory reference procedure has, so far, been restricted by statute
to the adjudication of water rights concerning other than percolating ground
water. The statutory reference procedure is instigated by the action of one or
more claimants to the use of water, who petition the State Water Rights Board
to determine the rights of the various claimants to the water. It is in these two
respects that the reference procedure differs markedly from the counrz refer-
ence procedure. As will be discussed below, however, the applicability of the
court reference procedure to the adjudication of ground-water rights constitutes
a most essential difference--and the basis for this research report.

Court Reference Procedure. The Water Commission Act of 1913 stated
that when suit is brought in superior court, the case may (at the discretion of
the cour )7be transferred to the State Water Commission for investigation, as
referee. The revision of the Water Commission Act by legislative amend-
ment in 1917 separated the court reference procedure from the statutory ref-
erence procedure.30 The revision modeled the procedure after that used by
Oregon.39 The court reference procedure was revised again in 1931, not to
change the legal intent or provision of the law, but to clarify it by stating the
procedure more precisely. 40

During the period from 1914 to 1933, the use of the court reference pro-
cedure was restricted to use in water-rights adjudication in surface water or
water in subterranean streams flowing in known and definite channels.41 Re-
vision by legislative amendment in 1933 restricted the application of the phrase,
"surface water, and to subterranean streams flowing through known and defi-
nite channels, to those sections of the Water Commission Act pertaining to
the statutory reference procedure.42 Such an omission combined with the gen-
eral wording of the section of the act relating to the court reference procedure

bCalifornia. Water Code. See sections 2500-2900 for the provisions
affecting the statutory reference procedure.
37
3Sec. 24, Chapter 586. Statutes and Amendments to the Codes, Cali-
fornia, 1913. Op. cit.
38Sec. 1, Chapter 153. Statutes and Amendments to the Code, Califor-
nia, 1917.
Sec. 539.020. Oregon Revised Statutes, 1935. See also Sec. 11,
Chapter 216, ,General Laws of Oregon, 1909.
40
0Sec. 1, Chapter 1135. Statutes and Amendments to the Codes, Cali-
fornia, '1931.
1Sec. 42, Chapter 586. Statutes and Amendments to the Codes, Cali-
fornia, 1913.
4Sec. 1, Chapter 357. Statutes and Amendments to the Codes, Cali-
fornia, 1933.









was deemed sufficient to permit the court reference procedure to be applied
to any and all suits brought in courts "of competent jurisdiction for determina-
tion of rights to water or the use of water.' 43 Thus, there is no limit upon the
category of water--surface or ground water--to which the court reference pro-
cedure may be applied.

The first application of the court reference procedure in California was
to ground water in the Raymond Basin, Pasadena v Alhambra, in which the
reference was upheld by the State Supreme Court.44 It is also to be noted that
this reference procedure is discretionary, not mandatory with the trial court:
"No positive duty rests upon the court to refer such a problem to the Division
of Water Resources. .but it may call upon that agency at any time for assist-
ance.,45

Section 24 of the Water Commission Act, relating to the court reference
procedure, was codified by legislative action in 1943 and enacted as a part of
the Water Code of California.46 No essential changes were made in the pro-
cedure by this action.

Subjects of Reference. 47 In any suit relating to the determination of
water rights brought in any court of competent jurisdiction in California, the
court may order a reference to the State Water Rights Board. This reference
may take one of two forms.

The Board may act as referee to determine any or all issues involved in
the suit. The court may refer the suit to the Division for investigation of and
report on any or all of the physical facts involved. Thus far, all references
relating to ground water have been based on the latter or narrow reference.48

4Sec. 1, Chapter 1135. Statutes and Amendments to the Codes, Cali-
fornia, 1931.
44Pasadena v Alhambra. 33 Calif (2d) 908.
45Allen v California Water and Telephone Company. 29 Cal (2d) 466, at
489. See also Sections 2000 and 2001, Water Code, 1955, California.
46Sec. 2000-2050. Chapter 368. Statutes and Amendments to the Codes.
California, 1943. Also, California. Water Code 1955. Sec. 2000-2050.
4California. Water Code, 1953. Sec. 2000-2001.
48The administrative interpretation of these sections of the water code as
prepared by Henry Holsinger, Principal Attorney of the former Division of Wa-
ter Resources and now Chairman of the State Water Rights Board is quoted as
follows:
"The administrative determination and application of Water Code sections
2000 and 2001 consistently followed since early 1948 is set forth in the follow-
ing. Section 2000 is direct authority for the reference by the Court to the De-
partment of Public Works acting through the State Engineer of 'any and all
issues' in a pending suit for determination of water rights. This authority is
irrespective of whether those issues are of law or fact. The reference might,
if the court in its discretion, saw fit, include all such issues. This would re-
quire receipt of all evidence substantially in the same manner and means as
would the court hearing the cause in absence of a reference, under oath at
formally called and held hearings. Section 2000 therefore authorizes a general
reference. In a reference pursuant to Section 2001, it is not the practice to
hold hearings, except informall4r. The objective of a limited reference is to
afford the court the assistance of impartial and expert personnel in developing









A "Report of Referee" is prepared after the State Water Rights Board
has conducted its investigations in a particular reference. Copies are sent to
all parties to the suit before filing the report with the court. After considering
any objections to the report by parties to the suit--but not necessarily sub-
scribing to them--a final copy of the report is filed with the initiating court.
The report of the referee, as filed with the court, becomes prima facie evi-
dence of the physical facts in the case. The court will also consider any evi-
dence filed by parties to the suit. It is to be noted that the State Water Rights
Board is not entitled to any fee for its services but does receive total reim-
bursement for all expenses incurred. This over-all procedure provides all
parties with the services of an impartial investigatory agency at minimum cost.
Furthermore, the interests of the public are protected by this participation of
a state agency.

Comparisons with Legal Provisions in Selected Western States

Of the 17 western states, only Arizona, Nevada, Oregon, and Washington
appear to have provisions that permit a court reference procedure similar to
that of California. In so far as can be determined, the intent and working mech-
anisms of the procedure in these states are approximately the same as in Cali-
fornia. Of more interest, perhaps, is the status of the reference procedure in
those states that differ from California.
Court Adjudications. Colorado, Idaho, Montana, New Mexico, North
Dakota, Oklahoma, South Dakota, and Texas are states in which adjudication
of ground-water rights is determined by court proceedings, with little or no
aid from the state agent or agency responsible for regulating use of the water
resources. In these states, the parties to a court action must provide their
own physical facts and expert witnesses. In such situations, testimony and
evidence frequently may reflect considerable selectivity and bias, depending
upon who pays the expenses involved. The court must consider testimony and
evidence offered--much of it completely contradictory--and reach an equitable
decision. There is no impartial referee to investigate the facts and issues of
the case. Lack of such an impartial aid to the court puts greater strain upon
the judiciary and may provide greater opportunity for reaching something less
than an equitable decision.
Statutory Adjudications. Kansas, Nebraska, and Wyoming place great
reliance upon the fact-finding role of their authorized state agent in water-
rights determinations. In these three states the agent and/or agency not only
investigates the physical facts involved, but also determines and allocates
determined water rights. These determinations are filed in the courts and
unless appealed by the affected parties within a specified time period become
final adjudications. If appealed, then the action takes the nature of an ordi-
nary civil action. In Utah the procedure relies more heavily on court action
in that a preliminary determination by the State Engineer must be affirmed or
modified by court decision in order to become a final adjudication. Although
not a statutory reference procedure as described above for California, this
approach can accomplish the same objectives.
the facts essential to a just determination of the issues with a minimum of ex-
pense and delay. The direct methods of collecting evidence employed in case
of a reference under Section 2001 could not be utilized under a general refer-
ence pursuant to Section 2000. It is the considered view therefore that a gen-
eral reference pursuant to Section 2000 et. seq. would defeat that objective.
In all instances where, as has occasionaTl'y occurred, the court has referred
all issues pursuant to Section 2000, a motion has promptly been made and
granted to modify the order in accord with the views here expressed." Hutchins,
Wells. Op. cit. p. 357.









It is interesting to note that the former, more administrative procedure
(the so-called "Wyoming Method") after adoption by Nebraska was appealed to
the State Supreme Court and held to be valid. On the other hand, after adop-
tion by Texa-s and appealed to the State Supreme Court, the same procedure
was held to be invalid.49 Thus an identical procedure affecting adjudication of
ground-water rights may be viewed differently in two states. But in a decision
of the U.S. Supreme Court relating to a similar question, it was held that such
a procedure merely paves the way for a court adjudication if the claimants)
desire to appeal. The courts, in the final analysis, can accord all the evidence
"its proper weight and value."50

Thus, it seems an administrative agency may properly act in a quasi-
judicial capacity, without a court hearing unless a claimant appeals the statu-
tory determination. The unbiased and objective investigations by these agen-
cies serve to protect the interests of the public as well as of the individuals
directly concerned. The investigations of an impartial referee are an ordi-
nary part of the water-rights determination and adjudication. Where final
court adjudication is an integral part of the statutory reference procedure,
the part played by the State Engineer (or other authorized agent) is even more
clearly an integral part of the due process of law. It also seems clear that
the court reference procedure and the statutory reference procedure could be
combined into a single procedure that would serve the same ends and simplify
adjudication of ground-water rights.

The Court Reference Procedure Applied to Ground-Water Basins in California

The Raymond Basin Reference. The Raymond Basin Court Reference
was the first instance of the adjudication of conflicting water rights of many
owners of ground water in California. On September 23, 1937, the city of
Pasadena initiated litigation in the Superior Court of Los Angeles County to
quiet title to ground-water rights within the Raymond Basin.1 Specifically
involved were the rights to divert water from the ground-water basin. This
action was precipitated by an increasing concern over the steadily increasing
pumping lifts in the area. This situation finally stimulated enough concern
that court action was taken.

On January 31, 1939, twenty of the original thirty-one parties to the
suit petitioned the court to refer the matter to the Division of Water Resources
for investigation. The Division was appointed referee in this court case on
February 8, 1939.52 The reference order called for investigation of all physi-
cal facts involved in the action and to report thereon. Conclusions of the in-
vestigation were to specify the safe yield of the area, the surplus water, if
any, and the overdraft, if any. In addition, the court order recommended to
the parties of the suit that the parties to the action appoint engineers to col-
laborate with the Division. Thirteen parties to the suit appointed such engi-
neering consultants. The referee was in contact with this group during the
entire investigation.

49Water Resources Law. Op. cit., p. 777.
50Pacific Livestock v Lewis, 241 (U.S.) 440, at 451.
51City of Pasadena v City of Alhambra, et. al., No Pasadena C-1323.
52Report of Referee, (Raymond Basin Reference). P. xxi-xxiii.









The Division of Water Resources formally served its draft of the Re-
port of the Referee upon all parties on March 15, 1943. 53 After minor re-
visions the Report of the Referee was submitted to the court on July 12, 1943.
On the basis of this report, the trial court entered judgment on December 23,
1944, defining the water rights of the litigants (Table 6). All of the parties
with rights to pump ground water did not enter the suit; therefore, the court'
defined the decreed water rights as equal to the safe yield less the estimated
rights of the many parties with small quantitative rights not in the suit.

Prior to their final judgment but after the Report of the Referee was
filed, twenty-five of the parties to the suit entered into a water exchange agree-
ment. This agreement provides a means by which any party can meet its de-
mands for water in excess of its decreed right by purchase of pumping rights
when offered by other parties. This water exchange agreement was made a
part of the above-mentioned final judgment. The importance of this agreement
will be discussed later.
54
The judgment was upheld by the California Supreme Court in June 1949.
The concept of mutual prescription as applied to ground-water basins was
established by the trial court. Mutual prescription was not mentioned specifi-
cally by this Supreme Court decision. But in not specifically denying the con-
cept, the effect is an implied establishment and support of mutual prescrip-
tion. Final satisfaction of legal criteria for "establishment" of a doctrine will
probably await specific and explicit definition by the Supreme Court during
some future litigation. A petition to the U.S. Supreme Court for a writ of
certiorari by the California-Michigan Land and Water Company was denied on
April 17, 1950.55 With this action, the lengthy litigation of nearly thirteen
years -was terminated.

By action of this judgment, the court appbintedthe Division of Water Re-
sources as Watermaster charged with administering the terms of the judgment
and the 1943 water exchange agreement. 56 The State Engineer created the
Raymond Basin Watermaster Service Area embracing the area covered by the
judgment. On.July 1, 1944, the Watermaster assumed the responsibility of
administering provisions of the judgment and reporting any violations to the
court. Since that date, the Division has regulated ground-water extractions in
the Raymond Basin Area according to the terms of the judgment. Up to June
30, 1954, average annual extractions have been kept within 1.5 percent of the
1937-1938 safe yield volume.57 Detailed accounts of watermaster service
operations are contained in annual reports submitted to the court and parties
to the decree.

Review of the Determination of Safe Yield. A rise in ground-water
levels from 1944 to 1950 induced the city of Pasadena to petition the court for

5Objections to the draft were filed by twelve of thirty-one parties. Sev-
eral objectors stated their objections were filed only to preserve their right to
present argument in court if the proposed plan for settlement were not adopted
by the court. Ibid. p. xxvii.
54Pasadena v Alhambra. 33 Cal (2d) 908.
55California-Michigan Land and Water Company v Pasadena 339 U.S.
397.
56Confirmed by Article IX of the Judgement dated November 23, 1944.
An earlier order datedcApril 5, 1944 marks the original appointment.
5California. Division of Water Resources. Report on Watermaster
Service July 1, 1953 through June 30, 1954, p. 12.









Table 6. Unadjusted and Decreed Ground-Water Rights, Raymond Basina

1937-38 Safe Decreed Safe Decreed
Unadjusted Yield Right Yield Right
Right 1937-38 1944 1951-52 1955
Owner of Right - Acre -feet per year


Eastern Unit
Arcadia, City of
Sierra Madre, City of
SUB TOTALS


Western Unit
Alhambra, City of
Arcadia, City of
California-Michigan Land &
Water Co.
California Water and Tele -
phone Co.
Canyon Mutal Water Co.
Crown City Ice Co.
El Campo Mutal Water Co.
First Trust and Savings Bank
of Pasadenab
Graves, Francis P., et al
La Canada Irrigation District
Las Flores Water Co.
Lincoln Avenue Water Co.
Lockhart, Ross M.c
Huntington Library and Art
Gallery
Mira Loma Mutual Water Co.
Monrovia, City of
Osborn, Chesley E. and
Kathleen M.
Pasadena Cemetery Association
Pasadena, City of
Royal Laundry and Dry Clean-
ing Co.
Rubio Canon Land and Water
Assoc.
San Gabriel County Water Dist.
Sunny Slope Water Co.
Valley Water Co.
Wagner, A. V., et al
SUB TOTALS


2, 527
1,264
3,791


1,042
1, 180


521


2,272
128
0
52


188
65
101
252
573
88


265
99
961

63
92
12, 758


2, 527
1,264
3, 870 3,791


719
814

359


-1,567
88
0
36


3, 526
1,764
5, 290 5,"29


1,031
1, 167


515


2,248
127

51


130
45
70
174
395
61


183
68
663

44
64
8, 794


111


1,234
1, 103
1,575
806
79
25,60 8


RAYMOND BASIN TOTALS 29, 399


851
761 -
1,086
556
55
17,970 T7, 66 25,480
21,840 21, 451 30,770


a
64
100
249
567


262b
98
951

62
91
12,807

110

1, 221
1,091
1, 558
797
78
25, 332
30,632


aReport of Referee (Review of Determination) p. 3, and Modification of Judg-
ment. Pasadena v Alhambra No. Pasadena C-1323. April 29, 1955. Judge
Kurtz Kauffman, Superior Court of the State of California in and for the County
of Los Angeles.
bRights have been acquired and are now owned by the city of Pasadena.
CRights have been-acquired and now are owned by Kinneloa Canyon Estates,Inc.
dRights formerly owned by Flintridge Mutual Water Company.









a redetermination of safe yield.58 On November 17, 1950, the court ordered
the Division as Referee, to redetermine the safe yield of the Raymond Basin
Area. 59 This redetermination increased estimated safe yield of the area by
40.5 percent (see Table 6). As a result of this redetermination, the court has
ordered an increase in adjudicated water rights of approximately 30 percent.

Any party to the action may petition the court for future redetermination
of safe yield and modification of decreed iightssas the city of Pasadena did in
1950. This does not alter the legal finality or the form of the adjudication.
The Raymond Basin Reference Case can be considered as a terminated legal
adjudication of ground-water rights. However, this does not make it fin-a-in
the economic sense--provision exists for future adjustments in the quantitative
magnitudes of water pumped from the basin if the need arises.

The West Coast Basin Reference. Salt-water intrusion and resultant in-
ferior quality of ground water accompanied the decline in water levels experi-
enced by ground-water users in the West Coast Basin Area. The Report of the
Referee in the West Coast Basin Reference details the many investigations that
took place prior to the initiation of legal action.61

Legal action opened on October 24, 1945. The plaintiffs in the action
sought to quiet title to the ground-water rights of each and every party involved.
Also requested was regulation and reduction of ground-water extraction from
the basin so that the supply would not be further depleted.

On July 26, 1946, the court ordered a reference to the Division as ref-
eree. The court requested the referee to define the extent and boundaries of
the West Coast Basin and to report on the physical facts involved. The physi-
cal facts were more involved in this reference, however, than in the Raymond
Basin. The complexities of the added problem of salt-water intrusionhave been
discussed earlier. The court recommended to the parties to the suit that they
appoint engineers to aid the referee in the investigation. Nineteen engineers
made up this "Engineering Advisory Committee" and represented a total of

58Article XXI of 4944 judgmehttp'ro'ided for a review of the safe yield
determination upon petition by any party--but no more frequently thai at five-
year intervals. This portion was stricken by the Supreme Court Decision.
The Supreme Court stated that the court should retain continual jurisdiction
over the redetermination or review of the safe yield determination upon peti-
tion by any party. Pasadena v Alhambra, 33 Cal (2d) at 920.
59
5California. Department of Public Works, The State Engineer. Draft
of Report of Referee on a Review of the Determination of the Safe Yield of the
Raymond Basin Area, Los Angeles County, California. (In the Superior Court
of the State of California in and for the County of Los Angeles. Pasadena v
Alhambra, et. al. No. Pasadena C-1323.) May 1954. 109 p. [Hereinafter
cited as: Report of Referee (Review of Determination. 9
6Modification of judgment. Pasadena v Alhambra. In the Superior
Court of the State of California in and for the County of Los Angeles. April 29,
1955. Kurtz Kauffman, Judge of the Superior Court.
6Report of Referee. (West Coast Basin Reference). Op. cit.









twenty-nine parties to the suit. This committee served as n advisory group
to the referee during the entire period of the investigation.
Early in the investigation the referee requested that additional parties be
brought into the action. The referee stated this was necessary if all issues in
the reference were to be determined completely. A court order of November
9, 1949, directed the plaintiff to bring in nearly 400 additional parties.63 The
plaintiffs filed an amended complaint listing the additional defendants' on De-
cember 5, 1949. At this time the plaintiffs also alleged that the rights and
claims of each and every party to the action were adverse to each and every
other claim. This move will make it easy for the court to apply the mutual
prescription concept in the final adjudication.
The referee filed their Draft of Report of Referee on February 15, 1952.
A total of thirty-eight objections were filed with the court and transmitted to
the referee. The final Report of Referee was issued on June 27, 1952. The
case is pending in court at the present time.
Interim Agreement. The large number of parties in the suit and the com-
plex issues under litigation will require a long, involved trial. All parties to
the action are well aware of the serious nature of the problem, however. The
referee was not able to specify the safe yield of the basin, but recommended
that ground-water extractions be limited to 30, 000 acre-feet per year.64
Ground-water extractions for the period 1932-1950 averaged 60,600 acre-feet
per year growing from less than 50,000 acre-feet per year in 1932-33 to more
than 80,000 acre-feet in 1949-50. And the upward trend was continuing. Clear-
ly, the rate of ground-water extraction was several times greater than the aver-
age annual replenishment. The trend would continue unless something was done.
Due to the seriousness of the ground-water situation and the long time-
period before a final adjudication will be forthcoming, the parties to the suit
have executed an Interim Agreement. This agreement became effective on
March 1, 1955, and has reduced ground-water extractions by about 25 percent
from the 1952-54 rates.65
Ground-water extractions have been reduced significantly as a result of
the agreement. The volume of water pumped by each party is based on the
referee's report of ground-water extractions. They constitute--and are labeled
as--Prescriptive Rights, 1949. Section 9 of this agreement states that no

While the investigation was under way, local interests were active in
attempts to evaluate the overdraft problem. Several citizens' groups of water
users and producers superseded one another from 1943 to 1947. This activity
culminated in the formation of the West Basin Municipal Water District on No-
vember 25, 1947. This unit was organized to facilitate joining the Metropolitan
Water District--and thus secure a supplemental supply of water from the Colo-
rado River. Ibid. pp. 2-3.
63
Before the referee's study was completed, 472 parties were involved
in the action.
6Report of the Referee. (West Coast Basin). Op. cit. pp. 126-130.
65
Personal communication. Mr. Max Bookman, Division of Water Re-
sources, Los Angeles. December 1955.
6Defined as "the highest continuous production of water by each user for
beneficial use in any five-year period prior to October 1, 1949, as to which
there was no cessation of use by it during any subsequent continuous five-year
period prior to October 1, 1949." Interim Agreement and Petition, California
Water Service Co. v City of Compton No. 506806. In the Superior Court of the
State of California in and for the County of Los Angeles. February 16, 1955.









action performed under the agreement shall affect the water rights of the par-
ties to the suit. The agreement was designed to reduce the volume of over-
draft and preserve the status quo of the rights of the parties during the process
of litigation. This was accomplished.

Final adjudication will probably await Supreme Court review. This may
take many years. The case probably will be argued in Appellate Court as well
as Superior Court before the case goes to the Supreme Court.67 But in the
meantime significant reduction in overdraft has been accomplished, and even
greater reduction may result from the trial court judgment.

The Economic Function of the Court Reference Procedure

The relative scarcity of the ground-water resource in both the Raymond
Basin and the West Coast Basin has been recognized for many years. The use
demands that have been placed on the ground-water resource in these two ba-
sins have varied from agricultural to domestic and industrial. Domestic and
industrial uses have been dominant, however, especially in recent years. Wa-
ter use has been sufficient to deplete the resource over time. Until the en-
forcement of the safe-yield ration in the Raymond Basin and importation of
supplemental water the deficit was made up from the ground-water stock--and
rapidly increasing pumping lifts were the result. Increased pumping lifts and
salt water intrusion in thie West Coast Basin attest to the continued scarcity
of ground water in this area. The development and use of an Interim Agree-
ment to reduce pump draft has slowed down the rate of ground-water overdraft
but has not eliminated it.

This scarce ground-water resource plays a key role in the attainment of
economic ends or goals in southern California. Prices paid for it in part de-
termine the level of employment of the resource and its allocation among the
several uses.

The actual role of price as an allocator, however, needs to be thoroughly
investigated--as yet it remains an unknown problem, not an established fact.
The Court Reference Procedure also determines, in part, the level of employ-
ment and allocation of the resource--and the part it plays may become increas-
ingly important in the future. The economic evaluation of the allocative func-
tion of the Court Reference Procedure is therefore a desirable undertaking.

Allocation of the Resource Among Uses. The literature of economic
theory is full of examples or models that explain how resources are allocated
among their several uses. One of the major papers in this meeting is devoted
to a review of recent literature on the application of marginal analysis to
problems of water allocation. It is not the purpose of this paper to engage in
a similar review. The present paper is directed toward an analysis of the
Court Reference Procedure as a means of allocating water--and specifically,
ground water. As a point of departure, it is sufficient to outline the most sim-
ple theoretical concepts.

Building a model to explain resource allocation begins with identification
of a simplified singlefirm demand for a particular "resource" under conditions
of pure competition. Analysis of the supply and demand for a single service
will aid in determining the price and amount used. The model building pro-
cedure suggests the stepwise consideration of the individual firm demand,

67A move has been made to secure a stipulated judgment at an early date.
Whether this can be secured remains to be seen, however.









market demand, and finally market supply. Once these are identified then
market price of the service, its use by the firm, and its uselby the market
are determined by. the model. ..The market demand curve.-and the mar-
iket supply curve taken together sum up the conditions of market demand and
market supply and, consequently, determine the market price of the resource.
The equilibrium price of the resource will be that at which buyers of the re-
source are willing to take the quantity per unit of time that sellers desire to
sell. Under conditions of a stable economy an individual user desiring to pur-
chase the resource can get as much of it at the market equilibrium as he de-
sires. The level of the employment of the resource by this single firm buying
the resource competitively is set at the point at which the marginal value prod-
uct is equal to the price per unit.

An alternative way of looking at this same situation is to see that each
firm views its use of the resource in terms of the alternatives available to it.
Thus, any discrepancy in the resource prices offered by different firms will
induce units of the resource to move from lower-paying to higher-paying uses
until a single price prevails throughout the market. Thus, the resource price
or its cost to any firm will be equal to its marginal value product in its alter-
native employment or uses.

Thus far only a particular single use for water has been considered. The
actual heart of the resource-allocation problem, however, is to be found in the
consideration of allocating the water resource among several competing uses
or users over time. One approach in examining this problem has been to use a
popular technique in firm-theory economics by superimposing smoothly convex
social satisfaction indifference curves on a single production possibility curve
to determire a point of maximum social satisfaction in water allocation between
two uses.

The basic inadequacies of this static or instantaneous time-period ap-
proach in attempting to evaluate problems of water resource development and
use over time have been discussed elsewhere.69 Use of instantaneous models
to evaluate water-resource development and use bypasses the time-oriented
part of the problem. It might be well, however, to consider at this point some
of the imperfections in the theoretical model designed to determine the level of
resource use and allocation of the resource among its competing uses.

Use of the simplified model described above implies the knowledge of, or
at least, an ability to measure, the marginal value product of water in all of
its uses. Under conditions of less than perfect competition this would imply al-
so the ability to measure or determine a marginal revenue product measure of

See for example: Heady, Earl O, and John F. Timmons. "Economic
Framework for Planning Efficient Use of Water Resources." Iowa's Water
Resources, sponsored by the Agricultural Law Center, College of Law, State
University of Iowa, and the Division of Agriculture, Iowa State College, Ames,
Iowa. The Iowa State College Press, 1956, pp,. 47-61; and Timmons, John
F. "Theoretical Consideration of Water Allocation Among Competing Uses
and Users." Presented at the Annual Meeting of the American Farm Econ.
Assoc. and Western Farm Econ. Assoc. Asilomar, California, August 27,
1956.
6Ciriacy-Wantrup, S.V. Concepts Used as Economic Criteria for a
System of Water Rights. Paper presented at the Symposium on the Law of
Water Allocation in the Eastern United States, sponsored by the Conservation
Foundation, held at Washington, D.C. October 4-6, 1956.









water for the set of several uses.70 It is true that for a particular isolated
firm one can measure the marginal value product of water in a particular use.
The basic assumptions, however, concerning the operation of a purely com-
petitive market in the determination of marginal value product are not met in
reality. It would appear to be extremely difficult to aggregate the marginal
value products for several firms to make up a market demand for water in a
particular use. Different firm characteristics, varying engineering efficien-
cies, different management policies, differences in prices paid for the use of
the water resource-, and differences in use and recycling of use for the water
resource, to name just a few, are so widespread that it would be impossible
to measure a marginal value product for the market that would have significant
meaning. This would be particularly true in an area such as the Raymond Ba-
sin or the West Coast Basin. It might be less true among some of the more
homogeneous areas in agriculture, for example, where the diversity of use of
water resources is not nearly so great as are to be found in these localities.

In addition to the time-oriented difficulties encountered in using this ap-
proach additional difficulties are encountered with respect to the differences in
marginal value products between users in different use categories. It is well
established that agricultural use of water resources satisfies perhaps the low-
est marginal value product in an economy and, in addition, tends to require
relatively greater quantities of water per unit of land area. Commerical, in-
dustrial, and domestic uses of Vwater tend to have higher marginal value prod-
ucts in the order listed, and at times are several fold greater than the margi-
nal value product of water in-agr culture. If marginal value product is used
as-the only criteriajblr establishing allocation of water resources, agricultural
use of the water resource in southern California would soon be squeezed into an
area- so narrowly defined that it could create severe hardships upon agri-
cultural production and the provision of agricultural foodstuffs. Use of such
a single criteria could conceivably force changes long before market forces
would ordinarily bring them about. Increase in the cost of providing agricul-
tural food and fibers and a consequent lessening of social welfare for society
as a whole could be the result of such a premature allocative procedure. But
actual impact of such a possibility is probably quite small.

Resource Rationing. A point of departure has thus been established for
considering not resource allocation but perhaps more properly resource ra-
tioning. Rationing of ground water in the Raymond Basin area has been ac-
complished. A preliminary rationing agreement for the West Coast Basin is
in effect. In neither case have the courts tried to rely upon a determination of
marginal value product of the water in its several uses. Reliance has been
made instead on the validity of the water rights possessed by the individual
user of the ground-water resource. The amount of the resource that an indi-
vidual user has been allocated or rationed was dependent upon a history of
beneficial use of the water resource--not upon some conceptual economic con-
struct that attempts to measure the contribution of the user to society.

In view of the difficulties described above concerning the measurement
of the marginal value productivity of the water resource in competing uses and
among categories of use it would appear that this legal device--the Court Ref-
erence Procedure--has been at least a realistic expedient. As has been
pointed out earlier, one of the companion conditions for the success of this
procedure has been the availability of additional supplies of water from alter-
native sources to supplement the demands of the individual water users.

70A marginal revenue product for water would exist under conditions of
monopoly or imperfect competition.









Individual water users can continue to use the amount of water rationed by the
court at whatever price exists or under whatever conditions for pumping may
exist among individuals. Furthermore, these rights can be exchanged, for a
price, in the market place and help satisfy the need, if any, for a price-oriented
means of allocating ground water. However, the role of price in allocating wa-
ter awaits thorough study of the extent and significance of such allocations and
the condition under which they occur.

Furthermore, the pattern of pumpage in the Raymond Basin area has been
substantially altered through operation of a water exchange agreement incor-
porated in the court decree. This agreement which applies to all parties ex-
cept Sunny Slope Water Company and California-Michigan Land and Water Com-
pany provides that pumpage rights surplus to the needs of any member shall be
released for use by other members with due compensation under administration
of the watermaster. Under terms of this agreement the city of Pasadena and
other parties who formerly pumped ground water for exportation have decreased
their extractions and released exchange water for use in the Monk Hill Basin
and Pasadena subareas. This agreement has had the effect of satisfying water
demands or water requirements of individuals more easily than would have
been the case if dependence had been made upon a marginal value productivity
allocation of the resource.

It would be relatively easy to demonstrate that reliance upon a marginal
value productivity measure in rationing or allocating scarce water resources
would have deprived some water users of the resource. This would have had
the effect of forcing some of the water users out of business. Such a situation
would be more evidencedandmore pronounced in the West Coast Basin where
there still exist- many agricultural users of the water resource.

Management of Ground-Water Resources. Management of ground -water
basins for use of the water resource involves at least two important criteria
with respect to economic decision-making. These are: flexibility and secu-
rity. On the one hand, in order to develop water resources, to undertake cap-
ital expenditures, to commit resources other than the water resources to long-
time development, it is desirable that there exists a certain degree of security
over time with respect to use of the resource. On the other hand, the desire
to change the commitments and decisions that have been made in response to
changes in the economy creates the desire for a reasonable degree of flexibility
with respect to availability of the resource and the use to which the resource
may be put. There has been increasing concern and interest in the problem
alleged superior flexibility of the riparian doctrine of water rights relative to
appropriation rights in the course of economic change.71

Flexibility and Economic Decisions. There is general agreement that the
riparian doctrine of water rights has elements of flexibility and that the appro-
priation doctrine has elements of rigidity.. The usual argument presented to
credit the riparian doctrine with flexibility in the course of economic change
points out that riparian rights are not lost through nonuse. That is, "new"
uses compete on an equal legal basis with "older" users. This idea may be
applied also to ground water. The riparian doctrine has been applied to ground
water in California in the form known as the correlative rights doctrine. But
71-
Ciriacy-Wantrup, S. V. "Some Economic Issues in Water Rights,"
Journal of Farm Economics. Proceedings number Vol. XXXVII, no. 5, De-
cember, 1955, pp. 875-885, and "Concepts Used as Economic Criteria for a
System of Water Rights, Land Economics. Vol. XXXII, no. 4, November
1956, pp. 295-312.









it should be pointed out that the economic significance of the flexibility aspect
is frequently overestimated. It is possible for important water rights to be
established through prescription. In the Raymond Basin case the element of
mutual prescription was applied to water rights that were established through
open, adverse, and hostile use--thus invalidating or seriously impeding the
flexibility aspect of the correlative rights doctrine as applied to ground water.
A similar agreement was stipulated in the West Coast Basin case.

The correlative rights doctrine established the fact that overlying land
owners have "equal right" to use of the water underlying the ground surface.
These rights are therefore both uncertain and insecure in terms of quantitative
definition. It is this very fact which has led to the need for rationing in the
Raymond Basin and in the We st Coast Basin areas.

The adjudication process in these two situations has been for the most
part to apply equal percentage reductions to quantities used during the base
period--one by court decree, the other by agreement--in order to equate the
demand for water with the supply of water available in the basin. These adju-
dicative shares in the supply are quantitative rights subject to; voluntary ex-
change between individual users. There is the additional restriction, however,
that if there should be future reapportionment--such as was made in the Ray-
mond Basin redetermination--the reapportionment will be in proportion to the
established water rights.

The Court Reference Procedure as applied in these two cases has worked
quite effectively. Established overlying and nonoverlying uses have been rec-
ognized as co-equal in right through mutual prescription. Water rationing in
accordance with the "safe yield" of ground water has been accomplished for
the Raymond Basin. Voluntary reduction in draft in the West Coast Basin al-
though not in accord with the "safe yield" principle has been accomplished as
an axiom to the safe-yield concept.

The elements of flexibility inherent in this doctrine have, however, been
replaced to considerable degree by elements of flexibility more characteristic
for the appropriation doctrine. Quantity of water, location of extraction, pri-
ority, etc. have been defined by the Court Reference Procedure. The rights
are a commodity that may be exchanged in the market.

A preliminary conclusion may be offered at this point with respect to the
flexibility aspect of ground-water management. Flexible: aspects of the ri-
parian doctrine as applied to ground water--the correlative rights doctrine--
has facilitated the development of the ground-water resource in the course of
economic change. It is necessary to note at the same time, however, that the
rationing induced in the Raymond Basin and West Coast Basin areas merely
provides for a reduction in use of relatively inexpensive local ground water
and a supplementation by making use of relatively expensive imported surface
water. Although the correlative rights doctrine has stimulated the develop-
ment of many ground-water basins of the arid West, it has not yet been fully
tested under economic conditions where ground-water development cannot be
"firmed up" subsequently by additional water development.

Security and Economic Decisions. Development, management, and use
of water in a ground-water basin requires long-run security for the individual
developing or making use of the water. In order to encourage development,
the user must be certain that all deferred revenues and costs of the use and
development can be accounted for and fully compensated over time. The ap-
propriation doctrine as applied to water resources is usually considered as









satisfying this requirement. Voluntary transfer of water rights in the market
place is fairly common. Appropriation rights are far better suited for such
transfer than riparian rights because the former are clearly defined in quan-
tity, seasonal distribution, priority, diversion points, etc. In this sense the
appropriation doctrine as well as providing security of water rights also con-
tains an element of flexibility with respect to economic change over time.

Another aspect of the security criterion deals with the establishment of
preference classes with respect to use. For the most part the highest prefer-
ence is "domestic" and "municipal" uses. The next highest is usually "irri-
gation. "Industrial" and "recreational, if they are recognized as "reason-
able and beneficial" at all, generally have the lowest preference rate. Nor-
mally speaking, these preferences are operative only vhile appropriation of
water is pending. After the completion of appropriation the principle of "first
in time, first in right" will hold under normal conditions. Thus, under ordi-
nary circumstances, a senior but "lower" use does not yield to a junior but
"higher" use. 72 In most Western states there are tendencies in this direction.
The classification of uses into those that are, and those that are not,. "reason-
able and beneficial" implies a ranking of uses.- The final decisions, however,
rest with the courts so long as'they,conform to declared, constitutionally valid
legislative intent. Economic changes thus in a positiontoaffect court decisions

Need for Impartial Court Decisions. It is significant to note, however,
that complete reliance on court decisions may tend to decrease the over-all
efficiency of adjudicating water rights. Each decision reached in a court of
law adds to the existing legal base--the basis for future legal decisions. Each
particular decision, however, is related to current understanding of hydrologic
principles and details of water availability and may be highly localized in na-
ture. In any decision, the evidence may be inadequate or biased or both. Thus
this legal base for future decisions may or may not be adequate even for the
specific local question under litigation. Most certainly when a decision is ac-
cepted as a precedent in subsequent suits, it should be recognized as necessar-
ily provincial, not only because of limitations on specific hydrologic informa-
tion underlying the decision but also because of the "water philosophy at the
place and time that the decision was rendered."74

The courts are dependent upon the practice of basing findings upon legal
precedent and tradition. In so doing, the courts have rendered impartial legal
decisions because their conclusions have been made by justices who can be
acknowledged as impartial experts on legal matters. Too frequently, however,
the facts and evidences that form the basis for the legal decisions are inade-
quate both in terms of historical precedent and current situations. If current
legal decisions in states completely dependent upon court adjudication are
7"One may propose eliminating statutory preferences altogether --ex-
cept possibly for domestic and municipal uses--and leaving to the courts the
determination of which is the higher use in each situation of conflict. This is
the approach taken in Washington." Ciriacy-Wantrup, S.V., "Some Economic
Issues in Water Rights." Op. cit. Additional citation is made to the Revised
Code, Washington, Section-i0.T4T.'030.
73For a stimulating discussion of this point of view, see, O'Bryne, John
C., "Law is a Fact." Paper to be printed in Proceedings of the 1956 Land
Tenure Workshop held at Columbia, Missouri, July 16-27, 1956.
74
Thomas, H. E.4 "Water Rights in Areas of Ground-Water Mining."
Geological Survey Circular 347. Geological Survey, U.S. Department of the
Interior, Washington, D.C., 1955. P.. 7.









weak and inadequate because of too great reliance upon historical precedent or
current facts, then there is real need for sound and impartial investigations of
hydrologic fact in each litigation involving water-rights adjudication. The
Court Reference Procedure as operative in California supplies this need. 75
The additional service of an impartial referee to determine matters of hydro-
logic fact improves the effectiveness of economic change in affecting court
decisions.

Economic Decisions and Ground-Water Use. One of the key character-
istics of an operating economy is the change inherent in that economy. Nor-
mal operations of an economy have built in it the elements conducive to per-
mitting economic flexibility as well as economic security over time. The im-
position of a legal framework upon the operation of an economy should allow for
economic change over time of that economy. Thus, absolute dependence or re-
liance upon a single legal doctrine that provides some elements of flexibility,
for example, but little or no security would not be conducive to the best oper-
ation of the economy. On the other hand a legal process that would establish
security but not permit flexibility over time would be equally awkward. Thus,
a single legal process, if it is to allow for the normal operations of an econ-
omy, must take into account both the security and flexibility aspects of the
operation of that economy.

The Court Reference Procedure as applied in the Raymond Basin case
and as preliminary applied in the West Coast Basin case has both the flexi-
bility and the security aspects necessary to normal operation of an economy
built into the process. There is provision for change in the amounts of water
that may be extracted from the ground water by a particular user. There is
also the provision for new users to make an application for water in these
areas. The satisfaction of the new users' requirements, however, can be met
through use of supplementary imported surface water. There has been no
situation, as yet, in which the Court Reference Procedure in California has
been applied to a situation in which there is no supplementary water available.

Can the Court Reference Procedure Be Improved ?

A Lengthy Process. The adjudication of ground-water rights is a lengthy
process. They Raymond Basin Reference directly concerned 27 water rights
from an area of 25, 217 acres involving a safe yield (1951-52) of 30, 770 acre-
feet. Thirteen years were required for the entire litigation. The West Coast
Basin Reference directly concerns 472 water rights from an area of 101, 000
acres and involves recommended extractions (1952) of 30, 000 acre-feet. Ten
years have already elapsed--and many more will be required before ligitation
is terminated.

The mechanics of the Court Reference Procedure were outlined earlier.
They are simple and straightforward. But the process is very time-consum-
ing. Proceedings in the trial court took nearly three years for the Raymond
Basin Reference. Proceedings in the Appellate and Supreme Courts took near-
ly four and one-half years.

The referee's investigation-in the Raymond Basin Reference took nearly
four and one-half years. This could be considered a very long time--for a
simple physical investigation. But the physical facts of ground-water hydrol-
ogy are not simple. Surface reservoirs can be measured easily but to evaluate

75Integration of a court reference procedure with a statutory reference
procedure might even strengthen this function.








ground-water storage is a difficult and complex task.76 Essential facts can be
gathered only after long and patient effort. Furthermore, these facts are pre-
sented in open court--where they must stand the searching scrutiny and criti-
cism of the parties to the suit.

The referee's investigation in the West Coast Basin took nearly six of the
ten years thus far consumed. The West Coast Basin is four times as large as
the Raymond Basin. The physical setting is more complicated. Nearly 500 wa-
ter rights are involved. The final report--of sufficient detail and accuracy to
withstand court-room presentation--consisted of the one-volume report and
fourteen volumes of basic data. Except for two volumes, basic data consist en-
tirely of tabular presentation of basic data. 77 And yet the West Coast Basin is
a relatively small area. The major part of the referee's time was spent com-
piling the basic data on ground-water extractions and ground-water hydrology.
The physical facts, of geology and ground-water hydrology cannot be simplified
greatly. The amount of information desired probably cannot be lessened ma-
terially. But there appear to be other possibilities in the over-all process.

Ground-Water Extraction Records. At least part of this problem was
solved by legislative action in 1955. SB 1557 of the California Legislature, as
enacted July 9, 1955, requires recording of ground-water extractions.78 The
requirement is limited to Riverside, San Bernardino, Los Angeles, Ventura,
and Santa Barbara counties in Southern California--for the most part an area
characterized by overdrawn ground-water basins. The act requires each per-
son extracting more than 25 acre-feet per year from ground water to file annual
notice of extraction and diversion of water with the Division of, Water Resources.
Furthermore, the first notice filed (effective for March 1, 1956 filing) must re-
cord extractions and diversions for the previous ten-year period.

This act has an important effect on'ground-water rights in the five county
area. Section 5003 states that:

"No prescriptive right which might otherwise accrue to extract ground
water shall arise or accrue to, nor shall any statute of limitations
operate in regard to such ground water in the five counties or any of
them after the year 1956 in favor of any person required to file such
notice of extraction and diversion of water, until such person shall
file with the division of the first 'Notice of Extraction and Diversion
of water'.. ., and as to each person who fails to file such notice by
the end of the year 1957, it shall be deemed for the period from that
time until the first notice is filed, that no claim of right to the

7Snyder, J. Herbert. Ground Water in California: The Experience of
Antelope Valley. Op. cit. pp. 18-53.
7The first two items are reports of special studies; the remainder con-
tain tabulations of basic data:
1. Report of Cooperative Investigations on Consumptive Use of Water
in the West Coast Basin.
2. Geology of the West Coast Basin.
3. Location and Description of Wells (four volumes).
4. Wall Logs and Zonal Classification (two volumes).
5. Analysis of Ground Water from Wells.
6. Measured and Estimated Ground-Water Production (two volumes).
7. Records of Ground-Water Levels at Wells (three volumes).
78Chapter 1869. Statutes and Amendments to the Codes. California
1955. Adds Part 5 of Division 2 to the Water Code. (Sec. 4999-5008 incl.).









extraction of ground water from any such course in the five counties
has been made by such person, and that water so extracted by such
person from such ground-water source during such period has not
been devoted to or used for any beneficial use. The beneficial use
of water from any ground-water source within the five counties in
any year by such person shall be deemed not to exceed the quantity
reported in the notice filed for such year."

Thus, not only are ground-water rights per se established, but alsp some meas-
ure of their magnitude. The ground-water rights of persons extracting less
than 25 acre- feet per year are also protected in Section 5004:

"...this section and Section 5003 shall not apply to any person whose
aggregate extractions of ground water in any year does not exceed
25 acre-feet nor to any extraction of ground water with respect to
which no notice is required to be filed under this pact."

This information, on file with the State Water Rights Board, will simplify
one of the most difficult parts of the referee's job in future references--that of
determining the history of beneficial use of ground water by pumpers. It is im-
possible to state how much time and expense will be saved in any particular in-
vestigation--but it will be a significant saving.

Interim Agreements and Pumping Injunctions. The use of an interim
agreement to reduce ground-water draft has been described for the West Coast
Basin Reference. Without some such instrument, the important ground-water
storage resource could be destroyed by salt-water intrusion before final liti-
gation in this case. The interim agreement has reduced draft and lessened the
likelihood of destruction of a vital resource. At the same time, ground-water
rights have been protected.

A 1953 legislative amendment provides authority for the State Water
Rights Board to request an injunction restricting--on an equitable basis--the
amount of ground water pumped. 79 This section is restricted to five southern
California counties in the arid coastal area and may be applied only after the
Board has filed its report. 80 This section was adopted because the court liti-
gations following the filing of the referee's report are frequently very lengthy.
Action such as this should be permitted in any area of ground-water overdraft.
Without such a procedure, irreparable damage to ground-water quality or loss
of ground-water storage might result before final determination of the water
rights by court decree.

The use of these instruments will not speed up the Court Reference Pro-
cedure. But the impact of the referee's investigation will take effect earlier.
Final adjudication of ground-water rights will not be hastened. But reduced
draft on ground water during litigation effected by such an agreement will not
distort the final adjudication.

Another advantage of the use of interim agreements and pumping injunc-
tions is that it permits a proposed plan to be tested before a final decree is

79Chapter 1690. Statutes and Amendments to the Codes, California,
1953. Also Sec. 2020. Water Code, 1953.
8The area is defined by the exterior boundaries of the counties of Santa
Barbara, Ventura, Los Angeles, Orange and San Diego.









made. Several different arrangements as to total draft volume could be tried.
The very important element of location of pump draft could be varied and the
effect of different locations of extractions compared. Such testing of tentative
solutions would lead to more satisfactory final decrees--in both economic and
physical contexts. 81

Reduce the Number of Parties. There is no reason why the number of
litigants in the Court Reference Procedure could not be reduced. In the West
Coast Basin. Case, this litigation includes potentially 472 parties. However,
only 108 parties had individual prescriptive rights of 25 acre-feet or more per
year (Table 7). These 108 parties had prescriptive rights to 66, 561.3 acre-
feet of water per year--or 98.2 percent of the total prescriptive rights to
ground water.

It appears that unnecessary expense and effort was incurred in the West
Coast Basin Case by including all parties with any (implied or actual) ground-
water rights. 82 If the investigation had centered on the 108 parties instead of
472, then 98.2 percent of the interests involved would have been included. For
all practical purposes, the remaining 1.8 percent could be ignored. This has
been the actual result of this interim agreement. Only 70 percent of the pre-
scriptive ground-water rights involved were required to make the agreement
effective--and effect reduced draft by all parties.

Why could not the referee's investigation likewise be limited to those
ground-water rights that represent the upper 90 percent or so of the total?
This would simplify the amount of work to be done by the referee. The time
period involved would be shorter. Ground-water rights df those persons produc-
ducing less than, say, 25 acrefeet peer year couldbe protected by statute--as they
have beer in the water extraction legislation cited above. Futhermorb, court
action woutldbe less time-consurning if fewer parties were involved in the suit.
Final adjudication could be reachedmore rapidly and enforced justas easily.

The Court Reference Procedure as a legal process appears to be adequate
to adjudicate ground-water rights in specific ground-water basins. It is a
legally valid process that satisfies an immediate economic need. It can be im-
provedand made more efficient, however, if basic data are gathered in ad-
vance, if interim agreements or court injunctions are used, and if only the
major water rights--selected on some justifiable predetermined basis--are
actually included in the process.

The foregoing analysis has endeavored to show that the court reference
procedure may be used as an effective over-all means for allocating ground
water andprotecting ground-water rights. Adoption of suggested improvements
will serve to strengthen its effectiveness.
81--
The Court Reference Procedure contains sufficient authority to effect
trial solutions. Legislative action in 1955 established the right of water re-
plenishment districts under certain conditions to control location of ground-
water extractions. (See Water Code, California, 1955. Division 18.) Pre-
sumably, trial courts could acquire similar authority.
82
The costs associated with and leading to the delivery of subpoenas to
the parties added to the suit by the amended complaint of December 5, 1949
cost the plaintiffs in the suit over $100, 000. T. R. Simpson. Formerly Prin-
cipal Hydraulic Engineer, Division of Water Resources.









Table 7. Classification of "Prescriptive Water Rights, 1949"
West Coast Basin, Californiaa

Range of Individual Number of Total Volume Cumulative
Ground-Water Parties of Ground Number Volume
'Prescriptive Within Each Water Within of of
Rights, 1949" Range Each Range Producers Water
acre -feet acre-feet
0 0.9 176 36.0 192 36.0
1.0 4.9 92 219.4 284 255.4
5.0 9.9 37 273.0 321 528.4
10.0 14.9 20 246.2 341 774.6
15.0 19.9 14 247.3 355 1,021.9
20.0 24.9 9 205.6 364 1,227.5
25.0 49.9 33 1, 174.8 397 2,402.3
50.0 74.9 12 719.2 409 3, 121.5
75.0 99.9 12 1,034.3 421 4, 155.8
100.0 199.9 12 1,586.0 433 5,741.8
200.0 299.9 10 2,563.0 443 8,304.8
300.0 399.9 3 1,077.0 446 9,381.8
400.0 499.9 1 427.0 447 9,808.8
500.0 999.9 9 6,977.0 456 16,785.8
1,000.0 1,499.9 2 2, 178.0 458 18,963.8
1,500.0 -2,499.9 4 7,470.0 462 26,433.8
2,500.0 -4,999.9 9 32,991.0 471 59,424.8
5,000.0 9,999.9 1 8,364.0 472 67,788.8

a Exhibit A. Interim Agreement and Petition. California Water Service Co.
v City of Compton. Los Angeles No. 506806.













ECONOMIC IMPLICATIONS AND APPRAISAL OF THE
COURT REFERENCE PROCEDURE FOR ALLOCATING GROUND WATER

Helmer Holje2

Dr. Snyder has presented an excellent paper describing the physical,
legal, and economic problems associated with ground-water use in two areas
of California; and, more important, how these problems were resolved through
the use of a relatively new institution known as the Court Reference Procedure.
Case studies of this nature are very helpful in understanding and developing
water policies, particularly where these physical, legal, and economic prob-
lems have not yet developed.

This paper illustrates the obvious fact that when water supplies are short
all uses and users must accept a reduction of some sort, or some must go with-
out. The resulting conflict involves not only the equities as among competing
uses and users themselves, but the public interest in preventing waste of wa-
ter and promoting its mose desirable use, both today and in the future. This
implies that a means of rationing must be effected. The Court Reference Pro-
cedure has served in this capacity in the two cases studied by Dr. Snyder.

The basic organization of this paper is good. First, a comprehensive
physical description of the two areas is given. This enables one to determine
why and how the problem of interest developed. Secondly, the legal framework
within the Court Reference Procedure operates is presented. This sets the
stage, so to speak, for an evaluation of the central problem--how effective is
the Court Reference Procedure for allocating ground water ? It is apparent
from this background material that one needs to be much more than an econo-
mist when conducting an investigation of this type. However, I would suggest
that much of the F'spadeworl' material is not needed in the research report.
As an economist I am primarily interested in learning whether or not the Court
Reference Procedure proved to be an effective device for allocating ground wa-
ter, and, further, some of the limitations and shortcomings in its use.

Dr. Snyder opens his economic evaluation section with a brief discussion
of conventional price theory. In this he points out the many inadequacies at
present in the use of this theory for allocating ground water. He concludes
that probably we are not actually concerned with resource allocation but re-
source rationing. I am not able to determine if this conclusion is reached be-
cause he feels that the allocation must be made by means other than the market
system. Furthermore, I fail to see the distinction between resource allocation
and resource rationing. I am sure that the intention is not the implied one that
prices do not serve as a rationing function. However, this is not of any great
significance to the problem treated.

Two criteria, flexibility and security, were used to measure the effect-
iveness of the Court Reference Procedure. It was pointed out that flexibility
of water use is necessary to meet changing economic conditions. At the same
time security of use must be provided to encourage private investment and de-
velopment. Dr. Snyder concludes his analysis with the recognition that the
Court Reference Procedure has provided both these attributes in the two cases
studied. New users have been recognized, and changes in the amount of water

1Discussion of paper given by J. Herbert Snyder.
2Department of Economics and Sociology, Montana State College, Boze-
man, Montana.









going to old users have been made. This was accomplished by:

1. court decree
2. market transactions by the water users.

However, it was pointed out that supplementary surface water was available
and the situation would be much more difficult to solve if alternative sources
of water were not available.

The major advantages of the Court Reference Procedure as a means of
allocating ground water appear to be:

1. the decisions are made by an impartial board,
2. both private and public interests can be presented,
3. the procuring of basic facts needed for the analysis are provided by
experts.
The disadvantages are:
1. it is a time-consuming process,
2. it is costly.
Dr. Snyder presents a number of suggestions to overcome these disad-
vantages. He feels that the use of ground-water extraction records will aid
materially in determining the history of beneficial use. This has been a very
time-consuming process ini the twocases studied. ,The use of interim agreements
and pumping injunctions would allow for wise use and protection of the water
supplies during the period of litigation. Furthermore, these agreements and
injunctions could be devised in such a manner as to provide for test plans be-
fore a final allocation decision is reached. Lastly, the number of litigants
could be reduced substantially. He pointed out that in the West Coast Basin case
108 of the 472 parties controlled 98. 2% of the total prescriptive rights.

Judging from Dr. Snyder's case studies, it would appear that the Court
Reference Procedure does provide one of the more desirable means of allocat-
ing our water resources when serious conflicts arise. Care must be exercised,
however, in its use. Each case must be considered independent of another. If
this practice is not followed a stereotyped court decision will result and there-
by nullify the effectiveness of the Court Reference Procedure. I am sure all
of us will be looking forward with much interest to further study by Dr. Snyder
in the use of the Court Reference Procedure.









GROUND-WATER MANAGEMENT IN BASINS WHERE RECHARGE IS
SMALL IN RELATION TO STOCK, WITH PARTICULAR
REFERENCE TO LEGISLATION IN NEW MEXICO1

0. P. Blaich2

Water, in New Mexico as in many other western states, has long been a
factor limiting production. The supply of water is scarce not only in quantity
but also has limitations with regard to location and source. Therefore, its
distribution and allocation among users creates many unusual problems. It has
many of the problems which are characteristic of public utilities--hence, its
allocation has been subjected to varying degrees of public control.

The difficulties of equitable allocation of water among users in an arid
region were recognized early in the history of New Mexico. The Spanish sett-
lers had very definite rules and codes based upon their experiences by which
water was allocated for irrigation and farm use. The regulations which had
been developed by the village authorities closely resembled our present-day
concept of prior appropriation as it applies to surface water. In fact, these
early Spanish laws became the basis of our present doctrine.

In 1846, four years before New Mexico became a territory, Brig-General
S. W. Kearney, the military commander, recognized the need for public con-
trol of water. He set up what is now referred to as the Kearney Code which,
among other things, recognized the then-existing laws pertaining to the use of
water and declared that they should remain in force.

All legislation subsequent to 1846 was intended primarily to clarify the
existing law and to lay down rules of fair play so that it may be applied. In
1851 at the first meeting of the territorial legislature, it was recorded that
the waters of all rivers and streams were declared to be public. This was
followed in 1891 by an accompanying provision, that a sworn statement describ.-
ing any water-control works must be filed with the territorial engineer within
90 days after the start of the works. This provision formed the basis for wa-
ter control by what is known today as the Office of the State Engineer. The
penalty for failure to comply was strict--it meant the loss of priority.

After a preliminary attempt in 1901 to lay down a basic code for the use
of water in New Mexico, the Statute of 1907, showing clearly the intent of the
Legislature, stated that all surface waters in New Mexico were public waters
and that the courts would follow the doctrine of prior appropriation. It was al-
so stated, then, that the water must be put to some beneficial use. A further
expansion of the earlier provision stated, that water could be appropriated only
upon application to and by permit from the Territorial Engineer. The 1907
Statute was subsequently rephrased again, and included in 1911 as a provision
in the New Mexico State Constitution. The pertinent part of the Constitution
states in essence: (1) that all existing rights are recognized and confirmed;
(2) that all unappropriated water is declared to be public and subject to appro-
priation for beneficial use; (3) that beneficial use shall be the basis, the meas-
ure, and the limit of the right to use water.

The assistance and valuable criticism offered by W. P. Stephens and
others is gratefully acknowledged.
2Dept. of Agricultural Economics, New Mexico A and M, College Sta-
tion, New Mexico.









These three clauses fprm the basis of our present water law, and any
legislation since has been mainly procedural in setting up fair rules for ac-
quiring and administering water rights. Thus, water is available for appro-
priation if the new appropriator's use is to be beneficial and if the use does
not infringe on the rights of prior appropriators.

This is the basic code which in itself shows clear intent. However, the
criteria, economic or otherwise, by which the code is administered are, with
few exceptions, not as objective as they might be. The rating of priority is
fairly clear, as the criteria of dated time is objective. On the other hand, the
clause dealing with beneficial use has had to be interpreted subjectively and
hence has been rather loosely administered. The judgment in granting permits
has been left primarily the responsibility of the State Engineer. He determines
beneficial use according to specific-use categories. The courts have adjudi-
cated several cases where beneficial use was questioned. However, these
cases were primarily instances where the argument was to decide between an
appropriator who did not use all or part of his water and another appropriator
who could use it for some beneficial purpose. They were not to decide the
degree of beneficial use between two different uses. The courts generally con-
cluded that a new appropriator has the right to the use of water which was over
and above the requirements of a prior appropriator. In other words, waste or
excess did not constitute beneficial use. If a prior appropriator complained of
injury, the onus of the proof of beneficial use (to satisfy the court) lay with
him. The new or intending appropriator had to prove that there was unappro-
priated water. As far as I know, the court has never questioned the economic
criteria (if such exist) which determine beneficial use. It would seem that
consideration of this is very important, if maximum benefit is to be derived
from the use of water.

Many legislative and administrative decisions have been combined in the
history of water laws in New Mexico, but never has the doctrine of prior ap-
propriation been seriously questioned. It is felt that the doctrine has arisen
out of the conditions of the region and has reflected the needs of the people.
Therefore, it is understandable, that when the question of the administration
of the use of ground water in New Mexico arose, the code should be based on
the surface-water concept with possibly modified administrative regulations.
The problems of public management of ground water have resulted not so much
from the adoption of the appropriation doctrine but have arisen largely from
an incomplete understanding of the movement and source of ground water.
They have been complicated by the need to decide the rate at which ground
water should be used to give the greatest long-time social benefit with a mini-
mum of encroachment of the rights of prior appropriators. Once the true na-
ture of the stock and flow relationships of ground-water basins are fully under-
stood and can be measured and predicted with reasonable accuracy, more con-
crete policies with regard to the optimum rate of use and the distribution
among users can be determined.

The first legislation dealing with the appropriation of ground water in
New Mexico was attempted in 1927 upon the realization that water from under-
ground sources was limited as was surface water. This first attempt, how-
ever, violated a constitutional prohibition against legislation by mere refer-
ence to pre-existing legislation and was held invalid .by the New Mexico Su-
preme Court. In other words, it could not be based on laws which had previ-
ously applied only to surface waters. In 1931, this was rectified by establish-
ing a separate Ground-water Statute. The basic concept of the new code re-
mained the same as it had been for surface water. It contained three funda-
mental clauses which in effect were: (1) Bodies of ground water with









reasonably ascertainable boundaries belong to the public and are subject to ap-
propriation. (The emphasis was on the phrase, 'reasonably ascertainable
boundaries. ) (2) All existing water rights based upon application to beneficial
use were fully recognized; and (3) :any water right is subject to forfeiture after
four years of nonuse.

The ground-water statute was accompanied by an administrative provision
for obtaining water rights. A person intending to appropriate ground water in
a declared basin must apply to the State Engineer for permission to appropriate.
The State Engineer must then publish notice of the intent, to advise all prior
appropriators. If any of the prior appropriators feel that they may be injured
by an additional appropriation, a hearing before the district court may be re-
quested to decide the issue. If it is taken to court, the onus of the proof of in-
jury will then lie with the prior appropriator. The proof of the existence of un-
appropriated ground water will be with the intending appropriator. Whether or
not the matter is decided by the court the State Engineer must issue a permit
if there is water to be appropriated. However, he may at his discretion reduce
the quantity of water requested or he may specify at what times throughout the
year pumping will be allowed.

Once a permit is granted, the works must be completed without undue de-
lay. Upon completion, a report to this effect must be filed with the State Engi-
neer. Within four years from the date of the issue of the permit to appropriate,
the appropriator must submit a sworn statement of Proof of Beneficial Use, and
only upon receipt of this proof can he be considered to have a valid and proven
right.

In addition to this procedure for the establishment of the water rights, the
administrative provisions impowered the State Engineer with a control over
matters such as: changes in water rights, transfers of ownership, changes in
method of use, changes in well location, and changes in well construction.
This gives the State Engineer over-all control over the protection of water
rights. It also permits centralization of all records which makes a better-in-
formed and more efficient administration.

The control of the quantity of water extracted from ground-water basins
by irrigators has not been very stringent. No metering of water is required.
Permission is usually granted for three acre-feet over a specific area as in-
dicated in the permit. The actual amount of water used per acre cropped may,
however, vary considerably. A cotton crop, for example, generally requires
about 2 acre-feet per acre. An alfalfa crop may require as much as 7 acre -
feet--more usually about 5. If a high water-consuming crop such as alfalfa is
grown on the entire area for which a permit is held, the actual use may far ex-
ceed the legal allowance. However, in many instances, the entire acreage
covered by the permit is not cropped since some of the land may not be suitable.
Therefore, more than three acre-feet on a reduced portion of the permit area
may be legally permissible. Thus, the amount of water used varies considera-
bly with the type of crop grown. It also varies according to the amount and
timeliness of precipitation.

With this general background of water management in New Mexico, I
should like to get a little closer to my topic and deal with a specific case, the
Lea County Underground Water Basin, where the recharge is negligible in re-
lation to the stock.

Lea County is situated in the extreme southeastern corner of New Mexico
and forms a part of the western edge of the Southern High Plains. Over much









of the area, cattle ranching is, as it always was, the most important enter-
prise. Within Lea County there is an area of about 71 townships (the whole
county contains about 106 townships) which in geologic terms constitutes the
underground basin. Much of the area within the basin is still used for cattle
ranching. Irrigated farming has developed primarily in localities where the
water table was less than 50 feet from the surface. The main crops produced
over the past 10 years on the irrigated portion were. cotton and sorghum.
Some alfalfa was also grown as were small quantities of corn, fruit, and veg-
etable crops.

The Lea County Basin was one of the first basins to be declared after the
passing of the 1931 Statute. It was deemed at the time that the boundaries of
the basin were reasonably ascertainable. The administrative boundaries, how-
ever, were determined arbitrarily by the 50-foot contour of the depth to the
water table. This comprised an area of about 45 townships or a little more
than the eastern half of the entire geologic basin in Lea County. The exact
physical boundaries of the basin were not described, although it was stated
that they could be, providing enough time and money were available. Also, the
hydrology of the area and an inventory of the available water were not clearly
determined.

The declaration of this basin was in many respects an unusually far-
sighted measure, anticipating that future problems might arise. At that time,
there was virtually no irrigated farming in the area, and no problem of allo-
cation. Valid rights were recognized for only 567 acres. During the next 10
years, there was practically no development. By 1941, valid rights were held
for only 4, 800 acres. The war years provided some impetus, and, when it
ended, 15, 800 acres contained valid water rights. The very rapid upsurge
came after this period when cotton prices rose rapidly and machinery was again
available. By December of 1948, valid rights and rights in process were-heId
for 117, 700 acres. In 1948 alone, the acreage under rights had more than
doubled from 55, 200 to 117, 700 acres.

This tremendously rapid development of irrigation was cause for con-
siderable concern in 1948 as to the degree to which recent appropriators would
encroach upon the rights of prior appropriators particularly if the rate of de-
velopment should continue. Thus, with still limited knowledge of the total sup-
ply of water in the basin and without precise knowledge of its movement, the
State Engineer considered it wise to close the basin to further appropriations.
All subsequent requests for water rights were denied.

In 1952, an appeal to the district court of a denial to appropriate water
brought the administrative actions under close investigation. The appellant in
the case first sought to test whether or notthe boundaries of the declared basin
had been reasonably ascertained in 1931, thereby testing whether or not the
basin was legally under the jurisdiction of the State Engineer. The State Engi-
neer presented in his defense all the geologic and hydrologic information that
was available to date and satisfied the court that the basin boundaries were
reasonably ascertainable and therefore the 1931 action was legal.

I will try to give a summarized version of the geology and hydrology of
the area as brought out at the trial to clarify in our own minds the type of re-
source with which we are dealing and the way in which the court approached
the problem.

Along the western civil boundary of Lea County and projecting slightly be-
yond, is an escarpment which drops very sharply--anywhere from 100 to 300









feet. The slope to the west and away from the basin continues with a further
drop of 400 to 600 feet in the next 30 miles toward the Pecos River. All along
the sides of the escarpment and the slope are outcroppings of the geologic for-
mations which underlie the Lea County Basin.

To the south is a similar escarpment but with a somewhat more gradual
slope. In most places on the southern slope, the outcrops of the lower forma-
tions are covered by a thick layer of wind-blown deposits. However, there is
sufficient evidence of the same geologic formations that show to the west.

These outcroppings and more recent information from the logs of oil and
water drillings reveal the following: Near the surface under a few inches of
topsoil is a thick layer of caliche (cemented calcium and magnesium carbonate
deposits), particularly at the edge of the escarpment. The thickness of the
caliche over the entire basin is highly variable--as is its permeability. It may
be as thick as 20 feet in some parts and in other parts may be virtually non-
existent. The depth of the soil also varies considerably over different parts of
the area. Immediately underlying either topsoil or caliche, as the case may
be, is a thick deposit of sand and gravel intermingled with lenses of clay. This
layer is known as the Ogallala formation and was deposited during the Tertiary
Period when the rivers flowed from the mountains in a southeastexlly direction
across the High Plains. The Ogallala formation varies in thickness from 100 to
200 feet, averaging about 175 feet. This is the saturated water-bearing stratum
below which are relatively impermeable layers of rock which do not yield water.

The northern boundary of the basin is not clearly discernible since drill-
ing records, which are few in this vicinity, are the only source of information.
The high plains area extends to the north, and there is no clear -cut escarp-
ment to demark the basin. However, from the evidence available, there is
every indication that the bottom of the Ogallala formation (or the top of the im-
permeable substratum) rises to near the surface and the water-bearing stratum
peters out completely. This condition exists because the Ogallala formation
was deposited on the eroded surface of an earlier shale deposit which had rest-
ed on the impermeable rock beds. The shale is very dense and does not per-
mit enough movement of water to be significant.

The eastern boundary of the basin did not need to be defined geologically,
since it was formed by the New Mexico-Texas state line and forms a definite
limit to New Mexico's legal and administrative control.

The boundaries, as I have described therpi,.frm the boundaries of the Lea
County portion of the over-all High Plains geologic basin. However, as I men-
tioned earlier, the boundaries of the administrative basin, as declared in 1931,
were established at approximately the 50-foot contour of the depth to water.
At the southern end, the geblogic and administrative boundaries coincided.
West of the 50-foot contour, the water table lowers gradually and is about 130
to 160 feet from the surface near the escarpment. To the north of any point
within the basin, the water table, where it exists, remains at about the same
depth as within. The majority of the wells which are drilled in the area out-
side the north boundary of the basin yield only enough water for stock watering
and domestic purposes because the acquifer is ver y thin. In fact, in most of
this area, it is difficult to find water-bearing formations at all. Near the New
Mexico-Texas state line, that is within the administrative portion of the basin,
the water table is only about 30 feet from the surface.

To get a better picture of the depth to water, we might summarize by
studying a roughly west- to-east cross -section of the area (see Figure I). The









land surface and the levels of the various strata slope in the direction of south-
east by east from the escarpment toward the Texas line--a distance of approxi-
mately 50 miles. The altitude of the land surface drops by nearly 800 feet.
Water, even though inbedded in sand and gravel, has a tendency to find its own
level. Hence, the, slope of the water table over the same distance is only about
670 feet. Therefore, at the escarpment, it is about 160 feet from the surface
and at the Texas line only about 30 feet with an average thickness of the satu-
rated acquifer of 94 feet.

The water table through a roughly north-to-south cross-section (see
Figure II), shows relatively little change in level as the contours of the geo-
logic strata run about the same direction. There is only some tapering off
near the southern escarpment, and the water table may come to the surface of
the slope as seeps.

The important question is what does this convey in terms of the hydrology
of the area ? It is impossible for any recharge to come from the west and south
since the Ogallala formation outcrops at the escarpment, and water from possi-
ble southern or western sources would have to flow uphill. Furthermore, be-
cause the impervious substratum, on which the Ogallala rests, comes to the
surface at the escarpment, there is no possibility of recharge from Artesian
pressure. No water can come in from the Portales Basin to the north (which
is also part of the High Plains Basin) since the Lea County Basin is separated
in that direction by an almost impervious shale which rises from the bedrock
to the surface and cuts off the Ogallala. Though the shale may transmit some
water, it is extremely slow and insignificant in relation to the draft. The
Ogallala formation is, of course, unrestricted to the east, but since the slope
of the strata is in that general direction, the ground water moves out of the
Lea County Basin, rather than into it.

The only recharge possible to the area is from precipitation which aver-
ages about 15 inches per annum. The range is fairly wide. Over the last 28
years the lowest annual rainfall recorded was 7 inches and the highest was 35
inches. It is only in years of above-average precipitation that there is any
appreciable recharge to thebasin. There may be some additional recharge when
sufficient rain falls over a short period to saturate the surfacesoil and permit
percolation into the substrata. Sudden heavy downpours are quite character-
istic of the area. Buteven then, because of the limited permeability of the
caliche layer over much of the area, a considerable portion of the rainfall runs
off into shallow depressions which characterize the topography of the area.
The heavy textures in these depressions permit slow percolation, and much of
the water which collects is lost in evaporation. The annual evaporation rate is
about 70 inches.

It has been estimated that the average annual recharge to the basin would
not exceed 29 thousand acre-feet and may be less. At the same time, the loss
through the movement of water east into Texas is estimated to be about 25
thousand acre-feet. This leaves a net recharge to the basin of about 4 thous-
and acre-feet or less. Giving some room for error in measurement, the net
recharge is considered to be negligible, and any water which is pumped must
come primarily from stock.

These are the basic geological and hydrological facts which were re-
vealed at the trial, and the appeal was denied. However, the court did recom-
mend that the situation be reinvestigated "with the view in mind of the possibil-
ity of setting up districts within the basin, within which additional appropria-
tions could be made and at the same time afford protection for prior appropria-
tors."


































MILES


Figure I. Lea County cross-section--south east by east


water table 4


Shale -
Impervious rock


Permion


FEET
4600
4400-
4200-
4000-
3800
3600-
3400
3200
3000-
2800-
2600-
2400-
2200


MILES

Figure II. Lea County cross-section--north east by north









The degree to which prior appropriators were to be protected was never
questioned at the trial. Under conditions where water is pumped almost en-
tirely from stock any subsequent appropriator would to some degree infringe on
the rights of all prior appropriators. The cone of depression from one well in
time, could, though minutely, affect the entire outlying area. Therefore, how
many appropriators should be allowed and how many years should the water be
made to last? The situation is very comparable to the straw which broke the
camel's back. At the trial, much of the discussion as to whether or not there
was water to appropriate was centered around an assumed 40-year life of the
acquifer. The appellant and the court had accepted without question the State
Engineer's assumption that an additional well or a group of wells would have a
detrimental effect onprior appropriators during the next 40 years. The eco-
nomic feasibility of using the water for this period was not considered.

In any case, the office of the State Engineer went on to inventory the
stock of water in the whole geologic basin within the boundaries of New Mexico.
The entire area beyond the western boundary of the administrative basin, up
to the escarpment was included. (This involved 71 townships as compared
with the original 45.) The main reason for including this extension in the in-
vestigation was because it formed part of the recharge area and water moved
from there into the administrative basin. Furthermore, it was also recognized
that any pumping development in the western-portion area might affect prior
appropriators to the east who were under administrative control.

In late 1952, the inventory was completed. It was estimated that the
basin contained about 26.6 million acre-feet of water, and the information was
supplied in detail for each township. The average township contained about
375 thousand acre-feet of water and varied (as is understandable from our pre-
vious description of the acquifer) from 20 thousand to 895 thousand acre-feet
per township. It was estimated that only about two thirds of the stock of water
could be extracted efficiently for irrigation. That is to say, once the saturated
acquifer was reduced to one third of its present depth, the draw down in a well
during pumping would hit the bottom of the acquifer and the wells would not be
able to yield sufficient water for irrigation. With this assumption, the total
supply of water underlying each township was divided by 60 to get an estimate
of the annual amount of water available for 40 years of irrigation. Thus, when
irrigation will have to cease, there will still be an ample supply of water for
domestic and municipal purposes.

These data were then compared with the amount of water claimed by
existing valid rights, and itwas found that actually only 9 of the 71 townships
had been overappropriated to the total extent of 17 thousand acre-feet per
annum or an average of 1, 900 acre-feet per township per annum. In other
words, the water would not last for 40 years of irrigation at the present al-
lowed rate of appropriation of 3 acre-feet per acre per year over the specified
area under rights. The other 62 townships on the same basis of calculation
had a surplus available for annual appropriation to the total extent of 238.8
thousand acre-feet or an average of 3, 800 acre-feet per township per annum.
The total amount of water which was appropriated at the time when the basin
was closed was only 220.6 thousand acre-feet or 3,100 acre-feet per township
per year. This represents less than one half of the total amount of 6, 200 acre-
feet per township per year that was available for the next 40 years. If, how-
ever, the area under appropriation does notincrease materially in the future,
the water will last for more than 80 years.

The State Engineer in his report considered the effect that pumpage in
Texas might have on the New Mexico supply. However, it did not enter his









calculations since it was thought to be largely offset by the effect of New Mexi-
co farmers drawing water out of Texas, providing their relative pumping rates
did not change appreciably. Any possibilities of the net recharge to the area
being increased by either artificial recharge methods or by reduced natural
discharge were also not considered in the calculations. The former, by means
of recharge holes, would cost about 2 million dollars. The effects are diffi-
cult to assess without present knowledge, but it has been estimated that per-
haps 30 to 50 thousand acre-feet could be added to the acquifer annually by this
method. The quantity of natural discharge into Texas which would be saved
by a lowering of the water table as the basin becomes developed would also be
small in relation to the 220 thousand acre-feet of rights now held. By the time
the basin would be developed to a point where this saving might be significant,
the stock would be exhausted to a point beyond which the wells would not yield
enough water for irrigation.

This investigation resulted in the re-opening and enlarging of the basin
for further' appropriation on a township basis in all but 13 townships. Thus
the administration has recognized to some degree the important aspect of well
spacing over the entire basin to get the optimum extraction of water from the
acquifer. Well spacing within a township is also regulated to some degree
though more indirectly. It is left primarily to the discretion of the State Engi-
neer in granting new permits or in permitting changes of location of wells.
There is no stipulated distance which the wells of one appropriator must be
from those of another.

The data on what has happened in Lea County since the 1953 decision
have not yet been compiled. However, it is generally felt that it was a step in
the right direction.

There is a need to inventory and assess the effects which past legislative,
administrative, and judicial decisions may have had on the development of the
economy of Lea County, and to determine what future action might be taken so
that maximum long-time social benefit can be obtained while the stock of water
lasts, or until such a time that the stock may be supplemented by methods
which may be economically unsound at the present time or perhaps even un-
known. 3

The basic approach to such an investigation would be to budget for the
entire Lea County economy and in considerable detail for the agricultural sec-
tor. A budget based on the assumption that no public action had been taken
could be used as a basis for comparison. Then as each of the various manage-
ment decisions were made, the budget would be adjusted accordingly; the dif-
ference would represent the effect of the actions compared with the assumption
of laissez-faire economic development. Complete budgets for the economy
would also have to be developed starting at the time the three major decisions
took effect in 1931, 1948, and in 1953; that is, declaring the basin, closing the
basin, and reopening it. The effects of any minor intermediate decisions that
were made could then be measured by partial budgets superimposed on the
main three. Stating the proposition as it is here sounds to be a much simpler
task than in reality. Such an approach would have to be modified depending up-
on the .availability of data from which to construct the budgets. There will also.need
to be considerable primary analysis before budgets, can be adequately developed.
A study entitled, "An Analysis of Ground-Water Laws and Related In-
stitutions as They Affect the Economy of Lea County in New Mexico, is being
undertaken by the Dept. of Agric. Economics of the New Mexico College of A
& M A and represents a contribution to a similar regional project, W-42.









One of the prerequisites will be to determine how much water can be
economically extracted from the basin and how long pumping for irrigation
can continue before the yields of wells will drop to a point where it is no long-
er sound to maintain the investment. In other words, what is the total eco-
nomic supply of water ?
A second prerequisite will be to establish the responses of crops, which
are suited to the area, to varying amounts of water. This is needed to deter-
mine the amount of water that is likely to be withdrawn from the basin at vari-
ous assumptions of future prices for the products taking into account the in-
creasing costs of pumping as the water table lowers and finally becomes de-
pleted. The State Engineer has based his estimate of future available appro-
priations on a 40-year life of the acquifer, assuming that 3 acre-feet per per-
mit acre are appropriated. However, there are studies which indicate that
much less water is actually being used. This fact combined with the fact that
there are physical limits to further development may provide a new outlook to
the future of Lea County.
An inventory of the soils is needed. Their suitability for irrigated crop
production can be translated in terms of an index which would be useful for
analysis as well as a future management guide. Soil will probably be one of
the most important factors that will determine the rate of future expansion of
irrigation in the area. As indicated earlier, the area is cut up by marrow
strips of soils which are of varying fertility. Much of it is covered by very
shallow soils, overlying caliche. These are not generally suitable for crop
production of any sort. The marginal quality of the soil that will be brought
into production at various anticipated future prices and costs will pose an im-
portant question.
The investigation will also have to consider the criteria or factors that
determine the choice of the length of period over which the water should be
used. There is clearly a conflict between the objectives of society and of the
individual. The individual will no doubt be motivated strongly by maximum
returns over his own lifetime, and will be relatively little concerned with the
returns to his heirs. The community, on the other hand, is differently con-
cerned with the effects of future income for future generations. Society is
concerned with planning for social services of all types over a period much
longer than is the concern of an individual. It therefore becomes a problem of
conservation--how to conserve and when. Any decision must compromise the
aims of society and of the individual. These are some basic ideas on the ap-
proach toward an assessment of the managerial actions with regard to the un-
derground basin in Lea County. An analysis of this type would produce some
objective criteria that might be suitable to guide future managerial action.
What forms should such criteria take and what action might be taken to
introduce a higher degree of objectivity into the management of an underground
basin such as in Lea County. At this stage any suggestions can only be pre-
liminary conjecture which may be used to represent the hypotheses to be prov-
en by an investigation.
Let us assume that there are weaknesses in the present system of con-
trolling the use of ground water from basins where the recharge is small in re-
lation to the draft. If more control is desirable--this is a policy decision--
there is no doubt an important need for more objective consideration in the
granting of permits to appropriate water. Some of these criteria might be in
terms of: (1) more refined control over well spacing to permit optimum ex-
traction. This would have to take into account the texture of the water-bearing
stratum surrounding a well and the cone of effect that the well would have on
nearby appropriators; (2) more objective consideration of the economics of
beneficial use by granting permits for specific amounts of water for a specific









soil type depending on the ability of that soil to make use of water for crop pro-
duction (It may be that economic forces are doing an effective job at the present
time of allocating water to the soils which can most effectively use it.); and
(3) permits might be granted for different rates of water application to different
crops depending on their ability to make optimum use of water. (Different rates
of application to different crops are in effect being accomplished at the present
time by the relaxed policing of the actual quantities pumped. If, however, me-
tering is introduced--it is being considered in several basins--then some such
action may be necessary. Whatever criterion is adopted, it will need to be
flexible enough as so not to influence adversely the land-use pattern.) These
are some of the more important criteria which require investigation.

A more drastic hypothesis might consider that our present system is in-
adequate for the management of ground water and that some form of monopo-
listic control is necessary. In this regard, ground water might be managed as
a public utility. The water could be sold to the users, and the problem of allo-
cation would be left to prices.

Whatever it may be, any future action will ha e to be studied not only
from the economic point of view but the social, legal, and administrative im-
plications will also have to be considered.

References

(1) Harris, Charles D. "Legal Status of Water in New Mexico, paper pre-
sented at a Water Seminar at New Mexico College of A & M A, February,
1956.

(2) Cooper vs State Engineer, "Transcript of Court Proceedings on the Matter
of the Application of Luther Cooper on Appeal from the State Engineer, 1952.

(3) Yates, J. C. "Water Supply of Lea County Underground Water Basin, "
unpublished data 1952.

(4) Minton, E. G. Jr. "Report and Recommendations on Artificial Recharge, "
published in condensed version by Lovington Chamber of Commerce--undated.

(5) Stephens, W. P. "Cost of Pumping Irrigation Water, Lea County, 1952, "
Bulletin 383, N. M. Agric. Exp. Station, December, 1953.












THE ROLE OF THE PUBLIC DISTRICT IN THE INTEGRATED
MANAGEMENT OF GROUND AND SURFACE WATER1

Stephen C. Smith2

The public district is one of several public agencies which may play a
role in the integrated management of ground and surface water. How widely
the district will be used for this purpose is not yet certain as the western
states are in the process of adopting and adjusting their procedures for deal-
ing with this problem. Some state legislatures have granted rather broad pow-
ers to the state executive branches of the government and have made them re-
sponsible for operating a system of ground-water appropriations and for initi-
ating the use of a variety of techniques to accomplish basin-wide management.
In other states the courts have played a more dominant role in defining the
limits within which water management may proceed without violating a system
of private water rights vested in the overlying owners. The public district
may be used as an agency for integrating the management of ground and sur -
face water in both instances, but it has been more highly developed for this
purpose in the nonappropriation states.

The role which the district performs could be examined from many points
of view. For purposes of this discussion, I should like to look at it as a public
agency which is used in organizing integrated management of ground and sur -
face water. It is through this process of organization that integration takes
place. Through the district the holders of property rights to ground water and
other parties interested in the management of the local waters may organize
to take collective action to overcome uncertainties inadequately protected
against in water law. The district provides an organizational structure for
representing these interests. Integration is achieved through the representa-
tion of these interests internally within the district. But internal representa-
tion is frequently not enough. These interests must in turn be integrated with
external interests. And the district may have the legal, political, and eco-
nomic responsibility for performing this function. -For example.,, water im-
portation may be required for recharge purposes in order to overcome uncer-
tainties associated with a particular basin.

The Economic Value of Water Rights, Integrated Management and the Public
District'

An important contribution of a water-right system is that it defines the
legal privileges of water use in terms of a property right and prescribes legal
remedies for the infringement of these privileges. These legal definitions not
only have significant economic import, but their meaning is, in part, shaped
by the demands of economic existence.3 Thus, the principle of mutual pre-
scription was enaundiaite in an economic situation which had encouraged ground-

1Prepared for the Committee on the Economics of Water Resources De-
velopment, Berkeley, California, December 20-21, 1956.
Appreciation is acknowledged for the constructive comments of S. V.
Ciriacy-Wantrup, Wells Hutchins, and J. Herbert Snyder.
2Dept. of Agricultural Economics, University of California, Berkeley.
3For a thorough discussion of this point as it relates to systems of water
rights, see the following article: Ciriacy-Wantrup, S. V., "Economic Criteria
for a System of Water Rights, Land Economics, vol. 32, no. 4, November,
1955, pp. 295-312.









water draft and permitted the utilization of an imported Surface-water source.
On the other hand, the public district has been called into use to give economic
meaning to existent rights. It has been used as an agency for integrated man-
agement to counteract such factors as an increasing depth to water, salt-water
intrusion, compaction, and excessively high water tables. Thus, forces tend-
ing to destroy the economic value of water rights are combated.

California's correlative rights doctrine grants a coequal right to overlying
land owners to use ground water. The effect of this system has been the rapid
but uncoordinated development of a large number of California's ground-water
reservoirs. 4 This development has had the economic value of contributing to
the build-up of the economy which utilizes this water5 and of permitting each
user to economically relate his use of ground water to other available sources
of water with minimum legal restriction. However, as a result of this use, a
wide variety of problems have ensued which cannot be solved in terms of legal
privileges and remedies. For example, in northern Santa Clara Valley6 the
depth to water increased 109 feet from 1915-16 to 1933-34; from 1933-34 to
1942-43 the water table rose 85 feet; from 1942-43 to 1950-51 the depth to wa-
ter increased 110 feet; and from 1950-51 to 1954-55 the water table rose 21
feet.8 The State Department of Water Resources classifies this as a reservoir
with overdraft. 9 The Santa Clara Valley ground-water users were troubled
with the physical uncertainty due to cyclical fluctuations in recharge and from
the effects of secular overdraft. A portion of this uncertainty comes from the
cyclical nature of the rainfall which supplies the water for ground-water re-
charge. During the dry portion of the cycle the depth to water increases with
added water costs and with no knowledge of how much nor for how long the wa-
ter table will decline. In such a situation, the correlative rights doctrine
spreads the uncertainty equally among all reservoir users. The responsibility
is not placed with a state agency for limiting draft.

The following statement indicates the number of basins in which over-
draft conditions exist. However, it does not indicate the relative economic im-
portance of these basins. "A condition of overdraft is not unique to any one
area of the State of California. Any tendency on the part of local areas or
groups to consider that overdevelopment of ground water with attendant over-
draft and adverse effects is unique to its area should be dispelled by the knowl-
edge that as of 1954 overdraft existed in at least 33 ground-water basins, ap-
proximately 15 percent of the 223 ground-water basins so far identified within
the State." Richter, Raymond C., "Overdraft Conditions in California Ground-
Water Reservoirs and Effects, a paper presented to the Conference on the
California Ground-Water Situation, University of California, Berkeley, Cali-
fornia (Sacramento: State Department of Water Resources, December 3, 1956),
p. 12 and Appendix p. 8.
Ciriacy-Wantrup, S. V., "Some Economic Issues in Water Rights,"
Journal of Farm Economics, vol. 37, no. 5, December, 1955, p. 879.
Northern Santa Clara Valley lies at the southern tip of San Francisco
Bay.
7Unpublished data collected by Patricia Bartz for the University of Cali-
fornia from the files of the Santa Clara Valley Water Conservation District,
San Jose, California.
The average depth to ground water from 1933-1955 was compiled by the
staff of the Santa Clara Valley Water Conservation District. These figures are
for the month of October.
Richter, op. cit.









From the point of view of the local area, overdraft mnay not be cyclic in
nature. Secular overdraft is prevalent in many parts of the West with over-
draft continuing throughout all phases of the cycle. 10 The ground-water stock
is being mined. In this situation the correlative rights doctrine with the court-
reference procedure has been used to define the individual water rights and to
restrict the draft permitted under the right. These rights are determined upon
a historical base, and restriction of draft is defined as a percentage of the ap-
proved base. The court may vary the volume of the draft by changing the per-
centage, thus, integrating draft with importations. 11 But the more complete
integration of management is not provided for.

The correlative rights system does not provide protection against the
physical uncertainties of water supply, nor does this system place the respon-
sibility upon a state agency. However, this economically important element of
security may be sought through the actions of a local public district. Through
its action of integrating the management of surface and ground water, the physi-
cal uncertainty of overdraft may be alleviated by such means as water importa-
tions and artificial recharge.

The public district is used in a somewhat similar fashion under the Texas
application of the English rule. This rule does not provide the coequal status
of the correlative rights doctrine. 12 Each holder of a right can extract as
much water as he needs without the restraints usually given to the terms rea-
sonable and beneficial use. To overcome some of the problems involved in
this type of action, the Texas legislature passed an enabling act to permit dis -
tricts to recharge, to control waste, to regulate the spacing of wells, to limit
the amount of water which can be produced from a well, and to carry on edu-
cational and planning functions. 13 Again, the role of the district is to provide
the organizational framework through which the interests in the ground-water
basin can act.

For example, one of the policies which has been adopted by the High
Plains Underground Water Conservation District No. 1 is to establish mini-
mum distances for the spacing of wells. 14 In other words, the well owners
are provided with security from the adverse effects of pump draw down from
neighboring wells and, thus, the value of their water right is protected. Se-
curity of this type was not provided under the English rule, but such protection
may be given by the district in performing its role as an agency for collective
action. This is accomplished through the power of the district as a body politic

10Snyder, J. Herbert, with a foreword by S. V. Ciriacy-Wantrup, Ground
Water in California: The Experience of Antelope Valley (Berkeley: University
of California, College of Agriculture, Agricultural Experiment Station, Februc
ary, 1955), pp. 81-86. (Giannini Foundation Ground Water Studies No. 2.)
11Snyder, J. Herbert, "Economic Implications and Appraisal of the Court
Reference Procedure for Allocating Ground Water, presented to the Committee
on the Economics of Water Resources Development, Berkeley, California, De-
cember 20-21, 1956.
12Hutchins, Wells. A..,, "Trends in the Statutory Law of Ground Water in
the Western States, Texas Law Review, December, 1955, pp. 157-191.
13Duggan, Arthur P., "Texas Ground Water Law, Proceedings, Water
Law Conferences (Austin: University of Texas, School of Law, November 20-
21, 1952, and June 1011, 1954), pp. 11-29. Texas, Board of Water Engineers,
Rules, Regulations, and Modes of Procedure, 1955 Revision, Austin, 1955,
Act. 7880-3c., pp. XLVI-LIV.
14High Plains Underground Water Conservation District No. 1, Rules of
High Plains Undergxound Wate.r CoAiserviatioin District'No. 1, Lubbock, Texas.









to carry out the provision of the state constitution regarding the "preservation
and conservation of all such natural resources of the State since they are each
and all hereby declared public rights and duties." Thus, through the local ap-
proval of district ordinances, the district is granted a public-welfare right to
control the use of a private-property right. In this way, certain techniques of
ground-water management may be executed.

States with the appropriative system of ground-water law rely upon local
organizations to a varying degree--Colorado and Oregon being examples of
states which authorize the use of local organizations. However, these powers
of administration and control are generally vested in some office such as the
state engineer. In these states the, main attempt.has been to rely upon the ad-
ministration of property rights to give adequate ground-water management
through the regulation of draft. Rights may be granted up to the administrative-
ly determined "full" appropriation of the ground-water reservoir. If a reduc-
tion in draft is called for, reduction would proceed in reverse order from that
of appropriation. Thus, the impact of cyclical fluctuations would fall upon the
junior appropriators and would affect their security of investment. As their
ground-water problems become more acute with increased reservoir develop-
ment, it may become necessary to adopt other management techniques such as
artificial recharge, the disposal and reuse of return flows, and other such ac-
tions. 15 These activities could be executed by a state agency in conjunction
with the administration of the appropriative system. On the other hand, the
district form of organization could also be used within the same framework.
Hutchins indicates that the trend in the West is apparently toward the statutory
authorization of local associations and districts in both appropriative and non-
appropriative states. 16 Whichever form of organization might be chosen, it
is evident that the- appropriative system may provide some techniques for an
integrated management program. But supplementary action may be required,
and this may be provided through a state or a local organization.

This review of ground-water law reveals that the states generally have
procedures for the establishment of private-property rights to use ground wa-
ter or at least legislative or judicial recognition that such rights exist. As
these rights are used and developed, problems frequently emerge which re-
quire a program of integrated management of ground and surface water. The
systems of ground-water law may not provide the organizational framework for
taking the collective action necessary for program execution, although they
may be particularly important in controlling draft. The role of the district is
to make an organizational framework available.

Integration through Internal Interest Representation

A second aspect of the role of the public district is to provide for the in-
tegrated management of ground and surface water through the creation of an
organization which will represent the interests internal to the management plan.
These internal interests are associated with the various parts of the plan; how-
ever, they are not necessarily in agreement with each other. In fact, conflicts
of interest generally exist, and a principal role of the public district is to pro-
vide an internal organizational structure for reaching a common interest among
the conflicting interests.

Oregon's appropriative ground-water law permits the state engineer to
exercise a wider range of management techniques than many appropriative laws.
State of Oregon, Oregon Laws, 1955, Chapter 708.
Hutchins, op. cit.









One of the important features of this structure is the electoral procedure
which may be used to determine whether a statutorily favorable common in-
terestl7 exists among the internal interests of the ground-water reservoir.
In this fashion the physical as well as the economic necessity of having con-
trol over the whole basin may be achieved without :requiring unanimity of in-
terest. The entire area benefited maybe included even though some opposi-
tion exists. Generally, this area is considered to be all of the overlying land
irrespective of ground-water use. 18 In addition, individuals with a primary
economic interest in reservoir management, but not the holders of a water
right, may find a means for representation in district affairs. This may be
accomplished by designating who may possess the voting privilege. Property
requirements and voting in proportion to assessed property valuation are not
uncommon. On the other hand, if ground water is widely used throughout the
district, the procedure of permitting all registered voters to participate in
district elections seems reasonable.

A step toward integrated management is achieved if all relevant interests
have an opportunity to be heard. Of course, for this to be effective, the issues
must be presented to the voters so that a decision can be reached with respect
to the problems of interrelating ground and surface water rather than to con-
sider them as separable, independent resources. In this way the district can
play an important role ini determining voter preferences with respect to ques-
tions of integrated management. The neutral, competitive, and complementary
aspects of management need internal representation for the district to operate
in this fashion. For example, a water-conservation reservoir may be used for
recreational purposes; or these same detention dams may hold some flood wa-
ter; or flood waters maybe diverted to settling ponds and then to infiltration
ponds for recharge purposes. One role of the district is to have the interests
--associated with water conservation, flood control, and recreation--take part
in policy formation as internal participants.

The problem which is involved may be illustrated from the experience in
Santa Clara County. In this case internal representation has not existed for
all interests. Each of these interests has been represented by its own organi-
zation. The oldest governmentally organized interest is associated with wa-
ter conservation for purposes of artificial recharge;1 the second oldest is the
flood-control and storm-water drainage interest, 40 while the youngest is the
recreational interest. 21 Each of these interests are represented by a public

1This is not the place to discuss the interesting implications of a statu-
tory common interest, although the problem is everpresent in many attempts
to define the public interest. Suffice it to say that a statutory common interest
is achieved at election time if a predetermined percentage of the electorate ap-
prove a proposed action. This percentage is usually stated in the enabling leg-
islation.
18For a recent case on this point, see Atchison, Topeka, and Santa Fe
Railway Company v Kings County Water District, Advance California Reports,
San Francisco, October 23, 1956, 47 A. C. No. 9, pp. 134-141, L. A. No.
24184.
19The Santa Clara Valley Water Conservation District was organized in
1929.
20The Santa Clara County Flood Control and Water Conservation District
was organized in 1952.
21The Santa Clara County Parks and Recreation Commission was estab-
lished in 1955.









agency; and each organization carries on, or will potentially carry on, activi-
ties which are of no or, at best, little concern of the other organizations.

At the present time, the recreational policy is being decided. One of the
major issues is whether the conservation reservoirs should be developed for
recreational purposes due to the extreme fluctuations of the reservoir level.22
Of course, a recreational program could be developed upon the basis of the
currently accepted standards of operation if the uncertainties of fluctuations
were properly taken into account in estimating the recreational potential. In-
tegration could take place in this fashion.

On the other hand, the public agencies could bargain among each other
and arrive at a solution which might require the adjustment of the reservoir
operating policy. In terms of economic analysis, this would require operating
studies of each proposal. These studies could be used in the bargaining proc-
ess in order to assist in achieving agreement. However, since neither party
has the other interest internally represented, it is quite conceivable that the
initial bargaining positions would be poles apart even if each had made his in-
dividual studies, and there might be no pressure to accept the values of the
other party unless there has been a considerable build-up of third-party inter-
est. This third-party pressure could come from special interest groups or
from public sentiment expressed in other ways. The existence of such pres-
sure is frequently associated with major decisions but would be relatively in-
active in the "minor" decisions. On a cumulative basis, these small decisions
often prove to be of major importance.

A third possibility would be for the recreational interests to be repre-
sented within the Water Conservation District. 23 This might be done in at
least two ways. One alternative would be for the district to operate the recre-
ational facilities and to develop the reservoirs itself. This line of action has
been rejected in favor of signing development contracts upon a demand basis.
Each proposal was considered as an individual item of business, and little over-
all policy existed except for the maintenance of public access points. The re-
sult of this course of action has been what might be termed an erratic develop-
ment with the district never accepting this as an essential element of its re-
sponsibility. However, the district board always has maintained that the pub-
lic should be allowed to use the facilities.

Of course, internal representation couldbe supplied by the Recreational
Commission or the Planning Commission. In other words, the internal operat-
ing and developmental plans could be reviewed by recreational specialists on
these staffs. Integration of this type might be particularly important for the
achievement of the efficient use of small staffs and budgets. But, such an in-
teragency approach certainly has greater opportunities for rift and has no built-
in system of securing integration. Such a "built-in" would be available if both
the recreational and the water agency reported to the same board. Pressure
from such a board could be usefully applied to bring integration.

Another major interest in the integrated management of ground and sur-
face water in northern Santa Clara Valley is exemplified in the use of

San Jose Mercury-Herald, June 16, 1956.
23
Personnel of the Water Conservation District took an active interest
in the recreational problems, and recreational interests were continually mak-
ing representations before the district's board of directors. However, no
recreational specialist was attached to the district's operations.








24
conservation dams for downstream flood protection.4 To briefly summarize
the complexities of this situation, there are again two public agencies--the
Santa Clara Valley Water Conservation District and the Santa Clara County
Flood Control and Water Conservation District. The activities of these two
districts are complementary in such operations as capturing flood water in the
fore part of the rainy season and at other times when reservoir levels are
lowered. The general policy is to drop these levels as soon as percolation con-
ditions are favorable. This element of complementarity was graphically dem-
onstrated during the historic flood of December, 1955. Between December 21
and December 25, Lexington Dam held back 13, 400 acre-feet of water, and
Coyote Dam and Anderson Dam stored 30, 250 acre-feet of water. The exist-
ence of this storage capacity made it possible to "avert a disaster of major pro-
portions in the town of Los Gatos and in a part of the city of San Jose.j5

Competition exists, however, for reservoir use. Water with a high silt
and debris content cannot be diverted into percolation ponds as clogging is a
danger to be guarded against. 26 Consequently, storm water must be held in
storage until conditions will permit its release. In addition, the rate of dis-
charging water from the reservoirs for percolation purposes would be slower
than if the reservoirs were used solely for flood-control purposes. Conserva-
tion water may be held into the irrigation season to aid in combating seasonal
overdraft or to be used for recreational purposes. Thus, less storage space
is available to capture succeeding rainfall for flood protection.

The extent of mutual interest in diverting and utilizing the water origi-
nating on the valley floor is still undecided. Reservoirs do not give full flood
protection. The disposal of storm waters from the rapidly growing areas of
urban land use has created many major difficulties And the integration of
flood-water disposal with protection from tidal action also has created a prob-
lem. Levees constructed to keep out the tide hold back flood flows and flood
low-lying land. Can these waters be economically utilized for other purposes?

These interrelationships are among those which have given rise to prob-
lems of integrating the activities of the Water Conservation District and the
Flood Control District. These difficulties appeared in the formation process
of the Flood Control District, and they have continued to the present time.
The problem was clear when both districts desired to go to the voters for ap-
proval of new projects. The Water Conservation District included dams with
claimed flood-control benefits which were not supported in the Flood Control
District's proposal.27 The Water Conservation District is restudying these
plans.
Z4The extent to which flood protection has been provided has been the
subject of engineering review. However, the subsequent discussion indicates
the extent they were used for this purpose, especially in December, 1955.
25California State Division of Water Resources, Floods of December,
1955, inCalifornia (Sacramento: Govt. Print. Off., January, 195b), pp. 3-11,
A-4.
26The reservoirs act as settling basins; however, downstream flows may
need clearing prior to percolation.
27Roll, Robert, Report to the Honorable Board of Directors of the Santa
Clara Valley Water Conservation District on 1956 Waste Water Salvage Proj-
ect (San Jose, California). (Santa Clara Valley Water Conservation District,
March 8, 1956.)
Santa Clara County Flood Control and Water Conservation District, Engi-
neer's Report on Proposed Improvement for Zone E-1, Zone NC-1, and Zone
NW-1, County of Santa Clara, San Jose, California, August, 195b.









In another section of the county, the Water Conservation District pro-
posed the construction of two detention dams. The Flood Control District
stated that the construction of these works would eliminate approximately
$795, 000 in channel construction. On the basis of its estimates, the Flood
Control District asked the voters in the zone of benefit to approve a bond issue
for the above amount. These funds would then be used to reimburse the Water
Conservation District if its dams were constructed. In the event these dams
were not constructed, the monies would be expended by the Flood Control Dis-
trict on the same streams.

The voters in this zone of benefit defeated the Flood Control District's
proposal.28 Now, the possibility exists that the same dams will be proposed
to the voters of the Water Conservation District. In this case approval will
rest with the voters residing in almost all portions of the northern valley floor
rather than in the confines of a zone of benefit defined by the watershed of a
small stream. If such approval is forthcoming, the incidence of cost will be
spread over the larger area with the area benefiting from flood control paying
at the same rate as all artificial recharge interests. Of course, the possibility
exists that a special assessment could be placed upon the flood-control interests
through the organization of a subdivision within the Water Conservation District.


From this experience the fact that these two interests were represented
by separate organizations has not resulted in the integrated management of
ground and surface water. It must be recognized, however, that one of the
reasons for restudying the Water Conservation District plan was due to the
lack of support for some of its stated flood-control benefits. In this situation
external representation forced some integration--also, a strong third-party
pressure has urged that integrated management be organized. This strong
pressure has come from the westside cities which would benefit both from water
conservation in terms of their water supply and from flood control. It might
be suggested that if these interests were represented internally within one
organization that major elements of the conflict could have been settled
through staff study and debate. Such integration would not eliminate the con-
flicts nor the benefits from a strong third-party pressure in major decisions.
But it could add continued management pressure for integration in all small
decisions. In addition, integration would not present the voters with the alter-
native of voting no in order to spread their costs more widely. Such a solution
implies that control and responsibility would be attached with internal repre-
sentation, thus, making it possible to achieve integration within one agency.

Another aspect of the internal representation within the public district
is that through district procedures a reasonable relationship can be worked
out between the provision of a service for benefit and charging for this benefit.
This may not be an easy task, but by the use of the district form of organization,
a wide variety of procedures are available if adequate enabling provisions are
enacted. A tax upon land exclusive of improvements, a tax upon land and im-
provements, a charge for surface-water delivery, and a charge upon the wa-
ter which is pumped in the owner's well are all in use in California at the pres-
ent time. This aspect of integrating the management of ground and surface
water is important, and the use of the public district as the agency for integra-
tion permits a wide range of action. In this connection, the use of zones*of
benefit needs further exploration. Such an analysis implies a study of possi-
ble pricing plans, but these can be studied better in the specific context of a

8San Jose Mercury-Herald, San Jose, California, October 2, 1956.









particular integrated management plan. For our purposes it is sufficient to note
that the public district is quite flexible on this point.

Integration through External Interest Representation

A third aspect of the role which the public district plays is to represent
the internal interest so they may be integrated with external interests. By be-
ing able to perform this function, the district may relate itself to sources of
water far beyond the bounds of local watersheds. Of course, this has evolved
as a cornerstone to much western water development. The long-distance trans-
port of water is no longer unusual. Thus, an integrated management program
may use surface water which originated several hundreds of miles away from
the ground-water basin. The district performs the role of representing the
preferences of the internal interests in the bargain for the acquisition of im-
ported water and of managing the acquired water according to the agreed-upon
plan. For example, the Orange County Water District purchases water for
spreading, which is transported from the Colorado River, and taxes the draft
from individual wells to pay the charges. The Los Angeles County Flood Con-
trol District purchases Colorado River water and stores it in ground-water
reservoirs to give security from cyclical variations in rainfall, to combat salt-
water intrusion, and to give an element of security to the area's defense.

But; the plans for integrating the management of ground and surface wa-
ter are on an even grander scale. In California the recurrent water plans have
discussed the use of the ground-water reservoirs for temporary storage in
transporting water from north to south. These reservoirs are subject to the
long-standing proprietary interests of the overlying users, but the assertion of
a broader state interest is being heard. This state interest is not in the wa-
ter within the reservoir but in the storage capacity of the reservoir.

Many difficulties beset the execution of such a plan. Detailed physical
information is lacking. Operation should not be attempted prior to the obtain-
ing of this knowledge. But there are also may problems of interest to the
social scientist. These reservoir areas are not starting with an "institutional"
clean slate. Irrigation districts currently overlay the underground reservoirs,
and these district boundaries are not consistent with ground-water flow nor
with the necessities of management techniques. Thus, the existing irrigation
districts do not seem to be appropriate agencies for organizing this manage-
ment activity. In addition, proprietary rights under the correlative rights
doctrine are of long standing and are quite firm. It would not be unreasonable
for the holders of these rights to have an interest in basin management differ-
ent from that of a regional operating agency. One possible source of a differ-
ence might be in the proposed management variations in the depth to water.
For example, in the southern San Joaquin Valley storage would take place in
aquifers lying from 10 to 200 feet below the surface.29 Intentional variability
in depth to water within this range might well cause an operating agency to be
confronted with legal demands for compensation. In addition, basin manage-
ment might require rather stringent control of draft to insure the maintenance

9California State Water Resources Board. Report on the California
Water Plan, Vol. III (Sacramento: State Water Resources Board, May, 1956)
pp. 10-181.
This range of depth is applicable for the south San Joaquin-Tulare Lake
area. The use of other ground-water reservoirs is discussed in other por-
tions of this three-volume report.









of a desired storage volume. This in turn would affect the requirements for
delivering surface water. For large ground-water basins, complicating fac-
tors of the type mentioned above would be numerous and complex involving the
reaching of an operating agreement among the many interests.

One method for reaching agreement might be for the state to operate
these basins in the interests of region-wide planning. The ability to exercise
eminent domaine and the police power might be sufficient if proper legislation
authorized such action. The interests in the ground water basin could be
dealt with on an individual basis by the operating agency by condemnation and
other means.

Another possibility might be for the interests internal to basin operation
to organize a new district which would represent their internal interests with
respect to the broader interests. In fact, precedent for such action exists.
We have already noted that districts do have experience in integrating the man-
agement of a local ground-water reservoir with imported water supplied by
another agency. In addition, districts have been used to "protect" the interests
of ground-water users. This was a stated purpose of the Kings County Water
District--"to protect the underground supplies of the area from excessive
pumping and to guard against the transportation of the underground water to
areas outside the district. 0 Thus, the integrated management would be de-
pendent, in large part, upon the ability of the district to represent the external
interests--such as the operating agency, the existing irrigation districts, and
others--to the internal interests.

The requirements for organizing the use of underground reservoirs in
the interregional transport of water need more investigation. Many procedures
of action need to be studied. These would involve the state's right of condem-
nation, a district's use of reverse condemnation, a system of exchange con-
tracts or compensatory payments, and a procedure of scheduling recharge and
discharge. Problems of this type will require serious consideration.

Conclusions

The public district is an agency for collective action. The role of the
district is to provide an organization for the integrated management of ground
and surface water. The performance of this role has been encouraged in Cal-
ifornia and Texas since state statutory administration of water rights is lack-
ing. And in some appropriative states, the use of the district or other local
organization is authorized to integrate the local interests with the state inter-
ests even though state statutory administration is used. The district may be
used under both legal systems to carry out programs such as combating phys-
ical uncertainties due to cyclic fluctuations, salt-water intrusion, or compac-
tion.

Many management practices may be executed by the district without af-
fecting the legal status of the water rights. On the other hand, the district
as a governmental organization may perform certain acts which will restrict
the use of these property rights in the interests of the general welfare.


3Atchison, Topeka, and Santa Fe Railway Company v Kings County
Water District, supra.
See also Coachella Valley County Water District v Stevens, 206 Cal 400
(274 P. 538].









The district may also integrate the management of ground and surface
water through the internal representation of the conflicting interests associated
with the management plan. Conflicts that might exist between interests such
as recreation, water conservation, and flood control could be settled internally
within the organization. In addition, the district can perform the internal fi-
nancial role of relating the repayment of a current investment in water-utiliz-
ation facilities to the economic benefits which accrue to the area over an ex-
tended period of time. This role has been a prominent feature in the use of
the district as a water-management agency for more than three quarters of a
century. The district may use a variety of taxing and pricing schemes to for-
ward this objective, thus, making it an adaptable form of organization.

Finally, the district can be used to represent the internal interests with-
in the district on a common basis to the external interests in water manage-
ment. Thus, the private property rights in a local ground-water reservoir may
be related to the broader interests involved in a regional water plan. Contrac-
tual relationships may be established for such purposes as regulation of re-
charge, discharge, and compensation. In this instance, the agency represent-
ing the broader interest would have a responsible local agency with which to
deal. And this local agency would be related to the local economic base.




j*










THE ROLE OF THE PUBLIC DISTRICT IN THE INTEGRATED
MANAGEMENT OF GROUND AND SURFACE WATER

M. L. Upchurch2

Dr. Smith has just given us a very thoughtful paper on the role of the
public district as a tool for ground-and surface-water management. The title
to this paper and the approach taken in it accept without question the notion
that integrated management of ground and surface waters is a goal to be sought.
Perhaps this goal is obvious enough to pass without question, but one should
be ever alert to generalizations applied too broadly to water problems. Each
water-resource situation is unique in some degree, and the type of manage-
ment suited to one may be quite inappropriate to another. Some valid gener-
alization can be made, to be sure, but before we apply this one to a given sit-
uation, examine the kind of integration needed in management and the objec -
tives to be achieved by integration.

The public district is merely a type of tool or social machinery that can
be designed to do a great variety of jobs. A district is a creature of the state.
It can be given many different forms and empowered to perform many different
functions. To be successful, a district must be given adequate powers to carry
out the functions intended, must be given the means for adequate financing,
must be of a size that will permit performance of its functions efficiently, and
must have within its representation sufficient unanimity of purpose so that it
can act effectively.

Dr. Smith says that a district may unify conflicting interests within a
given water-resource situation. So it may, but if the conflicting interests are
too diverse, the district itself may not be able to function effectively.

Dr. Smith says further that a district can represent its internal interests
to external interests in water management. It may do this to be sure, but its
effectiveness will depend upon the nature and extent of the internal interests
as compared with the nature and extent of the external interests and in relation
to the organizational structure and powers of the district itself.

Success in management of any given water resource is not guaranteed by
the mere existence of a public district. The district is a machine that must
be designed properly and operated effectively if it is to achieve integrated man-
agement of ground and surface water or to perform any other function. You
would not hitch your automobile to a plow nor drive your tractor on a cross-
country tour. The purpose must be in mind in choosing the machine, and the
machine must be used effectively to accomplish its purpose.








-1
Discussion of paper given by Stephen Smith.
ZProduction Economics Research Branch, USDA, Washington 1).C.












GROUND-WATER UTILIZATION IN CONJUCTION WITH THE
DEVELOPMENT OF PUBLIC LAND UNDER FEDERAL LAW

Clyde E. Stewart1

Public-land and water policies and programs in the United States have
undergone numerous changes in the last 100 years. New programs have been
tried to meet problems peculiar to the West. Many revisions have been made
in old programs. Today, new problems are apparent. Efforts are being
made to adjust programs and policies to meet them. Within this general
framework, I want to examine with you what appear to be some unique features
and significant differences in two federal programs that deal with the use of
ground water for irrigation.

Irrigation, based on use of ground water, is a resource development of
considerable magnitude, especially in recent years. This holds for both pri-
vate and public land. My topic is concerned with the problem of ground-water
utilization in conjunction with the development of public land under federal law.
I have viewed the term "federal law" in the context of particular federal legis-
lation related to public-action programs in irrigation development. I have
chosen further to emphasize the kinds of agriculture that are evolving under
these laws and their administration. But I recognize that the legal framework
is an important determinant of the type of agricultural economy that will de -
velop.

Within my acquaintance and experience, two main federal programs are
currently active in ground-water development. These programs are based on:
(1) Federal Reclamation Law--the Reclamation Act of June 17, 1902, and sub-
sequent related legislation--and (2) the Desert Land Act of March 3, 1877, with
amendments and other legislation related to public land, including the Taylor
Grazing Act of June 28, 1934.

The Taylor Grazing Act is especially important to water development
under the Desert Land Act. The stated purpose of the Taylor Grazing Act is
"to promote the highest use of the public lands pending its final disposal."
Section 7 of the act authorizes the Secretary of Interior in his discretion to
examine and classify any lands withdrawn or reserved, or within a grazing
district, which are more valuable or suitable for production of agricultural
crops than for production of native grasses and forage plants, and to open such
lands to entry. Under this section, lands are examined, classified, and opened
to entry for irrigation development under the Desert Land Act.

In the 1870's, a great deal of agitation prevailed for liberal public policies
in getting land into private ownership. In passing the Desert Land Act, the Con-
gress emphasized the importance of private enterprise. The bill was more
liberal in many respects than the Homestead Laws. For example, settlement
on the land is not required. Another significant characteristic is the absence
of public participation; development under the act is left almost entirely to pri-
vate capital and initiative. The statute states as its purpose "to encourage and
promote the reclamation, by irrigation, of the arid and semiarid public lands
of the Western States through individual effort and private capital, it being
assumed that settlement and occupation will naturally follow when the lands have
been rendered more productive and habitable. Proof was made usually with-
out meeting the irrigation requirements. Much land was disposed of under the

1Production Economics Research Branch, Agricultural Research Service,
USDA, Logan, Utah.









act during the first several decades after its passage. But it is recognized
generally that the program fell short of the expectations of the Congress.

Amendments to the Desert Land Act, the Carey Act, and other efforts
followed and largely failed. By 1900, many people had concluded that federal
reclamation was essential for development of irrigation in the West. The Rec-
lamation Act of 1902 resulted from the decision for federal action. Several
features stand out in contrast to the Desert Land Act. The public supplies
capital for construction purposes. Settlement is essential on public land.
Limitations as to farm size are substantially less. A philosophy of maximiz-
ing farm numbers and farming opportunities has been predominant. Diffusion
of ownership has been a leading goal.

By the late forties, the Desert Land Act, while still on the books, had
long since been considered dead. Few opportunities were left for surface-
water development by individuals. But about 1950 a combination of factors
touched off a great deal of activity under this act. These factors related to
prospects of favorable incomes associated with high farm prices and improved
technologies of ground-water development. The program was renewed on the
basis of ground water, a type of development that lends itself to individual en-
terprise.

During the last five or six years, ground-water development under the
Desert Land Act has been of considerable magnitude and importance. It has
far exceeded ground-water development under other federal programs. Some
people have asserted that more new irrigated land has been developed under
the Desert Land Act than under the federal reclamation program since 1950.

At our Pullman meeting in 1955, we discussed problems of development
and administration under the Desert Land Act and a research study under way
in Idaho and Utah related to this program.2 I do not propose to deal further
with these matters at this time. Rather, my discussion will be in terms of
experiences with ground-water development under the Desert Land Act and the
federal reclamation legislation. It will be oriented to unusual aspects of each
program and possible implications that each program has for the other and
for ground-water and resource development generally. As implied earlier,
these peculiarities arise essentially because of differences in the two sets of
laws and their administration.

Federal legislation and programs often do not apply equally well to all
physical and economic situations. The comparative advantages of the two
methods to be described later differ among areas. The question of flexibility
of laws and programs is paramount to this problem.

It may be observed that the Reclamation Act of 1902 came into being be-
cause of the apparent failure of the Desert Land Act and other private and local
endeavors. Some people would argue now that in many instances the Desert
Land program is superior, especially for ground-water developments.

Many features of the Desert Land Program aad associated problems
are discussed in "Research procedures for an economic study of resource de-
velopment under the Desert Land Act by Clyde E. Stewart. Report No. 4 of
this Committee, 1955." The research referred to here does not include study
of the federal reclamation program. Information about the Minidoka project
was obtained for another purpose.




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