On June 23, 2014, the U.S. Forest Service published a Notice of Proposed Directive, proposing a revision to the water rights clause in special use permits for ski areas on National Forest System (NFS) lands.  The Forest Service uses a system where the Chief of the Forest Service and other key administrators issue internal “directives” on policy and procedure, which are then incorporated into the Forest Service Manual and implemented by agency employees.  The proposed directive here departs from prior policy and allows water rights for ski areas on NFS lands to be held by the permit holder, provided that the permit holder does not take action that adversely affects the availability of the water rights to support the ski area operations.

The Forest Service regulates the occupancy and use of NFS lands through special use permits.  For ski area operations on NFS lands (NFS ski areas), the Forest Service issues special use permits for a period of up to 40 years.  Traditionally, the Forest Service sought to sustain winter recreation uses by requiring permit holders to acquire water rights in the name of the United States for water diverted from and used on NFS ski areas.  The Forest Service implemented this requirement to prevent severance of the water rights from the land in cases where the water rights become more valuable than the winter recreation opportunities.  Forest Service directives included this policy since 1982.  However, in 2004, the Forest Service adopted a new water rights clause, which allowed rights to water diverted from and used on NFS ski areas to be jointly held by the permit holder and the United States.  This clause produced substantial misunderstandings, and the Forest Service revised the water rights clause for ski area permits again in 2011.

The 2011 Clause provided that certain water rights acquired for use on NFS ski areas had to be acquired in the name in the United States.  Upon termination or revocation of the permit, the 2011 Clause required the permit holder to transfer any jointly held interest in certain water rights associated with NFS ski areas to the United States.  This clause provoked significant opposition from the ski area representatives because ski areas commit considerable financial resources to acquire and maintain water rights under state law.  The National Ski Areas Association filed a lawsuit in district court challenging the use of the 2011 Clause, and a modification to the 2011 Clause issued in 2012.  The district court found that the Forest Service’s directives were procedurally deficient, vacated the directives, and enjoined the enforcement of the 2011 and 2012 Clauses in existing permits that contained them.  Following the litigation, the Forest Service began a stakeholder process to develop a revised water rights clause.  The proposed directive published in the June 23, 2014 Notice is the result of this stakeholder process.

The proposed directive contains two separate clauses for prior appropriation states and riparian states.  For prior appropriation states, including California, the proposed clause would provide that when the permit holder has an interest in any NFS ski area water rights, or water rights that the holder has purchased that are changed or exchanged for use on NFS ski areas, the holder shall not take any action that would adversely affect the future availability of those water rights to support ski area operations, unless approved by the Forest Service.  Upon termination or revocation of the permit, the proposed clause provides that the holder shall transfer the interest in the water rights to a subsequent holder.  If the ski area is not reauthorized, then the holder shall remove the point of diversion and use from NFS lands in accordance with state law.

Comments on the proposed directive are due by August 22, 2014.  For more information on the proposed water rights clause, please contact Brittany Lewis-Roberts at blewis-roberts@somachlaw.com.

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