Play for brewery’s water shocks cities

This article appeared in The Olympian on Wednesday, February 15, 2006. The course of action that the city of Olympia is taking would seem to be a consequence of the Department of Ecology's work to justify instream flows. It seems that we are at a point where water issues are starting to display a strong relationship to eminent domain and all of the property rights issues that go along with such condemnations.

A few days ago we had the article in the Tacoma paper about cities in Pierce County that can't get additional water because of instream flow issues, and now we have one city condemning land in another city just to get the water rights that pertain to the parcel.

This is a bit of a turn for a state where we were assured that property rights are so well protected that we would not have to worry about something like Connecticut's Kelo case. Apparently that pertains so long as you don't have a sizeable water right. The details may differ, but the consequences are running headlong down a parallel path.

Because Olympia fears that the private landowner of the former brewery in Tumwater might exercise the right to sell or lease the parcel's water to someone of other than the municipalities, or perhaps even choose to sell water to them at a rate high enough to force increases in water prices to the consumer, the city files to condemn the land? Olympia can do this even though the property is located in another jurisdiction?

Does this mean that if a east Jefferson County landowner with a water right puts up a for sale sign on his property, Port Townsend would then be allowed to condemn his land in order to obtain his water right? It would appear so.

Why shouldn't the current owner of the property be allowed to sell or lease water to the municipalities? If the property is condemned for this purpose, what will the compensation be? Will part of that compensation include the actual value of the water right in addition to the actual market value of the parcel and its infrastructure?

If Olympia prevails in this course of action, the writing will be on the wall for a number of actions of this kind. How safe from condemnation would any private water right holder be if a public entity wanted the private holder's water?

Wouldn't the public good be just as well satisfied if the municipalities were either to purchase the property in the normal manner, or even simply to purchase or lease the water from the current owner?

With the Department of Ecology closing basins to additional withdrawals, based on an assumption that this is a wise course of action that will preserve stream flows, our municipalities are already starting to be choked, even though they are where smart growth advocates prefer that people reside. The state is projected to have a significant increase in population. The Department of Ecology is seeking to reduce the number of exempt wells allowed in the future, and are not very willing to allow new water rights for Washingtonians, or even for their municipalities.

Is it wise for Ecology to grant all previously unappropriated water (surface and ground) in a basin as the water right in line of seniority for the instream flow, when the Department's own thinking is that doing so will have little, if any, benefit for the fish populations in the streams? How does doing so meet the beneficial use test for water right applications?

Aren't we well past the time where the Department of Ecology should be required to provide iron-clad proof that their approach in regard to instream flows is the only appropriate way to go?

This instream flow business is not simply a localized issue. It appears to be the root of a rapidly growing state-wide problem with the Department of Ecology serving as a core driver. We're in a situation where it would seem there is a strong potential for litigation between a broad range of current water right holders and municipalities if the city of Olympia prevails in this.

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Play for brewery’s water shocks cities
Olympia plans to condemn land, take over water rights

By Katherine Tam

The Olympian

Olympia decided to take immediate legal action to secure water rights at the former brewery in Tumwater, much to the chagrin of neighboring cities, because officials feared the brewery owner or another private party would beat them to the courthouse.

Officials found a rarely used legal tool that allows them to condemn land, even though in another city, for water rights. They said they wanted to act immediately before the brewery owner or another private party caught wind of the idea and filed a legal action to stop them.

They did not tell officials in Tumwater, who said Tuesday they were “shocked” by the move, because they worried the brewery owner might find out as more time passed before they could file the paperwork.

“We had to take action to preserve the water for public use so we don’t lose this chance and then have the conversation” with neighboring cities, City Manager Steve Hall said.

The brewery holds some of the largest water rights in the area: 12 to 14 million gallons a day. That’s enough to serve Lacey’s 60,000 customers on a typical day. And officials say it’s enough to put a big dent in water needs for the region.

So far, the brewery owner has no concrete plan for using the resource.

“The action was in response to the current owner not utilizing the water, creating the potential for the water rights to be relinquished and result in a permanent loss to the community,” Olympia Councilman Doug Mah said.

After an executive session Monday night, Olympia council members decided to begin condemnation proceedings on the brewery land.

The city will ask the court to set the market value for water rights and give the city access to the land so officials can pinpoint where wells, pipes and pump houses are.

The city has no interest in the land beyond water rights, Hall said.

Court papers filed Tuesday morning encompass the entire property, but officials plan to narrow the request to those areas tied to water.

The city doesn’t want to hog the water either, Hall said. Olympia officials plan to meet with Lacey and Tumwater officials to discuss sharing the resource.

All-American Bottled Water bought the Miller Brewing Co. property in 2004 and announced plans to bottle water. The company has had trouble acquiring the financing needed to complete the conversion.

Olympia officials worry the community could lose the water entirely, Mah said. Jack Hohenadel, the attorney representing All-American, declined to comment Tuesday.

The company has told Olympia, Lacey and Tumwater it might be interested in leasing water, but not selling water rights. Owning water rights is valuable to a city because it means the city has the legal authority to withdraw water without someone raising the price.

With hope of buying water rights from All-American drying up, officials in the three cities began talking loosely about meeting to set a regional strategy for buying the land to get the water. But Olympia’s decision took Tumwater and Lacey by surprise.

Tumwater Mayor Ralph Osgood said he was “shocked” when Foutch called him late Monday night to deliver the news.

“It’s somewhat an embarrassment of interjurisdictional cooperation,” Osgood said.

Asked whether Tumwater will accept Olympia’s offer to discuss shared use of the water, Osgood said, “I still believe in interjurisdictional cooperation. I would have hoped they would have consulted with us first; they chose not to. We owe it to the businesses and the citizens of all three cities to work together. No doubt this will strain relationships.”

Osgood wonders what removing the water rights will mean for his city’s vision to see the sprawling 134 acres redeveloped. The brewery was an employment giant in its heyday, providing jobs for 400 on an annual payroll of $26 million.

Some water rights could be left with the brewery, said Hall, Olympia’s city manager. Or Tumwater could keep some water rights to sell to the person or company that develops the land. Those details will be discussed in upcoming meetings.

“It’s a valid concern; we’re not blind to that,” Hall said.

Lacey Mayor Virgil Clarkson doesn’t oppose the decision, but said he would have handled it differently had the roles been reversed.

“I was sort of taken aback,” Clarkson said. “I would have appreciated if there was some sort of conversation prior to the action being taken.”

Olympia is within its legal authority, said Bob Sterbank, Olympia’s city attorney. State law allows cities to condemn land in another jurisdiction for water as long as it’s for public use. Cities have done it infrequently in the past because it used to be easier to get water rights. But cities are finding it harder to increase their supplies, in part because the state is closing
basins to further withdrawals.

“We’re in a different world now in terms of water,” Sterbank said.

Condemnation for a water right is rare, said Tom Loranger, a water resources manager at the state Department of Ecology. The last time it happened was in 1895.

Another state law requires that water rights be relinquished if an owner doesn’t use the water for five years or have a plan to use it, Loranger said. That law dates to 1967 and was passed to preserve water as a public resource.

All-American has owned the brewery for two years. Sterbank said it could take a year for Olympia’s court proceedings to finish, but it’s unlikely that it’ll take as long as three years.

Cities’ water status

Olympia

• Outlook: The city has water through about 2015 if residents keep conserving. It has rights to 22 million gallons a day at McAllister Springs and five wells.

• Need: It will need 15.6 million more gallons of water a day by 2050.

• Plan: In addition to water rights at the old brewery, officials are working on getting rights at two more wells. They’re looking for more ways to use recycled wastewater and more incentives for people to conserve. They also want to develop a new well field in the McAllister area.

Lacey

• Outlook: Lacey is reaching its limit on how much water it can pump because of growth. It has water rights totaling 8,274 acre feet a year, and is using all but about 600 acre feet. Officials began withholding certificates of water availability from developers in the urban growth area last summer because they can’t guarantee there will be enough water.

• Need: It has applied to the state for water rights totaling 10,500 acre feet, enough water to serve Lacey at full build-out or a population between 135,000 and 140,000.

• Plan: Lacey wants brewery water, too. It’s awaiting word from the state on its water rights requests. Officials have developed a four-tier water rate, in which big water users pay more starting in 2007.

Tumwater

• Outlook: The city is in good shape now but will need more water in the future. It has rights to 11.9 million gallons of water a day.

• Need: It must increase its supply by 20 percent, or another 3.17 million gallons a day by the year 2022.

• Plan: Tumwater is also interested in water rights at the brewery. In the meantime, it’s applying to the state for water rights at a well field near North Street and a second one on 93rd Avenue.

Olympian reporter Christian Hill contributed to this report.
Katherine Tam covers the city of Olympia for The Olympian. She can be reached at 360-704-6869 or ktam@theolympian.com

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