The U.S. Forest Service and the National Ski Areas Association (NSAA), an organization representing ski areas throughout the U.S. are going head to head over a clause recently inserted in permits that allows NSAA members to operate on national forest system lands. The NSAA claims Clause D-30 would  require the operators to transfer privately acquired and held water rights to the federal government even if those rights apply to water acquired outside the boundaries of the permitted property.

Specifically, Clause D-30 revises a 2004 clause in NSAA members’ permits that called for the Forest Service and permittees to co-own water rights derived from the permit granted by the Forest Service and used on the permitted property, in effect, a system of joint water rights.

Clause D-30 appears to extend this joint ownership to rights acquired outside the permitted property as well. Specifically, Clause D-30 treats the ownership and use of water rights differently depending on where, when and how they are acquired. For some, Clause D-30 requires the permit holder to apply for joint ownership with the U.S. while, for others, the right must be applied for and held solely in the name of the U.S. government.

Clause D-30 is also more liberal with respect to the uses to which the Forest Service may put the water rights than it is with respect to permittees’ rights of usage. While the permit holder may not use the water rights for any purpose other than support of the permitted property, the Forest Service need only use the water primarily for that purpose, but may also divert some water for other, off-property purposes.

Notably, upon termination or revocation of the permit, Clause D-30 requires the permit holder to transfer its interest in the water rights, regardless of the time or method of acquisition, only to any subsequent permit holder or to the U.S.  if there is no subsequent user. This requirement is enforceable even if the rights are for water obtained from private land outside the National Forest system, or land a substantial distance from the permitted property.

As a coup de grâce, a condition of receiving the permit in the first instance requires the prospective user to waive any right to compensation against the U.S. for the required transfer of water rights, or for the imposition of restrictions on division, transfer or modification of the included water rights.

Predictably, the NSAA has brought a legal action under the Administrative Procedures Act  (APA) claiming, among other things, that the Forest Service action:

• Is arbitrary, capricious and an abuse of discretion
• Constitutes an appropriation of private property without compensation, in contravention of the Fifth Amendment
• Was approved without required publication in the Federal Register, or opportunity to comment, thus violating the due process clause of the Constitution as well

Also predictably, the Forest Service denies the NSAA’s claims and takes the position that water rights established in national forests are tied to the land and therefore permittees’ contractual relations with the U.S. under the special use permits govern all water rights.

The outcome of this dispute will be a test of the scope and extent of the regulatory power of government agencies over both public and private properties.