The proposed bypass flow requirements were met with strong objections. The owners of these facilities asserted that 1) the Forest Service did not have the legal authority to require bypass flows as a condition of renewal of the land use authorizations, relying in part on §701(g) and (h) of FLPMA; 2) some facilities would be physically incapable of making winter-time releases; 3) the conditions would deprive them of part of their decreed water rights and, therefore, constitute a taking of property rights; and 4) the requirements were effectively federal claims to water that were inconsistent with traditional federal deference to state water law and with the requirement that federal claims to the use of water be asserted, quantified, and adjudicated in McCarran Act proceedings in Colorado. Some of the facilities were also asserted to be authorized by pre-FLPMA land use authorizations that did not need to be renewed.

A number of United States Senators and Congressmen wrote to the Secretary of Agriculture and objected to the attempted imposition of bypass flow conditions on the basis that these requirements would "violate the law, [injure] vested property rights, [destroy] established management practices, and ... result in the implementation of environmentally damaging alternatives . . ." The Secretary of Agriculture responded with a letter regarding the Forest Service policy regarding the renewal of land use authorizations for existing facilities, and instructed the Forest Service to reissue the permits in accordance with the policy outlined in the letter. This policy statement was based on the interpretation of the Organic Act as explained by the United States Supreme Court in New Mexico, as well as the water rights savings and valid existing rights provisions of FLPMA and NFMA.

In July 1994, the Forest Service issued decisions on five of the seven facilities that were initially a part of this controversy (an alternate timetable for federal action had been agreed to by the Forest Service and the owners of two of the facilities). For the five facilities, the land use authorizations were renewed based on a variety of terms and conditions. The Cache la Poudre River Case Study, which is included in Part VIII of this Report, provides a more detailed discussion of the basis for the decision to renew some of the land use authorizations without the imposition of bypass flow requirements. The Forest Service also amended the Forest Plan so that it was consistent with the decisions made for these land use authorizations. These decisions were then challenged in federal court by environmental groups, and the case is now pending in the United States Federal District Court for Colorado. However, at the request of the Department of Justice and Plaintiff , Trout Unlimited, the litigation has been stayed pending the completion of the Report of this Task Force.

Bypass Flows - A Definition. Any analysis of this issue must include a definition of what constitutes a "bypass flow" requirement. A simple definition of a "bypass flow" condition is that the term refers to a requirement that water which would otherwise be diverted in priority instead be "bypassed" from the diversion and left in the stream. For the purposes of this analysis, a "bypass flow" requirement has the following elements: 1) it is imposed by the Forest Service, 2) on the operation of a water supply or hydropower production facility, 3) for the purpose of or with an intent to protect or establish stream flows or water levels in the National Forests, 4) in order to achieve National Forest "purposes" other than those for which a federal reserved water right has been obtained (commonly referred to as "secondary" forest purposes), or to achieve purposes for which a federal reserved or other water right was obtained, but in a manner which is not consistent with the exercise in priority of that federal water right, and 5) results in a loss of the water yield from the affected facility which would otherwise result from the operation of that facility in accordance with water rights established under state or federal law, or a material increase in the cost of that yield, or otherwise interferes with the use of the water supply in accordance with the terms and conditions of the water rights associated with the water supply.

Accordingly, conditions imposed on the operation of affected facilities that are intended to protect public health and safety (dam safety requirements or restrictions on recreational use), or which are intended to protect forest resources by means other than the regulation of water use or flow levels (regulation of stocking of non-native species, reasonable access restrictions, regulation of commercial activities such as marinas, the requirement of BMP’s for construction and maintenance activities) do not constitute a bypass flow requirement.

Bypass Flows interfere with the exercise of water rights. Throughout the Colorado bypass flow controversy, the Forest Service asserted that the imposition of bypass flows did not interfere with the exercise of a water right. The Forest Service attempted to justify this position by asserting that 1) because title to the water right remained in non-federal ownership, there was no interference with the water right, 2) there was no interference with water rights because the Forest Service was not "seeking" or "claiming" a water right, 3) water users could simply take the water at a different time and place, and 4) any impact on water rights was de minimis or inconsequential.

The argument that a bypass flow requirement is not an interference with the exercise of a water right because title to the water right remains with the permittee draws a distinction without a difference. Having title to a water right is meaningless if the owner is not allowed to exercise the right in accordance with its terms, i.e. time and place of diversion or storage, quantity, and priority.

The argument that a bypass flow requirement is not an interference with the exercise of a water right because the water can be diverted at a later time or in a different place also ignores basic water law and the reality of geography. Several examples illustrate the injurious effects of bypass flows on water rights. First, if a federal agency imposes bypass flows on the operation of a ditch or direct-flow water delivery structure, the water remains undiverted in the stream and flows past that structure in order to fulfill the Forest Service's desired use. Because the water is bypassed at the point of diversion and continues downstream, the ditch owner will not be able to recover the bypassed water, reconvey it upstream to the diversion point, and place it to its decreed, historical beneficial use. Contrary to Forest Service assertions, the bypassed water, once converted to the agency's preferred use, is often lost forever and no longer available for beneficial use by its owner.

Second, bypass flows imposed upon reservoirs have the effect of converting water storage rights to direct-flow rights. The owner of this type of facility usually releases previously stored water from an upstream reservoir to satisfy a downstream demand (e.g., at an irrigation ditch headgate or municipal treatment plant intake). Most agricultural and municipal water users in the West need storage water to meet demands during times of drought. Many of these water users also need storage water to meet demands during annual periods of low flows (typically in late summer or in the winter.) Like deposits to a saving account, this water is saved for use in times of shortage. If the water is not stored when it is available, it will not be there for use when water is needed but is either legally unavailable (because all of the water in the stream belongs to senior appropriators) or physically unavailable (because of actual water shortage). Bypass flow requirements defeat the purpose of water storage. In addition, the bypassed flows which are not diverted by downstream water users and actually arrive at the downstream intake point often do so at times when there is no demand or when other water rights (e.g., decreed direct-flow water rights) fully satisfy the existing demand. In these circumstances, the bypassed water has no value to the entity that owns it.

Finally, as is demonstrated by the Poudre River Case Study and the letters to the Task Force from the City of Thornton and the Water Supply & Storage Company, the bypass flow requirements that the Forest Service initially attempted to impose would have taken over 50% of the water supply provided from the facilities at issue in dry-years. This is not de minimis or inconsequential. In addition, based on the fact that the demand for bypass flows was based on attaining goals and standards defined in the Forest Plan, and because these plans are periodically amended and revised, Forest Service employees asserted that they might raise these bypass flow requirement in the future.

A Forest Service employee recently made a telling admission regarding the impact of bypass flows on a water right in Colorado when he asserted that other water rights developed by the reservoir owner could replace the resulting loss of yield: "The increased capacity realized by the perfection of [your additional water rights] will . . . increase your ability to meet the bypass amounts required." While the appropriation of junior water rights may replace water lost to bypass flows in some circumstances, this alternative is clearly not available when other water rights have appropriated all of the remaining flows. More importantly, this statement admits that bypass flows do impact water rights.

Bypass Flow Conditions are inconsistent with State Water Administration Systems. Bypass flow conditions also threaten the ability of a state to administer water rights. The administration of water rights is typically a function performed by State officials. These State officials enforce water rights priorities established under state and federal law. Unless there is enough water to satisfy all demands, the water rights administrators must be able to curtail junior uses in order to ensure that the water is available for senior water rights. If the Forest Service has the authority to impose bypass flow conditions on senior water rights, State water rights administrators will be unable to ensure that water is delivered in accordance with existing priorities. In some cases, the imposition of a bypass flow condition simply takes water from a senior water user and makes it available to a junior water right that is not entitled to the water.

In an actual example which occurred in Colorado, downstream junior appropriators diverted the water which the Forest Service required to be bypassed by the owner of an upstream senior ditch and reservoir located on Forest land. The interception of the bypassed water occurs just a few miles downstream of the bypass, and many miles above the stream reach which the bypass flow allegedly would protect. Consequently, the assertion of bypass flow authority took water from the ditch company that owned it, gave it to a non-federal party who would not have otherwise received this water, and left the federal desire for water unmet. As was conceded by the Department of Agriculture’s Office of General Counsel, "[a]fter the water is required to be bypassed & left in the stream at that identified point, the FS has no continued right to maintain the water in the stream downstream . . . We don’t have a protectable water right, over a given stream segment, with a bypass flow . . . [W]e may be able to get a junior water right for a stream stretch, but this should be discussed at a site specific basis to determine whether it offers the FS any advantage." This statement concedes that bypass flows cannot keep water in the stream, as they are not capable of being administered in priority by state water rights administration systems.

As the Director of the Colorado Water Conservation Board explained, after observing that Colorado’s instream flow program provides protection for "over 8,000 miles of streams and 486 lakes statewide" in a manner that protects water rights: