INTRODUCTION

Nearly twenty-five years ago the economist Kenneth Boulding wrote a brilliant article called "The Economics of the Coming Spaceship Earth." Boulding said that we were moving from what he called a cowboy economy, in which achievement was measured by "throughput," growth in production and consumption, to a spaceship economy, where achievement would be measured by our ability to maintain the stock of resources we had and to put them to effective and sustaining use. Boulding has proven to be uncannily foresighted, and nowhere is his vision more pertinent than in western water law.

Traditional water strategies were classic examples of Boulding’s description of the cowboy economy. One has only to recall the developmental history of Denver and Los Angeles, or to have seen the old newsreels portraying cascading water supplies to celebrate the opening of the Owens Valley, system or the Hoover Dam, to appreciate the literal aptness of Boulding’s use of the word "throughput." Today virtually everyone acknowledges that the big dam era is over and that a central task of water policy is to stretch, reallocate and protect the quality of existing supplies of water—in short, to move into the spaceship mode.

Since the water agenda is changing, the question is how water law will in turn change. For more than a century western water law facilitated the goals of the cowboy-throughput economy. It aided the removal of water from rivers for application on land and the damming, storing, and transporting of new supplies from areas of abundance to those of shortage. In conjunction with other laws and policies (such as the federal reclamation program) state water law encouraged growth in demand by keeping prices low to users, and it generated means to meet that demand by exploitation of new sources of supply. In a pristine example of throughput and consumption as its measure of progress, it defined beneficial use in terms of diversion of water out of streams and considered water left in a stream as effectively wasted.

The goals of a spaceship economy are, by definition, sharply different. It is not by accident that we are turning toward control of waste and water marketing as ways to reallocate existing supplies and meet new demand. There is also increasing interest in re-use of existing water supplies and in technical means to achieve equal output with smaller inputs of water. Rising concern for maintenance and augmentation of instream flows is entirely congruent with these developments. It is a clear example of stock maintenance. As we move toward a fundamentally different water strategy a primary question is whether, and to what extent, claims of vested property rights constrain opportunities for change.

What exactly is the problem? At its crudest the claim would be that whatever uses an appropriator has been making, and that have been recognized as lawful in the past, must as a matter of property right be permitted to continue or be compensated as a taking. If successful, such demands would deny a state effective authority to mandate more efficient use of existing supplies. The notion seems to be that to declare an existing use wasteful, or non-beneficial, is a sort of prohibited ex post facto law that impairs a vested right.

For practical reasons most states are not likely to want to enforce waste laws very rigorously. They are more likely to promote efficiency by letting appropriators sell the water they can conserve out of their present allotments. But a state's ability to do even this depends in part on its ability to persuade appropriators that they can be subjected to laws requiring that long-standing inefficiencies be abated.

A second property dispute arises from the demand that existing appropriators give up some water in order to restore instream flows. Here the claim is that an appropriator with a recognized right to abstract and use a given quantum of water from a stream cannot be required to divert less, or to make discharges from storage, in order to produce desired stream conditions. The appropriator would say that the right to abstract water from a stream is the very essence of his property right in water and that to diminish that right because the state wants increased instream flows is the most blatant sort of taking without compensation.

These two species of regulation broadly exemplify the property issues that modern and prospective water legislation raise. In this article I shall discuss the constitutional property standards against which such concerns should be measured.

I shall draw my conclusions primarily from the constitutional law of property developed by the United States Supreme Court. While as a matter of sate constitutional law the states may hold different and more property-oriented views, in fact they follow quite closely the precepts set down by the Supreme Court. In speaking generally about constitutional property law the best one can do is to describe the shape of takings law as developed by the federal Supreme Court. Of course no one can warrant that one state or another will not go its own eccentric way, but at the present time I am aware of no state law interpretations that would make the federal standards an unreliable general guide.
 

I. WATER RIGHTS AS CONSTITUTIONALLY PROTECTED PROPERTY

Water rights are property, but they have no higher or more protected status than any other sort of property. Insofar as "there appears to be a broadly held view that a water right is a special kind of property right which cannot be regulated in the same manner as other property rights," a simple response can be given: that view is wrong.

The constitutional situation can be summarized this way:
 

This is not the place to rehearse all the twists and turns of the "takings" question. There is a vast literature and a wide range of legal-philosophical views about the appropriate range of uncompensated regulation. But the law is a good deal clearer in practice than academic hand-wringing would suggest. It is much easier to identify the operative law of takings than to spin out a perfectly coherent theory to explain all outcomes.

The following is a brief statement of the constitutional situation. The regulatory authority of the state under the aegis of the police power is very broad. Even the Court's most conservative and property-oriented Justices accept the capaciousness of the police power. The reason, no doubt, is reluctance to second-guess legislatures about the need for regulation, and a recognition that we live in a regulatory state. Significant changes in takings doctrine would put the court at odds with the modern legislative style of governance. Short of regulation that is forbidden by some other constitutional provision (such as the religion or free speech provisions of the first amendment), or is seen as not serving a public function at all, it is difficult to imagine subjects that might garner legislative majorities whose purpose would be viewed today as beyond the police power. Certainly legislation that constrains uses of property to achieve environmental protection goals is firmly within the police power, as is legislation that constrains property use in order to conserve scarce natural resources by requiring more efficient use. The same is true of legislation to promote efficient administration. Those three categories cover just about all the regulatory proposals that are likely to be made as to western water law.

The question then is under what circumstances compensation is due even for a valid exercise of the police power? There are essentially only two grounds on which it is possible to win a takings case today. The first is where there is a "physical invasion," that is, where government physically appropriates to itself some part of an owner's property, as in the recent Nollan, Loretto, and Kaiser Aetna cases. The second is where the effect of the regulation, though its purpose is valid under the police power, is so greatly to diminish the value of the property that it is no longer economically viable. As to this latter test -- the so-called diminution of value standard -- the Supreme Court has been extremely deferential to regulators. Even diminutions approaching 90% of value have been sustained without compensation. That has been the Court's unvarying position for many decades.

Under these standards, the only new water law regulation that would prima facie raise a taking problem is a release requirement: requiring existing appropriators to make releases in order to augment instream flows for public purposes such as ecosystem protection and public recreation. If the appropriator's property right were an unqualified one, such a requirement might well be viewed as a "physical invasion," and would thus be compensable. But, for reasons that will be detailed in Part III, original limitations on the property that can be acquired in water undermines this facially appealing claim for compensation.

Otherwise, the regulations most likely to be challenged are those that require existing uses to be cut back as wasteful. There is no property right to waste water, and that would seem to end the matter. But several claims may nonetheless be anticipated against such regulation. First, that it would be retroactive; conduct previously considered legal would be made illegal." Second, insofar as such regulation is sought to be justified under the preexisting waste doctrine, it may be urged that the doctrine has been unused or loosely construed for a long time and should not be tightened up now. Or it may be urged that definitions of waste should not change over time.

The first of these issues is easily answered. There is no constitutional bar to retroactive regulatory legislation. The U.S. Supreme Court has recently and explicitly sustained retroactive legislation against taking challenges. The issue no longer presents a substantial federal question. Nonetheless, a notion seems to have been advanced in some circles that what might be called the "non-conforming use" rule in land zoning states a constitutional proposition. The claim is that a use that is already being made and that was lawful when initiated cannot be regulated away without compensation, even though similarly situated new uses may be regulated. The short answer is that there has never been a non-conforming use rule in federal constitutional property law. Valid preexisting uses have been subject to rezoning and owners have been required to change their use to conform to the new law.

Although the non-conforming use rule may be a prudent one for certain relatively low priority public purposes (such as removing highway billboards or clearing commercial uses out of residential neighborhoods), it would fundamentally subvert the regulatory process if it were implemented as a constitutional principle. New fire and safety laws could hardly await a whole new generation of buildings, and for that reason required retrofitting of devices like fire sprinklers, or removal of hazards like asbestos, raise no constitutional taking problem.

The notion that a standard once set (such as a waste rule in water law) cannot be subsequently revised is just another version of the "non-conforming use" argument. Indeed, if the argument were correct that standards cannot be upgrade, all of our environmental statutes would be unconstitutional. We could not require industries to retrofit new air and water pollution control equipment to meet new, tighter standards so long as they had been in compliance with the standards that were in effect when their facility was built. Although the Supreme Court has never in so many words sustained the constitutionality of new pollution standards applied to existing facilities, betting on the constitutionality of such laws as against taking claims is as safe a wager as the law has to offer.

There is one respect in which new standards of permissible use in water law may seem to be different from most other upgraded regulations, as in air or water pollution laws. Waste laws in water are essentially efficiency laws. As demand increases they require older users to tighten up existing uses so as to make more of the resource available for newcomers. In this respect the regulations are directly redistributive of existing uses. In one sense this is different. We don't, for example require owners of existing homes on large lots to rebuild on a smaller lot as a city grows. But the water laws are not as different as they may at first seem to be.

Some conventional regulatory laws are redistributive in the same way as water waste regulations. For example, as an area grows we tighten up air emission standards for existing facilities because there is only so much assimilative capacity available in the ambient air. We in effect require existing facilities to "use" less of the ambient air than they have been doing, so as to make more air available for new entrants. That is precisely what the most far-reaching water waste laws accomplish.

Even to the extent that waste laws are seen as different from most other regulatory laws, there are two differences in water doctrine that put holders of water rights in a weaker position than other property owners subject to retrospective regulation. First, there has always been a law saying in effect that water could not be wasted, or could only be used beneficially. While owners of most property have a right to make inefficient uses if they so choose, this is not true of owners of water rights.

Second, new laws defining existing uses as wasteful are more prospective, and less retroactive, than a number of other laws whose constitutionality has been sustained by the Supreme Court. In the leading retroactive regulation cases, property owners were required to make supplemental payments to compensate for conduct wholly in the past which was legal when engaged in. In the water situation, imposition of waste laws would only change the uses that can be made in the future. No reparation would be required for past wasteful uses.
 

II. THE TRADITION OF CHANGE IN WATER LAW

Up to this point only the constitutional limits on regulation of water rights have been considered. The preceding discussion shows that the Constitution permits extensive revision of previous rules without compensation. Nonetheless, it is appropriate to ask whether the sort of changes that are already underway in some states, like California, and which are in contemplation elsewhere, would be (albeit constitutionally tolerable) historically unprecedented and -- at least in that sense -- a cruel disappointment of expectations.

Only by ignoring the historical record could such a plea be made. The story of water law is a record of continual change. At one time riparian law rested upon the natural flow doctrine. That doctrine was appropriate to, and supportive of, a pre-industrial society where the highest value of water was instream, for aesthetic, navigation and recreational use. As the industrial revolution got underway, and water as a source of power for mills became crucial, the natural flow doctrine (which effectively prohibited diversion of water from streams) gave way to the reasonable use doctrine, which permitted some diversions. Reasonable use became the legal instrumentality of the industrial society's agenda as applied to water.

The prior appropriation doctrine, itself the product of felt necessity, came as a rude shock to patentees of federal lands in the West who though riparian rights were as much an incident of ownership of a riparian tract as were the trees upon the tract. Anyone holding appropriative rights who thinks that there is something fundamentally unconstitutional about a dynamic element in the rules of property should take a careful look at the pedigree of water doctrine in the "pure" appropriation state of Colorado which became pure only by judicial revisionism in reading the Territorial legislature's riparian statutes.

Far from being a modern invention of goal-oriented judges, change is the unchanging chronicle of water jurisprudence. When the question was getting timber to market in places which lacked highways or railroads but not rivers, those rivers suitable for floating logs to market magically became navigable. When the needs of commerce required it, navigability was extended from tidal waters (which had been its historic limit) to nontidal waters suitable for waterborne navigation. New needs have always generated new doctrines and, thereby, new property rights.

Water, as a necessary and common medium for community development at every stage of society, has been held subject to the perceived societal necessities of the time and circumstances. In that sense water's capacity for full privatization has always been limited. The very terminology of water law reveals that limitation: terms such as "beneficial," "non-wasteful," "navigation servitude," and "public trust" all import an irreducible public claim on waters as a public resource, and not merely as a private commodity. In the following section I address those doctrines that limit full privatization of water. A discussion of these doctrines will show why, in demanding releases to meet instream flow needs, a state is only asserting a right it has always had and never granted away.
 

III. A TRADITION OF PUBLIC SERVITUDES

A. The Public Trust and Its Predecessors

There is a tradition that recognizes a pre-existing right of the State in the flow of its rivers. Private diversions, at least those in tidal or navigable waters and affected tributaries, have always been subject to a servitude and a trust in favor of the public. Only California courts have thus far fully explored the implications of this tradition for the imposition of release requirements on existing appropriators. They have resolved the question strongly in favor of the public, first in the Mono Lake case, then in the intermediate appellate decision in the Delta water case, and most recently in a carefully crafted Superior Court decision, Environmental Defense Fund v. East Bay Municipal Utility District.

The California cases show an unmistakable progression. In the Mono Lake decision, the California Supreme Court held that a navigable lake was entitled to in situ protection against diminution caused by diversions of its tributaries, even by a long-standing appropriator of those tributaries.

The Delta case held that where upstream diversions were causing water quality problems downstream by diminishing flows in a river, all appropriators -- however senior -- could be called upon to make releases sufficient to abate those problems. The Delta case has far-reaching implications because it implies that all appropriations are held "subject to call" for maintenance or restoration of the functioning of the river as a natural system.

East Bay MUD holds that public trust considerations, such as protection of fisheries, riparian ecosystems, and recreation must be satisfied in determining where a diversion may be made and to what extent appropriators may be permitted to dewater a river. In that case the appropriator, a municipal supplier, sought to divert upstream, above an important recreational and natural stretch of the river. Objectors urged that the public trust required a downstream diversion site in order to protect those values. The court found that the diversion was subject to the public trust, and ordered a physical solution that permitted upstream diversion but only subject to maintenance of specified flow downstream of the diversion.

Though the California cases have been widely viewed as dramatic new precedents, they are not nearly as novel in principle as they may at first seem. More than half a century ago in an offshore oil drilling case, the California Supreme Court held that property rights granted by an oil lease were subject to subsequent regulation under the public trust, even to the extent of shutting down the operation entirely. In the 1928 case of Boone v. Kingsbury, the court said:

B. Appropriators as Polluters
 

Where releases are required to protect downstream water quality, appropriators may be seen as in no better position than conventional polluters. The water rights and uses of industrial and municipal polluters are subject to all controls necessary to restore desired water quality even if such controls prohibit or limit uses that have been lawfully made for many decades. For example, it seems unquestionable that both the intake and discharge of water by industrialists may be extensively regulated where their uses pollute the water body into which they discharge.

The situation of the industrial water user/polluter puts in perspective the appropriator's claim that it has a right to dewater a river and destroy it as a natural system -- and that if the state wants now to restore the river, the public should pay. Prior to federal water quality legislation, the shoreline oil refinery or power plant that discharged heated or tainted water back into the source was permitted to destroy the river as a sustaining natural system. Now the public is reclaiming rivers from industrial polluters in order to restore their natural functioning and the public is not paying.

In at least some circumstances the situations of irrigators and industrial polluters seem indistinguishable. The following illustration suggests the similarity. Mineralized return flows from irrigation appropriators contaminated California's Kesterson refuge with selenium, killing birds that roosted there. One way to control the contamination is to reduce the total amount of water flowing through irrigation systems. Reductions in amounts of water diverted and passed over the irrigated lands would decrease the mineral content of the water and reduce the concentration of the contaminated water downstream. Assuming that the reduced-diversion approach is part of the best and most economical strategy for dealing with the contamination issue, and that such a requirement would not deprive the irrigators of all economic viability, would such a release requirement be viewed as a physical invasion (government seizure) of the water, or as a legitimate noncompensable regulation?

No legally or factually significant difference is apparent between the Kesterson-type hypothetical case and a conventional case of industrial pollution. Both involve a physical discharge of water that has been contaminated. Though the issue has not been authoritatively litigated, the operating premise has been that the pollution model applies, so that the government can require releases without incurring an obligation to compensate.

The model is applicable in other factual settings as well. Consider the case where agricultural diversions upstream are reducing downward pressure on an estuary and permitting salt water to move upstream, thus contaminating the water. The effective result, pollution, is the same as in the Kesterson case. It is a basic precept of property jurisprudence that no one can obtain a property right to pollute. So it would seem that an appropriator could not obtain a property right to make diversions where the result is pollution by salt water incursion. Only a formalistic distinction, one even thinner than that between non-feasance and mis-feasance, could be invoked to justify treating such a case differently from a standard pollution case. In one situation water is removed from the stream, and in the other water (with contaminants) is added to the stream; in both cases what remains, because of the user's conduct, is unfit for use.

Consider yet a third variant. We regulate the industrial polluter because it is harming aquatic life in the water body by its discharges of contaminated water. How about the appropriator whose diversions are harming fish life by reducing necessary flows or effecting temperature changes, and who could mitigate the problem by reducing its diversions? Here one might say the diverter is suffocating the fish while the industrial user is poisoning them. I do not think there is a substantial difference between the two cases.

In each case the industrial polluter might well have argued that traditionally it was permitted certain uses of water, to divert, utilize and then discharge the water, modified by the necessary consequences of its industrial processes. By tradition the industrialist was permitted to use the water body as a waste sink, and the harm to the natural system was a "natural and inevitable" cost of its use. The modern invocation of pollution laws effectively "took" that right away from industrial users, often at great cost to them. The agricultural diverter's situation is no different. Traditional agricultural uses required preempting the natural functions of the river (by dewatering rather than by contaminating); that result was a necessary cost of use. But now, just as we no longer permit rivers to be denatured by being used as waste sinks, we no longer want to permit them to be denatured by being dewatered. Are the different traditional users (industrialist and agricultural irrigator) in different constitutional positions as to these new public goals?

If there is a difference, it is too subtle for me to discern. Appropriators say that the right to take water out of the river is the very essence of their property. That is certainly true. But the water is simply one raw material input into their business. Exactly the same can be said of the industrialist who has used water for processing or cooling and then returned it to the river. That water, taken as a property right, was simply one raw material input into its business.

For practical reasons rather than as constitutional limits, pollution controls have been fashioned so as not to destroy the industries they regulate. It seems reasonable to expect the same restraint to be applied to appropriators. But insofar as industrial pollution control is the model, prudential limits rather than constitutional ones will govern the extent to which appropriators will be required to make uncompensated releases to protect downstream water quality.
 

C. Justice Holmes and the Law of Public Rights in Waters

The subordination of private rights to public claims in natural resources is not new or unfamiliar. The issue was addressed by Justice Oliver Wendell Holmes three-quarters of a century ago. In a series of natural resources cases strikingly analogous to modern instream use controversies, the United States Supreme Court made clear that it would vouchsafe to each state the capacity to control its economy and its future by letting it determine the role its natural resources would play.

"The state has an interest," Mr. Justice Holmes said in Georgia v. Tennessee Copper Co., "independent of and behind the titles of its citizens, in all the earth and air within its domain. It has the last word as to whether its mountains shall be stripped of their forests and its inhabitants shall breathe pure air." In that 1907 case involving land, Holmes left open the question of whether the exercise of the state interest would require compensation. A year later, however, he sustained New Jersey's Right to prohibit the diversion of water for export from the Passaic River against a water company's admitted property right. This time Holmes faced the property question directly. The language he used in Hudson County Water Co. v. McCarter seems almost eerily prescient of the issues posed by California's Mono Lake or Delta water cases, or more generally by contemporary demands for renewed and retained instream flows. Holmes said:

Holmes' statement in Hudson County that "the private property of riparian proprietors cannot be supposed to have deeper roots ... than the interest of the public of a State to maintain the rivers that are wholly within it substantially undiminished, except by such drafts upon them as the guardian of the public welfare may permit" is probably the most far-reaching statement of a public right in water that has ever been made in an American judicial opinion.

At first it is difficult to know what to make of the Homesian statement. It seems to put ordinary property rights in a state of permanent disequilibrium and jeopardy, contrary to all traditional learning about the need for such rights to be stable and predictable. Certainly his statements are at odds with generations of practice, where owners have been permitted -- even encouraged -- to dewater our rivers in order to make land economically productive. Is the Holmesian language just a rhetorical flourish?

I think not. Holmes, who was faced with the first great interstate pollution case many years ago, Georgia v. Tennessee Copper Co., and then with the water cases, came to an early recognition of the role of natural resources in undergirding and sustaining the economy and wellbeing of the entire community. He intuited what is indeed a radical idea, that basic resources must be seen not only as ordinary property subject to the rules and assumptions of the private property system, but also as elements of the community's capital stock, the use and protection of which could affect the fate of the whole community. What economist Kenneth Boulding would see much later, in light of growing scarcity as a need for stock maintenance, Holmes also saw as a public claim on the stock of natural resources in the face of early large-scale pollution threats.

At the very heart of the spaceship image, as at the heart of Holmes's rhetoric in the Tennessee Copper and Hudson County cases, is the idea of a community of people endowed with a limited source of sustenance upon which they are mutually dependent. Because the survival of all of them depends upon the continuing ability of their resources to sustain them, their relationship is inevitably one of mutual dependence, common enterprise and joint responsibility.

The contemporary notion of the earth as a spaceship in the setting of problems such as global warming, acid precipitation, deforestation or intensifying species extinction had its earliest recognition (as to water) in the proposition that no one could obtain a property right to pollute a river, and in the famous statement of the U.S. Supreme Court in 1913 "that the running water in a great navigable stream is capable of private ownership is inconceivable." It is hardly surprising that as understanding of the biological importance of aquatic systems grew, such conceptions were adapted to the protection of biologically productive tideland areas under the rubric of the modernized public trust doctrine, or that the doctrine is being extended to flows needed for goals such as species protection. Justice Holmes recognized far earlier than most the untenability of a private property claim incompatible with the sustaining capacity of the community's resource stock. The transformation now beginning to take place in state water law is a realization of his foresight.
 

IV. APPLYING THE THEORY: AN ILLUSTRATIVE CASE

A recent Oregon statute exemplifies the likely future direction of water law throughout the West. The law encourages conservation by permitting appropriators to sell or lease water they save. They must subtract from the saleable amount a portion of the conserved water (usually 25%) that is to be allocated to the state and held for instream flow maintenance.

As will no doubt be the case in other states, Oregon has taken a positive rather than a negative approach to the waste problem. Instead of setting out to find waste and demanding that the appropriator yield it to the state, the state gives the user an incentive to cut back existing diversions voluntarily by permitting her to profit by selling the conserved water.

This approach avoids the constitutional taking concerns about waste regulation discussed earlier in this article. If experience in California is any guide, however, states will still want to keep waste enforcement at the ready, even when voluntary conservation and marketing become their primary strategies. The reason is that, notwithstanding economic incentives, agricultural interests appear reluctant to dispose of water they have been using. Perhaps the fear is that they are giving up the best source to meet their own future needs, or that they are eventually going to put themselves out of business by selling agricultural water to urban areas. In any event, it was only after a state determination of waste and an order to cut back uses substantially that the Imperial Irrigation District finally agreed to market its conservable water to the Metropolitan Water District of Southern California. So, paradoxically, waste enforcement may be needed even to induce "voluntary" conservation and sale.

Although the positive approach will no doubt meet less resistance from appropriators than would non-compensable enforcement of waste laws, there is a price paid in distributive justice for greasing the wheels of reallocation in this way. That price is the concession of a windfall to the least efficient appropriators. Much of the water to be conserved will be "waste," rather than savings over and above ordinary efficient use achieved by special innovations. Thus, the most wasteful users will profit the most. There is little to be said for such a plan as a matter of equity; its justification is the practical desire to get the job of conservation underway with as much dispatch as possible. Oregon mitigates the windfall to some extent by capturing a portion of the water saved for allocation to the state as instream flow.

How does such a plan -- likely to be followed in its general outlines elsewhere -- stand up against potential constitutional challenges? Oregon permits an appropriator to keep water it has conserved. Obviously this presents no harm to the conserving appropriator, who will actually be better off. Moreover, since the statute protects other appropriators who might have been using the water to be conserved (as return flow, for example), they will not be harmed. The losers are junior appropriators who have not been getting water in most years, but who would get the conserved water if it were simply returned to the river and made available, rather than being held for instream flow maintenance.

Although these juniors would get the water under traditional doctrine, they do not have a strong constitutional claim to it. If the water is viewed as not being wasted, then the savings engendered by innovative conservation methods can be treated as "developed" water to which juniors are not entitled. If the water is being wasted, then in theory it should be returned to the river where the next junior in line would be entitled to it. The state can, however, deny the juniors such water. A determination could be made that beneficial use is maximized by encouraging voluntary savings rather than by seeking to identify and regulate waste. Though no case so holds, it seems likely that a legislative judgment as how best to promote efficient use would be sustained as a rational anti-waste policy. The juniors are unlikely to prevail in insisting they have a vested right to any particular form or degree of anti-waste enforcement. Any such claims by the juniors would be weakened by the fact that they had not been using the water in question previously. No existing use is being cut off. The courts have been quite willing to permit the abolition of unused water rights.

Finally, and most importantly, there is the problem presented by the state demanding that a percentage of the water conserved be allocated to it. On its face, this arrangement may seem to present the flaw the U.S. Supreme Court found in Nollan: the state is using its regulatory power (to permit construction in Nollan, to permit a sale of conserved water in the Oregon case) to exact a benefit to itself that has no obvious nexus with its asserted regulatory intervention. That is, it would be argued that conservation and stretching existing water supplies to meet new demand -- the state's presumed goal -- would be fully achieved by letting the conserver sell 100% of the water saved. The state could then compete with other purchasers to obtain instream supplies. The claim would be that the state is simply using its position of power to extort for its own account water it should buy.

The first response is that an owner of a water right has a lesser property right than the landowner in Nollan. Under the Holmesian analysis, the public trust doctrine or the water pollution analogy, the state could require appropriators to make releases to restore or maintain desired conditions in its rivers. The state is not "taking" something belonging to an owner, but is asserting a right it has always held as a servitude burdening owners of water rights.

The state need not rest only on its proprietary type claims, however. It can also justify the statute as a legitimate exercise of the police power. Perhaps the best answer to a taking claim is to turn the demand around and see how much the state is giving to, rather than how much it is taking from, the appropriator. The state while staying well within the confines of the police power, might have imposed new and restrictive beneficial use requirements on all appropriators, mandating that they use water much more efficiently. For reasons explained previously in this article, no compensation would constitutionally be required for such regulation. So long as the appropriator is not worse off than she would be under an efficiency-driven regulation, the demand would be within the permissible scope of the police power. The program could be seen as an alternative method for promoting efficient use.

Had the state enacted such an efficient-use regulation, the appropriators would have been required to return all the saved water to the river. The regulated appropriators would have had no right to keep, or to profit from, any of the conserved water. Under the statute as enacted, the state permits sale of 75% of the water simply as an administrative device to encourage rapid and effective compliance with its conservation goals. Thus, rather than taking 25% of the appropriator's water, it has actually given the appropriator 75% of its (the public's) water. Although the percentages do not correlate directly to public needs, they presumably represent the legislature's "ballpark" estimate of the incentive necessary to get the job of conservation and reallocation done as rapidly as feasible.

I have used the Oregon statute to illustrate the conclusion to which the main body of the article points, that the way is constitutionally clear for changes that will bring water law into phase with contemporary needs.
 

CONCLUSION

Water law in theory has always incorporated an intuitive appreciation of the public, common, systemic nature of the resource -- in the duty not to waste, in the public navigation servitude and the public trust, and in the basic concepts of pollution law. For most of our history, largely because of the illusion of abundance we created, we have operated as if the private element of the property system was the whole of it, and the public elements could be relegated to a back corner.

Now the reality of the spaceship economy is upon us. Three interlocking programs will define the future of water policy: conservation of existing supplies, reallocation through marketing, and restoration and protection of instream flows to protect natural systems. None of these elements will suffice without the other two. Taken together they promise a fruitful integration of private needs and public claims.

Underlying these steps is a recognition that one who holds a claim on natural resources stands in two roles. The first and traditional role is that of the proprietor who is entitled to benefit economically from the uses that can be made of his appropriation and to turn that ingenuity to the enlargement of those benefits. In this respect water, and water rights, are part of the conventional economy.

But an appropriator stands in another role as well. The water to which the right attaches is part of a larger entity -- the earth. Boulding's spaceship and the scientist's web of interconnections. It is an element of a watershed. It plays a role in the provision of potable water, in wildlife and species diversity, in public recreation, in navigation, in maintaining a sustaining supply of timber and energy, and in providing the raw materials of scientific knowledge. It is a part of our common capital, from which we sustain our limited capacity to furnish the means for our common survival and well-being. In this respect our water resources are integral elements of the spaceship economy.

The paradox is that all this is both very new and very old. Certainly it is new to proprietors of water rights in a practical everyday sense, for what is now being urged represents a departure from the practice of many decades. And it is new in that it is a reflection of current ecologically-oriented thinking, which sees systems and resources as whole. But it old too, for the special nature of water -- its inevitably common and communal character -- pervades every water law regime, including the nineteenth century constitutions of the western states.

As a practical matter, striking changes are being required of those who hold, and aspire hold, water rights. We are in a time of basic change in our relation to our resources. The changes that are required need not all be made tomorrow. There is time for a fairly gradual shift, and the sooner the need for change is recognized, the sooner planning for change can begin, and the less painful the ultimate changes will be.