Crown West Realty LLC Water Rights Scheme Meets Legal Challenges

Crown West Realty LLC is a development company affiliated with a larger corporation called Petrus Partners Ltd., based in New York City, which invests in real estate and farmland. Crown West owns the Spokane Industrial Park, a former Navy supply depot that held rights to groundwater in continuity with the Spokane River. Crown West attempted to use these water rights in a scheme to sell mitigation water in areas far downstream from Spokane along the Columbia River.

Using mitigation strategies to secure a new water right has become more common as Washington increasingly lacks water where and when it is needed. It is often difficult to find water for new uses in many parts of the state and so water mitigation may allow Ecology to approve a water right application where otherwise it would be denied. Under Washington water law, a mitigation plan must address environmental costs and benefits, and must address water availability or otherwise offset adverse impacts. Ecology considers mitigation on a case-by-case basis as the suitability of an approach depends on the unique characteristics of the site. Unfortunately, large corporations have started to take advantage of this strategy by buying and then selling mitigation water in profit-making schemes that put everyone’s access to water at risk. Read more about Crown Columbia’s (different company, same corporate backer: Petrus Partners LLC) water scheme in the Columbia River and CELP’s efforts to stop it here.

In this specific case, the water rights in question had not been used for decades. Crown West attempted to protect them from relinquishment by misuse of the municipal water laws surrounding mitigation. Recognizing the attempted misuse, Ecology denied Crown West’s application. After the Pollution Control Hearing Board (PCHB) agreed with Ecology, Crown West appealed to the courts. 

CELP filed an amicus brief at the Court of Appeals, explaining the context around municipal water rights and the consequences of allowing such improper use. On February 26, 2019, the Court affirmed the PCHB, holding that Crown West’s scheme was improper because the water rights in question did not qualify as municipal rights.