The Pinedale Town Council is proposing to sell its 1931 priority date storage right for 4,800 acre-feet of Fremont Lake water to the Wyoming Water Development in order to achieve an instream flow for Pine Creek to its confluence with the New Fork.

Pinedale’s water deal

by Cat Urbigkit

Next Monday night at 7:15 in the Pinedale Library, the Town of Pinedale will hold a special meeting to hear public comment on its proposed deal to sell 4,800-acre feet of its Fremont Lake storage right to the Wyoming Water Development Commission for a 30-year term for $10. It’s part of Pinedale’s ongoing effort to obtain an instream flow for Pine Creek.

The contract

The water right purchase and sale agreement between the Town of Pinedale and the Wyoming Water Development Commission calls for the town to sell its 4,800-acre feet of Fremont Lake storage to WWDC. The water right has a 1931 priority date.

The agreement states: “The town and state recognize the economic and non-economic benefits of maintaining an instream flow in Pine Creek and desire that the water right be used to maintain instream flows to maintain new or existing fisheries. The purpose of this agreement is for the town to transfer the water right to the state in order for the state to use the water right for an instream flow in Pine Creek between Fremont Lake dam and the confluence of Pine Creek and the New Fork River in accordance with Wyoming law, and for the state to grant to the town an option to repurchase the water right.”

The agreement would be in effect until July 2034. The state would pay $10 for the water right, and the town would be required to pay $1 for the option to repurchase the water right, and the price to repurchase the water right would be $10 as well.

In the event WWDC is unable to obtain approval for the instream flow, the agreement would become null and void.

The agreement must be signed by Pinedale Mayor Rose Skinner and two members of the WWDC and approved by the governor.

The $10 appraisal

Former state engineer Jeff Fassett, now a private consultant, wrote a letter to Skinner addressing the need for an appraisal of the storage water right being sold.

Fassett wrote: “The value of water rights is difficult to reliably determine due to the relatively limited number of market transactions and because there is very little ‘hard published’ information about the values of water rights, which are typically described in private agreements. While all changes to water rights must pass through a State Board of Control proceeding, often the documentation that is submitted for a change of water rights do not routinely include the sale price or other financial arrangements.”

Fassett indicated that there are a variety of factors that influence the value of a water right, including priority date, source of water, proximity to the market, alternative water supplies available, historic use, local competition for water, control over facilities, and the terms and conditions of sale.

“Due primarily to the general availability of adequate water supplies in the entire Green River Basin (recent drought period excluded); there is not much market for water in the basin, and as such almost no information about such transactions,” Fassett wrote.

Fassett cited the fact that the state holds a significant portion of storage water in Fontenelle Reservoir that has been available for sale for years without any buyers.

“Again, this is because there is an adequate supply of water for the uses under current water rights in the Green River Basin without the need for supplemental water,” Fassett wrote to Skinner. “The market value of the water supplies and rights are minimal unless there is a rigid and ongoing demand for water that cannot be met with existing supplies. ... This river basin is different from the North Platte River basin in Wyoming, where the tight water supplies practically mandates the purchase of senior priority water rights, at relatively high prices, to establish a firm water supply.”

Fassett’s letter stated: “The most important factor in the proposed sale of the town’s storage water to the WWDC is the fact that the town can have the water back if it needs to meet its future municipal demands. While the parties have negotiated an agreement for a 30-year term with options to extend, it also contains an exclusive option and right for the town to repurchase the water right from WWDC at the town’s determination. In essence, the repurchase provision retains the value of the water right from the town.”

Fassett continued: “The town has determined that the near-term best use for the storage water is to enhance and protect the fishery in Pine Creek through the establishment of an instream flow water right, which is supportive of important economic activities of the town. In this regard, the town will achieve its goals by executing a sale and repurchase agreement with the WWDC. The town will maintain its prior investment in the reservoir and water right, under the agreement through the option to repurchase the water right upon its sole determination.

“For the purpose of valuation, it could be suggested that the town has not permanently disposed of its storage right asset and therefore, the price of $10 is a fair and equitable price because the sale and repurchase agreement allows the town to achieve its short goals and preserves the water for the town if it is needed to meet its future municipal demands,” Fassett concluded.

Fassett’s letter was copied to Town Attorney Ed Wood and Laurie Goodman of Trout Unlimited.

Photo credits:  Delsa Allen