The Final Consolidation Report from the aborted consolidation between Sheep Creek Water Company and Phelan/Pinon Hills Community Service District posted on Sheep Creek’s website is missing much of the supporting documentation in the appendices. Plenty of good information there, but lots of it is missing as well.
Through the Freedom of Information Act, I submitted a request for the complete report with all appendices, and have received the full document. I will be posting the full report for anyone interested in the details. I wil also be separately posting and commenting on some of the more interesting sections in the full report over time. In all honesty, the main reason I submitted the FOIA request was because I wanted to see the legal analysis of Sheep Creek Water Company’s water rights for 3000 acre feet from Sheep Creek in the canyon below Wrightwood.
The entire document is only 7 pages, and it’s a good read for shareholders interested in our company’s historical and current water rights. Below are a few items I find interesting in this document:
- According to this legal analysis, Sheep Creek Water Company’s water rights are not the stronger pre-1913 water rights. Despite the company being formed in ~1912, the water rights application and approval came later, in 1917 and 1918, respectively (from page 2): “On June 12, 1917, SCWC filed application No. 12-718 with the State Water Resources Control Board (State Board) to appropriate 13,300 acre feet per year. The State Board granted certificate 12-5 on September 19, 1918, allowing SCWC until 1921 to put the water to full beneficial use. (D- 3383, at 2.)” After Sheep Creek Water Company failed to complete it’s water project in time, the original grant was lowered to 3000 acre feet in 1926, which are the water rights the company holds today. The fact these aren’t pre-1913 water rights could potentially leave us vulnerable to legislative or administrative action in a statewide water crisis.
— - Sheep Creek Water Company almost certainly will be unable to sell the water rights without selling the company, and also can’t sell the company without including the water rights and all supporting infrastructure and land. On page 5 we find: “There are cases that involve the purchase or condemnation of a private or mutually held water company. These cases hold that the water rights and the system used to serve the rights are connected and cannot be separated for purposes of acquisition.” There’s more detail about this issue elsewhere in the write-up.
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- If Sheep Creek were to sell the system to a private company or consolidate with PPHCSD (a municipal provider), there would be a requirement that shareholders continue to receive water, but the water rights we currently have through shares would no longer apply (from page 6): “when a municipal system takes over a mutual or privately held water system, the obligation to provide service to the shareholders remains… However, the service of providing water would be in the context of water provided to a municipal customer – after the acquisition of the water system, the water service would not longer be through rights as a shareholder.”