Can Utah regulate interstate water exports under federal compacts? Water Horse v. Wilhelmsen Explained

In Water Horse v. Wilhelmsen, 2025 UT 43, the Utah Supreme Court addressed whether Utah’s Export Statute conflicts with the Upper Colorado River Basin Compact and whether an applicant must demonstrate beneficial use before obtaining an export appropriation.

Background and Facts

Water Horse Resources, LLC applied to divert 55,000 acre-feet annually from Utah’s Green River for use in Colorado. The company proposed piping the water across Wyoming to Colorado’s Front Range Corridor. The Utah State Engineer rejected the application, finding Water Horse failed to establish that the water could be beneficially used in Colorado as required by Utah’s Export Statute. Water Horse argued the Upper Colorado River Basin Compact preempted Utah’s Export Statute and granted it an unambiguous right to divert water for use within Colorado’s compact allocation.

Key Legal Issues

The court addressed two primary questions: (1) whether the Upper Colorado River Basin Compact preempts Utah’s Export Statute, and (2) whether Water Horse satisfied the Export Statute’s requirement to show the water “can be transported, measured, delivered, and beneficially used in the recipient state.”

Court’s Analysis and Holding

The court held the Upper Compact does not preempt Utah’s Export Statute. Article XV(b) of the compact expressly preserves each signatory state’s authority “to regulate within its boundaries the appropriation, use and control of water.” While Article IX(a) protects the “right to acquire rights to the use of water,” this creates an opportunity to gain water rights through proper procedures, not a guarantee of approval. The court distinguished Tarrant Regional Water District v. Herrmann, noting it did not interpret the Upper Compact as granting automatic approval rights.

On beneficial use, the court applied the “reason to believe” standard and found Water Horse failed to meet its burden. Key undisputed facts showed Water Horse had not filed any application with Colorado agencies, obtained Colorado approvals, or asked that the appropriation be counted against Colorado’s allocation. Colorado officials explicitly stated that water would not be considered part of Colorado’s apportionment “unless and until proceedings for placing water to beneficial use in Colorado have been followed and completed.”

Practice Implications

This decision reinforces that interstate water compacts do not automatically override state regulatory authority when the compact preserves such authority. Practitioners handling interstate water matters must carefully analyze compact language regarding state sovereignty. The ruling also emphasizes that speculative proposals insufficient—applicants must provide concrete evidence of their ability to beneficially use water in the recipient state, not merely assert they will “figure it out” after approval.