Article IX(a) Grants a Right to Seek, Not a Right to Divert: Utah May Enforce Its Export Statute and Require Evidence of Beneficial Use in the Recipient State

Introduction

In Water Horse Resources, LLC v. Wilhelmsen (2025 UT 43), the Utah Supreme Court addressed a high-stakes dispute at the intersection of interstate water compacts and state water law. Water Horse sought to divert 55,000 acre-feet of Green River water from Utah, transport it via pipeline across Wyoming, and deliver it for use along Colorado’s Front Range. The Utah State Engineer denied the application under Utah’s water export statute, concluding that Water Horse had not shown the water could be beneficially used in Colorado and that Utah law was not preempted by the Upper Colorado River Basin Compact (Upper Compact).

The case sits squarely within the “Law of the River”—the dense lattice of compacts, statutes, and judicial decisions that govern the Colorado River System. It required the court to decide two primary issues:

Does the Upper Compact preempt Utah’s statutory scheme governing water export approvals?
Did Water Horse meet Utah’s statutory prerequisites—especially the requirement to show reason to believe the water can be beneficially used in the recipient state (Colorado)?

The court answered no to the first and no to the second, affirming summary judgment for the State Engineer. In doing so, the court clarified the meaning of Article IX(a) of the Upper Compact and reinforced Utah’s authority to require concrete, pre-approval evidence of beneficial use when water is exported out of state.

Summary of the Opinion

No preemption by the Upper Compact: Article IX(a) guarantees a “right to acquire rights to the use of water,” not an automatic right to divert water across state lines. Article XV(b) preserves each signatory state’s authority to regulate appropriation within its borders. Therefore, Utah’s Export Statute is not preempted; rather, it facilitates compliance with the Compact’s purposes.
Beneficial use must be shown before approval: Under Utah Code § 73-3a-108(1)(b)(ii), an applicant must establish there is reason to believe the exported water “can be transported, measured, delivered, and beneficially used in the recipient state.” Water Horse did not submit any Colorado approval, proceeding, decree, or administrative mechanism demonstrating the ability to beneficially use the water in Colorado, and thus failed the statutory criterion.
No conditional approval to postpone beneficial-use showing: The Export Statute does not permit the State Engineer to conditionally approve an export application while deferring the beneficial-use requirement. If any criterion in § 73-3a-108(1)(b) is unmet, the application must be rejected (§ 73-3a-108(3)).
Issues not reached: Because the court affirmed on the beneficial-use ground, it did not decide whether the application was speculative under § 73-3-8 or whether Colorado was a necessary and indispensable party under Utah Rule of Civil Procedure 19.

Analysis

Precedents Cited

The court’s reasoning drew on a number of interpretive and substantive precedents:

Tarrant Regional Water District v. Herrmann (569 U.S. 614 (2013)): The U.S. Supreme Court held that an interstate compact (there, the Red River Compact) did not authorize cross-border diversions absent explicit compact language. Tarrant emphasized state sovereignty over intrastate waters and noted that where compacts do authorize cross-border diversions, they often specify mechanics. The Utah Supreme Court distinguished Tarrant to clarify that it did not interpret the Upper Compact, but it used Tarrant’s sovereign-control principle to underscore that states do not lightly cede regulatory authority.
Texas v. New Mexico (602 U.S. 943 (2024)): Cited for the proposition that a congressionally approved compact functions as a federal statute that can preempt conflicting state law. Utah agreed on the legal framework but held there was no conflict in this instance.
Alabama v. North Carolina (560 U.S. 330 (2010)): Emphasizes that compacts are both contracts and federal statutes; courts interpret them as contracts while giving them statutory force, guiding the Utah court’s approach to the Upper Compact.
Southwest Airlines Co. v. Saxon (596 U.S. 450 (2022)): For ordinary-meaning statutory interpretation in context, supporting the court’s textual parsing of “acquire rights to the use of water.”
Altria Group v. Good (555 U.S. 70 (2008)); Fidelity Federal Savings & Loan Ass’n v. de la Cuesta (458 U.S. 141 (1982)); Arizona v. United States (567 U.S. 387 (2012)); PLIVA, Inc. v. Mensing (564 U.S. 604 (2011)); Hines v. Davidowitz (312 U.S. 52 (1941)); Crosby v. National Foreign Trade Council (530 U.S. 363 (2000)): Collectively supply the preemption framework (express, field, and conflict preemption) and the “obstacle preemption” standard.
Searle v. Milburn Irrigation Co. (2006 UT 16): Key Utah authority on the “reason to believe” standard in appropriation decisions; the court reaffirmed that the standard, though low, is not so low as to reduce the State Engineer to a “rubber stamp.”
Western Water, LLC v. Olds (2008 UT 18): Articulates de novo review in district court of informal State Engineer proceedings and confines the court’s review to issues within the Engineer’s statutory remit.
West End Irrigation Co. v. Garvey (184 P.2d 476 (Colo. 1947)): Discussed by Water Horse to argue limits on Colorado courts’ jurisdiction for extra-territorial diversion points. The Utah Supreme Court held this did not excuse Water Horse from demonstrating a Colorado pathway to beneficial use before Utah could approve export.

Legal Reasoning

1) No preemption: Harmonizing Article IX(a) with Utah’s Export Statute

The court began with the compact-as-contract principle: read the Upper Compact’s text in context and according to its ordinary meaning. Article IX(a) provides that “no State shall deny the right of another signatory State, any person, or entity of any signatory State to acquire rights to the use of water … when such use is within the apportionment to such lower State made by this Compact.”

The court emphasized the distinction between:

a “right to acquire rights to the use of water” (an opportunity or access to a process to obtain a right), and
a substantive “right to use water” (a guaranteed entitlement to divert and consume).

Using ordinary meaning and dictionaries, the court read “acquire” to denote a process: the compact ensures that a Coloradan applicant may seek to obtain rights in Utah, but it does not guarantee success. This reading aligns with Article XV(b), which expressly preserves each state’s sovereign power “to regulate within its boundaries the appropriation, use and control of water.” In other words, Article IX(a) opens the door; Article XV(b) lets each state decide the terms of entry.

Against this framework, Utah’s Export Statute does not conflict with the Upper Compact. There is no impossibility preemption because a Utah denial for failure to meet statutory prerequisites does not “deny the right to acquire rights”—it denies a particular application under a state-administered process. Nor is there obstacle preemption: Utah’s statute advances compact purposes—especially the central principle that “beneficial use is the basis, the measure and the limit of the right to use” (Upper Compact, art. III(b)(2))—by requiring a pre-approval showing that exported water can be beneficially used in the recipient state and by ensuring compliance with interstate obligations.

2) Beneficial use in the recipient state must be shown, to a “reason to believe” standard, before approval

Utah Code § 73-3a-108(1)(b)(ii) requires the State Engineer to find that “the water can be transported, measured, delivered, and beneficially used in the recipient state.” The court assumed (without deciding) that the Appropriation Statute’s “reason to believe” standard also governs this export criterion. Under Searle, that standard is low but meaningful; it requires evidence sufficient to make the engineer’s belief reasonable—not simply a promise to figure things out later.

The undisputed record showed that Water Horse:

had not filed any application or proceeding with any Colorado agency or water court,
had obtained no Colorado approvals,
had not asked Colorado or the Upper Colorado River Commission to account the proposed depletions against Colorado’s apportionment, and
had received communications from Colorado’s officials stating that water would not be accounted to Colorado’s compact apportionment “unless and until” proceedings for placing water to beneficial use in Colorado were followed and completed.

On that record, Utah’s State Engineer, and then the district court, had no evidentiary basis to reasonably believe Water Horse could beneficially use the water in Colorado. The court rejected the notion that Utah should approve first and let Colorado sort out beneficial use later. The statute demands the showing before approval.

3) Conditional approval cannot postpone the beneficial-use showing

Water Horse argued the State Engineer could issue a conditional approval subject to later confirmation of Colorado beneficial use. The court disagreed. Section 73-3a-108(3) mandates rejection if any criterion in § 73-3a-108(1) is unmet; and § 73-3a-108(4)’s conditioning authority is limited to ensuring out-of-state use is subject to the same legal controls as Utah uses or is consistent with interstate compact terms. It does not authorize deferring the mandatory beneficial-use showing.

4) Rebuttals to Water Horse’s additional arguments

Colorado court jurisdiction: Even assuming Colorado courts cannot decree a diversion point outside Colorado, Water Horse still needed to demonstrate a Colorado legal pathway for beneficial use—judicial, administrative, or by operation of law. It showed none.
Catch-22 claim (order of operations): The court found this speculative because Water Horse had not attempted any Colorado proceeding. Hypothetical hurdles cannot substitute for evidence establishing reason to believe beneficial use is achievable.
“Place of use controls allocation” argument: Colorado’s officials expressly stated that depletions will not be accounted to Colorado’s apportionment absent Colorado proceedings and completion. The court deferred to the practical reality that the recipient state’s internal processes and approvals matter to “beneficial use” and “accounting.”

Impact

The decision carries meaningful implications for interstate water projects and the administration of the Upper Basin’s share of the Colorado River System:

Clarified meaning of Article IX(a): The Utah Supreme Court’s textual holding—that IX(a) secures a right to seek rights, not a guarantee to divert—will likely be cited in future litigation over cross-border diversions under the Upper Compact and analogous compacts.
Reaffirmed state sovereignty under Article XV(b): States retain full authority to regulate appropriations at in-state diversion points. Applicants must satisfy each state’s statutory process, even for compact-enabled cross-border uses.
Elevated front-end diligence for export projects: Utah will require concrete, pre-approval evidence that the recipient state will allow and can administer beneficial use and compact accounting. Letters of principle, general intentions, or post-approval plans will not suffice.
Recipient-state engagement becomes essential: Proponents must initiate appropriate proceedings (e.g., water court filings, administrative actions, or other cognizable mechanisms) in the recipient state and generate evidence (orders, decrees, formal commitments) establishing a reasonable likelihood of beneficial use and accounting before Utah will approve export.
Administrative efficiency and compact compliance: By aligning Utah’s export approvals with demonstrable recipient-state readiness, the decision reduces the risk of stranded approvals and promotes the compact’s core of beneficial and equitable use.
Unresolved but looming issues: The court did not reach speculation and indispensable-party questions. Future applicants who clear the beneficial-use hurdle should still expect scrutiny on speculation under § 73-3-8 and potential Rule 19 joinder issues where another state’s commitments are central.

Complex Concepts Simplified

Law of the River: The collective framework governing the Colorado River System, including interstate compacts (e.g., 1922 Colorado River Compact; 1948 Upper Compact), federal statutes, treaties, and court decisions.
Upper Compact, Article IX(a): Ensures that signatory states and their residents have the opportunity to seek water rights across state lines within the Upper Basin apportionment. It does not, by itself, grant a diversion right.
Upper Compact, Article XV(b): Explicitly preserves each state’s sovereign power to regulate the appropriation and use of water within its borders.
Preemption: When federal law overrides state law. The court rejected express and field preemption, and found no conflict preemption because Utah’s Export Statute neither makes compliance with the Compact impossible nor obstructs its purposes; it advances them.
Beneficial use: A foundational water law principle: a water right exists only to the extent water is used for recognized, advantageous purposes. Both the Upper Compact and Utah law enshrine this as the basis, measure, and limit of the right.
“Reason to believe” standard: A low but meaningful evidentiary threshold requiring enough concrete information to make a belief reasonable—not mere aspiration or conjecture.
Utah Export Statute (Utah Code § 73-3a-108): Requires, among other things, that an export applicant show the water can be transported, measured, delivered, and beneficially used in the receiving state. If any required criterion is unmet, the application must be rejected.
Acre-foot: The volume of water needed to cover one acre to a depth of one foot—about 325,851 gallons.

Practical Guidance for Future Applicants

To satisfy Utah’s export criteria in light of Water Horse:

Initiate recipient-state proceedings tailored to the intended beneficial use (e.g., water court filings, administrative approvals, decrees, or other recognized processes).
Obtain, or at least meaningfully advance, recipient-state approvals that demonstrate the administrative feasibility of beneficial use and the mechanism for compact accounting.
Develop and document a concrete measuring and accounting plan consistent with the recipient state’s administration and the Upper Colorado River Commission’s expectations.
Provide evidence of institutional commitments (e.g., letters from recipient-state officials reflecting willingness to process and account, contingent approvals, or decrees tied to specified conditions).
Show progress on necessary federal and local permits (e.g., BLM rights-of-way, Corps permits) and property rights acquisitions to establish a credible delivery pathway.
Where relevant, coordinate with the Upper Colorado River Commission early to address interstate accounting and apportionment issues.

Conclusion

Water Horse v. Wilhelmsen establishes a clear and influential rule for interstate water export proposals in Utah: Article IX(a) of the Upper Compact does not guarantee a right to divert across state lines; it guarantees access to seek such rights under state law. Utah may—and must—apply its Export Statute, which requires a pre-approval showing that the water can be beneficially used in the recipient state. Applicants cannot defer that showing or rely on aspirational plans; they must furnish concrete evidence sufficient to make the State Engineer’s “reason to believe” determination reasonable.

In reaffirming state sovereignty preserved by Article XV(b) and prioritizing beneficial use as the basis, measure, and limit of water rights, the court’s decision both honors the Upper Compact’s core purposes and sets a practical roadmap for future cross-border projects. The message is straightforward: engage the recipient state’s legal and administrative processes first, demonstrate the feasibility of beneficial use and compact accounting, and then seek Utah’s export approval on a firm, evidentiary foundation.