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Two closely related questions concern the source of WUO legislation and the legal status of WUOs.

(a) The source of WUO legislation

The first question is what is the main source of WUO legislation? Put another way, where are the main legislative provisions that regulate the establishment and operation of WUOs? To some extent, of course, this will depend on a country's particular legislative practices and traditions.[34] Nevertheless, some common trends can be detected.

In several jurisdictions, such as Mexico and Spain, provisions on WUOs are contained in a chapter in the principal water law[35], while those of the State of California are, subject to one exception, contained in its Water Code. In such cases, the degree of detail to be found in the water law or water code will vary in accordance with national practice. For example, it is not uncommon to find relatively brief provisions on WUOs in a Water Code, with more detail contained in regulations issued pursuant to that law or code.[36] By contrast, the California Water Code contains rather detailed provisions on the establishment and operation of the WUOs, of the type (and in the level of detail) that in Spain are included in the regulations issued pursuant to the Water Law.[37] The California exception relates to 'Water Companies' that supply water for irrigation and 'Mutual Water Companies Formed in Connection with Sub-divided Lands' which, as types of company, are established by and regulated in accordance with provisions in the California Corporations Code.[38]

Another source of WUO legislation is sectoral legislation that goes beyond the regulation of WUOs themselves to include, for example, irrigation and drainage (Albania), land drainage and flood defence (England and Wales) and land improvement/amelioration (Georgia and Italy).[39]

Finally in a number of countries, including Germany, Romania, Bulgaria and the Kyrgyz Republic the relevant legislative provisions are contained in a specific WUO law. Indeed a more extreme variation on this approach is found in those cases where an individual WUO is established on the basis of a specific law (such the Middle Level Act in England and Wales[40]) or regulated on the basis specific legal provisions within a water law, (such as references to individual WUOs in the California Water Code.[41]) This kind of situation usually arises in connection with a specific land improvement scheme, where legislation is needed, for example, to acquire the necessary rights on behalf of the state to begin construction and the WUO is created at the same time, perhaps to take account of specific requirements.

Further variety is to be found concerning the source of WUO legislation in federal states. In this connection, Germany is unusual in that the WUO law is a Federal law of national application.[42] In the other federal states considered, the WUO legislation is enacted at state level (for example California, Punjab Province in Pakistan, Andhra Pradesh in India, Victoria in Australia, Mendoza Province in Argentina and Saskatchewan Province in Canada).[43] And even within a unitary state, such as Italy, regional devolution initiatives can also lead to regional variations in respect of laws.[44]

Leaving aside these specific cases, the question arises, does the source of WUO legislation make any practical difference? The answer is, probably not. There can be advantages in including provisions on WUOs as a chapter in a water code or principal water law, as this means that the main items of water legislation are contained in one integrated text. On the other hand, if the provisions on WUOs are rather detailed, as they may well need to be, then the WUO chapter may be disproportionately long, and/or the whole text may become rather bulky. As described above, a solution in such circumstances is to include only brief details on WUOs in the code or law, leaving the details to regulations. The appropriateness of such an approach may in turn depend on the length of a country's WUO tradition and common perceptions as to the normative value of regulations. Experience in the former socialist countries of Eastern Europe and Central Asia, where WUOs are a new concept, suggests that water users are distrustful of 'mere' regulations, whatever their theoretical normative value, as they can be easily changed by governments.

Thus, where the WUOs are being introduced for the first time, a specific WUO law or clear provisions on WUOs in a wider sectoral law may demonstrate a stronger political commitment to the WUO concept. Practically speaking, it may be easier for water users to be able to refer to a specific law rather than a detailed water law or water code. On a conceptual level, provisions that regulate WUOs will tend to be more permissive in form than the normative and prescriptive provisions on water management found in a typical water code or water law.[45] Ultimately, however, the issue is likely to be determined by a country's specific legislative needs at any given time rather than any specific practical or theoretical rule.

What is evident, though, is that a sufficient amount of clear legislation is necessary for the successful establishment and operation of WUOs. Attempts to establish WUOs in the absence of clear and specific primary legislation have generally been unsuccessful, particularly in cases where the introduction of WUOs is part of a new policy initiative. The simple point is that WUOs are complex structures subject to the inherent conflict between collective endeavour and individual benefit described in Part One. However, it must not be forgotten that apart from setting out the legal 'rules' for WUO establishment and operation, a key role of the law is to act as a statement of policy. If the law on WUOs is itself unclear, ambiguous or simply absent, then what kind of policy message is sent out to farmers and other water users?

In Turkey, where WUOs have been established on the basis of local government legislation,[46] the lack of clear WUO legislation is seen by the Government as constraining the development of the sector. Similarly, in neighbouring Armenia it is now generally accepted that one of the reasons why attempts to establish WUOs as 'Water User Consumer Co-operatives' on the basis of generic co-operative legislation, were generally unsuccessful was due to the absence of clear and specific WUO legislation.[47]

(b) The legal status of WUOs

It is usually hard for WUOs to operate without legal personality, but such WUOs can and do exist, usually on a small-scale customary or informal basis and in circumstances where their relationship with their members does not include monetary transactions.[48] Bolivian legislation, for example, permits the Government to recognise WUOs created on the basis of customary norms as de facto 'Irrigation Organizations'. The Government keeps a special register of such organizations.

All of the other legislation reviewed, however, provides for WUOs to be established with independent legal personality. As formal 'legal persons' they are able to enter into contracts, hold bank accounts, employ staff and to take and defend legal proceedings in their own names. In some jurisdictions such rights are implicitly acquired once a WUO obtains legal personality. Elsewhere, as in Saskatchewan Province in Canada, the scope of the legal rights and duties of WUOs are set out in some detail. Section 13 of the Irrigation Act of 1996 states:

For the purpose of fulfilling its objects and purposes, an irrigation district may:

(a) enter into any agreements with the Corporation or any person, agency, government or organization for any purpose related to:

(i) the exercise of the powers of the irrigation district; or
(ii) the carrying out of any of the irrigation district's objects and purposes;

(b) provide irrigation services to its district consumers and other persons in the irrigation district;

(c) subject to the other provisions of this Act and to The Water Corporation Act, construct, acquire, establish, maintain and operate irrigation works, water control works and water supply works in the irrigation district;

(d) acquire electrical or other power required to maintain and operate its irrigation works, water control works and water supply works in the irrigation district;

(e) subject to section 17, establish and collect water service charges;

(f) acquire any moneys or property that is necessary for or related to its objects and purposes;

(g) dispose of any of its property that it no longer requires in any manner and on those terms that it considers appropriate;

(h) manage, improve, cultivate and maintain any agricultural land that it owns or leases;

(i) employ any staff that it considers necessary and determine the salary, duties and conditions of employment of its staff;

(j) generally do and authorize the doing of any things that it considers incidental or conducive to exercising its powers or furthering its objects and purposes.

An equally important effect of an independent legal personality is that participants in a WUO are not themselves responsible for its liabilities.[49] Some WUO laws, such as that of South Africa, state this explicitly: the liability of participants is limited to the amount of unpaid charges and interest thereon owed to the WUO.

All of the legislation reviewed in the course of preparing this study provides for WUOs to operate on a 'non-profit' basis, in that their primary aim is not to make and distribute profits. The legislation usually provides that any surplus of income over expenditure must be retained within the organization, rather than being distributed among participants. In some countries, such as Albania and Morocco, the legislation states this explicitly. Elsewhere it is implicit because there is no mechanism for surpluses to be distributed.

There is, however, a clear divergence of approach concerning the legal status of WUOs, as to whether they are established under 'public law' or 'private law'. Put another way, are WUOs bodies of public law (sometimes called 'public corporations' or 'statutory corporations') or bodies of private law? A closely related matter is the legislative source of their legal personality. At first glance this looks like a dry legal question of little significance, but, as will be seen below, it can have a crucial practical impact both on how WUOs are established, and how they operate.

Before continuing, it is necessary to briefly consider the difference between 'public law' and 'private law'. While different terms are used from jurisdiction to jurisdiction, in essence private (or civil) law regulates the conduct of private citizens. Contracts, for example, are generally regulated under private law, which also provides the legislative frameworks for the establishment of the various different types of legal person that permit citizens to arrange their commercial activities (such as companies and co-operatives) and their non-commercial activities (such as clubs, associations and non-government organizations).[50] Such bodies are private in the sense that they are controlled by private actors who can decide, for example, who to admit as a member or, provided any necessary permits are obtained, what tasks the organization is to undertake.[51]

Public law (sometimes known as administrative law) by contrast, regulates the activities of the state, of state bodies, including ministries and other state agencies, and of other bodies that undertake quasi-state functions of a public or public interest nature. While practice varies from country to country, examples of the latter include chambers of commerce, hospitals, professional associations that undertake a regulatory function, compulsory pension funds, universities and, of course, WUOs.[52] The decisions of bodies regulated by public law are usually subject to review by the courts, usually by specialist administrative law tribunals.[53]

Typical characteristics of public law bodies are that they:

When WUOs are established as bodies of public law, they are a kind of legal hybrid.[55] Under the democratic control of their own participants they are functionally separate to the state. The Saskatchewan legislation makes this very clear. Section 9 simply states: 'An irrigation district is not an agent of the Crown'.[56]

On the other hand, as public service providers, WUOs are usually subject to public law as regards the manner in which they function, and also to a degree of regulatory oversight by the state, an issue that is considered in more detail below. It is important, however, to emphasize that oversight means just that. WUOs are free, within the bounds of the law, to make their own decisions and thus their own mistakes. A WUO regulator may disagree with a decision taken by a WUO. But unless that decision is actually unlawful s/he may not challenge it, let alone seek to substitute it with her/his own.

Sometimes, as in Germany for example, this public law status means that the legislation provides that WUO employees may be granted the status of civil servants. But this is unusual.[57] It is more common that public law WUOs are actually governed by private law in so far as their relationships with third parties are concerned, including their employees. Thus in California, while Irrigation Districts are bodies of public law, they have the practical status of private corporations with respect to ordinary contractual relationships. Their directors are on the same footing as private individuals, or the directors of private companies, and their purchasing decisions are not subject to public procurement rules. This approach is also followed in the draft WUO law that will shortly go to the Turkish parliament.

So, should WUOs be established under public law or private law? Both approaches are found among the laws considered in this study, with rather more WUOs being established under public law.[58] Indeed, it can in practice be difficult to identify the status of a WUO. In some cases the law itself makes the position clear. For example, in the Spanish Water Law explicitly states that WUOs are established as bodies of public law. Similar statements can be found in the recent Bulgarian and Georgian legislation as well as in the WUO legislation of the Argentine province of Mendoza. Elsewhere the precise legal status of the WUO is not specifically stated in the legislation and must be inferred.[59]

As a general principle, a WUO is likely to be a body of public law where it is established on the basis of the WUO legislation itself,[60] and acquires its legal personality on the basis of a decision made by an official or official body of government (as opposed to entry in a register or approval by a court.) Thus for example, WUOs in Punjab Province, Pakistan, are established on the basis of a government decision and are bodies of public law, as are those in South Africa, which gain legal personality on the basis of a decision of the Minister responsible for water resources.

In Nepal, the legislation simply provides that 'User Associations' are corporate bodies, with perpetual succession, and a similar approach is taken in India. It appears that in both cases, the associations are public law bodies. This approach is generally taken in the Western European countries considered, such as France, the Netherlands, Germany and the United Kingdom, where WUOs are established under public law, even though this is not actually specified in the relevant legislation. Similarly the various 'districts' provided for in North American legislation are public law bodies.

Elsewhere, the legislation indicates, either expressly or implicitly, that WUOs are established on the basis of private law, although they may be subject to a specific legal regime contained in the relevant irrigation legislation. Examples include the Albanian 'Water User Associations', which are established in accordance with the Civil Code and the Law on Irrigation and Drainage, and the Estonian 'Land and Water Associations', which were established on the basis of the Amelioration law and the Law on Associations. In Mexico, WUOs are constituted as private law non-profit associations that operate profit-making ventures.[61] Similarly, in Colombia WUOs must register with the Ministry of Agriculture following their establishment under private law on the basis of other legislation. In Costa Rica, WUOs acquire the legal status of a co-operative, which is usually a private law form, by registering with the Government.[62] In some cases, however, it is hard to tell. For example, although WUOs in Romania are established in accordance with specific WUO legislation,[63] they acquire legal personality through registration in the register of non-commercial organizations and are thus actually bodies of private law.

The question then arises, what difference does it make whether WUOs are established under public law or private law? This question can be answered on both a conceptual level and a practical level.

On a conceptual level, the establishment and operation of a private law legal person is essentially a private affair, like a private club, a company, a non-government organization (NGO) or for that matter a co-operative. The members of such a body are broadly free to determine how it operates: for example, the members of a club can determine who may and may not be a club member, either in individual cases or by establishing membership criteria. The same is true for an NGO and a co-operative. If any members want to leave and set up a new club or NGO or cooperative of their own, then usually they can. There is no need to control how many such bodies are established or where they operate. Equally, as already described, a private law entity, whether club, company, NGO or cooperative, is basically free to determine the scope and range of its activities.

This kind of private arrangement might be best suited to a group of neighbouring land owners who pool resources to build their own private irrigation canal or drainage ditch to serve their own (private) interests. However, as the size of an irrigation or drainage scheme grows, its continued operation (and thus the operation of the responsible WUO) may become a matter of public rather than private interest. If public money is involved, then almost by definition the continued operation of the scheme and the proper functioning of the WUO is a matter of public interest. All beneficiaries need to have an explicit legal right to participate in the WUO which can no longer be run along the lines of a private club. But how can the state (or the law) dictate to a private law entity who its members are to be?

Similarly, it is usually important to ensure that a WUO focuses on its core water management task rather than diversifying into other areas. The design of most items of infrastructure operated by WUOs, such as irrigation and drainage schemes, water distribution networks and so forth, mean that it is impractical, or even impossible, to have two separate organizations operating different parts of the same infrastructure. Some limits are therefore necessary regarding the establishment and/or restructuring of WUOs. Again though, if a WUO is a private law body how can the state dictate how it is to be established, dissolved or re-structured? Oversight will also be necessary in the public interest in addition to clear legal provisions to promote certainty as the internal functioning of the organization is no longer a purely private matter to be left to the participants. In these circumstances, it can be argued that on a conceptual level it is simply legally wrong for a body that accomplishes public interest tasks to remain as a sort of private club, even if specific statutory rules apply to it.

On a practical level, the creation of WUOs as bodies of public law can make it easier to confer a range of benefits and advantages on them through legislation. These include:

These issues are considered in more detail in Part 12 below. These kinds of benefits, coupled with the problems of trying to use private law forms, perhaps explain why in countries with a long tradition both of WUOs and WUO law, the legislation invariably provides for them to be established as bodies of public law.[64]

On the other hand, as already mentioned, private law WUOs in the form or mutual ditch and irrigation companies have existed for many years in the United States, alongside the public law Districts. These companies are privately owned water stock companies, and, subject to the approval of their shareholders, they have the right to set water rates and deliver water as they see fit to their shareholders.[65] The majority of mutual ditch and irrigation companies appear to have been voluntarily formed through grass-roots efforts to assume management of irrigation systems that were built by US and European-financed land development companies in the nineteenth century. Mutual companies were most frequently formed by farmers themselves when land development companies left the business of delivering water to irrigated land once the land had been sold to individual farmers.[66]

Where the establishment of WUOs is part of an Irrigation Management Transfer programme, the use of private legal forms might be considered helpful in emphasizing the independence of WUOs from the state or the state irrigation body. In the former socialist countries of Eastern Europe and Central Asia, the concept of the body of public law is often unfamiliar. For example it simply did not exist in the former Soviet legal system. Consequently people are familiar with private legal entities and state entities and nothing else. To the extent that WUOs established under public law would be perceived as 'state' entities, this might cause confusion as to their role and purpose and hinder their chances of successfully operating. It is probably for this reason that in many cases in the transition countries WUOs have been established on a private law basis, albeit with a specific regulatory regime. Thus they become a special form of private law legal person. For legal purists this approach may be not be strictly legally correct, but in a time of increased regulation of economic enterprises and an increased role for the private sector in the provision of public services, this probably represents an appropriate solution. However, the situation is fluid, and apart from the already mentioned example of Bulgaria, Georgia has recently amended its Amelioration Law to convert its Amelioration Associations to bodies of public law.

Specific disadvantages of establishing WUOs under private law include the fact that it can be difficult for WUOs to obtain tax benefits and other advantages open to public law bodies, including rights to compulsorily acquire land and to use simpler more direct enforcement procedures. Another potential danger arises when the legislation that confers legal personality on WUOs is of general application. As described further in Box C, amendments to such legislation may not always take account of the particular needs of WUOs.

Box C - Legal personality problems in Estonia and Albania

In Estonia 'Land and Water Associations' were established to operate land drainage schemes in accordance with the 1994 Amelioration Law, but obtained their legal personality on the basis of the Law on Associations. The replacement of that law with a new Law on Non-Government Organizations meant that all Land and Water Associations had to re-register at some inconvenience and expense. In Albania, the situation is potentially more serious. Although regulated under the Irrigation and Drainage Law, Water User Associations receive their legal personality as associations created under provisions in the Civil Code. On the proposal of the Ministry of Justice, a new Law on Non Government Organizations has now been enacted. The position of the Ministry is that all Water User Associations must all re-register as non-government organizations even though the provisions of the new law contradict the provisions of the Irrigation and Drainage Law in a number of areas including the scope of their permitted activities, regulatory oversight and as regards permitted 'economic activity'. This development has the potential to throw the whole legal basis of present and future Water User Associations into doubt.

So what conclusions can be reached? Again, much will depend on each country's individual circumstances and legal traditions. However, it is a fact that in the countries with longer WUO traditions, WUOs are established as bodies of public law and as mentioned above, this legal form can confer specific benefits on WUOs. Having all the relevant provisions on WUO establishment and operation in one law should result in a clearer legal framework, which should also mean that the framework can adapt as necessary to the specific needs of WUOs in particular, and the water sector in general.

[34] Even within the common law tradition the practice and degree of codification differs from jurisdiction to jurisdiction.
[35] This is also the approach taken by South Africa's recently enacted comprehensive National Water Act. As regards Mexico the provisions on WUOs in the water law are actually relatively brief. Mexican WUOs are established as private law associations (see discussion below).
[36] For example, this is the approach taken in Spain and South Africa.
[37] Public Domain Water Regulations that elaborate the Spanish Water Act 29/1985, 2 August 1985, amended in 1999 and eventually consolidated by Royal Legislative Decree No. 1 of 2001.
[38] Corporations Code, Section 14302, 'Corporations for Specific Purposes'.
[39] In Punjab Province, Pakistan, the legal basis for WUOs is contained in the Punjab Irrigation and Drainage Authority Act, 1997 (No. XI of 1997) while the main legislative provisions on WUOs are contained in regulations, the Punjab Irrigation and Drainage Authority (Pilot Farmers Organizations) Rules, 1999, 1 January 1999 and the Farmers Organizations - Conduct of Business Regulations, 1999, 1 January 1999, both of which were issued pursuant to the Act.
[40] This Act conferred statutory authority on the 'Middle Level Commissioners' a WUO that is responsible for land drainage on the 'Middle Level', an area of around 70,000 hectares in the East of England most of which lies below sea level.
[41] Numerous specific references to individual water districts are to be found in the California Water Code.
[42] However, apart from varying the tasks that WUOs may undertake, as mentioned above, individual Lander (states) are free to amend the basic text and/or add new provisions as they deem necessary.
[43] Similarly, the Land Drainage Act applies only to England and Wales and not to the other countries (Scotland and Northern Ireland) that form the United Kingdom.
[44] For example the Consorzi of the Veneto Region are regulated by different legislation to those of Puglia.
[45] This will be the case particularly in jurisdictions where WUO establishment is entirely voluntary. On the other hand a water law or code will generally apply to all uses of water within that jurisdiction.
[46] Law 'On Municipalities' No. 1580 of 1930. Articles 133 to 148 of this law allow village and provincial administrations to establish 'associations' to take over responsibility for various tasks and duties.
[47] Similarly in the Kyrgyz Republic the previous legal framework for WUOs, which was based on a passing reference in the Water Law and a Government Resolution was widely seen to be an inadequate for the establishment of WUOs, a crucial issue in an arid climate where irrigation is essential for arable agriculture.
[48] For example, in the mountains of Albania small un-registered WUOs were functioning in the late 1990s. Usually the operation of such WUOs was a relatively simple matter. Typically, a single earth canal flowed from the water source. WUO members jointly cleaned the canal each spring and then in turn broke the canal walls to water their plots.
[49] An exception would be in a case where WUO members had for example guaranteed the liabilities of the WUO.
[50] Different rules and restrictions evidently apply in each
[51] For example, a private company is broadly speaking free to re-focus its attention from one area of commercial activity to a completely separate one. In practice, a company may need to alter the 'objectives clause' in its internal governing document to include the activity. For some activities regulatory permits may also be needed to enable the company to actually engage in the new tasks, but under private law the company is free to alter its governing document and to apply for such permits. Similarly, a private club, such as an opera appreciation society, for example, is free on the basis of a decision of its members to re-focus its primary interest. The opera appreciation society could decide to focus on the music of Verdi - or rap music.
[52] This list is not intended to be comprehensive. Indeed within the same jurisdiction public law bodies may be found alongside private law bodies undertaking the same functions. In Germany, for examples, both hospitals and universities can be established under public law or private law.
[53] For example the Conseil D'Etat in France and the Tribunali Amministrativi Regionali (TAR) in Italy. It is important to note that while an administrative law court can review and even quash an unlawful decision it cannot usually substitute its own decision.
[54] Maurer, Hartmutt, Allgemeines Verwaltungsrecht, C.H. Beck 1999, page 577 (translation: Petra Siegers).
[55] For example in the United States, courts in different states have defined irrigation districts as: (i) quasi-governmental organizations;(ii) state agencies; (iii) public agencies in which the public have an interest; (iv) for some purposes, political sub-divisions of the state; or (v) an arm of government that exercises some government functions. At the same time, other courts have frequently held that, strictly speaking, irrigation districts are not municipal corporations or political subdivisions of the state. Corpus Juris Secunum, Vol 94, 1956. Pages 265-66.
[56] Irrigation Act 1996.
[57] Even in Germany this is unusual. Most German WUO staff are employed under private law.
[58] In Italy the legal status of a WUO depends on the form the WUO is established. The Consorzi di bonifica, or 'land reclamation associations' are bodies of public law while the Consorzi di miglioramento fondiario or 'land improvement associations' are bodies of private law although the latter can acquire the status of bodies of public law if the extent of their jurisdiction or the importance of the activities they carry out so warrant.
[59] This too is not always so easy. The Indonesian law states that WUOs 'have a distinct social connotation'. It is unclear what this implies in terms of legal status.
[60] As a legal person sui generis.
[61] Implementing regulation of the Law on National Waters (Reglamento de la Ley de Aguas Nacionales), 11 January 1994.
[62] Law 276, Water Law (Ley N° 276 - Ley de Aguas), 27 August 1942. Agreement 2.217 - Regulation of Irrigation Services (Acuerdo N° 2.217 - Reglamento de servicios de riego) 26 July 1999 and Agreement 2.173 - Regulation of Irrigation Services (Acuerdo N° 2.173 - Reglamento de servicios de riego) 19 April 1999.
[63] Emergency Ordinance 147 on Irrigation Water Users Associations, 7 October, 1999.
[64] Indeed, for a long time in Germany the Water and Land Associations were established under private law, until the practical difficulties of using private law became such that new legislation was needed.
[65] The California Corporations Code permits 'Water Companies' established to supply water for irrigation to provide in their governing documents that water is only to be supplied to share holders and that such shares are to be 'appurtenant' to a specified land plot. Such provisions are mandatory in the case of Water Companies that are established to supply water for domestic purposes. On the sale of such a land plot the stock must also be transferred to the new owner. California Corporations Code Section 14302, Part 7, Chapter 1, §14300-14302.
[66] USBR op cit.

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