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~ ~0058 While the question of the validity of the federal non- reserved water rights theory arose in the relatively narrow context of the Wyoming litigation, it is a question that has created considerable uncertainty for you and yo~ client agencies (the Departments of Interior, Agriculture, and Defense), and for the western states. It is no exaggeration to say that water is the single most vital resource in the western states. The importance of the availability of water for management of federal lands in the western states and concern at the state level with allocation of dwindling water resources have led in the past to conflicts within the Executive Branch and intense controversy with the western states over the basis and scope of the federal government's right to use unappropriated water arising on or flowing across federal lands. Previous Executive Branch positions relative to federal government claims to water in the western states have been inconsistent and have produced confusion, turmoil, and significant hostility toward the federal government. 1/ The need to establish clear, dependable, reliable, and sound legal policies and to avoid conflicts and uncertainty in the western states to the extent possible, and to facilitate future planning for the use of water resources by both the western states and the responsible federal agencies has led you to ask this Office to address the matter more broadly. We address here ~nl; the le;al issues raised_bY the federal non-reserved water r;gh~~ theory. Some uncertainty may persist as to how the legal principles we outline here should be applied to specific factual situations. Policy considerations will also continue to be important, for example, in the determinations by federal agencies relative to the breadth of permissible rights which they wish to assert or in the choice of procedures and forums in which to adjudicate federal water rights, and quantification of current and future water rights may have to await comprehensive adju- dications in each state. However, because much of the uncertainty has been created by contradictory analyses of the 1/ The Attorney General for the State of Wyoming has stated, tor example, that .the non-reserved right doctrine creates a nightmare for Western States' water resources management.. Letter from the Honorable Steven F. freudenthal, Attorney General, State of Wyoming, to Theodore B. Olson, Assistant Attorney General, Office of Legal Counsel (April 1, 1982). The Montana Attorney General has suggested that failure to resolve the non-reserved water rights dispute would lead to "a long and acrimonious confrontation between the federal and state governments.. Memorandum from the Honorable Mike Greely, Attorney General, State of Montana, to Theodore B. Olson, Assistant Attorney General, Office of Legal Counsel (April 1, 1982) at 12. - 2 -