Colorado, Centennial State at the Headwaters*

Justice Hobbs at Lee's Ferry, July 2009

With its roots in the farms needed to feed
the miners and the growing communities arising on the plains, Colorado staked
its water law upon the framework of open access and opportunity. Drought, the
recurring type long experienced by Native Americans and Hispanic peoples of the
Southwest, occurred in the 1860s–70s—the same time Colorado formulated its
water principles. Supply was scarce, and the potential for monopolization by
land speculators was great.

Small farmers feared that corporations
would tie up the water supply. This was entirely possible. Under the common law
of the eastern United States and England, only riparian landowners along the
watercourses were entitled to use the water flowing by their property or lying
beneath it. But, much of the potential cropland of Colorado available for
settlement under federal land laws lay far away from the rivers.

In 1861, the Territorial Legislature broke
from riparian water law in its first water act. Colorado guaranteed farmers two
fundamental rights: the right to make an actual beneficial use of water needed
for irrigation of their lands and the right to build, maintain, and operate a
water ditch across the lands of others lying between them and the river.[2]

The actual beneficial use requirement was
anti-speculative and anti-monopolistic in character to stop riparian land
holders from blocking access to water. Only those who had proven need for the
water could obtain water rights. In light of scarcity, the Territorial
Legislature of 1864 directed administration of water rights to occur based on
prior appropriation.[3] This requirement simply means that those who have relied on an
actual use of the water earlier than others have the better right of access to water
in times of short supply.

The Colorado Constitution of 1876 and
subsequent acts of the General Assembly embody these enduring water principles:
(1) the public always retains ownership of all types of water in Colorado; (2)
private persons and public agencies may obtain water rights for actual
beneficial use; (3) the water officials must administer water rights to natural
stream water, which includes tributary groundwater, in order of decreed
priorities determined by the courts; (4) a private right of condemnation
exists, with payment of just compensation, to build, operate and maintain the
necessary diversion, transport, and storage structures upon the private lands
of others; and (5) the streams and aquifers may be used to carry and store
water in the exercise of water rights.[4] These principles are collectively known in water law as the
“Colorado Doctrine.”

The Farms, the Cities, the Environment

Colorado today is a far different place
from both its Civil War origination and when it became a state in 1876, 100
years after the Declaration of Independence. Yet environmentally, it’s
virtually the same. Mountains, plains, mesas and canyons make this place a
treasured homeland for five million persons now, and more are on the way.

Reflecting a changing population and
economy, Colorado water law has fostered the establishment of many uses, far
more than the initial agricultural law. The cities have grown out of the farms
and environmental and recreational needs now command instream water rights
through the state’s instream flow and recreational in-channel diversion laws.[5]

Colorado has learned to share water with
Indian tribes, federal agencies and other states, not because it volunteered,
but because the law and good practice commands. The Union comprises more than
one state, the public owns the water resource and we are part of the public
that owes duties and enjoys benefits in relation to each other. Colorado’s
anti-monopolistic, anti-speculative water law, together with prior
appropriation administration, turns out to be surprisingly flexible, while
maintaining stability.

Because Colorado water law recognizes water
use rights as property rights in the courts and enforces them on the ground
through water officials, the state has had an active market for water since the
early 1890s. Colorado Springs first tested successfully in the Colorado Supreme
Court the proposition that senior water right agricultural priorities could be
changed to other uses, including cities and instream uses for fish and
recreation.[6]

Colorado ensures that injury to other water
rights must not occur while changing uses; so the state requires quantification
of the actual historical consumptive use of the water based on a representative
historical period of time. It also requires maintenance of return flow patterns
from first use of native in-basin water that other water rights depend upon for
their supply. Water imported from out-of-basin sources or groundwater
unconnected to the native basin stream system may be used and reused to extinction.[7]

Anti-Speculation’s Contemporary Application

The anti-speculation legacy of Colorado
water law applies not only to agricultural water rights, but to municipal water
rights as well. We know this from recent Colorado Supreme Court water cases.

In Fort Lyon Canal Co v. High Plans
A&M, LLC, the court prevented a group of investors from changing one
third of the mutual ditch shares of the Fort Lyon Canal, a lower Arkansas River
ditch and reservoir company, from agricultural to municipal use.[8] The application did not specify where the water would actually be
used. In effect, the proposal sought to commoditize the water rights and sell
them anywhere along Colorado’s populous Front Range in the future. But,
Colorado water law requires a change of water right application to specify
where the water will actually be used following the change, in order to verify
that this portion of the public’s water resource is entitled to continued
recognition of its preferred senior priority status.

In Pagosa Area Water and Sanitation Dist. v. San
Juan River Conservancy Dist., the court prevented two
water districts from cornering a one-hundred year supply of unappropriated
water in the San Juan River. Although municipalities are allowed to plan for
reasonably expected population growth, they have only a limited exception from
the anti-speculation doctrine that applies to private persons. A governmental
entity has the burden of satisfying three elements demonstrating its
intent to make a non-speculative conditional appropriation: (1) what is a
reasonable water supply planning period; (2) what are the substantiated
population projections based on a normal rate of growth for that period; and
(3) what amount of available unappropriated water is reasonably necessary to
serve the reasonably anticipated needs of the governmental agency for the
planning period, above its current water supply. The Colorado Supreme Court
relied on a prior case identifying fifty years as a reasonable planning period
based on the facts in evidence before the water court for Water Division No. 7
in southwestern Colorado.[9]
The state has seven water courts across the state in major watersheds for the
purpose of adjudicating water right matters. Direct appeal from a water court
is to the Colorado Supreme Court.

The Colorado Supreme Court in Pagosa listed pertinent
factors to include in the water court’s analysis: “(1) implementation of
reasonable water conservation measures for the planning period; (2) reasonably
expected land use mixes during that period; (3) reasonably attainable per
capita usage projections for indoor and outdoor use based on the land use mixes
for that period; and (4) the amount of consumptive use reasonably necessary for
use through the conditional appropriation to serve the increased population.”[10]

Colorado water law provides for broad standing so that
members of the public can require water court applicants to meet their burden
of proof. The opposer in the Pagosa case, Trout Unlimited, sought to
keep unappropriated water in the river, so that other recognized beneficial
uses, such as instream flows for environmental preservation and in-channel
recreational diversions like rafting and kayaking, could claim and perfect
water rights to a portion of the remaining unappropriated water in the San Juan
River.[11]

Innovation Compelled by Scarcity, Twenty-First Century Drought

Enduring characteristics of Colorado’s water policy and law
include scarcity, competition, and sharing of a precious and limited public
resource. Two recent issues of Headwaters magazine focus on contemporary
manifestations of these themes: Colorado’s Water Supply Future and Administering
Colorado’s Water Resources.[12]
The first of these highlights the basin-by-basin and inter-basin roundtable
discussion and planning process, coordinated by the Colorado Department of
Natural Resources. The second emphasizes the critical role of the State
Engineer and local water commissioners in monitoring stream and aquifer
conditions, enforcing Colorado’s law of water use rights, and keeping Colorado
in compliance with the interstate compacts and equitable apportionment decrees.

In the midst of the early twenty-first century
drought, one of the most severe in the history of the Southwest, innovation
proves to be a hallmark. New statutes adopted by the Colorado General Assembly
allow for these significant innovations, among others: in-channel recreational
water rights; crop rotational management plans for lease of water to cities and
the environment as an alternative to permanent dry-up of agricultural lands;
temporary change of water right and substitute supply plan approval by the
State Engineer while change of water right and augmentation plan applications
are pending in water court; review of water quality impacts and in lieu payment
for thirty years of lost tax revenues in connection with permanent water
transfers of more than 1000 acre feet out of a county; tax credits for donating
senior priority water rights for enhancement of the Colorado Water Conservation
Board's instream flow program; and coordination of land use decision making with
water supply availability.

Regulation of Tributary Groundwater Pumping

The integration of tributary groundwater and surface water,
required by Colorado’s prior appropriation system under the State’s constitution
and the 1969 Colorado Water Right and Administration Act, continues to measure
our commitment to stable, principled, and resilient decision making. Colorado
leads the nation in recognizing the natural law of stream and aquifer
interconnection in the creation and enforcement of water rights. Persons with
junior well rights cannot simply pump and cut off the supply of water upon
which senior rights for traditional as well as the new instream flow rights
depend. They must replace their injurious depletions with a like amount of
water at the time, place, and in the amount and quality necessary for the
senior’s use.

The development of real time stream monitoring, river basin
regulations, and publicly accessible and useable hydrologic models—an effort
underway, but strapped by funding problems—deserves the immediate attention of
local, state, and federal governments, along with water supply and
environmental interests at all levels. Studies show climate change may reduce
the availability of Colorado River water by 10 to 40 percent.[13]
Colorado depends upon its remaining undeveloped allocations under the 1922 and
1948 Colorado River Compacts to meet future water demands.[14]

Knowing what the water resource actually is can only lead to
more informed decision making. Contempt and ignorance make for manifest
injustice. The rights protected by the First Amendment guarantee a plethora of
voices. In recent years, the voices of many Coloradans working in the state’s
watersheds have resounded loud and clear. Colorado jointly settled the water
rights of the Southern Ute and Ute Mountain Ute tribes and the filling of the
Animas-La Plata Project for them and the Navajo Nation.[15]
A decree for the federal reserved water right of the Black Canyon of the
Gunnison National Park is also now in place, due to another settlement.[16]

Reform in Water Court Rules and Role of Experts

For the timely, fair, and effective disposition of water
cases, the Colorado Supreme Court has adopted a revised set of rules, effective
July 1, 2009. New water court forms and a guidebook to assist non-lawyers are
now readily available on the Colorado Judicial Branch website.[17]
Under the new rules, experts will meet without attorneys and clients to review
the facts and expert testimony. They will submit a confidential report to the
parties stating what the experts agree upon and what remains for trial. Each
expert will sign and submit to the water court a declaration that the report
and opinion is the expert’s own. These rule changes are intended to emphasize an
expert’s duty to the court and inhibit alterations in expert reports and
opinions shaped by a battle of the expert advocacy milieu.

A multitude of local governmental entities exist to supply
Colorado citizens and businesses with the water they need. Conservation and
demand reduction measures of all types will be required, along with good
planning, shared infrastructure investment, and new water works. Important and
crucial decisions are pending. Because water is short and the need great,
Coloradans have and always will depend on each other.

The Colorado Experience and Lessons Learned

Each state has developed its own set of water laws to
allocate and administer the public’s water resource. Colorado utilizes water
courts to adjudicate every application for a decree confirming a new water
right, changing an existing water right, or putting into place an augmentation
plan that allows an out of priority diversion to occur without injury to other
water rights. Applicants include Indian tribes and U.S. agencies. Each
application proceeds separately on its merits. Appeals proceed directly from
the water court to the Colorado Supreme Court. This accelerates obtaining a
final judgment in the case. The final judgment controls administration of the
water right vis-à-vis all other state and federal decreed water rights.[18]

This system does not give deference to administrative
agencies, except for temporary decisions pending application to the water
court. Standing to appear and oppose an application is freely available to
interested persons, administrative agencies, and members of the public.
Colorado has had this system since 1879. The result has been a large body of
water law decisions available to the public and the legislature. The Colorado
General Assembly has adopted many statutes that clarify and amend the water
law, and it continues to fund State Engineer enforcement of the adjudicated
water rights. Depending on its complexity, taking an application to a
successful conclusion can be expensive. Nevertheless, the existence of
Colorado’s referee system results in settlement of the vast majority of cases
without trial. Involving the courts provides a neutral forum. The primary
lessons learned from this experience are that water law evolves with the
customs and values of the people and there is no resource more valuable than
the public’s water resource.

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