WSMT has deep experience in water rights and in all matters that involve water, including the generation of hydropower. Our water law attorneys represent industrial clients, municipalities, mining and oil and gas companies, utilities, ranchers and farmers, water conservancies and ditch companies, individuals, and land developers on all issues regar...ding ground water and surface water rights throughout Colorado – in all seven of the state's water divisions – as well as in Arizona. New Mexico, and Wyoming. We work with Interior agencies and the U.S. Forest Service to handle our clients' issues with water rights and water facilities on federal lands. More

Colorado Legislature Protects Existing Recreational Water Rights

On May 25, 2017, the Colorado legislature passed House Bill 17-1990 addressing the 2015 Colorado Supreme Court decision of St. Jude’s Co. v. Roaring Fork Club LLC denying a private club’s ability to obtain an instream water right. Colorado, as a prior appropriation state, requires its water users to demonstrate that the water will be (1) diverted and (2) put to a beneficial use, in order to claim a water right. Beneficial use is defined by statute in C.R.S. §37-92-103(4), which by its terms does not allow private parties to appropriate instream flow rights.

In St. Jude’s Co., the applicant, Roaring Fork Club, was granted a new direct-flow appropriative right for aesthetic, recreation, and piscatorial uses. On appeal, the Supreme Court of Colorado held that a private club could not obtain a direct-flow water right for aesthetic, recreation, and piscatorial use because such uses are not beneficial uses of water under Colorado law. 351 P.3d 442, 445 ("the Club failed to demonstrate an intent to apply the amount of water for which it sought a decree to any beneficial use").

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Update to February 11, 2016 Blog Post/Weed and Water - Can Water Be Used for Marijuana Cultivation in Colorado

Last Year, WSMT blogged about whether water could be lawfully appropriated for Marijuana cultivation.  2/11/16 blog post.  We provided three arguments why that would be allowed.

Almost exactly a year later, the Division  water referee agreed In Re High Valley Farms, LLC, 14CW3095 with two of the reasons we set forth in our blog from last year - namely that appropriation of water is controlled by state law, and that the word "lawfully" in the state law definition of beneficial use of water means that the appropriation, not the use of the water, must be lawful.  A copy of the February 17, 2017 order is available here.

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Supreme Court Grants Operational Flexibility to Owners of Multiple Conditional Water Rights

The Colorado Supreme Court’s recent ruling in Upper Eagle Reg'l Water Authority v. Wolfe, 2016 CO 42 creates opportunities for owners of more than one conditional water right to make those rights absolute in advance of demonstrating the need for both, and the “catch” or court-imposed limitation may not have a practical effect in some situations.

In Upper Eagle, the applicant owned a junior and a senior conditional water right for diversion and use at the same location and for the same purpose. The conditional rights were granted for projected future need. Presently, the applicant needs less than what one of those rights can provide. At a time when both rights were in priority and the applicant diverted what it needed, the applicant chose to attribute the diversion to the junior conditional water right. It thereafter sought to make that part of the junior right absolute.

The Court allowed this, and it held “that where there is no evidence of waste, hoarding, or other mischief, and no injury to the rights of other water users, the owner of a portfolio of water rights is entitled to select which of its different, in-priority conditional water rights it wishes to first divert and make absolute. However, the portfolio owner must live with its choice.” Id. at ¶ 2.

The Court rejected the argument that this would allow owners of several conditional water rights to make all of them absolute before there is a need for, and availability of, the total combined amount of water. The Court stated that the “catch,” when choosing to attribute a diversion to the junior conditional right, is that then the owner can no longer divert pursuant to the senior conditional right without showing a need therefor above and beyond what can be diverted through the junior right. Id. at ¶ 21. The Court seemingly believed that this would effectively prevent the owner from diverting pursuant to the senior right until it has a need for more than the full amount of the junior right.

That is, however, not necessarily the case. As an example, assume that Owner has a junior and a senior water right for 1 c.f.s. each based on a projected future need for 2 c.f.s. For now, Owner’s need is limited to 1 c.f.s. Under the rule announced in this case, Owner can apparently attribute a 1 c.f.s. diversion on a day where both rights are in priority due to extraordinary rainfall to the junior right and thereby make it absolute. The following day, when the rain has stopped and the junior right is out of priority, but the senior right is in priority and needed, the Owner can then make the senior right absolute as well. That is so regardless of the fact that Owner never needed or diverted more than 1 c.f.s.

The Court failed to recognize that changing river conditions can potentially create a legitimate need for the senior right before there is a need for more water than could be diverted pursuant to the junior right had it been in priority. Upper Eagle, therefore, provides an opportunity for those who own several conditional water rights that can be diverted at the same point for the same use to make their rights absolute long before reaching their projected need.

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Weed and Water - Can water be used for marijuana cultivation in Colorado?

The question has become important to marijuana growers after the Colorado Supreme Court’s decision in Coats v. Dish Network, LLC, 303 P.3d 147 (Colo. 2015), where the Court held that an activity is only “lawful” if it violates neither state nor federal law.

The issue has now arisen in the water context before Water Division 5. In Re High Valley Farms, LLC, 14CW3095. In that case, the Division Engineer has demanded that “[t]he applicant must explain how the claim for these conditional water rights [the water is to be used for an indoor marijuana grow facility] can be granted in light of the definition of beneficial use as defined in C.R.S. § 37-92-103(4). Specifically, beneficial use means ‘the use of that amount of water that is reasonable and appropriate under reasonably efficient practices to accomplish without waste the purpose for which the appropriation is lawfully made.’”

In Coats v. Dish Network, LLC, 303 P.3d 147 (Colo. 2015), the Colorado Supreme Court held that “lawful,” as used in an employment statute where it was not further defined, should be interpreted based on its ordinary meaning. Id. at 150. The “ordinary meaning of ‘lawful’ is that which is ‘permitted by law.’” Id. So, “for an activity to be ‘lawful in Colorado, it must be permitted by, and not contrary to, both state and federal law.” Id. at 151.

Like the statute in Coats, the statutes governing water rights in Colorado do not define “lawful.” Thus, Coats seemingly dictates that the ordinary meaning of “lawful,” as meaning lawful under both federal and state law, applies. That would mean that growing marijuana is not a beneficial use and therefore not an allowed use of water pursuant to Colorado water law. There are, however, at least three reasons to believe that growing marijuana can be considered a beneficial use despite the broad language in Coats: 1) there is a constitutional right to divert water that cannot be curtailed by statute, 2) the statutory definition of beneficial use does not necessarily prohibit using water for illegal purposes, and 3) policy considerations in the water context, unlike the employment context, weighs in favor of interpreting lawful to mean lawful under state law only.

First, although beneficial use is statutorily defined, the right to divert for beneficial use derives from the Colorado Constitution. Colo. Const., Art. XVI, §§ 5-6. The Colorado Supreme Court has interpreted this to mean that the legislature “cannot prohibit the appropriation or diversion of unappropriated water for useful purposes.” Fox v. Div. Engineer for Water Div. 5, 810 P.2d 644, 646 (Colo. 1991). The Colorado Constitution establishes that marijuana grow is a useful purpose. Colo. Const., Art. XVIII, § 16. It should therefore be possible to appropriate water to grow marijuana, regardless of the statutory definition of beneficial use, because the legislature cannot abrogate the constitutional right to divert water for a purpose that is protected by the constitution.

Second, it is not readily apparent that “lawfully” modifies “the purpose” in the statutory definition of “beneficial use.” Pursuant to the last-antecedent canon of construction, “lawfully” modifies “appropriation” – not “purpose.” Thus, the appropriation must be accomplished lawfully in accordance with Colorado water law, but the water does not necessarily have to be used for a lawful purpose to effect an actual appropriation. In fact, the prior appropriations doctrine arose in the west to administer water rights when miners were using water to illegally mine federal lands prior to the General Mining Act of 1872. Thus, the statutory definition of “beneficial use” does not preclude appropriation of water for an illegal purpose as long as it is diverted in accordance with the law.

Third, Coats involved employment discrimination, an area of extensive federal regulation where policy concerns weighed in favor of allowing employers to discharge employees for violations of federal law. Id. Unlike employment law, water law is uniquely controlled by state law. 43 U.S.C. § 666 (subjecting the U.S. to state law in water rights cases); See also Bureau of Reclamation, Reclamation Manual (Temporary Release): Use of Reclamation Water or Facilities for Activities Prohibited by the Controlled Substances Act of 1970, PEC TRMR-63 (May 16, 2014) (prohibiting the use of BOR water for marijuana grow facilities, while not prohibiting the use of other water passing through BOR facilities for marijuana grow facilities). Further, policy arguments favor interpreting beneficial use as encompassing marijuana grow because the objective of Colorado water law is “the optimum use of water consistent with preservation of the priority system of water rights” C.R.S. § 37-92-501(2)(e). There is no doubt that marijuana grow is optimal in the sense that it can lead to greater revenues both per acre planted and per acre-foot of water used than most other crops grown in this state. Lawful should therefore, for the purpose of water law, be interpreted to relate only to state law.

While marijuana growers in Colorado should prevail against a challenge that their use is not beneficial, the safer course of action may still be to apply for indoor irrigation, commercial, and industrial use, without specifying the type of crop to be grown. That may also allow greater flexibility for future changes in the type of crop grown.

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Colorado Supreme Court Issues Important Water Rights Opinion in Wolfe v. Sedalia Water & Sanitation District.

The Colorado Supreme Court has now determined the standard for quantifying water rights that have already changed from one use to another in a prior case. This is an issue that has been very unclear for some time, and many water users have been uncertain about how this issue would be addressed, until now.

In this case, the Court considered an appeal from an application to change the use of a water right that had originally been decreed for irrigation purposes, with an 1872 priority date. In 1986, the owner of the water right had obtained a water court decree, changing the use of the water right from irrigation uses to replacement purposes for an augmentation plan. In the 1986 case, the water right was quantified with an annual average of 13 acre feet per year for augmentation purposes, based on the long-standing principle that water rights will be limited to their historical beneficial use amount when they are changed to new uses.

The new owner of the water right, a water and sanitation district, acquired this water right, and sought to change it again, from augmentation purposes to municipal purposes. The central issue in the case was whether the applicant was entitled to rely on the previous quantification of the water right from 1986, or whether the court would need to consider the use of the water right since the last quantification and re-quantify the water right based on average historical use, including those years. This would have been a real problem for the applicant, because the water right had not been used at all since it was originally changed to a new use in 1986. Thus, if the water right needed to be requantified again based on a historical use study including those years, the yield of the water right likely would have been reduced substantially.

The Colorado Supreme Court ruled that the doctrine of “issue preclusion” (also known as collateral estoppel) will prevent relitigation of the historical beneficial use of previously changed water rights in many cases. However, in a subsequent change of water rights case, the court should take into evidence any periods of nonuse of the water right since the previous change case. If the water court determines that there has been “prolonged and unjustified nonuse” of the water right, since it was changed the last time, then this will be a legal basis to determine that “changed circumstances” have occurred. In that event, the water court should consider the nonuse of the water right since the last change decree, and requantify the water right based on a new historical use analysis.

While this decision provides some guidance to those seeking to change their water rights that may have been changed once before, it still leaves open some uncertainty. Subsequent cases will need to address what qualifies as “prolonged and unjustified nonuse” of a water right, thereby triggering a new historical use analysis. Also, a bill is currently pending in the Colorado Senate, SB 15-183, which would remove the “prolonged and unjustified nonuse” exception. If this bill passes, then prior quantifications of changed water rights will be preclusive, regardless of whether the water rights have been used since the first quantification. The bill does not address abandonment of water rights due to non-use, however. Therefore, water rights that have been previously changed but not used for an unreasonable length of time since then may still be susceptible to claims that they have been abandoned and are therefore no longer valid.

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Top Ten Tips for Acquiring a Water Supply

Plan Ahead – In Colorado, a complex set of laws and regulations govern when and where water can be taken and used. The process of determining whether water is available for your needs and obtaining a legal water supply can be a lengthy process.

Need Water Quickly? – The best option in this case may be to lease treated effluent water from a municipality that has a supply that is “fully consumable” and can be legally used at any location and for any purpose. This water may be expensive, however.

Ensure The Source is Legally Available – Just because someone has a water right and they are willing to sell water, does not mean that the water can legally be used for industrial purposes. Water rights are limited by point of diversion, place of use, and purpose of use. A water court process may be needed to change it so that it is available for different purposes.

Determine if there is “Nontributary” Water Available – Parts of Colorado have aquifers that have been legally designated as “nontributary.” Unlike other water rights, overlying landowners own the right to this water. These water rights often have less restrictions than tributary groundwater or surface water, and can be a good option for industrial uses. The surface owner may have nontributary water rights that can be leased for energy development purposes.

Produced Water – In Colorado, there are specific regulations to determine whether produced water requires a water well permit and whether the water can be beneficially used. Depending on the circumstances, this water may be available for subsequent use.

Pitfalls with “Tributary” Wells – If a water well pumps water from an aquifer that is connected to a surface stream, which is the presumption in Colorado, then the well cannot be used unless it is part of a court-approved augmentation plan or an administratively approved substitute water supply plan. In either case, a replacement water source is required to replace depletions caused by the groundwater pumping.

Get to Know the Local Water Commissioner – The Water Commissioner is the “water cop” for a particular geographic region, who makes sure that water users comply with legal requirements. This person knows and understands the river systems and water users in an area better than anyone else. The water commissioner can be an invaluable resource for ideas of available water supplies in a given area. Once you obtain a water supply, you will need to follow this person’s requirements as well!

Year Round Supplies Often Require Storage – If you need a supply that is available all year, then a storage reservoir such as a reclaimed gravel pit, may be an important component to consider.

Designated Groundwater Basins – Much of eastern Colorado is located within designated groundwater basins, under the jurisdiction of individual groundwater management districts.

Call the Experts – In order to successfully navigate the laws and technical requirements for the diversion and use of water, it is important to obtain legal counsel and an experienced water resources engineer from the outset to avoid pursuing options with legal or technical fatal flaws.




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