Colorado Water Law

Posted: Oct 15, 2010

Although Colorado receives an average annual precipitation of 16.5 inches, it varies widely across the state, and nearly 85% of precipitation statewide is lost to evaporation and transpiration.  Around 80% of the state’s water supply comes from snowfall, with approximately 88% of water going toward agricultural uses, 5% toward municipal uses, and the remaining 7% toward industrial and recreational uses, including snowmaking.  Colorado’s population is concentrated on the drier eastern side of the Rocky Mountains, so numerous trans-mountain diversions have been constructed to transport water from the western slope and the Colorado River basin to cities and agricultural areas along the Front Range and the eastern plains.  

As far back as 1872, Colorado’s Territorial Supreme Court recognized that Colorado water law arises from necessity in an arid climate. Water is considered a public resource for beneficial use, and a water right is the right to use a portion of the public resource according to the first-in-time, first-in-right doctrine of prior appropriation. Prior appropriation applies to surface water and tributary groundwater, but not to nontributary groundwater.  Unlike other western states that follow the prior appropriation doctrine, however, Colorado generally does not require a permit to appropriate water—just beneficial use of the water and certification of the right by a water court. 

Historical and Constitutional Framework

Beginning in 1861, Colorado’s territorial government adopted a statutory scheme for surface water allocation based on a conglomeration of riparian, equitable, and appropriation principles.  As population and the demand for water grew, however, a system of strict prior appropriation became increasingly attractive. Upon gaining statehood in 1875, Colorado’s new constitution declared that “[t]he water of every natural stream, not heretofore appropriated . . . is hereby declared to be the property of the public, and the same is dedicated to the use of the people of the state . . . .”  The constitution goes on to state that “[t]he right to divert the unappropriated waters of any natural stream to beneficial uses shall never be denied. Priority of appropriation shall give the better right . . . .”  In periods of shortage, the constitution mandates that priority go to domestic uses, followed by agricultural, and then manufacturing uses.  These constitutional mandates did not, however, eliminate questions over the legitimacy of riparian rights previously acquired under either the territorial government’s mixed scheme or by federal law upon acquisition of title to homesteading lands. In its 1882 decision, Coffin v. Left Hand Ditch Co., the Colorado Supreme Court tried to settle the matter, affirming the constitutional framework and holding that Colorado is a pure prior appropriation state by “imperative necessity.” 

Structure of State Water Agencies

Colorado was the first state to provide for water distribution by public officials, establishing water districts and commissioners in 1879 to help enforce the priority system and creating the Office of the State Engineer in 1881.  The State Engineer in the Colorado Division of Water Resources  is responsible for well permitting, administration of water rights according to priority, and monitoring of the state’s water resources.  The state is divided into seven water divisions corresponding with the major drainage basins.  Each division has a Division Engineer responsible for supervising the various water commissioners in administering water rights.  

The Colorado Ground Water Commission  is the regulatory and adjudicatory body charged with managing and controlling designated groundwater resources, pursuant to the Ground Water Management Act of 1965. 

The state’s seven water courts correspond with the seven water divisions.  Water judges are district judges appointed by the Colorado Supreme Court and have “exclusive jurisdiction of water matters within the division.”  Each water judge appoints qualified “water referees” to conduct necessary investigations and rulings regarding water rights. 

Finally, the Colorado Water Conservation Board (CWCB) was created in 1937 “to conserve, develop, protect and manage Colorado’s water for present and future generations.”  The CWCB is responsible for the state’s instream flow program, as well as water supply protection, planning, and finance; flood protection; intrastate management and development; stream and lake protection; and water conservation and drought planning.  

Surface Water Rights

The Water Rights Determination and Administration Act of 1969 states that “it is the policy of this state to integrate the appropriation, use, and administration of underground water tributary to a stream with the use of surface water in such a way as to maximize the beneficial use of all of the waters of this state.”  The joint administration of surface and tributary water rests on a rebuttable presumption that all water is tributary to a stream, including seepage, wastewater, flood water, return flow, springs, mine water, and groundwater.

Colorado’s instream flow program was established in 1973, allowing the CWCB to acquire instream flow rights to “preserve the natural environment to a reasonable degree.”  In a 1979 opinion, Colo. River Water Conservation Dist. v. Colo. Water Conservation Bd., the Colorado Supreme Court held the instream flow program to be a constitutional beneficial use.  The CWCB currently holds over 1,400 instream flow rights on more than 8,400 miles of streams and rivers throughout the state.  

Groundwater Rights

Colorado divides its groundwater resources into several classifications, including tributary groundwater, designated groundwater, nontributary groundwater, and not nontributary groundwater.

Tributary Groundwater

Tributary water is that which is “hydraulically connected” to surface water.  Often called shallow groundwater, tributary groundwater interacts with streams through outflows and inflows to and from aquifers. It is administered along with surface water pursuant to the Water Right Determination and Administration Act of 1969.  All groundwater is presumed to be tributary—and therefore subject to prior appropriation—unless proven otherwise by clear and convincing evidence.  

Designated Groundwater

Designated groundwater basins are established by the Colorado Ground Water Commission in accordance with § 37-90-106 of the Colorado Revised Statutes. The eight designated basins are located throughout eastern Colorado and the Front Range and are further divided into 13 groundwater management districts. Groundwater that does not naturally recharge surface streams and historically has constituted the principle water source within a particular designated basin is considered “designated groundwater.”  The Colorado Ground Water Commission has sole authority over managing and regulating designated groundwater pursuant to the Ground Water Management Act of 1965 and a modified form of prior appropriation.  Applications for appropriation of designated groundwater must be made to the Commission, which determines “whether a proposed use will create unreasonable waste or unreasonably affect the rights of other appropriators” by considering factors such as geologic conditions, average annual yield, recharge rate, existing rights, and proposed method of use.  In a 1970 decision, the Colorado Supreme Court upheld the “three mile test” to determine when a proposed use might impair existing rights by unreasonably lowering the water level or exceeding economic limits of withdrawal.  More specifically, the “three mile test” requires denial of a permit application for a groundwater well where the proposed withdrawal will exceed a 40% depletion rate within a three-mile radius over 25 years. 

Nontributary Groundwater

Nontributary groundwater is that located outside designated groundwater basins where withdrawal will not, within 100 years, deplete the flow of a natural stream at an annual rate greater than one-tenth of one percent of the annual rate of withdrawal.  Nontributary groundwater is not subject to prior appropriation.  Instead, it is allocated based on ownership of the overlying land and a 100-year aquifer life expectancy: a common law, reasonable use standard.  

Not Nontributary Groundwater

Not nontributary groundwater is that located within certain aquifers in the Denver Basin that does not meet the requirements for nontributary groundwater—meaning its withdrawal will, within 100 years, deplete the flow of a natural stream at an annual rate greater than one-tenth of one percent of the annual rate of withdrawal.  In other words, not nontributary groundwater is essentially tributary, but not managed as such. Instead, it is allocated and administered like nontributary groundwater, but subject to additional limitations, including judicial approval of a plan for augmentation (see infra Permit and Adjudication Process) prior to use.  

Conjunctive Use

Section 37-92-102’s legislative declaration of the basic tenants of Colorado water law states “that the use of underground waters as an independent source or in conjunction with surface waters is necessary to the present and future welfare of the people of this state and that the future welfare of the state depends upon a sound and flexible integrated use of all waters of the state . . . .” Colorado law therefore recognizes conjunctive use by encouraging coordination of surface and ground water use to maximize the beneficial use of all waters.  

Incidental Extractions

Colorado law treats open mining pits as wells subject to well permitting and augmentation plan requirements, but there have historically been no additional requirements for incidental extractions of groundwater through other sub-surface mining activities, including oil and gas development. However, this may be changing.  In 2007, the District Court in Water Division 7 held that Colorado water law and the doctrine of prior appropriation apply to coalbed methane (CBM) operations, and in 2009 the Colorado Supreme Court affirmed. The court found that the State Engineer must require well permits and augmentation plans when tributary groundwater is diverted out of priority in the course of CBM production.  Furthermore, the court found that such incidental extractions constitute an appropriation of water for beneficial use and are not to be considered mere byproduct waste.

Permit and Adjudication Process

Unlike other western states, Colorado water appropriation generally does not include a permitting stage. Instead, water rights are obtained by water court decree where an appropriator has diverted water and applied it to a beneficial use. In most cases, individuals first apply for a conditional water right in order to secure a priority date while completing construction of the project and putting the water to beneficial use. A conditional water right is defined in § 37-92-103(6) as the “right to perfect a water right with a certain priority upon the completion with reasonable diligence of the appropriation upon which such water right is to be based.” A conditional decree requires a threshold showing of intent to appropriate accompanied by an overt act sufficient to give notice to third parties—often called the “first step” test.  Additionally, an applicant must show a non-speculative intent and that there is a substantial likelihood that he or she “can and will complete appropriation with diligence.”  Conditional right holders must apply to the water court every six years for a finding of reasonable diligence in order to maintain the right.

Once water has successfully been put to beneficial use, the appropriator must seek perfection of that right in order to make it legally enforceable within the priority system. To initiate the adjudication process for an absolute water right, an appropriator must file a water right application with the appropriate water court in his or her water division. The application must include the type of diversion structure, the point of diversion, the source, the date and method of initiation of appropriation, when the water was applied to beneficial use, the amount of water claimed, and the type of use.  Completed applications are published in the court’s monthly resume, pursuant to § 37-92-302(3)(a), and private parties have two months to file a statement of opposition with the water court.  The Division Engineer then reviews the application, performs a field inspection, and submits recommendations to the water court. If there is no opposition, the application will go before the water referee for review, and a ruling is issued.  Any party may file a protest in response to the ruling, but if there is no protest, the water judge will confirm and approve the ruling to make it an official court decree.  If the ruling is protested, the matter goes before the water judge for a de novo hearing, with further appeals going directly to the Colorado Supreme Court.

Although surface water appropriation does not require a permit, all new groundwater wells do. According to the Colorado Ground Water Law of 1957, an application including the location and use of the proposed well must be filed with the State Engineer.  Permits are granted where there is unappropriated water available and the well will not cause injury to the vested rights of others.  A groundwater well permit does not give the holder a water right; the appropriator still must apply to the water court for a groundwater right and include a copy of the well permit with his or her application. Certain wells, however, are considered exempt and are not administered under the priority system. These generally include those wells that pump 15 gallons or less per minute for household, domestic, or livestock uses on lots of 35 acres or more, as well as commercially exempt wells for small businesses, existing unregistered wells dating back to before May 1972, monitoring and observation wells, and geo-exchange wells.  All other wells, including irrigation, commercial, municipal, and industrial wells, are considered non-exempt and therefore are subject to the prior appropriation system and require a plan for augmentation where the system has been over-appropriated.  

Augmentation plans are designed to increase the supply of water through various means—such as pooling water resources, providing substitute supplies, or developing alternate means or points of diversion—in order to protect senior rights while allowing junior appropriators to divert water out of priority in times of shortage.  Plans for augmentation require consultation with a water resource engineer and water attorney, as well as approval by a water court. 

Abandonment and Forfeiture

Section 37-92-103(2) allows for full or partial abandonment of a water right where the owner intends to discontinue use permanently. Although nonuse must be accompanied by specific intent to forfeit the right, intent may be implied where nonuse has occurred for an “unreasonable period of time.” A ten-year period of nonuse creates a rebuttable presumption of abandonment, and the State Engineer has the authority to cancel unused rights in partial or in full based upon a decennial abandonment list tabulated by the various division engineers.

Conditional rights are considered abandoned where the owner fails to develop the project with reasonable diligence.

Transfers and Exchanges 

Colorado water law is generally friendly toward changes of water rights, including changes in the type, place, or time of use or in the point of diversion, as long as they will not result in injury to other users.  Changes do, however, require judicial approval, and the application for a change of water right requires documentation of the historic use and details about the proposed change. Furthermore, the “no injury” standard generally limits the amount of water being changed to the “same amount historically diverted through . . . the original decreed points of diversion.”

Standing and Judicial Review

Any person may file a statement of opposition to an application for a water right.  Likewise, anyone, including the State Engineer, may file a protest to a ruling of the water referee and initiate a de novo hearing by the water judge.  The Colorado Supreme Court conducts appellate review of water court judgments and decrees, but review is only available when a protest was filed in response to the initial ruling.  Furthermore, opposition based on public interest or environmental grounds is not allowed under Colorado case law (see below “The Public Interest”). Although any person may oppose an application or protest a ruling, only the holder of a “legally protected interest in a vested water right or conditional decree” has standing to assert injury to his or her right.  The Colorado Supreme Court has held that water rights vest upon appropriation (not adjudication), but that adjudication is necessary to make the right legally enforceable.  

Parties aggrieved by an act or decision of the State Engineer or Ground Water Commission may request a hearing by the Commission or take an appeal to the district court in the county in which the water right or well is located. Furthermore, parties aggrieved by a rule adopted by the Ground Water Commission may take an appeal pursuant to the Colorado Administrative Procedure Act, which provides for judicial review of final agency actions. 

The Public Interest

Neither the Colorado Constitution nor the Colorado Revised Statutes explicitly mention the public interest, and generally it does not seem to be considered in the allocation of water rights. Arguably, the concept of public ownership outlined in § 5 of Article XVI of the state constitution at least implicitly invokes the public interest. Likewise, § 6’s beneficial use criterion would seem to consider the public interest. Section 37-92-103(4) defines beneficial use as “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.” Beneficial uses include everything from instream flows for fish and wildlife culture and in-channel recreational diversions for rafting and kayaking, to dust suppression, flood control, and power generation. Implicitly, any of these uses are in the public interest.

Yet neither environmental factors nor the public interest may be taken into account during water right allocation. In its 1995 decision, In re Application for Water Rights of Board of County Commissioners, 891 P.2d 952 (1995), the Colorado Supreme Court held that, “[c]onceptually, a public interest theory is in conflict with the doctrine of prior appropriation because a water court cannot, in the absence of statutory authority, deny a legitimate appropriation based on public policy.”  The court failed to comment on how its declaration that the public interest conceptually is in conflict with prior appropriation can be reconciled with the constitutional provision that the state’s water resources are under public ownership. The court went on to specify that beneficial use does not encompass the broad public policy of protecting the environment; instead, minimum stream flow legislation, the Colorado Water Quality Control Act,  and the Colorado Water Conservation Board were adopted to address these concerns.  While the court made clear that the water courts lack the authority to consider the public interest in allocation decisions, it apparently left room for the legislature to impose a public interest standard. Ultimately, the constitutional provisions regarding public ownership and beneficial use remain conceptually at odds with Colorado case law, especially in the absence of an explicit public interest standard. 

Attorney fees and access to the courts may further hamper public participation and consideration of the public interest in water allocation decisions. Although Colorado’s judicial process for water allocation may better identify and regulate water rights than other western states using a wholly administrative system, it is unclear whether the high transactional costs of court proceedings come at the expense of the public interest. 

Overall, it seems the public interest generally is not taken into account in Colorado water allocation decisions. However, Colorado is unlike most other western states whose constitutions or statutory provisions explicitly mention the public interest. Colorado’s failure to consider the public interest therefore is not unlawful per se. Yet in such a rapidly developing state with limited water resources and the impacts of climate change—such as earlier snow-pack melt— already being felt, adequate consideration of the public interest in water allocation decisions is becoming an unavoidable necessity.

 

Resources

•Justice Gregory J. Hobbs, Jr., Citizen’s Guide to Colorado Water Law (Karla A. Brown ed., Colorado Foundation for Water Education 2003).

Colorado Water Courts, http://www.courts.state.co.us/Courts/Water/Index.cfm.

Colorado Division of Water Resources, Office of the State Engineer, http://www.water.state.co.us/. 

Colorado Ground Water Commission, http://www.water.state.co.us/cgwc/. 

Colorado Water Conservation Board, http://www.cwcb.state.co.us/. 

BLM National Science & Technology Center, Western States Water Laws, Colorado (Aug. 15, 2001), available at http://www.blm.gov/nstc/WaterLaws/colorado.html. 

WAYNE B. SCHROEDER, WATERS AND WATER RIGHTS 433 (Robert E. Beck ed., vol. 6, Matthew Bender 2005 repl. vol.) (1991).

Colorado Division of Water Resources, Guide to Colorado Well Permits, Water Rights, and Water Administration (Mar. 2006), available at http://water.state.co.us/pubs/wellpermitguide.pdf. 

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