Law360 (June 20, 2023, 1:05 PM EDT) — Colorado is the only state in the nation to have a permanent court with exclusive jurisdiction over water rights, and you can’t understand it without knowing how it began.
It’s a setup rooted in the history of the dry West, said James Witwer, of counsel at Davis Graham & Stubbs whose family owns a ranch in Northeastern Colorado. He recalled an instance in his teens when his grandfather pulled him aside in Greeley and pointed to ground covered in cactus and yucca, and then to a patch of irrigated lawn on the other side of the fence.
“That’s what this whole city looked like before they brought the water, and don’t you forget that,” Witwer recalled his grandfather saying.
Many Eastern states followed a legal doctrine giving owners of land next to streams the right to use that water. But in the West, where rainfall is scarce, white settlers needed to divert that water to irrigate farms, feed animals, and sustain booming gold and silver mine operations. And they decided the oldest claims would take precedence.
“Even if [I’m] looking at an individual water right, I’ll pull out the original decree from 1800 and find the mapping for the ditch system,” said Susan Ryan, of counsel at Holland & Hart LLP. “Once you understand that, you can understand how best to work within the system.”
Colorado decided the courts would be in charge of the right to divert and use the precious natural resource. It’s the only state in the nation to have a permanent court with exclusive jurisdiction over water rights.
A farmer might go to court to change a water right from an irrigation use in order to sell it to a municipality looking to add to its water supply. Nonprofit groups like the Colorado Water Trust help the state buy up rights for environmental conservation and to restore streams.
And sometimes, the courts hear applications for more unusual proposals. In 2020, a water court ruled that water extracted from milk used to make cheese at the Leprino Foods plant in Greeley is considered “developed” water — and approved an arrangement with Greeley to reuse the water, including renting it out to others.
“It’s really the ingenuity of Coloradans that’s the only limiting factor,” Witwer said.
Here’s a look at how the system works:
Only a Few States Have Water Courts
Colorado’s state trial courts used to hear water rights cases from across more than 70 water districts, a sprawling system that resulted in “uneven” applications of the law, said Witwer, who has represented mining and energy companies, livestock feeding operations, and other water users in court.
The Colorado Legislature eventually passed a reform bill, the Water Rights Adjudication and Administration Act of 1969, which established the seven water courts, one for each of the major river basins, as a permanent division of the trial court system.
Much like the business courts in many states, the goal was to create a new system where judges would have an opportunity to specialize in water law, which requires a lot of technical as well as legal expertise. Applicants and water users within each river basin could also count on consistency, said Witwer.
The Colorado Supreme Court appoints a district judge to each division, who generally maintains a regular caseload alongside hearing water matters. Each division is staffed with a clerk, engineer and water referee who, like a magistrate judge, can recommend decisions, oversee settlements and resolve low conflict disputes.
The state engineer, who works under the Department of Natural Resources’ Division of Water Resources, is responsible for overseeing the actual distribution and administration of water.
Most other Western states, including Wyoming and California, have hybrid arrangements that handle water rights through an administrative process and permitting system, with the civil court system playing a role in approvals or appeals.
Montana and Idaho do have separate water courts, but they largely adjudicate old rights, while new rights are handled by an administrative process. Montana’s water courts hear disputes involving rights from before 1973, while Idaho’s water courts finished their task of adjudicating rights in the Snake River Basin in 2014, according to a report from Montana’s legislative services division.
Colorado’s water courts also have another distinction: Appeals are heard directly by the state Supreme Court, an effort to avoid conflicting opinions from the state Court of Appeals.
“First in Time, First in Right”
Colorado follows a legal doctrine known as prior appropriation, often described as “first in time, first in right.”
That means the first person to physically take water from a stream or underground aquifer and apply it to a “beneficial use” — and then get a court decree confirming they were first — has senior rights, and their water right must be fully satisfied before any other rights can be fulfilled. Colorado law broadly defines “beneficial use” because it’s meant to be a flexible term that evolves with the state’s water needs.
Colorado also adheres to prior appropriation strictly, meaning the system gives the oldest, or most senior, water rights priority. There are ways for junior rights to secure water out-of-priority, but in dry years, the system often means those with junior rights might not get any water. Certain uses also get priority, with domestic water use favored over all other types and agriculture prioritized over manufacturing.
Most other Western states have a hybrid system, adopting some aspects of prior appropriation alongside permitting systems that can be trickier to manage.
Colorado’s water courts are responsible for confirming what place in line applicants have, what the water can be used for, and other limitations — like how much, where and what time of year water can be used.
Witwer likened the prior appropriation system to entering an intersection with a four-way stop, where the driver on the right always has the right of way.
“Rather than having to argue about who at the four-way stop is more deserving of the water, we already know who gets it. When water is tight, and time is critical, we have an administrative ability to make decisions on a given day,” Witwer said.
Because Colorado has been adjudicating state water rights for more than a century — with the oldest rights dating back to the 1850s — for the most part, everybody knows their place in line. Most new water cases involve parties seeking changes to existing water rights, or finding ways for new water rights to be appropriated without having to offset the impacts on more senior users downstream.
States like New Mexico, Utah and Montana, however, are still working to adjudicate their water rights, leaving more regulatory uncertainty for users trying to determine their priority relative to others and figure out how much water they are entitled to, especially in times of drought. Colorado also has more fleshed-out statutes and case law, water attorneys said.
Witwer cited a case in New Mexico over whether a mining company has abandoned water rights to the Pecos River. The New Mexico Court of Appeals is taking a serious look at Colorado’s “more evolved” case law on abandonment, he said.
“Perhaps it’s not as flexible, but [our system] is so well-defined that, on a practical basis, it’s a little easier to operate within,” said Kate Ryan, a water attorney and executive director of the Colorado Water Trust.
Ryan said that certainty has made it easier for groups like the Water Trust to get secure decrees for conservation.
The System Is Still Evolving
There are plenty of critics of Colorado’s strict prior appropriation system, who argue it doesn’t do enough to safeguard against drought and overuse of water in an era of climate change and can shortchange public interests.
Colorado followed a prior appropriation system from the very beginning, even before statehood, said Susan Ryan, who served as water referee in the Division 5 water court for five years, helping to oversee the Colorado River Basins.
When white settlers were moving out west during the 19th century, people were thinking about using water to develop land for agriculture and industry, not about climate change or preserving natural ecosystems, she said. Water rights can still be appropriated to protect the environment and keep rivers full, but they often have junior priority dates.
“So during drought, the criticism is that [the system] excludes this whole class of water rights that fall within the public interest,” she said. “I think it’s valid, but there’s not an easy way to address that without changing how we operate under our prior appropriation system.”
State leaders have looked for ways to adapt the system to Colorado’s changing needs.
The 1969 reform law created a mechanism called augmentation plans, which allow newer, junior water rights holders to use water out-of-priority by developing plans to put water from another source back into the system and avoid harm to senior rights. It was aimed, in part, to help booming towns secure water for growing populations, without the uncertainty of a junior priority date.
The plans have also been key to integrating groundwater use into the state’s priority system, said Witwer, citing a controversy in the early 2000s over annual plans that once allowed farmers in the South Platte Basin to pump groundwater from their wells without ever coming to court.
State lawmakers also passed a bill in 1972 that gave the Colorado Water Conservation Board the ability to appropriate water rights to a “reasonable degree” in order to keep water in streams and lakes.
The board has since gone to water court to acquire “instream flow” rights on more than 9,700 miles of stream and rights for 480 natural lakes, according to the CWCB website, often working in conjunction with the Colorado Water Trust to take donations of rights or create short-term leases to put water back into streams.
The courts also weighed in when the 2012 legalization of recreational marijuana use raised questions for cannabis growers. There was some uncertainty about whether cannabis cultivation would be considered a beneficial use, given watering a marijuana plant is illegal under federal law, said David Shohet, a partner at the water law firm Monson Cummins Shohet & Farr LLC who has represented a number of cannabis businesses.
In 2017, the Division 5 Water Court ruled that issuing a water right to irrigate cannabis doesn’t conflict with federal law, as those rights are governed entirely by Colorado law. Although that decision only applies to Division 5, that ruling was never appealed and gave cannabis growers confidence they could continue to operate, said Shohet.
“Growers know they’re in a frontier industry and there are rules and uncertainties that seem to change all the time. But in terms of water, they’ve really been treated like any other water user,” said Shohet.
Experts Play an Important Role
Water disputes require a lot of technical expertise, and Colorado’s water courts have adopted procedures aimed at boosting efficiency and resolving cases as quickly as possible.
Many cases are administrative in nature and can be resolved by a water referee within a few months if there are no opposing parties. Division engineers also perform a technical analysis of each case and work closely with referees to create a summary of any issues and concerns related to a water right application.
The courts also have a unique requirement aimed at narrowing factual disputes that can drive up the cost of litigation or cause delays. The state adopted a rule in 2009 requiring expert witnesses on both sides of a dispute to meet without attorneys or clients present, known as a “meeting of the experts.”
“There were a number of folks in the [water law] community who were highly suspicious about what the experts would do if they got in a room together — that they would go off, have a cocktail and settle the case,” said Witwer. “I think that’s a really important way to keep the case moving along, either toward settlement — which happens more often than not — or, if in trial, to keep everybody’s eye on the ball for what the real dispute is.”
Law360
Author: Thy Vo
Editor: Phillip Shea
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