UNIVERSITY OF DENVER WATER LAW REVIEW ANNUAL SYMPOSIUM 2013: ADDRESSING SUPPLY & DEMAND IMBALANCES IN THE COLORADO RIVER BASIN

Denver, Colorado       April 12, 2013

Challenges of the Future in the Colorado River Basin

Anne Castle, Assistant Secretary for Water and Science, US Department of the Interior, opened the Annual Water Law Symposium with her keynote address.  Castle focused on future challenges in the severely endangered Colorado River Basin ( “Basin”) and the importance of operational flexibility in managing the Basin.  She emphasized that only strategic collaboration of governments, people, and nations can achieve needed levels of flexibility and preserve the future of the Basin.  In her keynote address, Castle discussed four projects involving the management and conservation of the Basin: (1) Colorado River Supply and Demand Study (“Study”); (2) Minute 319 interpreting the 1944 US-Mexico Treaty for the Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande (“Water Treaty”); (3) Navajo Generating Station; and (4) Glen Canyon Dam.

As a part of a broader Basin study program, the Study evaluated existing infrastructure and supply and demand imbalances of the Basin.  Furthermore, the Study attempted to develop strategies for projecting future imbalances and moving forward to the water sustainability in the Basin.  Cooperation and partnership of the federal government, seven Basin states, ten Basin Native American tribes, and multiple governmental and non-governmental organizations was essential for completion of this three-year-long, comprehensive Study completed in January 2013.  The Study confirmed that with rapidly increasing water demands, environmental needs, and continuous droughts, Basin water supply remains at least static, and is possibly declining.  Having established a common technical foundation model, the Study offered an opportunity for thoughtful discussion through an open comment process.  It solicited ideas from general public on the ways to address the supply and demand imbalance in the Basin.  As a result, the Study received around 150 suggestions, yet all of the proposed solutions shared a common element: the total cost of implementing each of them would range between 3.5 and 6 billion dollars in 2060.  Wrapping up her discussion of the Study, Castle suggested that although the Study still needs to refine some areas and reduce uncertainties; the Study is “smart,” very detailed, should serve as a model for the future, and should serve as a tool for educating the public about the Basin.  She added that only broad support and collaborative efforts will result in concrete methods advancing the common goal: to give a healthy river to future generations.

The second Basin management development that Castle discussed was Minute 319 that interprets the Water Treaty.  The Water Treaty, inter alia, regulates utilization of waters of the Colorado River across international boundaries.  Pursuant to Minute 319, Mexico and the United States must share water shortages, as well as water surpluses.  Prior to Minute 319, the two countries shared water shortages only.  Sharing surpluses will allow for more reliability and predictability of water supply in the United States and Mexico.  Minute 319 also extended Minute 318 by allowing Mexico to defer its water rights and store its Colorado River allotment in Lake Mead without losing its rights to the allotment.  Such deferred delivery benefits both countries.  On the one hand, it enhances Mexico’s water security and storage capacity.  On the other hand, it increases the water levels of Lake Mead, ensuring predictable water storage levels for lower-Basin states.  Another important provision of Minute 319 authorized establishment of an Intentionally Created Mexican Allocation, which enabled Mexico to adjust its water delivery schedule to allow for later use.  Minute 319 also created a pilot program that provides water for planned environmental flows and a one-time high-volume pulse flow for the Colorado River delta.  The goal of this pilot program is to create new wetland habitat in the dry and damaged delta and establish a foundation for further restoration projects.  Castle emphasized that such productive collaboration between Mexico and the United States is especially remarkable in light of the fact that even US states often fail to cooperate with each other when it comes to water sustainability.  Castle called Minute 319 a “breakthrough” and a historical example of a three-year cooperation of the US and Mexican federal governments, seven US states, International Boundary and Water Commission, and many non-governmental organizations.

Moving on to her third topic, Castle discussed the Navajo Generating Station (“NGS”).  The need for additional energy generation in the Southwest became apparent in the 1960s.  However, the initial suggestion to build two hydroelectric dams did not pass through vigorous opposition from the National Park Service and environmental groups.  Instead, the compromise was to build NGS, a 2250-megawatt coal-fired power plant on territory of the Navajo Indian Reservation in Arizona.  NGS has become an important energy, income, and employment source for the region and the Navajo Tribe.  NGS-generated energy serves many purposes, including pumping Colorado River water for Arizona, Nevada, and California.  Revenues from selling energy surplus and mining coal on reservations lands return back to the Native American tribes.  In addition, NGS is one of the main sources of employment for several tribes.  However, the power plant is also the second largest source of nitrogen oxide (“NOx”), largely contributing to the notorious haze in the area.  NOx emissions have become increasingly concerning in light of NGS’s proximity to three wilderness parks, a national park, and several Native American tribes.  Furthermore, high levels of NOx emissions negatively affect the tourism industry, which has historically generated substantial income for the area as well.

Castle discussed the Glen Canyon Dam (“Dam”) as her final keynote address topic.  The Dam is a physical dividing point between upper and lower Basin water supplies on the Colorado River.  Basin restoration efforts involving the Dam include releasing water from the Dam and stimulating historically natural seasonal floods.  In the past, the Bureau of Reclamation had to complete an individual environmental impact statement (“EIS”) for each such release.  The process often resulted in irreversible delays, where water releases would not occur during optimal natural conditions.  Recently, the Bureau of Reclamation was able to receive an approval of a programmatic EIS that lists conditions when planned water releases are permissible.  This change allows for flexibility and ability to operate the Basin restoration program seamlessly.  Following the programmatic EIS, the Department of the Interior initiated the first high-volume release in November of 2012, and more similar releases are on the way.  The goal is to study whether repeated high-volume water releases can stimulate natural conditions, retain sediment, and stop extensive erosion of the Basin.  In addition, the Department of the Interior and approximately twenty cooperating agencies are currently working on the Long-Term Experimental and Management Plan for operation of the Dam.  Castle noted that she expects the release of the initial draft in the beginning of 2014.

In closing, Castle once again reiterated the scale of problems that the Basin is facing as a result of climate change, population growth, unquantified water rights for Native American reservations, interests of competing industries, and environmental dilemmas.  She praised the recognition that submitting Basin problems to the judiciary does not help to solve these problems – only mutual efforts and cooperation can lead the way to water sustainability and preserve the Basin for the generations to come.

 


Ctr. for Biological Diversity v. U.S. Fish & Wildlife Serv., WL 4497680 (D.Nev. 2012) (holding that action brought by the Center for Biological Diversity challenging the Fish and Wildlife Service’s involvement in a Memorandum of Agreement failed because: (i) the Center for Biological Diversity lacked standing to assert claim under the Property Clause and the Endangered Species Act; (ii) Fish and Wildlife Service was not required to perform an environmental statement or environmental assessment because the Memorandum of Agreement did not constitute a major federal action; (iii) the National Wildlife Refuge System Improvement Act did not apply to Fish and Wildlife Service’s decision to sign the Memorandum of Agreement because the groundwater pumping project occurred outside the National Wildlife Refuge’s boundaries).

In March 2002, the State Engineer of Nevada issued Order No. 1169 (“Order”).  The order accepted applications for new groundwater rights in various groundwater basins, as well as ordered a study of the effect of pumpage on pre-existing water rights.  The study was ordered to last a minimum of five years, during which at least fifty percent of the currently approved water rights in the Coyote Springs Valley groundwater basin were going to be pumped for at least two successive years.

The Fish and Wildlife Service (“FWS”), Southern Nevada Water Authority (“SNWA”), Coyote Springs Investment LLC (“CSI”), Moapa Valley Water District (“MVWD”), and the Moapa Band of Paiute Indians (“Tribe”) entered into the Memorandum of Agreement (“MOA”) in April of 2006.  The MOA guaranteed that proper conservation measures were established prior to any potential effects resulting from the required groundwater pumping pursuant to the State Engineer of Nevada’s 2002 Order.  These conservation measures included: the creation of a recovery implementation program, habitat restoration and recovery procedures, protection of in-stream flows, and the formation of a hydrologic review team to guarantee precise monitoring and data collection.

In anticipation of entering into the MOA with the SNWA, CSI, MVWD, and the Tribe, the FWS issued the Programmatic Biological Opinion (“BiOp”).  The BiOp evaluated the execution of the MOA.  Ultimately, the FWS concluded that the proposed signing of the MOA, in and of itself, would not result in the pumping of any groundwater.  Therefore, the FWS’s becoming a signatory to the MOA was not likely to jeopardize the existence of the Moapa dace (a federally listed endangered species that the FWS had previously assigned the highest recovery priority possible).

The Center for Biological Diversity (“Center”) brought an action against FWS in August of 2010.  The Center alleged that FWS’s decision to sign the MOA violated: (1) the Property Clause of the United States Constitution, (2) the National Environmental Policy Act (“NEPA”), (3) the Endangered Species Act (“ESA”), and (4) the National Wildlife Refuge System Improvement Act.

First, the district court of Nevada found that the Center lacked standing to assert a claim under the Property Clause.  The district court agreed that the Center had not shown the requisite elements of causation and redressability and, therefore did not meet its challenge of the MOA.  Additionally, the district court reasoned that the MOA itself did not authorize any pumping, but rather was primarily concerned with establishing conservation measures to assist, not harm, the endangered Moapa dace.  Any harm to the fish was a result of the State Engineer of Nevada’s order, which authorized the groundwater pumping, not the MOA.

Second, the district court held FWS’s decision to sign the MOA without first completing an environmental assessment (“EA”) or environmental impact statement (“EIS”) did not violate NEPA.  NEPA requires an EIS for every major Federal action significantly affecting the quality of the human environment.  In order to determine whether an EIS is necessary, an agency may first prepare an EA.  An EIS is not mandatory when a proposed federal action would not change the status quo. When an agency decides that a project does not require an EIS without first conducting an EA, courts review the decision under the reasonableness standard.  Ultimately, the court found that FWS’s decision not to complete an EA or EIS, before entering into the MOA, was not an unreasonable course of action because the MOA did not constitute a major federal action.

Third, the district court found that the Center lacked standing to assert a claim against the FWS for its failure to undertake action against the State Engineer of Nevada for authorizing the groundwater pumping.  Section 7 of the ESA demands that federal agencies confer with the FWS to insure that any action carried out by such agency is unlikely to threaten the existence of any endangered or threatened species.  Ultimately, the court reasoned that the FWS’s action of entering into the MOA did not jeopardize the Moapa dace because the MOA involved conservation measures that would have a positive effect on the population of the Moapa dace, not a negative one.

Next, the district court concluded that FWS’s decision to sign the MOA did not violate the National Wildlife Refuge System Improvement Act (“Act”).  The Center argued that by agreeing in the MOA not to assert injury to its water right until flow fell to 2.7 CFS, the FWS allowed a percentage of the Refuge water right and spring complex to be used in association with the groundwater pumping pronounced in the MOA.  Ultimately, the district court found that FWS’s signing of the MOA did not violate the Act because the groundwater pumping project occurred outside the boundaries of the national wildlife refuge and, therefore the Act was inapplicable.

Ultimately, the district court granted summary judgment in favor of FWS and argued that the Center’s action failed because it challenged an agreement (the MOA), designed to aid, not harm the endangered Moapa dace.  In addition, the district court concluded that the MOA was not the authority permitting the pumping of water from the Coyote Spring Valley basin and, therefore the Center’s action lacked merit.


In re Yakima River Drainage Basin, 296 P.3d 835 (Wash. 2013) (holding in the dispute between the Yakima Nation and non-tribal landowners over Yakima River Basin water rights: (1) the Nation acreage must be re-calculated, (2) the Nation does have a right to water storage, (3) non-tribal users do have excess water rights within certain limitations, (4) and the future use exception should be narrowly applied).

The Yakima River Basin has been the subject of several cases and agreements going back to the 1855 Treaty between the United States and the Yakima Nation (“Nation”), which created the Yakima Reservation.  Under the Winters Doctrine, the creation of a reservation also establishes an implied water right to meet all present and future water needs on the reservation.  In 1908, the United States created a “Code Agreement” dividing water rights on the Yakima River, twenty-five percent to the Nation and seventy-five percent to non-tribal water users in the Basin on the north side of the Ahtanum Creek (“Northside users”).  In 1977, the Washington Department of Ecology (“DOE”) filed an action to determine surface water rights in to Yakima River Basin.

Since 1977, several adjudications took place culminating in the current case in point between the United States, the Nation, DOE, Ahtanum Irrigation District (“AID”), John Cox Ditch Company, Department of Natural Resources (“DNR”), and several individual water users including the La Salle High School, the Brules, Jerome Durnil, and Albert Lantrip.  The Supreme Court of Washington (“Court”) considered the following issues on appeal: (1) whether cases and agreements prior to and since 1977 determined Northside users’ water rights or Nation acreage, which is the measure of water necessary to irrigate all the irrigable acreage on a reservation, (2) whether non-Nation water users have a right to excess water, (3) whether there is a right to storage for the Nation, and (4) whether the court correctly applied the future use exception.

First, the Court decided the threshold question of whether previous litigation on the Yakima River Basin determined the terms of Northside users’ water rights.  The Court ruled United States v. Ahantum Irr. Dist. litigation in 1956 was an adjudication of the water rights for the Northside users; as a result, the Court need not adjudicate those rights again.  After settling this threshold question, the Court moved on to the question of what acreage the Nation held.  The Court reversed the trial court’s determination on the Nation’s acreage because it believed the trial court relied on old documents that were approximate claims rather than findings of fact.  As a result, the Court remanded the quantification of the Nation’s acreage.

Next, the Court turned to the question of whether previous agreements or cases provided a right to storage of water from the Yakima River to the Nation.  The Court held a plain language reading of the Pope Decree, the most recent federal court opinion on the Yakima River Basin, created a right to water storage for the Nation.  The Court remanded the case to allow the trial court to include a storage right in its calculations of the Nation’s acreage.

The Court then turned to the question of whether Northside users had a right to take in any excess water from the Yakima River after the Nation received its share.  The Court agreed with the trial court’s ruling in favor of granting excess water rights for qualifying Northside users.  The right to excess water existed regardless of whether or not there would ever be excess water.  However, the Court also upheld limitations the trial court placed on the excess water rights.  Based on its reading of the Pope Decree, the Court held that Northside users only have excess water rights until July 10, each year.  Additionally, the Pope Decree imposed a time limit of either thirty or forty-five days during which the Northside user could collect excess water.  While the John Cox Company alone challenged its forty-five day period, the Court upheld the trial court’s ruling, validating the forty-five day period, because the trial court based its decision on a sufficient amount of evidence, including ten years of water flow data indicating when there was usually excess water.  The Court then refused to allow excess water rights to extend to junior rights users, which would be any users not recognized by the Pope Decree.  Parties recognized by the Pope Decree could actually trace their water rights back through the 1908 Code Agreement and prior litigation.  The Court reasoned then that entities not party to the Code Agreement were not included in the Pope Decree and, as such, do not have a place in the allocation of water rights for the Yakima River Basin.

After settling the issues of water use, the Court turned to the question of how to correctly apply the future use exception.  The Court reversed the trial court because it applied the exception too broadly.  The Court held the exception applied only in narrow circumstances.  Resuming irrigation, rather than taking actual steps toward development, did not fit the exception.

Accordingly, the Court remanded the case to the trial court for further factual findings on the Nation’s practicably irrigable acreage and excess water rights, upheld the Northside users’ excess water rights within certain limitations, and reversed the trial court’s determination on an individual Northside user’s future development excuse for nonuse of water rights.


Town of Minturn v. Tucker

Town of Minturn v. Tucker, 293 P.3d 581 (Colo.  2013) (holding substantive error existed in stipulations between parties and therefore the water court retained jurisdiction to correct substantive errors pursuant to statute).

The Town of Minturn (“Minturn”) filed applications in the Colorado District Court for Water Division No. 5 (“water court”) for new water rights and changes to existing water rights in 2005 and 2007.  Over thirty parties challenged the applications and Minturn subsequently entered into agreements with all opponents.  Among these opponents were J. Tucker, Trustee’s (“Tucker”) predecessors in interest, Battle Mountain Corporation, Battle Mountain Limited Liability Company, and Sensible Housing Co., Inc.  These stipulations contained provisions stating the parties would not oppose entry of water decrees containing terms and conditions that were no less restrictive than what was contained in the stipulations.  At some point after entry of the decrees, Minturn discovered the stipulations based several consumptive use calculations on billing statements, which made the monthly calculations off by one month and not reflective of actual monthly historical use numbers.  Minturn petitioned the water court to correct the decrees.  Tucker was the only opponent to these decree corrections.  The water court granted the petition, and Tucker appealed.

The Colorado Supreme Court (“Court”) reviewed the case de novo.  Minturn first argued Colo. Rev. Stat.  § 37-92-304(10) provides the water court with authority to correct substantive or clerical errors in decrees.  The Court began by analyzing the plain language of the statute and determined it plainly provided water courts the authority to correct substantive errors that could adversely affect a water right.  The Court then looked to Minturn’s petitions to determine whether they alleged facts sufficient to establish a prima facie showing of clerical error.  After examining the petitions, the Court determined there was in fact a prima facie showing, and upon such a showing, it became the duty of the water court to admit and consider all pertinent testimony to establish the intent of the original decree.

The Court then reviewed the evidence the water court examined and held the water court did not abuse its discretion in deciding the parties intended to use the actual consumptive use, and not the mistaken data provided by the billing company.  The language of the stipulations and the initial decrees included specific language stating that the historic actual use of the applicant was the amount the parties intended to use in the decree.

The Court then considered whether the water court afforded Tucker an opportunity to rebut the evidence.  Tucker supplied a supplemental response and affidavit, but did not provide expert testimony to rebut Minturn’s expert testimony.  Because the water court afforded Tucker an opportunity to provide contrary evidence, it did not abuse its discretion in giving more weight to Minturn’s expert than to Tucker.

In sum, Minturn met the criteria established in Colo. Rev. Stat.  § 37-92-304(10) to petition the water court to correct substantive errors, and the water court did not abuse its discretion in correcting the errors.

The Court next addressed the “no less restrictive” provisions of the stipulations to determine whether they precluded the water court from altering decrees.  The stipulations between the parties contained language stating the parties would not oppose a decree as long as the decree contained terms and conditions that were no less restrictive than those in the stipulations.  Tucker argued any increase in the monthly limitations was per se less restrictive on Minturn, and thus against the intent of the plain language of the stipulations.  Minturn argued that while the monthly use totals would be different, the yearly consumptive use was identical.  The Court examined the stipulations, and determined the phrase “no less restrictive” was open to more than one reasonable interpretation, and therefore was ambiguous.  The Court then stated that because it was ambiguous, they would look to the facts and circumstances surrounding the stipulations to determine the intent of the parties.  The Court examined the language of all the stipulations and concluded the intent of the parties was to use the “historical actual use” as the basis of the calculations, and the erroneous amounts submitted went against the intent of the parties.

The Court next looked at whether the corrected decrees were no less restrictive, as intended by the parties to the stipulations.  The Court examined the actual historic use of Minturn and determined the corrected amounts entered by the water court correlated to the historic use, and thus were within the intent of the stipulations.  Furthermore, the water court’s conclusion that no other vested rights would be injuriously affected was based on sufficient evidence.  While Tucker argued his rights would be injuriously affected, he did not provide any evidence of this assertion.  However, the Court also found if Tucker had evidence of an injurious effect, Colo. Rev. Stat.  § 37-92-304(6) allowed the water court to retain jurisdiction over the adjudication for five years on the question of injury to vested rights.

Therefore, the Colorado Supreme Court affirmed the decision of the water court.


Lawmakers in Colorado are considering a number of water bills for the 2013 legislative session.  The proposed bills come in the midst of a nation-wide drought that has hit Colorado particularly hard, and are aimed at increasing water conservation efforts.  According to Sen. Ellen Roberts, R-Durango, a sponsor of one of the bills, “we need the ability to respond to the drought.”  As a result, some of the proposals mark a departure from the traditional Colorado water doctrine, which involves maximizing water use and promotes a “use it or lose it” policy that has been in operation for more than a century.

BACKGROUND

Colorado has been a prior appropriations state since before statehood and during its territory days.  The prior appropriations doctrine calls for a “first in time, first in line” approach to water rights, whereby senior appropriators take priority over junior appropriators.   In other words, a person can claim a water right by being the first to use the unclaimed water, and people maintain the right as long as they are continuously using the water.  In an 1882 decision, the Colorado Supreme Court explained that the aridity of the land and the importance of irrigated agriculture was the rationale for the prior appropriations doctrine.  This is a departure from the common law riparian doctrine, which holds that running water is the property of the public and private landowners lay claim to the waters on the shores and banks of their property.   Colorado’s prior appropriations doctrine reflects the complicated nature of western water issues and some have even argued it is the most intricate system of water laws in the nation.

PROPOSED LEGISLATION

Senate Bill 19: Promote Water Conservation

Section 1 of Senate Bill 19 states that under the current system, a water user has no incentive to reduce the amount of water diverted (or consumed) because the amount of water that can be diverted is “is limited to the amount of water that was historically consumed by the original type and place of use.”  That is, there is a fixed amount of water that can be diverted or consumed which is determined by historical use.  Further, under the present system, water conservation results in a reduction of consumptive water rights—the ability to remove water from the source for agriculture, drinking water, irrigation, commercial uses, and other uses which do not return the water back to the source—because of the lack of incentive to conserve.  In other words, water conservation actually penalizes water users under the current system because it reduces the consumptive rights of those that conserve.  Senate Bill 19 aims to correct this issue by incentivizing appropriators to conserve water and allowing the diversion of water for conservation purposes without reducing water rights.

Senate Bill 41: Protect Water Storage Long-Term Use

The purpose of Senate Bill 41 is to have a long-term water storage system for firefighting and drought mitigation by increasing the definition of ‘beneficial use’ to encompass the storage of water for firefighting.  Further, the bill states that a water right is not abandoned if water is placed in storage.  This is a reversal of Colorado Supreme Court holdings which held that beneficial use does not include the storage of water.  For example, in a 2011 decision, the Court held that in order to store water there must be a demonstration that absolute storage rights have been exhausted before conditional storage rights can be perfected.  In other words, an appropriator must show that a water right which has been placed to beneficial use is complete (absolute) before the possibility of being granted the ability to store water for a conditional purpose (firefighting or drought mitigating).  But under Senate Bill 41, there does not need to be a showing that all absolute water rights have been perfected before conditional water rights can be exercised in order to ensure there is adequate water storage for firefighting and drought mitigation.

Senate Bill 75: Promote Water Conservation of Designated Ground Water

The purpose of this bill is to protect users of groundwater that conserve their water from losing their rights.  It states that “once the state engineer issues a final permit for the withdrawal of designated groundwater . . . a reduction in the amount of water used pursuant to the permit due to the conservation of water is not grounds to reduce.”  In other words, groundwater users should not be penalized through a reduction in overall rights due to the conservation of water.

House Bill 1018: Beneficial Use Produced Water Dust Suppression

This bill gives the solid and hazardous waste commission jurisdiction to regulate the groundwater used by oil and gas companies to suppress dust in rural areas and on dirt roads.  The commission is directed to promulgate regulations that would protect state waters from pollution and the public from exposure to toxic materials.  The regulations should conform to the federal environmental protection agency’s (“EPA”) standards regarding radioactive material in water used for dust suppression and should not exceed the EPA’s allowed maximum concentration for such material.

House Bill 1044: Authorize Graywater Use

Graywater is defined under Section 1 of House Bill 1044 “as that portion of wastewater that, before being treated or combined with other wastewater, is collected . . . for the purpose of being put to beneficial uses authorized by the water quality control commission.”  Graywater is water collected from sources authorized by the water quality control commission (“commission”), such as from bathroom and laundry room sinks, bathtubs, showers, and laundry machines.  However, the bill specifies that wastewater from toilets, kitchen sinks, urinals, utility sinks, and dishwashers are not permissible types of graywater.  The rationale for the bill is that the utilization of graywater for authorized purposed will maximize water conservation efforts.  Furthermore, the bill seeks to clarify under what circumstances graywater can be used.  In addition, the bill gives counties and municipalities the discretion to authorize graywater use in compliance with the minimum statewide standards that will be determined by the commission.  It also provides counties and municipalities with absolute authority to enforce resolutions and ordinances in regards to graywater use.

House Bill 1130: Reapprove Interruptible Water Supply Agreements

Under this bill, the state engineer can reapprove the operation of an interruptible water supply agreement a total of three times, whereas before the state engineer was only permitted to do so once.  Interruptible water agreements allow for the “temporary change in the point of diversion, location of use, and type of use of an absolute water right without the need for . . . adjudication.”  The underlying purpose of House Bill 1130 is to broaden water sharing agreements between private users and public users, such as between farmers and cities

CONCLUSION

Some of the proposed water bills are quite controversial because they represent a departure from Colorado’s traditional water doctrine.  For example, under the current system if a water user does not use their water they are deemed to have abandoned them and the water courts can reduce their water rights.  Senate Bill 75 addresses this matter by encouraging the users of groundwater to conserve their water without risk of reduction.  Moreover, Senate Bill 41 is in response to a Colorado Supreme Court decision which held drought mitigation and firefighting are not proper justifications for water storage.  According to Sen. Roberts, “The idea of it is to push back on those court cases and say, no, you can store water for firefighting and drought mitigation,” in order to promote better planning for  future droughts.   Another bill that encourages conservation is House Bill 1044, sponsored by Rep. Randy Fischer, D-Fort Collins, which allows for the use of graywater.  Regardless of whether the expressed objective of the bill is water storage or more broadly, water conservation, one thing is clear, water issues are a hot topic in Colorado this year.  It is likely the current drought and the prospect of another wildfire season like 2012 has prompted the legislature to dive into water issues.  With the existence of drought conditions continuing in the foreseeable future, it is also probable that we will see more changes proposed to the traditional Colorado water doctrine.

Lauren Joseph is an Experiential Educator and has worked with corporate clients, at-risk youth and adults with co-occurring disorders in dynamic learning programs designed to facilitate positive change.  She also is an outdoor enthusiast and is excited to bring her passion for the environment to the Water Law Review.


Sources:

Marianne Goodland, Water Issues Expected to be Big in the 2013 Legislative Session, The Holyoke Enterprise (Jan. 30, 2013), http://www.holyokeenterprise.com/index.php?option=com_content&view=article&id=6643:water-issues-expected-to-be-big-in-the-2013-legislative-session&catid=34:local-news&Itemid=34.

Joe Hanel, Water Bills on Tap, The Durango Herald (Jan. 25, 2013), http://durangoherald.com/article/20130125/NEWS01/130129721/-1/s.

Justice Gregory J. Hobbs Jr., Colorado Water Law: An Historical Overview, 1 U. Denv. Water L. Rev. 1, (1997).

Lawrence J. MacDonnell, Five Principles that Define Colorado Water Law, 165 Colo. Law., (1997).

H.B. 1018, 69th Gen. Assemb., Reg. Sess. (Colo. 2013).

H.B. 1130, 69th Gen. Assemb., Reg. Sess. (Colo. 2013).

H.B. 1044, 69th Gen. Assemb., Reg. Sess. (Colo. 2013).

S.B. 19, 69th Gen. Assemb., Reg. Sess. (Colo. 2013).

S.B. 41, 69th Gen. Assemb. Reg. Sess. (Colo. 2013).

S.B. 75, 69th Gen. Assemb. Reg. Sess. (Colo. 2013).


22ND ANNUAL ROCKY MOUNTAIN LAND USE INSTITUTE CONFERENCE: LAND USE FOR A LIFETIME: CHANGING DEMOGRAPHICS AND SHIFTING PRIORITIES

Denver, Colorado   March 8, 2013

The Colorado River: Intergovernmental Agreements

As part of their three-day conference, the Rocky Mountain Land Use Institute hosted a discussion on recent developments in Colorado River use, particularly as they relate to the unique and sometimes competing land use interests in Colorado on either side of the Continental Divide.  “The Colorado River: Intergovernmental Agreements” specifically focused on the 2011 Colorado River Conservation Agreement (“CRCA”), which brought together Western Slope and Front Range parties to settle ongoing conflicts and consider cooperative conservation efforts.  Eric Kuhn, General Manager of the Colorado River Water Conservation District (“CRWCD”), outlined the general Western Slope view.  Covering fifteen counties, CRWCD is one of Colorado’s four conservation districts formed around a specific water basin.  As the conservation district of the Colorado River Basin, CRWCD strives to conserve water in the basin, protect statewide interests, and promote responsible development on both sides of the Divide.  Tom Gougeon, a member of Denver Water’s five-person Board of Water Commissioners, joined Kuhn and represented the Front Range (and more specifically Denver) view.

Kuhn began by describing how land use policy inextricably links to water use and conservation.  For the Western Slope, encouraging settlement and agricultural development requires extensive irrigation and improvements to access.  At least since the 1930s, the Bureau of Reclamation has played a vital role in creating more arable land and encouraging agriculture on the Western Slope.

But as the Bureau of Reclamation experienced its heyday in Western Slope irrigation projects, Denver also continued to grow and strain its own water supply from the South Platte system.  Denver and the Front Range had similar goals in agriculture and irrigation as the Western Slope, but Denver’s large population growth forced the city to look beyond the South Platte to supply its residents. As a solution, Denver turned to the Colorado River Basin and constructed an impressive water infrastructure that could supply the burgeoning Denver population.  The decision to turn to the Colorado River was predictable: 80% of the state’s population lives along the Front Range, but about 80% of the state’s water flows west away from Denver by the Colorado River and its tributaries.  As Kuhn noted, major projects that brought Western Slope water to the Front Range, including the Moffatt System on the Fraser River and Dillon Reservoir on the Blue River, pulled water from headwater streams.  Kuhn also explained that projects on the Fraser River and the Blue River were both just “one pass” from the Front Range (Berthoud and Loveland Passes, respectively), making them the most accessible options to Denver.

As these projects came on line, Kuhn explained, disputes arose between the two interests, pumping untold amounts of money into litigation.  For example, determining the priorities of the Colorado-Big Thompson Project, which supplies the Front Range, and Green Mountain Reservoir, which supplies Western Slope communities, proved arduous and expensive. Some on the Western Slope also desired some kind of mitigation for the water they would lose to Denver.  The Blue River Decree attempted to resolve these and other conflicts, but since its inception in 1955 the Decree has been the subject of continued litigation and disputes of interpretation.

After the drought years of 2002-2003, Denver sought to improve the Moffatt System and increase the capacity of Gross Reservoir, and applied for permits to do so. Instead of allowing the permits, CRWCD and other Western Slope entities wanted to create a comprehensive agreement to resolve problems and set out a more cooperative relationship over Colorado River use.  The CRCA concluded in 2011. CRWCD, Denver Water, and many Western Slope counties and towns have signed the agreement.

As Kuhn explained, the most important goals for CRWCD and the other Western Slope signatories were to protect streamflows, secure water for consumptive use in the Western Slope’s agricultural and recreational economies, encourage smarter growth and irrigation practices, and implement better Front Range conservation and reuse.  To CRWCD, the CRCA works to achieve each of those goals by, for example, defining the specific service area of Denver Water, supplying more water for more diverse uses in Summit and Grand counties, implementing Denver’s “WISE” reuse project (discussed below), and allowing new Denver Water development only with the consent of impacted Western Slope signatories.  Each of these provisions contributes to water conservation and to a more cooperative environment that can allow the two sides to work together to tackle future challenges.  As Kuhn stated, the CRCA recognizes that Denver and the Western Slope have interconnected economies but need to recognize the same connection in water policies.

After Kuhn’s outline of the CRCA and its effect on Western Slope signatories, Denver Water’s Tom Gougeon spoke about the agreement’s impact on Denver and the Front Range.  After summarizing the century-long development of the Denver system and its utilization of the South Platte, Blue, and Fraser Rivers, Gougeon assessed the current state of the system and noted that Denver Water’s system is quite reliable and robust, providing high-quality water to over 1.3 million people in Denver and surrounding areas.  Denver Water has diligently pursued conservation efforts by metering use and instilling a culture of conservation in its customers.  In fact, despite population growth Denver Water has reduced demand by 20-25% since 2005.  But as Gougeon explained, these improvements to the system and to conservation efforts have not tempered the need to ensure reliable supply in an increasingly unpredictable hydrological climate.  The old view that rivers provide a “firm yield” year-to-year no longer accurately describes the situation.  Future supply is not as easily calculable as once believed, meaning conservation and reuse are more important than ever to prepare for dry years.  New challenges like increased fire danger, terrorism, and possible Colorado River Compact calls do not simplify the picture either.

To Denver Water, the CRCA was a way to tackle numerous goals at once and replace historical conflict with cooperation. Above all, the CRCA helped to create more certainty in supply and in the ability to cooperate with the Western Slope on new projects and conservation.  As Gougeon astutely observed, fighting over the interpretation of the Blue River Decree did not help either party.  By settling points of contention, both sides could instead focus on more pressing issues of conservation and vulnerability of supply.  Denver Water, for instance, abandoned long-held conditional water rights in Eagle County because it was unlikely to ever utilize those priorities. In truth, continued retention of those priorities only aggravated relations with Western Slope communities.  CRWCD likewise abandoned similar rights that it perfected in the 1950s and 1960s but never put to development or use.  This new cooperative mindset, Gougeon believed, created “a holistic approach” that would be better suited to actually resolve sticking points between the Western Slope and Front Range and benefit all Colorado River users.

Two accomplishments of the CRCA particularly serve Denver’s interests.  First, Gougeon said, making progress on the Gross Reservoir expansion was essential to Denver Water to strengthen the relatively weak northern end of their system.  Second, WISE would also serve to conserve more water and relieve some stress upon Denver’s system in the present and future.  As Gougeon explained, WISE was part of a realization that, eventually, many residents in Douglas County and other areas southeast of Denver would face supply problems and would turn to Denver Water’s extensive system for relief.  Since many residents of Douglas County rely upon a decentralized system of groundwater wells, any depletion in supply cannot easily be resolved without outside help.  Instead of taking on those customers directly, Denver Water preferred to reuse some of its reusable effluent through the WISE project to supply those areas.

Kuhn and Gougeon agreed that, from each of their perspectives, the CRCA embodies a “new way of doing business.”  While future supply may always be uncertain due to climate change and Colorado River use outside of the state, the CRCA will help to secure reliable water supply to all Coloradoans along the Front Range and throughout the Colorado River Basin.  It will also work to ensure environmentally healthy water systems and politically healthy relationships across the Continental Divide.

Overall, the discussion was effective in helping to describe the competing interests in Colorado for Colorado River water.  Kuhn and Gougeon’s comprehensive account of the various challenges each faces in their job role and in implementing the CRCA left out no detail, and provided a good look into the future of cooperation between their respective organizations.

 


New Zealand Māori Council v. Attorney General

New Zealand Māori Council v Attorney General, SC 98/2012 [2013] NZSC 6 (Supreme Court of New Zealand) (holding the partial privatization of Mighty River Power will not impair to a material extent the New Zealand government’s ability to remedy any breach of the Treaty of Waitangi with respect to Māori water rights; the proposed sale of shares in Mighty River Power is consistent with the principles of the Treaty; the proposed sale of shares is reviewable by the Court for consistency with the principles of the Treaty; the proposed sale of shares is not in breach of the Waikato-Tainui Raupatu Claims Settlement Act 2010; the consultation between the New Zealand government and Māori following the recommendation of the Waitangi Tribunal was consistent with the principles of the Treaty).

In this case, the New Zealand Supreme Court upheld the Government of New Zealand’s (Government’s) partial privatization of a major hydroelectric power producer, despite valid Māori claims to ownership and control over the underlying water rights.  The decision has national and international implications for freshwater management and the nature of water rights.

Mighty River Power Limited produces and markets 15-18% of New Zealand’s electricity, with 60% of this coming from hydroelectricity.  Mighty River Power is currently a state-owned enterprise.  In 2012 the Government sought to privatize 49% of the company pursuant to the State-Owned Enterprises Amendment Act 2012.  The Government will also seek to partially privatize Meridian Energy Limited and Genesis Energy Limited, accounting for an additional 47% of New Zealand’s energy production, again with a substantial portion of this coming from hydroelectricity.  These privatizations will involve similar issues.

The Māori parties claimed privatization of Mighty River Power is inconsistent with the Government’s obligations under the 1840 Treaty of Waitangi (“Treaty”).  Partial privatization would impair the Government from settling ongoing misuse and misappropriation of Māori proprietary water rights, which would in turn violate the Treaty.

The permanent Waitangi Tribunal (“Tribunal”), which was established to determine Treaty breaches, recommended that the privatization should not proceed until nationwide consultation with Māori could be held.  One approach considered by the Tribunal was “shares plus,” a combination of Māori-held shares and control in the partially-privatized company.

The Government disagreed with the Tribunal’s recommendations and the dispute proceeded to litigation.  The High Court found in favor of the Government, as did the Supreme Court on direct appeal in a unanimous opinion.  The Supreme Court heard the case on a “tight timetable” and cautioned, “That circumstance and the fact that some of the arguments touch on fundamental elements of the New Zealand legal order prompt caution in straying beyond matters essential to disposition of the appeal.”  In the weeks following the decision, hundreds of thousands of New Zealand citizens registered to purchase shares in the privatized portion of Mighty River Power, to be listed on the New Zealand and Australian stock exchanges.  One estimate of the money that will be raised by the sale is U.S. $1.5 billion.

The Supreme Court decision considers, among other issues, whether the Government followed the proper procedure for privatizing a major state-owned enterprise, the Court’s power to review the Government’s decision to do so, and whether the Government properly considered the Tribunal’s recommendations.  This court report focuses on a major water rights issue of interest to U.S. practitioners, specifically the nature of water rights in New Zealand, and how Māori water rights may fit into that legal framework.

The Tribunal found that Māori rights and interests in water bodies were essentially ownership rights, and that those rights were guaranteed by the Treaty.  Specifically, the Tribunal identified the proprietary water rights guaranteed by the Treaty as the exclusive right to control access to and use of water.  These rights are based on historical control and management of water bodies, such as restrictions on travel over waterways.  Māori do not claim sole or exclusive ownership and control over water, but maintain there are ongoing breaches of their residual water rights established and protected by the Treaty.

The Government does not dispute that Māori have water rights established by the Treaty.  The Government also concedes that, at least in some cases, these claims can be described as “residual property rights.”  However, the Government claims that, under Common Law, “no one owns the water” until contained (for example, put in a tank or bottled), and that New Zealand law does not provide for ownership of water in rivers and lakes.

Consistent with this view, perpetual water rights do not currently exist under New Zealand law.  Water resource consents granted pursuant to the Resource Management Act (“Act”) are limited to a maximum of 35 years.  Water resource consents are considered limited proprietary interests.  However, depending on their terms, resource consents can be subject to modification, limitation for instream flow protection or other values (through water conservation orders), negative impact due to granting additional consents, or as pertinent to this case, to redress the Government’s Treaty obligations.  Mighty River Power’s hydropower resource consents contemplate for review due to any Treaty settlement.

The High Court found “there can be no doubt” that the Māori have “claims of a type of proprietary interest in freshwater . . . including . . . the source of water used by [Mighty River Power] to generate electricity.”  However, the High Court also supported the Government’s view that, “There are only two forms of property in New Zealand, real and personal.  A resource consent is neither.”  The High Court added that, in the case of Mighty River Power, “[t]he hoped for Māori control…is expressly prohibited, citing that the Māori would have at best a minority interest in the resulting privatized company,” that the hydropower project is already in place, and that there are corporate issues with granting one group of shareholders greater rights.  The High Court suggested that the Māori could gain greater say in the New Zealand-wide management of water through revision of the Act rather than through the privatization process.  The Act is in fact going through extensive review and revision, as described below.

Like the High Court, the Supreme Court confirmed the Māori water rights, but struggled with what forms those rights could take.  One problem cited by the Court is that “the [Māori] were not very specific as to…relief which is substantially in prospect and would become materially harder to obtain post-privatization.”  The Court summarized the possible forms of settlement as: (1) the “shares plus” concept; (2) “modern water rights” in the form of water permits issuable by the Māori as a regulating authority; or (3) royalty payments for water use.

The Supreme Court also agreed with the High Court that, in this instance, granting the Māori exclusive control over water may be practically impossible, finding, “The [Māori] are not seeking, and in any event the [Government] could not agree to, settlements which would be inconsistent with the continuing efficient operation of the current power-generating capacity.”  The Court added, “Since it is however implausible to suggest that the use of the water could be withheld from the generation of electricity . . . in effect proprietary recognition through the water permits is likely to be of value as reparation only to provide a basis for payment to Māori of royalties in respect of the particular waters used” and that both Mighty River Power minority shareholders and other power producers would resist such payments.

Nevertheless, the Court cited previous settlements broadly recognizing Māori rights to water and waterways as indicative of the Government’s willingness to recognize those rights subsequent to privatization.  In particular, the Court found that Māori claims to the Waikato River “have received substantial redress,” while nevertheless remaining incomplete.  The Supreme Court also noted that the 35-year limit for water resource consents was established by the Act to ensure that the Government could remedy Treaty violations even if the Government transferred water rights.

The Supreme Court decision could be interpreted as tacitly supporting essentially a dual system of water rights in New Zealand.  “Modern water rights,” i.e. resource consents, will remain subject to the Government’s “no one owns the water” view; while Māori proprietary rights may be recognized, at least in some instances, as possessing greater ownership indicia of ownership and control.  This approach would be somewhat analogous to Native American tribal water rights established by Winters v. United States, 207 U.S. 564 (1908), in the sense that the Māori rights are established by the Treaty independent of any subsequent permitting process.  However, this approach would be different than that established by Winters in that the rights granted Māori would be an different type of water right than those granted through the subsequent permitting process.  An additional interpretation of the decision is that Māori ownership of permanent water rights could be recognized unless exclusive control would be practically impossible, for example due to prior establishment of a major hydroelectric project.

This case is one component of major changes to, and arguably a crisis in, New Zealand freshwater management.  First, the issues in this case will arise in negotiations and/or litigation regarding the upcoming partial privatization of Meridian Energy Limited and Genesis Energy Limited.  Second, the Tribunal will continue its inquiry into remedying the Government’s treaty violations of Māori water rights.  The Supreme Court noted that the Government “will be required to respond to” the Tribunal’s recommendations.

Third, the Government is in the midst of revising the Act, including the sections regarding water allocation and quality.  This process involves Māori stakeholders on multiple levels, and Government has committed not to issue additional water resource consents until this process is finished.  Shortly after the Supreme Court’s decision, the Government released a framework for “freshwater reform for 2013 and beyond” discussion, proposals, and comment.  Possible changes to freshwater management include limitations on or changes to water conservation orders.

Fourth, the Court issued its decision in the midst of an historic drought, which has reduced agricultural production and brought a renewed concern for areas of the New Zealand with over-allocated water supplies.  The drought has heightened calls for changes to freshwater management.  The question of “who owns water,” and what water rights are, will remain an important issue in the course of these changes, which in turn will provide examples for other countries seeking to effectively manage a limited freshwater resource.

 

Will Stenzel, Esq. is a Colorado water law attorney visiting New Zealand with his spouse, who is on a U.S. State Department Fulbright grant at the University of Otago.  Stenzel is a visiting staff member at at the law school.

Dr. Jacinta Ruru is an Associate Professor at the University of Otago Law School in New Zealand. Her research focuses on exploring indigenous people’s legal rights to land and water.


Sources:

Aoraki Water Trust v. Meridian Energy Ltd., 2 NZLR 268 [2005] (citing that subsequent water permit is subject to priority in time, and not to be devalued by subsequent permits during the permit term).

Maree Baker-Galloway, Public Lecture, Mar. 21, 2013, 7:00 p.m., Burns Hall, Dunedin, New Zealand.

David Hargreaves, Ensuring Strong Demand for Mighty River Power shares in Australia is Key to the Government’s Partial Privatization Plan, Interest.co.nz, (Mar. 5, 2013, 8:17 AM), http://www.interest.co.nz/opinion/63413/opinion-ensuring-strong-demand-mighty-river-power-shares-australia-key-government%E2%80%99s-pa

Mighty River Power Commerce Committee: Financial Review FY2011/HY2012, Mighty River Power (Apr. 5, 2012), http://www.mightyriver.co.nz/PDFs/Results/Presentations/MIGHTY-RIVER-POWER_CommerceCommittee_financial-rev.aspx.

New Zealand Ministry of Economic Development, New Zealand Energy Data File, 2011 Calendar Year Edition, (2012), http://www.med.govt.nz/sectors-industries/energy/pdf-docs-library/energy-data-and-modelling/publications/energy-data-file/energydatafile-2011.pdf

New Zealand Ministry of the Environment, Fresh Start for Fresh Water reforms 2012, (2011), http://www.mfe.govt.nz/issues/water/freshwater/fresh-start-for-fresh-water/.

New Zealand Ministry of the Environment, Freshwater Reform 2013 and Beyond, (Mar. 2013), http://www.mfe.govt.nz/publications/water/freshwater-reform-2013/freshwater-reform-2013.pdf.

New Zealand North Island Hit by Worst Drought in 30 Years, BBC News Asia (Mar. 15, 2013, 5:45 GMT), http://www.bbc.co.uk/news/world-asia-21797095.

Waitangi Tribunal, The Stage 1 Report on the National Freshwater and Geothermal Resources Claim, WAI2358, (Dec. 7, 2012), http://www.waitangi-tribunal.govt.nz/scripts/reports/reports/2358/C2257DAB-CB5D-481F-9018-6A4F35044D0B.pdf.

Brian Fallow,  From here on every drop counts, The New Zealand Herald (March 14, 2013, 5:30 AM): http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10871078