Gulf Restoration Network v. McCarthy, 783 F.3d 227 (5th Cir. 2015) (holding that: (i) the EPA’s refusal to regulate pollution resembled a rejection of a rulemaking petition, which is presumptively reviewable by the courts; (ii) the Clean Water Act possesses sufficiently specific language to allow for judicial review; and (iii) the EPA may refrain from making a necessity determination if it uses the language of the Clean Water Act to explain its decision).

In July 2008, a group of nonprofit environmental organizations, led by the Gulf Restoration Network (“Network”), petitioned the Environmental Protection Agency (“EPA”) to regulate the high levels of nitrogen and phosphorous pollution that have entered waters in the Mississippi River Basin and created what the petition called a “dead zone” in the northern Gulf of Mexico. The EPA denied this petition, deciding that it could create more efficient regulations by working cooperatively with the states. Network then filed suit in the United States District Court, Eastern District of Louisiana, alleging that the EPA violated both the Administrative Procedure Act (“APA”) and the Clean Water Act (“CWA”). The relevant section of the CWA stipulates that the EPA can directly create water standards if: (i) the state-created standards do not satisfy the requirements of the CWA; or (ii) the administrator decides that a new or improved standard is necessary. The district court ruled that the Supreme Court’s decision in Massachusetts v. EPA required the EPA to make the requested necessity determination before denying the petition, and the court remanded the matter to the EPA to conduct such a determination. The EPA appealed the decision to the United States Court of Appeals, Fifth Circuit (“Court”).

The Court began its inquiry by reviewing the district court’s holding that it possessed subject matter jurisdiction to review the EPA’s action. Generally, the United States government and its agencies possess sovereign immunity and are not subject to civil actions unless they consent to suit. Congress waived this immunity in the APA, which created a general presumption that the courts have the requisite jurisdiction to review final actions of an agency. The Court recognized two circumstances in which sovereign immunity remains: (i) when a statute prohibits judicial review; and (ii) when the agency action falls within the agency’s legal discretion. The Court found that the first circumstance did not apply in this case, and that the second circumstance could only apply to agency actions for which the applicable statute provides no “meaningful standard” of review.

Before considering whether the CWA provided a meaningful standard of review, the Court considered whether this type of agency action was categorically reviewable, presumptively reviewable, or presumptively unreviewable. When an agency acts affirmatively, the courts apply a presumption of reviewability. Because the EPA decided not to act, the presumption depends on the activity in question. If the EPA refused to perform a rulemaking function, then the Court would consider the action presumptively reviewable; if the EPA refused to engage in an enforcement action, then the Court would consider the action presumptively unreviewable. The Court declined to define the EPA’s action as categorically reviewable, as Network argued, and instead the Court found that judicial review should only occur after careful review of the statute.

Next, to determine which presumption applied, the Court considered whether the EPA’s actions resembled denial of a rulemaking petition or an enforcement action. Due to the breadth of Network’s request to regulate pollution, the Court held that the EPA’s refusal to conduct such regulation aligned with a denial of a rulemaking petition. The Court rejected the EPA’s comparison to an issuance of a Notice of Deficiency (“NOD”), a mechanism of the Clean Air Act that the Court held to be an enforcement action in its prior decision in Public Citizen, Inc. v. EPA. The Court distinguished the NOD as a punitive measure to correct inadequate state measures. The Court turned to the language of the CWA, which uses the word “or” to separate the EPA’s power to correct state inadequacies from its power to conduct a necessity determination. The Court found that this disjunctive indicates that the necessity determination does not require any finding of state inadequacies. The Court noted that an action to correct state inadequacies would reflect an enforcement action, but the necessity determination more closely resembles a rulemaking feature. The Court also considered the consequences of noncompliance with each measure: the EPA may sanction states for failure to correct inefficiencies after the agency issues an NOD, but the CWA does not authorize the EPA to impose any sanctions for noncompliance. Finally, the Court described the CWA’s general notification process, during which the EPA must prepare and publish its proposed regulations. Unlike the sanctions following an NOD, this general notification does not entail any direct notification to affected states. The Court thus concluded that the EPA’s refusal to make a necessity determination resembled denial of a petition for rulemaking, not an enforcement action. Therefore, the action warrants a presumption of reviewability.

With this presumption in place, the Court then considered whether the language of the CWA provided a “meaningful standard” to apply when reviewing a denial of a rulemaking petition. The Court turned to Massachusetts, in which the Supreme Court ruled that the EPA may decline to exercise its rulemaking power by providing a reasonable explanation “grounded in” the language of the controlling statute, not merely a self-directed policy explanation. The Court then answered two questions: (i) whether the “necessity determination” section of the CWA contains sufficiently specific language to allow judicial review; and (ii) whether the EPA did, in fact, have the discretion to decide against making a necessity determination.

First, the Court found the CWA to possess sufficiently specific language; the CWA dictated that water quality standards “shall be established taking into consideration their use and value for public water supplies, propagation of fish and wildlife, recreational purposes, and . . . use and value for navigation.” The specificity of these considerations provides the EPA with a basis for explanation, thereby allowing for judicial review. The Court further concluded that the “mandatory language” of these sections of the CWA suggests reviewability. Courts have found provisions with discretionary and suggestive language, such as the agency “may” regulate, to be unreviewable. However, the relevant sections of the CWA dictate that the Administrator “shall” create new standards when necessary. Thus, the Court held that it possessed subject matter jurisdiction to review the EPA’s action.

Second, the Court disagreed with the trial court’s finding that the EPA lacked discretionary authority to decline a necessity determination. The Court revisited the ruling in Massachusetts, holding that the case’s “reasonable explanation” standard also applies to this section of the CWA. Massachusetts’ holding requires the district court to analyze the EPA’s explanation and determine whether the explanation reflects the language of the CWA. Noting the highly deferential nature of this standard, the Court described the EPA’s burden as “slight”. Nevertheless, the Court ruled that the EPA must provide such an explanation to the district court to justify the agency’s refusal.

Accordingly, the Court vacated the order of the district court and remanded the case for proceedings consistent with its ruling.

Featured image is of the Mississippi River taken by NASA.  Image is part of the public domain.

Frees v. Tidd

Frees v. Tidd, 349 P.3d 259 (Colo. 2015) (holding that the owner of a servient estate, whose property is subject to a ditch easement conveying water under a senior priority, may obtain a junior conditional right to use the same water for non-consumptive hydropower use if he or she can make an initial showing that water is available).

David Frees, George Frees, and Shirley Frees (“Frees”) own an irrigation water right with an 1890 priority, which has diverted at most 6.4 cubic feet per second (“cfs”) of water from Garner Creek. The Garner Creek Ditch No. 1 headgate delivered the water into a ditch that crossed property owned by Charles and Barbara Tidd (“Tidds”) in Saguache County. Across the Tidds’ property, the Frees owned an easement for delivery of their water right.

In 2010, the Tidds applied for a 0.41 cfs conditional water right for non-consumptive hydropower use. The Tidds initially filed for a right to divert from Garner Creek Ditch, but they amended their application to identify Garner Creek itself as the source of appropriation. In 2014, the District Court, Alamosa County (“water court”) issued a decree, giving the Tidds a conditional water right with a 2010 priority date. The water court determined that water was available for the Tidds’ proposed non-consumptive hydropower use and that the Frees could not exclude the Tidds from use. The water court reasoned that the Frees only owned the right to use the water for irrigation purposes, not the water itself. In order to apply the decreed water for their proposed hydropower use, the Tidds needed to make modifications to the ditch thereby altering the Frees’ easement. Subsequently, both parties outlined and agreed to terms and conditions to a decree that would ensure against any material injury to the Frees’ water right. Nevertheless, the Frees appealed the decree to the Colorado Supreme Court (“Court”), arguing that Colorado law prevented the Tidds from appropriating the same physical water the Frees had already appropriated through their 1890 irrigation priority.

On appeal, Justice Hobbs, writing for the majority, first addressed the Frees’ contention that the water they diverted “ha[d] a label on it.” Relying on the Tenth Circuit’s opinion in Public Service Co. of Colorado v. Federal Energy Regulatory Commission, the Frees argued that their “label” prohibited the Tidds from using the water for any purpose. The Court rejected this argument, concluding that the language came from problematic dicta and, therefore, did not support the Frees’ position. Instead, the Court explained that the Tidds’ use of water was consistent with Public Service Company’s use of the Green Mountain Reservoir water in the Tenth Circuit opinion.

Accordingly, the Court stated that Public Service Co. of Colorado did not support the Frees’ position. The Court found that the Frees owned the right to use the water for irrigation, which the Court distinguished from owning the physical water itself. Therefore, the Frees’ ownership interest in the water did not prevent the Tidds from also using the water.

Additionally, the Frees argued that the water court lacked the power to order another appropriation unless there was un-appropriated water available to assign to that decree. The Court explained that this argument directly contradicted the intent and requirements of the Water Right Determination and Administration Act of 1969. The fundamental goal of the 1969 Act was to promote, without injury, “flexibility” in the use and appropriation of the public’s water, concurrently and in succession. The Court also relied on previous case law and the Colorado Constitution for support of the same proposition. Previous cases reiterated the notion that the Constitution guarantees the right to use a specified amount of groundwater to the exclusion of others not in priority. However, this right is not the right to exclude others from using the same water if multiple users can use the water without injury.

Next, the Court addressed the Frees’ contention that Colorado law required the Tidds to appropriate new water. The Court rejected this argument, explaining that Colorado law did not require a conditional water right applicant to appropriate new water. Instead, Colorado law requires the applicant to show that there is water available that he can put to beneficial use. The “can and will” doctrine promulgated in section 37-92-305(9)(b) of the Colorado Revised Statutes requires: “an applicant for a conditional water rights decree to prove the availability of water under river conditions existing at the time of the application as a threshold requirement to establishing that there is a substantial probability that the project can and will be completed with diligence and within a reasonable time.”

The Court found that the question of water availability linked directly to the question of whether decreeing a new appropriation would injure senior water rights. In order to meet this statutory requirement, a new appropriator must convince the water court that its diversion will not injure senior appropriators and that water is available. The Court determined that under the terms of the 2010 decree, which protected against any injury to the Frees’ irrigation water right, water was available for the Tidds’ decreed use.

Accordingly, the Court affirmed the water court’s conditional water right decree.

Márquez, J., Dissenting

Justice Márquez, joined by Justice Coats, dissented. Justice Márquez raised several issues: the scope of the right to appropriate, the lack of support for the decision in prior precedent, the potential for unintended consequences, and the Court’s intrusion into the realm of legislative policy and decision-making. The dissent argued that although the Tidds’ conditional water right had a 2010 priority, the Tidds would actually be diverting pursuant to the Frees’ 1890 priority. The dissent observed that, under the majority’s decision, a new appropriator could intercept water that was only available in light of a senior appropriator’s diversion. The majority’s decision would effectively allow the junior appropriator to gain an “overvalued water right by ‘diverting’ under an earlier priority date.”

The dissent also disagreed with the majority’s interpretation of Public Service Co. of Colorado. The dissent argued that the majority’s analysis overlooked the crucial fact in that case: Public Service Company received more water than Colorado law would have otherwise granted. Contrary to the majority’s interpretation, the dissent argued that Public Service Co. of Colorado “stands for the proposition that a downstream user cannot obtain a vested water right in already appropriated water simply by applying that water to a beneficial, non-consumptive use.”

The dissent also questioned, among other things, what would happen if the Frees changed the water diversion point. Because the potential answers proved problematic, Justice Márquez advised the Court to defer to the legislature on “novel, out-of-priority diversions, rather than upholding a conditional water right in the unique circumstances of this case and thereby establishing a potentially dangerous precedent.”

Featured image is part of the public domain.

San Antonio, Los Pinos & Conejos River Acequia Pres. Ass’n v. Special Improvement Dist. No. 1 of the Rio Grande Water Conservation Dist., 351 P.3d 1112 (Colo. 2015) (en banc) (affirming the water court’s decision in holding: (i) the water court correctly rejected challenges to issues previously affirmed by appellate courts; (ii) objections to an annual replacement plan pending resolution does not justify a stay on the plan; (iii) the Closed Basin Project water was an adequate source of replacement water; (iv) the annual replacement plan’s treatment of augmentation plan wells did not violate the water management plan; and (v) the omission of the augmentation plan wells lifespan did not render the annual replacement plan invalid).

In 2011, under San Antonio, Los Pinos & Conejos River Acequia Pres. Ass’n v. Special Improvement Dist. No. 1, 270 P.3d 927 (Colo. 2011) (“San Antonio”), the Colorado Supreme Court (“Court”) affirmed a May 2010 decree (“Decree”) issued by the District Court for Water Division No. 3 (“water court”) for Special Improvement District No. 1 (“Subdistrict”) of the Rio Grande Water Conservation District. The Decree states that, along with specific decreed conditions, the amended water management plan (“Plan”) established a “satisfactory methodology and procedure” to determine injurious depletions due to well pumping within the Subdistrict and to acquire replacement water. The Plan’s appendices established requirements for the Subdistrict to develop an annual replacement plan (“ARP”) to support the operation of the Plan. The water court retained jurisdiction to ensure operation of the Plan and to prevent injury in conformity with the terms of the Decree.

The Subdistrict submitted the initial ARP to the State Engineer for approval in 2012. The State Engineer determined that the ARP was sufficient to remedy injurious depletions without injuring senior water rights and approved the ARP on May 1, 2012. Several senior surface water rights holders (“Objectors”) raised objections to the ARP and challenged the approval.

The water court reviewed the objections and made several pretrial rulings. The Objectors appealed two of the rulings. The first was whether the water court appropriately denied a motion to halt all pumping until resolving protests to the ARP. The Objectors based this motion on the reasoning that the ARP was an extension of the Plan and subject to groundwater management rules and regulations. The water court clarified that the Plan was complete with the Court’s decision in San Antonio and that the ARP was an operating tool created annually to predict stream depletions and establish replacement of depletions. As such, the water court saw no requirement to halt operation of an ARP until all challenges are resolved.

The Objectors also took issue with the water court’s decision regarding the supporters’ motion to dismiss ten of the Objector’s challenges. The water court partially granted the motion and dismissed eight of the challenges. The water court reasoned that the challenges should be dismissed because they questioned methodologies approved by the Decree and affirmed in San Antonio. The water court concluded that it was barred from reconsidering those issues. The remaining two challenges the water court addressed were whether the water produced by the Closed Basin Project was a suitable source of replacement water and whether the treatment of augmentation plan wells violated the Plan. First, the water court maintained that the basin water was a suitable source of replacement water, as established in the Decree, and that challenges to “salvaged” water rights of basin water were a collateral attack on the Basin decree. Second, the water court determined that the treatment of augmentation plan wells was appropriate, and while the failure to include a list of augmentation wells was improper, this failure did not invalidate the 2012 ARP.

Following the trial, the water court upheld the State Engineer’s approval of the 2012 ARP. The Objectors appealed to the Court, and argued: (i) the water court could address issues previously decided; (ii) the ARP could not go into effect with open challenges; (iii) the replacement water source was not appropriate use of water; (iv) the inclusion of augmentation plan wells violated the Decree; and (v) the omission of a list of wells invalidated the 2012 ARP.

First, the Objectors claimed that the water court’s retained jurisdiction required it to hear all challenges to the Plan, regardless of the Court’s affirmation of the Plan and Decree. Reviewing the Court’s decision in San Antonio, the Court verified that the Decree was still appropriate and continued to meet its stated objectives. Consequently, the Court determined the water court correctly dismissed the challenges regarding previously decided issues.

Second, the Objectors claimed that the ARP is an extension of the Plan. Thus, the Objectors argued, the ARP should be subject to the rules and regulations of groundwater management plans and should not be effective until all protests are resolved. However, the Court determined that prior decisions affirming the Plan deemed the Plan complete. In addition, the Court found that the Plan established the ARP as an operating “tool.” The Court discussed that halting the implementation of the ARP every year to address objections would be impractical because it would ultimately stop the Plan from ever going into effect. Therefore, the Court affirmed the water court’s finding that the ARP is an extension of the plan and is not subject to a stay pending the resolution of all challenges.

Third, the Objectors argued that using basin water as replacement water in the 2012 ARP was not permissible. The Court noted that the basin waster is a result of a federal reclamation effort to help meet obligations under the Rio Grande Compact (“Compact”). The Objectors claimed that using basin water interferes with the State’s ability to meet Compact obligations and, furthermore, falls under the definition of salvaged water managed by the priority system. Below, the water court determined that the basin water was a suitable source of replacement water as set forth in the basin decree, allowing the Subdistrict to simultaneously meet Compact obligations and replace injurious depletions. The water court also found that using basin water provided the opportunity to reduce curtailments upriver, benefitting senior water right owners. Finally, the water court found the salvaged water claim was an improper collateral attack on the basin decree. The Court agreed with the water court’s analysis and affirmed the water court’s finding that the basin water was adequate and suitable to prevent injury to senior surface right holders. The Court further stated that the basin water provided a suitable source of replacement water in the 2012 ARP, and that the water usage falls within the decreed purposes.

Fourth, the Objectors contended that the inclusion of augmentation plan well pumping in the calculation of the Subdistrict’s groundwater use violated the Plan. The Court noted that the Decree established that Subdistrict landowners with augmentation plan wells may, but are not required to, opt out of the Plan. The Court held that including the augmentation plan wells was appropriate and found that including augmentation plan wells as Subdistrict wells did not injure senior surface right holders. Therefore, the Court allowed the 2012 ARP to include wells covered by augmentation plans and held it did not violate the Decree.

Finally, the Objectors claimed that the ARP’s omission of a comprehensive list of augmentation plan wells violated the Plan, and rendered the 2012 ARP invalid pursuant to the doctrine of substantial compliance. The Court agreed with the water court that this was a minor omission as the Subdistrict and the State Engineer made good faith efforts to comply with the Plan. Thus, the Court found that the failure was an oversight caused by the unfamiliarity of the process and did not invalidate 2012 ARP.

Accordingly, the Court affirmed the water court’s decision and upheld the approval of the ARP.

The featured image is of the State Bridge, Spanning the Rio Grande River, Del Norte, in Rio Grande County, Colorado.  The image is part of the public domain.

Sierra Club, Inc. v. Bostick, 787 F.3d 1043 (10th Cir. 2015) (holding that by issuing Nationwide Permit 12 and verifying that the construction of the TransCanada pipeline was covered under the permit, the United States Army Corps of Engineers did not violate the National Environmental Policy Act, the Clean Water Act, or its own nationwide permit).

The U.S. Army Corps of Engineers (“Corps”) has the authority, under Section 404(e) of the Clean Water Act, to issue nationwide permits authorizing activities that involve the discharge of dredged material into waters and wetlands. The Corps issued a nationwide permit, Nationwide Permit 12 (“Permit”), which permitted anyone to build utility lines in waters as long as the construction did not result in a loss of greater than one-half acre of water for each single and complete project.

TransCanada Corporation (“TransCanada”), sought to build the Gulf Coast Pipeline (“Pipeline”), an oil pipeline which would cross 2,000 waterways and expand across 485 miles. The Corps verified, in several letters, that the Permit permitted construction of TransCanada’s pipeline. Based off the Corp’s verification, TransCanada constructed, completed, and began using the Pipeline.

Concerned about the Pipeline’s effect on the environment, Sierra Club, Inc., Clean Energy Future of Oklahoma, and East Texas Sub Regional Planning Commission (collectively “the environmental groups”) challenged the Corps’ authority to issue Nationwide Permit 12. The United States District Court for the Western District of Oklahoma (“district court”) entered judgment in favor of the Corps. The environmental groups appealed to the United States Court of Appeals, Tenth Circuit (“Court”). The environmental groups asserted three major claims on appeal: (i) that the Corps violated the National Environmental Policy Act (“NEPA”) when it issued the Permit and letters without considering the risk of oil spills and the cumulative impacts on the environment; (ii) that Nationwide Permit 12 violates Section 404(e) of the Clean Water Act because it permits activities that cause more than minimal environmental impacts and because it defers a part of the minimal-impact determination to project-level personnel; and (iii) that the Corps violated its own Permit when it failed to conduct an analysis of the Pipeline’s cumulative effects on the environment.

The Court first addressed the claim that the Corps violated NEPA when it failed to consider the risks of oil spills and the Pipeline’s cumulative impacts. The Court held that the environmental groups waived their NEPA claims. The Court noted that the Corps met the NEPA requirements because, under NEPA, no further analysis is required beyond an environmental assessment if the assessment indicates that the environmental impact of the proposed action is insignificant. Further, the Court noted that a party challenging NEPA compliance must raise any relevant objections to the proposed project during the public comment period. A party waives its claim if it does not raise it during such period, unless the environmental assessment’s flaw is an obvious flaw or the issue is otherwise brought to the agency’s attention.

Additionally, the Court analyzed whether the risk of an oil spill was an obvious flaw in the assessment. The Court determined that the environmental groups were required, and failed, to show that the Corps’ assessment for the construction, maintenance, and repair of utility lines contained an obvious flaw. The Court found that the Corps appropriately considered the impacts from the construction of the Pipeline—the permitted activity—and not the impact associated with operation of the Pipeline, which fell under the authority of other agencies. Additionally, the Court noted that even if the Corps knew about the risk of oil spills from other sources, it made no difference because the duty to assess that risk belonged to another agency. Second, the Court addressed whether the environmental groups waived their claim that the Corps violated NEPA by failing to consider the pipeline’s cumulative impact. The Court held that the environmental groups waived their claim because no commentator raised this objection during the relevant public comment period.

Next, the Court analyzed the environmental groups’ argument that NEPA required the Corps to conduct an environmental analysis before issuing the verification letters to TransCanada, because the letters constituted “major Federal actions.” The Court disagreed with the environmental groups and held that the Corps complied with NEPA. The Court noted that NEPA requires agencies to conduct an analysis of potential impacts of all major Federal actions, but that the letter would only constitute a “major Federal action” if such verification resulted in a significant impact. The Court found that the Corps considered the impact of the construction of an oil pipeline when it issued Nationwide Permit 12, and that the letters only verified that TransCanada’s actions were covered by the Permit. Therefore, the Court held there was no need for the Corps to conduct a second environmental assessment.

The Court then considered the environmental groups’ argument that the Corps violated the Clean Water Act when it issued Nationwide Permit 12. The environmental groups argued the Permit violated the Clean Water Act in two ways: (i) because the Permit allows activities that have more than minimal environmental impacts; and (ii) because it defers a part of the minimal-impact determination to project-level personnel. The Court held that the Corps did not violate Section 404(e) when it issued Nationwide Permit 12 because it used its long-standing practice for assessing impacts based on its technical expertise. The Court found the environmental groups failed to show that the Corps’ test did not adequately control aquatic impact.

The Court then considered the Corps’ interpretation of Section 404(e) as allowing the Corps to use project-level personnel in portions of the minimal-impact analysis. When analyzing the case under Chevron, the Court noted that there was no direction from Congress as to whether assigning project-level personnel such duties is permissible. Because Congress had not directly spoken on the issue, the Court determined that the Corps’ interpretation of Section 404(e) was permissible because nationwide permitting is complicated and the Corps’ interpretation provided a reasonable safeguard from unforeseen impacts. The Court reasoned that the Corps recognized that it could not predict every potential use of Nationwide Permit 12, but that it made an assessment of all predictable uses—including construction of an oil pipeline—so the Corps did not need to conduct a new environmental analysis. Additionally, the Court noted that the use of project-level personnel did not affect the public’s ability to comment on the proposed permits because the Corps prepares a written impact evaluation of authorized activity; it only defers aspects of the evaluation that it cannot practically undertake before the start of a project.

Lastly, the Court addressed the environmental groups claim that the Corps violated its own Permit when it failed to document its cumulative impact analysis in the verification letters and in its administrative records regarding the analysis. The Court held that there was no violation because the Corps has never required district engineers to include the analysis in a verification letter, as long as the record supported the letter. The Court found that in this case the record included sufficient facts to support that the district engineers considered cumulative impacts.

Therefore, the Court found that the environmental groups waived their NEPA claims by failing to object during the appropriate public comment period. The Court rejected the remainder of the environmental groups’ arguments. The Court held that, by issuing Nationwide Permit 12 and verifying the construction of TransCanada’s pipeline under the Permit, the Corps did not violate NEPA, the Clean Water Act, or its own Permit.

Accordingly, the Court affirmed the district court’s decision.

The featured image is of the Trans-Alaska Pipeline crossing the South Fork Koyukuk River.  The image is part of the public domain.

E. Cherry Creek Valley Water & Sanitation Dist. v. Greeley Irrigation Co., 348 P.3d 434 (Colo. 2015) (holding that the water court’s resolution of motions for claim and issue preclusion did not constitute a final and appealable judgment because the water court did not address the requisite factual inquiries in the underlying original claim for relief and thus could not be certified for immediate appeal).

In 1998, the Weld County District Court, Water Division 1 (“water court”) quantified and decreed the historical consumptive use yield of the Greeley Irrigation Company (“GIC”) shares in a case that became known as the “Poudre Prairie Decree.” In that decree, the water court directed that the specified quantification of GIC shares could be used in future applications for changes in water rights, absent a showing of other material circumstances the Poudre Prairie Decree did not address.

In 2013, East Cherry Creek Valley Water and Sanitation District and Colorado Water Network, Inc. (“East Cherry Creek Valley”) submitted an application to the water court requesting a change in the place and type of use of its shares in the GIC. That application asserted East Cherry Creek Valley’s right to use the pro-rata allocation of consumptive use that the Poudre Prairie Decree provided. East Cherry Creek Valley also filed a Colorado Rules of Civil Procedure (“C.R.C.P.”) 56(h) motion with the water court, seeking three determinations of law that the Poudre Prairie Decree precluded requantification of East Cherry Creek Valley’s water right, East Cherry Creek Valley did not have the burden to establish claim preclusion by showing a lack of changed circumstances, and the water court should not allow evidence regarding changed circumstances.

The water court denied the motion and found: (i) the Poudre Prairie Decree was subject to requantification if there was a showing of relevant subsequent events not addressed at the time of the decree; (ii) the preclusive effect of the decree was limited to the period before it was entered; and (iii) East Cherry Creek Valley had the initial burden of proving no material circumstances had occurred that would result in injury to other water users. After the water court denied the motion, East Cherry Creek Valley moved under C.R.C.P. 54(b) for an entry of the denial as a final judgment. The State and Division Engineers (“Engineers”) opposed the motion, but the water court granted it, certifying the Rule 56(h) order as final and appealable.

East Cherry Creek Valley appealed to the Colorado Supreme Court (“Court”) on all three issues. The Engineers cross-appealed on two issues and moved for dismissal of East Cherry Creek Valley’s appeal on the grounds that the water court’s order was not a final judgment.

On appeal, East Cherry Creek Valley’s application made one claim for relief — it requested issuance of a decree changing its water right in its GIC shares. The water court’s denial of East Cherry Creek Valley’s Rule 56(h) motion did not address that claim, so the Court held that the water court had not entered a final judgment on East Cherry Creek Valley’s actual claim for relief in the litigation. In reaching this conclusion, the Court reviewed some key legal tenets.

First, Rule 54(b) is an exception to the rule that a trial court’s final judgment must resolve all claims for relief. The Court explained that a trial court may only issue a Rule 54(b) certification if three elements are met: (i) the ruling must be upon an entire claim; (ii) the decision must be the final and ultimate disposition of an individual claim; and (iii) there must be no just reason for delay in entering the final judgment on the claim. In granting the Rule 54(b) motion, the water court reasoned that the parties would benefit from direction from the Court, and the appeal would further judicial administration. However, because these stated justifications did not meet the three requirements laid out in Rule 54(b), the Court held that the certification without a final judgment on the claim for relief was improper.

Second, the Court described what constitutes a claim for relief in the context of a change of water right. The Court described how, unlike other property rights, a water right is the right to use a certain portion of the state’s waters, according to the right’s priority. The state owns the water, and the right to use the water is subject to prior appropriation limitations. The Court noted an application to change a water right is considered a complaint. A water right owner may apply to change the type, location, or time of use, as well as the point of diversion of the right. The Court held that a “claim” for change of water rights is “the aggregate of operative facts that give rise to the right to a change decree.” The issuance of a change decree is subject to a two-pronged factual inquiry. The water court must address the scope, measure, and limit of the water right to be changed, and the conditions necessary to prevent injury to other water rights.

The Court further explained that the first question hinges on the historical beneficial use. To avoid rewarding waste, actual beneficial water use becomes the basis and limit of the water right. The second question addresses what conditions will be necessary in order to ensure that other decreed water rights are not injured by the change. Because East Cherry Creek Valley sought to divert from different points at different rates, the Court reasoned it might be required to make out-of-priority diversions and exchanges or relinquish portions of water available from its shares in order to protect other water rights. The water court reserved these factual issues for trial, but the Court held that the water court needed to make a finding regarding those issues before it could enter a final judgment on the claim.

The Court held that the claim and issue preclusion issues that the water court addressed were affirmative defenses, not separate claims for relief. Because the water court’s decision did not actually resolve an entire claim for relief, there was no final judgment for the Court to address. The Court held that, “By definition, a Rule 56(h) order will not be subject to Rule 54(b) unless the determination of a question of law has a final, dispositive effect on an entire claim.” Absent a final judgment on a true claim for relief, the Court lacked jurisdiction to consider the appeal.

Accordingly, the Court reversed the water court’s certification order, dismissed the appeal, and remanded the case for further proceedings.

Featured image is property of Chris Whitted and is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

St. Jude’s Co. v. Roaring Fork Club, LLC, 351 P.3d 442 (Colo. 2015) (holding that: (i) the private club’s asserted “aesthetic, recreation, and piscatorial uses,” without impoundment, do not meet the state’s constitutional and statutory requirements for beneficial use, and therefore, the water court erred in granting new appropriative rights to the club; and (ii) the water court correctly determined that prior agreements between the parties barred all but one of the claims against the private club).

Roaring Fork Club (“the Club”) owns a private resort along the Roaring Fork River that provides members and guests with golfing, fishing, residential, and recreational amenities. The resort is located upstream from a contiguous parcel where St. Jude’s Company (“the Company”) conducts agricultural operations. The two parties have water rights that are diverted from the same headgate located on the Club’s property. A settlement agreement and a mutual release agreement (“the Prior Agreements”), which are the result of earlier litigation between the parties, govern the terms of the parties’ water use.

In March of 2007, the Club filed two applications with the Garfield County District Court, Water Division 5 (“the water court”). The first application requested a decree of new appropriative water rights and a change in the point of diversion of an existing water right. The Club sought new appropriative rights for “aesthetic, recreation, and piscatorial uses” because it claimed that since 2001 it had diverted twenty-one cubic feet per second from the Roaring Fork River (“the River”) into its ditch. The Club also sought to correct the legal description of an existing right’s point of diversion to its actual location. The second application proposed an augmentation plan for the ditch to account for “evaporative depletions.”

The Company opposed both of the Club’s applications because the Company was concerned that those changes would adversely affect its downstream rights. In October of 2007, the Company also filed a complaint against the Club with the water court. The Company alleged that the Club was wrongfully denying it access to and use of the headgate on Club’s property in violation of the Prior Agreements and Colorado law. The Company also alleged trespass and breach of contract, and requested that the water court quiet title to two other disputed priority rights between the parties.

The water court approved both of the Club’s applications. It decreed the Club new appropriative rights “for aesthetic, recreation, and piscatorial uses,” corrected the legal description of the diversion point, and approved the proposed augmentation. The water court found that the terms of the Prior Agreements between the two parties barred all of the Company’s claims, aside from one. The water court quieted title to the disputed priority rights, allotting sixty-one percent of each right to the Company and thirty-nine percent to the Club. The Company appealed the water court’s ruling to the Colorado Supreme Court (“the Court”).

On appeal, the Court addressed whether the Club’s diversion into and through a ditch for aesthetic, recreation, and piscatorial purposes was a beneficial use under state law. The Colorado Constitution guarantees the right to divert water for “beneficial uses.” The 1969 Water Right Determination and Administration Act (“the Act”) 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.” The Act specifically approves three applications of water: (i) the impoundment of water for firefighting or storage for recreational, fishery, or wildlife purposes; (ii) the appropriation by the State of Colorado for future generations of minimum flows in order to preserve the natural environments; and (iii) the diversion by a county, city, municipality, water conservation district, or sanitation district for recreational in-channel diversion purposes. The Court noted that the legislature has recently strictly limited recreational in-channel diversions by only allowing for appropriation to “certain governmental entities,” and by limiting such appropriations to a “minimum amount of stream flow . . . for a reasonable recreation experience.”

The Court found the Club’s applications for “aesthetic, recreation, and piscatorial” uses did not fit under any of the Act’s specifically authorized uses because the Club was not impounding any water, only the Colorado Water Conservation Board can appropriate instream flows, and the Act reserved recreational in-channel diversion for governmental entities. The Court found that the Club’s application of water—diverting it into and through a ditch for fishing streams, golf-course maintenance and aesthetic purposes—was entirely “passive.” The Court reasoned that putting water to “use” requires the water be used actively or for a type of service.

Further, the Court found that even if the Club’s uses were in fact active applications of water, the Club was still not putting the water to beneficial use because, unlike the approved recreational uses that benefit the public in general, the Club’s uses only serve “the subjective enjoyment of the Club’s private guests.” The Court concluded that “[t]he flow of water necessary to efficiently produce beauty, excitement, or fun cannot even conceptually be quantified,” and thus is there is no way to properly limit such use. And while the Court noted previous decisions that designated “piscatorial” uses as beneficial, the uses in those cases were for fish production, a sharp juxtaposition to the Club’s merely recreational purpose. Thus, the Court held that the water court erred in decreeing appropriative rights to the Club.

The Court also addressed the Company’s assertion that the water court erred in interpreting the Prior Agreements between the parties, as well as governing law. The Court found that because contract law governed the interpretation of the Prior Agreements, the water court properly interpreted the agreements based on their “meaning according to the intent of the parties as expressed in the instrument itself.” Therefore, the water court did not err in concluding that the plain language in the Prior Agreements barred all but one of the Company’s trespass claims.

The Court found no clear error in the water court’s findings of facts based on observation, testimony, and the documentary record, nor did it find abuse of discretion in any of the water court’s other decisions.
Accordingly, the Court reversed the water court’s order decreeing new appropriative rights to the Club and affirmed the rest of its rulings.

Márquez, J., Concurring in Part and Dissenting in Part

Justice Márquez, joined by Justice Hood, dissented, arguing that the Club’s uses were beneficial under state law. She reasoned that there is “no meaningful distinction between recreational fishing in a reservoir and recreational fishing in a flow-through diversion.” Accordingly, Justice Márquez argued that the Club’s use was a beneficial use enumerated under the Act.

The featured image is property of Jim Bain and is licensed for reuse under the Creative Commons Attribution-ShareAlike 2.0 license.

Chostner v. Colorado Water Quality Control Comm’n, 327 P.3d 290 (Colo. App. 2013), cert. denied No. 13SC678, 2014 WL 1669160 (Colo. Apr. 28, 2014) (holding that the Colorado Water Quality Control Commission’s approval of the Water Quality Control Division’s conditional section 401 certification provided reasonable assurance that the proposed Southern Delivery System will not violate applicable quality standards).

This appeal arose from a decision of the Water Quality Control Division (“Division”) to conditionally certify a municipal water project, the Southern Delivery System (“SDS”), pursuant to section 401 of the Clean Water Act (“Section 401”). The District Attorney for the Tenth Judicial District, along with the Rocky Mountain Environment and Labor Coalition (collectively “Coalition”) appealed the section 401 certification to the Colorado Water Quality Control Commission (“Commission”), which affirmed the Division’s ruling. The Coalition appealed the decision to the district court, which reversed. The Commission, along with Colorado Springs Utilities (“Colorado Springs”) appealed the district court’s judgment.

The SDS is a pipeline project spanning over fifty miles, designed to transport water from the Pueblo Reservoir into El Paso County. The project involved constructing two new reservoirs and modifying an existing ditch. Parties in the case expected the SDS to impact the Arkansas River and Fountain Creek, along with potential long-term impacts to groundwater. The SDS involved federal contracts with the Bureau of Reclamation (“Bureau”), triggering a National Environmental Policy Act (“NEPA”) environmental review. The Bureau conducted water quality analyses, sought public comment, imposed mitigation measures, and required the development of adaptive management practices. As part of the review, the Bureau considered seven alternative plans, including six “action” plans and one “no action” alternative. The “no action” plan presented the most likely future action absent a major project such as the SDS. After reviewing the alternatives, the Bureau identified the SDS as the preferred project because it would cause the least amount of environmental damage.

Construction of the SDS required Colorado Springs to obtain multiple permits. For one of these required permits, Colorado Springs requested the Army Corps of Engineers grant it a dredge and fill permit. In order to obtain this permit, Colorado Springs needed state certification under Section 401. This certification constituted the state’s assertion that Colorado Springs would avoid violating federal water quality standards during construction. The Division reviewed the application over a year-long process. The Division conducted anti-degradation reviews of stream segments, considered mitigation requirements, and analyzed the Bureau’s impact statement, along with various agencies’ mitigation plans. The Division then conditionally certificated the SDS under Section 401. The Division made the certification contingent upon

(1) the development of an adaptive management program, (2) all conditions “placed on the SDS . . . by other applicable regulatory agencies,” (3) flow maintenance plans to minimize water quality impacts due to potential reduced flows in the Arkansas River, and (4) the installation of groundwater monitoring wells both up and downstream of the new Williams Creek Reservoirs.

Following the conditional certification, the Corps of Engineers issued the dredge and fill permit.

The Commission affirmed the Division’s 401 certification upon administrative appeal. The district court then heard the Coalition’s appeal: it adopted the Coalition’s proposed order, reversed the Commission’s order, and found the Division’s 401 certification arbitrary and capricious. The district court held that (i) the Division failed to properly notify the public; (ii) the Division failed to conduct relevant anti-degradation reviews; (iii) the Division used arbitrary and capricious methodologies in making its determinations; (iv) the Division’s certification would allow for impermissible degradation because it failed to establish total maximum daily loads (“TMDL”); and (v) the Division failed to assess the impact of population growth on water quality.

On appeal, the Colorado Court of Appeals (“Court”) reviewed the district court’s findings under the arbitrary and capricious standard. The Court first held that because the District Attorney’s office asserted the same arguments as the Coalition, and the Coalition had standing, the Court did not need to address whether the District Attorney had standing. Next, the Court held that the district court applied the incorrect standard of review insofar as it made credibility determinations based on information not contained in the administrative record.

As to the issue of the public notice requirements, the regulations required the Division to notify the public of its preliminary anti-degradation findings, its draft certification determination, and the final anti-degradation and certification determinations. The regulations also required the Division to place notices in its Water Quality Information Bulletin. On appeal, the dispute centered on whether the Division should have identified the Wildhorse Creek, the Lower Arkansas Segment 1b, and the Middle Arkansas Segments 2 and 3 in the Division’s public notices. The Court held that Wildhorse Creek and the Lower Arkansas Segment 1b were both classified as “use-protected,” and so were not subject to the notice requirements. The Court further held that the district court’s reasoning was erroneous with regard to the Middle Arkansas Segments 2 and 3. The Court found that the Coalition did not preserve its argument concerning these segments because the Coalition did not raise it before the Commission. Finally, despite any deficiencies in the public notice, the Coalition did not demonstrate prejudice related to the deficiencies. The Court concluded that the record contained evidence to support the Commission’s finding that public notice was sufficient.

Next, the Court addressed the evidence supporting the Division’s anti-degradation determinations and the methodologies of the anti-degradation analyses. The Court found that the testimony regarding the anti-degradation determinations provided sufficient evidence, and that the anti-degradation reviews were sufficient, notwithstanding their oral nature. The evidence in the record demonstrated that the Division reviewed proper materials in its findings regarding water quality impacts. Finally, the Court found that the Division’s qualitative analyses were all that the regulations required. As such, the Court determined that the district court erred in finding that the Division failed to conduct proper anti-degradation reviews.

The Court then addressed the district court’s finding that federal regulations required the Division to establish TMDLs prior to issuing a 401 certification. When a permit seeks permission to discharge pollutants into source waters, federal regulations require TMDLs. Section 401 certifications, however, are distinct from such pollution discharge permits. The regulations did not require the Division to develop a TMDL prior to certification because the Division’s certification of the SDS under Section 401 did not include a point source discharge pollution permit. Therefore, the district court erred when it concluded that federal regulations required a TMDL.

Lastly, the Court addressed whether the Division had an obligation to consider future population growth and its impact on water quality. The Court found nothing in the Commission’s regulations that required such consideration, and, moreover, the Coalition presented no evidence that the SDS would cause population growth. Therefore, the Court adopted the Division’s findings, and reversed the district court’s conclusion on this issue.

Accordingly, the Court reversed the district court’s judgment.

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Upper Black Squirrel Creek Ground Water Mgmt. Dist. v. Cherokee Metro. Dist., 351 P.3d 408 (Colo. 2015) (affirming the water court’s decision and holding (i) a stipulation agreement mandating that a special district recharge an aquifer with its recaptured wastewater did not allow the special district to “reuse” the water, and (ii) the stipulation did not preclude the district from requesting the right to claim replenishment credits for that wastewater in an application for replacement plan because the stipulation did not address the issue).

The Upper Black Squirrel Creek Ground Water Management District (“UBS”) is a governmental body responsible for managing ground water in the Upper Black Squirrel Creek Ground Water Basin (“UBS Basin”). The Cherokee Metropolitan District (“Cherokee”) is a special district that previously had numerous disputes with UBS concerning Cherokee’s conditional ground water rights in the UBS Basin. In 1999, UBS, Cherokee, and other parties entered into a stipulation (“Stipulation”) that resolved many of the disputes. The Stipulation required Cherokee to deliver wastewater returns back to the UBS Basin in order to recharge the aquifer.

Cherokee filed an application for replacement plan with the Colorado Ground Water Commission (“Commission”). In 2009, UBS opposed the application before the Commission and motioned the El Paso County, Water Division 2 (“water court”) for a declaratory judgment that the terms of the Stipulation prohibited Cherokee from claiming credit for the wastewater returns it delivered back to the UBS Basin. UBS also sought to enjoin Cherokee from asserting such a claim in its application for replacement plan before the Commission.

The water court initially found the Stipulation prohibited Cherokee, or any other person, from claiming credit for the wastewater returns in Cherokee’s replacement plan application. However, Cherokee appealed to the Colorado Supreme Court (“Court”) and the Court remanded the case to the water court on other grounds.

UBS then filed an amended motion for declaratory judgment and the parties rebriefed the issues. This time, the water court found the Stipulation did not preclude Cherokee from making a claim for credits from the wastewater Cherokee was obligated to return to the UBS aquifer. The water court emphasized that it was only to interpret the relevant “recharge” provision of the Stipulation. The water court determined the Stipulation only required Cherokee to deliver wastewater returns to the UBS Basin to recharge the aquifer, rather than putting it to successive uses. Because the Stipulation did not mention anything regarding claims for water credits in future applications, the water court found the Stipulation did not specifically preclude Cherokee from making such a claim.

UBS appealed the water court’s interpretation of the Stipulation to the Court. On appeal, the Court considered the effect of the requirement that Cherokee deliver its wastewater returns to the UBS Basin had on its application for new appropriative rights. The Court reasoned that the Stipulation should be governed by the principles of contract law and the Colorado Ground Water Management Act. The Court noted that ground water is different from water native to a public stream in that it follows a modified prior appropriation regime. This allows an appropriator who lawfully exports water from another basin to make successive uses of that water.

UBS argued that the water court’s finding implicitly authorized Cherokee to claim credits for the wastewater it had to return to the UBS Basin. The Court rejected this argument for two reasons. First, the Court noted the water court’s ruling gave no direction as to Cherokee’s potential future rights to claim credit for the wastewater. The Court emphasized that the Commission is responsible for managing designated ground water and ensuring that aquifers are not unreasonably depleted. Thus, because the Stipulation lacked any language about claiming future credits, the Court found it had no bearing on any such claim and the decision to allow or deny such a claim remained squarely with the Commission. Therefore, the Court determined that the question of whether Cherokee could claim water rights for delivering wastewater to the UBS aquifer was beyond the scope of the Stipulation. The Court upheld the water court’s finding that the Stipulation neither permitted nor precluded Cherokee from applying for credits.

Second, the Court considered UBS’s argument that returning the wastewater to the aquifer amounted to Cherokee being able to “reuse” it. The Court disagreed with UBS’s definition of reuse. The Court found the Stipulation requires Cherokee to use its best efforts to recapture the wastewater returns and deliver them back to the aquifer, nothing more. The Court held, “[I]n no meaningful sense can receiving credit for relinquishing dominion over return flows by delivering them back to the basin for recharge of the aquifer, in lieu of making successive uses of them, be characterized as reuse.”

Accordingly, the Court affirmed the water court’s interpretation of the Stipulation.

Hobbs, G.J., Concurring in Part and Dissenting in Part

Justice Hobbs wrote a concurrence-in-part and dissent-in-part, with which Chief Justice Rice joined. Justice Hobbs opined that because granting Cherokee water credits for the recharged wastewater would effectively deprive UBS of the benefits it had bargained for in the Stipulation, the Stipulation did implicitly preclude Cherokee from claiming those rights. He observed that if Cherokee had the right to claim replacement credits, the Stipulation’s recharge obligation would be unnecessary and meaningless. Justice Hobbs argued that the Court should have adopted a construction that gave effect to all Stipulation provisions in determining the Stipulation precluded Cherokee from claiming replacement credits. However, Justice Hobbs also observed that the Colorado Ground Water Commission would certainly prohibit Cherokee from claiming credits for the recharged water, so the outcome would be correct despite the Court’s restraint. Justice Hobbs agreed with the rest of the majority’s findings.

This photo of Gross Reservoir in Boulder County was taken by Jeffery Beall.  The use of this photo does not suggest that the photographer endorses the Water Law Review.