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.

The featured image is part of the public domain and can be used without expressed permission.

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.

Farmers Water Development Company v. Colorado Water Conservation Board, 346 P.3d 52 (Colo. 2015) (holding that Colorado Water Conservation Board decisions concerning preservation of the natural environment are quasi-legislative, rather than quasi-judicial, actions).

The San Miguel River originates in the San Juan Mountains above the town of Telluride. The river goes down a valley for seventy miles before joining the waters of the Dolores River. Within those seventy miles of river the Colorado Water Conservation Board (“CWCB”) sought to appropriate an instream flow right (“ISF”) along seventeen miles for environmental preservation. The Colorado Division of Wildlife and U.S. Bureau of Land Management recommended the CWCB seek this appropriation for the preservation of three “sensitive” fish species and the “imperiled” riparian habitat. Farmers Water Development Company (“Farmers”) opposed the appropriation.

CWCB’s enabling legislation requires it to make three findings before applying for an ISF: (i) the appropriated water would preserve the natural environment to a reasonable degree; (ii) the appropriation can preserve a natural environment; and (iii) the environment’s preservation will not cause material injury to other water rights.

The CWCB must have notice and comment at various stages of the determination process. This includes annual meetings in January, whern the CWCB declares any intent to appropriate, and in March when it takes public comment on any pending ISF appropriations. The CWCB also must have a hearing whenever a party contests an ISF appropriation. Parties can present evidence, have witnesses give testimony, and orally argue their position for or against the appropriation. The CWCB typically announces hearing results at its November board meeting, but retains the discretion to modify or delay this schedule. In this case, the CWCB made notice of its intentions nine times between 2008 and 2010, ultimately delaying its decision until January of 2011. This schedule modification gave water users in the San Miguel Basin time to adjudicate water rights for future needs. Farmers did not apply for a water right during this postponement period.

At the meeting in January the CWCB set a hearing for the proposed appropriation in September 2011. Farmers gave a notice of intent to contest the proposed ISF request, but did not participate in the September 2011 hearing. At the hearing the CWCB found the ISF appropriation satisfied the requirements of the three determinations. The CWCB filed its request for the ISF appropriation with Water Division 4 and published notice of its request. Farmers opposed. The CWCB asked the water court to determine whether its decision-making procedure for an ISF appropriation was quasi-legislative. Farmers counterclaimed alleging both that the procedure is quasi-judicial and that the CWCB’s procedure was insufficient under that premise.

The water court held in favor of the CWCB, finding that the process for obtaining an ISF appropriation is quasi-legislative in nature. The water court found that the ultimate outcome of the process is to enact legislation with the purpose of protecting the environment, rather than make any determination as to a specific person’s rights or duties. Farmers reserved the right to appeal to the Colorado Supreme Court (“Court”), and timely did so.

The Court sought to answer whether the CWCB’s decision-making process for an ISF appropriation request was quasi-legislative, as CWCB claimed, or quasi-judicial, as Farmers alleged. The Court reviewed the water court’s ruling de novo. The Court acknowledged early in its opinion that the CWCB has the exclusive right to appropriate ISFs to maintain minimum water levels for the benefit of the citizens of Colorado, and the CWCB follows a specific procedure to acquire ISF appropriations to natural streams and lakes.

The Court analyzed a similar decision-making question in its previous case, Cherry Hills Resort Dev. Co. v. City of Cherry Hills Vill., 757 P.2d 622 (Colo. 1988). In Cherry Hills, the Court held that the key factor in determining whether an action is quasi-judicial or quasi-legislative is the nature of the governmental body’s action, rather than a set legislative system requiring notice and hearing. Applying the Cherry Hills analysis, the Court determined that the nature of the CWCB’s ISF appropriation was the preservation of the environment, which section 37-92-10(3) charges CWCB with pursuing on behalf of the public of Colorado. The Court held that the CWCB’s determination was quasi-legislative because it requested an ISF appropriation in the public’s interest, rather than adjudicating a specific case.

The Court next looked at the CWCB’s process. The CWCB possesses discretion for how it proceeds once it has gone through initial inquiries. It may apply for the ISF, decline to apply, or table the proposal. The Colorado legislature delegated this power and the calculation of the three determinations CWCB must find before requesting an ISF appropriation to the CWCB. The legislature required these three determinations to direct the CWCB’s analysis when determining whether to apply for an appropriation. The Court said that the CWCB’s required three determinations did not make the process an adjudication and therefore quasi-judicial. The CWCB has limitations on its ability to appropriate: it may only exercise its appropriation power to maintain minimum stream flows as necessary for the preservation of the natural environment.

The Court saw the notice and comment periods, and the hearings as a process to gather public input for CWBC’s determination. The CWCB has a unique duty to preserve the environment on behalf of the people of Colorado, making its policy determinations generally applicable. The process the CWBC follows prior to applying for an appropriation facilitates its determination of whether the preservation will be successful without causing harm to existing water rights. The general, rather than individual, applicability of the ISF determinations reinforced the Court’s view that the CWBC pursued the ISF in order to preserve the environment on behalf of the citizens of Colorado. The Court observed that the legislature put the three determinations in place to channel the CWCB’s policy in making policy findings like those in this case. The CWCB, under direction of the necessary determinations, seeks to preserve the environment for the citizens of Colorado. For these reasons the Court affirmed the water court’s ruling.

The Court then analyzed each of Farmers’ arguments for why the process is quasi-judicial, and ultimately found all of Farmers’ argument fruitless. First, Farmers focused on two factors laid out in Snyder v. City of Lakewood, 542 P.3d 371, 374 (Colo. 1975). These factors included: (i) that a state or local law required publication of notice, and (ii) state or local law required a public forum at which citizens could give testimony and present evidence. The Court rejected this argument because Cherry Hills overruled Snyder and stated that the factors in Snyder were not determinative of an agency’s action being quasi-legislative or quasi-judicial. The Court concluded that the nature of the decision is what controls, and in this case that nature is quasi-legislative. The Court held that the nature of the CWCB’s decision to apply for an ISF is quasi-legislative because it is prospective in nature, not focused on an individual or group, and it has general applicability.

Second, Farmers argued that the CWCB’s process must be adjudicative because it replaces adjudicative water court proceedings. This argument also failed because the CWCB’s process was not for adjudication of water, but for the determination of whether or not to request an ISF appropriation from the water court. The CWCB does not have the power to grant itself an ISF decree, nor to amend one it already has. Thus, the Court did not find this argument persuasive.

Third, Farmers contested the water court’s deferential standard of review when it makes a finding based on an administrative record. Farmers complained that this deference contributes to preventing Farmers from having its day in court. The Court found that this argument lacked merit because one does not have that right in response to an agency’s quasi-legislative policy decision. Furthermore, the Court recognized that Farmers willingly passed on its opportunity to partake in the notice and comment proceedings, and to appear at the CWCB hearing. Additionally, the Court noted that Farmers had the opportunity to appear before the water court prior to filing an appeal.

Finally, the Court dismissed Farmers’ argument that the ISF determination impermissibly affected current water right holders with vested interests in the San Miguel River. The Court interpreted this argument as a challenge to the CWCB’s determination that it may obtain the ISF appropriation without injuring other water rights. The Court also found that Farmers waived this argument on appeal because Farmers did not raise it before the water court. The Court, however, explained that in Colorado the doctrine of prior appropriation guarantees that no junior water right may infringe on any senior water right. The Court noted that the CWCB further combatted this argument by choosing to postpone making a determination in order to allow water users in the basin to obtain water rights for foreseeable needs, and that Farmers chose not to apply for additional water rights during this period.

Accordingly, the Court affirmed the water court’s ruling that the CWCB’s decision to apply for an ISF appropriation was a quasi-legislative action, not quasi-judicial, because the CWCB made a policy decision regarding the preservation of Colorado’s natural environment.

John Fowler took this picture near Telluride, Colorado.  It is licensed under Creative Commons Attribution 2.0 Generic License.

Wolfe v. Jim Hutton Educ. Found., 344 P.3d 855 (Colo. 2015) (reversing the water court’s abandonment determination, remanding the case back to the water court, and holding that: (i) evidence of over ten years of nonuse of a decreed point of diversion is sufficient to trigger a rebuttable presumption of the water right holder’s intent to abandon the water right, and (ii) the burden then shifts to the water right holder to rebut the presumption of abandonment).

In 1893, the Tip Jack water right was originally decreed to service the Tip Jack Ditch. Jim Hutton Educational Foundation (“Foundation”) now owns and operates a 4,000-acre ranch encompassing the Tip Jack Ditch. In 2010, the State and Division One Engineers (“Engineers”) determined that the Foundation abandoned the Tip Jack water right and placed the water right on the decennial abandonment list. The Foundation challenged the listing in District Court, Weld County, Water Division 1 (“water court”).

The Engineers argued the Foundation abandoned the Tip Jack water right because Roscoe Hutton, the Foundation’s predecessor in interest, failed to use the water right. Hutton acquired the Tip Jack water right in 1948. In 1978, the water court entered a decree changing the point of diversion (“1978 diversion point”). The water court simultaneously decreed two additional water rights, Hutton Ditches 1 and 2. The Engineers argued that Hutton’s failure to use the 1978 diversion point proved the Foundation abandoned the Tip Jack water right. Conversely, the Foundation contended that notwithstanding Hutton’s failure to use the 1978 diversion point, the Foundation did not abandon the Tip Jack water right. Specifically, the Foundation argued that it used the Tip Jack water right, but diverted it from the Hutton 2 diversion point instead of the 1978 diversion point.

The water court ruled in favor of the Foundation because it determined the Engineers failed to prove nonuse by a preponderance of the evidence, and even if they had proven nonuse, there was ample evidence to rebut the presumption of abandonment. The Engineers appealed to the Colorado Supreme Court (“Court”). The Republican River Water Conservation District (“RRWCD”) joined in the appeal.

On appeal, the Court reviewed the water court’s abandonment determination regarding the Tip Jack water right. Specifically, the Court analyzed how the presumption of abandonment applies when the water right holder used the amount of water decreed, but not from the decreed point of diversion. A water right holder has abandoned the water right when there is no beneficial use for over ten years and there is intent to abandon. The Court applied a two-step analysis to determine whether the Foundation abandoned the Tip Jack water right when Hutton failed to use the 1978 point of diversion. In the first step, the Court considered whether Engineers met their initial burden of demonstrating nonuse for ten years or more to trigger the presumption of intent to abandon. If the Engineers met their initial burden, then the burden shifted to the water right holder. In the second step, the Court considered whether the Foundation presented sufficient evidence to prove lack of intent to abandon, or excuse nonuse, to rebut the presumption of abandonment.

In step one of the analysis, the Court evaluated whether the Engineers’ evidence was sufficient to trigger the presumption of intent to abandon. The water court held that the Engineers proved water was never diverted into the Tip Jack Ditch from the 1978 diversion point. Nonetheless, the water court deemed the nonuse at the 1978 diversion point insufficient to trigger the presumption. The Court disagreed with the water court regarding this finding. The Court reasoned that nonuse referred to the water right, not just the water. Further, the decreed point of diversion was a key element of use of the water right. Therefore, the Court found that evidence of nonuse at the decreed diversion point for ten years or more was enough to effectively trigger the presumption. Accordingly, the Court held the Engineers proved prolonged nonuse at the 1978 diversion point, and thereby triggered the statutory presumption of intent to abandon.

In step two of the analysis, the Court considered whether the Foundation rebutted the presumption of abandonment. The Foundation alleged it rebutted the presumption with evidence that Hutton used the Tip Jack water right through a different, undecreed diversion point. Specifically, the Foundation produced aerial photographs that indicated Jim Hutton pumped water into the Tip Jack Ditch by diverting the Tip Jack water right and the Hutton 2 water right from the Hutton 2 diversion point. Conversely, the Engineers maintained that the use of an undecreed point of diversion is insufficient to rebut the presumption of abandonment.

The Court noted that Colorado law disfavors abandonment. The Court accepted the Foundation’s contention that use of a water right at an undecreed point of diversion evidences a lack of intent to abandon the water right. However, the Court found the water court’s order did not specify which water rights the Foundation used. The Court reasoned that the use of the Tip Jack Ditch did not necessarily constitute use of the Tip Jack water right. Therefore, the water court needed to analyze each of the three water rights in order to determine whether the evidence was sufficient to rebut the presumption of intent to abandon.

Accordingly, the Court reversed the water court’s abandonment determination, held that the Engineers’ evidence triggered the rebuttable presumption of abandonment, and remanded for reconsideration of whether the Foundation met its burden of rebutting the presumption.

Photo is of a beaver dam on the Mcgregor Ranch near the Rocky Mountain National Park.  The photo is part of the public domain.

Platt v. Platt

Platt v. Platt, 337 P.3d 431 (Wyo. 2014) (holding the district court’s order to partition in kind a ranch property, including the water rights appurtenant to the individual parcels, by ordering the owners of the property to construct a separate ditch to carry water from one parcel to the other, was incomplete and clearly erroneous because the record lacked competent evidence to establish the ditch requirement would not manifestly injure the value of the property).

In the first proceeding before the district court, the commissioners recommended the parties decide the location for the Dedicated Ditch because snow cover prevented the commissioners from locating it. When the parties were unable to agree on a location, the district court held a second hearing to decide the issue. The district court heard recommendations from the commissioners, Alice, and the Trust. Ultimately, the district court ordered the parties to construct the Trust’s proposed “Westerly Ditch” because, although it was “arguably the most expensive option, [it offered] the best future outcome for both parties, being that there would be minimal to no interaction between them for maintenance and inspection.” The Westerly Ditch required an easement from Kraft Ranches, a non-party. The district court ordered the parties share the cost of construction, including the cost of installing a workable irrigation system.

Alice appealed to the Wyoming Supreme Court (“Court”), arguing that the district court’s order for construction of the Westerly Ditch was legally and factually erroneous because it required her to obtain an easement from a non-party and to change her means of water conveyance without evidence that she could do either without causing manifest injury to the value of her property.

On appeal, the Court first addressed whether the district court’s first order for partition in kind of the parties’ property was clearly erroneous. Under Wyoming law, partition in kind is inappropriate if “the real property cannot be divided in kind without causing manifest injury to its value.” In the first proceeding, the district court determined the property could be partitioned in kind “without manifest injury to the whole” despite the fact that the commissioners did not determine the exact location of the Dedicated Ditch. The Court found this conclusion erroneous. Given that Alice planned to use the partitioned property for agriculture and ranching, knowing whether and how water could be delivered to her parcel was essential to determining the land’s value. The Court noted “[t]here can be little doubt that a property with good water rights and a means to convey the water to the land is worth considerably more in arid Wyoming than land without one or the other.” The Court held that the location of the Dedicated Ditch would also affect the value of the Trust’s parcel because two of the ditch locations the district court considered would have used seven acres of the Trust’s valuable hay meadows. Because the location of the Dedicated Ditch would impact the partitioned property’s value, the Court held the district court’s finding that partition in kind would not manifestly injure the value of the property, without affirmatively locating the ditch, was clearly erroneous.

Next, the Court addressed whether the district court erred in the second proceeding when it ordered the parties to build the Westerly Ditch because it required an easement from a non-party, Kraft Ranches. Alice argued the district court could not require the parties to obtain an additional easement across Kraft Ranches’s property without evidence of permission. The Platt brothers argued that the district court could require the easement because evidence in the record demonstrated Kraft Ranches would grant it. The Court began by noting that it was a matter of first impression whether a court has the power to order a party to obtain an easement from a non-party in a partition proceeding. The Court held that one approach to the issue may lie in the common law doctrine of “owelty,” where one coparcener compensates the other when land is not capable of being partitioned into exactly equal shares. Accordingly, had the record supported a conclusion that it was possible to obtain an easement from Kraft Ranches and build a ditch connecting the Westerly Ditch to King Turnbull Ditch No. 2, the district court could have ordered the Trust to pay the difference in value or divide the cost of construction between the parties to effectuate an equitable partition.

However, the Court held that the “vague promise of future performance” from Kraft Ranches in the commissioners’ report was not specific enough to constitute consent to an easement under the Statute of Frauds. Because the district court did not determine if the easement (i) could be obtained, (ii) would allow appropriate construction and necessary maintenance of the ditch, or (iii) would run with the land, the Court held it had no basis to determine that the partition was equitable, nor that the order would not manifestly injure the value of the partitioned property.

Next, the Court considered whether the district court’s order for construction of the Westerly Ditch required Alice to change her means of conveyance for the water she received in the partition. Alice argued she could not be compelled to change her means of conveyance because Wyoming law requires her to petition the State Board of Control for the change, but does not guarantee permission. The Trust argued that a person can change their means of conveyance without petitioning the Board of Control. The Court held that the Wyoming Legislature did intend to “require a person changing the means of conveyance of water supplied through a water right to obtain approval by the Board of Control,” but that the district court did not order Alice to change her means of conveyance. If the district court required construction of the Westerly Ditch on remand, Alice could choose to change her means of conveyance to bring water to her land, or choose not to change her means of conveyance and forego her water rights. The Court noted that this result “may be a Hobson’s choice, but it may also be unavoidable.” However, the Court also noted the lack of evidence demonstrating that Alice could obtain approval to change her means of conveyance. On remand, evidence that Alice could not obtain permission to change the means of conveyance would negatively affect the value of her partitioned parcel and weigh against the Westerly Ditch as an equitable means of dividing the property.

Finally, the Court considered whether the district court abused its discretion in choosing the Westerly Ditch over the alternatives that Alice and the commissioners suggested. Alice contended that building the Westerly Ditch was a high cost risk because the ditch was unproven. The Trust argued that evidence presented at trial showed the Westerly Ditch could be successfully built and operated. The Court concluded the district court did not review evidence of construction costs for the Westerly Ditch until after selecting it, and remanded the issue of whether the cost of building the Westerly Ditch would manifestly injure the value of the property.

Accordingly, the Court reversed the district court’s order to construct the Westerly Ditch, and remanded with instructions for the district court to determine whether the property could be partitioned in kind without manifestly injuring its value, and if so, whether the Westerly Ditch is an equitable means of dividing the property.


The title image features an aerial view of Carbon County, Wyoming. This file is licensed under the Creative Commons Attribution 2.0 Generic license. The owner does not endorse this blog.

Brown v. Greenheart

Brown v. Greenheart, 335 P.3d 1 (Idaho 2014) (holding that: (i) the statute of limitations for a quite title action does not begin to run until a party claims a right in property that is adverse to another; (ii) the statute of limitations for mutual mistake does not begin to run until the facts constituting the mistake are discovered, not when the mistake is discoverable; (iii) the plaintiffs adequately pled the issue of mutual mistake; and (iv) the conveyance was ambiguous and, therefore, the trial court did not err in considering extrinsic evidence to resolve the ambiguity).

Jay Brown and Christine Hopson-Brown owned a 320-acre parcel of land in Elmore County (“Brown Property”). In 2000, the Snake River Basin Adjudication Court decreed water rights associated with parcel to the Browns. The rights authorized the Brown’s to irrigate a total of 287 acres. In 2003, the Browns agreed to idle 160 acres of their property from irrigation, and lease the associated water rights to the Idaho Water Resource Board. Three years later, the Browns listed 60 unirrigated acres of their property for sale, communicating to their real estate agent that they did not wish to transfer any water rights with the listed 60 acres.

Augusta Greenheart purchased the 60 acres of land from the Browns. The real estate agent verbally informed Greenheart that the land was “dry,” and that there were no water rights associated with the property. The purchase and sale agreement included two provisions about the associated water rights. The first provision stated: “Seller represents that the property does have the following utilities, improvements, & other rights available.”  The provision was marked “not applicable.” The second provision, paragraph 16, stated: “WATER RIGHTS: Description of water rights, water systems, wells springs, water, ditches, ditch rights, etc. if any, that are appurtenant thereto that are on or used in connection with the premises and shall be included in the sale unless otherwise provided herein.” This provision was left blank. Additionally, in the Seller’s Disclosure Form accompanying the purchase and sale agreement, the parties marked the disclosure “Irrigation water provided by” as not applicable.

In 2007, First American Title prepared a warranty deed conveying the 60-acre piece of land to Greenheart, granting the premises “with their appurtenances.” Soon after, Greenheart noticed that, contrary to the conversations she had with the real estate agent and the Browns, her new property was classified as irrigated agriculture for tax purposes. Greenheart submitted a challenge with the Elmore County Board of Equalization to have the property classified as dry-grazing. The Elmore County Board of Equalization adjusted the classification, which decreased her taxes by $600 annually.

In 2012, the City of Mountain Home entered into discussions with the Browns to purchase their water rights for $2,000 per acre. During the negotiations, the Browns’ attorney notified the city that the Browns might have conveyed some of their water rights to Greenheart during the 2006 sale because of the “appurtenances” language contained in the 2007 warranty deed. After the Browns notified Greenheart of the possible mistake, Greenheart filed a notice of change of water right ownership with the Idaho Department of Water Resources (“IDWR”). IDWR approved Greenheart’s request, granting her ownership of a portion of the Browns’ water rights.

The Browns filed a quiet title action, “and sought declaratory judgment that they owned the water rights because the claim that the water rights passed under the appurtenances clause of the warranty deed was rebuffed by facts demonstrating that the parties did not intend to convey water rights.” The district court found that inclusion of the appurtenance language in the warranty deed was based on a mutual mistake between the parties, that the Browns were entitled to equitable relief on the grounds of quasi-estoppel and waiver, and entered a judgment reforming the warranty deed to reserve the water rights to the Browns.

On appeal, the Supreme Court of Idaho (“Court”) first addressed Greenheart’s contention that the Browns’ quiet title action and mutual mistake claim were both time-barred. The Court agreed with the district court, and held that the statute of limitations provided in Idaho Code section 5-224 did not prohibit the Browns’ quiet title action. The court noted that a cause of action for quiet title does not begin until a party “claims an interest in property ‘adverse to’ another.” The Court determined that the statute of limitations period did not begin to run until Greenheart asserted a claim to the water rights by filing the notice to change ownership with the IDWR.

The Court also rejected Greenheart’s assertion that the three-year statute of limitations provided in Idaho Code section 5-218(4) prohibited the Browns’ mutual mistake claim. Greenheart argued that the Court should adopt “a bright line rule that a party is expected to realize the alleged fraud or mistake at the time of execution of a deed.” In refusing to adopt such a rule, the Court noted that the statute expressly states a cause of action does not accrue “until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” The Court held that this did not occur until the Browns’ attorney discovered the mistake in 2012. Prior to that, both parties had operated under the assumption that the sale did not transfer water rights. Greenheart failed to produce evidence to the contrary.

Next, the court addressed the Brown’s mutual mistake claim. The district court ruled that the Browns’ were entitled to reformation of the deed based on mutual mistake. The district court found that “both parties shared a vital misconception about the water rights . . . and that the misconception was so substantial and fundamental as to defeat the object of the parties, which was the sale of dry-grazing land.” Greenheart did not challenge the factual basis of the district court’s ruling, but argued that the district court erred because the Browns did not plead mutual mistake, or in the alternative, that they did not plead mutual mistake with sufficient particularity. The Court disagreed and found that the Browns sufficiently plead the mutual mistake claim and that Greenheart had adequate notice that the issue would be litigated.

Greenheart also asserted a negligence claim against the Browns, arguing that they were negligent in protecting their interests in the water rights by not seeking legal advice during the sale. The district court concluded that the Browns acted reasonably because they sought the assistance of a licensed real estate agent. Because the district court’s discussion of negligence was only in the context of the statute of limitations argument, Greenheart’s independent negligence claim was being raised for the first time on appeal and the Court declined to address it.

Last, Greenheart appealed the district court’s decision that the purchase and sale agreement was ambiguous. The Court noted that, “[a] contract term is ambiguous when there are two different, reasonable interpretations of the language.” The Court found that the district court did not err in finding paragraph 16—providing for a “[d]escription of water rights . . . if any, that are appurtenant thereto that are now on or used in connection with the premises and shall be included in the sale unless otherwise provided herein”—was ambiguous because the term “herein” is inherently ambiguous. The Court also held that the agreement was ambiguous as to whether water rights were transferred, because the Browns checked the box indicating that a water rights transfer fee was not applicable. The Court stated that, “[i]f water rights were intended to be transferred, then the payment of the transfer fee would very much be applicable.” As a result, the Court held that the district court did not err in considering extrinsic evidence to resolve the ambiguity.

Accordingly, the court affirmed the district court’s findings in all respects, and held that the Brown’s were entitled to reformation of the original deed to specifically reserve all water rights to the Brown’s.


The title image features the Snake River in Mountain Home, Idaho. This image was created by an employee of the government and as such is part of the public domain.