Small-scale hydropower projects are on the rise in Colorado. Both federal and state legislation paved the road for the rise by easing the permit process for hydropower as an energy source, and the recent Colorado Supreme Court decision in Frees v. Tidd created the no-stoplight speedway to make hydropower an up-and-coming energy source in the state. However, stakeholders don’t yet fully know what this development might mean for water and water rights holders.
HYDROPOWER ISSUES IN COLORADO
Historically, Colorado has been a proponent of hydropower development. In 1891, Southwest Colorado became home to the first hydropower generating station in the world, and the state was already attempting to demolish the road blocks standing in the hydropower industry’s way prior to any of the recent federal congressional acts. Between 2005 and 2013, Colorado developed sixty-two hydropower facilities. In 2010, the Colorado Energy Office and the Federal Energy Regulatory Commission (“FERC”) signed a memorandum of understanding to streamline the processing of low-impact hydropower projects in Colorado.
While streamlining provided a clearing of roadblocks on the way toward a hydropower processing system that would benefit developers, Congress also enacted legislation to ease the process further. In 2013, Congress passed both the Hydropower Regulatory Efficiency Act and the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act (“Acts”). These Acts incentivize hydropower development by eliminating the requirement of environmental impact statements while streamlining the federal regulatory approval process. Colorado responded by publishing The Small Hydropower Handbook in 2013 and followed up with its 2014 state legislative law that synchronized state and federal permit processing. This new process allows a noncontroversial project to obtain both state and federal approval in as short as sixty days.
Colorado courts joined the legislature’s pursuit for a streamlined hydropower permitting process with the landmark Colorado Supreme Court decision of Frees v. Tidd (“Frees”). The Frees case, decided in June 2015, established that an applicant can obtain a junior conditional water right to use the same water as a senior water right holder so long as the applicant can show the water is available and will be for a non-consumptive use.
David, George, and Shirley Frees (the “Frees”) own an irrigation water right with an 1890 priority. This right diverts water from Garner Creek to Garner Creek Ditch, where the Frees own an easement across a small portion of Charles and Barbara Tidd’s (the “Tidds”) property. When the Tidds applied for a conditional water right to use .41 cfs for a non-consumptive hydropower use, the district court granted the declaratory judgment in favor of the Tidds, and the Colorado Supreme Court affirmed in a divided decision.
Colorado’s high court affirmed the judgment in part because the Tidds could demonstrate that their non-consumptive hydropower use would not cause injury to the senior, the Frees, while also putting the water a beneficial use. Moreover, because the Frees’ senior water right is usufructuary and limited to irrigation purposes, the Court reasoned that the Tidds can use that .41 cfs for hydropower purposes and not disrupt the Frees’ use of the water.
The Court’s decision comports with the goal of maximizing beneficial use of Colorado’s water, while also aligning with recent pro-hydropower legislation. The Court found that hydropower is a legitimate beneficial use under state law because its environmental impacts are minimal and do not require building dams or reservoirs. Hydropower also diverts less water and is less vulnerable to blackouts and damage caused by storms. Given these advantages, small hydropower is attract both developers and policymakers alike.
Now, by issuing the Frees decision that allows a junior conditional water right to utilize preexisting senior water rights for hydropower purposes, the Colorado Supreme Court essentially gave a green light to small hydropower development. Developers can now easily acquire junior conditional water rights of flows over developers’ property, so long as they can show no injury to the senior water right holder and that the water will be used for hydropower and then returned for the senior water right holder’s use.
Legislative streamlining and the Frees decision could potentially affect 315 individual water rights in Colorado. Ditches are the largest potential source of flows (at about 4,000 cfs) to support hydropower projects, and Montrose and Mesa counties could potentially hold the largest sources for hydropower flows.
However, as the dissent in Frees discussed, some unfortunate ramifications could result from this otherwise less environmentally invasive and strategically streamlined plan. The dissent proposed the hypothetical of the Frees desiring to change their point of diversion. This would potentially injure the junior water rights holders, the Tidds. If this were to happen, a court would have to balance the interests of the Frees and the Tidds so that both parties can reasonably enjoy their water rights conjunctively. In essence, the dissent argued, the Frees might not be able to unilaterally move their point of diversion, despite an 1890 priority date.
Although these junior, nonconsumptive rights are small (less than five megawatts), the amount of junior water rights available under this new rule in Colorado could lead to unforeseen consequences. For example, as laid out in University of Denver School of Law student Christopher Ainscough’s recent law review article, the situation is much more complex if, instead of one senior water right holder, multiple seniors are involved. Aincough’s article also considered the potentially damaging environmental and legal consequences of setting up multiple small-scale hydropower plants every half-mile along the Colorado River.
Further, the Frees dissent argued that the majority intruded into legislative policy and decision-making and did not consider the consequences of the decision. This is exactly what Ainscough warns of: the potentially chaotic results of the influential decision.
While proponents of the Frees decision boast allowing hydropower as a less environmentally damaging alternative than dams and reservoirs and an economically feasible way for developers to utilize water, the impact the case may pose for future water and senior water rights holders could be detrimental to waterways. A seemingly harmless judicial decision for the Frees and Tidd families, a decision that puts the finishing touches on the speedway toward hydropower in Colorado, could create quite the traffic jam as policymakers and water courts figure out how to work in its aftermath.
Image: Fuji Speedway at the base of Mount Fuji in Japan. Flickr User Alexander Nie, Creative Commons.
Neillie Fields, Frees v. Tidd, U. Denv. Water L. Rev. (Jan. 6, 2016), http://duwaterlawreview.com/frees-v-tidd/.
Courtney Krause, Edalin Koziol, Matthew Merrill, Incorporating Small-Scale Hydropower Projects into Our Energy Future, Nat. Resources & Env’t (Spring 2016), http://www.white-jankowski.com/wp-content/uploads/2016/04/Natural-Resources-Environment.pdf.
Christopher Ainscough, New Opportunities for Small-Scale Hydropower in Colorado, 19 U. Denv. Water L. Rev. 157 (2016).
William A. Paddock, What’s Yours is Mine: Frees v. Tidd and the Modern Rule of Property, Denv. Bar. Assoc. CLE Presentation, http://www.cba.cobar.org/repository/Insi de_Bar/Water%20Law/Frees%20v%20Tidd%20CLE%20Presentation%20(00167545xCEF9F).pdf.
Paul Noto, Water Law Basics for Real Estate Practitioners, Colo. Law. 63 (Nov. 2015).
L. of Water Rights and Resources § 5:16.
L. of Water Rights and Resources § 5:24.
1 Real Estate Law Digest 4th § 11:9.
3 Tiffany Real Prop. § 721 (3d ed.).