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Colorado Supreme Court Opinion in Grand Valley Water Users Ass’n v. Busk-Ivanhoe, Inc.

December 21, 2016

 

Factual Background:

The Busk-Ivanhoe System water rights were originally adjudicated on January 9, 1928, by the Garfield County District Court, Water District 38, in Case No. 2621, and were decreed for supplemental irrigation on approximately 80,000 acres of land in the Arkansas River Basin (the 2621 Decree). The 2621 Decree confirmed absolute and conditional water rights to divert water from tributaries to the Roaring Fork River, and included a priority for storage of 1,200 acre-feet of the diverted water in the Ivanhoe Reservoir on the western slope. Under the terms of the decree, the diverted water is exported through the Ivanhoe Tunnel to the eastern slope, and some is exported after storage in the Ivanhoe Reservoir.

The City of Aurora is the sole owner of capital stock in Busk-Ivanhoe, Inc. (Busk-Ivanhoe).  Busk-Ivanhoe owns a one-half undivided interest in the 2621 Decree. In 1987, Busk-Ivanhoe began to use its water for municipal purposes in Aurora, in Water Division 1. Busk-Ivanhoe did not file an application to change its use until 2009.

The water court approved Busk-Ivanhoe’s change application to allow the use of the Busk-Ivanhoe water rights for use within Aurora’s municipal system. The water court concluded that storage of water on the eastern slope prior to its use was lawful under the 2621 Decree; that volumes of exported water paid to rent storage on the eastern slope should be included in the historic consumptive use quantification of the water rights; and the undecreed use of water rights (from 1987-2009) should be excluded from the representative study in calculating historic consumptive use of the Busk-Ivanhoe water rights.

Issues on Appeal:

  1. Whether storing the Busk-Ivanhoe water rights on the eastern slope was lawful prior to use under the “2621 Decree;” and whether the volumes of water paid to rent such storage were wrongly included in calculating historic use.
  1. Whether years of non-use (for decreed purposes) were unjustified, and thus should be included as “zero-use” years for purposes of historical use quantification.

Decision:

First, the Colorado Supreme Court determined that the water court erred when it concluded that storage of the Busk-Ivanhoe water rights on the eastern slope was lawful prior to its use for decreed purposes. It is a principle in Colorado law that “the right to store water is not an automatic incident of a direct flow right.” Significantly, the Court held that this principle does not change solely because the rights are exported transmountain; the right to reuse imported water is not equivalent to the right to store imported water. Grand Valley Water Users Ass’n v. Busk-Ivanhoe, Inc., No. 14SA303, 2016 CO 75, ¶ 49 (Dec. 5, 2016).

Second, “the right to store water in the basin of import prior to use is not an automatic incident of transmountain water rights, but rather, must be reflected, or at least implied in the decree.” 2016 CO 75, ¶ 25. In this case, the 2621 Decree is silent on the storage of exported water on the eastern slope, and this does not support a finding of an implicit right to store water, particularly since the 2621 Decree explicitly provided for storage on the western slope prior to export.  In addition, the water court erred by relying on extrinsic evidence to show the intent of the original appropriators to store water on the eastern slope prior to use since such evidence was not before the court in the 2621 Decree proceedings. The water court on remand must re-quantify the water rights subject to change, taking out the unlawfully stored water from any historic use quantification of those rights. Because the storage of water on the eastern slope was unlawful, the water court also erred in including the volumes of exported water paid for storage to quantify historic consumptive use.

Third, the water court erred in finding that it was required to exclude the 22 years of undecreed use of water rights from the representative period in quantifying historic use. Rather, the water court on remand should determine whether the use of water for undecreed purposes was “unjustified.” If it finds that the use was unjustified, it should include the years of unjustified non-use in the representative period as “zero-use” years for purposes of quantifying historic use. 2016 CO 75, ¶ 72.

Dissenting in Part and Concurring in Part, Chief Justice Rice, joined by Justice Hood

Justice Rice agreed with the majority opinion that transmountain water rights do not automatically include a storage right, but disagreed that the storage of Busk-Ivanhoe rights on the eastern slope was unlawful. 2016 CO 75, ¶¶ 77-83. She agreed with the majority that the water court erred by concluding that it was required to exclude periods of undecreed use from the representative study.

White & Jankowski, LLP filed an amicus brief in support of the Colorado River Water Conservation District’s position on the transmountain storage issue.

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