Colorado § 37-92-301 - Administration and distribution of waters.

§ 37-92-301. Administration and distribution of waters.

(1) The state engineer shall be responsible for the administration and distribution of the waters of the state, and, in each division, such administration and distribution shall be accomplished through the offices of the division engineer as specified in this article.

(2) In accordance with procedures specified in this article, the referee in each division shall in the first instance have the authority and duty to rule upon determinations of water rights and conditional water rights and the amount and priority thereof, including a determination that a conditional water right has become a water right by reason of completion of the appropriation, determinations with respect to changes of water rights, plans for augmentation, approvals of reasonable diligence in the development of appropriations under conditional water rights, and determinations of abandonment of a water rights or a conditional water rights; and he may include in any ruling for a determination of water right or conditional water right any use or combination of uses, any diversion or combination of points or methods of diversion, and any place or alternate places of storage and may approve any change of water right as defined in this article.

(3) In the distribution of water, the division engineer in each division and the state engineer shall be governed by the priorities for water rights and conditional water rights established by adjudication decrees entered in proceedings concluded or pending on June 7, 1969, and by the priorities for water rights and conditional water rights determined pursuant to the provisions of this article. All such priorities shall take precedence in their appropriate order over other diversions of waters of the state. Subject to section 37-92-502 (2), in determining and administering the use of water, judicial and administrative officers shall be governed by the following:

(a) In every case in which the owner of an appropriative right to divert water supplies his water needs by the use of a well, the water diverted by that well may be charged to its own appropriation; or it may be used to divert water under the provisions set forth in paragraph (b) of this subsection (3). This statutory statement is intended as a legislative acknowledgment of the long-held practice in Colorado under which various water rights may be carried through the same physical structure.

(b) In any case in which the owner of an appropriative right to divert water at the surface of a stream or to have water so diverted delivered for his use or benefit has a well so situated as to draw water from the same stream system, that owner may secure the right to have such well, or more than one if he has more than one such well, made an alternate point of diversion to said surface right by procedures provided in this article for securing alternate points of diversion.

(c) Until July 1, 1972, all diversions by well to supply a water use for which there is a surface decree may be charged against and be considered as part of the exercise of said surface decree even if the owner has not secured the right to an alternate point of diversion at the well, but nothing in this article shall be construed to prevent regulation of the well in accordance with law and within the system of priorities established for regulation of diversions of water in Colorado.

(d) In authorizing alternate points of diversion for wells, the widest possible discretion to permit the use of wells shall prevail. In administering the waters of a watercourse, the withdrawal of water which will lower the water table shall be permitted but not to such a degree as will prevent the water source to be recharged or replenished under all predictable circumstances to the extent necessary to prevent injury to senior appropriators in the order of their priorities, and with due regard for daily, seasonal, and longer demands on the water supply.

(4) (a) (I) In every sixth calendar year after the calendar year in which a water right is conditionally decreed, or in which a finding of reasonable diligence has been decreed, the owner or user thereof, if such owner or user desires to maintain the same, shall file an application for a finding of reasonable diligence, or said conditional water right shall be considered abandoned.

(I.5) If an application described in subsection (4)(a)(I) of this section filed on or before December 31, 2050, seeks a finding of reasonable diligence for a conditional water right that is owned by an electric utility in division 6 since January 1, 2019, the water judge may consider the following as supporting evidence for a finding of reasonable diligence:

(A) The conditional water right may be used to support a specific project or potential future generation technologies or concepts that have the potential to advance progress toward Colorado's clean energy and greenhouse gas emission reduction goals; and

(B) The electric utility has made efforts to develop the water right with reasonable diligence, which may include efforts made by the electric utility or another entity in the electric generation and distribution industry or a related research industry to investigate the technical or commercial viability of future generation technologies or concepts that have the potential to advance progress toward Colorado's clean energy and greenhouse gas emission reduction goals.

(II) If a conditional underground water right requires construction of a well, the expiration of the permit issued for the construction of such well by the state engineer pursuant to section 37-90-137 (1) shall not be the sole basis for a determination of abandonment pursuant to subparagraph (I) of this paragraph (a).

(III) The judgment and decree of the court shall specify the month and calendar year in which a subsequent application for a finding of reasonable diligence shall be filed with the water clerk pursuant to section 37-92-302 (1). A subsequent application shall be filed during the same month as the previous decree was entered every six years after such entry of the decree until the right is made absolute or otherwise disposed of.

(IV) The provisions of this paragraph (a) shall supersede any contrary provision or requirement of a previous conditional decree or determination of reasonable diligence.

(b) The measure of reasonable diligence is the steady application of effort to complete the appropriation in a reasonably expedient and efficient manner under all the facts and circumstances. When a project or integrated system is comprised of several features, work on one feature of the project or system shall be considered in finding that reasonable diligence has been shown in the development of water rights for all features of the entire project or system.

(c) Subject to the provisions of paragraph (b) of this subsection (4), neither current economic conditions beyond the control of the applicant which adversely affect the feasibility of perfecting a conditional water right or the proposed use of water from a conditional water right nor the fact that one or more governmental permits or approvals have not been obtained shall be considered sufficient to deny a diligence application, so long as other facts and circumstances which show diligence are present.

(d) In the case of a project or integrated system that contains more than one water storage feature, an applicant need not demonstrate that all existing absolute decreed water rights that are part of the project or integrated system have been utilized to their full extent in order to make absolute, in whole or in part, a conditional water storage right decreed for a separate feature of the project or integrated system.

(e) A decreed conditional water storage right shall be made absolute for all decreed purposes to the extent of the volume of the appropriation that has been captured, possessed, and controlled at the decreed storage structure.

(5) In all proceedings for a change of water right and for approval of reasonable diligence with respect to a conditional water right, it is appropriate for the referee and the courts to consider abandonment of all or any part of such water right or conditional water right; except that no conditional underground water right requiring the construction of a well shall be declared abandoned pursuant to this subsection (5) solely upon the ground that the permit issued for the construction of such well by the state engineer pursuant to section 37-90-137 (1) has expired. In all such proceedings, no water storage right shall be declared abandoned in whole or in part on account of carrying water over in storage from year to year.

Source: L. 69: p. 1205, § 1. C.R.S. 1963: § 148-21-17. L. 71: p. 1324, § 4. L. 73: p. 1523, § 1. L. 74: (2) amended, p. 442, § 2, effective May 7. L. 77: (2) amended, p. 1702, § 1, effective June 19. L. 88: (4) amended, p. 1239, § 1, effective July 1. L. 90: (4) amended, p. 1625, § 1, effective April 13. L. 94: (4)(a) and (5) amended, p. 1209, § 2, effective May 19. L. 2013: (4)(d) and (4)(e) added and (5) amended, (SB 13-041), ch. 111, p. 382, § 3, effective August 7. L. 2024: (4)(a)(I.5) added, (SB 24-197), ch. 276, p. 1835, § 5, effective August 7.

Cross references: (1) For the division engineer ordering discontinuance of diversion, see § 37-92-502 (2).

(2) For the legislative declaration in the 2013 act adding subsections (4)(d) and (4)(e) and amending subsection (5), see section 1 of chapter 111, Session Laws of Colorado 2013. For the legislative declaration in SB 24-197, see section 1 of chapter 276, Session Laws of Colorado 2024.

ANNOTATION

I. General Consideration.

II. Federal Reserved Water Rights.

I. GENERAL CONSIDERATION.

Law reviews. For article, "Water for Oil Shale Development", see 43 Den. L.J. 72 (1966). For article, "Adjudication of Indian and Federal Water Rights in the Federal Courts", see 46 U. Colo. L. Rev. 555 (1974-75). For article, "Developments in Conditional Water Rights Law", see 14 Colo. Law 353 (1985). For article, "The Effect of Water Law on the Development of Oil Shale", see 58 Den. L.J. 751 (1981). For comment, "Town of De Beque v. Enewold: Conditional Water Rights and Statutory Water Law", see 58 Den. L.J. 837 (1981). For article, "Developments in Conditional Water Rights Law", see 14 Colo. Law. 353 (1985). For article, "The Physical Solution in Western Water Law", see 57 U. Colo. L. Rev. 445 (1986). For article, "Colorado's Law of 'Underground Water': A Look at the South Platte Basin and Beyond", see 59 U. Colo. L. Rev. 579 (1988). For article, "Ethical Considerations in Water Right Adjudications", see 17 Colo. Law. 2381 (1988). For article, "Abandonment of Water Rights: Is 'Use It or Lose It' the Law?", see 18 Colo. Law. 2125 (1989). For article, "Water Rights Protection In Water Quality Law", see 60 U. Colo. L. Rev. 841 (1990). For article, "Transaction Costs as Determinants of Water Transfers", see 61 U. Colo. L. Rev. 393 (1990).

The state engineer does not have statutory authority to place and dig any wells. Kuiper v. Well Owners Conservation Ass'n, 176 Colo. 119, 490 P.2d 268 (1971).

State engineer's authority to apply compact tributary rule. A compact requiring administration of the Rio Grande mainstem and Conejos river according to delivery schedules that did not include the contributions of three creeks as significant to the delivery obligation did away with the state engineer's authority to apply the tributary rule of the compact to the three creeks. Alamosa-La Jara Water Users Prot. Ass'n v. Gould, 674 P.2d 914 (Colo. 1983).

Stream administration. Streams independently appropriated remain independent under the doctrine of prior appropriation unless the water of those streams becomes subject to equitable apportionment by compact, in which case the streams must be administered as mandated by the compact or statutory provisions for priority administration of water rights. Alamosa-La Jara Water Users Prot. Ass'n v. Gould, 674 P.2d 914 (Colo. 1983).

Water rights governed by water deed. Where a landowner's rights were determined by the terms of a water deed through and on which his claim for water is based, he had a right to use water at such times, manner, and place as is provided in the water deed, and his rights were governed by the water deed and not by § 37-92-305 (3). Merrick v. Fort Lyon Canal Co., 621 P.2d 952 (Colo. 1981).

Administration of water rights is accomplished pursuant to water court decrees, not stipulations among the parties. Colo. River Water Conservation Dist. v. Bar Forty Seven Co., 195 Colo. 478, 579 P.2d 636 (1978).

Right to change point of diversion is limited in quantity by historical use. Se. Colo. Water Conservancy Dist. v. Rich, 625 P.2d 977 (Colo. 1981).

Diversions made pursuant to water right considered historical use where not ordered discontinued. Where the water commissioner was aware of the landowners' diversions of water and had never ordered them to be discontinued or limited the diversions made pursuant to a water right, though not in priority, such diversions could be considered as establishing an historical use for the purpose of the change of water right. Se. Colo. Water Conservancy Dist. v. Rich, 625 P.2d 977 (Colo. 1981).

Out-of-priority undetected diversions made by appropriator's predecessor in interest should not be considered in establishment of historical use of water right. Pueblo W. Metro. Dist. v. S.E. Colo. Water Cons. Dist., 717 P.2d 955 (Colo. 1986).

Automatic cessation of diversions by junior appropriator not contemplated. Sections 37-92-501 and 37-92-502 do not contemplate automatic cessation of diversions by a junior appropriator in response to a river call. Se. Colo. Water Conservancy Dist. v. Rich, 625 P.2d 977 (Colo. 1981).

Division engineer must evaluate each junior appropriator's diversion to determine material injury caused. The statutory plan in §§ 37-92-501 and 37-92-502 contemplates that the division engineer will evaluate each junior appropriator's diversion to determine whether it is causing material injury to water rights having senior priorities before ordering the discontinuance of the diversion by the junior appropriator. Se. Colo. Water Conservancy Dist. v. Rich, 625 P.2d 977 (Colo. 1981).

Statements opposing water right application may be based on abandonment theory. The statutory delegation in subsection (2) of authority to water referees to make determinations of abandonment is merely a recognition that statements of opposition to an application may be based on the theory of abandonment as an affirmative defense to the application. Gardner v. State, 200 Colo. 221, 614 P.2d 357 (1980).

Different tests for abandonment of conditional and absolute water rights. The general assembly clearly intended different tests to be applied in determining when a conditional water right is abandoned and when an absolute water right is abandoned. The difference is the element of intent, which must be shown before an abandonment of an absolute water right can be decreed, but which is not necessary in establishing the abandonment of a conditional water right. The test applicable to determining whether a conditional water right has been abandoned is whether there has been a "failure to develop with reasonable diligence". Town of De Beque v. Enewold, 199 Colo. 110, 606 P.2d 48 (1980).

Every six years after the issuance of a conditional water right decree, the owner or user must obtain, from the water court, a finding of reasonable diligence in the development of the proposed appropriation or the conditional water right will be considered abandoned. City of Lafayette v. New Anderson Ditch Co., 962 P.2d 955 (Colo. 1998).

Purpose of subsection (4) is to prevent the accumulation of conditional water rights without diligent efforts to complete the projects to the detriment of those needing and seeking to make immediate beneficial use of the same water. Colo. River Water Conservation Dist. v. City & County of Denver, 640 P.2d 1139 (Colo. 1982); Trans-County Water v. Cent. Colo. Water Conservancy District, 727 P.2d 60 (Colo. 1986); City of Lafayette v. New Anderson Ditch Co., 962 P.2d 955 (Colo. 1998).

Conditional water rights may be lost by failure to timely file. The general assembly demonstrated in this section that it intends that conditional water rights could be lost because of failure to timely file. Town of De Beque v. Enewold, 199 Colo. 110, 606 P.2d 48 (1980); In re Simineo v. Kelling, 199 Colo. 225, 607 P.2d 1289 (1980); Mun. Subdistrict v. Rifle Ski Corp., 726 P.2d 635 (Colo. 1986); Purgatoire River Water Conservancy v. Witte, 859 P.2d 825 (Colo. 1993).

A conditional water right may not be perfected and may be terminated for lack of diligence or by abandonment. Matter of Bd. of County Comm'rs, 891 P.2d 952 (Colo. 1995).

Subsection (4) can be considered as a statute of limitations, and a failure to file the necessary application within the period of limitation mandates cancellation of the conditional water right. Broyles v. Fort Lyon Canal Co., 695 P.2d 1136 (Colo. 1985); Fort Lyon Canal v. Purgatoire River, 818 P.2d 747 (Colo. 1991).

Under the 1990 amendments to subsection (4), the controlling date for the six-year filing period for reasonable diligence reports is the date on which the last finding of reasonable diligence was made. Darby v. All J Land & Rental Co., 821 P.2d 297 (Colo. 1991).

Water court erred in applying the 1990 statute to its diligence determination where general assembly did not express any intention that the new standards apply to diligence determinations initiated prior to the 1990 statute's effective date. Upper Gunnison River v. Bd. of County Comm'rs, 841 P.2d 1061 (Colo. 1992).

Failure to file due diligence application pursuant to subsection (4) after receiving notice that failure to file would result in cancellation or expiration of conditional water right constitutes abandonment of such right. Bar 70 Enters., Inc. v. Highland Ditch Ass'n, 694 P.2d 1253 (Colo. 1985); Mun. Subdistrict v. Rifle Ski Corp., 726 P.2d 635 (Colo. 1986).

But failure to file a timely due diligence application pursuant to subsection (4) of this section does not result in the cancellation of a conditional water right if the water court does not provide notice of cancellation to the owner pursuant to § 37-92-305 (7). Double RL Co. v. Telluray Ranch Props., 54 P.3d 908 (Colo. 2002).

Failure to obtain quadrennial finding of reasonable diligence in the development of proposed appropriation results in abandonment and terminates a conditional water right. Application of Talco, Ltd., 769 P.2d 468 (Colo. 1989).

A conditional decree is a vested property right, subject to forfeiture if the holder fails to pursue his conditional water rights with reasonable diligence. Mooney v. Kuiper, 194 Colo. 477, 573 P.2d 538 (1978); Trans-County Water v. Cent. Colo. Water Conservancy District, 727 P.2d 60 (Colo. 1986); Application of Talco, Ltd., 769 P.2d 468 (Colo. 1989).

Diligence determination made only on case-by-case basis. A judicial determination of diligence can only be made on a case-by-case basis after considering all of the facts and circumstances relating to the development of each particular project. Colo. River Water Conservation Dist. v. City & County of Denver, 640 P.2d 1139 (Colo. 1982); Mun. Subdistrict v. Rifle Ski Corp., 726 P.2d 635 (Colo. 1986); Trans-County Water v. Central Colo. Water Conservancy District, 727 P.2d 60 (Colo. 1986); Application of Talco, Ltd., 769 P.2d 468 (Colo. 1989); N. Colo. Water v. Three Peaks Water, 859 P.2d 836 (Colo. 1993); City of Lafayette v. New Anderson Ditch Co., 962 P.2d 955 (Colo. 1998).

Factors considered in diligence determination. A court in making a diligence determination must look at all factors which can be considered as important in determining whether an appropriator is satisfying the terms of a conditional water decree by developing it for a beneficial use in the most expedient and efficient fashion possible under the circumstances. Colo. River Water Conservation Dist. v. City & County of Denver, 640 P.2d 1139 (Colo. 1982); Mun. Subdistrict v. Rifle Ski Corp., 726 P.2d 635 (Colo. 1986).

To obtain a finding of reasonable diligence, the holder of the right must prove continuous, project-specific effort directed toward the development of the conditional right commensurate with his capabilities, as well as evidence of reasonable progress in the development of the conditional appropriation in the most expedient and efficient manner. Trans-County Water v. Central Colo. Water Conservancy District, 727 P.2d 60 (Colo. 1986).

Consideration by the court to determine a finding of due diligence include, but are not necessarily limited to: (1) Economic feasibility; (2) status of requisite permit applications and other required governmental approvals; (3) expenditures made to develop the appropriation; (4) ongoing conduct of engineering and environmental studies; (5) design and construction of facilities; and (6) nature and extent of land holdings and contracts demonstrating the water demand and beneficial uses which the conditional right is to serve when perfected. Dallas Creek Water Co. v. Huey, 933 P.2d 27 (Colo. 1997); City of Lafayette v. New Anderson Ditch Co., 962 P.2d 955 (Colo. 1998).

Under subsection (4)(c), water project's current economic unfeasibility and the diligence applicant's consequent decision to not build project facilities during the diligence period do not justify denial of a finding of reasonable diligence, where water court's findings of other factors relevant to diligence are supported by competent evidence. Mun. Subdistrict v. Chevron Shale Oil Co., 986 P.2d 918 (Colo. 1999).

Party seeking to establish reasonable diligence with respect to a conditional water right does not have the burden of proof regarding the economic feasibility of a particular project; rather, such economic feasibility is one factor to be considered in a finding of reasonable diligence. Pub. Serv. Co. v. Blue River Irr., 782 P.2d 792 (Colo. 1989).

If no other facts and circumstances that show diligence are present, the lack of governmental approvals and permits supports the water court's determination that the applicant failed to satisfy the can and will test, and a final denial of such approvals or permits is not required. Natural Energy Res. Co. v. Upper Gunnison River Water Conservancy Dist., 142 P.3d 1265 (Colo. 2006).

The existence of current economic factors beyond a diligence applicant's control that made a water project infeasible does not preclude a finding of diligence. Mun. Subdist., N. Colo. Water Conservancy District v. OXY USA, Inc., 990 P.2d 701 (Colo. 1999).

Work performed on a water project that was not part of a common system with the rights at issue can be considered in determining diligence if the work is complementary to the rights at issue. Mun. Subdist., N. Colo. Water Conservancy Dist. v. Getty Oil Exploration Co., 997 P.2d 557 (Colo. 2000).

Nonproject efforts insufficient for finding of reasonable diligence. Nonproject-related efforts and activities to protect or promote the future development of a conditional water right, standing alone, will not be sufficient to support a finding of reasonable diligence. Colo. River Water Conservation Dist. v. City & County of Denver, 640 P.2d 1139 (Colo. 1982); Application of Talco, Ltd., 769 P.2d 468 (Colo. 1989).

Finding of reasonable diligence equal to development with reasonable diligence. In considering subsection (4) in juxtaposition with § 37-92-103(1), it is evident that the general assembly was drawing a clear connecting line between "failure to develop with reasonable diligence" and the requirement that the owner or user of a conditional water right obtain a finding of reasonable diligence. In effect, the general assembly equated a failure to obtain a finding of reasonable diligence with a failure to develop with reasonable diligence. Town of De Beque v. Enewold, 199 Colo. 110, 606 P.2d 48 (1980).

Test well, which diverted underground waters in violation of court order granting conditional water right, was not sufficiently related to original appropriation of conditional water right holder as to constitute reasonable diligence in the development of the conditional water right. Application of Talco, Ltd., 769 P.2d 468 (Colo. 1989).

Third parties are entitled to notice and hearing in a change of water right proceeding under this section. Broyles v. Fort Lyon Canal Co., 638 P.2d 244 (Colo. 1981).

Applied in Purgatoire River Water Conservancy Dist. v. Kuiper, 197 Colo. 200, 593 P.2d 333 (1979); Broyles v. Fort Lyon Canal Co., 638 P.2d 244 (Colo. 1981); Colo. River Water Conservation Dist. v. City & County of Denver, 642 P.2d 510 (Colo. 1982); United States v. City & County of Denver, 656 P.2d 1 (Colo. 1982).

II. FEDERAL RESERVED WATER RIGHTS.

Law reviews. For note, "Adjudication of Federal Reserved Water Rights", see 42 U. Colo. L. Rev. 161 (1970). For article, "Adjudication of Indian and Federal Water Rights in the Federal Courts", see 46 U. Colo. L. Rev. 555 (1974-75). For comment on determining the priority of federal reserved rights relative to the water rights of state appropriators, see 48 U. Colo. L. Rev. 547 (1977).

Federal reserved water rights. The United States possesses reserved rights for its federal reservations in Colorado in waters unappropriated upon the date of reservation of the federal lands from the public domain, and in the amount necessary to achieve the primary purposes of the reservations. United States v. City & County of Denver, 656 P.2d 1 (Colo. 1982).

Reserved rights to be determined by Colorado law. Colorado law governing the determination of water rights is properly applied as the rule of decision by which the courts will determine the contours of the reserved rights asserted by the United States. United States v. City & County of Denver, 656 P.2d 1 (Colo. 1982).

Seniority of federal reserved rights. The federal government's position is similar to the holder of a conditional senior water right who can step ahead of junior appropriators causing a diminution of the amount of water available for diversion. Navajo Dev. Co. v. Sanderson, 655 P.2d 1374 (Colo. 1982).

Immunity from nonuse requirement. Federal reserved water rights are immune from Colorado's nonuse requirement to the extent necessary to fulfill the purposes of the reservation. United States v. City & County of Denver, 656 P.2d 1 (Colo. 1982).

Federal right is outside of state appropriation system. Once the federal right has been quantified, that amount is then outside the state appropriation system. United States v. City & County of Denver, 656 P.2d 1 (Colo. 1982).

Federal reserved water rights subject to state administration. Federal reserved water rights ultimately adjudicated to the United States are subject to administration by the state engineer. United States v. City & County of Denver, 656 P.2d 1 (Colo. 1982).

For extent of federal reserved water rights on different categories of public lands, see United States v. City & County of Denver, 656 P.2d 1 (Colo. 1982).

For effect of federal reserved water rights, see Navajo Dev. Co. v. Sanderson, 655 P.2d 1374 (Colo. 1982).