Grand Valley Water Users Ass'n v. Busk-Ivanhoe, Inc. (In re Busk-Ivanhoe, Inc.)

• Decision Date: 05 December 2016
• Docket Number: Supreme Court Case No. 14SA303
• Citation: 386 P.3d 452,2016 CO 75
• Parties: Concerning the Application of Busk-Ivanhoe, Inc., a Colorado corporation in Adams, Arapahoe, Chaffee, Douglas, Jefferson, Lake, Pitkin, and Weld Counties, Colorado, GRAND VALLEY WATER USERS ASSOCIATION; Orchard Mesa Irrigation District ; Ute Water Conservancy District acting by and through the Ute Water Activity Enterprise; Colorado River Water Conservation District; Basalt Water Conservancy District ; Board of County Commissioners of Eagle County; Board of County Commissioners of Pitkin County; Dick Wolfe, P.E., State Engineer; David L. Nettles, P.E., Division Engineer for Water Division 1; Steve Witte, P.E., Division Engineer for Water Division 2; and Alan Martellaro, P.E., Division Engineer for Water Division 5, Opposers–Appellants, and High Line Canal Company; Southeastern Colorado Water Conservancy District ; and The City and County of Denver, acting by and through its Board of Water Commissioners, Opposers–Appellees, and Board of Water Works of Pueblo, Colorado, Opposer–Appellant/Opposer–Appellee, and Centennial Water and Sanitation District, Opposer, v. BUSK-IVANHOE, INC., a Colorado corporation, Applicant–Appellee.
• Court: Colorado Supreme Court

386 P.3d 452

2016 CO 75

Concerning the Application of Busk-Ivanhoe, Inc., a Colorado corporation in Adams, Arapahoe, Chaffee, Douglas, Jefferson, Lake, Pitkin, and Weld Counties, Colorado,GRAND VALLEY WATER USERS ASSOCIATION; Orchard Mesa Irrigation District ; Ute Water Conservancy District acting by and through the Ute Water Activity Enterprise; Colorado River Water Conservation District; Basalt Water Conservancy District ; Board of County Commissioners of Eagle County; Board of County Commissioners of Pitkin County; Dick Wolfe, P.E., State Engineer; David L. Nettles, P.E., Division Engineer for Water Division 1; Steve Witte, P.E., Division Engineer for Water Division 2; and Alan Martellaro, P.E., Division Engineer for Water Division 5, Opposers–Appellants,andHigh Line Canal Company; Southeastern Colorado Water Conservancy District ; and The City and County of Denver, acting by and through its Board of Water Commissioners, Opposers–Appellees,andBoard of Water Works of Pueblo, Colorado, Opposer–Appellant/Opposer–Appellee,andCentennial Water and Sanitation District, Opposer,

v.BUSK-IVANHOE, INC., a Colorado corporation, Applicant–Appellee.

Supreme Court Case No. 14SA303

Supreme Court of Colorado.

December 5, 2016

Rehearing Denied January 9, 2017

Attorneys for Opposers–Appellants Grand Valley Water Users Association, Orchard Mesa Irrigation District, and Ute Water Conservancy District acting by and through the Ute Water Activity Enterprise: Williams, Turner & Holmes, P.C., Kirsten M. Kurath, Mark A. Hermundstad, Grand Junction, Colorado

Attorneys for Opposers–Appellants Colorado River Water Conservation District, Basalt Water Conservancy District, and Board of County Commissioners of Eagle County: Balcomb & Green, P.C., David C. Hallford, Christopher L. Geiger, Scott Grosscup, Glenwood Springs, Colorado

Attorneys for Opposer–Appellant Board of County Commissioners of Pitkin County: Moses, Wittemyer, Harrison and Woodruff, P.C., Timothy J. Beaton, Jennifer M. DiLalla, Boulder, Colorado

Attorneys for Opposers–Appellants Dick Wolfe, P.E., State Engineer, David L. Nettles, P.E., Division Engineer for Water Division 1, Steve Witte, P.E., Division Engineer for Water Division 2, and Alan Martellaro, P.E., Division Engineer for Water Division 5: Cynthia H. Coffman, Attorney General, Paul L. Benington, First Assistant Attorney General, Denver, Colorado

Attorneys for Opposer–Appellant/ Opposer–Appellee Board of Water Works of Pueblo, Colorado: Carlson, Hammond & Paddock, LLC, William A. Paddock, Mary Mead Hammond, Karl D. Ohlsen, Denver, Colorado

Attorneys for Opposer–Appellee Southeastern Colorado Water Conservancy District: Burns, Figa & Will, P.C., Stephen H. Leonhardt, Sarah M. Shechter, Greenwood Village, Colorado

Attorneys for Opposer–Appellee City and County of Denver, acting by and through its Board of Water Commissioners: Patricia L. Wells, General Counsel, Casey S. Funk, Mary J. Brennan, Daniel J. Arnold, James M. Wittler, Denver, Colorado

Attorneys for Applicant–Appellee Busk-Ivanhoe, Inc.: Hamre, Rodriguez, Ostrander & Dingess, P.C., John M. Dingess, Austin Hamre, Denver, Colorado

Attorneys for Amicus Curiae Cache La Poudre Water Users Association and for Amicus Curiae City of Northglenn: Fischer, Brown, Bartlett & Gunn, P.C.,

William R. Fischer, Donald E. Frick, Fort Collins, Colorado

Attorneys for Amici Curiae City of Colorado Springs and Twin Lakes Reservoir and Canal Company: Michael Gustafson, City Attorney, Colorado Springs, Colorado, Hill & Robbins, P.C., David W. Robbins, Denver, Colorado, Carlson, Hammond & Paddock, LLC, William A. Paddock, Mary Mead Hammond, Karl D. Ohlsen, Denver, Colorado

Attorneys for Amicus Curiae Board of County Commissioners for the County of Grand: White & Jankowski, LLP, David C. Taussig, Mitra M. Pemberton, Denver, Colorado

Attorneys for Amicus Curiae Lower Arkansas Valley Water Conservancy District: Berg Hill Greenleaf & Ruscitti LLP, Peter D. Nichols, Leah K. Martinsson, Boulder, Colorado, Mendenhall & Malouff, H. Barton Mendenhall, II, Rocky Ford, Colorado

Attorneys for Amici Curiae Northern Colorado Water Conservancy District, Municipal Subdistrict, and the City of Greely, acting by and through its Water and Sewer Board: Trout, Raley, Montaño, Witwer & Freeman, P.C., Bennett W. Raley, Douglas M. Sinor, Lisa M. Thompson, Denver, Colorado, Greeley City Attorney's Office, Andrew B. Nicewicz, Greeley, Colorado, Vranesh and Raisch, LLP, Paul J. Zilis, Boulder, Colorado, Riley Carlock & Applewhite, Brian M. Nazarenus, Susan M. Ryan, Denver, Colorado, City of Lafayette, David C. Lindholm, Lafayette, Colorado, Starr & Westbrook, P.C., Randolph W. Starr, Michael A. Westbrook, Loveland, Colorado, Petrock & Fendel, P.C., Frederick A. Fendel, III, Denver, Colorado

Attorneys for Amicus Curiae The Consolidated Mutual Water Company: Collins Crockrel & Cole, P.C., Evan D. Ela, Joseph W. Norris, Denver, Colorado

En Banc

JUSTICE MÁRQUEZ delivered the Opinion of the Court.

¶1 This appeal from the water court in Water Division 2 challenges certain rulings relevant to the historic consumptive use quantification of transmountain water rights that are the subject of a change application.

¶2 The City of Aurora, Colorado ("Aurora"), is the sole owner of the capital stock of Busk-Ivanhoe, Inc. ("Busk-Ivanhoe"). Busk-Ivanhoe owns a one-half interest in water rights decreed in 1928 to the Busk-Ivanhoe System for supplemental irrigation in the Arkansas River Basin by Garfield County District Court in Civil Action No. 2621 (the "2621 Decree"). The Busk-Ivanhoe System is a transmountain diversion from the Colorado River Basin on the western slope in Water Division 5, through the Ivanhoe Tunnel at the Continental Divide, to the Arkansas River Basin on the eastern slope in Water Division 2.

¶3 The 2621 Decree confirmed absolute and conditional appropriations to divert water from tributaries of the Roaring Fork River, and includes 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—some amounts on an immediate basis and some after storage in the Ivanhoe Reservoir (on the western slope). The decree, however, contains no reference at all to storage of the exported water on the eastern slope prior to its decreed use for supplemental irrigation in the Arkansas River Basin. Nevertheless, transmountain water decreed to the Busk-Ivanhoe System has been stored in reservoirs on the eastern slope before being put to beneficial use.

¶4 In 1987, at Aurora's direction, Busk-Ivanhoe began to put its water rights to municipal use in Aurora in Water Division 1. However, Busk-Ivanhoe did not file an application to change the type and place of use of these rights until 2009. That change application is the subject of this appeal.

¶5 In its May 27, 2014, Findings of Fact, Conclusions of Law, and Order ("May 2014 Order"), the water court for Water Division 2 approved Busk-Ivanhoe's change application to allow use of the subject water rights within Aurora's municipal system. It confirmed these rulings in its August 15, 2014, Judgment and Decree ("August 2014 Judgment and Decree") approving the change application.

¶6 The issues raised in this appeal concern the water court's quantification of the water rights to be changed under the application. Relevant here, the water court concluded that: (1) storage of the water rights on the eastern slope prior to use was lawful despite the 2621 Decree's silence on the issue, and, therefore, the quantification of the historic consumptive use of those rights should include water used for its decreed purpose after release from storage on the eastern slope; (2) volumes of exported water paid to rent storage on the eastern slope should also be included in the historic consumptive use quantification of the water rights; and (3) the twenty-two-year period of undecreed use of the water rights for municipal purposes must be excluded from the representative study period when calculating the historic consumptive use of the decreed rights. Opposers–Appellants—who include the State Engineer and Division Engineers for Water Divisions 1, 2, and 5 (collectively, the "Engineer Opposers"), as well as several entities located in the Colorado River Basin (collectively, the "Western Slope Opposers")¹ —challenge the water court's conclusions.

¶7 As set forth more fully below, we hold as follows. First, the water court erred when it concluded that storage of the Busk-Ivanhoe rights on the eastern slope prior to use was lawful. On remand, the water court must requantify the water rights subject to change; to the extent that unlawful storage of the water on the eastern slope prior to use expanded the decreed rights, such amounts cannot be included in the historic use quantification of those rights.

¶8 Second, because storage of the subject water rights in the basin of import was unlawful, the water court erred in including the volumes of exported water paid as rental fees for storage on the eastern slope in its historic consumptive use quantification of the water rights.

¶9 Finally, the water court erred in concluding that it was required to exclude the twenty-two years of undecreed use of the subject water rights from the representative study period. In this case, the period of undecreed use reflects twenty-two years of non-use of the decreed rights. Because unjustified non-use of a decreed right should be considered when quantifying historic consumptive use for purposes of a change application, we remand the case to the water court to determine whether the years of non-use of the Busk-Ivanhoe rights for their decreed purpose were unjustified. If so, the water court should consider including the years of unjustified non-use in the representative study period as "zero-use" years for purposes of its historic consumptive use analysis. Accordingly, we reverse the water co...