City and County of Denver By and Through Bd. of Water Com'rs v. Consolidated Ditches Co. of Dist. No. 2, 1

Citation807 P.2d 23
Decision Date25 February 1991
Docket NumberNo. 1,O,No. 89SA345,1,89SA345
PartiesThe CITY AND COUNTY OF DENVER, Acting By and Through Its BOARD OF WATER COMMISSIONERS, and the City and County of Denver, acting By and Through Its Department of Parks and Recreation, Applicant-Appellants/Cross-Appellees, v. CONSOLIDATED DITCHES COMPANY OF DISTRICT NO. 2, and the City of Englewood, Opposer-Appellees/Cross-Appellants, and The City of Thornton, acting By and Through Its Utilities Board, South Adams County Water and Sanitation District, North Fork Associates, Arapahoe Water and Sanitation District, the Union Ditch Company, the Godfrey Ditch Company, the Lower Latham Ditch Company, the Burlington Ditch, Land and Reservoir Company, the City of Lakewood, the State Engineer and the Division Engineer, Water Divisionpposers-Appellees.
CourtSupreme Court of Colorado

Wayne D. Williams, Michael L. Walker, Henry C. Teigen and Casey S. Funk, Denver, for applicant-appellant City and County of Denver, acting by and through its Bd. of Water Com'rs and its Dept. of Parks and Recreation.

Patricia L. Wells, City Atty., Denver, for applicant City and County of Denver, acting by and through its Department of Parks and Recreation.

Davis, Graham & Stubbs, Bennett W. Raley, Max A. Minnig, Jr. and Alison L. Taylor, Parcel, Mauro, Hultin & Spaanstra, P.C., William A. Hillhouse, II, Denver, for Consol. Ditches Co. of Dist. No. 2.

Gale A. Norton, Atty. Gen., Timothy M. Tymkovich, Sol. Gen., and Bradley W. Cameron, Asst. Atty. Gen., Denver, for the State and Div. Engineer, Water Div. No. 1.

Justice QUINN delivered the Opinion of the Court.

This appeal is a sequel to our decision in City and County of Denver v. Fulton Irrigating Ditch Co., 179 Colo. 47, 506 P.2d 144 (1972), which involved a 1940 agreement between the City and County of Denver, acting by and through its Board of Water Commissioners, and several ditch companies using water in the South Platte River Basin. Under the 1940 agreement, Denver agreed to cease using effluent from transmountain water diverted from the Colorado River System and used in its municipal water system in lieu of making evaporation releases from certain streambed reservoirs in the South Platte River Basin. In the instant case, Consolidated Ditches raised the 1940 agreement in opposition to Denver's application for approval of a plan for augmentation with respect to alluvial wells used to irrigate two of Denver's municipal golf courses. Denver's plan for augmentation proposed to recapture from its sewage treatment plants a portion of effluent attributable to water derived from Colorado River sources. The water court upheld the validity of the 1940 agreement and concluded and decreed, in pertinent part, as follows: that the 1940 agreement was not void as against public policy; that the 1940 agreement permitted Denver to "reuse, successively use and dispose of all return flows of water derived from Colorado River sources for all purposes for which said waters were decreed, which have appropriation dates subsequent to May 1, 1940, or which were acquired by the [Denver Board of Water Commissioners] subsequent to May 1, 1940"; that the 1940 agreement precluded Denver from reusing, successively using, or disposing of all return flows of water derived from Colorado River sources "pursuant to water rights with appropriation dates preceding May 1, 1940, whether those rights be conditionally or absolutely decreed, unless such rights were acquired by the [Denver Board of Water Commissioners] subsequent to May 1, 1940"; that the 1940 agreement also precluded Denver from reusing, successively using, or disposing of return flows from water derived from the Williams Fork River pursuant to water rights owned by Denver's Department of Improvements and Parks on May 1, 1940; and that the 1940 agreement would terminate if state water officials made an order requiring Denver to make evaporation releases from Antero, Eleven Mile Canon, or Cheesman Reservoirs in the South Platte River Basin.

Denver appeals from that part of the judgment and decree upholding the validity of the 1940 agreement and precluding Denver from reusing, successively using, or disposing of effluent return flows from Colorado River sources. Consolidated Ditches, in turn, appeals from that part of the judgment and decree which holds that the 1940 agreement will terminate in the event water officials issue an order requiring Denver to make evaporation releases from any of the three streambed reservoirs in the South Platte River Basin. We affirm that part of the judgment and decree which upholds the validity of the 1940 agreement and which precludes Denver from reusing, successively using, or disposing of effluent return flows derived from decreed water rights from Colorado River sources with appropriation dates preceding May 1, 1940. We reverse that part of the judgment and decree which holds that the 1940 agreement will terminate upon the issuance of an order requiring Denver to make evaporative releases from any of the three streambed reservoirs in the South Platte River Basin.

I.

A detailed statement of the facts leading up to the judgment and decree in this case is necessary to a complete understanding of the issues before us. By May 1, 1940, the date of the agreement which is central to this case, the City and County of Denver (Denver), acting by and through its Board of Water Commissioners (Denver Water Board), had developed an extensive and complex water supply system. This system included storage rights in three streambed reservoirs--Cheesman, Antero, and Eleven Mile Canon Reservoirs--in the South Platte River Basin on the eastern slope of the Continental Divide. Also included in Denver's water supply system were transmountain diversions from the Fraser River Diversion Project and the Williams Fork River Diversion Project. The Fraser River and the Williams Fork River are tributaries of the Colorado River and are on the western slope of the Continental Divide. Both the Fraser River Diversion Project and the Williams Fork River Diversion Project had been granted appropriation dates of July 4, 1921, by a decree entered on November 5, 1937. Diversions from the Fraser River were directed by the Denver Water Board, and the water was used primarily for general municipal purposes. The Williams Fork River Diversion Project was owned by Denver's general city government, and diversions from the Williams Fork River were used primarily for the dilution of sewage. On May 1, 1940, the same day on which the contract underlying the present controversy was executed, Denver granted the Denver Water Board "the perpetual right to use so much as may be desired by the Board of the water stored or to be stored in Williams Fork Reservoir," and later, in 1955, transferred ownership of the Williams Fork Diversion Project to the board.

By the year 1940, Denver had been operating its municipal water system by diverting approximately 38,672 acre-feet of water from the Colorado River Basin--approximately 29,200 acre-feet from the Fraser River Diversion Project and the balance from the Williams Fork River Diversion Project. The 38,672 acre-feet of imported water resulted in 12,506 acre-feet of effluent return flow, and the estimated evaporation losses from the three streambed reservoirs amounted to 10,142 acre-feet. 1 Thus, in 1940, the return flows exceeded the evaporation losses by 2,364 acre-feet.

Denver used some of the imported water directly and stored some of the balance in the three streambed reservoirs on the South Platte River by means of exchanges. Denver operated the streambed reservoirs according to a "gauge height" method. Under this method, the water flowing out of the reservoir equalled the water flowing into the reservoir, and the water stored in the reservoir was maintained at a steady gauge level. The "gauge height" method, however, failed to take into account water loss due to evaporation and, at the time of the 1940 agreement, no adjustments or releases of water were made in order to offset evaporation losses in the reservoir. When the "gauge height" method was utilized in 1940, there was no statute or decisional law charging the reservoirs with liability for evaporation losses. Although Denver and downstream appropriators on the South Platte River were aware that such evaporation occurred, no precise method existed for determining the amount of evaporation losses. Consequently, the burden of evaporation losses was borne by downstream senior appropriators, such as the members of Consolidated Ditches Company of District No. 2 (Consolidated Ditches), with priority dates ranging from 1860 to 1894. Prior to May 1, 1940, the date of the agreement in question, downstream senior appropriators were also concerned about Denver's recapture of transmountain effluent from Colorado River sources for reuse or successive use in its municipal water system. This concern over evaporation losses and Denver's disposition of recaptured effluent from its sewage treatment plant ultimately led to the agreement of May 1, 1940, between Denver and Consolidated Ditches.

The agreement of May 1, 1940, was intended to settle and determine all differences between Denver and Consolidated Ditches over evaporation losses from the three streambed reservoirs. The agreement was executed by the City and County of Denver, acting by and through the President of the Denver Board of Water Commissioners, and fifteen ditch companies consolidated under the name and management of Consolidated Ditches. 2 Pursuant to the agreement, Denver and the other signatories agreed that the Eleven Mile Canon Reservoir would be operated on an in-out flow basis measured by flumes without reference to gauge height and that "[a]ll streambed reservoirs now owned or operated by the City and County of Denver other than Eleven Mile Canon Reservoir shall be operated according to the...

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