MOUNT EMMONS MIN. CO. v. Crested Butte

Decision Date28 January 2002
Docket NumberNo. 99SA354.,99SA354.
Citation40 P.3d 1255
PartiesConcerning the Application for Water Rights of the Mount Emmons Mining Company, an affiliate of Climax Molybdenum Company, in the Slate River, Carbon Creek, and Elk Creek, All Tributaries to the Gunnison River, in Gunnison County. MOUNT EMMONS MINING COMPANY, Applicant-Appellant, v. TOWN OF CRESTED BUTTE; Western Slope Environmental Council; High Country Citizens' Alliance; Board of County Commissioners of Gunnison County, Colorado; Rosalie C. Munis; Albert W. Sanderson; William S. Sanderson; A.B. Herndon, Jr. and June G. Herndon; John Evans and Betty Evans; the Ranches at Ohio Creek, LLC; Cheri-Colleen Campbell-Raferty; Mary J. Turner; The Colorado Water Conservation Board; Dr. B. Henry Estess; Crested Butte Mountain Resort, Inc.; Castle Creek Cattle Corp.; Castleton Ranch Company; Eagle Ridge Ranch Homeowners Association; Bert A. Guerrieri; Richard E. Guerrieri and Phyllis C. Guerrieri; Wallace A. Jones and Marry M. Jones; The Ochs Brothers Partnership; Harrison F. Russell and Patricia E. Russell; E. Allan Stockton and Barbara V. Stockton; John L. Walsh and Agnes Ann Walsh; The City of Gunnison; E.J. Maurer; The Board of County Commissioners of Arapahoe County; The United States (Bureau of Land Management and United States Forest Service); Crested Butte Land Trust; Earl Partch; Francis Partch; Carl E. Silka; Dan Rundell; Phyllis Rundell; Debe Hancock; Star Mountain Ranch Association, Inc.; and Scott Rennck, Opposers-Appellees, and Wayne I. Schieldt, Division Engineer, Water Division No. 4., Appellee pursuant to C.A.R. 1(e).
CourtColorado Supreme Court

Friedlob Sanderson Paulson & Tourtillott, LLC, Brian M. Nazarenus, Carolyn F. Burr, Denver, CO, Attorneys for Applicant-Appellant.

Laura L. Magner, Crested Butte, CO, Frascona, Joiner, Goodman, and Greenstein, P.C., Joseph Adams Cope, Boulder, CO, Attorneys for Opposer-Appellee Town of Crested Butte.

Land and Water Fund of the Rockies, Bruce C. Driver, Bart P. Miller, Boulder, CO, Attorneys for Opposers-Appellees Western Slope Environmental Resource Council and High Country Citizens' Alliance.

David Baumgarten, Gunnison, CO, Attorney for Opposer-Appellee Board of County Commissioners of Gunnison County, CO.

Ken Salazar, Attorney General, Steven O. Sims, First Assistant Attorney General, Linda J. Bassi, Assistant Attorney General, Natural Resources and Environment Section, Denver, CO, Attorneys for State and Division Engineer.

No appearance by or on behalf of Rosalie C. Munis; Albert W. Sanderson; William S. Sanderson; A.B. Herndon, Jr. and June G. Herndon; John Evans and Betty Evans; The Ranches At Ohio Creek, LLC; Cheri-Colleen Campbell-Raferty; Mary J. Turner; The Colorado Water Conservation Board; Dr. B. Henry Estess; Crested Butte Mountain Resort, Inc.; Castle Creek Cattle Corp.; Castleton Ranch Company; Eagle Ridge Ranch Homeowners Association; Bert A. Guerrieri; Richard E. Guerrieri and Phyllis C. Guerrieri; Wallace A. Jones and Marry M. Jones; The Ochs Brothers Partnership; Harrison F. Russell and Patricia E. Russell; E. Allan Stockton and Barbara V. Stockton; John L. Walsh and Agnes Ann Walsh; The City Of Gunnison; E.J. Maurer; The Board Of County Commissioners Of Arapahoe County; The United States (Bureau Of Land Management And United States Forest Service); Crested Butte Land Trust; Earl Partch; Francis Partch; Carl E. Silka; Dan Rundell; Phyllis Rundell; Debe Hancock; Star Mountain Ranch Association, Inc.; and Scott Rennck.

Justice KOURLIS delivered the Opinion of the Court.

Mount Emmons Mining Company (Applicant) applied for a conditional water right to operate a molybdenum mine in Gunnison County. The water court denied the application, finding that Applicant failed to establish sufficient water availability to support a conditional decree. The water court based its denial upon an earlier ruling out of the same Water Division that affected the Gunnison River basin. The earlier order found 60,000 acre-feet of water available for in-basin users such as Applicant, but also found that a contract was necessary to access that water. We now hold that such a user-specific contract is not necessary for Applicant to make the requisite showing of water availability to support the issuance of a conditional decree. Accordingly, we reverse the water court ruling and remand the case for further proceedings consistent with this opinion.

I.

In 1998, Applicant filed a conditional water right application in connection with its proposed molybdenum mine near Crested Butte, Colorado. The application contemplated consumptive use of 1,500 acre-feet of water per year, taken from the Slate River and Carbon Creek, both tributaries of the Gunnison River above the Aspinall Unit (Unit).

The Unit, originally called the Curecanti Unit, is a series of three Colorado River Storage Project Act reservoirs located on the main stem of the Gunnison River. The reservoirs, Blue Mesa, Morrow Point, and Crystal, are together capable of storing 1,090,000 acre-feet of water. The decrees for the Unit were made absolute in 1980, with 1957 priority dates.1

The United States Government (acting through the Bureau of Reclamation, "BUREC") is the holder of the water rights in the Unit, having received them by grant from the Colorado River Water Conservation District (River District).

The Aspinall Unit water rights are generally subject to Colorado law and are further specifically subject to a subordination obligation. The River District assigned the state adjudicated water rights for the Unit to the BUREC on the condition that in-basin projects on the Gunnison and its tributaries above the Unit could deplete at least 60,000 acre-feet of water. This obligation was an outgrowth of negotiations between the River District, local interests, the United States, and the Colorado Water Conservation Board to accommodate development of water resources in the natural basin of the Gunnison River. The water court has found, and this court has confirmed, that such understanding resulted in a binding, enforceable agreement. Bd. of County Comm'rs v. Crystal Creek Homeowners' Ass'n, 14 P.3d 325, 340-41, 346 (Colo.2000) (Arapahoe II.) The effect of the subordination is to make water available for appropriation that BUREC could otherwise call for the Unit in the exercise of its absolute water rights.

Thus, the question before us today is simply whether a junior, up-stream, in-basin appropriator must have a contract with BUREC in order to take advantage of the subordination policy. The water court agreed with the Objectors in this case that, in order to meet the required showing of water availability for issuance of a conditional decree, Applicant must produce a contract with BUREC that permits Applicant to take advantage of the subordination policy. We disagree.

II.

Colorado cherishes its water as a scarce and valuable resource. State Eng'r v. Castle Meadows, Inc., 856 P.2d 496, 505 (Colo.1993). The State strives to distribute the resource in ways that respect historical uses without thwarting growth or entrepreneurial development. One of the cornerstones of this state's water policy is that the resource be administered to maximize its beneficial uses. See § 37-92-102, 10 C.R.S. (2001).

An applicant may commence the process of developing a beneficial use by filing for a conditional right, defined by statute as "a right to perfect a water right with a certain priority upon the completion with reasonable diligence of the appropriation." § 37-92-103(6), 10 C.R.S. (2001). A conditional right is a right that serves to hold the place of the appropriator in the "first in time, first in right" system in effect in Colorado. If the appropriator diligently puts the water to beneficial use, the conditional right can mature into an "absolute" water right, with a priority that dates back to the initiation of the conditional right. Bd. of County Comm'rs v. United States, 891 P.2d 952, 970 (Colo.1995) (Arapahoe I).

The elements required to establish a conditional right are:

[A]n applicant must show in general that a "first step" toward the appropriation of a certain amount of water has been taken, that the applicant's intent to appropriate is not based upon the speculative sale or transfer of the appropriative rights, and that there is a substantial probability that the applicant can and will complete the appropriation with diligence.

City of Thornton v. Bijou Irrigation Co., 926 P.2d 1, 31 (Colo.1996) (emphasis added). The "can and will" reference above is from a 1979 addition to section 37-92-305(9)(b), 10 C.R.S. (2001) ("No claim for a conditional water right may be recognized ... except to the extent that it is established that the waters can be and will be diverted, stored, or otherwise captured, possessed, and controlled and will be beneficially used....").

In In re Water Rights of Hines Highlands Ltd. Partnership, 929 P.2d 718 (Colo. 1996), the applicant sought a conditional decree for water rights for a ski area development plan. Id. at 721. The objectors argued that there was insufficient water available in Maroon Creek to permit the diversions under the proposed junior conditional rights. Id. at 723. We held that:

Under the can and will statute, the applicant must make a threshold showing of reasonable availability of water to prove that the applicant "can" complete the appropriation....
... The applicant need only prove that there is a substantial probability that the appropriation can and will be completed, based upon necessarily imperfect predictions of future conditions. This approach to obtaining a conditional water right decree promotes the development and maximum utilization of Colorado's scarce water resources.

Id. at 723-24 (citation omitted). Thus, as a prerequisite to receiving a conditional decree, applicants must show water is available that can be diverted. See also Arapahoe II, 14 P.3d at 333 (...

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