Public Service Co. of Colorado v. Blue River Irr. Co.

• Decision Date: 06 April 1992
• Docket Number: No. 91SA37,O,No. 5,5,91SA37
• Citation: 829 P.2d 1276
• Parties: PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation, Objector-Appellant, v. BLUE RIVER IRRIGATION COMPANY, Applicant-Appellee, and City and County of Denver, acting by and through its Board of Water Commissioners, and Orlyn Bell, Division Engineer, Water Divisionbjectors-Appellees.
• Court: Colorado Supreme Court

Page 1276

829 P.2d 1276

PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation, Objector-Appellant, v. BLUE RIVER IRRIGATION COMPANY, Applicant-Appellee, and City and County of Denver, acting by and through its Board

of Water Commissioners, and Orlyn Bell, Division

Engineer, Water Division No. 5,

Objectors-Appellees.

No. 91SA37.

Supreme Court of Colorado,

En Banc.

April 6, 1992.

As Modified on Denial of Rehearing April 27, 1992.

Timothy J. Flanagan, Chad M. Neuens, Kelly, Stansfield & O'Donnell (James R. McCotter, Sr. Vice President and General Counsel, Public Service Co., of counsel), Denver, for objector-appellant.

Glenn E. Porzak, James R. Ghiselli, Holme, Roberts & Owen, Boulder, for applicant-appellee.

Michael L. Walker, Casey S. Funk, Denver, for objector-appellee City and County of Denver.

Wendy C. Weiss, First Asst. Atty. Gen., Natural Resources Section, Denver, for objector-appellee Orlyn Bell, Div. Engineer, Water Div. No. 5.

Justice MULLARKEY delivered the Opinion of the Court.

Public Service Company of Colorado ("Public Service") appeals a judgment and decree of the water court which found that the Blue River Irrigation Company ("Blue River") had exercised reasonable diligence for the period from May 1980 to May 1984 in the development of Blue River's conditional water right. This is the third time this case is before this court. In two prior opinions, we concluded that Public Service was a proper party and ordered the water court to permit Public Service to conduct discovery and to present evidence at trial regarding the identity and intent of Blue River's shareholders and the economic feasibility of the project. See Public Service Company of Colorado v. Blue River Irrigation Company, 753 P.2d 737 (Colo.1988) ("Blue River I" ), and Public Service Company v. Blue River Irrigation Company, 782 P.2d 792 (Colo.1989) ("Blue River II" ). In this appeal, we affirm the water court's finding of reasonable diligence.

I.

Before considering Public Service's arguments on appeal, we will briefly summarize the applicable standards for judicial review. In a reasonable diligence proceeding, the applicant must show its intention to put the water to beneficial use, together with concrete acts which it has taken to finalize the appropriation. Blue River I, 753 P.2d at 742. The determination of whether reasonable diligence has been demonstrated is fact-based requiring the water court to consider all the relevant evidence. It should consider, for example, "the size and complexity of the project, the extent of the construction season, the availability of material, labor, and equipment, the economic ability of the claimant, and the intervention of outside delaying factors." Trans-County Water, Inc. v. Central Colorado Water Conservancy District, 727 P.2d 60, 64 (Colo.1986). The economic feasibility of the project also is a relevant factor. Blue River I, 753 P.2d at 742. Given the factual nature of the water court's determination, we have said that its findings of reasonable diligence "are binding on appeal if there is competent evidence to support them." Trans-County, 727 P.2d at 65. See also Municipal Subdistrict, Northern Colorado Water Conservancy District v. Rifle Ski Corporation, 726 P.2d 635, 637 (Colo.1986) (same); Orchard Mesa Irrigation District v. City and County of Denver, 182 Colo. 59, 63, 511 P.2d 25, 27 (1973) (same).

Public Service Company makes two basic arguments in this appeal. First, it contends that Blue River failed to comply with this court's prior opinions because Public Service was permitted only limited discovery regarding the identity of Blue River's shareholders. Therefore, contends Public Service, Blue River's application should be dismissed as a matter of law. Public Service's second argument is that Blue River did not demonstrate due diligence because it lacked an appropriative intent and instead had an improper speculative intent. As evidence of its contention, Public Service points to Blue River's sale negotiations with the City and County of Denver. It also alleges that there are inadequate irrigable lands for the project, that Blue River lacks financial ability to fund the project, and that its on-site activities have been minimal. We will consider these arguments in turn.

II.

In our prior opinions, we directed the water court to permit Public Service to conduct discovery and to present evidence at trial regarding the identity and intent of Blue River's shareholders and the economic feasibility of the project. We found that the information regarding Blue River's shareholders was relevant because Blue River is a mutual ditch company and its shareholders are the ones which will actually exercise the water rights held by Blue River. Blue River I, 753 P.2d at 741-742. Blue River argues that we should reject Public Service's contention regarding compliance with the remand orders in our prior opinions because Public Service had full opportunity to engage in discovery and to present evidence regarding Blue River's shareholders.

The shares of Blue River are owned by two corporations, Water Resources Co. (89%) and Red Creek Water Company (11%). Water Resources Co., in turn, is wholly owned by Water Resources Corp., a Delaware corporation. Water Resources Corp. itself is wholly owned by a trust.

In support of its contention that discovery was improperly restricted, Public Service focuses on the trust. Although the names of the trustee and the beneficiary were disclosed by Blue River, Public Service contends that it was unable to ascertain the intent and identity of the Blue River shareholders without access to the trust document. Assuming without deciding that the trust document was relevant, Public Service made no attempt to discover it. Under these circumstances, the issue is not properly preserved for review and we decline to address it. See Dove v. Delgado, 808 P.2d 1270, 1273 n. 3 (Colo.1991) ("Generally, issues not presented in the trial court are deemed waived and cannot be raised on appeal.").

III.

Public Service's principal argument on appeal is that Blue River lacks the intent to put the water to beneficial use for irrigation. It claims that Blue River is attempting to preserve a "paper" water right for speculative purposes. The water right at issue here was adjudicated by the Summit County District Court on March 2, 1910 for 85 cfs for irrigation uses and has an appropriation date of July 5, 1904. In four separate diligence cases covering time periods prior to 1980, the water court found that reasonable diligence had been exercised in the development of this water right.

The water court made the following factual findings in support of its conclusion that Blue River exercised reasonable diligence in this case:

6. Applicant owns or otherwise controls lands in the Blue River basin which it intends to irrigate with the subject water right. The diversion points for the subject water right are located at the shoreline of Green Mountain Reservoir. In order to transport water from Green Mountain Reservoir to the applicant's property, the applicant was required to obtain a federal permit and right-of-way to cross intervening Forest Service and Bureau of Land Management lands.

7. During the present diligence period (May 1980 through May 1984), the applicant has undertaken the following activities in an effort to apply the subject water right to a beneficial use:

(a) Between May 1980 and February 1982, applicant and its agents participated in over 40 meetings with Forest Service and BLM officials in order to secure the necessary governmental permit and right-of-way to construct the facilities required to apply the subject water right to a beneficial use.

(b) On or about October 6, 1981, applicant obtained a special use permit from the U.S. Forest Service which grants the right to construct, operate and maintain on and across intervening Forest Service lands the various facilities required to transport applicant's irrigation water to its lands.

(c) On or about ...