Three Bells Ranch Associates v. Cache La Poudre Water Users Ass'n

• Decision Date: 23 May 1988
• Docket Number: No. 86SA37,No. 1,S,1,86SA37
• Citation: 758 P.2d 164
• Parties: The THREE BELLS RANCH ASSOCIATES and Sterling Sand & Gravel Company, A Colorado Corporation, Appellants-Defendants, v. CACHE LA POUDRE WATER USERS ASSOCIATION; Cache La Poudre Reservoir Company; The New Cache La Poudre Irrigation Company; The Ogilvy Ditch Company; and The North Side Lateral Ditch Company, Appellees-Plaintiffs, and Jeris Danielson, State Engineer, State of Colorado, and James Clark, Division Engineer, Water Divisiontate of Colorado, Appellees-Defendants.
• Court: Colorado Supreme Court

Page 164

758 P.2d 164

The THREE BELLS RANCH ASSOCIATES and Sterling Sand & Gravel

Company, A Colorado Corporation, Appellants-Defendants, v. CACHE LA POUDRE WATER USERS ASSOCIATION; Cache La Poudre

Reservoir Company; The New Cache La Poudre Irrigation

Company; The Ogilvy Ditch Company; and The North Side

Lateral Ditch Company, Appellees-Plaintiffs,

and

Jeris Danielson, State Engineer, State of Colorado, and

James Clark, Division Engineer, Water Division No.

1, State of Colorado, Appellees-Defendants.

No. 86SA37.

Supreme Court of Colorado,

En Banc.

May 23, 1988.

Caplan & Earnest, Gerald A. Caplan, Richard E. Bump, Boulder, Bratton and Associates, L. Richard Bratton, Gunnison, for appellants-defendants.

Fischer, Brown, Huddleson & Gunn, William H. Brown, Fort Collins, for appellees-plaintiffs.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Sherry A. Caloia, Peggy M. Ventura, Asst. Attys. Gen., Denver, for appellees-defendants.

LOHR, Justice.

This case arises out of a conflict between the operators of a gravel quarry and water users on the over-appropriated Cache La Poudre River. The conflict concerns the responsibility of the quarry operators to make advance provisions to compensate for the water that will be lost by evaporation when the gravel removal operations are completed and ponds of ground water remain in the gravel pits as part of a reclamation plan. The plaintiff water users obtained a declaratory judgment against the quarry operators in the District Court for Water Division No. 1. The court held that the reclamation of the mined property by the creation of lakes or ponds caused by digging gravel pits to depths below the water table will constitute an appropriation of water as defined in section 37-92-103(3)(a), 15 C.R.S. (1987 Supp.), and that the gravel pits will be wells, as defined in section 37-90-103(21), 15 C.R.S. (1973). As a result, the operators will be required to obtain well permits from the state engineer, which in turn will require that they adopt a plan for augmentation to compensate for any injury that will be caused to owners of senior water rights by the gravel removal and reclamation activities. The water users are principally concerned about the evaporative losses that will occur from the surface of the ponds. The quarry operators appealed, contending that the issues are not appropriate for resolution by declaratory judgment at this time and that the district court erred in its resolution of each of the questions presented. We conclude that the district court was correct in all respects and therefore affirm the judgment.

I.

In 1979, The Three Bells Ranch Associates, a partnership (Three Bells), applied for and subsequently obtained a mining and reclamation permit from the Mined Land Reclamation Board of the State of Colorado to conduct a gravel mining operation on lands near the Cache La Poudre River in Larimer County. See Colorado Mined Land Reclamation Act, §§ 34-32-101 to -126, 14 C.R.S. (1984 & 1987 Supp.) (Mined Land Reclamation Act). The application included a reclamation plan involving the creation of lakes by the flow of tributary ground water into the gravel pits as a result of extending the excavations below the level of the water table in the alluvium of the Cache La Poudre River. According to the application, the lakes are to be used for recreational purposes and will provide fishing areas and additional wildlife habitat. It was estimated that the mining operation would continue for at least fifteen years, and reclamation was to be an ongoing activity concurrent with mining. ¹

In 1980, plaintiffs Cache La Poudre Water Users Association, Cache La Poudre Reservoir Company, The New Cache La Poudre Irrigation Company, The Ogilvy Ditch Company, and The North Side Lateral Ditch Company (collectively, the "water users") ² brought an action for declaratory judgment under C.R.C.P. 57 against Three Bells ³ in the District Court for Water Division No. 1 (district court). Also named as defendants were the state engineer and the division engineer for water division no. 1. As the litigation progressed, however, the state and division engineers supported the position of the water users.

The water users' complaint alleged that Three Bells intended to appropriate water for recreational purposes by excavating pits adjacent to the Cache La Poudre River. The pits would become filled with water from the river and its connected alluvial aquifer and could then be used for recreational and other beneficial purposes. This activity, it was alleged, would injure the water users and other appropriators on the river. The water users sought a determination that the excavation of such a pit would constitute the construction of a "well" as defined in section 37-90-103(21), and that such construction can occur only if a permit is obtained from the state engineer under the Colorado Ground Water Management Act, §§ 37-90-101 to -142, 15 C.R.S. (1973 & 1987 Supp.) (Ground Water Management Act). The water users also asked that the court decree that the intended actions of Three Bells would constitute an attempted or intended appropriation of water. Other relief requested included a determination that Three Bells could use the water only in accordance with the doctrine of priority of appropriation.

The district court held a hearing limited to the issues of whether Three Bells' proposed activities would effect an appropriation and whether the gravel pits would be wells. The issue of injury to the water users was not included among the matters to be resolved at the hearing. On September 23, 1982, nunc pro tunc November 10, 1981, the district court found that the plan for reclamation involved the creation of lakes for recreational purposes, and concluded that this "would be an application of the waters of the state to a beneficial use." The court then decreed that "[t]he proposed activities of [Three Bells] pertaining to reclamation of the mined property will constitute an appropriation of water" and that "[t]he pits, since they will obtain ground water for beneficial use from an aquifer, will be wells." The order provided that this was not a final judgment, and the plaintiff water users later moved to dismiss their other claims and to make the judgment final. The district court granted the dismissal on November 14, 1984, and determined that the September 23, 1982, order would become a final judgment unless Three Bells filed additional claims or applications in the case within thirty days.

While the litigation was in progress, Three Bells commenced gravel mining operations. On November 2, 1984, the division engineer issued an order pursuant to section 37-92-502, 15 C.R.S. (1987 Supp.), directing Three Bells to cease diversions or removal of water from the gravel pit. Within ten days, Three Bells was required to submit to the state engineer a well permit application for the gravel pit as well as evidence of a plan of substitute supply pursuant to section 37-80-120, 15 C.R.S. (1973), in order to protect other water users from injury while Three Bells attempted to obtain judicial approval of a plan for augmentation. ⁴ The order also required that an application for approval of a plan for augmentation be filed in the district court within sixty days.

Three Bells complied with the requirements to submit a well permit application and a plan of substitute supply. The quarry operators filed an additional pleading in the present case on December 13, 1984, seeking injunctive relief against the state engineer and the division engineer to restrain them from enforcing the November 2, 1984, cease and desist order. The pleading also requested approval of a plan for augmentation to compensate for water consumption during mining operations, but asked that adoption of any plan for augmentation relating to post-mining evaporative losses be deferred until after water is accumulated in the lakes as part of the reclamation project. Three Bells indicated in this pleading that it was filed within thirty days of the court's November 14, 1984, determination in order to prevent the September 23, 1982, judgment from becoming final.

In January 1985 the water users renewed their motion to make the September 23, 1982, declaratory judgment order final. On June 28, 1985, the district court granted that motion, under C.R.C.P. 54(b), and this appeal followed. The issues before us are limited to whether declaratory judgment was appropriate, and whether the district court was correct in determining that Three Bells' reclamation activities will effect an appropriation and that the gravel pits to be excavated will be wells.

II.

We begin with an analysis of the appropriateness of declaratory judgment. Three Bells contends that the declaratory judgment issued in this case pursuant to C.R.C.P. 57 was not proper because the district court was requested to issue an advisory opinion rather than to resolve an actual controversy. It is true that declaratory judgment is not available simply for advisory purposes when no real controversy exists. Beacom v. Board of County Comm'rs, 657 P.2d 440, 447 (Colo.1983); Farmers Elevator Co. of Sterling v. First Nat'l Bank of Fleming, 176 Colo. 168, 171, 489 P.2d 318, 319 (1971). The legal controversy presented must be a current one rather than one that may arise at some future time. See Heron v. City & County of Denver, 159 Colo. 314, 316, 411 P.2d 314, 315 (1966) (declaratory judgment proceeding not available for challenge of building permit ordinance when plaintiff had not applied for a permit; "there must be a justiciable issue or a legal controversy extant, and not a mere possibility that at some future time such a question may arise"); McDonald's Corp. v. Rocky Mountain McDonald's, Inc., 42 Colo.App. 143, 590 P.2d 519 (1979) (determination of corporate good standing not ripe for declaratory judgment when good standing at a specified future...