Preserving Historical Consumptive Use During Water Leases for Instream Use
| Publication year | 2011 |
| Pages | 49 |
| Citation | Vol. 40 No. 6 Pg. 49 |
2011, June, Pg. 49. Preserving Historical Consumptive Use During Water Leases for Instream Use
June 2011
Vol. 40, No. 6 [Page 49]
Natural Resource and Environmental Law-Water Law
Natural Resource and Environmental Law articles are sponsoredby the CBA Environmental Law, Water Law, and Natural Resources and Energy Law Sections. The Sections publish articles of interest on local and international topics.
Coordinating Editors
Melanie Granberg (Environmental), Denver, Gablehouse Calkins and Granberg, LLC-(303) 572-0050, mgranberg@gcgllc.com; Kevin Kinnear (Water), Boulder, Porzak Browning and Bushong LLP-(303) 443-6800, kkinnear@pbblaw.com; Joel Benson (Natural Resources and Energy), Denver, Davis Graham and Stubbs LLP-(303) 892-7470, joel.benson@dgslaw.com
About the Authors
Chad J. Lee is an associate at Balcomb and Green, P.C. in Glenwood Springs, Colorado. He practices water, real estate, oil and gas, and land use law. Sara M. Dunn is a partner at Balcomb and Green, P.C., specializing in water law.
Colorado law preserves the historical consumptive use of a water right during a lease to the Colorado Water Conservation Board for instream flow purposes provided a change decree is obtained. The water is fully consumable downstream of the instream flow reach.
In 2008, the Colorado Legislature eliminated a major impediment to Colorado's instream flow (ISF) programby enacting House Bill (H.B.) 08-1280. This bill allows owners of water rights to preserve the historical consumptive use of a water right during a lease to the Colorado Water Conservation Board (CWCB).(fn1) The law gives the CWCB a useful tool to increase stream flows and preserve the natural environment. It also allows practitioners to preserve the value of clients' water rights while benefitting the natural environment. This article provides a brief history of Colorado's ISF program, discusses the mechanics of H.B. 1280 leases, and analyzes the potential impact of H.B. 1280.
A Brief History of Colorado's Instream Program
Before 1973, Colorado did not recognize ISF rights.(fn2) The Water Right Determination and Administration Act of 1969 defined "appropriation" as the "diversion of a certain portion of the waters of the state and the application of the same to a beneficial use."(fn3) "Diversion" meant "removing water from its natural course or location, or controlling water in its natural course or location,by means of a ditch ... or other structure or device."(fn4)
However, in 1973, the legislature legitimized ISF rightsby eliminating the need to divert water to obtain a priority.(fn5) In so doing, Colorado recognized the "need to correlate the activities of mankind with some reasonable protection of the natural environment" and authorized the appropriation of instream flows.(fn6) The CWCB was appointed as the exclusive authority to appropriate "minimum flows" and lake levels "to preserve the natural environment to a reasonable degree."(fn7) In 1979, the Colorado Supreme Court upheld the constitutionality of the ISF program.(fn8)
Two years later, the legislature passed a compromise bill that added four principles and limitations the CWCB was required to follow in establishing instream water rights. These principles and limitations are: (1) ISF rights could not constrain the use of imported water; (2) ISF rights were subordinated to any water uses and exchanges existing prior to the instream right, even if not yet decreed; (3) the CWCB must make independent findings that the environment will be preserved to a reasonable degree; and (4) a clarification that the program did not create a public right to access streams or condemn rights of way.(fn9)
The program gained momentum in the 1980s, partially as a way of staving off federal intervention.(fn10) Although the CWCB had been authorized to acquire water for instream flows since 1973,(fn11) the legislature clarified the law in 1986 to empower the CWCB to acquire senior rights for ISF purposes by "grant purchase, bequest, devise, lease, exchange, or contractual agreement."(fn12) The CWCB clearly had the authority to acquire senior existing rights for ISF purposes in the private market.
In 2002, the Colorado Legislature declined to enact certain provisions of a bill that would have allowed private individuals to hold ISF rights.(fn13) The legislature preferred to restrict ownership of ISF water rights to the CWCB to balance competing interests.(fn14) Proponents of the bill, however, struck a compromise that expanded the CWCB's authority to appropriate ISFs to "improve" the natural environment, whereas previously the CWCB had the authority to appropriate only the bare minimum flows to "preserve" the natural environment.(fn15)
CWCB Program
The CWCB uses two primary tools to improve streamflows: appropriations and acquisitions.(fn16) Acquisitions, in contrast to junior post-1973 appropriations, enable the CWCB to acquire senior water rights permanently through gifts or sales, temporarily through leases, or through other interests. Acquisition is the less-used of the two tools due to the complexity of water transactions and lack of funding, and leases were not used at all due to the penalty incurred in the historical consumptive use of the water right.(fn17) However, in 2008, the legislature eliminated a major impediment to leases of water rights for instream purposes.
The 2008 Amendment: H.B. 1280
In 2008, the legislature allowed appropriators to claim historical use credit for periods during which the water was leased to the CWCB for ISF purposes. Previously, no appropriator was inclined to lease water to the CWCB because of the risk that the historical consumptive use-the transferable component of a water right-would gradually atrophy throughout the lease term. This risk was present because a water right must be used for its decreed purposes at its decreed place of use, without waste, to be transferred.(fn18) Further, even if the CWCB were to judicially change a leased...
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