Chapter 12 - § 12.7 • "CAN AND WILL" REQUIREMENTS


Justice Carrigan's famous statement that the Colorado Constitution allows for the "right to appropriate, not a right to speculate"35 was amended into the provisions of the 1969 Act relative to conditional water rights in 1979 with the adoption of C.R.S. § 37-92-305(9)(b). This requirement has been described as the intent of the General Assembly to reduce speculation associated with claims for conditional water rights and to increase certainty of the administration of water rights.36 It is important to note this requirement can be met when the conditional decree is issued but may be found to be lacking in a subsequent diligence proceeding.37 Economic feasibility of a reservoir project is a proper consideration in a diligence proceeding.38

The "can and will" test has been used by objectors to defeat or put in serious jeopardy a number of storage projects, including:

1) 20,000 AF Southeast Plant Division;39
2) 900,000 AF Union Park Reservoir;40 and
3) 29,000 AF Dry Gulch Reservoir.41

It is certainly easier to accuse a private developer of speculation by proposing a new reservoir because the same facts will be claimed as evidence of prudent planning by a public entity. But there are cases setting limits even upon public proponents of new storage projects. For example, in City of Thornton v. Bijou Irrigation Co.,42 the Colorado Supreme Court allowed a 50-year planning period for future demand, holding that "municipalities receive sufficient flexibility within the anti-speculation doctrine to allow them to plan for future water needs."43 When does planning become speculation?

As articulated by Justice Hobbs in Pagosa Area Water & Sanitation District v. Trout Unlimited:44

We hold that a governmental water supply agency has the burden of demonstrating three elements in regard to its intent to make a non-speculative conditional appropriation of unappropriated water: (1) what is the reasonable water supply planning period; (2) what are the substantiated population projections based on a normal rate of growth for that period; and (3) what amount of available unappropriated water is reasonably necessary to serve the reasonably anticipated needs of the governmental agency for the planning period, above its current water supply. In addition, it must show under the "can and will" test that it can and will put the conditionally appropriated water to beneficial use within a reasonable period of time.45

Another application of the "can and will" standard is in City of Aurora v. ACJ Partnership.46 In that filing for a new conditional storage site by a municipality, a water district was able to defeat the application, using this statutory provision, by establishing that the city's claimed sites substantially overlapped certain reservoir locations on lands owned by the State of Colorado and administered by the State Land Board. The Land Board had previously entered into a 99-year lease with the water district to locate its own future reservoirs at the same location.47 Thus, Aurora's claims were denied.

§ 12.7.1—Anti-Speculation Doctrine

The Colorado Supreme Court reaffirmed the anti-speculation doctrine in Vermillion Ranch Limited Partnership v. Raftopoulos Brothers.48 The court held that for an applicant seeking a conditional water storage right, one must establish a need for the amount of water claimed and that there is a "specific plan" to put a "specific quantity of water" toward the claimed beneficial use.49 In Vermillion Ranch, the applicant put on expert testimony to establish physical and legal availability of water for the new appropriation. For evidence of need, the applicant relied upon the fact that an energy company planned to develop 4,000 new oil and gas wells in Moffat County over the next 20 years and that each well used four to seven acre-feet of water.50 Nonetheless, the water court denied the attempt to make the conditional storage absolute because it determined that the applicant had failed to quantify a specific plan for a commercial or industrial use and could not show that it needed the claimed water itself, nor was it in privity with the energy company that needed the water.51

§ 12.7.2—Perfection Of Conditional Water Storage Rights

It has become increasingly difficult to perfect conditional water storage rights, a classic example of which arose in Water Division 6, one of the few basins that are not yet over-appropriated. In Upper Yampa Water Conservancy District v. Wolfe,52 the Colorado Supreme Court set forth the extent to which an applicant has to prove-up its...

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