Adjudication of an exchange assigns it a priority within the priority system vis-à-vis the entire stream system,41 including other exchanges operating in the affected stream reach, as well as other water rights, such as instream flow rights. In this example, both Water Users A and B are called out by the 1902 senior water right. Water User A is capable of operating an exchange to its upstream reservoir from its downstream reservoir. Water User B has 20 cfs of reusable effluent at the wastewater treatment plant (WWTP) that it can use to effectuate an exchange to its municipal intake. Thus, Water User A and Water User B are competing for the exchange potential in the same reach of the river. If Water User A has an adjudicated priority for the exchange senior to Water User B's exchange, then Water User A can call out all of Water User B's exchange. (See Graphic 5.)

§ 13.5.1—First Step Requirements

An applicant for a conditional appropriative right of exchange must establish an intent to appropriate water for beneficial use.42 A municipality's entitlement to secure a conditional decree for appropriative rights of exchange is subject to the water court's determination that the applicant intends to acquire and can and will acquire suitable sources of substitute supply.43

§ 13.5.2—Relation Back Of Existing Exchanges

Unlike other water rights, approval of applications for existing exchanges may relate back to the original priority date(s) of the exchange unless it would be contrary to the manner in which the exchange has been administered.44

§ 13.5.3—"Can And Will" Requirements

Under the "can and will" statute,45 an applicant for a conditional right of exchange must show that it can and will operate the exchange and put the water diverted by exchange to beneficial use. C.R.S. § 37-92-305(9)(b) provides that "[n]o claim for a conditional water right may be recognized or a decree therefor granted 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 and that the project can and will be completed with diligence and within a reasonable time." Thus, the can and will test requires a conditional water right applicant to show that there is a "substantial probability" that (1) water can and will be diverted; (2) within a reasonable time the facilities necessary to effect the appropriation can and will be completed with diligence; and (3) as a result waters will be applied to a beneficial use.46

Depending on the facts of the case, the can and will test may require a showing that includes, but is not limited to, evidence

1) That water is available for the exchange in the form of exchange potential;47
2) That the applicant can obtain the right to use any necessary structures or points of diversion to operate the exchange;48
3) That there is a substantial probability that the applicant

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