Chapter 3 - § 3.3 • OWNERSHIP OF A WATER RIGHT

• Jurisdiction: Colorado

§ 3.3 • OWNERSHIP OF A WATER RIGHT

§ 3.3.1—General Background

So far, this chapter has discussed two mechanisms recognizing the right to use water: a well permit and a water court decree. The well permit records the well's yield, depth, water level, and annual appropriation; the use of the water; and the geological aquifer.⁶⁵ The Division of Water Resources has created a resource for researching well records online.⁶⁶ The water court decree memorializes the right to divert and use water, and the details of its source, amount, point of diversion, type of use, place of use, and priority.

Another way to obtain water in Colorado is by way of ownership of ditch shares. Historically, ditches and canals were the best way to move water to arid fields. "Ditches are important to Colorado. They permit a landscape, economy and history in which fertile valleys prosper. Without them, properties adjacent to or distant from water courses wither."⁶⁷ The Colorado Constitution, Article XVI, § 7 states:

All persons and corporations shall have the right-of-way across public, private and corporate lands for the construction of ditches, canals and flumes for the purpose of conveying water for domestic purposes, for the irrigation of agricultural lands, and for mining and manufacturing purposes, and for drainage, upon payment of just compensation.

The right to use water is distinct from the right to use a ditch. Therefore, a purchaser needs to evaluate the water use right, as well as confirm the status of any rights-of-way or ditch easements necessary for the delivery of the water.

§ 3.3.2—Mutual Ditch Companies

It is possible to own rights to water through a mutual ditch company. A mutual ditch company is a nonprofit corporation formed "solely for the convenience of its members in managing a joint water distribution system."⁶⁸ Mutual ditch companies are regulated by statute, at C.R.S. §§ 7-42-101 through -118. They are associations organized to develop, maintain, and deliver irrigation water to shareholders via elaborate networks of pipes, ditches, reservoirs, and flumes. In August 2009, HB 09-1233⁶⁹ added C.R.S. § 7-42-101.5, which defines a specialized form of mutual ditch called an acequia mutual ditch. "[A]cequias are community organizations that treat water as a communal resource," and the "mutual ditch company system was modeled, in Colorado, on the acequia system."⁷⁰ One of the statutory characteristics of an acequia is that it originated prior to Colorado's statehood.

A company's articles of incorporation or bylaws will authorize the issuance of stock. Shares of stock represent the water right a person owns. Each stock certificate is a pro rata share in the use of water and facilities owned by the mutual ditch company. The stock certificates are deemed by statute to be transferable personal property — an exception to the general view that water rights are like real property.⁷¹ Nevertheless, the water rights underlying the stock certificates are real property interests.

The need for mutual ditch companies grew out of farmers' needs to irrigate arid land:⁷² the average farmer did not have sufficient means to construct, own, or operate an irrigation ditch to convey water to his or her land. The most economical solution was to convey the water over a great distance through a single large main and laterals, and then distribute it to consumers by means of smaller laterals. "Ditches are linear delivery systems that function as a part of the whole," and the supreme court has recognized that interference with them jeopardizes...