Supreme Court Grants Operational Flexibility to Owners of Multiple Conditional Water Rights

The Colorado Supreme Court’s recent ruling in Upper Eagle Reg’l Water Authority v. Wolfe, 2016 CO 42 creates opportunities for owners of more than one conditional water right to make those rights absolute in advance of demonstrating the need for both, and the “catch” or court-imposed limitation may not have a practical effect in some situations.

In Upper Eagle, the applicant owned a junior and a senior conditional water right for diversion and use at the same location and for the same purpose. The conditional rights were granted for projected future need. Presently, the applicant needs less than what one of those rights can provide. At a time when both rights were in priority and the applicant diverted what it needed, the applicant chose to attribute the diversion to the junior conditional water right. It thereafter sought to make that part of the junior right absolute.

The Court allowed this, and it held “that where there is no evidence of waste, hoarding, or other mischief, and no injury to the rights of other water users, the owner of a portfolio of water rights is entitled to select which of its different, in-priority conditional water rights it wishes to first divert and make absolute. However, the portfolio owner must live with its choice.” Id. at ¶ 2.

The Court rejected the argument that this would allow owners of several conditional water rights to make all of them absolute before there is a need for, and availability of, the total combined amount of water. The Court stated that the “catch,” when choosing to attribute a diversion to the junior conditional right, is that then the owner can no longer divert pursuant to the senior conditional right without showing a need therefor above and beyond what can be diverted through the junior right. Id. at ¶ 21. The Court seemingly believed that this would effectively prevent the owner from diverting pursuant to the senior right until it has a need for more than the full amount of the junior right.

That is, however, not necessarily the case. As an example, assume that Owner has a junior and a senior water right for 1 c.f.s. each based on a projected future need for 2 c.f.s. For now, Owner’s need is limited to 1 c.f.s. Under the rule announced in this case, Owner can apparently attribute a 1 c.f.s. diversion on a day where both rights are in priority due to extraordinary rainfall to the junior right and thereby make it absolute. The following day, when the rain has stopped and the junior right is out of priority, but the senior right is in priority and needed, the Owner can then make the senior right absolute as well. That is so regardless of the fact that Owner never needed or diverted more than 1 c.f.s.

The Court failed to recognize that changing river conditions can potentially create a legitimate need for the senior right before there is a need for more water than could be diverted pursuant to the junior right had it been in priority. Upper Eagle, therefore, provides an opportunity for those who own several conditional water rights that can be diverted at the same point for the same use to make their rights absolute long before reaching their projected need.