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Colorado Supreme Court Rules that Water Court Jurisdiction Does Not Extend to Unadjudicated Water Rights

In a recent appeal, on September 9, 2019, the Colorado Supreme Court ruled that the Water Court jurisdiction does not include unadjudicated water rights, and therefore also does not include any matters related to those water rights. This clarification of Water Court jurisdiction is the latest in a string of cases in which the Colorado Supreme Court has further defined exactly what matters a Water Court can hear. [The Luskin Daughters 1996 Trust v. Young, 2019 CO 74 (Color. 2019).]

Background

The Luskin Daughters 1996 Trust (Trust) began the action by filing a complaint for declaratory judgment and injunctive relief and damages in the Water Court. The two parties own adjacent parcels of land and the Trust had historically utilized a system of springs and ditches to deliver water to their land for irrigation, animal watering, wildlife, and recreation purposes. The complaint alleged that in 2017, the Youngs built a house that destroyed one or more of the ditches, thereby denying the Trust the ability to deliver its water. The crux, however, was that none of the Trust’s water rights had ever been adjudicated. Therefore, the complaint sought: 1) a declaratory judgment confirming the existence of the Trust’s unadjudicated water rights, 2) a declaratory judgment confirming the existence of ditch easements for those water rights, 3) injunctive relief from the Youngs’ interference with those water rights, 4) injunctive relief from the Youngs’ trespass and damage to the Trust’s ditch rights, and 5) damages.

Water Rights in Colorado

In Colorado a “water right” is defined as:

“. . .a right to use in accordance with its priority a certain portion of the waters of the state by reason of the appropriation of the same.” C.R.S. § 37-92-103(12).

Importantly, this is only a usufructuary right and the water rights holder does not actually own the water itself. Kobobel v. State Dep’t of Nat. Res., 249 P.3d 1127, 1134 (Colo. 2011). The Colorado Constitution, as well as subsequent case law, provides that the water right is created when a person appropriates—through diversion and placement to a beneficial use—or initiates the appropriation of any yet unappropriated water. Shirola v. Turkey Canon Ranch Ltd. Liab. Co., 937 P.2d 739, 748 (Colo. 1997). Critical to this case, “absent an adjudication under the [1969] Act, water rights are generally incapable of being enforced.” The Luskin Daughters 1996 Trust v. Young, 2019 CO 74.

The above cited Act is the Water Right Determination and Administration Act of 1969 (Act), which controls all water rights appropriations in Colorado. The purpose of the Act was to take Colorado’s ad hoc system of allocating water rights and provide a “comprehensive, integrated scheme of adjudication and tabulation of water rights.” James N. Cobridge, Jr. & Teresa A. Rice, Vranesh’s Colorado Water Law 139 (rev. ed. 1999). The Act was passed at a time when the state’s population was beginning to grow exponentially and a statutory scheme was needed “to give notice of the nature, scope and impact” of potential new water rights to allow other users to file statements of opposition to protect their own rights against new appropriations. S. Ute Indian Tribe v. King Consol. Ditch Co., 250 P.3d 1226, 1234 (Colo. 2011).

Water rights appropriations through the 1969 Act occur through Colorado’s Water Courts, whose jurisdiction is limited to “water matters,” although, because of the complex nature of many water matters, the jurisdiction also extends to “issues ancillary to water matters.” C.R.S. §37-92-203; Crystal Lakes Water & Sewer Ass’n v. Backlund, 908 P.2d 534, 543 (Colo. 1996). Those jurisdictional issues, combined with the Trust’s lack of adjudicated water rights, formed the basis of this case.

The Motion to Dismiss at the Water Court

In response to the complaint, the Youngs filed a motion to dismiss on three grounds. First, they asserted that the claim seeking to confirm existence of the unadjudicated rights was merely a work-around to the 1969 Act’s provisions for “determination of a water right.” That section proscribes certain notice and publication procedures that must accompany such an application and, because the Trust had not followed those procedures, the Water Court did not have jurisdiction to grant such declaratory relief. The Youngs’ second grounds for dismissal also attacked the Water Court’s jurisdiction, arguing that, because they did not have jurisdiction over the “water matter” of the first claim, the court similarly lacked ancillary jurisdiction over the remaining claims. The final argument was that, even if the court had jurisdiction, it could not grant the Trust’s requested relief because, as discussed above, unadjudicated water rights are not judicially enforceable against a third party.

The Water Court granted the Youngs’ motion, ruling that the Trust’s claim for declaration of unadjudicated water rights, without following the correct statutory procedures, was asking the Water Court “to operate outside the 1969 act” and therefore the court did not have the authority to grant such relief. The Trust then appealed to the Supreme Court. [In Colorado, Water Court appeals skip the Court of Appeals and go straight to the Colorado Supreme Court.]

The Supreme Court’s Decision

On appeal, the Supreme Court fixated on the 1969 Act and the significance of a water right’s adjudication. In addition to noting that unadjudicated rights are judicially unenforceable, the Court further stated that:

“. . .an adjudication is necessary for maintaining a related action premised upon the existence of a claimed water right. See, In re Tonko, 154 P.3d 397, 404 (Colo. 2007). . . .Because a condemnation action involves issues such as necessity and valuation in determining the compensation award for a ditch or pipeline right-of-way needed for water transportation in the exercise of a water right, we found in Tonko, that the adjudication of a water right was actually a “prerequisite” for maintaining the private condemnation action for ditch easements allowing for the exercise of that water right.” Young, 2019 CO 74.

The Court went on to explain the 1969 Act adjudication process in detail, highlighting the importance of the process in notifying other water users of claims that could be adverse to their vested water rights.

Water Court Jurisdiction

The Supreme Court next turned to the issue of Water Court jurisdiction. Although it used different justification, the Court agreed that the Water Court did not have the requisite jurisdiction to grant the Trust’s requested relief. Although never specifically stated by the Water Court, appellate briefs in this case characterized the Water Court’s ruling as finding that, because of the absence of an adjudicated water right, the court lacked subject matter jurisdiction. Because the Trust had claimed a right to use water by appropriation, the Court reasoned, the Water Court did have subject matter jurisdiction. However, because of lack of notice and other adjudication procedures, the Supreme Court found that the Water Court lacked personal jurisdiction over the Trust’s claims. To support this finding, the Court noted that water adjudications, although unique in nature, are in rem proceedings:

“To the extent the Trust’s pleadings are properly construed to seek a determination of water right in regard to the Trust’s use of water from the Youngs’ springs, the Water Court lacked jurisdiction over the res of the action.” Id.

The Trust countered this, instead claiming that it was not seeking determination of a water right, but rather a declaration that it’s right to use that water is superior to the Youngs’ right to interfere with that use. The Court summarily denied this, stating:

“. . .we have never suggested that priority over another’s use of water could be established without having first adjudicated a water right according to the resume notice process prescribed by the 1969 Act.” Id. (“Our statement…could [not] be reasonably understood to sanction a failure to comply with the statutory resume notice procedure for the determination of a water right by merely requesting declaratory of injunctive relief against a particular party.”).

As a result, the Supreme Court upheld the Water Court’s dismissal for failure to state a claim upon which relief could be granted.

Conclusion and Implications

The Supreme Court made it clear that 1969 Act is the supreme law of Colorado water rights. The statutory scheme and procedures of the Act are necessary to provide a uniform system of water rights adjudication that balances allowing new appropriations while affording existing water rights users the ability to protect their vested water rights. The Water Courts’ jurisdiction was also further defined in that a “water matter” must be in relation to an adjudicated water right, or one that has otherwise complied with the procedures of the 1969 Act. Although a water right is created at the time of appropriation, this case emphasizes the critical need for water rights users to adjudicate their rights so that they can be judicially enforced and protected in the future. The Colorado Supreme Court’s opinion is available online at: https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2018/18SA215.pdf

(John Sittler, Paul Noto)