Written by John Stratman & John Braly
Broker Associate(s)
Mason & Morse Ranch Company

History of Colorado Water Law:
All water rights in Colorado follow a system of priority, which is “first in time first in right”. Any new applicant for water, receives rights that are considered “junior” (later in time) to others who hold “senior” (earlier in time) rights.

Colorado’s Constitution and statutes codify the idea of achieving the maximum beneficial use of water by transferring it to new locations. Water rights are governed by a strict application of the prior appropriation doctrine. Prior appropriation means that more senior water rights are satisfied first.

A water right can be an important and valuable piece of a real estate portfolio. In some locations along the Colorado Front Range, the water rights can be worth more than the underlying land. But just like other types of real estate, water rights are quite varied and can carry a wide range of values.

Colorado Water Rights are Interrupted and Governed by Water Courts
• Water courts do not grant water rights.
• A water right is created by actual, beneficial use.
• Water can be diverted and used without a water court decree (with some exceptions).
• A water right is confirmed by the water court.
• The court determines the priority date, amount, source, point of diversion, and the uses of water right.
• Benefits of going to water court.
• Obtain an enforceable priority date.
• Allows a water right to be administered and enforced against other rights.
• Establishes the transferrable yield of a water right.

Examples of Water Court Decrees:
• Plan for Augmentation: a way to prevent injury to senior water rights by allowing junior water rights to divert out-of-priority by providing an adequate replacement water supply to the senior right.
• Exchange: allows an upstream water right to divert water that would otherwise be unavailable by providing an adequate replacement source to a downstream water right.
• Change in Water Right: allows a different use, point of diversion, amount, and/or place of use while keeping the original priority date; requires the court to quantify the historical consumptive use and transferrable yield of a water right.
• Conditional: holds a place in the priority system to allow a water user to develop a water right; requires a court of finding of diligence every six years.
• Absolute: confirmation of diversion and actual, beneficial use of a water right.

What is an Augmentation Plan:
Augmentation Plans are a broad category of water operations designed to increase the supply of water available for beneficial use. Commonly, an augmentation plan authorizes out of priority diversions for beneficial use to the extent that a replacement supply of water is made available to substitute for the otherwise diminished amount of water available to supply other water rights. This allows the junior diversion to operate without injury to senior vested water rights. Augmentation plans allow for flexibility and maximum utilization of water while protecting senior rights in over-appropriated stream systems throughout Colorado. Augmentation Plans must be approved through a decree of the water court. While an application for an augmentation plan is pending before the water court, a substitute water supply plan may allow for operation of the project until the water court approves (decrees) the augmentation plan.

While Colorado produces more water than it uses, the use of water in the streams and rivers flowing downstream and out of Colorado is limited by agreement with downstream states through compacts with those downstream states.

INTERSTATE COMPACTS & EQUITABLE APPORTIONMENT
• Colorado is obligated to deliver water to downstream states either through interstate compacts or equitable apportionment decrees.
• Interstate Compacts: authorized by the U.S. Constitution and allows states to set their obligations to each other with Congressional approval.
• Equitable Apportionment: U.S. Supreme Court has authority to allocate a shared stream system between states.
• Colorado consumes about 1/3 of the water it produces.

A real-life pressing issue of water and its governing rules is shown by example within the Rio Grande River basin.  The Rio Grande River originates high in the Colorado Rockies from the San Juan Mountain Range in southern Colorado and flows through the San Luis Valley of Colorado into New Mexico and Texas and all the way along the US/Mexico border before entering the Gulf of Mexico.

The San Luis Valley is a major irrigated crop producing region using well water to irrigate approximately 175,000 acres.  This high-altitude valley is favorable for crop and livestock production with 286 days of sunshine per year.  The valley has a relatively dry climate with Monte Vista receiving 9 inches of rainfall and 32 inches of snow per year.

Colorado is the 6th largest potato growing area in the US.

The San Luis Valley produces 92% of Colorado’s potato production with 52,000 planted acres.  The San Luis Valley also produces a variety of other crops including alfalfa hay, barley, carrots, onions and other crops and livestock.

The State Engineer has imposed augmentation requirements on well users under Colorado’s “priority water rights doctrine.”

Currently, farmers in the 7 sub-districts that make up the San Luis Valley irrigators are paying $150/acre/year to offset the inability to meet augmentation rules.

These vary across the board. All lands irrigated by wells are subject to annual assessments from $40 per acre up to $150 per acre.

Sub-District 1 is warning it will raise the fee to $500/acre/year. Increases are already being debated in the Colorado water court.

A couple of the largest growers have filed litigation over the mandate to be included in the sub-districts that the State Engineer has approved.

The momentum is mounting to find a solution to the augmentation issue in the San Luis Valley.

Finding answers to the San Luis Valley well water augmentation issue involves seeking out high priority streamflow adjudicated water rights in the area.

The L Cross ranch serves as and example of the solution - L Cross Ranch for Sale

The L-Cross, in average years, has more than enough surface water to offset any pumping fees. The L Cross is included in Sub-District 1 currently.