Buffalo Park Development Co. v. Mountain Mutual Reservoir Co.

JUSTICE COATS,

dissenting.

I dissent from the majority's opinion and judgment, not because I believe the applicants actually proved the availability of unappropriated water, but because I believe the water court nevertheless erred in denying their demand to propose additional terms and conditions to prevent any injurious ef*692fects that might result from their application. Beyond erroneously depriving the applicants of at least fourteen years of seniority, the water court's outright dismissal betrays a fundamental misconception about the relationship between the availability of unappropriated water (proof of which we have held to be necessary to acquire conditional water rights) and the absence of injury to senior appropriators (proof of which is necessary for approval of an accompanying augmentation plan).

More particularly, I believe the water court's ruling demonstrates a failure to appreciate, especially in the context of tributary ground water, what it means for unappropriated water to be "available." Although at first glance, my quarrel with the majority may appear to involve little more than a disagreement over the procedure by which an applicant may invoke its statutory right to propose additional augmentation conditions, I believe this dispute is merely symptomatic of broader and much more profound differences in our understanding of the so-called "availability requirement" of the can-and-will test. I therefore write separately to explain my views.

I.

The meandrous history of this application is hardly a model for case management, with (as the water court itself noted) plenty of blame to go around.1 Exasperated as that court may have been, however, I believe it erred by granting the opposers' motion for post-trial relief and simply dismissing the application relative to these three subdivisions. While belatedly agreeing that the applicants failed to meet a "threshold" obligation to prove the availability of unappropriated water (and discarding the bulk of its earlier 21-page order permitting further observation) may have seemed like a particularly antiseptic way of ending these tangled proceedings, once and for all, I believe it amounted to a fundamental error of law, which deprived the applicants of their statutory right to amend their plan.

Although the applicants argued at trial that their proposed wells would not interfere with existing wells in these subdivisions, and that their plan to augment the stream with an amount of water equal to the amount they would take (even though it would be down-gradient of these particular wells) was therefore sufficient to prevent injury to senior appropriators, the water court remained unconvinced.2 The court was equally unconvinced, however, by the opposers' expert testimony to the contrary. In its original order, it therefore retained jurisdiction for five years and ordered a four-year supervisory plan to determine whether there would actually be well-to-well interference.

In their motion for post-trial relief, the opposers objected, not simply that this was an improper use of the court's "retained jurisdiction," but that in order to avoid dismissal the applicants were obliged to prove, as a threshold matter, that their proposed drilling *693would not cause the static water table to drop, which their expert equated with proving the availability of unappropriated water. The applicants opposed the motion, and in their response in opposition asserted that even if retaining jurisdiction for further monitoring were erroneous, dismissal would nevertheless not be the proper remedy. The applicants expressly asserted that upon any determination by the water court that their augmentation plan would not satisfactorily prevent injurious effects to senior appropriators, section 37-92-305(8) of the revised statutes mandated that they be afforded an opportunity to propose additional terms and conditions.

In granting the motion for post-trial relief, the water court ordered dismissal of the applicants' ground water claims regarding these three subdivisions; ordered the applicants to prepare an amended proposed decree, excluding all references to these three subdivisions; and specified that it would entertain motions to reconsider only with regard to "clerical errors, inconsistencies, ambiguities, and omissions," but not with regard to any challenges to its findings of fact or conclusions of law, which challenges it ordered the parties to reserve for appeal. Because the water court expressed its ruling regarding these three subdivisions in terms of a failure to prove the availability of unappropriated water as a threshold matter, it failed to address the applicants' augmentstion plan altogether, much less afford them an opportunity to modify it.

IL.

By judicial gloss, this court has previously construed the statutory can-and-will test for a conditional water right, see § 87-92-305(9)(b), C.R.S. (2007), to require a demonstration of the availability of unappropriated water. See Farmers Reservoir & Irrigation Co. v. Consol. Mut. Water Co., 33 P.3d 799, 806-07 (Colo.2001). We have never suggested, however, that availability must be established before or apart from consideration of a statutorily permitted augmentation plan with which the application is combined. Quite the contrary, water may be, and typically is, made available and injury avoided through a plan to provide an augmented water supply sufficient to offset the out-of-priority deple-tions for which the conditional decree is sought. See id.; see, eg., Mount Emmons Mining Co. v. Town of Crested Butte, 40 P.3d 1255, 1260 (Colo.2002) ("Typically, to satisfy the 'can and will test, new appropriators must convince the water court that their diversion will cause no harm to senior appropriators: i.e., that water is available."). At least where an application for conditional water rights is accompanied by a plan for augmentation (which would appear to be virtually always, in the current environment), the questions of availability and the adequacy of an augmented water supply are therefore integrally related, if not precisely identical.

The General Assembly dictates that a plan for augmentation must be approved unless it will "injuriously affect" senior water rights, § 37-92-305(8), C.R.S. (2007); and even if it is determined that an augmentation plan, as presented in the application and proposed decree, would cause such injurious effects, the applicant must be afforded an opportunity to propose additional terms or conditions to prevent that injury. Id. It is undisputed that the applicants in this case combined their application for conditional water rights with an application for approval of an augmentation plan, to include various changes in water rights, exchanges, and substitutions, proposing to replace from other sources fully 100% of the water they sought to divert.

If an augmentation plan were treated as a thing distinct from, rather than part and parcel of, an application for a conditional decree with which it is combined, the "injurious effect" referred to in the statute might conceivably be construed as including only those particular injuries caused by augmenting the water supply (or by some other aspect of the augmentation plan itself), as distinguished from out-of-priority depletions left unabated by adequate augmentation. In fact, however, without making the distinction express, we have long treated both kinds of injuries-those caused by redirecting water for use in an augmentation plan and those that would result from an application seeking inadequately augmented out-of-priority diversions-as falling within the contemplation *694of section 37-92-805(8). See, eg., Danielson v. Castle Meadows, Inc., 791 P.2d 1106, 1115 (Colo.1990) ("The proponent of a plan for augmentation has the burden to establish the absence of injury resulting from the out-of-priority diversion of water.")(emphasis added); Cache LaPoudre Water Users Ass'n v. Glacier View Meadows, 191 Colo. 53, 61-62, 550 P.2d 288, 293-94 (1976) (referring to a plan for drilling domestic wells and replacing consumed water with applicant's reservoir rights as an "application for approval of a plan of augmentation," and approving the plan in the absence of injury caused to downstream objectors by depletions from the proposed wells).

That being the case, it is difficult to imagine how an application paired with an augmentation plan, inadequate as that plan may turn out to be, could ever be dismissed for failure to prove the availability of unappropriated water, without first considering the applicant's augmentation plan and, if necessary, permitting the applicant to propose additional conditions that could prevent injury to senior appropriators. While other kinds of injuries can undoubtedly result from inadequate augmentation plans, depriving senior appropriators of water to which they are entitled by reason of their seniority is clearly one such injury. Successfully preventing inJury to senior appropriators that would otherwise be caused by out-of-priority deple-tions, whether accomplished by augmenting the water supply, or perhaps in some other way altogether, is therefore tantamount to making water available for appropriation.

With regard to ground water, the questions of availability and injury are even less differentiable. Perhaps for reasons related to collection and replenishment, we have never attempted to define the "availability" of tributary ground water (as distinguished from surface water) strictly in terms of amount and location. Instead, we have always analyzed the availability of groundwater in terms of the absence of injury that would result to senior rights from accessing and removing it. See, eg., Cache LaPoudre Water Users Assoc., 191 Colo. at 62, 550 P.2d at 294 ("We rule that, in a matter such as this one, water is available for appropriation if the taking thereof does not cause injury."); Fundingsland v. Colorado Ground Water Comm'n, 171 Colo. 487, 497, 468 P.2d 835, 839-40 (1970) (finding unavailability not simply because underground water was already being mined but only because the proposed appropriation would also result in unreasonable harm). While lowering the static water table in a particular aquifer may injure existing well owners (immediately or at least at some point in the future), proof that the water level will be lowered by pumping additional wells (or the failure to prove otherwise) does not, by itself, demonstrate that unappropriated water is currently unavail-ables.3

Although I believe our case law is replete with holdings that are irreconcilable with the water court's understanding of a "threshold requirement" to prove the availability of unappropriated water in general, and the maintenance of a static water table in particular, one need look no further than our holding in In re Application for Water Rights of Turkey Canon Ranch, LLC (Shirola), 937 P.2d 739 (Colo.1997). In that compellingly similar case, Turkey Canon was "seeking conditional underground water rights for two wells accompanied by a plan for augmentation to replace surface water depletions occasioned by pumping the two wells," and the owners of certain small capacity domestic wells filed statements of opposition, asserting that Turkey Canon's proposed wells would lower the static water table and thereby diminish the water supply available for their wells. Id. at 748. In concluding that only exempt well owners filing for adjudication at the time of their opposition would have *695standing to challenge the proposed new wells, and in fashioning an appropriate remand order, we made clear that a challenge of this kind goes beyond merely holding the applicant to its burden of proving the availability of unappropriated water and, further, that the viability of Turkey Canon's application was not contingent upon proof that its proposed wells would not lower the water levels in existing wells.

Our initial holding-that the exempt well owners acquired standing only upon filing an application for adjudication-necessarily determined that their challenge went beyond merely holding the applicant to its strict burden of proving availability, standing requirements for which would have been satisfied by "any person." Id. at 747. By contrast, we characterized the well owners' objection-that the statice water table would be lowered by Turkey Canon's proposed wells-as "assert(ing) injury in an augmentation plan proceeding," standing for which required an allegation of injury to a "legally protected interest in a vested water right or a conditional decree." Id. at 751-52. The necessary and inescapable implication of this holding is that an applicant's failure to prove that additional pumping will not lower water levels does not equate with a failure to prove the availability of unappropriated water.

In addition, we held that in order to demonstrate the availability of unappropriated water and prevent injury to existing wells, an augmentation plan supporting an underground water application need not even provide an augmented supply of water sufficient to prevent a lowering of the static water table. Id. at 754-55. Relying instead on the principle that a senior appropriator is not entitled to command a substantial flow of an underground aquifer solely to facilitate taking the fraction to which he is entitled, we held that even if the augmentation plan in that case were incapable of maintaining the aquifer's existing water level, the applicants would nevertheless be entitled to propose other techniques for preventing injury, including assigning to themselves the costs incurred by senior well owners in reaching a lowered water table. Id. Ultimately, we ordered the water court to simply determine whether "Turkey Canon's application for conditional rights, together with a plan for augmentation," would injuriously affect the exempt well owners. Id. at 755.

TIL

Although I consider the majority's finding of a procedural default to be both unsupported by the record and irreconcilable with the plain language of section 37-92-3058), I am more concerned that by treating the matter as simply a question of procedure, the majority fails to come to grips with (or even acknowledge) the debate over this difficult relationship between availability and absence of injury, which proved decisive below. I think it is clear, from any fair reading of the record, that the water court dismissed the application, rather than afford the applicants an opportunity to propose additional conditions, precisely because its ruling was premised on the applicants' failure to initially and separately satisfy the can-and-will test-not a failure of their augmentation plan to prevent injurious effects.

The majority's half-hearted reliance on procedural default as a justification is, in my view, simply untenable. In their response to the motion for post-trial relief, the applicants expressly invoked their statutory right to propose additional terms or conditions, if the court should determine that their augmentation was inadequate. The water court not only ordered dismissal of their application without affording them such an opportunity; it actually limited requests for reconsideration of its dismissal order to complaints about various technical errors, and it directed the applicants to reserve for appeal any challenges they might have to its legal conclusions.

Similarly, I disagree with the majority's suggestion that as a result of our holding in Shirola, the applicants should have, at some earlier point in the proceedings, introduced evidence of augmentation sufficient to demonstrate non-injury to existing well owners. Until the water court abruptly reversed itself by granting the motion for post-trial relief, the applicants' augmentation plan had not yet been found inadequate and therefore *696they had not yet acquired an obligation, or even a right, to propose additional terms.4 Quite the contrary, the significance of Shiro-lo for this case is our recognition that proof of falling water levels does not, in itself, establish either the unavailability of unappropriated water or an obligation to augment the water supply.5

While I consider the majority's finding of a procedural default to be unsupported in any event, its persistence in blaming the applicants for not doing more to assert their right hinges to a large extent on its misreading of the water court's final order and judgment. Quite apart from the water court's own written statement that it would refuse to entertain any but perfunctory challenges to its order of dismissal, no reasonable applicant could have understood its finding of unavailability as being contingent upon the absence of more effective augmentation. Contrary to the majority's interpretation, by the time of the water court's post-trial order, it had indisputably come to accept the opposers' argument that proof of availability was a threshold requirement, which could not be satisfied except by demonstrating that the application would not result in lowering the water levels of surrounding wells In its final order, the water court therefore found it unnecessary to even acknowledge the augmentation plan included in the applicants' filing. It simply found that their failure to prove an absence of well-to-well hydrologic connection amounted to a failure to satisfy the can-and-will test, mandating dismissal of their application.

I believe that by continuing to treat proof of availability in conditional water rights proceedings (at least those combining the application with an augmentation plan) as a requirement separate and apart from proving the absence of injury to senior appropriators, we will only perpetuate the misunderstandings and misapplication evidenced in this case. With regard to tributary ground water in particular, I believe this kind of mechanical and meaningless distinction risks allowing the very thing we sought to avoid in Shiro-la-command by senior appropriators of a substantial flow of an underground aquifer solely to facilitate taking the fraction to which they are entitled. Cf. Simpson v. Cotton Creek Circles, 181 P.3d at 260-61 (explaining why the engineer's rules requiring regulation "so as to maintain a sustainable water supply in each aquifer system," did not conflict with the principle of maximum utilization, under the particular conditions existing in Division Three). For my part, the majority's attempt to justify the dismissal of this application as a procedural default is not only an unfair characterization of the record but, in fact, trivializes the appeal.

The statute itself offers virtually no guidance about the extent or nature of the opportunity that must be afforded an applicant (or opposer) wishing to propose additional terms, and we have thus far had little occasion to consider this question. The water court, no doubt, must retain the discretion to control the proceedings before it, and therefore an applicant cannot have an unlimited right to perpetually propose additional conditions. In this case, however, where numerous stipulations with opposers had already been entered and the state and division engineers had dropped their objections to the augmentation plan; where the trial proceedings were continued on several occasions, onee for more than two and one-half years; and where the water court had not only failed to find any injurious effect but had in fact already granted the application, subject only to further *697supervision; its sudden reversal at the time of post-trial motions leaves it far from clear that the applicants were ever given a fair opportunity to fortify their augmentation plan.

IV.

Although I believe, for the reasons I have given, that the water court was misled by the opposers' argument concerning the availability of underground water, I also believe it clear that the applicants failed to carry their burden of proving that their application and accompanying augmentation plan would not injuriously affect persons entitled to use water under a vested or conditional water right. Unlike the majority, however, I would remand for the water court to determine whether, in these tangled proceedings, the applicants have been afforded a fair opportunity to propose addition terms or conditions and, if not, to afford them that opportunity.

I therefore respectfully dissent.

I am authorized to state Justice EID joins in this dissent.

. 'In fairness, the court cannot impose the severe sanction of dismissal, where the court itself has created nearly as much delay as the Applicants." Water Court Order, dated August 4, 2006 (chastising applicants for delay in reducing the court's previous order to a proposed decree and for adding terms and conditions without the court's permission). Unlike the majority, I do not consider this admission merely an expression of the water court's regret that it failed to accept the opposers' "threshold" theory sooner. See Maj. op. at 690-91.

. The majority makes much of the testimony of the applicants' expert, Mr. Wells. During Buffalo Park's case in chief, Wells attempted to testify generally about geological conditions underlying all five of the affected subdivisions but was largely precluded from doing so on the grounds that the report he disclosed in discovery specifically addressed only two of the five. When the trial reconvened after a two and one-half year delay, Buffalo Park's case in chief was reopened only with regard to the Colorado Water Conservancy Board issue for which the delay was granted, and therefore Wells' testimony upon reconvening was limited to general rebuttal of the opposers' expert, concerning falling water levels. While I do not consider this the significant issue on appeal, I am hard pressed to think of another area of the law in which this court would so readily defer to the exclusion of essential expert testimony for a lack of specificity in disclosure, despite virtually endless opportunities for opposing counsel to prepare during the inordinately long subsequent delay in the trial. See, eg., Todd v. Bear Valley Village Apartments, 980 P.2d 973, 980 (Colo.1999) (failure to disclose considered harmless where trial was continued for other reasons anyway).

. In Simpson v. Cotton Creek Circles, LLC, 181 P.3d 252, 258 (Colo.2008), we upheld the validity of rules governing the use of underground water in Division Three, which were promulgated by the state engineer upon express statutory authority to regulate "so as to maintain a sustainable water supply in each aquifer system" in that division, see § 37-92-501(4)(a)(I). Although our reliance on the water court's determination of the unavailability of unappropriated water, in finding the rules valid in the first place, may raise legitimate questions about the circularity of our reasoning, we clearly did not suggest that proof that groundwater "mining" is already taking place means that unappropriated water is no longer available.

. In reliance on our holding in City of Aurora v. Simpson, 105 P.3d 595, 614-16 (Colo.2005), the majority rightly emphasizes that proof of the adequacy of an augmentation plan cannot be postponed for determination later under retained jurisdiction. Maj. op. at 690. I do not understand it to suggest, however, that this proposition affects in any way an applicant's entitlement to provide additional conditions and prove their effectiveness once its original augmentation plan is determined to be inadequate.

. Because I agree with the majority's conclusion that the homeowners' association met the requirements of associational standing and therefore had standing to the same extent that its members would have had standing to assert injury individually, I find its discussion about holding the applicant to its strict proof unnecessary. I note only that in Shirole we roundly rejected the notion that a challenge by exempt well owners, on grounds of lowering the water table, could be characterized as merely a challenge to the availability of unappropriated water.