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ATER LEGAL NEWS
irado Water Congress • 1390 Logan St-, Rm. 312 • Denver, Co ;rtadd 663 ( te::t ) 837-0812
Legal News Edii,jr: Greg Hobbs August 2 ;' 84
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1. The United States Supreme Court (Justice O'Connor) has ruled in an
equitable apportionment suit between Colorado and New Mexico, that Colorado
is not currently entitled to a share of Vermejo River waters. Although the
Vermejo River has its source in Colorado, its waters have been put to
beneficial use solely by New Mexico water users in the past. CFBI Steel
Corporation proposed to make a new diversion within Colorado.
The Court exercised its original jurisdiction to resolve a dispute
between two states. The Vermejo River has not been allocated by interstate
compact. New Mexico claimed that its water users had put the entire supply
of the Vermejo River to beneficial use and that any diversion in Colorado
would cause material injury in New Mexico.
In its decision, the Court explained that equitable apportionment is
not controlled by the first in time/first in right doctrine. Nor is a
state entitled to share in a river solely because it arises in that state.
In its 1982 decision in the same case, the Court held that, when a
new diversion will cause "certain and immediate" harm, the diverting state
must show by clear and convincing evidence "that it is entitled to an
equitable share of the waters." (See Water Legal News, January 3, 1983) .
According to the Court's prior decision,-lorado would be entitled to a
share of Vermejo River waters, if it could show that reasonable
conservation measures in both states could compensate for some or all of
the proposed diversion and that the benefits of the proposed diversion in
Colorado outweigh the harm that would result in New Mexico.
On remand, the Special Master again awarded Colorado the right to
divert up to 4,000 acre feet of the Vermejo River annually.
But the Supreme Court refused to follow the findings and
recommendations of the Special Master:
As our opinion noted last Term, New Mexico has met
its initial burden of showing "real or substantial injury"
because "any diversion by Colorado, unless offset by New
Mexico at its own expense, [would] necessarily reduce the
amount of water available to New Mexico users ." 459 U.S. ,
at n. 13, Accordingly, the burden shifted on remand to
Colorado to show, by clear and convincing evidence, that
reasonable conservation measures could compensate for' some
or all of the proposed diversion and that the injury, if
any, to New Mexico would be outweighed by the benefits to
Colorado from the diversion.
. .[T]though Colorado alleged that New Mexico could improve
its administration of stockponds, fishponds, and water
detention structures, it did not actually point to specific
measures New Mexico could take to conserve water.
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WATER LEGAL NEWS -2- August 23, 1984
The Court said that only conservation reassures which are
"financially and physically feasible" and "within practical limits" can be
taken into account.
A State can carry its burden of proof in an equitable
apportionment action only with specific evidence about how
existing uses might be improved, or with clear evidence
that a project is far less efficient than most other
projects. Mere assertions about the relative efficiencies
of competing projects will not do.
Moreover, said the Court, Colorado has not shown what reasonable
steps it would take to minimize the amount of diversion required, nor had
it presented evidence "concerning CF&I 's inability to relieve its needs
through substitute sources."
Futhermore, there is no evidence that CF&I has settled on a
definite or even tentative construction design or plan, or
that it has prepared an economic analysis of its proposed
diversion. Indeed, CF&I has not even conducted an
operational study of the reservoir that Colorado contends
will be built in conjunction with the proposed diversion.
It may be impractible to ask the State proposing a
diversion to provide unerring proof of future uses and
concomitant conservation measures that would be taken. But
it would be irresponsible of us to apportion water to uses
that have not been, at a minimum, carefully studied and
objectively evaluated, not to mention decided upon.
Financially and physically feasible conservation efforts
include careful study of future, as well as prudent
implementation of current water uses. Colorado has been
unwilling to take any concrete steps in this direction.
As to whether the benefit to Colorado would outweigh the harm to New
Mexico, the Court said that "all Colorado has established is that a steel
corporation wants to take water for some unidentified need in the future."
We have only required that a State proposing a diversion
conceive and implement some type of long-range planning and
analysis of the diversion it proposes. Long-range planning
and analysis will , we believe, reduce the uncertainties
with which equitable apportionment judgments are made. If
New Mexico can develop evidence to prove that its existing
economy is efficiently using water, we see no reason why
Colorado cannot take similar steps to prove that its future
economy could do better.
The Court said that until Colorado can generate sufficient evidence
to show that "circumstances have changed" and that a "diversion is
appropriate", "the equities compel the continued protection" of the
WATER LEGAL NEWS -3- August 23, 1984
existing uses of the Vermejo River. In its prior decision, the Court had
pointed out that the protection of "existing economies" which has been
built up through the use of water "will usually be compelling," until the
competing state tips the benefit/harm balance in its favor by clear and
convincing evidence. (Colorado v. New Mexico , U.S. , 52 U.S.L.W.
4700, No. 80 Original , decided June 4, 1984) .
2. The United States Court of Appeals for the 10th Circuit (Judge
Barrett) has upheld the constitutionality of House Bill 1272, which was
passed by the Colorado Legislature in February of 1983, validating and
re-creating the State's forty-six water conservancy districts.
In 1982, this suit was brought in federal court by opponents of the
Animas-La Plata project who called themselves the Taxpayers for the
Animas-La Plata Referendum (TAR) . Originally, the suit challenged the
petition and protest provisions of the Water Conservancy Act, under which
the Animas-La Plata District was organized.
During the pendency of the suit in federal district court, the
Colorado Legislature enacted House Bill 1272, sponsored by Representative
Chris Paulson, by which the Legislature recreated and validated by statute,
each of the forty-six water conservancy districts, including the Animas-La
Plata District .
The Court 's opinion describes the Legislature' s concern in passing
H.B. 1272 as follows:
At this point , TAR's lawsuit ballooned into a matter
of great consequence to the entire State of Colorado. The
issues presented by the case cast some degree of doubt upon
the validity of every conservancy district formed pursuant
to the Act's procedures . This doubt apparently hindered
the existing districts' efforts to finance and refinance
their projects , and thus created widespread fears that
Colorado would lose substantial control over its water
resources .
Such uncertainty was unacceptable to the Colorado
Legislature. It quickly considered and passed House Bill
1272 (now codified at C.R.S. 37-45-153) , which "validated"
and "recreated" every conservancy district originally
pursuant to the Act ' s procedures . The bill did not affect
or change, however, the Water Conservancy Act 's existing
procedures far establising conservancy districts.
The TAR group then challenged the constitutionality of H.B. 1272,
claiming that the Legislature had improperly interfered with the federal
judicial power to decide a pending lawsuit. The court rejected this
argument, holding that a State Legislature may change the law and float a
lawsuit which is then pending in the courts:
WATER LEGAL NEWS -4- August 23, 1984
Alt`lugh TAR argues that the motive behind House Bill
1272 was to destroy their pending lawsuit, the purpose
expressed in the statute ::as "to provide financial security
and stability" for water development and "to ensure that
obligations and projects undertaken.. ..are honored and
carried out." C.R.S. 37-45-153(5) . (Significantly, the
legislature rejected an amendment to the bill which would
have excluded the Animas-La Plata district from its
coverage.)
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It is true that House Bill 1272 undercut the validity
of TAR's challenge to the formation of the Animas-La Plata
District. It is not true, however, that this result
stemmed from state interference with the federal court's
power to hear the matter. Rather, the federal court, in
applying Article III, Section 2 of the United States
Constitution, itself determined that TAR's lawsuit did not
present a justicable case or controversy. It is well
established that new legislation, by curing the
constitutional defects of a prior statute, may moot a
pending lawsuit.
The Court emphasized that H.B. 12.72 was designed to promote a "public
purpose," in what the Legislature felt were "dangerous" if not "emergency"
circumstances.
The Colorado Legislature clearly felt it was
attempting to remedy a dangerous, if not an emergency,
situation in enacting House Bill 1272. Although TAR
plainly disagrees with the legislature's perceptions
regarding the proper direction of water development in
Colorado we cannot ignore that House Bill 1272 was
designed to promote what the legislature deemed a "public
purpose" in response to a troublesome situation.
The Court held that the TAR challenge to the Animas-La Plata Water
Conservancy District is moot because that district, like the other
forty-five, "now exists by means of the Colorado Legislature's statutory
enactment," thereby removing any "alleged impropriety" regarding the
district formation procedures .
The Animas-La Plata District was supported on appeal , in its
successful defense of the case, by briefs submitted on behalf of the State
of Colorado, the Northern Colorado Water Conservancy District and its
Municipal Subdistrict, and the Ute Mountain Ute and Southern Ute Indian
Tribes . (Taxpapers of the Animas-La Plata Referendum v. Animas-La Plata
Water Conservancy 51-strict, F2d , 14th Cir., No. 83-2218,
decided July 11, 1983).
WATER LEGAL NEWS -5- August 23, 1984
3. The Colorado Supreme Court (Justice Kirshbaum) has determined
that the Great Western Sugar Company mly not alter use of its share of Fort
Morgan Company water for purposes of an augmentation plan, in a manner
which will cause injury to the established usage of other shareholders .
Fort Morgan Company is a mutual ditch company which provides water to
its shareholders through Fort Morgan Ditch. The company supplements its
South Platte River direct flow rights through it ownership of shares in the
Jackson Lake Company, a mutual reservoir company.
Historically, the Jackson Lake water rights have been utilized during
the irrigation season to maintain a flow of at least two hundred cubic feet
per second in the Fort Morgan Ditch. This rate of flow is necessary to
ensure that water will reach shareholders down the ditch .
Jackson Lake water, with only one exception, had never been released
to supplement Fort Morgan direct flow rights after October 1. Following
the irrigation season, surplus Jackson Lake water has remained in the
reservoir and has been carried over to the next irrigation season.
Great Western proposed to use its share of Jackson Lake water,
represented by its ownership of Fort Morgan shares , in a plan of
augmentation for its Greeley, Loveland, Fort Morgan, Sterling, and Ovid
sugar plants. The water would be used for a two-week period between
October 1 and October 15. But, said the Court, this would cause injury to
other Fort Morgan Company shareholders, because some Jackson Lake water
normally utilized to maintain the 200 cfs flow in the Fort Morgan Ditch
would be kept in storage instead.
The Court held that Great Western Sugar Company, as a shareholder in
a mutual ditch corporation, is entitled to a pro rata share of the water
rights held by the company as a fiduciary for its-shareholders . However,
"Great Western's use of its water rights is limited by the principle that
established usage cannot be altered if such alteration would cause injury
to other shareholders ."
The right of a shareholder of a mutual ditch company to
change its water rights is limited by the requirement that
such change not injure others who possess vested water
rights .
The Court said that Great Western should be given the opportunity in
water court to propose means for rectifying the injury that would be caused
otherwise.
Great Western must be accorded the opportunity of proposing
terms and conditions in the prior augmentation decrees
which would prevent injury to others .
Fort Morgan Company and Jackson Lake Company argued that Great
Western had forfeited its rights to Jackson Lake water, by attempting to
WATER LEGAL NEWS -6- August 23, 1984
use the water for facilities other than its Fort Morgan plant. The Court
rejected this claim, pointing out that the stock certificates in question
did not so lime ` Great Western's use, so long as it operates a sugar
factory in Fort Morgan, which it continues to do. (Great Western Sugar
Company v. Jackson Lake Reservoir & Irrigation Company,
p.2d (Colo. Sup. Ct., No. 82 SA 506, decided April 23, 1984) .
4. The United States Supreme Court (Justice White) has held that the
Federal Power Act requires the Federal Energy Regulatory Commission (FERC) ,
when issuing a license for hydroelectric project works located on or within
reservations of the United States, to adopt conditions specified by the
Secretary who has supervisory power over the reservation. FERC has no
discretion to determine whether the conditions are appropriate or
reasonable. Rather, only the Court of Appeals has jurisdiction to
determine, on review, whether the Secretary's conditions are reasonably
related to the protection of the public reservation.
It is thus clear enough that while Congress intended that
the Commission would have exclusive authority to issue all
licenses, it wanted the individual Secretaries to continue
to play the major role in determining what conditions would
be included in the license in order to protect the
resources under their respective jurisdiction. The
legislative history concerning (section) 4(e) plainly
supports the conclusion that Congress meant what it said
when it stated that the license "shall . ..contain such
conditions as the Secretary.. .shall deem necessary for the
adequate protection and utilization of such reservations."
If the Secretary concludes that the conditions are
necessary to protect the reservation, the Commission is
required to adopt them as its own, and the court is
obligated to sustain them if they are reasonably related to
that goal , otherwise consistent with the FPA (Federal Power
Act) , and supported by substantial evidence (parentheticals
added).
For this purpose, reservations include national forests as well as
Indian reservations. Some of the project works must be physically located
within the reservation. FERC is not required to accept such conditions
when a hydroelectric project may affect a reservation but is not physically
located thereon.
The Secretary may not veto issuance of a power license, only require
that his conditions for protection of the reservation be adopted by FERC.
The case involved a FERC relicensing proceeding involving location
of hydroelectric project works on Indian reservations in Southern
California. The Court also held that the Indians could not veto a power
license granted by FERC on Indian reservations .
WATER LEGAL NEWS -7- August 23, 1984
The Court refused to accept the Indians' argument that the
Secretary should also have power to require acceptance of his license
conditions for hydroelectric projects .:hich adversely affect the quantity
of water flowing through a reservation, when the project is located outside
the reservation. The Court said that "other protections" are available.
The Indians "cannot be deprived of water to which they have a legal right,"
since the license applicant must demonstrate to the Commission that it has
obtained sufficient water rights to operate the project authorized in the
license," and the commission "is expressly forbidden to adjudicate water
rights." Moreover, the Commission can require the license applicant to
"surrender some of its water rights" as a condition of the license, if the
Commission determines that the Indians' use of the water "constitutes an
overriding beneficial public use."
Whether or not a hydroelectric project is on a Federal
reservation,the Commission may impose license conditions "to structure the
project so as to avoid any undue injury" to a reservation, including
requiring a license applicant to forego part of its water rights."
(Escondido Mutual Water Company v. La Jolla, 104 S. Ct. 2105, No. 82-2056,
decided May 15, 1984) .
5. The United States Court of Appeals for the Sixth Circuit (Judge
Merritt) has held that the Corps of Engineers' wetlands jurisdiction under
section 404 of the Clean Water Act is limited to:
.. .lands such as swamps , marshes, and bogs that are so
frequently flooded by waters from adjacent streams and seas
subject to the jurisdiction of the Corps that it is not
unreasonable to classify them as lands which frequently
underlie the "waters of the United States."
The Court said that the Corps ex-eeds its jurisdiction when it seeks
under section 404 to regulate "inland property which is rarely if ever
flooded." Citing a recently revised regulation of the Corps, the Court
said that "inundation" sufficient to "cause the growth of aquatic
vegetation" is necessary before an area may properly be classified as a
wetland subject to Corps' jurisdiction.
The new regulation makes clear that it is the present
occurrence of inundation or flooding sufficient to support
wetlands vegetation, not the mere presence of such
vegetation from some other cause, that determines whether a
particular area is a wetland . Thus, as we understand it,
the presence of inundation on the land "as it exists" now,
sufficient to cause the growth of aquatic vegetation, is
necessary to satisfy the wetlands definition. Neither
inundation nor aquatic vegetation would be sufficient ,
standing alone, to bring a piece of land within the
definition. Both must be present, and the latter must be
caused by the former.
WATER LEGAL NEWS -8- August 23, 1984
Were this not so, then areas which inexplicably
support some species of aquatic vegetation, but which are
not normally inundated, would fall with the wetlands
definition. Such a perverse result would not have been
what the Corps contemplated in promulgating the regulation.
Indeed, as noted earlier, the Corps expressly adverted to
the situation of "areas that are not aquatic but experience
an abnormal presence of aquatic vegetation" and emphasized
that such lands were not intended to be covered by the
regulations.
The Court noted that the Clean Water Act makes no reference to
wetlands; hence, the Corps' jurisdiction under 404 is founded upon the
phrase "navigable waters," which is defined in the Clean Water Act as
"waters of the United States." Expanding the "wetlands" jurisdiction would
result in "a very real taking problem." Accordingly, the Court said that
"frequent flooding by waters flowing from 'navigable waters' , as defined in
the Clean Water Act," is required before an area can be classified as a
wetland under section 404. (United States v. Riverside Bayview Homes
Inc., F. 2d , 20 E.R.C. 2124, 6th Cir. , Nos. 81-1405, 81-1498,
decided March 7, 1984) .
Comments on the legal newsletter and suggestions for inclusion should
be addressed to Greg Hobbs, P.O. Box 185, Denver, Colorado 80201 (Phone
(303) 892-9400).
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