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finding abandonment of a hydroelectric water right when Denver provided no justification for nonuse of a water right
Summary of this case from Consolidated Home Supply v. BerthoudOpinion
No. 88SA365
Decided March 12, 1990. Rehearing Denied April 9, 1990.
Appeal from District Court Water Division No. 5 Honorable Gavin D. Litwiller, Judge
Wayne D. Williams, Michael L. Walker, Casey S. Funk, for Applicant-Appellant.
Holme, Roberts Owen, Glenn E. Porzak, for Objector-Appellee Snake River Water District.
Donald H. Hamburg, General Counsel, Colorado River Water Conservation District, for Objector-Appellee Colorado River Water Conservation District.
Baker, Cazier and McGowan, Stanley W. Cazier, for Objector-Appellee Middle Park Water Conservancy District.
Entries of Appearance filed for the following:
Delaney Balcomb, P.C., Kenneth Balcomb, for Objectors-Appellees Breckenridge Ski Area and Copper Mountain, Inc.
Sherman Howard, Gary L. Greer, for Objector-Appellee Keystone-Arapahoe, Ltd.
Grant, Bernard, Lyons Gaddis, Jeffrey J. Kahn, for Objector-Appellee Town of Dillon.
Hill Robbins, David Robbins, for Objector-Appellee Town of Silverthorne.
No appearance for the following Objectors-Appellees:
Northern Colorado Water Conservancy District, Dillon Valley District, The Metropolitan Denver Water Authority, The Division Engineer, Water Division No. 5.
The City and County of Denver, acting by and through its Board of Water Commissioners ("Board"), appeals the judgment of the District Court, Water Division No. 5 ("water court"), denying the Board's application for certain changes of water rights. The water court found that the water rights, historically used to generate electric power at a site later inundated by the waters of Dillon Reservoir, had been abandoned and therefore "canceled" them. We affirm.
The water court further found that the evidence was insufficient to quantify historical use, thereby preventing the court from developing terms and conditions that would avoid injury to other appropriators. The water court cited this as an additional reason for denying the Board's application for changes of water rights. Because we affirm the water court's determination of abandonment, it is unnecessary to consider whether the evidence of historical use was so deficient as to supply an independent basis to uphold the water court's judgment. See generally May v. United States, 756 P.2d 362, 371 (Colo. 1988) (where the inability accurately to quantify historical use prevents the water court from developing terms and conditions that will avoid injuring other appropriators, a change of water right must be denied).
I.
At issue are water rights in three ditches, located in Summit County near the Dillon Dam and Reservoir, decreed for the sole beneficial use of generation of electric power. They consist of a 59 cubic feet per second ("cfs") right in the Straight Creek Ditch, a 35 cfs right in the Swanson Mill Ditch and a 160.14 cfs right in the Snake River Ditch (collectively, "the water rights"). Each has an 1899 appropriation date. The Straight Creek and Swanson Mill ditches have their decreed points of diversion on Straight Creek, a tributary of the Blue River. Straight Creek enters the Blue River from the east a short distance below Dillon Dam. The Snake River Ditch has its decreed point of diversion on the Snake River, a tributary of the Blue River. The Snake River flows into Dillon Reservoir from the east.
The water court described the Board's Straight Creek Ditch water right as follows: "A. Straight Creek Ditch "i. The Straight Creek Ditch was decreed on March 2, 1910 in Civil Action 1277 in the Summit County District Court with an appropriation date of April 18, 1899 for 62.5 cfs. "ii. Decreed Point of Diversion: South bank of Straight Creek whence the southwest corner of Section 4, Township 5 South, Range 77 West of the 6th P.M. bears South 18° 30' West 2,650 feet in Summit County, Colorado. "iii. Source: Straight Creek, a tributary of the Blue River. "iv. Decreed use: Generation of electric power. "v. The Applicant owns 59 cfs of this power right. "vi. Three and one-half (3.5) cfs of the water right decreed to the Straight Creek Ditch was transferred to the Town of Dillon and changed in Case No. W-12 to municipal uses subject to the terms and conditions of that decree."
The water court described the Board's Swanson Mill Ditch water right as follows: "B. Swanson Mill Ditch "i. The Swanson Mill Ditch was decreed on March 2, 1910 in Civil Action No. 1277 by the Summit County District Court with an appropriation date of June 30, 1899 for 35 cfs. "ii. Decreed Point of Diversion: South bank of Straight Creek whence the southwest corner of Section 4, Township 5 South, Range 77 West of the 6th P.M. bears South 18° 30' West 2,650 feet in Summit County, Colorado. "iii. Source: Straight Creek, a tributary of the Blue River. "iv. Decreed Use: Generation of electric power. "v. The Applicant owns 35 cfs of this power water right."
The water court described the Board's Snake River Ditch water right as follows: "C. Snake River Ditch "i. The Snake River Ditch was decreed on March 2, 1910 in Civil Action No. 1277 by the Summit County District Court with an appropriation date of October 11, 1899 in the amount of 160.74 cfs. "ii. Decreed Point of Diversion: North bank of Snake River whence the North quarter (N 1/4) corner, Section 9, Township 5 South, Range 76 West of the 6th P.M. bears North 21° 10' East 1,725 feet in Summit County, Colorado. "iii. Source: Snake River, a tributary of the Blue River. "iv. Decreed Use: Generation of electric power. "v. The Applicant owns 160.14 cfs of this power right and conveyed 0.6 cfs of said water right to the Loveland Pass Motel."
For many years, the water rights were put to their decreed use — generation of electric power — to operate the Summit Hydro Plant ("the old power plant"), owned by Public Service Company of Colorado. In December 1959, however, Public Service Company permanently shut down the plant. In February 1960, the Board purchased the old power plant and its water rights from Public Service Company. Later that year the Board dismantled the old power plant to make way for the Dillon Dam and Reservoir, which was completed in 1963.
The Board did not seek permission from the federal government to construct a new power plant in the Dillon area until twenty-four years after the water rights were last used to generate power at the old power plant and twenty-one years after completion of the Dillon Dam. In February 1984, the Board requested an exemption from licensing from the Federal Energy Regulatory Commission, which would allow it to construct a new power plant on the Dillon Dam and Reservoir at a location different from that of the old power plant. The Board's request was granted in August 1984. Construction began in 1986, and the Board began generating electricity at the new power plant on October 1, 1987. The water rights have never been used to produce power at the new power plant.
Robert W. Fischer, the Board's water resource development officer, testified that the Board applied to the Federal Energy Regulatory Commission for a "preliminary permit" "about 1982," "right in that neighborhood."
The water rights were placed on the July 1984 Abandonment List by the Division Engineer for Water Division No. 5. Later, the Board and the Division Engineer agreed, as the water court found, "that the water rights would be deleted from the Abandonment List if [the Board] would file [an application for change of water rights]."
Under the Water Right Determination and Administration Act of 1969, §§ 37-92-101 to -602, 15 C.R.S. (1973 1989 Supp.), the division engineer of each water division must prepare a quadrennial tabulation of all water rights and conditional water rights in the engineer's division. § 37-92-401(1), 15 C.R.S. (1989 Supp.). Additionally, under § 37-92-402(1), the division engineer was required to prepare an abandonment list reflecting "any water rights or conditional water rights which the division engineer determines to have been abandoned in part, and [omitting] any water rights or conditional water rights which the division engineer determines have been totally abandoned."
The Board filed its application for change of water rights on December 19, 1986, more than two years after it had obtained the exemption from licensing so that it could build the new power plant. In its application, the Board requested approval for alternate points of diversion that would allow the Board to use the water rights to generate power at the new power plant. The appellees opposed the application on grounds that the Board had abandoned the water rights and that the changes sought by the Board could not be granted without injuring other appropriators.
The Division Engineer for Water Division No. 5 did not file a statement of opposition.
After conducting a three-day trial beginning June 7, 1988, the water court issued a written judgment and decree on September 7, 1988, containing detailed findings of fact and conclusions of law, and denying the Board's application. The water court found that the Board had not used the water rights since acquiring them in 1960, a twenty-nine year period of non-use. The court held that this long period of non-use without adequate justification created a presumption of abandonment. The court further held that the Board had not rebutted the presumption, and consequently that the water rights had been abandoned.
II.
The principles of law governing the issue of abandonment are well-established. A water right can be terminated by abandonment. People v. City of Thornton, 775 P.2d 11, 17 (Colo. 1989); Masters Inv. Co., Inc. v. Irrigationists Ass'n, 702 P.2d 268, 271-72 (Colo. 1985); Sieber v. Frink, 7 Colo. 148, 154, 2 P. 901, 904 (1883). "Abandonment of a water right" is defined in the Water Right Determination and Administration Act of 1969 as "the termination of a water right in whole or in part as a result of the intent of the owner thereof to discontinue permanently the use of all or part of the water available thereunder." § 37-92-103(2), 15 C.R.S. (1973); see, e.g., Farmers Reservoir Irrigation Co. v. Fulton Irrigating Ditch Co., 108 Colo. 482, 487, 120 P.2d 196, 199 (1941) (basing a similar definition on common law principles). Intent is the critical element in determining abandonment. Masters, 702 P.2d at 271-72; Beaver Park Water, Inc. v. City of Victor, 649 P.2d 300, 302 (Colo. 1982). The requisite intent need not be proved directly but may be inferred from all the circumstances of the case. Southeastern Colorado Water Conservancy Dist. v. Twin Lakes Assoc., Inc., 770 P.2d 1231, 1237 (Colo. 1989); Beaver Park, 649 P.2d at 302.
The Water Right Determination and Administration Act of 1969 is found at §§ 37-92-101 to -602, 15 C.R.S. (1973 (1989 Supp.).
Continued and unexplained nonuse of a water right for an unreasonable period of time creates a rebuttable presumption of intent to abandon. Thornton, 775 P.2d at 18; Twin Lakes, 770 P.2d at 1237; Hallenbeck v. Granby Ditch Reservoir Co., 160 Colo. 555, 567, 420 P.2d 419, 426 (1966). The amount of time considered to be "unreasonable" will necessarily vary with the facts of each case. Thornton, 775 P.2d at 18; Twin Lakes, 770 P.2d at 1238; cf. § 37-92-402(1), (11), 15 C.R.S. (1973 1989 Supp.) (for purpose of preparing division engineer's 1978 abandonment tabulation, ten year period of nonuse when needed created rebuttable presumption of abandonment).
The presumption of abandonment shifts the burden of going forward to the water right owner to introduce enough evidence to rebut the presumption. Thornton, 775 P.2d at 18; Masters, 702 P.2d at 272. "[T]o rebut the presumption of abandonment arising from [a] long period of nonuse, there must be established not merely expressions of desire or hope or intent, but some fact or condition excusing such long nonuse." Thornton, 775 P.2d at 18 (quoting Mason v. Hills Land Cattle Co., 119 Colo. 404, 408-09, 204 P.2d 153, 156 (1949)); accord Twin Lakes, 770 P.2d at 1238. The existence of excuse for a long period of nonuse is not independently significant but is relevant in determining the owner's intent. Thornton, 775 P.2d at 18. Statements of intent by the owner of water rights, in the absence of other evidence, are insufficient to rebut the presumption of abandonment. Twin Lakes, 770 P.2d at 1238; Beaver Park, 649 P.2d at 302.
Abandonment of a water right must be established by a preponderance of the evidence. Thornton, 775 P.2d at 19; Masters, 702 P.2d at 272. Resolution of the issue of abandonment often involves conflicting evidence of nonuse and intent, and therefore the water court must determine this issue by weighing all the evidence and assessing the credibility of the witnesses. Twin Lakes, 770 P.2d at 1238; Masters, 702 P.2d at 272. The weight to be assigned to the evidence is for the water court to decide. See Masters, 702 P.2d at 272. "Because abandonment is a question of fact depending on the particular circumstances of each case, the water court's resolution of the factual issues presented will not be disturbed on appeal unless the evidence is wholly insufficient to support the decision." Thornton, 775 P.2d at 19; accord Twin Lakes, 770 P.2d at 1239; Masters, 702 P.2d at 272; Beaver Park, 649 P.2d at 302. When the foregoing principles are applied to the evidence in the present case, we are persuaded that the water court's finding of abandonment must be affirmed.
III.
We begin by reviewing the evidence before the water court on the issue of abandonment. The evidence established that the water rights had not been put to use from the time Public Service Company of Colorado shut down the old power plant in December 1959 until the date of trial, a period of about twenty-nine years. The water court ruled that "the long period of non-use, coupled with the absence of justification for such non-use, created a presumption of abandonment." It then went on to determine whether the presumption had been rebutted. The evidence presented on the issue of the Board's intent was not extensive, and the trial court made specific findings as to much of it.
A.
The Board presented evidence that it obtained a Special Use Permit from the United States Forest Service dated December 4, 1962, and amended September 5, 1963, allowing it to construct a ditch on public lands for the purpose of diverting water around the Dillon Dam and Reservoir while the dam was being built and to construct another ditch for the purposes of supplying water to Dillon and diverting water from Straight Creek into the Dillon Reservoir. The first ditch apparently involved a realignment of the Snake River Ditch and the second, a realignment of the Straight Creek Ditch.
The permit contained a proviso requiring that the Board obtain written approval from the Forest Service before transporting water in the newly-authorized ditches. As the water court noted, the evidence showed that the Board "had never sought or received approval for the transmission of water through the ditch." The permit superseded special use permits designated "Summit County Power Company; Conduit and Transmission lines, 9/23/07, 2/3/11, 10/24/12, 4/14/17," and, as the water court found, "was more restrictive than the previous permits given to Summit County Power which allowed the conveyance of water for the generation of electrical energy."
Charles Smith, the Board's acting property manager, testified that at the time of trial approval had not yet been sought for construction of the realigned ditches by submitting plans and specifications to the Forest Service.
B.
The Board also offered evidence that on two occasions it had transferred portions of the water rights acquired from Public Service Company of Colorado to third parties. On July 27, 1960, shortly after the Board acquired the water rights, it agreed to convey 0.6 cfs of its Snake River Ditch water right and an easement in the Snake River Ditch to Hans Hansen, the owner of the Loveland Pass Motel. The agreement between the Board and Hansen states in pertinent part:
"Whenever, in the utilization of its portion of the water rights decreed to the Snake River Ditch, it becomes necessary for the Board to operate said ditch, it shall do so in such a manner as not to interfere with Hansen's rights in the ditch."
In accordance with the Board-Hansen agreement, the Board executed a special warranty deed on July 27, 1960, conveying the 0.6 cfs water right in the Snake River Ditch and the ditch easement to Hansen. The deed included the statement that the Board "has found, determined and declared, by appropriate resolution, that the above bargained rights are neither useful for nor required in the Denver Municipal Water Works operation."
On August 18, 1971, more than fifteen years before the filing of the application for change of water rights at issue here, the Board agreed to convey 3.5 cfs of its Straight Creek Ditch water right to the Town of Dillon, to be used for municipal purposes only. Paragraph 12 of the agreement states that "it is necessary to the Board's future operation of the Straight Creek Ditch that any [of Dillon's] plans for laying a pipeline within or beneath the Straight Creek Ditch right-of-way shall not conflict or hinder the Board's proposed future use." Paragraph 13 adds that "[t]he Board may at any time enlarge the Straight Creek Ditch to provide for the Board's uses." On October 3, 1973, the Board granted Dillon a license to install a raw water pipeline "within and across" the Straight Creek Ditch right-of-way.
Diligent efforts to sell a water right are evidence of intent not to abandon. See Thornton, 775 P.2d at 19-22; Beaver Park, 649 P.2d at 302-03. In this case, however, the Board did not make diligent efforts to sell the water rights. Only two sales were shown by the evidence. Regarding the sale to Hansen of 0.6 cfs of the Board's Snake River Ditch right, the uncontroverted evidence established that the Board sold Hansen this water right in response to Hansen's claim that the Board, in drilling the Roberts Tunnel, had caused his well to run dry. As to the transfer to Dillon of 3.5 cfs of the Board's Straight Creek Ditch right, the agreement providing for that transfer reflects that it was arrived at in settlement of litigation between the Board and Dillon involving a number of issues. There is no evidence or contention that the Board sought to sell any other portions of the water rights.
In addition to the evidence contained in the agreement itself, Robert Fischer, one of the Board's witnesses at trial, testified that the Board traded — not sold — this right to Dillon.
C.
The Board presented additional evidence that on December 27, 1978, the Board, Dillon, and Dillon Valley Water and Sanitation District agreed to participate in creating a diversion dam and intake structure on Straight Creek. Although there was conflicting evidence whether the structure had any relation to the water rights at issue in this case, the water court determined, in the exercise of its fact-finding function, that the diversion structure was constructed for use in connection with water rights other than the ones at issue here, specifically the Board's "Straight Creek Conduit Unit granted to [the Board] in Case Nos. 1529, 1548 and 2371." The water court found and concluded, therefore, that the diversion structure "is not relevant to the question of abandonment because it involves a completely separate water right decreed for other purposes."
D.
The Board's evidence established that on February 19, 1976, January 17, 1977, May 24, 1977, and November 21, 1980, the Board entered into licensing agreements with Keystone International. Each of these agreements authorized Keystone to construct a condominium complex across the Board's Snake River Ditch right-of-way. The water court found that these agreements, although relevant, were all entered into by the Board to protect its interest in the real property involved, and were not sufficient to show non-abandonment of the water rights. The water court also noted that by the terms of the 1962 Special Use Permit, the Snake River Ditch was "not to be used for the conveyance of water for the generation of electrical energy." Language in paragraph 4 of each of the licensing agreements reserved the Board's right "to make full use of the property involved as may be necessary or convenient in the operation of the water plant and system under the control of the Board," and each agreement also provided that "[a]t no time shall Licensee interfere with the flow of water in Board facilities." This language provides some support for an inference that the Board did not intend to abandon the water rights at issue. The water court recognized this but, in its role as fact-finder, determined that this evidence, when taken together with the other evidence in the case, was insufficient to rebut the presumption of abandonment.
It appears that the Board does not intend to use the Snake River Ditch to carry water to the new power plant. Robert Fischer, the Board's water resource development officer, testified as a witness for the Board. On direct examination, Fischer testified that in connection with the Snake River Ditch right "there is no facility that needs to be constructed." On cross-examination, the following exchange took place: "Q You indicated in your testimony that there are no facilities that need to be constructed to use the Snake River power plant right at the proposed new place of use; is that correct? "A I think that's right, yes. "Q Okay. "A It can be done. "Q So, I take it, that you don't — Denver doesn't need any of the easements associated with that old historic Snake River right in connection with the proposed new use? "A I think that would be right once we're set up to do that." The alternate point of diversion requested for the Snake River Ditch water right was on Dillon Dam. The clear import of this evidence is that water obtained by exercise of the Snake River Ditch water right would be left in the Snake River and not diverted until it reached the Dillon power plant. The Board appears to acknowledge this in its briefs.
But see n. 11, above.
E.
The Board's evidence included a June 23, 1982, letter written by an engineer employed by the Board to an attorney concerning his client's interest in purchasing some of the Board's rights in the Snake River Ditch, in which the author offered the following explanation for the refusal to sell: "The portion of the canal adjoining your clients [sic] property is owned by the Water Board in Fee Simple Title and is used to convey water to the Loveland Valley Motel. It is therefore not possible to relinquish any of the Water Board's rights in this parcel of land." (Emphasis added.) The letter gives no indication of the Board's intent not to abandon the water rights.
IV.
The evidence established a presumption of abandonment based on a long period of unexcused nonuse. The water rights have not been used since 1959 when the old power plant was shut down. Even though Dillon Dam was completed in 1963, no efforts were made to obtain approval for and build a new power plant until the early 1980s.
We agree with the water court that this extended period of unexplained nonuse created a rebuttable presumption of abandonment. The only evidence tending to rebut the presumption of abandonment was limited and inconclusive. The water court held it insufficient to rebut the presumption.
"As in most judicial inquiries into the state of mind of a particular person, the question of the intent of an owner of a water right is essentially a question of fact for determination by the trier of fact on the basis of the evidence produced at trial." Masters, 702 P.2d at 272. "When, as most often occurs, the record contains conflicting evidence on the issue of intent to abandon, the water court's final determination of this issue will rarely be overturned by this court." Id. When faced with conflicting evidence in the record on the issue of abandonment, we have held consistently over the years that "the finding of the facts as to the intent of the owners with respect to the abandonment of the ditch and water rights [is] peculiarly within the province of the trial court and under elementary rules its conclusions as well as the judgment based thereon may not, with propriety, be disturbed by us." Scott v. Temple, 108 Colo. 463, 466, 119 P.2d 607, 608 (1941); accord Masters, 702 P.2d at 272-73. The water court's ruling that the Board had not overcome the presumption of abandonment is entitled to the same deference shown by us in the past in affirming water court findings on the issue of abandonment. See, e.g., Masters, 702 P.2d 268 (affirming water court's finding that water rights had been abandoned); Twin Lakes, 770 P.2d 1231 (same); Thornton, 775 P.2d 11 (affirming water court's finding that evidence rebutted presumption of abandonment); Beaver Park, 649 P.2d 300 (same). The evidence was sufficient to support the water court's ruling that the Board had abandoned the water rights.
V.
The water court made careful and detailed findings of fact and conclusions of law, fully supported by the record, and determined that the water rights had been abandoned. We affirm the judgment of the water court.
JUSTICE VOLLACK dissents, and JUSTICE ROVIRA and JUSTICE MULLARKEY join in the dissent.