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<br />The "1041" process became an issue with regard to conditioning interbasin transfers <br />in 1988 when the Colorado Court of Appeals affirmed the right of local governments to <br />regulate water diversion facilities. The city of Denver challenged the authority of Eagle <br />and Grand counties to issue pennits for three of its proposed diversion projects. Denver <br />argued that the effect of the local regualtions was to deny the city its constitutional right to <br />appropriate water. The court countered that the ''building of Denver's water projects in <br />Eagle and Grand counties may have a substantial impact on the environment and may <br />greatly affect the health, welfare and safety of Colorado citizens far removed from the city <br />[which would define the projects as being of state interest]." (City and County of Denver v. <br />Board of County Commissioners of Grand County, et aI., 760 P.2d 656 (Colo. App. 1988) On <br />appeal, the state supreme court upheld the decision. (City and County of Denver v. Board of <br />County Commissioners of Grand County, et ai., 782 P.2d 753 (Colo. 1989)). <br /> <br />The local government permit authority has been exercised by Eagle County, but not <br />in regard to Denver's projects. In February 1988, the county commissioners voted <br />unanimously to deny permits for the construction of the Homestake II project proposed by <br />the cities of Aurora and Colorado Springs.64 The size of the project (which would divert <br />21,000 acre-feet per year from the Holy Cross Wilderness to the Front Range) made it <br />subject to considerable review. <br /> <br />Barbara Green, an attorney representing Eagle County in the proceedings, <br />acknowledges that the "1041" process is not intended to regulate water rights, only <br />construction projects associated with a water right (had the proposal not involved a land <br />use development, it probably would not have corne under local jurisdiction). She argues, <br />however, that the "water rights issue has been used as a shield to immunize developers <br />from the land use permit process:.65 She suggests further that if water is considered to be <br /> <br />31 <br />