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<br />, <br /> <br />Developments in <br />Conditional Water <br />Rights Law <br /> <br />( <br /> <br />. Peprinted by permission of 'l11e O:>lorado <br />lawyer fran (volume 14, no.3)', 'l11e by David C. Hallford <br />O:>lorado lawye.;- (p. 353), (1985) -;--'l11e I <br />O:>loradci Bar Association 1985. All <br />rights reserved. <br /> <br />( <br /> <br />Unappropriated water has becomc <br />increasingly scarce in pans of Colorado <br />and, as a result. decreed conditional <br />water rights have become significant <br />considcrations for water supply devel- <br />opers. As Colorado water use COntinues <br />to change from agricultural and mining <br />to municipal. industrial and other uses, <br />water use relationships are being <br />refined and adjusted. Currently, chang- <br />ing economic conditions.have atTected <br />Ihe viability of some decreed conditio,,- <br />al projects. making it desirable to alter <br />some projects either to serve ditTerent <br />. ends or to accomplish original goals dif- <br />ferently. Also, several large conditional <br />projects involve the same water supply, <br />casting doubt on the feasibility of the <br />more junior projects. <br />The need for greater certainty in wa- <br />ter planning, the intensifying competi- <br />tion for and protection of supplies, and <br />the desirability of altering some proj. <br />ects have spurred developments in con- <br />ditional rights law. The parameters of <br />the legal framework are being defined <br />in the couns and the General As- <br />s<mbly. During the past few years, <br />changes have been and are continu- <br />ing to be made in the requirements for <br />initiating and establishing diligence in <br />developing conditional ripts;. and in <br />the standards for chan,ing and perfect. <br />ing conditional rights.' These develop- <br />ments ha ve imponance beyond water <br />law. They are relevant in real estate, <br />property development and municipal <br />law practice since they will atTect the <br />activities and decisions of property <br />owners and developers, as well as those <br />of private and public water suppliers. <br /> <br />( <br /> <br />BACKGROUND <br /> <br />A conditional water right is an in- <br />choate ri~ht to use water that has been <br /> <br />initiated for a project that has not been <br />completen. It .is defined by statute as <br />a right to perf..ct a water right with a <br />cenain priority upon the completion <br />with reasonable diligence of the ap- <br />propriation upon which such water <br />right is to be based.' <br />Conditional water rights were first <br />recognized in the development of the <br />doctrine of "relation back." This pro- <br />vides that if adequate intention is <br />fom1ed and actions are taken to initiate <br />a water project. its priority dau: under <br />the appropriation system may "relate <br />back" to the date of those acts if the <br />project is completed diligentl)." The <br />. doctnne otTers the security of priority' <br />needed to plan and finance major water <br />proJects. panicularly long-range muni- <br />cipal and industrial water plans. The <br />dottnne is in derogation of the Colora- <br />do Constitutio". and it is strictly con. <br />Slrued and applied.' <br />Two major policy goals must be ad- <br />dressed in the development of condi- <br />tional rights law: (I) the certainty ofpri- <br />ority. needed to justify development of <br />costly and Icing-range projects; and (2) <br />the desirability of mnimum us< of <br />Colorado's water and the concomitant <br />prevention of hoarding of undeveloped <br />righU. Both goals require flexibility in <br />standards for developing and changing <br />conditional projects, as well as the es- <br />tablishment of firm requirements so <br />that speculative appropriations are de- <br />nied or cancelled. These two considera. <br />tions are not mutually exclusive, but at <br />times can conflict. <br />Striking and maintaining a balance <br />between these two policies is helpful. <br />Maximum. utilization depends ulti- <br />mattly on certainty of priority since <br />. large water projects probabl) cannot be <br />financed and developed without it. In <br />contr351. certainty of priority does not <br /> <br /> <br />David C. Hal~. OIIn..r. ,. an aSl<)Ciale <br />of the firm of c.lkins. Kra",.r. Grimshaw & <br />Harring. <br /> <br />depend on the realization of maximum <br />use because it focuses on individual wa- <br />ter rights. An emphasis on fostering cer- <br />tainty of priority, howe,'cr. would im- <br />pede maximum use due to the chilling <br />effects of pefllCtuating conditional de- <br />crees without actual development ef- <br />forts. Certainty of priority is a tool <br />which can be used either to meet or to <br />defeat maximum utilization. <br /> <br />. INITIATION OF <br />WATER RIGHTS <br /> <br />To initiale a conditIonal water right. <br />an intent to diVer! and use specific wa- <br />ters must be formed. and overt actions <br />must be taken to give notice of the in- <br />tent to third panies. The intent and ac- <br />tion ~equirements are "distinct and sep- <br />arate" elements. and the priority dale of <br />a conditional right is the date on which <br />both elements are satisfied and .coex- <br />ist."' The adequacy of both intent and <br />action is a factual maller, The water <br />court's findings are binding if sup- <br />poned by competent evidence,- The in- <br />tent and action "prongs" of initiation <br />are of equal concern to an appropriator, <br />and several signifiCant recent develop- <br />ments concerning the requirements for <br />each should be considered carefull).. <br /> <br />Tilt lartadolt Proltg <br />Initiation of an appropriation. condi- <br />tional or absolute, requires "an intent <br />to appropriate a definite quantity of <br />water for beneficial use,.,.", Analyti- <br />cally, intent appears to have two ele- <br />ments; intent to divert water and intent <br />to use water. These elements often. <br />overlap. <br />Intrnt to L'sr l'erslIs SprclIlation: <br />In the 1970s, what is known as the <br />.speculation" doctrine was applied <br />APPEMlIX A <br />