The Colorado River District’s take on Aspen’s conditional storage rights

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Source: City of Aspen

This map from 1984 is one of the few ever published that puts the Maroon and Castle creek reservoirs into the context of the city's overall water system.

GLENWOOD SPRINGS – Given the ongoing discussion in Aspen about the city’s conditional water storage rights tied to two reservoirs on Castle and Maroon creeks, we thought it would be informative to interview Chris Treese, the external affairs manager of the Colorado River Water Conservation District, which works to protect Western Slope water supplies.

Treese oversees the River District’s legislative and regulatory governmental relations in Denver and Washington, D.C. Treese, who has a master’s degree in economics, describes his current job responsibilities “as everything you don’t want lawyers and engineers doing,” but he still spends much of his time discussing the finer points of existing and proposed water law.

The city of Aspen filed two due diligence applications on Oct. 31 in Division 5 Water Court in Glenwood Springs, seeking to extend the conditional storage rights for Castle and Maroon creek reservoirs until 2022. The city originally filed for the rights in 1965. Ten opposers have filed statements of opposition in the two resulting diligence cases, and the next status conference among the parties is set for Aug. 10, 2017.

We spoke with Treese on April 25 in the River District’s conference room in Glenwood Springs.

The resulting transcript has been edited for clarity.

BGS: Chris, thanks for doing this. It seems like the River District is well-positioned to shed some light on conditional water storage rights. The River District both holds conditional water rights and it also has walked away from conditional water rights, including on the Crystal River in 2013 which were part of the West Divide Project. And the River District is not involved in either of the two water court cases now underway in response to Aspen’s due diligence filings for the two reservoirs.

CT: Correct.

BGS: People have drawn parallels with the Crystal River rights that the River District abandoned, which were tied in part to two large dams, and the option, if you will, for Aspen to do the same. What’s similar and what’s different about the River District’s former rights on the Crystal and Aspen’s conditional storage rights on Castle and Maroon creeks?

CT: One of the similarities is they are both conditional water rights and simply by virtue of being conditional, they are what a conditional water right is, a placeholder in the priority system. But frankly, the differences leap to mind.

One difference is the ownership, as Aspen is a municipality, and municipalities have a different standard for diligence. The West Divide Project did not have a municipal purpose. It was originally, and remains, part of a federal project. And it was an out-of-basin diversion with its own impacts and concerns. I think those differences are significant.

The advantage, if you will, of having a municipal right, is you benefit from what’s known as the great and growing cities doctrine. In contrast to an agricultural or an industrial right with some fixed parameters around acreage or location and purpose of use, the courts have recognized that municipalities grow. And the responsibility of a municipal water provider is to provide water for present as well as the future.

As such, municipalities have enjoyed almost unfettered ability to hold on to water rights and to perfect their conditional rights as part of their portfolio, either because they are growing or because they may grow. So the great and growing cities doctrine has provided an essentially unconstrained ability for municipalities to hold large quantities of water rights.

BGS: Wasn’t that latitude more closely defined by the two recent Colorado Supreme Court decisions known as the Pagosa decisions?

CT: Yes. So now you can’t say you will need the water in 100 years, but you can project need out 50 years. The supreme court found that 50 years is a reasonable planning horizon, and it recognizes that water projects take a long time to develop and water rights can be evermore critical during a period like 50 years. It also said that there has to be some common sense, some historical reality, to the projections over that 50-year period.

BGS: You mean you can’t just say Aspen’s population is going to from 7,000 to, say, 100,000 people, because, maybe it could.

CT: The applicant in the Pagosa cases – Pagosa Water and Sanitation District – were projecting 8 percent annual compounded growth for 100 years, and that was seen as overly aggressive by the court.

BGS: So there is a great and growing cities doctrine, which Aspen presumably can benefit from, but there’s also now some limitations placed on it from the Pagosa cases, primarily concerning reasonable growth projections.

CT: Right.

BGS: It strikes me that one of the similarities is the absurdist factor in both the Crystal River and the Maroon Creek situations. The dam forming Osgood Reservoir on the Crystal River would have flooded the town of Redstone, and Maroon Creek Reservoir requires a 155-foot-tall dam within view of the Maroon Bells. How should someone consider the relative impossibility of building such projects?

CT: One of the challenges to conditional water rights is that you have to prove diligence on the conditional right as filed. In the case of the Crystal it was a conditional water right for a reservoir that would have flooded a large part of the town of Redstone, if built exactly where and to the size as filed.

But the fact is that a water right, conditional or otherwise, can be changed, can be modified. It still would need to meet some of its basic purposes, but you could go into the water court and say, “There’s now a town of Redstone there and before there wasn’t a town of Redstone. And now the highway is there,” and seek changes.

In fact, when the River District and its West Divide District partners looked at the Crystal conditional rights, we looked at how those conditional rights could be useful to the Crystal River valley, in contrast to their originally decreed purpose of transferring water out of the Crystal basin. But we knew we would still have to file diligence on the project as originally decreed.

BGS: So how flexible, how portable, are conditional water rights and their priority dates? There’s been ideas floated with the Castle and Maroon rights – that a smaller reservoir could be built, that they could be transferred to an underground storage facility on the city golf course, etc.

CT: What you can’t do is come in to a diligence filing and say, “We’ve talked about this.” That’s not diligence. You would have had to do more than talk about it, you would have had to at least study it.

BGS: Have studied moving it, for example?

CT: Yes, having studied moving it or using it for a different purpose at a different location. But it’s always up to the water court to find what’s adequate diligence, and they can look back at the original project and say, “I think you’re talking about a new and different project. You need to file for a new water right.” That’s a risk.

BGS: Is there a threshold for what constitutes a new project?

CT: No.

BGS: Can we explore the standards of diligence? It seems there is a difference in what the water court might consider as diligence and what the average person might understand as diligence.

CT: There is a definition of diligence. It’s broad, and fairly non-specific in the legislation.

BGS: Is the diligence standard excused because you’re a municipality? Or does it still apply?

CT: It absolutely still applies. You must demonstrate to the satisfaction of the court that you are moving diligently toward development of the conditional water rights.

BGS: In the last clause of the city’s diligence application for the Maroon Creek Reservoir, it says, “applicant city of Aspen having demonstrated that it has steadily applied effort to complete the appropriation of the Maroon Creek reservoir conditional water right in a reasonably expedient and efficient matter under all the facts and circumstances … ” should be allowed to hang on to the rights for another six years.

So if someone has “steadily applied effort” to complete the appropriation of a conditional storage water right, does that mean they’ve steadily applied effort toward storing the water in question?

CT: Yes.

BGS: Which also means they’re steadily applying effort toward building the structures, or dams, that would actually store the water in question?

CT: Well, the courts recognize that developing a reservoir is not as simple as getting a bunch of spray-painted shovels and having a ground-breaking ceremony. There are a lot of studies, and permits, and financing, and there’s a lot that goes into the early conditional period when planning for a reservoir.

BGS: But “steadily” applying effort means you’re moving toward actually storing the water some day, right?

CT: Yes.

BGS: It’s doesn’t mean you’re just hanging on to the water right for the sake of hanging on to the water right?

CT: Colorado water law prohibits speculation.

BGS: To be clear, if you’ve steadily applied effort to “complete the appropriation” of the conditional water right, then you’re moving toward storing the water. And if you are moving toward storing water, you need to be moving toward building a structure, a dam.

CT: Yes, right.

BGS: That’s what “complete the appropriation” ultimately means, right?

CT: Yes it does. Storage is clearly the end game, but diligence doesn’t specifically mean you’ve applied for a permit, or that you’ve hired bond counsel. There are a lot of early steps that may qualify as diligence.

BGS: Aspen, for example, does not claim it has been studying the reservoirs themselves, but instead it says that work on any part of integrated water management system counts as work on the whole system. So something like repairing pipes in downtown Aspen can count as steadily applying effort toward building the dams and reservoirs?

CT: Every water system is an integrated system in one form or another.

BGS: So what’s a citizen to make of that? In Aspen’s case, there appears to be little, if any, actual diligence on aspects of the projects that commonly comprise a feasibility study, such as water supply and demand studies, geological studies, construction analysis, permitting review, etc.

CT: I don’t know that.

BGS: Well, I’ve asked for such studies, and none have been forthcoming. What the city has told the court is that the reservoirs are part of their integrated water management system, they’ve been working on other parts of the system first, and work on one part of the system is work on all parts of the system.

That strikes me as a bit of a loophole, or at least a low bar. But how bulletproof of a legal argument is the integrated water management argument? Is that all the state requires? If you develop a reuse system at a wastewater plant, say, you can legitimately say you’ve also made progress on building two reservoirs?

CT: Nothing’s bulletproof, it’s up to the water court. And I’ll keep saying that. It’s to the satisfaction of the judge in water court. Or, actually, to the water referee and then, if necessary, the water court judge.

I can tell you the history of the integrated water system provision. The oil shale sector was the primary proponent for the amendment to that section of the law. And they said if they were working on other aspects of a system, such as a pump station and a pipeline, then those were physical manifestations of diligence toward developing their overall system.

If, say, a pump station was for 20 cubic feet per second, but their conditional right allowed for 100 cfs, they didn’t wish to see the larger amount challenged, as they were simply working in a steady and progressive manner toward eventual development of the entire system and perfection of the conditional right.

BGS: So does a judge have to decide, in a claim of being in an integrated water management system, whether there’s actual progress being made in that claim?

CT: Yes. I think the court would ask, is there a reasonable nexus to the diligence application for the water right in question? Is one action leading to another? The other part of steady progress is that it cannot just be in the last week before you filed. You do have to show you were engaged in steady application of diligence efforts.

BGS: So even though it’s within the confines of an integrated water management system, there still has to be a nexus to the ultimate development of completing the appropriation.

CT: Yes.

BGS: So can Aspen claim it worked on one part of our system, even though it bears little relationship to the actual potential reservoirs, and still claim that as steady effort?

CT: That’s up to the water judge.

BGS: There is no clear standard?

CT: Well, in the diligence applications that I’m familiar with, you include all of the efforts that you feel are relevant. For example, when the River District files for diligence on conditional water rights, we often include details of our work on the recovery program for endangered fish, because it’s critical to the way the river system works today. It may not have a geographic nexus to the conditional filing in question, but it has a hydrologic nexus. And so we hope the water court recognizes our work is a necessary element to be able to ultimately develop the water right.

For example, if a city was going to build a reservoir someday they could look forward to having to go through a NEPA [National Environmental Policy Act] review. As such, they will need to study a range of alternative measures they could take, such as making sure they don’t have leaks, water conservation efforts, pricing, all of that.

You have to accept that water development is an enormous challenge, and you’re going to have to show that you’re using your existing supply to its maximum benefit and efficiency before seeking permits. So a water provider might include in an application for diligence the work done today on those types of activities, even though they don’t appear to be physically linked to the reservoirs. And they can count it as work toward a future reservoir, because it’s related.

BGS: Do you think the city should have been more actively studying its two potential reservoirs?

CT: You have to allow any conditional water right owner to decide what their own timing is that leads to development.

BGS: Okay, but is there any requirement for work to be done on a specific site or project basis? Even if you’re doing other stuff, do you still have to study the project at some basic level?

Because, in this case, it doesn’t appear Aspen has done much, or is doing much, investigating of the feasibility of the reservoirs themselves. And if the city thinks it might actually need the reservoirs, shouldn’t city officials be studying them?

CT: Not necessarily. You have to allow that Aspen has accepted from 1965 that these reservoirs may be necessary. And what they have asserted is that what they’re doing is working on the other elements of their integrated system that require immediate work, and in the succession of development and maintenance of their system, those are their priorities.

The fact that I filed for a reservoir, say, on Three Mile Creek, doesn’t mean that I have to keep drilling every six years to see what the soils look like on Three Mile Creek.

BGS: Yes, but should you have drilled once? No drilling, for example, has ever been done on the location of the Maroon Creek Reservoir, that I can find or that the city can produce.

CT: Eventually you will, but there are many other things required before eventual storage construction. Personally, I don’t know what the order is of when drilling or soils testing is required.

BGS: Wouldn’t you want to know what a drill test says about a key factor in a reservoir, which is where the bedrock is?

CT: Yes. You will.

BGS: Not now?

CT: Maybe not yet. This is probably not the first thing I need to know. Not everything is a study for fatal flaws, especially if you accept that they have a premise around their original filing that this is necessary and appropriate someday. That’s exactly what a conditional water right is.

BGS: It just strikes me as a profound lack of curiosity.

CT: I understand. I think you have a legitimate question as long as you’ll acknowledge that there is a whole series of studies, and hard and soft science steps, that have to be followed before you can get to application, let alone development. Then I think it’s a legitimate question.

BGS: So what’s the average person to make of the larger situation? The city can, in effect, say they are making progress but really, at least in terms of how most people might see the question, they are really not?

CT: Yes.

BGS: I understand then that someone can technically say in water court they are making progress, given the integrated system provision, but it seems to lack a certain integrity from a street corner or real-world perspective.

CT: Well, for example, for the Osgood Reservoir on the Crystal River, the River District didn’t feel we could tell the court, “Rest assured, we’re not going to flood the town of Redstone,” when the water right as decreed would have done so.

We were, in fact, looking at alternatives, but then it would no longer have been the West Divide project as conditionally decreed. And we would have admitted that to most anybody, except the court. Because if we weren’t going to flood the town of Redstone, by moving the storage right to a more acceptable location, it might be considered a different right by the court.

BGS: So that suggests there is an integrity gap in Aspen’s approach, because they are saying, in effect, “We don’t want to build the dam near Maroon Bells,” and yet they are still pursuing the same rights that are tied to the dam.

CT: When you are filing for diligence, you’re filing to maintain the water right’s priority date. And it’s not a secret, and it’s not a lie, that the water right may in fact be developed someday in another fashion for another purpose in another location.

BGS: Well, then, how low are the state’s standards for diligence? If you simply say you’re making progress, and want to keep all your options open, does the court just say, “Okay, carry on.”

CT: Let me acknowledge that conditional water rights are typically not contested. You usually don’t have objectors in a diligence case. And until relatively recently, if a filing didn’t have an objector, including the state of Colorado or anyone else, water courts tended to say, “Nobody’s upset, so no harm, no foul. Continue. Your diligence application is approved.”

Now the bigger filings have had objectors. We’ve had objectors on the Western Slope from eastern Colorado for large filings that were senior to some of the junior aspects of their transmountain diversions. They have had a clear self-interest in attacking these conditional rights, because they would improve the seniority of their junior rights by removing the threat, if you will, of a senior conditional.

But most filings aren’t contested, and uncontested filings are generally approved by the court without much analysis. Admittedly, the court might take exception to that.

BGS: Switching gears, what is the harm in walking away from a water right?

CT: It depends. We maintained the rights on the Crystal because we thought storage in that basin could have been a significant benefit to western Colorado. And our choice to abandon those rights was not as simple as concluding we didn’t need storage there.

We were being challenged in court, and the challenge was to the entire West Divide project. And our partners in that project, the West Divide Water Conservancy District, still intended to pursue aspects of that project that are outside of the Crystal River drainage.

We didn’t want the tail – the potential dams on the Crystal – to wag the dog – the other parts of the project. So we looked at number one, the opposition and the risk to the other water rights outside of the Crystal River basin. And, two, we recognized that if, in the future we still wanted to pursue storage on the Crystal then a new junior storage right would accomplish largely the same goals as those senior rights associated with the conditional filing would have.

BGS: Okay, so the River District made a call to walk away from two large dams. But the city of Aspen seems to always pour cold water on that option by suggesting if they abandon them someone else is going to come in and claim them, and their decreed date of 1971, apparently.

CT: Impossible.

BGS: So if someone else comes in and claims a storage right on Castle and Maroon creeks, it’s going to have a new junior priority date? They can’t come in and claim a 1971 right?

CT: Correct.

BGS: And someone could always still come in and file for a new junior right, whether or not the city abandoned its rights?

CT: Yes, but it’s a very different water right if you’re behind a senior conditional right. And there is the “can and will” test. You may not be able to develop the new junior right if it’s in line behind a senior conditional right. It depends upon the hydrology and how much water is available to store during runoff.

BGS: So if by retaining a conditional senior storage right, you make it less likely that someone’s going to come in and file for a junior right, isn’t that an advantage for a senior rights holder, like Aspen, in this case? If so, that suggests there is value in just sitting, if you will, on a senior conditional right as a pre-emptive move against future interlopers.

CT: Aspen, or anyone else, may see a strategic value in that approach. But that’s not sufficient diligence. There were a number of people in the Crystal basin who were in favor of water development. Not in favor of flooding Redstone, but who were in favor of water development. And they saw our conditional water rights as a strategic card and said if we didn’t hang on to that water right, then someone like Denver Water could come in and file. But we never said that; we never saw that. It’s not a legitimate or feasible threat. Nor did we see it as sufficient to present as diligence.

BGS: You mean you can’t protect your water rights unless you’re actually making progress toward completing the appropriation? You can’t just be doing it for strategic purposes?

CT: Correct. You have to be diligently moving toward development. Remember, though, that oil shale has largely maintained its water rights from the 1940s by researching oil shale development. Some would argue there’s no way that they’re moving toward development or perfection of those rights. But the courts so far largely have found that they are.

BGS: Ah, yes, it’s always the court’s call. But how unusual is it to have ten opposers, as Aspen does, in a diligence case? Doesn’t that change things?

CT: It’s certainly uncommon to have opposers in diligence cases. And it’s worth noting that while a city cannot hold on to water rights solely to suit their strategic priorities, opposers can challenge the city’s rights based on their own strategic priorities

BGS: In other words, as an opposer you don’t need to prove standing, you don’t have to show injury.

CT: Essentially right.

BGS: Another outstanding question I have is about storage. The Castle Creek Reservoir would hold 9,000 acre-feet of water and the Maroon Creek Reservoir would hold about 4,500 acre-feet.

And recently, Aspen City Manager Steve Barwick told the Pitkin County Healthy Rivers and Streams Board, and I quote, “All of this, this whole notion of how much water do we need and how much water do we need to store, and all of that, has been based upon very preliminary analysis. And now it’s time to tighten up the whole analysis and do a rational set of studies so we can have a rational discussion with the entire valley about what are we going to do here. How much storage do we need, and where do we want to put it?”

Given that, why is the city telling the state it needs 14,000 acre-feet of storage if they aren’t sure how much storage they need? How hard is it to determine how much storage a city needs? A recent raw water supply analysis from Wilson Water found the city could meet future needs without storage, even after aggressive climate change projections.

CT: I would suggest that it’s not particularly easy to look 50 years down the road and try to figure out exactly what your needs are going to be.

BGS: So, again, what should a citizen make about the duality in the situation, where the city is telling the state it’s making progress while telling citizen’s it’s the last thing they want to do?

CT: I will say I feel the city’s pain, because while they may not have any actual intent to build that size reservoir in that location, they apparently see a need and a purpose for additional storage. As we did on the Crystal. Were we going to flood the town of Redstone? Not in this day and age. We knew that. Could we admit that anywhere but the water court? Sure. But in the water court, that’s not what you’re able to do.

BGS: So does that speak to the failing of the water court? Or to an issue of integrity?

CT: You keep suggesting that this is an issue of integrity.

BGS: Well, I keep asking.

CT: I think the city recognizes the value, the purpose, and the benefit of storage at large. Storage of some size. Storage in their water supply planning.

BGS: Storage of some size, somewhere, at some point, in some location.

CT: Yes, and that’s what a conditional water right may provide. But it’s not a failing of the court, because it doesn’t, in fact, allow for unfettered flexibility. The court would likely reject a suggestion, say, that a conditional storage right on Castle Creek might be used on Hunter Creek.

BGS: But the city is studying and positioning various potential alternatives, suggesting the rights are quite portable and flexible.

CT: The conditional water right system does allow for movement. But it would likely have to have a junior right if moved too far.

BGS: But no one knows for sure until they go through the process? There’s no standard?

CT: Well there is a standard for that. If you go too far, say if you try to exchange that right to Hunter Creek, it’s going to end up being a new junior right.

BGS: So there’s generally limited flexibility?

CT: Yes. But you never know until you go through water court.

BGS: Can we discuss why the River District has not taken a position, or really, said anything, one way or the other, about Aspen’s conditional water rights? The district is not an opposer, so it apparently doesn’t oppose them, but it hasn’t said, for example, that they think those reservoirs might be valuable for any reason.

CT: Well, we’ve never been asked.

BGS: The city has not come to you? They’ve never consulted with you?

CT: No. Aspen has not asked for help.

BGS: Or sat down and asked you about your experiences on the Crystal?

CT: No. Nor do I find that odd that they didn’t. Montrose hasn’t, and Grand Junction hasn’t. Ute Water is working on developing and permitting storage on the Grand Mesa. They haven’t asked for our help. Others have. Eagle River and Water Sanitation asked for our help in putting together multi-party agreements that years ago resulted in the Eagle River memorandum of understanding, or MOU. Now we’re working on fulfillment of the MOU to develop joint-use, mutually beneficial East Slope-West Slope water.

BGS: Do you feel there’s any harm done if the city’s water rights are abandoned, from a Western Slope water rights perspective?

CT: We have not looked at them.

BGS: With respect, why not? It seems like something the River District would do.

CT: Well, this is what individual utilities do within our 15 county district. They develop their water rights.

BGS: But Aspen suggests there are threats from a Front Range bogeyman, and I wonder if you think a bogeyman is lurking, waiting for the city to give up its rights?

CT: We don’t see this as the bargaining chip that we need to, or have been asked to, help preserve. It’s a tool in the toolbox, perhaps, but we haven’t analyzed exactly how these water rights might be used in the ongoing poker game.

BGS: I’m trying to discern the significance of the River District’s neutrality and silence about the Castle and Maroon creek reservoirs.

CT: I find our position unremarkable. There are many entities that are pursuing diligence or perfection of their water rights. We have no interest in jumping into a situation that has already divided our shared constituents. And Aspen has not asked for our help in their diligence filing, or their studies. So we have no direct dog in this fight.

BGS: So, again, is there a downside to Aspen giving up the rights, as the River District did on the Crystal?

CT: I think it may be important to ask what the opposers are seeking. Are they concerned about a dam in that particular location? If the dam were somewhere else, would they have the same concerns? Are their concerns really about growth? Is the concern that Aspen has, or may have, a vision of its future, that is more crowded than some may accept? I don’t know the answer. Is it that Aspen has said that they want to maintain the instream flow rights? Is it the idea that storage can be used for meeting an instream flow, or enhancing an environmental benefit? What are their motivations? And perhaps most importantly, what happens if they succeed?

BGS: Well, fair enough. I’ll follow up with the opposers, and they have articulated many of their concerns for the water court referee. But that’s why I asked you what harm the River District sees if the rights are abandoned. Apparently you don’t see any, which says something about the size of the bogeyman.

CT: What does Aspen see? Are there any competing conditional rights in between that if Aspen drops out, somebody moves up the line? If there’s an intervening conditional water right on the Roaring Fork, that would be pertinent.

These water rights may be a bar, or a deterrent, to another conditional right that couldn’t be developed if these rights were senior. So I think it’s a legitimate inquiry as to whether, say, Pitkin County Healthy Rivers and Streams, has considered what the full implications are to not having these water rights. I don’t know the answer. I’m just saying it’s a reasonable question.

BGS: I agree it is a reasonable question. And a reasonable question to ask the River District, too.

CT: We haven’t looked at it.

BGS: Again, with respect, why not?

CT: Nobody’s asked us, nobody’s suggested it. It’s not a problem.

BGS: But isn’t that in your mission? I have to think that if the River District thought that if these rights were to go away it would harm the Western Slope, you would have said something.

CT: If we thought so yes, if we had looked at it and come to that conclusion. But you’re giving us too much credit.

BGS: I guess so.

CT: We haven’t looked at it. I think if they were pre-compact, or pre-1922, rights I guess it would be more interesting to us.

BGS: Do you think there’s a bogeyman out there as it relates to Castle and Maroon?

CT: I think there’s a much bigger bogeyman in the upper Roaring Fork. Castle and Maroon, hard to picture, but the upper Roaring Fork, easy to see. The evidence is all there.

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