Summary of a Recent
Judicial Development in
Agriculture & Urbanization

"Beneficial Use" Requirement of Water Rights Applies
to Change Application Proceedings

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In ISG, LLC v. Arkansas Valley Ditch Association, 120 P.3d 724 (Colo. 2005), the Colorado Supreme Court affirmed dismissal of a private water investment company's change of water rights application for failure to identify places where the water would be put to actual beneficial use, and held that the water court had sufficient legal grounds to enter summary judgment on the issue sua sponte.

Background

ISG, LLC, a private water investment company, filed a change of water rights application in August 2003, seeking to change water rights historically used for irrigation to any one of over fifty proposed uses in any of twenty-eight Colorado counties. Id. at 728. It consolidated its change application with that of High Plains A & M, LLC, another private water investment company seeking essentially the same decree, and then filed a motion for determination of a question of law requesting a water court ruling that the anti-speculation doctrine and the "can and will" requirements of C.R.S. § 37-92-305(9)(b) applied only to new appropriations in proceedings for water rights and not to change application proceedings. See id. at 729; see also High Plains A & M, LLC v. Se. Colo. Water Conservancy Dist., 120 P.3d 710 (Colo. 2005). Based on motions filed by Southeastern Colorado Water Conservancy District (Southeastern) and other objectors, the water court dismissed both companies' applications even though Southeastern had only moved for summary judgment on the application by High Plains, because the controlling legal issue was the same in both cases and the facts were undisputed. Id. ISG appealed the ruling. Id.

Arguments

ISG argued that dismissal of its change application was improper because no party specifically requested dismissal or filed for summary judgment in regard to the application, and also challenged the water court's ruling on the merits of the dismissal. Id.

Analysis and Holdings

The court affirmed the dismissal of ISG's application because ISG had failed to identify the locations at which the appropriations would be placed to actual beneficial use under the change decree. Id. Regarding ISG's procedural argument, the court stated that "a technically flawed dismissal may be affirmed, if it was entered as a matter of law and the party that lost its claim had adequate opportunity but did not offer any evidence or argument on which the claim could have survived." Id. at 731. The court found that ISG had sufficient notice of its vulnerability to summary judgment on the legal issues raised by its application, because it had moved to consolidate its application with High Plains' applications, and also because it had moved for a determination that the anti-speculation doctrine did not apply to change applications and was now appealing that ruling. Id. Furthermore, the court found that ISG had not shown that undue prejudice resulted from the water court's ruling. Id. ISG argued that it had not been afforded the opportunity to present evidence of its members' intent regarding the beneficial use of the water, but the water court's dismissal was not based on intent; rather, the dismissal was based on the fact that no actual end users or places of use where the water would be put to beneficial use were identified in the applications. Id. Therefore, the court affirmed dismissal of ISG's application and awarded costs to Southeastern, the prevailing party. Id.

The case was decided on September 12, 2005.