In a June 10, 2022, memorandum (the “Memo”), the Colorado Division of Water Resources (DWR) summarized the agency’s position on water court applications for water exchanges involving wells pumping from alluvial aquifers. The Memo builds on a 2018 decision issued by the Division 1 Water Court in Case No. 15CW3178 and formalizes DWR’s position on what is required to obtain a decree authorizing exchanges from wells. To avoid unnecessary opposition from DWR in water court cases, Colorado water users should understand DWR’s position to determine whether they want to include the elements of DWR’s approach in future water court applications.

DWR Differentiates Between Two Types of Exchanges: Traditional Appropriative Rights of Exchange and Water Exchange Projects That Must Be Part of an Augmentation Plan

In general, water exchanges allow for out-of-priority diversions of water upstream by replacing an equivalent amount of water downstream to satisfy the requirements (including quality, quantity, time, and location) of a senior calling right. Augmentation plans replace out-of-priority depletions from out-of-priority diversions in time, location, and amount, and are most commonly associated with groundwater pumping. Exchanges may be appropriative rights; augmentation plans do not confer a prior appropriative right. As the DWR Memo notes, an augmentation plan may include an exchange.

The Memo draws a distinction between what is termed a “traditional” exchange and a water exchange project. The traditional exchange is described as an upstream out-of-priority diversion of surface water with instantaneous downstream replacement with surface water but that cannot include “withdrawals through wells or other structures located away from the stream that have a lagged or non-instantaneous effect on the stream.” Memo, pg. 2. In contrast, DWR defines a water exchange project as involving upstream out-of-priority diversions of groundwater that have a delayed effect on the river and thus must be included as part of an augmentation plan to ensure sufficient replacement. Id.

DWR’s Policy Position Reflected in the Memo Will Only Affect Pending and Future Water Court Applications

For pending applications filed through the end of 2021 that include a plan for augmentation claim, but that incorrectly claim an appropriative right of exchange rather than a water exchange project, DWR will not attempt to require applicants to amend their applications, and such augmentation plans can be decreed to include water exchange projects. Memo, pg. 7.

For pending applications filed through the end of 2021 that do not include an augmentation plan claim, “DWR will provide comments” that the application should include an augmentation plan to communicate DWR’s position on this issue; however, “DWR will not now or in the future seek correction of such decrees.” Id. at 8.

For pending applications filed through the end of 2021 that include “a request for an exchange to the point of a well depletion without a plan for augmentation,” DWR will seek entry of a decree that includes the operation within a plan for augmentation “through litigation if necessary.” Id.

Finally, for applications filed in 2022 and later that seek to approve a water exchange project without a plan for augmentation, “DWR will either notify the water court of the deficiency through the consultation process or will oppose the application as a formal party.” Id. at 9. Given this, water users should ensure that all future water court applications seeking a decreed water exchange project include an augmentation plan claim. Note that although DWR characterizes this as a “deficiency” in the application, it is more properly characterized as DWR’s litigation position. DWR’s Memo in and of itself does not establish a legal basis for a water court to require an applicant to amend the application. With that said, thrifty applicants will likely want to ensure their applications conform to DWR’s approach to avoid DWR opposition.

DWR’s New Understanding of Exchanges Will Not Affect Already-Decreed Water Rights

The Memo explicitly states that DWR’s new approach to water exchange projects “does not result in changes to administration of existing decrees or subsequent diligence, changes of water rights, or amendment proceedings involving previously decreed rights,” and “DWR will not seek to have previously decreed rights or plans for augmentation conform to” this new approach. Memo, pg. 9.

Importantly for water users with decreed exchanges that involve wells and that do not conform to DWR’s approach, “DWR will not seek to disturb and will continue to administer existing decrees approving exchanges involving the use of groundwater, such as decreed exchanges of accretions that may or may not be included in a plan for augmentation,” and “water rights junior to the exchange are not entitled to demand that water physically be replaced upstream of the exchange from point.” Id. at 10. This is good news, because numerous existing water court decrees in Divisions 1 and 2 have adjudicated exchanges involving “upstream out-of-priority diversions” made via groundwater pumping.

Water Users Should Determine How DWR’s New Understanding of Water Exchanges Will Affect Existing Operations and Future Water Court Applications

The Memo constitutes a newly announced DWR policy that will impact DWR participation in water court cases that include exchanges that involve the use of wells. Ultimately, the filing standards for water court applications are established by the General Assembly and interpreted by the Water Judge. The Memo does, however, put Colorado water users on notice of what to expect from DWR if they apply for an exchange involving groundwater pumping that causes delayed depletions to the river without including that exchange in an augmentation plan.

Before filing a new application seeking an exchange, Colorado water users should consider contacting DWR to determine whether DWR is likely to oppose the exchange sought because it is contrary to the stated policies of DWR described in the Memo; a water attorney can also advise you on these issues.

Somach Simmons & Dunn can help you determine whether DWR’s Memo will impact future water court applications seeking exchanges. Contact Michael Daugherty at mdaugherty@somachlaw.com for more information.

Somach Simmons & Dunn provides the information in its Environmental Law & Policy Alerts and on its website for informational purposes only. This general information is not a substitute for legal advice, and users should consult with legal counsel for specific advice. In addition, using this information or sending electronic mail to Somach Simmons & Dunn or its attorneys does not create an attorney-client relationship with Somach Simmons & Dunn.