U.S. Water News Online
DENVER -- The Colorado Supreme Court ruled that a nearly 130-year-old contract prevents water designated for agriculture to be converted to drinking water for new houses in fast-growing Fort Collins.
In a ruling that could affect similar cases statewide, the court said East Ridge of Fort Collins LLC, which bought 160 acres northeast of the city for its proposed development, had to comply with the original 1878 water-use contracts that were attached to the land.
The ruling drew a strongly worded dissent from Justice Gregory Hobbs, a water-law expert, who called it "shocking" and "unconscionable" and said it could set a dangerous precedent that denies rights to holders of such contracts.
East Ridge's contracts stemmed from a ditch dug in 1864 to irrigate farmland from the Cache la Poudre River. The ditch's original operators specified that the water was to be used only for irrigation.
In 1878, the original operators agreed to turn over all their shares in the ditch and its water to a larger irrigation company, and in return they got delivery rights -- rights to receive the water, even though they did not own it. The contract specified that the original operators' delivery rights were senior to the new owners' water rights, meaning that in a dry year, the owners of the delivery rights got their water first.
East Ridge now owns the senior delivery rights, and the Larimer and Weld Irrigation Co. owns the junior water rights.
The irrigation company sued to block East Ridge from using the water for homes, citing the 1878 contract the said the water must be used for irrigation.
A state Water Court judge sided with the irrigation company in an October 2003 ruling, and the Supreme Court upheld that ruling.
In his dissent, Hobbs said it makes no sense to restrict East Ridge, which owns the senior delivery rights, but not restrict the irrigation company, which owns the junior rights.
"This result is shocking, unconscionable, and contrary to Colorado law, in my view," Hobbs wrote. "While all others on the ditch are free to realize modern-day market value of their water, the owners of first priority are made to be last in realizing that value."
Alan Hill, an attorney who represents East Ridge, said there are many similar water-delivery contracts around the state that could be affected by the ruling, but noted the language in each contract is different.
He said East Ridge is still planning the development, and the ruling means the company will have to look elsewhere for water to supply a treatment plant to help meet additional demand from the planned development.
"Particularly with Colorado having all the water issues they have now, we thought it was appropriate that the policy be maximum utilization of water -- and it is -- and this water won't be used the best way it could be used for this property based on this decision," Hill said.
If East Ridge builds the development, water it would have converted to municipal use would be allocated among other irrigation company shareholders, company attorney Tim Dow said.
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