Muddied waters in Glenwood Canyon

Purchase of Shoshone hydroelectric water rights might get snagged by messy realities of state water law

 

by Oliver Skelly

 

Colorado water transfers rarely come easily. State water law ensures that every last drop of water is accounted for, litigated, and litigated some more.

It is no surprise then that the attempted Shoshone purchase by the Colorado River Water Conservation District has snagged on a couple of thorny legal and policy issues. Whether those issues will prove fatal to the purchase will be taken up at a meeting tomorrow afternoon, Nov. 19, in Golden.

The Shoshone rights

The transferred water rights from Xcel Energy to the Glenwood Springs-based River District have huge implications. Xcel uses the water rights for hydroelectric production at the Shoshone plant in Glenwood Canyon. The hydro plant produces relatively little power. As in real estate, though, location matters entirely.

Xcel’s water rights of 1902 and 1929 are senior to most other water rights upstream of Glenwood Canyon. They are also high-volume water rights, at 1,250 and 158 cubic feet per second, respectively. Additionally, they are entirely non-consumptive, meaning that all water taken out of the river (to spin the turbines) soon returns to the river for downstream use. As such, they have tremendous power to influence flows along the entirety of the Colorado River through Colorado.

If Xcel were to cease making electricity there, junior users upstream could divert more water. Many of those users would be the state’s transmountain diversions, which extend from Rocky Mountain National Park to Independence Pass. They benefit farmers and now mostly cities from Fort Collins to Colorado Springs. Any water that is diverted to the Front Range, however, is water that does not flow westward.

Because of this, both the River District and the Front Range diverters have had their eyes on those water rights for decades. What happens at Shoshone matters greatly both on the Western Slope, where the river naturally flows, and on the Front Range, where some of the river is now diverted.

Will the River District get that water right? It plans to keep the senior, high-volume hydropower water rights but also add an environmental instream flow right to the original decree, a class of water right approved by state legislators in 1973.

The district has already inked a purchase-and-sale agreement with Xcel and has raised $57 million of the $99 million price. It has been promised an additional $40 million from the Bureau of Reclamation, although the Trump administration has now frozen that money.

The Colorado Water Conservation Board (CWCB), a state agency responsible for water policy and funding, plays several major roles. In addition to agreeing to contribute $20 million, the CWCB has the sole authority under state law to own instream flow rights. For this deal to work, the River District also needs the agency’s board approval. That approval would seem to be a given because of the board’s commitment of $20 million to the purchase. But there are complications.

 

Not so simple

You are likely not shocked that Front Range water providers have not been thrilled with this pending transfer. In June, they asked the CWCB to hold a hearing to express their concerns.

At a September 19^th meeting held on the campus of Fort Lewis College in Durango, the two primary parties testifying fell along predictable geographical lines: the Front Range (water providers) and the Western Slope (River District). CWCB staff also presented findings.

The question before the CWCB was a simple one: Does the acquisition “preserve the natural environment to a reasonable degree?” If the answer is yes, the water right is suitable as an instream flow right. By law, the board must consider 11 factors when making this determination. These factors are found in the instream flow law’s implementing regulations and range from whether this transfer will cause injury to other water users, the impact on interstate water compacts, and the cost of the transaction.

At the hearing, a host of messy realities surfaced. The first came after the CWCB staff presentation on the environmental importance of the 2.4-mile instream flow segment (i.e., whether the acquisition would in fact “preserve the natural environment to a reasonable degree”) in Glenwood Canyon.

The Front Range and Western Slope parties then trumpeted the many but competing public benefits afforded by the Shoshone rights: rafting in Glenwood Canyon, orchard irrigation at Palisade, hospitals in Aurora.

 

Public interest…in Colorado?

Nearly all other Western states have incorporated some form of public interest requirement during water transfers. Although a difficult term to pin down, public interest reviews involve the consideration of public goods, such as healthy rivers or recreational amenities. The presiding bodies, when evaluating transactions, must weigh the private interests against the broader public benefits (or lack thereof).

Colorado has no requirement. In 1995, the Colorado Supreme Court found the public interest theory conflicts with the prior appropriation doctrine. Without any legislative developments or a judicial about-face, that is that.

So, if we don’t have a public interest review, why the parade of testimony?

The most obvious answer is politics. When seeking approval (or denial) from an administrative body, it’s not a bad bet to show pretty pictures and tell compelling stories. But “politics” in this context can also be seen as a sub-in for those public interest principles.

The eighth factor governing the CWCB’s deliberations requires consideration of the “effect of the proposed acquisition on the maximum utilization of the waters of the state.” Maximum utilization and the public interest, although not direct parallels, both share a principle of the “greatest good.”

This backdoor introduction of the public interest gave listeners a glimpse of what the judicially disapproved principle might look like in Colorado water transfers.

 

Whose right is it, anyway?

That introduction at the hearing spurred perhaps the trickiest legal and policy issue of the day: Who has authority to enforce the instream flow agreement? That is, who can make the legal call instructing other water users to forgo their diversion so that the instream flow right gets its full water allocation. Is that a Western Slope political entity, the River District, or the statewide agency, the CWCB?

And if it is the CWCB, does it have authority to grant its enforcement power to the River District? While the law appears to say yes, the River District can be granted authority, there is enough ambiguity in the 1973 law to perhaps send this to Colorado Supreme Court.

The policy question, however, quickly returned parties to the realm of the public interest.

The Front Range parties, arguably the most averse to any sniff of public interest requirements, ironically now found themselves supporting the idea that the broader public benefits should be under consideration.

They contended that the CWCB should preserve its discretion to use and operate the instream-flow right. That, they said, would be sound public policy. Or if you will, “in the public interest.”

Meanwhile, the River District, as the purchasing party and longstanding practitioners of Colorado water law, understandably wants to get what they are paying for: full control over exercising their water rights. Retaining enforcement powers under the agreement was, in fact, “the one sword that the West Slope” was prepared to fall on.

Filings from both parties on Monday suggest that there is ongoing disagreement on this issue, meaning the CWCB will have a big decision to make.

Can’t you just compromise?

The next display of messiness came when it was time for the Board to apply the 11 factors.

To those listening, it was quickly apparent that such a contested hearing had not been before these board members before. Few of the directors seemed to understand how each factor was to be applied to the proposal in front of them. Although no fault of the board members, the misalignment between their understanding of their roles and the consequences of the decision to be made felt almost incommensurate.

That unpreparedness may have resulted in the Board’s parting directive to the parties to “compromise”: surely a favorable idea aimed at inspiring creative strategies and good faith negotiating.

But in the adversarial world of Colorado water law, what might result from this directive?

Such directives are common enough in water disputes. Recently, in the case of the Gross Reservoir expansion, a federal court, the 10^th Circuit, told Denver Water and Save the Colorado to do the same.

In matters of purely Colorado domain, however, such directives are normally reserved as an outcome of the water court process. Ordering it before litigation seemed premature, perhaps even subversive.

The parties’ reactions were revealing here. The Front Range interests will certainly see it as a tally in their favor because it suggests the River District needs to move away from its hardline position. Perhaps their aversion to the public interest doctrine is not so set in stone, after all.

For the River District, it is hard not to imagine some frustration. This was a contracted-for acquisition under Colorado’s longstanding, private property water rights regime. But here, too, the water is muddy. Recall that the CWCB is providing 20% of the purchase price. What kind of leverage, tacit or otherwise, does that commitment provide?

 

Nov. 19^th hearing

These are all difficult questions, and they are being asked amidst a backdrop of high stakes, interstate Colorado River negotiations. Answering them will be no easy feat, and as the filings on Monday indicate, those questions remain unanswered. Whether it is indeed a “compromise” at the CWCB meeting on Wednesday, Nov. 19, or back to the drawing board for the River District is anyone’s guess. But the uncomfortable positions and contortions on display at the contested hearing gave an insightful glimpse into the messy realities of today and stress tests of the future for Colorado water law.

 

Oliver Skelly is a 2025 graduate of the University of Colorado Law School, a former river guide, and follower of Western water happenings. He has worked at various law practices around Colorado and is now clerking for a judge on the Western Slope.