City & Cty. of Denver v. Consol. Ditches of Water Dist. No. 2

Summary

The Colorado Supreme Court affirmed the water court’s judgment in favor of Denver concerning the reuse of return flows from water imported through the Roberts Tunnel under Blue River exchange and substitution operations. The court held that these operations involved a water source acquired after May 1, 1940, and therefore the return flows were not subject to the reuse prohibition in the parties’ 1940 Agreement. The court declined to adopt a mandatory character-of-exchange rule applicable to all exchange operations.

Holdings

1. The 1940 Agreement does not prohibit Denver from reusing or successively using those return flows because the water imported through the Roberts Tunnel under the Blue River exchange and substitution operations is a source acquired after May 1, 1940.
2. Colorado law does not require a mandatory character-of-exchange rule that rigidly applies to all exchange operations.

Questions Presented

1. Whether the 1940 Agreement prohibits Denver from reusing or successively using return flows from Blue River water imported through the Roberts Tunnel under exchange and substitution operations using Williams Fork Reservoir water as a substitute supply.
2. Whether Colorado law requires application of a mandatory character-of-exchange rule under which water diverted through an exchange takes on the legal character, including priority date, of the substitute supply.

Disposition

affirmed