Click the link to read the article on the Aspen Journalism website (Heather Sackett) Be sure to click through for the great graphic showing conditional water rights volumes and locations:

Updated December 18, 2024 to include William Woody’s photographs (Used with permission).

December 12, 2024

Cities, conservancy districts, energy companies own rights for 2.6 million acre-feet of additional water storage on the Western Slope.

Nearly two hours east of Grand Junction on a remote dirt road on the Grand Mesa is a nondescript, shallow, sage-brush-covered valley where two creeks meet. 

The site, at 8,200 feet in elevation, is home to a wooden corral where ranchers with grazing permits gather their livestock and to the Owens Creek Trailhead where hikers set out for nearby Porter Mountain. 

It’s also the spot where the largest domestic water provider on Colorado’s Western Slope plans to someday build a reservoir. The proposed Owens Creek Reservoir is modest in size, at about 7,000 acre-feet. It would help Ute Water Conservancy District satisfy the needs of its 90,000 customers into the future.

“Our job as a water provider is never done,” said Greg Williams, assistant manager at Ute Water. “You can develop one and you move onto your next project and go through that same process.”

In most cases, water in Colorado must be put to beneficial use to keep a right to use it on the books. The cornerstone of Colorado water law is the system of prior appropriation, where the oldest water rights get first use of rivers. And hoarding water rights without using them amounts to speculation, which is illegal. But a Colorado water law feature known as a conditional water right allows water-rights holders to skirt this requirement and hold their place in line. The conditional water rights for the proposed Owens Reservoir date to 1972, although work to build this particular reservoir appears limited to preliminary studies and work on other related components of Ute Water’s system. 

Ute Water, along with many other cities, conservancy districts and oil and gas companies across the Western Slope, are hanging on to water rights that are in some cases a half-century old without using them. Conditional water rights allow a would-be water user to reserve their priority date based on when they applied for the right, while they work toward eventually using the water. The result is millions of acre-feet worth of conditional water rights on paper that have been languishing for decades without being developed. Some of these rights are tied to large reservoir projects.

An analysis by Aspen Journalism found that across Colorado’s Western Slope, cities, conservancy districts, fossil fuel companies and private entities hold conditional water rights that would store about 2.6 million additional acre-feet from the Colorado River and its tributaries in not-yet-built reservoirs each bigger than 5,000 acre-feet. This is a staggering amount of water storage and more than the entire state of Colorado currently uses from the Colorado River basin, which is about 2.1 million acre-feet a year.

Most of this water would be stored in not-yet-built reservoirs, each bigger than 5,000 acre-feet. In some cases, the water would be stored in already-existing reservoirs, using conditional rights that would allow the reservoir to be refilled or enlarged.

Ute Water has plenty of company among the state’s conditional water rights holders. The Glenwood Springs-based Colorado River Water Conservancy District has rights from 1972 for the 66,000-acre-foot Wolcott Reservoir on Ute Creek in Eagle County; Mountain Coal Company says it wants to build the 75,000-acre-foot Snowshoe Reservoir on Anthracite Creek near Kebler Pass with rights from 1969; and Denver Water has plans for the 350,000-acre-foot Eagle-Colorado Reservoir on Alkali Creek in Eagle County using water rights from 2007. These are just a few examples of the 94 conditional water rights for new and existing reservoirs of 5,000 acre-feet or more planned for western Colorado identified by Aspen Journalism.

In a way, this planned water development represents the hopes and dreams for the future growth of the Colorado River’s Upper Basin states — Colorado, Wyoming, Utah and New Mexico. The 1922 Colorado River Compact promised 7.5 million acre-feet to the Upper Basin, which so far has never come close to using its half. The state of Colorado has the right to use 51.75% of the Upper Basin’s allocation.

But some experts say these proposed reservoirs are unrealistic wishes of the past, a vestige of the mid-20th century frenzy of dam building across the West that is mismatched for 21st century conditions. They say if this scale of future development comes to pass, it would upend the system of water rights, as well as harm the environment. They say the water court system that keeps these phantom reservoirs alive is being abused and should be reformed. In the era of historic drought, climate change and crashing reservoir levels, where users already see shortages in dry years, some say this amount of water for new development simply does not exist. 

The Upper Basin’s dreams of water development also highlight a central tension at the heart of the current disagreement between the Upper Basin and the Lower Basin states of California, Arizona and Nevada. The two sides have not been able to reach an agreement about how the river’s two largest storage buckets, Lake Powell and Lake Mead, should be operated in the future and how cuts should be shared in drought years. Negotiations are currently at an impasse. 

Over the past 100 years, the Lower Basin has fully developed its share of the river and then some. The Upper Basin has not, but it believes it is still entitled to, despite the contradictory nature of both committing to conservation while holding on to plans for new future uses. 

“It’s especially a problem when we’re trying to find more water to reduce the amount of depletion on the Colorado River,” said Mark Squillace, a natural resources law professor at the University of Colorado Boulder. “If all these water rights were developed, it would be a disaster. I think everybody understands that.”

Holding on to conditional rights

Entities can’t just hang on to conditional water rights in perpetuity. To maintain a conditional right, an applicant must every six years file what’s known as a diligence application with the state’s water court, proving that they still have a need for the water, that they have taken substantial steps toward putting the water to use and that they “can and will” eventually use the water. They must essentially prove they are not speculating and hoarding water rights they won’t soon use. 

A cottage industry has sprung up around these diligence filings. Engineering firms produce studies that show a conditional water rights holder has worked to develop the water right. Attorneys file diligence applications with the water court and then see them through the sometimes yearslong process to get it renewed for another six years. 

Aspen Journalism’s analysis looked at only the biggest proposed reservoirs on the Western Slope, but every year, hundreds of diligence applications are filed statewide for smaller amounts of water.

And the bar for proving diligence is low. 

“It’s only limited by the imagination of the lawyer who’s filing the application about what you can claim for diligence,” said Aaron Clay, a longtime water attorney and water court referee in the Gunnison River basin, who teaches community courses about the basics of water law across the Western Slope.

The standard for reasonable diligence is much lower now than it was decades ago, Clay said, because state officials want at least some of these reservoirs to be built. The thinking is practical and political: Building more reservoirs makes it easier to control the timing and amount of water Colorado lets flow downstream.

Water court judges are hesitant to abandon these conditional water rights, even if they have been languishing without being used for decades partly because in Colorado water is treated as a fully vested property right, where the state may have to compensate water rights holders if they take it away from them. And owners of these rights believe they are valuable and are reluctant to let them go. The status quo is maintained because there’s no incentive for anyone to scrub these unused water rights from the books.  [ed. emphasis mine]

Some entities, such as Ute Water, have conditional water rights for several reservoirs, pipelines, pumping stations and other components of an integrated system. Applicants are not usually required to file separate diligence applications for each of the system’s components. For example, in Ute Water’s most recent diligence filing for Owens Reservoir, the conservancy district filed a combined application for 14 different components of an integrated system. The application, filed in August and still pending in Division 5 of water court, claims that work on one feature of the system constitutes reasonable diligence on all the features of the system. 

Municipal water providers such as Ute Water are given special deference under Colorado water law through something called the Great and Growing Cities Doctrine.  [ed. emphasis mine]

“The standard for diligence for a municipality is even lower,” Clay said. “We’re going to give them a little leniency with diligence by saying if you can still show us you’re going to need that water 30, 40, 50 years from now and you’re doing something toward it — studying it, working on the environmental issues or whatever — that’s going to be enough diligence to get you by for another six years.”

Owens Reservoir is just one of several Ute Water plans to develop. Williams said they are currently working to enlarge Monument Reservoir No. 1 and will then explore building Buzzard Creek Reservoir, Willow Creek Reservoir and Big Park Reservoir, all on the Grand Mesa.

“It remains to be seen the timing of when those reservoirs would be developed,” Williams said. “But our intent would be to continue developing each one of those sources.”

Squillace said that although he understands cities may need more leeway when it comes to long-term water planning, there is a lot of abuse of the conditional water rights system. The state water courts should be tougher on denying claims of diligence and stop granting extensions to water rights that haven’t been developed despite having had decades to do so, he said. 

“You’re not supposed to sit on them for 20, 30, 40 years before you develop them,” he said. “It’s the failure of the state water courts to take diligence requirements seriously. They just apparently seem to give out these extensions of water rights without a whole lot of showing that there’s actually any kind of diligent work toward developing the water. I think it’s a huge problem.”

Uncertainty hangs over decades-old proposed reservoirs

One way in which these conditional water rights could present a problem is the uncertainty they create for the state’s other water users, especially those who have put their water to use in the past 60 or so years. 

Andrew Teegarden is a fellow at the Getches-Wilkinson Center for Natural Resources, Energy and the Environment at the University of Colorado School of Law. The University of Denver Water Law Review plans next fall to publish his paper “Uncertain Future: How Conditional Water Rights Have Created Unintended Consequences in Colorado.” When the owners of conditional water rights with older priority dates finally begin diverting water that they have not used for decades, they may cut off junior water users who began using water between the conditional right’s older date and the present day. Teegarden calls this “line-jumping,” and if all these proposed reservoirs were developed, it could upend the entire priority system. [ed. emphasis mine]

The solution, he said, is for Colorado to stop treating conditional rights as property rights. Lawmakers could also reform diligence standards and impose a strict time limit, such as 50 years, for applicants to put their water to beneficial use. Otherwise, these conditional rights should be abandoned.

“Clearly, the history and precedent surrounding conditional rights were well-intentioned on giving users within the system flexibility to implement large-scale projects and the security to hold their place in priority,” the paper reads. “These rights, though, come with unintended consequences and it is vital that reforms be implemented before people begin seeing their water rights curtailed or diminished.”

If these proposed dams are built, they could also have a negative impact on the environment. Western Resource Advocates and several other nonprofit and government organizations within Colorado work to improve riparian habitats and keep water flowing in rivers for the benefit of fish and ecosystems. Many of the groups’ projects try to mitigate the effects of cities and agriculture taking too much water out of rivers. 

John Cyran, senior attorney with WRA’s Healthy Rivers Program, said this 2.6 million acre-feet of proposed reservoirs is a time bomb.

“Given that so many streams are already in stressed positions, it’s a big problem for the environment,” Cyran said. “We’re trying to look at the river as it is now and figure out how we can make it healthier. If a bunch of new claims come on the river, that work will be for nothing.” 

Cyran brings up another potential issue with conditional water rights: They are able to be bought, sold, changed and transferred to another owner, another location or another type of use. In October, the Middle Park Water Conservancy District transferred conditional rights for a 20,000 acre-foot reservoir on Troublesome Creek near Kremmling to a private ranch for just $10. Some worry that this Western Slope water could be sold to the Front Range. And WRA is opposing another instance in the White River basin where an oil and gas company wants to transfer its storage rights to a new location.

“The idea is supposed to be a conditional right saves your place in line,” Cyran said. “There should be restrictions on water users trying to change those rights to some new purpose while retaining their senior priority. If you can’t use it for what you intended, it goes back to the river. You don’t get to use it for something else, and you don’t get to sell it to somebody to use for something else.”

Future water development tensions persist on Colorado River 

But perhaps the biggest issue with 2.6 million acre-feet worth of new water storage may be the effect on, and implications for, the Colorado River basin as a whole. Water managers from each of the seven basin states are in the midst of hammering out a deal that would decide how Lake Powell and Lake Mead are operated and how cuts are shared among the seven states beyond 2026. 

Colorado officials have been rolling out new talking points, which include that the Upper Basin already uses about 30% less water in dry years because the water simply isn’t there, so the Lower Basin should take a corresponding proportionate cut of 30%. 

At a time when water managers are debating how to share cuts in a hotter, drier future and where some water users are already suffering shortages, why is this large scope of water development in western Colorado still planned?

JB Hamby, chair of the Colorado River Board of California and the state’s lead negotiator in Colorado River talks, who also serves on the board of the Imperial Irrigation District, which is the biggest water user on the Colorado River, laughed when Aspen Journalism told him that Colorado has plans to develop 2.6 million acre-feet worth of new reservoirs on the Western Slope. 

“That’s crazy,” he said.

Hamby said building 20th century-style infrastructure to develop more water in the Upper Basin does not make sense. He said all water users in the basin should be working together to find ways to collectively reduce their use. That includes navigating differing interpretations of the Colorado River Compact without involving the U.S. Supreme Court.

“That’s our best step forward, not pretending like it’s 1965, which it is not,” Hamby said.

Hamby was getting at something that is a major sticking point between the Upper and Lower basins: two different interpretations of an aspect of the 1922 Colorado River Compact. 

The agreement assumed there was 16 million acre-feet of available water each year, with 7.5 million acre-feet each allocated to the Upper and Lower basins. The goal was to reserve an equal portion of the river’s flows for the Upper Basin to prevent rapidly growing California from taking all the water. Giving half to the Upper Basin ensured that the states could slowly grow into their full allocation. 

A century later, the Upper Basin still has not done that and currently uses about 4.3 million acre-feet a year. Experts have pointed out that 16 million acre-feet was an overestimate of how much water was available to begin with, and after two decades of being wracked by drought and climate change, that amount of water surely no longer exists in the Colorado River basin system. The foundation of the Colorado River Compact was flawed.

Upper Basin water managers cling not only to what was promised to them 100 years ago but to the belief that as long as they don’t use more than the 7.5 million acre-feet allocated to them, they will not be in violation of the compact. However, some Lower Basin advocates believe that regardless of the Upper Basin’s use, the upstream states could be subject to a compact call if they don’t deliver 7.5 million acre-feet a year. Because river flows have diminished over the past 20-plus years, additional use in the Upper Basin could exacerbate shortages and trigger litigation from the Lower Basin in the form of a compact call, which could force cuts on the Upper Basin. Legal uncertainties about how a compact call could unfold complicates the dynamic and heightens animosity between the two basins.

Amy Ostdiek, chief of the interstate, federal and water information section of the Colorado Water Conservation Board, said an additional 2.6 million acre-feet of reservoir storage won’t increase the risk of a compact call.

“We have the right to the beneficial use of 7.5 million acre-feet a year and in the Upper Basin, Colorado gets 51.75% of the available supply,” she said. “I do not see these projects as putting us in danger of going over that number.”

According to Jason Ullmann, Colorado’s head engineer at the Department of Water Resources, 2.6 million additional acre-feet of water exists in some years and could be developed, especially since most of that would be captured as spring runoff. The way reservoirs typically work is by storing snowmelt in the spring and releasing it as needed later in the year. But any new reservoir would be at the mercy of the particular and variable hydrologic conditions of any given year and may not always fill.

“Typically, storage buckets, the larger ones in particular, they may not accomplish a full fill every year,” Ullmann said. “It may not be a [2.6 million acre-foot] draw on the river every year. It’s just a water right for that amount of storage.”

Hamby said the Upper Basin point of view is one of the past and out of alignment with the hydrology of the river, which has been declining over the past two decades and is expected to continue to decline. 

“The idea of developing new infrastructure to put more water to use does not make sense in this century,” he said. “And while there may be feelings of promises from 1922, this is 2024.”

What if it was all a dream?

One reason these proposed reservoirs don’t seem to worry many water managers is because nobody believes they will ever all be built. Although these projects represent the desires of the Upper Basin, this scale of development may be just a pipe dream.

Eric Kuhn, a Colorado River expert, author and former general manager of the Colorado River District, doubts that many of these reservoirs will be built, but not because the water isn’t there or because of the permitting hurdles, environmental impacts or expense of construction. Rather, Kuhn says there’s no longer a need for many of these storage buckets. 

Some of these conditional rights, especially in the Yampa-White-Green River basin, are associated with oil shale development, which has become less economically feasible in recent years. There are no new large-scale federally subsidized irrigation projects on the horizon. And as more agricultural land is converted to residential developments across the West, water use goes down. 

Cities such as Aurora and Las Vegas have implemented aggressive conservation programs and have proved they can grow without using a lot more water. As the Upper Basin continues to urbanize, it may never grow into its 7.5 million-acre-foot allocation. The only reservoirs that will realistically be built, Kuhn said, will be small (1,000 acre-feet or less) and on a creek where there’s municipal demand. 

“Maybe you need additional storage for streams that don’t have enough storage today, but that’s a tiny, minute amount,” he said. “Conditional water rights are a product of 50, 60, 70, 80 years ago, when they had a purpose. I don’t even see that they have a purpose anymore. They also represent a whole bunch of projects that, if they had been economically feasible, would have been built a long time ago.”

Although many entities continue to hang on to conditional water rights that they are unlikely to develop, some are starting to take a more clear-eyed approach, recognizing that some of these phantom reservoirs are dreams of the past and letting them go. 

The River District has abandoned conditional reservoir rights on the Crystal River and other places; in January, a company with ties to oil shale development abandoned rights for a reservoir on Thompson Creek south of Carbondale; Colorado Springs recently gave up water rights for reservoirs in Summit County; and in October, the town of Breckenridge let go of water rights for two reservoirs on the Swan River but kept rights for a third: Swan River Reservoir No. 4.  

James Phelps, director of public works for the town of Breckenridge, said they didn’t file the diligence claims this time for Swan River Reservoirs Nos. 1 and 2, which had water rights dating to 1981, because the town doesn’t need to develop that much reservoir capacity. Other factors in the town’s decision to not keep the reservoirs alive were the huge financial costs; the fact that housing developments encroached on the reservoir sites; and disturbance to the ecosystem in a place where residents place a high value on the environment. 

“It was determined that if there was a need for the water in the future, whatever that need may be, we wouldn’t need to develop all three of those,” Phelps said. “We know that developing reservoirs is not an easy thing to do.”

Despite Colorado water courts’ tendency to rubber-stamp most diligence applications to keep alive decades-old unused water rights, there is at least one recent example of legal pushback on a reservoir enlargement project. 

In October, a federal judge ruled that Denver Water’s Gross Reservoir expansion violated the Clean Water Act because it didn’t take into consideration the potential for a Colorado River Compact call and the declining hydrology of the basin. Although it’s unclear if this ruling would set a precedent for any other dam and reservoir project in Colorado, it signals a growing understanding of the risks that new water development could pose to the entire Colorado River system.

“The Colorado River Compact rests on a politically unpalatable truth — the Compact promised the basin states water that simply does not exist,” a footnote in the ruling reads. “The Court emphasizes this context for good reason: The cracked foundation of the Colorado River’s management system all but demands skepticism over any proposal that will affect the hydrology of the Colorado River basin.”

This story was produced by Aspen Journalism, in partnership with The Water Desk at the University of Colorado Center for Environmental Journalism.