Water ‘investment’ difficult to define, may involve property rights – The Fort Morgan Times
Trying to recommend ways to improve Colorado’s anti-water speculation law is hard work, mainly because the state’s constitution, statutes, and legal precedents are already doing a good job.
It doesn’t take much to set off alarms in the Colorado water community, and in 2019 there were purchases of irrigated land by entities not normally associated with the use of the water. water. According to water reporter Allen Best, “large water-rich ranches in the Great Valley on the West Slope by investment banks” have set off all kinds of alarms across the state. Of all the nightmares that keep Colorado’s water interests awake at night, water speculation is among the most frightening.
During the 2020 legislative session, the General Assembly passed Senate Bill 20-048, which ordered the director of the Colorado Department of Natural Resources to convene a task force to recommend ways to strengthen state protections against water speculation.
Joe Frank, Director of the Lower South Platte Water Conservation District, was appointed a member of the 22-member task force, which submitted its final report, titled “Task Force Report to Explore Ways to Strengthen Current anti-speculation water law, ”last month Aug. 13, just two days from the deadline.
Critics immediately denounced the report, saying it was of little value because it made no recommendations to the Legislature. In an interview with Best, Frank said there was still work to be done before he could write new laws.
Speaking last week with the Journal-Advocate, Frank said it would be difficult to find ways to strengthen something that is already strong enough.
“We took it upon ourselves to define two types of water speculation,” Frank said. “There is traditional speculation, which is already fairly well addressed. And then we defined what we call “investment water speculation”, and it’s harder to understand. “
Under the Colorado Water Act, Colorado water is a public resource intended for use for beneficial purposes by public agencies, individuals, and private entities. A water right, which is owned, is created to use part of the public’s water resources, and is subject to the availability of water and under conditions specified by a water tribunal. These specifications – priority date, physical location and quantity that can be used by the water right – are contained in what is called a decree.
Cities have rights to water and the infrastructure to provide those rights, so people buy water from the city even though the water in Colorado is a public resource. Water rights are real property rights and can be sold and traded as long as they continue to be used for beneficial purposes.
Under Colorado’s Basic Water Law – formally known as the Prior Appropriation Doctrine – anyone who has a right to water must have immediate beneficial use of water. It’s easy to show for irrigators, municipalities and some industries.
The Colorado Constitution’s requirement that appropriate water be used for beneficial purposes is seen as built-in protection against water speculation. According to the August 13 report, water scarcity in Colorado has led to the doctrine of prior appropriation and “several policy principles that underpin Colorado’s water law, one of which is maximum use. and anti-speculation ”.
The report cites the 2005 Colorado Supreme Court decision in High Plains A&M, LLC v. Southeastern Water Conservancy District, which pointed out that the state’s water law anti-speculation intent dates back to the early days of Colorado Territory.
“The roots of Colorado’s water law lie in the agrarian and populist efforts of miners and farmers to resist speculative investments that monopolized the water resource to the exclusion of actual users settling in the land and l ‘State,’ the court ruling said. “In this context, Colorado’s adoption of the principle that water belongs to the public,… its constitutional limitations on the maximum rates that individuals or businesses can charge for water (and) the actual limitation of water. beneficial use restricting the amount of water that may be appropriate. of the public’s water resource… all reflect the anti-monopoly, underlying this state’s water law.
If the state’s own Supreme Court has confirmed that water speculation is illegal, even according to Colorado’s founding government document, what is left to legislate?
According to Frank, the only way to prevent “water investment speculation” is to set actions that prove intention, and this raises the specter of another agrarian nightmare; trampling on an owner’s right to sell his property.
“Is it the intention to come and take advantage of the increased value of water?” Frank asked. “It’s about the point of sale and real estate. But can you pass a law that says you can interfere with the market? “
In other words, to prove intention, it would be necessary to examine and exercise some legal control over the sale of land and water rights. In theory, a Manhattan investor could buy several irrigated farms, allow water to be used for crops for a period of time while the dollar value of those stocks rises, and then sell those stocks, for example, to a suburb. of Denver growing and at a pocket the profit.
State Senator Don Coram, who wrote SB 20-048, has publicly stated that he does not want the state to get involved in restricting property rights.
Frank said there might not be an easy way to write anti-speculation legislation, but instead it would take a series of smaller actions.
“The overriding problem we have to solve is supply and demand,” Frank said. “When there is more demand than supply, it drives up the price of water. Conservation and efficiency don’t go far, and no one creates more water. “
You can read the task force report here.