Opinion ID: 1236532
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Heading: The Diligence Standard

Text: Colorado has long required owners or users of conditional water rights to file applications for findings of reasonable diligence at specified times in order to maintain the conditional right. § 37-92-301, 15 C.R.S. (1988 Supp. & 1990); Public Serv. Co. v. Blue River Irrigation Co., 753 P.2d 737, 739 (Colo.1988); Vail Valley Consol. Water Dist. v. City of Aurora, 731 P.2d 665, 668 (Colo.1987); Trans-County Water, Inc. v. Central Colorado Water Conservancy Dist., 727 P.2d 60, 64 (Colo.1986); Colorado River Water Conservation Dist. v. City and County of Denver, 640 P.2d 1139, 1141 (Colo.1982); Colorado River Water Conservation Dist. v. Twin Lakes Reservoir and Canal Co., 171 Colo. 561, 564, 468 P.2d 853, 854-55 (1970). The purpose of a conditional water right is to encourage development of water resources by allowing the applicant to complete financing, engineering, and construction with the certainty that if its development plan succeeds, it will be able to obtain an absolute water right. Public Serv. Co., 753 P.2d at 739 (citing Metropolitan Suburban Water Users Ass'n v. Colorado River Water Conservation Dist., 148 Colo. 173, 194, 365 P.2d 273, 284-85 (1961)). The requirement of filing applications for findings of reasonable diligence thus prevent[s] the accumulation of conditional water rights without diligent efforts to complete the projects to the detriment of those needing and seeking to make immediate beneficial use of the same water. Colorado River Water, 640 P.2d at 1141; see Talco, Ltd. v. Danielson, 769 P.2d 468, 472 (Colo.1989); Public Serv. Co., 753 P.2d at 742; Trans-County, 727 P.2d at 65. In accord with these purposes, this court has emphasized that an applicant seeking to obtain a finding of diligence must prove `an intention to use the water, coupled with concrete action amounting to diligent efforts to finalize the intended appropriation.' Talco, 769 P.2d at 472 (quoting Orchard Mesa Irrigation Dist. v. City and County of Denver, 182 Colo. 59, 65, 511 P.2d 25, 28 (1973)); see Public Serv. Co., 753 P.2d at 742; Vail Valley, 731 P.2d at 670; City and County of Denver v. Colorado River Water Conservation Dist., 696 P.2d 730, 745 (Colo.1985); Colorado River Water, 640 P.2d at 1142 (quoting Orchard Mesa, 182 Colo. at 65, 511 P.2d at 28). At the outset, we have stressed the water court's broad discretion to consider all relevant factors in making diligence determinations. Vail Valley, 731 P.2d at 669-70; Colorado River Water, 640 P.2d at 1142. We have noted that [a] quadrennial diligence proceeding necessarily entails an ad hoc factual determination. Vail Valley, 731 P.2d at 672; see Colorado River Water 640 P.2d at 1142. We have identified factors which may, in a given case, be relevant to a finding of diligence, including: the size and complexity of the project; availability of materials, labor, and equipment; the length of the construction season; the claimant's economic ability; and the economic feasibility of the proposed development. Public Serv. Co., 753 P.2d at 742; Vail Valley; 731 P.2d at 670; Trans-County Water, 727 P.2d at 64; Colorado River Water, 640 P.2d at 1142; Twin Lakes Reservoir, 171 Colo. at 567, 468 P.2d at 856. Prior to 1990, our decisions have also identified integration as a relevant factor in diligence determinations. Talco, 769 P.2d at 472; Vail Valley, 731 P.2d at 670; Trans-County, 727 P.2d at 66; City and County of Denver, 696 P.2d at 749-50; Twin Lakes Reservoir, 171 Colo. at 568, 468 P.2d at 856. We have thus stated that, [w]hile non-project related efforts, standing alone, are insufficient to constitute diligence, work performed on one portion of an integrated project may be considered evidence of diligence as to another portion. Vail Valley, 731 P.2d at 670 (citation omitted); see Trans-County, 727 P.2d at 66 (relying on Twin Lakes Reservoir ); Twin Lakes Reservoir, 171 Colo. at 568, 468 P.2d at 856 (Claimant[s] [are] required to present evidence of work performance on at least a segment or a portion of a complex and integrated system.). In the present case, the water court expressly adopted the parties' stipulation that the 1990 statute provided the standard by which to evaluate diligence in this case. While noting that the judicially identified factors in Trans-County still applied, the water court concluded that the standard adopted by the [1990] statute is less onerous than the standard in Trans County.  The water court further concluded that, given the significant lapse of time since the original decrees issued, it had some obligation under the 1990 statute to find diligence only with respect to those features (including their integrated parts, if any, and alternative sites therefor[], if applicable) which continue to be viable and feasible. The 1990 statute was approved on April 13, 1990. Ch. 269, 1990 Colo.Sess.Laws 1625, 1627. The Conservancy District filed an application for a quadrennial finding of diligence on December 30, 1988. The Conservancy District filed its protest to the referee's decision in the water court on January 16, 1990. Application of the 1990 statutewhich the water court found to create a less onerous diligence standard than that existing under prior lawresults in an impermissible application of a retrospective law. [9] § 2-4-202, 1B C.R.S. (1980) (stating that statutes are presumed to be prospective in their operation); see Exotic Coins, Inc. v. Beacom, 699 P.2d 930, 945 (Colo.1985) (stating that statutes are presumed to apply prospectively unless something in the statute suggests that it encompasses acts occurring before the statute was drafted); Allchurch v. Project Unicorn, Ltd., 33 Colo.App. 173, 516 P.2d 441 (1973) (statutes are presumed to apply prospectively unless a contrary legislative intent is clearly manifested). The General Assembly stated that the 1990 statute was an act concerning a change in the requirement of a finding of reasonable diligence for conditional water rights to periodic intervals not exceeding six years, and, in connection therewith, setting standards for such a finding. Ch. 269, 1990 Colo.Sess.Laws 1625. The General Assembly did not clearly express any intention that the new standards apply to diligence determinations initiated prior to the 1990 statute's effective date. We thus conclude that the water court erred in applying the 1990 statute to its diligence determination in the present case. We remand the case to the water court for findings of fact, conclusions of law, and judgment based on the record, with instructions to apply the diligence standard set forth in the 1988 statute and appropriate case law. If the water court deems necessary, it may order further hearings prior to entry of judgment.