Opinion ID: 4539739
Heading Depth: 3
Heading Rank: 2

Heading: Storage as Diversion

Text: ¶53 Jacobs argues that section 37-92-503(6)(a)(II), which authorizes the imposition of civil penalties in certain circumstances, only applies to illegal diversions of surface water, as opposed to the illegal storage of such water, and therefore the water court improperly assessed civil penalties against him. Specifically, his argument is as follows: Section 37-92-503(6)(a)(II) only authorizes civil penalties against persons who divert water contrary to a valid order of the State Engineer. Subsections 37-92-502(2) and -502(3), however, distinguish between orders related to diversions (-502(2)) and orders related to releases of stored water (-502(3)). Accordingly, the penalties provision in section 37-92-503(6)(a)(II), which refers to one who diverts water, applies only to violations of orders issued under subsection -502(2) and not to violations of orders 26 issued under subsection -502(3), as the 2016 Order here was. We are not persuaded by this argument. ¶54 Section 37-92-503(6)(a)(II) provides, “Any person who diverts surface water contrary to a valid order of the state engineer or a division engineer issued pursuant to section 37-92-502 shall forfeit and pay a sum not to exceed five hundred dollars for each day such violation continues.” (Emphasis added.) This provision, on its face, applies to any diversion of surface water contrary to a valid order of the State or Division Engineer issued pursuant to section 37-92-502. ¶55 “Diversion” or “divert” is defined, in pertinent part, as “removing water from its natural course or location, or controlling water in its natural course or location, by means of a control structure . . . or other structure or device.” § 37-92-103(7). “[T]o effect a diversion under the statute, water either must be removed or it must be controlled.” City of Thornton ex rel. Utils. Bd. v. City of Fort Collins, 830 P.2d 915, 930 (Colo. 1992). Moreover, “[a] dam certainly qualifies as a structure or device.” Id. ¶56 Here, it is undisputed that the 2016 Order issued to Jacobs was issued pursuant to section 37-92-502. Moreover, the evidence in the summary judgment record shows that Jacobs retained and controlled surface water. Specifically, the record shows that the ponds have continuously controlled water in its natural course or location by means of a reservoir and dams, which are structures or 27 devices encompassed within the statutory definition of diversion. See City of Thornton, 830 P.2d at 930. Accordingly, by definition, Jacobs diverted surface water contrary to a valid order of the Division Engineer pursuant to section 37-92-502. Thus, under the plain language of section 37-92-503(6)(a)(II), the imposition of civil penalties was proper. ¶57 To conclude otherwise and to adopt Jacobs’s construction of section 37-92-503(6)(a)(II) would have us draw a distinction between illegal diversions and illegal storage of water that the statute does not make. To the contrary, as noted above, the statute subsumes violations of all orders issued pursuant to section 37-92-502, and that section includes both illegal diversions and illegal storage of surface water. Moreover, distinguishing between the two for purposes of the civil penalties provision would lead to absurd results because under such a construction, no penalties could ever be imposed on a party who stores water illegally, no matter how long the party does so. We, however, must avoid such absurd results. Agilent Techs., Inc., ¶ 16, 441 P.3d at 1016. ¶58 We are likewise unpersuaded by Jacobs’s assertion that, if penalties may properly be assessed here, then only his initial fill constituted a violation of the 2016 Order, and therefore he was only in violation of the Order for one day. Jacobs’s argument simply ignores the fact that for 460 days, he did not prepare and execute a plan for draining the ponds, nor did he provide for legally obtained 28 return flow credits from PFWD or apply to the State Engineer’s office for approval of a substitute water supply plan. Jacobs further ignores the undisputed fact that, continually since 1999, there has been a call for water administered by the Engineers on the Arkansas River and that no “free river” conditions existed in 2014 or later that would have allowed the ponds to fill without depriving vested water rights of water to which they were entitled under decreed priorities. Accordingly, for every day that Jacobs did not release the water as he was ordered to do, he injured such decreed water rights. ¶59 Lastly, we are unpersuaded by Jacobs’s argument that the $92,000 penalty constitutes an excessive penalty in violation of the Colorado and United States Constitutions. ¶60 A penalty is constitutionally excessive if it is grossly disproportionate to the gravity of the underlying offense. Colo. Dep’t of Labor & Emp’t v. Dami Hosp., LLC, 2019 CO 47M, ¶ 29, 442 P.3d 94, 101. In assessing proportionality, a court should consider “whether the gravity of the offense is proportional to the severity of the penalty, considering whether the fine is harsher than fines for comparable offenses in this jurisdiction or than fines for the same offense in other jurisdictions.” Id. at ¶ 38, 442 P.3d at 103. In addition, a court should consider the regulated individual’s or entity’s ability to pay. Id. And “[w]hen a fine is imposed on a per diem basis, with each day constituting an independent violation, the evaluation of 29 whether a fine is excessive must be done with reference to each individual daily fine.” Id. at ¶ 36, 442 P.3d at 103. ¶61 Here, section 37-92-503(6)(a)(II) specifically authorizes the Engineers to levy penalties of up to $500 “for each day such violation continues.” § 37-92-503(6)(a)(II). Thus, we evaluate whether the penalties imposed are excessive on the basis of the individual daily imposition. Dami Hosp., ¶ 36, 442 P.3d at 103. For several reasons, we conclude that the $200 daily penalty that the water court imposed here was not unconstitutionally excessive. ¶62 First, the statutory maximum penalty is $500 per day, and the daily penalty that the water court levied was well below that authorized maximum. § 37-92-503(6)(a)(II). Moreover, the $200 daily penalty appears to be commensurate with penalties levied for comparable conduct in Colorado. For example, section 37-92-503(6)(a)–(c) lists the civil penalties for violations of a variety of orders issued by the State Engineer, and each of those penalties is similarly capped at a maximum of $500 per day. ¶63 Second, the record here shows that the $200 per day penalty was not grossly disproportionate to the gravity of the underlying offense. Dami Hosp., ¶ 29, 442 P.3d at 101. As noted above, there has been a continual call for water on the Arkansas River since 1999. Accordingly, for each day that Jacobs continued storing water in violation of the 2016 Order, he injured decreed water rights. In 30 addition, during part of the time in which Jacobs was illegally storing the water at issue, Colorado was in the midst of a severe drought. Particularly in this context, and given the over-appropriated nature of the stream system, we, like the water court, view Jacobs’s failure to comply with the 2016 Order for as long as he did to constitute a serious violation warranting substantial penalties. For these reasons as well, we believe that the penalties imposed were commensurate with the gravity of Jacobs’s violation. ¶64 Third, Vaughn v. People ex rel. Simpson, 135 P.3d 721 (Colo. 2006), on which Jacobs relies, does not assist him. In Vaughn, 135 P.3d at 722, a well on Vaughn’s property had pumped approximately 6.2 million gallons of water after the division engineer had issued an order requiring Vaughn to discontinue diverting from that well. Division engineers calculated that if the well had been pumping twenty-four hours per day, then it would have taken 7.25 days to divert that amount of water. Id. Based on the foregoing, the water court imposed a penalty of $200 per day for each of these seven days, resulting in total penalties of $1,400, and we upheld those penalties. Id. at 721, 725. ¶65 Notwithstanding Jacobs’s assertions to the contrary, Vaughn did not involve a $1,400 penalty for illegally pumping over a 153-day span. Rather, as noted above, it involved $1,400 in penalties for an approximately seven-day violation. Accordingly, Vaughn does not support Jacobs’s assertion that the penalties here 31 were grossly disproportionate. To the contrary, the $200 per day penalty imposed in Vaughn matches the daily penalty imposed here. The only difference is that Vaughn’s violation occurred over seven days, whereas Jacobs’s violation spanned 460 days. We therefore perceive no conflict between Vaughn and the water court’s order in this case. ¶66 Finally, Jacobs does not dispute his ability to pay the $200 daily penalty. Nor does he argue that the $200 penalty is excessive in comparison to penalties set forth in similar statutes in this jurisdiction or in other jurisdictions. ¶67 Accordingly, we conclude that the water court properly assessed penalties in the amount of $200 per day for the 460 days in which Jacobs was in violation of the 2016 Order, and we further conclude that these penalties were not constitutionally excessive.