## Facts

- Ranch owners in southwestern Colorado held senior surface and groundwater rights in an area affected by coalbed methane (CBM) development.
- CBM production commonly requires pumping substantial groundwater from coal seams to reduce pressure and release methane gas.
- Operators stored the pumped water in tanks or pits and then disposed of or discharged it under non-water-right regulatory permits.
- Colorado law generally requires permits for groundwater wells outside designated groundwater basins; a “well” includes any structure used for the purpose or with the effect of obtaining groundwater for a beneficial use from an aquifer.
- The State Engineer and a Division Engineer did not require CBM operators to obtain well permits or to secure adjudicated water rights for CBM-related groundwater extraction, treating the water as incidental to oil and gas production.
- The ranchers sought declaratory relief that CBM groundwater extraction is a beneficial use, that CBM production wells are “wells” under groundwater statutes, and that engineers must require well permits and, when pumping causes out-of-priority depletions, augmentation plans.
- The water court granted summary judgment to the ranchers, concluding CBM pumping is a beneficial use and subject to permitting and administration; the engineers appealed.

## Issues

1. Whether extracting groundwater to facilitate CBM production constitutes a “beneficial use” under the Water Right Determination and Administration Act of 1969.
2. Whether CBM production wells fall within the statutory definition of “well” under the Colorado Ground Water Management Act.
3. Whether state water officials must regulate CBM-related groundwater production under prior appropriation, including well permitting and augmentation requirements for out-of-priority depletions.

## Decision

- The Colorado Supreme Court affirmed the water court’s summary judgment.
- The Court held that extracting groundwater to facilitate CBM production is a “beneficial use” because the process uses water to accomplish the purpose of releasing methane gas.
- The Court held that CBM production wells are “wells” because they obtain groundwater from aquifers for a beneficial use.
- The Court rejected the argument that CBM-produced water is merely a nuisance or unwanted byproduct exempt from water-right regulation.
- The Court concluded that CBM groundwater extraction must be administered under Colorado water law, including well permits and augmentation plans or comparable measures when pumping would cause out-of-priority depletions that injure senior rights.

## Legal Principles

- “Beneficial use” includes a purposeful use of water that is reasonable and appropriate to accomplish the lawful objective of the appropriation; the fact that the extracted water may later be discarded does not defeat beneficial use.
- A structure that obtains groundwater from an aquifer for a beneficial use qualifies as a “well” and is subject to groundwater permitting requirements.
- Groundwater pumping associated with industrial activity is subject to prior appropriation administration when it depletes waters affecting other rights, including requirements to prevent or remedy out-of-priority injury.
- Regulation of oil and gas operations does not displace water-rights regulation; the same activity may be governed concurrently by oil-and-gas oversight and water allocation/priority statutes.

## Conclusion

The court required state water officials to treat CBM-related groundwater extraction as a regulated beneficial use and to treat CBM wells as wells under groundwater law, bringing such pumping within Colorado’s permitting and prior-appropriation administration, including augmentation where necessary to protect senior water rights.


Vance v. Wolfe, 205 P.3d 1165 (Colo. 2009)