City of Thornton ex rel. Utilities Board v. City of Fort Collins

delivered the Opinion of the Court.

The City of Thornton (Thornton) appeals from a judgment of the water court for Water Division 1 (water court) awarding the City of Fort Collins (Fort Collins) a conditional surface water right with a certain appropriation date. Fort Collins cross-appeals from the judgment of the water court denying Fort Collins another conditional surface water right. As to the appeal, we affirm in part and reverse in part and remand. As to the cross-appeal, we reverse and remand.

I

First, we review the applications by Fort Collins for conditional water rights and Thornton’s objections. This case began when Fort Collins sought approval of conditional surface water rights along a segment of the Cache La Poudre River (Pou-dre River) which runs roughly from the northwest boundary diagonally toward the southeast boundary of Fort Collins. Fort Collins refers to that segment of the Pou-dre River as the Poudre River Recreation Corridor (Corridor). The Corridor is comprised of several parks, open space areas and trail systems. With the development of the Corridor, Fort Collins has enhanced the recreational opportunities and preserved the piscatory and wildlife resources of the Poudre River for the enjoyment of the residents of and visitors to Fort Collins.

The application for the Poudre River water rights was filed with the water court on December 31, 1986, pursuant to the Water Right Determination and Administration Act (Act), §§ 37-92-101, et seq., 15 C.R.S. (1990). The 1986 application claimed 55 cubic feet per second (55 cfs) of Poudre River water for the Corridor “for municipal purposes, including recreational, piscatorial, fishery, wildlife, and other beneficial uses.” The appropriation was claimed as of February 18, 1986, the date when the Fort Collins city council formally adopted the Poudre River Trust Land Use Policy Plan (Plan). The Plan outlines the various projects to be developed in the downtown section of the Corridor.

The Corridor was the named “diversionary structure” in the 1986 application. In addition to identifying the structure, the appropriation date and the amount and uses of water, the 1986 application also stated in relevant part:

No diversions from the [Poudre] river are anticipated [¶ 3.A.].

# * * * Sc *

Construction and planning is underway for a system of trails along the river, development of a fishery through [the Corridor], preservation and enhancement of wildlife habitat and aquatic life, as well as other public purposes. The existence of in-stream flows of water up to the amounts specified above, undiminished in both quantity and quality, are necessary to fulfill the purposes of the Recreation Corridor [H 7.B.(i) ].

******

*920[T]he uses will take place in the streambed ... [¶ 8.B.],

******

Since no diversions from the Poudre River are necessary to accomplish the actual and intended beneficial uses described above, Fort Collins specifically requests that the Court confirm these ... conditional water rights as in-stream rights, without the necessity for making any diversion from the river channel; [and] that the Court find that all of the uses described above are beneficial uses of water_ Additionally, Fort Collins requests a determination that all of these conditional rights are part of an integrated plan by the City to provide for ... recreational ... uses within the [Corridor], and that work on any part of this plan constitutes work on the entire plan for the purpose of subsequent diligence proceedings [H 9.].

A statement of opposition to this 1986 application was filed by Thornton on February 24, 1987. Other parties, including the Colorado Water Conservation Board (CWCB) and the state engineer, also filed objections. The objections were largely based on the claim or impression that Fort Collins was applying for minimum stream flow rights contrary to law.

After negotiations with the CWCB and the state engineer, Fort Collins agreed to amend its 1986 application. The settlement with the CWCB included certain stipulations and a proposed decree. The amendments were filed with the water court on June 1, 1988. According to the introductory remarks to these 1988 amendments, the amendments were generally “intended to narrow the scope of and to clarify” the 1986 application and were “consistent with and intended to relate back to the filing” of the 1986 application.

In particular, the 1988 amendments deleted the Corridor as the named diversionary structure, substituting therefor two specific diversionary structures within the Corridor, namely, the Fort Collins Nature Center Diversion Dam (Nature Dam) and the Fort Collins Power Plant Diversion Dam (Power Dam). The Nature Dam is a relatively new structure designed and built to divert the Poudre River back into its “historic” channel and away from a channel cut after heavy rains and flooding in 1983-84. Along the historic channel, Colorado State University (CSU) owns and maintains property slated for development as the Northern Colorado Nature Center. The Nature Center offers an interpretive trail system and picnic grounds for day use. Future plans include an arboretum and the relocation of the CSU raptor rehabilitation program to the Nature Center. Fort Collins and CSU cooperate with regard to the Nature Center and the continued development of the historic channel. Construction of the Nature Dam began after 1986 but was completed before trial to the water court. The Power Dam is an older structure on the Poudre River owned and maintained by Fort Collins. The Power Dam is so named because of its proximity to a retired municipal power plant which has received local historical designation. The old plant and the Power Dam are in the midst of numerous parks, a visual arts center and a community center, all integral to the Corridor. Other, valid appropriations of Poudre River water not at issue in this case are effected by Fort Collins at the Power Dam. Recently, Fort Collins renovated the Power Dam by strengthening the structure itself and by adding a boat chute and a fish ladder designed for recreational use and piscatorial preservation respectively-

The relevant provisions of the 1988 amendments are the following:

The legal description of the stream segment designated [in the 1986 application as the Corridor] has been narrowed to two individual points of diversion, ... [i.e., the Nature Dam and the Power Dam] [112.].

******

Fort Collins has formulated the intent and taken overt action to create the ... Corridor within which Fort Collins will construct diversion structures and use water within the Cache La Poudre River for municipal purposes, including recreational, piscatorial, fishery, wildlife, and *921other beneficial uses. Construction and planning is underway for a system of trails along the river, diversion structures within the river, development of a fishery, preservation and enhancement of wildlife habitat and aquatic life, as well as other public purposes [11 5.A.],

* * * * * *

Fort Collins has already initiated construction of the [Power Dam,] ... which includes a boat chute for recreational use, and a fish ladder for piscatorial purposes. This diversion structure will be used to control and regulate the flow of the Poudre River to implement the intended beneficial uses of water. Additionally, Fort Collins is designing and plans to construct the [Nature Dam]. It will be a dam across the Poudre River which will divert water from the current river channel (carved during the 1983 and 1984 run-offs) back into the historic river channel adjacent to the dam.... This diversion structure will control and regulate the flow of the Poudre River to implement the intended beneficial uses of water [11 5.B.].

[The 1986] Application is amended ... by withdrawing the reference to “in-stream rights,” since the definition of these rights by stream segments has been narrowed to two individual points of diversion. ... At all times since the date of appropriation ... [the] purpose was to divert, as defined by statute, within the river's natural course or location, or otherwise capture, possess and control water for the described beneficial uses [¶ 7].

The 1988 amendments claimed 55 cfs of Poudre River water for the Nature Dam and 55 cfs for the Power Dam, both with appropriation dates of February 18, 1986, the same appropriation date for the 55 cfs of water for the Corridor in the 1986 application.

Due to the changes made by the 1988 amendments, most of the statements of opposition to the 1986 application were withdrawn. Thornton, however, along with the Northern Colorado Water Conservancy District (NCWCD), timely filed supplemental statements of opposition, objecting to the 1988 amendments. In its supplemental statement of opposition, Thornton claimed that its water rights might be injured by granting the application. Thornton asserted that before the water court could decree a conditional water right, Fort Collins must prove that the waters sought to be appropriated can and will be diverted, stored, or otherwise captured, possessed, and controlled, and are not a thinly disguised minimum stream flow. Thornton further asserted that Fort Collins must prove that those waters will be applied to beneficial uses, that it had a fixed intent to divert and beneficially use those waters on February 18, 1986, and that it took overt acts sufficient to provide notice of that intent. Finally, Thornton asserted that Fort Collins must prove that the water rights sought in the 1988 amendments can be reconciled with the water rights sought in the 1986 application. That unappropriated Poudre River water is available is not disputed.

Although the NCWCD was a party below, Thornton and Fort Collins were the only parties which participated at trial to the water court in August, 1990. Here, the NCWCD urges affirmance of the water court on both the appeal and the cross-appeal. In its judgment and decree, the water court determined that the 1988 amendments related back to the 1986 application. The water court also found that Fort Collins had provided notice of its intent conditionally to appropriate Poudre River water and that this intent was shown by overt acts, particularly by the formal adoption of the Plan by the Fort Collins city council. The water court found that the water appropriation at the Nature Dam was a diversion and not a minimum stream flow and decreed Fort Collins a conditional Poudre River water right of 55 cfs with an appropriation date of February 18, 1986. However, the water court found that the water appropriation at the Power Dam was not a diversion, but a minimum stream flow, and thus did not decree a conditional Poudre River water right for the Power Dam.

Thornton appeals the water court’s award of a conditional water right to Fort *922Collins for the Nature Dam, and Fort Collins cross-appeals the water court’s denial of a decree for its claimed conditional water right for the Power Dam.

II

In its appeal, Thornton makes three basic arguments: first, that the 1988 amendments cannot relate back to the 1986 application; second, that the evidence presented by Fort Collins does not support an appropriation date of February 18, 1986; and third, that the Nature Dam is not a diversion within the meaning of the law. For these reasons, according to Thornton, the water court erred in awarding Fort Collins a conditional Poudre River water right for the Nature Dam with an appropriation date of February 18, 1986. We take each of Thornton’s arguments in turn.

A

In support of its argument that the 1988 amendments cannot relate back to the 1986 application, Thornton offers two grounds. First, Thornton asserts that the 1988 amendments substantially differ from the 1986 application because the 1986 application sought a minimum stream flow with no diversions while the 1988 amendments sought the converse, namely, two precise diversions with no minimum stream flow. Because of this difference, Thornton adds, no reasonably prudent person can be charged with notice that the water rights claimed in the 1986 application were or could ever be the water rights claimed in the 1988 amendments. Second, Thornton asserts that the 1986 application was patently unlawful because it was an application for a minimum stream flow, contrary to section 37-92-102(3), 15 C.R.S. (1990). In effect, Thornton argues that an amendment cannot relate back to an unlawful application.

For its part, the water court, in deciding that the amendments related back to the original application, did note that the 1988 amendments differed from the 1986 application in that the 1986 application stated that there would be no diversions while the 1988 amendments stated that in fact there would be two discrete diversions. Nonetheless, the water court compared the amendments with the original application and found that the applicant was the same, that the source, amount and uses of the water were the same, and that the Nature and Power Dams were structures within the confines of the Corridor. The water court concluded that the 1988 amendments did not expand, but actually narrowed, the 1986 application and that therefore the amendments related back to the original application.

In United States v. Bell, 724 P.2d 631 (Colo.1986), we held that the issue of relation back in water adjudications is governed by the requirements of C.R.C.P. 15(c) so long as those requirements are not inconsistent with procedures provided in the Act. 724 P.2d at 635-636. The requirements of C.R.C.P. 15(c) are essentially notice requirements. Transposing the requirements to a water dispute under the Act, for an amendment to relate back to the date of an original water application, the claim(s) in the amendment must arise “out of the conduct, transaction, or occurrence set forth in the original” application. See C.R.C.P. 15(c). Because notice is the essential requisite for a relation back, we hold that since the source, amount and uses of Poudre River water claimed by the 1988 amendments were the same as in the original application, the 1988 water claims are claims arising out of the conduct, transaction or occurrence set forth in the 1986 application.

In Bell, the dispositive factor was the source of the water claimed. We denied a relation back in that case because the water source designated in the amendment was different from the water source designated in the original application. 724 P.2d at 639. Because the source of the claimed water differed, no notice was provided by the original application to parties with interests in the water from the new source designated in the amendment. See Park Center Water Dist. v. United States, 781 P.2d 90, 97-98 (Colo.1989). Here, in contrast, there is no significant disparity *923between the 1986 application and the 1988 amendments as to the named source of the water. The water source named and legally described in the 1986 application was that segment of the Poudre River known as the Corridor. The water source named and legally described in the 1988 amendments was the Poudre River at specific points within the Corridor. Thus, the effect of naming the Corridor as the source of the water claimed in the 1986 application was not only to place those parties with interests or potential interests in that segment of the Poudre on notice but also to place those parties with interests or potential interests in specific points within that segment of the Poudre on notice. That the latter were placed on notice is indicated by the fact that no new parties filed statements of opposition to the 1988 amendments. All interested parties were alerted by the 1986 application, and the fact that the notice was perhaps overinclusive is not a defect.

Thus, Thornton’s argument, that the conceptual difference between a minimum stream flow with no diversions and two discrete diversions with no minimum stream flow precludes a relation back, is not persuasive. Even assuming that a minimum stream flow is of an entirely different legal character than a diversion, it is possible nonetheless that one can be put on notice of another’s intent to appropriate a definite amount of water from a sufficiently definite source even when the claimed water right is artlessly or even impermissi-bly characterized as a minimum stream flow rather than a diversion. Cf. Board of County Comm’rs v. Collard, 827 P.2d 546, 552 (Colo.1992) (when published resume notice suggests that the “ ‘applicants were seeking to appropriate substantial flows of various segments of the named streams, [such] fact alone would raise a red flag (inquiry notice) to any person interested in water in the subject streams’ ”); Closed Basin Landowners Ass’n v. Rio Grande, 734 P.2d 627, 633 (Colo.1987) (“The concept of the Closed Basin Project was not the appropriation of water from many discrete points, but a diversion of water from the entire area. The content of the published resume gave reasonable notice that the points of the proposed diversion would consist of the entire area....”); City and County of Denver v. Colorado River Water Conservation District, 696 P.2d 730, 751 (Colo.1985) (“an absence of a precise location [of points of diversion] does not automatically preclude a conditional decree. A would-be appropriator must give some notice to others of the claim upon the water from a particular source to establish a conditional water right; locating the diversion points with absolute specificity is not required.”). Viewed as a reasonably prudent party, Thornton “ ‘ought to have been able to anticipate or should have expected that the character of the original pleaded claim might be altered or that other aspects of the conduct, transaction, or occurrence set forth in the original pleading might be called into question.’ ” Bell, 724 P.2d at 638 (quoting 6 Wright & Miller, Federal Practice and Procedure: Civil § 1497 at 498-99 (1971)).1

We conclude that Thornton was on notice, as of at least December 31, 1986, that Fort Collins intended to appropriate 55 cfs of Poudre River water from within the established limits of the Corridor for municipal, recreational and piscatory purposes. We thus reject Thornton’s second ground in support of its argument that the 1988 amendments cannot be found to relate back to the 1986 application, namely, that the 1986 application was of dubious legality. An allegation that a claim for a conditional water right is illegal because it claims a minimum stream flow speaks to the issue of whether the right claimed should be granted at all, not to the sufficiency of notice upon which depends the issue of relation back. See Part II C. We hold that the water court properly found that the 1988 amendments relate back to the 1986 application.

*924B

Thornton also disputes the appropriation date of February 18, 1986, decreed by the water court for the conditional water right at the Nature Dam. The water court found that the adoption of the Plan by the city council of Fort Collins at a public meeting on February 18, 1986, was an act sufficiently overt to place all interested parties on notice that Fort Collins intended to appropriate the Poudre River water claimed by the 1986 application. The water court ruled that the Plan’s adoption satisfied both prongs of the so-called “first step” test for an appropriation of a conditional water right. The water court also found that the field trips by Fort Collins staff to the proposed sites for the Nature Center and power plant dams in February of 1986; the publication of notice of Poudre River water rights claims in a Fort Collins newspaper on December 31, 1986, and the signs posted at certain locations along the corridor on December 31, 1986, satisfied the overt acts prong of the first step test.

Thornton argues that neither the adoption of the Plan by the Fort Collins city council on February 18, 1986, nor the staff field trip in February, nor the posting of signs along the Corridor in December of 1986, nor the notices published in the local newspaper in December of 1986, whether taken singly or cumulatively, could constitute evidence sufficient to support an appropriation date of February 18, 1986. According to Thornton, these acts did not manifest a fixed intent to appropriate water at the Nature Dam as of February 18, 1986, nor did they constitute acts sufficiently overt to qualify as the first step taken toward the appropriation of water at the Nature Dam on February 18, 1986. Rather, the earliest possible appropriation date, according to Thornton, is June 1, 1988, the date on which the 1988 amendments were filed with the water court.2

1. The First Step Test.

We review the principles governing the adjudication of a conditional water right. In particular, we review the principles of the “first step” test and some of the sequential and evidentiary problems encountered in applying the test. The sequential problems are generated by the division of the first step into an intent prong and an overt act(s) prong. See Lionelle v. Southeastern Colorado Conservancy Dist., 676 P.2d 1162, 1168 (Colo.1984). Such problems are further complicated by the requirement that the overt act or acts must perform at least three functions. See Bar 70 Enterprises, Inc. v. Tosco Corp., 703 P.2d 1297, 1307 (Colo.1985). Evidentiary problems arise over whether a relevant act can be deemed to have performed one or more of the required functions.

A conditional water right is defined by the Act as “a right to perfect a water right with a certain priority upon the completion with reasonable diligence of the appropriation upon which such water right is to be based.” § 37-92-103(6), 15 C.R.S. (1990). A conditional water right “encourage[s] 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 Service Co. v. Blue River Irrigation Co., 753 P.2d 737, 739 (Colo.1988). We have held that “[cjondi-tional water rights decrees are designed to establish that the ‘first step’ toward an appropriation of a certain amount of water has been taken and to recognize the relation back of the ultimate appropriation to the date of that first step." City of Aspen v. Colo. River Water Conservation Dist., 696 P.2d 758, 761 (Colo.1985). See § 37-92-305(1), 15 C.R.S. (1990).3 To establish the date of the appropriation, the applicant *925must show the “concurrence of the intent to appropriate water for application to beneficial use with an overt manifestation of that intent through physical acts sufficient to constitute notice to third parties.” City of Aspen, 696 P.2d at 761.4 The concurrence of intent and overt acts qualifies as the first step toward an appropriation of water, and the date on which the first step is taken determines the date of the appropriation.

The division of the first step into an intent prong and an overt acts prong has generated disputes over whether there is a necessary sequence of intent formation followed by overt acts. In Bar 70, we held that “[although the formation of the intent to appropriate water will generally precede the performance of the overt acts, the ‘first step’ in some cases may be completed even though the overt acts occur before the formation of the requisite intent to appropriate.” 703 P.2d at 1307 (citing Harvey Land & Cattle Co. v. Southeastern Colorado Water Conservancy Dist., 631 P.2d 1111 (Colo.1981); Twin Lakes Reservoir & Canal Co. v. City of Aspen, 192 Colo. 209, 557 P.2d 825 (1976)). This formulation requires some clarification.

In Bar 70, we held that no matter the sequence, the relevant act(s) “must be of such character as to perform three func-tions_” 703 P.2d at 1307 (citing City of Aspen, 696 P.2d at 762-63). The three required functions are: “(1) to manifest the necessary intent to appropriate water to beneficial use; (2) to demonstrate the taking of a substantial step toward the application of water to beneficial use; and (3) to constitute notice to interested parties of the nature and extent of the proposed demand upon the water supply.” Bar 70, 703 P.2d at 1307. A relevant act need not perform all three functions, as long as all three functions are performed by some relevant act or acts. An act which performs one or more of these functions is thereby an overt act for purposes of the first step test. Obviously, if a relevant act is deemed to have performed the first function of manifesting the necessary intent, then the necessary intent has been formed.

Thus, if the sequence of elements in a particular case is such that a relevant act precedes the formation of the necessary intent, then that act cannot be deemed to have performed the first required function of manifesting the necessary intent. The act, therefore, which is deemed to have manifested the necessary intent is the one act which cannot precede the formation of the necessary intent. However, an act preceding both the formation of the necessary intent and the act manifesting that intent may be relevant because that act may be deemed to have performed the second and/or the third required functions. In City and County of Denver, we held that “formation of the necessary intent to appropriate may succeed the performance of those overt acts that serve the purposes of demonstrating that a substantial step has been taken toward application of water to beneficial use and of putting others on notice of the prospective demand upon the water supply.” 696 P.2d at 748. Conversely, overt acts performing those functions may precede the formation of intent.5 Even so, the first step can never be completed before the formation of the necessary intent, and the appropriation date of a conditional water right cannot be set earlier than the formation of the requisite intent and the act which manifests that intent.

Turning to evidentiary concerns, the problem may arise as to what relevant act can be deemed to have performed the function of manifesting the necessary intent. *926In Harvey Land & Cattle, 631 P.2d at 1113, and in Twin Lakes, 557 P.2d at 828, we held that the filing of an application for a conditional water right itself may be evidence that the necessary intent to appropriate water has been formed. That filing an application for a conditional water right may constitute such evidence means that the filing also was the relevant act which performed the first required function of manifesting the necessary intent. See City and County of Denver, 696 P.2d at 748 n. 14.

Given that filing an application for a conditional water right may be deemed to have performed the first function, we proceed to consider whether a filing may be deemed to have performed the second and third required functions if other relevant preceding acts are lacking or fail to qualify as overt under the first step test. While filing an application for a conditional water right certainly may be deemed to have performed the third required function of providing notice, see Collard, at 552, it is doubtful that a filing can be deemed in and of itself to have performed the second required function (ie., taking a substantial step to put the water to beneficial use). Other overt acts normally would be required. Under section 37-92-305(9)(b), 15 C.R.S. (1990), an applicant for a conditional water right must establish that water can be and will be “diverted, stored, or otherwise captured, possessed, and controlled and will be beneficially used.” Establishing that waters can be diverted or controlled would entail some showing that certain measures toward the application of waters to beneficial use either have been taken before the application was filed or at least before trial. See Southeastern Colorado Water Conservancy Dist. v. City of Florence, 688 P.2d 715, 718 (Colo.1984) (§ 37-92-305(9)(b) “requires proof that water will be diverted and that the project will be completed with diligence before issuance of a decree for a conditional right”). The relevant measures taken and offered as evidence to make the required proof under section 37-92-305(9)(b) also may be relevant for purposes of showing that the second function under the first step test thereby has been performed.

The relevant measures need not be physical acts in the conventional sense of the term. Because the statute is cast in terms of potentiality, that is, requiring proof that waters can and will be beneficially diverted, possessed or controlled, the relevant measures taken can be either physical acts, as conventionally understood, and/or formal acts. Formal acts include planning which is focused on the appropriation of water, studies undertaken as to whether a water diversion is feasible, specific expenditures of human and financial capital in this planning process, applying for various water permits, and other related legal or quasi-legal filings apart from the conditional water rights application itself.

We acknowledge that such formal acts hardly seem to qualify as “open and notorious physical demonstration[s]” of an intent to appropriate water to beneficial use. Fruitland Irrigation Co. v. Kruemling, 62 Colo. 160, 165, 162 P. 161, 163 (1916). The traditional requirement that the overt act(s) be a physical demonstration, however, may no longer fully exhaust the more modern functional approach in which the critical inquiry is whether the relevant act or acts were sufficient to have performed one or more of the three required functions of the first step. See City of Aspen, 696 P.2d at 764.6 Even in Fruitland, we rec*927ognized that the first step’s primary function is to provide notice to interested parties. 62 Colo, at 165, 162 P. at 163.

In applying this function-based test, we hold that formal acts may qualify as overt acts under the first step test so long as such formal acts perform one or more of the required functions. When a municipality or other public entity is the would-be appropriator, see § 37-92-103(8), 15 C.R.S. (1990), relevant formal acts also may include resolutions passed or other official decisions made, again so long as such formal acts are deemed to have performed one or more of the required functions. Cf. Public Service Co. of Colorado v. Blue River Irrigation Co., 829 P.2d 1276, 1278-1279 (Colo.1992) (the following formal acts were evidence of due diligence: meetings with government regulatory bodies, permit applications from regulatory bodies, design and engineering studies, and financial expenditures for related administrative and legal fees).

To summarize, the division of the first step into an intent prong and an overt act(s) prong and the required concurrence of the two means that the first step may begin with either the formation of intent or an act which performs one or more of the three required functions. The first step cannot be said to have been taken or completed, however, until the intent has been formed and all three functions have been performed by one or more overt acts, either physical or formal. Thus, the formation of intent and the required overt act or acts may constitute a series of discrete events over time. However, the appropriation date cannot be set before the latest date in that series, which is the date on which it can be said that the first step has been taken to appropriate water.

To conclude the framework for our analysis, we note that whether the relevant act or acts were sufficiently overt is a “mixed question of law and fact, the resolution of which must be made by the court through the application of a legal standard to the particular facts of the case.” Bar 70, 703 P.2d at 1306. That legal standard is of course the performance of one or more of the functions set forth above, recognizing that formal acts may qualify. However, even with the foregoing framework, the “determination whether the requisite first step has been taken [still] must be made on an ad hoc basis, taking into account the particular facts in each ease.” City of Aspen, 696 P.2d at 761. Finally, as always, the applicant has the burden of proving that a relevant act(s) has performed all of the required three functions and that the first step thereby has been completed on a particular date. Bar 70, 703 P.2d at 1306.

2. Applying the First Step Test.

With the foregoing analysis in mind, we turn to Thornton’s argument that the appropriation date cannot be February 18, 1986, the date decreed by the water court and the date on which Fort Collins adopted the Plan. Thornton argues that filing the amendments on June 1, 1988 “was the first time that Fort Collins demonstrated any kind of intent to divert and appropriate a water right at the Nature Center Diversion Dam by overt acts sufficient to put interested persons on notice of its intended appropriation.” Opening Brief for the Appellant at 22 n. 15. Thornton’s argument here is predicated on the view that the 1986 application manifested an intent to appropriate a minimum stream flow while the 1988 amendments manifested an intent to divert water at the Nature Dam.

We have already held that Thornton was on notice of the intent by Fort Collins to appropriate 55 cfs of Poudre River water from some point or points within the Corridor at least as of December 31, 1986, the date on which the original application was filed.7 The first and third *928required functions were thus performed at least as of December 31, 1986. The issues now are whether the first and third functions were performed by a relevant act earlier than December 31, 1986, and when exactly was the second required function performed by a relevant act. The earliest date on which it can be said that the three functions were performed by relevant acts determines the appropriation date.

To properly apply the first step test to these issues we begin with the appropriation date awarded by the water court and inquire whether the relevant act which was the basis of the appropriation date could have been deemed to have performed all three required functions. The relevant act was the formal adoption of the Plan by the Fort Collins city council on February 18, 1986. If adoption of the Plan performed none of the required functions, then it cannot be the basis for the appropriation date. The inquiry then would proceed to other relevant acts, possibly done before but most likely after February 18, 1986, to determine the earliest date on which it can be said that all three functions of the overt act(s) prong of the first step have been performed.

Reviewing the evidence, we find that nothing in the Plan as adopted by Fort Collins could have placed Thornton or anyone else on notice that Fort Collins intended to appropriate water from the Poudre River pursuant to the Act. See § 37-92-103(3)(a), 15 C.R.S. (1990). Nothing in the Plan indicates that a legal appropriation of water is required to implement the Plan. If anything, the testimonial evidence shows that an appropriation of water was not contemplated. If an appropriation of water were a condition precedent to the success of the Plan, then it surely would have received a modicum of specific discussion. Although the Plan does contemplate the enhancement of the natural environment, many land use plans implicate environmental issues, including water management and water habitat issues, without thereby constituting an intent to appropriate water under the Act. Conceding the otherwise laudable intent of the Plan, for purposes of the first step test it must fail as an act sufficiently overt as to have put interested parties on notice that a legal appropriation of Poudre River water was intended.8 Thus, adoption of the Plan cannot be deemed to have performed either the first or the third required functions under the first step test. For the same reasons, the formal adoption of the Plan cannot be said to have performed the second required function of demonstrating that a substantial measure has been taken to apply water to beneficial use. Thus, we hold that Fort Collins did not take the first step toward appropriating the Poudre River water on February 18, 1986, the date on which the Plan was adopted.

The water court cited a field trip by Fort Collins staff members at which photographs of what eventually would be the site of the Nature Dam were taken as confirming evidence of the formation of Fort Collins’s intent to appropriate water as of February 18,1986. That field trip did occur in February of 1986, but no more specific date is found in the record. Even if we were to assign the 18th as the date of the February 1986 field trip, such an act could not be deemed to have manifested an intent to appropriate water or to have performed any other required function. See Bar 70, 703 P.2d at 1307-08 (a field trip in the nature of a preliminary reconnaissance neither manifested an intent to appropriate water, nor demonstrated that a substantial measure was taken to apply waters to beneficial use, nor provided notice to interested parties).

The other relevant acts which the water court found to support an appropriation date of February 18, 1986, occurred after *929February 18, 1986, and as such cannot be deemed to establish the appropriation date of February 18, 1986. These post-February 18, 1986, acts were the posting of signs along the Corridor on December 31, 1986, and the publication in a local newspaper, also on December 31, 1986, of a notice to appropriate water. The dates of both acts coincide with the date of the filing of the original application for conditional water rights, an act which we have said performed the functions of manifesting intent and of providing notice to interested parties. It thus appears unlikely that the appropriation date can be set earlier than December 31, 1986. However, we remand this issue for a conclusive determination of the date on which the performance of all three required functions by a relevant act or acts concurred. We note that the record indicates that the decision to file the original application was made “sometime in November of 1986,” and that the basis for the decision may have been “some preliminary work in the river on some structures.” Although we have held that formal acts may satisfy the second required function, work on the river may be evidence of course of a substantial step taken to apply waters to beneficial use for purposes of the second required function under the first step test.9

C

Thornton’s final argument on appeal is that the Nature Dam is not a diversion within the meaning of the law. Thornton argues that because Fort Collins’s claimed diversion at the Nature Dam is nothing more than a minimum stream flow right, the conditional decree cannot issue. Thornton again points to the “in-stream” language employed in the 1986 application and to the fact that this language precipitated objections, negotiations and finally settlement with the CWCB. The settlement resulted in the 1988 amendments. Thornton argues that even with the corrective amendments and even if those amendments were found to relate back Fort Collins was still seeking and therefore was in fact granted an illegal conditional decree for a minimum stream flow rather than for a legal diversion at the Nature Dam.

The water court held that the Nature Dam diverts Poudre River water from a more recent channel back into its historic channel. “[B]ut for the dam,” in the water court’s view, “the river would run in a different course.” Thus, at the Nature Dam water from the Poudre River “is captured, it is controlled, and it is possessed” by Fort Collins, according to the water court. The water court concluded that the Nature Dam is a “diversion” and that the uses of the diverted water were beneficial.

We first review the relevant statutes. Under section 37-92-103(3)(a), 15 C.R.S. (1990), an “ ‘[ajppropriation’ means the application of a specified portion of the waters of the state to a beneficial use pursuant to the procedures prescribed by law....” Section 37-92-305(9)(b), 15 C.R.S. (1990), sets forth in part the criteria for awarding a conditi