The diversion and use of rainwater is subject to the Constitution of the State of Colorado, state statutes, and case law. New Colorado residents should understand that water rights in Colorado are unique compared to other parts of the country. The use of water in this state and other western states is governed by what is known as the prior appropriation doctrine. This system of water allocation controls who uses how much water, the types of uses allowed, and when those waters can be used. A simplified way to explain this system is often referred to as the priority system or "first in time, first in right."
An appropriation is made when an individual physically takes water from a stream or well (when legally available) and puts that water to beneficial use. The first person to appropriate water and apply that water to use has the first right to that water within a particular stream system. This person, after receiving a court decree verifying their priority status, then becomes the senior water right holder and that water right must be satisfied before any other water rights are filled. In Colorado, the State Engineer has the statutory obligation to protect all vested water rights. The process of allocating water to various water users is traditionally referred to as water rights administration, and is the responsibility of the Division of Water Resources.
Of course, the appropriation system is much more complicated than described above. Some priorities on major stream systems in Colorado date back to the 1850's, and most of the stream systems have been over-appropriated, meaning that at some or all times of the year, a call for water even by a senior appropriator is not satisfied. Practically speaking, this means that in most river drainages, a person cannot divert rainwater and put it to a beneficial use without a plan for augmentation that replaces the stream depletions associated with that diversion. In most areas of Colorado, the only sure legal way to use rainwater is to direct roof gutter downspouts to drain to landscape areas you wish to water.
It is recommended that before you develop a rainwater harvesting system you check with the Colorado Division of Water Resources and your local building, zoning, and environmental departments to determine what plumbing requirements, local restrictions, neighborhood covenants, or other regulations or guidelines might apply to your project. Rainwater catchments, distribution systems, and landscape holding areas must be located and used entirely within the property boundaries of the individual or entity building using the system. These systems must be maintained in an acceptable manner and not cause damage or interference to neighboring property. Standards for construction must be consistent with industry standards or as determined by the local administrative authority.