Re: Water produced in combustion
Almost all states in the west use the "Prior Appropriations" method of water rights allocation, and have been doing so for 100+ years. Prior appropriations basically means that water rights (from say a stream or river) are first-come-first-serve. So if you acquired rights for 10 acre-feet of water/year before anyone else, you are guaranteed that 10 acre-feet - even if it means someone "downstream" of you doesn't get any water at all. While most eastern states tend to use "Riparian Water Rights", which basically means anyone with water on their property is entitled to use it, as long as they do so reasonably.
Like I said, these "crazy ideas" are not new. Most of these laws have been on the books for 100+ years. Some states - including Colorado (which you claim has reasonable rules) even has it baked into their state constitution that they own any and all water that hasn't been appropriated. This means the state of Colorado owns all of your rain water runoff.
There was an issue a few years ago in Oregon with a man who built huge ponds and dams that had over 40 acre-feet of water - which is over 13 million gallons. He was basically capturing all the runoff from his 170 acres of land, under the claim that it was "just rain water". The problem was that runoff would have went into a local creek, which feed a nearby river - which had appropriated water rights. That means he was essentially indirectly stealing water from someone who paid for the ability to use that water.
I just want to reiterate one more time - these laws are not new. They've been in existence for hundreds of years in the United States. However, these laws rarely get enforced until we start running into water shortages. Which is what is happening now in the west. When we have excess water, the laws don't need to be enforced, and people tend to forget these laws even existed in the first place.
Managing and regulating water is very tricky and difficult, and there is no set of rules that will keep everyone satisfied.