Water Resources Review Committee (08/19/2009)

Final
STAFF SUMMARY OF MEETING

WATER RESOURCES REVIEW COMMITTEE

Date:	08/19/2009	ATTENDANCE

Time:	02:00 PM to 03:55 PM	Baumgardner	X
		Brophy	E
Place:	Steamboat Springs Sheraton Hotel	Fischer	X
		Gardner C.	E
This Meeting was called to order by		Hodge	X
	Representative Curry	McKinley	X
		Schwartz	X
This Report was prepared by		White	X
	David Beaujon	Curry	X
		Whitehead	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Implementation of 2009 Water Bills Water Efficiency Grant Program Governor's FY 2009-10 Budget Balancing Plan Public Testimony Requests for Draft Bills		Briefing only Briefing only Briefing only Briefing only Two draft bills requested

2:00 PM -- The Meeting was Called to Order

Representative Curry, Vice-Chair, called the meeting to order and welcomed Senator Bruce Whitehead who was recently appointed to replace Senator Jim Isgar on the Water Resources Review Committee. Committee members received copies of the meeting agenda (Attachment A).

2:02 PM -- Implementation of Senate Bill 09-80 and House Bill 09-1129 Concerning Precipitation Harvesting

Mike Sullivan, Deputy State Engineer, explained the bills that passed in 2009 that affect the Division of Water Resources. Senate Bill 09-80 allows the collection of precipitation from roofs of residences that are not connected to a domestic water system for more than three single family dwellings. Mr. Sullivan explained that as a result of this bill, the State Engineer's Office made changes to the exempt well permit form. Individuals who have an existing permitted well or unexpired well permit and intend to use a system of rooftop precipitation capture must complete the form available at www.water.state.co.us/.

HB 09-1129 authorizes a pilot program for the collection of precipitation from rooftops for nonpotable uses. The purpose of the program is to determine how much precipitation returns to the natural stream system and develop a baseline set of data and methods to measure local precipitation patterns, native plant consumption, and ground water flow information. The program will also involve evaluating precipitation harvesting designs and determine how to prevent injury to water rights. Mr. Sullivan explained that the Colorado Water Conservation Board (CWCB) and the Division of Water Resources are developing guidelines to evaluate pilot project applications and are developing criteria to determine how to assess impacts to stream systems. He explained that after two years, program participants will be required to obtain water court approved augmentation plan.

2:08 PM

Veva Deheza, CWCB Section Chief, responded to questions about the application process for the pilot project. She explained that the program is paid for by application fees. She also explained that the CWCB has formed a stakeholder group to consider draft guidelines, which are estimated to be issued in September. She indicated that final guidelines will be approved by the Colorado Water Conservation Board in November and that the first application will be accepted by January 2010.

2:10 PM -- Implementation of House Bill 09-1303 Concerning Administration of Mineral Development Water Wells

Mike Sullivan discussed a Supreme Court decision that upheld a water court decision that water produced from coalbed methane wells is a beneficial use of water and therefore subject to regulation by the state (Vance v. Simpson). House Bill 09-1303 authorizes the Division of Water Resources to promulgate rules regarding the withdrawal of nontributary ground water related to the mining of minerals (e.g. oil and gas wells). The bill delays when current prohibitions on the waste of water or the destruction of water resources apply to oil and gas wells until March 31, 2010, to allow for rule promulgation and to determine which existing oil and gas wells will be classified as nontributary. Mr. Sullivan estimated that draft rules will be issued in one month. The rules will guide determinations of whether wells will be classified as tributary or nontributary. He also responded to questions about rulemaking process. He indicated that the division has filed a rulemaking notice with the Secretary of State and that it is estimated that 34,000 wells may be affected by the new legislation. He also spoke about the possibility of litigation.

2:20 PM

Representative Curry stated the intent of House Bill 09-1302 was to streamline the permit review process and not to require adjudication of all coalbed methane wells.

2:26 PM -- Water Efficiency Grant Program

Jennifer Gimbel, Director, Colorado Water Conservation Board (CWCB), explained that the Water Efficiency Grant Program is a statutory program that will repeal July 1, 2012, unless the legislature passes a law to extend the program (Section 37-60-126 (12) (c), C.R.S. She also asked Veva Deheza, who administers the Water Efficiency Grant Program, to describe its activities and discuss possible legislation to continue the program.

2:27 PM

Veva Deheza, Section Chief for the CWCB’s Office of Water Conservation & Drought Planning, explained that the Water Efficiency Grant Program provides financial assistance to communities, water providers, and other eligible entities for water conservation activities and projects. She explained that, since its creation in 2005 (House Bill 05-1254) to April 2008 $1.6 million in grants to 41 entities have been issued. These moneys were used to develop conservation plans, landscape audits, and retrofit programs. Section 37-60-126 (2), C.R.S., requires municipalities and other water providers with total customer demand of at least 2,000 acre-feet of water to adopt and implement a water use efficiency plan. Entities that do not adopt such plans are ineligible to obtain loans from the CWCB and Colorado Water Resources and Power Development Authority. She explained that 35 of the state's 100 covered entities have filed a water use efficiency plan with the CWCB. Most of these plans were developed using Water Efficiency Grant moneys and some of these entities have applied for grants to implement their water efficiency plans. She explained that the legislature passed House Bill 09-1017 that specifies that moneys in the Water Efficiency Grant Program Cash Fund are to be continuously appropriated to the CWCB for the grant program and that such moneys are available until the projects are completed. Any moneys remaining in the fund after June 30, 2012, are transferred to the Operational Account of the Severance Tax Trust Fund. Ms. Deheza requested that the Water Resources Review Committee sponsor a bill to repeal the July 1, 2012, repeal date and continue the program indefinitely. She also explained that approximately $1.5 million remains in the Water Efficiency Grant Fund which is sufficient to continue the program through FY 2012-13. She also asked that bill transfer $550,000 from Tier 2 of the Operational Account of the Severance Tax Trust Fund to the Water Efficiency Grant Program for the state fiscal year commencing July 1, 2012, and each fiscal year thereafter.

2:37 PM

Ms. Gimbel responded to questions from the committee about moneys available from the CWCB for water efficiency and drought planning. She also described Governor Ritter's support for water efficiency and drought planning, and the growing interest from water providers to implement their water conservation plans. Ms. Deheza described public outreach for water efficiency and how the information about water efficiency is used by basin roundtables and the Interbasin Compact Committee. Ms. Deheza and Ms. Gimbel also responded to questions about the proposed bill to continue the Water Efficiency Grant Program and to transfer additional Tier 2 moneys of the Operational Account of the Severance Tax Trust Fund for the program.

2:47 PM -- Governor Ritter's FY 2009-10 Budget Balancing Plan for the Department of Natural Resources

Bill Levine, Budget Director, Colorado Department of Natural Resources, explained that on August 18, 2009, Governor Ritter released his FY 2009-10 budget balancing plan that seeks to reduce total General Fund appropriations by 10 percent (Attachment B). He explained that General Fund appropriations for the Department of Natural Resources in FY 2009-10 was $29 million including $25 million for the Division of Water Resources. The Governor's plan reduces FY 2009-10 General Fund appropriations to the department by $2.7 million and the equivalent of 5.3 full time employees (FTE). This plan replaces $2.0 million General Fund appropriations for the Division of Parks and Outdoor Recreation with Operational Account moneys from the Severance Tax Trust fund. The Severance Tax is collected on oil and gas and other nonrenewable minerals that are removed from the earth. He explained that this transfer would reduce moneys available for other programs that receive Operational Account moneys, called Tier 2 programs. Tier 2 programs support grants, loans, research, and construction projects. These programs are subject to proportional reduction if severance tax revenues are lower than expected. Because severance taxes are historically highly variable, Tier 2 programs are selected in part because they are designed to weather short-term reductions in funding. Under current law, the Division of Parks and Outdoor Recreation is authorized to receive up to 5 percent of the Tier 1 Operational Account moneys (Section 39-29-109.3 (1) (f), C.R.S.). In his explanation, Mr. Levine referenced a spreadsheet on the Operational Account of the Severance Tax Trust Fund (Attachment C).

2:54 PM

Mr. Levine explained that Governor Ritter's budget balancing plan also seeks to eliminate the National Environmental Policy Act Coordinator position for a General Fund savings of $90,000 and reduce 5.3 FTE from the Division of Water Resources for a General Fund savings of $400,000. These positions are currently vacant and include water commissioners, engineers, and an information technology specialist.

3:00 PM

Representative Curry expressed concern about the proposed cuts to the Division of Water Resources personnel and proposed that the Water Resources Review Committee recommend legislation to use Tier 1 Operational Account moneys from the Severance Tax Trust Fund to offset the proposed General Fund reductions. She explained that a similar bill, House Bill 09-1308, was postponed indefinitely by the Senate Committee on Agriculture and Natural Resources. Committee discussion followed about the impact to the Division of Water Resources from the proposed reduction in General Fund appropriations. Later in the meeting, the committee approved a motion to request a draft bill that amends Section 39-29-109.3 (1), C.R.S., (Tier 1 of Severance Tax Trust Fund Operational Account) by adding a new paragraph that appropriates to the Division of Water Resources up to 5 percent of the moneys in the Operational Account of the Severance Tax Trust Fund (Section 39-29-109 (2) (b)). See the following roll call vote taken at 3:45 p.m.

3:11 PM

Mr. Levine responded to questions about the potential use of Wildlife Cash Funds to pay for Division of Water Resources activities related to administration of water that benefits wildlife, such as instream flow rights. He also described Governor Ritter's proposal to reduce General Fund appropriations of $40,000 for the Division of Water Resources satellite monitoring system. The proposal seeks to offset this reduction with additional cash fund revenues to be collected from satellite monitoring system fees.

3:20 PM -- Public Testimony

Sara Duncan, Denver Water, explained that Denver uses water distributors who provide water to retail customers. These entities are not eligible to receive Water Efficiency Grant moneys under Section 37-60-126 (12) (a), C.R.S. However, she explained that these entities are required by their contract with the Denver Water Department to comply with the department's water conservation plan. She urged the committee to request a draft bill that would make distributors eligible for Water Efficiency Grant moneys if they are covered by a regional conservation plan, such as the plan Denver Water Department requires of its distributors.

3:24 PM

Jennifer Gimbel, Director, Colorado Water Conservation Board, responded to Ms. Duncan's comments. She explained that the CWCB is working to address Ms. Duncan's request administratively and she does not see a need to amend statute. She also responded to questions from the committee concerning the Water Efficiency Grant Program.

3:26 PM

Ms. Duncan responded to questions from the committee about whether the CWCB could address her concerns administratively. She also expressed concern about Governor Ritter's plan to reduce 5.3 FTE from the Division of Water Resources and commented on a proposal to increase fees for the division to offset the General Fund reductions. She explained that water administration is more deserving of the state's limited resources than recreational activities. She urged the committee to request a draft bill that appropriates to the Division of Water Resources moneys from Tier 1 of the Operational Account of the Severance Tax Trust Fund and expressed concern about reducing Tier 2 appropriations for the Species Conservation Trust Fund. This program provides moneys for federally mandated endangered species recovery programs on the Colorado and South Platte river basin, and other areas of the state.

3:29 PM

Jen Boulton, Colorado Trout Unlimited, Audubon of Colorado, spoke in opposition to amending statute to address Ms. Duncan's concern about the eligibility of water distributors to receive Water Efficiency Grant Program moneys.

3:36 PM -- Requests for Draft Bills

Representative Curry explained that Section 37-98-103 (1), C.R.S., prohibits the Water Resources Review Committee from reporting a bill to Legislative Council unless a two-thirds majority of the members (at least 7 members) vote to report the bill. Also, according to the July 14, 2009, memorandum from the Executive Committee of Legislative Council to chairs of interim committees, at least a majority of the interim committee must approve a motion to draft a bill in order for it to be drafted.


BILL:	Requests for Draft Bills
TIME:	03:36:30 PM
MOVED:	Fischer
MOTION:	Moved to amend Section 37-60-126 (12), C.R.S. (Water Efficiency Grant Program). Strike paragraph (c) of subsection (12) and continue the program indefinitely. Also for the state fiscal year commencing July 1, 2012 and each fiscal year thereafter, transfer $550,000 from Tier 2 of the Operational Account of the Severance Tax Trust Fund to the Water Efficiency Grant Program created in Section 37-60-126 (12), C.R.S. These moneys are to be used for grants to eligible entities and for administration of the program. Under current law, the board is authorized to distribute grants to "covered entities, other state or local governmental entities, and agencies in accordance with its guidelines." The motion passed on a vote of 8-0. The motion passed on a vote of 8-0. Final action on the draft bills is tentatively scheduled for September 30, 2009, in HCR 0112 in the State Capitol Building.
SECONDED:	Schwartz
		VOTE
	Baumgardner	Yes
	Brophy	Excused
	Fischer	Yes
	Gardner C.	Excused
	Hodge	Yes
	McKinley	Yes
	Schwartz	Yes
	White	Yes
	Curry	Yes
	Whitehead	Yes

Not Final YES: 8 NO: 0 EXC: 2 ABS: 0 FINAL ACTION: PASS


BILL:	Requests for Draft Bills
TIME:	03:45:30 PM
MOVED:	Curry
MOTION:	Moved to amend Section 39-29-109.3 (1), C.R.S. (Tier 1 of Severance Tax Trust Fund Operational Account). Add a new paragraph that appropriates to the Division of Water Resources up to 5 percent of the moneys in the Operational Account of the Severance Tax Trust Fund created in Section 39-29-109 (2) (b). Include paragraphs that identify current recipients of Tier 1 moneys: (a) Colorado Oil and Gas Conservation Commission; (b) Colorado Geological Survey; (c) Division of Reclamation, Mining, and Safety; (d) Colorado Water Conservation Board; (e) Division of Wildlife; and (f) Division of Parks and Outdoor Recreation. Leave blank the percent of the Operational Account moneys to be transferred to these programs. The committee will decide how to reduce these transfers to accommodate the new transfer to the Division of Water Resources. 3) Draft a narrow bill title that precludes amendments to adjust fees collected by the Division of Water Resources. The motion passed on a vote of 8-0. Final action on the draft bills is tentatively scheduled for September 30, 2009, in HCR 0112 in the State Capitol Building.
SECONDED:	Hodge
		VOTE
	Baumgardner	Yes
	Brophy	Excused
	Fischer	Yes
	Gardner C.	Excused
	Hodge	Yes
	McKinley	Yes
	Schwartz	Yes
	White	Yes
	Curry	Yes
	Whitehead	Yes

Not Final YES: 8 NO: 0 EXC: 2 ABS: 0 FINAL ACTION: PASS

3:55 PM

The meeting adjourned. The next meeting of the Water Resources Review Committee is tentatively scheduled for 3:00 p.m. on September 9, 2009, at the Durango Public Library