Water Resources Review Committee (07/20/2009)

Final
STAFF SUMMARY OF MEETING

WATER RESOURCES REVIEW COMMITTEE

Date:	07/20/2009	ATTENDANCE

Time:	03:12 PM to 06:06 PM	Baumgardner	X
		Brophy	X
Place:	Elevation Resort - Crested Butte	Fischer	X
		Gardner C.	X
This Meeting was called to order by		Hodge	X
	Representative Curry	McKinley	X
		Schwartz	X
This Report was prepared by		White	X
	Lauren Ris	Curry	X
		Isgar
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Joint WRRC and IBCC Meeting Water Resources Review Committee Meeting		Briefings only -

** Senator Isgar was no longer a member of the Committee at the time of this meeting

03:12 PM -- Overview of the Interbasin Compact Process

See Attachment A for the meeting agenda.

Harris Sherman, Executive Director, Colorado Department of Natural Resources and Director of the Interbasin Compact Negotiations, welcomed the Water Resources Review Committee and explained that the Interbasin Compact Committee (IBCC) was created in House Bill 05-1177, also called the Colorado Water for the 21st Century Act.

03:16 PM

Peter Nichols, a Governor appointee to the IBCC, explained that the IBCC was created in House Bill 05-1177 to address growing water demand and to overcome opposition to new water development. He referenced important events in Colorado's water history including the 1989 Homestake Conflict in Eagle County, the Two Forks Dam veto by the U.S. Environmental Protection Agency, Delph Carpenter's Interstate Compact negotiations, and the State Water Supply Initiative in explaining the history that lead to the IBCC. He discussed some new significant water development projects in the state including Aurora's Prairie Waters Project, Windy Gap Firming Project, and the Northern Integrated Supply Project. Mr. Nichols outlined some of the accomplishments of IBCC and indicated that the process has lead to increased involvement among water users and other interest groups in the state and that there has been greater cooperation between water providers to identify mutually beneficial water supply projects. He emphasized that the IBCC treats all basin and users as equal participants, though he acknowledged that it is a time consuming process. He concluded by listing possible alternatives to meet future water demand besides agricultural water transfers.

03:27 PM

Director Sherman provided some comments about the IBCC process and the future challenges of growth and water demand in the state. He discussed types of water supply projects that benefit both the basin of origin and the receiving basin.

03:29 PM -- Water Supply Strategies

Eric Kuhn, a Governor appointment to the IBCC and General Manager Colorado River Water Conservation District, provided some introductory remarks about water supply strategies. He explained that a variety of water supply strategies have been developed to meet the state's future water supply needs. He discussed the strategy developed in the Colorado Basin and some of the trade-offs in water development in the Colorado River. He also discussed some of the changing paradigms in water management as a result of climate change and technology. He indicated that the water supply strategies provide a variety of strategies for meeting future demand given uncertainties.

03:32 PM

Eric Wilkinson, South Platte Roundtable, General Manager Northern Colorado Water Conservancy District, spoke about the history of the State Water Supply Initiative (SWSI) and the information that was generated through the initiative. SWSI provided big picture information about the state's limited water supply, the impacts of agricultural dry up strategies, recreational and environmental water needs, and the role of water conservation. Mr. Wilkinson explained that the intent of House Bill 05-1177 was to create a vision for the state and then determine strategies for accomplishing that vision. He explained how these strategies will allow for the comparison of costs and benefits of water projects. He also discussed some of the challenges of the predicted increase in Colorado population and what this will mean in terms of increased water demand.

03:43 PM

Eric Hecox, IBCC staff, referred the committee to handouts provided by IBCC staff concerning water supply strategies and the IBCC (Attachments B and C). Representative Curry asked for more specific information about the strategies.

03:46 PM

Mr. Wilkinson explained that Colorado's population could potentially double over the next 40 years, which will lead to an increase in municipal and industrial water demand. He explained demand projection scenarios based on low, medium, and high population projections. He also discussed how this demand related to the Colorado Big Thompson Project, a large transmountain water diversion project that provides water to numerous cities and towns and is also used to irrigate farmland in northeastern Colorado.

03:48 PM

Representative Curry asked what the IBCC might need from the Interim Water Committee in relation to the water supply strategies. Mr. Hecox responded that the IBBC wants the water committee to understand long term water needs, both consumptive and nonconsumptive, so that the committee is able to protect the processes needed to respond to those needs knowing that there may be resource reductions in coming years as a result of budget issues. He stressed the importance of preserving the ability to meet the state's water demands in the future.

03:53 PM

T. Wright Dickenson, a Governor appointed IBCC member, provided some overarching comments about the purpose of the IBCC and the successes to date in bringing people together to talk about water management outside of court.

04:19 PM -- Basin Roundtable Needs Assessments

Jay Winner, Arkansas Basin Roundtable member, and the Lower Arkansas Water Conservancy District General Manager, explained that the IBCC process created a blueprint for how basins can determine what their consumptive, non-consumptive, and storage needs are. He described the process by which the Arkansas Basin Roundtable determined these needs and how information from the Statewide Water Supply Initiative was used.

04:02 PM

Dan Birch, Yampa/White/Green Basin Roundtable, Deputy Director of the Colorado River Water Conservation District, discussed the approach the Yampa/White/Green Basin Roundtable took in their needs assessment. He explained that prior to the House Bill 05-1077, the Yampa/White/Green had not come together to consider a vision for its future and the role the basin might play in satisfying the state's water needs. He described the different needs of the upper and lower parts of the basin and how these differences created a unique dynamic for creating a unified vision for the basin. He discussed the findings of the Statewide Water Supply Initiative relating to energy development in the basin. He explained that the need for water in the basin is largely dependent on whether there is an effort to develop oil shale. Mr. Birch stated that they have completed the first phase of their nonconsumptive needs assessment and are in the second phase of their consumptive needs assessment, which he expects will be completed in a year. Mr. Birch also mentioned that the basin is working on an arable lands study.

04:11 PM

Melinda Kassen, a Governor Appointee to the IBCC and the Managing Director of Trout Unlimited, discussed recreational in-channel diversions (RICD), which are water rights for recreational activities. She explained that while eight of nine roundtables have approved a first draft of a nonconsumptive needs assessment, almost every roundtable approached the assessments in a different way. These assessments resulted in a set of maps that classify each basin's stream reaches based on environmental and recreational attributes. She indicated that in next phase of the nonconsumptive needs assessments, basins will consider what these classifications mean and what approach they will take to manage these reaches. She further explained that basins may use funding from the Water Supply Reserve Account to quantify the flow on the reaches they identified, use money to get more information in reaches they know less about, or consider other conservation alternatives (e.g. alternatives to federally designated Wild and Scenic Rivers). Ms. Kassen answered questions from the Water Resources Review Committee.

04:20 PM

The Water Resources Review Committee and the IBCC discussed the doctrine of prior appropriations (commonly known as first in time first in right) and how this law affects Senate Bill 04-222. Senate Bill 04-222 authorizes the State Engineer to impose new regulations on ground water withdrawals in Water Division 3 (Rio Grande River Basin) to protect senior water rights and to ensure the sustainability of the unconfined and confined ground water aquifers. They also discussed the ability of the IBCC to help Colorado address future water needs in a maner that is consistent with the doctrine of prior appropriation.

04:29 PM

Representative Baumgardner asked Ms. Kassen to discuss alternatives to Wild and Scenic River designations. She explained that this is a federal designation and that the Bureau of Land Management has been looking for reaches to designate in Colorado. Ms. Kassen continued that once reaches have this designation, actions cannot be taken that impair the values for which it was designated. However, if the state can devise alternative agreements and protections, the federal agency may decide that the reach is sufficiently protected and forego the federal designation. She explained that the community's preference is usually to have a state based solution rather than a federal designation.

04:32 PM

Mr. Nichols provided additional comments related to the earlier discussion about the prior appropriations doctrine and Senate Bill 04-222. He explained that Colorado law specifies that nothing should be interpreted to repeal or amend the existing water rights adjudication system (section 37-75-102, C.R.S.).

04:33 PM

Mr. Hecox described the operation of the Water Supply Reserve Account. The account is administered by the Colorado Water Conservation Board in collaboration with the Interbasin Compact Commission. Basin Roundtables request funding which is then submitted to the Colorado Water Conservation Board. Money from the account is distributed according to guidelines that are jointly developed by the Colorado Water Conservation Board and the IBCC. See Attachment D for additional information on the Water Supply Reserve Account. The Water Resources Review Committee and the IBCC discussed reductions made to the Water Supply Reserve Account and the importance of the funding to the roundtables.

04:40 PM

The committee and the IBCC discussed the need for legislation that would help maximize existing water infrastructure resources which may reduce the need for new transbasin water diversion projects and agriculture to urban water transfers.

04:44 PM

The committee and the IBCC discussed the importance of the IBCC Roundtables and the ongoing needs assessment process. The committee also discussed the state budget shortfall and how it would affect the state's ability to address its long term water needs.

04:46 PM

Mr. Hecox provided some closing comments and thanked the Water Resources Review Committee for their attendance.

04:47 PM

The joint meeting was adjourned and was followed by a separate meeting of the Water Resources Review Committee.

05:11 PM -- First Meeting of the Water Resources Review Meeting

Representative Curry, Acting Chair, called the meeting to order.

05:11 PM – Colorado Water Resources and Power Development Authority Water Project Financing

Dan Law, Executive Director of the Colorado Water Resources and Power Development Authority (CWRPDA), explained that the Animas-La Plata Project is a federal water storage project near Durango built primarily to address tribal water needs (Attachment E). To help meet the cost-sharing criteria mandated by the federal government, the authority placed $30 million in an escrow account in 1989 for the project. By 1995 these funds had grown with interest earnings to meet the authority’s planned cost-sharing obligation of $42.4 million. Earnings above this amount ($17.7 million) were transferred to the Drinking Water Revolving Fund (DWRF) to provide the 20 percent state match for the (DWRF) capitalization grants. He explained that the authority provided $7.2 million for the Animas-La Plata Water Conservancy District in exchange for 2,600 acre-feet of average annual depletion and 2,919 acre feet of storage in the reservoir, called Lake Nighthorse.

05:17 PM

Mr. Law explained that the authority placed $15 million in an escrow to assist with water resources development in the La Plata River Basin. The La Plata Water Conservancy District received approval from U.S. Army Corps of Engineers to build a 5,400 acre-foot (AF) reservoir called the Long Hollow Reservoir. The proposed reservoir will be an on-channel reservoir with the dam embankment located on Long Hollow Creek approximately 0.5 mile upstream of the confluence of Long Hollow and the La Plata River and five miles upstream of the Colorado/New Mexico border. The project will enable the state to meet its delivery obligations under the La Plata River Compact and supplement the water supply to existing irrigated lands in Colorado. The authority is working with the La Plata Water Conservancy District to obtain a consulting engineer to develop the final design and conduct other activities.

05:19 PM

Mr. Law explained that in November of 2008, the authority entered into an interim loan agreement with the La Plata West Water Authority to pay for the construction of an intake tower in the reservoir associated with the Animas-La Plata Project. This project will provide water to communities in the La Plata River Basin. He also described other loans issued by the authority for water development projects including $8.1 million loan to the City of Fountain to purchase land for a reservoir and a building and a proposed loan of $7 to 9 million for the North Weld County Water District for additional transmission lines.

05:24 PM -- Small Hydropower Loan Program and Small Water Resource Loan Program

Mr. Law explained that the CWRPDA Board of Directors budgeted $10 million for 2009 to be loaned to local governments for new small hydropower (less than 5 MW) facilities. Loans may extend to 20 years with an interest rate of two percent. In 2009, the City of Cortez was approved for a $1.6 million Small Hydropower Loan. In addition to the loan funds, the Board authorized $165,000 to provide matching grants for communities to plan and design small hydropower facilities. Eleven matching grants have been awarded to governmental agencies. The Small Water Resources Projects (SWRP) Program provides lower cost loans for the construction, expansion or rehabilitation of existing public water systems owned by municipal governments and special districts having a population over 1,000 or a customer base of at least 650 taps. The bonds issued to fund these loans are insured by the Financial Guaranty Insurance Company. He explained that the ongoing financial issues with FGIC may prevent further loans from being issued from the SWRP.

05:27 PM -- American Recovery and Reinvestment Act

Mr. law provided an update on the federal American Recovery and Reinvestment Act that includes funding for public waste water and drinking water treatment projects. In 2009, approximately $90 million will be available for public waste water project loans from Water Pollution Control Revolving Fund (WPCRF) including $32 million from the federal American Recovery and Reinvestment Act (ARRA). Approximately $70 million will be available in 2009 for public waste water project loans from Drinking Water Revolving Fund (DWRF) including $32 million from the ARRA. He explained that ARRA moneys may be used for principal forgiveness of up to $2 million for each project and to provide no interest loans. Mr. law also expressed concern that the ARRA includes requirements that increase the cost of a project and may make it more difficult for projects to qualify for the federal moneys. For example, project sponsors must pay prevailing wages according to the federal Davis-Bacon Act and use American iron, steel, and manufactured goods in projects that use ARRA moneys. He also responded to questions about the selection process for ARRA grant recipients and the preparation of the priority list that identifies eligible projects.

05:44 PM -- Other WPCRF and DWRF Loans

Mr. Law described terms for WPCRF and DWRF loans issued by the authority using non ARRA moneys. In 2009, approximately $104 million will be available for these loans at interest rates of 0 to 2.5 percent depending upon a community's financial situation. He estimated that 10 to 20 jobs are created for each $1 million issued for loans. He also responded to questions about the current financial crisis and the challenge of obtaining affordable bond insurance for water projects.

05:57 PM -- Water Congress Review of State Budget Issues

Chris Treese, Colorado Water Congress (CWC), explained that a committee has been formed from members selected by CWC State Affairs Committee. The purpose of the committee is to review short and long term funding options for Colorado Water Conservation Board loan programs and the Division of Water Resources. He explained that the committee has met once and discussed funding alternatives for the Division of Water Resources and the water courts.

06:06 PM

The meeting adjourned. There was no public testimony and no draft bills were requested. The next meeting is tentatively scheduled for Wednesday, August 19, from 2:00 p.m. to 5:00 p.m. at the Steamboat Sheraton.