Water Resources Review Committee (10/06/2005)

Final
STAFF SUMMARY OF MEETING

WATER RESOURCES REVIEW COMMITTEE

Date:	10/06/2005	ATTENDANCE

Time:	09:09 AM to 03:24 PM	Butcher	E
		Entz	E
Place:	SCR 356	Fitz-Gerald	X
		Grossman	E
This Meeting was called to order by		Hodge	X
	Senator Isgar	Hoppe	X
		Taylor	X
This Report was prepared by		White	X
	Marc Carey	Curry	E
		Isgar	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Sixth Meeting		-

9:05 A.M.

Senator Isgar called the meeting to order, and asked the staff to take roll.

9:09 A.M. -- Drought Update

Hal Simpson, State Engineer, introduced Jack Byers, Deputy State Engineer. Mr. Byers provided an overview of the current drought situation in Colorado, and stated that is still recovering from the recent drought. Mr. Byers explained that about 80 percent of Colorado's water supply comes from snow pack, so it is not possible to know ahead of time what the water year will be like. Across Colorado, the average precipitation is about 17 inches. Regionally, annual precipitation ranges from about 7 inches in southwest Colorado to over 55 inches in the Steamboat Springs area (Attachment A). Colorado and Hawaii are the only states where all rivers flow out of state.

Mr. Byers described the 2002 drought and identified its impacts. He noted that there were a large amount of calls on the river and some 20 communities with significant water shortages. The largest economic impacts were felt by the tourism, recreation and agricultural sectors. While tourism and recreation have mostly recovered since then, agriculture hasn't and he projects their impacts will continue for years to come. While conditions have improved significantly this year, some hydrologic deficiencies still exist. The trend in average annual temperatures in Colorado is increasing, while the trend in average annual precipitation is decreasing. Mr. Byers showed several other slides summarizing temperature and precipitation data emphasizing the point that the state is recovering but not recovered from the 2002 drought. In April 2003, Colorado was about 57 percent of historical average storage. Today Colorado is about 94 percent of historical average levels. The Arkansas Basin is only at 64 percent of average, however, so the recovery is not uniform statewide. At the height of the drought, Colorado was about 1.7 million acre-feet short in terms of reservoir storage. Today Colorado is about 200,000 acre-feet short, representing about three percent of storage capacity. Since 2002, Colorado has significantly depleted its groundwater aquifers, especially in the San Luis Valley. Mr. Byers briefly reviewed the conferences and task forces which the state has convened in an effort to better understand droughts. He noted that, since we are always one low snowpack away from a critical situation, the drought is never over in Colorado.

Senator Taylor wondered what other basins had looked at in terms of aquifer recharge. Mr. Byers responded that much of the effort had focused on the Denver Basin, and that the drawdown there has declined recently. Hal Simpson, State Engineer, explained that over 200 recharge sites where over 150,000 acre-feet can be placed in underground storage to offset drought impacts. Senator Fitz-Gerald wondered what was being done to protect the security of our water supply. Mr. Byers responded that his agency worked closely with a number homeland security agencies to ensure the security of water supplies. Senator Taylor asked Mr. Simpson about opportunities for increased water production through a more active harvest of state forests. Mr. Simpson responded that his agency hasn't conducted a study on this topic so he couldn't provide any specific numbers, but that many believed that increased forest harvest could increase the yield in the watersheds.

09:36 AM - Update on Dam Safety Issues

Mr. Byers reviewed recent activities concerning dam safety rules and the construction of dam spillways. Mr. Byers described state oversight authority of State Engineer concerning dam safety (Attachment B). The purpose of this review is to prevent the loss of life and property and to protect state water supplies. The State Engineer does not have the authority or resources to oversee the security of the state's dams or perform threat assessments, but is able to assist dam owners with hazzard issue identification. Currently, there are about 3,000 dams in state, with about 1,800 jurisdictional sized dams (greater than ten feet in height) This includes about 335 high hazard, 312 significant hazard and 1,200 low hazzard dams. The different classifications depend on the potential for loss of life or property damage should the dams fail. There are 312 federal dams in Colorado. Current storage capacity is about 6.4 million acre-feet, although some smaller dams may not be included in this total. The two greatest sources of risk for failure are storm events that cause overtopping, or a static load condition resulting in seepage through pipes. In 2004, five new dams were finished at a total construction cost of $40 million. Mr. Byers reviewed the role of emergency spillways in preventing dam failure.

Mr. Byers noted that it is critical to update the methodology used in calculating the probability of an extreme storm event. He provided an overview of the methodological revisions that have been implemented to improve this calculation. The pilot of the study and final task force reports related to these improvements are due at the end of this month. Finally, Mr. Byers responded to questions regarding dam safety assessment of proposed dam construction projects in La Plata River Basin. He also discussed the benefits of labyrinth spillways.

10:07 AM -- Update on Negotiations Concerning Colorado River Management

Russel George, Executive Director, Colorado Department of Natural Resources, described the August 25, 2005 letter that the seven Colorado River Basin states sent to Gale Norton, Secretary of the U.S. Department of Interior (see Attachment C). This letter demonstrates how these seven states with diverse water interests can come together in agreement. The letter also represents a comprehensive list of these state's issues with respect to the management of the Colorado river.

10:12 AM

Rod Kuharich, Director, Colorado Water Conservation Board, noted that similar to the interim surplus guidelines, the Department of the Interior was working to develop interim shortage guidelines. These guidelines would apply only to lower basin states, because the upper basin states already have an agreement among themselves to administer water in times of shortage. Upper basin states want to ensure that they preserve their ability to develop existing compact allocations.

Of major concern to both upper and lower basin states is the utilization of the two main reservoirs on the Colorado, Lake Powell and Lake Mead, in times of drought. During the 2002 drought, the lower basin got their full allocation, but the upper basin states did not. The fact that these reservoirs were drawn down in the 2002 drought prompted the seven basin states to begin negotiations. Negotiations focused on operational issues, including the development of shortage guidelines for the lower basin, the coordination of reservoir operations, and the apportionment shortages to Mexico. Colorado's goals and water management proposals included better accounting for water delivered to Mexico and improvents to water storage and distribution in the Lower Basin states. Mr. Kuharich emphasized that in order to fully utilize Colorado's compact allocation, additional storage facilities will be necessary.

Representative Hoppe commented that Arizona likes Colorado to not have fully developed their compact entitlement because that means more water for Arizona. Mr. Kuharich responded that every additional acre-foot of storage developed in Colorado means one less acre-foot for lower basin states. Senator Fitz-Gerald asked what level of water development was sustainable, and whether plans were in place for accommodating the rapid growth in the west. She also noted that part of dealing with the immigration problem from Mexico was ensuring a sufficient water supply there, and it was in our interest to ensure that Mexico received its proper compact entitlement. Mr. Kuharich commented that he believed that wage disparities were driving the immigration from Mexico. He also discussed the potential for desalinization plants in providing water supplies to accommodate future regional population growth.

Senator Isgar wondered whether Mexico received their full allocation during the drought. Mr. Kuharich responded that throughout the drought, Mexico received its full entitlement, even as the upper basin states did not. Mr. George commented that the reason the lower basin states continued to receive their full allocation was the level of storage in Lake Powell and Lake Mead going into the drought. The reason the upper basin states were short was the decrease in precipitation. Full levels in Lake Powell and Lake Mead protects the upper basin states from any potential future curtailments. By the end of this water year, Lakes Powell and Mead are projected to be at 48 percent and 45 percent of capacity respectively.

President Fitz-Gerald wanted more information about plans for tamarisk control. Mr. Kuharich responded that they are anticipating $50 million in federal moneys to fund this effort in the next year or so. They are considering both helicopter spraying and biological control agents.

10:43 AM

Hal Simpson, State Engineer, described the recent development of rules to administer a Colorado River Compact call in Colorado. They anticipate that such a call would mean reduced diversions in western Colorado in accordance with compact requirements. The state has submitted a series of legal questions to the Colorado Attorney General's Office related to such a call. Once responses have been obtained, a rulemaking process will begin, complete with a full compliment of public meetings in western Colorado. These meetings would include discussions of various types of compact administration.

Senator Isgar asked whether all Colorado river rights had been tabulated. Mr. Kuharich commented that while it would not be difficult, this had not yet been done because they were still waiting on information from the Attorney General's office. Senator Isgar commented that the priority system would be the only method they would have of allocating a shortage, and that he felt such a tabulation would be a good starting point and would drive the discussion. Mr. George commented that while such a call had never happened, it was important to plan ahead and prepare in case of some future water shortage. Such an effort is worth the time and resource investment required.

10:52 AM

The committee recessed.

11:14 AM -- Regulation of Well Pumping in the South Platte River Basin

Mr. Hal Simpson, State Engineer described the history of well development and regulation of groundwater in the South Platte River Basin. In the 1960's, it was determined that groundwater pumping was impacting senior surface rights. This resulted in the 1969 Water Rights Determination and Administration Act. This Act created the water courts and the State Engineers Office, and it also to required tributary wells be adjudicated and regulated according to the doctrine of prior appropriation. The act also established a plan for augmentation, whereby junior wells could avoid curtailment by replacing out of priority depletions. Finally, the act required the State Engineer to promulgate rules and administer these groundwater rights to protect senior water rights. In the South Platte Basin, the rules were challenged in water court. After a settlement was reached, the court approved the rules, which required augmentation through an approved plan. Until 2002, the State Engineer assumed it had approval authority, and annually approved augmentation plans for user associations in the basin. In 2002, the Colorado Supreme Court ruled that the State Engineer did not have approval authority over augmentation plans. The 2002 legislature passed HB02-1001 giving the State Engineer authority to approve Substitute Water Supply Plans under limited conditions. With the drought of 2002, calls on the South Platte lasted from April through the end of the year, and augmentation associations had to replace depletions for an extended period, although there plans were based on a shorter period.

Mr. Simpson presented some general statistics on the current situation. There are about 9,000 wells irrigating about 1 million acres in the South Platte River Basin. Of these, about 7,000 are in approved substitute water supply plans or plans for augmentation approved by the water court (Attachment D). His office has contacted the owners of the remaining 2,000 wells, informing them that they may not pump unless they are in an approved plan. His office has tagged about 500 wells, and are currently monitoring those wells to ensure that they are not pumped. They have had to take about 20 well owners to water court. This year, the Division of Water Resources has approved 105 substitute water supply plans in the South Platte River Basin. Prior to 2002, they approved about 10 on an annual basis. Because of limited staff resources, their focus it to do as much with education as possible, informing people of augmentation requirements. For effective enforcement, they are requesting additional staff resources in the upcoming legislative session. To increase efficiency, they rely as much as possible on automated data collection. They have upgraded their data collection capabilities, and are working with local water conservancy districts to implement a timely and effective well monitoring system.

Mr. Simpson discussed some of the sources of replacement water that are used in the basin to prevent injury to senior water rights. Fully consumable water is the return flows from municipal water that has been brought in from other basins. Municipalities are marketing these reserves to augmentation associations. The effluent from municipally used non-tributary groundwater may also be used, along with reservoir releases, recharge wells and augmentation wells. The Central Colorado Water Conservancy District is also assisting in making a limited amount of water available for groundwater augmentation plans. Over the last few years, 200 recharge sites have been constructed along the South Platte river. In a good year, they think they can recharge up to 150,000 acre-feet into the basin. There are some 105 augmentation plans currently pending in water court. Recently, the Central Colorado Water Conservancy District's plan was approved, as the district was able to settle with all objectors before the case went to trial. A six-year projection tool will be required to ensure that all depletions will be augmented. During the next few years, the State Engineer will, if possible, continue approving substitute water supply plans given their statutory review authority.

Representative Hoppe asked if the South Platte River Decision Support System data was in place. Mr. Simpson responded that the system was largely in place, and felt that it would prove very helpful. It will probably take another two years for the project to be complete. Representative Hoppe commented that is was important for the legislature adequately fund the requested staff increases for the division, and expressed concern about software compatibility issues between the division and the water court.

Representative Kerr asked about the size of wells pumping in the basin. Mr. Simpson responded that they ranged from about 500 to 2000 gallons per minute. Representative Kerr asked about the penalties imposed. Mr. Simpson responded that the statutes allow for a fine of up to $500 per day for each day of violation. First-time offenders are usually assessed fines of about $200 per day, which escalate with each repeat offense. Most fines are less than $2,000 in total. Representative Kerr asked how they estimated their additional staff needs. Mr. Simpson responded that they have analyzed the anticipated workload, based on their experience in the Arkansas River Basin. He estimated that the additional staff costs would range between $700,000 and $800,000 annually. In addition, he noted that he hoped to get the legislature to increase the milage reimbursement for water commissioners who drive their own vehicles.

11:59 AM

The committee recessed for lunch.

01:36 PM Update on Republican River Basin issues

Ken Knox, Deputy State Engineer, reviewed the impacts occurring along the Republican River and the sustainability of the Ogalala aquifer. Mr. Knox described the Republican River Basin in northeast Colorado, including tributary streams and annual precipitation (Attachment E). He noted that eight large federal reservoirs are located in the basin. Colorado has one, the Pawnee Reservoir, located on the south fork of the Republican river. In the basin, there are approximately 4,000 wells in Colorado, 4,000 in Kansas, and 18,000 in Nebraska. The Republican River Compact was negotiated between these three states in 1942, before modern large-scale well technology. Reservoirs are acknowledged as important throughout the basin, both for storage and flood control.

Current compact allocations are based on measured water supplies as of 1942. Allocations are indexed to annual supplies, and increased or decreased proportionately. Kansas became alarmed with the well development in Nebraska, and sued Nebraska before the U.S. Supreme Court. One of the key questions was whether groundwater should be treated as part of the state water supply system. Nebraska held that there was no hydrologic connection between ground water and surface water, while Kansas argued there was. Colorado argued that only alluvial groundwater wells should be included. Kansas prevailed, and Mr. Knox reviewed the five conditions of this agreement (Attachment F). Today, the basin has at most 4,763 acres of surface water irrigated lands. For comparison, the basin had nearly 575,000 groundwater irrigated acres in 2004. In 2004, because of the dry conditions, Colorado was entitled to 30,000 acre-feet less than was originally envisioned under the compact. In 2003 and 2004, Colorado was out of compliance with the compact by 12,800 and 12,130 acre-feet respectively. Colorado has three years to make up this deficit.

Mr. Knox provided an overview of the current status of the Ogalala aquifer. In the Republican River Basin, the aquifer level has dropped 50 to 100 feet from the 1940's through 2000 in some places. If this trend continued, in twenty years, an additional decline of 50 to 75 feet would occur in the area of Burlington Colorado. However, on-farm economics, including factors such as fuel costs, commodity price, etc. will dictate how much water is pumped. Mr. Knox reviewed of current state activities to protect the basin's water resources and comply with the inter-state compact. SB 04-225 provided enforcement authority and the ability to levy fines on producers that are pumping illegally or irrigating more acreage than allowed. SB 04-235 created the Republican River Water Conservation District which provides greater local control over the resource.

The State of Colorado is trying to acheive compact compliance in a cost-effective manner. Two relevant federal programs, the Environmental Quality Incentive Program (EQIP) and Conservation Reserve Enhancement Program (CREP), are both aimed at land retirement. In 2005 through EQIP, 30 wells were voluntarily retired, including nine permanently. This translates to 3,227 acres taken out of production at a total cost of $349,509. CREP is 80 percent federally funded, and it's goal is to permanently retire 30,000 acres of land through voluntary actions. The remaining 20 percent of moneys are obtained through fees assessed on local ground water irrigators by the district. The current fee structure is $5.50 per acre annually, $5.10 per acre foot for post compact surface water rights and $4.40 per acre foot for municipal and industrial users. The total budget is $3.2 million, with the vast majority dedicated to compact compliance.

Land is retired under CREP for a 15-year period and must be replanted in native vegetation. The district has added an extra incentive for the producer to retire the land from irrigation permanently. After the initial 15-year period, the land may revert to dryland farming. Senator Fitz-Gerald asked for clarification on what producers would do during the 15-year period when they couldn't irrigate the land. Mr. Knox responded that CREP pays producers approximately $1,600 to $3,000 per acre for the suspension of their irrigation operations. The producer retains land ownership. This program affects about five percent of the current irrigated acreage in the basin.

2:15 P.M.

Stan Murphy, General Manager of the Republican River Water Conservation District, described the formation of the district, including how the district obtained revenu for land retirement and operations. To date, 95 percent of the total fee assessment has been collected by the county treasurer. Municipal and commercial fees represent a small percentage of overall revenue. They try to return assessments to counties in proportion to where it was collected. Mr. Murphy then responded to President's Fitz-Gerald's question concerning farmer attitudes towards EQIP and CREP. He receives several calls a day asking for program details, and both programs are very popular. Programs represent guaranteed income and remove much of the risk from farming. He also noted that while acreage retirement does take money out of the local economy, this impact is somewhat offset by program payments since 80 percent come from the federal government.

Representative Hoppe noted that she gets many complaints from constituents that have been assessed fees, and wondered if the district was still getting many complaints. Mr. Murphy responded that most have accepted the fee, and that if they were able to get back into compliance, most producers would be supportive. Senator Brophy asked if there was a potential for fee increases over the next five years. Mr. Murphy responded that none was anticipated.

2:37 PM Endangered Species Recovery Programs on the South Platte and Colorado River Basins

Don Ament, Commissioner of the Colorado Department of Agriculture, described the Three State Agreement to Recover Endangered Species on the Platte River in Nebraska. He reviewed a program to create wildlife habitat in Grand Island Nebraska and protect local Colorado water users from federal regulation. Commissioner Ament noted that, while the program is effective, it's costly. Colorado's payment obligation for this program is approximately $24 million over 13 years. Colorado is also obligated to send 17,000 acre-feet down the river annually.

Commissioner Ament urged the General Assembly to appropriate additional moneys for the Species Conservation Trust Fund, in part to cover program costs. He argued that the trust fund was almost empty, and that either it needed additional moneys, or an additional fee would have to be assessed on South Platte River water users. He felt that since endangered species recovery was a statewide concern, it would be unfair to focus the burden on local water users.

2:47 PM

Ted Kowalski, Colorado Water Conservation Board, distributed a handout summarizing on-going negotiations concerning the three-state agreement (Attachment G). Mr. Kowalski noted that he is hopeful that the three states are close to an agreement. A draft environmental impact statement (EIS) was circulated last year for comments, and the final EIS was being prepared. Any assistance that the committee could offer in ensuring that the program was fully funded by the federal government would be appreciated.

02:51 PM

Thomas Czapla, Program Coordinator for the Upper Colorado River Endangered Fish Recovery Program with the U.S. Fish and Wildlife Service, described recovery of endangered fish species in the Upper Colorado River. The Hump Back Chub and the Colorado Pike Minnow were reported to be stable, largely because of the efforts to reduce or remove known threats. The Boneytail and the Razor Back Sucker were listed as improving, both because of threat minimization and on-going stocking efforts. Mr. Czapla also commented that the Elk Head Reservoir expansion has had some minor delays and cost increases, but overall is expected to be completed on schedule in 2007. Other activities include the screening of irrigation canals, and screens should be in place by this fall.

Senator Taylor asked about stocking efforts, and whether this was a new development. Mr. Czapla responded that currently three species are stocked, and have been since the mid 1990's. Senator Taylor asked if stocking was a possibility for the three-state recovery effort. Mr. Kowalski responded that it was something they were investigating.

Commissioner Ament responded to questions concerning negotiations to increase regulation of well pumping in Nebraska. He described a proposed water recharge program to satisfy Colorado's water delivery obligation under the Three-State Agreement. Commissioner Ament and Mr. Kowalski described negotiations with the federal government to quantify the effect of more intensive forest management on federal lands on the stream flows in the South Platte River Basin and on endangered species.

3:20 PM

The meeting adjourned.