Final
STAFF SUMMARY OF MEETING

WATER RESOURCES REVIEW COMMITTEE

Date:07/21/2009
ATTENDANCE
Time:08:05 AM to 11:50 AM
Baumgardner
X
Brophy
X
Place:Elevation Hotel, Crested Butte
Fischer
X
Gardner C.
X
This Meeting was called to order by
Hodge
X
Senator Hodge
McKinley
X
Schwartz
X
This Report was prepared by
White
X
David Beaujon
Curry
E
Isgar
E
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Update on Basin Water Issues from Board Members
Colorado River Availability Study
Colorado River Curtailment Study
CWCB Water Project Financing Issues
Potential Legislation and Other Issues		Briefing only
Briefing only
Briefing only
Briefing only
Briefing only

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


08:05 AM -- Update on Basin Water Issues from Board Members

Senator Hodge, acting Chair, called the meeting to order and invited members of the Colorado Water Conservation Board (CWCB) to describe the river basins that they represent and water supply challenges or other issues that they want to bring to the attention of the Water Resources Review Committee.

08:06 AM

Carl Trick II, representing the North Platte Basin, explained that the basin drains the north central portion of the state and includes one small transbasin diversion. The major water use in the basin for irrigation of approximately 120,900 acres. Unlike most river basin in Colorado, the North Platte Basin is not regulated by an interstate compact. He also explained that the basin has received abundant precipitation in the spring of 2009.

08:09 AM

Eric Wilkinson, representing the South Platte Basin and Vice-chair of the CWCB, also representing the South Platte Basin on the Interbasin Compact Committee (IBCC), described the activities of the South Platte Roundtable including its use of Water Supply Reserve Account moneys for feasibility studies and other projects. The Water Supply Reserve Account was created by Senate Bill 06-179 to fund projects that address Colorado's water supply needs and support the IBCC process. He explained that the 2004 Statewide Water Supply Initiative determined that the South Platte Basin will need an additional 409,000 acre-feet of water by 2030. Approximately 80 percent of the increased demand is expected to be satisfied by identified projects and processes (IPPs) such as the Northern Integrated Supply Project (NISP) that will provide approximately 40,000 acre-feet annually to growing municipalities in the Northern Colorado Water Conservancy District. He expressed concern about meeting the remaining demand and responded to questions from the committee about alternatives to meet this demand. He explained that if NISP or other projects are not able to be completed as planned, then additional irrigation water will likely need to be transferred to municipal use.


08:21 AM

Barbara Biggs, representing the City and County of Denver, explained that the Denver Metro region includes almost half of the state’s population and that the Metro Roundtable has been working to address the future water demand. She identified projects and processes to meet this demand including the reallocation of storage space in the Chatfield Reservoir and Aurora's Prairie Waters Project. She also explained that the Arkansas and Metro roundtables have used Water Supply Reserve Account moneys to pay for the Zero Liquid Discharge Pilot Study. This study will help identify alternative methods for disposing of the waste from reverse osmosis water filtration systems that are used to treat lower quality water supplies.

08:24 AM

Reed Dils, representing the Arkansas River Basin, described the settlement of Kansas v. Colorado concerning Colorado's use of the Arkansas River and he identified major water projects in the basin including the Fry-Ark Project that delivers west slope water to irrigators and municipalities in the Southeast Colorado Water Conservancy District. He also described the proposed Arkansas Valley Conduit Project that would deliver higher quality water to municipalities in the lower Arkansas Valley. He explained that the legislature passed Senate Bill 09-141 that created the Fountain Creek Watershed District to fund flood mitigation, water quality improvements, and public recreation projects in the watershed.

08:28 AM

Travis Smith, representing the Rio Grande Basin, described the challenge of complying with the Rio Grande Compact that requires irrigators and other users in the basin to curtail diversions to satisfy water delivery obligations to downstream states. He also described the formation of groundwater management subdistricts to address overuse of groundwater resources in the basin and provided an update on State Engineers rulemaking for wells in the basin. He described the activities of the Rio Grande Basin Roundtable and urged the legislature to fund basin roundtable studies and project through the Water Supply Reserve Account. He also described the proposed Rio Grande Reservoir Project to address water supply needs in the basin and spoke in support of improving stream flow forecasts and satellite monitoring to better manage the state's water resources.

08:37 AM

Bruce Whitehead, representing the San Miguel, Delores, Animas, and San Juan river basins, explained that southwest Colorado experienced an early runoff in 2009 due to the effect of dust on snow. It also experienced a cool dry June, followed by a warm and dry July. He described the activities of the Southwest Basin Roundtable including its efforts to assess future water demand and identify projects and process to address this demand. He explained that construction of the Animas-La Plata Project near Durango is essentially complete and is currently being filled with water pumped from the Animas River. The project will store up to 120,000 acre-feet of water primarily for use by tribal entities. It also includes 10,000 acre-feet of storage space for purchase by the State of Colorado. Mr. Whitehead urged the state to purchase this storage and he responded to questions about potential uses of these waters. Dan McAuliffe, Deputy Director of the CWCB, explained that the CWCB will discuss the potential use of the State pool in the Animas-La Plata Project at its fall meeting.

08:50 AM

Harris Sherman, Executive Director of the Colorado Department of Natural Resources, responded to questions about state programs to address the impact of dust on snow. He explained that the Colorado is working with the U.S. Forest Service and the Department of Interior to identify land management practices that may be help reduce dust deposition on snow in Colorado. The legislature also approved appropriations in 2007 and 2009 in the CWCB Construction Fund bills to study the effect of dust on snow on the timing of spring runoff.

08:55 AM

John McClow, representing the Gunnison River Basin, described the benefits of the HB 05-1177 that created the roundtables and Interbasin Compact Committee (IBCC). He urged the legislature to continue funding the Water Supply Reserve Account that is used to address Colorado's water needs and support the IBCC process. He explained that WSRA moneys have been used to study the effect of dust on snow and he expressed concern about the effect of early runoff in the Gunnison Basin. For example, in 2009, the runoff occurred prior to the irrigation and rafting season and could not be stored due to lack of storage capacity in basin reservoirs. He explained that the Black Canyon of the Gunnison reserved water right case has been settled and is currently in effect. He also expressed concern about selenium levels in the Gunnison River and the potential impact on endangered species. House Bill 09-1289 appropriated $500,000 for the Upper Colorado Endangered Species Recovery Program including a study of the effect of selenium on endangered species.

09:06 AM

John Redifer, representing the Colorado River Basin, described water supply challenges in the basin and the need for water for nonconsumptive purposes to benefit tourism and the environment. He also explained that consumptive needs in the basin are expected to increase as oil shale development occurs and as oil and gas production increases. Exports from the basin to front range municipalities are also expected to increase. He explained that the Colorado Basin Roundtable is exploring alternatives to federal Wild and Scenic designation for rivers in the basin and urged the legislature to provide moneys for groups seeking to implement these alternatives.

09:10 AM

Jeff Blakesly, representing the Yampa and White river basins and President of the CWCB, explained that he is also a member of Yampa-White-Green Basins Roundtable and described the recent Elkhead Reservoir expansion near Hayden Colorado that provides water for endangered species and other purposes. He also explained that the Yampa-White-Green Basins Roundtable is working to determine future water needs and assess the impact of coalbed methane production on surface and groundwater users in the basin.

**Senator Isgar was no longer a member of the Committee when the meeting took place.


09:15 AM -- Colorado River Availability Study

Ray Alvarado introduced the Colorado River Water Availability Study and referenced an attachment he provided to the committee that includes a glossary of water terms (Attachment A). The study is intended to help Colorado make wise resource management decisions while acknowledging that there is a degree of uncertainty as the state moves into the future.

Attachment A.pdf

09:17 AM

Blaine Dwyer, the contract Project Manager of the study from Boyle Management, described the purpose of the study. His presentation is available at http://cwcbweblink.state.co.us/ElectronicFile.aspx?docid=135587. He explained that the study is intended to answer the question, "how much water from the Colorado River Basin System is available to meet Colorado's current and future water needs?" The study will take into account hydrology, water availability, and water use. He explained that Phase I of the study is looking at current uses and absolute water rights. Phase II of the study will consider potential future users, and Part III will involve a hydrologic assessment process.

09:29 AM

Ben Harding, an engineer with AMEC Earth and Environmental, described available data on hydrology including stream flow data and paleo hydrology which allows the engineers to extend hydrologic records through tree-ring data. The preliminary results of their work indicate earlier average annual runoff. All of their data will be reviewed by Veva Deheza at the Colorado Water Conservation Board. Mr. Harding responded to questions about how they have used a National Oceanic and Atmospheric Administration (NOAA) climate change study.

09:49 AM

Randy Seaholm, Colorado Water Conservation Board, responded to questions from the committee about the effect of climate change on Colorado's ability to satisfy its Colorado River Compact delivery obligations.

09:55 AM

Discussion between the committee and the Colorado Water Conservation Board followed about the accuracy of climate change and water availability predictions and the challenge of basing policy on this uncertainty. Mr. Harding and Mr. Seaholm explained that their objective is to provide information to the roundtables and other policy makers to help with water supply development decisions. Jennifer Gimbel, Director of the Colorado Water Conservation Board (CWCB), explained that the Colorado Water Conservation Board Construction Fund bill, Senate Bill 09-125, includes $1 million for Phase II of the study.

10:08 AM -- Colorado River Curtailment Study

Randy Seaholm, Interstate Compacts Section Chief of the CWCB, described the process of the Compact Compliance study. The study is funded by Section 10 of the 2008 CWCB Projects Bill (House Bill 08-1346) which authorized the expenditure of $500,000 from the Colorado Water Conservation Board Construction Fund. The study will identify issues associated with the administration of state water rights in the Colorado River Basin under the terms of the Colorado River and Upper Colorado River Compacts, to evaluate options to avoid the curtailment of uses, and to evaluate options for curtailing use in Colorado in an equitable manner if the terms of the Colorado River Compact fail to be met. He explained that the first step in the study will be to identify where pre-1922 rights are and were water rights exist that cannot be interrupted. Mr. Seaholm also indicated that they are looking at the concept of a water bank to avoid curtailment and have discussed reserving water in Blue Mesa Reservoir. He mentioned that his office is additionally working on smaller projects surrounding weather modification and vegetative management with respect to tamarisk.

10:40 AM -- Colorado Water Conservation Board and Water Project Financing Issues

 Jennifer Gimbel, Director of the Colorado Water Conservation Board (CWCB) explained that the mission of the CWCB is to aide in the protection and development of the waters of the state. Its programs include water project planning and finance, stream and lake protection, flood hazard identification and mitigation, weather modification, river restoration, water conservation and drought planning, water information, and water supply protection (Attachment ). She identified specific activities related to these responsibilities including the administration of the CWCB Construction Fund, the Perpetual Base Account of the Severance Tax Trust Fund, and the Water Supply Reserve Account. She also explained how the CWCB is helping to estimate future water needs and identify project and processes to meet these needs. She responded to questions from the committee about programs administered by the CWCB including the decision support systems that enable water planners and administrators to assess the effect of changes in water policy on streamflows and water users.

10:50 AM

Ms. Gimbel described the CWCB's budget. She explained that the agency does not receive General Fund moneys. Its revenue come primarily from the state severance tax on non-renewable minerals, federal mineral lease moneys, and interest on loans. These moneys are used to pay for administrative expenses, issue water project fiance loans, and pay for studies. To help address the shortfall in General Fund revenue, the legislature transferred $107 million from CWCB loan programs including $97 million from Perpetual Base Account and $10.25 million from the CWCB Construction Fund to the General Fund during the 2009 legislative session.


10:55 AM -- Revenue for CWCB Programs

Ms. Gimbel explained that revenues for the CWCB Construction Fund come from the return of principal and interest on outstanding loans, interest earned on the cash balance of the fund through investments by the State Treasurer, and federal mineral lease (FML) fund distributions. FML revenue is the portion of revenue the state receives from the money the federal government collects for mineral production on federal lands. The CWCB Construction Fund receives a distribution of 10 percent of FML revenue, excluding bonus payments, up to $14.0 million annually. The amount of FML revenue transferred to the construction fund is allowed to grow by 4 percent annually in succeeding years. The Perpetual Base Account receives half of the receipts to the Severance Tax Trust Fund which is one fourth of all severance tax revenue. The Perpetual Base Account is estimated to receive significantly lower revenue in FY 2009-10 due primarily to falling oil and gas prices and a local property tax offset. She also explained the CWCB administers several programs that rely on "Tier 2" moneys including the Water Supply Reserve Account, the Interbasin Compact Committee, the Water Efficiency Grant Program, and the Species Conservation Trust Fund. Section 39-29-109.3, C.R.S., allocates moneys from the Operational Account of the Severance Tax Trust Fund between Tier 1 and Tier 2 program. Tier 1 expenditures support salaries and on-going core programs of the DNR including the regulation of mining and oil and gas development. The Tier 2 programs support grants, loans, research, and construction. The required reserve for Tier 1 programs is one times the appropriations. The reserve requirement for Tier 2 programs is equal to 15.0 percent of the authorized expenditures. Ms. Gimbel expressed concern about having to rely on Tier 2 moneys that are subject to proportional reduction if mid-year revenue projections indicate there are insufficient funds.


10:57 AM -- Water Project Loans and Grants

Ms. Gimbel explained that moneys in the CWCB Construction Fund is a revolving loan program that finances projects that increase the consumption of Colorado's undeveloped river entitlements and that repair and rehabilitate existing water storage and delivery facilities. Moneys may be used to pay for up to 50 percent of the cost of feasibility studies and water supply investigations. Loans may not be used for domestic water treatment and distribution systems. Loans for more than $10 million must be approved by the General Assembly. Grants may not be made from the fund unless authorized by bill. She explained that construction fund moneys are used to pay for CWCB administrative expenses. For FY 2009-10, the General Assembly appropriated $8.8 million and 47.7 FTE to the CWCB for operations, primarily from moneys in the CWCB Construction Fund. She expressed concern about transfers from the CWCB Construction Fund and the Perpetual Base Account to the General Fund and the effect that these transfer will have on the ability of the CWCB to issue new loans and grants and address water supply needs in the state. For example, the legislature transferred $37 million from the Perpetual Base Account. These moneys were to be used to match federal moneys that may be appropriated for the Arkansas Valley Conduit Project.


11:02 AM

Ms. Gimbel explained that the CWCB provides water project financing for farmers and other private entities that are not eligible to borrow money from the Colorado Water Resources and Power Development Authority. These entities are also unable afford loans from commercial lenders. In 2007, the legislature authorized the CWCB to loan the City of Aurora Water Activity Enterprise $75.75 million for the Prairie Water Project. Ms. Gimbel expressed concern about a proposal that the CWCB sell this loan. She explained that the sale may only yield 20 percent to 40 percent of the actual loan value and reduce its ability to offer low interest loans to agricultural and low income borrowers. It would also impose a $6 million annual impact through lost interest payments. The sale of this loan and additional transfers from CWCB loan programs to the General Fund, she explained, threatens the ability of the CWCB to continue to be self supporting. She responded to questions from the committee concerning the federal mineral lease revenues that are transferred to the CWCB Construction Fund and the effect of recent revenue shortfalls on CWCB operations.

11:19 AM

At the request of Harris Sherman, Executive Director of the Colorado Department of Natural Resources, Senator Al White, member of the Joint Budget Committee, described the FY 2010-11 budget setting process and the challenges facing the legislature as it works to balance the budget. Senator White explained that Governor Ritter will released his FY 2009-10 budget balancing plan in August that seeks to reduce total General Fund appropriations by 10 percent for each department. He said he could not predict how the FY 2010-11 budget will be balanced, but understands the importance of the CWCB and the services that it provides to the state.

11:23 AM

Ms Gimbel closed her remarks and explained the moneys transferred from the CWCB Construction Fund and the Perpetual Base Account to the General Fund may prevent the CWCB from issuing new loans for water projects and limit the amount of money available for new grants in the annual CWCB water projects bill.

11:24 AM -- Potential Legislation and Other Issues

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 requested that the Water Resources Review Committee recommend legislation to continue the program indefinitely. In response to a question from the committee, she described federal legislation to fund the Arkansas Valley Conduit and estimated that the state would need to provide its match for the federal moneys in 2 to 3 years. Part of the Perpetual Base Account money that transferred to the General Fund were previously appropriated to match the federal moneys for the Arkansas Valley Conduit.

11:29 AM

John Whitney, Southwest Regional Director for Congressman John Salazar, described federal legislation to fund the Arkansas Valley Conduit. Harold Miskel, Vice President of the Southeastern Colorado Water Conservancy District, commented on the federal legislation and estimated when the state matching moneys will be needed to fund the Arkansas Valley Conduit.

11:33 AM

At the request of the a committee member, the CWCB described efforts to maximize the use of Colorado's groundwater. Dick Wolfe, State Engineer, described efforts to maximize the use of groundwater in the South Platte River Basin while protecting senior surface water rights from injury. He explained how the South Platte Decision Support System helps his office better manage surface and groundwater resources in the basin. He also described recent litigation over use of South Platte groundwater.

11:41 AM

Eric Wilkinson explained how the recent drought and Colorado Supreme Court decisions have affected the ability of the State Engineer to maximize the use of groundwater in the South Platte Basin. He also explained how loans from the CWCB have helped ground water users develop water supplies that offset the impact of well pumping on surface water users. Without these projects, additional well users would have been required to permanently cease pumping.. He also described the potential benefits of the South Platte Decision Support System once its completed which will enable the Division of Water Resources to better manage water in the South Platte Basin and it will provide greater transparency in water management decisions. He also described the need for additional water storage to offset out-of-priority diversions and protect senior water rights. Without measures to protect irrigation in the South Platte River Basin, he explained, that irrigation may be curtailed which will reduce return flows to the river and harm the environment. Ms. Gimbel explained that the she does not anticipate asking the legislature authorize the CWCB to spend additional money on the South Platte Decision Support System.


11:50 AM

The meeting adjourned. The next meeting is tentatively scheduled for August 19 in Steamboat, Colorado.