First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0332.01 Thomas Morris HOUSE BILL 11-1068 HOUSE SPONSORSHIP Fischer, SENATE SPONSORSHIP Giron and Schwartz, House Committees Senate Committees Agriculture, Livestock, & Natural Resources A BILL FOR AN ACT Concerning the state engineer's authority to approve temporary agricultural water transfer agreements. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill authorizes the state engineer to approve agricultural water transfer agreements for periods of up to 40 years, using a review and public notice and comment process analogous to that used for substitute water supply plans. The user of the agricultural water right must notify the state engineer and the parties who filed comments to the application for approval of the agreement by March 1 of any year in which the user intends to operate the water rights subject to the agreement. The agreement can be reapproved using the same process for one additional period of up to 40 years. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Part 3 of article 92 of title 37, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 37-92-310. Temporary agricultural water transfer agreements - lower Arkansas river - legislative declaration - definition - review procedures - rules - fees. (1) (a) The general assembly hereby: (I) Finds that the preservation of Colorado's irrigated agriculture promotes the health, welfare, and safety of the state and all Coloradans; (II) Determines that the future growth and economic well-being of the state depend to some extent on the use of vested irrigation water rights to meet municipal needs; and (III) Declares that administrative approval of the use of temporary agricultural water transfer agreements in the lower Arkansas river basin can maximize the beneficial use of Colorado water resources to meet future needs while preserving irrigated agriculture without the need for adjudication and without injury to vested water rights or decreed conditional water rights. (b) This section is intended to facilitate the transfer of the historical consumptive use of an absolute irrigation water right for application to municipal use on a temporary basis without permanently changing the water right. (2) For purposes of this section, "temporary agricultural water transfer agreement", or "agreement", means an agreement or amendment to an agreement between the owner of an irrigation water right in the lower Arkansas river basin and a municipal water user pursuant to which: (a) The irrigation water right owner agrees that, during the term of such agreement, the owner will stop his or her use of the irrigation water right for one or more entire irrigation seasons, up to a maximum of one-third of the total of such irrigation seasons or one-third of his or her total historically irrigated acreage during such term, in accordance with the agreement; and (b) The acquiring water right user may divert and beneficially use the water right for such user's own municipal purposes only, subject to the priority system and subject to the approval by the state engineer in accordance with this section. (3) The state engineer may approve and administer agreements that permit a temporary change in the point of diversion, location of use, and type of use of an absolute irrigation water right without the need for an adjudication pursuant to this article, subject to the following: (a) (I) The application for approval to operate an agreement must be accompanied by a detailed written report, prepared by a professional engineer, that evaluates the historical consumptive use, return flows, and the potential for material injury to other water rights relating to the agreement and that proposes conditions to prevent such injury. (II) To determine historical consumptive use for surface water rights in the lower Arkansas river basin within the model domain, the applicant may use and rely upon the assumptions on canal and lateral losses, tailwater runoff, secondary evapotranspiration losses, soil moisture accounting, and irrigation efficiencies and the data on irrigated acreage and cropping patterns, potential crop evapotranspiration, and effective precipitation used in the "Hydrologic Institutional Model", also known as the "HI model", as described in Appendix C to the decree in Kansas v. Colorado, No. 105, Original, United States Supreme Court, which contains the model documentation, including any future updates and revisions to the model under the terms of the decree. To determine the timing and location of historical and predicted return flows, the applicant may use and rely upon the unit response functions that were developed by the state and division engineers under rule 8 of the amended rules and regulations governing the diversion and use of tributary ground water in the Arkansas river basin, Colorado ("Use Rules") or the alluvial water accounting system as maintained by the integrated decision support group and described at www.ids.colostate.edu. An applicant's evaluation of the potential for material injury that uses the assumptions and data of the HI model and unit response functions is presumed valid, and such use shifts the burden of proof of material injury from the applicant to the objector. (III) Notice of an application for approval of an agreement or an amendment of an agreement must be included in the resume prepared by the water clerk in accordance with section 37-92-302 (3). The state engineer shall give the owners of water rights one hundred twenty days after the publication of the resume to file comments on the operation of the agreement. Such comments must include any claim of injury or any terms and conditions that should be imposed upon the agreement so that it will not cause injury to a party's vested water rights or decreed conditional water rights, if such conditional rights will be exercised during operation of the agreement, and any other information the party wishes the state engineer to consider in reviewing the application. (b) The state engineer, after consideration of the comments from any party submitting comments, may approve the operation and administration of the agreement only upon a determination that such operation and administration will not cause injury to other vested water rights and decreed conditional water rights, if such conditional rights will be exercised during operation of the agreement, and will not impair compliance with any interstate compact. Such determination must include the historical consumptive use of the water right, an accurate description of the land where the water is decreed for use, and a plan to prevent erosion and blowing soils and comply with local county noxious weed regulations and other land use provisions when such land is not irrigated pursuant to the agreement. The state engineer shall impose such terms and conditions as are necessary to ensure that these standards are met. In making the determinations specified in this paragraph (b), the state engineer need not hold any formal hearing or conduct any other formal proceedings, but may conduct a hearing or formal proceeding if the state engineer finds it necessary to address the issues. (c) An agreement approved pursuant to this section may be implemented for up to forty years, for which only a single approval is required, and may be reapproved for one successive period of up to forty years by repeating the application process pursuant to this subsection (3). (d) The applicant shall give notice by March 1 of each year, unless earlier required in the agreement or under terms and conditions imposed by the state engineer pursuant to paragraph (b) of this subsection (3), listing each water right subject to the agreement that will be operated pursuant to the agreement and the historically irrigated land that will not be irrigated by such water right that year to the state engineer, the owner of the water right, and all parties who filed comments with the state engineer pursuant to this section. After receiving the notice, the owner of the water right shall not irrigate the lands historically irrigated by such water right that year in accordance with the agreement. (4) (a) When the state engineer approves or denies an agreement, the state engineer shall serve a copy of the decision upon all parties to the application by first-class mail or, if such parties have so elected, by electronic mail. Neither the approval nor the denial of the agreement by the state engineer creates any presumptions, shifts the burden of proof, or serves as a defense in any legal action that may be initiated concerning the agreement. Any appeal of a decision made by the state engineer concerning the operation of an agreement pursuant to this section is de novo, expedited, limited to the issue of injury, and must be filed within forty-five days after mailing of the decision to the water judge in the applicable water division. The water judge shall hear and determine such appeal using the procedures and standards set forth in sections 37-92-304 and 37-92-305 for determination of matters rereferred to the water judge by the referee; except that the water judge shall not deem any failure to appeal all or any part of the decision of the state engineer or failure to state any grounds for appeal to preclude any party from raising any claims of injury in a future proceeding before the water judge. The proponent of the agreement shall be deemed to be the applicant for purposes of application of such procedures and standards. (b) A party that submitted comments on the original application may file comments concerning potential injury to such party's water rights or decreed conditional water rights due to the operation of the agreement with the state engineer by January 1 of the third year following the first year that a water right is used for municipal purposes pursuant to the agreement. The procedures of subsection (3) of this section regarding opportunity to comment and the state engineer's consideration of comments and determination regarding injury to other water rights, and the procedures of this subsection (4) regarding an appeal of such decision, apply with regard to such party's comments. (5) In any subsequent adjudication of a change of water right involved in an agreement, the water judge shall recognize the actual amount of consumptive use available for use pursuant to the agreement or used for its decreed purpose and shall not reduce the historical consumptive use of that water right during the agreement, except to the extent such reduction is based upon the actual amount of water physically and legally available in priority under said rights. (6) Applicants for approval of an agreement pursuant to this section shall pay a fee established by the state engineer pursuant to rules promulgated by the state engineer. Moneys from such fees must be transmitted to the state treasurer and deposited in the ground water management cash fund created in section 37-80-111.5, from which the state engineer may pay for the administrative costs of processing the applications, the review of the engineering reports, and the administration of the agreements. SECTION 2. Act subject to petition - effective date. This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 10, 2011, if adjournment sine die is on May 11, 2011); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part shall not take effect unless approved by the people at the general election to be held in November 2012 and shall take effect on the date of the official declaration of the vote thereon by the governor.