Water Resources Review Committee (09/30/2009)

Final
STAFF SUMMARY OF MEETING

WATER RESOURCES REVIEW COMMITTEE

Date:	09/30/2009	ATTENDANCE

Time:	10:00 AM to 03:55 PM	Baumgardner	X
		Brophy	*
Place:	HCR 0112	Fischer	X
		Gardner C.	E
This Meeting was called to order by		McKinley	X
	Senator Hodge	Schwartz	*
		White	X
This Report was prepared by		Whitehead	X
	Lauren Ris	Curry	X
		Hodge	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Windy Gap NISP Water Court Update Prep Water Eligibility Lists Regulation of Exempt Residential Well Permits Draft Bill 1 Draft Bill 2 Draft Bill 3 Micro-based Fuels Aquatic Nuisance Control Programs Public Testimony		Briefing Only Briefing Only Briefing Only Briefing Only Briefing Only Recommended to Legislative Council Recommended to Legislative Council Recommended to Legislative Council Briefing Only Briefing Only Briefing Only

10:01 AM -- Windy Gap

Bart Miller, Western Resource Advocates, discussed his concerns regarding the Windy Gap Firming Project and Northern Integrated Supply Project (NISP). The Windy Gap Project is located west of Granby and consists of a diversion dam on the Colorado River. The firming project is intended to increase the reliability of the Windy Gap Project. He discussed levels of municipal water use (Attachment A) and pointed out that while some cities have been able to reduce their water consumption, Greeley, Broomfield, and Longmont, on average, consume more water than some other front range cities (200 gallons per person per year or more), and that these same cities are some of the major proponents of the Windy Gap Project. He explained that because some cities have a much lower rate of consumption, he believes that there are opportunities to implement water conservation measures in these cities with higher consumption rates. He also discussed water rate structures (Attachment B) as one way to manage demand for water and explained that most cities, except for Loveland, Fort Morgan, and Broomfield, have stepped rate structures where the price of water increases based on the amount consumed. He again pointed out that Loveland and Broomfield are proponents of the project. He concluded by asking the committee to continue to provide funding for water efficiency through the Colorado Water Conservation Board (CWCB) and encouraged the committee members to look for ways to add language about water conservation in energy bills and other relevant bills.

10:06 AM -- Mely Whiting, Trout Unlimited, explained how the angling values of the Colorado River would be impaired by the Windy Gap Firming Project. She indicated that the project would take water from the Colorado River during periods of high flows. She also discussed the negative consequences of taking water during periods of high flow, which she said were not addressed in the project's environmental impact statement. She also thanked the district for its effort to mitigate the project's implementation during low flow periods.

10:09 AM -- James Newberry, Grand County Commissioner, explained that Grand County is dealing with two firming projects: one from Denver Water and the Windy Gap project. He discussed how keeping Grand County rivers healthy is important for tourism and maintaining the county's way of life. He explained that the county is continuing to have discussions with Denver Water and the Northern Colorado Water Conservancy District about how to use firming systems to enhance the rivers. He answered questions from the committee about how negotiations are addressing conservation issues, whether high flows are still up for negotiation, how flows will be protected during drought, and how instream flows will be used.

10:23 AM -- Eric Wilkinson, General Manager, Northern Colorado Water Conservancy District, described the location of the Windy Gap Project (Attachment C). He explained that the project is a compliment to the original project using excess capacity of the Colorado Big Thompson Project, which will make water from the Windy Gap Project more reliable. He discussed the project's history and indicated that the Windy Gap Project will firm 30,000 acre feet of water. Mr. Wilkinson explained that there are 13 participants in the project who are each creating individual water conservation plans. Additionally, he said that Northern Colorado Water Conservancy District is working to address concerns identified in the environmental impact statement and is working with the other participants to put together mitigation and enhancement packages to address these issues. The mitigation and enhancement measures will be incorporated into a proposed intergovernmental agreement between Grand County, the Northwest Council of Governments, Middle Park Water Conservancy District, and the Colorado River Conservation District. Once an agreement is reached, the parties will go to water court and have the agreement incorporated into the project's water decree. Mr. Wilkinson answered questions from the committee.

10:38 AM -- Norther Integrated Supply Project (NISP)

Gary Wockner, Save the Poudre Coalition, gave a power point presentation to the committee that outlined his concerns with the Northern Integrated Supply Project (Attachment D) and discussed an alternative plan (Attachment E). He argued that NISP will dry up and destroy farms and will drain and destroy the Poudre River. The alternative plan calls for water conservation, rotational fallowing programs on farms, and the use of growth-displaced water. He answered questions from the committee concerning population growth projections, farming organizations that support NISP, and acres of agricultural land that the alternative plan would dry up.

11:00 AM -- Eric Wilkinson, General manager of the Northern Colorado Water Conservancy District, explained that NISP is a regional water supply project coordinated by the Northern Colorado Water Conservancy District on behalf of 15 Front Range water providers. Attachment F includes maps of the project location as well as additional background information. The goal of the project is to provide participating water providers with approximately 40,000 acre-feet of water. The project will include the construction of Glade Reservoir, which would be located northwest of Fort Collins and north of Horsetooth Reservoir. The water to fill Glade Reservoir will be diverted from the Poudre River. Mr. Wilkinson explained that in addition to meeting municipal demands, the project will provide an alternative water supply for agriculture. He highlighted some of the differences between NISP and in the alternative plan discussed by Mr. Wockner. He explained that they looked at over 200 alternatives and concluded that NISP is the least environmentally damaging and most practicable project. He answered questions from the committee concerning how the project will impact Colorado's water delivery obligations to Nebraska, the likely source of water supply if the project is not completed, and the chance of increased water diversions from the Western Slope.

11:18 AM -- Water Court Update

Justice Hobbs, Colorado Supreme Court Justice, reported to the committee that all of the recommendations of the Water Court Committee have all been implemented (Attachment G). He reviewed the list of recommendations and discussed a variety of products and policy changes that resulted from the recommendations. One of the recommendations led to a newly released publication, "The Non-Attorney's Guide to Water Courts" (Attachment H). He also explained how one of the recommendations lead to the development of a new referee system in the Water Court System and discussed how these new procedures will be implemented. Another recommendation resulted in a new expert witness rule, which will allow water experts to come together in order to narrow issues in water cases by determining facts that can be agreed upon. Justice Hobbs closed by thanking the committee for passing two bills last session that were recommended by the Water Court Committee: SB 09-015, which changed the White River Division from Water Court Division 5 to Division 6, and HB 09-1185, which eliminated a provision requiring that water rights applications be filed in quadruplicate. He answered questions from the committee about the need to provide continuing education courses on issues surrounding produced water. Justice Hobbs additionally distributed a copy of an article he authored, "Colorado: Centennial State at the Headwaters" (Attachment I).

11:29 AM -- Preparation of Water Eligibility Loan Lists

Steve Gunderson, Director Water Quality Control Division, and Donna Davis, Operations Program Manager for the Water Quality Control Division, provided an overview of the prioritization of projects for the Water Pollution Control Project and Drinking Water Project loan eligibility lists. The projects provide low interest loans to governmental agencies for the construction of water projects. Mr. Gunderson explained that due to the funding received through the American Recovery and Reinvestment Act (ARRA), Water Quality Control Division staff have been working long hours to process applications with federal deadlines. He explained that the Water Quality Control Division has held four public meetings to lay out their ranking criteria. Ms. Davis described the division's prioritization process (Attachment J). She explained that they received $62 million for infrastructure projects from ARRA. In the base loan program, the division has about $140 million available for loans in 2009. She explained that the eligibility lists documented a need for about $1.2 billion worth of drinking water projects and about $1.9 billion in waste water projects. She discussed how projects were selected and the requirements of ARRA funding. ARRA requires that 50 percent of the ARRA funding be given away in loan forgiveness or grants, that 20 percent of the funding go towards projects that use green infrastructure. The rest of the money can be used to fund projects at

the state's discretion. ARRA also requires that the funding be expended by February 17, 2010. Ms. Davis reviewed the six funding categories which are used to prioritize projects. She further explained that only water pollution control projects in categories 1, 2, and 3 were funded and only drinking water projects in category 1 were funded.

11:46 AM -- State Engineer's Office Update on Regulation Geothermal Wells and Exempt Residential Well Permits

Kevin Rein, Assistant State Engineer, explained how geothermal resources are regulated in Colorado (Attachment K). Geothermal resources are subject to the prior appropriation system. If geothermal fluid is determined to be tributary, then it is a public resource and no property rights result from land ownership. Production of geothermal fluid from a well requires a permit from the State Engineer's Office. For geoexchange systems, there a provision in statute that allows for a blanket permit, rather than a requirement to obtain a permit for each site. In issuing a water well permit, the State Engineer must find that there is no material injury to a water right or a geothermal right, or that the applicant can offset any injury, or offer replacement water. He explained that injury includes any alteration of the quantity, temperature, or quality of another right. If the source is non-tributary ground water, then it is not administered in the priority system. He also explained that the state allows for geothermal management districts, although there have not been any formed. Mr. Rein answered questions from the committee concerning how temperature injury occurs. Mr. Rein also distributed a variety of informational handouts to the committee, including a "Guide to Colorado Well Permits" available at http://water.state.co.us/pubs/wellpermitguide.pdf, a booklet titled "Synopsis of Colorado Water Law" available through the Division of Water Resources, and the summer 2009 "Headwaters" magazine available through the Colorado Foundation for Water Education.

11:57 AM -- Dick Wolfe, State Engineer, provided an overview of exempt well permit regulations (Attachment L). Exempt wells are exempt from administration within the appropriation system. He explained that permits are not issued in areas where another existing water supply is available. The State Engineer's Office has been issuing permits for exempt wells since 1972, and Mr. Wolfe indicated that there are about 210,000 permitted exempt wells in Colorado today. Permits are not required for wells prior to 1972. He discussed some of the allowable uses under exempt and small capacity well permits. He clarified that small capacity wells are exempt wells in designated groundwater basins. Mr. Wolfe provided a synopsis of raincollection systems (Attachment M). He also discussed the types of parcels considered for residential well permits and described the evaluation methods for issuing permits. He answered questions from the committee concerning the number of exempt wells in the South Platte Basin and geothermal management districts.

12:12 PM

The committee recessed for lunch.

01:28 PM -- Draft Bill 1 - Funding for the Division of Water Resources

The committee reconvened.

Draft Bill 1— concerning funding for the Division of Water Resources— was requested at the August 19 meeting of the Water Resources Review Committee and amended at the September 9 meeting (Attachment N). It authorizes the expenditure of up to 5 percent of the moneys in Tier 1 of the Operational Account of the Severance Tax Trust Fund for the Division of Water Resources, and allows this increase to supplant moneys that would otherwise be made available to the division from the General Fund. It also eliminates the Tier 1 authorization for the Division of Wildlife to account for the increase.


BILL:	Draft Bill
TIME:	01:33:41 PM
MOVED:	Fischer
MOTION:	Moved Amendment L. 002 that reduces Tier 1 Operational Account moneys that are allocated to the Division of Reclamation, Mining, and Safety from 25 percent to 20 percent (Attachment O) and strikes the provision of Draft Bill 1 that eliminates the Tier 1 funding for the Division of Wildlife. The motion failed on a vote of 3 to 6.
SECONDED:
		VOTE
	Baumgardner	No
	Brophy	No
	Fischer	Yes
	Gardner C.	Excused
	McKinley	No
	Schwartz	Yes
	White	No
	Whitehead	Yes
	Curry	No
	Hodge	No

Not Final YES: 3 NO: 6 EXC: 1 ABS: 0 FINAL ACTION: FAIL

01:41 PM

Jeff Ver Steeg, Assistant Director of the Division of Wildlife, spoke in opposition to the provision of Draft Bill 1 that eliminates the Tier 1 Operational Account funding for the Division of Wildlife to account for the increase for the Division of Water Resources. He explained how the Division of Wildlife uses this money to address impacts to wildlife from mineral and energy development. He also explained that 75 percent of division's budget is paid for with hunting and fishing license fees which are expected to decline in 2009 and 2010. He also described how the division plans to address the revenue shortfall and responded to questions about the impact to the division if the Operational Account moneys are no longer available.


BILL:	Draft Bill
TIME:	01:56:47 PM
MOVED:	Curry
MOTION:	Moved to recommend Draft Bill 1 to the Legislative Council. This bill authorizes the expenditure of up to 5 percent of the moneys in Tier 1 of the Operational Account of the Severance Tax Trust Fund for the Division of Water Resources and eliminates the Tier 1 authorization for the Division of Wildlife to account for the increase. The motion passed on a vote of 7 to 2.
SECONDED:
		VOTE
	Baumgardner	Yes
	Brophy	Yes
	Fischer	No
	Gardner C.	Excused
	McKinley	Yes
	Schwartz	No
	White	Yes
	Whitehead	Yes
	Curry	Yes
	Hodge	Yes

Final YES: 7 NO: 2 EXC: 1 ABS: 0 FINAL ACTION: PASS

02:00 PM

Representative Curry offered to sponsor the bill in the House and Senator Brophy offered to sponsor the bill in the Senate. Senators Hodge, White, and Whitehead and Representatives Baumgardner and McKinley requested to be cosponsors of the bill. If approved by Legislative Council on November 10, this bill will be introduced as a House Bill in the 2010 Legislative session and will be exempt from the sponsor's five-bill limit.

01:59 PM -- Draft Bill 2 - Water Efficiency Grant Program

Draft Bill 2— concerning the Water Efficiency Grant Program— was requested at the August 19 meeting of the Water Resources Review Committee (Attachment P). The Water Efficiency Grant Program is administered by the Colorado Water Conservation Board and is currently scheduled to be repealed on July 1, 2012. Draft Bill 2 extends the program indefinitely and authorizes up to $550,000 of annual appropriations from the Water Efficiency Grant Program Cash Fund beginning on July 1, 2010. The bill also annually transfers $550,000 from Tier 2 of the Operational Account of the Severance Tax Trust Fund to the Water Efficiency Grant Program Cash Fund beginning on July 1, 2012.


BILL:	Draft Bill 2
TIME:	01:59:44 PM
MOVED:	Baumgardner
MOTION:	Moved to amend the Draft Bill 2 to repeal the Water Efficiency Grant Program in 2020. The motion passed on a vote of 6 to 3.
SECONDED:
		VOTE
	Baumgardner	Yes
	Brophy	Yes
	Fischer	No
	Gardner C.	Excused
	McKinley	Yes
	Schwartz	Yes
	White	Yes
	Whitehead	No
	Curry	Yes
	Hodge	No

Not Final YES: 6 NO: 3 EXC: 1 ABS: 0 FINAL ACTION: PASS


BILL:	Draft Bill 2
TIME:	02:02:12 PM
MOVED:	Schwartz
MOTION:	Moved to recommend Draft Bill 2, as amended, concerning the Water Efficiency Grant Program, to Legislative Council This bill extends the program to 2020 and authorizes up to $550,000 of annual appropriations from the Water Efficiency Grant Program Cash Fund beginning on July 1, 2010. The bill also annually transfers $550,000 from Tier 2 of the Operational Account of the Severance Tax Trust Fund to the Water Efficiency Grant Program Cash Fund beginning on July 1, 2012. The motion passed on a vote of 9 to 0.
SECONDED:
		VOTE
	Baumgardner	Yes
	Brophy	Yes
	Fischer	Yes
	Gardner C.	Excused
	McKinley	Yes
	Schwartz	Yes
	White	Yes
	Whitehead	Yes
	Curry	Yes
	Hodge	Yes

Final YES: 9 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS

02:03 PM

Senator Whitehead offered to sponsor the bill in the Senate and Representative Baumgardner offered to sponsor the bill in the House. Senators Hodge, Brophy, Schwartz, and White, and Representatives Curry, Baumgardner, Fischer, and McKinley requested to be cosponsors of the bill.

If approved by Legislative Council on November 10, this bill will be introduced as a Senate Bill in the 2010 legislative session and exempt from the sponsor's five-bill limit.

02:03 PM -- Draft Bill 3 -- Valuation of New Hydroelectric Facilities

Draft Bill 3— concerning valuation of new hydroelectric facilities— was requested at the September 9 meeting of the Water Resources Review Committee (Attachment Q). Senator Schwartz explained that Draft Bill 3 requires that new hydroelectric energy facilities be valued for the purpose of property taxation in the same manner as new wind energy facilities and new solar energy facilities are valued.


BILL:	Draft Bill 3
TIME:	02:04:35 PM
MOVED:	Schwartz
MOTION:	Moved to recommend Draft Bill 3 that requires a new hydroelectric energy facility to be valued for the purpose of property taxation in the same manner as new wind energy facilities and new solar energy facilities are valued. The motion passed on a vote of 8 to 1.
SECONDED:
		VOTE
	Baumgardner	No
	Brophy	Yes
	Fischer	Yes
	Gardner C.	Excused
	McKinley	Yes
	Schwartz	Yes
	White	Yes
	Whitehead	Yes
	Curry	Yes
	Hodge	Yes

Final YES: 8 NO: 1 EXC: 1 ABS: 0 FINAL ACTION: PASS

02:05 PM

Senator Schwartz offered to sponsor the bill in the Senate and Representative Fischer offered to sponsor the bill in the House. Senators Hodge, Brophy, White, and Whitehead and Representatives Curry, Baumgardner and McKinley requested to be cosponsors of the bill. If approved by Legislative Council on November 10, this bill will be introduced as a Senate Bill in the 2010 legislative session and exempt from the sponsor's five-bill limit.

The committee recessed.


BILL:	Draft Bill 3
TIME:	02:03:35 PM
MOVED:	Schwartz
MOTION:	Moved to recommend Draft Bill 3 that requires a new hydroelectric energy facility to be valued for the purpose of property taxation in the same manner as new wind energy facilities and new solar energy facilities are valued. The motion passed 8 to 1. Senator Schwartz offered to sponsor the bill in the Senate and Representative Fischer offered to sponsor the bill in the House. Senators Hodge, Brophy, White, and Whitehead and Representatives Curry, Baumgardner and McKinley requested to be cosponsors of the bill. If approved by Legislative Council on November 10, this bill will be introduced as a Senate Bill in the 2010 legislative session and exempt from the sponsor's five-bill limit.
SECONDED:
		VOTE
	Baumgardner	No
	Brophy	Yes
	Fischer	Yes
	Gardner C.	Excused
	McKinley	Yes
	Schwartz	Yes
	White	Yes
	Whitehead	Yes
	Curry	Yes
	Hodge	Yes

Final YES: 8 NO: 1 EXC: 1 ABS: 0 FINAL ACTION: PASS

02:14 PM -- Micro-based Fuels

The committee returned from recess. Douglas Henston, Chief Executive Officer, Solix Biofuels, Inc., explained that Solix Biofuels, Inc. was started in 2006 to develop and commercialize large-scale production of algae-based biofuels and bio-based products. He compared the amount of biofuel obtained from algae on an acre of land in one year with other biofuel crops. For example, rapeseed produces approximately 110 to 145 gallons of fuel for each acre of land. He estimated that algae will produce between 7,000 to 10,000 gallons of fuel from an acre of land when the production process is fully developed. Mr. Henston explained that algae-based fuels can be produced in open ponds and in closed systems such as the one used by his company. The closed system is more productive, but more expensive to operate than algae produced in open ponds. He also described recent advancements in algae based fuel production that have reduced the cost of his product and increased its yields.

02:35 PM

Mr. Henston explained how he plans to commercialize the production of algae-based fuels. He also described the Coyote Gulch Demonstration Facility that is located on the Southern Ute tribal lands in southwest Colorado. The two-acre facility uses produced water and carbon dioxide from local gas wells. It is expected to produce 3,000 gallons of algal oil per acre, per year by late 2009. In addition to the Southern Ute Tribe, he explained that several major companies and research institutions have invested in Solix Biofuels, Inc., including Cargill, Valero, Cemex, and the Los Alamos National Laboratory. He also responded to questions from committee about the amount of water that is consumed by the algal oil production process and the cost of this fuel compared to petroleum fuels.

02:59 PM -- Aquatic Nuisance Control Programs

Elizabeth Brown, Division of Wildlife, explained that aquatic nuisance species (ANS) are non-indigenous invasive organisms that are capable of causing significant damage to ecological, commercial and recreational resources. The State Aquatic Nuisance Species Regulation lists 15 ANS including Zebra and Quagga mussels, New Zealand mud snails and Eurasian watermilfoil that have been detected in Colorado. She explained that the General Assembly passed Senate Bill 08-226 which creates a program to protect the state's waters from ANS. The law requires the Division of Wildlife (DOW) and Division of Parks and Outdoor Recreation (Parks) in the Department of Natural Resources, the Governor's Office of Economic Development, the Colorado Tourism Office, and the Department of Agriculture, to implement plans to control these species. It also authorizes the DOW and Parks to inspect motor vehicles, vessels, trailers, or any related equipment (i.e., conveyances) under certain conditions. It allows the agencies to require conveyance owners to decontaminate their conveyance or have it impounded, and to assess penalties on persons who fail to comply with the requirements. The law appropriated $7.2 million from the Severance Tax Trust Fund and Wildlife Cash Fund for ANS control in FY 2008-09. It also appropriates $4 million for ANS control from Tier 2 of the Operational Account of the Severance Tax Trust Fund for FY 2009-10 and each year thereafter. She explained that some of these moneys are used for early detection programs. In 2008, the program sampled 102 water bodies in Colorado and in 2009, it sampled 160 water bodies. To date, seven Colorado water bodies have tested positive for ANS including Lake Granby and Pueblo, Taryall, and Jumbo reservoirs. Blue Mesa Reservoir is also suspected of being invaded. She also described how private entities assist with ANS inspection and control programs.

03:14 PM

Ms. Brown described measures to control the spread of ANS through fish stocking and programs to educate the public about ANS and how to control their spread. She explained that the state is also conducting research on how mussels are spread in cold water bodies, decontamination methods, and potential biological controls for ANS. She also responded to questions about recent mussel findings and factors that may limit ANS infestation, such as the pH level and the amount of dissolved calcium in a water body.

03:29 PM

Brad Wind, Northern Colorado Water Conservancy District, explained that the district receives water from Lake Granby in western Colorado that is contaminated with mussels. This water is transported through a tunnel to farms and cities in northeastern Colorado. He described inspection programs on western and eastern water bodies and efforts to reduce inspection costs such as reducing the number of boat ramps which eliminates the need for an inspector. He urged the legislature to consider imposing a user fee on boat owners to pay for ANS control programs. He also responded to questions about the costs of alternative inspection methods such as locating inspectors on every boat ramp and locating inspectors at central ports of entry.

03:39 PM -- Public Testimony

Robert Longenbaugh, representing himself, explained that he is a retired Assistant Engineer in the Division of Water Resources. He expressed concern about groundwater pumping regulations and he proposed policies to maximize groundwater use in Colorado. He identified major aquifers in Colorado including alluvial aquifers in the South Platte, Arkansas, and Rio Grande basins and the Ogalala aquifer. He explained how augmentation requirements limit the storage and use of groundwater for irrigation and municipal purposes. He also identified depletive effects on South Platte River flows including phreatophytes, gravel pits, and changes in irrigation practices. He explained that these activities may impact senior water rights more than unregulated groundwater users.

03:45 PM

John Meininger, representing himself, expressed concern about the management of the South Platte River and its effect on groundwater users in the basin. He also expressed concern about the cost and time required to litigate water rights cases. He urged the Water Resources Review Committee to determine if statutes should be amended to increase conjunctive use of surface and groundwater. He also urged the General Assembly to appropriate money to complete the South Platte River Decision Support System and to pay for more hydrology studies. He also identified pending court cases that may affect how the South Platte River is managed.

03:52 PM

Joan Green, representing the Pawnee Well Users Association, the Harmony Ditch Company, the City of Sterling, and the Farmers Reservoir and Irrigation Company (FRICO), urged the Water Resources Review Committee to consult with affected water rights owners before recommending any legislation to amend state water laws.

03:53 PM

The meeting adjourned.