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<br />Update--Resolution with of Outstanding Issues- In addition to our <br />issues with the City of Pueblo, we are still working with the Board of Water Works <br />and Colorado Springs Utilities on resolution of their concerns regarding the future <br />exchange of Project Water Return Flows in to Turquoise Reservoir. The main <br />issue to be resolved is whether or not Fry-Ark Project return flows can be stored <br />in Project space (stored as Project Water protected from spill). We currently store <br />Enterprise-owned Project Water (Project Water that was allocated but returned to <br />the Enterprise) in Project space under an Enterprise account. This water is not <br />subject to spill and is made available to water users throughout the District. In like <br />manner it would be good practice for the District to store Project water return <br />flows in Project space in an effort to maximize the use of Project water. Actually, I <br />would argue that we are under an obligation to first maximize the use of Project <br />water, including return flows, before we address non-project water storage. The <br />storage of return flows has the potential to benefit the entire District. <br /> <br />The Board of Water Works and Colorado Springs Utilities are asking that we <br />either limit how much return flow we can store in Project space or make return <br />flows subject to spill, This is a very important policy issue for the District Board to <br />consider, but Reclamation may also have something say about the issue even <br />though return flows are under the direction of the District. The 1989 Stipulation, <br />which places limits on the use of return flows accruing below Pueblo Reservoir, <br />provides that entities purchasing return flows must acquire their own storage. I <br />understand the compromise that was reached in the 1989 Stipulation, but it <br />doesn't preclude the District from storing return flows in Project space, which <br />provides for more potential uses of the return flow water. And, the 1989 <br />Stipulation does not address return flows accruing from above Pueblo Reservoir, <br />which is the issue now at stake. The Preferred Storage Options Plan identified the <br />concept of maximizing the use of Project water return flows as one of the <br />measures necessary to meet future demands, That is what we are trying to <br />accomplish. Your guidance on this matter would be helpful. <br /> <br />2 <br />