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<br />PSOP Water Rights Filings- We're still working with the City of Pueblo <br />(the City) on their flow issues. We have another negotiating session scheduled <br />for March 5. I've attached our recent counter proposal for your review. I met with <br />all but one member of Pueblo City Council and I've sent the Council a briefing <br />packet on the PSOP and the outstanding issues between the City and the <br />DistrictlPSOP participants (see attached). We are also working with the City's <br />attorneys to reach a joint stipulation (the District and the PSOP participants) in <br />their RICO case that would allow us to have enough time to negotiate the issues, <br />February 28 is the deadline for filing a statement of opposition in the RICO case. <br />So, we're trying to give ourselves more time so that we can avoid filing a <br />statement of opposition. We will bring to the board a proposed stipulation that <br />will provide the extra time we need. <br /> <br />Arkansas Valley Conduit Feasibility Study- Phase I of the Study is <br />complete. It was an initial evaluation of the technical feasibility of the proposed <br />pipeline project, looking for any fatal flaws in the concept. It also provided a <br />preliminary estimate of the cost of building the pipeline ($209 million). Phase II of <br />the study will provide more technical detail of the pipeline project including <br />possible alignment of the pipeline itself. Following Phase II the communities will <br />need to decide what approach to take to develop funding for the project; that will <br />likely include federal support, <br /> <br />Water Bank- Last week Bob Hamilton and I met with Reclamation and the <br />State Engineer's staff to review the current draft of the water bank rules and the <br />concept paper I had provided them on how winter water and the Project could <br />participate in the water bank, Reclamation raised several outstanding issues, <br />which have the potential to slow down the full implementation of the water bank. <br />They claimed that winter water stored in Project space would not be able to be <br />included in the water bank program because the Project Environment Impact <br />Statement (EIS),dated 1975, did not articulate that use of winter water, and the <br />District's repayment contract states that winter water will be delivered for <br />irrigation purposes in the Arkansas Valley. We should be able to address these <br />issues with the water bank section of our federal legislation. However, <br />Reclamation claims that they may have to amend the old EIS; that could take <br />two years. This is a potential major setback to the implementation of the water <br />bank and we may have to seek additional time from the legislature to resolve <br />these issues, <br /> <br />2 <br />