C150150 Market Report

• Contract/PO #: C150150
• Contractor Name: Lower Arkansas Water Management Association
• Contract Type: Loan
• Water District: 67
• County: Bent
• Loan Projects - Doc Type: Feasibility Study

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direct violation of the terms of the Compact. They therefore argued that curtailment orders made pursuant
to the 1980 Operating Plan were invalid.

Aftertrial, the water judge ruled, among other things, that Highland and Nine Mile were not injured
by the 1980 Operating Plan and did not have legal standing to challenge the 1980 Operating Plan. The
decision was appealed by Highland and Nine Mile to the Colorado Supreme Court. The Colorado
Supreme Court reversed the decision of the trial court, held that Highland and Nine Mile had standing to
raise this defense, and remanded the case to the trial court. See People ex rel. Simpson v. Highland
Irrigation Company, 893 P .2d 122 (Colo. 1995). On remand, the water judge rejected Highland and
Nine Mile's defense that the 1980 Operating Plan was invalid and entered an injunction against further
violation of the State Engineer's curtailment orders. Highland again appealed to the Colorado Supreme
Court. That court upheld both the validity of the 1980 Operating Plan and the trial court's inju.'lction against
Highland and Nine Mile. See People ex rel. Simpson v. Highland Irrigation Company, 917 P .2d 1242
(Colo. 1996).

D. The 1997 Offset Account in John Martin Reservoir

On March 11, 1997, the Administration approved anew storage account in John Martin Reservoir
known as the "Offset Account in John Martin Reservoir for Colorado Pumping" (the "Offset Account").
The Offset Account is 20,000 acre-feet and it is separate from and in addition to the accounts established
by the 1980 Operating Plan. The stated purpose of the Offset Account is to replace any depletions to
usable state-line flows caused by Colorado's allowance of post-Compact well pumping in excess of
Colorado's annual pre-Compact well pumping entitlement of 15,000 acre-feet. It operates by delivering
replacement water to the state line or by making replacement water available in the Offset Account where
it can be released at the call of Kansas.

The only water that may be delivered to the Offset Account is water approved for that purpose by
the Colorado State Engineer. Evaporation losses to the water in the Offset Account is charged to
Colorado until the water is released or transferred to Kansas or unless other conditions stated in the Offset
Account Resolution are satisfIed. Up to 1,500 acre-feet per year may be delivered to the Offset Account
for purposes of replacing depletions to Conservation Storage caused by post-Compact well pumping. Any
transit losses incurred onreleases of state-line return flow replacement water delivered to the Offset
Account must be made up by the entity delivering such water to the Offset Account.

In order to be able to use the Offset Account, Colorado or its water users must deliver 500 acre-
feet offully-consumable water to the account by April 1 of each year for use by Kansas as a prerequisite
to the rightto store 10,000 acre-feet. Five percent (5%) of all deliveries over 10,000 acre-feet to the
Offset Account are likewise allocated to Kansas. The 500 acre-feet and the fIve percent (5%) of amounts
in excess of 1 0,000 acre-feet is the "Storage Charge Water" allocated to Kansas, not to offset depletions
to usable state-line flows, but instead "as part of Kansas' equitable share of the benefIts arising from the
creation of the Offset Account" in John Martin Reservoir. The Resolution creating the Offset Account

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