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. i , . i _ ~ ~ I _~ • __ .f p • ~ of the Senate Subcommittee on the Environment, the authori2- example of what can be achieved through a constructive ap- l i l.l.S . Continued from page 5 ing subcommittee for the Federal Endangered Species Act. This proach to even such massive problems as the conflict between - successful effort resulted in cone-million dollar appropriation water development and the Endangered Species Actin fheUpper per year from the Colorado River and Storage Project O & M Fund and Congressional appropriations), and States of Col- orado, Wyoming, and Utah ($200,000 per year total). Tn addi- tion, water project sponsors will provide additional funding for .the Recovery Program from the $]0 per acre-foot contribution to the Program. Donations from other sources, including en- vironmental organizations, could also be part of the funding picture. CONGRESSIONAL FUNDING In addition to the annual operating fund, Congress will be asked to establish two capital funds. A $10 million fund will be used for purchase of water rights to establish instream flows `for endangered species pursuant to State law. Establishment of this fund is critical because it provides a guarantee that the resources will be available to implement instream flows. Since March, 1987, the Colorado Water Congress, State of Colorado, and Colorado Wildlife Federation have been working with Con- gressional committees to obtaininitial funding for water rights acquisition. Support for funding has been obtained from the entire Colorado House delegation, Senators Armstrong and Wirth of Colorado, Senators Wallop and Simpson of Wyoming, Senator Garn of Utah, and Senator Mitchell of Maine, Chairman Kuhn . Continued from page 6 4, The right toexchange~or replace the use of Green Moun- tain Reservoir is of value to the West Slope as source of develop- ment `funds. 5. Purchasing the right to exchange or replace Green Moun- iain Reservoir is of value to metropolitan Denver because it .provides water at a lower capital cost than alternative water supplies. A generic representation of the exchange financing model is shown below in Table L for water rights acquisition in FY 88. The second capital fund which Congress will be asked to establish will be for $5 million to initiate other recovery con- struction elements, such as capital investments for hatcheries, fish passages,.and possibly changing the location of diversion structures for water rights, where feasible, and other structures or habitat modification activities. No funding has been requested for this part of the Program to date, as specific needs have not been identified. The $15 million in capital funding from Congress essentially constitutes a match of funds that will be provided by states and water users. to the Recovery Program. IMPLEMENTING THE PROGRAM Participation in the Program over the long term by Colorado water users is essential if the interests of water users are to be represented and protected. Colorado water users have a vested interest in the Recovery Program, and in its effective, efficient implementation. Along with habitat protection under State law, a broad range of receovery activities must be acted on concur- rently if the Program is to be successful in achieving recovery .within the fifteen-_year timeframe. The Recovery Implementation Program sets an outstanding date the reservoir becomes operational. Denver will pay the River District $250 per acre-foot whether or not Denver uses the water, provided the water is available for use. The River District is building the Rock Creek Project under the terms of the Azure-Windy Gap settlement. The ultimate use of the reservoir will be to provide water to West Slope users similar to Green Mountain or Ruedi reservoirs. However, for the interim period of the lease, 15,000 acre-feet of the reservoir yield will be available to Denver as a source of additional exchange capacity. Revenues from the lease will be used by the River District to assist in the financing of other water projects for the benefit Colorado River Basm. The confltet between endangered species protection and water development remains unresolved in the Platte River Basin. It is hoped_that success in the Upper Col- orado River Basin will set the stage for a solution in the Platte River Basin. There is no question that an acceptable solution is achievable in the Platte Basin, provided that environmental organizations, water users, the States, and the Federal govern- ment are committed to resolving the conflict. The Colorado Water Congress is committed to resolving the conflict in the Platte River Basin. The Colorado Water Congress Special Project on Threatened and Endangered Species has achieved its goal for the Upper Colorado River Basin. This accomplishment should be credited to the Board of Directors of the Colorado Water Congress, to the public and private organizations which have supported the Special Project during the last four years, to the Management Committee of the Special Project, and to all those who served on the technical, legal, and political committees of the Special Project. Tom Pitts is Principal ofTom Pitts andAssociates, Consulting Engineers, Loveland, Colorado, and serves as Project Coor- dinator for the Colorado Ili'ater Congress Special Project on Threatened and Endangered Species. any proposals involving exchanges or management impacting Reclamation projects. Ultimately, federal laws or project operat- ing principles may have to be changed. The River District's. experience is that the federal government, through the Bureau of Reclamation, is in a pivotal role to either facilitate the use of its resources to encourage new means of project financing or to be a major institutional obstacle. The federal government can be a facilitator by working with local water organizations, the state, and the financial community to develop innovative means of using federal resources to sup- port the financing of future projects through non-federal means, or a combination of federal and non-federal means. of the West Slope. The financial aspects of the lease follow the The federal government can just as easily discourage innova- model. The Rock Creek Reservoir lease provides Denver with tive financing by adhering to rigid interpretations of federal a water supply that is cheaper than most of the alternatives and laws or by insisting that funds generated through the use of the lease provides the River District with a revenue stream Reclamation projects be returned to the federal treasury and which will be used to support future West Slope water develop- ,thus not be available for non-federal project development. ment. State Role limper Gunnison/Uncompahgre Basin Sttedy Like the River District, the State of Colorado, through the The third River District example of the exchange financial .Colorado Water Conservation Board, has been striving to model is the Upper Gunnison/Uncompahgre Basin study. The. develop alternative means to finance water projects. Within objectives of this study, which is being sponsored by the Col- Colorado, the state role has been subject to considerable debate. orado Water Resources and Power Development Authority with The Colorado Water Conservation Board administers aloes-in- participatinn hutha RnrPan of Rr rlamatinn the+.ronPrrunnicnn _ aract loan which .ic .available to _cmalls:r rtr{tiertc W' 1 the Water Conservancy District and the River Distnct, are to iden- .state. Recently, legislation was enacted to provide gra~~'s~i~t a .; tify the future water needs of the Upper Gunnison and Uncom- portion of the costs of fish and wildlife .mitigation on water pahgre basins, to propose project alternatives which will en- projects. Both of these programs are limited by appropriations Nance the region's recreation-based economy, and to develop from the state legislature. ,. means of project financing. The State of Colorado has not had success in developing Among the financing methods being considered is the use innovative uses of existing federal projects to finance future of. water sales to out-of-basin users. Although there are many states'' projects. A surcharge to the Colorado River Storage unsolved legal and technical issues, it is possible that a future Project electric rates has been proposed. Revenues from this _project in the Gunnison and Uncompahgre River basins may surcharge were to be divided among the Upper Basin states for utilize existing resources to provide water to out-of-basin users. financing water development. However, Colorado and its com- In return, the out-of-basin users will finance the construction panion Upper Basin states have been unable or unwilling to of specific projects that will enhance the water supply and put together the political coalition necessary to accomplish recreation economy of the Gunnison and Uncompahgre basins. changes in legislation necessary to use this resource as a means " of financing projects. Other Colorado Examples .SPECIFIC EXAMPLES. OF THE EXC~-IANGE ,FINANCING MODEL River District Examples -The River District has incorporated concepts of the exchange financing model in three specific projects, the Green Mountain Pumpback, the River District-Denver Rock Creek Reservoir lease and the Upper Gunnison-Uncompahgre Basin study. Green Mountain Pumpback 1 The proposal by the West Slope Water Advisory Council for the Green Mountain Pumpback was followed by specific negoti- ations between the River District, Denver Water Board, and the Northern Colorado Water Conservancy. District. Elements of the Green Mountain Pumpback proposal were included in the stipulated settlement of_ the litigation involving Denver's claims for West Slope water rights. The negotiated settlement was not identical to the proposal. Denver's payment to the West Slope for the right to exchange Green Mountain Reservoir is in the form of reservoir yield, not dollars. Under the settlement, Denver must replace the existing functions of Green Mountain plus provide the West Slope with an additional reservoir capacity yielding 25,000 acre-feet plus 15% of the Pumpback project yield to Denver. -The agreement also specified that the West Slope would participate with Denver in the evaluation and selection of the replacement reservoirs, and that the. reservoirs would be selected and operated to en- hance, if possible, the West Slope recreation economy. River District-Denver Rock Creek Reservoir Lease In March, 1986, the River District and Denver signed a lease agreement. Under the agreement, Denver will lease up to 15,000 acre-feet of water per year from the. River District's Rock Creek Reservoir project. The term of the lease is 25 years from the There are a number of other proposed projects in Colorado that utilize concepts of the exchange financing model. A private company has proposed agrand-scale lease of water allotted by compact to the Upper Basin states to end users in San Diego. The proposal included payments to Upper Basin states which could be used for water development. Northern Colorado Water Conservancy District is in the pro- cess of developing additional water storage in the Cache La Poadre Basin. As proposed, this project will include additional basin management and exchanges. The negotiated settlement between the Ute Indian tribes, the United States and the State of Colorado over the Indians' re- served rights claims may allow the lease of Animas Las Plata Project water to downstream users. Benefits from this type of lease could be used by the tribes for economic development. ISSUES AND CHALLENGES Institutional Issues and Constraints Any proposed change in the historic operation or status quo of an existing project raises fears from the present users of the project. The development of new projects utilizing exchanges or changes in system management requires careful planning and ground work. Colorado water law protects water users from injury from changes in water rights. But issues other than quan- tity and timing of flows are not normally addressed by the water courts. Other relevant issues are water quality, aquatic impacts, economic impacts and aesthetics. These issues may be covered by federal or local permitting requirements: Federal Role Because of the Bureau of Reclamation built and operates many of the key water projects in Colorado and other western states., the federal government must be an active participant in Challenges The water development community faces many difficult chal- lenges in the planning and financing of its future projects. It is almost a certainty that the federal government will have a limited role in the financing of future projects. Projects planned to meet the water needs of the 21st century will have to meet more rigid economic and environmental standards than existing projects. The water community must look at its existing resources. The use or management of existing resources may provide a means to assist in the financing of future projects. Cooperative efforts and change will be necessary. Through the use of its existing resources, the River District has put in place a plan to finance a portion of its future needs. However,. the plan will not meet all of the District's needs. The River District recognizes that changes to reflect political and economic realities will be made and that to finance its future water needs, further new and innovative approaches will have to be developed. ~ ACKNOWLEDGEMENTS The agreements discussed" in this paper were achieved through the concern, creativity and ej~orts of the West Slope members of the Governor's Metropolitan Water Roundtable, the members of the West Slope Water Advisory Council. and the Colorado River Water Conservation District Board. The negotiating team members representing the Colorado River Water Conservation District in the specific negotiations with the"Denver Water Board and Northern Colorado Water Conservancy District included Roland C.Fischer, Secretary- Engineer; Donald H. Hamburg, General Counsel; Anthony W. Williams, Special Counsel, and the author. Colorado Water Rights .. . _: . =_ _,~ ....~. ~~ ..n _. ,, a. ~ , .. _ . _ .,,~,~.~