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®berIanb Aittb anb 3.eserbafr QLampanp <br /> (970)872-4344 28444 Redlands Mesa Rd,Hotchkiss,Co 81419 overlandditch @tds.net <br /> March 29, 2011 <br /> Kirk G. Russell, P.E. <br /> Design&Construction Manager <br /> Water Project Loan Program <br /> Colorado Water Conservation Board <br /> Department of Natural Resources <br /> 1580 Logan Street,Suite 600 <br /> Denver,CO 80203 <br /> RE: Overland Ditch Project Update <br /> Loan extension request <br /> Dear Kirk: <br /> Thank you for your recent communication regarding our ongoing efforts to expand the Overland <br /> Reservoir. The company has encountered epic delays in the permitting process since our first application <br /> in the fall of 2007 with the US Forest Service. I am happy to report that the ODRC has successfully <br /> completed several months of work with the Corps of Engineers(Grand Junction Office) and is well along <br /> in the initial phases of a"404"permit. With any luck, the first round of public comments on the scoping <br /> document should be out in second quarter of this year. The company continues to be enthusiastic and <br /> committed that a project can be completed by the end of 2013. Until the final engineering documents are <br /> prepared it remains unclear whether the current loan request will be sufficient. I'll provide a brief review <br /> of the current and past activities: <br /> Permitting Process to date: <br /> • History: The first permit was applied for in the fall of 2005. Since the Overland Reservoir(OR) <br /> resides on National Forest the historic tradition was that the USFS would be the"lead agency" <br /> and start the permitting process. This included completing a USFS specific NEPA document and <br /> all the other requisite environmental requirements. At the end of this process the USFS would <br /> forward the permit to the US Army Corps of Engineers (COE)for evaluation of a"404"clean <br /> water permit. Embedded in this permit was a requirement for the COE to permit any"wetlands" <br /> issues that may be involved in the selective projects. In 2008 the USFS was involved with <br /> another Grand Mesa Project(Hunter reservoir expansion-Ute Water-Grand Junction, Co)that <br /> had started the permit process several years before the Overland request, but remained stalled at <br /> the"404" phase because of wetlands issues. Despite vigorous activity on the part of the Overland <br /> Board the USFS appeared to have made an internal decision not to permit any projects until a <br /> process for the wetlands issues could be agreed upon by all the Federal agencies. In 2008 the <br /> Overland applied for and was awarded a grant from the Gunnison Roundtable to delineate the <br /> FENS wetlands in the Overland reservoir basin and do some preliminary work on inundation <br /> studies and the effect on FENS. A final report was published by the Westwater Engineering <br /> Company of Grand Junction and is available on their website www.weswatertco.com. The FS <br /> continued to resist permitting efforts despite heavy pressure from the ODRC, State water leaders, <br /> and our congressional representatives. Finally, in the early part of 2011 the ODRC was notified <br /> that the COE would take over as the lead agency and the permit for the"404"would start. The FS <br /> would take a secondary role. This process represents a radical departure from the traditional <br /> historic permitting process and may signal a new strategy for permitting supply projects on the <br /> Page 1 <br />