BOARD00451

• Board Meeting Date: 1/31/1979
• Description: Agenda, Minutes, Resolution
• Board Meetings - Doc Type: Meeting

I would say that, Colorado has to be very concerned. As you may know,
and perhaps Larry mentioned, legislation will be submitted to the
Congress probably in the next two to three weeks to implement the cost-
sharing provisions of the water policy. I think from three or four
different standpoints we need to watch this one very carefully, as we
are.

One of those areas relates to agriculture. Under the provisions of , I
the legislation, contributions of excess power revenues through our
River Basin Fund will not be considered reyenues for a particular
project, which means that what is returned to the state. will obviously
be far less than what the state has advanced.

Let me give you an example of this. If you have a hundred_mill ion-
dollar agricultural, project, the state has to advance $10 million' of
the 100 million. 'And let's assume for the sake of argument that the
irrigators can't afford to pay 20 percent of the cost, the reimbursable
cost, and the remaining 80 percent is paid through excess pOWer revenues.
The federal government then would only consider the 20 percent the
irrigator has paid as "revenues under that project," which means that,
if the state advanced $10 million, all the state would get back is
$2 million.

Now as you know, we have got hundreds of millions of dollars of
irrigation-oriented projects that are either ,authorized. or in 'the
planning stages in the state. And under their definition of this rule,
Colorado would lose a great deal of money. And I think it is particu-
larly important to note that the federal government is going to be
reimbursed in full for these projects through the River Basin Funds.
But not only will they be reimbursed in full but they are also going
to get a certain percentage of state funds on top of that. And from
at least my evaluation, I think it is highly ~nfair. It is going to. be
a great disadvantage to the state if this proposal goes through.

In addition to that, you ought to recognize that the, state, in putting
up 10 percent, is, essentially for the first time now paying interest on
monies that are advanced for irrigation projects. Under the 1902 Act,
as you know, interest was waived for irrigation projects. But if the
state advances 10 percent, we will be paying significant interest on
that 10 percent over the life of the project, probably at a sum, that is
three to four to five-fold what we initially advanced. And this. is
expressly contrary to the 1902 Reclamation Act.

So I think we have a great deal to be concerned about. We have got to
watch this one very carefully. I think it is very important to tell I
you that, in meetings last week with the Western States Water Council,
and,: following that, meetings with the National Governors Associa-
tion's Water Committee, there seems to be almost unanimous opposition
to the proposed legislation. I think we are going to have a lot of
support from a lot of people around the country, both on the East
Coast and Mid-West and south and far: West. Most of their opposition
relates to other provisions of the Act. 'And let me just briefly
describe those.

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