BOARD01632

• Board Meeting Date: 9/13/2004
• Description: ISF Section - Proposed Water Right Acquisition - Elkhead Reservoir Enlargement
• Board Meetings - Doc Type: Memo

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recommended 5,000 AF come from a dedicated augmentation pool established by enlarging Elkhead
Reservoir with the remaining 2,000 AF provided through a 20-year renewable lease from other water in the
Elkhead Reservoir Enlargement.

In 1999, the Colorado River Water Conservation District ("River District") agreed to undertake the
enlargement of Elkhead Reservoir on its own behalf and on behalf of the Recovery Program. Elkhead
Reservoir is located on Elkhead Creek northeast of Craig (Appendix 1). The River District will be
constructing the reservoir enlargement with funding from the CWCB, Recovery Program and River District
sources. The River District has filed a new conditional storage right for the enlargement (Case No. 6-
02CW106) for "all beneficial uses including municipal, commercial, industrial, domestic, irrigation, livestock,
power generation and cooling, wastewater treatment, piscatorial and recreational (including in-reservoir and
in-river fish habitat and river flow maintenance and enhancement uses, and uses in furtherance of the
Upper Colorado River Basin Fishes Recovery Program)".

To meet the water needs identified by the Yampa Plan, the U.S. Bureau of Reclamation
("Reclamation"), acting on behalf of the Service and the Recovery Program, will fund (cost share) a portion
of the Recovery Program's pro-rata share of the reservoir enlargement cost of construction. Reclamation
will also enter into a 20-year lease for up to 2,000 AF of water from the River District's pool in the reservoir
enlargement. The intent is to convey 5,000 AF of the storage water right along with a storage space
easement to the CWCB, and sublease up to 2,000 AF of water to the CWCS, to hold on behalf of the
Recovery Program for the purpose of protecting instream flows through the Critical Habitat Reach on the
Yampa River.

Over the past several months, cwes staff has been working with the Department of Natural
Resources, the River District and federal agencies acting on behalf of the Recovery Program, to develOp
the numerous legal documents and the terms and conditions required to implement the proposed
conveyance and lease of water for endangered fish. A "map" of the agreements is included (Appendix 2)
for reference. The attached agreements (Appendix 3) address each entity's responsibilities and obligations
with regard to the reservoir enlargement and water right conveyance. The AcqUisition Agreement, Grant
Agreement, Reservoir Enlargement Agreement, 20-Year Lease Agreement, and the DNRlUCRIP Cost
Share Agreement have been reviewed and approved in concept by the River District Board, the federal
Solicitor's Office and the State Attorney General.

Summarv of Proposal

There are two components to this proposed water acquisition, The first component involves the
permanent DONATION of a 5,000 acre-foot storage water right in the Elkhead Reservoir Enlargement (the
"Permanent Water Supply"). The River District has filed a conditional water right for the Elkhead Reservoir
Enlargement in Case No. 6-02CW106 for piscatorial and recreational use (including in-river fish habitat and
river flow maintenance and enhancement uses, and uses in furtherance of the Upper Colorado River Basin
Endangered Fish Recovery Program), The River District, in cooperation with Reclamation and the Service,
will be responsible for perfecting the conditional water right for the claimed "in-river" uses. Once the
Recovery Program financial obligation has been paid in full and the 5,000 AF portion of the water right has
been decreed absolute, the River District will convey the right to the CWCB by means of a Special Warranty
Deed. Along with the water right, a pro-rata interest in storage space (the Storage Space Easement) for the
water right will be conveyed to the CWCB, The CWCB will hold the water right and storage space
easement in perpetuity for the benefit of the Recovery Program at the direction of the Service. The CWCB
will have no financial obligation with regard to the Permanent Water Supply, and no obligation to fund
annual operation, maintenance, and repair costs for the Elkhead Reservoir Enlargement so long as the
water is used for Recovery Program purposes. In the event the water is no longer needed for Recovery
Program purposes, the CWCS may use or dispose of the water right and easement subject to the terms of
the Acquisition Agreement.