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7 <br />Endangered Fish Recovery Program. Due to conditions in a complicated court case, <br />the bottom line result is that Green Mountain Reservoir releases are limited which <br />reduces deliveries and ultimately return flows that impact the 15 mile critical reach <br />near Grand Junction. <br /> <br />Water Division 7 <br /> <br />Yesterday (Wednesday, September 10), the Colorado Supreme Court heard oral <br />argument in Vance v. Simpson, 2007 SA293, an appeal by the State Engineer of a <br />decision by the Division 7 Water Court. In Vance v. Simpson, the Division 7 Water <br />Court ruled that the State Engineer must require ground water well permits for all <br />coal bed methane wells. The State Engineer is asking that the Supreme Court <br />reverse that decision. The State Engineer argued that, consistent with Colorado <br />statute and historic practice, it should exercise its well permitting authority only over <br />structures that remove groundwater for purposes of applying water to a beneficial <br />use. The State Engineer further argued that Colorado has never considered the <br />mere removal of water to facilitate mining to be application of water to beneficial use. <br />Moreover, the State Engineer argued that it has sufficient authority under the <br />enforcement provisions of the 1969 Water Rights Determination and Administration <br />Act to prevent any injury to water rights caused by coal bed methane operations. A <br />ruling on this matter is expected some time during the winter or spring of 2009. <br /> <br />Colorado River Basin <br /> <br />We have had discussions over the past few months with the Southwest <br />Conservation District and the Colorado River Water Conservation District. The <br />purpose of these discussions is the potential development of compact compliance <br />rules for the Colorado River Compact. These discussions have included the <br />potential creation of water bank of the pre-1922 water rights which are senior to the <br />compact. I and my staff will be working closely with Jennifer Gimbel of the Colorado <br />Water Conservation Board and her staff throughout the process. Allowing for the <br />completion of ongoing studies regarding water availability within the basin and what <br />future water demands will be, I expect that this process will take a few years to <br />finalize. <br /> <br />General Water Administration Issues <br /> <br />We continue to be severely restricted and impacted by mileage costs as I am sure <br />everyone is in their own lives and businesses. This continues to be big issue for us <br />and for the state. Our budgets are set a year in advance and then this year State <br />Fleet increased our mileage costs by over 44% from last year while the State <br />Controller increased our personal mileage reimbursement rates, effective July 1, <br />2008, approximately 17% for 4WD vehicles, which is paid to most of our water <br />commissioners because they are required to have 4WD vehicles for their jobs. <br />Given this recent increase in mileage rates, our operating budget for the 2008-2009 <br />fiscal year is short approximately $300,000 for mileage, and potentially growing <br />if/when the IRS increases mileage rates on January 1, 2009. I understand that this <br />impact is on the order of $8 million statewide. Staff of the Division of Water <br />Resources drive over 2.4 million miles a year as part of our work. We are taking