DWR_3348282

• Board or Commission: Colorado Ground Water Commission
• Document Type - Board and Commission Meetings: Meeting Document
• Document Date: 8/16/2002
• Subject: MEETING MATERIALS

July 31, 2002
MEmorandum
TO: Colorado Ground Water Commission
FROM: Patrick Kowaleski
Ass't Attorney General
Natural Resources and Environment
RE: What authority does the Commission have to recognize and implement the provisions of Management District rules?

Response:
The Commission currently has no authority for recognizing and implementing District rules. The Commission could however amend its Rules to either incorporate certain District rules,
or to allow the Staff to consider District rules in the processing of applications. The Commission, alternatively, could enter into an intergovernmental agreement with a District, whereby
the Commission could agree to incorporate certain validity-enacted District rules in the Commission’s review process.

Analysis:
The Colorado Ground Water Commission was created by the legislature and consists of twelve members, nine of whom are appointed by the Governor. In addition to these members, the Executive
Director of the Department of Natural Resources is a voting member and the State Engineer and the Director of the Colorado Water Conservation Board are nonvoting members. The State
Engineer is ex officio the Executive Director of the Commission and has the duty to carry out and enforce the decisions, orders and policies of the Commission. §37-90-104, C.R.S.

Management Districts have also been provided for by the legislature and the boards of these Districts can consist of from five to fifteen members. §37-90-130, C.R.S. The powers and
responsibilities of the District are enumerated at §37-90-130, C.R.S. and include the following:

(1) The district board has the duty and responsibility of consulting with the commission on all ground water matters affecting the district to determine whether proposed restrictions
or regulations are suitable for such area, to determine in conjunction with the commission whether the area of the district should be enlarged or contracted, to cooperate with the commission
and the state engineer in the assembling of data on the ground water aquifers in the area and the enforcement of regulations or restrictions which may be imposed thereon, and to assist
the commission and the state engineer to the end of conserving the ground water supplies of the area for the maximum beneficial use thereof.

(2) After the issuance of any well permit for the use of ground water within the district by the ground water commission as provided in section 3790108, the district board has the
authority to regulate the use, control, and conservation of the ground water of the district covered by such final permit by any one or more of the following methods, but the proposed
controls, regulations, or conservation measures shall be subject to review and final approval by the ground water commission if objection is made in accordance with section 3790131.
. . .

(c) To develop comprehensive plans for the most efficient use of the water of the ground water aquifer or subdivision thereof and for the control and prevention of waste of such water,
which plans shall specify in such detail as may be practicable the acts, procedure, performance, and avoidance which are or may be necessary to effect such plans, including specifications
therefor; to carry out research projects, develop information, and determine limitations, if any, which should be made on the withdrawal of water from the ground water aquifer or subdivisions
thereof; to collect and preserve information regarding the use of such water and the practicability of recharge of the ground water aquifer; and to publish such plans and information
and bring them to the notice and attention of the users of such ground water within the district and to encourage their adoption and execution; . . .

(e) To promulgate reasonable rules and regulations for the purpose of conserving, preserving, protecting, and recharging the ground water of the ground water aquifer or subdivision
thereof, in conformity with the provisions of this article . . .;

(f) To prohibit, after affording an opportunity for a hearing before the board of the local district and presentation of evidence, the use of ground water outside the boundaries of
the district where such use materially affects the rights acquired by permit by any owner or operator of land within the district; . . .

(j) To exercise such other administrative and regulatory authority concerning the ground waters of the district as, without the existence of the district, would otherwise be exercised
by the ground water commission.

In Jackson v. Colorado, 294 F. Supp. 1065, Colo. 1968, the Federal District Court summarized the nature and authority of management districts:

The management district, on the other hand, is a corporate government subdivision of the State of Colorado which is formed for the purpose of assisting the commission on all matters
affecting the district area, which include enforcing commission regulations, providing data on underground aquifers within the area, determining if commission regulations are suitable
for the area, and helping conserve the ground water for maximum beneficial use. The management district has general authority to regulate the use, control and conservation within the
district and specific authority, inter alia, to prohibit the use of ground water outside the boundaries of the district where such use would materially affect the rights of other permit
holders within the district.

If the District Board determines that control measures are necessary in order to ensure the proper conservation of ground water within the district, it shall “confer” with the Ground
Water Commission and ground water users within the district prior to announcing the control measures. § 37-90-131(1)(a), C.R.S. Any person adversely affected or aggrieved by the announcement
of control measures, as well as by conservation measures or rules and regulation adopted by the District Board, may appeal the District’s action to the Ground Water Commission. § 37-90-131(1)(b),
C.R.S After a hearing, the Commission issues its decision with regard to the rules and the decision is appealable to the district court where the water rights affected are situated.
§ 37-90-131 C.R.S. As was pointed out in North Kiowa Bijou Management District v. Ground Water Commission, 180 Colo. 313(1973), the Ground Water Commission only reviews the regulations
to determine their validity. Specific determinations with regard to how the rules are applied are determined by the District.

The Commission, for its part, has adopted Rule 9 on Coordination with Ground Water Management Districts. This Rule provides:
“9.1 The Commission shall request written recommendation from the board of directors of any ground water management district before issuing any orders or promulgating any regulations
affecting that district and shall request written recommendations on any permit application received from within the boundaries of that district.
“9.2 The Commission shall contact each district for the purpose of developing a working agreement which sets criteria, timetables, and procedures for the referral request set forth in
Section 37-90-111 (3), C.R.S. and Rule 9.1.”
Pursuant to the consultation process between the Commission and the Districts, coordination of the Commission and District processes has apparently in the past been limited to discussion
of attaching a copy of the District’s rules to a permit, or referencing in the permit that a permittee is also subject to District regulations.

Although there is no specific authority for the Commission to implement all District rules, the close interrelationship of the Commission and the Districts is recognized in both the
statutes and the Commission rules. This relationship was also recognized in the recently-decided case of Upper Black Squirrel Creek Ground Water Management Dist. v. Goss, 993 P 2d 1177
(2000), where the Supreme Court, at 1188, stated: “By statute, the relationship between the Commission and Management District is consultative and cooperative in nature.”

When the Commission receives a requests for large capacity replacement or substitute wells, the statute authorizes the Commission to approve the replacement wells without publication
where the wells “are relocated no further than the maximum distance allowed by district rules and regulations without prior board approval . . .” § 37-90-111(1)(g). C.R.S.

The State Engineer, under his own independent authority in the Ground Water Management Act, will limit a small capacity well permit where the District, pursuant to its authority, has
properly opted to “ by rules and regulations further restrict issuance of small capacity permits.” § 37-90-105, C.R.S.

When a permit holder seeks a change of a water right pursuant to § 37-90-111 C.R.S. the statute provides, at § (3), that the Commission is to “request written recommendations” from
the Board before taking final action on any request or application made pursuant to the section.

The Commission has further recognized District authority by adoption of Rule 7.7.4: “In consideration of the authority granted to management district pursuant to Section 37-90-130(2)(f),
C.R.S. if the requested change involves export of water out of the boundary of a Designated Ground Water Management District, the Commission shall request written recommendation from
the District and shall limit the approval of any export out to the District to an annual acre-feet amount not to exceed the amount approved for export by the District.”

Should the Commission desire to do so, it could amend its Rules to limit its approval in other situations as well, recognizing that the Districts have statutory authority to adopt rules
and regulations to preserve and protect ground water resources.

Another method of providing authority to recognize and implement District rules would be through an intergovernmental agreement. This concept of intergovernmental cooperation is ensconced
in the Constitution of the State of Colorado at Art. XIV, § 18(2)(a), which provides:

"Nothing in this constitution shall be construed to prohibit the state or any of its political subdivisions from cooperating or contracting with one another or with the government of
the United States to provide any function, service, or facility lawfully authorized to each of the cooperating or contracting units, including the sharing of costs, the imposition of
taxes, or the incurring of debt."

The legislative declaration to the statute providing for intergovernmental agreements statute states that the purpose of this statute is:
"[To permit and encourage] governments to make the most efficient and effective use of their powers and responsibilities by cooperating and contracting with other governments, and to
this end this [statute] shall be liberally construed." §29-1-201, C.R.S.

In order to implement this policy, the statute provides:
"Governments may cooperate or contract with one another to provide any function, service, or facility lawfully authorized to each of the cooperating or contracting units, including the
sharing of costs, the imposition of taxes, or the incurring of debt, only if such cooperation or contracts are authorized by each party thereto with the approval of its legislative
body or other authority having the power to so approve." § 29-1-203(1), C.R.S.

This statute allows law enforcement agencies to contract with one another for reciprocal law enforcement agreements, § 29-1-206, C.R.S., and has been interpreted to allow contracting
for transportation services, even if it means an entity is operating outside its own jurisdiction. Durango Transportation, Inc. v. Durango, 824 P2d 28, ( 1991)

The Commission and the Districts are considered “governments” for purposes of the statute, and would be authorized to contract with one another “to provide the services and functions
which each is authorized to provide.”
Should the Commission decide to pursue any of the approaches listed above, it should consider several points:
1) Although the Commission may wish to recognize some District rules, it would not be required to recognize all of a District’s rules. Any intergovernmental agreement should closely
review which specific rules would be the subject of the agreement, since some District rules have been in place for many years, and may not have been previously reviewed by the Commission
staff. Other rules may have been reviewed by the Commission staff and adopted by the District, against the Staff’s recommendation.
2) To the extent that there might be a concern about whether the District Rules were adopted properly, that issue could be dealt with in any intergovernmental agreement which were adopted.

3) The Commission should also consider, in any agreement with a District, what will happen if litigation is brought against the Commission as a result of a legal challenge to a District’s
rule.

The opinions expressed in this memo are those of the authoring attorney and should not be construed as an official opinion of the Colorado Attorney General.

Page 6

Hayden Tour.doc

NOTICE OF SPECIAL TOUR
Hayden Station Power Plant

Bob Plaska, Division Engineer for Division 6 (970-879-0272), has scheduled a tour of Hayden Station for the Colorado Ground Water Commission, consisting of 40 to 50 adults. Time and
date scheduled for this group is Thursday, August 15, at 2:00 p.m. Hayden Station is located at 12795 E. Yute. Take Highway 40 from Steamboat Springs and turn left at the Hayden Station
sign along the highway. Inside the plant property, follow the signs that lead to visitor parking.

A coal-fired generating station has doorknobs, railing machinery and corners that can catch clothing that is loose fitting. Recommended clothing includes slacks or jeans, shirts with
sleeves, and flat-soled comfortable shoes that provide ankle support. Shorts, dresses, full skirts or similar articles of clothing are not recommended, as well as loose fitting clothing.
Sandals and high-heeled shoes should not be worn.

If anyone in your party might be physically affected by climbing stairs or disturbed by heights, please let the guide know before starting the tour.

If you have further questions, please contact Frank Roitsch, Hayden Station Director, 970-276-2211, or Pam Butler, Customer and Community Relations Manager for Energy Supply, 720-497-2169.

Enjoy your tour!

Minutes-2nd '02.doc
MINUTES

SECOND QUARTERLY MEETING
COLORADO GROUND WATER COMMISSION

MAY 17, 2002

Ground Water Commission in Executive Session concerning North Kiowa-Bijou Ground Water Management District v. Ground Water Commission of the State of Colorado: Hal D. Simpson, State
Engineer/Executive Director of the Ground Water Commission and Thomas H. Bradbury et al., Case No. 2001CV1652 (Arapahoe District Court, June 27, 2001); and also concerning the litigation
regarding Kansas v. Nebraska and Colorado. Commissioner Castle moved to go into Executive Session at 9:00 a.m.; the motion was seconded by Commissioner Bauerle and passed unanimously.
Mr. Kowaleski, Conflicts Counsel, from the Attorney General’s Office, stated that the Executive Session did not need to be recorded on tape because it involves privileged attorney-client
information. Commissioner Loose recused himself from the Executive Session due to conflict of interest as his district is a party to the litigation. Mr. Kowaleski provided a briefing
on the status of the litigation regarding the Bradbury matter which is pending in Arapahoe County District Court.

Kansas v. Nebraska and Colorado – Ms. Carol Angel, from the Attorney General’s Office circulated a confidentiality agreement for all attendees to sign to safeguard the progress of the
settlement. She provided a briefing regarding the settlement process and discussions between the three states.

Public Meeting
The Second Quarterly Meeting of the Colorado Ground Water Commission took place on May 17, 2002, at 1313 Sherman Street, Room 318, Denver, Colorado. Chairman Earnest Mikita called the
meeting to order at 10:20 a.m. Marta Ahrens called the roll and determined that a quorum was present. Commission members present were Eugene Bauerle, Anne Castle, Larry Clever, Dennis
Coryell, Richard Huwa, Robert Loose, Max Smith, Ted Kowalski and Hal Simpson. Ex-Officio member Kent Holsinger was absent.

Review and Approval of Agenda Items - There were no additions or corrections to the agenda.

Approval of Minutes for Meeting of February 22, 2002 - Chairman Mikita asked if there were any corrections or additions to the Minutes of the February 22, 2002 meeting. Commissioner
Castle moved to accept the Minutes. The motion was seconded by Commissioner Loose and carried unanimously.

Report of the Executive Director by Hal Simpson – Mr. Simpson reported on the current status of the Division’s budget. He stated that Colorado has been taking drastic actions to balance
the budget to cut in excess of one billion dollars from this year’s approved budget. A number of positions will be held vacant to generate vacancy savings; there are currently 15 vacant
positions that cannot be filled, most of which are water commissioner positions. The Division was asked to prepare scenarios to cut the budget by 5% and 10%, which includes a potential
of furloughing staff.

Mr. Simpson stated that the Governor declared a statewide drought emergency. Colorado is looking at some very unusual dry conditions, possibly the driest year of recorded history, if
we do not get sufficient rain. The key will be what happens this summer with respect to rains and moisture flow from the southwest. Absent rains, every irrigation reservoir in the
state will probably be drained. The wells in the Arkansas and South Platte basins may have to be limited drastically unless additional replacement water is found. In western Colorado,
there are calls on streams by senior water rights that have never been experienced to date.

With regard to substitute supply plans and the Empire Lodge v. Homeowners Association case, Mr. Simpson stated that there is good news to report. HB-1414 is awaiting signature by the
Governor. With the help of Mike Shimmin and the Colorado Water Congress, a bill was drafted that gives the State Engineer limited authority to approve substitute supply plans. This
bill will, hopefully, enable the Division to better deal with the drought.

Mr. Simpson stated that two days of rulemaking on the Pilot Water Bank for the Arkansas River Basin were completed last week. These rules will allow a water bank to be operated for
a 5-year period on the Arkansas River Basin and only deals with stored water. The pilot water bank will allow some of the well augmentation associations in the Arkansas River Basins
to lease reservoir water if needed. A party could put their water into the bank and see what kind of bids they get for that water. Mr. Simpson stated that the rules will be finalized
and submitted to the Secretary of State for publishing by July 1, 2002.

The State Engineer’s Office is in the final stages of promulgating rules for the use of tributary ground water in the South Platte River basin for large wells to offset their depletions.
Extensive amendments are being made to the existing rules. The rules will be in final form for publication in approximately one week and will become effective in 2003. Protests to
these rules are anticipated and a lengthy trial is anticipated sometime this fall.

With regard to the Kansas v. Colorado litigation, Mr. Simpson reported that he recently completed an intensive deposition for one full day by Kansas. All experts submitted their expert
reports in rebuttal to Kansas’ reports. The trial is set to begin on June 24 and will continue for up to 11 weeks in Pasadena. The trial will be a battle over the model that determines
the impacts of post compact well pumping.

Status of the Kansas v. Nebraska and Colorado litigation - Republican River Compact by Hal Simpson – Mr. Simpson reported that settlement discussions are continuing. The Special Master
granted a stay in the trial schedule until December. The states will continue to meet over the next several months to attempt to reach settlement. Since the issues are under a confidential
order by the Special Master, Mr. Simpson could not report on the progress but hope to have settlement by December.

Discussion on the Geology of the Denver Basin Aquifers by George Van Slyke – Mr. Van Slyke reported on the geology of the Denver Basin. The Designated Basin overlays between 40 to 50%
of the Denver Basin. The Denver Basin is defined by the outcrop of the base of the Laramie-Fox Hills aquifer. The deepest is the Laramie-Fox hills (approximately 250 feet thick),
then the Laramie Formation (400 to 600 feet thick), the Arapahoe is about 400 feet thick, followed by the Denver which is 1,000 feet thick and then the Dawson formation. The base of
the Fox Hills is about 3,500 feet below the surface. Mr. Van Slyke passed rock samples around to the Commissioners from the various formations. He stated that water pumped from an
unconfined aquifer comes out of storage in excess of what is going in, resulting in a gradual decline over time. In a confined aquifer, there is a rapid decline until water table conditions
are reached and then there is a gradual decline. Mr. Van Slyke stated that water levels are declining about 30 feet per year in the Tech Center area. A significant change in the past
25 years in water availability in the Parker area is not how much water is available, but how little a person is going to get.

Discussion on the Legal Development of the Distinctive Issues Concerning the Administration of the Denver Basin Aquifers within the Designated Basins by Bill Fronczak Mr. Fronczak reported
on how the statutes have changed over time and how the Denver Basin water outside of the Designated Basins have been administered by the Division and the Commission. He stated that
ground water development in the state of Colorado has evolved over time and Colorado is on the leading edge of how to utilize ground water. The Commission was formed to solve a problem
with regard to the ground water resources of the state and how to manage this resource. The water districts were formed to give local control to how the water is administered. In
1973, SB-213 affected the withdrawal of ground water from the non-tributary Denver Basin aquifers outside the Designated Basins and placed a limitation of the amount of ground water
that is withdrawn. In 1985, SB-5 was enacted to give the State Engineer power to issue determination of the quantity of ground water rights to non-tributary ground water within the
Denver Basin outside of the Designated Basins. In 1988, the Commission was given statutory authority to allocate Denver Basin ground water based upon overlying land and withdrawal
over 100 years. In 1992, the Commission adopted its rules pursuant to Section 37-90-111, C.R.S., which gave the Commission authority to allocate Denver Basin ground water and replace
depletions to the alluvial aquifers of the affected Designated Basins. In 1998, the Commission was given authority to issue determination of water rights for the allocation of designated
ground water within the Denver Basin and clarified that Statements of Beneficial Use were not required on wells issued in the Denver Basin of the Designated Basins after 1991. Historically,
the Commission has followed the statutory and regulatory guidelines established for Denver Basin ground water outside the Designated Basins. Designated ground water basins were not
formed with respect to the Denver Basin aquifers but on the alluvial channels. In conclusion, Mr. Fronczak stated that the designated ground water basins are unique ground water and
that the Commission, the State Engineer, and the state of Colorado should be acknowledged for their visionary attitude with respect to ground water of this state.

Discussion and Commission Resolution on Whether the Anti-Speculation Doctrine Applies Within the Denver Basin Aquifers of the Designated Basins by Bill Fronczak – Mr. Fronczak reported
that the Commission is aware of the position of the staff but added that regardless whether the speculation applies or not, the staff needs direction on where the Commission is heading
and how the Commission wants to apply that determination. Commissioner Castle wanted to disclose on record that her law firm represents a client that could be affected by the outcome
of the decision on this issue.

Mr. Don McClary, attorney, representing the North Kiowa Bijou Ground Water Management District, stated that, from a legal standpoint and contrary to the opinion of the State Engineer’s
Office, the anti-speculation doctrine applies to the Denver basin aquifers and staff is legally bound by it. He stated that all they are trying to assure is that this water is properly
used and that the final water right has limitations on it.

Mr. Andy Jones, attorney representing the Lost Creek and the Upper Black Squirrel Ground Water Management Districts, spoke in favor of the anti-speculation doctrine. Also he stated
that, on behalf of his clients, he appreciates Mr. Simpson’s efforts.

Mr. Lee Miller, attorney, representing clients who are potentially affected by this (namely, the Boy Scouts of America, Denver Area Council), reported that he represented the state in
the case regarding Chatfield East and the decision regarding the speculation doctrine and the issue concerning severance from the land owners. Mr. Miller stated that he would not put
as much significance on this issue unless someone is trying to take water from the overlying land. He is supportive of the State Engineer’s decision.

Mr. Mike Shimmin, attorney, stated that the arguments made by the staff confuses the statutory definitions and the legal concepts that govern the categories of ground water; that this
issue is regarding non-tributary ground water, not designated basin ground water. He expressed concerns about the precedent this presents. Mr. Shimmin stated that the existing statute
provides the basis for the anti-speculation test and it applies in the designated basins, and that the Commission does not need to develop a resolution.

Mr. Simpson explained the staff’s position and the background regarding this issue. When HB-1151 was passed in 1998, the purpose was to provide consistency in creating a determination
for ground water rights for the Designated Basins without having to drill a well. This resulted in a definition of speculation and whether the proper test is applied.

Commissioner Castle reported that two decisions need to be made. First, advise the staff what to do with determinations and how they should evaluate the applications for determination
of Denver basin water rights within the Designated Basins, and the second is what to do in connection with the Bradbury case in light of the judge’s order. The Commission needs to
direct the staff to comply with this order in the Bradbury case to the best of their ability and not take a contrary position to the judge’s order until the Commission gets better guidance.
Commissioner Castle suggested that the Commission participate in the appeal and decide what decision to take. The reason for the speculation doctrine is to prevent people from typing
up water resources that others can use.

Discussions ensued between the Commission members regarding whether they should take a position on anti-speculation and whether speculation applies. Mr. Simpson stated that he feels
that it is important that the Commission take a stance. Commissioner Clever made a motion that the Commission recognizes that the anti-speculation doctrine applies within the Denver
Basin aquifers of the Designated Basins. The motion was seconded by Commissioner Huwa, and passed with seven in favor and one against (Commissioner Castle).

Following this motion, discussion followed regarding putting the water to beneficial use. Mr. Fronczak asked the Commission for the direction they want the staff to take on the individual
applications. Mr. Shimmin suggested that the Commission and staff use the anti-speculation test that is currently in the statutes in Section 37-92-103(3)(a). Mr. Kowaleski stated