    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

       FRYINGPAN-ARKANSAS PROJECT AT 45: SUSTAINABLE WATER FOR THE 21ST
                                    CENTURY

    =======================================================================

                            OVERSIGHT FIELD HEARING

                                   before the

                        SUBCOMMITTEE ON WATER AND POWER

                                     of the

                         COMMITTEE ON NATURAL RESOURCES
                         U.S. HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   __________

                   Friday, June 1, 2007, in Pueblo, Colorado

                                   __________

                               Serial No. 110-27

                                   __________

           Printed for the use of the Committee on Natural Resources

      Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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                         COMMITTEE ON NATURAL RESOURCES

                   NICK J. RAHALL II, West Virginia, Chairman
                  DON YOUNG, Alaska, Ranking Republican Member

    Dale E. Kildee, Michigan             Jim Saxton, New Jersey
    Eni F.H. Faleomavaega, American      Elton Gallegly, California
        Samoa                            John J. Duncan, Jr., Tennessee
    Neil Abercrombie, Hawaii             Wayne T. Gilchrest, Maryland
    Solomon P. Ortiz, Texas              Ken Calvert, California
    Frank Pallone, Jr., New Jersey       Chris Cannon, Utah
    Donna M. Christensen, Virgin         Thomas G. Tancredo, Colorado
        Islands                          Jeff Flake, Arizona
    Grace F. Napolitano, California      Stevan Pearce, New Mexico
    Rush D. Holt, New Jersey             Henry E. Brown, Jr., South
    Raul M. Grijalva, Arizona                Carolina
    Madeleine Z. Bordallo, Guam          Luis G. Fortuno, Puerto Rico
    Jim Costa, California                Cathy McMorris Rodgers, Washington
    Dan Boren, Oklahoma                  Bobby Jindal, Louisiana
    John P. Sarbanes, Maryland           Louie Gohmert, Texas
    George Miller, California            Tom Cole, Oklahoma
    Edward J. Markey, Massachusetts      Rob Bishop, Utah
    Peter A. DeFazio, Oregon             Bill Shuster, Pennsylvania
    Maurice D. Hinchey, New York         Dean Heller, Nevada
    Patrick J. Kennedy, Rhode Island     Bill Sali, Idaho
    Ron Kind, Wisconsin                  Doug Lamborn, Colorado
    Lois Capps, California               Vacancy
    Jay Inslee, Washington
    Mark Udall, Colorado
    Joe Baca, California
    Hilda L. Solis, California
    Stephanie Herseth Sandlin, South
        Dakota
    Heath Shuler, North Carolina

                         James H. Zoia, Chief of Staff
                       Jeffrey P. Petrich, Chief Counsel
                     Lloyd Jones, Republican Staff Director
                     Lisa Pittman, Republican Chief Counsel
                                     ------

                        SUBCOMMITTEE ON WATER AND POWER

                  GRACE F. NAPOLITANO, California, Chairwoman
         CATHY McMORRIS RODGERS, Washington, Ranking Republican Member

    Jim Costa, California                Ken Calvert, California
    George Miller, California            Dean Heller, Nevada
    Mark Udall, Colorado                 Doug Lamborn, Colorado
    Joe Baca, California                 Don Young, Alaska, ex officio
    Vacancy
    Nick J. Rahall II, West Virginia,
        ex officio
                                     ------

                                    CONTENTS

                                  ----------
                                                                       Page

    Hearing held on Friday, June 1, 2007.............................     1

    Statement of Members:
        Lamborn, Hon. Doug, a Representative in Congress from the
          State of Colorado..........................................     3
            Prepared statement of....................................     4
        Napolitano, Hon. Grace F., a Representative in Congress from
          the State of California....................................     1
            Prepared statement of....................................     2
        Perlmutter, Hon. Ed, a Representative in Congress from the
          State of Colorado..........................................    10
            Prepared statement of....................................    11
        Salazar, Hon. John, a Representative in Congress from the
          State of Colorado..........................................     5
            Prepared statement of....................................     6
        Udall, Hon. Mark, a Representative in Congress from the State
          of Colorado................................................     7
            Prepared statement of....................................     8

    Statement of Witnesses:
        Long, Bill, President, Southeastern Colorado Water
          Conservancy District, Pueblo, Colorado.....................    13
            Prepared statement of....................................    14
            Response to questions submitted for the record...........    26
        Peternell, Drew, Director and Counsel, Colorado Water
          Project, Trout Unlimited, Boulder, Colorado................   105
            Prepared statement of....................................   107
        Rivera, Hon. Lionel, Mayor, City of Colorado Springs,
          Colorado...................................................    44
            Prepared statement of....................................    46
            Response to questions submitted for the record...........    52
        Ryan, Michael J., Great Plains Regional Director, Bureau of
          Reclamation, U.S. Department of the Interior, Billings,
          Montana....................................................    31
            Prepared statement of....................................    33
            Response to questions submitted for the record...........    34
        Scanga, Ralph L. ``Terry,'' Jr., General Manager, Upper
          Arkansas Water Conservancy District, Salida, Colorado......    56
            Prepared statement of....................................    57
        Stealey, Wally, Arkansas Valley Rancher, Pueblo, Colorado....   113
        Tauer, Hon. Edward J., Mayor, City of Aurora, Colorado.......    91
            Prepared statement of....................................    93
            Response to questions submitted for the record...........   104
        Thiebaut, Bill, District Attorney, Tenth Judicial District,
          Colorado...................................................    60
            Prepared statement of....................................    61
            Response to questions submitted for the record...........    63
        Treese, Christopher J., Manager, External Affairs, Colorado
          River Water Conservation District, Glenwood Springs,
          Colorado...................................................   109
            Prepared statement of....................................   110
        White, Sandy, Pueblo Chieftain and Arkansas Native, LLC, La
          Veta, Colorado.............................................    68
            Prepared statement of....................................    69
        Winner, Jay, General Manager, Lower Arkansas Water
          Conservancy District, Rocky Ford, Colorado.................    63
            Prepared statement of....................................    65

    Additional materials supplied:
        Golnar, Steve, City Administrator, City of Salida, Colorado,
          Letter submitted for the record............................   127
        Jackson, Hon. William F., Mayor, City of Canon City,
          Colorado, Letter submitted for the record..................   128
        Piltingsrud, Thomas H., City Manager, City of Florence,
          Colorado, Letter submitted for the record..................   129
        Thonhoff, Hon. Mark F., Mayor, Town of Poncha Springs,
          Colorado, Letter submitted for the record..................   130

    OVERSIGHT FIELD HEARING ON ``THE FRYINGPAN-ARKANSAS PROJECT AT 45:
                    SUSTAINABLE WATER FOR THE 21ST CENTURY''

                                  ----------

                              Friday, June 1, 2007

                         U.S. House of Representatives

                        Subcommittee on Water and Power

                         Committee on Natural Resources

                                Pueblo, Colorado

                                  ----------

        The Subcommittee met, pursuant to call, at 9:00 a.m., in
    the Fortino Ballroom, Pueblo Community College, 900 W. Orman
    Avenue, Pueblo, Colorado, Hon. Grace Napolitano [Chairwoman of
    the Subcommittee] Presiding.
        Present: Representatives Napolitano, Lamborn, Udall,
    Salazar and Perlmutter.

      STATEMENT OF THE HON. GRACE NAPOLITANO, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        [Video clip played.]
        Mrs. Napolitano. Ladies and gentlemen, I was made aware of
    this clip yesterday, and I am glad that I brought it, because
    this is exactly where we're at today. This is our future, and
    it was just as evident and true then as it is today.
        Again, I'm Congresswoman Grace Napolitano with the
    Subcommittee on Water and Power. Good morning, and welcome to
    our Subcommittee field hearing, and we'll now come to order.
        This is the second in a series of oversight field hearings
    on sustainable water. Our first one was in the City of Pomona
    in California, dealing with perchlorate and other contaminants,
    and this hearing will focus on the Fryingpan-Arkansas Project.
    However, the question I'm interested in is far broader: What
    lessons can be learned from the Fryingpan-Arkansas Project
    about wasting water in general?
        The Bureau of Reclamation has jurisdiction over the 17
    western states, and the Bureau comes under the jurisdiction of
    the Subcommittee. And one of the aims I have is to be able to
    assess the water needs of the western states who are facing
    many challenges, whether it is climate change, drought cycles,
    contaminants and various other areas, so this is but one in a
    series of hearings to be able to determine and assess the
    communities which face challenges now and in the future being
    able to have a say that will go into the record.
        I'd like to begin by welcoming our guests to the
    Subcommittee today. First my friend and colleague who
    approached me about the area--and by the way, I am open to
    field hearings, so whoever feels they have an issue or wants to
    be able to bring information to the table that is pertinent--
    Representative John Salazar, who has been a most gracious host.
    John.
        Second on my left is Congressman Mark Udall, another good
    friend.
        To my right, I have my Ranking Member who has been sitting
    with me in the Subcommittee now for a while, Mr. Lamborn, and
    thank you, Mr. Lamborn, for being with us. I really appreciate
    it.
        Also we have Representative Ed Perlmutter from Jefferson
    County. Welcome.
        And I think that takes care of our colleagues. And staff is
    Zach.
        Kiel. Stand up, Kiel. Republican staff. I just want to be
    sure we don't leave anybody out, OK?
        I ask consent that Representative Perlmutter be allowed to
    sit on the dais with the Subcommittee this morning and to
    participate in the Subcommittee proceedings. Without objection,
    so ordered.
        I'll begin the hearing with a brief statement and then
    recognize the members for short statements. And ladies and
    gentlemen, you'll be held to the 5-minute rule. You'll have a
    timer. I don't think you can all see it, but I'll turn it to
    whoever is speaking. We have many witnesses and a lot of ground
    to cover, and we need to be out of this facility by I believe
    it's 12:00 or 12:30. 12:30, so we don't want to belabor that.
        Let's see. We start off now with Mr. Lamborn for 5 minutes.
        [The prepared statement of Mrs. Napolitano follows:]

      Statement of The Honorable Grace F. Napolitano, a Representative in
                     Congress from the State of California

        Good morning. I want to welcome our witnesses and guests this
    morning. I am so very happy to be here in the beautiful state of
    Colorado, and I look forward to all the testimony this morning. It is
    very important to me as Chairwoman to get this Subcommittee out of
    Washington, D.C. and hear the perspectives of local people. There are
    no better experts on the realities of our ever-increasing water supply
    challenges than those on the ground, in the community.
        I also want to take just a moment to thank our very gracious
    hosts--the administration and staff of the Pueblo Community College,
    and Congressman John Salazar and his staff. You have provided a perfect
    facility for our hearing this morning. On behalf of myself and
    Congressman Nick Rahall, who is the Chairman of the House Committee on
    Natural Resources, I thank you for your hospitality.
        This field hearing is the second in a series of field hearings this
    Subcommittee intends to conduct this year on sustainable water supplies
    for the west. All over the west, population growth, coupled with
    increased drought and decreased snow pack and rainfall due to the
    impacts of global warming, are already stressing our water supplies.
    Further, the infrastructure we currently have in place, often projects
    authorized and built decades ago long before we could have ever
    foreseen these challenges, may not necessarily be adequate to maintain
    sustainable water supplies well into the future.
        No one understands this issue better than the communities of
    Southeastern Colorado. Today's hearing, aptly titled, ``The Fryingpan-
    Arkansas Project at 45: Sustainable Water for the 21st Century,'' will
    focus on western water management challenges in Colorado through the
    lens of the Fryingpan-Arkansas Project.
        Like so many of the water projects in my home state of California,
    I understand this is a controversial issue. But this Subcommittee has a
    history of confronting such issues in a fair and bipartisan way. We
    accommodated as many witnesses as we could today so that we will get
    the full range of views on this issue. I am eager to listen.
        Specifically, I hope to hear from our witnesses regarding the
    Congressionally-authorized purposes of the Fryingpan-Arkansas project,
    the role of the project in sustaining agriculture and communities in
    Southeast Colorado, and the new challenges facing water users, water
    managers, and Front Range cities facing unprecedented growth, climate
    change, and increasing needs for reliable water supplies.
                                     ______

        STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF COLORADO

        Mr. Lamborn. Thank you all for being here. I also want to
    thank you, Chairwoman Napolitano, for coming here to our
    wonderful State of Colorado to learn more about the challenges
    that we face in meeting our current and future water needs.
        As a new Member of Congress, I appreciate the opportunity
    to serve on this important Subcommittee, and I am certainly
    honored to serve as the acting Ranking Member on this
    Subcommittee while my colleague, Cathy McMorris Rodgers, is on
    maternity leave. While I am new to the ways of Washington,
    D.C., the challenges facing Colorado with respect to water are
    certainly not new to me. The old adage of build them and they
    will come no longer applies here in Colorado. They'll come
    anyway.
        We have many water challenges facing us here. Past
    generations had the same challenges and they rose to the
    occasion by building visionary projects like the Fryingpan-
    Arkansas Project. And I really enjoyed that clip. The sense of
    history in seeing that was really special to me.
        Mrs. Napolitano. Thank you, Mr. Lamborn, and I'd like to
    ensure that that is entered into the record.
        Mr. Lamborn. The Fryingpan-Arkansas is a multi-use project
    that brings benefits to cities like Colorado Springs, but to
    irrigators as well. Now we have the opportunity to meet new
    water challenges, and the project can play a big role in our
    future water supply picture for not just my constituents, but
    for everyone in the region.
        Today is an opportunity to focus on the future and to
    appreciate the collaborative efforts that have brought us all
    to where we are today. Over the years, stakeholders have
    marched gradually toward more compromise, but consensus has
    been elusive. What's important today is that we march to the
    future and not get stuck in the past.
        Different perspectives will be heard today. Congressman
    Salazar and I have both introduced legislation regarding the
    Preferred Storage Option Plans (PSOPs), and there are
    significant differences. We are both working to further the
    needs and priorities of our districts though, and I am
    convinced that there is ample room for compromise. If we and
    everybody here do not step up to finalize solutions, the entire
    region will suffer, and that's not acceptable.
        It's important to note that while PSOP is important,
    Colorado Springs has alternative options to address its needs;
    however, many communities downstream do not have that same
    opportunity, which is why the leadership is critical to moving
    forward for the benefit of all affected communities. Should an
    alternative to PSOP be pursued, many concessions and benefits
    to entities in the Arkansas River Valley would be lost forever,
    and it would be a shame to lose what could have been a win/win
    situation just because of the obstructionism of a few.
        It's amazing to me that a handful of self-appointed experts
    want to dictate to other communities and cities what their
    future and destiny should be. No one has that right. The people
    of Colorado Springs would never dream of telling another city
    or community what its future should be, and they just ask that
    they be given that same fair treatment in return.
        This hearing is a great opportunity to move past the
    rhetoric and work on real solutions. I do not expect us to
    resolve all of the issues surrounding projects in the Fry-Ark
    today, but this hearing is a good opportunity to move this
    process forward and hear all concerns and hopefully find true
    common ground. I hope the hearing has a positive and
    constructive purpose and tone, as opposed to any kind of name
    calling or criticism. I look forward to working with all
    parties to meet this goal.
        Thank you. And thank you, Chairwoman Napolitano.
        [The prepared statement of Mr. Lamborn follows:]

     Statement of The Honorable Doug Lamborn, a Representative in Congress
                           from the State of Colorado

        Thank you all for being here. I also want to thank you, Chairwoman
    Napolitano, for coming to our wonderful state of Colorado to learn more
    about the challenges that we face in meeting our current and future
    water needs.
        As a new Member of Congress, I appreciate the opportunity to serve
    on this important subcommittee and I am certainly honored to serve as
    the Acting Ranking Member on this subcommittee while my colleague Cathy
    McMorris Rodgers is on maternity leave.
        While I am new to the ways of Washington, DC, the challenges facing
    Colorado with respect to water are certainly not new to me. The old
    adage of ``build it and they will come'' no longer applies here in
    Colorado. They'll come anyway.
        We have many water challenges facing us here. Past generations had
    the same challenge and they rose to the occasion by building visionary
    projects like the Fryingpan-Arkansas project. Our communities would not
    be what they are today without this project. The FryArk is a multi-use
    project that brings benefits to cities like Colorado Springs but to
    irrigators as well. Now, we have the opportunity to meet new water
    challenges and the project can play a big role in our future water
    supply picture for not just my constituents but for everyone in the
    region.
        Today is an opportunity to focus on the future and to appreciate
    the collaborative efforts that have brought us all to where we are
    today. Over the years, stakeholders have marched gradually towards more
    compromise but consensus has been elusive. What's important today is
    that we march to the future and not get stuck in the past.
        Differing perspectives will be heard today. Congressman Salazar and
    I have both introduced legislation regarding the Preferred Storage
    Options Plan and there are significant differences. We are both working
    to further the needs and priorities of our districts, yet I am
    convinced that there is ample room for compromise. If we and everyone
    here do not step up to finalize solutions, the entire region will
    suffer and that's not acceptable.
        It is important to note that while PSOP is important, Colorado
    Springs has alternate options to address its needs. However, many
    communities downstream do not have that same opportunity, which is why
    leadership is critical to moving forward for the benefit of all
    affected communities. Should an alternative to PSOP be pursued, many
    concessions and benefits to entities in the Arkansas River Valley would
    be lost forever, and it would be a shame to lose what could have been a
    win-win situation outcome just because of the obstructionism of a few.
        It is amazing to me that a handful of self-appointed experts want
    to dictate to other communities and cities what their future and
    destiny should be. A few have even said, for instance that Colorado
    Springs should not grow any more. No one has that right. The people of
    Colorado Springs would never dream of telling another community what
    its future should be, and they just ask that they be given the same
    fair treatment in return.
        This hearing is a great opportunity to move past the rhetoric and
    work on real solutions. I do not expect us to resolve all of the issues
    surrounding projects in the FryArk today, but this hearing is a good
    opportunity to move this process forward and hear all concerns and find
    true common ground. I hope it has a positive and constructive purpose
    and tone, as opposed to name calling and criticism. I look forward to
    working with all parties to meet this goal.
        Thank you.
                                     ______

        Mrs. Napolitano. Thank you very much, and we will now
    proceed to our next member, Representative Salazar.

        STATEMENT OF THE HON. JOHN SALAZAR, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF COLORADO

        Mr. Salazar. Thank you, Madam Chair.
        First of all, I want to thank you for allowing us to be
    here in Pueblo and for your visit as well. Today I'd like to
    talk a little bit about the Arkansas basin. I'd like to talk
    about an individual who has been and lived through it his
    entire life. This is about a young boy in the Arkansas basin,
    John Singletary, who sold his gold frying pan to try to raise
    money for the Fryingpan-Arkansas Project.
        Little Johnny dreamed of the day when farmers in the lower
    Arkansas Valley would never have to worry about future water
    needs. He remembers going to Rocky Ford with his father and
    seeing a booming farm town, which seemed to have melon stands
    on every street corner. In 1962, as we just saw, President
    Kennedy came to Pueblo to sign the Fryingpan-Arkansas Project
    into law. The Fry-Ark Project was being built to deliver water
    to the agricultural-based communities east of Pueblo.
        In committee hearing the legendary Congressman and
    Committee Chairman, Wayne Aspinall, who we heard President
    Kennedy speak about, laid out his argument for the Fryingpan-
    Arkansas Project. Aspinall stated that only 17,000 acre-feet of
    water would be used for the municipalities in the Arkansas
    Basin and of that only 5,000 acre-feet outside the lower Ark
    for Colorado Springs.
        He said that of the 219,100 acre-feet of usable project
    water, that an overwhelming majority of the 184,000 acre-feet
    would be designated for irrigated agriculture. That's roughly
    85 percent of the water for agriculture. Simply put the Fry-Ark
    was approved by Congress and signed by President Kennedy for
    the primary purpose of serving agriculture in the Arkansas
    basin.
        Today I am sad to say that agriculture is no longer the
    focus of the Fry-Ark Project. Even worse, the project is
    turning into an instrument to move water from the ag-based
    communities like Crowley County and Rocky Ford, to growing
    metropolises, sprawling communities, and sometimes out of
    basin. Promises made to these farm communities have not made up
    for the fact of the total community damage caused by their
    drive. And while Aurora cannot legally purchase Fry-Ark Project
    water, the Bureau of Reclamation has allowed Aurora to utilize
    the Fry-Ark facilities to move clean mountain water via
    exchange from water they purchased off the farm. The water
    taken off the farm will never return. The water taken out of
    the basin will never return. The trend leaves no hope for
    agriculture or for ag-based communities, nor for them to
    survive. I believe that it is immoral for large cities to rob
    the future of small towns for the sake of growth.
        Thomas Jefferson once said, ``Encouragement of agriculture
    I deem as one of the essential principles of our government and
    consequently those which ought to shape this administration.''
    Jefferson believed that the most moral society was one where
    agriculture is a predominant vocation. I agree with Jefferson;
    this is a moral issue.
        Through the actions of the Bureau of Reclamation and
    thirsty cities, farmers and small-town folks are being kicked
    out to the curb in towns like Rocky Ford so that urban areas
    can continue to grow and build another strip mall. When the
    farmer shuts down his operation when the water is moved, so
    does the fertilizer salesman, the banker, the tractor, the
    tractor repairman, and the farm workers all lose their jobs.
    The dried-up farm community can never return to their heyday.
        And for whose benefit? We know for whose benefit. And to
    add insult to injury, the Bureau of Reclamation has been
    complicit in moving water with annual one-year leases with
    Aurora since 1986 and is now proposing a 40-year lease that is
    almost completed. The Bureau has not made the case why they
    have the authority to contract with Aurora using Fry-Ark
    facilities. Furthermore, I would argue today that the Bureau
    doesn't have the authority to do so. I'm anxious to hear the
    testimony today of the witnesses that determined the original
    intent of the Fryingpan-Arkansas Project and the authority that
    the Bureau has to contract with out-of-basin entities.
        One thing I know for sure. John Singletary, who now is the
    president of the Lower Arkansas Water Conservancy District,
    didn't help his parents to sell these gold frying pans so that
    water could be moved out of the Arkansas Basin.
        Thank you.
        [The prepared statement of Mr. Salazar follows:]

       Talking Points of The Honorable John Salazar, a Representative in
                      Congress from the State of Colorado

          As a young boy in the Arkansas Basin, John Singletary
    sold gold frying pans
          Little Johny dreamed of a day when farmers in the Lower
    Arkansas Valley would never have to worry about future water needs
          He remembers going to Rocky Ford with his father and
    seeing a booming farm town, which seemed to have melon stands on every
    street corner.
          In 1962 President Kennedy came to Pueblo to sign the
    Fryingpan-Arkansas Project into law.
          The Fry-Ark project would be built to deliver water to
    Agricultural based communities East of Pueblo.
          In Committee Hearings, the legendary Congressman and
    Interior Chairman Wayne Aspinall laid out his argument for the Fry-Ark
    Project.
          Aspinall stated that only 17,000 acre feet of water would
    be used only for the municipalities in the Arkansas basin; and of that
    only 5000 acre feet outside the Lower Ark for Colorado Springs. He said
    that of the 219,100 acre feet of usable project water that an
    overwhelming majority of 184,600 acre feet would be designated for
    irrigated agriculture. That's roughly 85% of the water for agriculture.
    (source, Subcommittee on Irrigation and Reclamation, Interior
    Committee,
    June 9-11, 1953)
          Simply put, the Fry-Ark was approved by Congress and
    signed by President Kennedy for the primary purpose of serving
    agriculture in the Arkansas Basin.
          Today, I am sad to say that agriculture is no longer the
    focus of the Fry-Ark project. Even worse, the Project is turning into
    an instrument to move water from Agriculturally-based communities like
    Crowley County and Rocky Ford to growing metropolitan sprawling
    communities--sometimes out of basin.
          Promises made to these farm communities have not made up
    for the fact of the total community damage caused by their dry-up
          And, while Aurora cannot legally purchase transbasin Fry-
    Ark Project water, the Bureau has allowed Aurora to utilize the Fry-Ark
    facilities to move clean Mountain water via exchanges from water
    they've purchased off the farm.
          The water taken off the farm will never return.
          The water taken out of the basin will never return.
          This trend leaves no hope for agriculturally based
    communities to survive.
          It is immoral for large cities to rob the future from
    small towns for the sake of growth
          Thomas Jefferson said ``Encouragement of agriculture...I
    deem as one of the essential principles of our government, and
    consequently those which ought to shape its administration.'' Jefferson
    believed the most moral society is one where agriculture is the
    predominant vocation.
          I agree with Jefferson, this is a moral issue. Through
    the actions of the Bureau of Reclamation and thirsty cities, farmers
    and small town folk are being kicked to the curb in towns like Rocky
    Ford so that Aurora can build another strip mall.
          When the farmer shuts down his operation when the water
    is moved, so does the fertilizer sales man, the banker, the tractor
    repair man and farm workers lose their jobs. The dried up farm
    community can never return to their heyday. And for whose benefit?
          To add insult to injury, the Bureau or Reclamation has
    been complicit in moving water with annual one-year leases with Aurora
    since 1986 and with a new 40-year lease that's almost completed.
          The Bureau has not made the case why they have authority
    to contract with Aurora using Fry-Ark facilities.
          Furthermore, I argue that the Bureau doesn't have the
    authority to do so.
          I am anxious to hear the testimony of today's witnesses
    to determine the original intent of the Fryingpan-Arkansas Project and
    the authority that the Bureau has to contract with out of basin
    entities
          One thing I know for sure, John Singletary didn't help
    his parents sell golden frying pans so Aurora can transfer water from
    the Arkansas Basin.
                                     ______

        Mrs. Napolitano. Now I will move on to Congressman Mark
    Udall.

    STATEMENT OF THE HON. MARK UDALL, A REPRESENTATIVE IN CONGRESS
                       FROM THE STATE OF COLORADO

        Mr. Udall. Thank you, Madam Chairwoman.
        Good morning to all of you.
        Madam Chairwoman, I would ask the panel's consent that my
    entire statement would be submitted for the record.
        Mrs. Napolitano. Without objection, so ordered.
        Mr. Udall. Thank you. I want to keep my remarks relatively
    short so that we can hear from this very influential and well-
    informed group of witnesses that we have today and then we can
    open it up for questions and comments.
        In my remarks that I prepared for the record, I harkened
    back to the days of the initial approvals of the Fry-Ark
    Project, and I note that my Uncle Stewart, who was John
    Kennedy's Secretary of Interior, played a role in seeing this
    project come to fruition, but also my father, Morris Udall, who
    worked closely with Chairman Aspinall and had great respect for
    Chairman Aspinall, noted in a newsletter to his constituents
    that after the approval of the legislation that the only way
    that it moved forward was because the house delegation in
    particular in Colorado came to common consensus on how to move
    forward. And I think that's both the challenge and the
    opportunity that faces us here today as we hold this very
    important hearing.
        If we can find consensus--and I believe we can--the future
    is bright. But that consensus has to be based, I believe, on
    the needs and the outlooks and the sensibilities of
    particularly the people who live in the Arkansas Valley
    drainages.
        And with that spirit, Chairwoman, I'd like to yield back
    any time that I do have remaining. But again, I want to thank
    all of you for coming out, for being involved in this way.
    There's nothing more important to us in the west. The lifeblood
    of our communities, the lifeblood of what makes us westerners
    of course is water.
        I was even--Congressman Salazar, Congressman Lamborn,
    Congressman Perlmutter, for some reason I was dreaming about
    the water last night and preparing for this hearing today. And
    I think we all should be of course incredibly thankful how
    green it is all over this wonderful State of Colorado as we
    experienced a wet--actually a normal winter, a normal spring,
    and I'm certainly thankful that there's grass for our cattle,
    there's water for our reservoirs, and there will be water in
    which we can fish and enjoy the great outdoors in this State of
    Colorado. I know we come here with the same purpose in line,
    which is to protect all of the communities of Colorado together
    as Coloradans.
        Thank you, Madam Chairwoman. I yield back to you whatever
    time I have remaining.
        [The prepared statement of Mr. Udall follows:]

      Statement of The Honorable Mark Udall, a Representative in Congress
                           from the State of Colorado

        Thank you, Madam Chairwoman, and thank you for bringing our
    Subcommittee to Pueblo for today's oversight hearing.
        I join my delegation colleagues in welcoming you to Colorado and
    particularly to the great valley of the Arkansas River, which is linked
    with our Western Slope by the Fryingpan-Arkansas project that is the
    focus of today's hearing.
        I think today's hearing will help us to understand not just how the
    project has developed in the 45 years since President Kennedy signed
    its authorizing legislation, but also the role it can play in this new
    21st Century. And I hope the result will be to lay a sound foundation
    for decisions the subcommittee and the Congress will be asked to make
    in the near future.
        Taken together, the witnesses scheduled to testify no only possess
    great expertise regarding the Fryingpan-Arkansas Project's past and
    present but also represent a range of views about its future.
        I look forward to listening to their testimony and learning from
    what they have to tell us.
        But before yielding back my time, I want to share with everyone
    here today a bit of history about the project that I think is not only
    relevant for today's hearing but that can perhaps stand us in good
    stead as we go forward.
        The final step in authorizing the Fryingpan-Arkansas project was
    taken by President John F. Kennedy, when he signed the authorizing
    legislation in August, 1962.
        But that was hardly the beginning of the story.
        As Mr. Long notes in his statement, the idea of a big Reclamation
    project to bring West Slope water into the Arkansas valley originated
    many years earlier, and in supporting it President Kennedy--and his
    Secretary of the Interior, my uncle Stewart Udall--followed the lead of
    the Eisenhower Administration.
        And the idea had Congressional support, especially in the Senate.
    But for many years, the Colorado delegation was not of one mind on the
    subject, because of concerns about the different effects the project
    could have on different parts of the State.
        Those concerns were particularly important for Congressman Wayne
    Aspinall, who was one of my predecessors--and one of Representative
    Salazar's as well--in representing Coloradans living west of the
    Continental Divide.
        In 1959, Representative Aspinall became the Chairman of what was
    then the Committee on Interior and Insular Affairs and now is the
    Committee on Natural Resources. As such, he played a key role in
    developing the provisions that enabled the Colorado delegation to come
    together in support of a bill to authorize the Fryingpan-Arkansas
    project and in having that legislation favorably reported from the
    committee and then winning its passage by the House of Representatives
    on June 13, 1962.
        The bill's passage in the House was noted in a newsletter to his
    constituents from another Member of Chairman Aspinall's committee--my
    father, Morris K. Udall, of Arizona.
        He had strongly supported the legislation, speaking in favor of it
    on the House floor, and hailed its passage by the House as ``an
    immensely important political breakthrough'' and a precedent for other
    reclamation projects.
        And in explaining the reason for that breakthrough, he directed his
    constituents' attention to what he thought--and, looking back, what I
    think today--was the key part of the Committee's report on the bill.
        That part of the report said--and here let me quote it directly--
            ``The Fryingpan-Arkansas project has been under study and
            consideration for over 30 years. It has been ready for
            authorization for 8 years. However, it was not until recently
            that all interested parties in parties in the State of Colorado
            were able to agree on the development.''
        My father's message to his constituents was that it was agreement
    among the Colorado delegation in Congress that made passage of the
    bill--and construction of the project--possible.
        That was what he saw as one of the lessons of the legislation
    President Kennedy signed 45 years ago. And, in my opinion, that same
    message bears repeating here today, not just to my constituents, but to
    all Coloradans.
        As a practical matter, I think none of us who represent some
    Coloradans can win passage of legislation dealing with the Fryingpan-
    Arkansas project--or anything else that affects people in more than one
    part of the state--unless that legislation is acceptable to everyone in
    the delegation. And as a matter of public policy, I think it would be
    wrong to even try to pass such legislation otherwise.
        In Wayne Aspinall's time, one of the hurdles that had to be
    overcome to develop that consensus was concern about the adverse
    effects on the areas from which waters would be diverted. And in the
    years since, as population growth and changes in our economy have
    increased the demand for water in our cities, towns, and suburbs, those
    concerns have become even greater and more widespread. The demise of
    plans for a big Two Forks reservoir and the rejection of Referendum A
    by voters in every Colorado county are signals that times have changed.
    In some ways, that can make it harder to achieve consensus, but it does
    not change the fact that consensus is needed.
        Speaking for myself, I want everyone to know that I am ready to
    work with all my colleagues to try to achieve consensus, but that in
    doing so I will never forget the need to carefully consider the impacts
    on all concerned, including those in the areas from which water is
    proposed for diversion.
        Thank you, Madam Chairwoman, and I look forward to hearing from our
    witnesses.

                                     * * *

    FOR RELEASE June 21, 1962

                              Congressman's Report

                               By Morris K. Udall

            ``Out of the Fryingpan--Hope and a Lesson for Arizona''

        The growth of our West is to a great degree the story of
    reclamation. Roosevelt, Hoover, Grand Coulee, and the other projects
    have nearly exhausted the choice, low-cost dam sites. Future projects
    pose more difficult engineering problems. Water must be carried longer
    distances; new engineering ideas are needed to help put the water where
    the people are.
        On June 13, the House voted to bring into being a sound engineering
    dream--the Fryingpan-Arkansas project. If the Senate goes along this
    project will bring water and power to semi-arid southeastern Colorado.
    Water will be collected high in the Rocky Mountains on the west side of
    the Continental Divide. It will be sent churning eastward through a
    six-mile-long tunnel drilled through the Rockies at an altitude of
    10,000 feet. Then the water will tumble down the eastern slope through
    a series of canals, reservoirs and power generating plants and into the
    Arkansas River.
        Farmers who today don't know if they'll be able to harvest the
    crops they now plant will be assured of water to stabilize production.
    Colorado Springs, Pueblo and other thirsty municipalities will have
    more and better water to supply increasing populations. Badly-needed
    energy for farms, homes and industries will be created. Disastrous
    floods will be curtailed. The minimum flow of water needed for fishing
    and other recreation activities will be assured.
        In the 10-12 years needed to complete the project, the federal
    government will invest $170 million. Over a 50-year span, $153 million
    of this will be repaid. (Only monies invested in fish and wildlife,
    recreation and flood control are not reimbursable).
        The Fryingpan-Arkansas project has been under study for three
    decades. It has been officially before Congress since 1953. President
    Eisenhower strongly supported it. President Kennedy wholeheartedly
    endorses it. Yet the project drew heavy fire in the House--from those
    who ridiculed the idea of a trans-mountain tunnel as a ``Rube Goldberg
    Project'' and those who asserted the $170 million will simply be money
    thrown away. Members of Congress are always looking for ``economy
    votes'' and reclamation is often a likely target--especially from the
    big city Eastern members. One of the principal critics of the tunnel
    idea was a Long Beach Congressman whose people turn on their taps to
    draw water which has come 200 miles across the desert from the Colorado
    River through many mountain tunnels.
        In the House debate on this bill, I made these statements:
        ``Based upon some of the debate here today, one might assume that
    this was $170 million we are going to throw down a rat hole somewhere.
    Reclamation does not cost; it pays. This is not a drain on the
    taxpayer. This will be paid back--nearly all of it paid back--with
    interest.''
        ``Let us go back to 1911. If one had been asked to select the 10
    least likely places in America to be major cities, I think Phoenix
    would have headed this list. It was a dry city of 12,000; when these
    people occasionally did get water it came all at once--right in the
    living room--and flooded everyone out. It was a hot and barren country.
    When Teddy Roosevelt and other farsighted leaders--and I can hear the
    opponents in the Congress in those early days laughing at this Rube
    Goldberg project in Arizona--supported this type of reclamation, they
    probably did not fully realize that would happen. Yet this first major
    project has now paid off. It cost $20 million. The federal government
    takes out of Phoenix $200 million every year in federal income taxes.
    Phoenix has 700,000 people; it is one of the nation's major cities.
    Phoenix would be a little town today except for the foresight of the
    Congress back in the 1900's when it decided to invest $20 million.''
        The Fryingpan-Arkansas project diversion idea is in many respects a
    scientific and technological breakthrough. Passage by the House is an
    immensely important political breakthrough--one that bodes well for the
    $1 billion Central Arizona Project which will come before Congress if
    the Supreme Court acts favorably in the California-Arizona water suit.
    The lesson for Arizonans is contained in the Interior Committee report
    on the bill:
        ``The Fryingpan-Arkansas project has been under study and
    consideration for over 30 years. It has been ready for authorization
    for 8 years. However, it was not until recently that all interested
    parties in the State of Colorado were able to agree on the
    development.''
        In Arizona we have achieved substantial unity over the Central
    Arizona Project. The more we strengthen that unity, the better our
    chances for getting the financing which will bring in the water we must
    have to expand our state's economy.
                                     ______

        Mrs. Napolitano. Thank you, Congressman Udall.
        And now we will hear from Congressman Perlmutter.

       STATEMENT OF THE HON. ED PERLMUTTER, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF COLORADO

        Mr. Perlmutter. Thank you, Madam Chair.
        And it gives me great pleasure to be here for this hearing.
    I had another hearing in Pueblo a number of years ago when I
    was in the State senate, and it was an issue where water was at
    the forefront just as it is today. And I think it's key for all
    of us to really take the clip that we saw to heart, because I
    think for me, it was a very inspirational speech and
    presentation by the President.
        And I think what it reflected was cooperation and
    compromise, and most specifically if you heard at the
    beginning, there were Congressmen and women from California and
    all the Congressmen and Senators from Colorado. And the
    president said this is cooperation and compromise, taking water
    from the Pacific and sending it to the Atlantic, and the
    project was one that was marked by cooperation and compromise.
        And the President's statements--and I have to disagree with
    my friend to my right here, Congressman Salazar. The President
    said this project is an investment in the future of this
    country, an investment that will pay large dividends. It is an
    investment in the growth of the west, in the new cities and
    industries which this project helps make possible.
        There has got to be cooperation between and among cities
    and counties, farming communities, industry, the recreational
    sector of our economy. This is a great project that was built
    with the money of all of the people of the United States of
    America and all the citizens of the State of Colorado. I hate
    to see the conflict that arises between this part of the state
    and the district that I represent, which is Jefferson County,
    Adams County, and Arapahoe County.
        This is a project that's been marked by cooperation,
    compromise, and a vision of the future, and I hope it remains
    that way. And as Representative Udall said, this is a day where
    I believe we're going to get testimony from outstanding
    witnesses and experts who have looked at this issue for a long
    time, have many different feelings about it, but I believe
    there is a real opportunity to bring compromise.
        I can say I've been in the Congress for five months now,
    and beyond Iraq, this is the subject that comes up in my office
    more often than anything else. I've met with people from Pueblo
    and from Aurora and from Colorado Springs, and I would love to
    see an agreement reached.
        Madam Chair, thank you for having us here.
        [The prepared statement of Mr. Perlmutter follows:]

    Statement of The Honorable Ed Perlmutter, a Representative in Congress
                           from the State of Colorado

        I thank the Chairwoman, Congresswoman Napolitano, of the Water and
    Power Sub Committee for inviting me to attend this important and useful
    meeting on water issues in the West and in particular the Fryingpan-
    Arkansas Project. I also want to thank the witnesses here today who
    will be talking with us about the issue of water and how it affects
    different communities around our state.
        I do believe that above all today, this hearing will showcase how
    critical water needs are in Colorado and throughout the West and how
    important it is that we all work together to find solutions to
    complicated and challenging water issues.
        I am familiar with many of the issues that will be presented today
    and I also know that many of the witnesses here today and others not
    here are playing a critical role in working together to reach a
    consensus regarding the Fryingpan-Arkansas project.
        Most importantly, I believe there is opportunity to find a
    compromise and I would like to see and encourage a solution. I strongly
    support the Bureau of Reclamation in issuing a 40 year lease agreement
    to Aurora.
        I look forward to working with all of you, my colleagues in the
    House and the Senate as we move forward toward consensus.
        I would like to recognize Mayor Tauer of Aurora and Mark Pifher and
    Bill Groffy from Aurora Water for traveling from my district to
    participate in this hearing today.
        Again, thank you and I look forward to hearing from the witnesses.
                                     ______

        Mrs. Napolitano. Thank you, Congressman.
        Mrs. Napolitano. I'd like to ask that both Mr. Bill Long,
    President of Southeastern Colorado Conservancy District in
    Pueblo, and Mr. Mike Ryan, Regional Director of Great Plains
    Region, U.S. Bureau of Reclamation, Billings, Montana, please
    step up.
        And as they're coming up, I just welcome both of you.
    Delighted to be back in Colorado. I was in Denver not too long
    ago talking, listening about water, and I certainly look
    forward to the testimony here. It is important to me as the
    Chairwoman of the Subcommittee to hear the perspectives of the
    local people, because there are no better experts on the
    realities of the ever- increasing water supply challenges that
    you, the local entities, face.
        Allow me to take just a fraction of a moment to thank the
    Pueblo Community College, the administration and staff, John
    Salazar and his staff for providing us with this venue and
    being so gracious to host our field hearing. And it takes a
    great amount of work to be able to put these together and
    planning so that it can be what it's supposed to be, and that's
    to obtain information from the communities.
        On behalf of myself and the Chairman of the House Committee
    on Natural Resources, Mr. Rahall, thank you for your
    hospitality.
        And no one understands this issue better than the
    communities of southeastern Colorado, and so today's hearing is
    very aptly titled ``The Fryingpan-Arkansas Project at 45:
    Sustainable Water for the 21st Century.'' And it's going to be
    focused on the western water management challenges in Colorado
    through the lens of the Fryingpan-Arkansas Project.
        Like the projects in my district in my home State of
    California, I do understand controversy. I'm not new to it. But
    the Subcommittee has a long history of confronting such issues
    in a fair and bipartisan way. We accommodated as many witnesses
    as we could, tried to be as fair as we could, and I think Mr.
    Lamborn will bear that out.
        Mr. Lamborn. [nods head.]
        Mrs. Napolitano. To get the full range of the views and
    provide input from those affected, we are very eager to listen
    to you. More specifically I hope to hear from our witnesses
    regarding the congressionally authorized purposes of the Fry-
    Ark Project and the role of that project in sustaining
    agriculture and communities in southeast Colorado, and of
    course the new challenges facing water users, water managers,
    and the Front Range cities facing unprecedented growth, climate
    change, and increasing needs for reliable water supplies. And
    how, more specifically and to the point on my end, is how
    conservation, storage and recycling are used, to what extent,
    and how are they being used to prepare this area for all of the
    above.
        I'm pleased to yield now to--I'm sorry. I got a little out
    of sorts here. I don't always conduct the hearings the way it's
    programmed. I go with my feelings.
        Now I want to go forth and begin to ask the panel to hear
    their testimony, and your testimony will be in the record,
    gentlemen, so I ask, if you would, to highlight the points that
    you want to make unless you really want to read the reports.
        So we'll start off with Mr. Long.

       STATEMENT OF BILL LONG, PRESIDENT, SOUTHEASTERN COLORADO
                 CONSERVANCY DISTRICT, PUEBLO, COLORADO

        Mr. Long. Good morning, Chairwoman Napolitano and members
    of the committee. I am Bill Long, President of the Southeastern
    Colorado Conservancy District, and on behalf of the district
    and myself, thank you for the opportunity to testify today.
        The southeast district is a Colorado statutory water
    conservancy district formed in 1958 to hold water rights for
    and repay the Fryingpan-Arkansas Project. The Fry-Ark
    legislation enacted in 1962 and amended in 1978 created a
    multi- purpose water project that converts water from the
    Colorado River Basin on the west slope of Colorado to the
    Arkansas River Basin on the east slope of Colorado. For nearly
    half a century, Southeastern's board of directors has grappled
    with the challenge to develop, manage, and protect water and
    related resources in an environmentally and economically
    responsible manner.
        The Arkansas River, an over-appropriated system, is most
    always short of supply to meet the demand. While development of
    the Fry-Ark Project has greatly benefited the Arkansas Valley,
    operation of the project is not without challenges and unmet
    needs.
        Demand for water in the Arkansas Valley has increased,
    especially in drought years. As a result of the Kansas v.
    Colorado lawsuit decision and other issues, the state has
    drastically increased regulation of ground water pumping. These
    actions have substantially reduced the available water supply
    for the Arkansas Valley. Municipalities from other regions
    attempting to export some of the Arkansas's very limited supply
    of native water using Fry-Ark Project facilities have created
    challenges for water users in the Arkansas Valley as well as
    the southeast district.
        The Fry-Ark authorizing act, nor any documents incorporated
    by reference, provides no explicit authority for the Secretary
    of Interior to enter into contracts for use of Fry-Ark excess-
    capacity space, to store or exchange native Arkansas River
    water rights for use outside of the Arkansas River basin in
    Colorado.
        The possible exception is the city of Aurora, with whom the
    southeast district has reached a mutual agreement. It is not in
    the overall best interests of the district and its constituents
    for the project to be used in nonauthorized ways which could
    potentially hurt the project's intended beneficiaries. These
    challenges highlight the need for leadership in developing
    conservation programs and cooperative opportunities to assure a
    sustainable water supply for future generations in the Arkansas
    Valley.
        To meet future demands, we must better utilize existing
    capacities in Fry-Ark Project reservoirs to help meet the
    growing demand for storage without interfering with the current
    entitlement project water and storage. We must develop
    additional water storage, including expansion of existing Fry-
    Ark Projects, to meet future demands of project beneficiaries.
        We must finance and construct the Arkansas Valley conduit.
    The Bureau of Reclamation identified the water quality and
    quantity problems in the lower valley as early as 1950, and the
    problems have only gotten worse. More than 40 water providers
    of the lower valley with at least 16 under current enforcement
    orders to improve water quality have joined together in support
    of the conduit. The conduit proponents have reviewed the
    feasibility of developing the Arkansas Valley pipeline and have
    reached the following conclusion: There is an adequate water
    supply to make the conduit feasible, but the financial
    capabilities of the participating agencies are inadequate to
    fund construction of the conduit under the 100 percent funding
    requirements; however, conduit participants could afford to pay
    a share of the cost as proposed in Congresswoman Musgrave's
    H.R. 186 and Congressman Salazar's H.R. 317 conduit
    legislation.
        Conduit participants are prepared to discuss the terms of
    such cost-sharing arrangements with the committee. The
    committee should also be aware of the strong support the
    conduit has from the State of Colorado, whose water
    conservation board has recently approved a $60 million loan
    pending passage of this important legislation.
        In closing, Madam Chair, I respectfully request that a
    hearing on the conduit legislation be scheduled before Congress
    takes its Independence Day break, and with that, I'd once again
    like to thank you and the committee members for the opportunity
    to testify today and offer to answer questions at the
    appropriate time.
        [The prepared statement of Mr. Long follows:]

                      Statement of Bill Long, President,
                Southeastern Colorado Water Conservancy District

        Madame Chair: My name is Bill Long, president of the Southeastern
    Colorado Water Conservancy District (``Southeastern''), and I am
    testifying today on ``The Fryingpan-Arkansas Project at 45: Sustainable
    Water for the 21st Century.'' For nearly a half century, Southeastern's
    Board of Directors has grappled with the challenge to manage, develop,
    and protect water and related resources in an environmentally and
    economically sound manner.
        During the drought of 2002, the Denver Post captured water's
    importance in Colorado in a story line: ``In Colorado, water is
    everything.'' It's true, without water, our economy could not flourish
    and the state, and important to those who live here, the southeastern
    region of the state, could not sustain its population.
        What that simple statement from the Denver Post overlooks is the
    same point that Lt. Zebulon Pike overlooked when he judged eastern
    Colorado a desert that would never sustain a civilized society. Pike
    did not foresee that mountain water could be captured to provide growth
    for the plains. After using the readily-available river and well water,
    the early settlers in eastern Colorado learned that water storage was
    needed. The Fryingpan-Arkansas Project (``Fry-Ark Project'' or
    ``Project'') is one of these projects that fuels the possibility of
    communities here in the ``Great American Desert.''
        The Fry-Ark Project is the result of the vision of the Arkansas
    Valley's early water leaders, who combined vision with common-sense
    solutions fostered by a desire to make a better tomorrow for the people
    of southeastern Colorado and the state of Colorado as a whole. These
    leaders of the past leave a legacy that is both humbling and
    challenging. The challenge for this generation of southeastern Colorado
    leaders is not only to steward the project we have inherited, but to
    enhance and increase these assets for the future generation.
        Southeastern is a statutory water conservancy district (see C.R.S.
    Sec. 37-45-101, et seq.), which was formed on April 29, 1958, by the
    District Court for Pueblo County, Colorado. Southeastern's district
    boundaries extend along the Arkansas River from Buena Vista to Lamar,
    and along Fountain Creek from Colorado Springs to Pueblo, Colorado.
    Southeastern administers, holds all water rights for, and repays
    reimbursable costs for the Fry-Ark Project, a $550 million multi-
    purpose reclamation project authorized by Congress and built by the
    U.S. Bureau of Reclamation (``Reclamation''). The Project diverts water
    underneath the Continental Divide, from the Fryingpan and Roaring Fork
    River drainages, into the Arkansas River drainage, where Project water
    is stored in Pueblo Reservoir and other reservoirs. Southeastern
    provides Project water and return flows to supplement the decreed water
    rights of water users within Southeastern's boundaries. Southeastern
    repays a large part of the Project's construction costs (estimated at
    $127 million over a minimum 40-year period), as well as annual
    operation and maintenance costs, in accordance with its repayment
    contract with the United States. Payments are made from property tax
    revenues available to Southeastern, supplemented by revenue from
    Project water sales.
    I. Development of the Fryingpan-Arkansas Project
        Shortly after World War II, the nation was in flux. The country
    optimistically was gearing up for industrial growth. The ripples of the
    post-war economy washed over into the Arkansas Valley as well. The
    community leaders of the era saw a major stumbling block to overcome in
    any quest for growth--water. So they began pushing heavily for a
    project to bring water from the western slope of Colorado--with its
    abundant snowfall and sparse population--to the Arkansas River Basin,
    where irrigated agriculture and city water systems depended on a river
    that often was only a trickle by the time it reached the border with
    Kansas.
    A. Congressional Authorization of the Fryingpan-Arkansas Project
        The Project originally envisioned diversions from the Gunnison
    River and other tributaries of the Colorado River and was known as the
    Gunnison-Arkansas Project. As it progressed over the years, the scope
    of the entire project became limited to the first phase of the
    Gunnison-Arkansas Project, with construction of a reservoir on the
    Fryingpan River near Aspen, Colorado, transporting water through the
    Continental Divide via tunnel and moving it into the Arkansas River
    Basin for storage in mountain lakes and a new reservoir near Pueblo,
    Colorado. While the original Gunnison-Arkansas Project envisioned
    357,000 acre-feet of imports each year, the eventual Fryingpan-Arkansas
    Project would be limited to an average of just 69,100 acre-feet.
        The name took on even more significance when backers of the Project
    began peddling golden frying pans up and down the Arkansas valley to
    raise money for the lobbying effort that was soon to come. The sale of
    golden frying pans in the valley were brisk. Burros were used to carry
    the frying pans to towns up and down the Arkansas Valley. During
    January of 1955, groups were able to buy small frying pans for $5 and
    large ones for $100 or more.
        The Colorado Congressional delegation continued to work with local
    interests to develop consensus for how the Fry-Ark Project, once
    authorized, would operate. On June 16, 1950, the Policy and Review
    Committee, authorized by the Colorado Water Conservation Board to study
    the development of the Fry-Ark Project, issued the first set of
    proposed Operating Principles for the Project, which were approved by
    the Colorado Water Conservation Board.
        The Project, along with its Operating Principles, was opposed by
    the western slope of Colorado, led by Congressman Wayne Aspinall. Many
    west slope water users, including the City of Aspen, remained concerned
    about the Roaring Fork River. In response to these concerns,
    Congressional supporters of the Project modified the proposal to
    enlarge the west slope collection system (adding the Hunter Creek
    collection system). One of the many benefits of the expansion of the
    west slope collection system is that it allowed the Operating
    Principles to provide for minimum flows in the Roaring Fork for the
    protection fish and wildlife in the Project area.
        In 1958, the Colorado Water Conservation Board, now led by Felix
    Sparks from Delta, Colorado, began to try to resolve the East-West
    divide over the Project. Mr. Sparks established a second Policy and
    Review Committee to revise the Operating Principles for the Project.
    The major change was to replace the proposed Aspen Reservoir with a
    larger reservoir near Ruedi. The Operating Principles, as amended
    December 9, 1960, were adopted by the State of Colorado and signed by
    the Colorado Water Conservation Board, Southeastern, Colorado River
    Water Conservation District, and Southwestern Water Conservation
    District. After development of the 1960 Operating Principles,
    Colorado's Congressional delegation was united in seeking authorization
    for the Fry-Ark Project.
        On June 13, 1962, the House passed legislation authorizing the Fry-
    Ark Project. The Senate approved the Project on August 6th. On August
    16, 1962, John F. Kennedy flew to Pueblo, Colorado to officially and
    proudly proclaim the authorization of the Project, and the start of
    construction. The Project could not have been authorized without the
    diligent work of those within the Arkansas Valley to unify state
    interests and broker compromises to ensure that the final Project
    satisfied as many needs as possible.
    B.  The Fryingpan-Arkansas Project was Authorized for Multiple
            Purposes.
        The Fry-Ark Project was authorized for numerous purposes including:
    (1) developing the regional and national economy through irrigation of
    arid lands of the Arkansas Valley; (2) developing power and energy
    surplus to Project needs; (3) supplying domestic, municipal, and
    industrial water; (4) providing flood control on the Arkansas River;
    (5) providing for the preservation, propagation, and enhancement of
    fish and wildlife; (6) improving water quality; and (7) developing
    recreation facilities.
        The Authorizing Act, Public Law 87-590, makes it clear that certain
    purposes take precedence over others. Section 1(a) of the Authorizing
    Act acknowledges that the Project is authorized for the purposes of
    ``supplying water for irrigation, municipal, domestic, and industrial
    uses, generating and transmitting hydroelectric power and energy, and
    controlling floods, and for other useful and beneficial purposes
    incidental thereto.'' Incidental or secondary purposes include
    recreational uses, development of fisheries, and conservation of
    wildlife habitat. As evidenced by the programs discussed herein,
    Southeastern and its constituents use Project water for many purposes,
    and Southeastern's Board of Directors has attempted to maximize the use
    of all transmountain diversions, while recognizing the supplemental
    nature of Project water and acknowledging that there is insufficient
    water to satisfy all demands.
    C. Project Features
        Construction of the Fry-Ark Project began with Ruedi Dam and
    Reservoir in 1964, and continued without interruption until September
    28, 1990 when the Project was declared completed with the dedication of
    the Fish Hatchery at Pueblo Reservoir. Construction is completed on all
    the water supply-related features that were expected to be initially
    developed. The North Side Collection System may be expanded to Last
    Chance and Lime Creeks, tributaries of the Fryingpan River. However,
    plans to pursue this expansion have been deferred. Plans to construct
    the Arkansas Valley Conduit to serve towns and cities east of Pueblo
    with treated Project water are currently in process.
        There are two distinct areas of the Project: the western slope,
    located in the Hunter Creek and Fryingpan River watersheds, and the
    eastern slope in the Arkansas River Valley. These areas are separated
    by the Continental Divide, which, in many places, exceeds an elevation
    of 14,000 feet. The Project consists of diversion, conveyance, and
    storage facilities designed primarily to divert water from Colorado
    River tributaries on the western slope for use in the water-short areas
    in the Arkansas River on the eastern slope. The North and South Side
    Collection Systems and Ruedi Dam and Reservoir are located on the
    western slope in the Fryingpan River basin. Sugar Loaf Dam and
    Turquoise Lake, Mt. Elbert Conduit, Halfmoon Diversion Dam, Mt. Elbert
    Forebay Dam and Reservoir, Twin Lakes Dam and Reservoir, and Pueblo Dam
    and Reservoir are all located on the eastern slope in the Arkansas
    River Basin.
        The Project provides water for uses on the west slope in response
    to the requirements of the Water Conservancy Act, which directs water
    conservancy districts removing water from the Colorado River basin to
    operate their projects so that existing appropriations and prospective
    uses of water on the western slope will not be impaired nor increased
    in cost to the western slope water users. This compensatory storage is
    provided by Ruedi Reservoir, which provides storage for replacement and
    regulation of water for the western slope users. This water is used for
    irrigation, municipal, industrial, recreation, and fish and wildlife
    purposes.
        The North and South Side Collection Systems on the western slope
    collect the high mountain runoff and convey the diverted waters into
    the inlet portal of the Charles H. Boustead Tunnel. Sixteen diversion
    structures on the western slope are used to divert water into the
    Project collection system. The system includes eight tunnels with a
    combined length of 21.5 miles. The five-mile long Boustead Tunnel
    conveys the water from the North and South Collection Systems under the
    Continental Divide to Turquoise Lake. Boustead Tunnel may only divert
    at 900 c.f.s. from the Fryingpan River (not including water from the
    Hunter Creek system) unless the Colorado River Water Conservation
    District agrees that Ruedi Reservoir will fill that season, at which
    point Boustead may divert at 945 c.f.s.
        For water to be diverted through the Boustead Tunnel from the
    Fryingpan River, the Fryingpan must meet minimum flows as measured at
    the Thomasville Gage, just upstream from Ruedi Reservoir. From January
    through March, those flows are 30 c.f.s. As a practical matter,
    however, for this period of time, the snowpack is not melting and the
    diversion structures are generally inaccessible due to snow, so
    diversions during this season are unlikely. Diversions will generally
    not begin until the spring runoff begins in late April or May. Minimum
    flows for the Thomasville Gage are 100 c.f.s. in April, 150 c.f.s. for
    May and 200 c.f.s. for June. By the end of June, the runoff has
    generally peaked. Nonetheless, the Project may continue to divert so
    long as it is in priority and there is adequate water to meet minimum
    streamflow of 100 c.f.s. in July, 75 c.f.s. in August, and 65 c.f.s.
    for September. Due to colder weather and increased snowfall, diversions
    are less likely in the late fall through early winter, but may occur.
    The Fryingpan River must measure at least 30 c.fs. at Thomasville Gage
    between October 1 and December 31 for such diversions to occur.
        Turquoise Lake and Sugar Loaf Dam are located just east of the
    Continental Divide, approximately five miles west of Leadville,
    Colorado. The Lake provides storage capacity for the regulation of
    Project water delivered from the Boustead Tunnel, as well as non-
    Project water.
        The Mt. Elbert Conduit, a 10.7 mile, 90 inch diameter pipe, conveys
    water from Turquoise Lake to Mt. Elbert Forebay. The Halfmoon Diversion
    Dam diverts available flows to Halfmoon Creek into the Mt. Elbert
    Conduit. Water delivered to the forebay is used to generate power at
    the Mt. Elbert Pumped-Storage Powerplant.
        The Mt. Elbert Pumped-Storage Powerplant is located approximately
    13 miles southwest of Leadville, Colorado, at the northwest corner of
    the lower lake of Twin Lakes. The powerplant has two pump-generator
    units, each with a nameplate capacity of 100 megawatts. After use at
    the powerplant, Project water flows into Twin Lakes. From Twin Lakes,
    Project water is released to Lake Creek and the Arkansas River for
    delivery to water users upstream of Pueblo Dam and Reservoir or for
    storage in Pueblo Reservoir. The distance from the confluence of Lake
    Creek and the Arkansas River to Pueblo Dam is approximately 143 river
    miles.
        Project water is released from Pueblo Reservoir to the Arkansas
    River for irrigation and municipal use; to the Fountain Valley Conduit
    for municipal use by the members of the Fountain Valley Authority; and
    to the Bessemer Ditch for irrigation use. Pueblo Reservoir is the
    terminal storage feature for the Project, and both Project and non-
    Project water are conveyed to Pueblo and Pueblo West through the
    municipal outlet works in Pueblo Dam.
        El Paso County, Colorado is located to the north of the main
    channel of the Arkansas River. With the growth of the Colorado Springs
    metropolitan area, it became clear that this area would be interested
    in acquiring supplemental municipal water from the Project.
    Accordingly, representatives from El Paso County were active in the
    development of the Project, and portions of the county were included
    within Southeastern's boundaries. Nonetheless, it was clear that the
    Arkansas River could not be used as a delivery mechanism for such
    water. Several municipal entities including Colorado Springs Utilities,
    the City of Fountain, Widefield Water District, Security Water District
    and Stratmoor Hills Water District formed the Fountain Valley Authority
    which would sell bonds to construct a delivery pipeline and treatment
    plant. Revenue from the utility departments would then be used to fund
    a statutory authority which would, in turn, pay Southeastern and the
    United States for costs of construction of the delivery pipeline and
    water treatment plant. The Authority signed a 40-year contract with the
    United States and Southeastern to secure the repayment obligation. As
    with the remainder of the Project, title to the Fountain Valley
    Pipeline remains with the United States, even though Southeastern is
    responsible for operation and maintenance costs of all facilities.
    II. Challenges for Today
        While development of the Fry-Ark Project has greatly benefited the
    Arkansas Valley, operation of the Project is not without challenges.
    Demand for water in the Arkansas Valley has increased, particularly in
    drought years. The State has increased regulation of well pumping due
    to the Kansas v. Colorado decision. These factors and others have
    highlighted the need for leadership in developing conservation programs
    to ensure a sustainable water supply in the Arkansas Valley.
    A. Increased Demand for Project Water
        The Arkansas River is an over-appropriated system with a continuous
    call on the river. There is usually a constant demand for water.
    Reclamation conducted land classification investigations prior to Fry-
    Ark Project authorization in 1962. The total irrigable area within the
    District was estimated to be approximately 280,600 acres. This includes
    12,538 acres above Pueblo Reservoir, 12,805 acres along Fountain Creek,
    and 255,254 acres below Pueblo Reservoir.
        In 1979, Southeastern approved a set of Allocation Principles that
    described the percentage allocations to municipal and agricultural
    uses. The Allocation Principles were approved by the District Court for
    Pueblo County, Colorado that same year. The municipal demand for
    Project water is associated with the Arkansas Valley cities, towns, and
    entities lying east and west of Pueblo, Pueblo, and the Fountain Valley
    Authority. The Allocation Principles require allocation of ``a minimum
    of 51 percent of the annual Project water supply to municipal and
    domestic use.'' This allocation is distributed, as requested, to
    Arkansas Valley cities, towns and entities lying east of Pueblo (12%),
    west of Pueblo (4%), Pueblo (10%), and the Fountain Valley Authority
    participants (25%). In the event the municipalities do not request the
    full 51% available to them, any excess water is made available for
    agricultural uses. Finally, after all other municipal and agricultural
    have been met, Pueblo West Metropolitan District is given notice that
    it can make a request. No municipal water user is required to take a
    minimum amount of Project water in a given year.
        Project water for use by irrigation ditches is allocated based upon
    an acre-foot per irrigated acre basis. Therefore, when demand exceeds
    supply, each ditch receives a proportionate share of available Project
    water. This allocation is made only after the municipal requests are
    met up to at least 51% of the annual Project yield.
        Southeastern also promulgated a ``Water Allocation Policy,'' last
    amended in April 2006. The Water Allocation Policy is the direction of
    the Board of Directors as to how to implement the Allocation
    Principles. The Water Allocation Policy is not approved by the Pueblo
    County District Court and can be amended by majority vote of
    Southeastern's Board of Directors at any time.
        In March of each year, appropriate letters and forms are mailed to
    eligible entities offering them the opportunity to apply for an
    allocation of Project water. About May 1st of each year, Reclamation
    notifies Southeastern as to the amount of water available that year.
    The Allocation Committee then meets to review the applications
    submitted by constituent entities, and prepares recommendations
    concerning the applications received as related to the amount of water
    available. All recommendations of the Allocation Committee must be
    approved by Southeastern's Board of Directors. Recommendations from the
    Allocation Committee are considered at the next meeting of the Board of
    Directors, and appropriate allocations are made. Applicants are
    afforded the opportunity to appear before the Board in support of their
    allocation requests.
        Many of the ditches serving irrigable areas located within the
    District have very senior decreed water rights and generally have not
    requested supplemental water from the District. Also, a portion of the
    District's irrigable acres have been taken out of production, or are
    not eligible to receive a Project water allocation, because of sales
    and changes of use of their decreed water rights. As recognized in the
    Allocation Policy, it is Southeastern's policy ``not to replace with
    Project Water decreed water sold by persons or entities.'' This results
    in a reduction of the total irrigable acreage that are eligible to
    receive Project water.
        The Allocation Principles state that ``any increase in municipal
    and domestic allocations shall only occur if agricultural irrigated
    acreage, on which Project water has been used, is removed from
    irrigation, at which time the amount of Project water previously
    allocated to such acreage shall be allocated to other non-irrigation
    uses.'' Allocation Principle ] G. In accordance with the Allocation
    Principles, Southeastern recently approved a reallocation of 3.59% of
    the Project water supply from agriculture to non-agricultural uses, due
    to removal of formerly irrigated lands from agriculture. The goal of
    the Allocation Principles, the Allocation Policy and the procedures
    followed by the Board each year is to facilitate an equitable
    allocation of water and to ensure efficient use of Project water.
    B.  Impact of the Kansas v. Colorado Decision on the Use of Water in
            the Arkansas River Basin
        In 1949, after three years of negotiations, Kansas and Colorado
    approved, and Congress ratified, the Arkansas River Compact. The
    Arkansas River Compact's primary purposes are to ``[s]ettle existing
    disputes and remove causes of future controversy...concerning the
    waters of the Arkansas River'' and to ``[e]quitably divide and
    apportion'' the waters of the Arkansas River, ``as well as the benefits
    arising from the construction, operation and maintenance by the United
    States of John Martin Reservoir.''
        In the 1950s and 60s, there was a surge in well development along
    the Arkansas River due to improvement in pump technology and to the
    availability of inexpensive electrical power. Since the 1950s, water
    users in the Arkansas River Basin have increasingly relied on
    groundwater for irrigation and other uses.
        In December 1985, Kansas brought an original action in the United
    States Supreme Court against the State of Colorado to resolve disputes
    arising under the Arkansas River Compact. Kansas submitted that
    Colorado's increased reliance on new and existing irrigation wells
    materially depleted the water otherwise available for use by Kansas.
    The Special Master and the United States Supreme Court agreed that such
    additional pumping, absent appropriate offsets in surface diversions,
    increases the consumptive use of water, and ultimately decreases the
    surface flows of the Arkansas River. Colorado generally did not require
    sufficient reduction of surface water use to fully offset these
    impacts.
        Colorado's State Engineer promulgated the Amended Rules and
    Regulations Governing the Diversion and Use of Tributary Ground Water
    in the Arkansas River Basin (``Use Rules'') in September of 1995. The
    Use Rules require that all diversions of groundwater from the valley-
    fill and surficial aquifers along the Arkansas River from Pueblo to the
    Stateline, be discontinued unless depletions caused by such pumping are
    replaced pursuant to a replacement plan approved by the Colorado State
    Engineer's Office. The Use Rules establish certain presumptive stream
    depletions which are used to determine depletions to the Arkansas River
    caused by well pumping. The presumptive stream depletions are reviewed
    annually, and revised if necessary to prevent material injury to senior
    surface rights in Colorado, and depletions to usable Stateline flows.
    If replacement water is not available in sufficient quantities, pumping
    must be curtailed. Since the Use Rules became effective, the Arkansas
    River has seen more water rights, including Project water and return
    flows therefrom, being used for augmentation purposes. This is because
    wells can provide a more reliable, often better quality water supply
    than most surface water rights. The Fry-Ark Project is an important
    source of water that helps sustain agriculture in the Lower Arkansas
    Valley while complying with Colorado's Arkansas River Compact
    obligations.
    C. Sale of Project Water and Return Flows
        While Southeastern allocates Project water, Reclamation is
    responsible for accounting for the delivery of Project water.
    Southeastern provides Reclamation and the State Division 2 Engineer's
    Office with the listing of the annual allocation of Project water.
    Deliveries are then coordinated by Reclamation in communication with
    the Division 2 Engineer's Office as requests are made by ditch
    companies and municipalities.
        The price for Project water is determined by Reclamation as
    directed by Reclamation policy and the Project repayment contract.
    Rates are subject to adjustment depending upon the ``Ability to Pay
    Study'' and ``Repayment Analysis,'' which are conducted by Reclamation
    every four years. These studies first determine the irrigators' ability
    to pay for Project water by assessing the economic condition of the
    average farm operation within the District. Next, Reclamation, in
    consultation with Southeastern, projects the repayment status of the
    Project given projected revenues and expenses.
        To encourage the efficient use of domestic water, municipal water
    users are not required to take a minimum amount of Project water in a
    given year. In adopting the Allocation Principles, the Board
    acknowledged that it was unlikely that any municipal entity receiving
    Project water would require its maximum allocation for a number of
    years. Southeastern recognized that over time, demands will gradually
    increase. Even if full demand would not be asserted for many years, the
    Allocation Principles make it clear that failure to request full
    allocation of water will not constitute an abandonment of the municipal
    allocation. Water not needed by the area or entity to which it is
    allocated may be allocated first to municipal and domestic users,
    thereafter offered to any other user on such basis as the Board of
    Directors determines.
        The first time that municipalities requested their full 51% of
    Project Water was in 2002 due to the drought. This hurt agricultural
    water users, who had previously been able to use the unallocated
    municipal water. This is an indication that water use within the
    Arkansas Basin may be changing more toward municipal than agricultural
    uses.
        Pursuant to its repayment contract with the United States,
    Southeastern retains dominion and control over Project water return
    flows. Southeastern has made return flows from the use of Project water
    available for use by eligible entities within its boundaries, primarily
    for augmentation purposes, since the first deliveries of Project water
    occurred. Southeastern, by resolution, created the Southeastern
    Colorado Water Activity Enterprise to administer the sale of Project
    water return flows. On February 15, 1996 the Enterprise approved a
    policy governing the sale of return flows. This policy has been amended
    and the current version is as of April 15, 2004. Sale of return flows
    promotes multiple uses of Project water.
    D. Conservation of Project Water
        Southeastern encourages municipal water users to develop and
    implement Water Conservation and Drought Management Plans. The Board of
    Water Works of Pueblo, Colorado Springs Utilities, and the cities of La
    Junta, Salida and Canon City have provided summaries of their Water
    Conservation and Drought Management practices to Southeastern.
        Southeastern has also participated in numerous projects that
    encourage efficient use of Project water including the Winter Water
    Storage Program, various flow management programs, and programs to
    control non-native phreatophytes.
            1.  Winter Water Storage Program
        During the early planning stages of the Project, individuals and
    entities envisioned what has become known as the Winter Water Storage
    Program (``WWSP''). Prior to construction of Pueblo Dam, the various
    irrigation entities would divert the flow of the Arkansas River when in
    priority outside of the normal irrigation season to maintain soil
    moisture levels in the fields where crops would be grown during the
    following season. Problems associated with winter operation of canal
    and lateral systems, labor, and related items were frequently
    experienced.
        As a result, the concept of a WWSP evolved with the objective of
    storing waters that otherwise would have been diverted to the fields
    downstream of Pueblo Reservoir if the reservoirs of those entities
    whose diversions to storage were located upstream of John Martin
    Reservoir. These stored waters would then be released during the
    following irrigation season. Allocation of this winter stored water is
    based upon the ratio of foregone winter direct flow diversion based on
    the average of a historic period. These ratios were negotiated among
    the parties through extensive negotiations. In 1974, Southeastern, with
    the cooperation of various entities in the basin, promoted and operated
    a voluntary WWSP each year from 1975-76 through 1986-87, except 1977-
    78. With the experience and data gained each year, refinements and
    adjustments were made to the program with the goal of arriving at an
    equitable means of apportioning the stored water among the program
    participants and avoiding injury to nonparticipants. In 1984, the
    participants agreed to file a water court application seeking to
    permanently decree a change of water rights that allow winter storage.
    Following intensive negotiations, the Water Court entered a final
    decree on November 10, 1990.
        The WWSP includes all ditches (except Otero and Rocky Ford) on the
    main stem of the Arkansas River between Pueblo Reservoir and John
    Martin Reservoir which have historically diverted for beneficial use or
    storage during the winter period. The WWSP Decree changed various
    decreed water rights of Southeastern, Amity Mutual Irrigation Company,
    Bessemer Irrigating Ditch Company, Catlin Canal Company, Colorado Canal
    Company, Fort Lyon Canal Company, High Line Canal Company, Holbrook
    Mutual Irrigating Company, Lake Henry Reservoir Company, Lake Meredith
    Reservoir Company, Las Animas Consolidated Canal Company, Oxford
    Farmers Ditch Company, Riverside Dairy Ditch, and West Pueblo Ditch to
    storage for the November 15 to March 15 period with a shared priority
    of 1910. Many of these ditches have decrees that, so long as they are
    taking water for direct flow irrigation, are senior water rights on the
    Arkansas River. The WWSP Decree changed these water rights to a more
    junior shared priority from November 15 to March 15, that is typically
    the calling water right on the Arkansas River throughout those four
    months.
        Operation of the WWSP promotes more efficient use of water among
    agricultural irrigators. While irrigators were previously compelled to
    use water as it became available, using winter water primarily for
    increasing the soil moisture, they now have the flexibility to store
    water and use it when it is most effective for direct irrigation of
    crops. Storage of winter water also allows ditch owners to use the
    winter season for ditch improvements, given that no water will be run
    during that time, further promoting efficient use of both native and
    trans-mountain water.
            2.  Upper Arkansas Voluntary Flow Management Program
        It was noted in 1989 that commercial and private boating was
    increasing, as were the number of fishermen on the Arkansas River above
    Pueblo Reservoir. To answer the need for better management along the
    river corridor, the Bureau of Land Management with the Colorado
    Department of Parks and Outdoor Recreation (``CDPOR'') formed a new
    management organization known as the Arkansas Headwaters Recreation
    Area (``AHRA'').
        The AHRA is assisted by a Citizen Task Force. The task force
    reviews area issues and helps to give direction to the AHRA staff. This
    task force is made up of volunteer citizen members throughout the basin
    with representation from anglers, environmental groups, cattlemen,
    water users, local governments, private boaters, and commercial rafting
    companies.
        Prior to 1989, the rafting companies found that during the latter
    part of summer, river flows became too low to continue their rafting
    trips. They also noticed that river flows would increase as water users
    made their releases to the various entities downstream. Early in 1991,
    the rafting companies approached AHRA with an idea of a ``Volunteer
    Flow Program.''
        The Volunteer Flow Program was based in part on Reclamation timing
    releases of Project water from Twin Lakes Reservoir and Turquoise
    Reservoir to Pueblo Reservoir to meet the needs of fishermen and
    rafters. The one problem with such releases was the increased
    evaporative losses that resulted from storing increased amounts of
    water in Pueblo Reservoir during the summer, rather than the higher
    mountain reservoirs. In 1992, the Colorado Department of Natural
    Resources (``DNR'') recommended that CDPOR use funds collected from the
    commercial rafting companies to pay for replacement of evaporative
    water losses caused by the summer augmentation. This repayment is only
    necessary when the flows are released before they are actually needed
    by Southeastern or Reclamation. The funds to pay for this replacement
    are obtained from the commercial rafting companies' yearly licensing
    fees.
        For many years, DNR, Southeastern and other interested parties
    negotiated the terms of the program on an annual basis. In August of
    2006, Southeastern, DNR, the Colorado Division of Wildlife (``CDOW''),
    CDPOR, Chaffee County Board of County Commissioners, the Arkansas River
    Outfitters Association and Trout Unlimited executed a five-year
    agreement relating to the operation of the Upper Arkansas River
    Voluntary Flow Management Program (``VFMP''). As was true in previous
    years, the parties agreed to operate the VFMP on a year that runs from
    July 1 of each year through June 30 of the following year (``Plan
    Year''). For at least five Plan Years following the date of the VFMP
    Agreement (2007-2011), DNR agreed that it would, after consultation
    with the VFMP Parties, agreed to request Reclamation to operate the
    VFMP by agreement with DNR and Southeastern on an annual basis.
        The highest priority for the VFMP is to maintain a minimum year-
    round flow of at least 250 c.f.s. at the Wellsville gage, downstream
    from Salida, to protect the fishery. To the extent possible, winter
    incubation flows (mid-November through April) should be maintained from
    250 to 400 c.f.s., depending on spawning flows. Between April 1 and May
    15 the flow target is within the range of 250-400 c.f.s. to provide
    conditions favorable to egg hatching and fry emergence. Any flow
    augmentation for recreational use, or to maintain flows at a target
    level greater than 250 c.f.s., is limited to the period from July 1 to
    August 15. Subject to consideration of water and storage availability,
    flows from July 1 to August 15 should be augmented to maintain flows at
    700 c.f.s. through releases of Project water. The 700 c.f.s. level is a
    target; the primary goal is to maintain predictable, consistent
    recreation flows throughout the summer. Accordingly, Southeastern, DNR
    and Reclamation evaluate the water likely to be available for
    augmentation in a particular year and adjust the target accordingly to
    ensure that augmentation water is not exhausted prior to the end of the
    season. CDPOR is responsible for replacing evaporative losses to
    Project water caused by this summer flow augmentation.
        To ensure that the Project is not releasing water that will be
    consumed by other entities' exchanges, each year, the Parties request
    Reclamation to include in its annual VFMP Operating Agreement a
    provision restricting contract exchanges, to the effect that during the
    time of the annual VFMP Operating Agreement, Reclamation will not
    execute contract exchanges (non-Project water with Project water) until
    after the May 1 water supply forecast from the NRCS has been evaluated
    to assure that such contract exchanges will not interfere with
    operation of the VFMP, nor impair the ability of the Fremont Sanitation
    District or Salida Wastewater Treatment Plant to meet their Colorado
    Discharge Permit System requirements. Reclamation has frequently
    included such restrictions when granting contracts for storage in
    Project facilities. The VFMP facilitates use of Project water for
    multiple purposes by timing its release to support recreation and
    fisheries while allowing consumptive use below Pueblo Reservoir.
            3.  Arkansas River Flow Management Program
        In partnership with the United States Army Corps of Engineers, the
    City of Pueblo developed the Arkansas River Corridor Legacy Project
    (``Legacy Project''). The Legacy Project is intended to restore
    riparian habitat and provide enhancements to improve recreational
    opportunities in and along the Arkansas River through Pueblo. To help
    achieve the Legacy Project goals, Pueblo desired to protect and enhance
    the flows and the quality of the water in the Arkansas River through
    Pueblo. In furtherance of the Legacy Project, Pueblo filed an
    application for a recreational in-channel diversion (``RICD'') water
    right in Case No. 01CW160 (Water Division No. 2.) To resolve many of
    the disputes related to the RICD water right, several parties including
    the City of Pueblo, the City of Aurora, Southeastern, the City of
    Fountain, the City of Colorado Springs, and the Board of Water Works of
    Pueblo, Colorado (``BWWP'') entered into an intergovernmental agreement
    to address flow issues related to the Legacy Project.
        The six parties agreed to this intergovernmental agreement (``Six-
    Party IGA'') in May 2004. The Six-Party IGA binds the parties to the
    Arkansas River Flow Management Program (``FMP''). The FMP ensures that
    exchanges and augmentation plans operate in a manner that preserves
    minimum flows in the Arkansas River between the outlet of the fishery
    at the Pueblo Dam and the confluence of the Arkansas River with
    Fountain Creek. The minimum year-round target flow is 100 c.f.s.
    Recreation flows between March 16 and November 14 (all times except
    when Pueblo Reservoir is storing water for the WWSP) vary depending on
    the water forecast for that year.
        To meet the flow requirements of the FMP, the IGA parties,
    including Southeastern, agreed to limit their exchanges to allow the
    Arkansas River below Pueblo Dam to maintain certain flow levels. The
    Parties, however, explicitly stated that they did not intend to abandon
    any water right used to support the FMP, and accordingly created a
    program designed to recover foregone water. Colorado Springs, BWWP,
    Aurora, Fountain and Southeastern agreed to work together to develop
    recovery of yield storage, that is likely to be located at downstream
    gravel pit reservoirs.
            4.  Tamarisk Control Program
        Tamarisk is a tenacious, non-native plant that has a deep root
    system (up to 100 feet) and leaves a salt residue in the soil. These
    characteristics enable it to quickly displace native cottonwoods and
    willows as well as adjacent upland plant communities such as bunch
    grasses, sage and rabbit brush. The resulting Tamarisk thickets crowd
    out streams and rivers; provide poor habitat for livestock, animals,
    and birds; increase fire hazards; and limit human use of the waterways.
    Tamarisk steals water by using more water than the native vegetation
    that it displaces. This non-beneficial user of the West's limited water
    resources dries up springs, wetlands, and riparian areas by lowering
    water tables. It is estimated that the western United States is losing
    from 2 to 4.5 million acre-feet of water per year over what the native
    plants would use. This is enough water to supply upwards of 20 million
    people or to irrigate over 1,000,000 acres of land.
        Southeastern's Board of Directors supported the efforts to pass
    federal legislation providing the financial tools for the
    implementation of regional projects for the control of tamarisk and
    other non-native plants impacting western rivers. On October 11, 2006,
    President Bush signed the Salt Cedar and Russian Olive Control
    Demonstration Act, H.R. 2720, Public Law 109-320, which authorized $80
    million for large-scale demonstrations and associated research over a
    five-year period.
        The Tamarisk Coalition, in which Southeastern participates, is a
    non-profit alliance working to restore riparian lands. The Tamarisk
    Coalition is taking the lead in developing a collaborative effort
    between the western states and is developing partnerships with
    governmental agencies for control of this non-native invasive tree
    species. Southeastern is committed to developing innovative programs to
    eradicate non-native phreatophytes such as tamarisk that hinder
    agricultural and municipal entities from making efficient use of the
    limited water resources in the Arkansas River Basin.
    III. Challenges for the Future
    A. Colorado River Conflicts
        With the supplemental supply of water for the communities and
    individuals who benefit from the Fry-Ark Project coming from the
    Colorado River, Southeastern, as part of a coalition of Colorado water
    users, has been involved in three major issues on the Colorado River
    over the last several years:
        1.  Negotiations with California and the other upper basin states
    on California's over use of its apportionment in use of surplus water
    on the Colorado River. The basin states were successful in negotiating
    with California on achieving an agreement by California to reduce its
    use to its basin apportionment. With the Department of Interior's
    assistance, the other Basin states' success in reaching this agreement
    was historic for the river.
        2.  Deliveries of water to Mexico and some issues raised by Mexico
    and various environmental organizations in the United States to secure
    additional water for environmental purposes. The coalition has been
    involved in those issues in the last several years, and this issue will
    continue to come up over the next several years.
        3.  Current drought and shortage situation in the Colorado River.
    For several years, the focus of discussions has been about allocating
    surplus water, and, all of a sudden, there is no surplus water.
    Currently, the discussion is centering on drought and compact calls,
    which provides a very clear indication of how quickly things can change
    on the river.
        Neither the Boulder Canyon Project Act nor the decree in the
    Arizona v. California case provides any real guidance to the Secretary
    on how to develop shortage criteria for how shortages will be allocated
    in the lower basin. The only guidance is in the authorizing legislation
    for the Central Arizona Project, which give California the first
    priority to its basin apportionment of 4.4 million acre-feet. Former
    Secretary Gale Norton, considering the current conditions of the
    reservoirs, was interested in moving forward with the development of
    shortage criteria. She asked the basin states to come to a consensus on
    that, and to provide that consensus to her.
        Recently, after several months of intense negotiations, the seven
    Colorado River Basin States reached an accord on handling of the
    drought and shortage situation in the Colorado River. The agreement is
    specifically designed to comport with the Colorado River Compacts and
    the ``Law of the River'' but seeks to find flexibility within the law
    to further improve reservoir operations. The signing of the proposed
    agreement is a significant event in the overall water operations on the
    Colorado River and will remove the threat of litigation between the
    states over water operations through 2025.
        Several circumstances combined to lead to this agreement. Due to
    the recent drought conditions, the Secretary of the Interior was asked
    to review current operations of Colorado River reservoirs. As a result,
    on June 15, 2005, Reclamation published a Federal Register notice
    beginning the process to develop the lower basin shortage criteria and
    changes to the coordinated reservoir operations of Lakes Powell and
    Mead. The deadline for completion of this process is December 31, 2007.
        In response to the Bureau's notice, on August 25, 2005 Governor's
    representatives for the seven Colorado River Basin States wrote a
    letter to the Secretary of Interior stating the seven Colorado River
    Basin States had agreed on a three-pronged strategy for improving
    management and operations of the Colorado River. First, the states,
    working with Reclamation, would develop lower basin shortage criteria
    in conjunction with new coordinated operating criteria for Lakes Powell
    and Mead under low reservoir conditions. Second, the states, working
    with Reclamation, would look for ways to improve system efficiency and
    management. Finally, the states would look for ways to augment the
    water supplies of the Colorado River. Southeastern continues to work
    with other Colorado River water users to resolve those issues in a
    manner that promotes sustainable use of the Colorado River.
    B. Exportation of Water from the Arkansas Valley
        The Fry-Ark Project was designed to provide supplemental water to a
    valley that is water short. Thus, when municipalities from the South
    Platte basin have attempted to export some of the Arkansas' limited
    supply of native water, it has created challenges for water users in
    the Arkansas Valley as well as the District. Nothing in the Fry-Ark
    authorizing act, including any documents incorporated by reference in
    the statute, provides authority for the Secretary to enter contracts
    for use of Fry-Ark excess capacity space to store native Arkansas River
    water rights for use out of the Arkansas River Basin in Colorado, with
    the possible exception of the City of Aurora.
        Special protection for the Arkansas Basin beneficiaries of the Fry-
    Ark Project is built into the repayment contract, Contract No. 5-07-70-
    W0086, as amended, between Southeastern and the United States, which
    govern the evacuation of water from Pueblo Reservoir. The spill order
    became part of the Contract by the Fourth Amendment in 1984 and
    resulted from negotiations between Southeastern, BWWP and Colorado
    Springs in connection with the 1984 applications filed in Water Court
    for the WWSP and Colorado Springs' and BWWP's exchanges. The spill
    priorities in Article 13, which are unique among Reclamation projects,
    provide:
           (a) Whenever water is evacuated from Pueblo, Twin Lakes, and
    Turquoise Reservoirs to meet the necessities of Project flood control,
    power generation purposes, storage of transmountain Project water,
    storage of native Project water, and Project operational requirements;
    except as provided in Subarticle 13.(b) below, the water evacuated
    shall be charged in the following order:
              1. Against water stored under contracts for if-and-when
            available storage space for entities which will use the water
            outside the District boundaries.
              2. Against water stored under contracts for if-and-when
            available storage space for entities which will use the water
            within the District boundaries. This evacuation shall be
            charged pro rata against water stored under all such like
            contracts at the time of the evacuation.
              3. Against any winter storage water in excess of 70,000 acre-
            feet.
              4. Against water stored under contracts with municipal
            entities within the boundaries of the District, which water is
            neither Project water nor return flow from Project water and
            which water is limited to 163,100 acre-feet less any Project
            water purchased and stored by municipal users. This evacuation
            will be charged pro rata against the water stored under all
            such like contracts at the time of evacuation.
              5. Against winter storage water not in excess of 70,000 acre-
            feet.
              6. Against Project water accumulated from the Arkansas River
            and its tributaries.
           (b) Notwithstanding the order of evacuation of water listed in
    Subarticle 13.(a) above, evacuation of water from storage pursuant to
    existing firm storage contracts, the Highline storage contract and
    future storage contracts that may be entered into with the Board of
    Waterworks of Pueblo, Colorado and Twin Lakes Reservoir and Canal
    Company to satisfy prior commitments will be made pursuant to the terms
    of such storage contracts.
    First to spill out of the reservoirs is water stored under contracts
    for if-and-when available storage space for entities which will use the
    water outside Southeastern's district boundaries.
        Commissioner John W. Keys, III, by his letter of April 3, 2003,
    announced Reclamation's conclusion that it has authority to enter into
    long-term contracts with Aurora for utilization of Fry-Ark Project
    facilities. The City of Aurora acquired Rocky Ford Ditch water rights
    and applied to the Water Court to change the use of those water rights
    from irrigation use in the Arkansas Basin to use for municipal purposes
    in Aurora located in the South Platte River Basin. The lands previously
    irrigated by these water rights were included within Southeastern's
    district boundaries. The transfer of such water rights out of the basin
    to municipal uses in Aurora has potentially serious impacts to the
    Arkansas River Basin. Southeastern executed an intergovernmental
    agreement with Aurora, as did several other parties in the Arkansas
    River Basin, to mitigate the damages caused by the exportation of water
    from the Arkansas Valley.
    C. Meeting Increased Demands for Water Within the District.
        Southeastern finalized a study in September 1998 that documented
    the projected future water storage and supply demands of Southeastern's
    municipal and agricultural constituents. The study also provided
    alternatives to meet those demands, which included conservation
    efforts. Southeastern worked with twenty-seven other water users groups
    throughout the District to collectively assess future storage and
    supply needs. The Water and Storage Needs Assessment Project envisaged
    future water demands and listed a set of alternatives to provide for
    those demands. The Needs Assessment Study reviewed existing water
    conservation efforts in cooperation with Southeastern and the water
    users groups. They provided guidance for conservation measures that
    will help meet future demands. The Needs Assessment Study also reviewed
    storage alternatives including the expansion of existing facilities and
    the construction of new storage facilities. The report indicated a need
    for an additional 173,100 acre-feet of storage in the Arkansas Valley
    by the year 2040. The challenge for the Arkansas Valley is to locate
    such storage in an environmentally and economically sound manner.
    D. Preferred Storage Options Plan (PSOP)
        The ``Water and Storage Needs Assessment Report'' led Southeastern
    and the communities in the Arkansas Valley to further study water needs
    in the Arkansas River Basin. The participants analyzed many different
    alternatives for providing future water supplies, worked with
    agricultural and municipal water providers, recreation interests, local
    environmental groups and state and federal resource agencies, to devise
    a plan to prepare Southeastern to meet water needs in the basin into
    the year 2040.
        In 2000, the District completed a study that evaluated more than
    thirty different alternatives to meet the projected demand. The study
    concluded that efforts should be focused on the use and expansion of
    existing Fry-Ark Project facilities to meet future demands.
        The first objective of PSOP is to better utilize existing capacity
    in the Fry-Ark Project reservoirs to help meet growing demand for
    storage. This is Phase I, the goal being to make full use of existing
    capacity in Project facilities without interfering with the current
    entitlements to Project water and storage. These new storage contracts
    will help communities meet their water needs through the year 2015. At
    that point, new storage capacity will need to be developed. The
    preferred alternatives for Phase II were to enlarge both Pueblo and
    Turquoise Reservoirs and to allow the use of existing excess capacity
    in the Fry-Ark Project (long-term contracts for municipalities within
    district boundaries to store non-Project water). PSOP proposes to
    enlarge Pueblo Reservoir by 54,000 acre-feet and Turquoise Reservoir by
    19,000 acre-feet in order to help meet the projected 2040 demand.
        The reasons for enlarging Fry-Ark storage facilities are to allow
    for greater municipal storage and storage of agricultural water through
    the WWSP. An enlarged Pueblo Reservoir would help municipal users meet
    their future demands and provide permanent storage space for the WWSP.
    Without additional storage space in Pueblo Reservoir, Winter Water may
    be threatened with a spill or at least early release, which means that
    storage of this valuable water is restricted or eliminated entirely. In
    addition, the enlargement would provide for storage of other
    supplemental agricultural water and give small towns future
    opportunities to contract for firm storage space.
    E. Arkansas Valley Conduit
        Both the 1962 and 1978 Acts contemplated the construction of the
    Arkansas Valley Conduit (``AVC''), which has yet to be developed,
    primarily because the constituents do not have the funding to develop
    it.
        The need for the AVC is driven by projected population growth, the
    economically-disadvantaged nature of the lower Arkansas Valley, and
    increasingly costly water treatment requirements being experienced by
    certain water providers in the basin. In addition to population growth
    pressures, Southeastern's smaller communities, especially those east of
    Pueblo, who rely on groundwater for their main water supply, need to
    develop a higher quality drinking water supply for their residents. As
    early as 1953, the Secretary of the Interior acknowledged that
    additional quantity and better quality of domestic and municipal water
    was critically needed for the Arkansas Valley, and in particular for
    those towns and cities east of Pueblo. House Document 187, 83d
    Congress, 1st Session, and the Fryingpan-Arkansas Final Environmental
    Statement dated April 16, 1975, both of which have been incorporated by
    reference into the Authorizing Act, recognized that the AVC would be an
    effective way to address this need. The local water available from the
    Arkansas River alluvium has historically been high in Total Dissolved
    Solids (TDS), sulfates, and calcium, and has objectionable
    concentrations of iron and manganese. Additionally, various water
    suppliers have recently reported measurable concentrations of
    radionuclides in their water. This extremely poor groundwater quality,
    combined with increasingly stringent water quality regulations of the
    Safe Drinking Water Act, has caused several local water suppliers to
    invest in expensive water treatment facilities to assure a reliable
    water supply for their customers.
        Generally, all drinking water systems in the Lower Arkansas River
    Basin, from St. Charles Mesa in eastern Pueblo County to Lamar in
    Prowers County, are concerned with the poor water quality in this
    region. Many of the water providers do not satisfy, or only marginally
    satisfy, current drinking water standards. More than 40 water providers
    in the Lower Arkansas River Basin could benefit from the AVC, if
    implemented.
        All communities must meet the state and federal primary drinking
    water standards through treatment or source replacement. Less
    documented, however, is the potential burden placed upon communities by
    high raw water concentrations of various unregulated water quality
    constituents such as iron, manganese and hardness. These constituents
    can cause accelerated infrastructure decay and loss of tax base and
    economic impacts associated with factories and businesses locating
    elsewhere.
        To address these issues, representatives of local and county
    governments, water districts and other interested citizens of the Lower
    Arkansas River Basin formed a committee in 2000 to consider a
    feasibility study of the AVC. These interested parties formed the
    WaterWorks! Committee and, along with Southeastern, began to review the
    feasibility of developing the AVC. Some of the relevant conclusions
    reached are as follows:
          The cost of the AVC compares favorably with any ``no
    action alternative,'' which would still require the communities
    involved to make substantial financial investments to address current
    water quality and safe drinking standards.
          The financial capabilities of the participating agencies
    are estimated to be inadequate to fund the construction of the proposed
    Arkansas Valley Conduit, under a 100 percent funding requirement, but
    AVC participants could afford to pay 20 percent cost-share.
          There is an adequate water supply to make the AVC
    feasible.
        As mentioned above, the AVC was included in the original Fry-Ark
    reports integrated into the Fry-Ark Authorization Act. The AVC was not
    built because communities in the Lower Arkansas River Basin could not
    fully fund the AVC project. A study of the Arkansas Valley Conduit was
    prepared for Southeastern, the Four Corners Regional Commission and the
    Bureau of Reclamation in 1972. The report's recommendations for
    construction of a water treatment plant, pumping station and conduit to
    serve 16 communities and 25 water associations east of Pueblo were not
    implemented at that time due to the lack of federal funding.
    Evaluations on the quantity of water needed to satisfy long-range
    objectives for water users in the Southeastern district area were
    prepared in 1998. Additionally, an update of the estimated construction
    costs presented in the 1972 report was prepared in 1998.
        The citizens and communities of the Lower Arkansas River Basin have
    waited 30 to 50 years for this project that will improve their water
    quality and supply. The need for the AVC has been well established for
    more than 50 years. The Lower Arkansas River Basin communities continue
    to seek federal assistance in moving this much-needed project forward.
    IV. Conclusion
        Community leaders from throughout the basin worked together in the
    1950s and 1960s to create the vision for the Fry-Ark Project. Their
    vision has certainly paid off, but it wouldn't have been accomplished
    without a lot of cooperation and compromise. The challenge for
    Southeastern Colorado and the rest of the state is to come together
    again to plan for the future water resources needs by managing,
    developing, and protecting water and related resources in an
    environmentally and economically sound manner.
                                     ______

    Response to questions submitted for the record by Bill Long, President,
                Southeastern Colorado Water Conservancy District

     Response to Representative Mark Udall's request for a description of
            the ways that the Fry-Ark diversions from the West Slope are
            limited.
        The Fryingpan-Arkansas Project collects water from the headwaters
    of the Fryingpan River and Hunter Creek on the west slope of the
    Continental Divide and diverts this water to Arkansas River on the East
    Slope via the Boustead Tunnel. This collection and diversion process is
    accomplished via a network of in-stream diversion structures and
    underground tunnels.
        The amount of water that the project is allowed to divert is
    limited by several factors. The Operating Principles were adopted by
    the State of Colorado, April 30, 1959 with subsequent amendments, and
    are incorporated in the authorizing legislation for the Project. These
    Operating Principles provide for a ceiling of 2,352,800 acre-feet in
    any period of 34 consecutive years, with an annual ceiling of 120,000
    acre-feet. The 34 year rolling average works out to 69,200 acre-feet
    per year on average. The design capacity of the diversion system is
    further limited by the capacity of Boustead Tunnel, which normally
    cannot divert more than 945 cubic feet per second (c.f.s.).
        Additionally, the Project is only allowed to divert water from the
    Fryingpan River and its tributaries when the Fryingpan River at the
    Thomasville gauge (a few miles above Ruedi Reservoir) is flowing at or
    above the rates shown in the following table:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Additionally, each diversion into the collection system is limited
    by decree, and there are minimum flows that must bypass the diversion
    control structures on most streams within the collection system. These
    minimum flows are shown in the following tables:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        South Cunningham, Lily Pad and Granite Creeks have no minimum
    bypass as long as the minimum flow requirement on the Fryingpan River
    is met at the Thomasville gauge on the Fryingpan River.
        There is also a limitation on the diversions from the Collection
    System in the Hunter Creek drainage area. These diversion control
    structures are not allowed to operate when the flows on the Hunter
    Creek above the Red Mountain Ditch fall below 51 c.f.s.
        Finally, the first 3,000 acre-feet diverted from No Name and Midway
    diversions are used for the Twin Lakes exchange, which provides for the
    Twin Lakes transmountain diversion system to bypass flows on the
    Roaring Fork River and its tributaries above Aspen.
    Post Hearing Questions from Rep. John Salazar:
     Chairman Long, thank you for your leadership at the SouthEast and for
            pushing for the Arkansas Valley Conduit. The Conduit was an
            original piece of the Fryingpan-Arkansas Project. Do you get
            frustrated that the Fryingpan-Arkansas Project is being
            utilized to move water, through exchanges and storage, out of
            the Lower Ark and to Aurora decades before it'll serve one of
            its stated goals--to provide fresh drinking water to the Lower
            Ark?
    Answer:
        The Fry-Ark Project was designed to provide supplemental water to a
    valley that is water short. Thus, when municipalities from the South
    Platte basin have attempted to export some of the Arkansas' limited
    supply of native water, it has created challenges for water users in
    the Arkansas Valley as well as the District. Nothing in the Fry-Ark
    authorizing act, including any documents incorporated by reference in
    the statute, provides authority for the Secretary to enter contracts
    for use of Fry-Ark excess capacity space to store native Arkansas River
    water rights for use out of the Arkansas River Basin in Colorado, with
    the possible exception of the City of Aurora. It is not in the overall
    best interests of the District and its constituents for the Project to
    be used in unauthorized ways that could potentially hurt to the
    Project's intended beneficiaries.
        Special protection for the Arkansas Basin beneficiaries of the Fry-
    Ark Project is built into the repayment contract, Contract No. 5-07-70-
    W0086, as amended, between Southeastern and the United States, which
    govern the evacuation of water from Pueblo Reservoir. The spill order
    became part of the Contract by the Fourth Amendment in 1984 and
    resulted from negotiations between Southeastern, BWWP and Colorado
    Springs in connection with the 1984 applications filed in Water Court
    for the WWSP and Colorado Springs' and BWWP's exchanges. The spill
    priorities in Article 13, which are unique among Reclamation projects,
    provide:
               (a) Whenever water is evacuated from Pueblo, Twin Lakes, and
            Turquoise Reservoirs to meet the necessities of Project flood
            control, power generation purposes, storage of transmountain
            Project water, storage of native Project water, and Project
            operational requirements; except as provided in Subarticle
            13.(b) below, the water evacuated shall be charged in the
            following order:
                   1. Against water stored under contracts for if-and-when
                available storage space for entities which will use the
                water outside the District boundaries.
                   2. Against water stored under contracts for if-and-when
                available storage space for entities which will use the
                water within the District boundaries. This evacuation shall
                be charged pro rata against water stored under all such
                like contracts at the time of the evacuation.
                   3. Against any winter storage water in excess of 70,000
                acre-feet.
                   4. Against water stored under contracts with municipal
                entities within the boundaries of the District, which water
                is neither Project water nor return flow from Project water
                and which water is limited to 163,100 acre-feet less any
                Project water purchased and stored by municipal users. This
                evacuation will be charged pro rata against the water
                stored under all such like contracts at the time of
                evacuation.
                   5. Against winter storage water not in excess of 70,000
                acre-feet.
                   6. Against Project water accumulated from the Arkansas
                River and its tributaries.
               (b) Notwithstanding the order of evacuation of water listed
            in Subarticle 13.(a) above, evacuation of water from storage
            pursuant to existing firm storage contracts, the Highline
            storage contract and future storage contracts that may be
            entered into with the Board of Waterworks of Pueblo, Colorado
            and Twin Lakes Reservoir and Canal Company to satisfy prior
            commitments will be made pursuant to the terms of such storage
            contracts.
        First to spill out of the reservoirs is water stored under
    contracts for if-and-when available storage space for entities which
    will use the water outside Southeastern's district boundaries.
        Commissioner John W. Keys, III, by his letter of April 3, 2003,
    announced Reclamation's conclusion that it has authority to enter into
    long-term contracts with Aurora for utilization of Fry-Ark Project
    facilities. The transfer of such water rights out of the basin to
    municipal uses in Aurora has potentially serious impacts to the
    Arkansas River Basin. Southeastern executed an intergovernmental
    agreement with Aurora, as did several other parties in the Arkansas
    River Basin, to mitigate the damages caused by the exportation of water
    from the Arkansas Valley.
        Both the 1962 and 1978 Fry-Ark Authorizing Acts contemplated the
    construction of the Arkansas Valley Conduit (``AVC''), which has yet to
    be developed, primarily because the constituents do not have the
    funding to develop it. The citizens and communities of the Lower
    Arkansas River Basin have waited 30 to 50 years for this project that
    will improve their water quality and supply. The need for the AVC has
    been well established for more than 50 years. The Lower Arkansas River
    Basin communities continue to seek federal assistance in moving this
    much-needed project forward.
        That is why in my testimony I requested that the Water and Power
    Subcommittee hold a hearing on H.R. 186 and H.R. 317, the Conduit
    legislation, as soon as possible.
     Response to Representative Napolitano's question regarding how the
            PSOP long-term excess capacity contracts differ from the Aurora
            long-term excess capacity contract.
        The Preferred Storage Options Plan (PSOP) developed by the
    Southeastern Colorado Water Conservancy District, its Enterprise and
    Fry-Ark beneficiaries from 1999-2001 has two components to it: 1)
    Enlargement and 2) Excess Capacity (storage of water). Your question
    regarding storage contracts relates to the second component, excess
    capacity.
        Historically, there has been an average of approximately 131,700
    acre-feet of excess capacity storage space per water year. Temporary
    excess capacity contracts enable Contractors to more efficiently use
    their non-project water, by providing temporary storage for use at a
    later date. Consequently, temporary excess capacity contracts meet
    Contractor needs by providing valuable water storage and increased
    water management flexibility. Capacity in east slope Fry-Ark facilities
    is only available for storage of non-project water when it is not
    needed to meet other Project purposes. The number and total volume of
    temporary excess capacity contract requests made to Reclamation for use
    of Fry-Ark facilities have increased steadily since 2002. To analyze
    the direct, indirect and cumulative impacts of temporary excess
    capacity contracts were evaluated in a 2006 Environmental Assessment
    for contracts to be issued for the years 2006-2010.
        The PSOP evaluated scenarios to better utilize this excess capacity
    through long-term storage contracts. The scenario chosen in PSOP would
    allow a municipal water provider with an existing right to carry-over
    storage space for an allocation of Fry-Ark water to use that space,
    subject to a myriad of policy, legal and institutional considerations,
    to store both Fry-Ark and non-project water in carry-over space.
        Currently, only the Board of Water Works of Pueblo has a long-term
    excess capacity contract. That contract is for 25 years, and was
    entered into prior to the completion of the PSOP. Colorado Springs is
    currently in the NEPA-process for a long-term excess capacity contract.
        Special protection for the Arkansas Basin beneficiaries of the Fry-
    Ark Project is built into the repayment contract, Contract No. 5-07-70-
    W0086, as amended, between the Southeastern Colorado Water Conservancy
    District and the United States, which govern the evacuation of water
    from Pueblo Reservoir. The spill order became part of the Contract by
    the Fourth Amendment in 1984 and resulted from negotiations between
    Southeastern, BWWP and Colorado Springs in connection with the 1984
    applications filed in Water Court for the WWSP and Colorado Springs'
    and BWWP's exchanges. The spill priorities in Article 13, which are
    unique among Reclamation projects, provide:
               (a) Whenever water is evacuated from Pueblo, Twin Lakes, and
            Turquoise Reservoirs to meet the necessities of Project flood
            control, power generation purposes, storage of transmountain
            Project water, storage of native Project water, and Project
            operational requirements; except as provided in Subarticle
            13.(b) below, the water evacuated shall be charged in the
            following order:
                   1. Against water stored under contracts for if-and-when
                available storage space for entities which will use the
                water outside the District boundaries.
                   2. Against water stored under contracts for if-and-when
                available storage space for entities which will use the
                water within the District boundaries. This evacuation shall
                be charged pro rata against water stored under all such
                like contracts at the time of the evacuation.
                   3. Against any winter storage water in excess of 70,000
                acre-feet.
                   4. Against water stored under contracts with municipal
                entities within the boundaries of the District, which water
                is neither Project water nor return flow from Project water
                and which water is limited to 163,100 acre-feet less any
                Project water purchased and stored by municipal users. This
                evacuation will be charged pro rata against the water
                stored under all such like contracts at the time of
                evacuation.
                   5. Against winter storage water not in excess of 70,000
                acre-feet.
                   6. Against Project water accumulated from the Arkansas
                River and its tributaries.
               (b) Notwithstanding the order of evacuation of water listed
            in Subarticle 13.(a) above, evacuation of water from storage
            pursuant to existing firm storage contracts, the Highline
            storage contract and future storage contracts that may be
            entered into with the Board of Waterworks of Pueblo, Colorado
            and Twin Lakes Reservoir and Canal Company to satisfy prior
            commitments will be made pursuant to the terms of such storage
            contracts.
        First to spill out of the reservoirs is water stored under
    contracts for if-and-when available storage space for entities which
    will use the water outside Southeastern's district boundaries. West
    Slope project water is not allowed to spill or be used outside the
    State of Colorado.
        Regarding Aurora's proposed contract, Aurora is an out-of-district
    entity and would be treated as such in all of its contracts with the
    Bureau of Reclamation regarding Fryingpan-Arkansas Project contracts.
    Aurora is not currently involved in the District's Preferred Storage
    Option Plan (PSOP), except to the extent Aurora may have made
    obligations to individual PSOP participants to pay for costs associated
    with pursuing approval of the PSOP, such as Otero County.
     Response for the record to Rep. Lamborn's question regarding the
            history of the efforts to reach agreement on the PSOP
            legislation
        After several years of planning, the Storage Study Committee
    (``SSC''), which included municipal, agricultural, recreational,
    environmental, and state and federal resource management agencies,
    developed the PSOP as the best alternative to securing water resources
    for future demand. To get the plan underway, the PSOP Implementation
    Committee submitted to the Southeastern Colorado Water Activity
    Enterprise the PSOP Implementation Committee Report on April 19, 2001,
    which provides the operational details for the PSOP. Subsequently, in
    May 2001, Rep. Joel Hefley introduced the first PSOP bill, H.R. 1714,
    107th Cong., 1st Sess., which the City of Aurora (``Aurora'') opposed.
        After the introduction of the first PSOP bill, SECWCD executed
    stipulations with most of the potential parties to cases involving the
    enlargement of Pueblo and Turquoise Reservoirs in July 2001.
        On October 29, 2001, Aurora and the Board of County Commissioners
    of Otero County (``Otero County'') entered into an Intergovernmental
    Agreement (``IGA'') to resolve issues in dispute between them. In
    exchange for certain payments made by Aurora to offset the effects of
    the Rocky Ford transfer cases and an agreement for Aurora to cover
    certain PSOP costs, Otero County agreed to withdraw opposition to the
    Rocky Ford cases as well as support PSOP legislation and any amendments
    thereto that are agreed to by Aurora and SECWCD so long as such
    revisions do not substantially change the purpose and intent of the
    PSOP.
        By November 2001, roughly twenty communities and water providers in
    the District executed Memorandums of Agreement with SECWCD to
    participate in re-operations contract storage and enlargement storage
    development efforts.
        On December 7, 2001, SECWCD and Aurora entered into an IGA (``2001
    IGA''), in which the parties agreed to support certain federal
    legislation. That legislation was ultimately introduced in the 107th
    Congress as H.R. 3881, discussed below. By the express terms of the
    2001 IGA, however, it was to expire in October of the next year.
        Also in December 2001, the City of Pueblo (``Pueblo'') filed an
    application for a Recreational In-Channel Diversion (``RICD'') water
    right for 100 c.f.s during the winter storage period (November 15 to
    March 14) and 500 c.f.s during the remainder of the year. That water
    right was for a kayak course planned by Pueblo and presented possible
    conflicts with the PSOP. Also before the end of 2001, SECWCD filed an
    application in the Division 2 Water Court for additional exchange
    rights on the Arkansas River.
        In January 2002, Colorado Springs and the Board of Water Works of
    Pueblo executed stipulations with SECWCD involving water rights for the
    reservoir enlargements, and entered into a memorandum of agreement with
    SECWCD addressing storage of return flows from Fryingpan-Arkansas
    Project water.
        In March 2002, Rep. Hefley introduced his second PSOP bill, H.R.
    3881, 107th Cong., 2d Sess. Hefley's new bill was then discussed in a
    hearing before the House Resources Committee's Subcommittee on Water
    and Power before the end of the month. In August of the same year, the
    Colorado Water Conservation Board (``CWCB'') issued recommendations to
    the water court regarding Pueblo's RICD application.
        Then in November 2002, voters in Pueblo, Otero, Crowley, Bent and
    Prowers counties approved an initiative to form the Lower Arkansas
    Valley Water Conservancy District (``LAVWCD''). The Board of Directors
    was appointed that December, and in April of the next year, the LAVWCD
    hired a full-time general manager.
        Also in April 2003, John Keys, Commissioner of the Bureau of
    Reclamation (``Reclamation''), issued a letter announcing Reclamation's
    conclusion that it has authority to enter into long-term contracts with
    Aurora for the use of Fryingpan-Arkansas project facilities.
        On October 3, 2003, the SECWCD, the Upper Arkansas Water
    Conservancy District (``Upper Arkansas''), and Aurora entered into a
    Reuse Memorandum of Understanding (``MOU'') to resolve areas of
    dispute. In this MOU, the parties agreed to settle various issues in
    water court cases in which they were involved, and Aurora agreed to
    undertake certain reuse activities and report those activities to
    SECWCD and Upper Arkansas. Also on October 3, SECWCD and Aurora
    executed a new IGA, because the original 2001 IGA had expired and the
    SECWCD Board voted not to approve an extension. This new IGA
    principally concerned Aurora's water diversions and storage contracts
    and stipulated that both parties will request Members of Congress to
    support federal PSOP legislation.
        In November 2003, Upper Arkansas and Aurora entered into their own
    IGA to resolve issues pending in water court cases and to further
    cooperation between them, in particular, to participate in and
    contribute to storage in a replacement pool. Also in November 2003,
    SECWCD and Upper Arkansas entered into a storage MOU providing certain
    benefits received by SECWCD in the SECWCD-Aurora IGA to Upper Arkansas.
        In February 2004, Pueblo, the City of Colorado Springs (``Colorado
    Springs''), and the Board of Water Works of Pueblo executed an IGA that
    created a Flow Management Program related to the Pueblo's original
    plans for a kayak park and recreational flows. However, in May 2004,
    Aurora, SECWCD, and the City of Fountain joined Pueblo, Colorado
    Springs, and the Board of Water Works of Pueblo and all six parties
    entered into an IGA concerning the Flow Management Program and the
    development of Regional Water Management Program. Following these
    agreements, in June 2004, Rep. Hefley introduced H.R. 4691, 108th
    Cong., 2d Sess.
        In September 2004, the River District, Colorado Springs, Aurora,
    Twin Lakes Reservoir and Canal Company, and the Homestake Project,
    which is a joint undertaking between Colorado Springs and Aurora,
    entered in a MOU explaining and clarifying the water and storage rights
    of the parties in Arkansas River Basin water. Also in September 2004,
    Reclamation and SECWCD completed work on drafting a MOU defining the
    District's ``First Right of Refusal'' included in H.R. 4691 and
    outlining the procedures for the contracting of excess capacity
    contracts outside the Arkansas River Basin (this MOU was never
    executed).
        In November 2004, Rep. Bob Beauprez introduced another PSOP bill,
    H.R. 5373, 108th Cong., 2d Sess., during the lame-duck session of
    Congress. This bill was similar to Rep. Hefley's bill from earlier in
    the year. It was during consideration of Beauprez's H.R. 5373 that the
    LAVWCD began voicing its objections to the PSOP.
        It was also during November 2004 that SECWCD executed two other
    agreements. On November 16, SECWCD and the Colorado River Water
    Conservancy District (``River District'') entered into an agreement to
    settle various matters in dispute between the parties. The agreement
    accomplished four main goals: 1) it settled West Slope opposition to
    SECWCD's water court cases regarding the enlargement of its Boustead
    Tunnel water rights, 2) it resolved conflicts with SECWCD over West
    Slope operations of Ruedi Reservoir, 3) it provided for a dispute
    resolution process to address future issues, and 4) it stipulated that
    the River District agrees to support the PSOP legislation in a form
    substantially similar to H.R. 4691, 108th Cong., 2d Sess. Then on
    November 30, SECWCD, the River District, and Twin Lakes Reservoir and
    Canal Company entered into a separate agreement regarding the operation
    of the Twin Lakes Exchange described in the Operating Principles of the
    Fryingpan-Arkansas Project.
        Since early 2005, the PSOP parties have been in negotiations with
    LAVWCD to address a variety of regional concerns, including PSOP. In
    May 2005, SECWCD, Aurora and Reclamation entered into a MOU regarding
    the settlement of Aurora's application in Case No. 99CW170(A) and
    clarified the applicability of the spill priorities found in Article 13
    of the SECWCD Contract (No. 5-07-70-W0086) to Aurora's requested long-
    term storage and exchange contracts with Reclamation.
                                     ______

        Mrs. Napolitano. Thank you so much for your testimony, sir,
    and we'll take your request into consideration.
        Mr. Ryan, the Bureau of Reclamation.

    STATEMENT OF MIKE RYAN, REGIONAL DIRECTOR, GREAT PLAINS REGION,
             U.S. BUREAU OF RECLAMATION, BILLINGS, MONTANA

        Mr. Ryan. Good morning, Madam Chair, members of the
    committee. My name is Mike Ryan. I'm the Great Plains Regional
    Director for the U.S. Bureau of Reclamation. Early in my
    career, I spent about four years on the headwaters of the
    Arkansas, helping to operate and maintain some of the
    facilities of the Fryingpan-Arkansas Project, and I am pleased
    to be here today to provide you information on Reclamation's
    activities and involvement on the Fry-Ark and provide our view
    on water management challenges we are all facing.
        Congress authorized the project in 1962 as a multi-purpose
    trans-basin diversion project for Colorado. The project
    annually diverts an average of about 52,000 acre-feet of water
    from the Fryingpan River and other Colorado River tributaries
    on the Western Slope to the Arkansas River Basin on the Eastern
    Slope. Project water provides a supplemental water supply for
    municipal, industrial, and domestic uses and irrigation in the
    Arkansas Valley. Additional authorized project purposes include
    power, flood control, recreation, and conservation and
    development of fish and wildlife resources. The project has
    been operated and maintained by Reclamation since its
    completion in 1975, when the Fry-Ark Project water was first
    delivered to users in the Arkansas Valley.
        The Southeastern Colorado Water Conservancy District
    represents water users and is responsible for repaying the
    United States for the cost of the Fry-Ark Project works
    associated with irrigation and municipal uses. The district
    also pays a proportionate share of annual operation and
    maintenance.
        It is a challenge to meet the competing water demands of
    people, farms, cities, and the environment. Consistent with the
    principles of Reclamation's Water 2025 Initiative, Reclamation
    is proposing the use of existing facilities to better utilize
    infrastructure, while not jeopardizing authorized Fry-Ark
    Project purposes.
        Reclamation is involved in several ongoing projects, either
    as a lead agency or as a source of technical assistance, that
    will help alleviate water delivery challenges in Colorado. We
    have helped to prepare a report on Preferred Storage Options
    Plan, and have provided planning assistance to local
    stakeholders weighing options for the Southern Delivery System.
    Reclamation has also responded to frequent requests for
    information from local sponsors interested in the study of the
    Arkansas Valley conduit.
        We are also working to address water shortfalls through
    excess capacity contracts, commonly known as ``if and when''
    contracts for communities in Colorado. For instance, temporary
    ``if and when'' storage contracts for 10,000 acre-feet of
    Aurora's water have been executed on an annual basis with
    Reclamation for the past 22 years. In addition, ``if and when''
    exchange contracts for 10,000 acre-feet have been executed
    annually. This year in Eastern Colorado, Reclamation entered
    into 18 temporary storage contracts totaling approximately
    45,500 acre-feet, and one exchange contract for 10,000 acre-
    feet. Contractors included several cities and water districts,
    the Federal Bureau of Land Management, and the State of
    Colorado.
        The proposed Aurora contract is an example of the multi-
    purpose use of the Fry-Ark Project consistent with its
    governing statutes. The proposed contract allows a non-Federal
    entity to utilize space not being used to store project water.
    This contract is within both legal and policy parameters. It
    will cause no significant impact on the environment and does
    not require Aurora to construct additional facilities to meet
    their needs. It provides revenues which assist in the repayment
    of the reimbursable portion of the project. It also allows
    Aurora to plan for the future without injury to existing
    beneficiaries within the Arkansas Basin.
        Because excess capacity contracts are exercised only when
    the service can be provided without harm to the project or
    those receiving water from the project, Reclamation believes
    making excess capacity available to store non-project water for
    Aurora, Colorado Springs, and others is an efficient and
    beneficial use of existing project features.
        Reclamation has other proposed ``if and when'' contracts
    for the Southern Delivery System and the Preferred Storage
    Options Plan. These arrangements have been formulated in
    response to identified needs for additional water-related
    contracts to meet long-term water supply needs.
        Reclamation applauds the forward-thinking and collaborative
    planning efforts that have gone into the development of these
    efforts. We will continue to work with local entities to
    provide water to small valley cities to enhance existing flows
    for recreation and to protect the fisheries.
        In summary, full utilization of Reclamation's Fryingpan-
    Arkansas project is necessary to help communities work through
    water resource challenges. It is the right thing to do, and we
    are committed to this collaborative, constructive approach.
        This concludes my statement and I would be pleased to
    answer any questions at the appropriate time. Thank you.
        [The prepared statement of Mr. Ryan follows:]

         Statement of Michael J. Ryan, Great Plains Regional Director,
             Bureau of Reclamation, U.S. Department of the Interior

        Madam Chairwoman and members of the Subcommittee, my name is
    Michael J. Ryan and I am the Great Plains Regional Director for the
    Bureau of Reclamation. I am pleased to be here today to provide you
    information on Reclamation's activities and involvement in the
    Fryingpan-Arkansas Project, commonly known as the Fry-Ark Project, and
    provide the Department of the Interior's view on water management
    challenges we are facing.
        Congress authorized the Project in 1962 as a multi-purpose, trans-
    basin water diversion project for Colorado. The Project annually
    diverts an average of 52,300 acre-feet of water from the Fryingpan
    River and other Colorado River tributaries on the western slope of the
    Rocky Mountains to the Arkansas River basin on the eastern slope. Fry-
    Ark Project water provides a supplemental water supply for municipal,
    industrial, and domestic uses, and irrigation in the Arkansas Valley.
    Additional authorized Project purposes include power, flood control,
    recreation, and conservation and development of fish and wildlife
    resources. The Project has been operated and maintained by Reclamation
    since its completion in 1975 when Fry-Ark Project water was first
    delivered to users in the Arkansas Valley.
        The Southeastern Colorado Water Conservancy District represents
    water users and is responsible for repaying the United States for the
    cost of the Fry-Ark Project works associated with the irrigation and
    municipal uses, plus applicable interest. The District also pays a
    proportionate share of annual operation and maintenance of the Project.
        It is a challenge to meet the competing water demands of people,
    farms, cities, and the environment. Consistent with the principles of
    Reclamation's Water 2025 Initiative, Reclamation is proposing the use
    of existing facilities to better utilize infrastructure, while not
    jeopardizing existing authorized Fry-Ark Project purposes.
        Reclamation has played a role in several ongoing projects that aim
    to help alleviate water delivery challenges in Colorado. We have
    provided technical information for reports prepared by the Southeastern
    Colorado Water Conservancy District on the Preferred Storage Options
    Plan, a project conceived to provide additional reservoir storage space
    in the Arkansas River Basin. Reclamation has also provided planning
    assistance to local stakeholders weighing options for the Southern
    Delivery System, a project to provide additional water deliveries to
    the communities of Colorado Springs, Fountain and Security. And
    Reclamation has also responded to frequent requests for information
    from local sponsors interested in the study of ways to provide improved
    water quality to communities in the Arkansas River Valley east of
    Pueblo Reservoir.
        In addition, Reclamation is working to address water shortfalls
    through excess capacity contracts, also known as ``if and when''
    contracts for communities in Colorado. These contracts allow third
    parties to store water in Reclamation reservoirs as long as it does not
    affect the storage and delivery of project water. For instance,
    temporary ``if and when'' storage contracts for 10,000 acre-feet of
    Aurora's water have been executed on an annual basis with Reclamation
    for the past 22 years. In addition, ``if and when'' exchange contracts
    for 10,000 acre-feet have been executed annually for the past 9 years.
    This year in Eastern Colorado, Reclamation entered into 18 temporary
    storage contracts, totaling approximately 45,500 acre-feet, and one
    exchange contract for 10,000 acre-feet. Contractors included several
    cities and water districts, the Bureau of Land Management and the State
    of Colorado.
        The contract sought by Aurora is an example of the multi-purpose
    use of the Fry-Ark Project consistent with its governing statutes. The
    proposed contract allows a non-Federal entity to utilize space not
    being used to store Project water. This contract is within federal
    legal and policy parameters. It will cause no significant impact on the
    environment and does not require Aurora to construct additional
    facilities to meet their needs. The stored 10,000 acre-feet of water
    has been purchased from willing sellers, and will not be contracted as
    ``Project water.'' It provides revenues which assist in repayment of
    the reimbursable portion of the project. It also allows Aurora to plan
    for the future without injury to existing beneficiaries within the
    Arkansas Basin.
        Because excess capacity contracts are exercised only when the
    service can be provided without harm to the project or those receiving
    water from the project, Reclamation believes making excess capacity
    available to store non-project water for Aurora, Colorado Springs, and
    others is an efficient and beneficial use of existing Project features.
        Reclamation has other proposed ``if and when'' contracts for the
    Southern Delivery System and the Preferred Storage Options Plan. These
    arrangements have been formulated in response to identified needs for
    additional water related contracts to meet long-term water supply
    needs.
        Reclamation applauds the forward thinking and collaborative
    planning efforts that have gone into the development of these efforts.
    We will continue to work with local entities to provide water to small
    valley cities to enhance existing flows for recreation and to protect
    the fisheries.
        In summary, full utilization of Reclamation's Fryingpan-Arkansas
    Project is necessary to help communities work through water resource
    management challenges. It is the right thing to do, and we are
    committed to this collaborative approach.
        This concludes my written statement, and I would be pleased to
    answer any questions.
                                     ______

      Response to questions submitted for the record by Michael J. Ryan,
    Great Plains Regional Director, Bureau of Reclamation, U.S. Department
                                of the Interior

    Post Hearing Questions from Chairwoman Grace F. Napolitano:
     Question: Can you give us more information on exactly what authority
            the Bureau of Reclamation has to contract with Aurora and
            specifically include a copy of the solicitor's opinion on this?
        Answer: Reclamation laws encompass numerous statutes relating to
    specific projects as well as those of general application. Section 14
    of the Reclamation Projects Act of 1939 is the general authority for
    this decision. This Section authorizes the Secretary to enter into
    contracts for the exchange or substitution of water and water rights.
    The most relevant language is as follows:
            The Secretary is further authorized, for the purpose of orderly
            and economical construction or operation and maintenance of any
            project, to enter into such contracts for exchange or
            replacement of water, water rights, or electric energy or for
            the adjustment of water rights, as in his judgment are
            necessary and in the interests of the United States and the
            project.
        Under this authority, Reclamation has entered into contracts for
    the exchange or facilitation of an exchange of non-project water.
    Reclamation believes the 1962 Project Act, as amended, also authorizes
    this contract.
        There is no formal Solicitor's Opinion, but as per Reclamation's
    normal process for contracting actions, the Solicitor's Office has
    reviewed and approved the proposed contract for legal sufficiency.
     Question: By entering into these contracts with Aurora to store water,
            the Bureau is facilitating Aurora's effort to purchase water
            rights on the Arkansas River Valley. Aren't there policy
            considerations regarding the loss of farmland and the
            socioeconomic effects of water being removed from agricultural
            production for use by urban areas? Is this something a Federal
            Agency like the Bureau of Reclamation should be actively
            facilitating?
        Answer: Reclamation is not facilitating the purchase of water
    rights. For over 20 years, Aurora has followed state water law in
    acquiring the water from willing sellers, and the right to transfer the
    water to Aurora through the Colorado water rights system. All water
    proposed to be moved through the Fry-Ark Project facilities has been
    subject to environmental compliance and any additional amounts of water
    in the project would likewise be subject to further legal and
    environmental compliance. No significant socioeconomic impacts
    associated with the proposed contract were identified through
    Reclamation's National Environmental Policy Act compliance process.
     Question: How does the 40-year long-term contract differ from the
            annual contracts that the Bureau and Aurora have entered into
            in the past?
        Answer: Under the long-term contract, Aurora made additional
    commitments in the areas of payments for storage and exchange,
    proportionate responsibility for operation and maintenance and
    increased environmental safeguards for water quality. The rates under
    Aurora's current temporary 1-year contract, which include an operation
    and maintenance component, are $43.76 per ac-ft for 10,000 ac-ft of
    storage, and $43.76 for exchange. The storage rate under the long term
    contract starts at $43 per ac-ft and increases annually at a rate of
    1.79% providing a final storage rate of $85.90 per ac-ft in 2046. The
    exchange rate under the long term contract starts at $49 per ac-ft and
    increases annually at a rate of 1.79% providing a final exchange rate
    of $97.88 in 2046. Aurora will pay an appropriate separate charge for
    operation and maintenance.
     Question: What is wrong with continuing with the yearly contract with
            Aurora? Why is a long-term contract needed?
        Answer: The adoption of a long-term contract will result in a staff
    cost savings for both Reclamation and Aurora by ending the recurring
    cycle of annual contracts. Additionally, Aurora's payment for use of
    excess capacity of Fry-Ark facilities benefits the project and the
    United States with an earlier payout of reimbursable project costs. The
    use of excess capacity within the project provides for an efficient and
    beneficial use of existing project features. This use of facilities
    benefits the taxpayers and will not harm project beneficiaries.
     Question: Will this 40 year contract with Aurora mean that the Fry-Ark
            Project will be paid off any sooner?
        Answer: Yes, revenues expected from the 40 year contract are
    estimated to be $30-50 million, which may result in early repayment.
    Post Hearing Questions from Rep. John Salazar:
     Question: The stated purpose of the Fryingpan-Arkansas project was to
            bring trans-basin water into the Arkansas Basin. Now, the
            project is being used to divert water out of basin through
            exchanges to Aurora. This seems to be in direct opposition to
            the intent of Congress. How does the Bureau explain their
            rationale for going against the law of Congress?
        Answer: Reclamation's actions come in response to a direct request
    from a project stakeholder, and are consistent with federal and state
    laws. Under this proposed excess capacity contract, Aurora can use
    capacity in the project that is in excess of project needs to
    facilitate an exchange of their non-project Arkansas River water only
    when that capacity is not needed for project purposes. The non-project
    water Aurora intends to move through project facilities was purchased
    from willing sellers in the 1980's. Colorado state water law allows
    such a transfer and the Colorado water court approved the transaction.
    Excess capacity contracts are only entered into if there is no harm to
    the project or project beneficiaries.
     Question: I've never seen the Bureau articulate why they have
            authority to contract for storage or exchange contracts with
            Aurora. Can the Bureau, for once, explain how they generated
            their legal authority?
        Answer: Reclamation laws encompass numerous statutes relating to
    specific projects as well as those of general application. Section 14
    of the Reclamation Projects Act of 1939 is the general authority for
    this decision. This Section authorizes the Secretary to enter into
    contracts for the exchange or substitution of water and water rights.
    Under this authority, Reclamation has entered into contracts for the
    exchange or facilitation of an exchange of non-project water.
    Reclamation believes the 1962 Project Act, as amended, also authorizes
    this contract.
        Aurora has purchased water rights on the Arkansas River (below
    Pueblo Reservoir) that are below Aurora's intake works (Otero Pipeline,
    which comes directly out of Twin Lakes Dam). In order for Aurora to
    utilize this water, they will have to enter into an exchange against
    water/water rights upstream of the intake works. Reclamation has the
    operational flexibility to exchange non-project water.
        There are numerous provisions within the proposed contract to
    ensure that the Project is not adversely affected. Pursuant to state
    law, Aurora has changed the use and points of diversion of the water
    rights it has purchased in the Arkansas Valley. The Project has had
    ample excess capacity to store, convey and ultimately exchange Aurora's
    water. The contract would maximize the use of project facilities,
    within legal and policy parameters. There are minimal impacts on the
    environment in using Reclamation's facilities and this approach does
    not require Aurora to construct future facilities. The United States
    receives a benefit from the exchange in that Reclamation is able to
    retain 10% of the water exchanged that would have been lost to transit
    from moving the water to the lower reservoirs. The revenues from the
    contracting arrangement will also repay the Fry-Ark project at a faster
    rate.
        Finally, Reclamation has entered into exchange contracts of this
    type at other federal projects in Colorado, including the Colorado-Big
    Thompson Project where we have executed two such exchange contracts of
    non-project water. One is with the Municipal Subdistrict of Northern
    Colorado Water Conservancy District for the Windy Gap Project which
    moves water from the west slope of the Continental Divide to the east
    slope through project facilities. The other is with the City of
    Berthoud (a member of Northern Colorado Water Conservancy District).
    Reclamation is currently in the process of evaluating the possibility
    of another contract for exchange of non-project water with the
    Municipal Subdistrict of Northern Colorado Water Conservancy District
    for the Windy Gap Firming Project.
                                     ______

        Mrs. Napolitano. Thank you, gentlemen, and thank you for
    staying within the time frame. The first question I have is for
    you, Mr. Ryan, so you might as well keep that mike up there.
        One of the issues in reading your testimony there, you talk
    about the insignificant impact, on page 2, on the environment
    and doesn't require to construct additional facilities. Can you
    just briefly tell me how significant you found that?
        Mr. Ryan. Chair--is that with the question directed to the
    Aurora contract?
        Mrs. Napolitano. Correct.
        Mr. Ryan. Yes, ma'am. In the--in the environmental
    assessment that was prepared, we take a look at what the no-
    action alternative is, and the no-action alternative is these
    water rights are held by the City of Aurora. State law in
    Colorado allows them to move the water out of the basin up to
    Aurora. We believe that would happen regardless of whether or
    not the Fryingpan-Arkansas facility were used to help. So that
    becomes the baseline. Then the analysis in the environmental
    document, what the law requires is you take a look at the
    effects of the proposed action against the no-action
    alternative. Since the water would move anyway, there is no
    significant impact.
        Mrs. Napolitano. Thank you. And I understand that, but in
    looking at the map that I've reviewed, it allows for the lower
    portion to be able to exchange the water rights for water from
    the upper portion, which is cleaner water and essentially more,
    how would I say, desirable.
        Mr. Ryan. And that's the point that Congressman Salazar
    made earlier in his remarks. The environmental analysis, which
    reaches approximately 200 pages, took four years and a million
    and a half dollars to complete. One of the things they looked
    at was the impact to water quality. We believe those impacts
    would be negligible. But hearing from the communities, there is
    strong concern about the potential for that. We've built into
    the environmental commitments of the document and into the
    proposed contract with Aurora what we feel are safeguards, that
    should water quality become a concern, certain issues should
    those----
        Mrs. Napolitano. Excuse me, sir, but I understand there is
    a concern now.
        Mr. Ryan. There is a concern about impacts that may
    develop.
        Mrs. Napolitano. No, I'm talking about the water quality
    itself in that area, in the bottom area. My understanding, from
    reading various articles and reading some of the testimony, it
    already is questionable.
        Mr. Ryan. Are you speaking, Madam, to the groundwater
    quality or the surface water?
        Mrs. Napolitano. The water quality of--the surface water.
        Mr. Ryan. OK. Now my understanding is surface water quality
    problems do exist in the lower basin. I'm not--I don't
    understand the point that people make is how would the contract
    with Aurora exacerbate those. The result of our analysis shows
    that it would not.
        Mrs. Napolitano. Well, it doesn't take much common sense,
    sir, to understand that if you take more water from the top in
    exchange for water from the bottom, you're going to have less
    available to the bottom portion. I talk in general terms,
    because that's what I am. And if you did that in my area, I
    would be all over you, sir, because it is not something that we
    would consider, never mind kosher, ethical.
        Let me give you the next question. Can you give us more
    information on exactly what authority the Bureau of Reclamation
    has to contract with Aurora and do you have a Solicitor's
    Opinion and do you have a copy of that opinion from your
    solicitor?
        Mr. Ryan. Reclamation, in working through the documentation
    for the proposed contract, we worked with the solicitors. I do
    not have a formal Solicitor's Opinion, but the Solicitor's
    Office advises us that under the Reclamation Act of 1902, and
    more specifically Section 14 of the 1939 Act and the Fryingpan-
    Arkansas authorization of 1962, the Solicitor's Office is
    confident that we have authority to enter into this contract.
        Mrs. Napolitano. Would you mind being able to provide this
    committee the information that allowed you to be able to make
    that decision based on what you were informed by your
    solicitor?
        Mr. Ryan. Yes, ma'am, we'll do that.
        Mrs. Napolitano. For the record. Thank you.
        Mrs. Napolitano. And I'm already over my time. I'd like now
    to ask Congressman Salazar--I'm sorry, Perlmutter--or Lamborn.
    I'm sorry.
        Mr. Lamborn. Yeah, thank you, Madam Chairwoman.
        Mr. Ryan, one of the elements of the proposed piece of
    legislation that Congressman Salazar has called for is a state-
    sponsored water study that would examine social, economic and
    cultural impacts of water diversions or water use on lower
    river users. Has the Bureau ever funded such a study like that
    before?
        Mr. Ryan. Not to my knowledge, sir.
        Mr. Lamborn. OK. Thank you.
        Could you next explain what the role of the Fountain Creek
    is in regard to the Fryingpan-Arkansas Project? In other words,
    is Fountain Creek part of the Fryingpan-Arkansas system?
        Mr. Ryan. The City of Colorado Springs is a contractor for
    Fryingpan-Arkansas Project water. One of the drainages that's
    involved with return flow is the Fountain Creek area. There has
    been controversy in the recent past about city operations and
    wastewater treatment plant operations as well as regional
    flooding in the area. It is something that Reclamation and the
    City and others are taking a look at as we prepare the
    environmental documentation for the Southern Delivery System,
    and it's also an issue that Reclamation is involved with and
    citizens working on the Fountain Creek----
        Mr. Lamborn. OK. Could you explain the role and the extent
    to which agricultural runoff has contributed to the degradation
    of water quality in the Arkansas River.
        Mr. Ryan. The water quality studies that were done in the
    environmental documentation for the Aurora contract indicate
    that there has been some impact. Agricultural practices
    typically have some effect upon water quality through the
    introduction of return flows. It becomes a factor of the soil
    characteristics and the agricultural practices that will relate
    to both the specificity of the impact and the magnitude of the
    impact. But one thing is that there are agricultural practices
    which have some impact on water quality.
        Mr. Lamborn. OK. Thank you. And next, if I could ask a
    question of Mr. Long, a question or two. As you saw in the film
    clip a few minutes ago, President Kennedy said that a rising
    tide lifts all boats, and his whole speech was very inspiring,
    as I'm sure you would agree. In that context, if Pueblo
    Reservoir were to be expanded, would that allow for more water
    for all of the parties in the Arkansas Valley?
        Mr. Long. Under the proper operation, it would have the
    potential to do that, yes.
        Mr. Lamborn. Thank you very much.
        Next I'm going to ask you about the process by which PSOP
    has come about. Could you just explain how your district has
    done its negotiation and followed different processes to come
    up with the proposals that we have in front of us today?
        Mr. Long. I could provide part of an answer. We'll need to
    provide a written response to the larger part of it. I've only
    been on the southeast district since 2002. The actual process
    in looking at the potential for PSOP started many years before
    I was a board member, but there was a report that was submitted
    to our board several years ago. It included many different
    participants' input. Yeah, we still have to reach agreement on
    how that would move forward, but to really provide the
    historical detail, I will need to respond to that in writing.
        Mr. Lamborn. But would you agree that there have been long
    negotiations and a large degree of consensus and deliberation
    in the whole process that you have followed?
        Mr. Long. I would agree with part of your comment. Yes,
    there have been many, many years and much time involved in the
    process--and a great deal of consensus--but obviously not
    enough to move the project forward, but there is a great deal
    of consensus. There are many participants up and down the
    valley who need storage, but there's a concern, I believe,
    among the dissenters that there's a potential that new storage
    could be monopolized, and I think that's where we're at right
    now. So, yes, we've done a lot of work, put a lot of time in on
    it, we're reaching consensus, but we're not there yet.
        Mr. Lamborn. Thank you.
        Mrs. Napolitano. Thank you, Mr. Lamborn.
        Mr. Salazar.
        Mr. Salazar. Thank you, Madam Chair. I appreciate your
    recognizing me.
        Chairman Long, I want to, first of all, thank you for your
    leadership on trying to move the Arkansas Valley conduit, and I
    appreciate the question that, Madam Chair, we hope that we can
    get a hearing and that we can move this project right along.
    You know, the conduit was one of the original pieces of the
    Fry-Ark Project. Doesn't it frustrate you that the Fry-Ark
    Project is now being utilized to move water to exchange storage
    out of the lower Ark and out of the basin before it even serves
    one of its primary goals, and that is to deliver clean water to
    the towns along the lower Arkansas River?
        Mr. Long. Yes, it is somewhat discouraging. I made the
    statement before that if we do not get the conduit, the project
    ultimately would be a detriment to the valley rather than a
    benefit. As agriculture lands are dried up, the project water
    then goes to municipal interests, so ultimately a large portion
    of the water could be moved out of the area that was intended
    to be served and been a beneficiary of the project, yes.
        Mr. Salazar. Thank you, Chairman. One other quick question
    for you. In 2001, the Southeast District attorney, Lee Miller,
    he wrote a legal memo outlining why the district approved the
    Bureau storage leases to Aurora. Do you believe that the legal
    arguments outlined in the memo are still valid today?
        Mr. Long. There is no question we have board members who
    believe that the arguments are still valid. We believe those
    arguments are very valid, indicating that virtually everyone
    else outside of the basin. There was a little bit of a gray
    area concerning Aurora, because their previous contracts with
    the Bureau created a little bit of unease, and in my previous
    statements, I acknowledged that we had reached an agreement
    with Aurora, but it was because of that unease with previous
    relationships the Bureau had with Aurora. But we absolutely
    believe that the project is not authorized to be used to assist
    anyone outside of the Arkansas Valley Basin.
        Mr. Salazar. Thank you, Mr. Chairman.
        Mr. Ryan, you stated in your verbal testimony that the
    authority the Bureau of Reclamation had to actually contract
    with the 40-year contract with Aurora was the 1902 Act. Did you
    mean 1902 or 1920?
        Mr. Ryan. In my statement, Congressman, I referred to the
    1902 Act, specifically the act of June 17th. Many people
    commonly refer to that as the Reclamation Act that initiated
    the reclamation. But more specifically, as we come down through
    the years, we believe that Section 14 of the 1939 Act, coupled
    with the Fryingpan-Arkansas provision of 1962, gives the
    Secretary authority.
        Mr. Salazar. OK. Mr. Ryan, are you aware of the Sammy
    decision discussing the use of the Washington project
    facilities?
        Mr. Ryan. Is that for me, sir?
        Mr. Salazar. In that opinion, the Solicitor General
    reaffirmed that the principles of the Federal law requires that
    the Secretary, through the Bureau of Reclamation, to operate
    its water projects in a manner consistent with the project's
    legislative authorities and in a manner consistent with any
    feasibility reports submitted to Congress at the time of the
    project authorization.
        And the project--the authorization for this project was to
    provide water within the local--in this map, we show the
    project's boundary, which basically would have been Colorado
    Springs and Fountain Creek and along the lower Arkansas River
    all the way to the Kansas line.
        So based on that information, it seems like there was no
    feasibility study at the time that the legislation was moved
    forward by Wayne Aspinall, correct?
        Mr. Ryan. To get to the first part of your question, am I
    aware of the citation, the legal citation, my expectation is
    that the Solicitor's Office takes those into consideration as
    they advise us on the bounds of the Secretary's legal
    discretion. In regard to the planning documents developed in
    the early years of planning and formulation for the Fryingpan-
    Arkansas, I'm aware that some of the early documents referenced
    the use of the proposed Federal facilities in conjunction with
    non-Federal facilities to help people manage water, more
    specifically a person, when they read through the documents,
    the one that comes--at least for me, when I read through them,
    the one that came to most ready reference was the Homestake
    Project. But there are other non-Federal projects that are in
    the Arkansas Basin that some of the early planning documents
    that the Fryingpan-Arkansas discuss.
        Mr. Salazar. Thank you very much. I yield now. I apologize
    for taking more time.
        Mrs. Napolitano. No problem. Mr. Perlmutter.
        Mr. Perlmutter. Thanks, Madam Chair.
        Mr. Long, I get confused between the Lower Arkansas
    District and the Southeast Colorado Conservancy District. Which
    part of the--on this map, what part do you represent?
        Mr. Long. I represent all the area in brown.
        Mr. Perlmutter. OK. So you're all the way down to the
    Kansas border.
        Mr. Long. Actually the map is not entirely accurate. We go
    to the city of Lamar, near Kansas.
        Mr. Perlmutter. And originally as part of this project, the
    conduit was contemplated to bring water way downstream, isn't
    that right?
        Mr. Long. Correct, correct.
        Mr. Perlmutter. And that is what you're trying to get built
    now as part of the request by Senator Salazar and you,
    Representative Salazar? Well, do you have one--you and your
    brother--they get me confused too. So I'm confused by the
    districts and I'm confused by the Salazars, but that's a whole
    other story.
        So you have the--the request is a conduit, and the purpose
    of that is water quality?
        Mr. Long. Correct.
        Mr. Perlmutter. Now, isn't it true that a lot of the
    problems with water quality to the very end of the river as you
    go to Kansas is a result of metals and minerals into the river
    itself below the Pueblo Reservoir?
        Mr. Long. I would say that's partially true. There are many
    contributing factors, but yes.
        Mr. Perlmutter. But a lot of it has to do with the river
    bed itself, isn't that right?
        Mr. Long. Correct.
        Mr. Perlmutter. You and I have had this conversation.
        Mr. Long. Yes.
        Mr. Perlmutter. So I just wanted to be clear for the
    record. You do have an agreement with Aurora, don't you?
        Mr. Long. Southeast.
        Mr. Perlmutter. Southeast Conservancy. I mean you as a
    representative of the district.
        Mr. Long. Yes.
        Mr. Perlmutter. And that agreement provides a variety of
    benefits to the district, does it not?
        Mr. Long. It does.
        Mr. Perlmutter. So the key thing for your organization is
    that this conduit be built so that fresher water from the
    reservoir can get downstream; isn't that right?
        Mr. Long. Absolutely.
        Mr. Perlmutter. Mr. Ryan, I'd like to turn my questions to
    you, sir.
        Mr. Ryan. Yes, sir.
        Mr. Perlmutter. How does the Homestake Project play with
    the Fryingpan-Arkansas Project in ten words or less?
        Mr. Ryan. The two projects are transbasin diversions. The
    two projects act in synergy to improve the overall system
    effectiveness.
        Mr. Perlmutter. The two projects were put together back in
    the '60s, were they not, to really be able to build the whole
    project out as an economy of scale?
        Mr. Ryan. Yes, sir.
        Mr. Perlmutter. So it isn't as if Aurora and its use of the
    Fryingpan-Arkansas system is a new phenomenon. It's dated back
    to the beginning of the project?
        Mr. Ryan. Yes, sir. The first contract that I'm aware of
    was dated 1965.
        Mr. Perlmutter. Now the Chairwoman's questions really
    concern me in that your study, your four-year study, 200-page
    study, determined that there was negligible change to the
    river, to the water quality, based upon use of the water--
    diversion from the lower part, which would be the reservoir, to
    up the river into the mountains, isn't that right?
        Mr. Ryan. Yes, yes.
        Mr. Perlmutter. What that means is, as to Mr. Long, the
    water quality doesn't change based on the lease that's been
    requested by Aurora, at least in the estimation of the Bureau
    of Reclamation.
        Mr. Ryan. Yes.
        Mr. Perlmutter. So from your point of view, a 40-year--
    well, I'll get to the 40-year lease, but the differentiation by
    going upstream and transferring its water rights down to the
    reservoir shouldn't hurt Mr. Long or his district.
        Mr. Ryan. Yes, sir. But we recognize that concern remains,
    and so that's why we have included a commitment--and Aurora has
    agreed--that it requires Aurora to remain involved in the water
    quality study being organized by the Southeastern Colorado
    Conservancy District.
        Mr. Perlmutter. Last question. Is a 40- year lease as
    Aurora has requested from the Bureau of Reclamation, is that
    unique?
        Mr. Ryan. No, sir.
        Mr. Perlmutter. Thank you.
        No further questions, Madam Chair.
        Mrs. Napolitano. Thank you.
        Congressman Udall.
        Mr. Udall. Thank you, Madam Chair. As Congressman
    Perlmutter mentioned, he gets confused by all of the Salazars,
    Chairwoman, and no doubt all the Udalls confuse her, but you
    haven't seen nothing yet, because there are lots of Lamborns
    and Perlmutters as well. But in the end, of course, we are all
    Coloradans, and we are here today to look back at 45 years of
    history, but also to look at what the 21st Century might hold
    for us with this important project.
        At the risk of creating some concern on the part of my west
    slope friends--I know Chris Treese is here--I want to also
    mention that this project is a west slope project. In addition,
    we'll hear from Chris Treese and others about the Fryingpan
    portion of the Fry-Ark Project. Just I want to make note of
    that.
        Director Ryan, thank you for being here. As you know,
    recently I sent the Bureau of Reclamation a letter asking you
    all to consider and strongly urging you to do a full EIS on the
    relationship that we have with Aurora. Could you just for the
    record let us know why you declined to take that request to
    heart.
        Mr. Ryan. Congressman, we considered your request and
    others had requested it as well. When we took a look at the
    information we had in front of us, the analysis that had been
    done, and we took a look at what the requirements of law were
    under the National Environmental Policy Act, we came back to
    the same conclusion, that we believed that the environmental
    assessment with its finding of no significant impact is
    appropriate. We think that's the right thing.
        Mr. Udall. I appreciate the fact that you're forthcoming
    and I know there's a letter in transit to me.
        Mr. Ryan. Yes.
        Mr. Udall. I would just for the record mention in part the
    reason I requested that is that I think we're on track to end
    up in the courts, and I hope that isn't the case, but I think
    that may be what the outcome is, and I thought an EIS would
    further clarify where we are and perhaps help us to avoid
    litigation. But be that as it may.
        Mr. Ryan. Thank you.
        Mr. Udall. If I might, you say that the Reclamation has
    other proposed ``if and when'' contracts for the Southern
    Delivery System and the PSOP pump. Could you provide some more
    specific details about those possible future contracts. If
    that's a long answer, I would like to have it for the record,
    but if you can be concise, I'd appreciate it.
        Mr. Ryan. I'll do my best to be concise. In preparing the
    environmental documents or in conversations with the different
    groups in the past regarding whether it's the Southern Delivery
    System or the PSOP, we've had entities come to Reclamation and
    request if we go forward with this, would Reclamation consider
    entering into these ``if and when'' contracts with us, and we
    have said yes, we would consider that.
        Mr. Udall. Thank you, and if you want to provide additional
    information, I appreciate it.
        Mr. Ryan. Yes.
        Mr. Udall. Mr. Long, always great to have you here and
    thank you for your public service. Somebody said to me recently
    you have to wonder about elected officials. Most normal people
    don't want a job where they are hated by complete strangers,
    and I'm not suggesting that Mr. Long is in that category, but
    maybe some of us sitting at the table are.
        You say the project is limited to an average of just 69,100
    acre-feet on the west slope annually. What determined the
    actual amount that's diverted each year?
        Mr. Long. We need to meet certain flow requirements to the
    rivers on the west slope, and once the flow is at a certain
    level--and it changes during the course of the year, let's say
    100 cubic feet per second, and I'm just using the number, which
    I can't remember, let's say in April, anything over that, we
    can divert. So what determines what we bring across is meeting
    the flows as well as the snowfall.
        Mr. Udall. Thank you for that answer, and that's a very
    important number, as we all know. On page 11 of your statement,
    you discuss the Allocation Principles, which are listed of
    course in capital letters, to determine how project water is
    used, and you say the principles require allowing a minimum of
    51 percent of the annual project of water supply of municipal
    and domestic use. So is it fair to say that the project is
    primarily a municipal water supply project and not primarily a
    project to supply agriculture, and this is at the heart of the
    hearing today. And I left you 40 seconds to answer, but I know
    you may want to provide additional thoughts for the record.
        Mr. Long. OK. That is correct. The Allocation Principles
    provided for 51 percent of the water to go to municipalities,
    49 percent agricultural. Historically that has not been the
    case. As of 2007, 74.56 percent of the water has gone to
    agriculture. 25.4 percent has gone to municipal interests. In
    2002 and since 2002, the municipal interests have requested and
    received--well, not necessarily received, but they requested
    the full 51 percent of whatever we brought over.
        But as of today, the majority of the water has gone to
    agriculture. But we believe that we will see a shift and more
    will ultimately go to municipal interests.
        Mr. Udall. Thank you. Thank you, Madam Chair. I think what
    you're saying is there's a critical mass here, there is a
    tipping point that very much concerns those of you in the
    southeastern part of the state. And thank you, and thank you,
    Chairwoman Napolitano.
        Mrs. Napolitano. Thank you.
        I'd rather not do a second round, if you don't mind, Mr.
    Lamborn, so we can hear the rest of the testimony, unless you
    have some pertinent questions.
        Mr. Lamborn. [Shakes head.]
        Mrs. Napolitano. Thank you. Pardon me. Taking the
    prerogative of the chair though, I will point out to Mr. Long
    or ask Mr. Long, can you explain very quickly the differences
    between the Preferred Storage Options Plan, PSOP, and the plans
    for long-term excess capacity contracts with the City of
    Aurora.
        Mr. Long. Could you repeat the question?
        Mrs. Napolitano. Can you please explain the differences
    between PSOP and the plans for long-term excess capacity
    contracts with the City of Aurora.
        Mr. Long. I think I'd prefer to respond to that in writing.
    I mean, that's a lengthy answer.
        Mrs. Napolitano. That's fine. And, yes, certainly would
    love to have it in writing so that we--then they can share it
    with the panel. And this panel will be asked to submit
    questions for the record, because we have so many witnesses
    that we are not in a position to allow a second round. So
    questions will be entered for the record and we would
    appreciate if you would supply one, I believe it's a 10-day
    time frame.
        Mr. Long. That is absolutely no problem.
        Mrs. Napolitano. Thank you very much. And thank you both
    for being here.
        Mr. Ryan, may I ask that you might stick around in case we
    might want to ask other questions later on. Thank you, sir.
        Mrs. Napolitano. Gentlemen, please move on to the second
    panel.
        Welcome, Lionel Rivera, Mayor of Colorado Springs, please
    come up; Terry Scanga, General Manager, Upper Arkansas Water
    Conservancy District, Salida, Colorado; Mr. Bill Thiebaut,
    District Attorney, Pueblo, Colorado; Jay Winner, General
    Manager, Lower Arkansas Conservancy District, Rocky Ford; and
    Sandy White, attorney of water from La Veta.
        Welcome, and as soon as you're ready to go, we'll start off
    with the honorable mayor, Lionel Rivera.
        Mr. Rivera.

               STATEMENT OF THE HONORABLE LIONEL RIVERA,
                   MAYOR, COLORADO SPRINGS, COLORADO

        Mr. Rivera. Thank you. Thank you, Madam.
        I think I have it now, thank you. Thank you, Madam Chair
    Napolitano and members of the committee and Members of
    Congress. Thank you for this opportunity to appear before you
    today. My name is Lionel Rivera, and I am the mayor of Colorado
    Springs.
        Colorado Springs is known to many of you as being the
    location of the world-famous Broadmoor Hotel; the United States
    Olympic Training Center; strategic military installations,
    including the United States Air Force Academy, Peterson Air
    Force Base, headquarters for the U.S. Northern Command, NORAD,
    and Air Force Space Command, and Fort Carson, soon to be
    headquarters of the United States Army 4th Infantry Division.
        However, what may not be as well known to you is all of
    these entities and a population of over 400,000 people rely on
    Colorado Springs to deliver their water supply. Today Colorado
    Springs' water supply comes from a variety of sources and
    features a water delivery infrastructure that reaches over
    three river basins and seven counties, and on average 70
    percent of our water is delivered from western Colorado via
    three delivery pipelines. The Fry-Ark Project plays an integral
    role in delivering this water.
        As you have already heard, the Fry-Ark Project was
    conceived, planned and constructed as a multipurpose project to
    serve both the interests of agriculture and municipal entities
    within the Southeastern District. It has always included a
    pipeline to deliver project and acquired nonproject water to
    Colorado Springs, and Colorado Springs has an equal right to
    expect to receive the potential benefits that the project has
    to offer such as the other project supporters and beneficiaries
    do.
        From the inception of this project, the City of Colorado
    Springs has been an active participant and last year alone the
    people of El Paso County contributed over 72 percent of the
    total valuations that go into funding the project.
        The availability of a dependable and cost-effective water
    supply has propelled the growth and success of Colorado Springs
    and proves that in many ways the Fry-Ark Project is working as
    it was intended. On August 17, 1962, in a speech made right
    here in Pueblo, Colorado, President John F. Kennedy said the
    following about the Fry-Ark Project:
        ``This (project) is an investment in the future of this
    country, an investment that will repay large dividends. It is
    an investment in the growth of the West, in the new cities and
    industries which this project helps make possible.''
        Looking back almost 45 years now, President Kennedy's words
    seem almost prophetic. One needs to look no further than
    Colorado Springs and Pueblo to see how President Kennedy's
    vision for the growth of the West has come to fruition. As we
    have grown, we have done so responsibly with the full
    recognition that we would continually try to meet water
    quantity and quality challenges.
        We are meeting the water quantity challenge through an
    extensive release program and through a program that has
    resulted in one of the lowest per capita water consumption
    rates in the West. We have answered the water quality challenge
    by investing $85 million in completed and planned capital
    improvements to our wastewater system and by creating a
    stormwater enterprise that will collect over $14 million a year
    to fund capital improvements in our stormwater management
    system.
        For all of the rhetoric and misinformation that has been
    and will be spread about our city, the truth is that Colorado
    Springs has historically sought to avoid relying on the
    transfer of agricultural water rights to provide a water supply
    to the city. Far from seeking the demise of the Arkansas Valley
    agricultural economy, Colorado Springs is working hard to
    develop a fallowing and leasing program that allows for the
    development of multiple use of the valley's water supply,
    multiple uses that will allow farmers to financially benefit
    from their water rights, while protecting and enhancing the
    agricultural economy of the valley. And we are jointly leading
    the efforts to study water quality issues on the Arkansas River
    and Fountain Creek through a funded commitment and proposed
    agreement with the Lower Arkansas Valley Water Conservancy
    District.
        At every turn the City of Colorado Springs has complied
    with the applicable laws of the United States and the State of
    Colorado when it comes to acquiring these water supplies. Each
    of our sources of supply is a subject of decrees, and we are in
    compliance with the terms and conditions of those water right
    decrees. The water problems of this valley and of this state
    will never be solved by looking backward and trying to rewrite
    legal transactions between agricultural and municipal
    communities. True leadership on water issues requires us to
    identify the problems of the future and seek to solve those
    problems in order to better the conditions of all of our
    citizens. Colorado Springs is committed to that concept, and
    our resources must be spent planning for that better future.
        In closing, let me say the Fry-Ark Project was developed to
    benefit all of the citizens within the Southeastern Colorado
    Water Conservancy District. It was developed to benefit not
    only the agricultural lands within the district, but also
    municipal and industrial users as well. As the public body
    representing two-thirds of the citizens within the Southeastern
    Colorado Conservancy District, Colorado Springs is proud to
    have fulfilled President Kennedy's vision and support his
    concept that municipal interests must be considered at the same
    time as all of the other project beneficiaries.
        Increasing the usefulness of the Fry-Ark Project for all of
    the citizens of the Southeast District is a shared goal. The
    politics of demonization have no place in these discussions. We
    should be seeking win-win solutions and we trust the Congress
    of the United States is also interested in solutions that
    benefit all of the citizens of the district. We look forward to
    working with our neighbors in good will in solving the issues
    we face in the future and ensuring the project continues to
    excel.
        Again, I thank you for your invitation, your invitation and
    for taking such a keen interest in this project.
        Mrs. Napolitano. Thank you, Mayor.
        [The prepared statement of Mr. Rivera follows:]

               Statement of The Honorable Lionel Rivera, Mayor,
                            City of Colorado Springs

        Madam Chairman Napolitano, Members of the Committee and Members of
    Congress:
        Thank you for the opportunity to appear before you today to discuss
    the Fryingpan-Arkansas Project. My name is Lionel Rivera, and I am the
    Mayor of the City of Colorado Springs. Colorado Springs is the second
    largest city in Colorado, and is the County Seat of El Paso County
    which recently passed the City and County of Denver as the State's most
    populous county.
        Nestled at the foot of Pikes Peak, Colorado Springs is probably
    known to many of you as being the location of the world-famous
    Broadmoor Hotel, the United States Olympic Training Center, and for
    being the home of some our nations most important military
    installations including the United States Air Force Academy; Peterson
    Air Force Base, headquarters for the U.S. Northern Command; and Fort
    Carson, headquarters of the U.S. Army's 4th Infantry Division. However,
    what may not be as well known to you is that all of these entities and
    a population of over 400,000 people rely upon the City of Colorado
    Springs to deliver their water supply.
        Colorado Springs first developed the available water supplies on,
    and in the vicinity of, Pikes Peak. When those supplies proved
    insufficient for the needs of the City, Colorado Springs undertook the
    construction of a pipeline from the headwaters of the Blue River, in
    Summit County, Colorado. Thereafter Colorado Springs, in partnership
    with the City of Aurora, developed additional water supplies out of the
    Eagle River headwaters through a project called The Homestake Project.
    At the same time Colorado Springs participated in the development of
    the Fryingpan-Arkansas Project for additional water supplies and
    acquired interests in the Twin Lakes Company system which gets its
    water from the headwaters of the Roaring Fork River. Finally, after
    undertaking all of these developments, Colorado Springs was approached
    by a water broker and ultimately purchased a significant package of
    water that had formerly been used to irrigate lands under the Colorado
    Canal.
        Today, Colorado Springs' water supply comes from a variety of
    sources, and features a water delivery infrastructure that reaches over
    three river basins and seven counties, and, on average, 70% of our
    water supply is delivered from western Colorado via three delivery
    pipelines. The Fry-Ark Project plays an integral role in delivering
    this water.
        As you have already heard from Mr. Long, President of the
    Southeastern Colorado Water Conservancy District and Mr. Ryan of the
    Bureau of Reclamation, the Fry-Ark Project was conceived, planned and
    constructed as a multi-purpose project to serve both the interests of
    agriculture and municipal entities within the Southeastern District.
    From the inception of this Project, the City of Colorado Springs has
    been an active participant in the development of the project which has
    always included a pipeline to deliver both project and acquired non-
    project water from the Arkansas River to the City of Colorado Springs.
        The costs of the Fry-Ark Project to El Paso County and Colorado
    Springs are significant. From 1959 through 2006, El Paso County has
    contributed $65,317,360 to the administration and repayment of the Fry-
    Ark Project, an amount that is more than double the contributions of
    all other project participants combined. Last year alone, El Paso
    County contributed over 72% of the total valuations that go into
    funding the Project. The second largest contributor was Pueblo County
    which came in at 15%. As Colorado Springs and El Paso County continue
    to grow, our financial contributions to the Project will grow as well.
    I would like to submit to the record the accompanying document which
    details Southeastern Water Conservancy District's tax valuations.
    [Attachment A].
        The return on El Paso County's investment in the project is
    significant as well. Of the project water that is stored in Pueblo
    Reservoir, 25% is released to the Fountain Valley Conduit for municipal
    use in El Paso County by the members of the Fountain Valley Authority;
    The City of Colorado Springs; The City of Fountain; The Security Water
    District; The Stratmoor Hills Water District; and Widefield Water
    District. The conduit became fully operational in 1985 and reached full
    conveyance in 2006 and is an important supply and delivery system for
    all of those communities.
        The Fry-Ark Project is not today and never has been an irrigation-
    only project. It has always been a multiple-purpose project and
    Colorado Springs has an equal right to expect to receive all of the
    potential benefits that the project has to offer just as the other
    project supporters and beneficiaries do.
        Though we have been very fortunate with the growth and prosperity
    of our community, we fully recognize how scarce water is in our arid
    climate. As a part of this recognition, Colorado Springs is one of the
    most aggressive and responsible cities in the entire Western United
    States when it comes to water conservation, and Colorado Springs has
    actually witnessed a gradual decline in single-family residential water
    consumption over the last 25 years.
        Using the same methodology employed by Western Resource Advocates
    in a 2003 survey entitled ``The Smart Water Report,'' Colorado Springs
    found that in 2001 its citizens used less gallons of water per day than
    residents in other areas in the intermountain West, besting cities like
    El Paso, Albuquerque, Boulder, Phoenix, Denver, Tempe, and Las Vegas.
    Since 2001, our per-capita use has continued to decline and last year
    our residential per-capita consumption was below 100 gallons per day.
        This success is not an accident. It is the result of aggressive and
    innovative policies adopted by Colorado Springs that include citizen
    education; low-income conservation support; seasonal rates that
    discourage excessive outdoor watering during summer months; financial
    incentives for upgrading to more efficient appliances; and even
    adopting city codes that which require water-efficient landscaping on
    all new commercial, industrial and residential construction.
        In addition to conservation, Colorado Springs is a leader in non-
    potable water reuse, whereby raw surface water and tertiary-treated
    effluent water is piped through an independent system to avoid using
    new freshwater supplies for irrigation. Colorado Springs boasts of one
    of the oldest non-potable systems in the West, which delivers on
    aggregate, more than 12,000 acre feet a year, accounting for 13%
    Colorado Spring's total water deliveries. Our non-potable system waters
    city parks, municipal cemeteries and golf courses, our power plant
    cooling towers, and outdoor areas at Fort Carson and the United States
    Air Force Academy. In fact, next year when the PGA U.S. Senior Open is
    played at the world-famous Broadmoor golf course, it will be played on
    grass that has been irrigated by the Colorado Springs non-potable
    system. We are currently implementing plans to extend this valuable
    service to more and more regions or our city.
        Yet, even as our per-capita water use declines, we are still seeing
    growth and this is putting pressure on our ability to deliver water.
    Part of the response to this pressure will be to squeeze even more out
    of our existing conservation plans and to implement new additional
    conservation methods. But conservation alone will still leave Colorado
    Springs well short of the water it needs to provide for the residents
    that will call Colorado Springs ``home,'' over the next 40 years.
        To meet our future demand we will once again be looking to our
    water in the Fry-Ark system, and are right now in the process of
    implementing a new water delivery pipeline known as the Southern
    Delivery System or SDS. Though we are still exploring the options of
    connecting a new pipeline from Pueblo Reservoir, like we currently have
    with the existing Fountain Valley Authority pipeline, or by building a
    pipeline further up the river in Fremont County, we expect to begin
    construction on the project by 2009.
        The availability of a dependable and cost-effective water supply
    has propelled the growth and success of Colorado Springs and proves
    that, in many ways the Fry-Ark Project is working as it was intended.
    On August 17, 1962, in a speech made right here in Pueblo, Colorado,
    President John F. Kennedy said the following about the Fry-Ark project:
            ``This (project) is an investment in the future of this
            country, an investment that will repay large dividends. It is
            an investment in the growth of the West, in the new cities and
            industries which this project helps make possible.''
        Looking back almost 40 years now, President's Kennedy's words seem
    almost prophetic. The dividends of the investment in the Fry-Ark
    project are real. One needs look no further than Colorado Springs to
    see how President Kennedy's vision for the growth of the West has come
    to fruition.
        Unfortunately, while many aspects of the Fry-Ark project are
    working as they were intended, some unintended consequences have
    resulted from the success our cities and farms have realized over the
    past 40 years. As our cities have grown, tremendous strains have been
    placed on our water infrastructures. In Colorado Springs for example,
    we have in years past seen catastrophic weather events, and even
    vandalism plague our wastewater system, resulting in sewer overflows
    into Fountain Creek. While these disruptions were neither willful nor
    negligent, we as City have responded by investing over $60 million in
    capital programs in upgrading our system and have built a new state-of
    the art treatment plant which comes on line this year and have a new,
    even more advanced regional plant on the drawing boards to accommodate
    future growth. Again in 2007 we estimate investing an additional $25
    million on capital projects in the wastewater collection system.
        In spite of the having a better disruption record than most other
    wastewater utilities for a system of our size in the entire nation, we
    are constantly looking for innovative ways to prevent unintended spills
    from causing significant damage to our watersheds. I am proud to
    announce that next week, we will be inaugurating one of those
    innovations in the form of our Fountain Creek Recovery Project, a novel
    system whereby in the event of a wastewater spill, we will have the
    ability to capture the flow of the Fountain Creek, divert it to a
    holding pond, pump the water from the pond to one of our wastewater
    treatment facilities, while simultaneously releasing fresh water back
    into the creek.
        Yet while municipal sewer systems receive more publicity, when it
    comes to the overall threats to water quality in a stream, non-point
    source discharges should be of a much greater concern. Non-point
    discharges from cities come in the form of urban stormwater runoff,
    which occurs when rainwater washes pollutants and sediments from
    impervious surfaces into storm drains. To better manage the impacts
    urban runoff has on Fountain Creek, Colorado Springs this past year
    adopted a stormwater enterprise where by approximately $14.3 million a
    year will be collected from fees imposed on property owners to fund
    much needed capital improvements in our stormwater collection and
    management system.
        However, urban stormwater runoff is only part of the story, and
    significant water quality issues surround runoff from agricultural
    development in the Arkansas basin. The U.S. Army Corps of Engineers
    report on environmental baseline on the Fountain Creek cites the
    following finding from the U.S. EPA on agricultural impacts on water
    quality:
            ``The most recent National Water Quality Inventory reports that
            on a national scale, agricultural NPS pollution is the leading
            source of water quality impacts to surveyed rivers and
            lakes...and also a major contributor to ground water
            contamination and wetlands degradation....''
    The Army Corps report goes on to identify Fountain Creek to be the most
    heavily impacted stream segment in El Paso and Pueblo Counties in terms
    of agriculture non-point source pollution.
        In some ways, it is much easier for a large municipality like
    Colorado Springs to address its impacts on water quality than it is for
    an individual farmer or rancher. That is why we are hopeful as this
    subcommittee, the full Committee on Natural Resources, or any other
    Committee of the House or Senate examines how to manage the impacts
    growth has on both the quantity and quality of our water supplies, that
    it will pay special attention to helping the agricultural community
    mitigate its impacts on our rivers and streams.
        It would be wrong to interpret this plain statement of the facts as
    an affront to the agricultural community or a dismissal of the plight
    of our farmers. Not only are we aware of the difficulties that global
    competition poses on our farmers, we are all too familiar our selves.
    Already this year, we have seen high tech manufacturers in Colorado
    Springs leave our city for foreign shores because the realities of
    global commerce mean their products can be made more cheaply abroad.
        Instead of merely paying lip-service to the problems our farmer's
    face, we are instead forging new ground in Colorado and finding
    innovative ideas for farm and city to work together in meeting our
    mutual water needs. For our part, Colorado Springs is exploring a water
    leasing program with Arkansas Valley farmers, whereby irrigators would
    lease their water to cities during dry and less productive years. This
    would provide a much needed income source to the farmer, and a much
    needed water supply for a thirsty city when supplies are tight. The
    benefit is that the right to the water stays with the farmer and that
    right is loaned out when it serves the mutual benefit of both parties.
        For all of the rhetoric and misinformation that has been spread
    about our City, the truth is that Colorado Springs has historically
    sought to avoid relying on the transfer of agricultural water rights to
    provide a water supply for the City. Far from seeking the demise of the
    Arkansas Valley agricultural economy, Colorado Springs is working hard
    to see a fallowing and leasing program developed which allows for the
    development of multiple-use of the Valley's water supplies.
        At every turn the City of Colorado Springs has complied with the
    applicable laws of the United States and of the State of Colorado when
    it came to acquiring these water supplies. Each of our sources of
    supply is the subject of decrees and we are in compliance with the
    terms and conditions of those water rights decrees. Those decrees
    represent property interests of the citizens of the City of Colorado
    Springs and serve as the foundation of the City's health, safety and
    welfare. The problems of this Valley, this State and this Nation will
    never be solved by looking backward and conducting ``what if''
    investigation of matters that are long past. True leadership requires
    us to identify the problems of the future and seek to solve those
    problems in order to better the condition of all citizens. Our
    resources must be spent planning for the future, not attempting to
    relive or reinvent the past.
        In closing, let me say that the Fryingpan-Arkansas Project was
    developed to benefit all of the citizens within the Southeastern
    Colorado Water Conservancy District. It was not developed to benefit
    only the agricultural lands within the District, but to benefit
    municipal and industrial users as well. As the public body representing
    two-thirds of the citizens within the Southeastern Colorado Water
    Conservancy District, Colorado Springs is not embarrassed to suggest
    that its interests must be considered at the same time as all of the
    other Project beneficiaries and if consideration of enlargement of
    Pueblo Reservoir or other project facilities will benefit other
    entities then it should benefit Colorado Springs as well.
        Increasing the usefulness of the Fryingpan-Arkansas Project for all
    of the citizens of the Southeast District should be considered a good
    thing, not a bad one. In the arid west we only succeed in serving the
    interests of our citizens when we work together to solve water resource
    problems. The politics of demonization have no place in these
    discussions. We should be seeking win-win solutions and we trust the
    Congress of the United States is also interested in solutions that
    benefit all of the citizens instead of a few. So as one of the initial
    project beneficiaries and as an entity that has been involved in the
    planning, development, construction and operation of the Fryingpan-
    Arkansas Project since its inception, we are proud of our role and look
    forward to working with our neighbors of good will in solving the
    issues we face in the future.
        President Kennedy lauded the mutual effort and cooperation that
    went into building the Fry-Ark project as the stuff that makes America
    great. It took the joint effort of Colorado's municipal and
    agricultural interests to make the Fry-Ark a reality. It will take the
    joint effort of Colorado's municipal and agricultural interest to
    ensure the project continues to excel.
        Again, I thank you for your invitation, and for taking such a keen
    interest in this project.
                                     ______

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [The response to questions submitted for the record by Mr.
    Rivera follows:]
    July 9, 2007

    The Honorable Grace F. Napolitano
    Chairwoman
    Subcommittee on Water and Power
    Committee on Natural Resources
    U.S. House of Representatives
    1610 Longworth Bldg
    Washington, DC 20515

    Re:  The Fryingpan-Arkansas Project at 45: Sustainable Water for the
    21st Century

    Dear Chairwoman Napolitano:

        In response to your letter of June 12, 2007 and in furtherance of
    my testimony presented to your committee in Pueblo, Colorado, on June
    1, 2007, I would like to offer the following comments. If I may, I
    would like to address the questions which you presented to me in your
    letter of June 12, 2007 first.
    Post-Hearing Questions from Chairwoman Grace F. Napolitano
    1.  What water conservation programs does the City of Colorado Springs
            participate in now?
        Response: The City of Colorado Springs has been a leader in the
    recapture, reuse and retreatment of its municipal water supplies for
    the past 45 years. Beginning in the early 1960s Colorado Springs began
    operation of a tertiary treatment facility in order to capture and
    reuse water for non-potable purposes within the City. During
    intervening years, Colorado Springs has expanded that capacity on
    several occasions, including an upgrade to its Las Vegas Street Waste
    Water Treatment Plant. Most recently Colorado Springs undertook the
    construction of a new 12 million gallon per day tertiary treatment
    facility capable of treating and delivering reusable water for non-
    potable reuse purposes within the City. This also includes a 3-5
    million gallon per day reuse capability to the Martin Drake Power Plant
    for cooling water purposes.
        In addition to the physical treatment and reuse programs,
    conservation has been an integral part of water resource planning for
    over 60 years. Colorado Springs has six categories that make up its
    water conservation portfolio. They include education, low-income
    support, partnerships, rates, incentives and regulations.
        Education--Customer education provides the foundation for all of
    Springs Utilities' water conservation programs. Conservation messages
    appear in the customer newsletter, on the web site and in the media.
    The school program began in the 1990s and features curriculum that is
    developed in partnership with local educators. Colorado Springs
    Utilities has a Xeriscape Demonstration Garden and offers free classes
    and tours on a range of topics for homeowners, civic and business
    groups.
        Low-Income Support--The Home Efficiency Assistance Program (HEAP)
    provides financial assistance to low-income customers for the adoption
    of water-efficient fixtures. Free water audits are provided in
    partnership with the Energy Resource Center for qualified, low-income
    residential customers. If necessary, water leaks are repaired and
    inefficient showerheads, toilets and water heaters are replaced.
        Partnerships--Colorado Springs recognizes the value of partnerships
    in promoting water conservation and works with entities throughout the
    region to further the water conservation message. In February, a
    landscape symposium is held in which hundreds of homeowners and
    professionals gather to learn about water-wise landscape design,
    installation and maintenance.
        Rates--Seasonal rates are designed to encourage efficiency during
    the irrigation months, when the greatest demands are placed on the
    water system. All commercial, industrial and multi-family customers are
    on the seasonal rate, in effect from May 1 through October 31. The
    residential block rate structure provides an affordable rate for
    essential indoor use and sends a strong price signal for discretionary
    outdoor use.
        Incentives--Financial incentives are used to encourage customers to
    upgrade their appliances and equipment to more water-efficient models.
    Springs Utilities began to market water-efficient rebates in 2002,
    during the first year of water restrictions. Since that time, rebates
    have been offered for ultra-low flush and dual-flush toilets, high-
    efficiency clothes washers, and efficient irrigation systems, including
    rain shut-off devices and irrigation equipment.
        Regulations--Water consumption may be reduced by local, state and
    federal regulations. Since 1998, Colorado Springs has required water-
    efficient landscaping for all newly developed commercial, industrial
    and multi-family sites.
        In 2003, Western Resource Advocates released a report entitled the
    Smart Water Report. Although Springs Utilities did not participate in
    the study, the same methodology was used to calculate single-family
    residential water consumption. Colorado Springs compares very favorably
    to other cities as indicated in the chart below.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    2.  What incentives are there for water conservation?
        Pricing and purchasing incentives help encourage water conservation
    in the Colorado Springs community. All residential customers are on an
    inclining block rate which provides an affordable rate for essential
    indoor use, a moderate rate for typical outdoor use and an aggressive
    rate for excess use. The moderate and aggressive rates are 1.7 and 2.6
    times the affordable rate, respectively. In addition, all commercial,
    industrial and multi-family customers are on a seasonal rate. The
    seasonal rate is 1.8 times higher during the summer months, when the
    greatest demands are placed on the water system.
        In addition to pricing incentives, Colorado Springs Utilities
    offers purchasing incentives for water-efficient appliances and
    equipment. Currently, rebates are available for ENERGY STAR-qualified
    clothes washers, high-efficiency toilets, and irrigation equipment. The
    irrigation equipment rebates are particularly important since outdoor
    water use constitutes half of the water used annually. Irrigation
    equipment rebates are available for the purchase of qualified rain
    shut-off devices, irrigation controllers, spray heads with check
    valves, and rotating multi-stream nozzles--all technologies proven to
    increase outdoor water efficiency.
    Post-Hearing Questions from John Salazar
    1.  Is Aurora an agricultural or municipal entity within the District?
        Response: The City of Aurora is not physically located within the
    Southeastern Colorado Water Conservancy District. It is my
    understanding that at the time the Fryingpan-Arkansas Project was
    developed, the City of Aurora agreed to permit the use of certain water
    storage facilities in exchange for contract rights to use certain
    project facilities. The decision whether or not to enter into contracts
    for the use of Fryingpan-Arkansas facilities does not rest with the
    City of Colorado Springs, but with the Bureau of Reclamation.
    2.  How can you sit here today saying you need more water when back in
            2005 Colorado Springs felt like it needed to encourage its
            residents to use additional water?
        Response: The statewide drought offered many learning
    opportunities, as well as burdens for most water providers in Colorado.
    Water restrictions are considered emergency measures used for short-
    term system failures or drought situations, and are not the long-term
    commitment to sustainable community conservation. To mitigate the
    impacts of the drought we increased public education and imposed water
    restrictions. The result was that our community reduced water
    consumption by approximately twenty percent and reservoirs were
    replenished to ``near normal'' levels. Restrictions were lifted in late
    2005 due to improved water supply conditions, not to encourage more
    water use and revenue.
        It is a real challenge for all public utilities in the nation to
    balance the need to raise sufficient revenues to meet the fixed and
    ongoing operating costs and cost of water acquisition with the desire
    to control water rates and water usage. I would like to emphasize that
    the comment purported to be attributed to Colorado Springs Utilities
    CEO, by Mr. Tollefson, represented the need to address a short-term
    cash flow crunch in the operation of our utilities does not imply a
    lack of need for long-term water supply planning, nor for the need to
    construct the facilities required to ensure the preservation of the
    public health, safety and welfare of the citizens of Colorado Springs.
    Your question suggests that a comment related to a short-term financing
    issue somehow obviates the City's needs and obligations to plan for a
    provision of water supply for its residents into the future. In my mind
    the two are not directly related.
        I would also like to point out that despite the article you quote
    Colorado Springs continues to have one the of lowest per capita water
    use of any community within Colorado, evidence that the water
    conservation ethic in our community remains strong. So the point of
    your question seems to be moot given the fact that Colorado Springs
    programs encouraging water conservation and the attitude of its
    citizens continued to result in a very conservative per capita water
    use despite relaxation of water restrictions.
    Responses to Comments Made During the Hearing
    1.  Concerns about the nature and quantity of releases experienced in
            the Colorado Springs Utilities system.
        Response: Colorado Springs operates the largest unified wastewater
    collection and treatment system in the State of Colorado, which
    includes over 1500 miles of collector system as wells as 2 wastewater
    treatment plants. During a disastrous flood event in 1999, several
    sections of Colorado Springs' collection system were destroyed by the
    raging floodwaters. Colorado Springs immediately reported the condition
    to the responsible state officials at the Colorado Department of Public
    Health and Environment and worked night and day to make repairs to the
    system and prevent further discharges. As the result of this event,
    Colorado Springs undertook an extensive program of rehabilitation for
    its entire wastewater system with an eye toward preventing such events
    in the future. The vast majority of releases Colorado Springs has
    experienced since 1999 can be broadly categorized in four ways. a.)
    Releases resulting from vandalism or the actions of third-parties such
    as utility contractors cutting into sewer lines. b.) Normal blockages,
    experienced by utilities throughout the nation and the world operating
    collection systems, caused by customers depositing inappropriate
    material, such as grease, rags or other matter into sewers. In
    addition, the problem caused by tree roots intruding into the sewers in
    search of moisture in this arid climate is common to all wastewater
    utilities. c.) Releases associated with the City's efforts to
    rehabilitate its collection system when contractors fail to adequately
    control the bypass operations necessary when sewers are being
    rehabilitated or re-lined. d.) Releases from the portion of the
    tertiary treatment/reuse system transporting fully treated water from
    the treatment plants to the point of irrigation reuse. These
    ``releases'' are only an issue because the water in the reuse system is
    well chlorinated to ensure that the public health is fully protected.
        Finally, a separate but limited category includes additional breaks
    associated with extreme weather events of which there were only 8 in
    the eight year period since 1999. With regard to the events under
    category a, there were 12; category b there were 53; category c there
    were 9; and category d there were 23. Over time, Colorado Springs has
    worked hard to reduce the number of releases each year to a minimum,
    and has succeeded in reducing the total volume of releases
    significantly. Colorado Springs is confident that through its
    commitment of over $100 million in additional collection system
    expenditures, the number of releases of any size will continue to
    decline.
        All of these releases have been reported to the appropriate state
    officials and appropriate enforcement action has been taken and
    sanctions imposed. The City of Colorado Springs is in full compliance
    with those enforcement orders, has paid all of the fines that have been
    assessed and is ahead of all compliance schedules ordered by the State
    Health Department.
    2.  How old is the Colorado Springs wastewater treatment plant?
        Response: The Las Vegas Street wastewater treatment plan was first
    put into operation in 1935. Over the intervening years numerous
    upgrades, expansions and improvements to the facility have been planned
    and completed. The most recent upgrade and expansion occurred in the
    mid 1990s, which increased the plant's capacity to 65 million gallons
    per day and upgraded the treatment technology. It is currently one of
    the most modern advanced wastewater treatment plants in the state with
    a rated capacity of 65/75 million gallons per day. The current inflow
    to the plant is 42 million gallons per day. Colorado Springs is, and
    continues to be, in compliance with all of the permit limits contained
    in the plant's NPDES permit related to the discharges from the
    facility. Colorado Springs is justifiably proud of the performance of
    this plant and its ability to deliver extremely high quality water to
    the Fountain Creek.
    3.  Will the addition of the Phillips Water Treatment and Reclamation
            Plant decrease the City of Colorado Springs water use from the
            Fryingpan-Arkansas Project?
        Response: No, it will not in the long term. As the entity
    responsible for approximately two-thirds of all the citizens served by
    the Fryingpan-Arkansas Project, and who pay over 70% of the repayments
    costs associated with the Project, Colorado Springs' use of Project
    water supplies will not decrease as a result of the completion of the
    Phillips plant. However, Colorado Springs' ability to fully use water
    supplies within the City will increase as a result of the completion of
    the Phillips plant. Colorado Springs would like to emphasize that
    although the municipal participants in the Fryingpan-Arkansas Project,
    including the City of Pueblo, the City of Colorado Springs and a number
    of other smaller communities within the Arkansas Basin and within the
    Southeastern District are entitled to use 51% of the total water
    supplies from the Fryingpan-Arkansas Project, these communities
    collectively have historically only used approximately 25%, or half of
    their entitlement. The remainder has been utilized by agriculture.
    Although, in the future, municipalities, including Colorado Springs
    will want to secure a greater share of the project, as they are legally
    entitled to do, they certainly will not do so until it becomes
    necessary. The following summary chart further illustrates historical
    use of Fryingpan-Arkansas Project waters:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        I hope that the foregoing responses to your written questions as
    well as several that were asked of us during the hearing will be
    helpful to you. I have also included an updated attachment to my
    original testimony on Colorado Springs' contribution to the Fryingpan-
    Arkansas Project. I want to thank you again for permitting me to
    participate in the hearing and to respond to your further inquiries.

    Very truly yours,

    Lionel Rivera
    Mayor
    City of Colorado Springs
                                     ______

        Mrs. Napolitano. And we will go to Terry Scanga, General
    Manager, Upper Arkansas Water Conservancy District.

      STATEMENT OF TERRY SCANGA, GENERAL MANAGER, UPPER ARKANSAS
              WATER CONSERVANCY DISTRICT, SALIDA, COLORADO

        Mr. Scanga. Thank you, Madam Chair. Before I start, I'd
    like to give a little background about myself.
        Mrs. Napolitano. You have the whole 5 minutes, sir.
        Mr. Scanga. Thank you.
        As well as being the manager of the district--I've been in
    that capacity for about six years--before that I served for
    twelve years as a director on the Upper Arkansas Water
    Conservancy District Board. I own a business in Chaffee County
    in the upper Arkansas Basin. I'm also an agricultural water
    right owner, and my family has been involved in agriculture in
    the upper Arkansas Valley since my grandfather immigrated there
    in 1877. So I think I understand agricultural water use and
    water use in the basin.
        The Upper Arkansas Water Conservancy District was formed in
    1979, after the project was created. It was designed as the
    State of Colorado's Water Conservancy Act designs, to protect
    and develop water resources for beneficial use within our area.
        We operate several reservoirs and a blanket plan of
    augmentation, which is a landmark type of planning for
    domestic, agricultural use of water, and also for industrial
    uses. We use Fryingpan-Arkansas Project water as well to
    supplement our native water supplies and other transmountain
    water that we utilize within our plan.
        My father was a supporter of the Fryingpan-Arkansas
    Project. I can remember being a seven-year-old child and seeing
    in 1955 my father purchase a frying pan. And I asked him what
    the project was like. It was really interesting to see what the
    vision of the project was back then. There were going to be
    hydroelectric plants and dams all the way throughout the
    Arkansas Basin into the lower valley to produce hydroelectric
    power, as well as water for irrigation and for domestic use.
    There was even a vision that there would be a canal, a large
    pipeline that would deliver it, instead of the river delivering
    it as we see it today.
        I think the Fryingpan-Arkansas Project as we see it is
    really a story of change, a history of change within our valley
    if you look at it. Back then when the Fryingpan Project was
    started in the 1960s, primarily agricultural and mining were
    the main industries in the valley. Those industries used and
    that's where the demand for water went. Water follows demand
    and the needs of a community.
        And that's what we see today happening. We see a large
    change. We see the--there were two dramatic changes that have
    taken place. In 1969 the State of Colorado passed the
    Administration and Adjudication Act. It recognized the
    tributary groundwater extracted by wells, which were junior to
    senior surface water rights, were injuring those rights, and
    therefore it integrated those two, making it necessary for
    augmentation plans, specific plans of augmentation that would
    replace water into the rivers to prevent injury to those senior
    diverters.
        The lower Arkansas Valley had a lot of irrigation wells
    prior to this. And with the Colorado-Kansas lawsuit in 1994, it
    triggered a curtailment of the use of those wells and forced
    well owners to utilize in fact Fryingpan-Arkansas water to well
    associations to be able to put together plans of augmentation
    to be able to continue to pump and use that water.
        The second I think very dramatic thing that's happened in
    our state and probably throughout the entire west is that we
    have seen a shift from agricultural demands, because of
    competition from large corporate farms and competition from
    overseas with produce, with our local industries, we have seen
    a change and a shift of water being used, the demand of water,
    from agricultural to municipal uses.
        We have watched in the upper Arkansas Valley our towns grow
    from rural-type areas to suburban- and urban-type areas, where
    people are building subdivisions in the mountains and they're
    utilizing water for domestic uses. So we're beginning to see a
    shift, a large shift. In the upper Arkansas Valley, the
    projection is that the population will double.
        Another use today that we see in Fryingpan water is
    recreational use in the whitewater industry and in fishing. In
    that regard, the folks in the upper Arkansas Valley, the
    Arkansas River Outfitters, in cooperation with the Department
    of Parks, the Department of Natural Resources of the State of
    Colorado and the Bureau of Reclamation put together a Voluntary
    Flow Management Program. It's 10,000 acre-feet of water are
    delivered from project facilities. Because we have facilities
    of the project that were built in the upper basin and also
    lately we have in the lower basin with two vessels in between,
    we are able to put together a program that manages the delivery
    of water, of Fryingpan water, and the evaporation, the transit
    losses are made up by the whitewater industry.
        Mrs. Napolitano. Sir, would you wrap up here?
        Mr. Scanga. Yes. Well, thank you very much.
        For the future what I see is the Preferred Storage Options
    Plan is extremely important to the entities in the upper
    Arkansas Basin. You have letters in my testimony from about a
    half-dozen different cities and municipalities participate
    within PSOP, and this is very important for storage of
    nonproject water that this move forward. And we'd like to see
    this feasibility study move forward. Thank you very much,
    ma'am.
        Mrs. Napolitano. Thank you, sir.
        [The prepared statement of Mr. Scanga follows:]

         Statement of Ralph L. ``Terry'' Scanga, Jr., General Manager,
                   Upper Arkansas Water Conservancy District

        Background: The Upper Arkansas Water Conservancy District ``UAWCD''
    was formed in 1979 pursuant to the Colorado Water Conservancy Act, 37-
    45-102 C.R.S. to protect and develop water resources for beneficial use
    in the Upper Arkansas Region. The District includes Chaffee County,
    Custer County, the Western Half of Fremont County and that part of
    Saguache County that lies within the Upper Arkansas Basin. The District
    provides storage on key tributaries and water pursuant to its decreed
    plans for augmentation to the citizens and municipalities within its
    boundaries. The ``UAWCD'' is active in the protection of water rights
    within the basin from exportation to other areas and collaborates with
    other basin entities in the management of water resources for mutual
    benefit. The UAWCD owns a collection of native water rights and
    utilizes allocations of Fryingpan-Arkansas water within its
    augmentation plans as well as Fryingpan facilities through excess
    capacity contracts for the benefit of its constituents. In addition
    UAWCD has contracted with the Southeastern Colorado Water Conservancy
    District for participation in the Preferred Storage Option Plan for
    enlarged space and excess capacity space for storage of its non-project
    water.
        The Upper Arkansas basin is a less developed area of Eastern
    Colorado but in recent years is experiencing a greater rate of growth.
    In order to provide water for this growth and to protect the senior
    water rights from out-of-priority uses, the UAWCD has acquired various
    decrees for augmentation of various types of diversion structures to
    supply domestic and irrigation supplies to its citizenry. UAWCD is now
    embarking on the development of integrated water planning and
    management with several of the smaller municipalities within the Upper
    Arkansas basin to more efficiently manage and plan for growth impacts.
    Recently, in cooperation with the State of Colorado the UAWCD has
    agreed to become the Arkansas River Water Bank Operator. The Water Bank
    is designed to facilitate the distribution of stored water from sellers
    to buyers in need of water on a short-term or annual basis.
        Project Water: Vital to the Upper Arkansas Basin is the annual
    allocation of Fryingpan-Arkansas project water ``Project Water''.
    Although used to supplement existing native water supplies, and other
    trans-mountain water sources, such as Twin Lakes Canal Company shares,
    Project Water is integral to providing water for irrigation, domestic,
    municipal, industrial, and other beneficial uses in the Upper Arkansas
    Basin. The cities and towns, some of which did not exist in 1962 when
    the Project was authorized, depend upon annual allocations of this
    essential commodity. Created in 1979, the Upper Arkansas Water
    Conservancy District provides augmentation water supplies pursuant to
    landmark blanket augmentation plans that cover large portions of two
    counties in the Upper Arkansas Basin and provides replacement supplies
    for domestic, industrial and irrigation use. The Upper Arkansas Basin
    is typically defined as the lands upstream from the inlet to Pueblo
    Reservoir. These communities from Buena Vista in Northern Chaffee
    County to Florence in Eastern Fremont County rely on and have benefited
    from the Fryingpan-Arkansas Project and integrated this supply source
    with their native supplies and other trans-mountain water sources.
        Recreational Use: The Whitewater Industry and Fishing have
    developed into a thriving and important segment of the economy of the
    Upper Arkansas Basin. With storage at the top of the watershed, located
    in Turquoise, Twin Lakes and Clear Creek Reservoirs, and at the lower
    end of the Upper Basin, in Pueblo Reservoir, fine tuning of water
    management became possible. First, municipalities utilized this unique
    feature of the system and elaborately timed exchanges were conducted to
    correspond to demand. To protect water quality, municipal water
    entities agreed to refrain from exercising exchanges when native river
    flows fell below a water quality threshold. As river recreation
    progressed beyond infancy the need to consider flow levels for
    recreation began to loom. The practice of municipalities exercising
    large exchanges during the Whitewater season had the effect of lowering
    flows at times of recreational need and the releasing of large flows in
    the spring and fall were detrimental to the longevity of the fishery.
    Management of the timing of exchanges and releases became a point of
    contention between the domestic users and the recreational users. Since
    the Project had developed the infrastructure for Fryingpan-Arkansas,
    the ability to manage flows between reservoirs made support of the
    fledgling recreation industry a matter of water delivery. In 1988, the
    founding of the Arkansas Headwater Recreation Area, a Division of
    Colorado State Parks, in the Upper Basin, created the interface wherein
    the Upper Basin's Arkansas River Outfitters Association, The Colorado
    Division of Natural Resources, and The Bureau of Reclamation, could
    interact to manage flows for the mutual benefit of municipalities,
    agriculture and recreation. Without the Fryingpan-Arkansas Project the
    Voluntary Flow Management Program could not have been created and from
    that the likelihood the fledgling Whitewater Industry might well have
    never developed to maturity. Of major significance is the inclusion of
    the flow program concepts in exchange and change cases that have
    occurred since the inception of the Voluntary Flow Program.
        PSOP: As growth places pressure on these communities the need for
    storage becomes paramount for future water management. Extremely
    important to these Upper Basin communities is the need to develop
    storage for their native water supplies. Nearly 10 years ago water
    managers from these communities worked with the Southeastern Colorado
    Water Conservancy District to develop storage options. The result was
    the ``Preferred Storage Options Plan (PSOP)''. PSOP would utilize the
    existing infrastructure to provide increased firm storage and capture
    water during years of abundance. This was the same concept of the
    original Fryingpan-Arkansas Project: bring water from the area of
    Colorado where precipitation is more abundant and water demand is lower
    to the area of the State where there is meager precipitation but a
    greater demand. Since the run-off from the West Slope snow pack occurs
    in a two month period, storage would be needed to reserve this water
    for the time of need. Thus, Turquoise and Pueblo Reservoirs were
    developed. In many ways the storage developed by the Project is as
    important as the water diverted from the Western Slope.
        The Preferred Storage Options Plan was conceived to provide needed
    storage for native water supplies for domestic, municipal and
    augmentation uses. Most communities in the Upper Arkansas Basin have
    signed agreements to participate in this important project. As growth
    in the Upper Basin takes place at an increasing pace, the need to
    provide for storage of native supplies during times of abundance begins
    to take on a sense of urgency. Faced with the need to provide
    augmentation for agricultural and domestic ground water use, due to the
    1969 State law that integrated tributary ground water with surface
    water and the results of the Colorado v. Kansas law suit, storage
    becomes the most essential mechanism to provide for the increased water
    demands.
        For nearly a decade the federal authorization to conduct a
    feasibility study has been stalled due to local conflicts. Many
    communities are losing patience with the tedious process and are faced
    with an immediate need. Some are beginning to divert their energies
    from PSOP and are exploring other alternatives.
        Some Upper Basin entities have expressed a desire to begin the
    feasibility study in tandem with other studies on extensive water
    quality impacts in order that a determination can be made as to the
    probability of PSOP. If a determination is made that the project is not
    feasible then these municipal entities can explore other avenues to
    meet future demands.
        Water Conflicts: Although typically overstated, disagreements over
    water management and use have often resulted in mitigation agreements
    or crafted management planning that would not have taken place in the
    absence of change. Disagreements over filings of water exchanges from
    the Lower Basin to Upper Basin facilities by large municipal entities
    have the potential effect of de-watering the Upper Basin River. Some of
    the potential side-effects are reductions in flows and diminished water
    quality. Municipalities dependent upon certain stream flow levels to
    provide the required amount of dilution of sewage discharges were faced
    with increased treatment costs that could be caused from poor timing of
    exchanges or use of exchanges during low river flows. To avoid this
    occurrence, entities such as Colorado Springs entered into stipulations
    to curtail exchanges if the exchange would result in a reduction in
    flows below specified levels as a part of their exchange decrees. This
    type of stipulation has become the standard for all exchanges that
    involve the Upper Basin. Likewise, the Voluntary Flow Management
    Program has become institutionalized to the same degree to protect
    recreational flows a noted above. The manner of the utilization of
    Fryingpan-Arkansas facilities has been a major factor in the ability of
    basin entities to cooperate in these types of beneficial water
    management programs.
        More recently, Colorado Springs Utilities is planning a pipeline to
    deliver water to their city. This delivery system is referred to as the
    Southern Delivery System ``SDS'' and would pump water from the Arkansas
    through a diversion at Pueblo Reservoir.
        Although the Upper Arkansas Water Conservancy District has not
    taken an official position on this plan, it does not support any more
    imports of water out of the Upper Basin, such as those that occur at
    the Otero Pipeline. Although the Otero Pipeline was originally
    constructed to deliver water from the ``Home Stake Project'' to
    Colorado Springs from the Western Slope of Colorado, it has been used
    to remove native water by successive exchanges from the confluence of
    Fountain Creek and the Arkansas River at Pueblo. This practice has the
    effect of reducing river flows through the Upper Basin. By contrast,
    providing additional water to Colorado Springs, an Arkansas Basin
    entity, via a pipeline option that would not include the Otero Pipeline
    or a similar Upper Basin diversion, is preferred by the Upper Arkansas
    Water Conservancy District.
        Water quality issues still exist between the Lower Arkansas Valley
    and Colorado Springs in regard to Fountain Creek. These issues need to
    be resolved between these two entities and these issues should be
    resolved independent of the feasibility study of PSOP. Today this
    dispute is holding the Upper Basin entities ``hostage''!
        Summary: My first memory of this great project was of my father
    purchasing a golden frying pan at his butcher shop. I was seven years
    old. Two gentlemen dressed in suits and ties described the vision of
    the Frying-Pan Project. They claimed that the Fryingpan-Arkansas
    Project would bring water to the Arkansas Valley for irrigation and
    domestic uses. They described a large conduit with many reservoirs
    built at various intervals in the river that would produce hydro-
    electric power. For the most part, the dream has come true.
        The reservoirs have been developed in the Upper Basin. Pueblo
    Reservoir was built and water flows from the West Slope into our
    Arkansas River. Cities, towns and farms can rely on this precious
    supplement to their native and trans-mountain supplies. Because of the
    unique infrastructure mitigation management plans can lessen the strain
    of growth and recreation can flourish. At 45, Fryingpan-Arkansas has
    delivered.
        As we look to the future, the Preferred Storage Option Plan looms.
    All the water managers know we will need reliable storage for the
    future, but some issues still need to be resolved. The spirit of
    cooperation with good communication and an effort to understand each
    other's challenges is how the Fryingpan-Arkansas Project was
    accomplished. As we face today's challenges it is the hope of the Upper
    Arkansas Water Conservancy District that this same spirit leads us in
    providing needed water storage for the basin in the future.
                                     ______

        Mrs. Napolitano. Mr. Bill Thiebaut, District Attorney for
    Pueblo

            STATEMENT OF BILL THIEBAUT, DISTRICT ATTORNEY,
                        PUEBLO COUNTY, COLORADO

        Mr. Thiebault. Thank you, Madam Chair, members of the
    committee, and guest members.
        John Wesley Powell in 1877 said that ``In the whole region
    (the West), mere land is not of value. What is really valuable
    is the water privilege.''
        I'd like to share some thoughts about water quality, which
    is our new challenge. Water quality and water quantity can no
    longer be treated as separate issues. Water quality is rapidly
    evolving to become a matter of equal importance in water
    transfers and water quantity. Water quality can change as fast
    as its use. Just as Coloradans want water available in
    sufficient quantity and location, they also want and need to be
    assured that water is the right quality for its intended use.
    This past legislative session a bill was enacted into Colorado
    law to address the effects of a water right adjudication on
    water quality. The Fryingpan-Arkansas Project needs to be
    managed in a manner that recognizes this growing concern with
    water quality and assists, but does not hammer, this need.
        Surface water laws were written into the Colorado
    Constitution at the time of statehood in 1876 and became known
    as the ``Doctrine of Prior Appropriation.'' Water is considered
    a separate water right in Colorado--rights can be sold or
    inherited, and prices may fluctuate according to supply and
    demand. The increasing demand for water by urban areas has
    prompted many sales, as you know, of agricultural water to
    cities.
        Lake Pueblo is one of the components of the Fryingpan-
    Arkansas Project, a project which moved water, as you know,
    from one side of the Rocky Mountains to the other. It is a
    multipurpose project which built the Pueblo Dam and the system
    of pipelines dedicated to bringing Western Slope water to the
    southeast corner of Colorado. But foremost on the minds of
    farmers and ranchers at the time the project was conceived was
    winter storage and flood protection. In other words, the
    legislation was designed to provide supplemental water to the
    Arkansas River Basin. It was not designed to export that
    transmountain water or native water, out of the basin.
        Apparently there were no references in the legislation to
    Arkansas Valley quality; however, as we've heard today, water
    quality is clearly implied in the act. As an example by
    implication is one component of the project which has not been
    implemented, and that is the delivery of quality drinking water
    to the lower Arkansas Valley.
        The Arkansas Valley Conduit would take from behind the dam
    water and via pipeline deliver it to communities and rural
    water providers east of Pueblo. In fact, an outlet exists on
    the dam specifically for the conduit. Today there are competing
    bills in Congress--of course we have discussed that today--
    attempting to discuss this conduit issue, as well as addressing
    the Preferred Storage Options Plan, that is, an enlargement of
    the dam and increased storage.
        The Colorado Water Quality Control Commission is the body
    responsible for establishing surface water quality policy in
    the state. The Water Quality Control Division is the state
    agency charged with protecting the quality of the state's
    water. Despite the perceived fact that many water right holders
    may see a threat from water quality regulations, the protection
    of good quality waters benefits all users. Thus, good quality
    waters need protection from degradation.
        Generally, effluent is the liquid that flows out of a waste
    treatment plant. For wastewater, the Federal Clean Water Act,
    Federal legislation that regulates surface water quality, and
    the Colorado Water Quality Control Act prohibit the discharge
    of pollutants from a point source to surface waters without a
    permit.
        On October 12, 2005, I filed a lawsuit against the City of
    Colorado Springs, a Fry-Ark participant, for the unlawful
    discharges of raw materials, raw sewage, non-potable water, and
    chlorine from the City's collection and treatment system into
    the Fountain Creek and its tributaries. The plaintiffs are
    downstream victims of the pollution. Instead of being an
    amenity for downstream communities, Fountain Creek is more like
    an open sewer running through Pueblo.
        Return flow is another issue that was mentioned earlier. In
    essence what's going on there is that basically the so-called
    Southern Delivery System, which is advocated for by Colorado
    Springs, would take additional high quality water through a
    pipeline out of Lake Pueblo in exchange for effluent or at
    least contaminated urban flows running back down the Fountain
    Creek. In other words, exchanging good water for bad.
        In summary, we must recognize the value of preserving high-
    quality waters, stop gutting the power of water quality
    administrators and provide adequate funding and teeth for
    enforcement. The Fryingpan-Arkansas Project must be managed and
    evolved to support these goals, not to defeat them. Thank you.
        Mrs. Napolitano. Thank you, sir.
        [The prepared statement of Mr. Thiebaut follows:]

                Statement of Bill Thiebaut, District Attorney,
       Office of the District Attorney, Tenth Judicial District, Colorado

    Water Quality: Our New Challenge
        ``In the whole region (the West), mere land is not of value. What
    is really valuable is the water privilege.''--John Wesley Powell, 1877.
        Water quality and water quantity can no longer be treated as
    separate issues. Water quality is rapidly evolving to become a matter
    of equal importance in water transfers as water quantity. Water quality
    can change as fast as its use. Just as Coloradans want water available
    in sufficient quantity and location, they also want and need to be
    assured that water is the right quality for its intended use. This past
    legislative session a bill was enacted into Colorado law to address the
    effects of a water right adjudication on water quality. The Fryingpan-
    Arkansas Project needs to be managed in a manner that recognizes this
    growing concern with water quality and assists, but does not hamper,
    this need.
    Colorado Surface Water
        Surface water laws were written into the Colorado Constitution at
    the time of statehood in 1876 and became known as the ``Doctrine of
    Prior Appropriation.'' Water is considered a separate property right in
    Colorado--rights can be sold or inherited, and prices may fluctuate
    according to supply and demand. The increasing demand for water by
    urban areas has prompted many sales of agricultural water to cities.
    Notably, the Lower Arkansas Valley Water Conservancy District was
    formed to ``keep every drop of water in
        the Arkansas Valley.'' A water right is based on putting the water
    to a beneficial use. The Colorado Constitution recognizes a preference
    of water uses in the following order: domestic, agricultural, and
    industrial.
    The Pueblo Dam
        Lake Pueblo is one of the components of the Fryingpan-Arkansas
    Project--a project which moved water from one side of the Rocky
    Mountains to the other. It is a multipurpose project which built the
    Pueblo Dam and the system of pipelines dedicated to bringing Western
    Slope water to the southeast corner of Colorado. But foremost on the
    minds of farmers and ranchers at the time the Project was conceived was
    winter water storage and flood protection. In other words, the
    legislation was designed to provide supplemental water to the Arkansas
    River Basin. It was not designed to export that transmountain water,
    nor native water, out of the Basin. Apparently, there were no
    references in the legislation to Arkansas Valley water quality.
    However, water quality is clearly implied in the act. As an example of
    that implication, one component of the Project, which has not yet been
    implemented, is to deliver quality drinking water to the lower Arkansas
    Valley. The Arkansas Valley Conduit would take water from behind the
    Dam and via pipeline deliver it to communities and rural water
    providers east of Pueblo (an outlet exists on the Dam specifically for
    the conduit). Today there are competing bills in Congress attempting to
    address this conduit issue as well as addressing a ``Preferred Storage
    Options Plan''--that is, an enlargement of the Dam and increased
    storage.
    Colorado Water Quality
    Regulation
        The Colorado Water Quality Control Commission is the body
    responsible for establishing surface water quality policy in the state.
    For example, the Commission has the authority to maintain and enhance
    the quality of the state's waters for public water supplies, for
    protection and propagation of wildlife and aquatic life, and for
    domestic, agricultural and recreational and other beneficial uses. The
    Water Quality Control Division is the state agency charged with
    protecting the quality of the state's water by implementing federal and
    state water quality control and regulatory programs.
        Despite the fact that water rights holders may perceive a threat
    from water quality regulations, the protection of good quality waters
    benefits all users. Thus, good quality waters need protection from
    degradation.
    Effluent
        Generally, effluent is the liquid that flows out of a waste
    treatment plant. For wastewater, the federal Clean Water Act, federal
    legislation that regulates surface water quality, and the Colorado
    Water Quality Control Act prohibit the discharge of pollutants from a
    point source (a discrete source of discharge of a contaminant) to
    surface waters without a permit. The U.S. Environmental Protection
    Agency has delegated authority to the Division to issue discharge
    permits to municipalities and industries. The permits specify the
    levels of contaminants, such as bacteria, metals, and chemicals that
    can be discharge by the permitted entity.
        On October 12, 2005, I filed a lawsuit against the city of Colorado
    Springs, a Fryingpan-Arkansas Project participant, for the unlawful
    discharges of raw sewage, non-potable water, and chlorine from that
    city's sewage collection and treatment system into Fountain Creek and
    its tributaries. The Plaintiffs are downstream victims of this
    pollution. Instead of being an amenity for downstream communities,
    Fountain Creek is more like an open sewer running through Pueblo.
    Return Flow
        Return flow is unconsumed water that returns to its source or
    surface after use. Generally, the wastewater and return flow water at
    the new point of discharge should not exceed pollution limits
    established at the original place.
        Use of existing or enlarged Pueblo Dam storage capacity by
    development hungry cities creates the probability of more Fountain
    Creek downstream victims. For example, the so-called Southern Delivery
    System, advocated for by Colorado Springs, would take additional high-
    quality water through a pipeline out of Lake Pueblo in exchange for
    effluent, or at least contaminated urban flows, running back down the
    Fountain Creek--in other words, exchanging good water for bad. Some
    have suggested that any diversion be piped below the confluence of
    Fountain Creek and the Arkansas River to assure that Colorado Springs
    has an incentive to send quality water downstream.
    Summary
        We must recognize the value of preserving high-quality waters, stop
    gutting the power of water quality administrators and provide adequate
    funding and teeth for enforcement. The Fryingpan-Arkansas Project must
    be managed and evolved to support these goals not work to defeat them.
                                     ______

        [The response to questions submitted for the record by Mr.
    Thiebaut follows:]
        On June 1, 2007, my written and oral testimony stated, in part:
        ``On October 12, 2005, I filed a lawsuit against the city of
    Colorado Springs, a Fryingpan-Arkansas Project participant, for the
    unlawful discharges of raw sewage, non-potable water, and chlorine from
    that city's sewage collection and treatment system into Fountain Creek
    and its tributaries. The Plaintiffs are downstream victims of this
    pollution. Instead of being an amenity for downstream communities,
    Fountain Creek is more like an open sewer running through Pueblo.''
    Question by Representative John Salazar, Guest Member of the Committee
        What are the numbers of spills since the lawsuit was filed?
    Response
    Sewage Spills
        Since October 12, 2005, there have been 20 sewage spills. This
    number includes only spills that reached receiving waters. Colorado
    Springs has had many additional sewage spills from their system that
    did not reach receiving waters.
    Non-potable Water Spills
        Since October 12, 2005, there have been 6 non-potable water spills.
    This number includes only spills that have reached receiving waters.
    Colorado Springs has had many additional non-potable water spills that
    did not reach receiving waters.
    Chlorine Violations
        Since October 12, 2005, there have been 4 chlorine violations at
    the treatment plant discharge point.
                                     ______

        Mrs. Napolitano. Next we have Mr. Jay Winner, General
    Manager of Lower Arkansas Water Conservancy District.

    STATEMENT OF JAY WINNER, GENERAL MANAGER, LOWER ARKANSAS WATER
               CONSERVANCY DISTRICT, ROCKY FORD, COLORADO

        Mr. Winner. Madam Chair, members of the Subcommittee, thank
    you.
        The Fryingpan-Arkansas Project promised a golden future for
    the Arkansas Valley in the sweltering years of the 1950s.
    Already ravaged by the drought of the 1930s, the valley's
    residents embraced the prospect of additional water with
    unprecedented enthusiasm. Now there would be a new supply of
    water and insurance against the droughts of the future.
        Now 45 years after the inception of the Fryingpan-Arkansas
    Project, the golden future has turned into a last stand for the
    communities east of Pueblo, the apparent losers so far in a
    race to develop increasingly scarce water resources in the
    Arkansas Valley.
        Has the project met its purposes? For the major population
    centers of the valley, Colorado Springs and Pueblo, the project
    has done an admirable job. It has provided the storage that
    allows these cities to continue to grow.
        The Western Slope has benefited as well, with compensatory
    storage that has allowed for stable flows to aid the
    environment and a new source of water for its people.
        For the farms east of Pueblo, it has provided a temporary
    source of water that merely replaced other more difficult to
    maintain sources of water. In fact, the conversion of Twin
    Lakes from an agricultural buffer to a municipal reservoir was
    hastened by the promise of Fry-Ark water.
        But farms have not prospered as intended by the 1962
    Fryingpan-Arkansas authorization. Irrigated acreage has
    decreased since the project began. Despite its significant
    imports, transfers have permanently removed 65,000 acres of
    farmland irrigation since 1955. Canals continue to be short in
    supply and the ditches are the target of unceasing raids on the
    water supply for municipal and industrial use.
        Approximately 121,000 acre-feet were sold for use outside
    the main stem of the Arkansas River through 2002. This is one-
    fifth of the historic average native Arkansas River flow.
        For the communities east of Pueblo, the Fry-Ark Project has
    so far been a disaster. An economy once bolstered by thriving
    farms and the demand for goods and services by rural families
    has become a string of economically depressed communities
    struggling to survive. In 1976, Rocky Ford had a graduating
    class of 129. In 2006, a graduating class of 40. Lake County in
    1973 had a graduating class of 131, and in 2006, a graduating
    class of 61.
        The poor water quality of the valley was recognized in the
    earliest Congressional testimony on the Fryingpan-Arkansas
    Project. The remedy was to develop water resources as a primary
    supply for cities like Rocky Ford, La Junta, Las Animas and
    Lamar.
        Today the Arkansas Valley Conduit remains only a dream for
    those cities, while the Federal government is taking steps
    toward projects that will only worsen the water quality in
    incremental, but deadly, steps. Those communities have been
    through a series of last stands: The decline of the family
    farm, the collapse of the regional sugar beet industry and the
    endless water raids.
        In contrast, the city of Colorado Springs has thrived
    beyond all expectations of the hopeful people who were forming
    the Southeastern Colorado Water Conservancy District 50 years
    ago. At that time, Pueblo was larger than Colorado Springs, a
    quaint mountain city seemingly in the league with its partners
    in the Arkansas Valley.
        Through its partnership with Colorado Springs, Aurora has
    bullied its way into the Arkansas Valley. Without the Homestake
    Project, Aurora never would have gained a toehold in the
    Arkansas Valley and developed an absurd premise of moving one-
    third of its annual water supply 300 miles from what were once
    productive farms. The Bureau of Reclamation has compounded that
    technical and moral error through its annual contracts with
    Aurora. In just three days, the Bureau of Reclamation is
    planning to finalize a contract that will tie up part of the
    Fryingpan-Arkansas Project for the next 40 years.
        One issue of significance is exchanges. Aurora and others
    trade pristine mountain water for poor quality water from the
    lower Arkansas Valley through exchanges, exchanges made
    possible by the reservoirs of the Fry-Ark Project.
        Here is a good example of an exchange. This is what is
    purchased. This is what people get.
        Mrs. Napolitano. Will you hold it up, please.
        Mr. Winner. This water has a purchased cost right around
    $1,700 per share. The water that they get, if they were to
    purchase it, is about $25,000 per share.
        When we talk about water quality, I believe this is a very
    good example of what has happened in the Arkansas Basin. In the
    Arkansas Basin, we currently have two RO plans, one in La Junta
    and one in Las Animas. I have asked over and over and over to
    municipal providers, why don't you take what you purchased? The
    answer is always the same. Jay, it's too expensive for us to
    clean it up. It's the burden of that cleanup that falls on the
    people of the Arkansas Valley. Thank you.
        [The prepared statement of Mr. Winner follows:]

                   Statement of Jay Winner, General Manager,
                Lower Arkansas Valley Water Conservancy District

        Madame Chairwoman, members of the Subcommittee, I am Jay Winner,
    the General Manager of the Lower Arkansas Valley Water Conservancy
    District
        Thank you for being here in the Lower Arkansas Valley today, and
    your invitation to testify.
        The Fryingpan-Arkansas Project promised a golden future for the
    Arkansas Valley in the sweltering years of the 1950s. Already ravaged
    by the drought of the 1930s, the valley's residents embraced the
    prospect of additional water with unprecedented enthusiasm. Now, there
    would be a new supply of water and insurance against the droughts of
    the future.
        Now, 45 years after the inception of the Fryingpan-Arkansas
    Project, that golden future has turned into a last stand for the
    communities east of Pueblo, the apparent losers so far in a race to
    develop increasingly scarce water resources in the Arkansas Valley.
        Has the project met its purpose? For the major population centers
    of the valley, Colorado Springs and Pueblo, the project has done an
    admirable job. It has provided the storage that allows these cities to
    continue to grow.
        The Western Slope has benefited as well, with compensatory storage
    that has allowed for stable flows to aid the environment and a new
    source of water for its people.
        For the farms east of Pueblo, it has provided a temporary source of
    water that merely replaced other, more difficult-to-maintain sources of
    water. In fact, the conversion of Twin Lakes from an agricultural
    buffer to a municipal reservoir was hastened by the promise of Fry-Ark
    water.
        But farms have not prospered as intended by the 1962 Fryingpan-
    Arkansas authorizing legislation. Irrigated acreage has decreased since
    the project began, Despite significant imports, transfers have
    permanently removed 65,000 acres of farmland from irrigation since
    1955. canals continue to be short in supply and the ditches are the
    targets of unceasing raids on their water supply for municipal and
    industrial uses. Approximately 121,520 acre-feet were sold for use
    outside the main stem of the Arkansas River through 2002. 1
    This is one-fifth of historic average native Arkansas River flows.
    2
    ---------------------------------------------------------------------------
        \1\ Charles H. Howe, ``The Regional Economic Impacts of Transfers
    of Water from Irrigated Agriculture in the Arkansas Valley of Colorado
    to In-Basin and Out-of-Basin Non-Agricultural Uses,'' at 6 (2002).
        \2\ Colo. Div. of Water Resources, ``Annual Report,'' at 17 (1995).
    ---------------------------------------------------------------------------
        For the communities east of Pueblo, the Fry-Ark Project has so far
    been a disaster. An economy once bolstered by thriving farms, and the
    demand for goods and services by rural families, has become a string of
    economically depressed communities struggling to survive. (Rocky Ford
    Year book)
        The poor water quality of the valley was recognized in the earliest
    congressional testimony on the Fryingpan-Arkansas Project. The remedy
    was to develop water resources as a primary supply for cities like
    Rocky Ford, La Junta, Las Animas and Lamar. Today, the Arkansas Valley
    Conduit remains only a dream for those cities, while the federal
    government is taking steps toward projects that will only worsen water
    quality in incremental, but deadly, steps.
        Those communities have been through a series of last stands: the
    decline of the family farm, the collapse of the regional sugar beet
    industry and the endless water raids.
        In contrast, the City of Colorado Springs has thrived beyond all
    expectations of the hopeful people who formed the Southeastern Colorado
    Water Conservancy District 50 years ago. At that time, Pueblo was
    larger than Colorado Springs, a quaint mountain city seemingly in
    league with its partners in the Arkansas Valley
        Through its partnership with Colorado Springs, Aurora has bullied
    its way into the Arkansas Valley. Without the Homestake Project, Aurora
    never would have gained a toehold in the Arkansas Valley and developed
    the absurd premise of moving one-third of its annual water supply 100
    miles from what were once productive farms. The Bureau of Reclamation
    has compounded that technical and moral error through its annual
    contracts with Aurora. In just three days, the Bureau of Reclamation is
    planning to finalize a contract that will tie up part of the Fryingpan-
    Arkansas Project for the next 40 years.
        One issue of particular significance is exchanges. Aurora and
    others trade pristine mountain water for poor quality water from the
    Lower Arkansas Valley through exchanges--exchanges made possible by the
    reservoirs of the Fry-Ark Project.
        The poor quality of water for downstream users was well documented
    more than 50 years ago. Instead of the making that water better--the
    real golden promise of the Fryingpan Arkansas Project--the federal
    government has established the means to adopt policies that will
    actually make the water worse.
        Aurora would like to increase such exchanges. Aurora should never
    have been allowed into the Arkansas Basin through a federal project
    before all of the needs of the Basin were satisfied. Within the
    Southeastern District, there are communities whose water needs have
    never been met by the project. This past year, the district struggled
    mightily for more than nine months, to come up with a way to
    accommodate Pueblo West and Manitou Springs.
        The LAVWCD, among many others, firmly believes that nothing in the
    Fry-Ark authorizing act and amendments, 3 including
    documents incorporated by reference in the statute, provides authority
    for Reclamation to enter into long-term excess capacity contracts with
    Aurora. In particular, the proposed exchange contract is so far outside
    established law that Reclamation's authority to enter into such a
    contract is speculative, at best. Yet Reclamation would promote Aurora
    to the head of the class in its proposed contract when it comes to
    water exchanges.
    ---------------------------------------------------------------------------
        \3\ Pub. L. No. 87-590 (76 Stat. 389, Aug. 16, 1962), amended by
    P.L. No. 95-386 (92 Stat. 2493, Nov. 3, 1978).
    ---------------------------------------------------------------------------
        Reclamation's authority to contract for non-project use of the Fry-
    Ark Project is not a new issue. It has been the subject of a lively and
    at times heated debate for over 20 years. 4 But the issue is
    approaching a critical juncture since Reclamation appears poised to
    issue excess capacity storage and exchange contracts with Aurora.
    ---------------------------------------------------------------------------
        \4\ Letter dated July 13 (?), 1985 from Raymond H. Wilms, Fry-Ark
    Project Manager, to Tom Griswold, Aurora Manager of Planning and
    Resources.
    ---------------------------------------------------------------------------
        It seems to the LAVWCD that there are only two ways to resolve this
    issue: Congressional legislation or federal litigation.
        The LAVWCD continues to believe that it is preferable to solve this
    issue--and others involving the Fry-Ark Project--through negotiations
    leading to an agreement that the parties could jointly recommend to
    Congress. To that end, the LAVWCD remains ready, willing and able to
    negotiate its concerns with Aurora, although, frankly, not everyone at
    Aurora has been similarly committed to engaging in good faith
    discussions. Perhaps--whether or not Reclamation heeds Senator
    Salazar's request (which the LAVWCD supports) to defer action on the
    proposed contracts pending the completion of negotiations--Aurora will
    find a way to engage in constructive negotiations to address issues of
    concern to the Lower Valley.
        The alternative to legislation is litigation. The LAVWCD hopes that
    the issue of Aurora's contracts will not lead to court. However, the
    District is investigating and, if necessary, will pursue all available
    legal avenues to protect the future of the Lower Arkansas Valley.
        In Lake County, where two of the project's major lakes are located,
    officials complain about rough treatment at the hands of Reclamation.
    At the other end of the valley, residents in Kiowa County have not
    received one drop of water through the project.
        Yet Aurora is promoted to the head of the class when it comes to
    water exchanges in its pending contract with the Bureau of Reclamation.
        It's no wonder that in 2002, the voters in the five counties in the
    Lower Arkansas Valley--Bent, Crowley, Otero, Prowers and Pueblo--voted
    overwhelmingly to form the Lower Arkansas Valley Water Conservancy
    District. Embroiled in yet another drought, the residents of the five
    counties formed the district as a defensive measure to protect
    themselves from even more losses. In a way, it was yet another ``last
    stand.''
        The Lower Valley simply cannot afford any additional permanent
    transfers of agricultural water that would further undermine its
    economic future. That is why the LAVWCD has been investing time and
    money to develop a viable alternative to permanent agricultural
    transfers that will both strengthen irrigated agriculture and address
    the water needs of municipal and other users.
        Success will require some fundamental changes in the relationships
    between the interests involved, primarily in the form of new
    partnerships and cooperation. The LAVWCD has, accordingly, been working
    for over two years on a nine-party intergovernmental agreement. The
    draft IGA envisions a water future that addresses everyone's future
    social and economic well being.
        The Lower Arkansas Valley has a high proportion of Hispanic and
    low-income residents. In fact, Hispanic residents constitute over a
    third of the population of the LAVWCD. 5 In addition,
    residents living below the poverty level ranged from 14.9 to 19.5
    percent in the five counties that comprise the LAVWCD in 2000.
    6
    ---------------------------------------------------------------------------
        \5\ U.S. Bureau of the Census, ``State and County Quickfacts,''
    available at http://quickfacts.census.gov/qfd/states/08/08011.html.
        \6\ Id.
    ---------------------------------------------------------------------------
        President Clinton recognized that minority and low-income
    populations often bear disproportionately high and adverse human health
    or environmental effects of governmental programs. 7 The
    possibility exists that minority and low-income populations could bear
    adversely high negative effects of future changes in the administration
    of the Fry-Ark Project. For example, Reclamation has proposed entering
    into long-term excess capacity contracts for the use of Fry-Ark
    facilities with Aurora, where the Hispanic population is roughly half
    that of Pueblo County. 8 Similarly, the poverty rate in
    Aurora is between a third and a half of that found in the LAVWCD.
    9
    ---------------------------------------------------------------------------
        \7\ Executive Order 12898 (Feb. 11, 1994).
        \8\ U.S. Bureau of Census, ``Factfinder, Aurora City, Colorado,''
    available at http://factfinder.census.gov/servlet/SAFFFacts?
        \9\ Id.
    ---------------------------------------------------------------------------
        In short, the proposed excess capacity contracts with Aurora run
    counter to fundamental concepts of justice and the new partnerships and
    cooperation that the LAVWCD and others are trying to foster.
        As pressures on Colorado water by outside municipal users grow in
    coming years, what does the future hold for the Arkansas River? Do we
    continue to let the Fryingpan-Arkansas Project be used as a siphon that
    will continue to degrade water quality in the basin? Or do we complete
    the golden promise of the project for the communities, particularly
    those east of Pueblo?
        The ultimate question for water users in the Lower Arkansas Valley
    is: ``How many more last stands can we survive?''
        Thank you for your attention. I will be happy to try to answer any
    questions
                                     ______

        Mrs. Napolitano. Thank you, and next is Sandy White, the
    water attorney from La Veta.

                STATEMENT OF SANDY WHITE, WATER LAWYER,
                           LA VETA, COLORADO

        Mr. White. Thank you, Madam Chairman--or Chairwoman.
        Mrs. Napolitano. May I interrupt just to start time over
    again, please. I am going to have to step aside and I will turn
    it over to Ranking Member, Mr. Lamborn. I'll be right back.
        Mr. Lamborn. Thank you, Madam Chairwoman. And Mr. White,
    can you please continue and give us your testimony.
        Mr. White. Thank you very much, Madam Chair and members of
    the Subcommittee. I'm Sandy White. I have represented clients.
    I'm a water lawyer. I've represented clients in the Arkansas
    Valley since 1971. I currently appear before you on behalf of
    Pueblo Chieftain and the Arkansas Native L.L.C., which is a
    water right owner and is determined to protect the Arkansas
    Valley and the Fry-Ark Project.
        Now there's a lot of material in my written testimony, but
    I'd like to try to respond in the few minutes I have to some
    questions that have come up and are within my testimony. One of
    the questions the Chairwoman had was what were the purposes of
    this project, and we've heard that it's a large multipurpose
    project. Just about everything including the kitchen sink can
    be found in the preamble to the authorizing act of 1962.
        The real question is what is this project meant to do? And
    that same language appears in maybe a couple of dozen other
    project authorizing acts. What is the Fry-Ark Project meant to
    do? And there are two purposes that have developed and were
    initially intended. One, as President Kennedy said in the film
    clip we watched, is to import water into the Arkansas Valley.
    The second is to enhance the base flows that are already in the
    Arkansas Valley, and that's been done by creation of some
    Eastern Slope storage that captures flood flows, for example.
    So you have two purposes: To bring in transmountain water, or
    imported water, and to enhance the base flow.
        Into this situation came Aurora. It bought water rights to
    the base flow, far downstream from Pueblo, down where the water
    looks like what was on your right when Jay held things up. It
    is now proposing, or the Bureau is proposing, to enter into a
    contract with them that would swap that water for the clear
    water that's found in Twin Lakes and Turquoise Lake reservoirs.
    Only by using the project facilities through a process of
    storage and exchange is Aurora able to move the water upstream
    and out of the basin.
        So the thrust of my testimony is that based on the purposes
    of the project, the Bureau is not authorized to enter into that
    contract with Aurora.
        Now we've heard two things discussed in the way of
    authorization. One was Section 14 of the Reclamation Act.
    That's codified at 43 USC 369. And you read that, and yes,
    indeed, it is possible for the Secretary of Interior to enter
    into these kinds of contracts. But he must make a finding that
    the contract is necessary and that it is in the interests of
    the project.
        Neither of those findings has been made. And so when you
    get the material from the Solicitor's Office that was
    volunteered by the Bureau, look for where did the Secretary
    make those findings? He hasn't made those findings. The Bureau
    is essentially on an adventure of its own.
        We also heard about the Homestake Project and the
    connection between the Homestake Project and the Fry-Ark
    Project. The 1965 contract that was mentioned was entitled
    ``Contract for the Transportation of Water From the Homestake
    Project.'' Now there is a Section 10B in that contract that
    talks about the storage of water in east slope facilities. But
    what it says is that the Bureau grants Aurora an option to
    negotiate for such a contract. So the argument must be that by
    granting Aurora an option to negotiate, the Bureau also created
    its own authority to enter into that contract.
        It is an absurd argument. The Bureau adopted it early on,
    over 15 years ago, and has now dropped it. And I know of no one
    who seriously carries it forth. So there is no authority. There
    has been no finding by the Secretary, and more importantly
    perhaps, under Section 390, according to USC 390, there has
    been no Congressional approval as required by that section.
        Mr. Lamborn. Mr. White, thank you for your testimony.
        Mr. White. Thank you.
        [The prepared statement of Mr. White follows:]

                Statement of Sandy White, Pueblo Chieftain and
                              Arkansas Native, LLC

        Chairwoman Napolitano and Members of the Subcommittee:
        I am Sandy White, a local water lawyer from La Veta, Colorado, and
    a partner in the Denver firm of White & Jankowski, LLP. I have
    represented clients on the Arkansas River since 1971. Today, I appear
    on behalf of the Pueblo Chieftain and Arkansas Native, LLC, a water
    right owner determined to protect the Arkansas River Basin and the
    Fryingpan-Arkansas Project. Thank you for inviting me to testify
    concerning the Project. As noted in the subject of this hearing, the
    larger issue is ``sustainable water.'' In this basin whose native water
    has long been over-appropriated, the Fry-Ark Project's purposes of
    regulating base flows and importation of water to supplement the base
    flow are essential to a sustainable water supply, a sustainable
    economy.
    Background and Introduction
        Almost forty-five years ago, on August 16, 1962, President John F.
    Kennedy signed PL 87-590, authorizing the Fry-Ark Project. Two days
    later, he flew to Pueblo where he spoke at the then Pueblo Public
    Schools Stadium, about 6 blocks from here. After acknowledging the
    worthies on the podium, the President began: ``I don't think there is
    any more valuable lesson for a President or for a member of the House
    and Senate to fly as we have flown today over some of the bleakest land
    in the United States and then to come to a river and see what grows
    next to it--to know how vitally important water is.'' Noting that
    federally funded Reclamation projects were started some sixty years
    before under President Theodore Roosevelt's administration, President
    Kennedy went on. ``We are finally on our way to bringing water through
    the Continental Divide into the Arkansas River Basin.''
        Other witnesses have and will describe to you the vast benefits
    brought by the Project to the valley. I testify, however, in opposition
    to a planned future development: the Bureau's proposed 40-year ``excess
    storage contract'' with the City of Aurora.
        Under that contract, Aurora will use Project facilities to
    facilitate its export of water out of the Arkansas Basin for municipal
    use in Aurora. Located some 115 miles from here, Aurora is a large and
    powerful city. It has many good qualities, but it is not in the
    Arkansas Basin. The proposed contract will increase Aurora's average
    annual exports by over 20,000 a.f..
        We must ask: If President Kennedy thought he signed project
    authorization to bring water into the Arkansas Basin, how is it that
    the project facilities will now be used to help Aurora or anyone else
    take water out of the basin?
    Summary
        The Bureau of Reclamation is without authority to enter into the
    proposed Aurora contract:
        1. Original Project purposes are diametrically opposed to current
    contract purposes.
          The original purposes of the Project were two-fold: (1)
    to make more efficient use of Arkansas base or native flows by
    providing storage facilities on the Arkansas, and (2) to add new water
    to the Arkansas by importing supplemental supplies from the Colorado
    River Basin into the Arkansas.
          Under the Aurora contract, however, instead of using
    Project facilities to enhance the Arkansas base flows or to import
    supplemental water, the Bureau proposes to lend Project facilities to
    facilitate Aurora's taking water from the Arkansas Basin.
        2. For the Bureau to be authorized to enter the Aurora contract,
    two things must happen.
          The Secretary of the Interior must find, inter alia, that
    the contract is ``necessary'' and ``in the interests of the project,''
    43 USC Sec. 389, and
          Since the Aurora contract ``seriously affects'' project
    purposes and involves ``major operation changes,'' Congress must give
    its approval. 43 USC Sec. 390(d)
        3. For the Bureau to comply with Colorado law in the Project's
    ``control, appropriation, use, and distribution of water,'' P.L. 87-
    590, Sec. 5(e), under the Aurora contract:
          The Project's west-slope water must be used solely in the
    Arkansas basin, based on Project water right decrees.
          There may be no ``re-coloring'' of imported water as
    native water. Thornton v. Bijou.
          Each contract exchange must either be approved by water
    court decree or be administered by the State Engineer, Empire Lodge v.
    Moyer, not by the Bureau's Regional Director, who is given ``exclusive
    authority'' over the exchanges by the Aurora contract.
          Contract exchanges should operate only when Aurora's
    decreed exchanges could operate, thereby complying with the terms and
    conditions imposed by state law.
          Since the Aurora contract's Environmental Assessment
    expressly avoided consideration of water right injury, only court
    adjudication or State Engineer administration of those exchanges will
    protect other water rights.
    Aurora's Problem Water
        How did this situation arise? First, Aurora purchased some Arkansas
    water which is diverted some 25-90 miles downstream from here. At that
    point, Aurora faced a geographic problem. The city had no feasible way
    to move the water directly from its original head-gate to Aurora's
    terminal storage and water treatment facilities. A 115 mile pipeline is
    mighty expensive. In addition, the water quality diverted in that reach
    of the Arkansas is not attractive for municipal use, particularly in
    comparison with water much farther upstream near the headwaters.
        As a result, Aurora started to work its water upstream--towards the
    point where the distance is shorter, where the headwaters of the
    Arkansas and South Platte River basins back up to one another. First,
    Aurora got temporary annual contracts with the Bureau to store its
    water in Pueblo Reservoir. That was followed by state water court
    decrees allowing that storage. Then Aurora got decrees allowing it to
    exchange the water from Pueblo Reservoir to its Otero Pump Station,
    some 115 miles upstream. At Otero, Aurora has existing facilities which
    can pump water into the South Platte River basin. However, Aurora's
    decrees imposed strict terms and conditions on the storage and
    exchanges, limiting Aurora's ability to exchange water to the Otero
    Pump Station.
    The Aurora Contract
        Even though Aurora is in a different river basin and will not use
    its water in the Arkansas basin, the Bureau of Reclamation agreed to
    assist Aurora. A deal was struck in the form of Contract No.
    07XX6C0010. Comments on the final draft contract are due on or before
    June 4th, next Monday.
        Under the contract, Aurora could continue to store its water in
    Pueblo Reservoir; not for just one year, but for 40 years. Once the
    water was stored in Pueblo Reservoir, the Bureau would help Aurora
    again. Finding it difficult to comply with the terms and conditions of
    its decrees, Aurora needed a way to circumvent them. Again the Bureau
    was there to help. When Aurora could not operate under its decrees, the
    Bureau itself would move the water upstream. It would do so by
    ``accounting.'' In what came to be called ``contract exchanges'' the
    Bureau would trade Aurora the same amount of Project water upstream as
    native water Aurora stored downstream in Pueblo Reservoir.
    Consequently, Fry-Ark Project water stored in project facilities, Twin
    Lakes or Turquoise Lake reservoirs which are 125 and 150 miles
    upstream, will become Aurora's water by computer keystroke. From those
    reservoirs, Project water is then released back to the Arkansas River.
    It flows 26 and 11 miles downstream, respectively, before it is
    diverted by Aurora at the Otero Pump Station. Once diverted the water
    flows through a tunnel to the South Platte River. See Map of Project
    Area, Attachment # 1, as well as Map of District Boundaries, Attachment
    #2, and Exchange Schematic, Attachment #3, to this testimony.Project
    Purposes
        The Project's Authorizing Act, PL 87-590, simply describes a multi-
    purpose reclamation project. The legislative history and documents
    which the act incorporated, however, tell a more specific story. See
    the Project's engineering plans (House Doc. No. 187, 83rd Cong., as
    modified), and the Project operating principles (House Doc. No. 130,
    87th Cong). The Project's original purpose was to provide supplement
    municipal and irrigation water by: (1) making more efficient use of the
    Arkansas base or native flows by providing eastern slope storage
    facilities, and (2) to add new water to the Arkansas by importing water
    from the Colorado River Basin (Fryingpan River) into the Arkansas.
    Enhancing the base flows
        As Secretary Udall wrote to the respective committee chairs in the
    House and Senate, ``The Project contemplates [inter alia] the
    construction of storage on the eastern slope--for eastern slope
    floodwaters and winter flows averaging 50,000 and 93,000 acre-feet per
    annum, respectively.'' Senate Report No. 1742, Senator Carrol's Report
    of Accompany Fry-Ark Bill (July 1962). The Report itself described
    ``regulation of winter flows'' and ``conservation of floodflows'' in
    the respective annual amounts of 88,600 a.f. and 19,100 a.f.
    Importation of supplemental water
        According to the then Chairman of the House Interior Committee,
    Colorado's Wayne Aspinall, speaking on the floor of the House, ``The
    purpose of the Project is to take water out of the Fryingpan
    tributaries and send it across the mountains--and drop it into the
    Arkansas Valley and send it down to the users--in the Arkansas Valley.
    Congressional Record--House, June 12, 1962, p. 9404.
        The authorizing act itself incorporates and directs the Bureau ``to
    comply with--operating principles'' contained in House Document
    Numbered 130, hereinafter ``HD-130.'' PL 87-590, Sec. Sec. 5(e), 3(a).
    Those principles define the Project as one ``planned and designed--for
    the transmountain diversion of water--to the basin of the Arkansas
    River.'' The operating principles also provide that the SECWCD shall
    ``acquire title to the water required by the project for diversion to
    the Arkansas Valley.'' HD 130, Sec. Sec. 1(a), 18.
        The Bureau itself has recognized that the purpose of the Project
    facilities is to bring water to the Arkansas basin. In the Aurora
    contract's Environmental Assessment, for example, the project is
    described as a ``multipurpose transbasin project that delivers water
    from the West Slope of Colorado to the upper Arkansas River basin'' EA,
    Sec. 1.1, p. 1, emphasis added.
        The incontrovertible purpose of Fry-Ark Project facilities is to
    import water into the Arkansas River basin. Nevertheless, under the
    Aurora Contract, those works will be used to facilitate the export of
    water from the Arkansas basin.
    The Bureau is Not Authorized to enter the Aurora Contract
        Perhaps the most important issue to address by way of oversight is:
    Whether the Bureau is authorized to enter into the proposed Aurora
    Contract. The proposed Aurora Contract would be authorized only under
    two circumstances: (1) if the Secretary of Interior were to find that
    the changes in Project operations required by the Contract are in the
    ``interests of the Project,'' and (2) if Congress were to approve of
    the changes wrought by the contract which ``seriously affect''
    operations. Let's take these requirements one at a time.
    Secretarial Finding
        The Reclamation Act, Sec. 14, codified at 43 USC Sec. 389,
    authorizes the Secretary of Interior, ``for the purpose of orderly and
    economical construction or operation and maintenance'' of a project to
    enter into ``such contracts for exchange or replacement of water--as in
    his judgment are necessary and in the interests of the United States
    and the project.'' (emphasis added) Accordingly, at pp. 1-2, the Aurora
    Contract repeats in full the requirements of Sec. 14, above.
        Nevertheless, the contract nowhere reflects that the Secretary or
    his appropriate designee has made such a judgment or finding that the
    Aurora Contract is ``necessary and in the interests of the United
    States and the project.'' Informally, the Bureau points to the April 3,
    2003, letter from Reclamation Commissioner John W. Keys, III, to James
    Broderick of the Southeastern District. The letter is Attachment #4 to
    this testimony. Attachment #5 is Regional Director Bach's letter of
    August 20, 2003. She cautions, ``The request for any such contracts,
    however, will be reviewed for authority and evaluated on a case-by-case
    basis....''
        In his letter the Commissioner neither makes nor reports any
    finding as required by Sec. 14. Instead, he simply says, ``we have
    concluded that such authority exists'' to issue a long-term contract to
    Aurora. Without providing any support for his conclusion, the
    Commissioner continued, ``The arrangements with the City of Aurora will
    not adversely affect Reclamation's contract'' with the Southeastern
    District. The Keyes letter could be considered an appropriate finding
    only if non-interference with Reclamation's contract with the district
    means the same as being ``necessary and in the interests of
    the...project.'' It does not.
        Should the Secretary make such a determination, it would be an
    abuse of discretion on two related counts. First, since the purpose of
    the Fry-Ark Project is to enhance the base supply of the Arkansas
    River, it cannot be in the interest of the Project to facilitate
    removal of a portion of that base supply. Second, since the purpose of
    the Project is also to import water into the Arkansas basin, it cannot
    be in the best interest of the Project to use its facilities to enable
    the export of water from the basin. It strains credulity to assume that
    the discretion of a rational public servant could be properly exercised
    to decide that black is white, that up is down or, in this instance,
    that in is out, i.e. that import means export.
    Congressional Approval
        Another provision of the Reclamation Act, 43 USC Sec. 390(d),
    provides that any project modifications--which would seriously affect
    the purposes for which the project was authorized--or which would
    involve major--operational changes shall be made only upon the approval
    of Congress.''
        The Fry-Ark Project was authorized to enhance the base supply of
    the Arkansas River and to import water into the Arkansas basin as a
    supplemental supply to the existing base supply. The Aurora Contract,
    however, is designed to diminish the base flows and to export Project
    water from the basin.
        Although the amounts involved are relatively small, compliance with
    the proposed Aurora contract will reverse Project purposes. Instead of
    enhancing base flows, they will be diminished. Instead of importing
    supplemental water, it will be exported. The reversal of purposes
    involves ``major operational changes'' which would ``seriously affect
    the purposes for which the project was authorized.'' Congress must
    approve these operational changes. It has not.
    Intergovernmental Agreement
        Even after Commissioner Keys' letter of April 3, 2003, Aurora and
    the SECWCD continued to seek ``the enactment of federal legislation
    expressly authorizing Reclamation to enter into contracts--with Aurora
    for use of Fryingpan-Arkansas Project facilities.'' Intergovernmental
    Agreement Between the Southeastern Colorado Water Conservancy District
    and the City of Aurora (Oct. 2003) (hereinafter ``2003 IGA''), p. 2.
        Indeed one of the purposes of the IGA was to cooperate ``in efforts
    to pass federal legislation that provides specific authorization--for
    Aurora's contracting for ``if-and-when'' available storage and exchange
    use of excess capacity in current Fryingpan-Arkansas facilities,'' 2003
    IGA, Sec. II. A, B, and to ``request Members of Congress to introduce
    and support federal legislation'' to the same effect.
    Id.,Sec. III.B.1.iii.
        Prior to its IGA with Aurora, the SECWCD adamantly opposed any
    proposed Bureau contract with Aurora. In 2001, counsel for the District
    prepared a lengthy (23 pp) memorandum regarding the authority of the
    Secretary of Interior to contract with Aurora for use of Fry-Ark
    Project ``excess capacity space to store native Arkansas River water
    right for use out of the Fry-Ark service area and the Arkansas River
    Basin.'' He concluded that there was no authority except, perhaps, the
    1920 Miscellaneous Purposes Act which requires several conditions for
    such a contract, including that no other practicable water supply
    source is available. In a portent of things to come, perhaps, the
    District's counsel concluded, ``At a minimum, Southeastern contends
    that no contract could be entered with Aurora pursuant to the 1920
    Miscellaneous Purposes Act without Southeastern's approval.''
    Memorandum, Lee E. Miller to Brian Person, March 9. 2001, re: Authority
    to contract with Aurora for use of Fry-Ark excess capacity space to
    store and transport native Arkansas River water rights out of the
    Arkansas River Basin.
        To induce SECWCD approval, Aurora committed itself to payments
    totaling some $19,000,000. 2003 IGA,Sec. III.E. Most of those payments
    are due only after ``execution by Aurora and Reclamation of a long-term
    contract for use of Fryingpan-Arkansas facilities.'' Sec. III.E.1.a, b,
    III.E.3. In the meantime, the District is to be on its best behavior:
    ``Until Aurora obtains a forty year contract with Reclamation,
    Southeastern will not oppose Aurora's request for annual `if-and-when'
    agreements for storage and exchange purposes.''
        Is it surprising that Aurora continues to feel that the Bureau
    needs express legislative authority before entering into the Aurora
    Contract? Probably not, considering what the current statutes say, as
    discussed above. What is surprising is that the District allowed itself
    to be co-opted. If the custodian of the Fry-Ark Project itself can be
    bought off, the only chance for water users in the Arkansas Valley who
    are the intended beneficiaries of the Project is that Congress will see
    fit unconditionally to close the door on the type of adventurism being
    displayed by Aurora and the Bureau.
        Parenthetically, it should be noted that Aurora has entered IGAs
    with innumerable other entities in the Arkansas Basin, often providing
    substantial consideration for their cooperation. In addition, under the
    proposed contract, Aurora is also paying the Bureau well over $60
    million. All-in-all, a good bargain in light of the alternative, a much
    costlier pipeline and water treatment facility.
    The First (1986) Aurora Contract
        The Bureau's first excess storage contract with Aurora was executed
    in 1986. Like those that followed, the contract was limited to one
    year. The Southeastern District (SECWCD) challenged the Bureau's
    authority to enter the contract. Relying on the incidental purposes
    provision in the authorizing legislation (``other useful and beneficial
    purposes incidental thereto''), the Bureau brushed aside the District.
    The Bureau went on to rely on Sec. 10(b) of the ``Homestake Contract''
    for authority. Raymond Williams' April 30, 1986, letter to Raymond
    Nixon (emphasis added).
        Executed in 1965 between the Bureau and the cities of Colorado
    Springs and Aurora, the Homestake Contract provides for the
    transportation of Homestake water. The one possible exception is
    Sec. 10(b). It ``grants an option to the Cities to negotiate for
    additional storage service in the Eastern Slope project works'' of the
    Fry-Ark Project. The type of water to be stored is not specified, but
    from the context and the title of the contract, the most likely
    interpretation is that it is Homestake water. Agreement between the
    United States and the Cities of Colorado Springs, and Aurora, Colorado
    for the Transportation of Water from the Homestake Project, Contract
    No. 14-06-700-6019, December 14, 1965.
        The history of Aurora's first contract has little of value by way
    of providing authority for today's proposed contract. The incidental
    purposes provision is a weak reed. Relying on it to support diminishing
    the Arkansas River base supply or the exporting of Project water from
    the river, would transform incidental purposes into super-purposes,
    those which conflict with and override primary purposes.
        Similarly, Sec. 10(b) of the Homestake Contract, simply grants an
    ``option to negotiate,'' nothing more than permission to apply. It
    certainly doesn't give the Bureau the authority to enter into such a
    contract. If it did, then the Bureau would have never-ending
    opportunities to expand its authority, with regard to any project,
    simply by executing contract after contract granting options to
    negotiate for other contracts which were theretofore unauthorized.
        Finally, as pointed out by the Williams letter, the 1986 Aurora
    contract ``specifically excludes exchanges involving Project water.''
    That Project water is ``involved'' in the proposed contract is
    undeniable. According to Williams, the 1986 Aurora contract ``requires
    both storage of water and any exchange with nonproject water to be
    approved by the State of Colorado Division of Water Resources.'' No
    such state administration is contained in the proposed contract. As
    pointed out below, it must be.
    Compliance with Colorado Law
        The authorizing act also requires Project operation to ``comply
    with the laws of the State of Colorado relating to the control,
    appropriation, use, and distribution of water therein.'' PL 87-590,
    Sec. 5(e), emphasis added.
    Filings and Decrees
        The filings and decree for the Fry-Ark Project's western-slope
    water leave little doubt about where it was intended to be used.
        To create prima facie evidence of the appropriation of water rights
    for the Fry-Ark Project, pursuant to 1953 CRS 147-4-1 et seq. and 1963
    CRS 148-4-1 et seq., the SECWCD and its predecessor filed maps with the
    Office of the Colorado State Engineer. Those maps recited that the Fry-
    Ark Project works ``are to be constructed for (a) Supplying water to
    the lands of the Arkansas Valley in Southeastern Colorado; (b) Domestic
    water supply in the area served; (c) The regulation and flood control
    of waters in the Arkansas River and its tributaries; (d) Power,
    recreational, and industrial purposes; [and] (e) Other beneficial
    consumptive and nonconsumptive uses in the area served.'' Filings in
    the Office of the Colorado State Engineer numbered 20997 and 20997A,
    accepted February 1, 1957, and November 25, 1968, emphasis added.
        After filing the maps, the SECWCD began to adjudicate its state
    water rights for the Fry-Ark Project. On the western-slope, for
    example, the decree provided that Project Water ``will be used for
    irrigation, manufacturing, domestic, municipal, power, and other
    beneficial purposes. Various cities and towns in the Arkansas Valley in
    Colorado will use such water for all municipal purposes''. The various
    ditch companies and farmers of the Arkansas Valley will use such water
    for all farming purposes....'' Decree, Supplemental Adjudication, Water
    District 38, In the District Court in and for Garfield County,
    Colorado, CA 4613, entered July 21, 1959, Art. VIII, pp 25-26 (emphasis
    added).
        Consequently, the intent of the Fry-Ark Project appropriations and
    the provisions of the decree which made them enforceable was to provide
    water for beneficial use only in the Arkansas River basin. By the
    proposed Aurora Contract, the Bureau now intends to allow project water
    to be exported from the Arkansas Basin for beneficial use elsewhere. To
    do so lawfully, an application must be made to and a decree obtained
    from the Colorado Water Court authorizing the change of place of use.
    The appropriate venue for such an application is the Division 2 Water
    Court, Pueblo. People v. Ogburn, 194 Colo. 60, 570 P.2d 4 (1977)
    Re-coloring
        The Bureau may seek to avoid the prohibition on export of Project
    water by simply presuming that Project Water may be re-colored or
    relabeled as reusable native Arkansas water which may be diverted out
    of the Arkansas basin.
        The Colorado Supreme Court has rejected the practice of re-coloring
    Project water in an exchange. It determined that project water cannot
    be relabeled as reusable native water. In Thornton v. Bijou, 926 P.2d 1
    (Colo. 1996), involving the Bureau of Reclamation's Colorado-Big
    Thompson Project, the court was faced with a similar municipal attempt
    to exchange Non-Project Water for Project Water, then export the
    Project Water outside of the Northern Colorado Water Conservancy
    District. As the Bureau does here, Thornton asserted that the
    ``character of exchange rule'' provides that water diverted by exchange
    takes on the character of the substitute supply, i.e. if Project Water
    is diverted in exchange for Non-Project Water, the Project Water
    becomes Non-Project Water available for diversion out of the district.
    Noting that the trial court labeled the rule as a ``legal fiction,''
    Thornton, 926 P.2d 1, 70, the Supreme Court ``affirm[ed] the trial
    court's denial of Thornton proposed application of CBT water for
    replacement and exchange purposes creating benefits for Thornton
    outside the boundaries of the NCWCD.'' Thornton, 926 P.2d 1, 77.
        Consequently, any Project Water in Twin Lakes or Turquoise
    reservoirs which is the subject of Aurora's contract exchange is still
    Project Water which cannot lawfully be exported to the South Platte
    River basin.
    State Engineer supervision
        Under the proposed contract, ``The [Regional Director] shall have
    exclusive authority to determine if and when an exchange may occur,''
    and he ``shall execute the exchanges herein contemplated through
    reservoir water accounting procedures.'' Aurora Contract, ]]
    5.b.(2),(3). These provisions presumably apply only to the ``contract
    exchanges'' authorized by the Aurora Contract. Those exchanges,
    however, would only ``occur when the exchange potential in the Arkansas
    River is insufficient to move water stored in Pueblo Reservoir
    upstream.'' EA, Sec. 2.3.1, p. 12. More specifically, Aurora's current
    decrees do not cover the contract exchanges. EA, Sec. 2.2, p. 10.
    Simply put, the contract exchanges ignore Colorado water law.
        The Bureau's slightly cock-eyed rationale for this approach is
    found in the Bureau's Draft Hydrologic Model Documentation, p 4-24:
    ``Contract exchanges are not decreed by the water court, because the
    exchange occurs between two willing parties who have legally diverted
    water, which is under their control, and when doing so would not injure
    other water rights holders.''
        The Bureau's understanding is only partially correct. It is correct
    that exchanges must be administered so that they do not cause injury.
    In addition, exchanges, including contract exchanges, do not require
    decrees. City of Florence v. Board of Waterworks of Pueblo, 793 P.2d
    148, 155-56 (Colo. 1990) (Erickson, J., concurring). Nevertheless, all
    exchanges, including contract exchanges, are subject to regulation by
    the State Engineer. Id. at 156. All exchanges must be regulated to
    ensure there is no injury to other water rights. They may be
    adjudicated if the party operating the exchange wishes to receive a
    priority date for the exchange. Justice Erickson's characterization of
    exchanges was adopted by the majority opinion of the Colorado Supreme
    Court eleven years later. Empire Lodge Homeowners' Ass'n v. Moyer, 39
    P.3d 1139, 1155 (Colo. 2001) (``an exchange is a water management
    practice the State Engineer administers between decreed points of
    diversion...The State Engineer may allow an exchange in absence of a
    decree confirming it. If the exchange is adjudicated, it receives the
    priority date of its appropriation.''). See also, Colorado Water
    Conservation Board v. City of Central, 125 P.3d 424, 436-37 (Colo.
    2005) (``A water right exchange is a trade of water between structures
    or users administered by the state engineer.''). See also CRS Sec. 37-
    83-104 (exchanges to be charged deductions for stream loss ``to be
    determined by the state engineer'');
        The water court or the State Engineer, not the Bureau's Regional
    Director, is responsible for ensuring exchanges do not injure senior
    water rights. As such, exchanges must subject themselves to his
    authority and administration before the exchange is operated. The
    primary concern is to ensure that water will be available to satisfy
    senior rights when needed. See, e.g., City and County of Denver v. City
    of Englewood, 826 P.2d 1266, 1272-73 (Colo. 1992) (disallowing Denver's
    ``owe-the-river'' accounting system for its exchange where the division
    engineer was not informed of the exchange until after the water had
    been diverted; ``[p]rior notification of the exchange allows the
    engineers to ensure that water is available to be released to meet the
    needs of downstream senior appropriators.'').
        The water that the Bureau books over to Aurora upstream in Twin
    Lakes and Turquoise reservoirs will not be sent downstream to project
    beneficiaries, as it otherwise would be. That water is destined for the
    Otero pump station and the South Platte basin instead, forever
    unavailable to downstream rights along the exchange reach. The Bureau's
    own analysis demonstrates the impact of the contract exchanges on the
    flow of the Arkansas. Attachment # 6, hereto, demonstrates that the
    cumulative effects of the Aurora Contract will reduce the flow of the
    Arkansas River in the exchange reach at the Wellsville Gage by up to
    approximately 5% during a ``mean dry year.''
        Consequently, in order to comply with Colorado water law, the
    Aurora Contract must be amended to reflect that the Colorado State
    Engineer, not the Bureau's Regional Director, has sole authorization to
    determine when contract exchanges may operate without injury to others
    and how much water may be exchanged. In addition, as described below,
    the Aurora contract must also incorporate the restrictions in Aurora's
    exchange decrees.
    Compliance with Aurora's Exchange Decrees
        Aurora holds several decrees allowing the exchange of its water in
    Pueblo Reservoir, including those issued in cases 87CW63, and
    99CW170(A), as well as a consolidated decree for cases 84CW62 and
    84CW63, 84CW64, all in the water court for Water Division No. 2. To
    protect other water rights, those decrees impose on Aurora's exchanges
    a variety of terms and conditions, including priorities among competing
    exchanges, and requirements for a live stream in the exchange reach,
    Division Engineer determination of non-injury, volumetric limitation,
    daily accounting, the satisfaction of all intervening senior rights
    which are calling for water, seasonal limitations (e.g. no exchanges
    November 15 through March 15th; reduced exchanges, July 1st through
    August 15th), flow limitations, volumetric limitation, protection of
    minimum stream flows, matching of exchange diversions to reservoir
    releases, limitations on simultaneous exchanges, protection of water
    quality, maximum diversion rates based on gage readings, protection of
    the Upper Arkansas River Voluntary Flow Management Program, and subject
    to the terms of over 30 stipulations incorporated by reference, subject
    to IGAs incorporated by reference, compliance with its own exchange
    priorities, making all the exchanges absolute, notice to the Division
    Engineer prior to exchange operation, and the court's retained
    jurisdiction.
        These decrees aggregate over 70 pages and are the result of
    thousands of hours of effort by expert witnesses, lawyers, and judges.
    Aurora now wants to circumvent the results by doing an end run around
    the decrees using the contract and with the Bureau running
    interference. If Aurora and the Bureau truly wish to comply with
    Colorado law, the exchanges contemplated by the contract should be
    subject to all the terms. conditions, and limitations contained in
    those decrees.
    Summary
        The proposed Bureau contract with Aurora is unlawful and
    unauthorized. It is unlawful since, contrary to the Project Authorizing
    Act, the contract is an unvarnished an attempt to circumvent Colorado
    water law. The Aurora Contract is unauthorized (1) since the Secretary
    has not found that the contract operations are in the interest of the
    project, and (2) since Congress has not authorized such changes which
    would ``seriously affect'' Project purposes.
        Supporters of the contract will ask, ``What is the big deal? We've
    had temporary annual contracts for years in the past. Why not save us
    the trouble of renewal and make the contract good for forty years?''
    The answer is two-fold: First, 40 years is a long time, a professional
    life-time, practically permanent from the view point of a resident of
    the Arkansas Valley. Second, after forty years, when Aurora has become
    dependent on Arkansas River water, contract renewal will be politically
    mandatory.
        Once again, thank you for inviting me to testify. I am available to
    answer any questions you may have.
    List of Attachments
        1.  Map of Project Area
        2.  Map of District Boundaries
        3.  Exchange Schematic
        4.  Reclamation Commissioner John W. Keys III April 3, 2003, letter
    to James Broderick of the Southeastern District
        5.  Regional Director Bach August 20, 2003, letter to James
    Broderick of the Southeastern District
        6.  Cumulative Effects of contract exchanges on stream flow
                                     ______

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Lamborn. The Chairwoman will have her questions as soon
    as she gets back. I'll go ahead with the next questions for
    myself and then we will continue on down the line.
        Mr. Thiebaut, I enjoyed the years that you and I spent in
    the legislature, but I've got to ask you these questions
    though. Given that pollution spills have occurred in your own
    counties, but you have not filed suit against those
    responsible, while you have sued the City of Colorado Springs
    for the same thing, wouldn't you agree that there's a double
    standard at work?
        Mr. Thiebault. Well, first of all, it's a thrill to see all
    of my former colleagues in the legislature one more time.
    That's not such a thrilling question, but----
        [Laughter.]
        Mr. Thiebault.--let me assure you, Representative Lamborn
    and members of the committee and guest members and this entire
    community and this state, that if I believed that there were
    violations of the law and any community within the boundaries
    of the 10th Judicial District, the area that I represent, was
    affecting anyone's safety, health, or welfare, I would take
    action.
        It's a little difficult to discuss pending litigation in
    Federal courts right now. I don't think it would be fair, but I
    do want to assure you that because of the chronic nature of
    those discharges, nearly 73 million gallons from 1998 to the
    point of the lawsuit, over 100 spills, during a very short
    period of time in the last few years, I was duty bound to bring
    an action.
        If any other entity within my jurisdictional powers brings
    forth such demonstrative conduct that creates a danger to the
    health and safety of a community, I'll take action.
        Mr. Lamborn. OK, thank you.
        Mr. Rivera, how much money has Colorado Springs Utilities
    spent on recent improvements of water quality flowing into
    Fountain Creek and what are the plans for the future?
        Mr. Rivera. Thank you for that question, Representative
    Lamborn. Today we have spent over $65 million reinforcing our
    wastewater collection system. This year we will spend an
    additional $20 million to further improve it. Next week we will
    open a $10.5 million Fountain Creek recovery system, where we
    will be able to use a diversion dam, if we have any future
    spills, to divert it into two holding ponds, treat the water,
    clean it, and send it back down Fountain Creek.
        In the future over the next 15 years, we anticipate to
    spend close to $200 million, and again, reinforcing our
    wastewater collection system. I think we've been good stewards.
    We rely on the Colorado Department of Public Health and
    Environment to enforce the Clean Water Act. They are doing
    that. We are in compliance with all of their requirements, and
    frankly, I think that's where the enforcement should lie, and
    they are doing a good job of enforcing EPA standards.
        Mr. Lamborn. OK. Thank you, Mr. Mayor. And Mr. Winner, if I
    could ask you a question. You focused a great deal in your
    testimony on water quality problems in the lower valley, and
    you seem to associate these problems with Colorado Springs's
    participation in the Fry-Ark Project; however, I was under the
    impression that the lower district and Colorado Springs have a
    conceptual agreement in place that addresses most of the
    concerns you raised in your testimony, including comprehensive
    plans for water quality studies and a comprehensive approach
    for managing Fountain Creek. Isn't there such a conceptual
    plan?
        Mr. Winner. That is correct. And I did not mean to point
    any fingers at Colorado Springs. I was not aware that I did
    that. What I was attempting to do was clarify an exchange.
        Mr. Lamborn. So is the Lower Ark Conservancy District ready
    to sign such an agreement with Colorado Springs?
        Mr. Winner. At this time, two of the nine parties have come
    to an agreement. I believe it's not nine parties. I believe
    it's 12 parties. We have conceptually come to an agreement with
    Colorado Springs. There's still a long way to go. It took us
    two and a half years to get this far.
        Mr. Lamborn. And when you say ``a long way to go,'' what do
    you mean by that? Because I thought you said a second ago that
    there was.
        Mr. Winner. Nine more entities have to agree to what we
    have agreed to with Colorado Springs.
        Mr. Lamborn. And the last question for you, Mayor Rivera.
    Is the City of Colorado Springs only asking to have water
    delivered to it that it already has the rights to?
        Mr. Rivera. That's correct, Congressman Lamborn. These are
    water rights that were acquired in the mid to late '80s, and
    what we are looking for with our Southern Delivery System
    basically is what all of us want for the Arkansas Valley
    conduit. We want a project that will be built and to deliver
    clean drinking water to members of the Fry-Ark Project.
        I think the Arkansas Valley conduit is something that
    Congress should step up to the plate, enact legislation, and
    help us get that funded as soon as possible, because then
    members of the lower Arkansas Valley community can have clean
    drinking water that they deserve.
        Mr. Lamborn. Thank you all for your answers, and this time
    I'll turn the gavel back over to Chairwoman Napolitano.
        Mrs. Napolitano. Thank you, Congressman. And thank you for
    taking over. Thank you, and now I will turn over to Mr.
    Perlmutter for questions.
        Mr. Perlmutter. OK.
        Mrs. Napolitano. Thank you.
        Mr. Perlmutter. Yes, Madam Chair.
        Senator Thiebaut, a question for you. You talked about
    water rights being property rights. And if I understand the
    water law that I learned from Mr. White at the end of the table
    there, those water rights can be sold to and from anybody,
    isn't that true?
        Mr. Thiebault. That is my understanding, yes.
        Mr. Perlmutter. And that they are not necessarily attached
    to the land. They are severed from the land.
        Mr. Thiebault. Yes.
        Mr. Perlmutter. Mr. Winner, about five years ago--no,
    longer than that, six years ago, we had a hearing here in
    Pueblo, and this was just an experience that occurred at that
    time. There were two gentlemen from St. Charles Mesa, which
    used to be a truck farming area, as I understand it. One guy
    announced that he sold his water rights I think to the City of
    Pueblo. I'm not sure who he sold it to. But his next-door
    neighbor said what are you doing that for? You're going to, you
    know, dry up this land and it's going to be for development.
        Do you object to the farmers that have had water down along
    this--along the Arkansas, do you object to them selling their
    water rights?
        Mr. Winner. Water is a property right. If a farmer wants to
    sell his water, he has every right to sell his water.
        Mr. Perlmutter. And he can sell it to anybody he wants to?
        Mr. Winner. He can sell it to anybody he wants. Where my
    problem lies when it comes to the purchase of water, this is
    what you buy, this is what you take. There's a big difference
    between what you purchase and what you actually take. I have no
    problem if somebody buys water, let's say they buy it for life.
    Go ahead, put your pipeline in, clean up the water. The cost of
    that is over a billion dollars. It's quite simpler for people
    who want to buy water to exchange it up high to get this, and
    then leave this for the small communities that cannot afford to
    clean it up.
        Mr. Perlmutter. Let me stop you for a second. Isn't it true
    that the water rights that we're talking about are all water
    rights that come from the west slope? And the transmountain
    diversion of Homestake?
        Mr. Winner. No.
        Mr. Perlmutter. Homestake is the transmountain diversion?
        Mr. Winner. Homestake is a transmountain diversion.
        Mr. Perlmutter. All right. And Fryingpan-Arkansas is a
    diversion.
        Mr. Winner. Absolutely.
        Mr. Perlmutter. All right. And are you saying that the
    water rights that are purchased down on the lower Arkansas are
    of the muddy quality and not the clean quality? Is that your
    point?
        Mr. Winner. That is correct. Such as the Rocky Ford high,
    the Rocky Ford ditch is native water that starts on the east
    slope. It----
        Mr. Perlmutter. So do you disagree then--you obviously
    disagree with the Bureau's conclusion after four years and 200
    pages, that there's a negligible difference between having the
    water up high and taking it from the Pueblo Reservoir.
        Mr. Winner. Absolutely.
        Mr. Perlmutter. OK. Would the water quality improve if
    there were a conduit that directed water down to the Southeast
    Water Conservancy District? I'm not sure exactly which counties
    you represent.
        Mr. Winner. If there is a conduit built, it would improve
    the water quality a hundredfold to the small communities east
    of Pueblo.
        Mr. Perlmutter. You mentioned in your testimony that even
    at the outset of the Fryingpan-Arkansas, that the farming in
    that area along the Arkansas has actually decreased, not--it
    isn't just a recent phenomenon.
        Mr. Winner. Since 1955, 65,000 acres have been taken out of
    production, with 121,000 acre-feet transferred off the main
    stem of the Arkansas. I believe the water raids started right
    around that time.
        Mr. Perlmutter. And even so, today it's still, as I heard
    somebody testify, 74 percent of the water from the Fryingpan-
    Arkansas is still used for farming, even though cities are
    entitled to 51 percent.
        Mr. Winner. That is correct. Realizing that the amount of
    water that the Fryingpan-Arkansas Project brings over is
    minuscule compared to what is diverted for Arkansas.
        Mr. Perlmutter. One last question for Mr. White. You
    represent cities as part of your water law practice, do you
    not?
        Mr. White. Yes, and I represent a lot of other kinds of
    people too.
        Mr. Perlmutter. And as part of that, you've been involved
    with transfers from farmers--water rights from farmers to city
    clients that you represent.
        Mr. White. That's correct.
        Mr. Perlmutter. OK. Thanks, Madam Chair.
        Mrs. Napolitano. Now Mr. Salazar?
        Mr. Salazar. Thank you. Mr. Mayor, it's good to see you
    here again. I totally agree with your statement. It starts out
    by the following: ``The Fry-Ark Project was conceived, planned
    and constructed as a multipurpose project to serve both the
    interests of agriculture and the municipal entities within the
    Southeast District.''
        Let me just read to you what the original legislation said.
    This was testimony by Wayne Aspinall. It talks about the water
    quality, and it talks about the quality of water utilized by
    some of the cities that are extremely short on water. Water
    quality is a (inaudible). The needs of the principal cities in
    the area that can be supplied with water by the project are
    shown in the following tables. The following table provides for
    17,000 acre-feet of water for Colorado Springs, Pueblo,
    Manzanola, Crowley, Rocky Ford, La Junta, Las Animas,
    (inaudible), and Lamar. These are all within the project
    boundaries. OK? And it would also supply--which has never
    happened, 184,000 acre-feet for irrigation purposes and the
    17,000 for municipal uses. Are you aware of any congressional
    act that basically enlarged the boundaries of the project?
        Mr. Rivera. No comment.
        Mr. Salazar. You are within the boundary, correct?
        Mr. Rivera. Yes, sir.
        Mr. Salazar. Thank you very much. And can you tell me, you
    know, there's been several reports in the paper on several
    spills that have come from Colorado Springs because of
    malfunctions of your wastewater facilities; is that correct?
    Can you tell me how many of those happened over the last two
    years?
        Mr. Rivera. No, sir, I cannot, but I can provide you
    written documentation to give you that information. Some of
    those are due to vandalism, some--the majority of the spillage
    that the D.A. referenced was because of a 1999 flood that
    inundated the entire valley, and that's really an act of God
    that no utility, whether it's Colorado Springs or Pueblo, has a
    way of preventing.
        Mr. Salazar. Well, I sit on the Water and Infrastructure
    Subcommittee and Transportation Committee, and we are happy to
    work on wastewater facilities and other projects in Congress. I
    would be happy to try to help Colorado Springs try to lessen
    some of the problems that they have with some of their
    wastewater treatment facilities, so I offer you that sort of
    service, if I can be of any help.
        Mr. Scanga, you and I are lifelong ranchers and farmers. We
    have a long history back in Colorado. My family settled in 1860
    in the San Luis Valley. We're seven generations on the same
    farm. Are you aware that last year, the United States became a
    net importer of specialty crops?
        Mr. Scanga. Yes, since I'm in the meat business, I'm very
    aware of that.
        Mr. Salazar. Does it worry you that much of our water that
    is purposefully supposed to go to agricultural is moving to
    urban use?
        Mr. Scanga. Yes, it does. I'm not sure that economically
    speaking that water moving to other uses is necessarily the
    cause of why we have become a net importer. I think we've
    become a net importer because our cost of production is higher
    than foreign costs of production. I'm not sure how that relates
    to water. I believe in terms of water, drip irrigation, new
    types of water systems that conserve water, drip irrigation in
    particular, would help in the lower Arkansas Valley by actually
    cleaning up the river. Irrigation creates--the return flows
    from irrigation, the lower Arkansas Valley in particular,
    create a lot of contaminants, like sedimentation of the lower
    Arkansas River. I'm aware of that. There's a lot of USGS
    studies that confirm that, so----
        Mr. Salazar. Thank you, Mr. Scanga.
        Mr. Winner, do you believe that in all of the water
    transfers that have happened out of the lower Arkansas there
    has been proper mitigation that's happened to make sure that
    the effect of the socioeconomic impacts of the water transfers
    out of the basin has been addressed?
        Mr. Winner. I do not believe proper mitigation is in place.
    I believe what needs to happen is that we need to have a
    socioeconomic study to study the past so that we do not lose
    the future. As I said before, some mitigation for Aurora's
    school system was $1.5 million to the high school. $1.5 million
    does not make up for a graduation class to lose 100 students
    over 30 years.
        Mr. Salazar. Thank you.
        Mr. White, are you aware of any legislation in Congress
    that actually authorizes the project boundaries to be enlarged
    from this current map?
        Mr. White. I am not.
        Mr. Salazar. So do you believe that the Bureau of
    Reclamation has the authority to enter into a 40-year contract
    to move water out of the basin using the project?
        Mr. White. I do not.
        Mr. Salazar. Thank you, sir.
        Mr. Thiebaut, since you've filed a lawsuit against Colorado
    Springs, how many spills have you counted within the last two
    years? Do you have any idea or recollect?
        Mr. Thiebault. Congressman Salazar, my gut reaction is that
    there's been several. I don't have the exact count. When I
    answered Representative Lamborn, I know there's been since 2000
    or 2001, over 100 spills, and there's a significant number over
    the last few years, and I can sure provide that correct
    information to you at a later date.
        Mr. Salazar. Madam Chair, could you give me one additional
    question, please?
        Mrs. Napolitano. No.
        [Laughter.]
        Mrs. Napolitano. Go ahead. I'll give you part of my time.
    So----
        Mr. Salazar. I do appreciate that.
        Mrs. Napolitano. I'll yield some of my time to you.
        Mr. Salazar. Mr. Mayor, as you know, there's two bills. One
    is being proposed by Congressman Lamborn and one is being
    proposed by me. My bill basically deals with making a
    socioeconomic study that can be an independent study conducted
    by the state. The bill would actually include a requirement
    that the State of Colorado study the cumulative effects,
    socioeconomic and environment impact of water transfers out of
    the Arkansas and Colorado basins prior to Federal dollars being
    spent on enlargement potential for Lake Pueblo. Could you
    support something like that?
        Mr. Rivera. Congressman Salazar, I think it's important to
    note that we currently have intergovernmental agreements that
    have been signed by the City of Pueblo, the Pueblo Board of
    Water Works, the Southeast Water Conservancy District, the City
    of Fountain, that we would support legislation similar to what
    Congressman Lamborn has already introduced. So we are already
    on record and have intergovernmental agreements that would
    unwind if we were to change that.
        Mr. Salazar. So basically you would not support a
    comprehensive study that would actually study the cumulative
    effects, the socioeconomic and environmental impact on the
    basin when water is moved out of the basin, and I'm asking you,
    would you or would you not support that?
        Mr. Rivera. I would restate what I just said. We are on
    record with intergovernmental agreements with our partners,
    that we would support legislation similar to what Congressman
    Lamborn has already introduced, and I guess I personally would
    have concerns at looking back at history at the transfers of
    water rights that were done between the agricultural community
    and the municipalities that at that time following Colorado
    water law, were completely imbedded, and I don't think it would
    be appropriate to go back and try to unwind those.
        I think the better solution is what we are trying to work
    out with the Lower Arkansas Conservancy District, and that is a
    lease and fallowing program, where we allow farmers to benefit
    from their water rights while protecting the agricultural
    community and making it stronger.
        Mr. Salazar. And does the fallowing program actually put
    the fertilizer dealer back in place, does it put the tractor
    dealer back in place?
        Mr. Rivera. I'm sorry. Could you repeat that question?
        Mr. Salazar. Does the fallowing program that--your
    mitigation project in the lower Arkansas Basin, do they
    actually put the grocery store owner back in place or the
    equipment, fertilizer dealer back in place? Does it put the
    tractor dealer back in place? So we are not really addressing
    the full effects of what happens when water is transferred out
    of the basin, correct?
        Mr. Rivera. Well, sir, our goal is not to do that. Our goal
    is to keep the water in the valley and basically the farmers
    benefit and at the same time the municipalities can also
    benefit.
        Mr. Salazar. Thank you.
        Mrs. Napolitano. Thank you, Congressman Salazar.
        Congressman Udall.
        Mr. Udall. Thank you, Madam Chair. Before I start my
    questioning, I want to note that there are a lot of brave
    people here today, and I would include Senator Thiebaut in that
    list. He is appearing with his old and tired colleagues.
        I think I see Commissioner Richards here in the audience. I
    see Mayor Ed Tauer here from Aurora. We're going to give Ed a
    chance to give his point of view.
        Mayor Rivera, thank you for being here. But I think the
    most courageous person is the Chairwoman, given she's a
    Californian.
        Grace, we could turn on you and then there wouldn't be
    anything left of you. We want to thank you for again holding
    the hearing and for being here in the spirit of more broadly we
    are all Americans.
        Mrs. Napolitano. Just try it.
        Mr. Udall. She's something, isn't she?
        If I could, Mayor, I'll turn to you briefly. You mention
    the money that the Springs contributes to the administrative
    and I think the O&M aspects of the project, and the amount that
    you put forth is more than double of all of the other
    participants combined. What determines how much the Springs
    pays and why is your city's commitment so large?
        Mr. Rivera. It's basically based on the ad valorem property
    tax value and the mill levy set for the Southeast Water
    Conservancy District and because Colorado Springs has had
    tremendous success in growing as a community, the value of our
    property is what determines what we contribute.
        Mr. Udall. If I could, Mr. White--and I noticed Mr. White's
    graduated West Point, served in our Army. Thank you for your
    service, particularly at this time in our history.
        Let me turn to I think what really is a very important
    question that you posed. Am I right in understanding that any
    water exchanges by Aurora have to be done under Colorado state
    water law? I think that is a yes or no answer, I hope.
        Mr. White. It is not.
        Mr. Udall. All right. Take a shot at it and give me a
    chance to ask you a follow-up question.
        Mr. White. I'll use about 20 words. The contract exchanges
    are not under the contract with the Bureau. Aurora has exchange
    decrees, but those aren't involved. In fact, those are so
    cumbersome in that they're being replaced by the contract
    exchanges.
        Mr. Udall. The follow-up question I have then, is this
    about the legality of the exchanges, or about the legality of
    the actions of Bureau of Reclamation that it may take in
    connection with the exchanges? Do you care to expound on that?
        Mr. White. If I understand the question, I believe that it
    is about the legality of the exchanges, because the exchanges
    are by the authorizing legislation to be conducted in
    accordance with Colorado law. The decreed exchanges that exist
    for Aurora have dozens of pages of terms and conditions that
    Aurora must comply with.
        By going through the contract exchange, however, they avoid
    that. And how the Bureau is able to help Aurora escape the
    provisions of Colorado law and still comply with the
    authorizing legislation is beyond my understanding.
        Mr. Udall. Thank you for sharing and furthering your point
    of view on that.
        Senator Thiebaut, I apologize for adding another syllable
    to your name when I first mentioned you earlier in this round.
    At the end of your statement, you say we must stop gutting the
    power of water quality administrators and provide adequate
    funding and teeth for enforcement. Would you talk a little bit
    about what gutting and enforcement is taking place right now?
        Mr. Thiebault. Thank you, Representative Udall, and I've
    been called a lot of things, so please don't worry about that.
        What I'm experiencing in the situation that I took up for
    our community is that our state regulators are in essence
    sitting down with the perceived polluters and working out
    arrangements to try to fix the issue that we're involved in,
    and that's just basically wastewater, human feces, denigrated
    water that's coming down the Fountain Creek.
        And it's just odd for me to see that there is no public
    engagement prior to any decisions being made with regard to
    that, and that only after the fact, after a deal is cut, so to
    speak, that people are then asked to comment on what has been
    accomplished, and it's sort of a backward process. And I think
    it demonstrates that at least on the state level, there is not
    enough resources to have public hearings, or gain adequate
    input into resolving what is a regional problem.
        And I think how it relates to the Federal government is
    that the Federal government has given our local and state
    regulators the power to work on these issues, and so if there's
    more help from Congress, I think there would be more help at
    the state level and more help at the local level, and it would
    all translate into more open discussions about how to solve the
    problem in the first instance, rather than having the polluter
    and the regulator sit in a room and work out solutions that are
    not satisfactory, frankly, to downstream communities.
        Mr. Udall. I presume your conversations with Governor
    Ritter and his administration in that regard, and I would
    imagine that all of us here on the panel could add some help to
    need to have better oversight of our water quality.
        Mr. Thiebault. Representative Udall, I would appreciate
    anything that any one of you could do to nudge our state
    elected officials and regulators. It is something that's going
    to continue until many years to come unless we sit down and do
    something different than we're doing now.
        Mrs. Napolitano. Thank you, sir.
        I have a lot of questions and follow-up. Some of them will
    be posed to you in writing, because there's not going to be
    enough time. But Mayor Rivera, how many sewage treatment plants
    do you have, roughly? One, two, three?
        Mr. Rivera. We have one major wastewater treatment facility
    and we're about to open a second in a matter of weeks.
        Mrs. Napolitano. And I've dealt with the sanitation
    district in my area, so I'm a little cognizant of the issue.
    How old is your treatment plant and what capacity does it have?
        Mr. Rivera. Those are technical questions. I can get you
    those answers, but I don't have it for you now.
        Mrs. Napolitano. Thank you, for the record, because I know
    that in some areas that I've known, the age of a--and the size
    precludes them from actually being able to treat the increased
    sewage from the new developments, from the growth that has
    emanated from the area. And so it's a great challenge for the
    communities to stay on top of it; however, it's one of those
    areas that should not be overlooked, because that could lead to
    lawsuits based on people getting sick from that sewage-
    contaminated water. Do you follow?
        Mr. Rivera. I do, ma'am, but we follow Colorado law, and
    when it comes to planning and building a new wastewater
    facility, when we reach 85 percent of a capacity of an existing
    facility, we need to begin to find a property. Like I
    mentioned, we will be opening a new facility, and we have spent
    millions of dollars improving and enhancing our facility.
        Mrs. Napolitano. I've read that, sir, but if you are having
    spills, what are they due to?
        Mr. Rivera. Primarily, they are due to the fact that we
    have about 1500 miles of wastewater lines. A lot of them run
    along creek beds. And when we have very strong storms, the
    tributaries of Fountain Creek turn into raging rivers. And we
    are in the process, as I mentioned before, of spending $85
    million reinforcing all of those collection lines in our creek
    beds, and I think we've done a good job of making sure those
    kinds of spills don't happen again.
        Mrs. Napolitano. I would hope not, sir, because that is a
    health hazard for all concerned. The other issue, we were
    discussing which--let's see. I'm--do you have any water-
    recycling projects serving Colorado Springs, and if not, why
    not?
        Mr. Rivera. Well, we probably are one of the best reusers
    of treated water. We have 12,000 acre-feet per year, about 13
    percent of our water supply, that is used throughout our
    community, whether it's watering golf courses, cooling our
    power plants----
        Mrs. Napolitano. Excuse me. How many acre-feet, do you
    have?
        Mr. Rivera. 12,000 acre-feet per year. It's about 13
    percent of our water supply that we use.
        Mrs. Napolitano. Do you plan to increase that recycling
    capability?
        Mr. Rivera. Our new wastewater treatment plant that will be
    opening in a few weeks will have the capability to deliver
    tertiary-treated water that we can use throughout the community
    for nonpotable uses, yes.
        Mrs. Napolitano. Is that going to be able to assist you in
    reducing the take of water from the project?
        Mr. Rivera. Well, I think we've done a good job of that
    over the years. One of the----
        Mrs. Napolitano. No, I'm asking do you think that is going
    to help reduce the take that you now have?
        Mr. Rivera. Umm----
        Mrs. Napolitano. Putting more recycled water into use, for
    whether it's commercial, industrial, ag use--California does it
    all the time now--but is that something that you've looked into
    and are you considering it?
        Mr. Rivera. The answer to that is yes, ma'am. We
    retrofitted our power plant to use 2 million gallons of water
    per day of treated effluent instead of fresh water. So we are
    doing that throughout our community. So the answer is yes.
        Mrs. Napolitano. Thank you, sir.
        Mr. Scanga, If the storage that Aurora is seeking for their
    water is the first to spill, how could the use of this unused
    space affect anyone else in the Arkansas Valley's water rights?
        Mr. Scanga. The use of which unused space? I'm not clear.
        Mrs. Napolitano. The space in the Pueblo Reservoir.
        Mr. Scanga. In Pueblo Reservoir? Unused space?
        Mrs. Napolitano. Excess water.
        Mr. Scanga. Oh, you mean excess capacity contracted.
        Mrs. Napolitano. I'm sorry.
        Mr. Scanga. Now, madam, if you wouldn't mind repeating that
    question now that I understand what you mean by excess
    capacity. I don't quite understand your question.
        Mrs. Napolitano. Well, in essence, you have Aurora water
    stored, and if that's the first to spill, what is that--how
    does that affect everybody else?
        Mr. Scanga. If it's the first to spill, that means that the
    in-basin entities have the higher priority, storage priority.
    So that would give more space available in a situation where we
    end up in a spill situation to an in-basin entity. It wouldn't
    bump their water, in other words.
        Mrs. Napolitano. OK. And then your district Web site says
    that one of the primary roles of the district is to preserve
    and protect water by legislative and judicial means. Does that
    mean you expect a legal challenge if the long-term contract
    with Aurora will be filed?
        Mr. Scanga. No. Sometimes there's legislation that could be
    detrimental to water right owners and to our system in
    particular, the Arkansas River. So we are active in lobbying
    activities to make sure that adverse legislation is not passed
    and also legislation that could be beneficial, such as water-
    banking legislation, that that type of thing is passed.
        For example, water banking legislation was first introduced
    in the State of Colorado. It allowed water to be moved through
    a water bank outside the basins. We fought against that, and
    eventually we were able to get that language amended and
    therefore water banking cannot be used to move water out of the
    basin.
        Mrs. Napolitano. Thank you. And to any of you very quickly,
    with a yes or no answer simply, Congressman Salazar and Lamborn
    both have legislation proposed, and Congressman Salazar is
    requesting a study. How do you feel about the study's ability
    to influence what you're facing now? And the reason I ask that
    is because the Bureau of Reclamation needs to answer how long
    would it take them should that bill pass to come up with a
    study? Given that I've waited 11 years for a study to come out
    on Los Angeles water needs since 1996 and just recently was
    finally given it. It was early this year.
        Mr. Scanga. I think the study--ma'am, if I understand the
    question, I think the study of the socioeconomic impacts of
    building the first storage option plan, I think that should
    take place. It should take place in a feasibility analysis that
    is necessary were the project to go forward. At this time, I
    would like to see at least a feasibility study be done to see
    if it's even feasible to do the Preferred Storage Options Plan
    first.
        Mrs. Napolitano. Gentlemen?
        Mr. Thiebault. I think that Representative Salazar's bill
    would be helpful.
        Mr. Winner. Like I said before, we must learn from the past
    so we don't lose the future, so I support Representative
    Salazar's bill.
        Mr. White. Me too.
        Mrs. Napolitano. Mayor?
        Mr. Rivera. I would agree with Terry Scanga. I think we
    need to do the feasibility study patterned after Lamborn's bill
    and then we would discuss socioeconomic needs after that
    feasibility study.
        Mrs. Napolitano. Thank you very much. This will conclude
    the second panel, gentlemen. Thank you for your testimony. It
    is appreciated and you will have additional questions sent to
    you. We appreciate your reply within ten days if at all
    possible. And again, for those in the audience who have
    questions, you may submit them for the record and on behalf of
    this committee, and I will call for a five-minute break. Five
    minutes. I think some people have been waiting patiently. Five
    minutes from now.
        [recess.]
        Mr. Lamborn. OK. The third panel will now resume. We have
    The Honorable Ed Tauer, Mayor of Aurora. We have Drew Peternell
    from Trout Unlimited; Chris Treese from the Colorado River
    Conservancy District--Conservation District, excuse me; and
    Wally Stealey of Pueblo.
        OK, Mr. Tauer, Mr. Mayor, you are the first one on the
    third panel. If you could present your testimony, please.

              STATEMENT OF THE HONORABLE EDWARD J. TAUER,
                        MAYOR, AURORA, COLORADO

        Mr. Tauer. OK. Thank you.
        Madam Chairperson, thank you very much for having us this
    afternoon--this morning. We appreciate you coming and hope you
    have time to enjoy Colorado for a little bit while you're here.
        My name is Ed Tauer, and I'm the mayor of the City of
    Aurora. It's a city on the eastern side of the Denver metro
    area, and our current population is about 310,000 people.
        You know, I was listening to some of the testimony earlier,
    and if somebody isn't from Colorado, they may not understand,
    in Colorado, water is life. It's so important that we actually
    have about half of the water lawyers in the country practicing
    in our state. We're one of the few states that have actual
    water court, special courts to decide water issues.
        It's a very emotional issue. First, last, and always, it's
    important to the people of Colorado. And we've heard what water
    can do in the valley, but I wanted to point out quickly some of
    the things that it's doing in the city of Aurora. It's allowing
    us to bring in great jobs for the people of Colorado, like with
    employers like Raytheon and Northrop-Grumman. It's allowing the
    extension of Buckley Air Force and projects like the
    redevelopment of the former Fitzsimons Army Hospital that
    Congressman Salazar has been so helpful with.
        This is a time for us to look at the issues of water with
    cool heads and do the best for all of the people of Colorado.
        We've been involved with the Fry-Ark Project since its
    early days. You know, the Fry-Ark Project is very simply a
    series of pipes, pumps, and buckets that allow the movement of
    water from one basin to another. And during the early
    development of the project, something very unique happened at
    the Bureau of Reclamation. The people working at the Bureau saw
    that there was another project nearby that had a similar
    purpose and they saw that by working together, those two
    projects could be better for everybody. That's a very unique
    thing to have happen in government. I think it's something that
    should be encouraged. And it was allowed because the original
    concept of the Fry-Ark Project was to be a multi-purpose
    project.
        So early on in the construction phase, before any of the
    construction was even begun on the Eastern Slope, the Bureau of
    Reclamation entered into discussions with Colorado Springs and
    Aurora about how to expand the use of the project. In fact, I
    believe the first contract was entered into in 1965. The intent
    and the rationale for this was reconfirmed by the Bureau in the
    '80s.
        I've heard somebody say that it wasn't part of the original
    intent, and that may be in a very, very narrow sense true, but
    I believe that it's the legacy of Congress and of the Bureau of
    Reclamation to maximize the investments of the taxpayers of the
    United States. And that's exactly what the Bureau has done
    through these agreements. For when you do that, it's important
    that you do it in a way that doesn't injure the original intent
    of the project, and it goes to your point earlier, Madam
    Chairperson, in one of your questions.
        The Bureau of Reclamation has managed the project so that
    Aurora has what's called an ``if and when'' contract. What that
    means is that we can store water in project facilities when,
    and only when, there's space available. Whenever an in-basin
    user needs space, if our water is in there, there isn't room
    for them as well, our water does spill out of the project.
        It does not change Colorado water law. We're still only
    allowed to move water per Colorado water law. And because we're
    an out-of-basin user, quite appropriately, we have to pay more
    for the usage of those facilities. And as a result we are the
    third-largest payer for the repayment back to the Federal
    government for this project.
        We believe that we have responsibility to be a good
    neighbor, and that's why we've entered into six different
    agreements with in-basin parties, most recent of which is the
    2004 agreement which is sometimes called the 6-Party Agreement.
    Under that agreement, we agreed to work with our partners to
    protect some of the flows in the river, some of which were
    already mentioned by Mr. Scanga, to participate financially in
    future storage, but also to limit the amount of water that
    Aurora can take out of the valley.
        We have to use water responsibly in Aurora. That's why we
    have some very innovative conservation programs and why we are
    leading the state in the reuse and recapture of water. I'd like
    to point out that the 40-year agreement that's under study and
    we hope to enter into soon with the Bureau does not change any
    of this. It's not a new agreement. It's a reconfirming of the
    year-to-year agreements that we've had. It doesn't change any
    of the conditions, the ``if and when'' aspects, the limits or
    any obligations that we have. And it also doesn't change
    Colorado water law.
        We hope that in the future, we're on the edge of something
    different in Colorado, that we're not talking about one basin
    against another. We think it's time for us to change that
    conversation and talk about how do we work together, people in
    cities and farms, people in one basin and another. There's a
    new process in Colorado, the 1177 Process, that aims to do just
    that.
        Especially in a year where Congress has so little money
    that's discretionary and available, it's time for us to
    maximize the investments of America's taxpayers, and
    cooperative uses like our involvement in the Fry-Ark Project
    are one way to do that. Thank you very much.
        [The prepared statement of Mr. Tauer follows:]

                  Statement of The Honorable Edward J. Tauer,
                             Mayor, City of Aurora

    I. Background
        The City of Aurora is the third largest municipal water provider in
    the State of Colorado and serves the needs of 300,000 people and
    businesses within its service area. The City operates a complex and
    integrated water system to reliably serve its customers with a safe
    drinking water supply. As a part of that water system, the City of
    Aurora derives about one quarter of its source water from the Arkansas
    River basin and has had a long-standing and productive relationship
    with the Fryingpan-Arkansas Project since its very inception in the
    1960's. All water sources have been developed under the State's water
    laws and operating agreements with the federal government and local
    agencies.
        Aurora is the third largest financial contributor to Fryingpan-
    Arkansas Project repayment, subsidizing the repayment obligations of
    local agricultural and municipal users while helping to retire the
    public debt at an earlier time. Aurora trails only El Paso County and
    Pueblo County, who contribute to project repayment obligations through
    the payment of ad valorem taxes on property within the Southeastern
    Colorado Water Conservancy District.
    Aurora History in the Fryingpan--Arkansas Project
        In the early 1960's, Aurora joined with Colorado Springs in the
    purchase and development of the Homestake Project. The Homestake
    Project imports water from the Eagle River, a tributary to the Colorado
    River and delivers water to the South Platte River basin through the
    Homestake Reservoir outlet and tunnel to Turquoise Lake and Twin Lakes
    which are both Fry-Ark facilities. Water is piped and pumped from Twin
    Lakes through the Otero Pump Station to Spinney Mountain Reservoir and
    then by gravity to the City of Aurora.
        The Fryingpan-Arkansas Project was proposed as a source of
    supplemental water for agricultural and municipal entities within the
    Arkansas basin. However, recognizing the economies of scale that could
    be realized where two projects, i.e., Homestake and Fry-Ark which were
    simultaneously in the planning and development stages, the Bureau of
    Reclamation entered into discussions with Colorado Springs and Aurora
    in an attempt to coordinate efforts and thereby minimize costs and
    maximize efficiencies. In 1965, prior to the construction of the East
    Slope components of the Fry-Ark Project, both Aurora and Colorado
    Springs executed a contract with the Bureau of Reclamation. That
    contract acknowledged that ``it will be economically feasible to
    transport all or part of the Homestake Project water through the
    Fryingpan-Arkansas Project facilities for delivery to the cities.'' The
    contract was designed to ``provide...for the coordinated operation of
    the two Projects, and to provide a method of payment for the use of the
    Fryingpan-Arkansas Project facilities.''
        In particular, the contract identified how Fry-Ark facilities would
    ``provide carriage of Homestake water...and storage for Homestake
    water...,'' and contained flow rate limits as well as a storage of
    30,000 acre-feet cap for Homestake water to be stored in East Slope
    Fry-Ark Project facilities. The 1965 contract went on to state:
            10(b) The United States hereby grants an option to the cities
            to negotiate for additional storage service in the eastern
            slope project works over and above the 30,000 acre-feet
            contemplated by this agreement, if and when there may be
            capacity in the system unused by the Project or uncommitted by
            prior agreements.
        See attached.
        The storage space option referenced in the above paragraph was
    specifically not limited to Homestake water and could include native
    Arkansas Valley waters that were legally developed by Aurora for
    municipal purposes.
        In response to subsequent questions concerning the Bureau's ability
    to contract with an out-of-basin entity, such as Aurora, for the use of
    excess capacity in Fry-Ark facilities, the Bureau has, on two separate
    occasions, concluded that such authority indeed exists. These
    statements were issued in 1986 and in 2003. See correspondence of Ray
    Whelms and John W. Keys attached hereto. However, reference to such
    participation by Aurora was previously made as early as 1964 in the
    Bureau's memorandum on the proposed water service contract for the Fry-
    Ark Project and subsequently in the operating principles for the
    Project.
    II. Aurora's Water Acquisitions in the Arkansas Valley
        Beginning in the late 1970's, Aurora received numerous sale offers
    from Arkansas Valley farmers who wanted to sell their decreed
    agricultural water rights. Aurora has since acquired and subsequently
    received State decrees for approximately 26,000 acre-feet of water from
    a number of farmers, ranchers and ditch shareholders. The City of
    Aurora has completed the necessary Colorado water court adjudications
    required to change the water rights to municipal use, ensuring ``no
    injury'' to other water rights and agreeing to a number of decree terms
    and conditions as related to the individual adjudications. These have
    included yield limitations and revegetation requirements. The City has
    operated an office in the lower Arkansas Valley near Rocky Ford and
    maintained an ongoing community presence that addresses water
    administration, revegetation, local watershed protection issues and
    other Arkansas Valley water management matters.
    III. Intergovernmental Agreements
        In order to implement the various operating agreements and work
    cooperatively within the Arkansas basin, Aurora has executed a number
    of Intergovernmental Agreements (IGAs) with entities within the area
    served by the Fryingpan-Arkansas Project, as well as entities within
    the Upper Arkansas basin. The provisions of these agreements extend far
    beyond the requirements of state law in preventing injury and providing
    mitigation for water transfers. These include the following:
          2004 Regional (6-Party) IGA
          2003 Southeastern Colorado Water Conservancy District IGA
          1994, 2001 and 2005 Otero County IGA's
          2005 Rocky Ford School District IGA
          2003 Upper Arkansas Water Conservancy District IGA
        A summary sheet for each of the above referenced IGAs is attached
    hereto. Of particular note, in those documents Aurora voluntarily
    agreed to the following:
          To support Preferred Storage Options Plan (PSOP)
    legislation in a form as referenced in the 2004 Regional IGA.
          To refrain from the additional purchase and permanent
    transfer of agricultural water rights from the basin for 40 years, with
    specific agricultural fallowing and leasing opportunities during
    drought recovery periods.
          To make multi year, multi-million dollar payments for the
    use of unused and available space in Fry-Ark facilities.
          To curtail water diversions and exchanges in support of a
    flow program and for the aquatic and recreational benefit of the river
    reach below Pueblo Reservoir.
          To make payment in lieu of taxes (PILT payments) and
    other tax loss payments (due to differential land and property tax
    assessments) to Otero County.
          To compensate the Rocky Ford School District in the sum
    of $1.5 million dollars as mitigation for perceived losses resulting
    from changes in their tax base--Aurora will complete payments over a
    five year period rather than the negotiated 99 year payout to provide
    the School District with substantial and effective cash payments in the
    near future.
          To provide an Upper Basin replacement or softening pool
    of water.
    IV. Additional Cooperative Activities
        Aurora has also extended its comprehensive local community programs
    through a variety of additional cooperative activities in the Arkansas
    Valley. These include:
          Investment in a ``continued-farming, drip irrigation''
    project (approximately $2 million) whereby Aurora assists local farmers
    with $1,400.00 per-acre for the installation of drip irrigation
    systems, $50.00 per planted acre for ten years, and 1/2 acre-foot per
    acre of augmentation water annually.
          Creation of a partnership with Lake County including the
    formation of the Lake County Open Space Initiative (LACOSI) designed to
    enhance recreation, historic preservation and wildlife activities along
    the upper Arkansas River riparian corridor.
          Conduct of a fen (wetland) research project to
    investigate, in cooperation with others, tools for wetland mitigation
    for this endangered high-altitude flora environment
        To date, under the various Bureau contracts, IGAs, and other
    governing documents, Aurora has spent almost $35 million dollars on its
    operations in the Arkansas Valley and estimates that it will
    potentially spend, in the next 40 years, an additional $150 million
    dollars. See attached expenditure summary. Aurora is fully vested in
    ensuring a successful relationship with the Fryingpan-Arkansas Project
    and the people of the Lower Arkansas Valley.
    V. Leasing and Sustainable Water Use
        In the recent severe drought of the last five years, Aurora's water
    storage fell to unacceptably low levels. As a part of an integrated
    program to recover the reservoirs, Aurora developed and implemented a
    highly effective short-term leasing program for fallowed agricultural
    water supplies within the Arkansas Valley. Aurora entered into a
    contractual leasing/fallowing relationship with the Rocky Ford Highline
    Canal Company whereby 37% of ditch acres were temporarily fallowed and,
    in exchange, almost $11 million dollars was placed into the local
    economy at a time when drought conditions already precluded an adequate
    water supply for crop production. Aurora's financial arrangement with
    the farmers, which also included soil stabilization, weed control and
    canal structural improvements, was overwhelmingly embraced by local
    shareholders and Aurora was only able to subscribe about one-half of
    all the water offered to the program.
        Aurora believes that the temporary leasing/fallowing concept, which
    it has supported legislatively, is a valuable and viable option to the
    ``buy and dry'' practices of the past. Though it is a complicated
    undertaking which is not easily implemented, with the ditch companies
    input and cooperation, in coordination with the use of storage
    facilities such as those of the Fry-Ark Project, it is a mechanism that
    can be employed to the benefit of both municipal and agricultural
    entities in the Valley.
        Aurora has been a statewide leader in both water conservation and
    reclamation. The City's comprehensive water conservation policies and
    continuing mandatory watering restrictions have greatly reduced per
    capita consumption. In addition, it is ensuring the maximum utilization
    of previously developed water supplies, having embarked on the $750
    million dollar Prairie Waters Project. This Project is designed to make
    successive reuse of its fully consumable return flows in the South
    Platte River. Those project facilities include a series of alluvial
    wells downstream from the City that will divert water to a 34 mile
    pipeline and a state-of-the-art water treatment plant. Indeed, Aurora
    is mindful of its responsibility to avoid waste, thereby minimizing and
    delaying its need for additional agricultural supplies and transbasin
    imports.
    VI. Forty-year Contract Request
        Since 1986, Aurora has executed a series of year-to-year contracts
    with the Bureau of Reclamation for the storage and exchange of water
    within the Fry-Ark system. These annual operating contracts have always
    been the subject of NEPA reviews. Most recently, consistent with the
    provisions of the aforementioned IGAs and Bureau policy, Aurora has
    requested a forty-year contract from the Bureau in lieu of the year-to-
    year arrangement. This long-term contract will provide additional water
    supply certainty to the City.
        Aurora has spent approximately four years and over $1.5 million
    dollars working with the Bureau in the conduct of an environmental
    analysis (EA) which examined the environmental and socio-economic
    impacts associated with this long term extension of the existing
    practice. This effort, which included extensive modeling of potential
    hydrologic and water quality impacts and numerous opportunities for
    public comment, concluded that there would be no significant impact
    from the proposed action. A FONSI was recently issued by the Bureau.
    The final contract terms are now being circulated for further public
    comment, though the contract was the subject of public negotiation
    sessions.
        The following facts ensure that there can be no harm to the Fry-Ark
    Project or its beneficiaries as a result of the long-term contract.
          Aurora will receive, and has received in the past, no
    Project water under the Bureau contracts.
          If there is insufficient storage capacity i.e. Aurora
    water cannot be stored at the same time as Project water or Project
    beneficiary water, Aurora is the ``first to spill''. No Project water
    is displaced by the City's use of empty and excess space in the
    facilities.
          Aurora's contract exchange opportunities under the
    contract are subordinate to all present and future exchange requests of
    in-district entities.
        In addition to the above ``constraints'' on Aurora's use of excess
    capacity, the Project will realize significant ``economic benefits.''
    These include anticipated payments from Aurora to the Project of
    greater than $45 million dollars and, in the case of contract
    exchanges, additional water yield. If Aurora is able to exchange water
    with the Bureau located high in the basin for water Aurora has stored
    lower in the basin, e.g. at Pueblo Reservoir, the Fryingpan-Arkansas
    Project can deliver that water to downstream beneficiaries without
    incurring the approximately 10% river shrink or loss that would
    otherwise occur as the water is moved down stream. The federal
    government and project participants benefit by receiving that greater
    amount of water for their use.
    VII. Conclusion
        The City of Aurora appreciates the opportunity to present this
    testimony on its longstanding involvement with the Fryingpan-Arkansas
    Project. Aurora takes very seriously its obligation to the Project and
    Project beneficiaries while it operates its Water System in compliance
    with State water decrees and the multiple IGAs with local agencies.
    Aurora will continue to cooperate with all involved entities to promote
    the Bureau's goals of maximum utilization of existing infrastructure.
    Aurora will work with responsible parties to minimize conflicts and
    mitigate adverse water development impacts. In fact, as we move into a
    new era of water supply management, the Fry-Ark Project can be a
    shining example of cooperative efforts designed to ensure sustainable
    and balanced water management approaches.
                                     ______

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [The response to questions submitted for the record by Mr.
    Tauer follows:]

    June 28, 2007

    The Honorable Grace Napolitano
    Chair, U.S. House Subcommittee on Water and Power
    Committee on Natural Resources
    1522 Longworth House Office Building
    Washington, DC 20515

    The Honorable John Salazar
    U. S. House of Representatives
    1531 Longworth House Office Building
    Washington, DC 20515

    Dear Chairwoman Napolitano and Representative Salazar,

        This letter is in response to your follow-up questions at the June
    1, 2007 Water and Power Subcommittee hearing in Pueblo, Colorado.
    Question asked by Chairwoman Napolitano:
     ``How do you balance asking your customers to save water through
            conservation with the need to maintain revenues to keep your
            balance sheet in good condition?''
        The City of Aurora has adopted a revenue neutrality approach to
    budget management during periods of significant and sustained water
    restriction programs. A surcharge was added to the user fee to account
    for projected lower revenues so the Utility's Debt Service Coverages
    were maintained and operating funds were available. During the recent
    drought, the annual revenues were within five percent of projected
    revenues and this has allowed the Utility to maintain its high credit
    rating which is essential given the City's major investment in new
    water source development in the South Platte River basin. That program
    to develop the City's new water sources exceeds $750,000,000 in capital
    cost and will be completed in 2010.
        This responsible approach to maintaining revenues during extended
    drought periods was not adopted by Metropolitan Water District of
    Southern California, which saw an accumulated deficit in revenues
    during that same time period.
    Question asked by Representative Salazar:
     ``Your statement seems to indicate that since Aurora has a larger tax
            base that you have the right to take water from the Lower
            Arkansas Basin and leave communities depressed. Do you believe
            that water policy should be based on only serving the needs of
            the wealthy?''
        Aurora does not get to set water policy to serve a singular or its
    own interest--the setting of state water policy is reserved to the
    State of Colorado's legislature and is promulgated under Rules and
    Regulations and the State's Constitution. Colorado administers the use
    of water as a public property right under the Appropriation Doctrine--
    that doctrine respects a ``first in time, first in right'' allocation
    of beneficially used waters. It is a Doctrine that recognizes the
    scarcity of water resources and includes numerous mechanisms for the
    change of beneficial use (for example from agricultural to municipal
    use), location of use by exchange, transfer or direct delivery. All of
    Aurora's decreed water rights, including those in the Arkansas Valley,
    are established through Water Court proceedings.
        For the record, Aurora is not alone in seeking to transfer
    agricultural rights to municipal or industrial use as a part of free
    market transactions. As of this time, other transfers the City of
    Aurora is aware of include:

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Further, the State of Colorado Department of Agriculture has
    estimated that, on average, 140,000 acres per year of agricultural land
    are transferred to alternative land uses including conservation
    easements, dry-land farming and urbanization. Approximately 28,800
    acres (about 20% of total) of irrigated acreage per year are
    transferred to urban uses, primarily in Boulder, Larimer and Weld
    Counties. There are numerous reasons for individual farmers choosing to
    sell their ranches, farms and water rights. These range from individual
    decisions based on family dynamics, economics, federal farm pricing
    policies, federal farm subsidies, social issues etc. These changes in
    farming are not confined just to Colorado. As noted in U.S. News and
    World Report, June 11, 2007:
            The fertile soil of Iowa has made its agricultural exports
            second only to California...Between 1974 and 2002, the number
            of people operating farms in the state declined from about
            102,000 to about 62,000; agriculture now makes up less than 5
            percent of the State's gross domestic product.
        A similar change is occurring in Colorado where urban-centric
    economies now dominate the State's economic well-being and agriculture
    produces less than 2 % of the Gross State Product. These are all trends
    that are blind to Aurora's legal acquisitions of water resources to
    reliably serve the needs of the 306,000 people in the City and the
    numerous cornerstones, including the Fitzsimons/ VA Medical Complex,
    Buckley Air Force Base and other additions, that contribute to
    Colorado's future.
        The responsible development of water resources to meet the needs of
    the State of Colorado and its many users is complex and recognized by
    the State legislature as well as municipalities. While Aurora
    represents less than 15% of the anticipated population growth in the
    Denver metropolitan area in the next 25 years, the City has embarked on
    a responsible program to develop reliable water supplies for its
    citizens. This investment includes a $754 million program to recapture
    city water rights north of the metropolitan area and to treat and
    deliver those flows to our customers.
        This maximization of sustainable use of previously developed water
    resources is acclaimed at all levels of government and the
    environmental community as an example of Smart Water Project Planning.
    At the same time, we will protect our previously developed water
    resources, including those in the Arkansas Basin, that are controlled
    by water decrees, intergovernmental agreements, operating agreements
    and contracts.
        We would be pleased to share further information on how Aurora's
    foresight in water supply planning is leading Colorado in meeting the
    water demands that we are all facing.

    Sincerely,

    Edward J. Tauer
    Mayor
                                     ______

        Mr. Lamborn. Thank you, Mr. Mayor, for your testimony.
        Mr. Peternell.

    STATEMENT OF DREW PETERNELL, DIRECTOR, COLORADO WATER PROJECT,
                   TROUT UNLIMITED, BOULDER, COLORADO

        Mr. Peternell. Thank you, Mr. Chair. My name is Drew
    Peternell. I'm an attorney for Trout Unlimited and the director
    of Trout Unlimited's Colorado Water Project.
        TU is a national nonprofit fisheries conservation
    organization, and the Colorado Water Project works specifically
    to maintain stream flows for the benefit of fish. We have an
    interest in the rivers and streams that are impacted by the
    Fry-Ark Project. Trout Unlimited is not opposed to water
    resources development. We understand that water resources
    development is important for our state, our economy, our
    agriculture, open spaces, our growing population.
        As we outlined, however, in our 2005 report entitled
    ``Facing Our Future,'' which I have a copy of if the panel is
    interested, as we outlined in that report, our support for new
    water development projects depends on the project being smart,
    and principles of smart water supply from our perspective
    include making full and efficient use of existing supplies
    before increasing transbasin diversions, integrating
    conservation, efficiency, reuse, nonstructural approaches into
    water resources planning, rehabilitating existing facilities
    before building new ones, and probably bottom line, adopting
    water supply solutions that minimize harm to or create benefits
    for the environment, the economy, and the local communities.
        As the panel knows, there are currently a number of water
    development proposals on the books or on the table that would
    involve Fry-Ark Project facilities, and TU's position on those
    projects depends on the degree to which they are developed in a
    smart manner. And it seems to us there are two things that the
    Federal government can help to assure that water development in
    the Fry-Ark area is smart. One would be to study the
    feasibility of a variety of means of meeting water supply, and
    the other is to study the impacts of water supply arrangements.
        On the first point, both Representative Salazar's H.R. 1833
    and Representative Lamborn's H.R. 2277 would authorize the
    Department of Interior to conduct a study of the most feasible
    method of meeting water supply demands in the Fry-Ark Project
    service area. TU is supportive of having the Bureau conduct
    such a study, but to ensure that the study is fully informed
    and actually results in smart water supply choices, we think
    it's important that the study look at a variety of options or
    combinations of options for meeting demand.
        Looking at storage only we think is too narrow and is
    inadequate. What we have in mind is looking at these
    nonstructural approaches, like efficiency, water-sharing
    arrangements, conservation, either nonstructural approaches
    which can be less environmentally damaging and less expensive
    to build.
        In addition to addressing a variety of needs of meeting
    demands, the other way the Federal government can help to
    assure smart water supply in the Fry-Ark area is to conduct a
    study of the impacts of various supply arrangements. Assessing
    the impacts of water development is the cornerstone of smart
    water supply. Therefore, Trout Unlimited is supportive of the
    provision of Representative Salazar's bill that directs the
    State of Colorado to conduct an impact evaluation.
        One of the sets of impacts of the Fry-Ark Project results
    from the diversion of water from the Colorado Basin to the
    Arkansas Basin that are felt in the Colorado Basin. And as it's
    currently written in H.R. 1833, it is a little bit unclear as
    to whether those impacts would be addressed in the evaluation.
    We think that it's important they be addressed and we suggest
    that the legislation make that point clear, that you're going
    to be addressing the impacts felt in the Colorado Basin of
    diversions to the Arkansas Basin.
        H.R. 1833 also must provide the impact study, which again
    would be conducted by the State of Colorado. The impact study
    is not a replacement for need for compliance. Before the
    Department of Interior and the Bureau of Reclamation takes
    action on any proposals related to the Fry-Ark Project, it must
    comply with NEPA, and in fact, given all of the changes to the
    Fry-Ark Project since it was authorized in 1962 and given all
    of the proposals for future changes to the Fry-Ark Project, we
    think that now might be an appropriate time for the Bureau of
    Reclamation to perform a programmatic environmental impact
    statement on Fry-Ark in general. This would be something in
    addition to the state analysis called for in H.R. 1833.
        With that, thank you again for the invitation. I appreciate
    the chance to be here, and Trout Unlimited is anxious to
    participate in future conversations regarding H.R. 1833 and any
    other similar legislation.
        Mr. Lamborn. Thank you, Mr. Peternell.
        [The prepared statement of Mr. Peternell follows:]

    May 29, 2007

    United States House of Representatives
    Committee on Natural Resources
    Subcommittee on Water and Power
    1324 Longworth House Office Building
    Washington, D.C. 20515

    Re: Fryingpan-Arkansas Project Field Hearing

    Dear Representatives:

        Please accept this letter as my written testimony in connection
    with the June 1, 2007 House Natural Resources Committee, Subcommittee
    on Water and Power field hearing regarding the Bureau of Reclamation's
    (``Reclamation's'') Fryingpan-Arkansas (``Fry-Ark'') Project.
        Trout Unlimited (``TU'') is a national, non-profit fisheries
    conservation organization with approximately 160,000 members nationwide
    and approximately 10,000 in Colorado. TU's mission is to conserve,
    protect and restore coldwater fisheries and their habitats. TU's
    Colorado Water Project works to maintain and restore stream flows for
    healthy coldwater fisheries and to increase meaningful public
    participation in decisions regarding water allocation. The Colorado
    Water Project and TU's Colorado membership are interested in the
    conservation and protection of the rivers and streams affected by the
    Fry-Ark Project.
        The Fry-Ark Project is a Reclamation project that diverts water
    from the Fryingpan River and Hunter Creek in the Colorado River basin
    for delivery to the Arkansas River basin. The project consists of a
    series of dams, reservoirs, diversion structures, pumps, pipelines and
    other infrastructure. Water is delivered initially to Turquoise Lake,
    near the top of the Arkansas River basin, and the terminal reservoir in
    the Fry-Ark system is Pueblo Reservoir, near the City of Pueblo. The
    project came on-line in 1975 and since that time has delivered an
    average of 55,000 acre-feet of water annually from the Colorado River
    basin to the Arkansas River basin for agricultural and municipal use.
        TU is not opposed to water resources development. We recognize that
    water development is necessary to sustain Colorado's agricultural
    heritage and growing population. As outlined, however, in our 2005
    report, Facing our Future: A Balanced Water Solution for Colorado, our
    support for new water development projects is contingent on the project
    being ``smart.'' Principles that undergird smart water supply include:
    making full, efficient use of existing supplies before increasing
    transbasin diversions; integrating conservation, reuse, water sharing
    arrangements and demand management into water supply planning;
    rehabilitating or enhancing existing infrastructure before building new
    projects; and adopting water supply solutions that minimize harm to, or
    create benefits for, the environment, the economy and local
    communities.
        Water providers on Colorado's Front Range and eastern slope
    currently are planning for or recently have undertaken four new water
    development projects that rely on Reclamation's Fry-Ark Project
    facilities. The four projects are:
          Reclamation recently issued a record of decision
    approving a 40-year contract with the City of Aurora for exchange and
    storage of non-project water using Fry-Ark facilities. This contract
    facilitates the delivery of Aurora's Arkansas River water rights to
    Aurora's service area in the South Platte River basin. Many of Aurora's
    Arkansas River water rights were obtained through retirement of
    irrigated lands in the lower Arkansas Valley.
          Colorado Springs is pursuing a project, known as the
    Southern Delivery System (``SDS''), that would transport water through
    a pipeline from Pueblo Reservoir to Colorado Springs. The project could
    enable additional diversions of water from the Colorado basin to the
    Arkansas basin and could deplete the Arkansas River between the outlet
    of Pueblo Reservoir and the confluence with Fountain Creek--a reach the
    City of Pueblo and the U.S. Army Corps of Engineers recently spent
    millions of dollars to restore. Colorado Springs would exchange SDS
    wastewater effluent down Fountain Creek, potentially exacerbating the
    water quality and flooding problems on the Fountain which already are
    the subject of a lawsuit between Pueblo and Colorado Springs.
          Working with the Southeastern Colorado Water Conservancy
    District (``SCWCD''), communities in the lower Arkansas Valley are
    pursuing the Arkansas Valley Conduit project. The conduit would deliver
    water from Pueblo Reservoir through a pipeline to cities and towns
    downstream in the Arkansas Valley.
        The SCWCD is promoting a plan, known as the Preferred Storage
    Options Plan (``PSOP''), to enlarge Pueblo and Turquoise Reservoirs for
    the benefit of a number of eastern Colorado water providers. Depending
    on the operational details, PSOP could dramatically alter the
    environment in both the Colorado and Arkansas River basins.
        TU's position on these and other water supply projects depends on
    the degree to which they are developed in a manner that is smart.
        As a precursor to expanding Fry-Ark facilities as contemplated in
    PSOP, two separate bills pending before the House Committee on Natural
    Resources--Representative Salazar's H.R. 1833 and Representative
    Lamborn's H.R. 2277--would authorize the Secretary of Interior to
    conduct a study of ``the most feasible method of meeting the present
    and future water supply and related storage requirements within the
    area served by the Fryingpan-Arkansas Project...'' An analysis such as
    this is a first-step towards planning for smart water supply. To ensure
    that the analysis results in smart water supply choices, however, the
    legislation should require that the study consider a variety of methods
    or combinations of methods of addressing water demand, specifically
    including water conservation, efficiency improvements, water sharing
    agreements and other non-structural approaches to supplying water and
    lessening water demand. The implementation of non-structural approaches
    could reduce or eliminate the need for new or renovated water diversion
    or storage facilities, which often are expensive, environmentally-
    damaging and culturally-disruptive. Any legislation authorizing a study
    of the feasibility of methods of meeting demands also should direct
    that the analysis account for demands for stream flows for
    environmental and recreational purposes and should require that
    Reclamation perform the study according to a process that allows for
    public involvement.
        Smart water resources planning depends not only on evaluating the
    feasibility of a variety of methods of satisfying demands, but also on
    assessing the impacts of various water supply arrangements.
    Individually, PSOP and the other water supply projects being pursued
    could impact fishery and ecological resources. Collectively, the raft
    of projects could have broad impacts on the environment, especially
    when considered in light of other alterations to natural flow regimes
    in the Colorado and Arkansas River basins, including on-going Fry-Ark
    operations. Projects that transfer water from one location or use to
    another also can have significant economic, social and cultural
    impacts. Assessing these impacts and implementing measures to avoid
    them is a cornerstone of smart water supply. Together with the
    feasibility study called for in Representative Salazar's and
    Representative Lamborn's legislation, an analysis of the impacts of
    Fry-Ark operations would serve as the basis for smart water resources
    planning in the Arkansas basin.
        Pursuant to NEPA, Reclamation prepared an environmental assessment
    to address the impacts of the excess capacity contract with Aurora.
    Reclamation also is in the process of preparing a NEPA environmental
    impact statement on Colorado Springs' Southern Delivery System. But,
    neither Reclamation nor anyone else has prepared an in-depth analysis
    of the cumulative environmental, recreational, economic, social and
    cultural impacts of current and future Fry-Ark Project operations.
    Before agreeing to any of the pending water supply proposals that would
    rely on Fry-Ark Project facilities, and before committing federal
    dollars to expanding Fry-Ark facilities, it is important that the
    cumulative impacts of Fry-Ark operations be evaluated. Section 3 of
    Representative Salazar's bill calls for the State of Colorado to
    conduct such an impact evaluation. Because Representative Lamborn's
    bill does not include a similar provision, TU supports H.R. 1833 over
    H.R. 2277.
        One set of impacts of the Fry-Ark Project results from the
    diversion of water from the Colorado basin to the Arkansas basin. As
    currently written, H.R. 1833 creates some confusion as to whether the
    analysis contemplated in Section 3 would address these impacts. Section
    3(a) of H.R. 1833 provides that the impact study is to evaluate the
    effects of water transfers from the Arkansas and Colorado basins to
    communities outside of those two basins. Section 3(b) is broader than
    Section 3(a), calling for evaluation of certain activities, such as
    exchanges and expansion of Fry-Ark facilities, that do not necessarily
    involve the transfer of water to areas outside the Colorado and
    Arkansas basins. The language of Section 3(a) should be expanded to be
    more consistent with Section 3(b) and to specify that the study is to
    address impacts in the Colorado basin of diversions to the Arkansas
    basin.
        H.R. 1833 should also require that the State of Colorado conduct
    the Section 3 impacts study using a public participation process
    modeled after NEPA. In particular, TU is concerned that the public
    process include an opportunity to comment on the scope of the impacts
    study and on draft and final versions of the study document. Further,
    while the legislation should require that the state conduct the impacts
    analysis with the benefit of public involvement, H.R. 1833 should
    provide that the Section 3 impacts study is not intended to satisfy the
    requirements of NEPA as applied to any individual federal action
    related to the Fry-Ark Project. In fact, depending on the timing of the
    various proposed federal actions relative to the timing of the Section
    3 impacts analysis, and depending on the scope of the Section 3
    analysis, it may be necessary for the Bureau of Reclamation to
    supplement the H.R. 1833 impacts analysis with a NEPA programmatic
    environmental impact statement addressing Fry-Ark Project effects on
    the Colorado and Arkansas River basins.
        Thank you for the invitation to provide this testimony. I look
    forward to the dialogue at the field hearing on June 1. Trout Unlimited
    also is anxious to participate in more detailed discussions regarding
    PSOP, H.R. 1833 or any other similar legislation.

    Sincerely,

    Drew Peternell
    Director and Counsel
    Colorado Water Project
    Trout Unlimited
                                     ______

        Mr. Lamborn. Mr. Treese.

    STATEMENT OF CHRIS TREESE, MANAGER, EXTERNAL AFFAIRS, COLORADO
     RIVER WATER CONSERVATION DISTRICT, GLENWOOD SPRINGS, COLORADO

        Mr. Treese. Thank you, Mr. Chairman. My special thanks to
    the Chairwoman for not only this hearing, but your commitment
    to personal travels throughout the West to visit firsthand and
    hear from water users and water interests on the challenges of
    sustainability. Appreciate it very much.
        I am the only Western Slope representative before you
    today, and I appreciate Mr. Udall's recognition that western
    Colorado is in fact a part of the Fryingpan-Arkansas Project,
    with corrections to President Kennedy, that is not just the
    source of water for the Fryingpan-Arkansas Project. And that
    was made clear in the authorizing legislation, western Colorado
    is part of the project.
        In fact, western Colorado, from the headwaters of the
    Roaring Fork River above Aspen, including the Fryingpan
    tributary, all the way down to the Colorado River at Grand
    Junction, is specifically listed as part of the service area to
    the project. We do supply water. We also receive water and
    benefits from the project.
        As a result of Colorado water law and Congressional
    leadership back in the 1950 and '60s, Ruedi Reservoir was
    constructed in western Colorado for the express purpose of
    addressing project impacts and ensuring that project benefits
    would accrue to western Colorado. Additionally through the
    Congressional authorization process, specific operating
    principles were adopted and incorporated by reference into
    Federal statute. I'd like to read into the record and for
    everyone's understanding the opening paragraph of these
    principles.
        It says that, quote, the project contemplates, A, the
    maximum conservation and use of water; B, the protection of
    western Colorado water uses, both existing and potential, in
    accordance with the declared policy of the State of Colorado;
    and C, the preservation of recreational values. The Colorado
    River District calls for nothing more than a rededication to
    these original and guiding principles of the Fryingpan-Arkansas
    Project.
        A couple other elements of those operating principles which
    I would like to call note to, one is the protection of stream
    flows on the Roaring Fork River above Aspen. Authorized in the
    original project was a second west slope reservoir; however,
    none was found feasible and none was ever constructed. The
    impacts to stream flows, however, continue to occur without any
    mitigation from such a reservoir.
        To further protect the upper Roaring Fork River, minimum
    stream flows were included in the principles. These are not
    being met consistently with attendant impacts on stream health
    and local recreational opportunities, and they deserve
    attention.
        Finally, I'd like to raise a looming issue of concern
    regarding repayment of Ruedi Reservoir. Ruedi Reservoir is a
    separately allocated feature of the Fryingpan-Arkansas Project
    for repayment purposes. There is no sponsoring entity like the
    Southeastern District for Ruedi Reservoir. At the time of
    authorization, Ruedi repayment was anticipated to come
    principally from a burgeoning oil shale industry and water
    service contracts to that industry.
        That industry has not materialized, in fact, has not
    materialized after two booms and busts in the energy cycles.
    There are numerous critical water contracts from Ruedi
    presently; however, they are much smaller contracts, bringing
    in less than the annual revenues required for repayment to the
    Federal government. The result is a negative amortization on
    the project. And the combination of an increasing repayment
    cost, in fact, the original cost of the repayment cost of the
    project was about 17 million, is now well over $30 million, and
    we have less time in which to repay it. Repayment is due no
    later than 2019. The result is the cost of water, annual
    service cost of water, is increasing geometrically and will
    soon become cost-prohibitive well in advance of 2019.
        I anticipate discussing this issue with the committee,
    Secretary of Interior and others who can help address this
    issue. It should also be noted that Ruedi, in addition to
    providing critical waters to west slope farms, cities and
    municipalities, is also a critical water source for water for
    the recovery of four endangered fish species listed under the
    endangered species act residing in the Colorado River.
        The Colorado River District, my district, looks forward to
    working with this committee, the Congress, and all project
    interests to ensure sustainable water in the future. We need to
    honor first and then fulfill the past commitments, and then we
    can move forward toward the admirable and necessary goal of a
    sustainable water future.
        Mr. Lamborn. OK. Thank you, Mr. Treese.
        [The prepared statement of Mr. Treese follows:]

        Statement of Christopher J. Treese, Manager, External Affairs,
     Colorado River Water Conservation District, Glenwood Springs, Colorado

        I want to thank Chairwoman Napolitano for this opportunity to share
    the Colorado River Water Conservation District's concerns and
    recommendations regarding the Fryingpan-Arkansas Project and the
    important goal of a sustainable water future. I also want to extend my
    District's gratitude to the Chairwoman for her commitment to the
    subcommittee's field hearings and her personal travels throughout the
    West to see and hear first-hand the issues facing Western water users.
        The Colorado River Water Conservation District is the principal
    policy body for the Colorado River within Colorado. We are an
    independent, political subdivision of the State of Colorado responsible
    for the conservation, use, and development of the water resources of
    the Colorado River basin to which the State of Colorado is entitled
    under the 1922 and 1948 Colorado River compacts. The Colorado River
    District includes all or part of 15 counties in western Colorado,
    including the Fryingpan and Roaring Fork Rivers which serve as the
    source waters for the Fryingpan-Arkansas Project. We offer the
    following testimony in a spirit of cooperation and partnership to
    ensure that adequate and safe water supplies are developed and
    maintained in a manner that is both timely and compatible with the
    competing values for water in the arid West.
        I would like to further commend the chairwoman for the topic of
    today's hearing. The Fryingpan-Arkansas Project, or ``Fry-Ark,'' is a
    fitting lens through which to view the challenges and opportunities
    inherent in the goal of sustainable water supplies. The Fry-Ark
    project, like so many throughout the arid West, faces competition for
    its water supplies. Competing values place stresses on the source
    waters, delivered waters, water quality, and management of the
    project's facilities. Agricultural beneficiaries struggle to maintain
    viable business operations in the face of lower commodity prices and
    increasing municipal demand for agriculture's water supplies. Other
    competing interests seek higher reservoir lake levels for recreation,
    while downstream interests compete for different water release
    schedules. White water enthusiasts favor higher flows during rafting
    season, while anglers seek more consistent flows that optimize trout
    habitat and are safe for wading. Accordingly, the Fry-Ark project, like
    other Western water projects, faces on-going challenges to sustainable
    and acceptable operations.
    Ruedi Reservoir
        As a federal transmountain water diversion project with a Colorado
    water conservancy district sponsor, the Fry-Ark project is subject to
    unique conditions of Colorado water law. The Colorado River basin, as
    the basin-of-origin for the project's water supply, enjoys certain
    protections in law not required of non-conservancy district water
    projects. Colorado law requires the conservancy district to ensure that
    present and future water uses in the Colorado River basin are not
    ``impaired nor increased in cost at the expense of the water users
    within the natural basin.'' (Colorado Revised Statutes 37-45-
    118(b)(II)) To fulfill this provision of state law, a central feature
    of the Fry-Ark project is Ruedi Reservoir. Congressional authorization
    for the Fry-Ark, in fact, specified that Ruedi Reservoir be the first
    project feature constructed.
        The Colorado River basin is not just the source water for the Fry-
    Ark project. Congressional authorizing legislation and related
    documents clearly establish Western Colorado as part of the project's
    service area. Today, Ruedi Reservoir provides supplemental water
    supplies to cities, towns, commercial interests and individual water
    users in Western Colorado. As a direct result of Ruedi's operations,
    Colorado's longest stretch of Gold Medal trout fishing extends from
    Ruedi dam to the Fryingpan River's confluence with the Roaring Fork
    River and onto its confluence with the Colorado River at Glenwood
    Springs.
        Western Colorado will continue to advocate for fair and equitable
    treatment of the Fry-Ark project's western service area in existing
    operations and any future changes to operations or expansions.
    Operating Principles
        Like many of today's water projects, the Fry-Ark was originally
    envisioned as a much larger water project. The original ``Gunn-Ark
    Project'' proposed nearly 500,000 acre-feet per year of diversions.
    Local opposition, however, resulted in project changes and assured
    operating conditions that ensured a viable project that provided a
    sustainable water supply without decimating the basin-of-origin. These
    conditions and the related operating principles were officially
    incorporated into the Fry-Ark's Congressional authorization in House
    Document 130. (Operating Principles Fryingpan-Arkansas Project, 87th
    Congress, First Session. March 15, 1961.) Interpretation and
    fulfillment of some of these permit conditions and project compromises,
    however, remain an area of contention.
        The Operating Principals of the Fry-Ark Project were incorporated
    as Sec. 3 of the authorizing legislation. (P.L. 87-590, 87th Congress,
    H.R. 2206. August 16, 1962.) The opening paragraph of these Principles
    states:
        ``The project contemplates--
            (a)  The maximum conservation and use of water;
            (b)  The protection on Western Colorado water uses, both
            existing and potential, in accordance with the declared policy
            of the State of Colorado; and
            (c)  The preservation of recreational values.''
    (Operating Principles, Fryingpan-Arkansas Project. Page 1.)
        The Colorado River District calls for a rededication of the U.S.
    Bureau of Reclamation (``Reclamation''), along with the project's East
    Slope and West Slope beneficiaries, to these guiding principles.
        To address the additional transmountain diversion of water by the
    private Twin Lakes Reservoir and Canal Company, the Operating
    Principles state, ``in order to offset adverse streamflow (sic)
    conditions of the Roaring Fork River above the town of Aspen which
    might occur as a result of the project enlargement of the Twin Lake
    Reservoir, the Ashcroft Reservoir on Castle Creek, or some reservoir in
    lieu thereof, shall be constructed on the Roaring Fork drainage above
    Aspen....'' (Operating Principles, Fryingpan-Arkansas Project. Sec. 2;
    Page 2.) The Principles go on to acknowledge that any such mitigation
    reservoir for the upper Roaring Fork River had to first be found
    feasible by the Secretary of the Interior. No feasible project was, in
    fact, found, and the communities in the upper Roaring Fork basin
    continue to be concerned about project impacts to stream health and
    water quality.
        Moreover, the Operating Principles include minimum monthly average
    in-stream flow thresholds for the Upper Roaring Fork River above the
    City of Aspen that were established by the U.S. Fish and Wildlife
    Service in cooperation with the (then) Colorado Department of Game and
    Fish. There are also ``hard minimums'' below which stream flows are not
    ever to be reduced by diversions. Both these recommended average and
    ``hard'' minimum flows are consistently not met. Proposed further
    development of East Slope water employing Fry-Ark facilities threatens
    to further aggravate this situation.
        The Fry-Ark Operating Principles also provide for a 3,000 acre-foot
    exchange between the Twin Lakes Company and the Project as an
    obligation of the Project. The current agreement implementing this
    exchange expires in 2014. The Project yield from diversions on the
    Hunter Creek are dependent on a long-term or permanent Twin Lakes
    Exchange agreement, as does the health of the upper Roaring Fork River.
    Reclamation is a necessary party to a future extension of this
    agreement and must provide leadership to ensure the requirements of the
    Operating Principles are carried out for the long term benefit of both
    the East and West Slope portions of the project's service area.
    Project Repayment
        Ruedi Reservoir is a separately allocated feature of the Fry-Ark
    project for repayment purposes. Ruedi's repayment was anticipated to
    come from West Slope water service contracts. There is no sponsoring
    water conservancy district with repayment responsibilities for Ruedi
    Reservoir. At the time of project authorization, Ruedi's repayment was
    projected to predominantly derive from water service contracts with the
    then-anticipated oil shale industry. Since the anticipated oil shale
    industry and its attendant industrial water demands did not
    materialize, scheduled annual payments to the federal government have
    been delinquent. However, there is no sponsoring local agency
    responsible for these payments. As a consequence, negative amortization
    of the project is occurring. Congressional authorization requires that
    the project's costs, including the original $17.5 million reimbursable
    portion of Ruedi Reservoir's construction costs, be repaid to the
    federal government by 2019. With negative amortization, this price is
    currently over $30 million and growing geometrically. The result is an
    increasing project cost and a further reduction in water demand because
    of the resulting increased price for Ruedi water. While a new round of
    interest in oil shale development is present today, changing
    technologies and newly proposed project locations outside the Colorado
    mainstem largely preclude oil shale as Ruedi's repayment solution. The
    Colorado River District anticipates discussing this matter with this
    committee and the Secretary of the Interior in the next few years to
    address these repayment conditions and to ensure the perpetual benefits
    to Western Colorado of Ruedi Reservoir as an integral feature of the
    Fry-Ark Project.
        Finally, it should be noted that Ruedi Reservoir today is a key
    source of water for the cooperative Recovery Program for the Four
    Endangered Fishes of the Upper Colorado River (``Recovery Program'').
    Over 21,000 acre-feet of water in Ruedi is dedicated to the
    preservation and recovery of four local fish species listed as
    endangered under the Endangered Species Act. Only half of that 21,000
    acre-feet, however, is permanently dedicated to the Recovery Program.
    The long-term use of Ruedi water and the attendant repayment
    implications are uncertain but must be addressed.
    Conclusion
        Western Colorado is an often overlooked project beneficiary of the
    Fryingpan-Arkansas Project. Ruedi Reservoir is an integral element of
    the project. In addition to fulfilling the mitigation requirements of
    Colorado water law, Ruedi provides vital water supplies to West Slope
    municipalities, industry and agriculture. Lingering issues of
    compliance with the project's Operating Principles and emerging issues
    of repayment and future water allocations must be addressed to the
    mutual satisfaction of all project beneficiaries and the U.S. Bureau of
    Reclamation.
                                     ______

        Mr. Lamborn. And Mr. Stealey is our next witness.
        Mr. Stealey, I notice that you have not submitted a written
    statement prior to your statement, like everyone else has and
    which the rules of the committee call for. Will you be able to
    do that after your testimony?
        Mr. Stealey. After 28 years in government, I have never
    written anything down, and I'm not starting today.
        Mrs. Napolitano. Mr. Lamborn, the Chair agrees that it's
    always preferable to have written testimony and to have that
    testimony submitted at least 48 hours before the hearing, and
    many times that is not done, and we still admit it into the
    record. The Chair submits that Rule 4B provides clear
    discretion for the Chair to allow the witness to speak without
    a written statement and will allow Mr. Stealey to testify, and
    I welcome his participation and his appearance.
        Mr. Lamborn. Please continue.

     STATEMENT OF WALLY STEALEY, ARKANSAS VALLEY RANCHER, PUEBLO,
                                COLORADO

        Mr. Stealey. Well, Committee, Madam Chairman, we are glad
    you're here. Welcome to the world of Colorado water buffalos.
    If you spend a lot of time with them, you will learn very
    rapidly that the most important thing you can remember is this
    statement, the difference between the sin of omission and the
    sin of commission. They will never lie to you, and they'll
    never tell you the whole truth unless your question is
    extremely specific as to what they know. I truly enjoy them.
    Many of them are my friends. I lobbied in the water area in
    Colorado many, many years.
        My first physical job as a young man was working on a
    transmountain diversion ditch, the (inaudible) ditch in Ouray
    County with an elevation of 11,000 feet, moving water from the
    west fork of the Cimarron River into the Cow Creek, and thus
    the Uncompahgre River and back down into the Gunnison. That
    ditch was dug in the late 1800's, the early 1900's, by one
    (inaudible). My family's been here all too long.
        Most of the people in the room either know me or heard of
    me. You heard everything there is to hear, so I'm just going to
    try to summarize this from just--I guess the best way to
    describe myself is the cowboy who happened to go to college.
        The biggest danger we've got--and I drafted a piece of
    legislation when I was Chairman of the District, the biggest
    danger we've got is diminishing the taxpayers' role in the
    Fryingpan-Arkansas Project by allowing PSOP participants to
    diminish our stock, just like in the business world. If I buy
    stock in your corporation and you add more stock and don't give
    me more, you have diminished my holding in the company.
        That is extremely dangerous. PSOP participants claim they
    have 11 or 12 members, but let me tell you how that's really
    going to work. It's created for the big three: Pueblo, Aurora,
    Colorado Springs. And when it comes time to pony up the water
    for the dam, the smaller communities are going to have to say,
    ``We probably don't have it.'' And Aurora has already said to
    one of those communities, ``Well, we'll put your money in for
    you.''
        This is a very dangerous project. If you want this to be
    still a public project, like a municipal golf course, please do
    not let them put a country club on top of our municipal golf
    course. It would be very bad for this valley.
        The exchange issue is most fascinating. It is not really
    covered in Colorado law, but we allow it. It took us years to
    get legislation through that would allow a water judge in
    Colorado to consider water quality. They don't have to deliver
    it. They can now consider it. We consider that a big step. We
    don't do anything with exchanges.
        We've got a little office out there in Crowley County with
    a nice young man--older man now--controlling and watching all
    of the exchanges. He knows where they go, Pueblo knows where
    they go, Aurora knows where they go, Colorado Springs knows
    where they go. And when I asked the state engineer to give me a
    list of all of the exchanges for a six-month period, he said,
    ``I don't have a clue what the hell they're doing.'' That's the
    water engineer for the State of Colorado.
        This has got to be stopped. Exchanges need to be
    controlled, because they can do their studies until hell
    freezes over, and when you take all of the good water out of
    the top of the river, it's going to get worse at the bottom of
    the river. And as soon as we put this package together, I'll
    bet every one of you that Kansas comes walking in the door and
    says, ``You're not going to do that.'' They have a stake in
    this too. And they should.
        We have watched one of our counties, Crowley County,
    totally destroyed by the purchase of their water. Let me
    address the water concept of property rights. Justice Douglas
    wrote in his famous decision, allowing for cities to control
    for aesthetic purposes planning and zoning was declared a
    property in the United States was not a right like the right of
    free speech or the right to a lawyer, but in fact it's a
    privilege to be used in conjunction with the benefit of the
    community. And it is not up to the United States government or
    the State of Colorado to provide farmers with a market for
    their water.
        They've got to join in there just like the rest of them.
    God, I love them. I'm a water right holder in the Bessemer
    ditch. I have water in Fremont County on my ranch, and I cry
    every time I hear of a ranch going under. But let me tell you
    one thing they won't admit to. Whenever there's a ranch or a
    farm for lease, somebody gobbles it up immediately. So it must
    not be all that bad out there in terms of making a living. They
    can lease that land immediately.
        Mr. Lamborn. Mr. Stealey, thank you for your testimony. And
    you can----
        Mrs. Napolitano. I will give him some of my time.
        Mr. Stealey. I would only ask one privilege. I could go on
    forever, but I would like to recognize two people that have not
    been recognized. They both preceded me as Chairman of the
    Southeast District, and both of these gentlemen have spent
    many, many years working on this project. I was only on the
    board five years, and they both go over 20 years, and that's
    Glen Everett and Alan Hammill, and with the Chairman's
    permission, I'd like to have them stand and be recognized.
        [Applause.]
        Mr. Lamborn. OK. Thank you.
        Mr. Stealey. Thank you very much, Mr. Chair.
        Mr. Lamborn. OK. At this point we'll have questions. I'll
    start out, and then we will go down the line here and finish up
    with Chairwoman Napolitano.
        Mr. Peternell, by calling for the kind of study that is
    explained in Representative Salazar's bill, not just
    feasibility, but things like economic, social, and cultural
    factors, do you understand that this is an unprecedented kind
    of study for a project like this?
        Mr. Peternell. It may be unprecedented. I don't know that
    myself, but it may be. I'll accept that representation from
    you. Nevertheless, we think that studying the impacts of water
    development is the cornerstone of making smart choices and
    choosing water supply arrangements that have the least impact
    on the environment and on the communities.
        Mr. Lamborn. OK. Thank you.
        For Mr. Treese. PSOP wouldn't result in any more
    transmountain diversion from the Western Slope or for that
    matter from the Pacific watershed, would it, compared to what's
    happening right now?
        Mr. Treese. It does not specifically authorize it, and it
    does have mitigation provisions if additional transmountain
    diversions do occur, so I think additional transmountain
    diversions are in fact anticipated in the language of the
    legislation. Not required, excuse me, but anticipated that they
    are possible.
        Mr. Lamborn. OK. For Mr. Tauer. Mr. Mayor, what assurances
    are you able to give anyone in the Arkansas Valley that water
    quality will be dealt with by the City of Aurora as things
    would go forward?
        Mr. Tauer. In the future or up to--now?
        Mr. Lamborn. In the future. Should PSOP take effect, then
    what--and you've heard some concerns about water quality. What
    is your response? What is the City of Aurora going to do about
    that?
        Mr. Tauer. Well, I think maybe we can make a couple of
    points. The first one is that remember water quality was
    mentioned in some of the original legislation. So it's a
    concern that goes back decades. And so it's not something that
    necessarily popped up recently. For example, the conduit was
    part of some of the original legislation. So some of those
    water quality issues have been around for decades, and they're
    not a direct result always of how water is transferred. So
    there's a lot of things that feed into that.
        One of the things that we did was last year we supported a
    water quality bill in the State of Colorado that says that the
    state engineer has the ability to control the movement of water
    when it goes below a certain level. And so we would support
    that kind of legislation and those kinds of rules.
        Mr. Lamborn. OK. Thank you. My last question is for Mr.
    Peternell. Isn't it true that Colorado Springs and the City of
    Pueblo and others have an agreement that protects flows of
    water through Pueblo and that improves these flows above and
    beyond what otherwise would have been?
        Mr. Peternell. It's true that there's an agreement in place
    between various entities, including Pueblo and Colorado Springs
    and Aurora, which protects some minimum flows under certain
    conditions. Not under all conditions, under certain conditions.
    Whether that agreement improves flows I can't speak to. I don't
    think that's in fact true. I don't think that's true.
        Mr. Lamborn. OK. Thank you. At this point I'll turn over
    questioning to Representative Udall.
        Mr. Udall. Thank you, Congressman Lamborn.
        I wanted to direct my first and it may be my last question,
    but I think there's a lot to be further heard from Wally
    Stealey. We've heard Mr. Stealey's description of the problem.
    What's the solution? Where do we go from here? What advice
    would you have for the delegation sitting up here as we move
    forward? I really look forward to your comments.
        Mr. Stealey. Congressman Udall, you can't unring the bell.
    We all know that. So I think what we're really urging the
    committee and the full committee when you get back to the
    House, is the next time the bell tolls, you've got to get it
    right. And one of the things you can't do and get it right is
    to walk into a community like Rocky Ford and buy the ditch and
    say, ``We've left all of this money on the table.'' When it
    comes right down to it, it's not a tip for a damn good
    waitress.
        They ain't leaving any money. They've destroyed the school
    district. They've basically destroyed the town. The Rocky Ford
    cantaloupe industry is gone. But we left $250,000 on the table.
    You don't have a right to destroy us.
        I hear that Aurora's got a plan for their future. I hear
    Colorado Springs has got a plan for your future, but let me
    submit this into the equation. If the mayor of Aurora says
    water is life, my question to you, Mr. Mayor, is why do you
    insist on killing us? That's not right. And I don't think under
    the Colorado constitution you have a proper right to do that.
        I would further submit to you that our constitution could
    be read in terms of your right is only for the use of that
    water, not to transfer that water. I taught constitutional law
    for 25 years. And I said to a lawyer one day, didn't you learn
    anything when you read the constitution? We have a major
    problem, gentlemen.
        Water releases, let me address that, Mark, for just a brief
    second. We have water leases that are perfectly legitimate on
    both sides of the contract, but when the growth gets to the
    point and the water lease period runs out and the judge is
    required to make a decision, he's not going to tear Alice,
    Mary, and Molly, that he's taken water out of their house
    merely because there's a bunch of water buffalos who drew up a
    lease that expires next week. That ain't going to happen,
    folks. So I warn you that a water lease is a sale with
    continued revenue. I don't think you'll ever get it back. So
    you have to be very, very careful.
        I'm going to let the Bureau off with just a slight slap. I
    totally agree they don't have the authority. I thought they
    were going to be playing poker with us with deuces in the hole
    ever since I've been on the board out there. But I do wish they
    would represent all of us and quit becoming the Bureau of Urban
    Development. That's not their role.
        Some of us are very angry at them, because it appears--I'm
    not saying that it is, but you get political perceptions. A
    perception of the Bureau is that it is being run out of
    Arapahoe County, and that's not right. I think I'll quit, Mark.
        Mr. Udall. Mr. Stealey, if you could wave a wand, what
    would the solution look like to you?
        Mr. Stealey. Number one, nobody in Pueblo County that I
    know of has said that Colorado Springs Utilities and Colorado
    Springs does not have a right to the water they already have in
    the Arkansas and they certainly have a right to move it up
    there. And I'm very aware of the fact they pay more money in
    now that they didn't in the beginning. We need to stop the
    transfer of water where it is now--according to the IGA that
    Mr. Rivera was bragging about, it says that Aurora will not
    take any more water.
        There's supposed to be fences there, but Aurora in fact
    yesterday, trying to change the IGA from a three-out-of-ten-
    year deal to a five-out-of-ten-year deal. And if you go to the
    (inaudible) down in the valley and you take that water for five
    years off, you're going to find out you've got to keep the
    water for five years on before you can grow a decent crop
    again. You've in effect taken the water off the land period.
    Because then you've got to irrigate it for five years to get
    ready to grow a crop, and not going to lease it for five years.
    It's gone. It's just gone.
        So we need to stop. We need to take them at their word.
    Peter Banning said, ``We don't want any more water.'' Peter is
    a good friend of mine. We don't agree on anything, but he's a
    good friend of mine. He's from New Zealand, you know. He's not
    a Coloradan.
        Mr. Udall. Mr. Stealey, on that point, I see my time is
    expired. I do know the Chairwoman has informed we're going to
    have a second round of two minutes each, so we'll come back
    around. But what I hear you saying, that there's a sweet spot
    here we've got to keep as we sit at the table, and that's the
    only way we are going to resolve this. Thank you.
        Mr. Lamborn. OK. Representative Salazar.
        Mr. Salazar. Thank you, Mr. Chair. My first question, of
    course, is to Mayor Tauer. Mayor Tauer, I have friends in both
    Colorado Springs and Aurora. As a matter of fact, you have a
    new constituent in Aurora, my son, Jesus, who just moved there
    from Dallas, Texas.
        You know, there was a (inaudible) poll that was done in
    2006 that showed that even most urban and suburban Coloradans
    are opposed to their community expending of water if it comes
    from farms. So far you've been utilizing agricultural water
    mainly because it's the cheapest source of water, or the most
    inexpensive source of water, I would say. But this goes against
    your constituents' expressed wishes. Could you address that?
        Mr. Tauer. I'm not familiar with the poll, Senator--or
    Congressman. A little early for that maybe, calling you
    Senator. But I think that that's one of the reasons why the 6-
    Party Agreement that I know you're familiar with, that we've
    limited the amount of water that Aurora will take out of the
    basin. And I was just informed that, you know, in most years
    it's limited to 24,000 acre-feet, and this glass of water does
    count against that allotment as I understand it, and we were
    willing to accept that.
        Mr. Salazar. Just make sure you use the bathroom in Pueblo.
        [Laughter.]
        Mr. Salazar. Thank you, Mayor. I do appreciate it. I want
    you to know that this hearing is not specifically targeted at
    Aurora. I mean, we have to find a perfect solution here so that
    we don't destroy farms and ranches in order to make other
    greenery in the urban areas. You know, we have the ability, I
    think, and the technology available for urban areas to continue
    to reuse water. Water, as long as you do not waste it, can be
    used to infinity over and over again, which basically does not
    limit your growth. I think it's critical though that we
    continue to protect our urban water supply.
        Mr. Treese, I have a question for you. You're familiar with
    the Warren Act, correct?
        Mr. Treese. [Nods head.]
        Mr. Salazar. The Warren Act is the early 1920's amendment
    to the Reclamation Act. It governs much of the BOR's
    operations. It's relevant to the proposed 40-year lease. It
    limits the Bureau into entering long-term excess capacity
    leases to only agricultural purposes. Does the Bureau's intent
    of entering the 40-year contract to provide water for urban use
    go against Federal legislation?
        Mr. Treese. Congressman, thank you. I'm not--I am not
    qualified to provide a legal opinion, but I think the PSOP
    legislation, one of the reasons western Colorado, the Colorado
    River District is supporting the PSOP legislation is that it
    addresses the Warren Act on a project-specific basis, without
    either ignoring it nor trying to make any blanket west-wide
    changes to the Warren Act. It addresses the issue as it
    pertains to the Fryingpan-Arkansas Project.
        Mr. Salazar. So the Bureau entering into this agreement
    then would specifically not go against the Warren Act.
        Do I get additional time now to speak?
        Mrs. Napolitano. Yes.
        Mr. Salazar. Thank you.
        Mayor Tauer, as you know, my bill versus Doug Lamborn's
    bill, of course basically his is PSOP bill and mine is
    basically a bill that would actually conduct a study concerning
    the impacts of water on the basin when water comes in and out
    of the basin. What's your reasoning for opposing a cumulative
    impact study for when water moves out of basin?
        Mr. Tauer. Well, I think probably the biggest issue is that
    it looks to address things that were acknowledged to be done
    legally in the past and kind of try and reset the clock back 45
    years. And I think to look at things that are moving forward,
    that's one thing. To go back and say we want to restudy things
    that have been done in the past that have openly been
    acknowledged to be done legally, I think that's----
        Mr. Salazar. Don't you agree that by looking at the past,
    we have reasonable data to show what the impacts have been?
    We're not calling for mitigation for past action. We're just
    basically calling for an understanding of what happens when
    water is moved out of a basin.
        Mr. Tauer. We think there are some open-ended questions in
    doing it that way, and that's why we think that the original
    PSOP legislation that so many of the people in the valley have
    agreed to support has some advantages in that area.
        Mr. Salazar. Mr. Treese, a quick question. You are aware of
    H.R. 1833, which is my bill, and H.R. 2277 that is Mr.
    Lamborn's bill?
        Mr. Treese. Yes.
        Mr. Salazar. There's Western Slope protections in my bill
    which basically does not allow any further movement of water
    from the Western Slope. Are you aware that Mr. Lamborn's bill
    does not address that?
        Mr. Treese. Yes.
        Mr. Salazar. Thank you.
        Mr. Stealey.
        Mr. Stealey. Yes, sir.
        Mr. Salazar. Could you respond to Mr. Tauer's comment on
    the study on impacts in the basin when water is moved out of
    the basin? Why is it that cities are so afraid to actually look
    at the relevance and the true impacts of water when it is moved
    out of a basin? Could you address that, please?
        Mr. Stealey. Well, let me quote an old state representative
    from down in Prowers and Baca counties. He told me when I first
    went to the legislature when Dick Lamm got elected Governor and
    I was his legislative aide that I needed to learn up front and
    fast that there were only two kinds of water thieves in the
    State of Colorado. There were Republican thieves and Democratic
    thieves. I'm a Democrat, and I want to keep the water at home
    and he's a Republican thief and he wants to take it to his
    home. That's never going to change. Water in Colorado is not
    really a partisan issue; it's a geographic issue. And it's
    going to continue to be a geographic issue. But there is a
    finite supply of water. And we have to begin to recognize
    former Senator, now Congressman Ed Perlmutter, which he
    understood much better when he was leading the anti-growth
    fight in the Senate than he is now--got ya, daddy. At any rate,
    there's a big danger in this equation. It's the 51/49
    agriculture/municipal. Unless that is cleared up in the law so
    that it isn't used as an incentive to buy a farm, to take it
    out of production, and increase the number of gallons that
    relates to the term 51 percent, they can use that formula
    legally to dry up the entire damn state.
        Mr. Salazar. Thank you. I appreciate that.
        Mr. Lamborn. OK. Representative Perlmutter. You get a
    chance to protect your reputation here.
        Mr. Perlmutter. Thank you. And----
        Mrs. Napolitano. Don't waste your time.
        Mr. Perlmutter. I'm not going to waste my time. Mr.
    Stealey, you should all know, was my advisor and friend until
    today. No, I'm kidding.
        I would like to start with Mayor Tauer. One of the things
    that the Chairwoman brought up at the very outset was a concern
    on her part about conservation and conservation techniques.
        Can you describe for us a number of the steps that Aurora
    has taken when it comes to conservation and efficient water
    use.
        Mr. Tauer. Sure. Thank you, Congressman.
        Let me start with the things that we do at home. We have a
    wide range of programs to cut down indoor use, where we can
    help reimburse part of the cost for existing homes when they
    put in low-flow fixtures. We also have very strict requirements
    for low-flow fixtures in any kind of new homes. We limit the
    amount of lawn that you're allowed to put on any kind of new
    home. For example, Congressman Salazar's son is moving into a
    new area of Aurora. We would limit the kind of lawn that he
    would be allowed to put in on his property to something
    typically around 40 to 45 percent of the landscapable area.
        But aside from that, we have two very large projects. The
    first one is that we take some of the wastewater and use that
    to irrigate any public areas on the north half of the City of
    Aurora. And we just sited a new reservoir, which should be on
    line in about four years, to double that capacity. But in
    addition to that, we have an $800 million project to reuse some
    of the water that after it's used by the city of Aurora, would
    go into the South Platte.
        We have a project that brings that back, as Congressman
    Salazar was alluding to, and lets us reuse a part of that
    water. And that's the biggest project of its kind in the State
    of Colorado and in the long run will allow us to yield
    something on the order of 10 to 15,000 acre-feet from water
    rights we already own.
        Mr. Perlmutter. Can you explain the sort of lease in
    allowing a part of a farm to go fallow? That part of your water
    purchase or water lease approach?
        Mr. Tauer. Well, we believe, as we were talking about
    earlier, that the future is not in a confrontation between
    agricultural and municipal users. It's in finding ways to
    cooperate. And one of the ways that we hope to be able to do
    that is through different kinds of fallowing programs. And the
    local farming community has to say how that program works best
    for them, but the basic idea would be that a part of the water
    that they might typically use to farm would be leased to a
    city, that area of the farm would lay fallow, and that would be
    rotated through a number of years. And I believe in Colorado
    law, it is now limited to a quarter of their farm that can be
    fallowed and have that water transferred to a city.
        Mr. Perlmutter. Isn't it true, sir, that--and with respect
    to Mr. Stealey, I think, was using a little rhetorical license
    when he talked about killing a town or taking away a way of
    life. Did you--Aurora--are you aware of any coercion or threat
    or other type of means when you purchased or leased water
    rights from anybody down here in this basin?
        Mr. Tauer. No, Congressman. In fact, most of the time
    people come to us. In just the last month, I've had a couple of
    different people in the Arkansas Valley call my office and say,
    ``Would you be interested in purchasing or leasing our water?''
    So when we go down, it's always a willing seller, and most of
    the time, it's people coming to us, not the other way around.
        Mr. Perlmutter. Because they found farming isn't for them
    at that point?
        Mr. Tauer. Either farming isn't for them or they can't make
    a profit doing it. And so there's a variety of reasons why they
    might do that. But it's not something where we can come and
    take the water. It has to be somebody that wants to sell the
    water to us. And the same would be true of Colorado Springs or
    Pueblo or anywhere else.
        Mr. Perlmutter. A couple more questions. First is has the
    city reached--or who has the city worked with--in trying to
    reach compromises and cooperative agreements in connection with
    the Fryingpan-Arkansas Homestake Project?
        Mr. Tauer. Pueblo, Pueblo Board of Water Works, Southeast
    Conservancy District, Upper District, Colorado Springs,
    Fountain, Colorado Springs Utilities, and we've also had
    discussions with the lower basin as well.
        Mr. Perlmutter. Last question, Mr. Treese, this is for you.
    You know, it seems to me there's a deal in here that really is
    beneficial to all parties concerned, and Mr. Stealey, I know
    that that's really what you wanted to say, that if good minds
    are coming together, we can work something out that really will
    benefit the area--Aurora, Colorado Springs, and the west slope.
    I was concerned about your comments about not being able to pay
    back the debt on the Ruedi Reservoir. If there's something--you
    know, you were looking for a sponsoring agency, I would just
    facetiously, but also in truth, suggest you take a look at
    Aurora, Colorado Springs, or Pueblo.
        Thank you, Madam Chair.
        Mr. Lamborn. OK. Chairwoman Napolitano.
        Mrs. Napolitano. Thank you. You might find it odd that my
    colleague has been chairing the last portion of the meeting.
    That's the way I run my meetings and I enjoy having him run
    them.
        Mr. Ryan, would you kindly come up and take the mike? I
    have a question for you, sir.
        Mr. Ryan. Yes, ma'am.
        Mrs. Napolitano. On the Bureau's side, does the proposed
    40-year contract violate the Warren Act?
        Mr. Ryan. No, ma'am.
        Mrs. Napolitano. And has the solicitor's office considered
    this and is it in writing?
        Mr. Ryan. If it's in writing, I have not seen it, but I
    have had conversations with our legal counsel. And as
    Congressman Salazar, I believe correctly noted, the Warren Act
    involves moving nonproject water through project facilities for
    irrigation purposes. I'm aware of only one other project in
    reclamation that has authority similar to the Warren Act, but
    for municipal purposes, that's in California, the Central
    Valley Project, through the Central Valley Improvement Act.
        Mrs. Napolitano. Would you kindly ask your solicitor to put
    it in writing at my request?
        Mr. Ryan. Yes, ma'am.
        Mrs. Napolitano. Thank you, sir. Appreciate your answer.
        For Mayor Tauer, are you familiar with what happened in
    California in the Owens Valley, and it took place quite a while
    ago where Los Angeles started buying water rights, turned into
    a bit of a dust bowl, and it took decades and millions upon
    millions of dollars to restore it. How will this be prevented
    in southeastern Colorado, or has the loss of the farmland
    already caused adverse effects on the communities?
        Mr. Tauer. Well, I'm certainly not an expert in what
    happened in California. I can tell you that the City of Aurora
    has two things that we have to do. The first one is that
    anytime that we would, let's say, hypothetically purchase a
    farm and transfer its water, we are required to revegetate that
    farm back to its natural condition, OK, to its pre-farm
    condition. And we do that. We will do that.
        We've offered many times if someone finds a property that
    we revegetated that has a problem with it, come see us, we'll
    fix it. So that's first.
        Second, with the 6-party intergovernmental agreement, we're
    capped with where we are roughly now on our ability to move
    water out of the farm right now to the valley. So we really
    can't move a lot more farm water out of the valley to Aurora
    under these intergovernmental agreements.
        Mrs. Napolitano. That may be so, but I am looking at some
    news article where they're showing a dust bowl again. Is that
    part of what the water rights that you have picked up?
        Mr. Tauer. Ma'am, the areas where we've purchased water
    rights off of a farm have been revegetated or are in the
    process of being revegetated back to their native condition.
    And again, anybody who sees an issue with one of those is
    welcome to call my office, and we'd come down and take a look
    at it and make sure it's done directly.
        Mrs. Napolitano. I appreciate that, sir.
        For Mr. Peternell. Was the environmental assessment that
    the Bureau completed on the proposed excess capacity contract
    with the City of Aurora sufficient, or do you think that a
    formal environmental impact statement, or the EIS, should be
    prepared?
        Mr. Peternell. I have to make an admission that I'm
    embarrassed to make, but I haven't had a chance to read the
    environmental assessment yet.
        Mrs. Napolitano. Your opinion?
        Mr. Peternell. I haven't read it, so I can't make an
    opinion.
        Mrs. Napolitano. Thank you. I'll take that. Are there
    potential environmental concerns connected with the PSOP, the
    Arkansas Valley Conduit, the Southern Delivery System, or the
    long-term Bureau contracts with the City of Aurora?
        Mr. Peternell. There are potential concerns related to all
    of those projects. The point I was trying to make in my
    testimony earlier was that before those projects go forward,
    it's smart and important to assess what those impacts might be
    by way of an impact statement such as the one called for in
    H.R. 1833, Representative Salazar's bill.
        Mrs. Napolitano. Thank you. Mr. Tauer, the City of Aurora
    certainly has adopted some aggressive water conservation
    measures utilizing water recycling, and I noted you use
    wastewater. Is it tertiary treated?
        Mr. Tauer. Yes.
        Mrs. Napolitano. Yet in the past the city has threatened to
    fine at least one individual for using gray water on their
    lawn, while other cities have encouraged the use of gray water.
    Is the use of gray water as a water conservation measure
    something that the city is in favor of or has looked into?
        Mr. Tauer. Under Colorado water law, there are limitations
    on what somebody individually can do with gray water, because
    of a lot of the treatment issues, it has to go through a
    licensed agency to do that. So most individuals can't do that.
    So there are times when for health and safety reasons we'll go
    to somebody and say, ``Hey, you have to obey Colorado water
    law.''
        For large-scale things like some of our public facilities,
    we're the ones doing it, so it's easy for us to control that,
    because we have the licenses in place for us to do that on a
    large scale for those kinds of projects. And that's much more
    efficient than trying to get a lot of individuals to do it in
    their home when they may not do it properly and it could create
    some health issues.
        Mrs. Napolitano. Thank you. And I know my time has expired,
    Mr. Chair, but there was one statement that you made that you
    do conservation--or you have several programs that you utilize
    with your residents. Do you have projects that go into
    conservation for the whole area to be able to conserve the
    water that you have? And also have you looked at additional
    possibility of underground water storage in aquifers?
        Mr. Tauer. Let me take the first part first, if that's all
    right. You mean in other parts of the Denver metro area have we
    been working on conservation or just in our area?
        Mrs. Napolitano. Aurora.
        Mr. Tauer. We recently led an effort in the metro area,
    including Aurora, to have where even this year, where many of
    our reservoirs are full, to continue with our water management
    programs. That's why this year, even though technically we
    wouldn't need to, we're still limiting the amount of water that
    our citizens can use on their lawns.
        We also have a tiered rate structure, so that the more you
    use, the more expensive it gets, and really drives people to
    use less water. So those are going to continue even when we
    have very wet years, because that's something that we need to
    do as being part of Colorado.
        Mr. Lamborn. OK. In the last minutes of our time, and we do
    have to give up this room, I believe, at 12:30 or so, each
    representative will have two minutes for either a closing
    statement or any final questions.
        I'll go ahead and start, and first I want to thank you, the
    audience, for coming today. You've been very attentive.
        [Applause.]
        Mr. Lamborn. And we need to bring this kind of cooperation
    to these important and critical issues, so thank you for coming
    and being here today. And Chairwoman Napolitano, thank you for
    holding this hearing. It's been informative and helpful to all
    of us, so thank you.
        Mrs. Napolitano. You're welcome.
        Mr. Lamborn. Mr. Treese, a final question for you. Which
    version of PSOP does your district support and do you have
    agreements in place stating your support for the bill of the
    type that I have already introduced this session?
        Mr. Treese. Thank you. The river district has not--my board
    has not had an opportunity to review Mr. Salazar's bill. We do
    have agreements in place and would support your bill as it is
    consistent with the bill that was introduced three Congresses
    ago, which we also supported, consistent with the agreements
    that we have reached.
        Mr. Lamborn. OK. Thank you. And in conclusion, I just want
    to say that we've had a good discussion here today. We have
    aired our views and our concerns. We are marching ever so
    slowly, but we are marching forward to a resolution, and I hope
    today was a step in that direction.
        I look forward to working with my colleagues here on the
    panel and for everyone else here today who can help us find a
    resolution to these important issues.
        Next we will go to Representative Perlmutter.
        Mr. Perlmutter. Thank you, Mr. Lamborn. Just a couple of
    statements and then I have a question.
        Again, I think that this really is an issue of property
    rights. It's an issue of the future. It's an issue of
    cooperation. I think the best way to have started this hearing
    was to watch President Kennedy and his ability to look to the
    future and to deal--he said, you know, what we're worried about
    here in 1962 is 300 million people that are going to be in the
    United States, and we're right at about that point. And it's
    our job to look into the future, to look--you know, Mr. Scanga
    talked about the changes that are occurring in the farming
    communities, municipalities, and recreational use on this river
    and vice versa. This is the time when communities really do
    have, again, just as they did in 1962 and states got together,
    but this is a time when people have to get together, put their
    intelligence to use, and work out the appropriate arrangements
    for the next 50 years.
        We've been 45 years since this thing started. There is
    talent in this room that can take care of it from this point
    forward.
        Mr. Mayor, last question, why do you need a 40-year lease?
        Mr. Tauer. I think--the primary thing is that it lets all
    of the parties come to a limitation. It's part of an agreement
    that we had in 2004, and it was a negotiated agreement where
    everybody gave some things, everybody got some things. And what
    it does is it puts the ability to use this out of being a year-
    to-year argument and says, it's here, it's here for 40 years,
    and lets us go on past that.
        I think the most--I think the most important thing that it
    does is it lets us move from talking about how to use these
    facilities to how do we really cooperate going forward? And I
    think that that's the most important thing we need to move to,
    and in my mind, that's the most important thing we can do next.
        Mr. Perlmutter. Thank you, Madam Chair.
        Mr. Lamborn. Representative Salazar.
        Mr. Salazar. Thank you, Mr. Chairman. Mr. Ryan, I believe
    that you just reaffirmed my theory on the violation that the
    Bureau of Reclamation is actually committing, because we talked
    about the Bureau of Reclamation having the authority to enter
    into a 40-year contract for excess capacities for irrigation
    uses. You are entering into a 40-year contract for excess
    capacity for urban uses, so I believe this is in direct
    violation of the Warren Act. And so I would really appreciate,
    you know, a brief on that, if you would.
        You know, several years ago, I used to watch our ditch
    meetings basically at the headgates of almost every ditch in
    the San Luis Valley when I served on the Rio Grande Water
    Conservation District.
        Many of our discussions were settled with shovels and rocks
    and angry words. I really appreciate the opportunity to be able
    to sit here and hear both sides of the issue. I think we can
    resolve the issue, but I think it's extremely critical that
    people in this state begin to understand what happens to a
    basin when you take water out of a basin. What happens to its
    environment, what happens to its economy, and what happens to
    the people that are left behind.
        The farmer that reaches an agreement with Aurora and takes
    $250,000 or whatever the price is agreed to, that's fine. He
    leaves and he's got money in his pocket. But the community that
    stays behind is the one that suffers. So I would appreciate the
    mayor of Aurora, the mayor of Colorado Springs, the mayor of
    Pueblo, and all of the other mayors to start looking at
    studying the impacts, the socioeconomic and environmental
    impacts of a basin when water leaves a basin. Thank you very
    much.
        [Applause.]
        Mr. Lamborn. Representative Udall.
        Mr. Udall. Thank you, Mr. Lamborn. If I might, I'd like to
    direct a request of Mr. Treese and then a question and then
    conclude with a very short statement.
        You talked about the payback of Ruedi, and Congressman
    Perlmutter brought it up. And if you would submit for the
    record any thoughts you have about changing the theoretical
    plan for repayment, so we can look at that, because that did
    call my attention as well.
        Mr. Treese. Thank you. I'd be happy to.
        Mr. Udall. On page 3 and 4, you talk about the way the
    operating principles for the Fry-Ark Project relate to concerns
    about additional diversions from the Roaring Fork River and the
    Arkansas Basin, and you go on to say Reclamation must provide
    leadership to ensure the requirements of the operating
    principles are carried out for the long-term benefit of both
    the east and west slope portions of the project's service area.
        Would you elaborate on what you mean and what kind of
    leadership you think Reclamation should demonstrate?
        Mr. Treese. Reclamation is the operator of the project. The
    operating principles are the requirements established by the
    State of Colorado, the proponents of the original project, and
    incorporated in Federal statute. Simply I think others have
    said before, that we need to ensure that we're learning from
    the lessons and providing for the best possible project now
    before we proceed into the future. I think a good start would
    be a rededication to those operating principles and some of the
    specifics of the operating principles that I mentioned.
        Mr. Udall. Thanks for that response, and I will
    refamiliarize myself with those principles so that I can also
    be an advocate in that regard, because there were some things
    that you talked about concerning minimum, maximum, hard and
    soft flow rates and so on that I think we ought to pay
    attention to.
        Let me just conclude by saying just a few days ago, I stood
    high on the planks of Culebra Peak. I've had a long-time goal
    to climb all the Fourteeners in the state, and had one left,
    and I stood up there--and by the way, I'll tell you, when you
    have one left, it's more interesting than when you've climbed
    them all. You're just run of the mill once you've climbed them
    all, but you wonder why you haven't climbed the one that's
    left. But what I want to say, as I stood up there, I didn't see
    the East Slope. I didn't see the West Slope. I didn't see the
    valley off to the northwest or the San Juans to the far west. I
    just saw Colorado. And I think that's the spirit in which we
    have to continue to engage in this discussion.
        And I know all of us here are working to achieve consensus,
    but I want to say in doing so, I will never forgot the need to
    carefully consider the impacts on all concerned including those
    in the area for which water is proposed for diversion. So thank
    you, Madam Chair, for coming all the way from California. We
    look forward to your presence and your future visits here to
    the great State of Colorado. Thank you.
        [Applause.]
        Mr. Lamborn. Now Chairwoman Napolitano.
        Mrs. Napolitano. Thank you, Mr. Chair. And this is not my
    first visit to Colorado. This is about my third or fourth. My
    son was stationed in Colorado Springs many, many years ago.
        What I hear here reminds me of California's north and south
    water wars, very simply--whiskey is for drinking, water is for
    fighting--is very true as well in California. And I hesitate
    because if you'll remember Colorado, and somebody was pointing
    some fingers, you water hogs in California, we were taking 5.2
    million acre-feet out of the Colorado River because California
    grew so exponentially. It's only the world's sixth largest
    economy, and we were mandated by the Department of the Interior
    to reduce the take to 4.4 million acre-feet per year several
    years ago. And this is a request of all the states, that they
    felt they needed their fair share of the water, because you
    were growing. Fine. That's absolutely correct.
        California through conservation, recycling, storage,
    desalination, reached the 4.4 mark almost two years ago. So it
    can be done, ladies and gentlemen, if you work together. The
    CalFed program in California, is for the overall health and
    wealth of California. And you're right, you need to work
    together. Congressman Udall is very correct. Together you can
    do a lot of things. Separately, not only will you fail, but the
    only ones that benefit, I'm sorry, are the attorneys. Fact or
    not.
        And in closing, I just want to say to the Coloradans,
    you've been great. Your colleagues, your representation is
    wonderful. They are very concerned. They care about what
    happens, and that's the reason I'm here. And I want to thank
    Mr. Lamborn for taking over the last part of the segment. He
    jumps right in. And so I thank you for hosting us. I thank the
    community college, Mr. Salazar for helping me get here, for my
    staff, and I want to remember--never forget actually my
    Republican colleague staff.
        So with that, I thank you very much for your patience and I
    am truly amazed that many of you have remained and stuck with
    us. God bless.
        Mr. Lamborn. This hearing is adjourned.
        [Whereupon, at 12:19 p.m., the Subcommittee was adjourned.]

        [Additional material submitted for the record follows:]

        [A letter submitted for the record by Steve Golnar, City
    Administrator, City of Salida, Colorado, follows:]

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    F. Jackson, Mayor, City of Canon City, Colorado, follows:]

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    Piltingsrud, City Manager, City of Florence, Colorado,
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        [A letter submitted for the record by The Honorable Mark F.
    Thonhoff, Mayor, Town of Poncha Springs, Colorado, follows:]

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