[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



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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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    [A letter submitted for the record by The Honorable William 
F. Jackson, Mayor, City of Canon City, Colorado, follows:]

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    [A letter submitted for the record by Thomas H. 
Piltingsrud, City Manager, City of Florence, Colorado, 
follows:]

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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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