The Colorado General Assembly adjourned its 2022 session on May 11. Among the water bills that passed, four share a common theme—funding. A rare confluence of new revenue sources led to strong bipartisan support of bills dealing with groundwater compact compliance and sustainability, state water plan projects, wildfire mitigation and watershed restoration, and urban turf replacement. A bill designed to strengthen Colorado’s water speculation laws failed.
Groundwater compact compliance and sustainability
Senate Bill 28 creates a Groundwater Compact Compliance and Sustainability Fund to help pay for the purchase and retirement of wells and irrigated acreage in the Republican and Rio Grande basins in northeast and south-central Colorado. It appropriates into the fund $60 million in federal American Rescue Plan Act (ARPA) revenue that had been transferred into the state’s Economic Recovery and Relief Cash Fund. The Colorado Water Conservation Board (CWCB) will distribute the money based on recommendations from the Republican River Water Conservation District and the Rio Grande Water Conservation District, with approval by the state engineer. These are one-time dollars that must be obligated by the end of 2024; if not spent by then, they will be used to support the state water plan.
The bill seeks to reduce groundwater pumping connected to surface water flows in the Republican River to comply with a compact among Colorado, Kansas and Nebraska. It will also help meet aquifer sustainability standards required by state statute and rules in the Rio Grande Basin, home to the San Luis Valley. To achieve those goals, 25,000 acres of irrigated land must be retired in the Republican Basin, and 40,000 acres in the Rio Grande, by 2029. If the targets are not met, the state engineer may have no choice but to shut down wells without compensation.
Sen. Cleave Simpson, R-Alamosa, general manager of the Rio Grande Water Conservation District, noted that agricultural production coming out of the two basins benefits the overall state economy, not just the local communities. “The state has some skin in the game,” he said, and the availability of ARPA revenue “presented a once-in-a-lifetime opportunity” to support the districts.
Simpson emphasized that neither district is looking for a handout. The Republican has already assessed its water users over $140 million since 2004 to retire irrigated land and purchase or lease surface and groundwater to meet Colorado’s water delivery obligations. The Rio Grande district has taxed its farmers nearly $70 million since 2006 to take irrigated land out of production and has cut groundwater pumping by a third. Simpson requested $80 million from the Economic Recovery Task Force and, by demonstrating the interconnectivity between the state and local economies and the commitment already shown by the districts—along with strong bipartisan support from legislators—was able to secure the $60 million appropriation.
State water plan projects
Each year the Colorado General Assembly considers the CWCB’s “projects bill,” which, among other things, has included appropriations from CWCB’s Construction Fund to support grants for projects that help implement the state water plan in recent years. The funding source for those grants is different this year, with gambling revenue from Proposition DD, which the electorate passed in 2019, becoming available for the first time. Proposition DD legalized sports betting and levied a 10% tax on sports betting proceeds, with the majority of that revenue going into the Water Plan Implementation Cash Fund.
House Bill 1316 appropriates $8.2 million from the fund for grants to help implement the state water plan; $7.2 million of that amount is from sports betting revenue. Rep. Marc Catlin, R-Montrose, said, “This is the first appropriation of funds from Proposition DD … and it looks like it’s starting to grow into what we had hoped.”
The bill also appropriates $2 million to CWCB from its Construction Fund to help the Republican River Water Conservation District retire irrigated acreage. Rod Lenz, district president, said the district has doubled its water use fee on irrigators but that “we’re in need of short-term funding while we wait for that rate increase.” The $2 million in state revenue will help the district meet its 2024 interim target of retiring 10,000 acres of the 25,000 acres necessary to comply with the Republican River Compact by 2029. This is on top of the funds the district will receive from Senate Bill 28.
Wildfire mitigation and watershed restoration
Like Senate Bill 28, House Bill 1379 takes advantage of ARPA revenue by appropriating $20 million from the Economic Recovery and Relief Cash Fund for projects to restore, mitigate and protect watersheds from damage caused by wildfire-induced erosion and flooding. Testimony on the bill in the House Agriculture, Livestock & Water Committee emphasized how investing mitigation dollars now helps avoid spending even more on very expensive recovery efforts later.
The bill allocates $3 million to the Healthy Forests and Vibrant Communities Fund to help communities reduce wildfire risks by promoting watershed resilience. It moves $2 million into the Wildfire Mitigation Capacity Development Fund for wildfire mitigation and fuel reduction projects. And $15 million goes to CWCB to fund watershed restoration and flood mitigation projects, and to help local governments and other entities apply for federal grants under the Infrastructure Investment and Jobs Act related to water and natural resources management.
While most of the focus at the Capitol in reducing water use has been on agriculture through retiring irrigated farmland, House Bill 1151 elevates urban turf replacement in importance. The bill requires CWCB to develop a statewide program to provide financial incentives for residential, commercial, institutional and industrial property owners to voluntarily replace non-native grasses with water-wise landscaping. It appropriates $2 million in general funds to a newly created Turf Replacement Fund and authorizes local governments, nonprofits and other entities to apply to CWCB for grants to help finance their programs. Landscape contractors, to whom individuals can apply for money to replace their lawns, are also eligible.
Rep. Catlin pointed out that “50% of the water that comes from the tap and goes through the meter and into the house is used outside.”
“We’re building ourselves a shortage,” he warned, “by continuing to use treated water for irrigation.” Rep. Dylan Roberts, D-Avon, added, “For too long the Western Slope and the Eastern Plains have borne the brunt of water conservation … but this is a bill that will give the tools to metro areas for them to play their fair part in this problem that is our drought.”
Investment water speculation
Senate Bill 29 was an attempt to strengthen protections against investment water speculation, defined as the purchase of agricultural water rights “with the intent, at the time of purchase, to profit from an increase in the water’s value in a subsequent transaction, such as the sale or lease of the water, or by receiving payment from another person for nonuse of all or a portion of the water.” It was aimed at curbing outside investors who may have little or no interest in agriculture from using the water right to maximize its value as the price of water increases during drought. It authorized the state engineer to investigate complaints of investment water speculation and, if found, to levy fines and prohibit the buyer from purchasing additional water rights for two years without the state engineer’s approval.
The 2021 interim Water Resources Review Committee recommended the bill, but it was never viewed as more than a “placeholder.” Sen. Kerry Donovan, D-Vail, a co-sponsor of the bill, expressed her disappointment that the bill did not generate more engagement between the water community and policymakers. “I was certainly hopeful that by having a bill we would force conversation,” she said, “but it did not result in having some forthright ‘let’s get around a table and hammer this out.’” Members struggled with trying to balance concerns over speculation with protecting property rights. Sen. Don Coram, R-Montrose, the other co-sponsor of the bill, emphasized, “We are certainly not trying to take a farmer’s or rancher’s ability away from selling that water. In many cases that is their 401K, their retirement.”
Opposition from water user groups in the Senate Agriculture & Natural Resources Committee sent a clear message: Existing legal requirements provide the necessary safeguards to address water speculation. Travis Smith, representing the Colorado Water Congress, said what’s needed is “having more voices, taking more time.”
Senate Bill 29 was amended to strike the language in the bill and refer the issue to interim study. Sen. Jerry Sonnenberg, R-Sterling, who was chairing the committee, expressed his frustration: “We have an ineffective water group that won’t have a conversation with lawmakers anymore. When they have a bill they just take a position and quit working with people.”
With that said he carried the bill over for further consideration, effectively killing it since this was the last committee meeting of the year. It’s unclear whether the issue will be studied this interim since it’s an election year and fewer committee meetings will be held.
Larry Morandi was formerly director of State Policy Research with the National Conference of State Legislatures in Denver, and is a frequent contributor to Fresh Water News. He can be reached at email@example.com.
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