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History



The Colorado River Water Conservation District
From its Beginning to the Present

HISTORY

Colorado River Water Conservation District (River District) was created by the Colorado General Assembly in 1937. The history suggests that the River District legislation was a compromise. State legislation creating the Colorado Water Conservation Board and authorizing the formation of conservancy districts was also introduced and passed in 1937. To address the fears of West Slope legislators that the Colorado Water Conservation Board would be dominated by Front Range interests, the River District was created as an "equalizer."

BOUNDARIES

The River District boundaries include all or parts of 15 West Slope counties and encompasses all or parts of the Colorado River mainstem, Yampa, White, Gunnison, Uncompahgre and Dolores River drainages.

Under the 1937 legislation, the River District included Summit, Eagle, Garfield, Mesa, Pitkin, Delta, Gunnison and Montrose Counties. In 1955, Grand, Moffat, Routt, Rio Blanco and Ouray Counties joined the District and in 1961, the portions of Hinsdale and Saguache Counties within the Colorado River Basin became a part of the River District.

Within Colorado, there are two other water conservation districts, the Southwestern Water Conservation District which was created in 1951 and the Rio Grande Water Conservation District, created in 1961.

MISSION AND GENERAL POWERS

The River District's general mission and powers are described in its legislative charter. The legislative declaration states:

37-46-101. Legislative declaration. "In the opinion of the general assembly of the state of Colorado, the conservation of the water of the Colorado river in Colorado for storage, irrigation, mining, and manufacturing purposes and the construction of reservoirs, ditches, and works for the purpose of irrigation and reclamation of additional lands not yet irrigated, as well as to furnish a supplemental supply of water for lands now under irrigation, are of vital importance to the growth and development of the entire district and the welfare of all its inhabitants and that, to promote the health and general welfare of the state of Colorado, an appropriate agency for the conservation, use, and development of the water resources of the Colorado river and its principal tributaries should be established and given such powers as may be necessary to safeguard for Colorado, all waters to which the state of Colorado is equitably entitled under the Colorado river compact."

The statute gives the River District broad powers to carry out its declaration. These powers are described in detail in S 37-46-107 (a) through (l). In general, the River District can appropriate water rights, litigate water matters, enter into contracts, hold real property, operate projects, etc. Paragraph (c) is particularly important because it has guided many of the District's past actions:

(c) "To make surveys and conduct investigations to determine the best manner of utilizing stream flows within the district and the amount of such stream flow or other water supply, and to locate ditches, irrigation works, and reservoirs to store or utilize water for irrigation, mining, manufacturing, or other purposes, and to make filings upon said water and initiate appropriations for the use and benefit of the ultimate appropriators, and to perform all acts and things necessary or advisable to secure and insure an adequate supply of water, present and future, for irrigation, mining, manufacturing, and domestic purposes with said districts;"

BOARD OF DIRECTORS

The District's legislation states that the district shall be managed and controlled by a board of fifteen directors, one from each of the 15 member counties. Board members are appointed by the board of county commissioners from each county and serve three year terms. Each January five board members are up for appointment. In 2003 those counties are Garfield, Gunnison, Montrose, Ouray and Rio Blanco Counties.

The Board elects a president and vice president and appoints a secretary (normally the manager) and treasurer. In 2002, the Board adopted a two term limit commencing in 2002, for its president and vice president.

The Board utilizes committees as necessary. The duties of the officers and procedures for committee meetings are further described in the District bylaws.

Regular Board meetings are held in Glenwood Springs on the third Tuesday of January, April, July and October and normally run two days.

The Board also holds special meetings and tours as necessary, including a budget workshop typically scheduled in mid-September.

RESOURCES

The available River District resources include its water resources (projects, contracts, absolute and conditional water rights) staff resources and budget resources.

The River District operates one project, Wolford Mountain Reservoir, located on Muddy Creek north of Kremmling. It also has contracted interests in water through its shares in Eagle Park Reservoir, the Homestake Reservoir exchange, water from the Twin Lake enlargement decree, a contract with the Bureau of Reclamation for Ruedi Reservoir water and a contracted interest in the Taylor Park Reservoir second fill.

The staff includes a manager, general counsel, water resource engineers and hydrologists, project caretakers and other public affairs, legal and administrative support personnel.

The River District utilizes three general budgets: the General Fund budget, Capital Fund budget and Water Projects Enterprise budget. The General Fund budget covers the general administration and operation of the River District. Revenues for this fund are primarily property taxes. The 2003 mill levy is .253 mills. Property tax revenues for 2003 will be in the range of $2.4 million.

Because of constitutional budget limitations (TABOR), the River District mill levy has been declining steadily; however, because of increased assessed valuations, total revenues have been going up at a modest pace. In 1996, revenue from property taxes was $1,917,621. In 2003, the budgeted property tax receipts are $2,434,295.

The Capital Project budget covers capital expenditures such as the acquisition of the office building and the capital grants program. Revenues for this fund are the sale of District assets, annual appropriations, interest earnings and the annual unspent balances from General Fund line items.

The Colorado River Enterprise budget covers our "business" operation of providing water. Revenues are from the Denver Water Board lease, water supply contracts and interest earnings. Enterprise expenditures are limited to those projects and prospective projects covered by the Enterprise. The Enterprise and General Fund jointly cover the costs of district personnel and board expenses on a proportional basis.

THE HISTORICAL SETTING
Early History
The Colorado River District was born out of a period of conflict between the two halves of Colorado separated by the Continental Divide: the drier and more population-dense East Slope and the West Slope with its more substantial water resources. In the 1930's, Colorado was wracked by the economic woes of the Great Depression and the drought of the Dustbowl years that hung over the entire decade. At this time, a coalition of East Slope interests pressed the U.S. Bureau of Reclamation to construct a massive transmountain diversion called the Grand Lake Project (later renamed the Colorado-Big Thompson Project, or C-BT) to drain the headwaters of the Colorado River in Grand County and divert it through a 13.1 mile long tunnel bored underneath Rocky Mountain National Park to northeastern Colorado. The C-BT project would provide farmers in northeast Colorado with supplemental "finishing" water to bring crops in this fertile area of the state to fruition. Naturally occurring water in the South Platte River basin was insufficient in volume to meet the demands of all farmers, except in wet years, resulting in fields of withered crops not worth much at
market.

In Western Colorado, the C-BT brought considerable fear, since diverting such a large volume as proposed, 310,000 acre-feet, would diminish the flow of the Colorado River to the point where West Slope farmers would soon be suffering the same fate that their East Slope counterparts were trying to avoid. Without any of the large reservoirs that exist today to regulate the flow of the Colorado River, Western Colorado relied only upon the natural flow of the river, and the high-altitude diversions proposed by the C-BT would particularly reduce the flow during the latter half of the summer irrigation season.

To combat the C-BT and look after West Slope interests, the Western Colorado Protective Association (WCPA) was formed. The WCPA, sometimes also referred to as the "Western Slope Protective Association," argued that the C-BT project would be unfair without just compensation to Western Colorado for its loss of water. The WCPA urged that a compensatory storage reservoir should be constructed to insulate and protect present and future West Slope needs for water from the large diversion of water at the Colorado's headwaters. Initially, the West Slope argued for "acre-foot for acre-foot" compensation: for each acre-foot of water diverted out of the basin, one acre-foot of storage water should be provided in return. A West Slope  Congressman Rep. Edward Taylor (D) of Glenwood Springs, was chairman of the powerful House Appropriations Committee at the time and threatened to withhold funding for the C-BT until a satisfactory compromise could be reached.
 
Compromise was reached between the two disputing sides and that compromise was embodied in Senate Document 80, which dictated the construction and operation of the C-BT project, and included direction to construct the 152,000 acre-foot Green Mountain Reservoir as the "basin of origin protection" portion of the project. Green Mountain Reservoir was the first part of the C-BT to be built.

Glenwood Springs lawyer, Frank Delaney (1889-1978), was one of the visionary founders of the Western Colorado Protective Association (WCPA), which became the Colorado River Water Conservation District in 1937. Mr. Delaney authored the text of the legislation founding the District, was its first General Counsel and served the District for 27 years. 

The members of the Western Colorado Protective Association saw that conflicts such as construction of big transmountain diversions would be a persistent problem for Western Colorado. Mr. Delaney drafted legislation for the formation of a taxpayer-funded public entity that would have the power to develop Colorado River Basin water for in-basin use and "act as a bulwark against attempted future infringements of our rights." The measure passed in the Colorado General Assembly in 1937 and the Colorado River Water Conservation District was formed.

The Colorado River District's mission:
To lead in the protection, conservation, use and development of the water resources of the Colorado River basin for the welfare of the District, and to safeguard for Colorado all waters of the Colorado River to which the state is entitled.
 

1937-1950s - THE EARLY YEARS

The focus in the early years was planning for the federal development of water projects on the West Slope and protecting the West Slope from transmountain diversion projects, primarily by Denver. During this period the River District was staffed by a contract engineer and a lawyer (Frank Delaney).

The River District's priorities were:

1. Participation in the negotiations that led up to the 1948 Upper Colorado River Compact.

2. Lobbying for and encouraging surveys and feasibility studies by the Bureau of Reclamation designed to identify Reclamation projects. These traditional Reclamation projects would be primarily for agricultural purposes and would encourage the settlement of the West Slope.

3. Representing the West Slope on transmountain diversion issues, primarily the litigation and negotiation with Denver that led to the stipulation and settlement of the Blue River Decree. This settlement adjudicated the rights of Denver for its Dillon Reservoir/Roberts Tunnel Project and the United States' rights for Green Mountain Reservoir and the West Slope features of the C-BT Project. Under the settlement, Green Mountain received the senior priority, but through the ability to exercise exchanges and provide power interference, Denver got enough water to make Dillon a feasible project. This period also included discussions and negotiations over the Frypan-Arkansas Project, which began as the Gunnison-Arkansas Project. These negotiations were concluded in 1959 and documented in the Frying Pan-Arkansas operating principles which became part of the authorizing legislation. Ruedi Reservoir was constructed as the compensatory storage a part of the project.

4. Lobbying for comprehensive legislation for the development of the Upper Colorado River Basin. This effort resulted in the passage of the 1956 Colorado River Storage Projects and Participating Projects Act (CRSPA). Under CRSPA, Reclamation constructed Glen Canyon Dam, Flaming Gorge, Aspinall Unit and Navajo Reservoir. Storage in these large reservoirs is managed so that the Upper Basin states meet downstream compact requirements. Revenues from hydroelectric plants are used to subsidize the irrigation components of the participating projects.

THE LATE 1950sTO THE MID 1970s - THE FEDERAL YEARS

During this period, the primary focus of the River District was the development of the federal projects envisioned by CRSPA. Internal Colorado issues included the proposed expansion of Denver's West Slope collection system, filings for the Windy Gap Project, the 1969 rewrite of the procedural aspects of Colorado water law, and the state legislation authorizing the CWCB's instream flow water rights program.

The federal involvement included much more than the construction of federal water projects. This period saw Congress pass NEPA, the Endangered Species Act, the Wilderness Act, the Clean Water Act, the 1968 Colorado River Basin Act (which authorized the Central Arizona Project and five participating projects in Colorado) and the Colorado River Salinity Control Act.

During this period the River District staff stayed very small: a Secretary/Engineer, office manager, technician, and law firm. However, the use of contract help for engineers, public relations and lobbying increased significantly.

The River District's priorities included:

1. Adjudicating water rights for the CRSP participating projects.

2. Encouraging and assisting the formation of local conservancy districts.

3. Working with Reclamation on the development of participating projects.

4. Litigating significant federal issues, addressing such items as the filling of Lake Powell, adjudication of federal rights under the McCarran Amendment and the implementation of the Endangered Species Act.

5. Opposing in water court the expansion of Denver's Dillon Reservoir/Roberts Tunnel system. The specific projects challenged were the East Gore collection system, Eagle-Piney Project, Eagle-Colorado Project and Straight Creek Project. In response, Denver challenged and successfully knocked out several River District conditional water rights. In 1964, and again in 1977, the River District and Denver went to federal court over the interpretation of the Blue River Decree.

6. Challenging the adjudication of the Windy Gap Project. After the Colorado Supreme Court ruled that the proposed Windy Gap Project had to comply with the conservancy district statute, the Municipal Subdistrict ultimately settled with the West Slope in the 1980 Azure-Windy Gap Agreement.

7. The River District began actively cooperating with energy companies. It conducted joint studies with several oil shale companies and filed a FERC application to build the Juniper-Cross Mountain Project as a joint project with the Colorado-Ute Electric Association.

8. On the issue of instream flows, the River District went to the Colorado Supreme Court twice - and lost. First, it tried to use its own instream flow powers, 37-46-101(g), to block a potential transbasin diversion in the Yampa Basin, then it challenged the constitutionality of the CWCB instream flow statute.

THE EARLY 1980s TO 1992 - THE TRANSITION YEARS

To then Secretary/Engineer Rolly Fischer's great credit, he was one of the first to understand that the federal role in water development had fundamentally changed in the 1970s and there was no turning back the clock. The 1980s were a period of great change for the River District and western water in general. During this period, the River District sought its own independent path. The annual budget and staff increased significantly, the General Counsel position moved in-house.

The milestones included:

1. In 1982, the impact of the oil shale bust on western Colorado, environmental and federal agency opposition primarily due to endangered fish concerns, and building local opposition killed the Juniper-Cross Mountain Project.

2. In 1982, the Municipal Subdistrict proposed building a multi-billion dollar pumped storage project as a way to satisfy its obligation to build Azure Reservoir. Azure is located on the mainstem of the Colorado River in Lower Gore Canyon, downstream of Kremmling. The River District, Middle Park Water Conservancy District and Grand County objected. The parties ultimately negotiated the Azure-Windy Gap supplemental agreement. Under this agreement, the Municipal Subdistrict paid the River District $10.2 million, which was used to help fund the construction of Wolford Mountain Reservoir.

3. Water rights litigation with Denver continued through most of the 1980s. After a Special Master and the Division 5 water judge ruled that Denver Water did not have the authority to appropriate water for use outside its boundaries for the four West Slope projects (East Gore, Eagle-Piney, Eagle-Colorado and Straight Creek), the Colorado Supreme Court overturned this decision, except for East Gore, where the court ruled that Denver never established an intent to appropriate. The Supreme Court remanded the case back to the water court to determine the amounts of water Denver was entitled to based on its contracts and agency relationships at the time of the appropriations.

4. In the early 1980s, the River District Board and staff actively participated in Governor Lamm's Metropolitan Water Roundtable and the Denver system wide/Two Forks EIS process.

5. In 1985, Summit County and Denver reached an agreement where Denver agreed to provide water for snowmaking and municipal purposes in Summit County. Denver agreed to subordinate recreation on Two Forks to Dillon Reservoir and agreed to Dillon Reservoir elevation targets during the summer season. In return, Summit County agreed to actively support the federal permitting of Two Forks Reservoir and issued Denver a 1041 permit for the Straight Creek Project.

6. In 1986, the River District, Denver Water, the Northern Colorado Water Conservancy District and its Municipal Subdistrict signed a MOU settling the remand case. Under this MOU, the River District agreed to decrees for Eagle-Piney, Eagle-Colorado and Straight Creek Projects and not to oppose the permitting of Two Forks Reservoir. In return, Denver agreed to the concept of attempting to build the Green Mountain Pumpback Project before proceeding with the Eagle-Piney or Eagle-Colorado Projects. Denver also agreed to subordinate its Eagle-Colorado Project to West Slope uses (if ever built) and to a 25-year lease from Wolford Mountain Reservoir. Denver wanted a 25 year lease to use Wolford as an interim water supply until Two Forks Reservoir was constructed ( a 15 to 20 year process). The concept behind the Wolford lease is that Denver uses this water as a substitute for the water Dillon Reservoir owes Green Mountain Reservoir in those very dry years (about 1 in 7) when Green Mountain Reservoir does not fill by natural inflow originating between Dillon and Green Mountain Reservoir. The Secretary of the Interior(delegated to Reclamation) must approve of each substitution.

7. In the mid 1980s, the relationship between the River District and Summit, Eagle and Grand Counties was often strained. The River District and Summit County had different views on the need for and interpretation of the Summit County agreement. Eagle County was upset with the River District's lack of involvement in the Homestake II Project (the River District neither supported or opposed Homestake II) and Grand County was left as the only West Slope front line entity opposing Two Forks.

8. Denver complicated the situation in 1988 by filing for water rights to implement the Green Mountain Pumpback Project and the Wolford Mountain substitution. While acknowledging the pumpback as a part of the 1986 MOU, the River District took the position that the 1988 exchange filing was premature and unnecessary. The exchange application was opposed by numerous West Slope entities and raised a number of unresolved river administration issues. The United States filed a competing application to adjudicate exchange rights for West Slope users of Green Mountain Reservoir. Denver's applications were dismissed, except that its "refill" right for Dillon Reservoir was decreed. The U.S. application was decreed.

9. In 1990, the EPA vetoed the Two Forks Project. The veto left Denver with a Wolford (then referred to as Rock Creek) lease that it could not use. Ultimately, in 1992 Denver, the United States, the River District and other West Slope parties reached a comprehensive agreement that settled the Green Mountain exchange case, amended the Wolford lease to give Denver a permanent 40% interest in Wolford Mountain Reservoir (for an annual lease that provides the River District $3 million/year through 2019), allowed for the acquisition of Clinton Gulch Reservoir by Summit County (the River District provided $4 million toward the acquisition), and provided 920 a.f. of water through Denver's Moffat system to the Fraser River Valley in Grand County.

10. The final legal challenge to the construction of Wolford Mountain Reservoir was addressing concerns in the Grand Valley with the impact of the Wolford Mountain substitution on salinity levels in the Colorado River. This issue was settled through what we refer to as the Palisade stipulation. Under this agreement, Denver agrees to sequence a Wolford substitution by using Williams Fork water during the critical irrigation season. In hindsight, actual salinity levels at Wolford Mountain Reservoir are much lower than the "modeled" levels predicted prior to the construction of the reservoir.

11. The 1980s were also an active period for the Gunnison River Basin. Taylor Park Reservoir, located on the Taylor River upstream of Gunnison, was constructed by the Bureau of Reclamation in the late 1930s as a late season water supply for the Uncompahgre Project. After the completion of the Aspinall Unit in the 1970s, the Upper Gunnison River Water Conservancy District, Uncompahgre Valley Water Users Association, River District and the Bureau of Reclamation entered into the 1975 Taylor Park exchange contract. This agreement allows Taylor Park operations to benefit irrigation and recreation uses in the Upper Gunnison Basin. In the mid 1980s, Upper Gunnison filed for second fill rights at Taylor Park to adjudicate its benefits under the 1975 exchange. In a landmark case that went to the Supreme Court, Upper Gunnison ultimately received the rights which were subsequently conveyed to the United States in a 1991 agreement. The Taylor Park second fill right is considered groundbreaking because it recognized that water can be stored in a reservoir and subsequently released to optimize instream recreation and environmental benefits.

12. In 1986, two new applications were made for transmountain diversion projects out of the Gunnison River. Aurora filed for, then ultimately dropped, an application for its Collegiate Range Project. NECO, a private company, filed for the Union Park transmountain diversion project. In 1988 Arapahoe County bought out NECO and refiled the application. The Union Park case went to the Supreme Court twice. The application was eventually denied based on water availability.

13. In the late 1980s, the River District began investigating alternatives for its Juniper-Cross Mountain rights. In 1989, then Department of Natural Resources Executive Director Chips Barry suggested the River District utilize the rights for instream flow purposes to support the Recovery Program.

14. Throughout the 1980s, federal issues remained very controversial. The River District and other water users first adopted a strategy of trying to amend or repeal the ESA. This approach was not successful. so Colorado water organizations organized to negotiate a programmatic approach to recovering the four native fishes listed under the ESA. This led to the signing of the Upper Colorado River Basin Endangered Fishes Recovery Program MOU in 1988. By the early 1990s the River District was expending considerable staff resources to follow and participate in Recovery Program activities.

1993 TO 1999 - MATURATION

The current era began about 1993 with the final approvals for construction of Wolford Mountain Reservoir. Actual project construction began in August 1994 and was completed in 1996. During this period, the River District staff continued to expand. Additionally, the River District matured as an organization. The Board adopted formal employee guidelines and policies, Rolly Fischer (Secretary/Engineer from 1968) retired in 1996, and in 1997 there was a significant turnover of board members.

1. The Board formalized its Water Projects Enterprise as a government "business" providing long- term water contracts.

2. The Board adopted a water marketing policy and made 10,000 a.f. of Wolford Mountain yield available for long- term contracting.

3. The River District convened the Eagle River Assembly (ERA). Ultimately the ERA process led to the 1998 Eagle River MOU. Under the Eagle River MOU, the Homestake II sponsors, Colorado Springs and Aurora, agreed to abandon their plans to build the controversial Homestake II Project and explore alternative projects more acceptable to the Eagle River Basin. The Eagle River MOU set the stage for Vail Associates, Upper Eagle Regional Water Authority, Eagle River Water and Sanitation District and the River District to establish the Eagle Park Reservoir Company and use it to purchase Eagle Park Reservoir (a reclaimed tailings pond) from Climax Molybdenum Company. The River District owns shares for 200 acre feet of Eagle Park Reservoir water and another 100 a.f. of Homestake Reservoir. The Eagle River water is marketed through the Enterprise.

4. Recovery Program issues remained a high priority.

In 1996, the CWCB filed for base flow and peak flow water rights in the Yampa River below Craig and the 15 Mile Reach of the Colorado River. These filings triggered significant West Slope opposition and a renewed interest in the Recovery Program.

In 1997, controversy over the CWCB filings, the concept of "sufficient progress" and proposed federal legislation authorizing the Recovery Program led to the discussions and negotiations that resulted in the December 1999 15 Mile Reach Programmatic Biological Opinion (PBO). The PBO was a new concept that in theory provides more certainty for both the U.S. Fish & Wildlife Service and for water users. The basic concepts of the 15 Mile Reach PBO are:

a. Covers all existing depletions (about 1,000,000 a.f./year on average, 1,200,000 a.f./year on maximum), plus an increment of new depletions (60,000 a.f/year increasing to 120,000 a.f./year depending on fish response).

b. The PBO was actually a specific biological opinion on five Reclamation projects with the non-federal projects considered "interrelated and interdependent."

c. For the first time, the PBO covered section 9 incidental take issues.

d. The biological opinion includes specific biological criteria that will trigger a reopening of the opinion. If the opinion is reopened, the U.S. Fish & Wildlife Service first reopens new uses, then existing uses (as of 1995).

e. The opinion requires new beneficiaries to sign recovery agreements and asks historic beneficiaries to sign the same agreement.

f. The PBO requires a number of specific actions. Many have not been completed yet: a "CFOPS" project to enhance spring peak flows; legal protection of reservoir releases, implementation of the Grand Valley Water management contract; a permanent source of 10,825 a.f. of water for delivery to the 15 Mile Reach; an interim contract for 10,825 a.f. of Ruedi Reservoir water (through 2012).

Upon completion, the River District Board supported implementation of the 15 Mile Reach PBO and signed an interim (through 2010) contract delivering 5,412.5 a.f. of Wolford Mountain water to the 15 Mile Reach. The Board also requested that the Recovery Program complete equivalent PBOs in other basins. The River District has not considered signing a recovery agreement until these other PBOs are complete.

5. Recovery Program Policy.

During the negotiations of the 15 Mile Reach PBO, the River District adopted a Recovery Program policy. Much of the policy dealt with the CWCB instream flow rights filed in support of the Recovery Program. These filings have been withdrawn. Other elements of the policy addressed good science (which has led to independent research sponsored by the River District), fair coverage of all the basins by the Recovery Program and equity between in-basin and transbasin projects for meeting endangered fish needs.

6. Transmountain Diversion Issues.

After the Two Forks veto, the State of Colorado took the initiative to get the process moving again. The state sponsored the Metropolitan Water Supply Investigation (MWSI). MWSI focused on four non-traditional water supply options: project integration, effluent reuse, interruptible supply contracts and groundwater-surface water conjunctive-use. A final report was issued in 1998. The report concluded that, in general, metro area water supplies were adequate to meet demands through the year 2020. The report recommended further work on effluent reuse, up to 100,000 a.f. of supply is available for future use. It also recommended conjunctive-use be further explored.

The Denver Water Board changed its planning philosophy. It prepared an Integrated Resource Plan (IRP) designed to meet the water needs of Denver, its distributors and fixed contracts through 2045. Denver adopted a policy of working on cooperative projects with other metro water suppliers, but it decided not to build projects "for" these suppliers as it had planned with Two Forks.

In 1998, the River District, working in cooperation with the Northwest Colorado Council of Governments (NWCOG), Quantity-Quality Committee (QQ), Denver Water and others began the Upper Colorado River Study (UPCO). Also in 1998, the River District Board and the Denver Water Board approved a joint resolution which led the Douglas County Water Resources Authority Study.

In 1998, the Southeastern Colorado Water Conservancy District began a programmatic study of water needs in the Arkansas River Basin by initiating the Arkansas Basin Storage Needs Assessment Study.

The Northern Colorado Water Conservancy District expanded its municipal system by building the Southern Supply Pipeline Project. This pipeline delivers C-BT Project water into the Northern Metro area; Broomfield, Louisville and Fort Lupton. Northern's policy does not allow C-BT water south of the Boulder County line, but Thornton has acquired large amounts of non-C-BT water from Northern farmers. Thornton won a critical court case allowing transfer of this water to Thornton, but has not started the project construction.

YEAR 2000, 2001 and 2002 - RECENT YEARS

The last three years have been both productive and challenging. Collectively, these three years may be one of the driest on record.

1. Colorado Statewide Matters.

a. The Drought. Hydrologically, both 2000 and 2001 were dry years. The 2000 snowpack and runoff were only "moderately" dry (/90% of average). However, the summer and fall of 2000 were very dry resulting in large releases from basin reservoirs. The dry soil conditions from 2000 carried forward into 2001.

The 2001 snowpack was again only moderately dry (85 to 90% of average), but actual runoffs were far below the projections. For the first time since the completion of construction, Wolford Mountain Reservoir failed to fill reaching approximately 63,000 a.f. (full is 66,000 a.f.) Additionally, for the first time since 1994 (and only the fourth time in 25 years), Green Mountain Reservoir did not reach a Blue River fill - resulting in a substitution (8,500 a.f).

The summer of 2001 brought average rainfall, but the fall of 2001 was very dry. Going into the 2001-2002 winter season soil conditions were very dry and reservoir levels were lower than average. The 2001 substitution triggered interest by Colorado Springs in a long term substitution agreement (similar to what Denver has with its Wolford supplies).

The combination of dry soils, lower than average snowfall through most of the winter of 2001/2002, a record dry and warm spring in 2002, and continued hot and dry conditions through August 2002 resulted in 2002 being a record dry year throughout most of Colorado. In general, conditions in the southern basins were the most severe, but the northern basins were still very dry. By mid-May, it was obvious that extraordinary measures would be needed to make it through the summer.

For the first time since 1954, Green Mountain Reservoir did not achieve a legal fill. Green Mountain contract users received no water.

Theoretically, the Green Mountain Reservoir 66,000 reservoir Historic User Pool (HUP) filled, but this amount of water was not available because of restrictions on the reservoir due to concerns by Reclamation that excessive drawdowns would reactivate or mobilize the Heeney Slide.

Through a program of utilizing Ruedi Reservoir water under contract, but not scheduled for release, uncontracted Ruedi water, and significant demand reductions, we were able to meet all critical water demands through the summer, including Green Mountain Reservoir contract users.

Throughout Colorado, only a few small reservoirs filled, available spring flows were 10 to 30% of normal. Wolford Mountain Reservoir only stored 3,000 a.f. Dillon Reservoir stored no water in priority. Blue Mesa Reservoir stored no spring runoff water. Overall inflow to Lake Powell during April to July 2002 was about 14% of normal, a record low flow.

For the second consecutive year, Denver and Colorado Springs made substitutions for water stored out-of-priority against the Green Mountain Reservoirs storage right. Green Mountain substitutions total about 32,000 a.f. (29,000 a.f. for Denver and 3,000 a.f. for Colorado Springs). Denver used all but about 1,000 a.f. of the substitution water it had available in Wolford Mountain Reservoir.

Most municipal water providers throughout Colorado enacted stringent water conservation measures. Denver Water declared a stage II drought in July. It prohibited outdoor lawn watering beginning October 1st. Denver expects that its stage II measures will remain into the spring of 2003. The City of Aurora was particularly hard hit. Its system only diverted about 30% of the amount of water Aurora's water managers expected for a drought year.

In the Gunnison River Basin, the Gunnison Tunnel placed a call on the river in June which stayed on the river through the summer. Ultimately, the Uncompahgre Valley Project used almost all of its available storage in Taylor Park and Ridgway Reservoirs. The Upper Gunnison River Water Conservancy District fully used its available Taylor Park Reservoir second fill water to keep irrigation uses in the Upper Gunnison District in priority through June. In some Upper Gunnison Basin tributaries, local calls senior to the Gunnison Tunnel were the controlling rights.

To minimize Aspinall releases and maximize water available for upstream uses, the River District entered into two agreements to reduce the Redlands call (which is at the very bottom of the Gunnison Basin). In July 2002, the River District and Redlands Water and Power Company agreed to an arrangement where the River District paid Redlands power interference to maintain the Redlands call at 600 cfs (instead of 750 cfs). This agreement was part of an overall package where the CWCB, Reclamation and the U.S. Fish & Wildlife Service also agreed to reduce the fish ladder and Two Mile Reach flow demands. These fish flow needs are met through Aspinall Unit releases.

In late October, the River District and Redlands made an agreement to remove the Redlands call through the winter months. Again, the River District agreed to pay Redlands the lost power revenues. This agreement allowed upstream junior reservoirs to store available water through the winter months.

Going into the winter of 2002/2003, reservoirs throughout Colorado are at very low levels, some approaching "dead" storage. It will likely take several average and above-average winter snowfalls to recover reservoir levels, soil moisture and base stream flows. The winter of 2002/2003 is a moderate "El Nino" year. In a typical El Nino year, Southern Colorado receives average to above-average precipitation, but Northern Colorado (north of I-70) has an equal chance of being wet or dry.

b. River District Transmountain Diversion Policy. In 2000, the River District Board adopted a transmountain diversion policy. The policy emphasizes better management of existing Front Range water supplies and the reuse of transmountain effluent and return flows. Denver Water received its federal permits and began detailed design of a non-potable reuse project. In 2001, Denver Water broke ground on actual construction of the re-use project which when completed, will deliver up to 16,000 a.f./year of non-potable water. In 2001, the City of Aurora began construction of a smaller re-use project. The Douglas County Water Resources Authority study is adopting a strategy that involves significant reuse of groundwater and transmountain diversion flows. In 2002, the City of Aurora announced plans to further expand its reuse plans.

c. State Legislation. In 2000, the Colorado General Assembly considered, but rejected, legislation that would direct the CWCB to build a 120,000 a.f./year transmountain diversion out of Water Division 4 (Gunnison River) or Water Division 5 (Colorado River). It also rejected legislation to expand the makeup of the CWCB to include more representatives from the Front Range. In November 2000, Colorado voters rejected an initiative that would have significantly reduced River District tax receipts and one which would have imposed growth measures on most counties.

In a special session during the summer of 2002, the General Assembly considered legislation that would provide the CWCB with up to $10 billion in revenue bonding authority. The bill sponsors promise to be back with similar legislation in 2003.

In late 2002, the CWCB agreed to ask the 2003 General Assembly for authorization to conduct a statewide water supply initiative study (SWSI) and a study of what is being referred to as the "Big Straw Project." The Big Straw Project is a proposal to pump water back from below Grand Junction up the I-70 corridor to the Front Range. The River District Board adopted a motion supporting an appraisal level study of the Big Straw Project.

d. Recreation Water Rights. In 2001, the State Legislature passed legislation regulating recreation in-channel diversion water rights (RICDs). The concept and debate over RICDs arose out of the Fort Collins boat chute case in the early 90s, laid dormant for awhile, then erupted again after a filing by Golden on Clear Creek. There are three separate West Slope RICD applications pending by Vail, Breckenridge and Aspen. Later in 2001, the CWCB held rulemaking hearings implementing the legislation.

In 2002, the Upper Gunnison River Water Conservancy District filed an application for a RICD on the Gunnison River. The River District filed a statement of opposition. Two other RICD applications were filed on the Front Range by the cities of Pueblo and Longmont.

In the Vail and Breckenridge cases, Judge Ossola issued rulings in favor of the applicants. The Colorado Supreme Court heard oral arguments on the appeal of the Golden case, but did not issue a decision.

e. Water Quality. In 2000, the River District Board adopted a water quality policy. The River District participated in a number of important Colorado Water Quality Control Commission proceedings.

In the summer of 2001, the River District participated in the triennial hearing process for the Lower Colorado River Basin (which includes the White, lower Yampa and lower Gunnison Rivers). We were encouraged by the success of our efforts, however we also recognize that water quality matters have the potential to require large staff and budget resources.

In 2002, we prepared for CWQCC hearings that are scheduled for 2003. We also followed a number of national water quality issues including a 2001 case where the Ninth Circuit Court of Appeals ruled that the use of pesticides or herbicides required an NPDES permit. To address the problems created by this case, the EPA issued additional nationwide guidelines in 2002.

2. Colorado River (Division 5) Issues.

a. Colorado-Big Thompson Project. In October 2000 the River District sent letters to the State Engineer and Bureau of Reclamation on the operation of the Colorado-Big Thompson Project (C-BT). The letter to Reclamation expressed concerns that the C-BT Project was not fully utilizing the project's East Slope decrees, that the operation of the non-charge program was both illegal and wasting water and that the operation of the C-BT Project was not in compliance with the Endangered Species Act (ESA). Both the State Engineer and the Bureau of Reclamation have now responded. In May 2001, State Engineer Hal Simpson responded to the River District's concern that under the non-charge program, West Slope water was not being diverted for beneficial use on the East Slope. The essence of the SEO's response is that while the non-charge water may have been delivered out-of-state in the past, it is not happening "under my watch."

In October 2001, Reclamation through Regional Director Maryanne Bach, responded that the non-charge program was not "unlawful" under federal law and that it was up to the Northern Board as to how project water should be delivered to the District's end users.

In November 2001, the Coordinated Facilities Operations Study (CFOPS) consultant working under a contract with the CWCB, concluded that Reclamation could accomplish the CFOPS goal without impacting project deliveries. This conclusion confirmed the results of the Helton study completed in October 2000.

In 2002, the Colorado-Big Thompson Project (C-BT) issues got even more complicated. In April 2002, the Board authorized litigation and delegated to its Litigation Committee the actual timing for filing a complaint. Then, during the summer months the Bureau of Reclamation "rediscovered" the Green Mountain Reservoir limitations necessary to address a landslide on the western edge of the reservoir (the Heeney Slide). In addressing the slide, Reclamation determined that its first obligation for Green Mountain Reservoir is to meet the needs of the 52,000 a.f. replacement pool, thus Reclamation's decision put the entire burden on present and future West Slope uses. This was an unacceptable precedent for the West Slope, thus the River District shifted its C-BT priorities to addressing the slide issues.

In November 2002, the River District made a proposal to the Northern Colorado Water Conservancy District for an "interim" solution and in December 2002, the River District Manager and General Counsel along with the Grand Valley Project Manager and their General Counsel met with Reclamation Commissioner John Keyes. As of the end of 2002, the River District has not received a response to its proposal from Northern. To further complicate matters, in mid-December Reclamation discovered a 15' x 20' x 5' deep depression on the upstream face of Green Mountain Reservoir.

b. Denver Water. In 2000, the River District, Summit County and Denver Water entered into a "standstill" agreement giving Denver a diligence decree on its Roberts Tunnel system while preserving Blue River Decree issues such as the decreed limitation on use of Blue River water in the Denver "metropolitan area." The standstill period is three years (until November 2003) which should be sufficient time for the completion of the Upper Colorado River Basin (UPCO) and Douglas County Resources Authority (DCWRA) studies.

In 2001, the standstill period continued. The UPCO and DCWRA studies have been moving

forward, but slowly. Toward the end of 2001, Denver Water and Hydrosphere Inc. completed the UPCO model baseline runs which will be an important analytical tool in developing an Upper Basin strategy. For most of 2001, the DCWRA study was bogged down on difficult groundwater modeling issues. The River District has hired an independent groundwater engineering consultant to help us with the "peer review" process.

In 2002, the pace of discussion among the various parties picked up. In October 2002, Hydrosphere issued the draft UPCO phase II report. The other 2002 highlights were:

Denver Water determined that one its top priorities is to find a fix for its North End system problem. The North End problem is that Denver does not have sufficient storage to meet its Moffat treatment plant demands during the summers of extended droughts. It needs either additional storage on the North (Moffat Tunnel) End of its system or a better interconnection with its South End (Blue River/Platte River).

In the fall of 2002, Denver Water and West Slope parties reached general agreements on discussions which would address a whole host of issues by the end of 2003. The issues include the North End problem, West Slope water supply shortages, Blue River Decree compliance, a Colorado Springs substitution, Dillon Reservoir levels, Blue River stream flows and a possible conjunctive-use project with Douglas County Water Resources Authority.

Denver, Colorado Springs, Summit County and the River District are close to reaching agreement on a Colorado Springs (CSU) substitution agreement.

c. Eagle River MOU. In 2000, Denver Water completed a reconfiguration study on its Eagle River rights. In 2001 we held a meeting among Denver and the Eagle River MOU parties to discuss whether or not, and if so, how to bring Denver into the Eagle River MOU. In 2001, the Eagle River parties continued discussions on bringing Denver into the Eagle River MOU. In 2002, because of the severe effect the drought has had on its water supply, the City of Aurora decided to accelerate its project development in the Eagle River. Aurora completed additional technical work on project alternatives.

d. Arkansas River Basin. In 2000, the Southeast Water Conservancy District completed the Arkansas Basin Storage Needs Assessment Study. The study recommends reoperation of the Fry-Ark Project East Slope reservoirs, providing more storage for municipal storage. It also recommends the enlargement of Pueblo Reservoir and Turquoise Reservoir as the next phase.

In 2001, Southeast moved forward with its efforts to reoperate the Fry-Ark Project and enlarge the capacity of Turquoise and Pueblo Reservoirs. This approach is now referred to as the Preferred Storage Options Plan (PSOP). Southeast has proposed federal legislation authorizing Reclamation to conduct feasibility studies on enlarging the two reservoirs. This proposed legislation was delayed over a dispute with Aurora. Southeast also filed in the Division Two Water Court for conditional water rights to enlarge the storage at Pueblo and Turquoise Reservoirs. The River District filed a statement of opposition.

In 2002, Southeast continued to pursue federal legislation to authorize a study of enlarging Turquoise and Pueblo Reservoirs. The River District, Southeast, the Twin Lakes Water Company and Colorado Springs began working on two MOUs to address River District concerns. However, toward the end of 2002 local political support for Southeast's proposed legislation began to fall apart. The Southeast Board did not approve a settlement agreement with the City of Aurora and the City of Pueblo remains opposed to the legislation.

e. Ruedi Reservoir. In 2000, the River District, in cooperation with the Ruedi Water and Power Authority and the Roaring Fork Conservancy began the Ruedi Futures study. The 2000 effort was a study of the regional and economic benefits of Ruedi Reservoir and the Fryingpan River. In 2001, we shifted the study emphasis to fishery issues on the Fryingpan River.

In 2002, we continued our Ruedi futures study efforts. Ruedi Reservoir releases were a critical component of the 2002 drought program. Ruedi Reservoir was drawn down from 78,000 a.f. (at its peak) to about 45,000 a.f. During the last extreme drought (1977), Ruedi Reservoir was only used to a small extent.

In 2002, the Bureau of Reclamation, CWCB and U.S. Fish & Wildlife Service began formal negotiations to complete a contract for the release of 10,825 a.f. of Ruedi water for endangered fish purposes through 2012. This contract is required by the Colorado River Programmatic Biological Opinion (aka 15 Mile Reach PBO).

3. Gunnison River (Division 4 Issues).

a. Transmountain Diversions. In 2000, the Colorado Supreme Court upheld the water ruling denying Arapahoe County's water rights application for the Union Park Project.

There were no new filings for transmountain diversions out of the Gunnison Basin in 2001 or 2002, however the filing by the United States to quantify the Black Canyon Reserved Right has triggered a letter from Front Range entities (and one letter signed by three Front Range Congressmen) expressing an interest in obtaining contract water from the Aspinall Unit marketing pool.

In 2002, the CWCB proposed a statewide water supply study. We expect that the SWSI study will include an analysis of potential transmountain diversions out of the Gunnison Basin.

b. Subordination Agreement. In 2000, the Bureau of Reclamation, the River District and the Upper Gunnison River Water Conservancy District entered into a formal subordination agreement to document the subordination of the Aspinall Unit rights to 60,000 a.f./year of upstream in-basin depletions.

In 2001, the River District and Upper Gunnison completed the first annual report required by the subordination agreement. During the process of preparing the annual report, we discovered that there are about 400 undecreed diversions (or enlargements to diversions) above Crystal Reservoir. In 2002, the River District and Upper Gunnison submitted a second subordination report.

c. Federal Issues. In 2000, the River District began participating in early discussions on a Gunnison Basin PBO. These discussions were put on hold in 2001 after the United States filed an application to quantify its reserved right in the Black Canyon National Park. We had some preliminary technical meetings to discuss the Park issues, but "progress" on the case was very slow. In fact, by the end of 2001, the courts had not yet decided whether venue for the Black Canyon case would be in Division 4 or Division 5. In 2002, the Chief Justice of the Colorado Supreme Court assigned the Black Canyon Reserved Right quantification case to Division 4.

The United States and opposers began an effort resolve the case. Some progress was made in late 2002 when the United States proposed a settlement based on four concepts:

Subordinating the Black Canyon right to private rights senior to Aspinall but junior to the 1933 priority of the Park right.

The Black Canyon right would honor the 60,000 a.f. of Aspinall Unit subordination.

The Black Canyon right would not impair the yield of the Aspinall Unit.

The Black Canyon right would not contribute to or aggravate flooding in the Delta area.

Toward the end of 2002, we had some additional discussions concerning the timing of a Gunnison Basin PBO and the relationship among the Gunnison Basin PBO, proposed flow recommendations to support endangered species, the proposed settlement of the Black Canyon case and an EIS on the operation of the Aspinall Unit that Reclamation plans to start sometime in 2003.

4. Yampa River Basin Issues.

a. Yampa Management Plan. The River District participated in discussions on a Yampa River Programmatic Biological Opinion (PBO). In late August 2000, the parties reached a conceptual agreement on a Yampa Basin management plan that will serve as a basis for the PBO. The plan includes the acquisition by the U.S. Fish & Wildlife Service of 7,000 a.f. of reservoir water for augmentation purposes, of which 3,700 a.f. would come from an enlarged Elkhead Reservoir. The plan contemplates enlarging Elkhead by a total of 8,000 a.f. with the additional 4,300 a.f. available for future human uses.

The Yampa Plan continued into 2001. The U.S. Fish & Wildlife Service issued the detailed "draft plan" report and held NEPA scoping meetings. The River District and the City of Craig began negotiations on an Intergovernmental Agreement (IGA) outlining the process for moving forward the NEPA process on Elkhead enlargement and if the permits are received, the actual enlargement.

In 2002, the River District and the City of Craig completed an intergovernmental agreement covering the permitting of the Elkhead Reservoir enlargement. The River District began negotiating with Craig for a more detailed project agreement and with the Craig Station (power plant) owners that hold about 8,000 a.f. of the existing reservoir.

In late 2002, the River District and the Recovery Program reached a tentative agreement on project financing where the Recovery Program would obtain a permanent interest in 5,000 a.f. of the enlargement. More detailed engineering revealed that the reservoir could be enlarged by about 12,000 a.f. The Recovery Program would also have the right to purchase up to 2,000 a.f. for a short period of time (10 years).

At the end of 2002, the River District filed for junior water rights to support the enlargement of Elkhead Reservoir.

b. Little Snake River. In 2002, the River District became actively involved in several Little Snake River issues. In early 2002, the Three Forks Ranch with land holdings in both Wyoming and Colorado filed suit in the federal District Court of Wyoming challenging the operation of the Cheyenne Diversion Project. The Cheyenne Project diverts water out of the headwaters of the Little Snake in Wyoming into the North Platte drainage for use (by exchange) for the City of Cheyenne.

In 2002, the Court addressed procedural and standing issues, but did not address substantive issues.

In late 2002, the River District participated in a meeting with the CWCB and the Wyoming Water Development Commission to discuss possible small storage projects in the Little Snake River Basin.

5. Federal/Interstate Issues.

a. Federal Legislation. At the federal level, in 2000 Congress passed the Federal Recovery Program funding legislation. Congress also passed the Colorado Canyons Bill which designated BLM areas west of Colorado National Monument as a conservation area and designated these as the Black Ridge Wilderness Area. The wilderness area is important because it designates a downstream BLM wilderness area including the mainstem of the Colorado River and does not include a federal reserved water right. In 2001, Representative McInnis introduced legislation designating Deep Creek as a wilderness area. The legislative debate over the Deep Creek Wilderness continued into 2002. The legislation did not move.

In 2002, Congress passed a small bill extending the deadline for completing the Recovery Program capital projects.

b. California 4.4 Plan. Through 2000 and 2001 there was significant progress on Colorado River and interstate matters. In 1999, Secretary Babbit announced that the Department of the Interior (Interior) would develop and adopt interim surplus/shortage criteria for the operation of Lake Mead. These criteria determine whether a normal, surplus or shortage year is declared and the amount of the surplus. Associated with the operating criteria, California, the other six basin states and Interior negotiated the basics of a California 4.4 plan. The purpose of the 4.4 plan is to reduce California's normal year use from its current 5.2 million acre feet per year to the 4.4.million acre feet level. Reducing California's use to 4.4 million acre feet requires a significant amount of current agricultural water use to be transferred to municipal uses. In September 2000, the seven Basin States reached a "consensus" on surplus/shortage criteria. In December 2001, Interior published the Final Environmental Impact Statement on the criteria identifying the seven-state consensus criteria as the preferred alternative.

In early 2001, Secretary Babbit formally approved the interim operating criteria. Secretary Babbit's successor, Gale Norton, has affirmed the Bush Administration's commitment to implementation of the Babbit interim operating criteria.

The major milestone for 2002 for the California water agencies was completion of the Quantification Settlement Agreement (QSA). The QSA quantifies the amount of water each of the four major California agricultural entities can receive. Without the QSA, the California agricultural deliveries are limited to 3.85 million acre feet in a normal year, but there are no allocations of the 3.85 m.a.f. In early December 2002, the Imperial Irrigation District Board of Directors voted NOT to sign the QSA. Although the California water agencies were continuing to negotiate through December 2002, this is a major setback for the 4.4. plan.

At the Colorado River Water Users meeting in Las Vegas in December, Secretary Norton made it clear that if a QSA is not signed, she will reduce California's water deliveries in 2003 to 4.4. m.a.f.

In 2001, environmental issues on the Colorado River Delta in Mexico continued as a major issue for resolution. The Bush Administration through Bennett Raley, has made it clear that the parties need to come up with real solutions to the delta issues, but those solutions need to be consistent with "the law of the River."

In 2002, the Colorado River Delta issues took a back seat to the QSA negotiations. The Board toured the Colorado River Delta region in November 2002.

In December 2000 and throughout 2001 and 2002, the River District joined forces with Denver Water, the Northern Colorado Water Conservancy District, the Southeastern Water Conservancy District, the Southwestern Water Conservation District and the City of Grand Junction to hire Jim Lochhead to continue to work on issues for Colorado. We plan on continuing the relationship with Jim in 2003.

6. Administrative Issues.

a. Office Spaces. In 2000 the River District purchased and remodeled the second floor of the Two Rivers Park Building. The River District had been renting portions of that same floor for the past 19 years.

In 2001, the River District put its Glenwood Springs lot (on Devereux Road) on the market. It did not sell in 2001 or 2002 and remains on the market.

b. Staff. In 2000, the River District completed a comprehensive staff salary survey and incorporated this data into a comprehensive staff salary plan. The plan is based on paying at the 60th to 65th percentile level based on similar Colorado water organizations. The 60th percentile level means that in comparing with 10 similar agencies, four would pay more and six would pay less than the River District. The salary survey will be updated in 2003.

c. Water Marketing. The water marketing program continued to operate smoothly. In 2000, the Enterprise received its Ruedi contracts (totaling 1,200 a.f.).The Enterprise Board also reached agreement with the Basalt and West Divide Conservancy Districts addressing the marketing of wholesale water in these districts. In 2001, we continued processing contracts at a moderate rate.

Because of the drought, in 2002 the demand for River District contracts significantly expanded. The River District has made all of its Eagle River water (250 a.f.) available for marketing. The District also made a request to the Bureau of Reclamation for a third Ruedi Reservoir contract for about 580 a.f. At the end of 2002, this contract was being processed by Reclamation.

d. Ballot Question. In June 2002, the River District Board voted to put a tax increase question to the voters. The proposal would have raised the River District mill levy by .25 mills for 25 years. The proceeds would have been used solely for water acquisition, water development and water quality projects. The ballot question failed by a 45% to 55% vote.


COLORADO RIVER WATER CONSERVATION DISTRICT
P.O. Box 1120 - Glenwood Springs, CO 81602 - 201 Centennial, Suite 200 - Glenwood Springs, CO 81601
(970) 945-8522 FAX (970) 945-8799
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