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 FryingpanArkansas 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. §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 reimburs

able 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