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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 FryingpanArkansas 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.

Ănd 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 FryingpanArkansas, 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 agri, cultural 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

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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,

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