Testimony at UBSGWMD Hearing 081110

8/9/2019 Testimony at UBSGWMD Hearing 081110

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Testimony at Hearing Before UBSGWMD Page 1August 11, 2010

Testimony at UBSGWMD Hearing on August 11, 2010

Joe Kiely, Assistant Manager

Background and Opening Argument

This hearing has been requested by the Town of Limon pursuant to C.R.S. 37-90-131 as a party adversely affected or aggrieved by an act of the District Board.

C.R.S. 37-90-131(1)(c) states:

(c) Any person adversely affected or aggrieved by an act of

the district board, other than the announcement of control

or conservation measures or regulations, has the right to

be heard by the board. Such person shall file a written

request for a hearing that states the basis of the alleged

injury. Unless agreed otherwise by all parties to a hearing

or unless otherwise approved by the district due toextenuating circumstances, a hearing shall be held within

one hundred eighty days after filing the request for such a

hearing. Upon thirty days' written notice to all adverse

parties, the district shall conduct a hearing upon the

matter. Hearing procedures shall be as informal as

possible, with due regard for the rights of the parties. All

parties shall have the right to subpoena witnesses and to be

heard either in person or by attorney. The district board

may have such hearings conducted before an agent or

hearing officer. After such hearing, the district board shall

issue a written decision containing its findings and

conclusions and shall serve its decision upon all parties by

first-class mail. Judicial review of such district decisions

may be taken in the manner and governed by the standards

set forth for review of commission and state engineer

decisions in section 37-90-115.

This hearing was requested because of actions of the Board of Directors of the

Upper Big Sandy Ground Water Management District (The Board of Directors)associated with but not limited to an application by Cedar Point LLC.

The application of Cedar Point LLC was submitted by Chris Thorne, Attorney forCedar Point LLC on January 14, 2008 requesting an export for no more than 35

acre-feet of water from the District.

As we will show, the certain interpretations of both Colorado Revised Statute and

District rules that have been discussed between the parties of this hearing and

others which continue to be the policy of the District Board which adverselyaffect and aggrieve the Town of Limon.


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No user in the District presented specific evidence of injury during the hearing.

Upon the closing of the March 12, 2008, a vote of the Board of Directors was

taken on the application and four directors voted to approve the Application andone director voted to deny the Application.

At the beginning of the March 12, 2008 hearing, as the Attorney for the District,Scott Krob introduced the process for the hearing he stated:

There is one point that I did want to emphasis and that is according to

the district rules, the decision of the Board must be unanimous tonight in

order to approve the exportation of water, so thats and the burden of

proof is for the applicant to convince the board by a preponderance of

evidence that it has been established that the exportation will not

materially affect the rights required by permit by any owner or operator of

land within the district and will not result in injury to other (inaudible) in

the district

The Town of Limon believes it was adversely affected and aggrieved by this

interpretation of District Rule No. 3.

Following the vote, Attorney Krob indicated that the requirement for a unanimous

vote was based on an interpretation of the rule. When he stated:

At this point according to the interpretation of the rule that this would

not support the application but I would to the board that they allow the

applicant I dont know (inaudible) to submit an argument to suggest the

(inaudible).

The hearing held on March 12, 2008 was continued to May 14, 2008 to allow

Cedar Point, LLC to present further argument as to why a majority vote would be

sufficient instead of a unanimous vote.

The May 14, 2008 hearing was continued to June 4, 2008 when the UBSGWMD

Board of Directors voted that a unanimous vote was required and the application

by Cedar Point, LLC was denied.

The Town filed on July 3, 2008 three claims for relief including one under

C.R.C.P 106(a)(4) and two under C.R.S. 13-51-1-1, et seq. and C.R.C.P. 57 andDistrict filed a Motion to Dismiss on November 12, 2008. The matter came before

Lincoln County District Court for oral argument, review, consideration and

resolution of the Motion to Dismiss on July 6, 2009. The Lincoln County DistrictCourt granted in Motion to Dismiss with prejudice on July 9, 2009 in a written

Order. The July 9, 2009 Order concluded that the Town should exhaust all

remedies provided by law, including requesting its own hearing before theUBSGWMD Board of Directors concerning its claims for relief.


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The Board of Trustees of the Town of Limon held a Public Hearing December 15,2009 at Limon Town Hall to hear comment and to receive evidence on its water

resources and those of the lower portions of the UBSGWMD, and the need to

provide affordable water for the sustenance of a vibrant community in order todetermine the best action of the Town of Limon in relationship to its current and

future water use requests.

As a result we are in this hearing tonight.

Before I continue, let me reiterate that the Town of Limon continues to support

the ongoing study of the water system in the UBS aquifer and wishes to see theDistrict take reasonable actions on behalf of the users of the District to protect this

important resource from large long term exportations. The time spent in

defending interpretations that create questions of use through bulk water sales bymunicipalities, requirements for unanimous votes and the creation of a situation

where there is no reasonable way to measure the potential injury from a potential

export do little to protect the taxpayers of the Upper Big Sandy Ground WaterManagement District except expend their tax dollars.

Introduction of Petition

I would like to submit the Petition from the Town of Limon which outlines the

determinations requested by the Town of Limon

Exhibit E Petition of the Town of Limon

Read items 1-4

Claims for Relief

Exhibit F Brief in Support of Petition of the Town of Limon by Raymond L.

Petros, Jr. and David S. Hayes, Petros and White, LLC, Attorneys for the Town ofLimon

Exhibit G May 1, 2009 Memorandum by Christopher S. Thorne, Holland &

Hart, LLP to Scott Krob Regarding Rule 3 of the Upper Big Sandy Ground WaterManagement District Rules

Claim for Relief No. 1 -- Municipal Bulk Water Sales Not an Export.

As indicated in the opening statement and background, The Town of Limon

believes it is an adversely affected and aggrieved person due to the interpretationby the District that a sale of Bulk Water within the District may be determined to

be an export of water from the District.


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Limon requests that the Board determine, as a matter of policy and by majorityvote pursuant to District Rule 26, that bulk water sales by a municipality, where

such sales and deliveries of water occur wholly within the boundaries of said

municipality, constitute a beneficial use of water for municipal purposes withinthe boundaries of the District; therefore such bulk sales are not subject to the

export determinations under District Rule 3.

Under such a determination, Rule 3 of the Rules, Regulations and Guidelines

Covering the Conservation, Preservation, Protection and Recharge of Ground

Water Located in Aquifers Within the Upper Big Sandy Ground Water

Management District in El Paso, Elbert and Lincoln Counties, Colorado(District Rules), concerning export of water, is not triggered by such a

municipal use, regardless of what the bulk sale customer does after taking

possession of the water.

A. A municipal utility functions by treating and selling water to public and

private customers; therefore, beneficial use of water for municipalpurposes is accomplished upon sale and delivery of the treated water to the

municipalitys customers.

Colorado law grants every municipality in Colorado the power to operateand maintain water facilities . . . for its own use and for the use of public

and private customers and users within and without the territorial

boundaries of the municipality . . . 31-35-402(1)(b), C.R.S. Thediversion and use of water consistent with the foregoing power has been

recognized as a beneficial use under Colorado water law. See State Dept.

of Natural Resources v. Southwestern Colorado Water Conservation Dist.,

671 P.2d 1294, 1322 (Colo. 1983), superseded by statute on other grounds

(Thus, we have recognized municipal use, which includes a variety ofuses incident to governmental activities, as a beneficial use.). The

Colorado Ground Water Commission has issued permits for wells within

the Upper Big Sandy Designated Ground Water Basin authorizingmunicipal use, including for municipal use by Limon.

A municipality is effectively a water retailer, accomplishing its beneficial

use by diverting water into its treatment plant, chemically treating thewater, and then delivering the treated water to its customers via the

municipalitys infrastructure. Customers are charged a fee based on the

amount of water delivered, typically in a rate per thousand gallons.Measurement of deliveries is made using a meter at the point of delivery;

thus, the transaction, and, consequently, the municipalitys beneficial use,

is completed upon delivery of the water to the customer. Revenuesgenerated from the sale of treated water by a municipality are then used to

pay debts associated with development of the municipal system and to

fund improvements to the municipal system.


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B. Municipal use occurs upon sale and delivery regardless of whetherthe treated water is delivered to the customer through a single-

purpose tap or through a bulk sale tap.

Water from a municipality is most often delivered via an individual tap

plumbed directly to the customers property off of the municipalityswater delivery infrastructure. However, customers with transient waterdemands, such as for construction, emergency domestic or stock water,

rural firefighting, and other purposes, may not be able to justify the fees

required for a permanent, individual tap. Although such demands

constitute a very small percentage of the overall water requirements in atypical community, satisfying these demands is nonetheless necessary to

foster the economic and social success of the community. Accordingly,

such customers can be served through use of a bulk sale or common taplocated within the municipality.

It is a common practice for municipalities in Colorado, includingmunicipalities like Limon within designated ground water basins, to

deliver water to certain customers by bulk sale. Attached hereto is

information about bulk water sales in the following municipalities in

Colorado, providing examples demonstrating the prevalence of thispractice: Town of Limon, Town of Bennett, City of Greeley, City of

Durango, City of Golden, Town of Meeker, Town of Rifle, Town of

Basalt, and City of Pueblo. The method for accomplishing such bulk salesvaries from use of drive-up coin/credit card operated filling stations to

issuance of permits and meters to fill trucks from fire hydrants.Regardless of method, the need to provide for spot deliveries of water to

certain customers, and the correlative benefits to the community and

region associated with satisfying such demands, are widely recognized bymunicipalities in Colorado.

Retail bulk water sales, which transactions occur within the service area ofa municipality and include small quantities of water for temporary use, are

distinguished from deliveries of water that occur outside the service area

of a municipality via a pipeline outside the District such outside

deliveries and sales are distinguishable and not within the scope of thepolicy requested by Limon.

C. Possession of the treated water is relinquished by a municipalityupon delivery to the customer with an understanding that the water

may be fully-consumed.

While the right to divert the publicly-owned waters of Colorado is

recognized as interest in real property, a possessory interest in the water is

obtained following diversion pursuant to such a right, and this interestsurvives so long as the water is under the control of the person or entity.


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See West End Irrigation Co. v. Garvey, 117 Colo. 109, 115, 184 P.2d 476,479 (1947); Brighton Ditch Co. v. Englewood, 124 Colo. 366, 373, 237

P.2d 116, 120 (1951); Bijou Irr. Dist. v. Empire Club, 804 P.2d 175, 184

(Colo. 1991). Thus, when delivering treated water to a customer, amunicipality transfers possession of the water to the customer further

evidence that beneficial use for municipal purposes has beenaccomplished.

Upon taking possession of the water, the customer may utilize it for any

number of purposes including domestic, irrigation, industrial, commercial,

or others. Certain of these purposes will fully consume the water, whileothers may eventually return a portion of the water back to the custody of

the municipality, via its sewer system. Water delivered to customers may

also be transported far beyond the boundaries of the municipality by thecustomer; for example, a town resident or visitor may fill up containers for

use while traveling, a gas station may use water from its tap to fill the

radiators of vehicles passing through on the interstate, a fire truck may usethe water to extinguish a fire outside the municipal boundaries, or a

cannery, bottling plant or brewery may use the water to produce products

and beverages for transport to grocery shelves across the country. The

variability of water consumption by customers of a municipality isrecognized and contemplated as part of any municipalitys appropriation

of water for treatment and sale to its customers. Therefore, the

consumptive disposition of the water following sale to a customer,whether delivered by single-purpose tap or by bulk sale, is irrelevant to the

consideration of the policy requested by Limon.

Issue 1 Conclusion

Beneficial use of water for municipal purposes is accomplished

when a municipality diverts, treats, delivers and sells water within its

service area to its customers, both public and private, within and withoutthe boundaries of the municipality. The final step in the municipalitys

use occurs at the point of delivery to the customer, whether via single-

purpose tap or bulk sale, when possession of the water is transferred to the

customer for a fee. The Town of Limon requests the Board to confirmthat bulk sales of water in its service area are not an export of water for

purposes of invoking Rule 3. Limon owns municipal water rights

pursuant to permits issued by the Colorado Ground Water Commission,and has developed, at great expense, water supply infrastructure in

reliance on Limons ability to sell and deliver the water diverted pursuant

to these rights to its customers.


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to make such a determination is contrary to Colorado law, which placesthe determination authority of a public body in the majority of the

members of the body. 2-4-110, C.R.S. (A grant of authority to three or

more persons as a public body confers the authority upon a majority of thenumber of members fixed by statute.)(emphasis added). 1

The foregoing rule conferring authority on a majority of a public bodyapplies unless there is an express provision specifying different voting

requirements. See OGorman v. Indus. Claim Appeals Office, 839 P.2d

1149, 1151-52 (Colo. 1992). The Groundwater Management Act, 37-

90-101, et seq., C.R.S., under which the District and its board areestablished and derive their authority, does not expressly provide for less

than majority vote. To the contrary, 37-90-104(4), C.R.S., concerning

the Groundwater Commission, expressly provides that a majority vote ofpresent members of the Commission shall rule. Moreover, C.R.S. 37-

90-130 grants certain powers to the District, acting through its board,

including the authority [t]o prohibit, after affording an opportunity for ahearing before the board of the local district and presentation of evidence,

the use of ground water outside the boundaries of the district . . . . 37-

90-130(2)(f), C.R.S. (emphasis added). Significantly, the foregoing

section expressly vests authority to prohibit export in the Districts board,not in any single individual. As currently interpreted, Rule 3 is

inconsistent with the Groundwater Management Act.

If requiring unanimity, and thereby authorizing any single board member

to prohibit export, Rule 3 is also inconsistent with all of the other DistrictRules addressing decisions by the board. Specifically, Rules 5, 6, 9, 11,

22, 25, & 26, in addition to Policy Guideline No. 3, all speak to decisions

by the board, which means a majority of the board. Notably, Rule 26authorizes the Board of Directors to amend the District Rules by a

majority vote.

B. Allowing a single member of the Board to control the quasi-judicial

determinations made pursuant to Rule 3 subjects the District to an

increased risk of litigation and otherwise unnecessary expenses.

As previously stated, Rule 3 is rooted in authority granted by the

Groundwater Management Act, 37-90-130(2), C.R.S.:

(2) . . . [T]he district board has the authority to

regulate the use, control, and conservation of the

1The law firm of Holland & Hart, representing Cedar Point Wind, LLC in a request for approval of atemporary use of water outside the District pursuant to Rule 3, previously submitted a memo to the District,

dated May 1, 2008, setting forth in detail the legal basis for majority decision making under Rule 3 of the

District Rules. Limon adopts the arguments set forth in the Holland & Hart Memo in support of its request

to change Rule 3.


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ground water of the district . . . by any one or more of

the following methods . . . .

(f) To prohibit, after affording an opportunity for a

hearing before the board . . . the use of ground water

outside the boundaries of the district where such usematerially affects the rights acquired by permit by

any owner or operator of land within the district.

Accordingly, a request made under Rule 3 involves a determination of the

rights of a specific individual or party, making the determination of theboard a quasi-judicial action. See Colorado Ground Water Comn v. Eagle Peak Farms, Ltd., 919 P.2d 212, 217 (Colo. 1996) (Actions

involving a determination of the rights, duties, or obligations of specificindividuals are quasi-judicial actions). Pursuant to 37-90-131(1)(c) and

37-90-115(1)(a), C.R.S., such actions may be appealed to the district court

in the county where the water right is situated. Review by the districtcourt shall be de novo. 37-90-115(b)(III), C.R.S.

An export request made pursuant to Rule 3 requires the board to consider

potentially complex facts as to whether or not such request materiallyaffects the rights of others in the District. Vesting the power to deny such

a request in any single member of the board increases the potential for

determinations contrary to the evidence presented to the board, and,consequently, the likelihood of appeal. The taxpayers of the District

should not be subjected to having to pay to defend such actions on appeal.

Issue 2 Conclusion

Colorado law requires that the decisions of a public body represent the

deliberate will of majority, and not be negated by a single or minority

vote. Section 37-90-130(2), C.R.S., vests the board, not any singleindividual, with the authority to prohibit the export of water from the

District. The unanimity requirement of Rule 3 is contrary to Colorado law

and increases the likelihood of unnecessary appeals and expenses to the

District. Therefore, Rule 3 should be interpreted to ensure that approval ordenial of export requests be made by majority vote of the board.

Claim for Relief No. 3 -- Approval of Limited Bulk Water Sales by Limon.

Next, the Town of Limon believes it is an adversely affected and

aggrieved person due to the determination of the District to deny theapplication for export of limited bulk water for the Cedar Point Wind

Power Project because no competent evidence proving that such uses

materially affect other specific rights within the District as required bystatute was presented by any user.


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If the bulk water sales described in paragraph 1, above, are determined to

be subject to District Rule 3, then Limon requests the Board to reconsider

and approve, by a vote conducted in a manner consistent with thedetermination requested in Paragraph 2 above, the proposed export of

water from the boundaries of the District where such water is from anexisting Town of Limon municipal well, for temporary use, and within theallowed annual amount of withdrawal of the permit for the municipal well.

The proposed limited use of water from Limons municipal wells for

temporary uses outside of District boundaries should be approved by theboard because there is no competent evidence proving that such uses

materially affect other specific rights within the District as required by

statute.

Limon requests the Board to approve the export of water from the

boundaries of the District, where such water is from an existing Town ofLimon municipal well, for temporary use, and within the allowed annual

amount of withdrawal of the permit for the municipal well. Limons

existing wells have permits granting the right to pump up to 2700 acre-feet

annually from the Upper Big Sandy alluvial aquifer, Limon has notpreviously used more than 947 acre-feet of such appropriations on an

annual basis, temporary delivery of up to 35 acre-feet of water per year for

export from Limons municipal wells will not cause Limon to exceed itsannual appropriations, and Limons wells are located at the downstream

end of the Upper Big Sandy Designated Ground Water Basin where wateris flowing out of the District boundaries. Section 37-90-130(2)(f), C.R.S.,

authorizes the District Board to prohibit exports only where export would

materially affect other water rights in the District. In the absence ofcompetent evidence proving that such limited exports materially affect

other specific rights within the District, the District shall approve the

proposed use for the limited and temporary purposes.

Water Usage by Town of Limon

As documented, the Town of Limon has never used more than 33% of thetotal amount of rights it has. When you consider that the Town returns

about 55% of the amount pumped back to the aquifer as discharge from

the WWTP their impact is fairly insignificant. The average consumptiveuse (difference between amount pumped and amount returned) the Town

has averaged over the last 6 years would be less than the amount that

would be expected to be used in the irrigation of 150 acres of alfalfaduring that same period.

By looking at the spreadsheet on the historical pumping (Exhibit C) youllnotice that usage for 2009 was significantly below any of the previous 14


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years. This is most likely due to the fact that residents are being moreconservative with usage due to economics, the reduction of commercial

use as indicated by sales tax revenues and the loss of one of the significant

industrial users we had until June of 2008 and the fact that we receivedmuch more rainfall in 2009, reducing the need to irrigate lawns. Is this a

permanent trend or only a temporary situation, only time will tell?

Issue 3 Conclusion

The export of water consistent with the limits described above should be

approved by the District Board. Section 37-90-130(2)(f), C.R.S., requiressuch an export to be approved without competent evidence establishing a

material affect on other specific rights in the District.

Claim for Relief No. 4 -- Rule 3 Amendments.

Finally, the Town of Limon believes it is an adversely affected and aggrievedperson due to the determination of the District described in Claims No. 1-3 and

has offered a proposal which would result in all claims presented today vacated

by the Town of Limon if the District would approve certain amendments to Rule

3 of the District.

Exhibit H Town of Limon resolution No. 01-10-06- A Resolution

approving Findings of Fact resulting in proposed amendments to theUpper Big Sandy Ground Water Management District (UBSGWMD) rules

and the filing of a request for approval to export a limited amount of waterfrom the Upper Big Sandy Ground Water Basin for specific purposes and

defined periods of time addressed to the Board of Directors of the

UBSGWMD.

The Town of Limon provided the District with a copy of its Resolution

No. 01-10-06 which consists of findings developed from a public meetingon the current status of the Limon water resources. That resolution

suggests amending Rule 3 in its entirety to read:

No ground waters shall be removed from aquifers within the

boundaries of the District and exported for first use outside the

District boundaries unless approved by a majority of the Board of

Directors of the Upper Big Sandy Ground Water Management

District present at the hearing. Such approval is not required for

uses of water when the water is from an existing municipal well,

amounting in aggregate to 10 acre-feet per year or less from said

well, for temporary use (less than 3 years), and within the allowed

annual amount of withdrawal of the permit; any such exempt use

will be metered and reported to the District. Any proposed use

outside the boundaries of the District that does not meet the


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previous exemption shall require approval by a majority of the

Board of Directors of the Upper Big Sandy Ground Water

Management District present at the hearing after appropriate

filing requirements and hearing presentations have been provided.

Any owner or operator of permitted water rights located within thedistrict claiming that the owner or operators permitted water

right would be materially affected as a result of the requested use

of ground water outside the boundaries of the district shall have

the burden of proving such material affect by clear and convincing

evidence to the satisfaction of a majority of the board of directors

of the district if the water is pumped from a municipal well. If the

water is not pumped from a municipal well the burden of proof lies

solely on the export applicant to satisfy the majority of the board of

directors of the district that the use will not unreasonably affect the

existing permitted water rights.

Consideration of an application shall be made at a public meeting

to be held within the District with Notice. Such Notice shall consist

of:

A minimum of 28 days before the public meeting the District shall cause to be published written Notice in

newspapers of record in El Paso, Elbert and Lincoln

Counties.

The application for export shall consist, as a minimum, of the

following:

The type of use proposed outside the District boundaries;

The maximum amount of water to be used outside theDistrict boundaries;

The maximum time of the proposed use; A summary of current water rights and current usage

during the past five years;

Any approval of such application for export shall require a

majority vote of the Board of Directors of the District present at

the hearing. Such approval shall require findings that

existing well owners will not be unreasonably affected; the applicant has adequate water rights in place to providefor the use; the proposed use corresponds to the type of use approved

for the well;

there is recognizable public benefit achieved by theutilization of the well;


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and all use will be metered and reported to the District asspecified by the District.

Issue 4 Conclusion

The Town of Limon, following a public hearing of its jurisdiction, offersthese changes as an opportunity to end the current issues without further

legal expenses to District taxpayers while protecting the District from thereal issue which is large, permanent exports of what from the Upper Big

Sandy Ground Water Management District.

Documents

Testimony at UBSGWMD Hearing 081110