HomeMy WebLinkAbout820726.tiff JUN 21 1982
WATER LEGISLATIVE REPORT GREELEY. G0LO
Colorado Water Congress • 1390 Logan St., Rm. 312 • Denver, Colorado 80203 • Phone: (303) 837-0812
Richard D. MacRavey, Editor June 17, 1982
Between now and the 10 a.m. , Wednesday, January 5, 1983 commencement of the Fifty-
Fourth General Assembly, we can expect -- besides election campaigns -- a certain amount
of state legislative interim committee activity.
There are twenty-one interim committees scheduled this year. Of these 21, there
are seven of varying degrees of interest to water users and those concerned with water
matters; namely: agriculture & natural resources, state-local issues (new federalism),
state government issues, energy coordinating council , joint budget committee, legal
services committee, and the legislative council itself. Of the seven aforementioned
committees, agriculture & natural resources is the most important to water users.
The membership of the agriculture and natural resources committee is as follows:
Chairman--Representative Walt Younglund (R-New Raymer); Vice Chairman--Senator Tilman
Bishop (R-Grand Junction); Senator Dennis Gallagher (D-Denver); Senator Ray Powers
(R-Colorado Springs) ; Senator Richard Soash (0-Steamboat Springs); Senator Maynard
Yost (R-Crook); Representative Laura DeHerrera (D-Denver); Representative Melba
Hastings (D-Sterling); Representative W.D. "Wad" Hinman (R-Kremmling); Representative
Jean Larson (R-Colorado Springs); Representative Jim Reeves (R-Littleton); and
Representative Kathleen Sullivan (D-Meeker).
The assignment of the agriculture and natural resources committee is to study the
following issues: (1) conduct a compilation of an inventory of all the various state
and federal potable water and wastewater programs and regulatory agencies involved
with such programs; (2) determine the feasibility of implementing a pilot project for
the utilization of recent technology available through private research firms for the
continuous monitoring of water flows; (3) determine the impacts of snowmobiles on the
economy and natural resources of the State of Colorado; and (4) examine the statutory
responsiblities of the Colorado Division of Mines.
The "Ag" Committee schedule of meeting dates at the State Capitol and the tenta-
tive topics for those meeting dates is as follows: June 30 -- snowmobiles and an
update on the "High Plains Study"; Jul 14 -- statutory responsibility of the Colorado
Division of Mines and monitor stream flows; August 11 -- potable water and wastewater;
September 9 -- statutory responsibility of the Colorado Division of Mines; October 6 --
potab`fe water and wastewater; and November 10 -- consideration of legislation and final
recommendations. ---
If any CWC member desires the complete calendar of dates for all twenty-one interim
committees and the list of members thereto, please contact the staff of the Colorado
Water Congress for copies of said memos. We do not, however, have the tentative agendas
for each committee -- due to the fact that not every committee has completed its agenda.
It should also be noted that pursuant to the provisions of article 7 of title 2,
Colorado Revised Statutes 1973, as amended, the three principal departments to be
studied (performance audit) by the joint legislative committees during the summer and
fall are: department of highways, department of local affairs and department of law.
Another item of interest to water users is the list of members of the legislature
who are not seeking their present seat; and they are (and their reason): Senator Fred
Anderson (R-Loveland)--retiring; Senator Sam Barnhill (R-Golden)--retiring; Senator Bill
82072 6 -9.
3� ��f 3/ >
LEGISLATIVE REPORT -2•- June 17, 1982
Becker (R-Colorado Springs)--retiring; Senator Marty Hatcher (D-Gunnison)--retiring;
Senator Jim Kadlecek (D-Greeley)--retiring; Senator Paul Powers (R-Denver)--retiring;
Senator Paul Sandoval (D-Denver)--retiring; Senator Maynard Yost (R-Crook)--retiring;
Senator Sam Zakhem (R-Denver)--seeking the post of secretary of state; Representative
Bob DeNier (R-Durango)--retiring; Representative Don Eberle (D-Denver)--seeking the
post of attorney general ; Representative Steve Erickson (R-Loveland)--retiring; Repre-
sentative Melba Hastings (D-Sterling)--seeking senate seat; Representative Wad Hinman
(R-Kremmling)--retiring; Representative Miller Hudson (D-Denver)--retiring; Representa-
tive Jim Lillpop (R-Alamosa)--seeking a senate seat; Representative Jean Marks (0-North-
glenn)--retiring; Representative Phil Massari (D-Trinidad)--retiring; Representative
Jack McCroskey (D-Denver)-•-retiring; Representative Betty Orten (D--Westminster)--seek-
ing the post of secretary of state; Representative Federico Pena (D-Denver)--retiring;
Representative Jim Reeves (R-Littleton)--retiring; Represen�.ative Mick Spano (R-Arvada)--
retiring; Representative Claire Traylor (R-Wheat Ridge)--seeking a senate seat; and
Representative Joe Winkler (R-Castle Rock)--seeking a senate seat. The "brass rail "
comments among veteran legislative observers indicate that there may be 30 to 40 new
faces in the legislature next January.
As events develop during the interim legislative period, CWC will publish periodic
"Water Legislative Reports." Incidentally, in the event that you need information on
any interim legislative activity, it is suggested that you contact the Legislative
Council staff at the State Capitol -- 866-3521 or the CWC staff -- 837-0812.
The Colorado Water Congress has published a complete book containing all water
and water related laws of the second regular session of the fifty-third General Assembly.
This book, incidentally, will "beat" the session laws by approximately four months in
terms of publication date. The one hundred thirty-two page book includes the following
new laws: SB 44--special district service plans; SB 87--Water Conservation Board Construc-
tion Fund; SB 97--initiative petitions; SE 111--county capital improvement trust funds;
SB 119--state lottery program; SB 127--Water Resources and Power Development Authority
special funds; SE 148--a power authority and short term obligations; HB 1002--soil
conservation districts; HO 1065--acquisition of water rights at Bonny Reservoir; HO 1095--
waste disposal sites; ;1O 1097--rules regulations of the Department of Health; HB 1099--
legislative review of rules and regulations of executive agencies; HE 1134--Colorado
Water Resources Institute; HO 1147--severance tax upon carbondioxide; HB 1I48--authority
of governmental entities to establish power authorities and water authorities; HE 1158--
severance tax & oil shale; HO 1198--severance tax & oil shale; and HO 1246--low-level
radioactive waste. In addition, the following other actions of the legislature are in-
cluded; namely: SCR 1--proposed constitutional amendment on lengths, and subjects of
bills considered during, even-numbered session; HCR 1005--proposed constitutional amend-
ment on property tax; SJR 6--Narrows and Animas-La Plata; SJR 12--National Wildlife
Federation v. Gorsuch; SJR 19--Legislative Council interim studies; and SJM 1--Endan-
gered Species Act. Since the book will be 132 pages in length and paper, printing,
postage and labor are significant costs, the price of the book is $40 (CWC members) and
$80 (non-members). Furthermore, since there will be only fifty copies of this book
available, distribution will be governed in order of requests. Readers are urged to
place their order for the "1982 Colorado Laws Enacted of Interest to Water Users" as
quickly as possible -- call or write the Colorado Water Congress, 1390 Logan Street,
Room 312, Denver, Colorado 80203, phone (303) 837-0812. (Fifteen of the 50 copies
of the "Laws Enacted" have already been sold.)
WATER. SPECIAL REPORT
Colorado Water Congress • 1390 Logan St., Rm. 312• Denver, Colorado 80203 • Phone: (303) 837-0812
Dick MacRavey, Editor June 16, 1982
Editor's Note: The interview recorded below with Mr. Eric Eidsness, Assistant Administra-
tor for Water at EPA, appeared in a recent issue of the EPA Journal and is reprinted with
the permission of EPA.
Water . for Living
•
An Interview with Frederic "Eric" A. Eidsness Jr.
EPA Assistant Administrator for Water
Q What are your main goals Another initiative is the in-
in your new post as Assistant stitution of a lead role concept.
Administrator? As an example. we have various
branches and divisions within the
A I am firmly committed to the Office of Water doing the same.
goals of environmental protec- if not similar, work with little or
tan and a strong economy. no cross fertilization of ideas. ex-
These are goals I share with the i periences. and approaches. As
President and the Administrator. an example. the lead role con•
While I will be working to help cept applied to risk assessments
achieve these overall goals ; for human health would assign
through regulatory reform. I have • the responsibility for develop-
two management goals of my ment of methodology and data
own which are essential to analysis to the Office of Drinking
meeting the broader goals. Water. One of the benefits of this
One is to open up our concept is that when I have a
regulatory development process problem. I can call my office
from the beginning and to work directors in the room and ask just
cooperatively with state and one of them "What happened?
local governments and the Why wasn't the job done right?"
regulated community in the are just as concerned as we are this approach to fixing respon-
process. The second goal is to about the protection of the en- sibility will also reduce overlap,
get control of resources in the vironment in general and water duplication of effort and max-
Office of Water and to better quality in particular. imize the use of our resources.
manage those resources from On my second goal of manag-
the top down. From what I've ing resources more effectively.
witnessed since I've been here we have initiated a number of Q What is the basic
there is fertile ground for doing new management policies. One philosophy that will guide you
that. of these policies is the develop- in your new post?
ment of annual work plans for
each of the administrative units A I don't believe that EPA is
Q What approach do you plan in the Office of Water. These wiser, more powerful or more
to take to achieve these goals? work plans will be developed and motivated in protecting the en-
used by the lower and mid-level vironment than anyone else. t
A I hope that by setting clear managers and not by the Assis- think that generally the average
policy direction and by constant tent Administrator for Water. citizen, small town, big city. in-
dialogue with my top managers Soon after coming here last Sep- dustry, and State will do the right
and mid-level managers that I tember, I became keenly aware thing if they understand what the
can instill in them a perspective that EPA's management and problem is. I view as unfortunate
of environmental protection that resource planning documents the attitude exhibited in the past
reflects my local orientation. I have been designed for the prin- by certain EPA.officials that
hope to show the people in the cipal purpose of letting the everybody is presumed guilty un-
Office of Water that EPA in agency comptroller and the Con- til proven innocent and that the
Washington is not the Center of gress know where the money's only organization that can define
• the universe. The center of our going. The old system did not and solve environmental
attention should be that par- serve the purpose of managing problems is EPA. This has
titular lake or stream out there our resources to meet our corn- resulted in a reputation of
whose water quality must be im- mitments. In the future.our work arrogance that is ill deserved by
proved or protected. We need to plans will be used to provide in- most EPA employees and in
recognize that those who are formation for the manager to un- regulations that are overly com-
closest to those bodies of water derstand his commitments, how plicated with procedure and
his resources are to be used and
in what priority,what outputs are
expected and when.
• 4,L 7ltiZ 61, 5 k,
WATER SPECIAL REPORT -2- June 16, 1982 .
which get in the way of state and practice has been to overly corn- there are only three kinds of
local initiatives. I guess that to plicate and in many cases policy for EPA Water. One is .
sum up my philosophy, I believe obscure the basic intent of the regulations, the second is a self-
that by opening up on internal Acts. Now we're trying to go standing policy document signed
processes. working cooperatively back through these complicated by the Administrator of EPA,and
with others and simplifying our regulations to identify essential the third is a self-standing policy
regulations we will make greater requirements. At the same time document signed by the Asses
strides in protecting the we're trying to reduce procedural tani Administrator for Water
environment. requirements so that we can get Everything else is guidance
regulations geared to results Guidance, furthermore, should be
11 rather than to following construed as EPA's bust ludg-
Q What parts of the water procedures. However I want to ment on one cost effective way
program in your view are in the point out that the regulations we of solving a problem that reflects
most urgent need of are tackling have been built. the best science and experience
redirection? defined and redefined over the we and the States have had over •
past ten years by their applica- the years.
A Perhaps the greatest lion and court suits. We are not
challenge that faces both EPA revising these regulations with a
and the States is to bridge meat cleaver but are carefully a What are your views on the
the enormous gulf between in- going through them with surgical subject of sludge disposal?
dustrial and municipal pollution tools to cut out the fat and leave
control regulations and discharge behind regulations which are A Sludge management is going
permits which translate these lean, clearly reflective of the to be one of the great challenges
regulations into reality for the in• statutory requirements and of the 1980's. The volume of
dividual municipalities and in- which demonstrate an attitude sludge has increased steadily in
dustry. We know that permits that those who read them are at the last decade and is expected
have been written that do not least as intelligent and fair min- to increase dramatically in the
reflect good scientific and ded as those who wrote them. future. Simultaneously, suitable
economic analysis, or are based Most importantly,the regulations disposal sites are diminishing
on regulations that have not revised under this Administration nationwide and in some areas of
been subjected to adequate peer will reflect a strong commitment the country are becoming un-
review and public debate. In to environmental protection available. Nobody wants to have
other instances no regulations which we believe will withstand a sludge management or solid
exist. Permit writers are put in time. waste disposal facility in his back
the most untenable position of yard.
making fundamental public The problem comes home to
policy. public finance or industry Q Do you see a need to shore EPA because most of the sludge
investment decisions without up leadership and manage- is produced by environmental
policy oversight. without peer ment oversight in the Office of control equipment that is re-
review. and without public Water? gutted by EPA under the Clean
debate. So we're going to take A Water Act,the Clean Air Act.the
steps to try to identify the Yes.The Office of Water Safe Drinking Water Act,and the
specific problems and remedies publishes reams of so-called Resource, Conservation, and
associated with this gap so that guidance documents every year. Recovery Act.
the permit writers won't be de Frequently. one of these docu- Municipalities are among
facto rule makers. ments might say something to those who are pressed hardest to
the effect that. "it is the agency determine suitable methods for
Q What are your views on policy that. .."The effect of such disposing or reusing sludge. For
regulatory reform? "policy" statements is twofold example. sewage sludge is a
on states. local governments, byproduct of municipal waste
A Reforming environmental and regulated community. (1) treatment. The chemical proper-
regulations is an absolutely es- They get mixed signals from dif- ties of this sludge vary ac-
senttal piece of the President's ferent program offices. (2) fay cording to the type and amount
overall national agenda. The Of- declaring something is agency of industrial waste which is dis-
fice of Water's basic approach policy in a rather casual manner charged into municipal treatment
taken in the past was to write in a guidance document, it facilities. Not knowing what their
into regulations all that the Acts becomes the agency policy even regulatory choices are.
would allow. The result of this though it is not set by the municipalities are finding it in-
approach has been a mountain of leadership of the agency. In order creasingly difficult to plan for the
rules. regulations and guidance to solve this particular problem cost effective disposal or reuse of
which attempt to identify every we are tightening control over sludge. EPA has a responsibility
possible situation that a State or guidance documents and we under the Clean Water Act to
local government or member of have a policy on "policy". prepare sludge management
the regulated community might Although that usually gets a lot guidance.This has become a ma-
find itself in and to prescribe a of laughs when I mention it.it's a jor priority within the Agency for
remedy.The consequence of this pretty serious matter. This policy the current year. I am confident
on policy in effect states that that the exercise will not only
WATER SPECIAL REPORT -3- June 16, 1982
.rovide municipalities with a there will not be unreasonable available, and as the public
wide range of choices for dis- degradation of the marine en- becomes more demanding of
posal and reuse of sludge as it vironment and that all feasible reutilization of resources, that
relates to the characteristics of land-based alternatives are less the focus of the future will be
that sludge but will also allow suitable from an environmental more on the side of resource
them to make choices based point of view. I think the role of recovery than it will be on waste
upon an understanding of the en- economics in such determine- disposal. I am optimistic about
vironmental and health risks that Lions will become more impor- the future in this regard.
may be associated with various tant where the environmental
options. I would like munici- risks of a land-based alternative
pahties to share the burden of versus an ocean disposal alter- a Are any new steps needed
making such determinations with native are equivalent. at the Federal level to assure
the regulatory agencies. I believe that Americans have a safe
they will do so and do so respon- supply of drinking water?
stbly as they recognize better 0.What does a regulatory
than we at the Federal level that agency do when it cannot A
the lower the risk the higher the predict the fate and effects of A A major objective of this ad-
cost. pollutants in the ocean or any ' ministration generally. is to
other medium? delegate fully the authority and
responsibility for the administra-
Q What are your views con- A The environment does not tion of various environmental
corning EPA's responsibilities lend itself to precise predic- programs to the States where the
to protect the oceans from tability. This is true whether one environmental laws permit. The
pollution? is considering waste disposal in Safe Drinking Water Act en-
the air. on land. or in the ocean. visioned a primary role and
A I must confess that I have a The answer to your question lies responsibility for States in the
strong affinity for the oceans in science and in process.We get regulation of public water sup-
having spent my youthful days as much factual data and infor- plies and controlling injection of
diving on Florida's coral reefs mation as we can: we apply the contaminants into ground water
and in later years serving in the most sophisticated analytical aquifers. In keeping with this
Navy. I've always viewed the procedures and analysis that we overall policy we will be working
oceans as the last great have available to us: and we very hard to fully delegate these
frontier—as a source of discuss and debate the facts and responsibilities to state agencies.
sustenance for a large part of the hypotheses in open public With respect to public water
world's population,as a reservoir forums. Once having made a supply systems.I believe that the .
of ecological wealth and enjoy- decision we rely upon monitoring Agency should develop with
ment and as a medium which and further research to assure states strategies which are more
ties nations together.The oceans that adequate protection is being effective at anticipating and deal-
are also vast- complex. and provided. Finally- we review the ing with the special problems
mysterious to us and it is not situation periodically and adjust faced by the 62.000 rural com-
clear what the fate and effects of decisions according to the munity systems. In the past,
pollutants in the oceans are. evidence using a similar process. EPA's attention and resources
Nothwithstanding the impor- Our various planning and per- have been focused primarily on
tance of the oceans as a resource milting tools serve this need to the 2.000 or so major water sup-
and the uncertainty regarding review past decisions. ply systems. These urban
their ability to assimilate wastes. . I believe that the EPA can do systems provide potable water
I think the oceans should be con- a better job in coordinating with for the vast majority of the
sidered as a viable option for other Federal, state. and local American people. For the most
waste management. at least for agencies in conducting research, part they are professionally
an interim period. Recent scien- and in developing analytical managed and they are and will
tiftc research supports this posi- procedures and monitoring continue to be subjected to
lion. programs which will reduce the microscopic oversight by state
The Agency has begun the uncertainty with respect to the regulatory agencies and their
task of revising the regulations fate and effects of pollutants in customers.
which control the dumping of our waters. Groundwater is another area
sludge into the ocean. In a I like to think of pollutants as where the Agency should focus
general sense I would like to see resources waiting to be more of its attention and
two key features in the regula- rediscovered. As we plan for the resources. Old timers have said
lions. One, that a very rigid en- management of our sludge, of the hardness of the water that
vironmental test be established whether it is for ocean dumping comes from the well at my
for determination of those or some land disposal method, Colorado homestead "you can
sludges which are suitable for we should give equal if not scarce get a bite to drink." My
ocean disposal without causing greater attention to resource personal concern with well water
unreasonable degradation. Two. recovery and reuse. I am op- is more a matter of aesthetics
that the burden of proof is placed timistic that as resources and convenience, but as the
on the polluter to show that become more scarce. as cost ef- Assistant Administrator for
fective technologies become Water. I cannot help but be con-
WATER SPECIAL REPORT -4- June 16, 1982
corned with the existing and The standards regulations I would prefer not to bore your
potential future contamination of which EPA will be proposing readers with the same worn out
ground water from a public stress the designation of horror stories and success stories
health point of view.Statistically, beneficial uses and numeric that have been printed and
greater than half of our popula- criteria sufficient to protect those reprinted so many times over.
tion receives its potable water uses on a site specific base. The The fact of the matter is.environ-
from the ground. regulations will also propose a mental trends are subtle except
Groundwater. once coma- policy of protection of uses in the rare instances of overt
mutated, takes years, if not de- currently attained with no signs of pollution such as fish
cedes or centuries, to purify. allowance for degradation of kills. I don't think the answer lies
Groundwater protection is those uses. necessarily in collecting more in-
fundamentally a land use issue. I am sure some States will be formation. EPA's water programs
State and local governments by concerned with the resource im- currently place approximately
far have the greater powers to phieations of revising their stan- 3.9 million work hours of burden
make determinations concerning dards along these lines, but I am on the regulated community and
siting of facilities, designation of convinced that the regulated state and local governments to
underground sources of water community will be more than collect information. I think the
supply and the like. States also willing to bear their fair share of answer to the question lies in
have extraordinary powers under the burden of developing how the data is used and who
their various health laws to pre- monitoring data. analysis. and in- uses it. I see three ways in which
vent and control ground water formation necessary to revise we can do a better job of deter-
pollution I believe that the EPA standards as it is in their self in- mining environmental results or
should work with the States in terest to do so. No elected of- trends in environmental quality.
the continued development of ficial or industry principal wants First. assert the need for states to
state ground water protection to make an investment in pollu- take a stronger role in assessing
strategies Our principal focus tion control unless it is well foun- improvements in water quality
should be on assuring that our ded in scientific bases and has This will be a clear reversal of
regulations governing water public support. To help avoid past trends where EPA has
supply systems, underground in- some of the confusion and rms. always assumed that it was the
jection, dump sites and the like conception that has grown over appropriate institution to make
are well coordinated and that the years regarding water quality such determinations. Secondly,
our enforcement posture supports standards. the EPA is trying to the focus of analyzing environ-
state strategies concerning focus attention on five basic mental trends and results should
ground water protection. questions which we believe cap- be on specific media on a
ture the essence of the standards geographic basis. States should
setting process. These questions review their long term monitor-
Q Are water quality stan- are. What is the use to oe rng data and develop qualitative
dards still a useful tool in protected and how is it charac- assessments which address the
protecting and enhancing our tenzed in physical, chemical and physical, chemical and biological
water ways? biological terms and in terms of characteristics of the aquatic pp en-
social and economic value? To vrronment, the uses made of it
AWater quality standards are what extent does pollution irn- and any pollution events or oc-
an important and logical next pair or support the use relative to currences which have been ob-
step to ensuring adequate other factors?What level of point served.
protection of beneficial uses of source pollution control is The third approach. which is
water nationwide. The Clean necessary to restore and protect less satisfactory from a scientific
Water Act envisioned that the use? What level of nonpoint point of view. is to use surrogate
technology based standards source pollution control is feast- measures. For example, knowing
would be set as a floor below ble that will restore and protect that we have reduced the dis-
which municipal and industrial the use? Is it worth it? charge measured in pounds of
dischargers could not go. The This last question should be pollutants in a particular water
Agency is committed to getting taken in light of a policy of an- body over a particular period of
into effect as soon as possible tidegradatron but it is an impor• time. is an indicator of the effec•
regulations governing the control tant question to ask when con- tiveness of pollution control re-
of toxic substances from in- sidering the costs and benefits of quirements. whereas counting
dustrial dischargers. Even with pollution control technology that the number of violations of
these regulations in effect. and may be required to meet water NPDES discharge permits does
technologies in place, the ques- quality standards in the future. not relate at all to the environ-
tion remains: is there adequate mental consequences of pollu-
protection of beneficial uses and tent loadings.
water quality?The answer will lie Q In your judgment are
in the strength of a state's water America's waterways getting
quality standards program. cleaner, holding their own, or Q. What are your views on
There is a major effort un- deteriorating? local government and water
derway currently to upgrade the quality management planning?
quality of EPA's guidance con- Q The only honest answer to
corning the states' adoption and that question is that I don't A I have a very strong orienta-
implementation of water quality know Surely its a mixed bag and lion toward local government as
standards.
WATER SPECIAL REPORT -5- June 16, 1982
a result of my past experience as sidered to be the most valuable targeted to restoring and main-
a health department official local and those that are most taining water quality and
planner and a consultant to local threatened from pollution. Local designated beneficial uses of
government and industry. Let me governments have an oppor- water. Secondly, that local
answer that question by first be- tunity for additional funding un- governments are to assume a
ing very frank about local govern- der the Clean Water Act to carry greater responsibility for assuring
ment involvement in water out planning provided they can that they have the requisite
quality planning under section make the case to the state pollu- financial and management
208 of the Clean Water Act and tion control agency that they are capability to construct, operate
one reason why this Administra- better equipped to conduct the and maintain waste treatment
lion has not shown support for necessary studies. facilities.
continual Federal funding of On a more philosophical level, Many of the horror stories that
areawide agencies to carry out section 208 of the Clean Water you have heard of regarding the
planning. Lack of implementation Act provides a very important high cost of wastewater service I
of water quality management handle for local governments to beiri;ve are attributable to a lack
plans in my view is a direct result join together on a voluntary basis of attention given to the details
of the inability of the planning to develop the institutional and of how a community is going to
agency to adequately define the technical capacity to deal eyeball implement its capital improve-
problem. This inability was due to eyeball with the regulatory merits program from the financial
either to the agency's un- agencies.This local role is essen- management point of view. This
questioned acceptance of a teal as we move into an era of in turn is an outgrowth of the
problem statement made by a reassessing our water quality large federal grant share and
state or federal agency or from goals in the context of revisions over-complicated.regulations.
having taken a one dimensional to state water quality standards. The construction grants
approach at defining the I am confident that many local regulations reflecting the new
problem. planning organizations will con- amendments are being revised
On the flip side of the coin tinue to play a major role without and shortened to reflect more
there have been numerous local Federal assistance. clearly the statutory require-
success stories. ments sot forth in the bill. One
In view of the lack of new emphasis that will be placed
familiarity with the Clean Water a Do you see a change in in these regulations will be the
Act at the start of planning and emphasis on management of requirement that the grantee
the lack of focus in EPA's the construction grants demonstrate its ability to finance
guidance as to what should be program for publicly owned and manage the construction,
planned for, local governments treatment works as a result of operation and maintenance of
have made substantial gains. the 1981 amendments? treatment facilities funded under
i think we should look ahead this program.
at water quality management A Yos.A new construction I believe that this is not only a
planning in terms of a new grants bill contained two very principle of good local
phase: one in which the plan- significant messages from my government—to plan in advance
ning under Federal grants is point of view as a former local of a major capital investment—
highly focused on specific government official. First, that but also necessary to assure that
streams or lakes which are con- Federal grant funds are to be the Federal investment in such
facilities is protected. O
•
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WATER. SPECIAL REPORT {�R
.soh 3 1,9F�2
Colorado Water Congress • 1390 Logan St., Rm. 312 • Denver, Colorado 80203 • - = • =co4 1'
RG '
Dick MacRavey, Editor June 14, 1982
STATE WATER PROJECT FINANCING
The Colorado Water Conservation Board and its staff are currently
examining the subject of state water project financing. The first
discussion draft on financing was promulgated by the CWCB staff to the
Board on March 31, 1982. This "Special Report" contains the second in
the series of CWCB memos on financing. Of particular interest to the
reader is the information on pages 2 and 3 of the report as it pertains
to the responses of the reviewers to the March 31st memo.
The emphasis of this second CWCB "discussion draft" on state
water project financing is: Alternative sources of funding. In this
second memo, the CWCB staff examines the availability and utility of
the following alternative sources:
(1) General tax revenues (e.g. , income taxes, sales and use
taxes, property taxes, etc.);
(2) "Economic rents" for the use of publicly owned resources
(e.g., severance taxes, mineral leasing fees, etc.); and
(3) "Excess charges" to one class of project user for the
benefit of another class of user (e.g. , hydropower users
paying more than is needed to repay a project's power
features with the "excess" payments being used to cover
project costs allowable to some other user such as irriga-
tors) .
The results of the CWCB's deliberations could be possible recom-
mendations to be submitted to the Fifty-Fourth General Assembly during
its "long session" in 1983. It, t erefore, behooves water users and
those interested in Colorado's water needs to communicate their feelings
on financing before the CWCB recommendations become "fixed in concrete. "
It should be noted the Colorado Water Conservation Board will meet
as follows in 1982: August 17-18, 1932 -- Denver, Airport Rodeway Inn
(Quebec & I-70) ; October 7-8, 1982 -- Alamosa, Holiday Inn (tentatively)
(US-160 & Hwy. 17); December 2-3, 1982 --- Denver (location has not been
set).
WATER SPECIAL REPORT -2- DISCUSSION DRAFT
LATE OF COLORADO
COLORADO WATER CONSERVATION BOARD
Department of Natural Resources
\ .
823 State Centennial Building _"a '
1313 Sherman Street
Denver,Colorado 80203
Phone:(303)866-3441 MEMORANDUM
Richard D.Lamm
Governor
William McDonald
Director
TO: Members , Colorado Water Conservation Board David w.Walker
Deputy Director
FROM: Bill McDonald
DATE: May 28 , 1982
SUBJECT: Agenda Item 9, June 3 , 1982, Board Meeting--
Water Project Financing Needs
Indtroduction
As you will recall , this will be the second in a series of
four Board meetings at which water project financing needs are
discussed . The April meeting was devoted to defining the problem
Colorado faces. In this regard, please bring with you my March
31st memo and draft discussion paper for ready reference . \;
Review of Draft Discussion Paper
The fundamental conclusion to which the draft discussion
paper reviewed at the April Board meeting came was that private
financial markets will be a source of capital to pay for project
construction costs only in the case of municipal and industrial
water supply and hydropower projects, with there being some
question as to whether small rural communities could afford
municipal projects financed entirely from private sources. As a
corollary, it was concluded that agricultural , flood control, and
recreational projects would find it very difficult , if not
impossible in the case of irrigation projects, to raise capital
in private financial markets to pay for project construction
costs.
Reviewers of the draft discussion paper, from whom comments
have been received since the April Board meeting , have offered
three main comments. First, one reviewer suggested that more
project benefits ( i .e . , outputs ) may be vendible than the draft
paper indicates, especially with respect to recreation. It was
BD:Bill 524
Robert A.Jackson.Chairman•John R.Fetcher.Vice!Chairman
C.M.Furneaux,Floyd L.Getz.Dale F.Grant.Rrchard W.1ohn,tan.Jr.,Frederick V.Kroeger.Dried W Robbins,Herbert H.Vandemoer
WATER SPECIAL REPORT -3- DISCUSSION DRAFT
•
noted , for example , that efforts to collect fees from
recreationists have seldom been attempted and that the
constraints to so doing may be more a function of tradition and
institutional arrangements than real administrative problems .
A second major comment was that financing could perhaps be
obtained from private markets even in the case of agricultural
and flood control projects if sources of revenue other than
charges to project beneficiaries were available . An obvious
example would be general obligation bonds.
This comment is well taken and the draft paper will need to
be revised accordingly. However , it does not alter the
fundamental fact that 1.:ax revenues will be needed for new
projects which cannot pay their own way. What the comment
brought into focus is that tax revenues can be used either to pay
for project costs at the time of construction or to repay
over time funds raised in private financial markets at the time
of construction.
The third major comment offered on the draft discussion
paper was that it did not address the problems of financing
project feasibility studies, which can run into the millions of
dollars. There are significant problems in this regard which
deserve specific attention. They could either be addressed
separately or in the context of the discussion paper when it is
revised.
Discussion
Although the comments received on the draft discussion paper
were well taken and do need to be factored into the Board 's
deliberations , they do not alter the underlying circumstances
which confront water project development in Colorado; namely:
( 1 ) large sums of state and local tax revenues will be
needed if agricultural (federal or non-federal ) , small
rural municipal, flood control, and, probably,
recreational projects are to be developed , and
( 2) such expenditures of tax monies will in large part not
be recovered ( i .e . , beneficiaries of these kinds of
projects will have to be subsidized ) .
I recommend that the Board 's deliberation 's on June 3 focus on
the first of these circumstances . The second item can then be
discussed at the August Board meeting .
There are three primary sources of funding for projects
which cannot compete for capital in private financial markets:
WATER SPECIAL REPORT -4- DISCUSSION DRAFT
•
( 1 ) General tax revenues (e.g. , income taxes, sales and use
taxes, property taxes, etc. ) ,
( 2) "Economic rents" for the use of publicly owned
resources (e.g . , severance taxes, mineral leasing fees,
etc. ) , and
( 3) "Excess charges" to one class of project user for the
benefit of another class of user (e.g. , hydropower
users paying more than is needed to repay a project' s
power features with the "excess" payments being used to
cover project costs allocable to some other user such
as irrigators) .
Y will provide you with a second draft discussion paper at the
Board meeting which will review the availability and utility of
each of these sources of funding .
JWM:dm
WATER SPECIAL REPORT -5- DISCUSSION DRAFT
Draft
6/1/82 .
WATER PROJECT FINANCING:
ALTERNATIVE SOURCES OF FUNDING
Introduction
This is the second in a series of discussion papers
concerning future water project financing needs in Colorado. The
first paper, entitled "Water Project Financing: Defining the
Problem Colorado Faces, " explored the considerations which govern
project financing and the problems which arise therefrom.
The main conclusion to which the first discussion paper came
was that the financing of future water project construction in
Colorado would, except for industrial and larger municipal water
supply projects, be dependent upon tax monies being made
available. Such tax monies will be needed either to pay for
construction at the time a project is built or to retire, at
least in part, the indebtedness created when capital is obtained
from private financial markets .
There are three primary sources of funding for projects
which cannot, based solely upon revenues from project
beneficiaries , raise the necessary capital for construction costs
in private financial markets. These are:
( 1 ) General tax revenues (e .g . , income taxes, sales and use
taxes , property taxes, etc . ) ,
( 2) "Economic rents" for the use of publicly owned
resources (e .g., severance taxes, mineral leasing fees,
etc. ) , and
( 3) "Excess charges" to one class of project user for the
benefit of another class of user (e.g ., hydropower
users paying more than is needed to repay a project 's
power features with the "excess" payments being used to
cover project costs a.l iowal le to some other user such
as <.rricators0 .
Each of these is briefly discussed below.
General Tax Revenues
The state and its political subdivisions obtain revenues
through a wide variety of qeneral taxes : income taxes, sales
taxes, use taxes, property taxes, inheritance taxes, etc. These
d175
w/p/f
WATER SPECIAL REPORT •-6- DISCUSSION DRAFT
tax revenues are typically available for expenditure on both
everyday governmental functions ( i.e . , salaries and operating
expenses) and on major capital investment projects such as
buildings, parks, and streets. For example, the General Assembly
has appropriated $78.6 million from general tax revenues since FY
72-73 for the benefit of water project funding ( including the
$30. 1 million transferred from the Colorado Water Conservation
Board construction fund to the Water Resources and Power
Development Authority by S.B. 19 , 1981 Session) .
At the state level , the key issue with respect to the
availability of general tax monies for water project development
is the intense competition for scarce funds. Monies in
sufficient quantity to provide significant assistance to water
project financing may not be available if the current trend
toward reductions in governmental budgets and increases in tax
relief measures continues.
With respect to political subdivisions of the state which
have taxing powers (e.g. , water conservancy districts) , two main
problems are encountered . First , there are sometimes statutory
limitations on the extent of an entity's power to levy taxes and
assessments . Second , in the context of agricultural projects,
the assessed valuation of water conservancy districts simply is
not large enough to generate significant amounts of tax revenues
when compared to the costs of water project construction.
Economic Rents for Publicly Owned Resources
Charges for the use and exploitation of publicly owned
resources such as lands and minerals have long been a source of
revenue for federal and state governments. Notable examples are
grazing and timbering fees, oil and gas royalties, severance
taxes, and mineral leasing fees. Collectively, these are
referred to as economic rents.
Pursuant to section 34-63- 102, C.R.S. 1973 , as amended , 10
percent of the monies accruing to Colorado under the terms of the
federal Mineral Lands Leasing Act of 1920 have been paid annually
into the Colorado Water Conservation Board construction fund
since 1977. Through FY 81-82, the total amount received was
approximately $ 11 million. it is anticipated that future
payments to the construction fund will be about $2-2 .5 per year
given present levels of mineral development on federal lands.
The other economic rent presently made available by statute
for the financing of water projects is Colorado 's severance tax
on coal, oil and gas, molybdenum ore, oil shale, and metallic
minerals. Half of the receipts from severance taxes are credited
to a severance tax trust fund, which fund:
WATER SPECIAL REPORT -7- DISCUSSION DRAFT
. . . is to be perpetual and held in trust as
a replacement for depleted natural resources
and for the development and conservation of
the state 's water resources pursuant to . . .
[the statutory provisions governing the
Colorado Water. Conservation Board
construction fund] . . . . Repayment of
moneys . . . used for state water projects
shall be required . . . and moneys so repaid
shall be credited to the severance tax trust
fund . Section 39-29- 109 , C.R.S. 1973 , as
amended .
The severance tax trust fund, which was created in 1977 ,
currently has a balance of Absent
oil shale development, annual receipts to the fund over the next
several years are projected to be about
An appropriation of monies in the fund for water project
construction has never been made .
Excess Charges to Certain Project Users
The federal reclamation program has for decades sold
hydropower at rates in excess of that needed to repay the
construction costs allocable to a project 's power features.
These excess charges have then been used to repay that portion of
the construction costs allocable to a project 's irrigation
features which are beyond the irrigator's ability to repay. The
Upper Colorado River Basin Fund and the repayment provisions of
the Pick-Sloan Missouri River Basin program are the devices with
which we in Colorado are most familiar .
In principle , future non-federal water project development
in Colorado could use this same approach. It could be
implemented either on an ad hoc project-by-Project basis or
through a state-created fund. It is doubtful, however, that the
hydropower potential which remains in the state, given current
construction costs, could assist with anything more than a
small portion of the costs of those multiple--purpose projects,
which themselves include hydropower features. Furthermore, it is
apparently not clear whether the Public Utilities Commission
would permit rates to be set so as to subsidize other users.
It has been suggested from time to time that excess power
revenues accruing to the Upper Colorado River Basin Fund ought to
be accessible to Colorado for its direct use. Under the
existing law, this is not possible (see the attachment to the
first discussion paper in this series) . It would take both
amendments to the existing act and a very substantial increase in
power rates before Colorado could realize a direct source of
revenues large enough to be of any consequence . The preference
customers of CRSP power and other Upper Basin states have voiced
strong opposition to any such suggestions .
WATER SPECIAL REPORT -8- DISCUSSION DRAFT
Summary
The task before Colorado is to decide whether one or a
combination of the above means of funding will be used to support
future water project development . Absent a commitment to utilize
monies from these sources, it is probable that significant future
water developments will be limited to those which serve
industrial and major municipal users.
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