APPLICATION TO MAKE CONDITIONAL WATER RIGHT ABSOLUTE OR, IN THE ALTERNATIVE, FOR A FINDING OF REASONABLE DILIGENCE

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DISTRICT COURT, WATER DIVISION 6, COLORADO

TO ALL PERSONS INTERESTED IN WATER APPLICATIONS IN WATER DIVISION 6

Pursuant to C.R.S. 37-92-302, you are hereby notified that the following pages comprise a resume of Applications and Amended Applications filed in the office of Water Division 6, during the month of MAY, 2011.

11CW9, MOFFAT COUNTY, APPLICATION TO MAKE CONDITIONAL WATER RIGHT ABSOLUTE OR, IN THE ALTERNATIVE, FOR A FINDING OF REASONABLE DILIGENCE Applicant: Colorado River Water Conservation District, acting by and through its Colorado River Water Projects Enterprise ("River District"), c/o R. Eric Kuhn, Secretary/General Manager, 201 Centennial Street, Suite 200, P.O. Box 1120, Glenwood Springs, Colorado 81602, (970) 945-8522. Please direct all pleadings and correspondence in this case to: Peter C. Fleming and Jason V. Turner. Introduction: This Application is filed pursuant to C.R.S. § 37-92-301(4) and § 37-92-601. The Colorado River Water Conservation District (hereinafter "River District") is a political subdivision of the State formed by the Colorado Legislature (See C.R.S. § 37-46-101, et seq.) in 1937 for the purpose of safeguarding for the State of Colorado the beneficial consumptive use in Colorado of that portion of the waters of the Colorado River equitably apportioned to the state by interstate compact. Geographically, the River District encompasses an area of approximately 29,000 square miles, including all of twelve and parts of three western Colorado counties. Included in that area are the headwaters and tributaries of the Colorado River mainstem and its principal tributaries, the Gunnison, the White and the Yampa Rivers. The general powers of the River District, set forth in C.R.S. § 37-46-107, inter alia, direct the River District to make surveys and investigations to ascertain the best method of utilizing stream flows within the River District and to make appropriations " . . . for the use and benefit of the ultimate appropriators . . . ." This statute further directs the River District ". . . to perform all acts and things necessary or advisable to secure and insure an adequate supply of water, present and future, for irrigation, mining, manufacturing, and domestic purposes within said districts." The decree that is the subject of this Application was obtained in furtherance of these statutory directives. Describe conditional water right (as to each structure as depicted on the map attached hereto as Exhibit A) giving the following from the Referee's Ruling and Judgment and Decree: Name of structure: Elkhead Creek Reservoir Enlargement (second). Date of original decree, case number and court: May 9, 2005, Case No. 02CW106, Water Division No. 6. Legal Description: The dam is located where the South quarter of Section 16, Township 7 North, Range 89 West of the 6th P.M. bears South 34°47'13" east, 869.37 feet. A point on the dam is located 370 feet North of the South line and 1637 feet east of the West line of said Section 16. Source: Elkhead Creek and its tributaries, tributary to the Yampa River. Appropriation Date: October 16, 2002. Amount: 13,000 AF, with a right to refill when in priority to a maximum amount of 1,000 AF. Total capacity of the reservoir as enlarged equals 26,800 AF. Use: Municipal, Commercial, Industrial, Domestic, Irrigation, Livestock, Hydro-power Production, Evaporation, Augmentation, Exchange, Replacement, Power Generation, and Cooling, Wastewater Treatment, Piscatorial, and Recreational (including in-reservoir and in-river fish habitat and river flow maintenance and enhancement uses, and uses in furtherance of the Upper Colorado River Basin Fishes Recovery Program) and with the right to reuse and successively use the water to extinction. Name of structure: Elkhead Creek Reservoir Enlargement Power Right. Date of original decree, case number and court: May 9, 2005, Case No. 02CW106, Water Division No. 6. Legal Description: The point of diversion will be at the dam of Elkhead Creek Reservoir Enlargement located where the South quarter of Section 16, Township 7 North, Range 89 West of the 6th P.M. bears South 34°47'13" east, 869.37 feet. A point on the dam is located 370 feet North of the South line and 1637 feet east of the West line of said Section 16. Source: Elkhead Creek and its tributaries, tributary to the Yampa River. Appropriation Date: October 16, 2002. Amount: 200 cfs. Use: Hydro-Power Production at the Elkhead Creek Reservoir facility. Integrated Project: This Court has previously determined that the subject conditional water rights and the existing Elkhead Creek Reservoir constitute an integrated project. Pursuant to C.R.S. §37-92-301(4)(b), "when a project or integrated system is comprised of several features, work on one feature of the project or system shall be considered in finding that reasonable diligence has been shown in the development of water rights for all features of the entire project or system." Where work on a component of a system is "necessary to the ultimate goal of putting the water to beneficial use, it is considered part of an integrated system." Metropolitan Suburban Water Users Ass'n v. Colorado River Water Cons. Dist., 365 P.2d 273, 289 (Colo. 1961). Each of the subject rights, therefore, should be considered an integrated component of the whole, and work on any of these rights should be considered in finding that reasonable diligence has been shown in the development of all these rights. Claim to make conditional water right absolute: The Elkhead Creek Reservoir Enlargement was completed in November of 2006. On April 20, 2007, the reservoir reached its physical capacity. Applicant subsequently put the Elkhead Creek Reservoir Enlargement storage right to a beneficial use by storing the full decreed amount, including the 1,000 AF refill right, and making water available by contract pursuant to the River District's Yampa River Water Marketing Policy for all decreed beneficial uses and by releasing, during the diligence period, 34,122 AF of water for decreed beneficial purposes, as shown on the reservoir accounting sheet attached as Exhibit B. Alternative claim for finding of reasonable diligence: Applicant seeks a finding of reasonable diligence with regard to any portion of its 13,000 AF Enlargement Right and 1,000 AF refill right that is not made absolute as requested above. In addition, the Applicant seeks a finding of reasonable diligence with regard to its 200 cfs Elkhead Creek Reservoir Enlargement Power Right. Provide a detailed outline of what has been done toward completion or for completion of the appropriation and application of water to a beneficial use as conditionally decreed including expenditures: Applicant has undertaken the following specific activities over the last six years that demonstrate its diligence with regard to the subject conditional rights. The explanation of work accomplished during the diligence period is not all inclusive but is merely representative. Unless otherwise noted, the expenditures listed herein do not include attorney's fees or salaries of staff of the River District but the Applicant does claim those significant expenses toward diligence. Endangered Species. Federal environmental legislation and related regulations on water development activities often make successful acquisition of needed federal permits the most predominant concern regarding a water development project. A significant concern and restriction regarding the development of projects in the Colorado River Basin, including the Yampa River Basin, is the existence and status of four native fish species which have been listed as "endangered" by the Fish & Wildlife Service pursuant to the federal Endangered Species Act. Because water depletions in the Colorado River basin are alleged to jeopardize the continued existence of those fish species, it is necessary for the River District to successfully address the alleged jeopardy of those species. Examples of the River District's activities include: The River District has funded and participated in extensive scientific investigations and lobbying activities concerning the recovery of endangered fish species in the Colorado River basin. Those efforts are necessary and appropriate in order for the River District, and for the water users within its boundaries, to secure permitting approvals for the construction and operation of water projects. The River District participated extensively in the development of the Recovery Implementation Program for Endangered Fish Species in the Upper Colorado River Basin (RIP) and the Final Programmatic Biological Opinion on the Management Plan for Endangered Fishes in the Yampa River Basin. The RIP and PBO allow for 30,000 to 50,000 acre feet of further water development and depletions while measures are taken to recover the endangered fish species. The completion of the PBO facilitated the permitting of the Elkhead Creek Reservoir Enlargement. Legislation and Administrative Regulations. The River District conducted extensive lobbying activities, at the federal and state levels, on a wide variety of statutory and regulatory issues related to water rights, water use, and environmental matters, as those matters relate to the construction of water projects and uses of water within Colorado, including: Participation in numerous rulemaking hearings and informal processes before the Water Quality Control Commission to ensure that the state's water quality regulations protect the ability of water users to place water to beneficial use. Litigation. The River District filed numerous Statements of Opposition in various Water Courts to protect its existing decreed water rights and the availability of water for use within the River District's boundaries. Examples of such litigation in Division 6 include but are not limited to: The River District is an opponent to the application of Shell Frontier Oil & Gas, Inc., in case No. 08CW90, Water Division 6 to protect its interest in the water right that is the subject of this application and other water rights owned by the River District. Salinity Control. The River District continues to actively participate in the Salinity Control Forum with the United States of America and other interested parties regarding the salinity of the Colorado River, as well as the operation of the Colorado River mainstem reservoirs to ensure to the River District, as well as to the State of Colorado, an adequate supply of water from the Colorado River as guaranteed by the Colorado River Compacts. Energy Development Water Needs Assessment. In 2008-2011, the River District directed a multi-phased study funded by the Colorado and Yampa-White River Roundtable to assess water use associated with energy development in the Colorado, White, and Yampa River basins. The Elkhead water rights, that are the subject of this Application, could be utilized, in part, to serve those water demands. USGS Gauging. The River District participates in the funding of United States Geological Survey gauging stations throughout the District in order to better assess the availability of water for development pursuant to its various projects. Maintenance of Reservoir Facilities. The River District has spent in excess $275,000 on maintenance and upkeep of Elkhead Reservoir since the completion of the enlargement. Construction of Reservoir Enlargement. During the diligence period the River District successfully completed the $30 million enlargement of Elkhead Creek Reservoir necessary for the storage and subsequent beneficial use of the Elkhead Creek Reservoir Enlargement Rights including the right to refill up to 1,000 AF and the 200 cfs Elkhead Creek Reservoir Enlargement Power Right. During the diligence period, in excess of $33 million was spent on the activities summarized above. Name(s) and address(es) of owner(s) of land on which structure is or will be located, upon which water is or will be stored, or upon which water is or will be placed to beneficial use: The structures are or may be located and water is stored on land owned by the agencies, entities, and individuals identified in Appendix C, attached hereto and incorporated herein by this reference. The water has and will continue to be placed to beneficial use within the extensive boundaries of the River District. The water rights may be put to beneficial use on lands owned by many thousands of individuals and entities. Therefore, it is not feasible to list at this time the names and addresses of the owners of land upon which water will be placed to beneficial use. WHEREFORE, the Applicant requests that the Court adjudge and decree that Applicant has exercised reasonable diligence in the development of the water rights that are the subject of this Application, that the 13,000 AF Elkhead Creek Reservoir Enlargement right, including the right to refill up to 1,000 AF has been made absolute for all of its decreed beneficial purposes, that the Court grant a finding of reasonable diligence for any portion of the Elkhead Creek Reservoir Enlargement right not made absolute, and that the 200 cfs conditional direct flow water right for the Elkhead Creek Reservoir Enlargement Power Right be continued in full force and effect, and that a date be set for a subsequent application for a finding of reasonable diligence. The Applicant also requests that the Court confirm that the conditional water rights identified above are features of an integrated system of water rights, and that work done on one feature of the project shall be considered in finding that reasonable diligence has been shown in the development of water rights for all features of the entire project. (8 pages, 3 exhibits)

You are hereby notified that you will have until the last day of JULY, 2011 to file with the Water Court a Verified Statement of Opposition, setting forth facts as to why a certain Application should not be granted or why it should be granted only in part or on certain conditions. A copy of such Statement of Opposition must be served on the Applicant or the Applicant's Attorney, with an affidavit or certificate of such service being filed with the Water Court, as prescribed by Rule 5, C.R.C.P. The filing fee for the Statement of Opposition is $158.00, and should be sent to the Clerk of the Water Court, Division 6, P.O. Box 773117, Steamboat Springs, CO 80477.

ROUTT COUNTY COMBINED COURT

WATER DIVISION 6

By: /s/ M. Rene Mattone

Court Judicial Assistant

Published in the Craig Daily Press

Publication Date: june 17, 211

10266048

Published in the Craig Daily Press Publication Date: june 17, 211

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