Editor’s note: This report is the second of a series looking into the fight over how best to plan for and secure sustainable water in Douglas County.

The six counties of the San Luis Valley are teaming up to ensure that exporting groundwater to somewhere else, including the 22,000 acre-feet being sought by a water investment firm, would become such a headache that it might not be worth the trouble.

Five of the six San Luis Valley county commissions already voted in favor of what’s known as a 1041 intergovernmental agreement (IGA); the sixth county is expected to do so this week.

Sean Duffy, a spokesman for Renewable Water Resources, said “no comment” when asked about the agreement when it was being drafted last spring.

The nine-page IGA comes from the San Luis Valley Council of Governments, which promotes regional cooperation among the area’s six counties: Alamosa, Conejos, Costilla, Mineral, Rio Grande and Saguache. 

It establishes a San Luis Valley Joint Planning Area to Protect Surface Water and Groundwater Resources, comprised of the six counties, and a separate entity, the San Luis Valley Planning Board. 

Most notably, it implements “a collaborative policy and regulatory process to protect the quality and quantity of the surface water and groundwater resources running through the Joint Planning Area from impacts of surface water and groundwater export” for use outside the valley.

Once in place, someone seeking valley water would have to get all six county governments to sign off, a pretty high hurdle, given that to date, the votes to approve the agreement from five of the six county commissions have been unanimous. The action from Mineral County, the last county commission to vote, is also expected to be unanimous.

The agreement, once in place, is in effect, a hard “no” to anyone who wants to export water out of the valley because of numerous hurdles it would impose to get an approval.  

David Baumgarten of Sullivan, Green, Seavy of Denver, a firm that represents the San Luis Valley Council of Governments and which drafted the IGA, said the proposal is a framework for local governments, both at the county and municipal levels, to work together in a coordinated manner to protect the water resources relied on by the communities of the San Luis Valley. It is intended to address potential exports out of the valley, not uses within the valley, Baumgarten added.

Any application for a 1041 permit would require applicants to demonstrate that potential effects would be mitigated, Baumgarten said. The burden is on applicants to show they’ve met the requirements, he added, just like any other permit sought from a local government.

The planning board — to be made up of the Council of Governments board of directors, an 11-member group — would handle applications, and, under the agreement, would require a supermajority vote to approve any applications for exporting water. 

That’s only the start. An application would then have to go to the local counties and could only be approved if the planning board had already given its okay.

The IGA’s first potential target is Renewable Water Resources, which for several years has been buying up land (and the water rights that go with it) in the valley, with the intention of exporting about 22,000 acre-feet of water annually and through a pipeline to Douglas County. 

The IGA hints at that proposal, noting “efforts currently and will foreseeably exist to export water from the San Luis Valley for use outside of the San Luis Valley, and that such transfers will be significantly detrimental to the Valley’s human and natural resources, environment, and abilities to continue to thrive as a community.”

RWR, which includes among its principals former Gov. Bill Owens and his former deputy chief of staff, Sean Tonner, have been trying since 2018 to buy water from the valley for Douglas County. The group’s proposal would require drilling 25 confined aquifer wells and at a cost of about $600 million. RWR would pay those willing to sell their water rights about $2,000 per acre-foot. RWR would then charge the water district that buys the water $19,500 per acre foot.

Water experts in the valley counter that the price point to sell water rights is about half of its value.

RWR’s Sean Tonner said last year the project would economically benefit the valley, which he said is among the most impoverished areas of the state at 43% below the poverty level and where population is declining and getting older.

“We can have both: We can have the Front Range being vibrant; the Front Range needs water. We can have the San Luis Valley being vibrant; it needs capital and needs to transition its economy to something lower than 90% to 95% agricultural-based,” he told Colorado Politics. “We’re not saying shut down all ranching and farming, but have a more diversified economy outside of government jobs and agriculture.”

The RWR project claims there’s a billion acre-feet of water in the confined aquifer. San Luis Valley water experts dispute that figure. One acre-foot is about 326,000 gallons of water or enough to cover Mile High Stadium’s football field with one foot of water.

In pitching for exporting groundwater out of the valley, the RWR project guarantees the valley’s resource would be protected. It notes that the Colorado Water Court already ensures that the San Luis Valley will not lose water. RWR says it would enter the water court process and “prove how the project meets these provisions of the water court.”

It would invest $68 million to pay farmers and ranchers who voluntarily sell water rights, maintaining that’s three times above market rate; and, finally, it is creating a $50 million “Community Fund,” which can be used to improve essential services, such as police, fire and education, an infusion of $3 to $4 million annually into the local economy.

And, in its overview of its pitch, the RWR project says it would develop only 2.5% of the aquifer’s annual recharge, or precipitation that refills the aquifer. 

Critics in the valley also dispute that claim, based primarily on the fact that the valley, like most of the West, is in a 20-year drought.

Sen. Cleave Simpson, R-Alamosa, who manages the Rio Grande Water Conservation District, earlier said there is no unappropriated water in the aquifer and whatever comes out would have to be replaced on a one-to-one basis.

In addition, valley water users are already under a state court order to restore 400,000 acre feet of water to the valley groundwater system within 10 years to be done primarily by retiring pumping from groundwater wells, according to the Alamosa Citizen. State lawmakers in 2022 appropriated $30 million to the Rio Grande Water Conservation District for that purpose.

RWR has never identified the Douglas County water provider that would take the San Luis Valley groundwater — the three largest have all said they aren’t planning for that water — and it has yet to find a place to store it. So far, municipal owners of reservoirs that could be potential storage sites have all said they won’t store RWR’s water nor allow RWR to use their pipelines.

RWR’s proposal is opposed by every state lawmaker in the valley, the valley’s congressional representative, both Colorado U.S. senators, the attorney general and the governor, as well as one Douglas County commissioner, Lora Thomas.

The other two Douglas County commissioners initially supported using $20 million as a buy-in to the project, but that was federal money from the American Rescue Plan Act and their attorneys said it would likely not be a legal use of those funds.

The intergovernmental agreement

The intergovernmental agreement (IGA), which is set up under a 1974 state law, HB 74-1041, commonly referred to as 1041 powers, allows local governments to regulate areas of “state interest” through a local permitting process, as it is described by the Department of Local Affairs (DOLA).

1041 powers allow a local government, or in this case, the six counties of the San Luis Valley, to maintain control over development projects, even when the project has a statewide effect.

That includes groundwater extraction and exportation, which is at the heart of the San Luis Valley IGA, although 1041 powers have are more commonly used for domestic water supply and sewage treatment systems.

KC McFerson, who runs the community development office at the local affairs department, said 1041 and IGA are ways for local governments to protect the health, safety and welfare of their communities. The Northwest Council of Governments, for example, used a 1041 agreement for water quality.

She called the SLV agreement “creative … this is a brand new space” for the valley, but with higher stakes due to the region’s drought.

“I can understand why they’re going for the highest level of formality” in the form of an IGA, she added.

“There’s a lot of regional collaboration that happens across the state, that’s not new. But water, to try and tackle such a relatively emerging issue, I’m excited to see what happens and how they make it work,” McFerson said.

Communities are seeking very clear language in that IGA and to make sure everyone’s on the same page, McFerson added.

That, as it turns out, led to some late changes in the IGA in the past month and delayed its final approval in order to settle concerns that it could interfere with local water projects. That was a question raised by several counties, along with the Rio Grande Water Conservation District.

“This is a pretty unique agreement among governing bodies that hasn’t been tested anywhere else,” Simpson, the legislator, told Colorado Politics. “We’re all one community, six different counties and any number of municipalities, but we function as one community, particularly when you talk about moving water out of the valley. The IGA recognizes that.”

Simpson said he wasn’t involved in the initial discussions and had some concerns about one governing body subjecting itself to the approval of another governing body.

“It’s an admirable undertaking, but part of me struggles in that space,” he said. 

While the IGA is a new and novel approach, Simpson said he wants to be thoughtful about its potential, unintended consequences.

“We’re buying people’s wells right now” and that means less reliance on groundwater, he said, adding, “I don’t want the 1041 to complicate that conversation.” 

The new language in the final version states that a major domestic water treatment system, or municipal and industrial project — directly or as part of another project — that will not export any water from the joint planning area shall not be considered an export of water under the IGA.

All eyes on Mineral County

The last remaining county to sign off on the IGA, which is expected to take place next on Aug. 2, is Mineral County.

Commissioner Ramona Weber favors the IGA and says her fellow commissioners are expected to vote for it. The only sticking point is making sure the commissioners have seen the final version.

“We’re the headwaters of everywhere but it all goes out from here,” Weber said. “I think it will all make us think twice about our water and how it affects the other counties, to make sure we act in a way not detrimental to the other counties. We have to stick together for a lot of things.”

As to efforts to export water out of the valley, Weber said, “We want to dissuade that as much as possible. The valley without water would be a desert.”

Fellow Commissioner Jesse Albright also said he supports it, adding the counties in the valley have worked together well in the past.

He said the agreement will get all the local governments on board to work on the 1041 and to protect against the exportation of water.

“Strength in numbers,” he said.

As to the ongoing fight with Renewal Water Resources over the valley’s water, Albright doesn’t think that will be over anytime soon, and he expects it won’t be the last time someone tries to get water out of the valley.

“We’re united and stand strong, and the more prepared we are, the better off we’ll be,” he said.