The Evolving Process of Permitting

In 1991 Bill Reilly visited Cheesman Canyon on a well-deserved vacation. It had been a year since his veto of what would have been the biggest dam and reservoir project in Colorado, and he was reminded yet again what the landmark decision meant to local residents. reading “Two Forks” with a red slash through its middle. Reilly’s buddy nudged the truck’s owner and told him that he was standing next to the guy who rejected the proposed dam.

Reilly was the administrator for the U.S. Environmental Protection Agency under George Bush Sr. His decision in November 1990 to veto Denver Water’s proposal to build a dam on the South Platte River did more than make him a local hero to some.

The groundbreaking decision, and the permitting process that led to it, ushered in the modern era of water supply planning and water conservation, influencing both the water projects Coloradans depend on and the way utilities approach planning. The resulting impact has touched not only water providers and the millions of people who rely on public water systems, but also rivers that have seen benefits like higher flows, habitat restoration, and fish recovery programs because of agreements and mitigation requirements that may not have come about otherwise.

While embattled water projects such as Two Forks that resolved into more holistic water supply solutions have, perhaps, bettered Colorado, the state’s population is continuing to grow, creating an impending gap between water supply and demand. Can Colorado continue to effectively develop and implement holistic water supply solutions to meet that growing demand? According to the Colorado Water Plan published in 2015, within the next few decades, even with aggressive water conservation and the completion of dozens of water projects, the state could still be short some 500,000 acre-feet annually. To meet future water needs, Coloradans need to plan. “Any municipal water supplier plans ahead,” says Mark Koleber, water supply director for the City of Thornton. “They know that the state is growing, our region is growing, and the city, like the rest of the area, is growing. We need to plan for that.”

Dan Luecke (left) and Dave Little (right) were adversaries when the Two Forks Project was under consideration in the 1980s, with Little representing Denver Water’s interest in constructing the dam and Lueck advocating for alternative water supply options on behalf of the Environmental Defense Fund. Looking back, Little says the Two Forks veto made Denver Water a better organization. Photo by Matthew Staver

Water providers, municipalities and regions are looking toward water sources of all kinds to meet or limit future demand including water conservation, new reservoirs, water recycling, sharing or buying agricultural water, and more—many of which depend on built projects like pipelines and reservoirs. “Whether it’s fixing existing infrastructure, enlarging existing infrastructure, or building new infrastructure, as a growing society, we need that, ” says Greg Johnson, chief of the Water Supply Planning Section at the Colorado Water Conservation Board (and a member of the Water Education Colorado Board of Trustees), the agency that coordinates work on the water plan. “And you definitely need permitting on top of that to make sure things are done efficiently and effectively,” Johnson says. In this context, “effectively” permitting projects means avoiding or mitigating undesirable impacts to the environment, water quality and communities. Projects that have been working through the permitting process, such as the Windy Gap Firming Project, Gross Reservoir Expansion Project, and others, have been leading the way in effective mitigation through years of negotiation to address the concerns and needs of stakeholders and the environment. But permitting hasn’t been particularly efficient recently, Johnson says. Many of the projects identified in the water plan are moving through an uncertain, expensive, and decades-long permitting process. As those water supply projects encounter additional complications, some wonder if the next generation of water needs will be met through the style of negotiation that Coloradans have come to rely on—the results will matter for all Coloradans.

“Getting the permitting process wrong has consequences on both sides,” – Karlyn Armstrong, Colorado Parks and Wildlife

“In the face of unmet water demand, permit denials exacerbate water supply insecurities. Yet projects that are approved without the benefit of serious negotiation and holistic approaches can result in unparalleled adverse impacts to our environment and communities.” Will Colorado get this generation of water supply permitting negotiations right?

THE VETO

The National Environmental Policy Act (NEPA) in 1970 was among the first in a set of statutes that gave the environmental era its name. The rules include amendments to the Federal Water Pollution Control Act in 1972, the Endangered Species Act in 1973, and many others. They completely altered the water supply permitting and planning landscape by forcing utilities to consider environmental impacts in their plans and requiring federal agencies to involve the public in decision making. Other state and local laws came into play around the same time. This all meant new permits, processes and negotiations.

That was true for the pioneering project under the new rules, Windy Gap Reservoir, which, completed in 1985, now pools Colorado River water in Grand County to be pumped under the Continental Divide and delivered to Front Range cities. The permitting process forced Northern Water’s Municipal Subdistrict to negotiate for years, from 1971 to 1985, with various federal agencies, the Colorado River District, and Grand County. The project moved forward when the subdistrict agreed to mitigation measures that included $550,000 for biological research in the Colorado River headwaters area and $10.2 million toward the construction of Wolford Mountain Reservoir, a compensatory storage reservoir near Kremmling meant to protect West Slope water rights and future development against water diverted to the Front Range.

When it came to Two Forks, Denver Water chose to push the project through the permitting process instead of taking the time to listen and negotiate with stakeholders. For years, with initial water rights filed in the early 1900s, Denver Water planned to build a dam at the confluence of the South Platte River and a major tributary, the North Fork. In 1986, it began permitting for Two Forks—a proposed 615-foot-high dam to hold 1.1 million acre-feet of water and meet the needs of 400,000 expected new residents in Denver and 42 surrounding suburbs.

A coalition of environmental groups that called themselves the environmental caucus, armed with the requirements of NEPA and the Clean Water Act, came out in droves to public hearings. Members of the caucus agreed on principles they would use to develop realistic alternatives to the dam—among other things they decided that their proposal would assure a dependable supply of water and include significant new storage on the South Platte. Their proposed alternatives included conservation, smaller projects, and the expansion of existing reservoirs that could be combined to supply the same quantity of water without flooding Cheesman Canyon. On Nov. 23, 1990, EPA vetoed Two Forks under Section 404(c) of the Clean Water Act, after Reilly found that Two Forks would have been more damaging than the alternatives.

For Denver Water, Two Forks would have been a continuation of big water projects that, up until that time, had been accepted without much opposition, says Dave Little, who retired in 2015 as Denver Water’s director of planning after 35 years as a water supply planner. But the world was changing and the veto forced the utility to re-evaluate the way it provided water to the metro area. “It was so good that we were challenged. [Denver Water] is now a much better organization,” Little says.

Growth and new development demand water. Numerous cities along the northern Front Range plan to receive water from the Windy Gap Firming Project or the Northern Integrated Supply Project. Others are working on their own water projects, like Greeley’s Milton Seaman Reservoir expansion or Fort Collins’ Halligan Water Supply Project. Photo by Matthew Staver

Without a new, massive water storage project, Denver Water better defined its service area boundaries—it would no longer regionally provide water to all surrounding suburbs, which meant different supplies were needed for other parts of the metro area. In years since, Denver Water has implemented most of the alternatives proposed by the coalition. It now boasts nationally recognized environmental mitigation, water conservation and water recycling programs.

“We had Denver Water admit what it could accomplish,” says Dan Luecke, a retired hydrologist who worked for the Environmental Defense Fund and led the caucus opposed to Two Forks (he’s also a member of the Water Education Colorado Board of Trustees). “We just needed to help Denver Water move to a different path than the one it wanted to take.”

The utility is also working on a “new” supply project, one that was already on its planning list at the time of the Two Forks review and that the caucus made part of its alternative to the big dam—the expansion of Gross Reservoir. The project has been moving its way through permits and approvals since 2003. However, this time Denver Water’s approach was far different than its attitude with Two Forks—negotiations, conversations and public input have shaped the reservoir expansion and mitigation to the point where representatives from Grand and Summit counties, home to the West Slope communities impacted by the diversion, publicly support Denver Water’s work. But it has encountered recent lawsuits and challenges with permitting, which could still halt the expansion.

PERMITTING REQUIREMENTS

Different water projects require different permits. For big water projects that have a federal nexus, the gauntlet of permitting begins with NEPA, which aims to ensure that federal agencies and project proponents consider the environmental impacts of the proposed project before undertaking any major federal action. NEPA is designed to take the time to look at other ways to solve a problem. That’s partly why Phil Strobel, the director of NEPA compliance for EPA Region 8, which includes Colorado, calls it a planning process, not a permitting process.

The key NEPA document in most Colorado water supply projects is an Environmental Impact Statement (EIS) which details the impacts of the proposed action and considers reasonable alternatives. The project proponent works with a lead federal agency to explain why the project is needed, how environmental effects will be minimized or avoided, and that a reasonable range of alternatives has been considered. The public is invited to comment, and eventually the agency issues a decision stating whether the project will be permitted.

A project triggers NEPA when it needs a federal permit or authorization, uses federal funds or involves federal lands. Many water projects, of course, fit these criteria. But it’s possible to skirt federal lands, bore under wetlands, and take other steps to avoid NEPA. That’s now a goal that some water utilities have achieved to save time and money in permitting.

Permitting and planning doesn’t end with NEPA. Section 404 of the Clean Water Act created a program to regulate the discharge of dredged or fill material into “waters of the United States,” which itself is currently being debated. These permits are reviewed by the U.S. Army Corps of Engineers, though EPA enforces section 404. A project won’t be permitted if a less damaging alternative exists or if the waters would be “significantly degraded.”

Most projects must also receive state permits and certifications. This includes working with Colorado Parks and Wildlife (CPW) and the Colorado Water Conservation Board on a state Fish and Wildlife Mitigation Plan focused on mitigation for fish and wildlife resources of state interest—which are often broader than the resources addressed in federal mitigation programs, says Karlyn Armstrong with CPW. “We work with the project proponent to implement a wide range of avoidance, minimization and mitigation tools so that impacts of water projects on fish and wildlife resources can be limited,” Armstrong says.

Project proponents must also receive 401 certification, which falls under the Clean Water Act but is issued by the Colorado Department of Public Health and Environment’s Water Quality Control Division and is required before a section 404 permit can be issued. A 401 certification provides reasonable assurance that water quality standards and other criteria won’t be exceeded during the life of the project and that the project won’t “significantly degrade” water quality. CDPHE’s role ensures that technical assessments and mitigation efforts align with state requirements, which can be more specific than federal requirements, says Aimee Konowal, Clean Water Program manager for CDPHE. “It’s important to us because we have an opportunity to look at water quality impacts and determine if mitigation is on the table and is adequate to address those impacts,” Konowal says.

Finally, counties and local governments often require additional approvals such as 1041 permits. Colorado House Bill 1041 gave local governments powers to identify, designate, and regulate areas and activities of state interest through local permitting processes. Local governments typically include municipal and industrial water projects as activities of state interest that require 1041 permits. 1041 permits are issued or denied by elected officials such as county commissioners and often involve public hearings.

NEGOTIATING POSITIVE
OUTCOMES

When Windy Gap Reservoir was completed in 1985, Northern Water’s Municipal Subdistrict already held the water rights for it to become a larger project—the Windy Gap Firming Project. To enable that expansion, the subdistrict, which consists of nine municipalities, two water districts and a power provider, hopes to build Chimney Hollow Reservoir in southern Larimer County, to store 90,000 acre-feet of water.

The firming project should “firm up” a reliable water supply of 30,000 acre-feet a year using Colorado-Big Thompson Project infrastructure. That supply isn’t guaranteed now despite the original Windy Gap because the subdistrict’s junior Colorado River water rights don’t yield water in dry years, while in wet years there isn’t storage space for the subdistrict’s water, says Jeff Drager, director of engineering for Northern Water. Cities in the subdistrict—which include the rapidly growing Greeley, Longmont and Loveland—need more reliable water for the northern Front Range’s explosive growth. According to November 2018 projections from the State Demographer’s Office, the region’s population, estimated at 554,760 in 2010, is projected to more than double by 2050.

Permitting the Windy Gap Firming Project has led to years of studies, public comments, mitigation efforts and eventual settlements—and it’s still ongoing. Initially, environmental groups and Grand County opposed the project because the original Windy Gap Project, an on-channel reservoir, severed the Colorado River to enable the diversion of more water out of the headwaters, impacting habitat, recreational opportunity, and the Grand County community. The firming project would divert even more water to the Front Range.

But after years of negotiating, Grand County, environmental advocacy groups, and the subdistrict agreed on a mitigation package that should improve the health of the Colorado River. Mitigation efforts include restructuring the river with a connecting channel that will go around Windy Gap Reservoir, and water stored in Granby Reservoir that can be released into the Colorado to boost flows and cool temperatures in late summer. It also includes a partnership between East and West Slope water stakeholders called Learning By Doing that aims to maintain, restore and enhance the aquatic environment in Grand County, and allows mitigation to be adjusted if needed in the future. Now, Trout Unlimited and Grand County endorse the project. “The bottom line is, this leaves the river healthier than it is right now,” says Mely Whiting, an attorney for Trout Unlimited who helped lead a coalition of environmental groups to negotiate the settlement.

The 1041 permitting process gave Grand County the power to negotiate a mitigation package to address concerns from the first Windy Gap Project, says Lurline Curran, the county’s longtime manager who retired in 2015. “This was a unique opportunity to revisit the first [Windy Gap] permit,” Curran says. “We had the history, and now we felt like we were better informed about the impact of the first project.”

Jeff Drager, director of engineering for Northern Water, has been working to permit the Windy Gap Firming Project for more than a decade. He sits among thousands of pages of permitting paperwork including Environmental Impact Statements, alternatives analyses, fish and wildlife mitigation plans, and more.  Photo by Matthew Staver

That mitigation package and support from all involved led to permitting success for the Windy Gap Firming Project, which received its 1041 permit from Grand County in 2012. The Bureau of Reclamation issued its NEPA Record of Decision in 2014, CDPHE issued its 401 certification in 2016, and the Army Corps of Engineers issued its final 404 permit and Record of Decision in 2017. Because permitting went on for so long—14 years passed from the start of NEPA to the issuance of a final Record of Decision—the Corps had to reevaluate many of the basic assumptions in the subdistrict’s application such as need for the firming project, changes to water demand, and impacts to wetlands. Initially the project was projected to cost around $300 million, but costs have risen to more than twice that at $600 million, due in part to the long timeline.

Some of the same groups such as Trout Unlimited, Grand County, and others were party to negotiations around Denver Water’s Gross Reservoir Expansion Project, which also aims to divert more water out of the headwaters of the Colorado River to store it in an enlarged Gross Reservoir in Boulder County. After years of negotiating, more than 40 partners agreed to the Colorado River Cooperative Agreement (CRCA) in 2013. Through the CRCA, Denver Water protects river flows and water quality, and will restore habitat in the headwaters area. Among other mitigation efforts, Denver Water will monitor and adjust its actions through Learning By Doing. In exchange, West Slope partners vowed not to oppose the expansion project. That project now has all but one federal permit, an amendment from the Federal Energy Regulatory Commission to modify its existing hydropower license, and one local 1041 permit from Boulder County.

On Oct. 26, 2017, a bevy of environmental groups, including Save the Colorado, Save the Poudre, WildEarth Guardians, Waterkeeper Alliance and others filed suit against the Bureau of Reclamation and the U.S. Army Corps of Engineers for approving the Windy Gap Firming Project. The lawsuit questions the need for the firming project and says that the impact of taking another 30,000 acre-feet of water out of the Colorado would be devastating (project proponents disagree with this figure and confirm that an additional 9,000 acre-feet will be taken out of the river to firm 30,000 acre-feet of water). The suit essentially questions whether the NEPA process was conducted correctly.

Jessica Alexander (left), and environmental scientist with Denver Water, evaluates river improvements on the Fraser River after completion of the Fraser Flats River Habitat Project in 2018, along with Kirk Klancke (right), president of the Colorado River Headwaters chapter of Trout Unlimited. This work restoring 0.9 miles of the Fraser was completed through Learning By Doing. Courtesy of Denver Water

The following year, on December 19, 2018, many of the same environmental groups filed another lawsuit, this time seeking to halt Denver Water’s proposed Gross expansion. Again they claimed that federal permitting didn’t comply with environmental laws. The suit was filed against specific federal agency staff: Lieutenant General Todd Semonite with the U.S. Army Corps of Engineers; then-Secretary of the Interior Ryan Zinke; and Margaret Everson with the U.S. Fish and Wildlife Service.

The lawsuits endanger the agreements that Grand County, West Slope cities, environmental groups, Northern Water’s Municipal Subdistrict, Denver Water, and others worked to secure for more than a decade. Further extending already long timelines drains the resources of both water providers and the conservation groups who have been negotiating on behalf of the public and the environment. Maybe that’s the point: If the projects are tied up in court, they can’t proceed, period. “It’s a delay for delay’s sake,” Whiting says.

Using lawsuits to delay projects isn’t a new tactic. “It’s no more than it ever was,” says Dan Luecke who led the environmental caucus’s charge against Two Forks. “If you go back 20 years or more, the environmental community was accused of just playing for time.” But starting with Two Forks, environmental groups tried to do things more cooperatively, Luecke says. “Our approach was to develop an alternative rather than play for time.” Two Forks was different because all environmental groups agreed to proceed by developing alternatives that would still assure a dependable water supply. They spent more than six years in biweekly conversations with the Army Corps of Engineers, EPA and others. Ultimately, EPA agreed that the environmentalists’ alternative was technically and economically feasible and less environmentally destructive than Two Forks.

AVOIDING NEPA

In the wake of Two Forks, Northern Water staff asked Denver Water about lessons learned. “What did we learn [from Denver Water]? Don’t get tunnel vision,” Drager says. For the subdistrict launching into the Windy Gap Firming Project, avoiding tunnel vision meant a $2 million study examining alternative water supplies and project locations. They even tried to avoid triggering NEPA, but in the end, the study verified that Chimney Hollow was the best option.

Construction and planning for Aurora’s Prairie Waters Project was completed in 2010, ahead of schedule and under budget, largely because the project avoided NEPA permitting. Courtesy of Aurora Water

The Two Forks veto forced water utilities to critically examine their projects, be more proactive, to collaborate, find water supplies in creative ways, and to have conversations. The veto resulted in many positive outcomes, but had Two Forks been built, it would have provided a reliable water supply in semi-arid Colorado.

“I think you could draw a fairly direct line from that decision to the agreements and conversations we are having now,” says Lisa Darling, executive director of the South Metro Water Supply Authority (SMWSA), which serves about 80 percent of Douglas County. (She is also president of the Water Education Colorado Board of Trustees). “On the other hand, you’ve got to look at where we would have been had [Two Forks] gotten constructed.”

The dam, though distasteful to many, would have provided the metro area with a reliable water supply and resulted in very different water portfolios among Front Range utilities today. It also might have helped Front Range communities who struggled through the devastating 2002 drought. That year was the first that Aurora couldn’t meet its water demands, and Darling, who managed the South Platte River Program for Aurora Water at the time, had to help the city keep taps running. If the drought had persisted in the same severity for another year, Aurora would have used all of its reservoir water. “There would be no water in storage. For a major municipal city, that’s unthinkable,” says Mark Pifher who was deputy director, then director of Aurora Water from 2005 to 2012. The drought highlighted the need for Aurora’s own project: Prairie Waters. “It was imperative to get that project rolling ASAP,” Pifher says.

Prairie Waters recaptures the city’s water after it has been used by residents, treated, and discharged into the South Platte River. The water is captured in wells near the river where it’s filtered and piped back 34 miles to a purification facility near Aurora Reservoir. This water is used by Aurora residents and shared with SMWSA members through a project known as Water Infrastructure Supply Efficiency (WISE). Aurora developed Prairie Waters ahead of schedule, in only five years, and $100 million under budget at $660 million. Darling credits Aurora Water’s staff and some luck for the low budget and quick timeline. But Prairie Waters’ expedited timeline wasn’t a mistake.

“We knew that if we could avoid tripping NEPA, we’d shave, literally, years off the timeline,” – Mark Pfifher, Aurora Water

So the project was designed to avoid an Individual 404 permit and the related NEPA review by drawing water from wells beside the South Platte, rather than from the river itself, and by tunneling under drainages. “That saved us, what do you think, five or 10 years?” Darling asks.

Aurora needed a Nationwide 404 permit, but that was a fairly minor process, Darling says. Nationwide permits are meant to streamline the Army Corps of Engineers’ authorization of projects that will have a minimal impact, whereas individual permits are required for more significant impacts. Aurora also needed local permits but easily obtained authorization. Avoiding federal NEPA processes allowed Aurora to quickly develop its project. “It’ll never happen this way again,” Darling says.

Prairie Waters, along with growing water demands, a shrinking groundwater table in the south metro area, and the absence of the regional water supply that Two Forks would have provided, all led to the WISE partnership. WISE was established in 2009 to help transition south metro cities from groundwater to reusable supplies with Prairie Waters’ infrastructure and water from Aurora and Denver Water. That reusable supply meets many needs without the expense, time and uncertainty of permitting.

WISE could have developed as part of Prairie Waters, with Aurora regionally partnering with SMWSA from the start, Pifher says. But Prairie Waters was constructed before WISE because Aurora feared that as a larger project, a massive EIS could have been required for all WISE partners. “We just said woah, that’s a little scary,” Pifher recalls. “So again, we just concluded that it would be best if we put any partnership off to the future.”

1041 AND THORNTON

But avoiding the NEPA process doesn’t always result in smooth permitting, or so one might infer from the February 11, 2019 denial of a Larimer County 1041 Permit which the City of Thornton had hoped to obtain for its long-planned pipeline project.

Thornton has been planning for population growth for years—back in the 1980s it was the biggest non-Denver participant in the Two Forks Project. In the mid ‘80s, when Two Forks faced some opposition, Thornton looked at potential water projects and purchased agricultural land with senior water rights in Weld and Larimer counties. Thornton planned to change that water from agricultural to municipal use and pipe it south to supply its population. In 2014 Thornton reexamined its plan along with various alternatives and confirmed that a pipeline was its best option to deliver this water to its residents.

The city designed a 72-mile-long pipeline that would avoid triggering NEPA by boring under wetlands, ditches and creeks rather than trenching through them, just as Prairie Waters did. Still, the utility would need permits from Larimer and Weld counties. Thornton worked with county staff and hosted open houses in 2016, then began public and targeted meetings in 2017 to hear concerns. To address concerns, it developed a mitigation package that included conservation easements on the land, improvements to diversion dams and habitat along the Poudre River, and instream flows to prevent dry-up spots on the river, among other things. “We felt we had a win-win with the package we put together,” says Mark Koleber, water supply director for the City of Thornton. “[Larimer County] staff indicated that we had met all of their criteria and we had been working diligently to make sure that we did.”

So it came as a surprise when, in February 2019, all three Larimer County Commissioners denied Thornton a 1041 permit for its pipeline. Thornton expects to need new water by 2025, when the population is projected to grow beyond 158,000 residents, which is the current capacity of its system. If built, the new pipeline should supply the city through 2065, when the population is projected to reach 242,000 residents. “We started planning in the 1980s,” Koleber says. “Now it’s time to put in the infrastructure to move [the water] here.”

But with the 1041 permit denial, will Thornton meet its 2025 deadline or be able to build the project at all? Perhaps. The City of Thornton has filed a lawsuit against Larimer County, claiming that the commissioners disregarded their own rules, the facts presented, and state law when they denied Thornton’s 1041 application. If the case goes Thornton’s way, the court will overturn the decision or require the commissioners to approve the pipeline. There’s no telling how that court timeline will look, Koleber says. In the meantime, Thornton is beginning construction on seven miles of pipeline and is working through permitting with Weld County this summer.

Some say the same challenge of obtaining a 1041 permit could be looming for other pending water supply projects. Northern Water’s Northern Integrated Supply Project (NISP), which would supply 15 northern Front Range water providers with 40,000 acre-feet of new, reliable water, is also planning a pipeline with portions that were designed alongside Thornton to follow the same route through Larimer County. Other northern Colorado cities are planning other projects that will call for permits, like the City of Fort Collins’ Halligan Water Supply Project and the City of Greeley’s Milton Seaman Water Supply Project—though both have many permitting steps to work through before considering 1041 permitting. Meanwhile, Denver Water recently sued Boulder County, arguing against the county’s determination that a 1041 permit is required for the Gross Reservoir Expansion Project.

Only time will tell if these projects, with the aid of holistic permitting and negotiations, will yield positive outcomes or if the demands and voices involved in permitting will push project proponents and stakeholders to find fresher ways to satisfy public demands along with the water demands of growth. “There have been many examples of high cost and high uncertainty involved in the permitting process,” says Greg Johnson with the CWCB.  “I think that the desire is to decrease those unknowns, decrease the costs, and decrease a lot of the uncertainties of it all. To make sure that things are getting done, and done responsibly.”

DAN ENGLAND is a freelance writer who lives in Greeley. He writes about music, environmental issues, fitness, and outdoor activities including ultrarunning and mountaineering. He has won more than 100 state and national awards, including many for feature writing. He is a father of twin girls and a teenage boy and enjoys running, dogs and listening to heavy metal even though he should have outgrown it by now.