(1) (a) Upon request by a water conservancy district or water conservation district, the state engineer shall promulgate program rules necessary or convenient for the operation of a water bank within the division in which such district is located. The state engineer shall hold public meetings and consult with the Colorado water conservation board regarding formulation of the rules. The rules shall be promulgated in accordance with the following:

(I) The rules shall authorize, facilitate, and permit the lease, exchange, or loan of stored water within a water division; except that nothing in this article shall be construed to authorize any lease, exchange, or loan of water that would negatively affect any of Colorado's interstate compacts.

(II) The rules shall not permit the transfer, lease, loan, exchange, or sale of water from the banks to instream flow uses as provided in section 37-92-102 (3) unless such transfer, lease, loan, exchange, or sale is to the Colorado water conservation board.

(III) The banks shall operate within existing requirements of Colorado water law as set forth in the "Water Right Determination and Administration Act of 1969", article 92 of this title, including specifically the requirement that water transferred through the banks be put to a beneficial use, and the "Colorado Groundwater Management Act", article 90 of this title; except that, in compliance with rules promulgated pursuant to this article, leases, loans, and exchanges effectuated through the banks need not require adjudication pursuant to article 92 of this title, and the state engineer shall administer such leases, loans, and exchanges notwithstanding the fact that they may not have been adjudicated.

(IV) The rules shall define the terms "interruptible supply" and "water banking".

(V) The rules shall take into account and address, as appropriate, any necessary or desirable limitations upon the time, place, or type of use of waters made available through the water banks, and the appropriate length of agreements implementing banking transactions.

(b) The rules shall ensure that operation of the banks shall not cause any material injury to the owner of or persons entitled to use water under a vested water right or a decreed conditional water right.

(c) The rules shall establish criteria pursuant to which the state engineer shall:

(I) Accept a deposit of a quantity of water in a bank, including necessary proof of:

(A) Ownership or a lease or contract that includes the right to use and control the disposition of water; and

(B) The legal parameters of the water for use subject to the proposed deposit, whether by decree or by contract;

(II) Credit a withdrawal of a quantity of water from a bank, including the term, location, and type of the proposed use of the withdrawn water;

(III) Publish a summary of each water bank's transactions, including the amounts of water subject to such transactions; and

(IV) Administer the withdrawn water:

(A) Within the priority system if the withdrawn water is subject to prior appropriation;

(B) With or without the need for an adjudication; and

(C) Without causing material injury to the owner of or persons entitled to use water under a vested water right or a decreed conditional water right.

(d) The rules shall delegate administration of a bank to the water conservancy district or water conservation district that submitted the request for the bank. Such district shall be entitled to charge a transaction fee for deposits, withdrawals, or both, sufficient to cover the bank's administration costs. Notwithstanding any restriction on the power of a water conservancy district or a water conservation district to act outside the geographic boundaries of such district, a district that has been delegated authority pursuant to this paragraph (d) shall have full authority to administer the bank's operations pursuant to this section, including any power to act outside the geographic boundaries of such district when necessary to administer the bank.

(2) The deposit of credits in a bank is voluntary, and credits may be removed by the owner at any time prior to an actual transaction in which control of a credit is transferred, subject to the terms and conditions of the deposit agreement executed with the operator of the bank.

(3) The state engineer shall seek a waiver or clarification of any federal laws, rules, or regulations that may impede the implementation of the water bank program.

(4) (a) The repeal of section 37-80.5-104 shall not affect the validity of any bank operating in the Arkansas river basin or any such bank's water deposit or withdrawal. After such repeal, such bank shall operate pursuant to the rules promulgated pursuant to this section.

(b) The state engineer shall provide the revisor of statutes with written notification when the period to file an appeal regarding promulgation of the rules under this section has expired or, if such an appeal is filed, when the litigation concerning such appeal has been fully resolved.