(1) The general assembly hereby finds, determines, and declares that:

(a) There are certain circumstances under which the time required to go through the water court adjudication process can be problematic for some water users. Prior to January 1, 2002, substitute water supply plans had come into common usage for a number of water users, and based on this precedent, it appears desirable to establish some additional authority for the state engineer to approve substitute water supply plans.

(b) Prior to January 1, 2002, the general assembly gave the state engineer certain authority to approve exchanges and substitute water supply plans, including substitute water supply plans involving sand and gravel mines approved pursuant to sections 37-90-137 (11) and 37-80-120 (5); exchanges pursuant to sections 37-80-120, 37-83-104, and 37-83-106, and other statutes authorizing exchanges; and water uses that are part of the Arkansas river water bank pilot program approved pursuant to article 80.5 of this title; and this section shall not apply to such plans and exchanges.

(c)

(I) Prior to January 1, 2003, the general assembly gave the state engineer administrative authority to regulate wells upon promulgation of rules for a river basin or aquifer, subject to the review of the water judge as provided in section 37-92-501 (3). The general assembly hereby ratifies the amended rules governing the diversion and use of tributary groundwater in the Arkansas river basin of Colorado, as approved by the water judge for water division 2, that became effective on June 1, 1996.

(II) On and after January 1, 2003, the state engineer shall have the authority in water division 2 to promulgate and amend well administration rules pursuant to sections 37-80-104 and 37-92-501 that include the authority to approve replacement plans that allow the continuing operation of wells causing out-of-priority depletions without requiring a plan for augmentation approved by the water judge.

(III) On and after January 1, 2003, the state engineer shall not have any authority in water division 1 to approve plans for, or to otherwise allow, the operation of wells, including augmentation wells, that cause out-of-priority depletions unless the wells are operated in accordance with plans for augmentation approved by the water judge or as allowed in this section.

(2) In addition to the authority previously granted to the state engineer, listed in subsection (1) of this section, the state engineer is authorized to review and approve substitute water supply plans only under the circumstances and pursuant to the procedures set forth in this section.

(3) (a) To provide sufficient time to fully integrate certain wells into the water court adjudication process for augmentation plans, during 2003, 2004, and 2005, the state engineer may approve annual substitute water supply plans for wells operating in the South Platte river basin that have been operating pursuant to substitute water supply plans approved before 2003, or for augmentation wells, using the procedures and standards set forth in this subsection (3). After December 31, 2005, all such wells shall comply with the provisions of subsection (4) of this section in order to continue operation under a substitute water supply plan. The general assembly finds that this three-year period is a sufficient amount of time to develop augmentation plan applications for these wells, and there shall be no subsequent extensions of this deadline. Beginning January 1, 2006, groundwater diversions from all such wells shall be continuously curtailed unless the wells are included in a plan for augmentation approved by the water judge for water division 1, are included in a substitute water supply plan approved pursuant to subsection (4) of this section, or can be operated under their own priorities without augmentation.

(b) Beginning January 1, 2003, the state engineer may approve the operation of a well described in paragraph (a) of this subsection (3) under a substitute water supply plan if the following conditions are met:

(I) The well is tributary to the South Platte river, has been included in a substitute water supply plan previously approved by the state engineer or is an augmentation well, and is included in a new written request for approval of a substitute water supply plan filed with the state engineer after January 1 of each calendar year from 2003 to 2005. The written request shall be signed by a person with legal authority to represent all of the owners of the wells subject to the request and shall contain acknowledgments that the operation of all wells in the substitute water supply plan pursuant to this subsection (3) shall cease no later than December 31, 2005, and that the wells shall be included in an application for approval of a plan for augmentation filed in the district court for water division 1 no later than December 31, 2005, in order to continue subsequent pumping, unless the wells can be operated under their own priorities without augmentation. The request shall also identify for each well, including any augmentation wells: The permit number and location; the projected use and volume of pumping; for all wells using the modified Blaney-Criddle method to determine consumptive use, the projected number of acres and crops to be irrigated; the anticipated stream depletions that affect the river after October 31, 2002, until eighteen months after the date of the request in time, location, and amount, including a detailed description of how such depletions were calculated, and shall list the identity, priority, location, and amount of all replacement water sources to be used to replace stream depletions, including both accretions and depletions attributable to any augmentation wells. Upon the request of any party who has subscribed to the substitute water supply plan notification list for water division 1, the applicant for a substitute water supply plan shall also provide the model used to calculate stream depletions and the assumptions, input data, and output data used by the applicant in such model.

(II) The applicant has provided written notice of the request for approval of the substitute water supply plan by first-class mail or electronic mail to all parties who have subscribed to the substitute water supply plan notification list for water division 1, and proof of such notice is filed with the state engineer. The applicant shall also provide a complete copy of the request and all accompanying information by e-mail to all parties that have provided e-mail addresses for said notification list.

(III) The state engineer has given the owners of water rights and decreed conditional water rights thirty-five days after the date of mailing of such notice to file comments on the substitute water supply plan. Such comments shall include any claim of injury, any terms and conditions that should be imposed upon the plan to prevent injury to a party's water rights or decreed conditional water rights, and any other information the opposer wishes the state engineer to consider in reviewing the substitute water supply plan request.

(IV) The state engineer, after consideration of the comments, has determined that the operation and administration of such plan will replace all out-of-priority stream depletions in time, location, and amount in a manner that will prevent injury to other water rights and decreed conditional water rights, including water quality and continuity to meet the requirements of use to which the senior appropriation has normally been put pursuant to section 37-80-120 (3), and will not impair compliance with the South Platte river compact. The state engineer shall impose such terms and conditions as are necessary to ensure that these standards are met. In making the determinations specified in this subparagraph (IV), the state engineer shall hold a public hearing to address the issues. The public hearing shall be held no sooner than thirty-five days and no later than forty-nine days after the date of mailing of notice of the request for approval of the substitute water supply plan. Notice of the time and place of the hearing shall be provided no later than twenty-one days prior to the hearing to all parties who have subscribed to the substitute water supply plan notification list for water division 1. At the hearing, every party shall be allotted a reasonable amount of time by the state engineer to present its case or defense by oral and documentary evidence and to conduct cross examination. At its own expense, any party may cause the hearing to be recorded by a court reporter or by an electronic recording device. Additionally, in making the determinations specified in this subparagraph (IV), the state engineer shall use the standards listed in paragraph (c) of this subsection (3) for evaluating such plans. It is the legislative intent that the adoption of these standards is only an interim compromise, to give greater certainty to senior surface water users in Colorado than past practices of the state engineer have given, until augmentation plans for these wells have been approved by the water judge for water division 1 and final determinations about the methodologies for calculating the amount and timing of stream depletions have been made by the water judge. These interim standards shall not create any presumptions, shift the burden of proof, or serve as a defense in any application for approval of a plan for augmentation.

(c)

(I) For those irrigation wells where diversions are actually measured using water meters or verified power conversion measurements, the presumed amount of consumptive use from wells used for flood irrigation shall not be less than fifty percent of diversions, and the presumed amount of consumptive use from wells used for sprinkler irrigation shall not be less than seventy-five percent of diversions. For those irrigation wells where diversions are not actually measured, the state engineer shall determine the amount of stream depletions using actual data for the crops grown, acres irrigated, surface water deliveries, and the modified Blaney-Criddle method.

(II) The state engineer shall determine the timing of all stream depletions caused by pumping wells included in the plan using the United States geological survey stream depletion factor method for all areas covered by such factors. In other areas, the state engineer shall use appropriate groundwater models or other methods acceptable to the state engineer, based on the location of the well, the rate of pumping, the use being made of the groundwater, and the aquifer characteristics.

(III) A substitute water supply plan approved pursuant to this subsection (3) shall require replacement of the following out-of-priority stream depletions that result from the pumping of wells in the plan: Out-of-priority stream depletions that affect the river after October 31, 2002, from pumping that took place after January 1, 1974, but before the date of the request; and those out-of-priority stream depletions that will affect the river for the eighteen months after the date of the request; except that out-of-priority stream depletions affecting the river from November 1, 2002, through June 15, 2003, may be remedied pursuant to agreements with all injured parties that are noticed in the request and approved as a part of the substitute water supply plan or an amendment thereto. The amount of such depletions shall be separately setforth in any plan approval issued by the state engineer. A substitute water supply plan approved pursuant to this subsection (3) shall require that the state engineer curtail all diversions, the out-of-priority depletions from which are not replaced as required by the plan.

(IV) Existing surface water rights may be used as a replacement water source in plans requested pursuant to this subsection (3), even if such rights have not been decreed for such use, but the substitute water supply plan shall prevent expanded use of such rights by imposing appropriate limitations, including, where appropriate, volumetric limitations on direct flow rights and shall require replacement of the historical return flows, including ditch seepage losses, from the use of such surface water rights in the time, location, and amount in which they occurred so that other water rights will not be injured. A request seeking to use existing surface water rights that have not been decreed for augmentation use shall include a calculation of the historical diversions and return flows, including estimated ditch seepage losses, attributable to such rights. The presumed amount of on-farm consumptive use from irrigation water rights shall not be more than fifty percent of the amount delivered to the farms; except that if a water court application has been filed and the proposed change of water right is approved as a separate substitute water supply plan pursuant to this section, such water rights shall be used in accordance with their own substitute water supply plan.

(V) Replacement water deliveries required by the substitute water supply plan shall be provided at the time and location necessary to satisfy the lawful requirements of a senior diverter. In determining the adequacy of the substitute water supply plan to prevent injury to water rights and decreed conditional water rights, the state engineer shall determine the amount of replacement water required for and available to the plan based upon current and projected hydrologic conditions.

(VI) If a substitute water supply plan covers wells, including augmentation wells, that are also covered by a decreed plan for augmentation or a separate substitute water supply plan, the accounting methodologies required by the decree or the separate plan shall control.

(VII) Substitute water supply plans that include or allow the use of augmentation wells shall include the terms and conditions needed to account for and replace all out-of-priority stream depletions that will result from their use, including post-pumping depletions. Beginning January 1, 2006, groundwater diversions from all such augmentation wells shall be continuously curtailed unless the wells are included in a plan for augmentation approved by the water judge for water division 1, a substitute water supply plan approved pursuant to subsection (4) of this section, or can be operated under their own priorities without augmentation.

(VIII) If amendments, including but not limited to the addition of more wells or the addition of different replacement water sources, are proposed to a substitute water supply plan after the initial written notice of the plan was given, the notice, comment, and hearing process described in this paragraph (c) shall be repeated for such amendments. If, in the opinion of the state engineer, an amendment is necessary to prevent immediate injury to other water rights that will occur prior to the expiration of the thirty-five-day comment period provided in subparagraph (III) of paragraph (b) of this subsection (3), the thirty-five-daycomment period shall be shortened to fourteen days, the public hearing shall be held no later than twenty-eight days after the date of the mailing of notice of the request for the amendment, and the amendment may be implemented before the comment deadline and the public hearing. For amendments implemented prior to a public hearing, the state engineer shall issue a decision approving or denying the amendment no later than seven days after the conclusion of the public hearing. The state engineer may revoke or further condition the approval of any amendment after the comment and hearing process.

(IX) A substitute water supply plan approved pursuant to this subsection (3) shall include a requirement for monthly accounting to be compiled for every month of each year. Such accounting shall state the amount and location of the calculated depletions from all wells included in the plan, the amount, location, and source of all replacement water actually provided, and shall describe any other plan operations for that month. After the end of the water year, and no later than December 31 of each calendar year of plan operation, an annual accounting of all actual plan operations for the previous water year shall be compiled. Copies of both the monthly and annual accounting shall be provided to all parties that filed written comments concerning the plan pursuant to subparagraph (II) of paragraph (b) of this subsection (3).

(d) A substitute water supply plan approved pursuant to this subsection (3) shall not be approved for a period of more than one year; except that an applicant may request the renewal of a plan by repeating the application process described in this subsection (3); except that in no case shall a plan approved pursuant to this subsection (3) be renewed beyond December 31, 2005.

(e) When the state engineer approves or denies a substitute water supply plan, the state engineer shall serve a copy of the decision on all parties to the application by first-class mail or, if such parties have so elected, by electronic mail. Every decision of the state engineer shall provide a detailed statement of the basis and rationale for the decision, including a complete explanation of how all stream depletions were calculated, the location where they occur, how all replacement water sources were quantified, and what terms and conditions were imposed to prevent injury to other water rights and why they were imposed. The decision shall also include a description of the consideration given to any written comments that were filed by other parties. Neither the approval nor the denial by the state engineer shall create any presumptions, shift the burden of proof, or serve as a defense in any legal action that may be initiated concerning the substitute water supply plan. Any appeal of a decision made by the state engineer concerning a substitute water supply plan pursuant to this subsection (3) shall be made to the water judge in water division 1 within thirty-five days after the date of service of the decision. The water judge shall hear and determine such appeal using the procedures and standards set forth in sections 37-92-304 and 37-92-305 for determination of matters rereferred to the water judge by the referee. The proponent of the substitute water supply plan shall be deemed to be the applicant for purposes of application of such procedures and standards. The filing fee for the appeal shall be two hundred seventy-one dollars for the proponent of the substitute water supply plan and seventy dollars for any other party to the appeal. Moneys from such fee shall be transmitted to the state treasurer and deposited in the water adjudication cash fund, which fund is hereby created in the state treasury. The general assembly shall appropriate moneys in the fund for the judicial department's adjudications pursuant to this subsection (3).

(f) The state engineer may accept for filing and consideration a written request for approval of a substitute water supply plan prior to April 30, 2003, subject to such request meeting all requirements of this subsection (3) prior to the date of approval. No approval of such request may be issued prior to April 30, 2003.

(g) Repealed.

(4) (a) Beginning January 1, 2002, if an application for approval of a plan for augmentation, rotational crop management contract, or change of water right has been filed with a water court and the court has not issued a decree, the state engineer may approve the temporary operation of such plan, contract, or change of water right as a substitute water supply plan if the following conditions are met:

(I) The water court applicant has filed a request for approval of the substitute water supply plan with the state engineer;

(II) The applicant has provided written notice of the request for approval of the substitute water supply plan by first-class mail or electronic mail to all parties who have filed a statement of opposition to the plan in water court and proof of such notice is filed with the state engineer, or, if the deadline for filing a statement of opposition has not passed, the applicant has provided written notice of the request for approval of the substitute water supply plan by first-class mail or electronic mail to all parties who have subscribed to the substitute water supply plan notification list for the water division in which the proposed plan is located and proof of such notice is filed with the state engineer;

(III) The state engineer has given those to whom notice was provided thirty-five days after the date of mailing of the notice to file comments on the substitute water supply plan. The comments must include any claim of injury, any terms and conditions that should be imposed upon the plan to prevent injury to an opposer's water rights or decreed conditional water rights, and any other information an opposer wishes the state engineer to consider in reviewing the substitute water supply plan request.

(IV) (A) The state engineer, after consideration of the comments received, has determined that the operation and administration of such plan will replace all out-of-priority depletions in time, location, and amount and will otherwise prevent injury to other water rights and decreed conditional water rights, including water quality and continuity to meet the requirements of use to which the senior appropriation has normally been put, pursuant to section 37-80-120 (3), and will not impair compliance with any interstate compacts.

(B) Notwithstanding any limitations regarding phreatophytes or impermeable surfaces that would otherwise apply pursuant to section 37-92-103 (9) or 37-92-501 (4)(b)(III), for any precipitation harvesting pilot project selected pursuant to section 37-60-115 (6) that has filed an application for a permanent augmentation plan in water court, the applicant shall fully augment any precipitation captured out of priority; except that, in determining the quantity of water required for the substitute water supply plan to replace out-of-priority stream depletions, there is no requirement to replace the amount of historic natural depletion to the waters of the state, if any, caused by preexisting natural vegetative cover evapotranspiration for the surface areas made impermeable and associated with the pilot project. The applicant may use applicable regional factors established pursuant to section 37-60-115 (6)(b)(VI). As a condition of approving a substitute water supply plan for a pilot project pursuant to this subsection (4), the state engineer shall have the authority to require the project sponsor to replace any ongoing delayed depletions after the water use plan associated with a precipitation harvesting pilot project has ceased.

(C) The state engineer shall impose such terms and conditions as are necessary to ensure that these standards are met. In making such determinations, the state engineer shall not be required to hold any formal hearings or conduct any other formal proceedings, but may conduct a hearing or formal proceeding if the state engineer finds it necessary to address the issues.

(b) A substitute water supply plan approved pursuant to this subsection (4) shall not be approved for a period of more than one year; except that an applicant may request the renewal of a plan by repeating the application process described in this subsection (4). If an applicant requests a renewal of a plan that would extend the plan past three years from the initial date of approval, the applicant shall demonstrate to the state engineer that the delay in obtaining a water court decree is justifiable and that not being able to continue operating under a substitute water supply plan until a decree is entered will cause undue hardship to the applicant. A project sponsor for a precipitation harvesting pilot project selected pursuant to section 37-60-115 (6) shall demonstrate to the state engineer that an additional year of operation under the plan is necessary to obtain sufficient data to meet the Colorado water conservation board's criteria for evaluating the pilot project. If an applicant requests renewal of a plan that would extend the plan past five years from the initial date of approval, the applicant shall demonstrate to the water judge in the applicable water division that the delay in obtaining a decree has been justifiable and that not being able to continue operating under a substitute water supply plan until a decree is entered will cause undue hardship to the applicant. Approval of a plan pursuant to subsection (5) of this section shall be deemed to be approval under this subsection (4) for purposes of calculating the number of years since the initial date of approval.

(c) When the state engineer approves or denies a substitute water supply plan, the state engineer shall serve a copy of the decision on all parties to the pending water court application by electronic mail, or, if a party has elected, by first-class mail. Neither the approval nor the denial by the state engineer shall create any presumptions, shift the burden of proof, or serve as a defense in the pending water court case or any other legal action that may be initiated concerning the substitute water supply plan. Any appeal of a decision made by the state engineer concerning a substitute water supply plan pursuant to this subsection (4) shall be to the water judge of the applicable water division within thirty days and shall be consolidated with the application for approval of the plan for augmentation.

(5) (a) Beginning January 1, 2002, for new water use plans involving out-of-priority diversions or a change of water right, if no application for approval of a plan for augmentation or a change of water right has been filed with a water court and the water use plan or change proposed and the depletions associated with such water use plan or change will be for a limited duration not to exceed five years, except as otherwise provided in subparagraph (II) of paragraph (b) of this subsection (5), the state engineer may approve such plan or change as a substitute water supply plan if the following conditions are met:

(I) The applicant has filed a request for approval of the substitute water supply plan with the state engineer;

(II) The applicant has provided written notice of the request for approval of the substitute water supply plan by first-class mail or electronic mail to all parties who have subscribed to the substitute water supply plan notification list for the water division in which the proposed plan is located and proof of such notice is filed with the state engineer;

(III) The state engineer has given the owners of water rights and decreed conditional water rights thirty-five days after the date of mailing of such notice to file comments on the substitute water supply plan. Such comments shall include any claim of injury or any terms and conditions that should be imposed upon the plan to prevent injury to a party's water rights or decreed conditional water rights and any other information the opposer wishes the state engineer to consider in reviewing the substitute water supply plan request.

(IV) (A) The state engineer, after consideration of the comments received, has determined that the operation and administration of such plan will replace all out-of-priority depletions in time, location, and amount and will otherwise prevent injury to other water rights and decreed conditional water rights, including water quality and continuity to meet the requirements of use to which the senior appropriation has normally been put, pursuant to section 37-80-120 (3), and will not impair compliance with any interstate compacts.

(B) Notwithstanding any limitations regarding phreatophytes or impermeable surfaces that would otherwise apply pursuant to section 37-92-103 (9) or 37-92-501 (4)(b)(III), for any precipitation harvesting pilot project selected pursuant to section 37-60-115 (6), the applicant shall fully augment any precipitation captured out of priority; except that, in determining the quantity of water required for the substitute water supply plan to replace out-of-priority stream depletions, there is no requirement to replace the amount of historic natural depletion to the waters of the state, if any, caused by preexisting natural vegetative cover evapotranspiration for the surface areas made impermeable and associated with the pilot project. The applicant may use applicable regional factors established pursuant to section 37-60-115 (6)(b)(VI).

(C) The state engineer shall impose such terms and conditions as are necessary to ensure that these standards are met. In making the determinations specified in this subparagraph (IV), the state engineer shall not be required to hold any formal hearings or conduct any other formal proceedings, but may conduct a hearing or formal proceeding if the state engineer finds it necessary to address the issues.

(b)

(I) Except as otherwise provided in subparagraph (II) of this paragraph (b), a substitute water supply plan approved pursuant to this subsection (5) shall not be approved for a period of more than one year; except that an applicant may request the renewal of a plan by repeating the application process described in this subsection (5). However, in no event shall any plan approved pursuant to this subsection (5) or any wateruse included in such plan be approved or renewed for more than five years.

(II) A project sponsor for a precipitation harvesting pilot project selected pursuant to section 37-60-115 (6) may request renewal of a plan that would extend the plan past five years from the initial date of approval if the project sponsor demonstrates to the state engineer that an additional year of operation under the plan is necessary to obtain sufficient data to meet the Colorado water conservation board's criteria for evaluating the pilot project or an application for a permanent augmentation plan is pending before the water court. As a condition of approving a substitute water supply plan for a pilot project pursuant to this subsection (5), the state engineer shall have the authority to require the project sponsor to replace any ongoing delayed depletions after the water use plan associated with a precipitation harvesting pilot project has ceased.

(c) When the state engineer approves or denies a substitute water supply plan, the state engineer shall serve a copy of the decision on all parties to the application by electronic mail, or if a party has elected, by first-class mail. Neither the approval nor the denial by the state engineer shall create any presumptions, shift the burden of proof, or serve as a defense in any legal action that may be initiated concerning the substitute water supply plan. Any appeal of a decision made by the state engineer concerning a substitute water supply plan pursuant to this subsection (5) shall be made to the water judge in the applicable water division within thirty days, who shall hear such appeal on an expedited basis.

(6) The state engineer shall establish a substitute water supply plan notification list for each water division for the purposes of notifying interested parties pursuant to subparagraph (II) of paragraph (b) of subsection (3) of this section and subparagraph (II) of paragraph (a) of subsection (5) of this section. Beginning in July 2002, and in January of each year thereafter, in order to establish the notification list, the water clerks in each division shall include in the water court resume an invitation to be included on the notification list for the applicable water division. Persons on the substitute water supply plan notification list shall receive notice of all substitute water supply plans filed in that water division pursuant to subsections (3) and (5) of this section by electronic mail or, if a person has elected, by first-class mail. Persons may be required to pay a fee, not to exceed twelve dollars per year, to be placed on the notification list.

(7) Beginning January 1, 2002, the state engineer may approve a substitute water supply plan if the state engineer determines such plan is needed to address an emergency situation and that the plan will not cause injury to the vested water rights or decreed conditional water rights of others or impair compliance with any interstate compact. Such plan shall not be implemented for more than ninety-one days. For purposes of this section, "emergency situation" means a situation affecting public health or safety where a substitute water supply plan needs to be implemented more quickly than the other procedures set forth in this section allow. For 2003, an "emergency situation" may also mean an immediate need for the use of augmentation wells necessitated by extreme drought conditions if such augmentation wells are also included in a request filed previously, or filed simultaneously with a request under this subsection (7), for approval of a substitute water supply plan under subsection (3) or (4) of this section. Approval pursuant to this section of the use of augmentation wells shall include the terms and conditions needed to account for and replace all out-of-priority stream depletions that will result from such use, including post-pumping depletions. Within seven days after the date of approval of the use of an augmentation well under this subsection (7), the state engineer shall give notice of the approval to all parties who have subscribed to the substitute water supply plan notification list for water division 1. In all other situations, notice to other water users shall not be required. Neither the approval nor the denial by the state engineer shall create any presumptions, shift the burden of proof, or be a defense in any legal action that may be initiated concerning an emergency substitute water supply plan or in any proceedings under subsection (3) or (4) of this section.

(8) After July 1, 2002, water users requesting approval of a new plan or a substitute water supply plan pursuant to this section shall pay a fee of three hundred dollars. The state engineer shall collect the fees and transmit them to the state treasurer, who shall deposit them in the water resources cash fund created in section 37-80-111.7 (1).

(9) If an entity pays for repairs, maintenance, dredging, or other improvements, including capital improvements, that are necessary and effective in removing a storage restriction imposed by the state engineer pursuant to section 37-87-107 on a dam or reservoir owned by a third party, such entity may apply to the state engineer pursuant to subsection (5) of this section for approval of the use of some or all of such newly unrestricted storage as a substitute water supply plan, if the entity has a written agreement concerning such use with all the owners of the dam or reservoir and the associated water rights.

(10) Repealed.

(11) (a) (I) To provide sufficient time to integrate coal bed methane wells into the water court adjudication process for augmentation plans, during 2010, 2011, and 2012 the state engineer may approve annual substitute water supply plans for such wells using the procedures and standards set forth in this subsection (11). Until July 31, 2010, coal bed methane wells may continue to operate without a substitute water supply plan if the oil and gas operator submits a request for approval of a substitute water supply plan pursuant to this subsection (11) by April 30, 2010. Beginning August 1, 2010, and ending December 31, 2012, no coal bed methane well that withdraws tributary groundwater and impacts an over-appropriated stream shall operate unless:

(A) Operation of the well is authorized pursuant to this section;

(B) The well is included in a plan for augmentation approved by a water judge; or

(C) The well is included in a substitute water supply plan approved pursuant to subsection (4) of this section.

(II) Beginning January 1, 2013, any coal bed methane well that withdraws tributary groundwater from a geologic formation in conjunction with the mining of minerals shall be continuously curtailed unless the well:

(A) Is included in a plan for augmentation approved by a water judge;

(B) Is included in a substitute water supply plan approved pursuant to subsection (4) of this section; or

(C) Can be operated in priority without augmentation.

(III) The general assembly finds that the time period established in subparagraph (II) of paragraph (b) of this subsection (11) is sufficient to develop augmentation plan applications for these wells, and there shall be no subsequent extensions of this deadline.

(b) For a substitute water supply plan pursuant to this subsection (11), the state engineer may approve the temporary operation of a coal bed methane well that withdraws tributary groundwater only if the following conditions are met:

(I) The applicant has provided written notice of the request for approval of the substitute water supply plan by first-class mail or electronic mail to all parties who have subscribed to the substitute water supply plan notification list for the water division in which the proposed plan is located and proof of such notice is filed with the state engineer;

(II) All parties who have subscribed to the substitute water supply plan notification list for the water division in which the proposed plan is located have thirty-five days after the date of mailing of such notice to file comments on the substitute water supply plan. Such comments shall include any claim of injury, any terms and conditions that should be imposed upon the plan to prevent injury to a party's water rights or decreed conditional water rights, and any other information a party wishes the state engineer to consider in reviewing the substitute water supply plan request.

(III) The state engineer, after consideration of the comments received, has determined that the operation and administration of such plan will: Replace all out-of-priority depletions occurring on or after June 2, 2009, in time, location, and amount, including delayed out-of-priority depletions that affect the stream system after expiration of the plan; otherwise prevent injury occurring on or after June 2, 2009, to other water rights and decreed conditional water rights, including water quality and continuity to meet the requirements of use to which the senior appropriation has normally been put pursuant to section 37-80-120 (3); and not impair compliance with any interstate compacts. The state engineer shall impose such terms and conditions as are necessary to ensure that these standards are met, which may include terms and conditions that remain in effect after expiration of the plan so as to require the proponent of the plan to replace delayed out-of-priority depletions occurring on or after June 2, 2009. In making such determinations, the state engineer shall not be required to hold any formal hearings or conduct any other formal proceedings, but may conduct a hearing or formal proceeding if the state engineer finds it necessary to address the issues.

(c) A substitute water supply plan approved pursuant to this subsection (11) shall not be approved for a period of more than one year; except that an applicant may request the renewal of a plan by repeating the application process described in this subsection (11). In no case shall a plan approved pursuant to this subsection (11) be renewed beyond December 31, 2012.

(d) When the state engineer approves or denies a substitute water supply plan, the state engineer shall serve a copy of the decision on all parties to the substitute water supply plan notification list for the water division in which the proposed plan is located by first-class mail or by electronic mail. Every decision of the state engineer shall provide a detailed statement of how all stream depletions were calculated, the location where they occur, how all replacement water sources were quantified, and what terms and conditions were imposed to prevent injury to other water rights and why they were imposed.

(e) Neither the approval nor the denial by the state engineer shall create any presumptions, shift the burden of proof, or serve as a defense in any legal action that may be initiated concerning the substitute water supply plan. Any appeal of a decision made by the state engineer concerning a substitute water supply plan pursuant to this subsection (11) shall be to the water judge of the applicable water division within thirty-five days after the date of service of the decision. The water judge shall hear and determine such appeal on an expedited basis using the procedures and standards set forth in sections 37-92-304 and 37-92-305 for determination of matters referred to the water judge by the referee.

(12) Agricultural water protection. (a) After a person has obtained a decreed agricultural water protection water right pursuant to section 37-92-305 (19), which water right is available only in water division 1 or 2, the person may apply for a substitute water supply plan pursuant to this subsection (12).

(b) (I) The state engineer may approve the lease, loan, or trade of water under a substitute water supply plan pursuant to this subsection (12) if the applicant has:

(A) Provided written notice of the request for approval of the substitute water supply plan by electronic mail or first-class mail to all parties who have subscribed to the substitute water supply plan notification list for the water division in which the proposed plan is located; and

(B) Filed proof of the notice with the state engineer.

(II) A person who receives written notice of the request for approval of a substitute water supply plan pursuant to subparagraph (I) of this paragraph (b) has thirty-five days after the date that the notice was mailed to file comments with the state engineer on the substitute water supply plan application. A party filing a comment with the state engineer must include the following in the comment:

(A) Any claim of injury;

(B) Any terms and conditions that the party believes should be imposed on the plan to prevent injury to a party's water rights or decreed conditional water rights; and

(C) Any other information the party wishes the state engineer to consider in reviewing the substitute water supply plan request.

(c) If, after consideration of the application and any comments received on the application, the state engineer approves a substitute water supply plan pursuant to this subsection (12), the approval must:

(I) Comply with conditions:

(A) Set forth in section 37-92-305 (19); and

(B) Developed by the state engineer pursuant to section 37-80-123;

(II) Comply with the terms and conditions of the applicant's decreed agricultural water protection water right, as recognized by the case number of the decree;

(III) Identify the associated water right as an agricultural water protection water right;

(IV) Quantify the portion of the historical consumptive use of the water right to be leased, loaned, or traded;

(V) Quantify the portion of the return flows associated with the historical use of the water to be leased, loaned, or traded in time, place, and amount;

(VI) Provide terms and conditions for the use of the water right, including the return flow obligations in time, place, and amount, that prevent material injury to other vested water rights and decreed conditional water rights; and

(VII) In accordance with section 37-92-305 (19)(b)(I), allow delivery of an amount of the quantified historical consumptive portion of the agricultural water protection water right. Delivery must be to a point of diversion that is subject to an existing water court decree.

(d) A substitute water supply plan approved pursuant to this subsection (12) is valid for one year. If the terms and conditions of the plan remain unchanged, the holder of the plan may renew the plan two times without reapplying by notifying the state engineer by electronic mail or first-class mail that the terms and conditions remain unchanged. To maintain the substitute water supply plan, the holder of the plan must file a new application every three years. Any change in the terms and conditions immediately nullifies the substitute water supply plan, and a new application must be applied for and approved by the state engineer pursuant to this subsection (12).

(e) When the state engineer approves or denies a substitute water supply plan, the state engineer shall serve a copy of the decision on all parties to the application and the water court application by first-class mail or, if a party has so elected, by electronic mail.

(f) The state engineer must provide a detailed statement of the basis and rationale for the decision. For a decision approving the application, the statement of the basis and rationale must include a complete explanation of the terms and conditions imposed to prevent injury to other water rights and why they are imposed. The decision must include a description of the consideration given to any written comments that were filed by other parties.

(g) Neither the state engineer's approval nor denial of an application creates any presumptions, shifts the burden of proof, or serves as a defense in any legal action that may be initiated concerning the substitute water supply plan.

(h) Any appeal of a decision made by the state engineer concerning a substitute water supply plan approved or denied pursuant to this subsection (12) must be made within thirty-five days after the date of service of the decision. Any appeal must be filed under the same case number as the decreed agricultural water protection water right and shall be heard using the procedures and standards set forth in sections 37-92-304 and 37-92-305 for determination of the matters referred to the water judge by the referee. The water judge shall hear and determine any appeal on an expedited basis.