Somach Simmons & Dunn | Attorneys at Law
Please complete the form below to subscribe and recieve our monthly eAlerts via email.
The Colorado General Assembly convened its 2025 legislative session January 8, 2025, and adjourned on May 7, 2025. Below is a highlight summary of water-related legislation passed by the General Assembly and signed into law by Governor Jared Polis.
On May 15, 2025, Governor Polis signed SB25‑040 into law. The new law creates the Future of Severance Taxes and Water Funding Task Force, a bipartisan initiative sponsored by Representatives Roberts (D) and Simpson (R), along with Senators McCormick (D) and Martinez (D). The big idea? Bring together experts, lawmakers, and a third-party research team to figure out how Colorado can continue supporting critical water infrastructure and conservation efforts—even as traditional funding sources dry up.
Under the bill, the Department of Natural Resources will hire an independent group to dig into the numbers, assess the current state of severance tax revenues, and explore new funding strategies. That research team will work closely with the task force to make sure the final recommendations are practical, sustainable, and grounded in real-world needs.
Here is the timeline: a draft report is due by January 15, 2026. The task force will review it and offer feedback. Then, by July 15, 2026, a final version—complete with the task force’s input—will be delivered to the state’s Water Resources and Agriculture Review Committee. That report will help guide legislative discussions during the 2026 interim session.
On April 7, 2025, Governor Polis signed SB25‑140 into law—a piece of legislation aimed at modernizing outdated dollar thresholds for Colorado’s irrigation districts. Sponsored by Representative Pelton (R) and Senator Johnson (R), the bill adjusts compensation and contract approval limits to better reflect today’s economic reality.
Under the old law, board members and election judges for irrigation districts could be paid no more than $100 per day—a rate that had not kept up with inflation. SB25‑140 increases that limit to $150 per day. It is a modest bump, but one that acknowledges the time and effort these local officials put into managing water resources.
The bill also updates the rules for how irrigation district contracts are approved based on their dollar value. Previously, any contract over $250,000 but under $400,000 required written authorization from at least one-third of the district’s electors (based on the last election turnout). Contracts over $400,000 had to be approved by voters in an election. SB25‑140 raises those thresholds: now, contracts between $400,000 and $650,000 need one-third written authorization, and anything over $650,000 must go to a full vote.
Perhaps most notably, the bill ensures these numbers will not stay static. Starting July 1, 2029, the compensation limits and contract thresholds will be adjusted every five years to keep pace with inflation.
On May 31, 2025, Governor Polis signed SB25‑203 into law—a clarification that helps the Colorado Department of Public Health and Environment (CDPHE) better support public water systems in small communities. Sponsored by Representatives Bradley (R) and Carter (D), along with Senators Exum (D) and Catlin (R), the bill clears up existing law to ensure that CDPHE can use up to 10% of appropriated funds to administer and manage grants related to public water systems and wastewater treatment projects.
Signed into law by Governor Polis on May 15, 2025, SB25‑283 makes significant funding allocations to support a wide range of water-related projects and programs in Colorado for the 2025‑26 fiscal year. Sponsored by Representatives McCormick (D) and Soper (R), and Senators Roberts (D) and Simpson (R), the bill appropriates money from the Colorado Water Conservation Board (CWCB) construction fund to various water initiatives across the state.
Key allocations include $380,000 to continue the satellite monitoring system, $500,000 for floodplain map modernization, and $500,000 for the weather modification permitting program. The Colorado Mesonet project receives $200,000, and the water forecasting partnership project is allocated $2 million. Other notable projects include the Arkansas River decision support system ($300,000), technical assistance for the federal irrigation improvement program ($500,000), and $1 million to enhance decision support systems tied to the Colorado Water Plan.
Significant funding also goes toward long-term planning and restoration efforts: $4.5 million will support updates to basin implementation plans, while $5 million is dedicated to watershed restoration and wildfire preparedness. A statewide turf analysis receives $1.4 million, the Yampa River and Walton Creek confluence restoration project is funded at $2 million, and $6 million is set aside for irrigated acreage retirement in the South Fork Focus Zone.
Beyond project funding, the bill authorizes several financial transfers and administrative changes. On July 1, 2025, up to $2 million will be moved from the CWCB construction fund to the CWCB litigation fund, and $500,000 will be transferred to the Department of Agriculture’s conservation services division to support the Colorado soil health program. The CWCB is also authorized to issue a $12.97 million loan from the severance tax perpetual base fund to the North Poudre Irrigation Company for the Park Creek expansion project. Additionally, $29.2 million from the water plan implementation cash fund will support grants aligned with the goals of the Colorado Water Plan.
SB25‑283 also restructures part of Colorado’s water governance by eliminating the Office of Water Conservation and the Water Efficiency Grant Program. Remaining funds from that program will be transferred to the severance tax perpetual base fund.
Lastly, the bill strengthens executive accountability by requiring the governor or the executive director of the Department of Natural Resources to appoint a director of compact negotiations within 30 days of a vacancy.
On June 4, 2025, Governor Polis signed SB25‑305 into law—a bipartisan effort to make Colorado’s water quality permitting process more transparent, efficient, and responsive. Sponsored by Representatives Bird (D) and Taggart (R), and Senators Kirkmeyer (R) and Bridges (D), the bill is a comprehensive overhaul of how the state handles water quality permits and inspections.
Under current law, the Division of Administration (Division) within the Colorado Department of Public Health and Environment provides annual reports to the Water Quality Control Commission (Commission). SB25‑305 expands that reporting requirement. Going forward, the Division must include information about how long it takes to issue water quality permits. The 2026 report will also feature a deep dive into the Division’s efforts to reduce the backlog of pending permits, implement suggestions from permit holders, and increase inspections under the Safe Drinking Water Program.
The bill also introduces several structural improvements. When reviewing a permit modification request, the Division must limit its review to the specific scope of the application—no more, no less. SB25‑305 further requires the Commission to adopt new rules by December 31, 2026, to allow a short (no more than 14 days) public review of preliminary draft permits before final public notice. This change is intended to catch any factual errors early in the permitting process.
By the end of 2027, the Division must propose, and by mid-2028 the Commission must adopt, specific timeframes for issuing decisions on different types of permitting actions. These timelines are meant to bring predictability and accountability to the permitting process—especially important for local governments working with tight budgets and regulatory deadlines.
SB25‑305 is also sensitive to the financial realities facing local governments. When setting new compliance schedules tied to water quality permits, the Division must take into account a local government’s existing debt on infrastructure. If allowable under federal law, compliance schedules may extend beyond 20 years for local governments needing additional time to pay for upgrades.
To speed up permit reviews, the bill introduces an option for applicants to use outside technical assistance. Starting May 1, 2026, if a permit modification or renewal has been pending for more than 60 days—or if the Division declines to process preliminary effluent limitations—the applicant and Division may jointly bring in an independent, qualified contractor. These nongovernmental contractors will assist under the Division’s oversight, and the applicant covers the costs. The Division may also charge an administrative fee of up to 10% to support contract management and final permit processing. Importantly, all information used in developing a permit must be made available to the applicant, unless protected by legal privilege.
Finally, the bill includes several funding transfers to ensure that both clean water and drinking water programs are financially supported. On July 1, 2025, $111,000 moved from the Water Quality Improvement Fund to the Drinking Water Cash Fund. Also on that date, $3,518,564 from the PFAS Cash Fund transferred to the Clean Water Cash Fund. PFAS stands for per- and polyfluoroalkyl substances. In 2026, two more transfers from the PFAS fund will occur: $3,002,435 to the Clean Water Cash Fund and $516,129 to the Drinking Water Cash Fund.
Colorado is taking steps to streamline and modernize its water permitting process. On June 3, 2025, Governor Polis signed HB25‑1014 into law, aiming to cut red tape and improve efficiency within the Division of Water Resources. Sponsored by Representatives Johnson (R) and Lukens (D), along with Senators Roberts (D) and Simpson (R), the bill addresses outdated procedures and unnecessary delays tied to water well permitting and water rights administration.
Previously, once a permit was issued to construct a well outside a designated groundwater basin, the permit holder had only one year to build the well. If the deadline was not met, the permit expired—unless the permit holder secured a one-time, one-year extension from the State Engineer or Ground Water Commission. HB25‑1014 simplifies this by extending the default construction window to two years, eliminating the need for an extension in most cases (though federally authorized water projects are still subject to the old rule).
The bill also modernizes how expired permits are handled. It removes the requirement for the Ground Water Commission or State Engineer to send a certified letter before a permit can be considered expired. Instead, it allows a streamlined reinstatement process: if the applicant can prove the well was completed on time and pays a $30 fee, the Ground Water Commission or State Engineer can reinstate the permit.
In addition to well permitting improvements, the bill updates the way water rights abandonment is processed. Currently, each Division Engineer must present a list of potentially abandoned water rights to the water court every 10 years. HB25‑1014 keeps the 10‑year cycle but splits the process into two staggered batches—some divisions will now report in 2030, others in 2035—creating a more manageable and efficient schedule.
Finally, the bill eliminates final permitting requirements for non-Denver Basin bedrock aquifer wells located in designated basins, further reducing administrative burdens for both water users and the state.
On May 20, 2025, Governor Polis signed HB25‑1113 into law—legislation that expands existing turf restrictions to include multi-family residential housing, such as apartments and condominiums. Sponsored by Representatives Smith (D) and McCormick (D), and Senator Roberts (D), the bill builds on last year’s SB24‑005, which prohibited the use of nonfunctional turf and invasive plant species on new or redeveloped government properties, transportation corridors, and home owner association common areas beginning January 1, 2026.
HB25‑1113 extends these turf restrictions to new apartment and condominium developments, requiring local governments to take action. Specifically, by January 1, 2028, local entities must adopt or update ordinances, resolutions, or regulations to limit the installation of nonfunctional turf in these types of residential properties.
What HB25‑1113 does not do is just as important:
HB25‑1113 reflects Colorado’s continued focus on sustainable growth and water-smart landscaping—especially in urban and high-density housing developments. As more communities face the pressures of limited water resources, this law encourages thoughtful planning without sacrificing livable, functional outdoor spaces.
On May 15, 2025, Governor Polis signed HB25‑1115 into law, giving the CWCB expanded authority to enhance its water measurement and forecasting capabilities. Sponsored by Representatives McCluskie (D) and Soper (R), and Senators Roberts (D) and Catlin (R), the bipartisan bill formalizes and strengthens efforts that have become increasingly important as Colorado faces growing water challenges.
The new law expands the CWCB’s responsibilities by establishing a dedicated Water Supply Measurement and Forecasting Program under the Department of Natural Resources. Through this program, the CWCB is now authorized to:
While the CWCB has already been conducting water forecasting work using a mix of federal grants, stakeholder contributions, and annual state appropriations, HB25‑1115 codifies the program and gives it a more stable foundation. Over the past five years, the CWCB has allocated an average of $1.4 million per year from its construction fund to support this work. This bill ensures that the program can continue—and grow—as demands for reliable water data increase across the state. With climate variability, population growth, and drought putting pressure on Colorado’s water systems, accurate forecasting is more critical than ever. HB25‑1115 positions the CWCB to lead with better tools, better data, and stronger partnerships.
On May 27, 2025, Governor Polis signed HB25‑1165 into law. Sponsored by Representatives Paschal (D) and Soper (R), along with Senators Simpson (R) and Kipp (D), the bill takes a dual approach: creating a financial and regulatory framework for carbon storage, and clarifying the rules around underground geothermal development.
At the heart of the bill is the creation of the Geologic Storage Stewardship Enterprise, housed within the Department of Natural Resources. This enterprise is tasked with managing the long-term care of geologic storage facilities—places where carbon dioxide is injected deep underground for permanent storage. To fund this work, the bill authorizes the enterprise to:
Oversight of the enterprise is handled by a newly created Geologic Storage Stewardship Enterprise Board. Stewardship fees are collected by the Energy and Carbon Management Commission and deposited into the Geologic Storage Stewardship Enterprise Cash Fund, which is continuously appropriated to the enterprise for its operations. One key provision: once a site receives closure approval from the Energy and Carbon Management Commission, ownership of the stored CO₂ and infrastructure transfers to the state, and the operator is generally released from further regulatory liability. At that point, the state takes over long-term stewardship responsibilities.
In addition to carbon storage, HB25‑1165 makes several important updates to Colorado’s laws around underground geothermal resources:
For more information about how HB25‑1165 balances protections for Colorado’s hot springs and renewable energy growth, check out our previous alert.
Sponsored by Representatives Stewart (D) and Lieder (D), and Senators Bridges (D) and Kirkmeyer (R), this bill focuses on making tap fees fairer and more transparent for property owners and developers. Tap fees are the charges imposed to connect a property to public water or sewer systems. Under current law, water districts have the authority to set these fees. HB25‑1211 adds some important responsibilities: boards of water districts must now ensure water service is provided if capacity exists and, when setting tap fees, they must make sure the fees reasonably reflect the actual costs, including water rights acquisition. Additionally, the bill encourages boards to consider factors that could justify lower fees, like expected long-term water usage, unit size, water-efficient appliances, number of bedrooms/bathrooms, and graywater treatment systems. The goal is a fairer, more tailored fee system that encourages responsible water use. Governor Polis signed this bill into law on May 9, 2025.
In Colorado, a 10% tax is imposed on net sports betting proceeds, as approved by voters in 2019. Sports betting operators currently calculate their taxable proceeds by deducting player payouts, federal excise taxes, and a portion of free bets offered to players. HB25‑1311 changes that calculation starting September 1, 2025, by removing the deduction for free bets entirely. This means operators will no longer reduce their taxable income by the value of free bets placed, potentially increasing tax revenue from sports betting. The bill was sponsored by Representatives Stewart (D) and Lieder (D), and Senators Bridges (D) and Kirkmeyer (R), and was signed into law on May 15, 2025.
This resolution, sponsored by Representatives McCormick (D) and Winter (R), and Senators Roberts (D) and Simpson (R), helps ensure critical water projects in Colorado get the funding they need. Before projects can access the Drinking Water Revolving Fund—an important financial resource for water infrastructure—they must first qualify for the Drinking Water Project Eligibility List, managed by the Colorado Water Resources and Power Development Authority. This list includes projects eligible for funding under the federal Bipartisan Infrastructure Law. By officially maintaining and updating this eligibility list for 2025, the state helps prioritize investments in clean, safe drinking water. This resolution was signed into law on February 27, 2025.
For further information or questions about how these pieces of legislation might affect your water rights or projects, please contact:
Somach Simmons & Dunn provides the information in its Environmental Law & Policy Alerts and on its website for informational purposes only. This general information is not a substitute for legal advice, and users should consult with legal counsel for specific advice. In addition, using this information or sending electronic mail to Somach Simmons & Dunn or its attorneys does not create an attorney-client relationship with Somach Simmons & Dunn.
Read more news and alerts »
