From the Valley Courier (Steve Vandiver):
In 2004, the Rio Grande Water Conservation District (RGWCD) supported legislation (SB04-222) that granted the State Engineer wide discretion to permit the continued use of underground water consistent with preventing material injury to senior surface water rights and ensuring sustainability of the unique aquifer systems in the San Luis Valley.
The district, as well as other water interests and well owners in the San Luis Valley, undertook this effort to try and reduce the severe negative economic impacts that have come about in other basins as the result of strict priority administration of groundwater by the state. The bill was signed into law in 2004, and codified as section 37-92-501. It prevents the State Engineer from curtailing groundwater withdrawals so long as those withdrawals are included in a groundwater management subdistrict and the withdrawals are made pursuant to the subdistricts’ properly adopted and approved groundwater management plan.
The district supports the development of subdistricts in the Valley as a flexible and innovative alternative to a strict priority administration by the state, as they can ensure protection to senior surface water rights, the viability of the aquifer systems and ensure the protection of the local economy that is dependent upon sophisticated agricultural practices. Water users developing subdistricts determined that subdistricts could be formed in communities of interest with relatively uniform hydrologic conditions that would reflect a local system, all the while protecting senior vested rights and sustaining the aquifer.
More Colorado Water 2012 coverage here.