Session of 1999
         
HOUSE BILL No. 2544
         
By Committee on Taxation
         
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  9             AN  ACT concerning water rights; authorizing the Kansas water office to
10             acquire certain water rights and authorizing certain loans for that pur-
11             pose; authorizing the sale of such water rights and prescribing terms
12             and conditions therefor.
13      
14       Be it enacted by the Legislature of the State of Kansas:
15             Section  1. (a) The Kansas water office is hereby authorized to ne-
16       gotiate with and acquire from the federal government all water rights,
17       both ground and surface, appurtenant to any federal property located in
18       the state of Kansas. The Kansas water office is further authorized to hold
19       all interest in such water rights until:
20             (1) The Kansas water office makes a determination, pursuant to sub-
21       section (c), regarding the quantity and conditions under which a potential
22       purchaser or purchasers may be granted a portion or all of the water
23       rights;
24             (2) all necessary approvals have been obtained from the chief engi-
25       neer of the division of water resources of the department of agriculture
26       for the change of water rights; and
27             (3) where applicable, approval has been granted pursuant to the wa-
28       ter transfer act (K.S.A. 82a-1501 et seq. and amendments thereto).
29             While the Kansas water office holds any such water right, the provisions
30       of K.S.A. 82a-718 shall not apply to such water right.
31             (b) The Kansas water office shall sell a portion or all of the water
32       rights acquired pursuant to subsection (a) to a purchaser or purchasers
33       only upon the following conditions:
34             (1) Receipt by the Kansas water office of approval by the chief en-
35       gineer of the division of water resources of the department of agriculture
36       of an application to change such water rights; and
37             (2) receipt by the Kansas water office from the purchaser or pur-
38       chasers of a share of all costs incurred by the state prior to the actual sale
39       in proportion to the amount of the water rights sold to the purchaser or
40       purchasers. Such costs shall include but not be limited to the purchase
41       price paid by the Kansas water office to the federal government, admin-
42       istrative costs, fees, dues, any interest on loans obtained by the Kansas
43       water office for the acquisition of the water rights and, if the sale is made

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  1       to a purchaser for a use that is neither a municipal nor an industrial use,
  2       the purchaser shall be responsible for the purchaser's pro rata share of
  3       the future water assurance district payment obligation. Any sale of a water
  4       right by the Kansas water office pursuant to this section shall contain a
  5       condition that the purchaser shall honor any current water uses under
  6       existing leases on the real property to which the water right is or has been
  7       appurtenant.
  8             (c) In order to determine whether a proposed contract for the sale
  9       of a water right acquired pursuant to this section is in the interest of the
10       people of Kansas and whether for the state the benefits of approving the
11       contract outweigh the benefits of not approving the contract, the Kansas
12       water office shall consider all pertinent matters, including:
13             (1) The present and future water supply needs of the applicant;
14             (2) any current beneficial uses being made of the noncontracted wa-
15       ter proposed to be diverted;
16             (3) any reasonably foreseeable future beneficial uses of the water,
17       including the water requirements of other applicants;
18             (4) the economic, environmental, public health and welfare and other
19       benefits or adverse impacts of approving the contract;
20             (5) alternative sources of water available to the applicant;
21             (6) the preliminary plan of design, construction and operation of any
22       works or facilities used in conjunction with carrying the water to its point
23       of use;
24             (7) whether the proposed purchase is consistent with the state water
25       plan approved by the legislature;
26             (8) the date of receipt of the application to contract for withdrawal
27       and use of water;
28             (9) minimum streamflow requirements; and
29             (10) whether the applicant has adopted and implemented a water
30       conservation plan.
31             The approval process shall be subject to the Kansas administrative pro-
32       cedure act (K.S.A. 77-501 et seq. and amendments thereto).
33             (d) Notice shall be given by the Kansas water office in the following
34       instances and manner:
35             (1) Upon acquisition of water rights pursuant to this section, the Kan-
36       sas water office shall publish in the Kansas register notice of the availa-
37       bility of the water rights for purchase and the procedures for application.
38             (2) When an application to enter into a contract pursuant to this sec-
39       tion is received by the director, the Kansas water office shall provide
40       notice of the acceptance to other applicants at each applicant's last known
41       address. The notice shall specify the name of the applicant whose appli-
42       cation has just been received and the annual quantity of water included
43       in the request.

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  1             Sec.  2. (a) To provide financing that may be necessary to acquire
  2       water rights from the federal government pursuant to section 1 and
  3       amendments thereto, the pooled money investment board is authorized
  4       and directed to loan to the director of the Kansas water office, upon
  5       request therefor, sufficient funds for such purpose. The pooled money
  6       investment board is authorized and directed to use any moneys in the
  7       operating accounts, investment accounts or other investments, of the state
  8       of Kansas to provide funds for such loan. On the loan date of such loan,
  9       the pooled money investment board shall transfer the loan amount to the
10       director of the Kansas water office by depositing the same in the state
11       treasury to the credit of the federal water rights acquisition financing
12       fund.
13             (b) A loan pursuant to this section shall bear interest from the date
14       of the loan at an annual rate of interest which is not less than the average
15       yield before taxes received on 91-day United States treasury bills as de-
16       termined by the federal reserve banks as fiscal agents of the United States
17       at its most recent public offering of such bills in effect on January 1 of
18       the year the loan is made. The principal and interest thereon shall be
19       payable in accordance with subsection (c). Such loan shall not be deemed
20       to be an indebtedness or debt of the state of Kansas within the meaning
21       of section 6 of article 11 of the constitution of the state of Kansas.
22             (c) The principal and interest on any loan made under this section
23       shall be payable in accordance with appropriation acts from the following
24       sources, in descending order of priority:
25             (1) Amounts received by the Kansas water office under contracts en-
26       tered into with the purchaser or purchasers of the water rights;
27             (2) the state water plan fund created by K.S.A. 82a-951 and amend-
28       ments thereto; and
29             (3) the state general fund.
30             (d) There is hereby created in the state treasury the federal water
31       rights acquisition financing fund. On or before the 10th day of each
32       month, the director of accounts and reports shall transfer from the state
33       general fund to the federal water rights acquisition financing fund interest
34       earnings based on:
35             (1) The average daily balance of moneys in the federal water rights
36       acquisition financing fund for the preceding month; and
37             (2) the net earnings rate for the pooled money investment portfolio
38       for the preceding month.
39             (e) All expenditures from the federal water rights acquisition financ-
40       ing fund shall be made for the purpose of financing the acquisition of
41       water rights from the federal government and for the purpose of paying
42       the principal and interest on the loan received under this section in ac-
43       cordance with appropriation acts upon warrants of the director of ac-

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  1       counts and reports issued pursuant to vouchers approved by the director
  2       of the Kansas water office or by a person designated by the director. 
  3        Sec.  3. This act shall take effect and be in force from and after its
  4       publication in the statute book.