The Arkansas Valley Conduit (AVC) is a roughly 120–130‑mile drinking‑water pipeline system that will carry treated water from Pueblo Reservoir east along the Arkansas River valley. It is intended to replace contaminated or unreliable groundwater and provide reliable municipal and industrial water to 39 small cities, towns, and rural water systems in southeastern Colorado—serving about 50,000 people in Bent, Crowley, Kiowa, Otero, Prowers, and eastern Pueblo counties (including communities such as Boone, Avondale, La Junta, Rocky Ford, Las Animas, Lamar, Eads, Wiley, and many local water associations).
Under current law the local participants must repay 35% of AVC construction costs over no more than 50 years, with interest. H.R. 131 would have (1) extended that repayment period by 25 years to a total of 75 years, and (2) substantially reduced the interest burden on that local share—described in the White House veto message as cutting the interest rate roughly in half, and in the bill sponsor’s summary as eliminating interest on non‑federal construction costs owed by local entities.
Extending the repayment period and lowering the interest rate would reduce annual and total debt costs for the local water providers and their customers (lowering monthly water bills and making the 35% local share easier to afford). Because the federal government would recover its construction outlays more slowly and with less interest, more of the project’s real cost would effectively be shifted onto federal taxpayers—one reason the Trump White House argued the bill would force “Federal taxpayers to bear even more of the massive costs,” while local sponsors explicitly sought these changes to “keep the cost of the AVC as low as possible for AVC participants” and to let Fryingpan‑Arkansas Project revenues cover much of the local share.
The Omnibus Public Land Management Act of 2009 (P.L. 111‑11) fundamentally changed AVC financing. It amended the original 1962 Fryingpan‑Arkansas Project authorization so that: (1) the federal government would pay 65% of AVC construction costs and local beneficiaries 35%, instead of expecting 100% repayment from locals; (2) Congress could appropriate annual federal funds “as necessary” to build the AVC; (3) the local 35% share would be repaid over a period of not more than 50 years; and (4) “miscellaneous revenues” generated by the broader Fryingpan‑Arkansas Project could be credited toward that 35% local repayment obligation.
After Colorado authorized $90 million in state loans and $10 million in grants for the AVC in 2020, the combination of state support and new federal funding moved the project from planning into full construction. Key points as of late 2025:
In this context, “miscellaneous revenues from the Fryingpan‑Arkansas Project” are the fees and other income that the larger Fry‑Ark system earns from selling or leasing use of its facilities—especially payments from excess‑capacity and exchange contracts that let outside water users store or move water through Fry‑Ark reservoirs, pipelines, and other infrastructure. Under the 2009 law (P.L. 111‑11), these miscellaneous revenues are credited toward the AVC participants’ 35% construction cost share: they can be applied to AVC construction and repayment, reducing how much local water providers must repay directly. Local sponsors’ stated goal is to use these revenues, potentially over an extended period, to pay off the entire trunk‑line portion of the AVC so that participants mainly repay only their own spurs and delivery lines.