From The Colorado Statesman (Marianne Goodland):
The state is made up of groundwater basins, designed by the Colorado Ground Water Commission. Nontributary groundwater is located outside those basins, and is defined as places where water withdrawal, within 100 years, will not “deplete the flow of a natural stream at an annual rate greater than one-tenth of one percent” per year. It is water that is so deep and isolated from surface water that the impact of its withdrawal would be minimal.
More importantly, nontributary groundwater is not subject to the doctrine of prior appropriation. That’s a fundamental concept within Colorado water law, and in its simplest form says whomever was there first gets the water right. According to the HB 1286 fiscal note, nontributary groundwater “is based on ownership of the overlying land and a 100-year aquifer life expectancy.”
According to [State Engineer Dick Wolfe’s] presentation, a domestic water well generally drills down to about 300 feet. An oil or gas well may need to drill down by 3,000 feet or more, and in Southwestern Colorado, they’re drilling for coal bed methane at levels up to 7,000 feet deep. When an oil or gas well is drilled, it results in “produced water.” That’s water that is removed from a geologic formation during the extraction process of mining for oil or gas. Once the water reaches the surface it must be separated from the mineral. If the state engineer determines that groundwater is coming from a tributary source, then the oil and gas company must get a water permit. No permit is needed if the water comes from a nontributary source.
More 2011 Colorado legislation coverage here.