The Colorado auditor released a new audit Tuesday of the state water-well inspection program, finding that it overspent its budget and must better prioritize high-risk wells for inspection.

The program has three employees and a budget of about $300,000 a year derived from fines and from license, permit and application fees.

The wells primarily are tapped by rural residents who lack access to municipal utilities. The wells commonly supply water for domestic use, businesses, irrigation and livestock watering. Some monitor groundwater quality.

Under state law, every new well that diverts groundwater must have a permit issued by the state engineer. The Legislature established the Well Inspection Program in 2003, saying wells that are improperly built or abandoned, or have improperly installed pumping equipment, can hurt groundwater and thus the public health, safety and welfare. So inspections are “essential,” legislators found, and inspectors should spend most of their time inspecting wells, not writing reports.

But last year, when more than 4,460 wells were built, only about 310 were inspected, the audit found. And only 15 of the 206 high-risk wells got inspections.

Inspectors are to keep an eye on well construction too because once it’s completed, they can’t see key aspects.

The program’s chief problem is its “underlying approach to protecting water resources and the public,” the audit found.

Others are:

• Lack of strategy to get the most from the three inspectors and annual budget.

• Ineffective use of a risk-based approach to ensure high-risk wells inspected.

• Inspectors’ time is not focused on observing key phases of well construction.

• The program does not ensure that its funds are used only for its operations.

With such limited resources, the program must better prioritize which wells to inspect, the audit reported.

High-risk wells aren’t only on the Eastern Plains or Western Slope. One of the highest-risk sites is in the Denver metro area, in the Laramie-Fox Hills aquifer, part of the Denver Basin, which stretches from Fort Collins to El Paso County. Well construction there could tap into coal seams that run through the aquifer, and poorly constructed wells could contaminate the aquifer.

Last year, 83 wells were drilled in that aquifer, but only six were inspected, the audit said. Wells drilled in “multiple confining layers” have a high risk of commingling water from multiple sources. Of those 68 wells drilled in 2018, only seven were inspected. And no inspections were conducted of 15 wells that could draw water in areas with known contamination.

Yet the Division of Water Resources has no written policy to determine which wells are high- or low-risk. Inspectors told the auditors that risks also are created by companies with a history of violating construction rules. Those wells got the highest priority for inspections, the audit found.

“Even though management agrees that contractors with more frequent violations are a concern, they are reluctant to include this as a risk category because they believe it could have a negative impact on a contractor’s reputation and business,” the audit reported.

Inspections appear to be based largely on where inspectors choose to drive that day, the audit said. Auditors spent a day in the field with the inspectors and noted that one inspector drove six hours to inspect one well.

“This haphazard approach to conducting on-site inspection of wells does not appear to be an efficient use of the program’s limited resources,” the audit reported.

Other problems cited:

• Advance notice of well construction is required, but 31 contractors didn’t provide that notice, with five of them failing to do so multiple times.

• The program overspent its budget over the past three fiscal years. Last year it spent $320,000 to inspect low-risk wells, some of them multiple times. That would have been better spent targeting high-risk wells.

The division responded that it would implement such a process, complete with written policy, by next February.

• The quality of inspections was suspect, too. Most inspections failed to review key phases of construction; one well was inspected 23 times but missed every key construction phase. Well construction has up to six key phases, including location, casing, grout and depth.

But, “The Division has not provided guidance to inspectors on what it considers to be key phases for each type of well or instruction to inspectors that they should focus their inspection efforts on key phases.” With better guidance, inspectors could time visits for when a key phase is in process.

• At least 11 times, landowners or construction workers locked inspectors out of well sites despite a state law that allows them to inspect. Inspectors told auditors they considered that a safety issue but never complained to the board in charge.

• The lack of inspections destroys the “sentinel effect,” which keeps contractors adhering to rules because they never know when an inspector might arrive.

The audit recommended written policies address the lack of information on key phases and how to file complaints against contractors or well owners who block access to sites. The division said those will be in place by August 2020.

The audit also recommends that the division refer contractors that don’t comply with the law to the board to face penalties, such as suspension or revocation of their licenses.

Finally, the audit said the excess spending is partly because the program pays salaries for a dozen staff who don’t inspect wells, to the tune of more than $43,000. The payments were due to a coding error that never was fixed. That money would have covered another 100 inspections.

The division agreed to clean up the coding problem and related concerns over its budget management.

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