To provide for the transfer of the Platoro Reservoir to the Conejos Water Conservancy District of the State of Colorado and for the protection of fish and wildlife habitat on the Conejos River.

Directs the Secretary of the Interior to enter into an agreement for the transfer of the Platoro Reservoir to the Conejos Water Conservancy District, Colorado, upon the early payout of the repayment obligation on a lump-sum basis. Defines the Platoro Reservoir as the Platoro Dam and Reservoir Unit of the Conejos Division of the San Luis Valley project.

Transfers to the District upon such payment: (1) all lands beneath the Platoro Dam and Reservoir up to the high water line; (2) land and improvements at the operation and maintenance site in the townsite of Platoro, Colorado, including the shop and caretaker house; and (3) all associated structures and all project operating facilities and equipment.

Reserves to the United States: (1) the right to make recreational use of the Platoro Reservoir, and all land underlying the high water line when such land is not inundated so long as such use does not interfere with its use for water supply, interstate compacts, and flood control; and (2) a reversionary interest in the transferred land in the event such lands are no longer used for reservoir purposes.

Subjects such transfer to the following conditions: (1) the District will use its best efforts to operate the reservoir to provide that releases from the reservoir flush out the channel of the Conejos River periodically to maintain the hydrologic regime of the river subject to operation of the reservoir by the District for water supply use; and interstate compact and flood control purposes; (2) the District will maintain a permanent pool in Platoro Reservoir for fish, wildlife, and recreation purposes; (3) the District will not use or sell any of the lands conveyed to it for private, commercial, or residential development; and (4) the District shall maintain specified releases of water from Platoro Reservoir to preserve fish and wildlife habitats.

Relieves the United States of responsibility and liability associated with the operation and maintenance of the project except: (1) recreation with respect to the Reservoir; and (2) flood control administration by the Secretary of the Army, acting through the Chief of Engineers.

Requires the Secretary of the Army to retain authority for the management of the Platoro Dam and Reservoir for flood control purposes.