Colorado River Interim Surplus Criteria

AGENCY:

Bureau of Reclamation, Department of the Interior.

ACTION:

Notice of public availability of information submitted on a draft environmental impact statement for the proposed adoption of Colorado River Interim Surplus Criteria: INT-DES 00-25.

SUMMARY:

Pursuant to Section 102(2)(C) of the National Environmental Policy Act (NEPA) of 1969, as amended, and the Council on Environmental Quality's Regulations for Implementing the Procedural Provisions of NEPA, the Bureau of Reclamation (Reclamation) has issued a Draft Environmental Impact Statement (DEIS) on the proposed adoption of specific criteria under which surplus water conditions may be determined in the Lower Colorado River Basin during the next 15 years. A notice of availability and public comment period was provided in a Federal Register notice published on July 7, 2000 (65 FR 42028).

As noted in the Federal Register notice published on May 18, 1999 (64 FR 27008), during this NEPA process Reclamation is consulting with state representatives of each of the Governors of the seven Colorado River Basin States, Indian Tribes, members of the general public, representatives of academic and scientific communities, environmental organizations, the recreation industry and contractors for the purchase of Federal power produced at Glen Canyon Dam. Reclamation has received information from the Colorado River Basin States of Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming during the public comment period on the proposed adoption of Colorado River Interim Surplus Criteria. The information provided to Reclamation is the product of significant effort on the part of the representatives of the Governors of the Colorado River Basin States. As noted in the Federal Register notice published on May 18, 1999 (64 FR 27008), the statutory framework for operation of Colorado River Reservoirs underscores the importance of working with the Colorado River Basin States in developing interim surplus criteria. Reclamation has made a preliminary review of the specific surplus criteria in the information presented by the Basin States and has made a preliminary determination that such criteria are within the range of alternatives and impacts analyzed in the DEIS. The information provided by the States does contain details regarding proposed surplus criteria that may be helpful to others preparing comments in response to the Federal Register notice published on July 7, 2000 (65 FR 42028). Accordingly, Reclamation is providing this information for public consideration during the public comment period on this action. That period will not be extended. Reclamation will be analyzing the issues and information presented in this submission, along with all other public comments on the Draft Environmental Impact Statement (DEIS) on the proposed adoption of Colorado River Interim Surplus Criteria. Reclamation, along with the Department of the Interior, will utilize this information, along with all other public comments, as appropriate, during its preparation of a Final Environmental Impact Statement and accompanying Record of Decision. The information provided by the representatives of the Colorado River Basin States may be found below in the SUPPLEMENTARY INFORMATION section.

The DEIS, and the information provided in the SUPPLEMENTARY INFORMATION section below are available for viewing on the Internet at http://www.lc.usbr.gov and http://www.uc.usbr.gov.

ADDRESSES:

The comment period on the DEIS remains unchanged. Send comments on the DEIS to Ms. Jayne Harkins, Attention BCOO-4600, PO Box 61470, Boulder City, Nevada, 89006-1470, or fax comments to Ms. Harkins at (702) 293-8042. As provided in the Federal Register notice published on July 7, 2000 (65 FR 42028), comments on the DEIS must be received no later than September 8, 2000.

Our practice is to make comments, including names and home addresses of respondents, available for public review. Individual respondents may request that we withhold their home address from public disclosure, which we will honor to the extent allowable by law. There also may be circumstances in which we would withhold a respondent's identity from public disclosure, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public disclosure in their entirety.

Copies of the DEIS, in the form of a printed document or on compact disk, remain available upon written request to the following address: Ms. Janet Steele, Attention BCOO-4601, PO Box 61470, Boulder City, Nevada 89006-1470, Telephone: (702) 293-8785, or by fax at (702) 293-8042.

DATES:

The public comment period on the DEIS remains unchanged and comments on this DEIS must be received no later than September 8, 2000.

FOR FURTHER INFORMATION CONTACT:

For additional information, contact Ms. Jayne Harkins at the above address or telephone Ms. Harkins at (702) 293-8785.

SUPPLEMENTARY INFORMATION:

The following information was received from the Colorado River Basin States:

Interim Surplus Guidelines—Working Draft

I. Background

A. The Boulder Canyon Project Act of 1928 (28 Stat. 1057) (the “BCPA”), authorized the Secretary of the Interior (the “Secretary”) to construct Hoover Dam and the All-American Canal, and to contract for the delivery and use of water from such facilities for irrigation and domestic uses. The effectiveness of the BCPA was contingent upon ratification of the Colorado River Compact of 1922 (the “Compact”) by the Colorado River Basin States, or, in the alternative, upon ratification by six of said states, including California. The effectiveness of the BCPA was further contingent upon agreement by the state of California, by act of its legislature, irrevocably and unconditionally with the United States and for the benefit of the other Colorado River Basin States, as an express covenant and in consideration of the passage of the BCPA, to limit the aggregate annual consumptive use (diversions less returns to the river) of water of and from the Colorado River for use in California, to no more than 4.4 million acre-feet (“maf”) per year of the waters apportioned to the Lower Basin States by Article III(a) of the Compact, plus not more than one-half of any excess or surplus waters unapportioned by the Compact, such use to be always subject to the terms of the Compact.

Six states, including California, ratified the Compact by 1929. The California Legislature also passed the California Limitation Act (Act of March 4, 1929; Ch. 16, 48th Sess.). Thus, the conditions of the BCPA were satisfied, the President proclaimed the BCPA effective on June 25, 1929 and the Secretary thereafter constructed Hoover Dam and the All-American Canal and executed contracts for the delivery and use of water from such facilities. Arizona ratified the Compact in 1944.

Before the Secretary entered into water delivery contracts with California agencies, he requested such agencies to agree to relative priorities of rights among them. This was accomplished by the California Seven-Party Agreement of August 18, 1931, incorporated into the water delivery contracts (the “California Seven Party Agreement”), which established the following priorities within California:

The California Seven-Party Agreement thus allocated water both within California's limitation of 4.4 maf per year, as well as surplus water above that amount. Only about one-half of the water under Priorities 4, 5(a) and 5(b) diverted by the Metropolitan Water District of Southern California (the “MWD”) through its Colorado River Aqueduct is within the 4.4 maf limitation. Diversions under Priorities 5(a) and (b) are dependent upon surplus water being made available. The amounts of water allocated to Priorities 1, 2, 3(a) and 3(b) were not quantified by priority, but were aggregated to not exceed 3.85 maf.

In 1964, the U.S. Supreme Court entered its Decree in Arizona v. California, 376 U.S. 340 (1964) (the “Decree”), pursuant to its Opinion in the same case, 373 U.S. 546 (1963). The Decree and the Court's Opinion confirmed and ordered the apportionment by the BCPA of water available for release from water controlled by the United States in the mainstream of the Colorado River downstream from Lee Ferry and within the United States to the states of Arizona (2.8 maf per year); California (4.4 maf per year); and Nevada (0.3 maf per year). The Decree also established certain federal reserved rights, and provided for the quantification of present perfected rights, all to be supplied from the apportionments decreed to each of the respective states. The Decree enjoins the Secretary from releasing mainstream water controlled by the United States for irrigation and domestic use in the Lower Division States (Arizona, California and Nevada) except in the following circumstances:

1. If sufficient mainstream water is available for release to satisfy 7.5 maf of annual consumptive use in the three Lower Division States, such water shall be made available in accordance with the basic apportionments set forth above. This is referred to as a “Normal Year.” (Article II(B)(1)).

2. If sufficient mainstream water is available for release to satisfy in excess of 7.5 maf of annual consumptive use in the three Lower Division States, water in excess of 7.5 maf shall be apportioned 50% for use in Arizona and 50% for use in California; provided, however, that in the event the United States so contracts with Nevada (which it has) then 46% of such surplus is apportioned for use in Arizona and 4% of such surplus is apportioned for use in Nevada. This is referred to as a “Surplus Year.” (Article II(B)(2)).

3. If insufficient mainstream water is available for release to satisfy 7.5 maf of annual consumptive use in the three Lower Division States, then after satisfying present perfected rights in order of priority, such water shall be apportioned consistent with the BCPA and the opinion of the Court, but in no event shall more that 4.4 maf be apportioned for use in California including all present perfected rights. Under § 301(b) of the Colorado River Basin Project Act of 1968, 82 Stat. 885, diversions from the Colorado River for the Central Arizona Project (the “CAP”) shall be so limited as to assure the availability of water in quantities sufficient to provide for the aggregate annual consumptive use by holders of present perfected rights, by other users in the State of California served under existing contracts with the United States by diversion works theretofore constructed, and by other existing Federal reservations in that State, of 4.4 maf, and by users of the same character in Arizona and Nevada. This is referred to as a “Shortage Year.” (Article II(B)(3)).

4. If, in any one year, water apportioned for consumptive use in a State will not be consumed in that State, the Secretary may make available such apportioned but unused water during such year for consumptive use in another Lower Division State. No rights to the recurrent use of such water shall accrue by reason of the use thereof. (Article II(B)(6))

In the Criteria for Coordinated Long-Range Operation of Colorado River Reservoirs Pursuant to the Colorado River Basin Project Act of September 30, 1968 (P.L. 90-537) (the “Criteria”), the Secretary adopted Criteria implementing his authorities under the BCPA, as enjoined by the Decree. Article III of the Criteria provides for the determination of Normal, Surplus and Shortage conditions for the release from Lake Mead of mainstream water downstream from Lee Ferry for use in the Lower Division States.

B. California's basic annual mainstream apportionment of Colorado River water is 4.4 maf, whereas its use of Colorado River water has ranged from 4.2 to 5.2 maf since 1975. In the past, California was able to consumptively use water above its basic annual apportionment because the water use by both Arizona and Nevada was below their basic annual apportionments.

In 1991 and 1992, as California faced its fifth and sixth consecutive years of severe drought, entities in California were able to divert all of the water that they requested or could transport from the Colorado River within the Lower Basin's apportionment. However, Nevada's Colorado River water use was forecasted to exceed its basic apportionment of 300,000 acre-feet (“af”) in the first decade of the 21st century, and Arizona's water use was projected to reach its basic annual apportionment of 2.8 maf. This meant that, in the future, without the Secretary declaring a Surplus condition, California's use of Colorado River water would be limited to its 4.4 maf basic apportionment, some 750,000 af less than its forecasted use of Colorado River water. The bulk of any mandated reduction in California's water use would occur within the priorities held by MWD, which serves the coastal plain of southern California through its Colorado River Aqueduct.

Since 1964, California has made significant investments to offset the eventual reduction in available Colorado River water. These investments have included: developing additional sources of imported water, conservation (demand reduction and use efficiency improvements), surface and groundwater storage, local supplies, conjunctive use programs, reclaimed water projects, and recovery and treatment of contaminated groundwater. While these investments have significantly increased supplies and reduced demand for imported water, they have not been adequate to offset the reduction of Colorado River water to 4.4 maf per year, when considered in conjunction with population increases and the reduction in dependable State Water Project (the “SWP”) and Los Angeles Aqueduct supplies. This reality has fueled further efforts to maximize the beneficial use of Colorado River water in California through cooperative conservation programs and transfers of conserved water.

C. Nevada is quickly approaching full use of its 0.3 maf basic apportionment. Nevada's basic apportionment is projected to meet its domestic needs (excluding groundwater recharge) until approximately 2007. Also, Nevada has a need for additional water above its basic apportionment before 2007 for groundwater recharge in local groundwater basins.

Nevada's long-term options for additional water supply include surplus Colorado River water, participation in the Arizona groundwater bank, a number of in-state options such as the Muddy and Virgin Rivers, recovery and treatment of poor quality shallow groundwater, import of groundwater from basins within Nevada, and recovery of water from local groundwater banks. Nevada projects that even with an aggressive water conservation program it will need additional water for domestic needs in about 2007 and the need will steadily increase to almost 40,000 af in 2016. Nevada also projects it could use an additional 30,000 to 50,000 af per year for local groundwater recharge when surplus supplies are available.

D. Arizona's Lower Basin apportionment is divided among a number of major agricultural, Indian, and municipal contractors. Geographically, there are numerous diversions by contractors located along the River corridor and there is the singular diversion by the CAP which delivers water through a series of aqueducts to the interior portion of the State.

Arizona's uses of Colorado River water are increasing rapidly, but primarily because the CAP, which was declared substantially complete in the early 1990's, is becoming more fully utilized. In contrast, uses by contractors located along the Colorado River in the Yuma and Parker areas have been developed for many years and their consumption has been stable. Increased municipal growth in the Yuma and Mohave County areas will gradually increase water demands over a period of many years, but some of the growth will result in a corresponding decrease in agricultural demand as farm lands are subdivided and urbanized. On-reservation uses by Indian Tribes located in proximity to the River are also well established, although the potential for increased consumptive use exists, especially on the Colorado River Indian Tribes (the “CRIT”) Reservation.

CAP water uses will increase over time as municipal and Indian contractors complete necessary water treatment and delivery infrastructure. In the meantime, the CAP will deliver significant quantities of water to irrigation districts who will use the water to displace groundwater supplies. Arizona has also developed a major capability to use CAP water that would otherwise be unordered, for groundwater recharge activities. The largest purchaser of water for recharge purposes is the Arizona Water Banking Authority (the “AWBA”), whose primary purpose is to firm municipal CAP water deliveries.

E. In January 1986, the Bureau of Reclamation (Reclamation) issued a special report titled Colorado River—Alternative Operating Strategies for Distributing Surplus Water and Avoiding Spills. This report suggested operating strategies for avoiding Lake Mead spills that went beyond the Field Working Agreement between the Bureau of Reclamation and the Army Corps of Engineers for Flood Control Operation of Hoover Dam and Lake Mead, but were, in essence, based on similar principles. Under one of these strategies, limited surpluses would be determined based on the need to provide adequate storage capacity for an assumed runoff rather than the actual yearly forecast in order to reduce the probability of reservoir spills.

One of the alternatives considered assumed that runoff to be the value of the 70th percentile of exceedance based on the historic record, which is equivalent to about 17.331 maf runoff above Lake Powell. This strategy was named OS 0.70 (“70R”) or “space building to avoid reservoir spills” in the 1986 report. This and other strategies have been utilized for long-range operation projections since 1986.

F. On October 18, 1999, the respective boards of Coachella Valley Water District (“CVWD”), Imperial Irrigation District (“IID”), MWD and the State of California released the Key Terms for Quantification Settlement (the “Key Terms”) as the basis for obtaining public input and completing a Quantification Settlement Agreement (“Settlement Agreement”) among the districts. The Settlement Agreement provides the basis for California to reduce its reliance on Colorado River water above its basic apportionment. The agreement further will quantify the rights and uses of Colorado River water by designating water budgets for CVWD, IID, and MWD. The quantification of the rights and uses of water with respect to priorities 3 and 6 of the 1931 California Seven Party Agreement is designed to help facilitate implementation of cooperative water supply programs, and provide a quantified baseline from which conservation and transfer programs can be measured. The Settlement Agreement is expected to be fully executed in January 2001, after the conditions precedent contained in the Key Terms have been satisfied.

California's Colorado River Water Use Plan (the “Plan”), is a framework by which programs, projects, actions, policies and other activities would be coordinated and cooperatively implemented allowing California to meet its Colorado River water needs within its basic apportionment in Normal years.

The Plan describes resource and financial investments and provides overall coordination on important initiatives undertaken by the Colorado River Board of California member agencies and others. The diverse components of the Plan are designed to help protect and optimize California's Colorado River resources. Some of these are associated components, meaning that they don't directly involve Colorado River water but are needed by implementing entities to meet their water needs within California's Colorado River water apportionment. The components of the Plan are broad in scope addressing both quantity and quality of California's share of Colorado River water.

The California agencies with Colorado River rights and contractual interests are the principal implementing entities for the programs and projects described in the Plan, and for obtaining the necessary program and project approvals, conducting appropriate environmental reviews, and ensuring compliance with endangered species acts (federal and state).

The Plan is intended to be dynamic and flexible enough to allow for modifications in, and periodic updates to, the framework when and where appropriate, and to allow for the substitution of programs and projects within the Plan's components when they have been found to be more cost effective and/or appropriate. Programs undertaken by the California agencies to transition California's use of Colorado River water to its basic apportionment without potential major water supply and economic disruptions include:

• Further quantification of rights and use of Colorado River water in California where helpful to facilitate the optimum use of California's Colorado River resources;
• Cooperative core water supply programs and voluntary transfers;
• Increased efficiencies in water conveyance and use;
• Water storage and conjunctive use programs to increase normal and dry year water supplies;
• Voluntary water exchanges;
• Administrative actions necessary for effective use and management of water supplies;
• Improved reservoir management and operations;
• Drought and surplus water management plans;
• Coordinated project operations for increased water supply yield; and
• Groundwater management.

The State of California has supported Plan implementation from the General Fund. Most notably, $235 million was appropriated in 1998 for lining portions of the All American and Coachella Canals ($200 million) and for groundwater storage and conjunctive use programs ($35 million) identified in the Plan. Also, between 1996 and 2000, California voters approved historic levels of general obligation bond financing for improving California water supply reliability, water quality and for restoring watershed ecosystems. The funding support provided by the $995 million Safe, Clean, Reliable Water Supply Act in 1996; the $2.1 billion Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection Act in 2000; and the $1.97 billion Safe Drinking Water, Clean Water, Watershed Protection and Flood Protection Act in 2000 extend to the implementation of the Plan.

The proposed Settlement Agreement, other proposed interagency agreements and associated implementation agreement(s) with the Secretary, together with the Secretary's administration of water rights and use below Glen Canyon Dam, constitute the principal binding and enforceable provisions of the Plan. Provisions regarding third and sixth priority use provide the mechanisms needed to help facilitate the voluntary shift of approximately 380,000 af per year from agricultural use to urban use on the coastal plain of Southern California and the needed quantified baseline by which such programs can be measured.

The Settlement Agreement, when fully executed, provides the basis for California to meet its Colorado River water supply needs from within its annual apportionment of Colorado River water. Specific terms of the settlement include:

• A shift of 380,000 acre-feet per year from agriculture to urban use, through water acquisitions from IID and CVWD to MWD and SDCWA and forbearance of the use of 38,000 acre-feet per year of 6th priority water by IID and CVWD for MWD's use;
• Caps on use of water by IID and CVWD under the third priority at 3.1 maf and 0.33 maf, respectively;
• The exclusive right for MWD to utilize all water below 420,000 acre-feet per year unused by the Palo Verde Irrigation District and the Yuma Project-Reservation Division collectively;
• A permanent water supply of 16,000 acre-feet per year for the San Luis Rey (the “SLR”) Indian Water Rights Settlement, from the All American and Coachella Canal Lining Projects;
• Deductions from IID, CVWD, and MWD's supplies to permit the Secretary to satisfy use of miscellaneous and Indian present perfected rights by holders of those rights as they were not addressed in the 1931 Seven-Party Agreement, the majority of the rights having been quantified in 1979; and
• A net yield of up to 90,000 acre-feet per year from the IID-MWD Conservation Program for MWD over a period of up to approximately 75 years.

Table 1 summarizes the yields and estimated start dates of the core cooperative voluntary water conservation/transfer projects and associated exchanges:

The agencies' Colorado River entitlement water use budgets are adjusted for each increment of transfer, resulting in an overall reduced use of Colorado River water by California. There is approximately a 20-year transition period before the core water conservation/transfers are fully implemented. All of the core conservation/transfers to the coastal plain of southern California are proposed to occur within a ten-year implementation period.

The agencies responsible for implementing the components of the Plan intend to move forward as quickly as possible. In a number of cases, environmental documentation must be prepared and, in certain cases, permits and approvals must be secured from state and/or federal agencies to permit projects to move forward. It should be understood that some components and/or associated components may be modified but would still produce the same conceptual results, or that other options may be substituted if they are found to be more effective and appropriate. There are also related activities, such as the Salton Sea (the “Sea”) restoration efforts. Congress specified in Public Law 105-372 that alternatives to restore the Sea should not include importation of any new or additional water from the Colorado River and should account for the transfer of water out of the Salton Sea Basin.

The Plan also includes consideration of environmental factors. Implementation of the Plan will reduce California's reliance on the Colorado River without severe dislocations in either urban or agricultural areas. Fundamentally, programs and projects in the Plan are not designed to increase water supplies to accommodate increased population growth. Thus, their implementation will not stimulate new growth, foster unplanned urban development, affect demands on local or regional transportation systems, require new public services and utilities, or create long-term increases in ambient noise levels. Their implementation will make a de minimis contribution to cumulative land use impacts and have a de minimis effect on associated socioeconomic resources, such as employment, earnings, and housing. The Plan and the accompanying Settlement Agreement programs and projects are designed to preserve the ability to meet existing needs while diverting less water from the Colorado River.

In accordance with the Plan, California's use of Colorado River water during the Interim Period will decline over time. During the Interim Period (2002-2016), MWD will use surplus water, when available, to meet direct water supply demands on the coastal plain while programs and projects in the Plan are implemented, as well as to provide a source of water for conjunctive use and storage programs. Following the Interim Period, beyond 2016, MWD's water supply demands will be met from occasional years of surplus water, conjunctive use and storage withdrawals, dry year transfers, and other water acquisitions.

California expects to have the projects shown in Table 1 yield the following amounts of water in the years shown:

II. Authority and Purpose

The purpose of these Guidelines is to provide direction for an Interim Period for the annual determination by the Secretary of Normal, Surplus, and Shortage conditions for the pumping or release from Lake Mead of mainstream water downstream from Lee Ferry for use in the Lower Division States. These Guidelines are used under the authority of the Boulder Canyon Project Act of 1928 (28 Stat. 1057) (the “BCPA”), the Decree in Arizona v. California, 376 U. S. 340 (1964) (the “Decree”) and in furtherance of Article III of the Criteria for the Coordinated Long-Range Operation of Colorado River Reservoirs Pursuant to the Colorado River Basin Project Act of September 30, 1968 (P.L. 90-537) (the “Criteria”). Additionally, these Guidelines rely on the authority of the Secretary to make apportioned but unused water in one Lower Division State available for use for irrigation and domestic uses in another state under Article II(B)(6) of the Decree. These Guidelines are adopted for the purpose of providing enhanced domestic water supply reliability in the Lower Division States during a transition period ending December 31, 2016 (the “Interim Period”), in accordance with the priorities contained in water delivery contracts or agreements.

These Guidelines become effective only when the Settlement Agreement becomes effective. The Guidelines include triggers that will implement Normal, Surplus or Shortage deliveries at specified target elevations of storage in Lake Mead. They also include benchmarks, reporting mechanisms and reviews by which California and agencies within California will demonstrate measurable and defined progress in meeting the goals of the California's Plan described herein. If sufficient progress is not being made, these Guidelines will automatically terminate.

The State of California and its affected agencies have recognized and agreed upon, and the Secretary has agreed with, the plan for implementation of agreements that will increase the efficiency of use within Priorities 1 through 3 of the California Seven-Party Agreement of August 18, 1931, and thereby reduce the amount of water required for irrigation and potable uses under such priorities. Savings shall be made available for use on the coastal plain of Southern California within California's basic annual apportionment of 4.4 maf.

These Guidelines include measures to be undertaken by MWD to provide reparation to Arizona for increased water supply shortages associated with interim operations, both during the effective period and for so long thereafter as such risk is present. During the Interim Period and after the termination of these Guidelines, the Secretary will withhold, deliver and account for water in accordance with such described reparation.

These Guidelines are not intended to, and do not:

• Guarantee or assure any water user a firm supply for any specified period;
• Change or expand existing authorities under the body of law known as the “Law of the River”;
• Address intrastate storage or intrastate distribution of water;
• Change the apportionments made for use within individual States, or in any way impair or impede the right of the Upper Basin to consumptively use water available to that Basin under the Compact;
• Affect any obligation of any Upper Division State under the Colorado River Compact;
• Affect any right of any State or of the United States under § 14 of the Colorado River Storage Project Act of 1956 (70 Stat. 105); § 601(c) of the Colorado River Basin Project Act of 1968 (82 Stat. 885); the California Limitation Act (Act of March 4, 1929; Ch. 16, 48th Sess.); or any other provision of the “Law of the River”; or
• Affect the rights of any holder of present perfected rights or reserved rights, which rights shall be satisfied within the apportionment of the State within which the use is made in accordance with the Decree.

For purposes of these guidelines, the following definitions do apply:

“Domestic” use shall have the meaning defined in the Compact. “Direct Delivery Domestic Use” shall mean direct delivery of water to domestic end users of other municipal and industrial water providers within the contractor's area of normal service, including incidental regulation of Colorado River water supplies within the year of operation but not including Off-stream Banking. “Direct Delivery Domestic Use” for MWD shall include delivery of water to end users within its area of normal service, incidental regulation of Colorado River water supplies within the year of operation, and Off-stream Banking only with water delivered through the Colorado River Aqueduct. “Off-stream Banking” shall mean the diversion of Colorado River water to underground storage facilities for use in subsequent years from the facility used by a contractor diverting such water.

III. Allocation of Unused Apportionment Water Under Article II(B)(6)

Article II(B)(6) of the Decree allows the Secretary to allocate water that is apportioned to one Lower Division State, but is for any reason unused in that State, to another Lower Division State. This determination is made for one year only and no rights to recurrent use of the water accrue to the state that receives the allocated water. Historically, this provision of the Decree has been used to allocate Arizona's and Nevada's apportioned but unused water to California.

Water use projections made for the analysis of these interim Guidelines indicate that neither California nor Nevada is likely to have significant volumes of apportioned but unused water during the Interim Period. Depending upon the requirements of the AWBA for intrastate and interstate Off-Stream Banking, Arizona may have significant amounts of apportioned but unused water.

Before making a determination of an interim Surplus condition under these Guidelines, the Secretary will determine the quantity of apportioned but unused water from the basic apportionments under Article II(B)(6), and will allocate such water in the following order of priority:

1. Meet the Direct Delivery Domestic Use requirements of Metropolitan Water District of Southern California (“MWD”) and Southern Nevada Water Authority (“SNWA”), allocated as agreed by said agencies;

2. Meet the needs for Off-stream Banking activities in California by MWD and in Nevada by SNWA, allocated as agreed by said agencies; and

3. Meet the other needs for water in California in accordance with the California Seven-Party Agreement as supplemented by the Settlement Agreement.

IV. Determination of Lake Mead Operation During the Interim Period

A. Normal

In years when available Lake Mead storage is projected to be at or below elevation 1,125 ft. and above the Shortage triggering level on January 1, the Secretary shall determine a Normal year.

B. Surplus

1. Partial Domestic Surplus: In years when Lake Mead storage is projected to be between elevation 1125 ft. and elevation 1145 ft. on January 1, the Secretary shall determine a Partial Domestic Surplus. The amount of such Surplus shall equal:

a. For Direct Delivery Domestic Use by MWD, 1.212 maf reduced by: 1.) the amount of basic apportionment available to MWD and 2.) the amount of its domestic demand which MWD offsets in such year by offstream groundwater withdrawals or other options. The amount offset under 2.) shall not be less than 400,000 af in 2001 and will be reduced by 20,000 af/yr over the Interim Period so as to equal 100,000 af in 2016.

b. For use by SNWA, one-half of the Direct Delivery Domestic Use within the SNWA service area in excess of the State of Nevada's basic apportionment.

c. For Arizona, one-half of the Direct Delivery Domestic Use in excess of the State of Arizona's basic apportionment.

2. Full Domestic Surplus: In years when Lake Mead content is projected to be above elevation 1145 ft., but less than the amount which would initiate a Surplus under B.3 or B.4 hereof on January 1, the Secretary shall determine a Full Domestic Surplus. The amount of such Surplus shall equal:

a. For Direct Delivery Domestic Use by MWD, 1.250 maf reduced by the amount of basic apportionment available to MWD.

b. For use by SNWA, the Direct Delivery Domestic Use within the SNWA service area in excess of the State of Nevada's basic apportionment.

c. For use in Arizona, the Direct Delivery Domestic Use in excess of Arizona's basic apportionment.

3. Quantified Surplus: In years when the Secretary determines that water should be released for beneficial consumptive use to reduce the risk of potential reservoir spills based on the OS 0.70 alternative strategy (“70R”) as described in the Bureau of Reclamation's CRSSez Annual Colorado River System Simulation Model Overview and Users Manual, revised May 1998, the Secretary shall determine and allocate a Quantified Surplus sequentially as follows:

a. Establish the volume of the Quantified Surplus.

b. Allocate and distribute the Quantified Surplus 50% to California, 46% to Arizona and 4% to Nevada, subject to c. through g. that follow.

c. Distribute California's share first to meet basic apportionment demands and MWD's Direct Delivery Domestic Use and Off-stream Banking demands, and then to California Priorities 6 and 7 and other surplus contracts. Distribute Nevada's share first to meet basic apportionment demands and then to the remaining Direct Delivery Domestic Use and Off-stream Banking demands. Distribute Arizona's share to surplus demands in Arizona including Off-stream Banking and interstate banking demands. Arizona, California and Nevada agree that Nevada would get first priority for interstate banking in Arizona.

d. Distribute any unused share of the Quantified Surplus in accordance with Section III, Allocation of Unused Apportionment Water Under Article II(B)(6).

e. Determine whether MWD, SNWA and Arizona have received the amount of water they would have received under Section IV.B.2., Full Domestic Surplus if a Quantified Surplus had not been declared. If they have not, then determine and meet all demands provided for in Section IV.B.2. (a), (b) and (c).

f. Any remaining water shall remain in storage in Lake Mead.

4. Flood Control Surplus: In years in which the Field Working Agreement between the Bureau of Reclamation and the Army Corps of Engineers for Flood Control Operation of Hoover Dam and Lake Mead requires releases greater than the downstream beneficial consumptive use demands, the Secretary shall determine a Flood Control Surplus in that year or the subsequent year. In such years, releases will be made to satisfy all beneficial uses within the United States, including unlimited off-stream groundwater banking, and section 215 deliveries under the Reclamation Reform Act of 1982 (96 Stat. 1263) (the “RRA”). After all beneficial uses within the United States have been met, the Secretary shall notify the United States Section of the International Boundary and Water Commission that there may be a surplus of water as provided in Article 10 of the Mexican Water Treaty of 1944.

C. Shortage

In a year when the Secretary projects that future water supply and demands would create a 20% or greater probability that Lake Mead would drop below elevation 1050 feet in a year prior to or in the year 2050, the Secretary shall determine a Shortage. This strategy is defined in the Bureau of Reclamation's CRSSez Annual Colorado River System Simulation Model Overview and Users Manual, revised May 1998. In any year when a shortage is declared, the Secretary shall deliver no more than 4.4 maf for consumptive use in California and no more than 2.3 maf for consumptive use in Arizona. Nevada shall share in shortages as required by law. If reservoir conditions continue to deteriorate, the Secretary may require additional reductions in accordance with the Decree and law.

V. Determination of 602(a) Storage in Lake Powell During the Interim Period

During the Interim Period, 602(a) storage requirements determined in accordance with Article II (1) of the Criteria shall utilize a value of not less than 14.85 maf (elevation 3630 feet) for Lake Powell.

VI. Implementation of Guidelines

During the Interim Period the Secretary shall utilize the currently established process for development of the Annual Operating Plan for the Colorado River System Reservoirs (“AOP”) and use these Guidelines to make determinations regarding Normal, Surplus, and Shortage conditions for the operation of Lake Mead and to allocate apportioned but unused water. The Secretary also shall apply, as appropriate, the provisions of these Guidelines related to reparation and termination. The operation of the other Colorado River System reservoirs and determinations associated with development of the AOP shall be in accordance with the Colorado River Basin Project Act of 1968, the Criteria, and other applicable laws.

In order to allow for better overall water management during the Interim Period, the Secretary shall undertake a “mid-year review” allowing for the revision of the current AOP, as appropriate based on actual runoff conditions which are greater than projected, or demands which are lower than projected. The Secretary shall revise the determination for the current year only to allow for additional deliveries. Any revision in the AOP may occur only after a re-initiation of the AOP consultation process as required by law.

As part of the AOP process during the Interim Period, California shall report to the Secretary on its progress in implementing the Plan.

VII. Reparation for Increased Water Supply Shortages

It is possible that the operation of Lake Mead under these Guidelines will result in the Secretary determining a shortage condition more frequently, or for a shortage to be more severe, or for a shortage to be longer in duration than would otherwise have occurred, during the Interim Period or thereafter. During the Interim Period, if the Secretary makes a shortage determination in which deliveries to Arizona would be reduced, and if MWD has diverted water under IV. B.1 and/or IV. B.2 herein, MWD has agreed to forbear the delivery off the River of 500,000 af per year, unless otherwise agreed by MWD and Arizona. The holders of Priorities 6 and 7 under the California Seven-Party Agreement and Nevada have waived any claim to such water. After the Interim Period, if the Secretary makes a shortage determination in which deliveries to Arizona would be reduced and, if MWD has diverted water under IV. B.1 and/or IV. B.2 herein, MWD has agreed to forbear the delivery off the river of an amount of water equal to such reductions to Arizona, unless otherwise agreed by MWD and Arizona. The holders of Priorities 6 and 7 under the California Seven-Party Agreement and Nevada have waived any claim to such water.

The total amount of water forborne by MWD during or after the Interim Period pursuant to these guidelines shall not exceed one maf.

The reparation obligation of MWD shall terminate at such time after the Interim Period that the Secretary determines a Surplus based on the Flood Control strategy or as otherwise agreed by MWD and Arizona.

VIII. Termination of Guidelines

These Guidelines shall terminate:

A. On December 31, 2016, or

B. In the event California has not implemented conservation measures as set forth in the Settlement Agreement, which actually reduce its need for surplus Colorado River water by the following amounts by the date indicated:

In such event, the Bureau of Reclamation shall account for the total volume of Colorado River water diverted into underground storage from the Colorado River Aqueduct by and for the benefit of MWD under any Full Domestic Surplus determination. MWD has agreed to forbear diversions in an amount equal to such volume in the next following Normal or Shortage year(s) in an amount not to exceed 200,000 af per year, and the holders of Priorities 6 and 7 under the California Seven-Party Agreement have waived any claim to such water. Such obligation shall be terminated in the first year that the Secretary determines a Surplus under a 70R strategy or a Flood Control strategy.

Upon termination, Lake Mead operations, for the purpose of determining Surplus, shall immediately revert to 70R. Note: We will prepare a separate document describing inadvertent overruns and average decree accounting that may be incorporated into the criteria or adopted separately.”