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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Appendixes

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability This page intentionally left blank.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Appendix A The States at Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming Governor’s Representatives on Colorado River Operations February 3, 2006 Honorable Gale A. Notion, Secretary Department of the Interior 1849 C. Street, NW Washington. D.C. 20240 Re: Development of Lower Basin Shortage Guidelines and Coordinated Management Strategies for the Operation of Lake Mead and Lake Powell Under Low Reservoir Conditions Dear Secretary Norton: The materials attached to this letter contain descriptions of the programs that the seven Colorado River Basin States suggest be included within the scope of the environmental impact statement (EIS) for the proposed Colorado River Reservoir Operations: Development of Lower Basin Shortage Guidelines and Coordinated Management Strategies for Lake Powell and Lake Mead Under Low Reservoir Conditions (70 Fed. Reg. 57322) (Sept. 30, 2005). The Basin States, Bureau of Reclamation and others have consulted regularly since our previous correspondence on August 25, 2005 to further discuss and refine recommended management strategies for the Colorado River system. Subsequently, individual entities within the seven Basin States submitted oral and written comments to the Bureau of Reclamation on the above-referenced EIS process. Attachment A, “Seven Basin States” Preliminary Proposal Regarding Colorado River Interim Operations,” is submitted as a consensus document on behalf of the seven Basin States. Please recognize that the States are still actively working on the matters addressed in this submission and anticipate further refinement. Our recommendation is designed to provide input for the Department’s consideration as it develops additional operational and water accounting procedures to: 1) delay the onset and minimize the extent and duration of shortages in the Lower Division States; 2) maximize the protection afforded the Upper Division Stales by storage in Lake Powell against possible curtailment of Upper Brain uses; 3) provide for more efficient, flexible, responsive and reliable operation of the system reservoirs for the benefit or both the Upper and Lower Basins by developing additional system water supplies through extraordinary conservation, system efficiency and augmentation projects; 4) allow the continued development and use of the Colorado River resource in both the Upper and Lower Basins; and 5) allow for development of dedicated water supplies through participation in improvements to system efficiency and clarification of how to proceed with development of non-system water reaching the Lower Basin

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability mainstream It is our position that implementation of these operational and accounting procedures can be accomplished without modification of the Long Range Operating Criteria or other elements of the law of the river. The States’ attached proposal incorporates an approach to shortage management. Additionally, the proposal includes modification and extension of the Department’s Interim Surplus Guidelines to incorporate operations [or all reservoir conditions. The attached proposal also addresses the States’ recommended approach to implementation of shortages pursuant to the U.S.-Mexico Treaty of 1994, We request that the Department of the Interior initiate, at the earliest appropriate time, consultation with the U.S. Section of the International Boundary and Water Commission and the U.S. Department of State on implementation of Treaty shortages. We further request the opportunity to consult with Interior and State Department officials on this issue as the federal government formulates its approach to any bi-national consultation with Mexico. An agreement between Basin State water managers and users will be necessary to put in place additional terms upon which they have reached common understanding. We intend that this agreement be finalized while Reclamation is preparing the draft EIS, and be executed as soon as practicable. We are including with this letter a draft version of the agreement. (Attachment B), to memorialize our current understandings and to provide you the benefits of our thoughts at this time. As with Attachment A, please recognize that the parties are still actively working on the matters addressed in Attachment B, and contemplate additional development and refinement of the agreement. We recognize that timely execution of our agreement is necessary in order to allow funding of certain efficiency projects to go forward. During the time Reclamation is preparing the draft EIS, the States will move forward with a package of other actions that include implementation of a demonstration program for extraordinary conservation in 2006, system efficiency projects, preparation of an action plan for System augmentation through weather modification, execution of a memorandum of understanding for preparing a Lower Division States interstate drought management plan, development of forbearance agreements among the Lower Division States and the initiation of a study for long-term augmentation of Colorado River system water supplies. The States have already begun the consultant procurement process to support the long-term augmentation study, and inland to complete a weather modification action plan and a memorandum of understanding for interstate drought planning as soon as practicable. The Basin States recognize that Reclamation is undertaking NEPA compliance separately to determine whether to construct a regulating reservoir near Drop 2 of the All-American Canal and urge swift completion of that process. We appreciate the opportunity you have provided for the Colorado River Basin States to recommend to you a program of reservoir management that considers all their respective concerns and interests. The Basin States look forward to working with you and Reclamation in analyzing and addressing these matters.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Sincerely, Herb Guenther Director Arizona Department of Water Resources Scott Balcomb Governor’s Representative State of Colorado Richard Bunker Chairman Colorado River Commission of Nevada John R. D’Antonio, Jr. Governor’s Representative State of New Mexico D. Larry Anderson Director Utah Division of Water Resources Gerald R. Zimmerman Executive Director Colorado River Board of California Rod Kuharich Director Colorado Water Conservation Board Patricia Mulroy General Manager Southern Nevada Water Authority Patrick Tyrrell State Engineer State of Wyoming List of Attachments: Attachment A: Seven Basin States’ Preliminary Proposal Regarding Colorado River Interim Attachment B: Drift Agreement

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Attachment A Seven Basin States’ Preliminary Proposal Regarding Colorado River Interim Operations The Seven Basin States (States) have worked together to recommend interim operations to the Secretary that should minimize shortages in the Lower Basin and avoid the risk of curtailment in the Upper Basin through conservation, more efficient reservoir operations, and long-term alternatives to bring additional water into the Colorado River community. The States’ recommendation has three key elements. First, the States propose to manage the reservoirs to minimize shortages and avoid curtailments. Second, the States have identified actions in the Lower Basin to conserve water. Third, the States recommend a specific proposal for implementing shortages in the Lower Basin. Finally, the States recognize the need for additional water supplies to meet the current and future needs in the Basin. Section 1. Allocation of Unused Basic Apportionment Water under Article II(B)(6) Introduction Article II(B)(6) of the 1964 Decree in Arizona v. California (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. Application of Unused Basic Apportionment Before making a determination of a surplus condition under this proposal, the Secretary will determine the quantity of apportioned but unused water under Article II (B)(6). and will allocate such water in the following order of priority. Meet the direct delivery domestic use requirements of the Metropolitan Water District of Southern California, (MWD) and me Southern Nevada Water Authority (SNWA), as allocated between them by agreement. Meet the needs of off stream banking activities by MWD in California and SNWA in Nevada, as allocated between them by agreement. Meet the other needs for water in California in accordance with the California Seven-Party Agreement as supplemented by the Quantification Settlement Agreement. Section 2. Coordinated Operation of Lakes Powell and Mead Figure 1 describes the operating strategy that has been agreed to by the Colorado River Basin States.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Lake Powell Equalization Elevation Table In each of the following years, the Lake Powell Equalization Elevation will he as follows: Year Elevation (feet)     2008 3636 2009 3639 2010 3642 2011 3643 2012 3645 2013 3646 2014 3648 2015 3649 2016 3651 2017 3652 2018 3654 2019 3655 2020 3657 2021 3659 2022 3660 2023 3662 2024 3663 2025 3664

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Equalization: In years when Lake Powell content is projected on January 1 to be at or above the elevation stated in the Lake Powell Equalization Elevation Table, an amount of water will he released from lake Powell to Lake Mead at a rate greater than 8,230,000 acre-feet per year to the extent necessary to equalize storage in the two reservoirs, or otherwise to release 8,230,000 acre-feet from Lake Powell. Upper Elevation Balancing: In years when Lake Powell content is projected on January 1 to be below the elevation stated in the Lake Powell Equalization Elevation Table and at or above 3575 ft., the Secretary shall release 8,230,000 acre-feet from Lake Powell if the projected elevation of Lake Mead is at or above 1075 ft. If the projected elevation of Lake Mead is below 1075 ft., the Secretary shall balance the contents of Lake Mead and Lake Powell, but shall release no more than 9,000,000 acre-feet and no less than 7,000,000 acre-feet from Lake Powell. Mid-Elevation Releases: In years when Lake Powell content is projected on January 1 to be below 3575 ft. and at or above 3525 ft., the Secretary shall release 7,480,000 acre-feel from Lake Powell if the projected elevation of Lake Mead is at or above 1025 ft. If the projected elevation of Lake Mead is below 1025 ft., the Secretary shall release 8,230,000 acre-feet from Lake Powell. Lower Elevation Balancing: In years when Lake Powell content is projected on January 1 to be below 3525 ft., the Secretary shall balance the contents of Lake Mead and Lake Powell, but shall release no more than 9,500,000 acre-feet and no less than 7,000,000 acre-feet from Lake Powell. Coordinated Operation of Lakes Powell and Mead as described herein will be presumed to be consistent with the Section 602(a) storage requirement contained in the Colorado River Basin Project Act. The objective of the operation of Lakes Powell and Mead as described herein is to avoid Curtailment of uses in the Upper Basin, minimize shortages in the Lower Basin and not adversely affect the yield for development available in the Upper Basin. The August 24-month study projections for the January 1 system storage and reservoir water surface elevations, for the following year, would be used to determine the applicability of the coordinated operation of Lakes Powell and Mead. Section 3. Determination of Lake Mead Operation during the Interim Period Interim Surplus Guidelines The Basin States recommend that the Secretary continue to implement the Interim Surplus Guidelines (ISG) except as modified by this proposal, including the following:

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Partial Domestic Surplus would be discontinued upon issuance of the Record Of Decision (“ROD”); and The ISG effective period would be extended through December 31, 2025. During the years 2017 through 2025 the Secretary shall distribute Domestic Surplus water: For use by MWD. 250,000 acre-feel per year in addition to the amount of California’s basic apportionment available to MWD. For use by SNWA, 100,000 acre-feel per year in addition to the amount of Nevada’s basic apportionment available to SNWA. For use in Arizona, 100,000 acre-feel per year in addition to the amount of Arizona’s basic apportionment available to Arizona contractors. Flood Control Surplus In years in which the Secretary makes space building or flood control releases pursuant to the Field Working Agreement, the Secretary shall determine a Flood Control Surplus for the remainder of that year or the subsequent year as specified in Section 7 of the ISG. In such years, releases will be made to satisfy all beneficial uses within the United Stales, including unlimited off-stream banking. Intentionally Created Surplus credits, as defined herein, would he reduced by the amount of any flood control release, if necessary until no credits are remaining. Under current practice, surplus declarations under the Treaty for Mexico are declared when flood control releases are made. Operation under a Flood Control Surplus does not establish any determination relating to implementation of the Treaty, including any potential changes in approach relating to surplus declarations under the Treaty. Such determinations must be addressed in a bilateral fashion with the Republic of Mexico. Quantified Surplus (70R Strategy) 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 70R Strategy, the Secretary shall determine and allocate Quantified Surplus sequentially as follows: Establish the volume of the Quantified Surplus. For the purpose of determining the existence, and establishing the volume, of Quantified Surplus, the Secretary would not consider the volume of Intentionally Created Surplus credits, as defined herein. Allocate and distribute the Quantified Surplus 50% to California, 46% to Arizona and 4% to Nevada, subject to 3. through 5. that follow.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Distribute California’s share first to meet basic apportionment demands and MWD’s demands. Then distribute to California Priorities 6 and 7 and other surplus contracts. Distribute Nevada’s share first to meet basic apportionment demands and SNWA’s 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. Distribute any unused share of the Quantified Surplus in accordance with Section 1, Allocation of Unused Basic Apportionment Water Under Article II (B)(6). Determine whether MWD, SNWA and Arizona have received the amount of water they would have received under Section 3 D of this proposal, Domestic Surplus, if a Quantified Surplus had not been declared. If they have not, then determine and meet all demands provided for in Section 3 D, Domestic Surplus. Domestic Surplus In years when Lake Mead elevation is projected on January 1 to be above 1145 ft and below 70R Strategy elevation determination, the Secretary would determine a Domestic Surplus in accordance with Section 2(B)(2) of the ISG between the effective date of the ROD and December 31, 2016 and in accordance with Section 3(A)(2) of this proposal between January 1, 2017 and December 31, 2025. Normal Conditions In years when Lake Mead elevation is projected on January 1 to be above elevation 1075 ft. and below 1145 ft., the Secretary would determine a normal operating condition. In any year when Lake Mead elevations are in this range, the Secretary may determine that Intentionally Created Surplus (“ICS”) as described in Section 4 of this proposal is available. ICS credits may then be delivered pursuant to the provisions of Section 4. Shortage Conditions Shortages would be implemented in the Lower Division Stales and Mexico under the following conditions and in the following manner: 400,000 acre foot shortage: In years when Lake Mead content is projected on January 1 to be at or below elevation 1075 ft. and at or above 1050 ft. a quantity of 400,000 acre-feet shall not be released or delivered in the Lower Division States and Mexico. 500,000 acre foot shortage: In years when Lake Mead content is projected on January 1 to be below elevation 1050 ft. and at or above 1025 ft. a quantity of 500,000 acre-feet shall not be released or delivered in the Lower Division States and Mexico.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability 600,000 acre foot shortage: In years when Lake Mead content is projected on January 1 to he below 1025 ft., a quantity of 600,000 acre-feet shall not The three conditions described above are illustrated in Figure 2. Figure 2 The United States, through the appropriate mechanisms, should implement a shortage pursuant to Article 10 of the 1944 Treaty in any year in which the Secretary has declared that a shortage condition exists pursuant to Art. II(B)(3) of the Decree. The total quzntity of water that will not be released or delivered to Mexico shall be based on Lower Basin water deliveries during normal water supply conditions. The proportion of the shortage that shall be borne by Mexico will be 17% (1.5% (1.5 maf / 9 maf x 100%=17%). Arizona and Nevada will share shortages based on a shortage sharing agreement. In the event that no agreement has been reached, Arizona and Nevada will share shortages in accordance with the 1968 Colorado River Basin Project Act, the Decree, other existing law as applicable, and the Interstate Banking Agreement between Arizona and Nevada parties. Whenever Lake Mead reaches elevation 1025 ft., the Secretary will consult with the States to determine whether Colorado River hydrologic conditions, together with the delivery of 8.4 million acre-feet of Colorado River water to Lower Basin users and Mexico, will cause the elevation of Lake Mead to fall below 1000 ft. Upon such a determination, the Secretary shall consult with the states to discuss further measures that may be undertaken to avoid or reduce further increases in shortage determinations. If increased reductions are required, the Secretary shall implement the reductions consistent with the law of the river. The States will evaluate factors at critical elevations that may avoid shortage determinations as reservoir elevations approach critical thresholds. The Slates may provide operational recommendations surrounding the critical elevations at some later date.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Attachment B DRAFT AGREEMENT The [name parties] hereby enter into this Agreement effective as of __________. RECITALS Parties. Arizona The Arizona Department of Water Resources, through its Director, is the successor to the signatory agency of the State for the 1922 Colorado River Compact, and the 1944 Contract for Delivery of Water with the United States, both authorized and ratified by the Arizona Legislature, A.R.S. §§ 45-1301 and 1311. Pursuant to A.R.S. §§ 45-107, the Director is authorized and directed, subject to the limitations in A.R.S. §§ 45-106. for and on behalf of the State of Arizona, to consult, advise and cooperate with the Secretary of the Interior of the United States with respect to the exercise by the Secretary of Congressionally authorized authority relative to the waters of the Colorado River (including but not limited to the Boulder Canyon Project Act, 43 U.S.C. § 617, and the 1968 Colorado River Basin Project Act 43 U.S.C. § 1501) and with respect to the development, negotiation and execution of interstate agreements. Additionally, under A.R.S. § 45-105(A)(9). the Director is authorized to “prosecute and defend all rights, claims and privileges of this state respecting interstate streams.” Under A.R.S. § 11-951 et. seq., the Director is authorized to enter into Intergovernmental Agreements with other public agencies, which includes another state; departments, agencies, boards and commissions of another state; and political subdivisions of another state. California. The chairman of the Colorado River Board of California, acting as the Colorado River Commissioner pursuant to California Water Code section 12525, has the authority to exercise on behalf of California every right and power granted to California by the Boulder Canyon Project Act, and to do and perform all other things necessary or expedient to carry out the purposes of the Colorado River Board. Colorado Section 24-1-109, Colorado Revised Statutes (2005) provides that “Interstate compacts authorized by law shall be administered under the direction of the office of the governor.” This includes the Colorado River Compact and the Upper Colorado River Basin Compact. Section 37-60-109 provides that “the governor from time to time, with approval of the

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability board, shall appoint a commissioner, who shall represent the state of Colorado upon joint commissions to be composed of commissioners representing the stale of Colorado and another stale or other states for the purpose of negotiating and entering into compacts or agreements between said states…” By Executive Order _____, issued __________, 2006, attached hereto as Exhibit ________ and incorporated herein by reference, the Governor appointed Upper Colorado River Commissioner Scott Balcomb to represent the State of Colorado. Section 37-60-106, subsections (e) and (i). C.R.S. (2005), authorize the Colorado Water Conservation Board to “cooperate with the United States and the agencies thereof, and with other states for the purpose of bringing about the greater utilization of the water of the state of Colorado and the prevention of flood damages.” and “to confer with and appear before the officers, representatives, boards, bureaus, committees, commissions, or other agencies of other states, or of the federal government, for the purpose of protecting and asserting the authority, interests, and rights of the state of Colorado and its citizens with respect to the waters of the interstate streams in this state.” By resolution dated _______________, attached hereto as Exhibit __, and incorporated herein by reference, the Colorado Water Conservation Board authorized and directed its Director to negotiate with and enter into agreements with other state entities within the Colorado River Basin. Nevada The Colorado River Commission of the State of Nevada (CRCN) is an agency of the State of Nevada, authorized generally by N.R.S. §§ 538.041 and 538.251. CRCN is authorized by N.R.S. § 538.161 (6), (7) to enter into this Agreement. The CRCN. in furtherance of’ the State of Nevada’s responsibility to promote the health and welfare of its people in Colorado River matters, makes this Agreement to supplement the supply of water in the Colorado River which is available for use in Nevada, augment the waters of the Colorado River, and facilitate the more flexible operation of dams and facilities by the Secretary of the Interior of the United States. The Chairman of the Commission, signatory hereto, serves as one of the Governor’s representatives as contemplated by Section 602(b) of the 1968 Colorado River Basin Project Act 43 U.S.C. § 1552(b) and the Criteria for Coordinated Long-Range Operation of Colorado River Reservoirs Pursuant to the Colorado River Basin Project Act. The Southern Nevada Water Authority (SNWA) is a Nevada joint powers agency and political subdivision of the State of Nevada, created by agreement dated July 25. 1991, as amended November 17,1994 and January 1,1996, pursuant to N.R.S. §§ 277.074 and 277.120. SNWA is authorized by N.R.S. § 538.186 to enter into this Agreement and, pursuant

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability to its contract issued under section 5 of the Boulder Canyon Project Act of 1928, SNWA has the right to divert “supplemental water” as defined by NRS § 538.041 (6). The General Manager of the SNWA, signatory hereto, serves as one of the Governor’s Representatives as contemplated by Section 602(b) of the 1968 Colorado River Basin Project Act. 43 U.S.C. § 1552(b) and the Criteria for Coordinated Long-Range Operation of Colorado River Reservoirs Pursuant to the Colorado River Basin Project Act. New Mexico. Pursuant to NMSA 1978, 72-14-3, the New Mexico Interstate Stream Commission is authorized to investigate water supply, to develop, to conserve, to protect and to do any and all other things necessary to protect, conserve and develop the waters and stream systems of the State of New Mexico, interstate or otherwise. The Interstate Stream Commission also is authorized to institute or cause to be instituted in the name of the state of New Mexico any and all negotiations and/or legal proceedings as in its judgment arc necessary. By Resolution dated ______, the Interstate Stream Commission authorizes the execution of this Agreement. Utah. The Division of Water Resources (DWR) is the water resource authority for the State of Utah. Utah Code Ann. § 73-10-18. ‘Ihe Utah Department of Natural Resources Executive Director (Department), with the concurrence of the Utah Board of Water Resources (Board), appoints the DWR Director (Director). § 63-34-6(1). The Board makes DWR policy. § 73-10-1.5. The Board develops, conserves, protects, and controls Utah waters, § 73-10-4(4),(5), and, in cooperation with the Department and Governor, supervises administration of interstate compacts, § 73-10-4, such as the Colorado River Compact, §§ 73-12a-l through 3, and the Upper Colorado River Basin Compact, § 73-13-10. The Board, with Department and Gubernatorial approval, appoints a Utah Interstate Stream Commissioner, § 73-10-3, currently the DWR Director, to represent Utah in interstate conferences to administer interstate compacts. §§ 73-10-3 and 73-10-4. These delegations of authority authorize the Utah Interstate Stream Commissioner/DWR Director to sign this document. He acts pursuant to a Board resolution, acknowledged by the Department, dated _______, attached hereto as Exhibit __, and incorporated herein by reference. Wyoming. Water in Wyoming belongs to the state. WYO. CONST. Art. 8 ' 1. The Wyoming State Engineer is a constitutionally created office and is Wyoming’s chief water official with general supervisory authority over the waters of the state. WYO. CONST. Art. 8 ' 5. The Wyoming legislature conferred upon Wyoming officers the authority to cooperate with and assist like authorities and entities of other states in the performance of any lawful power, duly, or authority. WYO. STAT. ANN. ' 16-1-101 (LEXISNEXIS 2005). Wyoming and its State Engineer represent the rights and interests of all Wyoming appropriators with respect to other states. Wyoming v. Colorado,

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability 286 U.S. 494 (1922). See Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92 (1938). In signing this Agreement, the State Engineer intends that this Agreement be mutually and equally binding between the Parties. Background Federal law and practice (including Section 602(b) of the 1968 Colorado River Basin Project Act, 43 U.S.C. § 1552(b), and the Criteria for Coordinated Long-Range Operation of Colorado River Reservoirs Pursuant to the Colorado River Basin Project Act), contemplate that in the operation of Lakes Powell and Mead, the Secretary of the Interior consults with the States through Governors’ Representatives, who represent the Governors and their respective States. Through this law and practice, the Governors’ Representatives have in the past reached agreements among themselves and with me Secretary on various aspects of Colorado River reservoir operation. This Agreement is entered into in furtherance of this law and practice. On January 16, 2001, the Secretary adopted Colorado River Interim Surplus Guidelines (ISG) based on an alternative prepared by the Colorado River Basin States, for the purposes of determining annually the conditions under which the Secretary would declare the availability of surplus water for use within the states of Arizona, California and Nevada in accordance with and under the authority of the Boulder Canyon Project Act of 1928 (45 Stat. 1057) and the Decree of the United States Supreme Court in Arizona v. California, 376 U.S. 340 (1964). The ISG are effective through calendar year 2015 (through preparation of the 2016 Annual Operating Plan). In the years following the adoption of the ISG, drought conditions in the Colorado River Basin caused a significant reduction in storage levels in Lakes Powell and Mead, and precipitated discussions by and among the Parties, and between the Parties and the United States through the Department of the Interior and the Bureau of Reclamation. The Parties recognize that the Upper Division States have not yet developed their full apportionment under the Colorado River Compact. Although the Secretary has not imposed any shortage in the Lower Basin, the Parties also recognize that with additional Upper Basin development and in drought conditions, the Lower Division States may be required to suffer shortages in deliveries of water from Lake Mead. Therefore, these discussions focused on ways to improve the management of water in Lakes Powell and Mead so as to enhance the protection afforded to the Upper Basin by Lake Powell, and to delay the onset and minimize the extent and duration of shortages in the Lower Basin. Shortages in the Lower Basin will also trigger shortages in the delivery of water lo Mexico pursuant to the Mexican Water Treaty of 1944, February 3, 1944, U.S.-Mex., 59 Slat. 1219, T.S. 994, 3 U.N.T.S. 313.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability On May 2, 2005, the Secretary announced her intent to undertake a process to develop Lower Basin shortage guidelines and explore management options for the coordinated operation of Lakes Powell and Mead. On June 15. 2005, the Bureau of Reclamation published a notice in the Federal Register, announcing its intent to implement the Secretary’s direction. The Bureau of Reclamation has proceeded to undertake scoping and develop alternatives pursuant to the National Environmental Policy Act (the NEPA Process), which the Parties anticipate will form the basis for a ROD to he issued by the Secretary by December 2007. On August 25, 2005, the Governors’ Representatives for the seven Colorado River Basin Slates wrote a letter to the Secretary expressing conceptual agreement in the development and implementation of three broad strategies for improved management and operation of the Colorado River: Coordinated Reservoir Management and Lower Basin Shortage Guidelines; System Efficiency and Management; and Augmentation of Supply. On February 3. 2006, the Governors’ Representatives transmitted to the Secretary their recommendation for the scope of the NEPA Process, which refined many of the elements outlined in the August 25, 2005 letter. At the request of the Secretary, the Parties have continued their discussions relative to the areas of agreement outlined in the letters of August 25, 2005 and February 3, 2006. In furtherance of the letters of August 25, 2005 and February 3, 2006, the Parties have reached agreement to take additional actions for their mutual benefit, which are designed to augment the supply of water available for use in the Colorado Rivet-System and improve the management of water in the Colorado River. Purpose. The Parlies intend that the actions by them contemplated in this Agreement will: improve cooperation and communication among them; provide additional security and certainty in the water supply of the Colorado River System for the benefit of the people served by water from the Colorado River System: and avoid circumstances which could otherwise form the basis for claims or controversies over interpretation or implementation of the Colorado River Compact and other applicable provisions of the law of the river. AGREEMENT In consideration of the above recitals and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: Recitals. The Recitals set forth above are material facts that are relevant to and form the basis for the agreements set forth herein.

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Definitions. As used in this Agreement the following terms have the following meanings: Colorado River System. This term shall have the meaning as defined in the Colorado River Compact. ISG. The Colorado River Interim Surplus Guidelines adopted by the Secretary on January 16, 2001. NEPA Process. The decision-making process pursuant to the National Environmental Policy Act, 42 U.S.C. §§ 4321 through 47, beginning with the Bureau of Reclamation’s Notice to SolicitComments and Hold Public Meetings, 70 Fed. Reg. 34794 (June 15, 2005) and culminating in a Record of Decision. Party or Parties. Any party or parties to this Agreement. Parties’ Recommendation. The Seven Basin States’ Preliminary Proposal Regarding Colorado River Interim Operations, a copy of which is attached hereto and incorporated herein by this reference, presented by the Parties to the Secretary in furtherance of the States’ letters of August 25, 2005 and February 3, 2006. and any modification of the Parties’ Recommendation adopted by the Parties pursuant to this Agreement. ROD. The Record of Decision anticipated to be issued by the Secretary after completion of NEPA Process, pursuant to her letter of May 2, 2005, and the Notice published in the Federal Register on September 30. 2005, 70 Fed. Reg. 57322. Secretary. The Secretary of the Interior or the Bureau of Reclamation, as applicable. State or States. Any of the states of Arizona, California, Colorado, Nevada, New Mexico, Utah or Wyoming, as context requires. Support for Parties’ Recommendation. After considering a number of alternatives, each Party has determined that the Parties’ Recommendation is in the best interests of that Party, and promotes the health and welfare of that Party and of the Colorado River Basin States. In the NEPA Process, the Parties shall support the Secretary’s adoption of the Parties’ Recommendation in a ROD. If during the course of the NEPA Process any new information becomes available which causes any Party, in its sole and absolute discretion, lo reassess any provision of the Parties’ Recommendation. that Party shall immediately notify all other Parties in writing. The Parties shall jointly confer and, if they agree to any modification of the Parties’ Recommendation, shall consult with the Secretary to advise her of such modification and request the adoption thereof in the ROD. If after such conference and consultation it is apparent there is an

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability irreconcilable conflict between the Parties as to such modification, then any Party may upon written notice to the other Parties withdraw from this Agreement, and in such event this Agreement shall no longer be effective or binding upon such withdrawing Parly. All withdrawing Parties hereby reserve all rights upon withdrawal from this Agreement to take such actions, including support of or challenges to the ROD, as they in their sole and absolute discretion deem necessary or appropriate. In the event of the withdrawal of any one or more Parties from this Agreement, this Agreement shall continue in full force and effect as to the remaining Parties. The remaining Parties may confer to determine whether to continue this Agreement in effect, to amend this Agreement, or to terminate this Agreement. In the event of termination, all Parties shall be relieved from the terms hereof, and this Agreement shall be of no further force or effect. ROD Consistent with the Parties’ Recommendation. In the event the Secretary adopts a ROD in substantial conformance with the Parties’ Recommendation, the Parties shall take all necessary actions to implement the terms of the ROD, including the approval and execution of agreements necessary for such implementation. ROD Inconsistent with the Parties’ Recommendation. In the event the Secretary adopts a ROD that any Party, in its sole and absolute discretion, determines is not in substantial conformance with the Parties’ Recommendation, such Party shall immediately notify all other Parties of such determination in writing. The Parties shall jointly confer, and consult with the Secretary as necessary, in order to determine whether the ROD is in substantial conformance with this Agreement, or whether any action, including the amendment of this Agreement, may resolve such concern. If after such conference and consultation it is apparent there is an irreconcilable conflict between the ROD and the concerns of such Party, then such Party may upon written notice to the other Parties withdraw from this Agreement, and in such event this Agreement shall no longer be effective or binding upon such withdrawing Party. All withdrawing Parties hereby reserve all rights upon withdrawal from this Agreement to take such actions, including support of or challenges to the ROD, as they in their sole and absolute discretion deem necessary or appropriate. In the event of the withdrawal of any one or more Parties from this Agreement, this Agreement shall continue in full force and effect as to the remaining Parties. The remaining Parties may confer to determine whether to continue this Agreement in effect, to amend this Agreement, or to terminate this Agreement. In the event of termination, all Parties shall be relieved from the terms hereof, and this Agreement shall be of no further force or effect. Additions to the ROD. The Parties hereby request that the Secretary recognize the specific provisions of this Agreement as part of the NEPA Process and, if appropriate, include in the ROD specific provisions that reference this Agreement as a basis for the ROD. The Parties also hereby request that the Secretary include in the ROD specific provision that the Secretary will first consult with all the Stales, through their designated Governor’s Representatives, before making any substantive modification to the ROD. Finally, the Parties hereby request that the Secretary include in the ROD specific provision that upon a request by any State for modification of the ROD, or upon any request by any State to resolve any claim or controversy arising under this Agreement or

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability under the operations of Lakes Powell and Mead pursuant to the ROD, the ISG, or any other applicable provision of federal law, regulation, criteria, policy, rule or guideline, the Secretary shall invite all of the Governors, or their designated representatives, to consult with the Secretary in an attempt to resolve such claim or controversy by mutual agreement. Consultation on Operations. After the Secretary commences operating Lakes Powell and Mead pursuant to the ROD, the Parties shall confer among themselves as necessary, but at least annually, to assess such operations. Any Party may request consultation with the other Parlies on a proposed adjustment or modification of such operations, based on changed circumstances, unanticipated conditions, or other factors. Upon such request, the Parties shall in good faith confer to resolve any such issues, and based thereon may request consultation by the States with the Secretary on adjustments to or modifications of operations under the ROD. In any event, the Parties shall confer before December 31, 2020. to determine whether to extend this Agreement and recommend that the Secretary continue operations under the ROD for an additional period, or modify this Agreement and recommend that the Secretary modify operations under the ROD, or terminate this Agreement and recommend that the Secretary not continue operations under the ROD after the expiration thereof. Development of System Augmentation. The Parties agree to diligently pursue system augmentation within the Colorado River System including but not limited to the determination of the feasibility of projects to increase precipitation in the basin or to augment available supplies through desalination. Additionally, the Parties agree to cooperatively pursue an interim water supply of at least a cumulative amount of 280,000 acre-feet for use in Nevada while long-term augmentation projects are being pursued. it is anticipated that this interim water supply will be made available in return for Nevada’s funding of the Drop 2 Reservoir currently proposed for construction by the Bureau of Reclamation. Annual recovery of this interim water supply by Nevada will not exceed 40,000 acre-feet. All water available to Nevada in consideration for funding the Drop 2 Reservoir would remain available during all shortage conditions declared by the Secretary. In consideration of the Parties’ diligent pursuit of long-term augmentation and the availability of the interim water supply, the Southern Nevada Water Authority (SNWA) agrees that it will withdraw right-of-way Application No. N-79203 filed with the Bureau of Land Management on October 1, 2004 for the purpose of developing Permit No. 58591 issued by the Nevada State Engineer in Ruling No. 4151. The SNWA will not re-file such right-of-way application or otherwise seek to divert the water rights available under Permit No. 58591 from the Virgin River prior to 2014 so long as Nevada is allowed to utilize its pre-Boulder Canyon Project Act Virgin and Muddy River rights in accordance with section 4(C) of the Parties’ Recommendation in the form forwarded to the Secretary on February 3. 2006, and the interim water supply made available to Nevada is reasonably certain to remain available. The SNWA will not re-file such right-of-way application or otherwise seek to divert the water rights available

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability under Permit No. 58591 from the Virgin River after 2014 so long as diligent pursuit of system augmentation is proceeding to provide Nevada an annual supply of 75,000 acre-feet by the year 2020. Prior to re-filing any applications with the Bureau of Land Management, SNWA and Nevada will consult with the other Basin States. This agreement is without prejudice to any Party’s claims, rights or interests in the Virgin or Muddy River systems. Consistency with Existing Law. The Parties’ Recommendation is consistent with existing law. The Parties expressly agree that the storage of water in and release of water from Lakes Powell and Mead pursuant to a ROD issued by the Secretary in substantial conformance with the Parties’ Recommendation and this Agreement, and any agreements, rules and regulations adopted by the Secretary or the parties to implement such ROD, shall not constitute a violation of Article III(a)-(c) inclusive of the Colorado River Compact, or Sections 601 and 602(a) of the Colorado River Basin Project Act of 1968 (43 U.S.C. §§ 1551 and 1552(a)), and all applicable rules and regulations promulgated thereunder. Resolution of Claims or Controversies. The Parties recognize that litigation is not the preferred alternative to the resolution of claims or controversies concerning the law of the river. In furtherance of this Agreement, the Parties desire to avoid litigation, and agree to pursue a consultative approach to the resolution of any claim or controversy. In the event that any Party becomes concerned that there may be a claim or controversy under this Agreement, the ROD, Article III(a)-(e) inclusive of the Colorado River Compact, or Sections 601 and 602(a) of the Colorado River Basin Project Act of 1968 (43 U.S.C. §§ 1551 and 1552(a)), and all applicable rules and regulations promulgated thereunder, such Party shall notify all other Parties in writing, and the Parties shall in good faith meet in order to resolve such claim or controversy by mutual agreement prior to any litigation. No Party shall initiate any judicial or administrative proceeding against any other Party or against the Secretary under Article III(a)-(e) inclusive of the Colorado River Compact, or Sections 601 and 602(a) of the Colorado River Basin Project Act of 1968 (43 U.S.C. §§ 1551 and 1552(a)), or any other applicable provision of federal law. regulation, criteria, policy, rule or guideline, and no claim thereunder shall be ripe, until such conference has been completed. In addition, all States shall comply with any request by the Secretary for consultation in order to resolve any claim or controversy. In addition, any State may invoke the provisions of Article VI of the Colorado River Compact. Notwithstanding anything in this Agreement to the contrary, the terms of this Paragraph 10 shall survive for a period of five years following the termination or expiration of this Agreement, and shall apply to any withdrawing Party after withdrawal for such period. Reservation of Rights. Notwithstanding the terms of this Agreement and the Parlies’ Recommendation, in the event that for any reason this Agreement is terminated, or that the term of this Agreement is not extended, or upon the withdrawal of any Party from this Agreement, the Parties reserve, and shall not be deemed to have waived, any and all rights, including any claims or defenses, they may have as of the date hereof or as

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability may accrue during the term hereof, under any existing federal or state law or administrative rule, regulation or guideline, including without limitation the Colorado River Compact, the Upper Colorado River Basin Compact, the Decree in Arizona v. California, the Colorado River Basin Project Act of 1968, and any other applicable provision of federal law, rule, regulation, or guideline. No Third-Party Beneficiaries. This Agreement is made for the benefit of the Parties. No Party to this Agreement intends for this Agreement to confer any benefit upon any person or entity not a signatory upon a theory of third-party beneficiary or otherwise. Joint Defense Against Third Party Claims. In the event the Secretary adopts a ROD in substantial conformance with the Parties’ Recommendation as set forth herein, they will have certain common, closely parallel, or identical interests in supporting, preserving and defending the ROD and this Agreement. The nature of this interest and the relationship among the Parties present common legal and factual issues and a mutuality of interests. Because of these common interests, the Parties will mutually benefit from an exchange of information relating to the support, preservation and defense of the ROD and this Agreement, as well as from a coordinated investigation and preparation for discussion of such interests. In furtherance thereof, in the event of any challenge by a third party as to the ROD or this Agreement (including claims by any withdrawing Party), the Parties will cooperate to proceed with reasonable diligence and to use reasonable best efforts in the support, preservation and defense thereof, including any lawsuit or administrative proceeding challenging the legality, validity or enforceability of any term of the ROD or this Agreement, and will to the extent appropriate enter into such agreements, including joint defense or common interest agreements, as are necessary therefor. Each Party shall bear its own costs of participation and representation in any such defense. Reaffirmation of Existing Law. Nothing in this Agreement or the Parties’ Recommendation is intended to, nor shall this Agreement be construed so as to, diminish or modify the right of any Party under existing law. including without limitation the Colorado River Compact, the Upper Colorado River Basin Compact, or the Decree in Arizona v. California. The Parties hereby affirm the entitlement and right of each State under such existing law to use and develop the water of the Colorado River System. Term. This Agreement shall be effective as of the date of the first two signatories hereto, and shall be effective as to any additional Party as of the date of execution by such Party. Unless earlier terminated, this Agreement shall be effective for so long as the ROD and the ISG are in effect, and shall terminate upon the termination of the ROD and the ISG. Authority. The persons and entities executing this Agreement on behalf of the Parlies are recognized by the Parties as representing the respective Stales in matters concerning the operation of Lakes Powell and Mead, and as those persons and entities authorized to bind the respective Parties to the terms hereof. Each person executing this

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Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability Agreement has the full power and authority to bind the respective Party to the terms of this Agreement. No Party shall challenge the authority of any person or Party to execute this Agreement and hind such Party to the terms hereof, and the Parties waive the right to challenge such authority.