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I I I I I I I I I I I I I I I I I I I Oraanizational Structure. The State Engineer requires LAWMA to establish volumetric pumping limitations on its members' wells. To date, LAWMA has assigned additional pumping to wells which approach their limits because there have been adequate reserves of replacement water. In a dry year, such reserves may not be available so the volumetric pumping limits will be enforced. The EnWater report recommended that LAWMA establish a structure similar to a mutual ditch company wherein "shares" or "units" are the basis for distributing replacement water. The units could be traded or sold to other well owners under guidelines developed by the board of directors, thus developing a secondary market. The board of directors will present this organizational structure for membership approval in August 1998. In 1998, the initial units were distributed to members by equal weighing of 1) the wells' decreed pumping rates and 2) the wells' historical pumping volumes. A unit will be equivalent to 1 acre-foot of replacement water. The board of directors will allocate the yield annually depending on forecasted replacement supplies and demands. For example in 1998 the board established an allocation of 110 percent or 1.1 acre-foot of replacement water per unit. The amount of replacement water required for a given well is a function of the 1) wellhead depletion rate established pursuant to the State Engineer's rules described earlier in this report, 2) the well's location and 3) the amount of pumping. The initial allocation of units was adopted for the 1998 replacement plan. It is anticipated that stock will be issued in 1999 if approved by the membership. If a well owner expects to exceed the pumping allocation he may purchase additional replacement water through LAWMA. Depending on Article II storage reserves LAWMA may sell water on hand or purchase additional water on the spot market. It is expected that this organizational structure may reduce pumping because 1) the well owner will know how much water he can pump in a given year so he can adjust his crops or crop acreage depending on the supply and 2) the well owner will know the cost of pumping additional water versus his expectations for returns. Also, according to the EnWater report, a shares structure will increase the economic stability of the organization. OFFSET ACCOUNT RESOLUTION In March 1997, the Arkansas River Compact Administration approved the "Resolution Concerning an Offset Account in John Martin Reservoir for Colorado Pumping". This resolution added a 20,000 acre-foot storage account for the purpose of regUlating water supplies for the replacement of depletions caused by post-compact wells with respect to 1) Usable Stateline Page 15