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-# "1 ......... January 23-24, 2007 Board Meeting Agenda Item 17 Page 5 of6 . with a fixed shortage assigned to Mexico, then wants to reduce the Lower Basin portion of each shortage step accordingly. The Upper Basin believes at the very least this is premature since the matter must be handled through the State Department and the International Boundary and Water Commission. The Upper Basin is unanimous in its opinion that first it is not good public policy to try to pressure the State Dept. through the Interior Dept. to adopt an arrangement that may not fully reflect future needs or conditions; and second, there are a number of reasons why the Upper Basin should not agree to an exclusive "trigger" for shortage sharing with Mexico, for example, the Upper Basin may want to share some ofthe "savings benefits" the Lower Basin would realize by shorting Mexico. Furthermore, the Upper Basin wants to carefully review any such agreement and fully evaluate any possible ramifications such may have on the Upper Basin. The Upper Basin is concerned that there could be compact implications in any such agreement. We believe that the most prudent course of action is to maintain all options at this time in the event that we would like Mexico's cooperation to say construct a desalination plant for the benefit of both countries. d. Depending on the description of Reclamation's preferred alternative, there may still be a few areas for negotiation before the state's comments on the DEIS are submitted to Reclamation. . Conclusions: . . The 7-state agreement commits the states to solve problems, much as it has done over the years, through a consultation process. The consultation process is much more likely to minimize ones risks than litigation. . It is intended to be consistent with existing law and provides a reaffirmation of the Compacts. . The rights of each state and their respective positions on various legal issues will be preserved. . The agreement forces the Lower Basin to recognize that there is some potential for shortages and that they not only need to, but will develop shortage criteria. Arizona is taking shortages voluntarily, which reinforces to some degree that CAP lacked a full water supply under full development conditions in the basin. However, Arizona gets to "limit" the shortage that the- Secretary will impose to a quantity Arizona can realistically absorb, which is very important to Arizona. . If the States reach an agreement that they can all commit too, the Secretary of Interior is far more likely to adopt that alternative in their EIS process. If the Record of Decision is not in substantial conformance with the 7-state recommendations, "off ramps" are provided . Nevada, in addition to its existing compact apportionment, gets an interim source of water (75,000 AF annually by 2020) that they have a fairly immediate need for. This allows the fight over how to account for water development on the tributaries to be delayed. Absent this agreement, Nevada