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. . . Resource Fund authorized by Congress in the 2000 Settlement Act Amendments which is to be "utilized in partnership with adjacent non-Indian communities or entities. . . .". 16. The earnings from the deposited funds initially shall be used to offset the variable O&M costs of operating the Project. Over time, as described in paragraphs 14 and 15, the earnings from the fund shall be used to pay portions of the fixed O&M costs of operating the Project. The concept is that the fund will accumulate and accrue interest. The unused interest from each year will be invested in the fund principal. Only the interest from the fund will be available to offset all or a portion of the O&M costs. 17. In any year in which the interest is not sufficient to pay the full amount of the O&M costs eligible for payment for that year, the remaining O&M costs shall be allocated to those entities that used water in that year in proportion to the amount of water that each entity used during that year. 18. [Once the escrow fund is established and the Project is operational the earnings from the escrow fund shall be used for no less than 10 years to cover the variable costs of the project participants to pump project water. As soon as one of the Ute Tribes uses, or contracts for the use of at least 20% of its Statutory Water Allocation so that it is responsible for the variable and fixed O&M costs associated with that portion of its Statutory Water Allocation, the earnings from the fund shall be used first to offset a percentage of the fixed O&M costs of each project participant equal to that percentage of the Ute Tribe using in a given year the larger percentage of its Statutory Water Allocation and then to offset variable O&M costs as described in paragraph 11. The 20% threshold can be achieved by a single Ute Tribe or collectively by both Tribes (i.e., 10% for each Tribe or some other combination). As the percentage of water used by a Tribe (Tribe with the highest use), increases, the percentage of the fixed O&M costs to be offset by the earnings from the fund shall increase accordingly. If the Ute Tribes do not meet the 20% threshold within 25 years of the establishment of the escrow fund, the escrow fund earnings may be used to cover the fixed operating costs of the project participants starting in the 26th year and continuing thereafter in perpetuity.] 1 [submitted by Dan Law] Organizational Structure 19. Project O&M responsibilities shall be assigned to the POC which will operate the Project after construction is completed and the Project is in O&M status. So long as the U.S. is paying a portion of the tribal O&M costs, the POC shall consult with the U.S. with regard to the annual O&M budgets. Reclamation will operate the Project during construction I In other words - for the first 10 years the earnings go to cover variable costs. Thereafter, if the Tribes use 20% or 10% each, or some other combination, the percentage associated with the highest use would be used to allocate the earnings to cover the fixed costs. That is, if one Tribe is using 15% and the other 5%, the earnings would be used to cover 15% of each participant's fixed costs. Page 3 of 4