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Agenda Item 18 July 11-12,2007 Board Meeting Page 2 of4 7-State Meetin2: June 25. 2007 The 7 Basin States met in Denver on June 25 to discuss how best to work with the Interior and State Departments on implementing shortage sharing provisions with Mexico. Updates were also provided on a number of other items related to the 7 State proposal. Furthermore, just prior to the meeting Arizona raised concerns with how equalization was modeled during the DEIS process. 1. Mexico Secretary Kempthorne and Reclamation had an opportunity to meet with the State Department and the Mexican Ambassador recently. All seemed to apparently agree that discussion on a number of issues related to drought and Colorado River issues in general would be a good idea. Discussions need to move past the All American Canal issue, which will continue to be very contentious. Interior and State are working on some "principles" for further discussions with Mexico, however those are not ready to be shared. We also learned that a small group of Lower Basin interests have been meeting with certain Mexican interests to develop a concept paper on drought and other related matters. While the concept paper is nearing completion, it also was not ready to be shared with other interests. It was suggested that the best way to advance issues with Mexico at this point in time was informally, but with the goal of Treaty Minute as the ultimate outcome. More on this matter to follow, but it seems clear that interests in the Upper Basin need to be more involved or at least kept better informed on these discussions. 2. Arizona position on modeling of equalization in the DEIS Arizona has taken the position that in years when equalization is required that it should not be constrained or stopped when the volume of release is projected to cause Lake Powell to fall below the 602(a) storage levels adopted for use in the DEIS and agreed to by the 7 states. Arizona has been aware of how 602(a) storage protections were being modeled and to raise this issue after the 7 states have submitted their proposal to Reclamation is disingenuous and inappropriate. The Upper Basin would have never given on the idea of allowing equalization to go unconstrained and that is in fact the reason that a different term "balancing" was used as operations under lower reservoir conditions were developed to keep storage in both Powell and Mead approximately the same. The Upper Basin is very concerned by this latest action by Arizona and we believe is of such significance that Reclamation would at a minimum need to do a supplemental EIS. Pursuit ofthis issue by Arizona as the potential to significantly delay Reclamation's schedule for completing the DEIS and will certainly strain the ability of the 7 States to remain united on the 7 state agreement. From the Upper Basin perspective we believe this is an issue that all 7 states agreed to set aside until 2025 and that a deal is a deal. We will have to wait and see how Reclamation responds to this matter. 3. Progress on other Actions in the 7-State Agreement Attached is the agenda listing the other items that were discussed at the 7 State's meeting. In general, good progress appears to be being made on those items. The biggest accomplishment was the completion of the Long-term Augmentation Study by Colorado River Water Consultants and funded by the Southern Nevada Water Authority. The Study is being put in final fonn and will be distributed shortly. Attachments Flood Protection. Water Project Planning and Finance. Stream and Lake Protection Water Supply Protection. Conservation Planning