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USDI Secretary Babbitt on Colorado River Issues Page 5 of6 the Colorado River: a situation of uncertainty about ability to meet needs as a res It of being in a subordinate, and potentially perilous, position. In a broad sense, Coachella's osture vis- a-vis lID is like San Diego's vis-a-vis other Met customers, like the Met as to the agricultural contractors, and like that of the Central Arizona Project in relation to he other Lower Basin states. Most of these matters will be taken up in the fullness of time. Each as its own history, and its own equities. Still, we need to keep in mind that in the long t rm the great issue on the River is providing confidence to every stakeholder that its reas nable needs can be met in good times and bad, without the risk of drastic measures. There are several other issues that need attention on our shorter term agenda, and ow I want to turn to them. Surplus Criteria The time is ripe for the formulation of criteria that will govern the declaration of s rplus conditions. surplus guidelines will provide a basis for Lower Basin water users tO~IY upon assessing the future availability of Colorado River water and in making appropriat plans for meeting water needs. I shall direct the Bureau of Reclamation to initiate the devel pment of guidelines for annual decisions regarding surplus determinations in operating the .ver. I! is clear that surplus water will not be available indefinitely to meet demands beJfond the 4.4 million acre-foot entitlement of California. The prospect of long term reliance n such water by users in California is a matter of great concern to other states in both basi s. The effective implementation of surplus criteria depends on the presence of a well-con eived strategy within California designed to cope with its long term demands on the Riv~r. I shall therefore temporarily defer making any such guidelines fmal in order to give Califtrnia an opportunity to put in place a realistic strategy to assure that it will be able to reduce its use when necessary, or to meet its needs from sources that do not jeopardize the entitle ent of other. Banking I continue to believe, as I observed last year, that some forms of banking, which m y include top-water banking, are useful tools that can contribute to more effective manageme t of the River, encouraging additional conservation. Since conservation incentives are one f the most important tools we have in encouraging efficient use of the limited resource e have, I believe banking should remain in our arsenal of techniques. However, considering e intense level of controversy top-water banking spawns, I believe formal regulatory consideration should be left to a later time. I shall, however, stand ready to entertai specific proposals for top-water banking that are put before me, on a case-by-case basis, pa icularly where there is a potential to demonstrate innovative conservation methods. Any suc proposals will be subject to public review and input from interested parties. The San Luis Rey Settlement http://www.sci.sdsu.edu/saItonlsecr_babbitt_CoR_issues.htm 11212006