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<br />Allen Matkins Leek Gamble & Mallory LLP <br />attorneys at law <br /> <br />Allen Matkins <br /> <br />501 West Broadway.9th Floor San Diego California 92101-3577 <br />telephone. 6192331155 facsimile. 6192331158 www.allenmatkins.com <br /> <br />to. Interested Persons <br /> <br />memorandum <br /> <br />writer. David L. Osias <br /> <br />t. 619 235 1526 e. dosias@allenmatkins.com <br />file number. 14161-G02/SD579387.01 <br /> <br />date. May 25 2003 <br />subject. Observations Concerning Certain New <br />MWD Positions as of 51:1.2103 MWD <br />Board Memorandum (attached) <br /> <br />Item #6: "Pursue a permanent quantification" <br /> <br />Previous MWD position: Support for a QSA with a limited term. <br /> <br />· MWD supported the 10/15/99 Key Terms, including Section V(2) providing for <br />termination in Year 30 or 45 as permitted under IID/SDCW A Transfer Agreement. <br /> <br />· MWD supported the October 15, 2002 Hertzberg term sheet, including Sections <br />1(b)(2) and (3) providing Initial Term of 45 years and Renewal Term of 30 years, <br />and including Sections 5(c) and (d) providing IID the right to terminate the QSA at <br />any time if the environmental occurrences and requirements are "unduly <br />burdensome" and allowing CVWD, MWD and SDCW A to terminate the QSA if <br />they chose not to cover unexpected new environmental costs as they arise. <br /> <br />· MWD approved a December 2002 QSA draft at the MWD Board Meeting of <br />December 10, 2002, including Sections 1.1(54), (55) and (71) which provide for_ <br />QSA termination within 18 months if the required HCP is unduly burdensome-on the <br />lID, termination in Year 30 or 45 if the IID/SDCW A Transfer Agreement terminates, <br />and termination in Year 31 if the Inadvertent Overrun and Payback Program <br />terminates at the end of Year 30. <br /> <br />Conclusion: Not ever--since QSA negotiations began-has MWD ever suggested or <br />insisted on a permanent quantification settlement. All historical iterations of the QSA <br />have had a limited term. A permanent quantification is not possible. <br /> <br />I San Diego Century City Los Angeles Orange County San Francisco <br /> <br />