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situation, implementation of the QSA water transfers has been determined by state and federal wildlife agencies to likely result in the take of protected species. Accordingly, compliance with both state and federal ESA requirements is one of the significant regulatory burdens impacting implementation of the QSA. b) Section 10 - Section 10 of the federal ESA is designed to cover circumstances where entities that are private in nature, or not directly connected to the state offederal government, are attempting to comply with the ESA. Because of the need to carry out actions within its service area to conserve water, and because of the potential for such actions to impact species at the Salton Sea, lID has from the outset been planning to develop for approval by the wildlife agencies what is known as a Section 10 Habitat Conservation Plan (HCP). The lID HCP was designed to be broad in scope, covering as many species as possible and providing lID with long term ESA protection during the life ofthe QSA transfers. The HCP would also provide for the kinds of regulatory assurances that come with Section 10 compliance. Completing the HCP is still part of the plan for eventual implementation of the QSA. However, in recognition of the time period necessary to properly complete the HCP (maybe a year or more), the future obligation of the agencies to coordinate to complete the HCP has been provided for in contract language contained in the Environmental Cost Sharing Agreement, one of the subordinate QSA agreements. Compliance with state law would be carried out in parallel fashion. c) Section 7 - Section 7 of the federal ESA applies to situations where federal agencies are carrying out actions that may affect species, and Section 7 also applies to voluntary programs to conserve protected species independent of - any planned federal actions. In the summer of 2002 it became apparent to the Bureau of Reclamation and the US Fish and Wildlife Service that the Section 10 HCP approach under development at that time could not be completed within the time remaining before the December 31, 2002 deadline. Accordingly, BOR and FWS made a proposal to the water agencies (lID, MWD, Coachella, and San Diego) that BOR would undertake a narrow, voluntary Section 7 species conservation program so as to provide necessary ESA compliance so that the QSA could be executed before the end of 2002 (focusing on listed species at the Salton Sea and in the liD service area). With agreement from the water agencies, BOR proceeded to develop this alternative ESA compliance process, recognizing that parallel state compliance could be carried out in a similar manner. Toward the end of2002 BOR and FWS were in the process of completing the Section 7 compliance process. It is expected that this Section 7 approach will be used in 2003 for state and federal ESA compliance purposes, so as to support timely execution of the restructured QSA, even though a Section 10 HCP will eventually supplant the Section 7 compliance product. 4