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<br />Background <br />In 1928, Congress passed the Boulder Canyon Project Act, authorizing construction of <br />Hoover Dam, Imperial Dam and the All-American Canal, but the act did not become effective <br />until 1929, when the California Legislature passed legislation agreeing to limit California's <br />apportionment of Colorado River water to the annual consumptive use of 4.4 million acre-feet, <br />plus one-half of any surplus. The Secretary of the Interior, California and the California <br />Colorado River contractors later were enjoined to abide by this limit in the1964 U.S. Supreme <br />Court Decree in Arizona v. California. <br /> <br />Section 5 of the Boulder Canyon Project Act prohibits the delivery of water from storage <br />behind Hoover Dam except pursuant to contracts made with the Secretary of the Interior. Before <br />signing water delivery contracts with users in California, the Secretary requested a <br />recommendation from the state on a division of California's apportionment among those users. <br />This resulted in the Seven Party Agreement of 1931, which establishes a cascading priority <br />system under which water not used by one priority holder flowed through to the next. The <br />agricultural contractors are allocated the first three priorities, totaling 3.85 million acre-feet, but <br />each individual agricultural contractor's entitlement is not quantified. MWD is allocated the <br />fourth and fifth priorities of 550,000 and 662,000 acre-feet, respectively, and the balance of <br />water available to California is allocated to the agricultural contractors under the sixth and <br />seventh priorities. The total of the first six priorities is 5.362 million acre-feet. Until recently, <br />California contractors have been able to use this amount because of surplus conditions and <br />unused apportionments of other states being made available to California. However, increasing <br />demands in other states and drought conditions in the basin have now forced California to the <br />day of reckoning. <br /> <br />The unquantified nature of the agricultural contractors' entitlements has led to controversies <br />among them and with urban users over issues of reasonable and beneficial use and water <br />transfers. The purpose of the Quantification Settlement Agreement is to put these controversies <br />to bed so the nD/SDCW A Transfer can go forward as part of a broader plan to bring California's <br />use within the limits of its 4.4 million acre-feet apportionment over a IS-year period. <br /> <br />In October 1999, negotiators from Coachella, Metropolitan and Imperial, with the assistance <br />of Deputy Secretary of the Interior David Hayes and DWR Director Tom Hannigan, reached <br /> <br />2 <br />