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January 7, 2004 IS The criteria used for determining a water sh0l1age in 2003 was based on protecting elevation 5,990 feet (the top of the inactive pool) at Navajo Reservoir, with future inflows assumed to be at minimum probable levels (90 percent exceedance). When the water surface elevation at Navajo Reservoir was projected to fall below 5,990 feet in 2003, with projected inflows at the minimum probable level, a water supply shortfall was determined. Using this methodology, a shortage percentage was determined each month in 2003 in the San Juan River Basin for all the endorsing parties. This percent shortage was also applied toward the 500 cfs (14 ems) target flow from Shiprock to Lake Powell. The shortage was recalculated each month for planning purposes (due to changing hydrologic conditions) and varied between 0 and 33 percent in 2003; but in October of 2003 the calculated shortage was reduced to zero, as late summer rains in August and September increased inflow into Navajo Reservoir above levels forecasted earlier in the year. Storage in Navajo Reservoir remains low, however. As water year 2003 ended, storage in Navajo was the lowest it has been since 1968, before the first filling of the reservoir. It is anticipated that a similar shortage-sharing agreement will be developed in 2004. Reclamation is proceeding through a National Environmental Policy Act (NEP A) process on the implementation of an operation at Navajo Dam that meets the Flow Recommendations or a reasonable alternative to them. A Notice of Intent to prepare an Environmental Impact Statement (EIS) was filed on October 1, 1999, in the Federal Register. A draft EIS was released on September 4, 2002. The completion of the final EIS is scheduled to occur late in December 2003 with the Record of Decision to follow in January 2004. Navajo Reservoir is not expected to fill in 2004 under the minimum probable, most probable or even the maximum probable inflow scenario. Releases from the reservoir will be 250 cfs (7 cms) to 500 cfs ( 14 cms) through the fall and winter depending upon the outcome of discussions between stake - holder groups in the San Juan River Basin and the EIS. Large spring releases as provided for in the Flow Recommendations are not likely to take place in 2004 due to the continuation of severe drought conditions in the San Juan River Basin and because of scheduled maintenance on the tandem outlet gates at Navajo Dam. Lake Powell Four years of drought in the Colorado River Basin has reduced water storage in Lake Powell. When drought conditions began in the autumn of 1999, Lake Powell was nearly full (95 percent of capacity on September 30, 1999). As water year 2003 ended on September 30, 2003, Lake Powell storage had been reduced to 12.1 maf(14,900 mcm) or 50 percent of capacity. . Lake Powell began water year 2003 with 14.5 maf(17,800 mcm) of water in storage (59 percent of capacity). Storage in Lake Powell at that time was 2.6 maf(3,200 mcm) lower than that of Lake Mead. Because of reduced storage, and Lake Powell storage being below Lake Mead, releases from Glen CanyonDam were scheduled to maintain the minimum release objective from Lake Powell of 8.23 maf (10,150 mcm) for water year 2003 in accordance with Article 11(2) of the Operating Criteria. Forecasted inflow to Lake Powell was significantly below average throughout water year 2003, and storage equalization releases between Lake Mead and Lake Powell were not required. The total release from Lake Powell in water year 2003 was 8.23 maf(10,150 mcm).