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CHAPTER VII to replace Hoover deficiencies with the resultant impact on the Upper Colorado River Basin Fund, and ad- vised that under current water and power marketing conditions, all Colorado River Storage Project genera- tion Is required to meet firm energy obligations of the United States and all energy needed to satisfy Hoover deficiencies must be purchased and that, except for minor variations, this operating condition Is expected to continue. The net result is that increased revenues will accrue to the Upper Colorado River Basin Fund from power sales, and money expended from that fund to replace Hoover deficiencies will be reimbursed from the Colorado River Development Fund pursuant to Section 502, Public Law 90-537. He further advised that, in accordance with the provisions of the Filling Criteria, the modification thereof dated May 11, 1964, and con- sistent with said Section 502, the Upper Colorado River Basin Fund will not be reimbursed for costs incurred In connection with impairment of capacity and energy resulting from the drawdown of Lake Mead below elevation 1123 feet incident to the attainment of minimum power pool in Lake Powell; and that neither will there be reimbursement for energy furnished from Colorado River Storage Project generation utilized in meeting energy deficiencies and impairments in Hoover generation. The letters from the Governors of the Lower and Upper Basins dated March 13 and March 31, 1970, respectively, proposed conflicting changes in the Secretary's draft of Operating Criteria. The resolution of some of the proposals, as was noted in the detailed explanation to all the interested parties from the Commis- sioner of Reclamation dated June 9, 1970, follows: In paragraph 1, a Lower Basin suggestion was adopted that the criteria apply to the storage reservoirs in the Colorado River Basin (rather than the "Upper" Basin) and "consonant" be changed to "consistent with applicable Federal laws ..." The Secretary did not adopt an Upper Basin suggestion to emphasize in this paragraph that the criteria are to assure that Upper Basin consumptive uses will not be impaired because of failure to store sufficient water to make deliveries under Sections 602(a) (1) and (2) of Public Law 90-537, since the point was more appropriately covered later. The Secretary did delete a reference to "contracts" in the Itemization of the "Law of the River" as proposed by the Upper Basin. In the second paragraph an Upper Basin suggestion was adopted to stress participation by State represent- atives In the review of the criteria. An Upper Division proposal was adopted that the reference to "water quality" in Subarticle 1(2) be revised to "water quality control." An Upper Basin proposal was rejected that a new subdivision be added to provide that one of the factors to be considered by the Secretary in determining the quantity of 602(a) Storage would be the maximum pro- duction of firm power and energy in conformity with Section 7 of Public Law 84-485. An Upper Basin proposal was rejected which advocated the immediate application of the 98.4 + percent rule curve to determine the amount of storage needed in the Upper Basin reservoirs to meet the requirements of Section 602(a) of Public Law 90-537. This was because factors other than a rule curve will, for many years, govern the storage of water in the Upper Basin reservoirs. A portion of an Upper Basin proposal was adopted in that specific reference was made in Subarticle 11(5) that releases from Lake Powell shall not prejudice the position of either Basin with respect to required deliveries at Lee Ferry pursuant to the Compact. An Upper Basin proposal was adopted that the definition of "surplus" state it has no reference to the term "surplus" in the Colorado River Compact. M. Prouisions of the Criteria The criteria provide that the Secretary may modify the criteria from time to time and will sponsor a formal review at least every 5 years. Article 1 provides for an annual report on January 1, 1972, and on January 1 of each year thereafter, describing the actual operation under the adopted criteria for the preceding compact water year and the pro- jected plan of operation for the current year, which shall reflect appropriate consideration of the uses of the reservoirs for all purposes. Article 11(1) provides that the annual plan of operation shall include a determination by the Secretary of the quantity of water considered necessary as of September 30 of that year to be in storage as required by Section 602(x) of Public Law 90-537 (hereinafter "602(a) Storage") and lists the factors to be considered in arriving at A-8