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. 2. The Supreme Court's ruling in December approved a formula that increased consmnptive use projections. Kansas took no deliveries from its offset pool in John Martin Reservoir in 2003, creating a 4,800 acre-foot shortfall. The pool was created in 1997 specifically to offset well depletions. Witte said this nmnber could be contested since much of the water evaporated by sitting in the pool. That would still leave Colorado 11,700 acre-feet short. Witte was optimistic that Colorado broke even or came out ahead in 2004, and if precipitation in the next two years is above or at average, there could even be a surplus by 2006. The state also will try to adjust some of the data in the model, such as the amount of acreage irrigated by wells, the rate of consmnptive use and weather conditions. In the meantime, the state will attempt to make a "down payment" through augmentation plans - half of the water in each of the two years remaining in the model. Three major well users associations and smaller users within the valley have been notified ofthe problem. It will be difficult for those water users to find supplemental native water to augment this year's well use. Trades for transmountain water might be possible, but buying and applying transmountain water toward the Kansas debt would bring action from West Slope water interests. Witte informed water users that state drought grants up to $1 million are available and should be pursued by the LA WCD. As a result, the Board voted to host a meeting with well owners' groups and to pursue a state drought grant to help defray costs of obtaining water to make up the deficit. Arkansas River Compact Administration: The Administration and its three committees met on Dec. 13-14, 2004 in Lamar for the Annual Meeting. Some progress was made on disputed accounting issues and the Administration took a significant step in agreeing to seek advice from participating federal agencies on the respective state positions on sorne of those issues. Procedures for utilizing the federal expertise will first have to be developed. In addition, the Administration modified its budget to provide funds for a potential study oftransit losses between John Martin Reservoir and the Stateline. Once agreement is reached on the scope and methodologies for such a study, the Administration is prepared to retain a consultant to conduct the investigation and develop accounting procedures to more accurately determine water deliveries to downstream water users in Kansas and Colorado. Water Bank: On Nov. 18, the Southeastern Colorado Water Activity Enterprise voted to discontinue operation of the Pilot Arkansas River Water Bank. Preferred Storage Options Plan (PSOP): The Southeastern Colorado Water Conservancy District (SEWCD) has reported that federal legislation for both the PSOPS, completed after four years of work in 2000, and the Arkansas Valley Conduit failed to move during the lame duck session and will need to be reintroduced. In the meantime, the SEWCD intends to submit an application for permission from the federal government to do a feasibility study to expand Pueblo and Turquoise reservoirs and to study the excess capacity of the existing Fry-Ark proj ect storage. It is estimated that the study will take about 10 years to complete. The PSOP was to meet the need for additional water storage capacity to meet growing demands in southeastern Colorado through the year 2040. Of the 40 alternatives that were studied, two are moving forward as a part of the PSOP - utilitizing the existing excess capacity in the federal Fryingpan-Arkansas Project and the enlargement of Pueblo and Turquoise Reservoirs. The size of the expansions will be determined during the study. . . 17