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.' . the Elkhead Reservoir Enlargement so long as the water is used for Recovery Program purposes. In the event the water is no longer needed for Recovery Program purposes, the CWCB may use or dispose of the water right and easement subject to the terms of the Acquisition Agreement The second component of this acquisition involves the SUBLEASE of 2,000 AF of water from the Elkhead Reservoir Enlargement for a period of 20 years (the "Short Term Water Supply") for the benefit of endangered native fish species in the Yampa River. The initial lease will be between the River District and Reclamation and will provide up to 2,000 AF of additional water for the Short-Term Water Supply, The Lease will be implemented through annual contracts with the River District, and water will be released on an "as-needed" basis, Pursuant to the terms of the Lease, the Bureau will pay the River District for any water leased from the Short-Term Water Supply. Reclamation, on behalf of the Service, will sublease, at no cost to the CWCB, all of its right, title and interest in the water it leases annually from the River District for use by CWCB to monitor and protect to and through the Critical Habitat Reach of the Yampa River. The CWCB will have no financial obligation with regard to the Short-Term Water Supply or the Lease, The Acquisition Agreement describes the procedure for establishing the annual schedule for releasing water, and requires the CWCB to take such action as may be required to fully exercise the conveyed water right and to coordinate, monitor and protect releases of water to and through the Critical Habitat Reach, The agreement also incorporates the provision from the 1993 Enforcement Agreement which requires the Service (through the Recovery Program) to install operate and maintain any stream gages required to ensure water releases are delivered to and through the Critical Habitat Reach of the Yampa River. Water Acquisition Procedure . The Acquisition Agreement between the CWCB, River District, U.S. Fish and Wildlife Service and Reclamation was presented to the Board for initial consideration at its September 2004 Board Meeting, Staff provided notice of the proposed acquisition to all persons included on the appropriate ISF Subscription Mailing Lists pursuant to Rule 6i of the ISF Rules, and staff requested recommendations from the Division of Wildlife, the Division of Parks and Outdoor Recreation, the U.S. Department of Agriculture and the U.S. Department of Interior, pursuant to statute, Staff received a letter from the Division of Wildlife supporting the proposed acquisition (attached), To date, no other comments or recommendations have been received, The September 2004 Report includes the proposed Acquisition Agreement as well as technical information about the water rights, flow requirements for endangered fish, and other factors for the Board to consider in reviewing the proposed acquisition, The ISF Rules require the Board to evaluate the "appropriateness" of the acquisition and determine how best to utilize the acquired water rights to preserve or improve the natural environment In taking final action on the proposed acquisition, the Board may "acquire, acquire with limitations, or reject the proposed acquisition". Discussion The proposed agreements have been approved by the River District Board, but have not yet been approved by the federal agencies. The Solicitor's Office has reviewed the agreements and concluded that the federal government cannot agree to the indemnification language included in the Acquisition Agreement CWCB staff and staff from the State Attorney General's Office have been working with the Solicitor's Office to develop mutually acceptable language and are hopeful that this issue will soon be resolved, Therefore, at this point, staff is recommending that the Board's approval of the proposed Acquisition Agreement be contingent upon resolution of the indemnification language issue with the Solicitor's Office, . 3