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<br />. <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />states and Arizona expressed concern about the proposal, for much the same reasons as they were <br />concerned about the California water bank - the proposal would violate the Law of the River, would <br />erode the entitlements to use water within the stateS, and would lead to wholesale water marketing <br />interbasin. The states expressed a preference to seek ways to resolve the California and Nevada through <br />operational mechanisms sanctioned within the Law of the River. <br /> <br />Crises in Arizona - During this time, 1991-1992, Arizona faced some critical problems in the <br />operation of the Central Arizona Project. Due primarily to low agricultural demand for CAP water, <br />deliveries of CAP water dropped significantly in 1991. The debt load of agricultural districts obligated <br />to continue to pay for CAP water even though they were not receiving it caused some of these districts to <br />file for banlaupsey. At the same time, the Secretary of the Interior was preparing to declare the CAP <br />substantially complete, which would trigger additional payments and financial hardship. Finally, there <br />was a dispute between the Department of the Interior and the CA WCD as to the amount that would be <br />owed to the United States once the substantial completion declaration was made. <br /> <br />These problems forced Arizona to look for potential solutions. A task force appointed by the <br />Governor looked at opportunities to increase agricultural water use, and also considered the possibility of <br />marketing CAP water interstate. However, a subsequent report by the Arizona Department of Water <br />Resources and a subsequent report by the Governor's Task Force in 1993 rejected the idea of direct <br />interstate marketing of CAP water. The reports stated: <br /> <br />[A ]rizona faces considerable risks by pursuing a marketing agreement. If Arizona attempts to <br />market a share of its low priority CAP water, other parties will likely demand the right to market <br />their water, including currently unused water. Arizona may find that once this currently unused <br />water is marketed, its low priority supply is diminished and it no longer has any water to market. <br />If Arizona seeks to negotiate a change in the Law of the River that allows a direct marketing of <br />water, it may find, after the negotiations, that the state has lost more than it is willing and can <br />afford to give up." <br /> <br />Negotiations between Arizona and the Department of the Interior over the issue of the repayment <br />obligation of the CAWCD for the CAP eventually broke down in 1995. The matter went to, and is still <br />as of the date of this paper in, litigation. <br /> <br />Discussions on a Lower Basin Water Bank and Lower Basin Operations - In 1994, in the <br />context of renewed discussions among the seven basin states, Nevada proposed the formation of a <br />publically controIled water bank in the Lower Basin. The bank would collect and allocate unused and <br />voluntarily contributed water, "to assure a full aqueduct for [MWD], an effective end to the [CAP] <br />subordination, and a long term augmentation of the water supply of the Southern Nevada Water <br />Authority (starting with the transportation of appropriated Virgin River water in Lake Mead)." Nevada <br />proposed that the bank be operated by a commission made up of representatives of each of the three <br />Lower Division states. <br /> <br />The proposal was generally well received by the other states. In particular, the Upper Division <br />states felt the proposal was consistent with one of t]leir fundamental principles - that Lower Basin water <br /> <br />"Preliminary Draft, Governor's Central Arizona Project Advisory Committee, Marketing Colorado River <br />Water to California or Nevada Water Users, Arizona Department of Water Resources, April 21, 1993 and Final <br />Report and Reconunendations, Governor's Central Arizona Project Advisory Report, October 1993. <br />