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<br />5. He recognized the concerns of the six states over surplus top-water banking proposals, and
<br />stated he would defer consideration of top-water banking proposals.
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<br />The Lower Basin Banking Regulations - Shortly after the Secretary's speech, the Department
<br />of the Interior published proposed rules for the "offstream storage of Colorado River water and intestate
<br />redemption of storage credits in the Lower Division States" - Lower Basin water banking regulations."
<br />Essentially, the proposed rule would provide a framework and authority for the implementation of the
<br />interstate aspects of the Arizona Groundwater Banking regulations, primarily between Arizona and
<br />Nevada. Under the regulations, Arizona would store to Nevada's account surplus or unused Nevada
<br />entitlement. In later years, Arizona would then forego the use of Colorado River water to Nevada's
<br />credit, and would take the stored groundwater in exchange, under the authority of Article II(B)(6) of the
<br />decree in Arizona v. California.
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<br />Although the states supported the regulations as a small but important step in achieving greater
<br />flexibility under the Law of the River, they have not yet been adopted. They remain hung up on a
<br />dispute between Interior and the state of Arizona over whether a separate federal contract is required for
<br />contractors to receive and deliver water under the regulations.
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<br />The California 4.4 Plan - Following the six state letter and the Secretary's speech, continued
<br />discussions among the state representatives and among California agency representatives resulted in the
<br />development of a draft "California 4.4 Plan." The plan was designed to respond directly to the concerns
<br />of the states and the Secretary, by articulating a water budget, timetable and program to reduce total
<br />California water use to 4.4 maf. The Plan contained components on conservation, non-firm transfer,
<br />accounting, administration, overrun accounting, credit for unmeasured return flows, reasonable and
<br />beneficial use, seepage recovery, settlement of the San Luis Rey claims, conjunctive use of groundwater,
<br />desalinization of drainage water, Salton Sea impacts, Colorado River impacts, surplus water criteria,
<br />Lake Mead water banking, and use of the Arizona groundwater bank.
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<br />However, there were many unresolved issues. First, the plan did not deal with present perfected
<br />rights within California's 4.4 maf/yr basic apportionment. These rights include Indian and non-Indian
<br />claims totaling about 85,000 af/yr. Second, the transfers identified in the Plan (referred to as "core
<br />transfers"), totaled only about 600,000 af/yr, about 200,000 af/yr short of that needed for California to
<br />get down to 4.4 maf/yr. Third, perhaps as a result of this shortfall, the Plan was heavily reliant on
<br />surplus operations and Lake Mead water banking -- the very issues that precipitated the six-state letter of
<br />concern in 1996. Fourth, the plan did not have a schedule for implementation.
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<br />Finally, California agencies had not reached agreement on many fundamental issues necessary to
<br />implement core transfers California agencies. Under the leadership of David Kennedy, director of the
<br />California Department of Water Resources, the agencies began working on three "Iynchpin" issues: I)
<br />SDCW A and Met had to finalize an agreement to wheel water conserved under the SDCW AlIID
<br />agreement through the Colorado River Aqueduct; 2) lID and Coachella had to agree on the relative
<br />quantification of their entitlements within California's third priority; and 3) implementing surplus and
<br />shortage criteria on the Colorado River was identified as a critical component of establishing a "soft
<br />landing" to 4.4. These clearly were complex issues. Therefore, although a start, California was still a
<br />significant distance from having a plan that was ready to be implemented.
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<br />"Federal Register, Vol. 62, No. 250, p. 68492, December 31,1997.
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