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) ) SCOPE OF SERVICES Task 1 - AssessinQ how criteria and principles for determinino LAWMA's replacement requirements and replacement credits mav chanqe in the future. The work in this task will include analysis of any rulings by the Special Master that are available and consultation with the State Engineer and his advisors. The assessment will include possible changes in volumes of replacement water as well as the timing of replacement water deliveries. LAWMA will be required al to make replacements based on the current year's pumping, b) to make replacements to Usable Stateline Flow based on the presumptive depletion and usability factors in the Amended Rules and Regulations and the Offset Account Resolution, and c) to have an annual limit on pumping based on the current year's replacement supply. There also is a possibility that replacement credits available from LAWMA's water rights may change with respect to Usable Stateline Flow based on testimony by Kansas experts in Kansas v. Colorado. Additionally, the Special Master indicated in his remarks to counsel during the hearing in Kansas v. Colorado that he thinks an account in John Martin Reservoir may be helpful in dealing with year-to-year variations in the annual replacements at the Stateline. This led to the negotiations between the states and the endorsement of the Offset Account Resolution. Task 2 . Assessino future replacement requirements and replacement credits from existinq sources over a ranoe of hvdrolooic conditions and estimatino shortaqes in replacement water. LAWMA's pumping depletions and replacement requirements can be expected to vary considerably both from year-to-year and within a particular year. Similarly, the replacement credits available under LAWMA's presently-held water rights will vary depending on hydrological conditions. The work in this task, therefore, will involve _ _ applying criteria obtained in Task 1 to pumping by LAWMA members to estimate the - pumping depletions, replacement requirements, and expected yields of LAWMA's existing replacement sources over a range of hydrologic conditions. These estimates will utilize the pumping estimates developed previously for Water District 67 for use in Kansas v. Colorado as well as those developed for individual LA WMA members since 1991. Task 3 - Identifvino and evaluatino options available to obtain additional replacement water and to reduce the pumpino bv LAWMA members. LAWMA's current plan is to use the proceeds from the sale of the X-V Ranch lands to purchase additional water rights. A shortfall will continue to exist, however, if the above-described criteria and principles are changed so as to increase LAWMA's overall replacement requirement. Several options appear to be available to LAWMA to obtain additional replacement water, and some opportunities may exist to reasonably reduce the replacement water requirements. Options involving organizational and payment structures will be evaluated by an economist specializing in rate structures. These options will be evaluated as part of this task, and will include the following: Outright purchase of additional water rights to cover the projected shortfall. In particular, the historical use of the Highland and Fort Bent Ditches will be evaluated. The level of detail will allow LAWMA to use the results in the adjudication of a plan for augmentation by the Water Court. Page 2