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. . \ folder, has been released by Reclamation to the public, via a Federal Register notice. and made part of the DEIS on the Colorado River Interim Surplus Criteria. The public, through this notice, has been invited to comment on the seven states' proposal along with the other alternatives included in the DEIS. One major issue related to development of the interim surplus criteria still to be resolved is whether Reclamation, as part of its Endangered Species Act (ESA) compliance, must consider any effects of the proposal action on species in Mexico that are listed as endangered or threatened under the ESA. A white paper, prepared by the California attorneys addressing the subject was delivered to Mr. David Hayes. In response, Mr. Leshy, Solicitor for the DOl, has written a letter to Mr. Martinez, Commissioner of Reclamation, enumerating DOl's current position on the matter. In his response Mr Leshy states in August 14,2000, memorandum that "[t]his issue is complex, involving analysis of international treaties, domestic statutes and regulations, as well as the Supreme Court's 1964 Decree." He goes on to say: "I am in the process of analyzing this issue and discussing it with the Department of Justice and the Department of Commerce, as well as other agencies in Interior.... While we continue our internal discussions on this complex legal issue, consultation between Reclamation and agencies with consultation responsibility over the species involved (the U.S. Fish and Wildlife Service and the National Marine Fisheries Service) should continue. The continuation of consultation does not reflect any conclusion on our part that consultation is required, as a matter of law or regulation on any possible impact the adoption interim surplus guidelines may have on U.S.-listed species in Mexico. Rather, Reclamation's consultation on these effects should proceed with the express understanding that it may exceed what is required under applicable federal law and regulations and does not establish a legal or policy precedent." Inadvertent Overruns and Averaging Now that agreement among the Basin states on the proposed interim surplus guidelines has been reached, the focus ofthe Basin states' attention has turned to attempting to reach agreement on "inadvertent overruns" and "averaging." As you recall, both of these programs are a part of the California's Colorado River Water Use Plan, as well as, conditions precedent in the Quantification Settlement Agreement. To date, general agreement has been reached on the inadvertent overrun program and the technical aspects of the averaging program; however, some legal and policy questions are still outstanding regarding averaging. The California representatives are further looking at how averaging of priorities I and 2, under the 1931 Seven-Party Agreement, could be handled, taking into consideration comments received from the other Basin states. After paper has been revised a conference call will be set to further discuss the how the averaging program would work. Colorado River Endangered Species The Defenders of Wildlife versus Babbitt lawsuit was filed on June 28, 2000 in Washington, D.C. Communications between the States and water and power entities is continuing. The Lower Basin states are planning to file a petition to intervene. The Upper Basin states are not planning to petition to intervene at this time. The discussion of the Upper Basin states not to petition for intervention is troubling because extraterritorial issues with Mexico could have basin-wide impacts 4