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. . Assessment) for public review and comment. The comment period closed on August 18, 2004. The LCR MSCP Technical Contractors and lead agencies met in Santa Barbara to review the comments and determine initial responses. The non-federal LCR MSCP participants spent much of the last month in developing an appropriate interim interstate cost-sharing relationship associated with long-t~rm LCR MSCP implementation. These discussions revolved around the recent proposal of The Metropolitan Water District of Southern California, Southern Nevada Water Authority, and the Colorado River Commission of Nevada to underwrite a portion of the non-federal share. The proposal recognizes the federal/non-federal cost-share of SO/SO for long-term Program implementation of the LCR MSCP. It also recognizes that to fully fund the non-federal share California would contribute 50% of the non-federal share and Arizona and Nevada each would contribute 25% of the non-federal share. In order to ensure continuity of the Program as described in the draft documents, The Metropolitan Water District of Southern California, Southern Nevada Water Authority, and the Colorado River Commission of Nevada would underwrite the unfunded non- federal share (estimated to be $310 million) during the SO-year implementation period. For funding the non-federal share over the SO-year implementation period the funding has been separated into coverage for existing operations, 60%, and future activities, 40%. Califomia and Nevada will fully fund coverage for their existing operation; however, Arizona has indicated that, at this time, it can only fund 10%, which would increase to 15% within three years, its full share for existing operations. The non-federal parties who are paying less than their full share cost share will have coverage for their existing operations, but will not be able to implement future covered actions without additional funding. Those parties not fully funding their shares will have up to 10 years to decide to fully fund their share, and if they do, they will receive benefit of the mitigation provided by the LCR MSCP for their future covered actions. U those parties do not elect to fund their full cost share, the underwriters will be entitled to the benefits from mitigation credits associated with those future covered actions. The three states prepared a letter to Interior Secretary, Gale Norton, detailing the funding commitments and the proposed long-term funding structure for the non-federal share. The letter is intended to provide the Secretary, the U.S. Bureau of Reclamation (Reclamation), and the U.S. Fish and Wildlife Service (USFWS) with necessary funding assurances in order to complete the Program on schedule in late-2004. The funding assurances are also a necessary requirement for the USFWS to issue the ESA Section 10(a)(I)(B) incidental take authorization pursuant to the Habitat Conservation Plan element of the LCR MSCP. Included in the Board folder for your information is a copy of the letters to Secretary Norton from each of the three states. It should be pointed out that there is a significant amount of work that remains in order to complete the LCR MSCP in time for the expected signing of the Record of Decision by Secretary Norton in late December 2004 or early January 2005. Over the next few months there will need to be further discussions on the interstate and intrastate cost sharing so that the specific language and the arrangements can be incorporated into the implementation, governance, and related documents. The California agencies need to work with the California Department of Fish and Game so that the necessary CESA compliance is obtained concurrently with the federal ESA compliance. Comments that were received on the draft documents during the public review 6