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G02622 . . fundamental issue lurns on the interpretation of Articlc III( c) of the 1922 Colorado River Compact. Article III(c) of the Compact addresses how the potential obligation to Mexico is met if there is a deficiency of water supply under the Compact's water allocation. The Compact states that if there is a deficiency of supply, the allocation to Mexico is borne equally by both Upper and Lower Basins. However, the Upper Basin States maintain that it is their".. .consistent position that because no such deficiency has been shown to exist, the Upper Basin has no obligation in this regard." The Upper Basin States are suggesting that a fonnal process must be initiated among the Seven Basin States to address these fundamental questions and issues. Additionally, the Upper Basin States believe that this is a state-to-state matter, and that all efforts should be made to avoid placing these questions in the federal courts, or being determined outright by the federal government's executive branch. Therefore the Upper Basin Stales are proposing a series of meetings to decide upon an appropriate process to address these issues. Finally, the Upper Basin States also sent a letter to Secretary of the Interior, Galc Norton, informing the Department of these issues and the proposed process to develop a resolution. The Upper Basin States letter states that the Secrelary's Office will be kept apprised of progress in the negotiations, and that the federal government will likely be brought into the discussions at some future point in time. Colorado River Environmenlal Activities Status of the Lower Colorado River MII/ti-Species Conservation Program (LCR MSCP) First, the Administrative Final Draft of the LCR MSCP Habitat Conservation Plan (HCP), Biological Assessment (BA), and Environmental Impact Statement and Environmental Impact Report (EISIEIR) have been completed and distributed. After a quick review, these documents will be finalized and submitted to the U.S. Fish and Wildlife Service (USFWS) to initiate its internal review leading to the issuance of the Biological Opinion and incidental take authorization permits for the non-federal participants. These documents include copies of all of the comments received on the review drafts of the documents, as well as responses to the comments and any appropriate changes to Ihe final documents. The process is still on track to meet the deadline for completion of the Program in late-2004, leading to the execution of the Record of Decision by the Secretary of the Interior in early-200S. Second, the federal and non-federal participants have been working diligently on the development of the LCR MSCP Implementing Agreement (IA). The IA describes the terms of the contract among all of the parties participating in the implementation of the long-term LCR MSCP. The IA integrates the terms and conditions of the HCP and the BA; addresses the terms under which future Section 7 consultations will occur; addresses the species covered by the LCR MSCP; describes the proposed adaptive management 6