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002H9 1.0 INTRODUCTION This report is prepared by Helton & Williamsen, P.C. on behalf of the Colorado River Water Conservation District (River District) and the Upper Gunnison River Water Conservancy District (Upper Gunnison District). On June 1, 2000, the United States of America, the Colorado State Engineer, the River District, and the Upper Gunnison District entered into an agreement entitled "Aspinall Unit Colorado River Storage Project - Agreement Among the United States of America, The Colorado State Engineer, The Colorado River Water Conservation District, and the Upper Gunnison River Water Conservancy District - For the Administration of Water Pursuant to the Subordination of Wayne N. Aspinall Unit Water Rights Within the Upper Gunnison River Basin". The above agreement (referred to in this report as the "Subordination Agreement") states in Paragraph 2 the following: The United States agrees to subordinate the Aspinall Unit Rights up to 10,000 af of annual water depletions in the Gunnison River Basin drainage between Crystal Dam and Morrow Point Dam, and 10,000 af of such depletions in the drainage between Blue Mesa Dam and Morrow Point Dam to the water users represented by the River District, and to subordinate the Aspinall Unit Rights to up to 40,000 af of annual water depletions in the drainage above Blue Mesa Dam to the water users represented by the Upper Gunnison District under conditions described in paragraph 5. By subordinating to the rights of such water users, the United States agrees that such water users may continue to divert when a call is placed on the Gunnison River by the United States under the Aspinall Rights, subject to the limits of the stated subordination in the separate drainages. The Subordination Agreement describes the type of uses that quantify under the depletion allowance in Paragraph 7 as follows: Water consumptively used under water rights benefiting from this Agreement and used within the Gunnison Basin through evapotranspiration, reservoir evaporation, irrigation, industrial, domestic and other beneficial uses shall be appropriate use of the Depletion Allowance. Water which is diverted and ultimately returns to the stream and then is available for use pursuant to the Aspinall Unit Rights shall not be considered a depletion and, therefore, not a use of the Depletion Allowance. As part of the Subordination Agreement, the River District and the Upper Gunnison District are required to submit a report describing the uses under the agreement. The initial report covering the period November 1, 1999 through October 31, 2000 was submitted on October 1, 2001. The reporting requirements for this second annual report covering the period November 1, 2000 to October 31, 2001 (2001 irrigation year) are oullined in Paragraph 9 of the Subordination Agreement as follows: