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I I I I I I I I I I I I I I n00473 Nevada Comments on Proposed OlTstream Storage Rule April 3, 1998 At the public meeting on March 27, 1998, Reclamation representatives invited us to submit language to remove any doubt that the Secretary will make an enforceable contractual commitment to release intentionally created unused apportionment. Our attached version of the rule, at section 41~.3(f), provides express language to address this concern. C. Authorized entity The proposed rule requires that an "authorized entity" be "expressly authorized" to engage in anyone offour specified acts, pursuant to "applicable laws" of the relevant Lower Division State. If the phrase "expressly authorized" were interpreted to refer narrowly to authorization by state legislation that expressly mentions interstate banking, intentionally created unused apportionment, or storage credits, the Arizona Water Banking Authority would qualifY, but the Southern Nevada Water Authority and the Metropolitan Water District arguably might not. At the same time, we recognize Arizona's view that - at least in Arizona - prospective state legislative authorization should be required before an entity may engage in the Storing State side of this type of transaction, particularly before unused state apportionment may be intentionally created for release to another state. Arizona has enacted such legislation, specifically empowering the A WBA in this regard. We suggest that a workable resolution of these differing considerations would be for the final rule to split the definition of "authorized entity" as between Storing States and Consuming States. This approach would retain as the test for qualification as an authorized entity the proposed rule's "expressly authorized" fonnulation for an entity in a Storing State but merely require that an authorized entity in a Consuming State "have the power" to enter into Interstate Storage Agreements under that state's law. (See our proposed section 414.2, definition of "authorized entity"). While this approach unquestionably would qualifY both the Southern Nevada Water Authority and Metropolitan as authorized entities for Consuming State purposes, at the March 27 public meeting it was correctly noted that under this fonnulation, as well as the proposed rule, it may be debatable whether any California or Nevada entity could qualifY as an authorized entity for Storing State purposes. It also seems questionable whether, for the foreseeable future, an entity in either California or Nevada will actually seek to store water for use in the other State (unlike Arizona, neither California nor Nevada has water to spare). If; and when, conditions change and such a proposal is advanced, the proponent then will have to decide whether to seek a change in the regulation or enactment of state law. 4 *210155.4