1. Firming For Indian Settlements OVERVIEW OF WATER SETTLEMENT ELEMENTS

2. Firming For Indian Settlements Firming For Indian Settlements What Is “Firming?” Background Section 105 of Arizona Water Settlements Act (S.437) Un-contracted 65,647 of M&I priority water was relinquished for use in settlements in early versions of settlement State parties proposed compromise using firming of NIA concept Agreement reached on split responsibility between Fed and State.

3. Firming For Indian Settlements Firming For Indian Settlements “In the same manner” State perspective – firm only if NIA supply falls below target level Federal perspective – firm based on assumption that target amount should have been M&I priority.

4. Firming For Indian Settlements Firming For Indian Settlements Examples #1 – Full supply – no difference #2 – 33% shortfall State – no obligation Fed – 4,600 af obligation #3 – 50% shortfall State – no obligation Fed – 7,500 af obligation

5. Firming For Indian Settlements Firming For Indian Settlements Examples #4 – 90% shortfall State – 3,000 af obligation Fed – 13.600 af obligation #5 – 100% shortfall Both State and Fed – 15,000af obligation #6 – 20% M&I shortfall Both Fed and State – 11,250 af obligation

6. SOUTHSIDE REPLENISHMENT PROGRAM

7. STATE LEGISLATION REQUIRED Southside Protection Program must be enacted by Arizona Legislature in order for GRIC Settlement to take effect--minimum requirements: Establish the Protection Zones Establish Southside Replenishment Bank Provide export prohibitions Provide replenishment obligations of State Provide for enforcement of Program by ADWR Southside Replenishment Program

8. PROTECTION ZONES Western Protection Zones M&I Zone Industrial Zone Eastern Protection Zones North South Central Protection Zone Southside Replenishment Program

10. PROHIBITION ON UNDERGROUND WATER EXPORTATIONS No Exportation From A Protection Zone For A New Use No Exportation From A Protection Zone For Use In Excess Of The Highest Historic Non-irrigation Use In 1999, 2000 Or 2001 Southside Replenishment Program

11. SOUTHSIDE REPLENISHMENT BANK State To Deliver 1,000 af each year to Reservation for 15 Years create a 15,000 af Bank When Balance In Bank Falls Below 5,000 af, State Obligated To Replace The Balance To 5,000 af Southside Replenishment Program

12. STATE REPLENISHMENT OBLIGATION WESTERN ZONE The amount by which non-irrigation pumping in M&I Zone exceeds 2.0 af per acre The amount by which pumping for municipal purposes in Municipal Zone exceeds 2.0 af per acre Southside Replenishment Program

13. STATE REPLENISHMENT OBLIGATION EASTERN ZONE The amount by which non-irrigation pumping in the Eastern Zone North Zone exceeds 2.33 af per acre The amount by which non-irrigation pumping in the Eastern Zone South exceeds 2.33 af per acre Southside Replenishment Program

14. STATE REPLENISHMENT OBLIGATION ARIZONA WATER COMPANY In years before 2024, pumping in excess of 1,275 af/yr from Eastern Zone South transported to outside Eastern Zones After 2023, AWC shall replenish any such excess pumping AWC to assign to State unused CAP for AWC Coolidge system Southside Replenishment Program

15. STATE REPLENISHMENT OBLIGATION IRRIGATION PUMPING Pumping in excess of cumulative IGFR allotments under TMP Base Ag Conservation Program Western zones treated as a single zone Eastern zones treated as a single zone Imported water used for irrigation excluded Southside Replenishment Program

16. OPTIONS FOR REPLENISHMENT Debiting the Southside Replenishment Bank Direct Delivery Extinguishment of Long Term Credits In Western Zones, must be earned under state law within 5 years prior to extinguishment In Eastern Zones, must be earned under state law within 7 years prior to extinguishment Southside Replenishment Program

17. Firming For Indian Settlements SHORTAGESHARINGAGREEMENT

18. Firming For Indian Settlements Firming For Indian Settlements Shortage Sharing Agreement Background Shortage potential recognized Differences in methodology emerged as contracts were written New agreement in paragraph 8.16 of GRIC Settlement Non-Indian Ag priority Change from % basis to fixed volume Shortages shared on pro-rata basis

19. Firming For Indian Settlements Firming For Indian Settlements Shortage Sharing Agreement M&I/Indian Priorities Fixed maximum pools Change in M&I pool after2044 to reflect Cliff Dam replacement contract New agreement Neither side must reduce first – steps eliminated Formula will establish split for any value of CAP available supply Separate formulas to split shortage among like pool contractors

20. Firming For Indian Settlements WATER AVAILABILITY

21. Firming For Indian Settlements WATER AVAILABILITY Colorado River Operations Water Operation Model & Model Assumptions Calculation of Firming Requirements Estimated Firming Obligation Current Commitments

22. “Law of the River” 1922 Colorado River Compact 1929 Boulder Canyon Project Act 1944 Treaty with Mexico 1964 AZ v. CA Supreme Court Decree 1968 Colorado River Basin Project Act 1974 Minute 242 & Salinity Control Act 2000 Interim Surplus Guidelines Firming For Indian Settlements Colorado River Operations

23. 1922 Colorado River Compact Allocations Upper Basin – 7.5 MAF Lower Basin - 7.5 MAF CA – 4.4 MAF AZ – 2.8 MAF NV – 0.3 MAF AZ 50 KAF Upper Basin Lee Ferry MX – 1.5 MAF

24. Hoover Dam Parker Dam Imperial Dam

25. 1964 AZ v. CA Supreme Court Decree Charged the Secretary with determining “surplus”, “shortage”, “normal” flows Secretary enjoined from delivering more than 7.5MAF to Lower Basin during “normal water supply conditions” Provided for use of unused apportionment between Lower Basin states Firming For Indian Settlements Colorado River Operations

26. 1968 Colorado River Basin Project Act Requires the Secretary to develop coordinated long- range operating criteria for the operation of storage reservoirs in the Upper Basin and the Lower Basin. Requires the Secretary to develop criteria for determining normal, surplus and shortage conditions. Annual Operating Plan – annual declaration of supply conditions. Firming For Indian Settlements Colorado River Operations

27. Firming For Indian Settlements Water Operation Model Computer Model developed by US Bureau of Reclamation ADWR uses model output to identify the potential future water supply conditions and availability. ADWR quantifies the potential shortages - - representing the amount of water that will need to “firmed”

28. INFLOW LOWER BASIN STATES UPPER BASIN USES PROJECTING WATER SUPPIES EVAPORATION MEXICO 7.5MAF 1.5MAF NORMAL SUPPLY

29. INFLOW LOWER BASIN STATES UPPER BASIN USES PROJECTING WATER SUPPIES EVAPORATION MEXICO 8+ MAF 1.7MAF SURPLUS SUPPLY

30. Firming For Indian Settlements Model Assumptions Upper Basin Water Demand Build-Up Lake Mead Protect Levels (Shortage Strategy) Surplus Strategy (Interim Surplus Guidelines) AZ Water Demand – Shortage Strategy Operation of the Yuma Desalter Other (Hydrology, LB Water Demand, Mexican Surplus)

31. Firming For Indian Settlements Model Assumptions Upper Basin Water Demand Build-Up AWBA Study Commission Projections USBR Projections

32. 1000’ 895’ Normal (2.8 MAF) Begin Shortages (2.3 MAF) Shortage (2.3 MAF or less) Minimum Pool Surplus or Flood Control Releases Firming For Indian Settlements Firming For Indian Settlements Lake Mead Protect Levels

33. 1145’ (62% full) 1125’ (54% full) 1000’ (17%) 895’ / Full Domestic Surplus (2.8+ maf) / Partial Domestic Surplus (2.8+ maf) Normal (2.8 maf) Begin Shortages MWD of CA takes first 1 MAF of shortages to AZ Minimum Pool Surplus or Flood Control Releases Firming For Indian Settlements Firming For Indian Settlements Interim Surplus Guidelines

34. When the Sec. of DOI determines that insufficient water is available to deliver 7.5 MAF, then water will be delivered to: First priority – pre-1929 rights in order of priority (Pre-Hoover Dam/Boulder Canyon Project Act) Then, delivery to other pre-1968 contractors in CA up to 4.4 MAF, and similar contracts in other states. In Arizona, most of the contracts on the river are either pre-1929 or pre-1968. Then, post 1968 contracts, or the CAP and 165,000 acre-feet of use on the mainstream Firming For Indian Settlements Firming For Indian Settlements Arizona Water Rights

35. Firming For Indian Settlements Model Assumptions Water Demand – Priority 4 Users Shortage Strategy Mainstream & CAP CAP M&I Subcontractors & CAP Indian Contractors

36. Firming For Indian Settlements Model Assumptions Operation of the Yuma Desalter Early Start Date (2004) Delayed Start (2030)

37. Firming For Indian Settlements Model Assumptions Projections of CAP and Mainstream Water Use LOW SHORT Mainstream AG M&I & Indian Tribes AWBA Losses Increasing GRD

38. Firming For Indian Settlements Calculation of Firming Requirement Assumption ComponentScenario AScenario D Hydrology Start Year 1906 Starting Reservoir Levels Jan. 1, 2003 Yuma Desalinization Plant Begin Operation 2004Begin Operation 2030 Upper Basin Demands 4.8 MAF5.4 MAF Surplus Strategy 70RISG Shortage Strategy 80P100080P1083 Hydrology 100 Year Analysis (1906 – 2002) using 96 traces 100 Year Analysis (1906 – 2002) using 96 traces

39. Firming For Indian Settlements Estimated Firming Requirement Firming ComponentScenario AScenario D GRIC (15,000AF) NIA 6,00067,000 M&I 272,000533,000 TOTAL 278,000600,000 GRIC (15,000AF) + Unallocated (8,724AF) = 23,734 AF NIA 9,000120,000 M&I 430,000843,000 TOTAL 439,000963,000

40. Firming For Indian Settlements CURRENT COMMITMENTS FOR CAP WATER

41. Firming For Indian Settlements Current Commitments for CAP M&I Subcontractors Indian Contractors Agricultural Incentive Recharge CAGRD Obligation Others CAGRD Reserve AWBA Intrastate AWBA Interstate

42. Firming For Indian Settlements Current Commitments for CAP

44. Firming For Indian Settlements POTENTIAL OPTIONS

45. Payment In-Lieu of Damages Demand Reduction - Water conservation - Minimizing waste of all water supplies - Maximizing efficiency in indoor and outdoor watering - Encouraging reuse of water supplies - Forbearance/Land Fallowing Firming For Indian Settlements OPTIONS FOR NON- AWBA PARTICIPATION

46. On-Reservation Recharge & Recovery Off-Reservation Recharge/On- Reservation Recovery Off Reservation Recharge/Off- Reservation Recovery Lease/Exchange Recovery of Existing Credits Groundwater Transfers Various Combinations Firming For Indian Settlements OPTIONS FOR AWBA PARTICIPATION

47. Firming For Indian Settlements FUNDING AVAILABILITY

48. Firming For Indian Settlements FUNDING AVAILABILITY Estimated Cost Funding Sources Current Statutory Restrictions Historic Use

49. Firming For Indian Settlements FUNDING AVAILABILITY Cost to Meet Obligation Firming In-Lieu USF Southside Replenishment Bank Direct Delivery of Water

50. Firming For Indian Settlements Estimated Costs ComponentScenario AScenario D GRIC (15,000AF)278,000AF600,000AF In-Lieu$9,452,000$20,400,000 USF$18,626,000$40,200,000 GRIC (15,000AF) + Unallocated (8,724AF) = 23,734 AF 439,000AF963,000AF In-Lieu$14,926,000$32,742,000 USF$29,413,000$64,521,0000 Southside Replenishment Bank15,000 AF Delivery$900,000

51. Firming For Indian Settlements FUNDING AVAILABILITY General Fund Appropriation Source Limitations on Use Historic Income/Use

52. Firming For Indian Settlements FUNDING AVAILABILITY Ad-Valorem Tax Source Limitations on Use Historic Income/Use

53. Firming For Indian Settlements FUNDING AVAILABILITY Groundwater Withdrawal Fees Source Limitations on Use Historic Income/Use

54. Firming For Indian Settlements SUMMARY

55. What Do We Know Why and What the Firming Obligation means; What the Southside Replenishment Program requires; The range of modeling assumptions that can be used to project the volume of water needed to meet the firming obligation; Approximate range of firming obligation volume; Firming For Indian Settlements SUMMARY

56. What Do We Know The variety of methods that can be used to meet the firming obligation; Current cost of excess CAP water supplies and cost to recharge; Current funding sources available; and Current statutory authorities. Firming For Indian Settlements SUMMARY

57. Why AWBA?? AWBA has existing authority and has performed a similar role for M&I Existing Funding Authority - General Fund - Withdrawal Fees Can Integrate Needs Into AWBA Plan Firming For Indian Settlements SUMMARY

58. Form an AWBA Technical Advisory Committee to Develop Alternatives that Benefit the State and the Tribes. Firming For Indian Settlements RECOMMENDATION

59. Technical Advisory Committee Objectives Determine the modeling assumptions that are most appropriate to estimate the volume of water needed to meet the firming obligation; Determine the projections necessary to maintain or replenish the Southside Replenishment Bank; Develop options for meeting the firming obligations; Develop options to build the Southside Replenishment Bank; Firming For Indian Settlements RECOMMENDATION

60. Technical Advisory Committee Objectives Determine cost components for each of the firming options; Determine cost components to develop the Southside Replenishment Bank; Develop criteria for ranking the options; Determine the funding sources appropriate to finance the options; Firming For Indian Settlements RECOMMENDATION

61. Technical Advisory Committee Objectives Determine the necessary changes to statute to meet the obligations; and Determine the impacts to other AWBA functions. Firming For Indian Settlements RECOMMENDATION

62. Technical Advisory Committee Objectives Firming For Indian Settlements RECOMMENDATION Develop alternative approaches for the Authority to review in order to make a recommendation to the Director of the Department of Water Resources including the ranked options, the estimated costs, and an identification of changes to statute.

63. QUESTIONS??? Firming For Indian Settlements