May 31, 2002 

VIA FACSIMILE AND E-MAIL

Michael J. Ryan 

U.S. Bureau of Reclamation 

Shasta Area Manager 

16349 Shasta Dam Boulevard 

Shasta Lake, CA 96019-8400 

 Re: Contractors’ Red-line of Reclamation 5/15-2002 Draft Contract

Dear Mr. Ryan: 

 Enclosed for your review and our discussion at the June 5, 2002 negotiating session is 

a red-line of Reclamation’s 5/15-2002 Draft Contract. The red-line was prepared jointly by 

those Settlement Contractors participating in the Basin-wide Water Management Plan 

process, including my client, Glenn-Colusa Irrigation District. Following is an explanation 

of the modifications that we propose. 

 1. The revisions to the title and preamble are to reflect the bi-lateral nature of the 

contracts in question and underscore the fact that these are Settlement Contracts. 

 2. First Recital: We believe that it is better to not “recite” matters that might be 

contentious. 

 3. Second and Fourth Recitals: We believe that there is no current dispute about 

whether the respective parties have a right to divert. The dispute, if any, revolves around the 

relative priority of the right. 

 4. Fifth Recital: The modifications focus on the history of the dispute that led to 

the Settlement Contract and corrects the mischaracterization of our right to Base Supply as 

being only permissive. 

 5. Sixth Recital: The modifications reference the current litigation and, again, 

conform the contract as being between parties with equal status. 

 6. Article 1.(a): The Base Supply is diverted as of right (and under the 

Contractors’ water rights), not with the permission of Reclamation. 
Michael J. Ryan 

May 31, 2002 

Page 2 

 7. Article 1.(b): Exhibit “D” should provide a description of the nature and 

extent (“categories”) of “Charges” being agreed to under the Settlement Contract. We, of 

course, do not object to paying Charges, but do not want an open-ended obligation. 

 8. We have corrected the contract’s references to numbers through use of words 

and numerals to reflect the modern usage of only numerals. 

 9. Article 1.(d)(2): We believe that the proposed modifications reflect the intent 

of the Parties. Development above Shasta (within the area-of-origin) would be junior to the 

Contractors but senior to Reclamation. 

 10. Article 2: We believe it important, where appropriate, to make distinctions 

between Project Water and the obligations that stem from the diversion and use of this water 

and Base Supply. We request clarification as to whether costs associated with the 

construction of Sites Reservoir could potentially fall within the definition of “construction 

costs of water supply works” in this Article. 

 11. Article 3(a): We believe that water rights obtained by the Settlement 

Contractors after the Settlement Contracts were executed should not be included in the 

Contract Total. An alternative might be to increase the Base Supply in Exhibit “A” to reflect 

this newly acquired water. It is also important that groundwater be excluded. 

 12. Article 3(b)(2): We have here deleted the provision for a new fee. We 

believe that the shifting of water, in fact, confers as much benefit on Reclamation as it does 

the Contractors. In any event, a further discussion of this issue would require some idea of 

what the fee being proposed would be. 

 13. Articles 3(d) and 3(e): We have modified the draft language to properly 

reflect the distinction between Project Water and Base Supply. 

 14. Article 3(f): We have modified this provision to reflect the expanded 

diversion season within most Contractors’ service areas. 

 15. Article 4: Again, we have merely modified the draft language to properly 

reflect the distinction between Project Water and Base Supply. What does Reclamation 

propose with respect to Colusa Basin Drain language? Do we need to define “non-Project 

Water”? It is used in several places but it is not defined. 

 16. Articles 5(a) and 5(b): We have no objection to discussing a reduction in noncritical years. We do, however, believe that compensation for these material concessions on 

our part is appropriate. We believe that it would be useful to include a new exhibit to the 

contract that explains, in detail, how the reduction provisions of Article 5(a) will be applied 
Michael J. Ryan 

May 31, 2002 

Page 3 

to each Contractor. We will also need to consider how this proposal will affect the ability to 

meet Phase 8 obligations. 

 17. Article 6 (new): We believe that a reference to integrated water management 

and Settlement Contractor/Reclamation Partnerships is important. 

 18. Article 7 (re-numbered1

): We have corrected the draft to reflect the 

agricultural use restrictions in the contract. (See Articles 7(b) and 8(a).) Some Settlement 

Contracts may need to have unique provisions with respect to M&I conversion. We have 

modified the language of Article 7(a) to clarify potential ambiguity. 

 19. Article 7(b): We, of course, recognize and have no problem with the 

requirement that we adhere to ESA and other requirements. In this regard, we believe it 

important that the Settlement Contract itself refer to the proper base-line for analysis. 

 20. Article 8(a): If we accept “take or pay,” then we cannot accept normal rate 

setting. In addition, take or pay seems to cut against the conservation and water use 

efficiency policies within the contract, CVPIA and RRA. 

 21. Article 8(b)(1): Again, we need a more specific idea and limit on what 

charges can be for. We need to define categories of acceptable Charges. 

 22. Article 8(d1) deleted: We are uncertain of the reason for (d1). We need 

further explanation of this proposed provision. 

 23. Article 8(e): The modification helps to clarify the purpose of this Article. 

 24. Article 8(h): The reason for the reference to the specific CVPIA provisions is 

not clear. We will need further explanation. 

 25. Article 9(a)(2): Again, the modification is to conform the Settlement Contract 

to its bi-lateral nature. 

 26. Article 9(b): We have re-written portions of the first proviso to create a 

process in which both parties are involved. The second proviso is simply not acceptable. If 

it is mandated and if it were accepted, we could not participate further in the Phase 8 process. 

 27. Article 10(e): The addition is for clarification. 

 28. Articles 10(f), 10(g) and 29: We understand that water conservation 

provisions need to be included within the Settlement Contract. However, over the years we 

 

1

 All references to Article numbers are to the numbers in the red-lined draft. 
Michael J. Ryan 

May 31, 2002 

Page 4 

have discussed with Reclamation, and Reclamation has agreed to, the development of 

regional criteria that acknowledge the unique nature of water use and re-use within the 

Sacramento Valley. Indeed, this was a specific, agreed-upon approach arrived at through the 

so-called “Garamendi Process.” We believe the mere insertion of standard San Joaquin 

Valley conservation language is back-sliding that does not advance the Basin-wide Water 

Management Program in which we all have been involved. We will shortly provide you with 

suggested language that better reflects the actual situation that exists within the Sacramento 

Valley. 

 29. Articles 18(a) and 18(b): As noted, the term “non-Project Water” is not 

defined. We made modifications that attempt to distinguish or clarify how Base Supply is to 

be treated. 

 30. Article 20: While it is appropriate for Contractors to consult with 

Reclamation with respect to the issues dealt with in this Article, it is not appropriate to obtain 

consent. Perhaps some distinction between the use of Base Supply and Project Water would 

be appropriate? 

 31. Article 21. As long as all of the obligations and burdens of each of the 

individual Contractors are assured, no further requirement should be required for approval. 

 Please do not hesitate to contact me if you have any questions or need additional 

information. 

 Very truly yours, 

 Stuart L. Somach 

 General Counsel 

 Glenn-Colusa Irrigation District 

SLS:sb 

Encl.

cc: J. Mark Atlas 

 Paul Bartkiewicz 

 William H. Baber, III 

 Kevin M. O’Brien 

 John Kenny 

 Marc E. Van Camp 

 Gary S. Nuss 

 James E. Turner 

 Dick Stevenson 

 Don Bultema 

 Andrew M. Hitchings 

 O.L. “Van” Tenney