August 5, 2002 

Michael J. Ryan 

U.S. Bureau of Reclamation 

Shasta Area Manager 

16349 Shasta Dam Boulevard 

Shasta Lake, CA 96019-8400 

 Re: Comments – USBR 7/11-2002 Draft of Settlement Contract

Dear Mr. Ryan: 

 Representatives of the Contractors have had an opportunity to review the abovereferenced draft and to also consider the information obtained during our July 17, 2002 

negotiation session. Following are our comments/suggestions. 

 1. With the exception of the 6th Recital, the modifications/changes in the 

7/11-2002 Draft of the Settlement Contract (hereinafter “7/11 Draft”) through page 4, 

line 8, are acceptable. 

 2. As discussed, we believe that the substance of the “reservation of rights” 

provision is best dealt with in the context of the litigation with some type of crossreference, within the Settlement Contract, to the litigation documents. With this in mind, 

we would delete the 6th Recital. 

 3. Article 1(a) — We would add the word “Surface” before “water” in the 

definition of “Base Supply.” 

 4. A new Article 1(b) — We would add a definition to the Settlement 

Contract for “Basin-Wide Water Management Plan. A proposed definition is provided 

below: 
Michael J. Ryan 

August 5, 2002 

Page 2 

(b) “Basin-Wide Water Management Plan” shall mean the mutually 

agreeable basin-wide water management plan developed by the United 

States Bureau of Reclamation and various Contractors in the Sacramento 

River watershed in accordance with: (1) the agreement entitled 

“Memorandum of Understanding Between Named Sacramento River 

Settlement Contractors and the United States of America For the 

Preparation of Data in Aid of the Renewal of the Settlement Contracts,” as 

executed by the parties thereto in January 1997; and (2) the related 

agreement entitled “Cost Share Agreement Between Participating 

Sacramento River Settlement Contractors and the U.S. Bureau of 

Reclamation For Technical Studies in Preparation For Renewal of 

Settlement Contracts,” dated August 31, 1998. 

 5. Existing Article 1(b) — We agreed to modify the definition of “Charges” 

as follows: 

“Charges” shall mean the payment for Project Water that the Contractor is 

required to pay to the United States in addition to the “Rates” specified in 

this Contract. The Contracting Officer will, on an annual basis, determine 

the extent of these Charges. The type and amount of each Charge shall be 

specified in Exhibit D. 

 6. Existing Article 1(d)(2) — This article should be corrected to both reflect 

the Existing Contract language as well as current circumstances, as follows: 

 The second sentence and following of Article 1(d)(2) should be a new paragraph 

which refers to Articles 1(d)(2) and 1(d)(1). It should read as follows: 

For the purpose of determining a critical year, the computed inflow to 

Shasta Lake shall be performed in a manner that considers the extent of 

upstream development above Shasta Lake during the year in question, and 

shall be used as the full natural flow to Shasta Lake. In the event that 

major construction has occurred or occurs above Shasta Lake after 

September 1, 1963 and which has materially altered or alters the regimen 

of the stream systems contributing to Shasta Lake, the computed inflow to 

Shasta Lake used, to define a critical year, will be adjusted to eliminate the 

effect of such material alterations. . . . 

 7. Existing Article 1(l) — We would add the word “Surface” before the word 

“Water” in the definition of “Project Water.” 
Michael J. Ryan 

August 5, 2002 

Page 3 

 8. A new Article 1(q) — We would add a definition to the Settlement 

Contract of “Surface Water.” A proposed definition is provided below: 

(q) “Surface Water” shall mean only those waters that are subject to 

appropriation as surface water under California law. 

I believe that this new definition of “Surface Water” and the modifications to the 

definition of “Base Supply” and “Project Water” are consistent with our discussions 

during the July 17, 2002 negotiating session. 

 9. We agree to the provisions of Article 1 that I have not otherwise 

discussed. 

 10. Article 2 — We agree to the Article 2, 7/11 Draft language. 

 11. Article 3 — We propose the following modifications to Article 3(b): 

 (b) The Contractor may have acquired rights to divert water from 

the Sacramento River during the period April through October, which that

were obtained after the date of execution of the Existing Contract, or the 

Contractor may acquire such rights in the future. All diversions made 

from the Sacramento River, pursuant to such rights, during the period 

April through October, shall not be considered a part of the quantity of 

Base Supply and Project Water specified in Exhibit A Contract Total; 

Provided, that the quantities diverted pursuant to the above rights shall be 

identified on the schedule submitted pursuant to Article 3(c) below. 

 We assume that this “after acquired water” can be scheduled prior to “Project 

Water.” 

 12. With respect to Article 3(c), payment provision, we are attempting to 

schedule a technical session to discuss the question of benefits. We also have asked for 

an example of how the provision would operate. We assume that a shift of water from, 

for example, October to April could result in a benefit to CVP operations and that this 

potential benefit will be accounted for when considering claimed impacts. (We note 

parenthetically that the provisions of Article 3(c)(2) should be deleted in any event. 

From a practical standpoint, in many cases, neither the Contractor nor Reclamation is 

aware of “excess diversions” until after they have occurred.) 
Michael J. Ryan 

August 5, 2002 

Page 4 

 13. The first sentence of Article 3(c) should be revised to read: 

 Before April 1 and before the first day of each month thereafter when a 

revision is needed, the Contractor will submit a written schedule to the 

Contracting Officer indicating the Contract Total to be diverted by the 

Contractor during each month under this Settlement Contract. 

 14. Article 3(e) is still under discussion. We have asked that the proposed 

language be clarified by deleting the word “guidelines.” We have also asked that the 

language be modified to provide that Reclamation’s “consent” not be “unreasonably 

withheld” and that it be “timely.” In this regard, we suggest a time within which 

Reclamation will complete its review, or the proposed transfer is deemed approved. We 

have further requested that Article 3(e)(2) should stand on its own merits; that is, 

Reclamation’s “consent” not involve a determination of “compliance” with the matters 

dealt with in Article 3(e)(2). We also believe that it would be helpful to add language 

that provides that movement of water pursuant to the Basin Wide Water Management 

Plan is not a transfer. 

 15. I believe that we agreed that the language on page 12, line 17, of the 7/11 

Draft should be modified to read as follows: “. . . Settlement Contract for surface 

irrigation or underground storage for the benefit of the lands shown on . . . .” Assuming 

this is the case, we agree with the language of Article 4. 

 16. We agree with the language of Article 5. 

 17. With the understanding that language cross-referencing other related 

agreements will be added to individual Settlement Contracts, as appropriate, we agree 

with the language in Article 6. 

 18. We propose the addition of the following language prior to the last 

sentence in Article 7(b). 

 The Existing Contract, which evidences in excess of 40 years of 

diversions, for agricultural uses, of the quantities of water provided for in 

Article 3, and the underlying water rights of the Contractor will be 

considered in developing an appropriate base-line for the Biological 

Assessment prepared pursuant to the Endangered Species Act, and in any 

other needed environmental review. 
Michael J. Ryan 

August 5, 2002 

Page 5 

 19. With respect to the “take-or-pay” issues that are addressed in Article 8, we 

propose the addition of the following concept prior to the last sentence in Article 8(a): 

 The Contractor may notify the Contracting Officer not later than 

[DATE] , in any year, that it will not take all or a 

portion of its Project Water. In that event, the amounts of Project Water 

on Exhibit “A” will be modified to reflect that notification and Rates and 

Charges will be imposed based upon that modification. The modification 

will be for a period of years with an option on the part of the 

Contractor to return to the full Exhibit A amounts of Project Water 

provided for in this Settlement Contract at the end of this period. 

 20. As we discussed during the July 17, 2002 negotiating session, we believe 

that what is dealt with in the 7/11 Draft Article 9(b) language at page 22, lines 11-21, was 

negotiated and dealt with as part of the preceding proviso and we are not willing to open 

that issue for re-negotiation. To do so would be to re-evaluate and re-balance the 

fundamental risk assessment that was undertaken 40 years ago. 

 21. Articles 10 and 29 — I have attached what we understand has been agreed 

to with respect to language for these articles. 

 22. We would propose modifying Article 20, as follows: 

 Delete the phrase “of Place of Use” from the heading. 

19 20. (a) Unless the written consent of the United States is first 

obtained consulted no change shall be made in the place of water use 

shown on Exhibit B. 

(b a) While this contract Settlement Contract is in effect, no 

change shall be made in the area of the Contractor as shown on its Exhibit 

B, by inclusion or exclusion annexation or detachment of lands, by 

dissolution, consolidation, or merger or otherwise, except upon unless the 

Contracting Officer’s written assent thereto Officer is first consulted. 

Such consent will not be unreasonably withheld and will be provided in a 

timely manner. [There may need to be Contractor specific language 

added.] 

(c b) In the event lands are annexed to or excluded detached from 

the area of the Contractor, as provided herein, the quantity of Project 

Water to be diverted may be increased or decreased, as may be 

appropriate, pursuant to a supplemental agreement to be executed in 

respect thereto. 

 23. We agree to the balance of the 7/11 Draft. 
Michael J. Ryan 

August 5, 2002 

Page 6 

 I assume that we will focus on the remaining issues in disagreement during our 

August 14, 2002 negotiating session. I would also like to confirm that we, in fact, have 

“agreement” on the other provisions of the Settlement Contract. In this context, any final 

agreement on the provisions of the renewal Settlement Contracts will require individual 

Settlement Contractor approval. 

 Very truly yours, 

 Stuart L. Somach 

 General Counsel 

 Glenn-Colusa Irrigation District 

SLS:sb 

Encl. 

cc: J. Mark Atlas 

 Kevin M. O’Brien 

 Paul Bartkiewicz 

 William H. Baber 

 John Kenny 

 David J. Guy 

 Gary Nuss 

 Marc Van Camp 

 O.L. “Van” Tenney 
New Articles 10 & 29 

As Modified 7/17/02 

R.O. Draft 05/15-2002 

SRSC Draft 05/22/02 

SRSC Draft 05/31/02 

R.O Draft 6/21/02 

SRSC Draft 7/9/02 

Revision Agreed to During 

 7/17/02 Negotiating Session 

 (Drafted 8/4/02) 

MEASUREMENT OF WATER

10. (a) All water diverted by the Contractor from Sacramento River will be 

diverted at the existing point or points of diversion shown on Exhibit A or at such other 

points as may be mutually agreed upon in writing by the Contracting Officer and the 

Contractor. 

(b) All water diverted from the Sacramento River pursuant to this Contract 

will be measured or caused to be measured by the United States at each point of diversion 

with existing equipment or equipment to be installed, operated, and maintained by the 

United States, and/or others, under contract with and at the option of the United States. 

The equipment and methods used to make such measurement shall be in accordance with 

sound engineering practices. Upon request of the Contractor, the accuracy of such 

measurements will be investigated by the Contracting Officer and any errors appearing 

therein will be corrected. 

(c) The right of ingress to and egress from all points of diversion is hereby 

granted to all authorized employees of the United States. The Contractor also hereby 

grants to the United States the right to install, operate, maintain and replace such 

Deleted: SRSC Proposed Revisions to 
Revision Agreed to During 

 7/17/02 Negotiating Session 

 (Drafted 8/4/02) 

 8 

equipment on diversion or carriage facilities at each point of diversion as the Contracting 

Officer deems necessary. 

(d) The Contractor shall not modify, alter, remove, or replace diversion 

facilities or do any other act which would alter the effectiveness or accuracy of the 

measuring equipment installed by the United States or its representatives unless and until 

the Contracting Officer has been notified with due diligence and has been given an 

opportunity to modify such measuring equipment in such manner as may be necessary or 

appropriate. In the event of an emergency the Contractor shall notify the United States 

within a reasonable time thereafter as to the existence of the emergency and the nature 

and extent of such modification, alteration, removal, or replacement of diversion 

facilities. 

(e) The Contractor shall pay the United States for the costs to repair, relocate, 

or replace measurement equipment when the Contractor modifies, alters, removes, or 

replaces diversion or carriage facilities. 

(f) Contractor and Contracting Officer shall develop a mutually agreeable 

surface water delivery water measurement program which shall be implemented by 

Contractor, and such measurement program shall be consistent with the conservation and 

efficiency criteria evaluating water conservation plans as provided in Article 29(a). 

(g) All new surface water delivery systems installed within the lands 

delineated on Exhibit B after the effective date of this Contract shall also comply with the 

measurement provisions described in this Article. 

********************************************************* 

Deleted: (f) (Contractor Specific) By 

__________________[DATE] ________, 

the Contractor shall ensure that, unless 

the Contractor establishes an alternative 

measurement program satisfactory to the 

Contracting Officer, all surface water 

delivered for irrigation purposes on the 

lands delineated on Exhibit B is measured 

at each agricultural turnout. The water 

measuring devices or water measuring 

methods of comparable effectiveness 

must be acceptable to the Contracting 

Officer. The Contractor shall be 

responsible for installing, operating, and 

maintaining and repairing all such 

measuring devices and implementing all 

such water measuring methods at no cost 

to the United States. The Contractor shall 

inform the Contracting Officer in writing 

by April 30 of each Year of the monthly 

volume of surface water delivered to the 

lands delineated on Exhibit B during the 

previous Year. This information will be 

used by Reclamation to satisfy the water 

measurement requirements of the 

Contractor’s water conservation plan, as 

set forth in Article 29 of this Contract.¶
Revision Agreed to During 

 7/17/02 Negotiating Session 

 (Drafted 8/4/02) 

 9 

WATER CONSERVATION

29. (a) Prior to the diversion of Project Water, the Contractor shall be 

implementing an effective water conservation and efficiency program based on the 

Basin-Wide Water Management Plan and/or Contractor's water conservation plan that 

has been determined by the Contracting Officer to meet the conservation and efficiency 

criteria for evaluating water conservation plans established under Federal law. The water 

conservation and efficiency program shall contain definite water conservation objectives, 

appropriate economically feasible water conservation measures, and time schedules for 

meeting those objectives. Continued diversion of Project Water pursuant to this Contract 

shall be contingent upon the Contractor’s continued implementation of such water 

conservation program. In the event the Contractor's water conservation plan or any 

revised water conservation plan completed pursuant to subdivision (c) of Article 29 of 

this Contract have not yet been determined by the Contracting Officer to meet such 

criteria, due to circumstances which the Contracting Officer determines are beyond the 

control of the Contractor, Project Water deliveries shall be made under this Contract so 

long as the Contractor diligently works with the Contracting Officer to obtain such 

determination at the earliest practicable date, and thereafter the Contractor immediately 

begins implementing its water conservation and efficiency program in accordance with 

the time schedules therein. 

(b) The Contractor shall submit to the Contracting Officer a report on the 

status of its implementation of the water conservation plan on the reporting dates 

specified in the then existing conservation and efficiency criteria established under 

Federal law. 
Revision Agreed to During 

 7/17/02 Negotiating Session 

 (Drafted 8/4/02) 

 10 

(c) At five (5)-year intervals, the Contractor shall revise its water 

conservation plan to reflect the then current conservation and efficiency criteria for 

evaluating water conservation plans established under Federal law and submit such 

revised water management plan to the Contracting Officer for review and evaluation. 

The Contracting Officer will then determine if the water conservation plan meets 

Reclamation’s then current conservation and efficiency criteria for evaluating water 

conservation plans established under Federal law. 

(d) If the Contractor is engaged in direct ground-water recharge, such activity 

shall be described in the Contractor’s water conservation plan. 

[Add definition of “Basin-Wide Water Management Plan” as new Article 1(b).]