August 30, 2002 

Michael J. Ryan 

U.S. Bureau of Reclamation 

Shasta Area Manager 

16349 Shasta Dam Boulevard 

Shasta Lake, CA 96019-8400 

 Re: Settlement Contractors’ Proposed Language for Discussion at the 

September 11, 2002 Negotiating Session 

Dear Mr. Ryan: 

 In preparation for our September 11, 2002 negotiating session, I am enclosing 

various materials. These materials include the following: 

 1. An August 30, 2002 August 16, 2002, draft of the Settlement Contract. 

This draft includes and highlights revisions discussed during the August 14, 2002 

negotiating session. Shaded provisions are those tentatively agreed to during the 

August 14, 2002 negotiating session. 

 2. A red-lined proposal to resolve disputes over the last proposed (7/11/02) 

Article 3(c). As you know, the Settlement Contractors do not agree that the movement of 

base supply confers a “benefit” on the Settlement Contractors. In most cases sufficient 

natural flow exists within the Sacramento River to serve Settlement Contractors’ needs. 

Moreover, the Settlement Contractors believe that in those situations where base supply 

is shifted from spring months to October, the CVP is, in fact, benefited. Nonetheless, in 

order to break the deadlock, we propose a payment to Reclamation when water is shifted 

to October. The 10% figure within the proposal reflects the years in which natural flow 

might not otherwise be available for diversion by Settlement Contractors under their 

water rights. 

 3. A red-lined proposal to resolve the disputes with respect to Reclamation’s 

proposed water quality “re-opener.” Again, the Settlement Contractors believe that any 

provision that has the potential to reduce contract quantities is inconsistent with the basic 

settlement that had been reached forty years ago. Nonetheless, in order to break the 

deadlock on this issue, we have proposed a means by which Reclamation’s concerns 

about this issue and future CVP operations can be resolved. 

 4. The Settlement Contractors would also propose two forms of the contract 

as it addressees the take-or-pay provisions of Articles 8(a) and 9. The first would be 

where a Settlement Contractor would “take or pay” for 100% of its Project Water supply. 
Michael J. Ryan 

August 30, 2002 

Page 2 

In this case, a provision would be added to the water conservation articles of the 

Settlement Contract that would encourage contractors to take less than this full amount. 

Proposed language to be added to the water conservation provision of the Settlement 

Contract would be as follows: 

The Contractor may notify the Contracting Officer not later 

than February 15 [this date could be earlier if Reclamation 

believes that planning requires an earlier date] in any year, 

that it will not take all or a portion of it’s Project Water. In 

that event, Exhibit “A” will be modified, for that year, to 

reflect the notification and water will be delivered and sales 

will be charged based upon that modification. 

 The second form of contract would be the current Reclamation proposal for takeor-pay to apply to 75% of Project Water supply. This provision, of course, contains 

within it a substantial conservation incentive for contractors not to utilize in excess of 

75% of their Project Water supply. This second form of Articles 8(a) and 9 is preferred 

by most of the Settlement Contractors. 

 Finally, while the Settlement Contractors have reviewed, in general, your 

August 22, 2002 letter, we are not yet in a position to respond. We will, however, be able 

to address these issues during our September 11, 2002 negotiating session. 

 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: Kevin O’Brien 

 Mark Atlas 

 Paul Bartkiewicz 

 William Baber 

 John Kenny 

 Andrew Hitchings 

 Van Tenney