Statement For San Luis Rey Indian Water Authority

I. Background.

Under the San Luis Rey Indian Water Settlement Act, the federal government is required to provide 16,000 acre feet of water for use on the 5 Indian reservations (La Jolla, Rincon, San Pasqual, Pauma and Pala), the City of Escondido and the Vista Irrigation District. The source of that water is the savings produced by projects to line portions of two large earthen canals that convey water from the Colorado River to the Imperial and Coachella Valleys in Southern California, where it is used primarily for irrigation.

II. The Three Agreements.

Three agreements are needed to make this Colorado River water available for the 5 reservations and for the San Luis Rey settlement. All three agreements were signed by the United States, the five Indian Bands, the San Luis Rey Indian Water Authority, the City of Escondido, the Vista Irrigation District, and other essential parties on October 10, 2003 in Los Angeles. After that they were formally celebrated in ceremonies in Las Vegas on December 10-12, 2003.

A. The Allocation Agreement.

The first document, known as the Allocation Agreement, provides for the division of the water saved by lining portions of the All-American Canal and its Coachella Branch. The San Luis Rey Settlement Parties annually receive 16,000 acre feet of that conserved water. Most of the remaining conserved water, approximately 77,000 acre feet per year, is allocated to the San Diego County Water Authority. The San Luis Rey Settlement Parties are entitled to the first 16,000 acre feet conserved by the two projects for as long as the projects save water. The cost for the two lining projects, estimated to be more than $200 million, is borne by the State of California. The Agreement also provides for the payment of the cost of operating and maintaining the two projects, for the resolution of any disputes that may arise and other necessary details.

B. Water Delivery Agreement with Metropolitan Water District of Southern California.

In order for the Colorado River water conserved by the two lining projects to be furnished to the 5 Indian Reservations, Escondido and Vista, it has to be conveyed hundreds of miles from Lake Havasu (which is located on the border between California and Arizona) to northern San Diego County. The Metropolitan Water District of Southern California (Metropolitan) owns and operates facilities that store, treat and convey Colorado River water from Lake Havasu to northern San Diego County.

Under the Water Delivery Agreement, the federal government furnishes the water conserved by the two lining projects to Metropolitan on the Colorado River at Lake Havasu. Metropolitan agrees to furnish an equivalent amount at the terminus of its facilities in northern San Diego County, just north of the San Luis Rey River. Metropolitan gets paid for the use of its facilities at a heavily discounted rate that increases annually at the low inflation rate of 1.5%. The Bands have the right to build facilities to divert their treated or untreated water from Metropolitan's pipelines for use on their reservations.

C. Water Conveyance Agreement with San Diego County Water Authority.

The third agreement is with the San Diego County Water Authority (SDCWA). SDCWA owns and operates several pipelines that convey water from Metropolitan's facilities south along the I-15 corridor to San Diego and to other cities and water districts in San Diego County.

Under the Water Conveyance Agreement, the federal government, the 5 Bands and Escondido and Vista are able to use SDCWA's facilities to deliver their water to the 5 reservations and to Escondido's and Vista's service areas. SDCWA also gets paid for the use of its facilities at discounted rates that increase annually at the low inflation rate of 1.5%. The Bands have the right to build facilities to divert their treated or untreated water from SDCWA's pipelines for use on their reservations. Alternatively, Bands may negotiate with other water districts for the use of their existing facilities to convey their water to their reservations.

Any water that is not needed for use by the Bands, either directly or indirectly, will be provided to Escondido and Vista. Escondido and Vista will pay the Bands for that water at rates that are substantially higher than what it costs the Bands to deliver the water. Those revenues will be used by the Bands for economic development.