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COOPERATIVE AGREEMENT

FOR PLATTE RIVER RESEARCH AND OTHER EFFORTS RELATING

TO ENDANGERED SPECIES HABITATS

ALONG THE CENTRAL PLATTE RIVER, NEBRASKA

ATTACHMENT II

WATER CONSERVATION/SUPPLY COMPONENT

COOPERATIVE AGREEMENT FOR PLATTE RIVER RESEARCH

AND OTHER EFFORTS RELATING TO ENDANGERED SPECIES HABITATS

ALONG THE CENTRAL PLATTE RIVER, NEBRASKA

ATTACHMENT II

WATER CONSERVATION/SUPPLY COMPONENT

I. GENERAL

To assist in meeting the instream flow objectives of a basin-wide Program and in keeping with the Milestones for the Cooperative Agreement, an incentive-based water conservation/supply component will be developed over the three-year period of the Cooperative Agreement for implementation in a Program. Such a water conservation/ supply component will require a plan that clearly identifies goals and time lines to conserve and supply water that would result in a quantifiable net water benefit for the target species (net reduction in shortage to target flows) to be applied to the overall water goals of the Program. Acceptable water conservation/supply practices, priorities and economic incentives will be developed by the Water Management Committee with approval of the Governance Committee and implemented in compliance with the applicable provisions of federal and state law as part of a Program.

The opportunities for water conservation/supply vary widely throughout the Platte River Basin depending on physical, legal, and institutional factors. For some regions, extensive information is already available on the effects of water conservation/supply alternatives on streamflows. In other areas, this information is being developed by state and local entities. The existing expertise of the states, and the fact that the implementation of water conservation/supply alternatives will require the cooperation of the states, make it appropriate for the signatories to the Cooperative Agreement to rely to the extent possible on information provided by the states and by DOI as water conservation/supply alternatives are identified and assessed for potential inclusion within a Program. This approach will ensure that available resources are used most efficiently and not wasted on the pursuit of alternatives that have little or no chance of success.

II. OBJECTIVES AND TARGETS

The overall objective of developing and implementing a water conservation/supply component for a Program, or the first increment of the proposed Program, is to produce annually on average at least 60,000 acre-feet of net hydrologic benefits in the associated habitats for the benefit of the target species.

III. ELEMENTS OF THE WATER CONSERVATION/SUPPLY COMPONENT

A. Reconnaissance Study

The Governance Committee will direct the Water Management Committee to develop a Scope of Work within a specified time period. The Scope of Work will guide the work of a hydrologic engineering consulting firm, which will conduct, in cooperation with the states and the Water Management Committee, a basin-wide reconnaissance study in the Platte River Basin to assess the potential for and make recommendations regarding the inclusion of water conservation and supply projects within the Program. Concurrent with development of the Scope of Work, each state and DOI will be invited to compile and assess any available information which may be helpful to the consultant in targeting its assessment to promising water conservation/supply opportunities in the basin. This information, to the degree it is made available to the Water Management Committee in a timely fashion, could also be used in focusing the Scope of Work on specific, unanswered questions regarding promising water conservation/supply opportunities in the basin. Once the Scope of Work is approved by the Governance Committee, the Water Management Committee will be directed to engage the services of a competent hydrologic engineering consulting firm through a competitive bid process.

The Reconnaissance Study, which will be completed in 12 to 18 months after execution of the Cooperative Agreement, will assess the opportunities for and the feasibility of incorporation of water conservation/supply alternatives within each of three regions in the Platte River Basin: the South Platte River Basin upstream from the Western Canal Diversion; the North Platte River Basin above Lake McConaughy; and the region below the Western Canal Diversion on the South Platte River and from Lake McConaughy to Grand Island in the North Platte and Platte River Basins. These assessments shall include cost-benefit analyses, analyses of impacts on groundwater and return flow, analyses of the gross amount of water conserved or supplied, and analyses of net water benefits provided at the associated habitats. Each assessment shall include a process that provides an opportunity for involvement by each state, the consultant, the public, and water conservation task forces as appropriate. Finally, the assessments of water conservation/supply alternatives shall consider the physical, legal, and institutional feasibility of the alternatives. The following alternative types of water conservation/supply projects shall be assessed:

potential modifications to surface water storage and delivery systems, taking into account seepage and any impacts to groundwater levels and return flows in the Platte River Basin;

incentives available to both surface and groundwater irrigators to improve on-farm efficiency of water use through such measures as improved measurement instrumentation, irrigation scheduling, and more efficient on-farm delivery systems;

incremental pricing and conservation credit for agricultural and municipal users;

education and information programs;

incentives for municipal conservation by individual water users;

reduction or retirement of consumptive uses on a willing-participant basis with compensation made to local governmental entities for third party and external impacts;

dry year leasing of water supplies from consumptive uses to a Program;

conjunctive management of surface and groundwater that achieves sustainable use of groundwater;

identification of demonstration projects;

additional surface water and/or groundwater reregulation opportunities involving reductions in diversion or pumping; and

incentives available to hydropower producers to provide water to a Program.

The assessment in each region shall result in recommendations regarding the inclusion of each of these alternative types of water conservation/supply projects, or other alternative types as may be identified for that region within a Program. Other assessments of or recommendations for water conservation/supply alternatives may be included for further consideration if and to the extent the Water Management Committee determines that a regional assessment has not adequately considered feasible alternatives.

In addition, the consultant shall develop as part of the Reconnaissance Study and in cooperation with the states and the Water Management Committee, a water budget for each region for use in helping to evaluate how other water related activities, including new accretions and depletions to the system, will affect streamflows down to and through the associated habitats. Further, the water budget should have the capacity for use in helping to evaluate how any proposed water conservation/supply measure influences the amount and timing of flows throughout the Platte River Basin. The budget should also have the capacity for use in helping to design and evaluate more specific methods of quantifying the net amount of water that will be saved or provided to the associated habitats by each proposed water conservation/supply measure. This information should be useable in any feasibility analyses that might be conducted on water conservation/supply measures and recommendations that emerge from the Reconnaissance Study.

Upon completion, the study will be submitted to the Governance Committee and Water Management Committee for evaluation. With guidance from the Governance Committee, the Water Management Committee will determine a process for the development of a Water Conservation/Supply Action Plan. This process may involve the use of the consulting firm retained to conduct the Reconnaissance Study, the initiation of a new competitive bid process to select another consulting firm, or other advisable measures.

B. Water Conservation/Supply Action Plan

Within 30 months of the signing of the Cooperative Agreement, the consultant will provide to the Governance Committee and the Water Management Committee a recommendation for a Water Conservation/Supply Action Plan incorporating water conservation/supply alternatives identified in the Reconnaissance Study which are feasible and consistent with attainment of the goals of the program. Measures included in the plan will be economically feasible and environmentally sound.

The Action Plan shall, at a minimum, identify:

specific projects and timetables for implementation of projects designed to achieve Program objectives. The recommended action plan will include a reasonable timetable for implementation of the alternatives necessary to achieve the objectives of the first increment of the proposed Program or any other agreed to Program. If that recommended timetable for project and program implementation would not be complete within the first nine years of a Program, the consultant shall explain why a longer time frame is needed. The Governance Committee will establish the timetable for implementation after reviewing such recommendations and after consulting with the Water Management Committee. The parties realize and agree that the benefits of the projects may not materialize until several years after implementation is initiated and completed;

monitoring and accounting methods to be used to assess the effectiveness of programs as they are implemented;

funding requirements;

institutional requirements/changes;

the rules concerning disposition of conserved water as it moves through the hydrologic system; and

methods, as appropriate, to compensate for any adverse impacts of Program water conservation/supply activities. It is agreed that payment of power interference charges is a potentially acceptable way of compensating for impacts to power generation.

C. Demonstration Projects

During the term of the Cooperative Agreement, demonstration projects such as those proposed by the Central Nebraska Regional Water Conservation Task Force may be implemented, with the water designated for wildlife benefits. Net reductions in shortage to target flows achieved during the term of the Cooperative Agreement by such demonstration projects shall be credited to the water conservation/supply objectives of the Program.

D. Storage of Conserved Water in the Environmental Account

Quantifiable net conserved water that is storable in Lake McConaughy or other storage facilities approved by the Governance Committee may be stored in any Environmental Account created pursuant to new licenses issued for FERC Projects Nos. 1417 and 1835 in Nebraska. Storable net conserved water is that portion of the quantifiable net water conserved which can be controlled such that it may be stored consistent with legal, regulatory and public safety restrictions.

It is an operational goal to coordinate upstream conservation activities so as to increase storage in the Environmental Account. It is recognized, however, that not all water conserved for environmental purposes will be storable in the Environmental Account, and that water need not be stored or storable to contribute toward Program objectives. The Water Management Committee, with the approval of the Governance Committee, shall develop protocols for determining what quantities of water are to be credited to the Environmental Account, and programs to verify that such water is actually storable.

E. Water Conservation/Supply Funding

During the period of the Cooperative Agreement, the signatories and other parties will fund conservation and water supply activities called for under the Milestones for the Cooperative Agreement, and any other such activities approved by the Governance Committee.

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