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<br />7A - ATTACHMENT NO.3 <br />Saltworks Proposal- Water Group Summary Report (22 January 2010) Page 48 <br /> <br />to SWP water. The banked water would also be available to maintain flows <br />during the summer in the restored reach of the lower Kern River. <br /> <br />. KCWA paid $1 million to OWD and $6.4 million to Nickel for the water rights. <br /> <br />. As additional compensation, KCWA committed to deliver 10,000 AFY of <br />KCWA water to Nickel. That is the source of the water that is commonly <br />referred to as "Nickel water." OMS proposes to rely on Nickel water for the <br />Saltworks project. <br /> <br />For purposes of OMS's proposal, the "Nickel water" is the only "asset" in the <br />KCWAlOWD/Nickel agreement that is relevant. Rights to lower Kern River water, to <br />storage rights, or to other water assets are not relevant, because these assets were <br />conveyed to other entities. The "Nickel water" is not contingent on the availability or use <br />of any of these other assets. <br /> <br />The agreement refers to the 10,000 AFY as "Agency Transfer Water." The agreement <br />defines this water as "10,000 acre-feet of water annually, to be provided by the Agency <br />(Le., KCWA) to Nickel for delivery and sale to third parties from the California Aqueduct." <br />(~ 1.10.)5 KCWA committed to deliver this water at the "Tupman Turnout." The Tupman <br />Turnout connects KCWA's Cross-Valley Canal with the California Aqueduct. <br /> <br />The agreement provides that the "Agency Transfer Water" (as noted above, now <br />referred to as "Nickel water") may be sold or transferred at Nickel's "sole discretion." <br />(~4.9.) KCWA committed to cooperate with Nickel in marketing, negotiating and <br />consummating any sale or transfer of this water. KCWA also agreed to facilitate "the <br />approval, cooperation and assistance of DWR and the SWP Contractors in obtaining any <br />necessary approvals from regulatory agencies to effect such sales or transfers." (~4.9.) <br />The cost of regulatory approval (including CEQA compliance) is paid out of the sales <br />proceeds of the Nickel water. After such costs are paid, the net proceeds of any sales of <br />Nickel water are allocated as follows: 90 percent to Nickel, and 10 percent to KCWA. (~ <br />4.10.) <br /> <br />KCWA cited the Negative Declaration adopted for the restoration program to serve as <br />the CEQA document for the KCWAlOWD/Nickel agreement. As noted above, KCWA <br />had adopted the Negative Declaration on September 7,2000. The restoration program <br />encompassed a variety of activities. The activities included the delivery of 10,000 AFY <br />of water to Nickel to compensate Nickel for acquiring the lower Kern River rights. <br /> <br />Also on December 15,2000, KCWA approved Resolution 90-00. This resolution <br />declared that the 10,000 AFY to be delivered to Nickel under the agreement was <br />"surplus." KCWA adopted this resolution to comply with State law providing that KCWA <br />could not sell water outside its service area without first declaring the water to be <br />surplus. No challenge to this determination was filed. <br /> <br />As noted above, KCWA relied on the 2000 Negative Declaration to approve these <br />resolutions. One premise of KCWA's 2000 Negative Declaration is that historically <br />Nickel had exported out of the basin at least 10,000 AFY of lower Kern River water. <br /> <br />5 Paragraph references in this section refer to the KCWA/OWD/Nickel agreement. <br /> <br />41 <br />