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Section 3
                                                                                         Water Quality Conditions

                 The transfer of the above amount reduced OVP Overlying rights to 1,218.46 ac-ft/yr for 2018.  In
                 the future OVPs rights will remain at this level or adjusted down as additional rights are transferred
                 to YVWD.  Starting in 2018, YVWD is free to use its Appropriative right by either pumping from the
                 basin, transfering to other Appropriators, or adding to its storage account.  Copies of the letters
                 sent by YVWD in CY 2018 notifying the Beaumont Basin Watermaster of the above transfers are
                 included in Appendix E.


                 3.4.3  Allocation of Unused Overlying Water
                 Section 7.8 of the Rules and Regulations, adopted on September 9, 2008, by Watermaster,
                 outlines the process for distributing the volume of adjudicated water not produced by the
                 Overlying Parties to the Appropriators. Under this section, if an Overlying Party produces less
                 than five times of their share of the Safe Yield in any five-year period, the quantity of
                 groundwater not produced by that Overlying Party shall be made available for allocation to the
                 Appropriators. Transferring of unused production from Overlying Users does not diminish their
                 legal right to produce in subsequent years.

                 Since the inception of the Judgment, transfers of unused production by Overlying Users has
                 been made on a fiscal year basis coinciding with the preparation of the annual report.
                 Preparing the annual report on a calendar year basis required that the transfers of unused
                 production also be made on the same basis. Based on the five-year format used in the Rules
                 and Regulations, transfers to the Appropriator Parties for CY 2018 were based on unused
                 production from Overlying Users in CY 2013. This required the recalculation of Overlying
                 Users production, back to July 2003, on a calendar year basis. Under this format, unused
                 production from the second half of 2003, with adjusted water rights for half of the year, was
                 allocated to Appropriators for CY 2008. Table 3-7 summarizes the volume of unused Overlying
                 water for CY 2003 through CY 2018. While groundwater production by Overlying Users has
                 decreased by over 40 percent since 2004, the volume of unused overlying water has
                 correspondingly increased from 5,053 ac-ft/yr in CY 2006 to a maximum of 6,679 ac-ft during
                 CY 2011.  The amount of unused production decreased starting in CY 2014 to slightly over
                 4,600 ac-ft/yr as a result of reduced Overlying allocations resulting from the new basin Safe
                 Yield of 6,700 ac-ft/yr.

                 Table 3-7 presents the allocation of unused Overlying water to each Appropriator based on
                 their shares of the Safe Yield and the schedule set forth under Section 7.8 of the Rules and
                 Regulations. It should be noted that this schedule has been modified to reflect a calendar year
                 basis for allocation.  Under the modified schedule, unused Overlying production in CY 2013,
                 estimated at 6,365 ac-ft, is allocated to Appropriators during CY 2018.  Unused Overlying
                 production during CY 2018, adjusted by reductions on OVP’s rights, is estimated at 4,299 ac-
                 ft. This amount would be allocated to Appropriators during CY 2023.

                 3.5      Storage Accounting

                 Section 6.7 of the Watermaster Rules and Regulations indicates that Watermaster shall
                 calculate additions, extractions, and losses of all water stored and any losses of water supplies
                 or Safe Yield resulting from such water stored. This section further indicates that Watermaster
                 shall keep and maintain for public record an annual accounting thereof. While additions



                  Beaumont Basin Watermaster 2018 Annual Report – DRAFT - February 2019                 3-10
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