Murray-Darling Basin Agreement (Schedule D - Adjusting Valley Accounts and State Transfer Accounts) Protocol 2010

This Protocol, enacted by the Murray‑Darling Basin Authority (the Authority) under clause 6 of Schedule D to the Murray‑Darling Basin Agreement and section 18E of the Water Act 2007, sets the administrative rules the Authority must follow to adjust valley accounts and State transfer accounts arising from interstate transfers of water allocations and entitlements in the southern connected Murray‑Darling Basin (see front matter; cl 1-3). It commenced on registration (cl 2) and expressly revokes an earlier 2010 instrument (cl 4).

Mechanically, the Protocol requires the Authority to record and adjust volumes in:

• valley accounts, maintained under subclause 11(3) of Schedule D to the Agreement, when allocations or entitlements move between valleys (Part 2, cl 6-8; Table 1 and Table 2); and
• State transfer accounts, used to record adjustments to water delivered to South Australia or volumes in Hume Reservoir that may be delivered to New South Wales or Victoria, resulting from interstate transfers (Part 3, cl 9-10; cross‑references to Appendix 2 of Schedule D).

Key operational mechanics include:

• The Authority must adjust valley accounts promptly on receipt of monthly records of interstate allocation transfers from each of the three State licensing authorities by the net volume transferred that month (cl 6(1)). If timing differences exist between jurisdictions, the Authority may estimate volumes (cl 6(2)).
• For entitlement transfers, the Protocol distinguishes exchange rate trade and tagged trade. Where exchange rate trade increases allocations entitlements in a source valley, the Authority must increase the relevant valley account by the equivalent increase after applying any conversion factor (cl 7(1)). For tagged trades, the Authority must increase a valley account by the volume actually used by the transferee outside the source valley (cl 7(2)). The Protocol permits estimation and requires review and adjustment when actual use is ascertained (cl 7(3)).
• The Authority may combine certain valley accounts (specifically Goulburn, Campaspe and Loddon) (cl 6(3)).
• The Authority may, and must in specified circumstances, direct a State Contracting Government to supply water from a designated reservoir at a designated site to satisfy water standing to the credit of a valley account (cl 8(3)-(4); Table 2). States must comply with such directions subject to prior agreement mechanisms (cl 8(6)-(7)). Directions reduce the relevant valley account by the volume supplied (cl 8(9)).
• Spillage rules prevent counting certain additions to accounts as spill and limit the volume by which spilled water reduces an account (cl 8(10)-(13)). Deficits at year‑end are carried forward (cl 7(4), cl 9(3)).
• Part 3 sets out how the Authority determines the volume used by a tagged transfer for the purpose of adjusting State entitlements (cl 9) and prescribes the timing and monthly apportionment rules by which the Authority alters deliveries and records adjustments in State transfer accounts (cl 10).

The Protocol is an administrative accounting and delivery‑direction instrument. It prescribes what the Authority must record, how to estimate and review usage, the mapping among valleys and accounts (Table 1), where deliveries should be taken from (Table 2), and the timing rules for altering monthly deliveries (cl 10). It does not create criminal sanctions or prescribed monetary penalties within its text; enforcement is effected through the Authority’s direction‑making and accounting functions (see cl 8 and Part 3).

The Protocol organises a set of recurrent administrative concepts that govern inter‑state and inter‑valley water movement accounting. The principal concepts are valley account, State transfer account, exchange rate trade, tagged trade, back trade, designated site, and designated reservoir.

• Valley account: defined as an account the Authority maintains under subclause 11(3) of Schedule D to the Agreement (Definitions). The Protocol requires the Authority to adjust valley accounts by the net volume of transfers into and out of that valley for each month (cl 6(1); Table 1). Valley accounts can be combined where permitted (cl 6(3)), and their balances are reduced by deliveries, spills and pre‑releases under specified rules (cl 8(9)-(13)). If a valley account is negative at a water‑year end, the deficit is carried forward to the following year (cl 7(4)).

• State transfer account: defined to cover accounts recording adjustments to water delivered to South Australia from upstream States, and adjustments to the volume of water in Hume Reservoir that may be delivered to NSW or Victoria as a result of transfers (Definitions). Part 3 sets rules for determining volumes for adjustments and for recording and implementing alterations to State entitlements in monthly delivery profiles (cl 9-10).

• Exchange rate trade versus tagged trade: The Protocol treats these two transfer mechanics differently. For exchange rate trade, the relevant adjustment volume is the change in allocations attributable to the transferred entitlement, adjusted by any conversion factor prescribed elsewhere (cl 7(1); Appendix 2 cross‑references). For tagged trade, the adjustment is the volume actually used by the transferee in the receiving valley, which the Authority may estimate and must review (cl 7(2)-(3); cl 9).

• Back trade: A defined term meaning a transfer from one trading zone to another that is no greater than the lesser of the net volume of preceding transfers in the opposite direction and the volume available in the relevant valley account (Definitions). The Protocol allows operating plans to reserve volumes for back trade (cl 8(2)).

• Designated site and designated reservoir: Table 2 specifies, for each river valley with an account, the designated site(s) and corresponding designated reservoir from which a State is to supply water when directed (cl 8(4); Table 2). For example, the Goulburn/Broken valley lists McCoys Bridge, Rices Weir and Rochester as designated sites and Lake Eildon as designated reservoir (Table 2). The Lower Darling account is held in NSW’s share of Menindee Lakes (Table 2, footnote).

The Protocol applies to a distinct set of institutional actors and water market participants in the southern connected Murray‑Darling Basin. The actors specified in or implicated by the text are:

• Murray‑Darling Basin Authority (the Authority): The Authority makes the required account adjustments, may estimate when record timing differs, may direct States to supply water from designated sites, can combine certain valley accounts, must reduce accounts when deliveries or spills occur, and is responsible for altering deliveries recorded in State transfer accounts (cl 6(1)-(3), cl 7, cl 8(3)-(4), cl 8(9), cl 10(1)-(4)). The front matter records the Authority made the Protocol after consultation with the Basin Officials Committee and person(s) nominated by Contracting Governments.

• State licensing authorities: Each of the three State licensing authorities must provide copies of records relating to interstate transfers of allocations for each month to the Authority; the Authority must promptly adjust valley accounts upon receipt (cl 6(1)). Differences in timing between state approvals may require the Authority to estimate volumes (cl 6(2)).

• State Contracting Governments: When directed by the Authority under cl 8(3), the relevant State Contracting Government must supply water from a specified designated reservoir at the designated site (cl 8(4)). States may, with the Authority’s prior agreement, supply to an alternate site (cl 8(6)) or comply by supplying from the Murrumbidgee/Yanco/Billabong valley into the River Murray via the Snowy Mountains Scheme in NSW’s case (cl 8(7)). States also have the practical duty to advise spilled volumes in their valley to enable the Authority to reduce the valley account (cl 8(10)).

• Water entitlement holders and water traders: Holders involved in interstate transfers of allocations and entitlements are directly affected because the Protocol dictates how such transfers adjust valley accounts and State transfer accounts (Part 2 and Part 3). Tagged trade users are particularly affected because actual use in the receiving valley determines adjustments (cl 7(2), cl 9).

• Bulk water operators and reservoir managers: Designated reservoirs listed in Table 2 (for example Lake Eildon, Lake Eppalock, Laanecoorie, Burrinjuck, Blowering, Menindee Lakes) and operators of the Snowy Mountains Scheme are implicated because the Protocol can direct deliveries from these storages (cl 8(4), cl 8(7); Table 2).

This section lists concrete duties the Protocol imposes and the rights or discretions it grants. All references are to the Protocol clauses.

Duties of the Authority

• Adjust valley accounts promptly when it receives monthly copies of interstate allocation transfer records from the three State licensing authorities (cl 6(1)). Promptness is a specified obligation.
• Estimate transfer volumes when State advice differs due to timing differences (cl 6(2)). The Authority is expressly permitted to estimate in such circumstances.
• Combine certain valley accounts if it chooses, specifically the Goulburn, Campaspe and Loddon valleys (cl 6(3)).
• Increase valley accounts where exchange rate trade transfers entitlements out of a valley and allocations in that valley increase, by the volume of that increase after applying conversion factors specified in other Protocols under Schedule D (cl 7(1)).
• Increase valley accounts where a tagged entitlement is used outside the source valley by the volume used (cl 7(2)).
• Estimate usage for tagged trades, taking into account prescribed matters: allocations to the entitlement in that year; transfers to/from associated retail account; orders placed to extract delivered water; usage patterns of similar entitlements in similar seasons; information provided by a State Contracting Government; and any other relevant matter (cl 7(3)(a)).
• Review any estimate and make consequential adjustments, and ultimately record the allocations actually used outside the source valley promptly after determination (cl 7(3)(b)-(c)).
• Carry forward any deficit in a valley account at year‑end to the following water year (cl 7(4)).
• Agree on operating plans with a State Contracting Government for accounting for and delivering bulk water transfers based on climatic predictions and water availability and, under those plans, direct that water standing to the credit of a valley account be used for purposes in paragraph 11(4)(a) of Schedule D (cl 8(1)-(3)).
• Reduce valley accounts by volumes supplied pursuant to directions, by spilled volumes advised by States subject to limits (cl 8(9)-(13)).
• Estimate the volume used by a tagged trade for the purpose of adjusting State entitlements, review estimates and make consequential adjustments, and adjust deliveries by the actual volume used in each year (cl 9(2)(a)-(c)).
• Alter deliveries of State entitlements and record those changes in State transfer accounts (cl 10(1)) and follow the monthly apportionment rules set out in cl 10(2)-(4).

The Protocol is an administrative instrument that prescribes accounting, estimation, direction and delivery procedures. The text itself does not create criminal offences, monetary fines, or explicit civil penalty regimes. Enforcement in the Protocol is primarily administrative and operates through directions, record‑keeping and account adjustments.

Administrative enforcement mechanisms in the Protocol

• Direction power: The Authority may direct a State Contracting Government that water credited to a valley account be used for particular purposes (cl 8(3)). The relevant State Contracting Government must comply with a direction by supplying water from the designated reservoir at the designated site, subject to the exceptions in subsections (5)-(7) (cl 8(4)-(6)). This is a mandatory obligation in the Protocol text and constitutes the principal instrument of operational enforcement.
• Recordkeeping and accounting: The Authority must reduce valley accounts by volumes supplied pursuant to directions and by volumes spilled as advised by States, subject to the constraints in cl 8(10)-(13). Accurate and timely advice from States is therefore essential; the requirement to supply records every month (cl 6(1)) and to advise spills (cl 8(10)) implies a compliance expectation that underpins the Authority’s accounting function.
• Estimation and review: The Protocol empowers the Authority to estimate volumes when timely or consistent data are not available (cl 6(2), cl 7(3)(a), cl 9(2)(a)) but requires review and consequential adjustment once better information is available (cl 7(3)(b), cl 9(2)(b)). This produces a procedural mechanism for correcting errors.

Limitations and absence of penalty provisions

• No explicit sanctions: The Protocol text contains no express clause specifying penalties, fines, or enforcement proceedings for non‑compliance by States, State licensing authorities, or private parties. It also does not specify administrative appeal processes against Authority directions nor the procedural forum for resolving disputes. The Authority’s role is framed as one of direction and accounting rather than sanctioning.
• Reliance on Agreement and Schedule D: The Protocol operates in the context of the Murray‑Darling Basin Agreement and the Water Act 2007. Several clauses cross‑refer to the Agreement (for example paragraph 88(a), subclause 11(6), clause 120(1)(d) and Appendix 2 of Schedule D). Any enforcement mechanisms or dispute resolution procedures applicable where a State fails to comply with an Authority direction may be found in those broader instruments, but they are not set out in this Protocol. The Protocol itself does not import additional penalties.

The Protocol is manifestly a subsidiary instrument operating within a broader statutory and intergovernmental framework. Its legal effect and practical operation are interwoven with provisions in the Water Act 2007 and, critically, with the Murray‑Darling Basin Agreement and its Schedule D and Appendix 2. The Protocol both implements and refers to those higher‑level texts.

Textual references to other instruments

• Water Act 2007: The Protocol is made under section 18E of the Water Act 2007 (front matter). That statutory authority is the source of the Authority’s power to make protocols under the Agreement.
• Murray‑Darling Basin Agreement, Schedule D: The Protocol deals with matters referred to in paragraphs 6(1)(c) and (f) of Schedule D to the Agreement (cl 1 note). It implements subclause 11(3) cross‑referenced in the valley account definition and relies on other subclauses referenced in cl 8 and elsewhere (for example subclause 11(6) of Schedule D regarding overdrawn valley accounts is noted under cl 8(9)).
• Appendix 2 to Schedule D: Part 3 and cl 9 of the Protocol cross‑reference Appendix 2, which sets out detailed rules for delivering adjustments for transfers affecting South Australia and transfers affecting the Hume Reservoir (Part 3 Note; cl 9(1)). Clause 1 of Appendix 2 defines the volumes for exchange rate and tagged trade (quoted in Protocol note to Part 3), and clause 2 provides exchange rate adjustments for transferred allocations (note in Part 3). The Protocol implements those calculation rules by prescribing estimation, review and timing rules (cl 9-10).
• Murray‑Darling Basin Agreement paragraph 88(a): The monthly apportionment rules in cl 10 reference paragraph 88(a) of the Agreement as the relevant monthly quantities against which to proportion adjustments when altering delivery across months (cl 10(2)-(3)). The Protocol therefore relies on the Agreement for the monthly distribution used in apportionment.

Operational intersections with State law and authorities

• State licensing authorities: The Protocol expects State licensing authorities to provide copies of monthly records of interstate transfers of allocations to the Authority (cl 6(1)). Those licensing authorities operate under State water legislation; coordination between State law and the Protocol is therefore operationally necessary even though the Protocol does not alter State statutory schemes directly. The Protocol allows the Authority to estimate where State approvals have timing differences (cl 6(2)), indicating interplay between State administrative timelines and the Authority’s federal account adjustments.

The Protocol’s text contains a limited, explicit amendment history. The relevant entries are:

• Making date and authentication: The Authority, having consulted the Basin Officials Committee and persons nominated by Contracting Governments where relevant, made the Protocol on 30 August 2010, and the Chief Executive, Rob Freeman, authenticated that the Authority validly made the Protocol on 30 August 2010 (front matter). The signature block shows the Chief Executive’s execution dated 7 September 2010 (front matter).

• Commencement: The Protocol commences on the day after it is registered (cl 2). The Protocol does not itself list a registration date in the text quoted, but the front matter indicates authentication on 30 August and signature on 7 September 2010.

• Revocation of prior instrument: Clause 4 expressly revokes the Murray‑Darling Basin Agreement (Adjusting Valley Accounts and State Transfer Accounts) Protocol 2010, and the accompanying note records that the earlier Protocol was made and registered on the Federal Register of Legislative Instruments on 25 January 2010 (cl 4 note). The 2010 revocation indicates this Protocol replaces that earlier instrument.

• No subsequent amendments recorded in the text: The document provided does not include any subsequent amendment dates, replacement instruments, or other modification entries. The text as provided stands as the operative Protocol replacing the January 2010 instrument.

• Cross‑references to other Protocols: Clause 7(1) requires application of any conversion factor specified by a Protocol made under paragraph 6(1)(d) of Schedule D to the Agreement. That clause anticipates other protocols may exist or be made which will affect the numerical conversion applied to exchange rate trades, but no such conversion factor is included in this Protocol itself.

• Notes regarding registration and FRLI: The Protocol includes a note referencing the Federal Register of Legislative Instruments as the register for legislative instruments and compilations (Notes at end). This confirms the Protocol is intended to be a registered legislative instrument, which is relevant to how it may be amended or repealed in the future pursuant to the statutory framework under the Water Act and the Legislative Instruments Act.

Practically, the Protocol replaced a January 2010 instrument within the same year. The text does not record any later amendments or replacements. Users seeking any updates or subsequent instruments should consult the Federal Register of Legislative Instruments (as the Protocol itself notes) and the Murray‑Darling Basin Authority’s instrument registers for later versions or replacement protocols, as that information is external to the Protocol text provided.

The Protocol text does not mention any litigation or judicial decisions concerning its validity, interpretation, or enforcement. No cases or tribunal decisions are named or cited within the Protocol.

Implications for researchers and practitioners

• Absence of recorded litigation in the Protocol text does not establish there have been, or have not been, subsequent legal challenges in courts or administrative tribunals; it only reflects that the instrument itself does not record case law.
• For authoritative litigation history, practitioners must search judicial and tribunal databases and the Federal Register of Legislative Instruments for any challenges to the Protocol, decisions interpreting clause provisions, or disputes involving the Authority’s exercise of direction or estimation powers. The Protocol itself provides no procedural route for appeals or challenge within its text; any such routes would be found in the Murray‑Darling Basin Agreement, the Water Act 2007, or general administrative law remedies.

The Protocol’s silence on litigation requires users to undertake external research to determine how its provisions have been tested in courts or tribunals and whether any interpretations have been established regarding, for example, the Authority’s estimation powers, the obligation of States to supply under direction, or the meaning of the spill and pre‑release rules.

This Protocol contains specific operational rules and exceptions that create practical risks and traps if omitted from an operational compliance plan. The following are concrete points to watch for, all grounded in the Protocol text:

1. Timing and monthly apportionment windows: The Authority applies delivery alterations across the period from the later of September and the month in which the alteration commences through to the following April (cl 10(2)-(3)). This fixed seasonal window means that an alteration notified outside that window is treated differently (notably transfers notified between 1 April and 30 June are treated under cl 10(3)(b) with different rules depending on whether the adjustment relates to South Australia or to NSW/Victoria). Practitioners must check the month of notification and the prescribed apportionment rule to determine the months affected.

2. Estimation and later reconciliation: The Authority is explicitly permitted to estimate transfer volumes where State approvals occur at different times or where tagged trade usage is uncertain (cl 6(2), cl 7(3)(a), cl 9(2)(a)). Estimates must be reviewed and adjusted (cl 7(3)(b), cl 9(2)(b)), and actual usage must be recorded promptly when determined (cl 7(3)(c), cl 9(2)(c)). Traders and State authorities should expect subsequent reconciliations that may create carry‑forward deficits (cl 7(4), cl 9(3)). That means provisional deliveries may be subject to later adjustment.

3. Complex mapping in Table 1: Table 1 maps "to/from" valleys to account codes (G, C, L, H, etc.). The mapping is non‑intuitive and requires careful reading of the table and the code key in cl 6(4). Errors in mapping which account to adjust may lead to incorrect bookkeeping or misdirected delivery directions.

4. Combining accounts: The Authority may combine Goulburn, Campaspe and Loddon accounts (cl 6(3)). Combining accounts can change the net available balance and the allocation of delivery obligations; affected jurisdictions should track whether combined accounting is in effect.

5. Designated sites and reservoirs: Directions require supply from designated reservoirs at designated sites specified in Table 2 (cl 8(4); Table 2). Where the Protocol lists multiple sites for a valley (for example Goulburn/Broken lists three designated sites), the State must supply at the relevant designated site indicated in the direction. States can comply via a different site only with the Authority’s prior agreement (cl 8(6)). Operational teams must ensure the nominated site is feasible and that prior agreement for alternatives is sought in good time.

This section sets out practical, actionable compliance steps for the Authority, State licensing authorities, State Contracting Governments, reservoir operators and water market participants. Each recommendation is grounded in the Protocol’s clauses.

1. Reporting and record provision (for State licensing authorities)

• Ensure monthly transfer records are compiled and transmitted promptly to the Authority, because the Authority must adjust valley accounts promptly on receipt of monthly records (cl 6(1)). Establish cut‑offs and confirm transmission protocols so that timing differences are minimised.
• Where State licensing authorities have internal approval timing differences, advise the Authority in writing about expected timing, to reduce reliance on the Authority’s estimation power (cl 6(2)).

2. Tagged trade usage reporting (for entitlement holders and State administrative agencies)

• For tagged trades, maintain contemporaneous records of orders placed to extract water, allocations made to the entitlement each year, and any transfers to or from associated retail accounts (cl 7(3)(a)(i)-(iii)). Provide expected usage information to the State Contracting Government where appropriate to support the Authority’s estimates (cl 7(3)(a)(v)).
• Because the Authority may estimate usage and will later review and adjust (cl 7(3)(a)-(c); cl 9(2)), maintain auditable records of actual usage so that reconciliations are straightforward.

3. Operational readiness for State Contracting Governments and reservoir operators

• When an Authority direction is possible, prepare operational plans that enable water to be supplied at the required designated sites, from the designated reservoirs listed in Table 2, including the ability to supply at rates higher than forecast without re‑ordering priority (cl 8(4), cl 8(8)(a)-(b)).
• If a State foresees difficulty with a specified designated site, seek prior agreement from the Authority for an alternative site under cl 8(6). Document and obtain written agreement to avoid later disputes.
• For NSW operations involving Menindee Lakes and Lower Darling accounts, agree internal processes to treat Lower Darling account holdings as first water released under clause 120(1)(d) assigned to NSW as noted in cl 8(5) and ensure the accounting systems reflect the Menindee Lakes footnote in Table 2.