Murray-Darling Basin Agreement (Schedule D - Conversion Factors and Exchange Rates) Protocol 2010

The Protocol revolves around a small number of tightly defined concepts. Those concepts, and how the Protocol operationalises them, determine who can convert or transfer what, by how much, and under what procedural constraints.

• Entitlement types and shorthand: The Protocol establishes shorthand labels for several entitlement types: GSEC (New South Wales General Security Access Licence), HSEC (New South Wales High Security Access Licence), HR (Victorian High‑Reliability Water Share), LR (Victorian Low‑Reliability Water Share), and SA LIC (South Australian water licence) (s5). It also notes that other expressions are defined in the Act and the Agreement, for example Authority and exchange rate trade (s5 note). The Protocol therefore works together with the Act/Agreement definitions rather than redefining them.

• Conversion factors: Conversion factors are the numerical multipliers used to convert an entitlement of one type into an entitlement of another type where Table 1 applies (s6). Table 1 gives conversion factors for two valley items (Murray New South Wales and Murrumbidgee) and for conversions either from lower reliability to higher reliability entitlements or vice versa. The values are asymmetrical: converting from lower to higher reliability uses a factor less than 1 (Murray NSW 0.6; Murrumbidgee 0.55) and converting from higher to lower reliability uses a factor greater than 1 (Murray NSW 1.6667; Murrumbidgee 1.8182) (s6, Table 1). The arithmetic rule is that the volume of the initial entitlement is multiplied by the relevant factor (s7(2)).

• Exchange rates (exchange rate trade): Table 2 sets the exchange rates for transfers that are treated as exchange rate trade (s10, Table 2). Many origin-destination combinations are marked N/A, explicitly meaning exchange rate trade is not available for those cases (Table 2, note). Where an exchange rate does apply, the volume of the entitlement created in the destination State is the volume cancelled/extinguished/suspended in the origin State multiplied by the exchange rate (s11(2)).

• State approval constraints for certain conversions: The Protocol places a specific approval duty on a State where a conversion is from a lower reliability entitlement to a higher reliability entitlement. A State must approve such an application in any year when either (a) the allocation under the lower reliability entitlement is 100% and none of the allocated water has been used or transferred; or (b) the allocation is less than 100% by a gap and, at the time of application, the applicant has acquired an additional volume at least equal to the gap and none of the allocated water has been used or transferred (s8). The Protocol thus sets precise factual preconditions for State approval.

• Suspension and notification: If a State, under its own law, decides to suspend conversions within one or more valleys, the State must notify the Authority in writing at the same time as it provides the notice required by that State law; the notice must set out the reasons. When a suspension ends, the State must promptly notify the Authority in writing, again at the same time as required by State law. On receipt of such notices, the Authority must inform the other State Contracting Governments (s9).

• Review triggers: A State may ask the Authority to review a conversion factor or exchange rate on specified triggers: an at least 8% change in total volume of a particular type of entitlement in a valley measured from 19 May 2006 or from the time of determination/amendment; substantial changes to a relevant best-practice hydrological model; creation of a new type of water entitlement in a State; or an amendment to legislation or a statutory plan that may affect exchange rates or interstate transfers under Schedule D (s12(a)-(d)).

These concepts link calculations (multipliers), administrative duties (approval, notification, review requests), and cross‑jurisdictional coordination (Authority informs other Contracting Governments) to govern the mechanics of how entitlements are converted and transferred across the Basin where this Protocol applies.

This Protocol affects several categories of actors directly and others indirectly, in ways set out in the instrument.

• Water entitlement holders and applicants seeking conversion or exchange-rate transfers. The Protocol prescribes how volumes are converted (s7) and under what conditions a State must approve conversion of lower to higher reliability entitlements (s8). If an entitlement holder wants to convert from an entitlement type covered in Table 1 (Murray New South Wales or Murrumbidgee), they must apply to the relevant State and the conversion will be calculated by reference to the conversion factor (s6, Table 1; s7). If they seek exchange-rate trade to create an entitlement in another State, the availability of such trade depends on Table 2 entries being non‑N/A for the origin-destination pair (s10, Table 2; Table 2 note).

• State Contracting Governments. States are the decision makers for approving conversions and for enacting suspensions of conversions under their own laws. The Protocol expressly obliges a State to approve conversions described in s8 when the stated factual conditions apply. It also requires a State to notify the Authority when it decides to suspend conversions or end a suspension, and to provide reasons; the State’s notice must be given at the same time as the State’s required notice under its own law (s9). States may also request reviews of conversion factors or exchange rates under the triggers in s12. The Protocol therefore places defined obligations and procedural duties on States rather than directly creating sanctions against private parties.

• The Murray‑Darling Basin Authority. The Authority is the instrument maker and the recipient of State notifications and review requests. The Authority must inform other State Contracting Governments when it receives suspension or re‑commencement notices from a State (s9(4)). The Authority also may be asked to review conversion factors and exchange rates under s12. The Protocol was made by the Authority after consultation with the Basin Officials Committee and consideration of advice from persons nominated by Contracting Governments under Schedule D processes (preamble).

• Basin Officials Committee and nominated advisers. The preamble records the Authority acted in consultation with the Basin Officials Committee and having considered advice (if any) given by persons nominated by Contracting Governments under subclause 6(3) of Schedule D to the Agreement (preamble). These roles are procedural or consultative within the Protocol’s making.

• Other Contracting Governments. On receipt of a suspension or re‑commencement notice, the Authority must inform other State Contracting Governments (s9(4)), making them recipients of information but not decision‑makers under the Protocol text itself.

• Administrators of State laws and statutory plans that interact with schedule D transfers. Where a State makes legislative or statutory plan changes that may affect exchange rates or interstate transfers, the Protocol provides for review requests by a State to the Authority (s12(d)). This recognises that State law changes have cross‑border effects.

Actors not directly covered in the Protocol text include private third parties such as traders, intermediaries or courts; the Protocol itself contains no express enforcement provisions directed at private actors. The Protocol interacts with State laws and the Water Act 2007 definitions, so those with responsibilities under State water management legislation will be affected by how States implement the Protocol’s obligations and by any domestic procedural rules that give effect to conversions and transfers.

The Protocol creates specific duties for States, calculation obligations for those performing conversions and transfers, and rights for States to seek reviews. It does not create standalone criminal or civil penalties; rather it prescribes process and arithmetic. The key duties and rights are:

Duties on States

• Approval duty for specified conversions: A State must approve an application to convert a lower reliability entitlement to a higher reliability entitlement in any year when the factual tests in s8 are met. Those tests are either (a) the allocation under the lower reliability entitlement is 100% and none of the allocated water has been used or transferred, or (b) the allocation is less than 100% by a gap and the applicant, at the time of applying, has acquired an additional volume at least equal to that gap and none of the allocated water has been used or transferred (s8). This is a compulsory approval duty when the conditions apply.

• Notification duty on suspension and re‑commencement: If a State decides (under state law) to suspend conversions of one entitlement type into another within one or more valleys, the State must notify the Authority in writing at the same time as it notifies under its law. The notice must set out reasons. Symmetrically, when a suspension ends the State must promptly notify the Authority in writing, again at the same time as its state law notice; the Authority must then inform the other State Contracting Governments (s9(1)-(4)). The State’s duties are to notify and to provide reasons; the Protocol does not prescribe a specific form for the notification beyond being written and contemporaneous with the State’s own legal notice requirements.

• Requesting reviews: A State may ask the Authority to review a conversion factor or exchange rate where the triggers in s12 apply (s12). The Protocol lists the measurable triggers and other grounds for review (see next section).

Calculation duties and mechanics

• Application of conversion factors: Where Table 1 applies, the conversion factor is determined by Table 1 and the conversion is effected by multiplying the initial entitlement volume by that conversion factor (s6; s7(2)). This is a deterministic mathematical duty for whoever administers the conversion (typically State registries).

• Application of exchange rates: Where Table 2 applies, the exchange rate described in Table 2 is the rate to be applied, and the volume of the entitlement to be created in the destination State equals the volume cancelled, extinguished or suspended in the origin State multiplied by the exchange rate (s10; s11(2)). If Table 2 says N/A for the origin-destination pair, exchange rate trade is not available for that pair (Table 2 note).

Rights and powers

• Right of applicants to conversion subject to State approval duty: Entitlement holders or applicants have the right to have an application approved by a State when the s8 conditions are satisfied; the Protocol makes that approval duty explicit (s8).

• Right of States to suspend under their own laws: The Protocol recognises and accommodates a State’s power to suspend conversions under its domestic law, but makes notification and reasoning duties mandatory to the Authority (s9).

• Right of States to request reviews: States have the express right to ask the Authority to review conversion factors or exchange rates where any of the triggers in s12 are met (s12).

Limits and absences

• No penalty regime in the Protocol: The Protocol contains no express penalties, sanctions or enforcement mechanisms against private parties; the text prescribes calculation rules and administrative obligations on States and roles for the Authority (no specific enforcement or dispute-resolution processes are set out in the Protocol text).

• Coverage limits: Conversion factors in Table 1 apply only to the rows expressly listed in that table; similarly, exchange-rate trade is available only where Table 2 contains a non‑N/A entry for the origin-destination pair (s6, Table 1; s10, Table 2). The Protocol does not purport to authorise conversions or transfers beyond those tables or beyond the powers of States under their own laws.

These duties and rights operate within the institutional framework of the Agreement and the Water Act 2007; the Protocol repeatedly points to definitions and existing powers in the Act and the Agreement (s5 note; preamble).

The Protocol itself does not establish civil or criminal penalties or a standalone enforcement mechanism against private parties. Its enforcement architecture is administrative and intergovernmental, expressed in duties on States and in prescribed arithmetic for conversions and for exchange-rate transfers. The following features are relevant to understanding enforcement and compliance risk as the Protocol frames them.

No express penalties in the Protocol

• The text contains no penalty clauses, fines, offence provisions, or express enforcement powers directed at entitlement holders, States or the Authority. The Protocol prescribes how to calculate conversion and exchange‑rate volumes (s6, s7, s10, s11) and sets notification and approval duties on States (s8, s9), but it does not attach sanctions to failure to comply with those duties within the Protocol instrument itself.

Administrative obligations as the principal compliance mechanism

• State approval obligation (s8). The principal compliance lever is the obligation on States to approve certain lower‑to‑higher reliability conversions when specific factual criteria are met. That approval obligation is an affirmative administrative duty rather than an express sanction; compliance therefore depends on States meeting their statutory or administrative obligations under their own laws and the Agreement. The Protocol does not offer a private right of action or prescribe remedies where a State refuses or fails to act; any remedy would need to be found in State law or in the Agreement mechanisms beyond this Protocol (the Protocol does not supply a remedy).

• Notification duty and intergovernmental transparency (s9). When a State suspends or ends suspension of conversions under State law, the State must notify the Authority and set out reasons; the Authority must inform other Contracting Governments (s9(1)-(4)). The enforcement mechanism here is reputational and informational: other Contracting Governments are informed, which creates intergovernmental oversight but not an internal penalty.

Review process (s12) as a governance tool

• A State may ask the Authority to review conversion factors or exchange rates under defined triggers (s12). The review process is a tool to adjust rates and factors where circumstances change materially. The Protocol does not specify binding outcomes, timelines or remedial powers arising from a review request; it simply grants the capacity to request a review and sets out the triggers.

Interaction with State law and the Agreement for enforcement

• The Protocol refers to State laws in the suspension context (s9) and to the Act and the Agreement for definitions and powers (s5 note; preamble). Enforcement in practice will therefore be mediated through State administrative systems and through the broader legal framework of the Agreement and the Water Act 2007, not through punitive provisions in this Protocol.

Practical consequence for non‑compliance

• Because the Protocol sets calculation rules, a practical compliance consequence of failing to apply the correct conversion factor or exchange rate is a manifest error in entitlement volumes recorded or created. Corrective measures would most likely be administrative (rectification by registry, intergovernmental negotiation or amendment of the Protocol) rather than penal, as the Protocol contains no prescribed fines or penalties.

In short, the Protocol’s enforcement model is procedural and administrative: it prescribes arithmetic, creates State notice and approval duties, and establishes review triggers. It does not, within its text, create an explicit penalty regime or judicial enforcement mechanism.

The Protocol is expressly made under clause 6 of Schedule D to the Murray‑Darling Basin Agreement and section 18E of the Water Act 2007 (preamble). Its operative text repeatedly references and relies on the Act and State laws. The interaction with other laws is therefore central; the Protocol operates as part of a layered legal framework rather than in isolation. Key interaction points follow.

Definitions and reliance on the Act and Agreement

• The Protocol draws its specialised terminology from the Act and the Agreement: s5 defines several shorthand terms (GSEC, HSEC, HR, LR, SA LIC) and the s5 note states that several other words and expressions used in the Protocol have the meaning given by the Act (including the Agreement), for example Authority and exchange rate trade. This means that how the Protocol applies in practice depends on the Act and Agreement definitions, and on any State-specific definitions incorporated into State law.

State law for suspension and approvals

• The Protocol recognises the primacy of State law for suspensions and for converting entitlements administratively. Section 9 contemplates that a State Contracting Government may, under a law of the State, decide to suspend conversion of one type of entitlement into another within one or more valleys. The State’s decision and required timing of notice to the Authority are to be governed by the State’s law (s9(1)-(2)). Likewise, a State’s obligation to approve certain conversions under s8 will interact with whatever approval process and statutory regime exists in the State for approving conversions and changing registered entitlements. The Protocol therefore prescribes intergovernmental duties that sit on top of, and must be exercised in accordance with, the State’s own statutory powers and administrative procedures.

Agreement mechanisms and clause 6 processes

• The preamble records that the Authority made the Protocol in consultation with the Basin Officials Committee and having considered advice nominated by Contracting Governments under subclause 6(3) of Schedule D. Clause 6 of Schedule D to the Agreement is the originating source of authority for the Protocol (preamble; s1 note), so the Protocol is a delegated instrument within the Agreement framework. Any disputes or higher‑order interpretive issues may therefore implicate the Agreement’s own dispute resolution or governance mechanisms, though those mechanisms are not reproduced in this Protocol.

Review triggers tied to hydrological models and State statutory plans

• s12 includes as triggers for review substantial changes to a relevant existing best practice hydrological model, creation of a new type of water entitlement in a State, or amendments to legislation or a statutory plan within a State that may affect exchange rates or interstate transfers under Schedule D. This explicitly links the Protocol’s operation to both technical hydrological modelling undertaken pursuant to State or Basin processes and to State legislative change. Therefore, the Protocol is designed to be dynamic with respect to State law and scientific developments.

Registration and legislative instruments framework

• The Notes at the end point users to the Federal Register of Legislative Instruments (FRLI) for registration and compilation information (Notes). The Protocol commences on registration (s2), so its legal effect is tied to the statutory instrument registration framework.

Limits of interaction

• The Protocol does not itself displace State law; it operates in concert with State law for approvals and suspensions (s9). Where the Protocol prescribes a duty on a State (s8, s9) it does not specify the internal State procedure for meeting that duty; implementation and any enforcement against State officials are matters for State legal and administrative systems and for the Agreement’s governance arrangements.

In sum, the Protocol is a delegated instrument that supplies calculation rules and procedural obligations, but it relies on State law for implementation of suspensions and approvals, on the Act and the Agreement for definitions and higher procedural context, and on technical models and statutory plans that State governments may alter, triggering review rights.

The Protocol itself records its immediate amendment and revocation history within the short instrument text. The following items are taken directly from the Protocol.

• Revocation of pre‑1 December 2009 protocols that apply to exchange rate trade. Section 3 expressly revokes all protocols made under paragraph 6(1)(d) of Schedule D to the Agreement before 1 December 2009, and all provisions of any such protocol, that apply to exchange rate trade. This is a targeted revocation that removes earlier instruments in the specific subject area of exchange rate trade.

• Date of making and authentication. The preamble states the Authority made the Protocol on 30 August 2010 (preamble). The authentication block records that Rob Freeman, Chief Executive of the Murray‑Darling Basin Authority, authenticated that the Authority validly made the Protocol on 30 August 2010, with a signature block dated 7 September 2010 (preamble; authentication).

• Commencement rule. Section 2 provides that the Protocol commences on the day after it is registered. The Protocol therefore comes into force through registration on the Federal Register of Legislative Instruments (s2 and Notes).

• No other amendments recorded in the text. The Protocol contains no later amendments or schedules amending its tables or numbers within the text provided. Section 12 sets out a process by which a State may ask the Authority to review a conversion factor or exchange rate on specified triggers (s12), but that is a review procedure rather than an automatic amendment. Any formal amendment to the Protocol’s tables or text would need to be made by the Authority in accordance with clause 6 of Schedule D and section 18E of the Water Act 2007 (preamble), and would likely be registered as a new or amended instrument.

• Review triggers that could lead to amendment. Section 12 lists triggers for reviews which may give rise to an amendment request and, potentially, changes to conversion factors or exchange rates: an 8% change in total volume of a particular entitlement type in a valley measured from 19 May 2006 or from the time a factor or rate is determined or altered; substantial changes to best‑practice hydrological models (including recalibration); the creation of a new type of water entitlement; or amendments to State legislation or statutory plans that may affect exchange rates or interstate transfers (s12(a)-(d)). The Protocol does not prescribe how the Authority must act on a review request; it simply permits States to ask for a review when these triggers occur.

• Registration and publication. The Notes point users to the FRLI as the locus for registration and compilation (Notes), and s2 ties commencement to registration. Any future amendment history would therefore be visible on the FRLI record for this instrument.

This is the full amendment history contained in the instrument text: a revocation of prior exchange‑rate protocols made before 1 December 2009; the making/authentication dates in 2010; commencement on registration; and a built‑in procedure for review requests that may result in future amendments but do not automatically change the Protocol.

The Protocol text contains no references to litigation, court decisions, or legal proceedings. It does not name or cite any judicial authorities or cases. The only legal instruments referenced are the Murray‑Darling Basin Agreement (Schedule D) and the Water Act 2007, and the instrument is made under their authority (preamble; s1 note; s5 note).

Therefore, as far as the Protocol itself records, there is no litigation history contained within the text. Any litigation arising from the operation of the Protocol,such as disputes over State approval refusals, factual questions about whether the s8 conditions were met, or disputes over interpretation of Table 1 or Table 2 entries,would necessarily be external to the Protocol and would depend on how State statutes, administrative regimes and the Agreement are engaged. The Protocol does not provide for internal dispute resolution or judicial review procedures; it sets rules and relies on State laws and the broader Agreement framework for implementation (s5 note; s9).

If a reader requires a catalogue of cases or disputes involving these conversion factors or exchange rates, that material is not contained in the instrument and would need to be sourced from judicial databases, State records, or the Agreement’s dispute mechanisms. The text of the Protocol itself contains no litigation or case references.

The Protocol is concise but contains multiple technical and procedural traps for practitioners and administrators. These are matters where a literal reading of the Protocol can produce unintended practical consequences, or where a narrow factual requirement could block or alter a conversion or transfer. The following points are strictly drawn from the Protocol text.

1. Conversion factors apply only where Table 1 applies (s6). Table 1 covers only two items: Murray New South Wales and Murrumbidgee. If a conversion involves entitlements outside those listed in Table 1, the conversion factors in this Protocol do not apply. Do not assume a conversion factor exists simply because similar entitlements exist elsewhere: the Protocol limits Table 1 coverage to the listed valley/State rows.

2. Asymmetry of conversion factors (s6; s7). The conversion factors are not reciprocal in the sense that converting from lower to higher reliability uses a factor less than 1 (reducing volume) while converting from higher to lower uses a factor greater than 1 (increasing volume). The Protocol prescribes the arithmetic: multiply the initial entitlement’s volume by the relevant conversion factor (s7(2)). The practical consequence is that converting to higher reliability reduces recorded volume under the entitlement regime; converting back increases it by a different multiplier (1.6667 vs 0.6 etc.). The precise numbers are set and must be applied as listed in Table 1.

3. State approval is mandatory only when the s8 tests are met (s8). Section 8 binds a State to approve conversion of lower to higher reliability entitlements in two narrowly circumscribed scenarios. If those conditions are not satisfied,e.g. if the allocation is less than 100% and the applicant has not acquired additional volume equal to the gap, or some allocated water has been used or transferred,the State is not bound by s8 to approve; State practice and State law will govern whether approval may be refused. Practitioners must strictly document the allocation percentage, whether any allocated water has been used or transferred, and any acquisition that purports to make up a gap.

4. “Acquired an additional volume” is a factual requirement at the time of application (s8(b)(i)). The Protocol requires the applicant, at the time of making the application, to have acquired an additional volume at least equal to any shortfall (s8(b)(i)). The Protocol does not define acceptable modes of acquisition in its text; that will interact with State law and registries. Practitioners should expect States to require documentary proof and to apply their own legal standards to what counts as “acquired”.

5. “None of the water allocated has been used or transferred” is absolute (s8(a) and s8(b)(ii)). Any use or transfer of the allocated water breaks the approval preconditions. Minor or inadvertent uses may therefore have large consequences for convertibility.

6. Exchange rate trade is often not available (Table 2, note). Table 2 contains many entries marked N/A. The note makes clear that N/A means exchange rate trade is not available for those cases. Do not assume interchangeability across valleys or States; check Table 2 before structuring an interstate exchange. Table 2 contains only a few non‑N/A entries (mostly 1.0000), including diagonal entries where the same entitlement/type and location are converted (effectively a 1:1 rule), and specific Goulburn HR entries where that HR can be used to create certain destination entitlements at 1.0000 (Table 2).

7. Effect of suspensions under State law (s9). A State may suspend conversion under its own law, but must notify the Authority at the same time and provide reasons (s9(1)-(3)). The Protocol does not prescribe how long a suspension can last, nor does it prescribe remedies for entitlement holders affected by a State’s suspension; those matters will be governed by State law and any higher Agreement mechanisms.

8. Reviews can be triggered by an 8% change measured from 19 May 2006 (s12(a)). The 8% threshold is measured either from 19 May 2006 or from the time a conversion factor or exchange rate is determined or altered by amendment to the Protocol. This historical baseline (19 May 2006) may produce surprising review triggers if entitlement volumes have shifted since that date. Practitioners should note the baseline date is embedded in the Protocol.

9. Technical model changes trigger review rights (s12(b)). Substantial changes to a relevant best‑practice hydrological model (including recalibration) are a ground for a State to request a review. This links technical modelling changes to legal review rights; practitioners should therefore track model changes closely.

10. No express remedy or penalty in the Protocol (s8-s12). If State officials fail to honour the approval duty in s8 or fail to notify under s9, the Protocol itself does not prescribe penalties or a built‑in dispute resolution process. Remedies would need to be sought in State law, through Agreement mechanisms, or by administrative means.

11. Registration and commencement timing (s2). The Protocol commences on the day after registration. Practitioners must check the FRLI registration date to know when it becomes operational (Notes; s2).

12. Revocation of earlier exchange rate protocols (s3). The Protocol revokes pre‑1 December 2009 protocols applying to exchange rate trade. Transitional or historic practice based on those prior instruments may no longer be authoritative and should be re‑examined in light of the revocation.

These “gotchas” are direct corollaries of the Protocol text. They are factual and procedural traps that will affect entitlement holders, solicitors and registries attempting conversions or exchange‑rate transfers. The safe course is to verify valley coverage of Table 1, check Table 2 for N/A entries, assemble contemporaneous documentary proof of allocations and acquisitions where s8 applies, and verify State notification timing and content if a State decides to suspend conversions under its laws.

Compliance with the Protocol requires adhering to its arithmetic rules, meeting the factual tests where State approval is required, and observing the notification and review procedures. The following stepwise checklist and recordkeeping steps are exclusively grounded in the Protocol text.

1. Confirm applicability and the operative instrument

• Verify the Protocol is in force by checking its registration date; it commences the day after registration (s2; Notes). Ensure you are acting under the currently registered instrument.

• Confirm the conversion or exchange you propose is covered by the Protocol. The Protocol applies to conversion of entitlements and exchange rate trade (s4). For conversions, check Table 1 to see whether the valley and entitlement types are listed (s6, Table 1). For exchange‑rate transfers, check Table 2 to see whether the origin-destination pair has a numeric entry or is marked N/A (s10, Table 2; Table 2 note).

2. Calculate the converted or exchanged volume using the prescribed arithmetic

• Conversions: If Table 1 applies, use the conversion factor in Table 1. Multiply the volume of the initial entitlement by the relevant conversion factor (s6; s7(2)). For example, where Table 1 applies and the conversion is from a lower reliability entitlement into a higher reliability entitlement in the Murray New South Wales valley, multiply the initial volume by 0.6 (s6, Table 1). Conversely, conversions from higher to lower reliability use the factor shown in Table 1 (s6).

• Exchange‑rate transfers: If Table 2 has a numeric entry for the origin-destination pair, compute the volume to be created in the destination State by multiplying the volume cancelled, extinguished or suspended at the origin by the exchange rate in Table 2 (s10; s11(2)). If Table 2 shows N/A for the pair, exchange rate trade is not available for that case (Table 2 note).

3. Satisfy the s8 conditions where converting from lower to higher reliability

• If the conversion sought is from a lower reliability entitlement to a higher reliability entitlement, the State must approve the application in any year when the factual preconditions in s8 are met. There are two alternative paths that create a State approval duty:

  • Path A: The allocation under the lower reliability entitlement is 100% and none of the water allocated has been used or transferred (s8(a)); or

  • Path B: The allocation is less than 100% by a certain volume (the gap) and, at the time of application, the applicant has acquired an additional volume at least equal to the gap, and none of the water allocated has been used or transferred (s8(b)(i)-(ii)).

• To comply, gather documentary proof of the allocation percentage, evidence that none of the allocated water has been used or transferred, and proof of acquisition of additional volume equal to any shortfall where applicable. The Protocol requires these facts be true at the time of application (s8). The Protocol does not define acceptable proof formats; expect State registries to set evidentiary standards and to operate under their own laws.

4. Observe State notification and suspension procedures

• If a State decides to suspend conversions under its own law for one or more valleys, the State must notify the Authority in writing and set out the reasons at the same time as it issues the notice required under its law (s9(1), s9(3)). If the suspension ends, the State must promptly notify the Authority in writing at the same time as its state law notification (s9(2)). The Authority, upon receipt, must inform other State Contracting Governments (s9(4)).

• Practically, ensure any State notifications required by State law are synchronised with the Authority notification and that the reasons for the decision are set out in writing as required by s9(3).

5. Use the review mechanism where appropriate

• If changes meeting the triggers in s12 occur, a State may ask the Authority to review a conversion factor or exchange rate (s12). The triggers include:

  • An at least 8% change in the total volume of a particular entitlement type in a valley measured from 19 May 2006 or from the time a factor or rate is determined or altered by amendment (s12(a));

  • Any substantial change to a relevant existing best practice hydrological model, including re‑calibration or major improvement (s12(b));

  • The creation of a new type of water entitlement in a State (s12(c)); or

  • An amendment to legislation or a statutory plan in a State that may affect exchange rates or interstate transfers under Schedule D (s12(d)).

• If you are a State, prepare the technical and documentary foundation for a review request (showing the 8% calculation, model changes, or legislative amendments) before asking the Authority to review.

6. Maintain contemporaneous records

• For any conversion or exchange-rate transfer, retain records of: entitlement type and valley; allocation percentages at the relevant time; evidence that allocated water has not been used or transferred where s8 is invoked; proof of acquisition of additional volumes where required; the arithmetic used in conversion or exchange-rate calculations (showing the multiplier and the resulting destination volume); dates of application and any State notifications to the Authority (s6-s11, s8, s9).

• Because the Protocol references historical baselines (19 May 2006) and technical-model triggers (s12), keep records that demonstrate the reference point and the measurement of any percentage change.

7. Coordinate with State registry and Authority expectations

• The Protocol embeds State law in its processes (s9) and relies on the Authority for intergovernmental communication (s9(4); s12). Ensure you follow State registry procedures for lodging conversion applications, and provide any evidence they require to demonstrate satisfaction of s8 conditions. If seeking an interstate exchange, verify the origin-destination pair is permitted under Table 2 and that the State registry and destination State are prepared to accept the created entitlement.

8. Check for N/A entries before structuring trades

• Before structuring an interstate exchange or advising a client, check Table 2 for N/A entries for the origin-destination pair (Table 2 note). If the pair is N/A, exchange-rate trade under this Protocol is not available, and you must either pursue a different mechanism under State law or accept that the Protocol does not permit that transfer.

9. Account for revocation and transitional issues

• Be aware the Protocol revokes earlier protocols applicable to exchange rate trade made before 1 December 2009 (s3). If relying on prior arrangements, check whether those earlier protocols have continuing effect in State law or whether the revocation means new agreements or registrations are required.

10. Don't assume remedies are supplied by the Protocol

• If a State refuses to approve a conversion despite meeting s8 conditions, or fails to give required notifications under s9, the Protocol itself does not prescribe penalties or remedies. Compliance challenges should be pursued under State administrative or legal remedies and, where relevant, under the Agreement’s governance mechanisms. Practitioners should advise clients accordingly.

Following these steps will align conversions and exchange‑rate transfers with the Protocol’s arithmetic and procedural rules. Because the Protocol ties into State law and technical models, coordination with State registries and with the Authority (for notifications and review requests) is indispensable.