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<br />1674 <br /> <br />.' ',. <br /> <br />The buyer typically prefers a water supply with senior decrees because less supply fluctuation will <br />occur. Associated reservoir storage close to the location of diversion or use, and a low purchase <br />cost and low transaction costs are important considerations for a buyer. Also important is a high <br />degree of certainty that the governmental permits and water court transfer decree can be obtained <br />with acceptable requirements. Crucial to the buyer is the ability to control the ditch company in <br />order to prevent obstruction of its change of use of shares by changes in the company articles, <br />bylaws, or procedures. Because of the cost of delivery facilities, the buyer usually seeks a range <br />of supply, i.e., a large enough supply to obtain economies of scale, but not so large that the supply <br />is excessive or the capital cost is out of reach. <br /> <br />All terms of the purchase and sale contract are negotiable, and contract terms are highly variable. <br />In some cases, the buyer bears the risk of successful transfer and consumptive use determination; <br />in other cases the seller bears that risk. <br /> <br />A variety of governmental permits and authorizations may be required. Because of the presence <br />of federally operated reservoirs on many major streams, federal storage authorizations may be <br />required. U. S. Army Corps of Engineers Section 404 permits may be required, as are rights of way <br />over federal lands for pipelines. One of the federal actions may trigger a fish and wildlife <br />endangered species consultation. State permits are required for rights of way over state lands for <br />pipelines and for water treatment facilities. If water treatment results in discharge of a waste, state <br />water quality permits for point source discharges will be necessary. Both federal and state parks <br />and recreation areas border most major streams; changes in stream flow may require consideration <br />by federal and! or state agencies. An additional possibility that currently no such restrictions exist <br />in the study area. In Colorado, local governments may enact land-use codes which impose <br />restrictions on water diversions or change in water uses, as well as zoning requirements on land <br />use. To date, no such restrictions are in place in the five county study area. <br /> <br />The water rights transfer process occurs in the special water court with responsibility for the <br />particular stream basin. Interested parties may file statements of opposition. Typically owners of <br />other water rights, including minority shareholders in the ditch, file statements of opposition, <br />asserting that their water rights could be adversely affected if the transfer request is granted <br />without terms and conditions to prevent material injury to their water rights. On occasion, other <br />interested persons or groups file statements of opposition and participate in the case. Generally <br />the state engineer participates to assure compliance with generally accepted hydrologic analysis, <br />compliance with state rules and regulations, and to encourage appropriate methods of <br />administration of and accounting for water being transferred. While a water rights owner or holder <br />clearly has standing to participate in the case, the Colorado supreme court has not resolved the <br />standing of other third parties. The extent to which the water court may act to protect third party <br />interests which are not related to water quantity or quality has not been tested. Typically objectors <br />complain that some aspect of the application will adversely change the quantity of water received, <br />especially as a result of changed return flows from historically irrigated lands, the timing of water <br />received, or its quality. Minority shareholders on the same ditch often also desire protection from <br />increased operating costs, or weed infestations on nearby dried up lands. <br /> <br />The application proceeds as normal civil litigation, with significant attention to experts' opinions <br />as to historic use of the rights and future injury to objectors. The case is tried before a water court <br />judge, with possible appeals directly to the Colorado Supreme Court by any of the parties. The case <br />may be settled by a stipulated judgement at any time. The water court must grant the application <br /> <br />2-2 <br />