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00 311 ~ Texas law originally passed in 1913 now provides that: [n]o person may take or divert any of the water of the ordinary flow, underflow, or storm flow of any stream, watercourse, or wa- tershed in this state into any other natural stream, watercourse, or watershed to the prejudice of any person or property situated within the watershed from which the water is proposed to be taken or diverted.'8 A 1966 Texas Supreme Court decision held that "prejudice" is to be determined by weighing the detriments to the basin of origin against the benefits of the diversion.39 The court concluded that this law pro- hibited an out-of-basin diversion "only to the extent such diversion would impair water rights in existence at the time of the proposed diversion. "40 The prejudice standard permits consideration of reason- able future needs as one of the factors to be evaluated in the permit review by the Texas Water Rights Commission. C. Compensation The third general approach taken to provide protection to areas of origin emphasizes compensation. Rather than reserving water for speculative future needs in the area of origin, the intent is to make the area of origin better off by providing benefits that at least offset the costs imposed by the transfer. California took this approach in developing its State Water Pro- ject. The Burns-Porter Act, passed in 1959 to create funding for the Project, contained several provisions intended to compensate northern California for the loss of water. One form of compensation was fund- ing for certain local needs including flood control.41 In addition, the Act established a grant program for recreation and fish enhancement and a loan program for small projects and rehabilitation of domestic water systems.42 It should be noted, however, that this law retained the right of area-of-origin residents to have permanent priority to any exported water.4J The 1968 Colorado River Basin Project Act adopted a compensa- tion approach to address area-of-origin concerns. Section 203(a) of the Act provides: 38. TEX. WATER CODE ANN. S 11.085 (Vemon Supp. 1985). 39. City orSan AnloniO \I. Texas Waler Comm'n. 407 S.W.2d 752, 759 (Tex. 1966). Set' 01.\0 City of Frisco v. Texas Water Righls Comm'll, 579 S.W.2d tJ6, 69 (Tex. Civ. App. 1979). 40. City orSan Antonio v. Texas Wah:r Comm'n, 407 S.W.ld 752 (Tex. 1966). 41. CAL WATER Com, ~ 12938 (Wes! lQIl). 42. 'd. ~9 I 2934(d)(6), 12880-128Q3 (We~t 1971). 43. See supra lex' accompanying notes 19.20.