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<br />2. There is nothinq in the Seven Party Aqreement or the <br />IID/Coachella 1934 Compromise Aqreement that prohibits lID from <br />leasinq conserved water to the Authority. <br /> <br />Neither agreement addresses transfers of conserved water, and <br />it is clear that the parties who negotiated the agreements did not <br />intend to cover such transfers. The sole purpose of the Seven <br />Party Agreement was to recommend "apportionments and priorities" <br />for water deliveries in the State of California under federal <br />contracts pursuant to the Boulder Canyon proj ect Act. The <br />principle purpose of the 1934 Compromise Agreement was to provide <br />for delivery of water to Coachella and to recognize lID's prior <br />right over Coachella to third and sixth priority water. Both <br />agreements did not address and therefore properly leave the <br />characteristics of water rights to state law. <br /> <br />The words "exclusively for use in the Imperial service area" <br />contained in the 1934 Compromise Agreement do not limit lID's right <br />to transfer conserved water. Some confuse the description of a <br />water right with a restriction on its use. Such wording does not <br />prevent lID from transferring its water to another location under <br />state law . Appropriative water rights always relate to a specified <br />place of use. Yet California law has long recognized an <br />appropriator's right, despite such relationship, to change the <br />place of use. In changing a place of use, of course, an <br />appropriator must ensure that the change does not injure other <br />water users who rely on return flows. Because holders of rights <br />junior to lID do not rely on any return flow from IID's water use, <br />they have no grounds under state law to challenge a change in the <br />place of use from lID to the Authority. <br /> <br />Junior rightholders would still enjoy the same <br />diversion/delivery opportunities following implementation of a <br />program where water conserved by lID is leased to the Authority. <br />Moreover, junior rightholders do not have any right to water that <br />would be conserved by lID and transferred to the Authority because, <br />but for the conservation, that water would have been used by lID <br />and, therefore, not available for use by the junior rightholders. <br /> <br />3. lID's water supply contract does not impede its proposed <br />transfer to the Authority. <br /> <br />As stated before, not only does Article 17 not prohibit <br />transfers, it expressly recognizes that lID's contractual rights <br />are lIwithout prejudice to any other or additional rights that the <br />District may now have not inconsistent with the foregoing <br />provisions of this article." The article further provides that <br />present perfected rights must be satisfied. Moreover, the wording <br />is not in the form one would expect if lID was agreeing to waive <br />its substantial water rights under state law. A clear reading of <br />the article establishes that the provision is directed towards <br />defining the federal government's water delivery obligations rather <br />than restricting lID's utilization of the water. <br /> <br />4 <br />