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The Next Step: A Major Water Transfer Because lID is by far the largest water user on the Colorado River, the pressure to conserve has been building for many years. In 1995, the board of directors adopted a set of principles contained in a resolution known as "lID-2000." In it, directors formally confirmed their intention to fund water conservation measures through a market-based water transfer program. This eventually led to negotiations with the San DiegoCounty Water Au- thority which likely will lead to lID's next and largest conservation effort. lID's goal is to secure and protect its water rights by conserving and sharing with a neighbor who is willing to underwrite the cost of conservation. San Diego's goal is to obtained a secure water supply and diversify its water sources. By gaining funds to imple- ment additional on-farm and system improvements lID will generate at least 200,000 acre-feet of conserved water. It is this water that will actually be leased to San Diego. Such a transfer would also benefit farmers by providing incentives to participate in conservation programs. It would help suppliers and contractors who would provide materials and labor which would benefit the community at large with a major economic stimulus. Conservation measures being explored for this program include continued system improvements. But much would be done on-farm, including improved irrigation systems, tailwater reuselcontrol and a variety of other tech- mques. A Conservation Mentality The success of past conservation programs and the aggressivepursuit of new conservation efforts have firmly established lID as a national leader in conservation practices. This national reputation aside, the most critical outcome of all these efforts is the growing amount of conserved water available to other people for other uses. lID's board remains firmly committed to this approach. Water Rights in the Imperial Valley Blessed with leaders of great foresight nearly a century ago, the people of the Imperial Valley today possess secure water rights that have been passed down from generation to generation as the Valley grew. Now, other Colorado River water users are looking closer at these entitlements. One, the Coachella Valley Water District is raising the decibel level of discussions aimed at preventing what the state and federal governments are encourag- ing, i.e. legally-allowed water transfers. For this reason, a quick review of lID's water rights is helpful. State Water Rights: Imperial Valley possesses water rights that predate all major agreements under which it now operates. Over the years, it has chosen to bind itself to agreements that serve the needs of its Southern Cali- fornia and southwest neighbors. The Colorado River Compact (1922), The Boulder Canyon Project Act (1928) and the Seven Party Agreement in 1931 identify the main body of California's water allocations. lID's appropriations in the late 1890s amounted to approximately 7 million acre-feet per year. These rights became the basis for a large part of the lower basin's Colorado River water rights, including California's apportionment. lID also agreed to allow Coach- ella Valley to join the District (CVWD refused the offer). The 1934 Compromise Agreement offered Coachella Valley Water District another opportunity to join lID and have an equal share of lID's water rights as the rest of the District. Instead, CVWD agreed by contract that all of its water uses would have a lower priority than those of lID. Within the framework of these water agreements, both California and federal water law and policy promote the conservation and transfer of water to meet the growing water needs within Southern California. lID and the SDCWA are negotiating an agreement that follows this law and policy. Careful analysis of the pertinent compact, statutes, cases, and state and federal regulations clearly establishes that a lease of conserved water by lID to the Authority is authorized under both state and federal law and is not prohibited by lID's contract with the Secretary of the Interior or by other contracts lID has made with other users of Colorado River water. A few points can summarize this review: In Arizona v California, (1964) the U.S. Supreme Court recognized that the 1922 Colorado River Compact and the Boulder Canyon Project Act protected lID's present perfected rights as having priority over other rights and superior to those under any other lID contract or agreement. Neither the Seven Party Agreement nor the 1934 Compromise addresses transfers of conserved water and it is clear that the parties who negotiated the agreements did not envision such transfers. The principle pur- 3