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<br />ditch company whose operation is controlled by all irrigators on the ditch. The buyer desires <br />confirmation that a certain minimum quantity of transferable consumptive use water will be available, <br />and that the water will be deliverable to its place of need. In some cases the water is to be <br />exchanged upstream to a storage location and pipeline intake, although sometimes a downstream <br />storage location and pipeline intake can be used. <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 cost <br />and low transaction costs are important considerations for a buyer. Also important is a high degree <br />of certainty that the governmental permits and water court transfer decree can be obtained with <br />acceptable requirements. Crucial to the buyer is the ability to control the ditch company in order <br />to prevent obstruction of its change of use of shares by changes in the company articles, bylaws, or <br />procedures. Because of the cost of delivery facilities, the buyer usually seeks a range of supply, i.e., <br />a large enough supply to obtain economies of scale, but not so large that the supply is excessive or <br />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 of <br />federally operated reservoirs on many major streams, federal storage authorizations may be required. <br />U. S. Army Corps of Engineers Section 404 permits may be required, as are rights of way over <br />federal lands for pipelines. One of the federal actions may trigger a fish and wildlife endangered <br />species consultation. State permits are required for rights of way over state lands for pipelines and <br />for water treatment facilities. If water treatment results in discharge of a waste, state water quality <br />permits for point source discharges will be necessary. Both federal and state parks and recreation <br />areas border most major streams; changes in stream flow may require consideration by federal and/or <br />state agencies. An additional possibility that currently no such restrictions exist in the study area. <br />In Colorado, local governments may enact land-use codes which impose restrictions on water <br />diversions or change in water uses, as well as zoning requirements on land use. To date, no such <br />restrictions are in place in the five county study area. <br /> <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 without <br />terms and conditions to prevent material injury to their water rights. On occasion, other interested <br />persons or groups file statements of opposition and participate in the case. Generally the state <br />engineer participates to assure compliance with generally accepted hydrologic analysis, compliance <br />with state rules and regulations, and to encourage appropriate methods of administration of and <br />accounting for water being transferred. While a water rights owner or holder clearly has standing <br />to participate in the case, the Colorado supreme court has not resolved the standing of other third <br />parties. The extent to which the water court may act to protect third party interests which are not <br /> <br />2-2 <br />