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Northern Colorado Water Conservancy District has fostered a system of free market transferability of water allotment contracts for water delivered by the Colorado-Big Thompson Project. The CBT Project, a Bureau of Reclamation Project completed in the mid 1950's, captures and stores an annual average of 240,000 acre-feet of water at the headwaters of the Colorado River on Colorado's Western Slope for delivery through a transmountain diversion tunnel to Northeastern Colorado. The Northern District, co-sponsor of the CBT Project, was created in 1937 as the first of forty-six water conservancy districts in the State. In 1938, the Northern District executed a Repayment Contract with the United States which provides that the District has the "perpetual right' to use all Project water transported across the mountains for "irrigation, domestic, municipal, and industrial purposes,' Article 16, Repayment Contract. The CST project was developed as a supplemental water supply primarily for irrigation use. The purpose was to augment the base water supply for farmers whose native water rights were inadequate to provide a reliable water supply, particularly in drought years. Today, due to original purchases of CBT allotments by cities and subsequent transfers over the past thirty years, one third of CBT Project units are now held for municipal use within the boundaries of the Northern District, in order to supplement the water supply inventories of Northern_ Colorado cities. Pursuant to the Water Conservancy Act, 37-45-101, C.R.S., ~ seq., the District allocates the CBT water supplies by means of 'allotment contracts' executed between the District and water users. Because of its imported water status, use of CST water within District boundaries can be changed without regard to the material injury doctrine which applies to transfers of native water. Because of a CBT Repayment Contract contractual -16-