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~ non-federal entities. costs of operation and maintenance to the extent that such costs exceed the expenses which would have been incurred absent the unitls construction; and WHEREAS. the Contractor is an irrigation distric~ organized pursuant to articles 41. 42. and/or 43 of title 37, Colorado Revised Statutes. which furnishes irrigation water to its users through headgates on its main canales), such water thereafter flowing through a system of private laterals which are currently owned and operated by numerous private individuals or informal groups and associations; and WHEREAS. the Secretary. acting through the United States Bureau of Reclamation (Reclamation). is requiring that the laterals be organized into entities enabled by the laws of the State of Colorado with which it can contract for the long-term operation and maintenance of the improved laterals; and WHEREAS. the State. acting through the Colorado Water Conservation Board (Board). has solicited the Contractor to be, and the Contractor is willing to become, the non-federal entity which will acquire such real property interests in the laterals under its canal system as will enable it to contract with Reclamation for the long-term operation and maintenance of the improved laterals; and WHEREAS. the Contractor must first conduct a review of its legal authorities and accounting procedures and negotiate with Reclamation a contract(s) lias to formu for the long-term operation and maintenance of the improved laterals (said activities hereinafter being referred to as IIStage II activitiesll); and WHEREAS. the State and Reclamation desire that the Contractor undertake these Stage II activities: and Page I of 10 Pages