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I I I I I I I I I I I I I I I I I I I SECTIONFOUR Water Rights ditches at any time during the irrigation season. If, and when, the irrigation pool in Trinidad Reservoir is empty during the irrigation season, the ditches can divert available water from the Purgatoire River under their own individual priorities. Table 4-1 of this Report sets out the amount of water delivered to the Company by the District under the two contracts for the period 1982 to 1998, based on the District's records. Under the Trinidad Project Operating Criteria, space in Trinidad Reservoir is reserved for storage of water for use exclusively on lands irrigated from Company facilities. Under these provisions, the District is required to reserve up to 1,200 acre-feet of water in advance of the irrigation season each year for exclusive use on Company lands. In addition, the Company can carry over water in this account up to a maximum storage amount of6,000 acre-feet at anyone time. This exclusive right is referred to as the Model Account in Trinidad Reservoir. As described below, 500 acre-feet per year of this right has been conveyed to the City of Trinidad. The water in the Model Account is included in the amount of water allocated to the Company by the District in the spring of each year described above. The Model Account water is primarily useful to the Company in particularly low water years when Trinidad Reservoir has little water in storage. A portion of the Company's rights under the two District contracts, and other water rights, were conveyed to the City of Trinidad in 1981 pursuant to a settlement ofa dispute among Trinidad, John T. Oxley, and the Company. Pursuant to a Separation Agreement dated August 1, 1981, between Trinidad and the Company, the Company conveyed the following rights to Trinidad: 1. 2.0 cfs of the Leitensdorfer Ditch, adjudicated by decree dated August 10, 1903, priority date March 20, 1862, Appropriation Priority No.5, in Water District No. 19, from the Purgatoire River, for irrigation purposes. 2. 242 shares in the Johns Flood Ditch Company. 3. The prior right to 500 acre-feet per year out of the first 1,200 acre-feet of water stored or storable in the Model Account in Trinidad Reservoir described above. 4. The right to the water allocable to 373.7 acres ofland jrrigable under the contract between the Company and the District regarding the Model water rights. 5. Up to 1,200 acre-feet of water stored in the Model Account of the Company's entitlement to water from the Trinidad Project in critically dry years for use as an emergency drought water supply. In addition to the transaction with Trinidad, the Company completed a transaction with River Canyon Ranch, Inc., in 1999 in which the Company transferred to River Canyon the right to receive water for irrigation of 50 acres under the Company's District contracts. This water, in the future, will be delivered to River Canyon's lands under the Lewelling & McCormick Ditch. In return for the transfer of water, River Canyon assigned to the Company its 50 shares of stock in the Company, thus eliminating River Canyon as a Company shareholder. The Company has not performed any studies of the historical consumptive use of water under the Company's water rights. However, Trinidad currently has pending a change of water right application that seeks to change the use of the Model water rights from irrigation to municipal use, Case No. 88CW61, Water Division No.2. W.W. Wheeler and Associates, Inc. performed an engineering study in support of Trinidad's change application, revised through December 1992. This engineering study estimates that the ditch losses between the Purgatoire River headgate and the farms under the Company's ditch system is 25%, and that the farm efficiency URS Greiner Woodward Clyde 6800044333.00fR2.doc 1/31100(3:18 PM)/PROJECTS 4-2