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I I I I I I I I I I I I I I I I I I I per year. The six wells currently owned by Preisser represent about i900 af/y. The wells historically have been used for irrigation, and the water rights are absolute for that use. The absolute water right was reduced to 1300 af/y by stipulation in a later diligence proceeding. The consumptive use has been further reduced to a total of 550 af/y under the settlement agreement that is part of this project. The decree in W -2545 and W -3890 is included as an attachment to this report. Water Quality Though no specific water quality analysis data is known to exist for the Preisser wells or the Box Springs augmentation source, both sources historically have been used for irrigation. The owners of both properties indicate that the water quality is suitable for the purposes of this project. Need for the Project This project is to provide an augmentation plan to allow pumping of junior Preisser wells located on the Preisser property (see Figure I). These wells historically have been used for irrigation of agricultural land. As the plan is envisioned, Preisser intends to sell land and water rights to a commercial hog-raising operation. Without the augmentation plan, these junior wells will be shut down by the State Engineer as being out of compliance with new rules applicable to the Arkansas River Basin. Preisser accepted a settlement agreement dated May 4, 1998 with owners of downstream water rights senior to Preisser's, i.e. Smith Cattle Company ("Smith"), Reid Cattle Company ("Reid"), Horse Creek Water Users Association ("HCWUA") and Box Springs Canal and Reservoir Company ("Box Springs"). Colorado State Engineer Hal Simpson is also a party to the settlement agreement. The agreement involves Preisser's purchase of certain Box Springs rights for a cash payment, and cash payments to the intervening seniors Smith and Reid to mitigate any HRS WATER CONSULTANTS, INC. page 4