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has been filed, and they have a right to file with the state comments on the mitigation of the compensation
<br />being paid for this water. So you can see the Legislature tried to make it a very inclusive, politically
<br />complicated process. Obviously, the state is going to look at the impact of an inter -basin transfer on
<br />existing water rights. Another thing that they will look at is the need for the water in the basin of origin --
<br />that is, the Red River Basin -- and in the receiving basin. For Irving, that would be the Trinity River Basin.
<br />So, is there really a need in the Trinity River Basin, and if water from Lake Pat Mayse is going to flow
<br />there, how is that going to impact the need for water in this area? Are needs still going to be met? The
<br />TCEQ will also look at the projected economic impact that is expected to occur in each basin as a result
<br />of the transfer. And in the case I was referring to, an economist was hired to write a report about
<br />economic impacts on both basins. It's not something they expect lip service to. They really want to have
<br />an analysis of what's going on. So it's a fairly arduous process to get one of these permits. It's not at all
<br />impossible; it's been done, but it's something there is a lot of process built into.
<br />As I mentioned, these inter -basin transfers will have a junior priority date, so the transfer out of Lake
<br />Texoma to Lake Lavon, has, I guess, a 2004 priority date associated with it, where the water rights that
<br />Denison holds in Lake Texoma probably go back to the 50s or 60s. That's simply a way for the
<br />Legislature to try to discourage the movement of surface water.
<br />So, that's the drill on inter -basin transfer permits -- a lot of process, a lot of very detailed questions and
<br />analysis that the state takes a look at. But that's not to say that can be a real big impediment to moving
<br />water around the state when there is a need for water and a surplus of water in other areas that can meet
<br />that need.
<br />Question: If the citizens of Paris found we had water to sell, and decided to sell it, we'd have to go
<br />through the permitting process, which means everybody in the Red River Compact area would have to
<br />approve that transfer?
<br />JM: No, not approve. Simply, they have to give notice to all county judges, and I think notice to mayors
<br />of all cities that have a population in excess of one thousand. So there's broad notice to elected officials.
<br />The county judges are specifically given by statute the right to file comments with the state on what they
<br />think is appropriate with regard to either mitigation to the basin of origin, which is the Red River Basin, or
<br />the compensation that is going to be paid by the City of Irving.
<br />Question: Is that all counties in all four states?
<br />JM: No, just in Texas. This is purely a Texas statute and would apply only within the state of Texas.
<br />It is a right to comment. It's not control. The thing I'd emphasize here, the only one I've been involved
<br />with since the statute passed,
<br />there was no mitigation planned with regard to the sale, there was merely a compensation provision. I'm
<br />not aware that any county judge commented on that at all. Was no hearing requests, and no hearing
<br />granted on the application. It went through surprisingly quickly and efficiently for something that had this
<br />much process built into it. Both parties did a good job communicating within their respective areas what
<br />they were going to do about it, and everybody pretty much said, "Sounds like a good deal to me."
<br />The water that's going to move inter -basin will have a priority date associated with it of the date of
<br />application. The priority date means anybody who has an earlier water right has a right to have their water
<br />rights met in full before that water right can be exercised. If you didn't have a storage reservoir, if you just
<br />had a stream, and I'm downstream and I've got a 1901 water right, and you're upstream and you've got a
<br />2004 water right, in a drought, if I'm not getting the water that applies under my permit, I call the state and
<br />say, you know, I think somebody's diverting my water upstream, go talk to them. And they would tell all
<br />these newer water rights holders, you got to pass through your water until I got my water first. That's how
<br />the priority key works in the appropriative water rights system. It becomes more complicated in a situation
<br />like you have here, where there's a storage reservoir, because Paris has a right to capture and store that
<br />water with a 1964 priority date to it, and regardless of whether you sell it to Irving, or you use it locally, or
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