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February 18, 1998, Mr. Lehrer and Mr. Rose signed a letter
agreement in which the LCRA agreed to purchase the portion of
petitioner’s water right not involved in the Corpus Christi
transaction and petitioner’s irrigation assets for $75 million.
The purchase price was proposed by Mr. Lehrer and accepted by the
LCRA without negotiation or counteroffer. As a condition to the
sale, the LCRA agreed to withdraw its opposition to the Corpus
Christi transaction and to assist petitioner in obtaining
approval for the Corpus Christi transaction from the TNRCC.
Petitioner had the right to cancel the sale if the TNRCC did not
approve the Corpus Christi transaction. Petitioner also agreed
not to negotiate with anyone else during the pendency of the sale
to the LCRA.
On July 20, 1998, petitioner and the LCRA signed a purchase
agreement for the sale of the remaining 133,000 acre-foot portion
of petitioner’s water right. On July 22, 1998, petitioner filed
an application with the TNRCC for authorization to use the
133,000 acre-foot portion of its water for municipal or
industrial purposes, but only to the extent the water was not
needed within petitioner’s service area for irrigation. The
application also requested an expansion of the service area in
which petitioner’s water right could be used, to four additional
counties within the Colorado River Basin, but again, only to the
extent the water was not needed within petitioner’s service area
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