William T. and Nicole L. Gladden - Page 5




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               In 1971, under Arizona State law, the Central Arizona Water             
          Conservation District (CAP Water District) was formed as a                   
          special water conservation district responsible for operation and            
          maintenance of CAP and for repayment to the Interior Department              
          of construction costs that the Federal Government would incur for            
          construction of the CAP water distribution system.                           
               In 1976, petitioners and other investors formed the Saddle              
          Mountain Ranch partnership (the partnership), and for a cost of              
          approximately $675,000, the partnership acquired an ownership                
          interest in farmland in Harquahala Valley, Maricopa County,                  
          Arizona.                                                                     
               On February 10, 1983, the Interior Department allocated to              
          Indian communities, to municipalities and industrial users, and              
          to non-Indian agricultural users including irrigation districts              
          such as HID, rights each year to receive, through the CAP                    
          distribution system, up to a specified quantity of Colorado River            
          water.  Notice of Final Decision, 48 Fed. Reg. 12446 (Mar. 24,               
          1983).  Under this allocation, HID was granted the right to                  
          obtain Colorado River water for redistribution to Harquahala                 
          Valley landowners for the purpose of irrigating farmland located             
          within geographic boundaries of the HID water district.                      
               As set forth in the following schedule, the specific                    
          quantity of lower Colorado River water to which HID was entitled             
          for the above purpose was 7.67 percent of non-Indian agricultural            
          lower Colorado River water that was available each year:                     




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