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At the time of the 1992 Master Agreement, the local water
distribution system that was connected to CAP and that was
maintained by HID was complete. HID agreed to continue to
maintain and operate this water distribution system in subsequent
years, by purchasing water on the open market and distributing
and selling water to the Harquahala Valley landowners and to
others as the landowners and others decided to purchase water
from HID at market rates. The CAP Water District was one of the
sources from which HID might purchase water in subsequent years,
depending on the price of water available through CAP in
comparison to the price of water available from other sources.
After relinquishment to the Interior Department of the water
rights by the Harquahala Valley landowners, the water rights were
reallocated to other users of Colorado River water.
On March 21, 1994, the Inspector General of the Interior
Department issued an audit report regarding the Master Agreement
and relinquishment by HID of its Colorado River water rights.
This report faulted the Interior Department in the negotiations
relating to relinquishment of HID’s water rights and for
discounting the value of HID's debt obligation to the Federal
Government to a present value (as of the end of 1992) of $5.8
million, which was factored into the computation of the payment
to HID of $28.7 million. This report also stated that the
Harquahala Valley landowners “unduly benefited” by receipt of
$24.6 million in connection with relinquishment of the water
rights.
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