William T. and Nicole L. Gladden - Page 23




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          contracts that were involved in those cases and in the Boulder               
          Canyon Project Act that is involved in the instant case.                     
               We now apply the law, as set forth and discussed above, to              
          the undisputed facts of this case.  The participation and rights             
          of the partnership in which petitioners invested in Colorado                 
          River water originated in 1983 only as a result of and in direct             
          proportion to the partnership’s ownership interest in Harquahala             
          Valley land.  The 1983 allocation of water rights to HID under               
          the Subcontract and through HID to the partnership under Arizona             
          law was directly linked to and dependent upon the partnership’s              
          ownership of the land and on irrigation of the land in prior                 
          years.                                                                       
               Ariz. Rev. Stat. Ann. sec. 48-2990, relating to water rights            
          and irrigation districts, and under which the partnership in 1983            
          received its Colorado River water rights, provides in part as                
          follows:  "Subject to the law of priority, all water of the                  
          district available for distribution shall be apportioned to the              
          lands thereof pro rata".                                                     
               The water rights of the partnership were linked to the                  
          partnership’s ownership interest in the land, to its farming                 
          operations and activities on the land, and to its capital                    
          investment in the land.  The water rights, and particularly the              
          decision in 1992 to relinquish the water rights, affected the                
          partnership’s farming activity and the investment risks                      
          associated with that farming activity--especially the financial              
          risks associated with purchasing water on the open market.                   


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