PROCEDURE FOR TRANSFER OF WATER
FROM ONE LATERAL TO ANOTHER
UNDER THE BESSEMER DITCH

 1. Transfer of water shares between laterals served by the Bessemer Ditch shall be permitted only on or before April 1 of each calendar year.

2. All requests for transfer of water from one lateral to another must be submitted in writing to the Superintendent of the Company not later than January 31 of the year in which the transfer is requested.

3. All approved transfers shall be conditioned upon the Applicant, at Applicant's expense, making all necessary changes in divider boxes and delivery systems.

4. The Superintendent shall notify the Board of any requested transfer and shall also notify by certified mail all Company stockholders on each lateral which will be effected by the requested transfer, advising each shareholder of his/her right to object, in writing, on or before March 1, to the proposed transfer on any valid water related basis. The records of the Company respecting stockholders on various laterals shall be deemed conclusive as to the stockholders to be notified respecting each lateral effected by the requested transfer.

5. Objections or protests to any proposed transfer must be filed, in writing, with the Superintendent, on or before the 1st day of March following the mailing of the notices of requested transfer.

6. The Board  initially determine whether, in its opinion, the requested  transfer may be  made without injury to either the Canal or the Company. The Board shall also determine whether or not any of the objections or protests received state valid water related issues. Objections or protests which do not appear to state valid water related issues will be disregarded by the Board and the Objector(s) so notified.

1. If the Board determines the requested transfer can be made without injury to the Canal or the Company, and there are no objections or protests from any stockholders, the Board shall approve the requested transfer.
2. If the Board determines the transfer CAN be made without injury to the Canal or the Company, but there are valid objections or protests:
3. If the Board determines that the transfer CANNOT be made without injury to the Canal or the Company:
   1. The Board shall reduce its decision to writing, including the reasons therefore; and,
   2. The Superintendent shall send Applicant a copy of the Board's decision and provide Applicant with copies of the valid objections received, all by March 10.
   3. If the Applicant disagrees with the Board's decision, Applicant may; within 30 days after Applicant's receipt of the Board's decision, request a hearing before the Board, which hearing will be held within 30 days following Applicant's request for hearing. Both Applicant and the Board, shall be free to introduce evidence at the hearing, and neither shall be limited to the information contained in either the Request for Transfer or the Reasons for Denial of Transfer. The Board shall render its decision within 15 days following the close of the hearing. The decision of the Board shall be final, subject only to review by the Water Court of the District Court of Pueblo County, Colorado.
4. If the Board ultimately determines the requested transfer can be made without injury to the Canal or the Company and there are valid objections or protests from any stockholders, the Board shall withhold approval of the requested transfer until the first to happen of the following occurs:
   1. The Applicant-and Objectors resolve their differences and the Board is so notified in writing, signed· by all Objectors and the Applicant; or
   2. Applicant and Objectors submit the matter to a BINDING HEARING before the Board, provided application for such is timely made under the terms of Paragraph E below. At the hearing, both Applicant and Objectors shall be entitled to present evidence; the Board shall be entitled to request additional evidence deemed necessary; be it engineering, legal, or whatever. The decision of the Board shall, in any event, be final and binding on the parties; the decision shall be rendered within 15 days following the close of the hearing. There shall be no appeal of this decision of the Board; or,
   3. Applicant commences an action in Water Court seeking approval of the proposed transfer. The Company shall not be made a party to the Water Court action, but shall abide by the final decision of the Court.
5. Applicant and Objectors may request the dispute be resolved by the Board, provided however, that the written request for a Board hearing is received by the Company at its office, within 45 days of the later of:
   1. The date of the final decision under Paragraph 5.C.3 above; or if no such hearing was held,
   2. The date the Company mailed to Applicant the copies of the valid objections or protests received by the Company. The parties failure to request a Board hearing within the above time period shall conclusively be presumed to constitute their election to submit the dispute to Water Court. Any request for a Board hearing must be signed by all Objectors and Applicant; the request shall be deemed the parties' waiver of any right to appeal the decision of the Board to Water Court.

The parties failure to request a Board hearing within the above time period shall conclusively be presumed to constitute their election to submit the dispute to Water Court. Any request for a Board hearing must be signed by all Objectors and Applicant; the request shall be deemed the parties' waiver of any right to appeal the decision of the Board to Water Court.

 7. All disputes relative to transfers must be resolved by March 31 for the water to be eligible for transfer during that year.

8. All expenses incurred by Company with respect to any requested transfer shall be paid by Applicant. Advanced payments or estimated anticipated expenses must be required at the discretion of the Superintendent.

1.5M - 12/93-20552