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cated. And you are saying, no, we want to go back to a veto and 

 contracts in perpetuity. 



Mr. Nelson. We want to go back to state water law the same 

 way that other water users — the other way that — the same way 

 that other transfers 



Mr. Miller. But you never had more than a contractual right. 

 You never had more than a contractual right. 



Mr. Nelson. However, there must be merit. There must be merit 

 for the renewals of other contracts of 



Mr. Miller. If you want to turn it into a property right, that is 

 different. But what you have is a contractual right. You went to 

 law school. 



Mr. Nelson. No, fortunately I didn't. 



Mr. Miller. You didn't? Well, that is why you don't understand. 

 You have got property rights and contractual rights all mixed up. 

 No, see, you have a contractual right for a period of time. 



Mr. Nelson. But, Congressman, this is an issue of 



Mr. Miller. And, you know, just like you lease your house, the 

 landlord comes along and says, "Next time you want to lease the 

 house, we are not going to let you have dogs," or, "We are going 

 to raise the rent," or, "Those are the terms and conditions." If you 

 have a mortgage, you don't go back at the end of your mortgage 

 and say to the bank, "I want the same terms I wanted 30 years 

 ago." There are new terms and conditions. Those are contracts. 



Now, some people up north in Mr. Doolittle's area, they have dif- 

 ferent water rights. OK? They have different water rights. These 

 are contractual rights. The state gave a permit so that we could 

 create some contractual rights. And the question is are those con- 

 tracts open to modification so they can be reviewed without deter- 

 mining the outcome, so they can be reviewed periodically so the 

 state c£in choose some priorities and some allocations. 



And the scenario that you are painting here is that cannot be 

 done because you want those contracts in perpetuity, no discretion, 

 and you want a veto over transfer rights. That means no water es- 

 capes the Central Valley users' portion of the water. 



Mr. Nelson. Essentially, in 1906 it does review the price and the 

 quantity within those contracts. Essentially, what we are doing is 

 providing certainty to those water users on an ongoing basis so 

 they can do long-term financing and do some of the other things 

 that water users need to do. 



Mr. Miller. And their financing agents all suggested that this 

 was allowable and doable and not a problem within the bill. Those 

 were the people who were calling the 



Mr. POMBO. Would the gentleman yield to me? I know that your 

 time is up, but would the gentleman yield to me on that? I think 

 that you are correct in terms of contractual rights, but if your land- 

 lord came to you in the middle of the lease and told you he was 

 going to give away half of your space to someone else who may give 

 him more money, that would break the contract. And I think that 

 part of what we are debating is whether or not contracts were hon- 

 ored through the process. And I know that you and I have had this 

 discussion many times. 



Mr. Miller. I am talking about after the 25-year period is run. 



