two studies were completed prior to completing leasing agreements with the potential lessors to 

 provide FWP with some idea about how other water users might be affected by leasing. 



There was disagreement between FWP and some supporters of the leasing bill as to whether the 

 market value study was necessary. They believed that FWP should simply go out and start 

 negotiating water leases. Because a market for transfer of existing rights to instream flow has 

 not been established in Montana, the market value study provided a basis for negotiating the 

 price of leasing water. However, the amount paid for a lease is negotiable and the outcome 

 depends, to a large extent, on how the negotiating parties perceive the value of the rights to be 

 leased. 



The initial slow pace of the program can also be attributed, in part, to the post-legislative 

 carryover of agricultural concern that leasing would interfere with their water rights and would 

 go against the traditional concept of water use, opening the door for other changes in water use 

 that would be imacceptable. Some potential lessors were unwilling to be the first persons to 

 lease water becaiise of perceived repercussions from others in the agricultural community. As 

 time passed, the concern of these folks diminished as they found that FWP was not acquiring 

 leases very fast and that interference with their water rights and existing water use was not 

 occurring. Gradually, the leasing program became more accepted as a potential 'Vin/win" 

 process through agreements between willing lessors and FWP. No one was being forced to lease 

 water and there were benefits to the water right holder. 



LATER LEASING SUCCESSES 



FWP has finalized ten leases on eight study streams. All of the approved leases are on tributary 

 streams to larger rivers that will improve fish spawning and reproduction in the larger rivers. 

 The approved leases are: 



Mill Creek. The first lease was completed in August, 1992 on Mill Creek, a tributary to the 

 Yellowstone River near Pray, MT. The lease is with the Mill Creek Water and Sewer District 

 and involves 48 individuals and 95 different water rights. It is a result of a water conservation 

 project in which three inefficient ditch systems used for flood irrigation were converted to a 

 gravity pipeline and sprinkler system to irrigate the same lands more efficiently. This lease 

 provides a once per year, 48-60 hour flushing flow of up to 65 cfs to move young cutthroat trout 

 out of the creek into the Yellowstone River. This lease was first implemented during the 1993 

 irrigation season. 



Mill Creek. The second lease was also completed on Mill Creek, in October, 1992. The lease is 

 with a single individual and is also a result of the water conservation project. This "salvage" 

 water lease helps improve the base flow in the creek during the irrigation season to allow young 

 cutthroat trout to grow and finally migrate to the Yellowstone River. This lease was also first 

 implemented during the 1993 irrigation season. 



A-6 



