(a) If a contract which obligates a supplier to supply water from storage to a purchaser does not provide for or contemplate diversions of water by the purchaser from streamflows other than those resulting from releases of water from storage under the contract, the supplier shall make releases of water to the extent of the purchaser's downstream diversions within the limits of the supplier's water right or the contract, except as follows.      
        (1) Nothing in these sections shall require a seller to release water to satisfy contractual obligations when such release would aggravate existing flooding conditions, and the purchaser may divert water during such conditions pursuant to the contract.        
          (2) The executive director may recommend a condition to be included in the contractual amendment which establishes stream flood stages for purposes of this section. The commission may include such a condition in each amendment whichauthorizes such a downstream sale of water from storage.          
            (b) If a contract which obligates a supplier to supply water from storage to a purchaser provides for or contemplates diversions of water by the purchaser from streamflows other than those resulting from releases of water from storage for the purchaser's use under the contract, and if neither the purchaser nor the supplier possesses a valid appropriative right authorizing such diversions:            
              (1) the purchaser shall obtain a regular, term, or temporary permit to appropriate water to the extent of his maximum annual diversions of water not released from storage before the supplier's amendment, if any, may be approved; or              
                (2) the supplier shall apply for a regular, term, or temporary permit or an amendment to the supplier's water right to appropriate water to the extent of the purchaser's maximum annual diversions of water not released from storage; providedthat the contract specified that the supplier shall have or shall apply for such permit or amendment and that the purchaser shall divert water not released from storage only pursuant to such permit or amendment.                
                  (c) If any contract required to be filed under this subchapter does not specify which party will bear transportation and evapotranspiration losses from a reservoir to a downstream point of diversion, the supplier shall bear such losses.                 
     Source Note:        The provisions of this §297.103 adopted to be effective May 29, 1986, 11 TexReg 2331.