As early as 1908, the Bureau of Reclamation and the District were engaged in discussions involving the carriage of the District’s water in the yet to be constructed government system. It was critical to the success of the government system that the power water used in the hydraulic pumps to lift irrigation water to the Mesa County and Palisade Irrigation Districts be abandoned or somehow conveyed to the United States for use in the government system. In return the government system would convey water for the districts by gravity. 10 years later, on May 31, 1918 a contract between the District and the United States was executed which established that all water used for irrigation of the District be diverted at the headgate installed by the U.S. for the Grand Valley Project (Cameo Diversion) and carried through the Government Highline Canal and made available to the District. This allowed the District to dispense with the operation and maintenance of its pumping plant, dam, and auxiliary works.

Currently, the District’s water supply is diverted from the Colorado River at the Government Highline’s Cameo Diversion and carried through the Government Highline Canal for approximately 6 miles to a location where the canal flows from the end of Tunnel Number 3 under Interstate 70 northeast of the Town of Palisade. The District’s water supply is then diverted from the Government Highline Canal at this location.