106Limitation on disposal of water and Commonwealth environmental water holdings

106  Limitation on disposal of water and Commonwealth environmental water holdings

 (1) The Commonwealth Environmental Water Holder may only dispose of water or Commonwealth environmental water holdings in accordance with subsection (2) or (3).

Water or holdings that cannot be carried over, or that are likely to result in a reduced allocation

 (2) The Commonwealth Environmental Water Holder may dispose of water or Commonwealth environmental water holdings during a water accounting period if he or she reasonably believes that:

 (a) the water or the water holdings are not required in the water accounting period to meet the objectives of:

 (i) if the water is in, or the water holdings relate to water in, the Murray‑Darling Basin—the environmental watering plan; or

 (ii) if the water is in, or the water holdings relate to water in, an area outside the Murray‑Darling Basin—any plans specified in the regulations in relation to that area; or

 (iii) any applicable environmental watering schedules; and

 (i) the water or the water holdings cannot be carried over into the next water accounting period; or

 (ii) a water allocation in respect of particular Commonwealth environmental water holdings is likely to be reduced (including to nil) if the disposal does not occur.

Proceeds of disposal used for new acquisitions or environmental activities

 (3) The Commonwealth Environmental Water Holder may dispose of water or Commonwealth environmental water holdings if:

 (a) the Commonwealth Environmental Water Holder uses the proceeds of the disposal for either or both of the following activities:

 (i) acquiring water or Commonwealth environmental water holdings;

 (ii) for a disposal of a water allocation—environmental activities; and

 (b) if the disposal is of a water allocation and any of the proceeds of the disposal are used for environmental activities—the long‑term annual diversion limit condition is satisfied in relation to the disposal (see subsections (5) and (6)); and

 (c) in any case—the Commonwealth Environmental Water Holder reasonably believes, at the time of the disposal, that using the proceeds for activities of the kind mentioned in subparagraph (a)(i) or (ii) (if applicable) would improve the capacity of the Commonwealth environmental water holdings to be applied to meet the objectives of one or more of the following:

 (i) the environmental watering plan;

 (ii) a plan specified in the regulations in relation to an area outside the Murray‑Darling Basin;

 (iii) protecting or restoring the environmental assets of an area outside the Murray‑Darling Basin in relation to which those regulations do not specify a plan.