By Mary Alice Murphy

The main topic of conversation at the Grant County Commission work session Tuesday morning, June 23, 2015, at the Administration Center was: "To approve or not to approve" the New Mexico Central Arizona Project Entity joint-powers agreement to design, construct, operate and maintain a New Mexico Unit.

In the 2004 Arizona Water Settlements Act, several deadlines were set for decision-making. This past December 2014, the first decision was made by the state of New Mexico. A letter was sent to the U.S. Secretary of the Interior declaring the state's intention to divert and develop up to 14,000 average annual acre-feet of water and utilize much of the funding of $66 million up to a maximum of $128 million as allocated by the Act. A water diversion and storage is called the New Mexico Unit in the Act.

As stipulated in the AWSA, the deadline this year is to send to the Secretary of the Interior for her to sign by November 15 the documents setting out the members of the CAP Entity, which will have authority over the NM Unit.

Commissioners warned County Planner Anthony Gutierrez, who represents the county on water issues, as well as serving as the Gila/San Francisco Water Commission chairman, that they would be asking lots of questions.

"There are always a lot of questions if the discussion is about the AWSA," Gutierrez said. "The JPA was approved by the Interstate Stream Commission at its most recent meeting. The ISC also named itself a non-voting member of the CAP Entity. The New Mexico Unit potentially has as a project to divert and store up to 140,000 acre-feet in a 10-year period.

"We haven't hammered out a diversion project," he continued.

He cited the letter of intent as the first item required, and then the one-year agreement to develop the CAP Entity. Gutierrez explained the GSFWC could not be the CAP Entity, and only individual members of the water commission could enter into the JPA.

"With this JPA we wanted to protect the entities and give them leeway to spend and generate new funds," Gutierrez said. "The Secretary of the Interior has to issue by Dec. 21, 2019, a notice to proceed depending on the National Environmental Protection Act process.

"The ISC is responsible for appointing the members of the CAP Entity," he said.

Commissioner Ron Hall had several pages of questions for Gutierrez.

"We've talked at length about the JPA," Hall said. "It's full of gaps, with the most difficult being how are we going to work with the JPA and be able to protect the county and the citizens of the county. First, are these projects economically feasible?"

"That is yet to be determined," Gutierrez replied. "There are a number of alternatives generated by the ISC and the U.S. Bureau of Reclamation. I attended a value study in Denver, and I have the same questions as you. The feasibility is in the value and benefit that comes out of the product. I am assuming that the value will be more in 50 to 100 years.

"No benefit analysis has been done," he said. "I asked what benefit would come out of the project and was told it hasn't been studied. In the Southwest U.S. any water value has continued to increase."

Hall compared the JPA decision to walking into an auto dealership not knowing what he wanted to buy, but agreeing to buy something. "We're signing something for we don't know what."

"The JPA is the formation of the CAP Entity," Gutierrez said. "Joining it gives Grant County the discretion on how much involvement it wants." He read from page 4, item 3(f), which says the parties agree that they "may provide financial support..." Gutierrez explained the language gives discretion to the parties of the JPA to decide how much or whether to financially support a Unit. He said potentially the four counties would join the CAP Entity, as well as ditch associations, "which have no budgets."

[Editor's Note: The entire JPA can be accessed at nmawsa.org and might be handy to have on hand to see language referred to throughout the discussion reported here. On the front page of the nmawsa.org website, the third item listed is the final JPA.]

"The CAP Entity has to find the most feasible project," Gutierrez said. "For all these studies, Reclamation uses 107 percent for contingency and doubles it."

Hall asked the purpose of the JPA.

"The purpose is to form the CAP Entity, with any party having to be a recognized subdivision of the state and agree to be a party to the diversion," Gutierrez said.

"Can you give me examples of groups who will potentially sign the JPA?" Commission Chairman Brett Kasten asked.

"Anyone who can benefit from a potential diversion, such as a ditch, a local government, a municipality, a mutual domestic..." Gutierrez replied. "Some ditch associations are political subdivisions. Each individual ditch has to make a decision."

Hall referred to page 8, item 5(o), which acknowledges that without local support a unit might not become a reality. "Whom does this refer to?"

"To the parties who enter the agreement," Gutierrez said. "The ISC entered that language, assuming that the ISC does not have enough funding, so it is left to the discretion of each governing body. I believe there are alternatives that can be funded by the money we have and adding in other revenue sources. We don't have a set dollar amount, because it is directly related to the size of the project and the amount of storage. Proposals took into account the point of diversion and how much potential storage there was. I'm in agreement that a lot is not known. I don't think we're signing on to buying anything."

"But we're being asked to sign without knowing what project and what cost," Hall said. "Can you explain what projects and what costs?"

"Last week, at the value meeting, the most feasible projects were to supplement water in the Gila and Virden valleys and provide for the environment," Gutierrez said. "The largest portion of cost would be a large storage area and sending the water over the Continental Divide to Deming."

Hall said it sounded good to him to supplement the water in the two valleys, to improve the environment and not go over the divide.

"That's the most feasible," Gutierrez concurred.

Hall asked about the safety net in the JPA of parties agreeing to participate as able.

County Attorney Abigail Robinson said she worked on that language with other attorneys. "This is a compromise between us and the ISC that the funding be discretionary. We changed the language from 'shall' to 'may." Grant County would determine whether it could put money in."

"I think it's important that we are in control," Hall said, "that we can pull the plug, with the understanding that anything we've agreed to, we are responsible for."

"Other than 'cash in hand,' it will require bonding," Gutierrez said. "Don't bond if you can't pay back. Assuming any boding, it would be part of the CAP Entity and the funding available."

Hall asked the purpose of the first and second fiscal agents.

"The first is the ISC," Gutierrez said. "The Act gave the New Mexico Unit Fund to the ISC. The CAP Entity must take its budget to the ISC annually for approval. The JPA did put provisions for long-time financing. The original 2004 dollars of $66 million will likely become about $90 million. At the November ISC meeting, the members funded part of several non-diversion alternatives. As a member of the GSFWC, we want to figure out how to fully fund them.

"The second fiscal agent does two things," he continued. "It allows the ISC to reimburse the CAP Entity for expenditures. The second fiscal agent would be the agent for the CAP Entity, so any other monies, other than from the NM Unit Fund, could go to the second fiscal agent. The revenue must be used to design, built, operate and maintain a unit."

Hall asked who gives the authority to the CAP Entity to design, build, operate and maintain.

"The Secretary of the Interior," Gutierrez replied. "A lot of the language in the JPA comes from the federal statute. For instance, the CAP Entity must conform to the CUFA (Consumptive Use and Forbearance Agreement)."

"Say the secretary has said; 'Yes, you can design, build, operate and maintain," Hall said. "Do you have to go back to her to turn on the tap?"

"The AWSA water has senior rights, but this area must exchange for the water," Gutierrez said. "By law senior rights get the first water."

"Could we build a unit and not be able to use it?" Hall asked.

"That would be in direct violation of the statute," Gutierrez said.

Hall asked for an explanation of page 11, item (v): "The New Mexico CAP Entity shall be responsible for its share of operations, maintenance and replacement costs of the NM Unit."

"The NM CAP Entity will own the NM Unit and will contract for use of the water," Gutierrez said. "Operations and maintenance will be part of the costs. Users will have to pay for delivery of the water and will include the costs of operations and maintenance. I have ideas on how to pay for the operations and maintenance costs."

Hall asked how many of the CAP Entity parties will have financial capacity to share in costs and how many understand the JPA

"We tried to give them as much information as possible," Gutierrez said. "I think they have a good understanding. As for capacity, only a few entities can offer funding. If a party receives the benefit of the water, I think they will see the benefit and know there are costs."

Hall asked about sovereign immunity on pages 12-13, item (y).

"My understanding is that the New Mexico Joint Powers Act protects the individual members of the CAP Entity. The CAP Entity doesn't have sovereign immunity, but each individual entity does have sovereign immunity," Gutierrez said. "Grant County cannot be sued under this agreement."

Robinson said the New Mexico Joint Powers Act describes the separation of entities. "We would be liable for our actions, but being a member does not make you liable."

Hall asked about termination clause on page 17, X(d), which states that in the event of withdrawal by a party..., the party shall be obligated to honor all commitments made... "If we say we'll give them a million, and we decide to withdraw, we are responsible for that amount?"

"Yes," Gutierrez said.

"How many communities want this AWSA water," Hall asked.

"Deming does," Gutierrez said, "because of a deficit in their aquifer. They are losing almost a foot of reserves annually."

"Anyone else," Hall asked.

"The Gila Valley and Virden irrigators," Gutierrez said.

"What about the incorporated areas in Grant County," Hall asked.

"They feel they can meet their needs with another well," Gutierrez said. "We don't know what our needs will be in 50 to 100 years. Arizona, Nevada and California figured they had enough water, too."

Hall asked for a recap of the timeline. Gutierrez said the ISC wants to do the resolution for the CAP Entity on July 3. At the July meeting, the ISC will approve the members. And the ISC wants to send the list to the Secretary of the Interior by September, so she has time to review it before signing in November.

Robinson reminded the commissioners that the New Mexico Department of Finance and Administration would have to approve the JPA, but in discussions with the ISC attorneys, they had indicated ISC would speed up the process as much as they could.

Hall asked if the CAP Entity could force Grant County to spend money it had not agreed to.

Gutierrez said Grant County could potentially not join and the CAP Entity could decide on a project that would impact the county without any input.

"That's my dilemma," Hall said. "Do we not sign and have someone else decide what happens to the water and we will have no say? We either join and take part through a weak JPA or walk away and suffer the consequences."

"I got this agreement about 10 days ago," Kasten said. "I had to relate it to a quote by Lester Hunt: 'A camel is a horse created by a committee.' I can see the contradictions in reading this. What group of individuals was tasked to make the decision to divert? Was it the ISC?"

"Yes, they were tasked with the decision by statute," Gutierrez said.

"If the parties to the JPA meet and find this diversion not feasible, who would stop it?" Kasten said.

"I am assuming between the NEPA process by Reclamation and all the parties," Gutierrez said. "The CAP Entity has the right to work with the Secretary of the Interior, the Office of the State Engineer, the ISC, Reclamation and the Central Arizona Project. Without identifying financial resources, the CAP Entity could put a stop to it."

Kasten asked how much money is "in hand." Gutierrez said the $90 million and another $34 million for construction reimbursement, so about $110 million to $120 million. "The up to $62 million looks like it's not going to happen."

"What is the cost per acre foot?" Kasten asked to which Gutierrez said the current cost is $164 per acre-foot just for exchange costs, not the operations and maintenance or debt service.

"How much water is available for 10 years?" Kasten asked.

"The safe yield is 7,000 to 8,000 acre feet a year from the Gila," Gutierrez said. "For perspective, the town of Silver City uses about 2,500 acre-feet a year and Deming about 3,000 acre-feet a year, so this water could double what they use.

"If the San Francisco does not do a project, its 4,000 allocated acre-feet would be available to the Gila."

"Does the JPA require dollars?" Kasten asked. "The bylaws might call for dues."

"Only if the members seek dues, which might cover operations," Gutierrez said.

"If the group votes for dues, everyone would have to pay them?" Kasten asked.

"That's correct," Gutierrez said.

"Does the JPA give the CAP Entity the authority to tax?" Kasten asked.

"It is not a taxing authority, unless it becomes a subdivision of the state," Gutierrez said.

"By signing the JPA, we do not give our taxing authority, right?" Kasten asked to which Gutierrez said that was correct.

Kasten asked if the CAP Entity would have authority to bond. Robinson said there has to be a pledge for a bond. "People think Grant County will be tricked, but it is such an arduous process, you can't be unaware of what's happening when you're bonding."

"This commission has gone on record by saying it supports a healthy river, permanent irrigation diversions and we do not support water going to the Mimbres Basin," Kasten said. "I'm not against a diversion, but I'm not for a Mangas project. I think a healthy river can be achieved by letting out water from storage.

"For the second fiscal agent, can we pick someone outside the CAP Entity?" Kasten asked.

"Probably not," Gutierrez said.

"What happens if we don't sign by July 3?" Kasten asked.

"If you decide you want to join, you'll have to ask and two-thirds of the members will have to approve," Gutierrez said. "And then DFA would have to approve it."

Robinson said her impression was that the ISC was not open to negotiating changes. "It's difficult to say what the membership will do in the future. The ISC is tied to its own schedule."

Gutierrez said the JPA could be amended with the approval by all signatories.

Kasten asked what Gutierrez's biggest fear was about the JPA.

"I don't really have a fear, but all of us have concerns about the total costs," Gutierrez said. "There has to be a balance over the total value/benefit and cost. We don't have numbers for the benefit. It's part of the planning.

"As the representative for Grant County, I try to represent the county," he said. "As chairman of the Gila/San Francisco Water Commission, I try to represent the agricultural benefit because most members are involved in ag. I don't fear too much."

"There are not many things I would rather see than a healthy agricultural economy on the Gila," Kasten said. "I would love to see the area flourish again. That will weigh into my decision.

"Hall does his homework and is prepared to debate," he continued. "I agree about whether we should decide to sign a poorly written agreement. It's signing this or not being part of the process going forward."

Gutierrez said if the water is needed "when my children have grandchildren, and if the water is not there, I will have failed them."

The rest of the meeting, which was a review of Thursday's regular meeting agenda will be covered in a future article.