[Editor's Note: This four-hour meeting will be covered in multiple articles. This final portion completes the reports from the executive director and the entity attorney.]
By Mary Alice Murphy
Toward the end of the May 2, 2017 New Mexico Central Arizona Project Entity meeting, Anthony Gutierrez gave his executive director report.
"I don't have much else to report," Gutierrez said. "I kept my floodplain certification and received safety training. We will have a section on the website to provide more information from the executive director."
NM CAP Entity Attorney Pete Domenici Jr. gave a comprehensive report on actions he has been pursuing. He said it was important to remind the board and the public that the AWSA has unique aspects, but is also similar to other projects being pursued in the West.
"The Central Utah Project Completion Act is similar to New Mexico in that it does not have direct access to the CAP," Domenici said, "but it has rights to water and to create infrastructure to utilize that water that might reach the Colorado River under the auspices of the Colorado Basin Act and the CAP."
The Central Utah Project was struggling to deal with Bureau of Reclamation requirements to transfer water from one basin to another. So in 1992, the Central Utah Project Completion Act was statute passed to allow the project to receive money directly, not through the Secretary of the Interior, into the project, which was owned by a state conservation district. So it owns the water and the money.
"The New Mexico CAP Entity is the only similar project in the West where the entity will own the project," Domenici said. "We, by statute, will have title to the New Mexico Unit. As things are built, we own them. It makes a big difference in who will use the water, the diversion, the storage and conveyance. We, down the road, will have to set the rules, regulations and procedures for use of the water and infrastructure. This will give us the ability to service not only Arizona Water Settlements Act water, but potentially other sources."
He said the CAP Entity has to request the ability to have design and planning authorization for construction. "But we will have title. We will define the multiple uses of the New Mexico Unit. This language is also in the New Mexico Unit Agreement."
Domenici said the entity's ownership of the New Mexico unit is a unique aspect of the statute. "Another thing that is unique is the sections of the funds tied to the 2019 deadline. The construction funds are $34 million up to $62 million. One of the fundamental questions is whether design and planning fit as construction costs. If the Record of Decision in 2019, unless the Secretary gives an extension, authorizes us to proceed with a unit, we will be able to request funding for engineering and planning costs. There are many straws in this fund, so will be able to get the funding and use it for planning costs? In initial meetings with the Bureau of Reclamation, we were told it is a relatively standard yes, but the BoR is still looking at it and is being cautious."
"If we spend all the $62 million to get to a project, then it doesn't matter," he continued. "But if we spend less than the $62 million, then it is an important question.
"We may not have a $62 million project," Domenici said. "It may be a $10 million to $15 million question. We may expect to use some, getting input from engineers, on planning, contracting and legal costs. I am trying to bring it together within the five months we have to pick a project."
Another issue he alluded to he said he wanted to discuss as concretely as he could.
"The AWSA contemplates water being diverted on the Gila and San Francisco rivers and an exchange being made to deliver Central Arizona Project water to the Gila River Indian Community," Domenici said. "That section is an amendment to the Colorado Basin Act, which allocated 18,000 acre-feet, not 14,000, and even up to 30,000 acre-feet. It still had the same exchange component."
He said in the 1960s when Steve Reynolds and others were negotiating the act, they were not contemplating that it might be necessary to utilize 5,000 acre-feet, and then another 5,000 acre-feet 40 years later and then even later another 5,000.
"What has concerned me is the exchange water that flows in the Central Arizona Project Canal," Domenici said. "It is tied to New Mexico and, in some way, it is an asset to southwest New Mexico. The Bureau of Reclamation has told me: 'Your client,' that's the CAP Entity, 'has the collective resource.' That means you have the right to demand that exchange of 14,000 acre-feet before another drop is taken by anyone else. Our question is what happens to that water when we're not taking it, even in times of shortage?""
He said there is a huge concern in Arizona that there may not be enough water in the CAP for water utilization. "Our comes off the top. Our water is available to be taken in exchange before anyone else in Arizona receives water deliveries. We have the high priority water. It seems to be generally agreed among those who don't often agree and don't like it and worry about it, that our water comes off the top. We pay the credits to get the exchange water that goes to the Gila River Indian Community. New Mexico gets the water, the Gila River Indian Community gets the water, but the CAP will have to curtail other uses in Arizona."
"Why do we have to divert to get the benefit of our water?" Domenici asked. "Why can't we get benefits from the water when we're not diverting it? I asked the BoR to show us the prohibition of us benefiting from the water to be used by others. The BoR looked at it differently. 'We don't see any provision to allow it.'"
Domenici continued by saying those who would use it in Arizona, including Indian tribes, have the greatest flexibility with their right to use the water. "They can sell it or sublease it. If our water went to the tribes, it would be flexible. Municipalities cannot sublease. Similar to the credits we would pay, they pay the costs for the credits and must use the water."
Arizona is storing water in the aquifer, saving it for pumping for a dry day. "They are not doing surface storage. They are also doing little groundwater pumping."
He said the discussions are ongoing.
Domenici presented some "round numbers. If an entity like the Gila River Indian Community wanted to lease the water for 50 years to 100 years, they would pay upfront for the use of the water for the next 50 or 100 years. At $4,000 an acre-foot, that would be $40 to $50 million up front. And at the end of the lease, the water comes back to you and if you can use it, do it, or lease it again. "
"I'm concerned that nothing we've seen will let us use the 14,000 acre-feet, but we've not been getting any benefit for the about 9,000 acre-feet we haven't been using since 1968," Domenici said. "Unless we use it, others are leasing it and benefitting from it. As a result of our questions, we are now on people's radar over there."
Another concept he said "we are floating is built on the CUFA (Consumptive Use and Forbearance Act). If we can't get the water by allocation, would an agreement to forbear that water and allow others to use it, would the other users share the benefit?"
"It's a good thing with no time constraints, because that is not tied to the 2019 deadline," Domenici said. "We have flexibility in time. There are a lot of dynamics. The issue flows from the Secretary of the Interior to the BoR, to the Gila River Indian CommunityGÇöour exchange partnerGÇöto other users in Arizona."
He said a huge drought mitigation project is going on in Arizona. "We are trying to transition ourselves into their world, where we could get a benefit, whether by forbearance or contract. We don't want to come across as threatening, and we are doing our due diligence. We are trying to come up with a strategy and are working our way through it and making progress. The end result could be federal legislation or contracts. We will continue the discussions."
Entity member Howard Hutchinson, representing the San Francisco Soil and Water Conservation District, asked if the entity had a contract with a user in Arizona, would the money belong to the entity.
Domenici said nothing is signed by the ISC to that effect, "but we would expect the money would come to the entity."
Hutchinson said initially, the money could be used for conservation, ditch improvements, operations and maintenance, and buying and delivery of water.
Dominique Work, ISC attorney participating in the meeting by telephone, said as a point of the joint powers agreement, money generated by the unit will be placed into the New Mexico Unit Fund to refund costs. "There may be a provision that can be amended, but the JPA as it exists would not allow reinvestment to items not connect to the New Mexico Unit."
Hutchinson said if the entity is developing AWSA water in New Mexico and delivering it to a user, "I always presumed those costs from the user would be paid to the entity. If the JPA prohibits this, then it needs to be amended to give discretion to the entity."
"The JPA says any money generated in any way, that income goes back into the New Mexico Unit Fund, with the purpose of financing the unit," Work said.
Kim Abeyta-Martinez, non-voting representative of the ISC said: "I hate to disagree with you, Dominique, but I thought any money deposited to the second fiscal agent was to be utilized for the New Mexico Unit."
Domenici said he didn't think the JPA contemplates what the entity would do with the money. "I want people to understand what we're contemplating, how and why."
He said the discusson was a good transition to talking about the entity working with Freeport-McMoRan.
"We are taking small steps to amend the JPA so the entity could negotiate to acquire through lease or purchase some rights from Freeport," Domenici said. "We have been in such discussion, but it would have to be approved by the ISC.
"The funding would come to the second fiscal agent and would be more discretionary," he continued. "We're always trying to talk to Freeport, but so far it's been at a high level. Freeport has an asset they are not using and not going to use and our board having the authority to take over the asset makes sense."
He said Freeport's use of the infrastructure is diminishing. "Freeport is hard to meet with. We are dealing with the highest levelGÇöthe manager of water projects throughout the world. Freeport is unwilling to delegate the discussion, but it's hard to get on the calendar. This is also not attached to the 2019 deadline. Freeport is moving at an appropriate rateGÇöcautiously. The potential for us is significant, probably more significant than the New Mexico Unit. We want authority through the JPA to negotiate with Freeport. The company has adjudicated water rights and has the state-engineer issued license to store and transmit the water. The staff surely knows we want the authority to utilize it. We would have to get permission to utilize the reservoir and to divert. We will keep working through this. Similar public/private contracts are working across the state."
In "general comments," Domenici said he wanted to reiterate if the entity can use the storage for non-AWSA water and other uses of the facilities, it would benefit the entity.
"Five months from now, we have to be on track to meet the 2019 deadline to get the $62 million or we have to decide we're not going the way to spend to get the $62 million. We need a more defined project. We have to sort through the work we are given and decide if we go ahead."
He noted that getting through NEPA successfully is never guaranteed. "The more defined the project, the less it will cost. AECOM will do the work and we have to sort through it. Things we let go now, may not be forever."
Domenici also said in discussions he has had with BoR, the CUFA also lasts forever. "If we don't meet the deadline, the two things we stand to lose are the money we are spending now and the $62 million. The water will still be here and so will the ability to exchange it."
With no questions to the attorney's report, Vice Chairman Vance Lee talked about the date for the next meeting.
Gutierrez said he would be out of town on June 6, and after discussion among members, it was decided to hold the June meeting on Thursday, June1, at 9 a.m. at the Grant County Administration Center.
The meeting adjourned.