By Mary Alice Murphy

The Interim Legislative Water and Natural Resources Committee, which met in Silver City, Monday and Tuesday, Aug. 31 and Sept 1, heard the second presentation of Monday morning at the Western New Mexico University J. Cloyd Miller Library.

Representatives of three agencies, the U.S. Bureau of Reclamation, the Interstate Stream Commission and the New Mexico Central Arizona Project Entity provided history and updates on the Arizona Water Settlements Act process that was set off by the Nov. 24, 2014 statement of New Mexico's decision to divert water as allocated by the AWSA.

Mary Reece, U.S. Bureau of Reclamation Phoenix Office Program Development Division manager, explained what the role of the agency and what its participation has been and is ongoing. "The most recent is the Value Study."

In the history of the process, she explained the 1968 Colorado River Basin Project Act set off the process. "Everything we are doing always was part of the 1968 Act. In 1987, the Hooker Dam was eliminated. The 2004 AWSA modified the 1968 Act. AWSA is four settlements in one. What it did was reduce the amount of water allocated from 18,000 average annual acre-feet to 14,000 up to 64,000 acre-feet in any given year, with a total over 10 years of 140,000 acre-feet. The Act also provided indexed non-reimbursable funding for a New Mexico Unit or other water utilization alternative in southwest New Mexico. The Consumptive Use and Forbearance Agreement allows for no lawsuits against New Mexico if it follows the strict parameters set out in the CUFA. It also shifted the responsibility from the federal government to the state."

"The Gila River is a tributary to the Colorado River," Reece said. "Our exchange partner is the Gila River Indian Community and the San Carlos Reservoir. By December 2014, New Mexico had to let the Secretary of the Interior know its decision. On Nov. 24, 2014, New Mexico gave notice of its intent to divert AWSA water. The agreement between the New Mexico CAP Entity and the Secretary must be signed by Nov. 23, 2015. The CAP Entity will be responsible for capital construction, operations and maintenance and for the CAP exchange."

Following the signing of the New Mexico Unit agreement, Reclamation will begin the National Environment Policy Act process, she said.

"Reclamation provides oversight for the Secretary of the Interior," Reece continued. "We manage the Lower Colorado River Basin Fund, oversee environmental compliance and manage tribal rights. The Lower Colorado River Basin Fund is providing about $9 million a year into the New Mexico Unit Fund. It is the $66 million indexed, so is likely to totally about $90 million at the end of the 10 years. Also available is about $34 million, which is also indexed, but it can only be used for construction."

She said Reclamation also manages other parts of the LCRBF fund.

"For the state planning process, the ISC requested technical assistance from Reclamation," Reece said. "We provided an engineering report and this summer, we have done the value study. From June 15-19, Reclamation met here with representatives of the ISC, the CAP Entity and the Gila National Forest. The purpose of the value study is to assess information in already available sources. Cost is a definite issue. We investigated lower cost unit options and whether they were technically sound."

She said Reclamation and the NM CAP Entity are also working on supplemental attachments to the terms of the New Mexico Unit Agreement.

Phase 1 of the overall project will include construction, diversion, conveyance, storage and delivery. Phase 2 will provide additional storage, and Phase 3 would convey the water to the Mimbres Basin and to Deming.

Reece explained that a matrix in the report set up the criteria to be met, and 12 alternatives, always remembering the maximum amount of water to be pulled at any one time is 350 cubic feet per second, as outlined in the CUFA.

The highest ranked projects included Winn and Bell canyons and full build out.

Phase 1 is in the $350 million range. Reece said. Alternative 7 was the lowest cost at about $150 million, but with storage of only 2,700 acre-feet of water.

In Alternative 9A to Winn Canyon, for example, Phase 1 includes a tunnel, siphon and open channel. "Each item has similar information."

"We are actively working on the New Mexico Unit Agreement between the NM CAP Entity and the Secretary of the Interior," Reece said. "When it is signed by Nov. 23, 2015, next we will perform environmental compliance with a record of decision by December 2019. The Secretary has the option to extend the deadline to 2030.

Craig Roepke, Project Manager, showed slides explaining the New Mexico Unit and how it operates. First on the map were shown the Gila River Basin and the San Francisco River Complex. "The Gila Basin is from where we may divert an annual average 14,000 acre-feet of water. That would equal a 47 percent increase to New Mexico's current Central Arizona Project allocation. The yellow areas shown were in litigation, but were settled in the AWSA, and included the Upper Valley Diversions, the San Carlos Reservoir and the Gila River Indian Community. Under the AWSA, before New Mexico can divert, the Secretary of the Interior must deliver water down the Central Arizona Project to the Gila River Indian Community. We can divert what is already delivered to the GRIC. There was an issue of impairment to downstream users, which the CUFA solved. As long as New Mexico has pre-banked the exchange water, it may divert without objection."

He said the New Mexico Unit Description states it is operated for the sole benefit of the New Mexico CAP Entity. "Water may be taken from the Gila and San Francisco rivers, their tributaries or underground sources and put to any beneficial use, which includes mining, agricultural, municipal, commercial, irrigation and environmental use. The water can be conveyed through gravity and/ or pumping anywhere in New Mexico."

He said the ISC took part in the negotiations for the AWSA between 2001 and 2004, the year it was signed by the president. "From 2005-2014, we completed the planning process. On Nov. 24, 2014, the state of New Mexico informed the Secretary of the Interior of the state's intention to divert the water. We formed the New Mexico CAP Entity in 2015. It will own the Unit."

"In the normal process, water users will make a contract for the water, and after the costs of a unit are repaid, it belongs to the federal government," Roepke said. "In the AWSA, the unit will belong to the CAP Entity. We must negotiate and sign the New Mexico Unit Agreement by Nov. 23, 2015. We provide technical and other support to the CAP Entity and to Reclamation. The ISC is the joint lead for the NEPA process on environmental compliance. After that we begin the New Mexico Unit design. The ISC is named in the AWSA to administer the New Mexico Unit Fund."

Darr Shannon, the recently elected NM CAP Entity chairwoman, said the process began with the Gila/San Francisco Water Commission, which is the successor to the Southwest New Mexico Water Planning Group named in the AWSA, working with the ISC over the years.

"The JPA has been approved, and Aug. 10 was our first meeting as the New Mexico CAP Entity," Shannon said. "We have 13 voting members and one non-voting member, the ISC."

Rep. Paul Bandy said it was difficult to read the costs on the chart from Reclamation. "What are the ranges?"

Jeff Riley, who heads up the engineering division of the Phoenix Office of Reclamation, said the price ranges are in the value study by different phases. "Phase 1 has 1,300 acre-feet of storage to the full build out, with 46,000 acre-feet and the water would be conveyed through the Mining District to Deming. Phase 1 costs range from $350 million to roughly $450 million. The full phase 3 ranges from $800 million to $1 billion."

Bandy asked how much money is allocated. Reece said the 1968 Act allocated none, but the AWSA allocated $66 million, which is indexed and being deposited at about $9 million a year for 10 years. The second tier of funding is about $34 million for construction only, and the third tier of about $28 million is based on interest earned in the Lower Colorado River Basin Fund being more than 4 percent a year, which is hasn't been in the past years. "Basically, it's a little more than $100 million indexed."

"What can the feds come up with?" Bandy asked.

"Nothing more," Reece said. "When the Unit fund is depleted, there is no more federal money."

"Have you considered contributions by users or by the state," Bandy asked Shannon.

'That's a tough question," she replied. "We have a hard-working group with fire for what we want to get accomplished. We have a deep-seated passion for capturing and storing this water. We are creative. We have thoughts of leasing the water until construction can begin. I ask you to support what we stand for."

Bandy said he serves on the Appropriation Committee and asked for a rough idea of users fees.

"We can't give you a figure," Roepke said, "because we don't know what a unit will look like. What the value study showed is the need to look at other alternatives that could greatly reduce costs. I don't think the CAP Entity will entertain anything that costs $800 million to $1 billion."

Rep. Bill McCamley asked whether construction costs included the reality that costs rise over the life of a construction project.

Riley said the value study costs are based on 2014 dollars, and costs will escalate, but the federal funds are indexed at basically the same rate.

McCamley said he was confused about the responsibility for water downstream in Arizona.

Roepke said: "We must pay the costs of transporting the water to the Gila River Indian Community. We also pay operating, maintenance and repair costs before New Mexico diverts the equivalent amount that was transported."

"How and who is New Mexico?" McCamley asked.

"The New Mexico CAP Entity must call for that water," Roepke said. "The transportation cost will be $157 an acre-foot in 2016."

McCamley noted that the costs are not just the construction costs, but also the exchange costs, which Roepke confirmed.

Roepke said the $350 million for Phase 2 is based on concepts, based on the value study that "we said was inadequate. Yes, there are capital costs, and O, M and R costs. We were never under the delusion it would be cheap water."

He went on to say his favorite place to hike is on the East Fork of the Gila River. "Below the wilderness, during irrigation season, portions of the river run dry. Storage and releasing water to flow in the river would help agriculture and would also help all species that rely on the riparian areas."

McCamley said it's a value decision. "The Gila is one of the last free-flowing rivers in the southwest and even in the country. Have you put any dollar value on the free-flowing river?"

"The Gila River exists as free-flowing only in the Gila Wilderness," Roepke countered. "We have no project that would impair the free-flowing aspect of the river."

"I presume the CAP Entity would come to the state asking for funding," McCamley said. "My concern is cost. What value do you place on keeping the river the way it is? If the value of the free-flowing river is gone, you can't get it back."

Sen. Mimi Stewart said she has heard the concerns about funding. "It is one of our biggest issues. We received a letter from the Department of the Interior calling for supplemental terms. What's that about?"

Reece said Interior has called for supplemental terms. The mandatory terms are part of the CUFA. "The supplemental terms clarify a number of things. It puts people on notice things they have to deal with, assuming NEPA will recommend a diversion."

Stewart asked who is responsible for adding the supplemental terms, to which Reece said Interior had a number of questions. The additional agreements would have to be put in place if a diversion is part of the record of decision after NEPA.

Stewart said she thinks the supplemental terms are important enough that "we would like to know what the Department of Interior is concerned about. And I'm concerned that anyone can pull out of the CAP Entity."

Reece said the supplemental terms make sure that implementation is consistent with federal law; acknowledgement of the need for additional funding; delivery of water and water contracts because there will be other contracts on much of the transportation of the water; what the entity would like to take on; the environmental compliance; use Reclamation standards for design and construction; the legal status of the CAP Entity, because if the state was envisioning changes to the JPA, the Secretary might have concerns; the LCRBF has other settlement costs with future discussions possible; tribal responsibilities; term of the New Mexico Unit diversions, because a draft had differences that need to be resolved; the issue of sovereign immunity; and the Entity might have concerns.

She told Stewart that the supplemental terms did not need to be in place before the Nov. 23, 2015 deadline.

Shannon confirmed that she realized the costs were a "huge amount of money. But a huge amount of water since 1968 has passed through the area. I don't plan to ask the New Mexico Legislature for money. We are independent thinkers. Our intentions have never been to get money out of the Legislature. We know how to work hard and are willing. We want a chance. Just give us the support of a chance."

Steward asked about San Carlos Apache Tribe not being a signatory to the AWSA.

Reece said Title 4 in the AWSA is a placeholder for a settlement with the San Carlos tribe, which has not yet been resolved. "They understand what is in the Act. Their biggest concern is the possible degrading of water quality."

"Funding is not the only concern, but it comes to the top," Stewart said. "Our plan doesn't get us to the amount of water allocated. The amount of water that we're saying we can store is pie in the sky. My final question is: A year ago, I asked then ISC Director Estevan Lopez if we couldn't use the money for projects the four counties would like to do that are not diversionary. He said: 'I don't see it happening.' Why not?"

"The ISC has allocated $3 million to conservation projects," Roepke said. "We put out requests for proposals and got few projects. The ISC has allocated $2.1 million to Silver City for its regional water plan and $1.8 million to pilot conservation plans in Deming and Silver City. The total amount of water saved by the conservation plans is about 640 acre-feet a year. We are still open to other conservation projects."

"What about watershed restoration?" Stewart asked. "The Ruidoso mayor said the fire has given the town more water than it could hope for."

"The ISC felt a watershed restoration study would not meet the consumptive use criterion," Roepke answered. "Other groups are working on watershed restoration."

Sen. Gerald Ortiz y Pino questioned the makeup of the New Mexico CAP Entity. "You have four counties, two municipalities, a village, four water associations and two irrigation associations. They have equal representation. Has there been a provision for allocation of costs?"

Shannon replied that it was up to the entity, which is working on its bylaws.

Ortiz y Pino said it concerns him that different-sized entities are given equal voice. "If you are a creative group, to whom are you thinking about leasing water?"

Shannon said: "We're looking at whether we will be able to lease. It doesn't mean that's what we will do."

Roepke explained that the CAP Entity is looking at the concept of getting benefit from leasing the water before construction begins. "The cost of leasing water is high in some places, such as San Diego, not that they are envisioning leasing to San Diego. There are entities in New Mexico and Arizona that need water quite badly."

Ortiz y Pino asked if they might be mining companies.

"There could be," Roepke said. "Just like municipalities, there is not enough water to go around."

Rep. Randal S. Crowder said it had been intimated that the $28 million was gone.

"The qualifiers to access it was that interest be greater than 4 percent since 2004," Reece said. "Just like our savings accounts, interest has not been that high. It will be challenging."

"Who is responsible for investing the money?" Crowder asked.

Reece said federal funds have constraints on investing.

"My second question is that this year you are talking about Winn Canyon," Crowder said. "A year or so ago, it was Spar Canyon."

"Winn rose in the ranking above Spar because of the greater storage capacity and the cost per acre-foot," Roepke said. "When the CAP Entity looks at the project, it will look at the cost per acre-foot and how to get through the NEPA process."

"Last year, you had two different reservoirs," Crowder said. "I see you are also looking at Small Spar, which is close to being feasible and to keep zero chance of extinction of endangered species."

"The original project could provide enough water for endangered species, but would not provide enough for agricultural and municipal use," Roepke replied. T"he ISC has to consider human needs as well."

"I hear free-flowing all the time," Crowder said. "How many diversions are already on the Gila River?"

"There are 11 diversions, and generally every year, it goes dry below them," Roepke said.

Rep. Jeff Steinborn said he appreciated the committee having the meeting in Silver City.

"I'm passionate about conservation and passionate about wildness," Steinborn said. "You get a chance of wildness in this Gila River with all its natural resources. It's a classic Faustian dilemma. If you use the water, you can get a little more money, but lose the birthright of the natural resources. Trust us, they say, we'll do with without coming to the Legislature. We know groups will come to us. Did Silver City join the CAP Entity and, if not, why not?"

Reece said she did not know in detail.

"It's because Silver City is not clamoring for that water," Steinborn said. "The important question is crucial. Who are the anticipated users?"

"The allocation of the water will be the responsibility of the CAP Entity," Roepke said. "Ag users, Deming and Catron County have to-date asked for the water. I don't think there will be any shortage of users."

"I don't doubt that," Steinborn replied, "but it's the costs. Who will benefit and who will pay for it and who will be impacted? We have conflicting information on what they can do. What are the Reclamation standards they will have to comply with?"

Reece said the federal and Reclamation standards could be found on Reclamation's website.

Steinborn said at a briefing in Las Cruces, things had been ticked off that would have an impact on endangered species.

"The impact on threatened and endangered species is part of NEPA," Roepke said. "And there is a possibility construction cannot go forward. The ISC has studied the impacts on the spikedace and loach minnow by a unit. The study showed a 3 percent increase in habitat, because water would be flowing. Some people don't agree. We have some of these studies under review for publication, and one has just been accepted."

Rep. Matthew McQueen said he has heard some discussion on the number of diversions on the river and whether it is free-flowing and that a reservoir will not be on the river.

"Not now and never has there been a mainstem dam proposal," Roepke said. "A proposal for one on the Gila and one on the San Francisco did not survive the Tier 1 evaluation process."

"Sen. Stewart pointed out that the funding and the economics barrier is perhaps the hardest thing to get over," McQueen said. "I was shocked when Commissioner Shannon said she wouldn't come to the Legislature for money. I like your passion."

"I've been in this position for three weeks," Shannon said. "Our first real meeting to discuss bylaws and a budget is tomorrow. We have not been able to plan until now."

"You could likely greatly shorten the meeting by asking the entities how you're going to pay for a unit," McQueen noted. "These are not entities that can come up with $700 million. San Diego was mentioned as a lessor of water. The city has 150 percent of the population of the whole state of New Mexico. Personally, I think there are significant reasons why the project should not go forward—specifically because of costs."

Roepke said the ISC and the CAP Entity would take all comments seriously. "But the $1 billion project was ranked at the bottom of the list. We think the costs are unrealistic and that projects can be built for a lot less."

Riley said one of the reasons for the value study was to look at alternatives when the Spar Canyon price when up. Some potential locations would require pumping the water, he said. "The other 11 alternatives were gravity flow. Small Spar could store 1,600 acre-feet of water. The lowest-priced we looked at was Winn Canyon with storage of 2,700 acre-feet for $110 million to $115 million. Every alternative went up in the cost analysis because it was presumed that every reservoir needed to be lined. Whether lining is required needs to be determined by a geologic study."

"So the lowest is $115 million?" McQueen asked.

Riley confirmed that amount and said it would provide construction, diversion, conveyance and storage. "We did not look at other existing infrastructure that we might be able to use."

McQueen noted that, if there were a plan, perhaps the Legislature could make a yes or no decision. "But you continue to move down a path without knowing the plan or the costs."

Rep. James G. Townsend asked: "Once the New Mexico CAP Entity has decided what is best and if you request the funding, would the project be federally funded or a state project?"

Reece said the NM CAP Entity will hold title to the unit, but federal money is available to help fund it.

Rep. Joseph Cervantes asked who chose the CAP Entity members.

"The AWSA provides for the entity," Roepke said. "The ISC drafted a joint powers agreement for the entity, and the members chose to be members and signed the JPA. In terms of voting rights, that is up to the CAP Entity."

Cervantes noted that in 2011 he expressed concerns about not waiting until the last minute to make decisions. "I was not surprised that you waited until the last minute. Nov. 23 is now the date to enter into the Unit Agreement. Three months and the details are not known. These are decisions that needed to be made by the Legislature. I'm not convinced the AWSA empowers the ISC to do these things without legislative oversight. The ISC has only the authority given to it by the Legislature. We wanted that authority, but the Senate did not agree. I challenge this committee to find out the details. Some of us didn't think the Spaceport made economic sense. We were told there would never need to be more legislative appropriations. It was a boon and would create jobs. We're a decade into it and behind by $225 million. Our investment has seen .4 percent ROI."

"I candidly do not support this project because we don't know the costs or details," Cervantes said. "It doesn't made economic sense."

Rep. Candy Spence Ezzell, committee vice chair, said she had to appreciate Sen. Stewart's comments about watershed restoration. "And lining a reservoir prevents water seeping back into the aquifer. We've had problems with Reclamation and endangered species on the Pecos. When you talk about endangered species, you will have to have supplemental wells to keep them alive."

"We are responsible for NEPA and the impacts on threatened and endangered species," Reece said.

"The New Mexico-Texas Settlement was an agreement entered into by the state of New Mexico and the ISC," Ezzell said. "Three years ago, the Pecos ran dry. Thirteen farmers had to pump supplemental wells to put water into the dry riverbed for the endangered species. The water didn't make it to Brantley Reservoir. It took Congress and Reclamation to run an X-ray to find out the taking of the water from the wells was contaminating the shallow wells. I always have a concern on the BoR. There is a lot to be learned from those with their boots on the ground. I'm not sure the ISC has the authority, but I do understand the need for water."

Sen. Nancy Rodriguez said many of her questions had been answered. "I serve on the Finance Committee. I cannot imagine what we would do if we received a proposal with this many ambiguities and lack of details with no plan for funding. You don't even have 10 percent of the $1 billion in costs. I'm trying to look at a plan with this dollar amount. It would be difficult to support. You haven't done that great with the money you've received. It should be used to plan and look for funding. You have no clue where the money is coming from. It has to come from somewhere public. I caution you to take it carefully. Plan adequately and judiciously to make sure the funding is there. It has turned into a political battle. It shouldn't be, because water is our most precious resource. There still are so many fragments. We can't vote on this because we don't know enough."

Rep. Bealquin "Bill" Gomez asked how the area would use the water and replace it for the Gila River Indian Community.

"The water to provide for the exchange comes from Arizona's allocation of the Colorado River," Roepke said. "The New Mexico CAP Entity will pay the operations, maintenance and replacement for the unit. "

Gomez noted the numbers look extremely expensive. "I don't see that I makes economic sense. I don't see how this project will move forward."

Sen. Benny Shendo said he drove around to Cliff and Gila. "I saw farms and diversions. Where is Winn Canyon?'' Roepke explained is was about one-quarter to one-half a mile before the end of the pavement on highway 293.

Riley explained that Small Winn Canyon could store 2,700 acre-feet of water. Large Winn would meet the target of Phase 3 of storing 46,000 acre-feet.

Shendo asked about flooding the area. Riley said a dam in Winn Canyon would back up the water. "It would be a low-profile diversion."

"The beauty of the place and the flowing nature of the river," Shendo said. "What is the cost to society about not leaving things as is? If it weren't for tribes, we wouldn't have open spaces. I think the value and price is on keeping things as is. I'm curious about the powers we've given to the ISC and how do we fix it?"

Rep. Andy Nuñez noted the Spaceport bill was his bill, but "I don't agree with they way they are handling it."

"If we don't meet the Nov. 23 deadline, what would happen to the money and what the state has put up?" Nuñez asked.

"The $66 million is going into the New Mexico Unit Fund," Reece explained. "Signing the agreement doesn't affect the water. The New Mexico Unit Agreement is to abide with the Department of the Interior that the construction will use the Reclamation standards and meet federal statutes."

"If we don't sign, does the water go to Arizona?" Nuñez asked.

"The exchange is part of the authorization the AWSA did not put in place," Reece said. "What would go away might by the CUFA and the agreement that no one downstream will bring lawsuits. Absent the CUFA, we go back to the existing 1968 law, which makes it very challenging to take water."

"How much water are we talking about?" Sen. Peter Wirth, committee chairman, asked. "What is the actual amount and has the ISC done a study on the yields?"

Roepke said the first yield study had been done in October or November of 2001. "We envisioned a reservoir in Mangas Creek, but that won't happen because of endangered species. Those yield studies were the only ones publicized. The Value Engineering work group is looking at alternatives. You cannot reliably conduct a yield study unless you know the location and inputs to the reservoir."

"The last model we used had drought projections by The Nature Conservancy," he continued. "When the CAP Entity decides on the unit location, we will make our best yield estimate. We will help with studies. All this is moving slowly because it is a measured process."

"I can't get my mind around the project, cost and yields," Wirth said. "It's frustration we feel. We want to keep our colleagues in the loop. This has been helpful, and we will continue the discussion."

The next report will report on a presentation by Norm Gaume, a consulting engineer, and Jim Brooks, U.S. Fish and Wildlife Service, retired.