[Editor's Note: Because of time constraints, this author attended only the meeting in Deming on the Arizona Water Settlements Act update.]

[Editor's Note 2: The presentations have been posted to www.nmcapentity.org under documents and presentations. The reference documents are being problematic, but will be posted as soon as the glitch is figured out.]

By Mary Alice Murphy

On Thursday, Sept. 27, members of the Interim Legislative Finance Committee met at the Mimbres Valley Learning Center in Deming. The topic at 4 p.m. was an update on the Arizona Water Settlements Act process ongoing in the area.

Interstate Stream Commission Director John Longworth presented background on the issue.

"In November 2014, the Interstate Stream Commission notified the U.S. Secretary of the Interior of the state's intent to pursue a New Mexico Unit," Longworth said. "The Commission became a joint lead with the U.S. Bureau of Reclamation on the project. The commissioners approved funding from the New Mexico Unit Fund for a number of non-unit alternatives in 2014-15. In July 2015, the New Mexico Central Arizona Project Entity was created and designated as the entity made up of stakeholders in the four-county region of southwest New Mexico. The Commission administers the $66 million, adjusted for inflation to $90.4 million, as allocated to the four-county region by the AWSA. The money, which is coming at about $9 million a year in one-year allocations for 10 years is deposited by Reclamation into the New Mexico Unit Fund. In August 2016, the decision was made to invest the monies in the fund."

He went into detail on the fiscal year 2018 expenditures. The NMISC operating budget, which includes full-time employees and support costs, was $214,000 for the year just concluded. The expenditures include management and oversight of various aspects of the AWSA implementation in New Mexico.

The contractual budget includes technical services, including conceptual engineer costing $629,000, legal services for litigation and NEPA support at $43,000 and other, $2,000.

A funding agreement for NEPA was signed between the ISC and Reclamation in November 2016. The budget includes Reclamation staff hours and all contractors hired by Reclamation for the New Mexico Unit EIS (environmental impact statement). The budget is broken into four categories: General NEPA, including hydrology, biology and overhead; cultural resources, such as archaeology and compliance with the National Historic Preservation Act; socioeconomic, including regional economic analysis and general economic impacts; and the engineering evaluation of health and safety issues and technical assessment of the proposed action.

As of the end of fiscal year 2018 on June 30, 2018, $4.4 million had been advanced to Reclamation; $2.9 million was obligated by Reclamation; $0.50 million had been expended by Reclamation and $2.4 million was obligated but not expended.

The notice of intent to proceed with NEPA was published in the Federal Register on June 12, 2018. Eight scoping meetings were held between July 2 and July 13, 2018, with five in New Mexico – Albuquerque, Silver City, Cliff, Glenwood and Virden and three in Arizona, San Carlos, Chandler and Safford. A total of 355 people attended the meetings, and 1,444 comments were received from 560 submissions. The draft EIS is scheduled for March 2019 and the record of decision by the Secretary of the Interior is slated by Dec. 31, 2019.

Longworth also talked about the expenditures for the NM CAP Entity budget. He explained that the ISC is the CAP Entity's first fiscal agent and must approve all expenditures. The city of Deming is the second fiscal agent for the entity. The budget includes the operating budget, professional services and administrative costs. The total expended in FY2018 was $386,000.

He gave an update on the non-NM Unit projects funded by the ISC. The Commission allocated $9.1 million to 16 projects in southwest New Mexico. The total expended in FY18 was $530,000.

With investment of NM Unit funds into the state Investment Council beginning in November 2016, with all income credited back to the Unit Fund, the market value increase in FY 18 was $2.59 million.

Longworth also talked about the FY 19 projection. The ISC's AWSA operating budget is for $315,000, NEPA support excluding Reclamation's budget is $200,000, technical services, $500,000 and legal services at $135,000.

Reclamation's NEPA budget is $1.34 million; the NM CAP Entity's budget is $700,000; and the non-NM unit project expenditures and the market value increase from investment are unknown.

He added the expenditures from FY 12- FY 19, as of Sept. 25, 2018. The ISC has spent $1.6 million on its operating budget, $1.46 million on NM Unit conceptual engineering and water modeling; studies including vetting non-NM Unit projects $3.8 million; legal services, $519,000, and other $109,000. The ISC has advanced out of the NM Unit Fund to Reclamation $4.4 million, of which $510,000 had been expended by the end of FY 18. Obligated but not expended is $2.4 million.

The NM CAP Entity by Sept. 25, 2018 had spent $1.32 million; non-NM Unit project expenditures totaled $1.6 million and market value increase from investment as of the end of August 2018 was $5.6 million.

He noted the ISC continues to administer the NM Unit Fund; consider, approve and process Reclamation's NEPA budget for the NM Unit; consider, approve and process the NM CAP Entity's budget and administer the 15 non-NM Unit projects. The ISC acts as joint lead in the NEPA process with Reclamation and will prepare the EIS and other required documents. He made clear that the ISC is not the project proponent. "The NM CAP Entity is the project proponent. The entity sought and got from the Secretary of the Interior authority to design, plan and construct the New Mexico Unit."

NM CAP Entity Executive Director Anthony Gutierrez gave an update on the proposed action of the New Mexico Unit. He also introduced members of the CAP Entity who would also speak, Howard Hutchinson representing the San Francisco Soil and Water Conservation District, Vance Lee representing Hidalgo County, Gabriel Ramos of Grant County, John Sweetser of Luna County and the entity's counsel Pete Domenici Jr.

Gutierrez said the NM CAP Entity created, in an open public meeting, its amended proposed action, which provides diversion, conveyance and storage components in three areas—the Upper Gila Valley, along the San Francisco River and in the Virden Valley. The action utilizes newly designed components and existing infrastructure. A second amendment was made on Feb. 6, 2018 and subsequently a summary report of the components was submitted to the NM CAP Entity Board by Stantec Engineering. The NM CAP staff has worked closely with the Gila Basin Irrigation Commission to ensure there are no conflicting issues with the GBIC's planning for a project. The GBIC project has been submitted for consideration as an alternative in the NEPA scoping portion of the EIS.

He said diversion and yield analyses were performed based on the Consumptive Use and Forbearance Agreement of the AWSA. The target demands are 3,000 acre-feet on the Gila, 1,000 acre-feet on the San Francisco and 500 acre-feet in the Virden Valley. Storage capacities of the components exceed the amount in all but the Virden Valley. The realized diversion available for all three areas has been calculated to be close to 7,000 acre-feet. The NM CAP Entity board has made it clear in its proposal to the joint leads that its long-term goal is full development of the allowable averages of 14,000 acre-feet per year to a maximum of 140,000 in a ten-year period as allocated in the AWSA. The Gila River would develop 10,000 acre-feet and 4,000 on the San Francisco as their annual allotments.

The CAP Entity Board is also working with Frank Ward and New Mexico State University on a strategic plan that includes a comprehensive economic and business plan.

"The NM CAP Entity, along with AECOM and Stantec Engineering has provided a feasible project for NEPA analysis, kept the project cost relevant to the funding available for construction outside the NM Unit Fund, provides for more efficient means of irrigation along with improving reliability of delivery by providing storage, performed diversion and yield analysis to prove water is available for consumptive use under the constraints of the AWSA and has also provided a means by which other water project alternatives can potentially be funded," Gutierrez said. "Most importantly, it has provided a foundation for development and conservation of New Mexico water, which was the original intent of the Arizona Water Settlements Act."

He provided maps and charts of projected costs for the various components. The costs total $50,334,059, which is less than what is anticipated to come from the construction fund, which is outside of the New Mexico Unit Fund, and comes from the Lower Colorado Basin Development Fund.

Rep. Patricia Lundstrom who moderated the meeting clarified items to see if she understood. "These are federal water rights; Reclamation does the NEPA; and the New Mexico CAP Entity has authority over the design."

Longworth confirmed her summary and said the ISC is the joint lead with Reclamation for NEPA and the ISC has responsibility for the New Mexico Unit Fund.

Howard Hutchinson, representing the NM CAP Entity in his role as member representing the San Francisco Soil and Water Conservation District, said NEPA is moving rapidly because of an executive order President Donald Trump issued that required most NEPA projects be completed within one year. He said the target date for the Secretary of Interior's record of decision is Nov. 11, 2019." His full comments are posted to nmcapentity.org on the presentations page, as are the other presentations.

Vance Lee, NM CAP Entity vice president representing Hidalgo County, said the projects, for which the legislators had received maps, include on-farm storage ponds. "We are also planning new and improved diversions. All will cost a little over $50 million to be paid for out of the construction fund, which can have up to $62 million for construction of a unit only. Since 1968, when the first settlements act was passed, we have let more than 900,000 acre-feet of water go to Arizona without diverting a drop. It's a shame, because it's almost half enough water to fill up Elephant Butte Reservoir. We are making every effort to keep our construction costs within the available construction funds. It's common sense for us to keep every available drop of water. It's about the water. The fund is a tool to keep the water in New Mexico."

Joe Runyan, representing the 10-member Gila Farm Ditch on the NM CAP Entity board, said the largest present diversion in the Gila Valley is owned by Freeport-McMoRan. The present ditch diversions are maintained as they have been for 100 years. "Now we get a Caterpillar and push up a berm across the river. We welcome a diversion because it will make it easier for us to utilize the water. If you're going to farm in the Upper Gila and didn't inherit water rights, you have to face the reality of purchasing water. Presently, fully adjudicated water rights in the upper Gila valley have a market value of about $12,500 per irrigated acre—if you can get them. Assume one buys 10 acres of water on a 30-year mortgage at 5.3 percent interest, the current average for farm loans. That will cost you over the 30 years of the loan about $125,000 plus about $125,000 in interest. So, during the 30 years, a farmer must come up with $850 per year to farm one acre of land. If you pay cash for water rights, it still costs $416.60 per acre."

He believes that if water can be stored, CAP users could afford at about $150 an acre-foot about $435 for the 2.9 acre feet of water per year to irrigate one acre of land. Many of the farmers sell produce at the farmers' markets in Silver City. Some use greenhouses. "With reliable water, I can imagine an explosion of innovations. Many of the farmers have more land than water rights, so with the relative low cost of water, they can successfully grow more crops, even in the winter, and create new enterprises in the upper Gila Valley."

NM CAP Entity Attorney Pete Domenici Jr. said although the NM CAP Entity has been in existence for only three years, "I started working on the Gila 20 years ago. Congress has told us this time in the AWSA, if you want to build a unit, get your act together and develop a project and get the record of decision by December 2019. We came together, and we have worked together to come up with a feasible project. That's what the CAP board has been doing, dealing with feasibility issues. Diverting is a challenge. Storage is currently not available. The board prioritized better diversions and storage. We are jumping through the hoops to get the money and most importantly to get the water."

Lundstrom asked if any of the projects has been applied for through the New Mexico Water Trust.

Hutchinson said no, as the group was trying to stay within the construction fund dollars. "In the future, we expect to look at other funding."

Lundstrom said the Water Trust Board can provide funding for five different categories.

Rep. Randal Crowder said all his questions had been answered. "I believe one of your Interstate Stream commissioners lives on the Gila. I think that's good for the personal touch. It was a good choice for you to invest your money with the investment council."

Longworth noted that the commissioner who lives on the Gila, whenever there is an issue addressing the Gila River, abstains from the vote.

Rep. Rodolpho "Rudy" Martinez asked if the funding had been allocated for the non-New Mexico Unit projects.

"The funding is being held for those projects," Longworth said. "They are in various stages. Some are complete; some are going through federal compliance; some are in design; and some are headed toward construction."

Martinez asked about the ISC tabling an amendment to the JPA with the NM CAP Entity to allocate funding to other non-unit projects.

"The ISC is concerned that the preferred focus of the CAP Entity at this time should be on the NEPA process," Longworth said. "We plan to take up the amendment at the next or following meeting."

Martinez asked what effect the tabling had on the already allocated funding for the non-unit projects.

Longworth said there is no connection. "The funding is already allocated for the 16 approved projects."

ISC Attorney Dominique Work said, according to the AWSA, the federal government is already dispersing the original $66 million, which has grown to about $90 million in yearly allocations to the New Mexico Unit Fund. "We have received seven so far."

Martinez asked if the amount of money would be sufficient to complete the project.

"There are two pots of money," Longworth said. "The first goes into the New Mexico Unit Fund and is about $9 million a year over 10 years. The second pot of money is for construction of a New Mexico Unit. The CAP Entity has chosen a project that will fit into the second pot of money, which is about $62 million. If there is no record of decision, we would anticipate losing the construction money to other projects in Arizona. We want to utilize the amount of funding allowable for construction, so the maximum amount of original funding can remain in the New Mexico Unit Fund for the future."

Martinez asked how much storage would be in the three areas. Gutierrez said the maximum in the upper Gila would be 3,700 acre-feet; 1,400 acre-feet in the San Francisco and 500 acre-feet in the Virden Valley.

Martinez asked if land had been acquired for storage to which Gutierrez replied: "We have had conversations with land owners. Freeport has not given us a negative answer. We have not yet done any contracts but have been in discussions."

Hutchinson said the storage facility on the San Francisco is on Forest Service land. "We have had talks with the Forest Service and the BLM to transfer the land to Reclamation for the storage."

Lee said he and the engineer as recently as two days ago had met with landowners. "Both of them are in agreement on using their land. We have had positive feedback."

Martinez asked about fallow properties.

Gutierrez said there are fallow areas that have the potential to use the AWSA water. "Freeport is in full support of using AWSA water for fallow areas."

Martinez asked about the proposed utilization of Freeport infrastructure. "Is the intent to transfer water to the Mimbres River to provide water to Luna County and Deming?"

Gutierrez said the intent is to recharge wells or perhaps to offset depletions.

Rep. James C. Hall asked if any of the water would be available to other than ag uses.

Hutchinson said: "Yes, the water can be used by any user. It just requires a contract to pay for the exchange costs."

Hall asked about the government structure of the CAP Entity.

Lee said it was made up of municipal, county, soil and water conservation district representatives, either elected or appointed.

Hall asked if the Legislature could appropriate the funding and use it for other uses.

Domenici said the federal legislation is clear that the funding must be used for water projects and in the four counties of southwest New Mexico—Grant, Luna, Hidalgo and Catron. "Our opinion and that of the ISC is that the funding must go through the entity or the ISC. There has been legal argument against taking it for other uses."

Hall asked if the ponds and storage could be used for fishing.

Hutchincson said the storage is for irrigation use in severe drought. "Fluctuations in the storage level will make it not viable for recreational use, but we have considered possibly using storage for recreation and stocking the endangered Gila trout."

Hall said his constituents have an interest in water in the river and in storage for recreation.

The NM CAP Entity representatives were released so the next group of speakers could talk about the Texas versus New Mexico ongoing water legal issues.