By Mary Alice Murphy

After election of officers at the Tuesday, Jan. 8, 2019 regular meeting of the New Mexico Central Arizona Project Entity members discussed proposed legislation to request political subdivision status for the entity.

Changes to the agenda included adding public input, which had inadvertently been left off, as well as deleting a watershed presentation, because the speaker Wendel Hann was unable to attend the meeting. He expects to do it at the February meeting. Also removed was a presentation from New Mexico Wild on the proposed Scenic Rivers designation for the Gila River.

No one spoke in public input.

Darr Shannon, incumbent chairwoman, was nominated and re-elected to the position. Vance Lee, incumbent vice chairman, was also nominated and re-elected, as was Van "Bucky" Allred as Secretary.

The 2019 Open Meetings Act Resolution passed unanimously with no discussion.

In the first agenda item in Old Business, discussion began on the proposed legislation for the CAP Entity to apply for political subdivision status.

Howard Hutchinson, representing the San Francisco Soil and Water Conservation District thanked CAP Entity's legal counsel, Pete Domenici's firm, especially Lorraine Hollingsworth, for making changes to the draft to focus on Arizona Water Settlements Act water and to make sure items do not interfere with the sovereignty of water rights. He said Rep. Gail Armstrong had agreed to sponsor the bill.

Domenici said the version he was presenting was a shorter version of the legislation. He went through the red-lined version. He said the beginning portions cleaned up definitions but made no substantive changes. "The second page is the heart of the document. It establishes what the new New Mexico CAP Entity will do. The first item is to plan, design and build the New Mexico Unit. The Secretary of the Interior still has some control, so the status does not conflict with the AWSA. We added that the AWSA water can be used for agricultural, municipal, commercial, industrial, mining, recreational or environmental purposes or any combination of these purposes within the boundaries of the entity."

It also states that the NM CAP Entity may acquire, develop and provide infrastructure and other water rights determined by the Board to be consistent with the purposes of the New Mexico CAP Entity.

"We don't want to acquire water systems," Domenici said, "but in specific instances, we may want to develop or acquire systems to use AWSA water. We can acquire water rights, but it will be on a case-by-case basis. It reflects that we are not trying to become a regional water authority."

He said the legislation goes along with the joint-powers agreement second amendment to provide quality of life. "The languages comes out of the AWSA and JPA."

Domenici said planning may be difficult for members of the entity and the four counties—Grant, Catron, Luna and Hidalgo—but the entity is the successor to the Gila-San Francisco Water Commission, which was the successor to the Southwest New Mexico Water Study Group, as stated in the AWSA. Membership in the CAP Entity is limited to public subdivisions in the four counties. Members may be added by a two-thirds majority approval to an agency's written request.

The legislation addresses the powers and duties of the Entity as a political subdivision, which includes owning and holding title to all portions of the New Mexico Unit and responsibility for operations and maintenance and replacement of the unit. The document also states the CAP Entity shall take all necessary steps to ensure the Entity's financial viability, with steps that may be taken to ensure the financial viability.

"We also facilitate the use of water," Domenici said. "The way the statute is set up makes the Entity the party that creates contracts for use of the water. This entity would be the successor to the JPA and would comply with contracts set up prior to subdivision status. The statute puts us under the 40-year-water plan for the state. We can do eminent domains, but not for water rights. It may be used only if necessary for rights of way and easements and for the use and placement of facilities and infrastructure elements, and as a last resort."

The legislation also lists the powers and duties of the CAP Entity board members. It lists the same things it does now, such as the Open Meetings Act resolution, setting up times of meetings and annually adopting an operations budget. Some actions may be done only upon resolution passed by two-thirds majority approval of the members, such as issuance of revenue bonds, initiation or continuation of legal action, except for liens for payment, which may be simple, or acquisition of real or personal property in excess of $2,000.

The statute gives the Entity authority to issue revenue bonds, including provisions for their payment and redemption. Income from the bonds shall be exempt from all taxation by the state or any political subdivision of the state.

"Basically, the statute makes the New Mexico CAP Entity a political subdivision," Domenici said, "with the authority to do what you need to do in the four counties. It is continuing and will be consistent with the JPA. You will be able to authorize other projects than the New Mexico Unit."

Vance Lee, representing Hidalgo County, asked if it was clear on how the entity will coordinate with existing contracts, "so that we can maintain ownership of the canals, but we can use AWSA water?"

Domenici said it was in the document, "but I don't think it's as clear as your question. I don't think it is necessary to stipulate it in the document."

Lee said he thought they wanted to make it clear that current ownership of the canals will continue as it is, and the entity will not be able to take over the existing canals.

"I think typically that language in contracts would make it clear that use of the water would not affect ownership of the canals," Domenici said. "I expect board members would be sparing with use of eminent domain and only as a very last resort."

Ty Bays, representing the Grant Soil and Water Conservation District, said taking over the ditches would take away farms.

Lee said if the language is in the contracts, it would spell out the rights of the ditch owners.

Joe Runyan, representing the Gila Farm Ditch, said one of his biggest concerns is the Gila watershed. "By managing it, we can yield more than the 14,000 acre-feet allocated to us. Can we lobby and persuade agencies to improve the watershed?"

Domenici said the establishment of the NM CAP Entity, under this statute, would give the members more authority. "The language was taken out of the AWSA. In section 2, it talks about the unit's environmental purposes. I think watershed management is part of your authority."

"If we were able to appoint someone to lobby the Forest Service and the BLM to enhance the watershed, it would help everyone," Runyan said.

Hutchinson noted that in the new federal Farm Bill, it expanded grants for watershed management to state and political subdivisions. "The president's executive order on forest management also enhances the possibilities. Another advantage of becoming our own political subdivision is we would become our own fiscal agent making us eligible for capital outlay and Water Trust Board funding.

A motion was made to approve the legislation for the CAP Entity to become a political subdivision.

Hutchinson said the bill would have to go through the legislative process. "I anticipate we may have to do it over two legislative sessions. We have to address concerns from others. We may see amendments, so we would have to monitor it closely to make sure it's what we intend. There is no guarantee the legislation comes out the same as when we passed it. The state has encouraged regional political subdivisions like this. There is no guarantee it will be passed and signed. Hopefully, we will encourage our representatives and senators to sponsor this. Some will recognize the benefit it will offer the region."

The motion passed.

The next item of business was the second amendment to the JPA. Chairwoman Darr Shannon, representing the Hidalgo Soil and Water Conservation District, encouraged members to make sure each entity approves and signs the document that includes the amendment.

The following item on the agenda was to make line item adjustments to the budget to put into professional services. The first was to take $100,000 in funding from legal services. The second was to take $2,000 from transportation and $5,000 from maintenance, for a total of $107,000 to go into professional services.

CAP Entity Executive Director Anthony Gutierrez explained the adjustments.

He said he didn't know if he had had a chance to explain that the ISC met. "We asked for a budget increase. Although the ISC did recommend an increase, it wasn't the total we asked for. The Professional Services line item is in need of extra funding. I talked to Pete and Lorraine about the budget moving forward, and they agreed we haven't needed as much legal assistance this year. This year, we've had a large task of providing data to the joint leads for the NEPA process. The vehicle was removed last year, but this time the maintenance line item remains. We do have a little bit of cushion in the budget."

"One of the things that makes it really difficult to estimate the budget we will need is that we have to estimate it two years in advance," Gutierrez said. "It's hard to see what we will need for professional services."

The motion was approved.

Shannon said the item on New Mexico Wild was removed from the agenda, because the person could not attend the meeting, would be again on the February meeting agenda "to hear what they have to say."

Under the executive director report, Gutierrez said he has taken some vacation time over the holidays. "Usually, in January and February, and this year into March, I spend a lot of time in Santa Fe. I did present to the Grant County Commission on the JPA second amendment. I would be willing to explain the JPA to other commissions at their request. The Grant County Commission approved it in a special meeting. I feel it's in our best interest to keep the entities involved."

He said he is seeing a change in how people view the entity's project. "I have spoken with Fish and Wildlife on our changes of design. I have talked to the engineer for changes on design if needed by the environmental impact statement of NEPA"

"I am preparing for the legislative session," Gutierrez said. "I will try to prepare for any and all aspects that may be thrown at me. I'm trying to organize documents to have them available for legislators and the public."

Shannon asked if Gutierrez had any idea when members of the Entity board would need to be in Santa Fe.

"Not yet," Gutierrez replied. "Only pre-filed legislation is available at this point. There may be changes in the ISC. One item that is pre-filed may take some executive power from the governor to appoint members to boards."

Domenici noted that the NEPA process is moving along. "Where are we in NEPA? What might come before the board, and what might be released to the public that we might need to be prepared to explain?"

Gutierrez said he continues to get requests to fill data gaps, especially on construction costs for Weedy Canyon. "We need to provide for footprint costs, such as the need for borrow material and spoils from construction. The engineer is working on them. We have heard concerns about construction costs per acre, which will be part of the economic analysis. We know what water rights cost, but we don't have documentation on it. I'm trying to get information from realtors about water sales. If you know of any, please let me know, especially if it's water sales for agriculture. We need to determine lease and purchase costs. I will meet with Dave (Maxwell, Stantec engineer) to get the business plan moving again. We are trying to get DFA and LFC to approve the increase in the budget to get it going."

Domenici said he hears questions focused on what the project is and its costs, specifically Winn Canyon. "We've been saying we will get it built for the construction money, but the Winn Canyon construction costs went up. Are we prepared to move forward if we are over budget on construction? Do we make adjustments if we have components that are more expensive? O and M (operations and maintenance) costs are fairly significant per acre foot. We've been using the exchange costs as what the water will cost, but it appears we will have significant O and M costs above that. If specific activities, such as pumping to a pond, are too costly without enough benefit, it will hurt the rest of the project. We need an updated discussion to determine if we need to strip down or de-prioritize some of the more expensive components."

"I brought them to the board," Gutierrez said. "The engineer found out that the proposed dam design at Winn Canyon may not be sufficient for the regulatory requirements of the Dam Safety Bureau. We did take the O and M costs into consideration at about $146, and estimated that with the exchange costs, at $156-$158, it would cost a total of about $300 per acre-foot. I presented this to the legislative committee meeting. If we remove the cost associated with return flow and get the credit for return flow, we estimated it will reduce the cost to $200-$220 an acre-foot. Dr. Ward at NMSU said that cost is right around what he would call the maximum cost for benefit regionally."

Shannon said she thought the numbers should be discussed at the next meeting. Gutierrez said he would have some updated costs at that time. "Some numbers may fluctuate."

Bays asked for clarification on shaving $70 for return flow credit off costs. "Would that be off the exchange costs?"

Gutierrez said that was correct and that the return flow credit would have to be determined by the Technical Committee.

Domenici said with return flow credit of, for instance, 40 percent, the users would pay 60 percent of the exchange costs. "The credit for return flow is critical. I'm not crystal clear why O and M is so high. We need to know the elements of O and M."

Hutchinson said, going back to the earlier discussions on how much it costs for using the water, "I'm paying about $75 a month for pumping one acre-foot. With a contract for AWSA water, I wouldn't be paying more than I am now. When we're calculating this cost benefit, are we saying we are going to divide the acre-feet of water we can produce into construction costs one time, or are we going to amortize it over the life of the project?"

"That information has not been made available to us and won't be until the EIS," Gutierrez said. "I don't know what numbers the NEPA contractor is using."

Jeff Riley of the Phoenix Office of the Bureau of Reclamation said: "The economic analysis will take into account costs amortized through the life of the project."

Hutchinson noted that legislators ask these questions. "They think costs will be excessive, but they are not taking into account the present costs of everything. We did not have the safety of the dam presented to us. When I heard that at our presentation in Santa Fe, I was shocked at the cost increase of Winn Canyon. Was it a project design change? I'm wondering how that happened."

Gutierrez said he provided all the information to the board members, but not as a change in proposed action, but only as a change in design.

"We're cautiously waiting for the environmental survey," Runyan said. "Isn't it true that we can then consider adjustments? And on a side note, I was in Las Cruces over the weekend and saw the incredible increase in pecan production. They take a lot of water. So many wells are being put in in Texas and New Mexico and along the Rio Grande south of Las Cruces. The appraisal of the value of water, with a good consultant, will change our views on how much this water is worth."

Gutierrez agreed and said if "we can provide that information it increases the value of the AWSA water. I don't know what number for the benefit that NEPA is going to use. We know the act provides up to $62 million for construction of a unit. But we don't know how that impacts the cost per acre foot that the contractor for the cost analysis is using."

Hutchinson said last year he presented information to the legislators based on a University of Arizona study on the cost of water and also another study from California. "They address water conservation versus reuse and versus the acquisition of new water. When you look at the costs of new water, it's a phenomenal cost. If we were to look at the value of AWSA water in comparison, it would have to go to $700 an acre foot. One of the legislators, who won't be coming back, said that hemp production is $40,000 per acre in revenue. That's not profit, because the cost of a seed is $1 per seed plus licensing. That will change, but seed companies have cornered the market. It's a high value crop we could look at. The CDB oils that come out of hemp production are a value-added product. The benefit New Mexico could get is huge. The leaves also go into fabric and other uses. When you look at the life of the project, who knows what the costs and benefits will be?"

He clarified that hemp is not marijuana and CDB oils go through a process to remove any traces of THC, the addictive portion of marijuana.

Gutierrez said he would bring the changes to Winn Canyon to the next meeting.

"Have we heard that we might be going over the amount in the construction fund?" Shannon asked.

Domenici said the numbers were brought to the board, but when they were brought, "we didn't know the regulatory requirements. I viewed the numbers as preliminary, but they do take us over the construction fund amount. We need to keep the board informed if the number jumps $25 million because of a letter from the Dam Safety Bureau. We've been working like crazy over a half a million dollars. I've seen costs jump in projects and then someone else comes in and says you can do it this way and costs drop."

Gutierrez said part of the changes would be in the overflow design.

Hutchinson said he met with members of the state government transition team. "They have some good folks. I sent them a set of bullet points on this project and about where we are in the process. At our last cooperating agency meeting, the NEPA contractor said the cooperating agencies could see a draft of the EIS by the end of the month, and then the draft EIS would be out in mid-February.

Bays noted that Grant County, Socorro County and Catron County commissions had all recommended Gabriel Ramos, a former member of the NM CAP Entity board, to replace Howie Morales as senator. "There's scuttlebutt that people are trying to undermine his nomination. I encourage you to call to support him."

"I've mentioned this before," Bays said. "The Gila River Basin is one of the most restricted in the West, maybe in the U.S. Because of this, I've seen water rights sell for not less than $10,000 an acre and up to $30,000 per acre foot. People outside of this area don't understand that we can't drill a well for an outside spigot without a water right. In Luna County, you can drop a well, but not in the Gila Basin. A young farmer can buy land but would never be able to buy water rights. There is arable land for sale in Grant, Catron and Hidalgo counties, but the capital investment is too high. This CAP water is a good deal. We need to convey this to the legislators, so they understand the value of this project."

Lee said those who pay $10,000 or $30,000 for a quarter acre-, half acre- or full acre-foot of water right are not counting on this for one year. They are amortizing over a large amount of time. "It makes sense to me to look at the value of this water over the long-term."

Hutchinson said he had redrafted the memorial that was sent to the Legislature last year and updated the numbers to present again this year.

Domenici noted that, in addition to the value of the water, "what we are providing is storage. Our project combines the use and the storage. Water and storage are long-term components. I did a storage appraisal in Las Vegas. We hired an appraiser. It was hard to find comparables. The numbers there were high, like the cost of water rights. There is data, but it's hard to find."

"One of the most valuable things for the legislative session is the presence of our board members at hearings and to speak with legislators," Gutierrez said. "They get tired of seeing the same faces. When other members present, it's very valuable. Mr. Runyan's testimony was very important. They appreciate it when you make the effort to talk to them."

Shannon said the members represent other entities, and "some of the entities will pay for per diem and mileage. I talked to Deming as the fiscal agent, and if we approve it, the CAP Entity can pay for per diem and mileage for our members."

Gutierrez said the next meeting falls about two weeks into a long session. "Let's put it on the agenda for the next meeting, because most hearings that members need to attend will come after that."

Hutchinson said he echoed the admonition for everybody to attend. "Don't be discouraged if the meeting you went up to attend is no longer on the agenda. When you are in Santa Fe, you can talk to individual legislators. There is ample opportunity to talk to them. Our access to legislators is the most open in the U.S. Take the time and meet with the legislators one-on-one. It is the best lobbying effort to hear from the individuals involved."

The next meeting is set for Tuesday, Feb. 5, 2019, at 10 a.m. at the Grant County Administration Center.

Domenici said he just wanted to let everyone know about the new airline. "Advanced Air is very accommodative and has a similar schedule to Boutique. The afternoon flight is a bit earlier, so if I walk out of a longer meeting, it's to catch my flight. But the time is actually more convenient."

The meeting was adjourned.

Content on the Beat

WARNING: All articles and photos with a byline or photo credit are copyrighted to the author or photographer. You may not use any information found within the articles without asking permission AND giving attribution to the source. Photos can be requested and may incur a nominal fee for use personally or commercially.

Disclaimer: If you find errors in articles not written by the Beat team but sent to us from other content providers, please contact the writer, not the Beat. For example, obituaries are always provided by the funeral home or a family member. We can fix errors, but please give details on where the error is so we can find it. News releases from government and non-profit entities are posted generally without change, except for legal notices, which incur a small charge.

NOTE: If an article does not have a byline, it was written by someone not affiliated with the Beat and then sent to the Beat for posting.

Images: We have received complaints about large images blocking parts of other articles. If you encounter this problem, click on the title of the article you want to read and it will take you to that article's page, which shows only that article without any intruders. 

New Columnists: The Beat continues to bring you new columnists. And check out the old faithfuls who continue to provide content.

Newsletter: If you opt in to the Join GCB Three Times Weekly Updates option above this to the right, you will be subscribed to email notifications with links to recently posted articles.

Submitting to the Beat

Those new to providing news releases to the Beat are asked to please check out submission guidelines at https://www.grantcountybeat.com/about/submissions. They are for your information to make life easier on the readers, as well as for the editor.

Advertising: Don't forget to tell advertisers that you saw their ads on the Beat.

Classifieds: We have changed Classifieds to a simpler option. Check periodically to see if any new ones have popped up. Send your information to editor@grantcountybeat.com and we will post it as soon as we can. Instructions and prices are on the page.

Editor's Notes

It has come to this editor's attention that people are sending information to the Grant County Beat Facebook page. Please be aware that the editor does not regularly monitor the page. If you have items you want to send to the editor, please send them to editor@grantcountybeat.com. Thanks!

Here for YOU: Consider the Beat your DAILY newspaper for up-to-date information about Grant County. It's at your fingertips! One Click to Local News. Thanks for your support for and your readership of Grant County's online news source—www.grantcountybeat.com

Feel free to notify editor@grantcountybeat.com if you notice any technical problems on the site. Your convenience is my desire for the Beat.  The Beat totally appreciates its readers and subscribers!  

Compliance: Because you are an esteemed member of The Grant County Beat readership, be assured that we at the Beat continue to do everything we can to be in full compliance with GDPR and pertinent US law, so that the information you have chosen to give to us cannot be compromised.