Hearing

before the Senate Energy and Natural Resources Committee

S. 1171

Northwestern New Mexico Rural Water Projects Act,

Statement of John R. D'Antonio, Jr.

New Mexico State Engineer

June 27, 2007

Mr. Chairman and committee members, I am John D'Antonio, New Mexico
State Engineer. I appreciate very much the opportunity to appear before
you today and provide comments on behalf of the State of New Mexico in
support of the Northwestern New Mexico Rural Water Projects Act, S.
1171.

This legislation will authorize construction of an important rural water
system for the Navajo Nation, the Jicarilla Apache Nation and the City
of Gallup.

It will also resolve long-standing water issues between the Navajo
Nation and the State of New Mexico in the San Juan River Basin of New
Mexico by authorizing a comprehensive settlement agreement. The
legislation clarifies provisions of existing law and provides guidance
regarding regulations that will be developed to implement the settlement
provisions.

The State of New Mexico and the Navajo Nation reached this settlement
after decades of disagreement and many years of intensive settlement
talks. It is no small matter that we appear before you today, together,
urging the United States to join us as signatories to the settlement
agreement.

We believe this legislation has been carefully crafted to address water
supply needs within New Mexico and protect the long-standing Law of the
Colorado River while building off the recent cooperation and agreements
among the Colorado River Basin states.

I would like to discuss these issues in further detail.

**Rural Water Supply Project**

The legislation would authorize the Northwestern New Mexico Rural Water
Supply Project. This project is vital to solving the acute water supply
conditions facing much of northwestern New Mexico, including a large
portion of the Navajo Nation. The project is described in detail in the
final draft Environmental Impact Statement recently released by the
Department of Interior. The project builds off of an existing Colorado
River Storage Project Act reservoir, and is supported by a federal
planning process that has been underway for over 30 years. The State of
New Mexico looks forward to receiving the Bureau of Reclamation's
feasibility level design cost estimates for the project in the near
future so that progress can continue toward a final EIS and project
construction.

As demonstrated through many of the comments presented to the Bureau of
Reclamation in response to the draft EIS, today more than half of rural
Navajos in New Mexico must haul water for many miles to receive a basic
domestic water supply. The reality faced by Navajo families was
highlighted in a recent PBS documentary, developed with the assistance
of the State of New Mexico, and many viewers were shocked to realize the
primitive conditions suffered by Navajo people, who currently have to
travel many miles each day to fill up tanks at water supply stations and
haul them home again. The BOR heard comments on the draft EIS from
several Navajo citizens including a Navajo Code Talker who described his
daily hardships and another veteran who lamented his inability to
utilize the GI home loan program because of the lack of fire hydrants
where he lives. During one public meeting, grade school children
presented drawings of trucks carrying water tanks as description of
their current water supply systems.

By providing the backbone for a regional water supply system, the
project will enable the Navajos to receive water -- a basic need that
virtually all other U.S. citizens take for granted.

The project will also enable the City of Gallup to acquire a renewable
surface water supply. Currently, Gallup faces quickly declining
groundwater supplies with the prospect of severe shortages within 20
years. Finally, the project will deliver water to the Jicarilla Apache
Nation for use in the water scarce southern portion of the Apache
reservation.

By 2040 the project is expected to serve approximately 250,000 people,
including the residents of Gallup. The project would be the second
biggest water utility in the state, smaller only than the Albuquerque
Bernalillo County water utility.

Because the project will serve a very large area and contain over 800
miles of pipeline, the cost of the project is high. But, the project
costs can be appropriated over several years, and the Reclamation Water
Settlements Fund, to be created by Title II of S.1171, provides a
reasonable means of funding project costs if sufficient appropriations
have not been made by 2018.

In recognition that the state will incur costs associated with its
Indian water rights settlement projects, including the Navajo
Settlement, the State of New Mexico has made initial contributions to
the New Mexico Indian Water Rights Settlements Fund (NMSA 72-1-12). In
addition, over the last 4 years, the state has invested approximately
\$9.7 million in a Gallup regional distribution system and, this year,
the New Mexico legislature appropriated \$15.3 million to be used for
construction of the "Cutter Lateral" pipeline on the eastern side of the
project. New Mexico recognizes the importance of funding rural water
supply and Indian water rights settlement projects and looks forward to
a federal commitment commensurate with the federal government's trust
and statutory responsibilities. New Mexico commends Senators Bingaman
and Domenici for their recent communications with the Office of
Management and Budget regarding the need to treat New Mexico's water
rights settlements fairly and consistently vis-a-vis other settlements
around the country.

# Benefits of the Navajo Settlement

# In addition to authorizing a project that would provide a secure source of drinking water for Navajo and Apache communities and for the City of Gallup, the legislation would approve a comprehensive settlement of the Navajo Nation's water rights claims in the San Juan Basin in New Mexico. Navajo claims to the San Juan River have long-threatened the security of water rights of all other water users within the basin. After years of difficult negotiations, the State of New Mexico and the Navajo Nation entered into a settlement agreement in 2005. 

# The State of New Mexico strongly believes that the settlement represents a fair and equitable resolution, and we respectfully ask this Committee to support it. The San Juan River, like most rivers in the southwest, does not produce enough water to meet all claims for current and future uses. Under the settlement, the Navajo Nation agrees to substantially reduce its claims in exchange for the wet water supplied by the proposed project.

# Before signing the settlement agreement, the State of New Mexico carefully considered the needs of non-Navajo water users in the San Juan Basin, and over the course of several years, the state met many times with water user groups, took formal public comments, analyzed alternatives and worked tirelessly to negotiate the agreement in order to resolve the concerns voiced. Some of the most difficult negotiations centered on numerous changes to the settlement agreement that provide additional protections for third parties. The State of New Mexico has reviewed the settlement agreement and proposed legislation from a perspective of protecting all water users within the state, including San Juan-Chama Project water users, and the state believes the settlement benefits and protects those water users. 

# I firmly believe that we have come as close as possible to a resolution that provides maximum benefits and protections for all water users, given limitations of water supply and potential uncertainties of its allocation if the Navajo claims were litigated. 

# To underscore this point, I want to outline some of the most important provisions built into the settlement to protect non-Navajo water users. 

# Under the settlement, the Navajo Nation accepts compromises regarding both the quantity of its water rights and administration of its priority dates, with the result that Navajo claims fit within New Mexico's apportionment of the Upper Colorado Stream System and will not displace other existing uses and projects. 

# Under the settlement, the quantity of Navajo water rights would be made up of essentially three components. First, the settlement recognizes the existing uses of the Navajo Nation, including its old irrigation projects Hogback and Fruitland diverting directly from the San Juan River for authorized irrigation of approximately 12,000 acres. Second, the settlement recognizes the Navajos' largest right, its right to irrigate over 110,000 acres that comprise the Navajo Indian Irrigation Project (NIIP), authorized by Congress in 1962 by Public Law 87-483. Finally, the only "new" water the Navajos will receive is almost 21,000 acre-feet a year of water to supply domestic and commercial uses for the Navajo portion of the Northwestern New Mexico Rural Water Supply Project. 

Regarding the large Navajo Indian Irrigation Project right, Congress
authorized an annual diversion of 508,000 acre-feet; however, the
Navajos through conservation are agreeing to limit diversions to 353,000
acre-feet and could only exceed that amount by obtaining a State
Engineer permit assuring that no other water users would be impaired by
an increase.

With respect to priority dates, under the federal reserved water rights
doctrine, the Navajos could claim an 1868 priority, the date of their
reservation. Under the prior appropriation doctrine, the Navajo Nation,
as most senior water right holder, could call for all its water before
anyone else on the San Juan River. Even with reduced quantities as
provided under the settlement, an 1868 priority would threaten frequent
curtailment of other water users. Consequently, the Navajos are agreeing
that NIIP and the proposed rural water supply project will be supplied
under the Navajo Reservoir's 1955 priority, instead of a reserved
priority date of 1868. This concession means that 10 percent of Navajo
rights will have an 1868 priority and 90 percent will be administered
with a 1955 or later priority.

I have described two of the most important protections incorporated into
the settlement, regarding quantity and priority, but there are several
other protections conferred by the settlement I want to touch on.

The settlement has valuable shortage sharing provisions that protect
other federal projects. As you know, the federal government has invested
a great deal of resources in the Animas-La Plata Project (ALP) and the
San Juan-Chama Project. These projects are vital to the State of New
Mexico, but they have relatively junior priority dates of 1956 and 1955,
respectively. In addition to the general protections I have already
described, the Navajo Nation is agreeing to additional, specific
protections for these two important federal projects.

ALP's 1956 priority in New Mexico makes it vulnerable to priority calls
within the San Juan Basin. Most of the 13,520 acre-feet per year of ALP
water allocated for use in New Mexico will supply the future needs of
the three municipalities of Farmington, Bloomfield and Aztec. In the
event that curtailment of New Mexico's water uses is required by the
Upper Colorado River Basin Compact, the Navajos agree to provide
protection to New Mexico contractors up to their project contract
amount. Under this protection, the Navajos agree to forgo their uses in
order to make water available to ALP at the same percentage supply
available to the rural water supply project authorized by S. 1171.

Section 102 of S. 1171 would amend Public Law 87-483, which authorized
the San Juan-Chama Project, to clarify that the normal annual diversion
requirement for that project is 135,000 acre-feet for purposes of
allocating annual water supply shortages between Navajo Reservoir
contractors and the San Juan-Chama Project. That provision minimizes the
potential for shortages to the San Juan-Chama Project, which on average
diverts 105,000 acre-feet per year, or less, in dry years when less
water is available for project diversions. This means that a large
reduction in Navajo Reservoir's physical supply would have to occur
before the San Juan-Chama Project would begin sharing administrative
shortages.

In addition, in order to protect federal project contractors, the state
analyzed the risks associated with allowing additional water to be
contracted from Navajo Reservoir to supply the proposed regional water
project.  The hydrologic determination recently signed by the Secretary
of Interior confirms that additional water is available for the new
contract uses without impairing existing uses.  The additional risk of
shortage to contractors from either the San Juan Chama-Project or Navajo
Reservoir supply is minimal, and the State of New Mexico believes that
other settlement and legislative benefits provided outweigh any
additional risks of shortage.

Another category of protections I want to mention consists of specific
protections for non-Navajo water users who are not supplied by federal
projects. These users are direct flow irrigators, municipalities and
power plants. Many non-Indian and municipal state-based rights were
quantified in the 1948 Echo Ditch Decree, to which the United States and
the Navajo Nation were not parties. Under the settlement, the Navajo
Nation and the United States would agree not to challenge the elements
of Echo Ditch Decree rights except on the basis of forfeiture,
abandonment or illegal use occurring after entry of the Decree. This
means that the U.S. and the Navajo Nation would not go behind this
long-standing decree to challenge the water rights decreed at that time
or challenge the validity of the decree. Similarly, in conjunction with
the settlement, the Navajo Nation is agreeing to recognize water rights
of the City of Farmington quantified by the Echo Ditch Decree.

An important protection for direct flow diverters is the Navajos'
agreement to call on an alternate water supply from Navajo Reservoir
before making a priority call against direct flow. Although, as I
mentioned above, the settlement provides that 90 percent of the Navajos'
rights would be supplied under Navajo Reservoir's 1955 priority, the
Navajos' old direct flow irrigation projects Hogback and Fruitland would
retain an 1868 priority. In many years the demand of those projects
would cause junior diverters to be shut off absent the additional
protection secured by the settlement requiring the Navajos to use their
alternate water supply. Under the alternate water supply provisions, the
Navajo Nation agrees the Hogback and Fruitland projects will refrain
from priority calls against upstream junior appropriators and instead
will deliver up to 12,000 acre-feet in any year of NIIP contract water
in storage in Navajo Reservoir when the direct flow is insufficient to
meet water demands. If this amount is exhausted in any year, priority
calls may occur at that time in that year. Based on the hydrologic
record, this provision would mean that instead of priority calls in one
out of two years, Hogback and Fruitland would only be entitled to make
priority calls in one out of every twenty years, on average.

The last category of protections I want to touch on includes
administrative provisions to help assure that the San Juan River Basin
is managed in an orderly fashion and within the supply available. Both
the legislation and settlement confirm the State of New Mexico's
authority to administer water. Under the settlement, the Navajo Nation
agrees that the State Engineer has authority to serve as water master in
the basin and to administer water rights in priority as necessary to
comply with interstate compact obligations and other applicable law. In
addition, the State Engineer will have authority to make determinations
of current beneficial uses for any changes in points of diversion and
for any changes in purposes or places of use of Navajo water rights off
of Navajo lands. The Navajo Nation also agrees to comply with state law
regarding marketing of water rights.

The Navajo Nation further agrees not to pump groundwater so as to
deplete the flow of the San Juan River by more than 2,000 acre-feet per
year, unless the State Engineer approves use of Navajo surface water to
offset depletions in excess of that amount. Any Navajo groundwater uses
beyond those quantified in the settlement agreement also would be
subject to non-impairment of existing water rights.

Outside the Navajo Reservation on lands allotted by the United States,
there are numerous individual Navajos who could assert federal reserved
claims in the pending San Juan River Adjudication. The Navajo Nation is
agreeing to use its water rights decreed under the settlement to supply
or offset any future uses that may be awarded in the adjudication to
individual Navajos allottees in the San Juan Basin.

I have already mentioned the settlement confirms over 150,000 acre-feet
per year of conservation of NIIP irrigation water. The settlement and S.
1171 further promote conservation of water by authorizing funding for
rehabilitation and construction improvements to Navajo and non-Indian
irrigation systems diverting from the San Juan River.

The proposed settlement is detailed and comprehensive. Although it is a
creature of negotiation and compromise, I strongly believe that is
represents the best result attainable for all New Mexicans who rely on
the San Juan River.

As we move forward, the State of New Mexico looks forward to working
with other parties on proposed legislative language to assure the
protections intended by the settlement are realized.

**The Colorado River Basin**

New Mexico supports this legislation because it is good for New Mexico,
the Navajo Nation, and the Colorado River Basin states. S. 1171 and the
Navajo settlement help protect and further the interests of New Mexico
with respect to the Colorado River Compact and the Upper Colorado River
Basin Compact and are consistent with the spirit of the recent
agreements among the basin states.

A basic tenet of the recent agreement reached among the seven Colorado
River Basin States is each state's right to develop its Colorado River
water entitlement. The settlement and the project's use of a renewable
surface water to meet domestic needs are consistent with the States'
Agreement Concerning Colorado River Management and Operations and the
States' joint comments to the Bureau of Reclamation in connection with
the Environmental Impact Statement for the coordinated operations of
Lakes Mead and Powell, which recognize that potential drought in the
future could raise uncertainties regarding each state's water supply
options. The Navajo Settlement resolves the Navajo Nation's water rights
claims within the San Juan Basin in New Mexico while allowing New Mexico
to develop water uses within its apportionment under the Upper Colorado
River Compact.

New Mexico appreciates the Department of Interior's role in encouraging
the recent agreement among the basin states and its recent engagement on
Indian water rights settlements in New Mexico. Resolution of tribal
water rights claims is important to states, tribes, and the federal
government, particularly when the claims are resolved within a state's
compact apportionment.

The Secretary of Interior's recent hydrologic determination was
developed by the Bureau of Reclamation in collaboration with engineers
and hydrologists from the Upper Division states and was concurred with
by the Upper Colorado River Commission (representing Colorado, Wyoming,
Utah and New Mexico) through a resolution dated June 9, 2006. The
Department of Interior consulted with all of the seven basin states,
including Arizona, California and Nevada, regarding the final hydrologic
determination. This hydrologic determination confirms that water is
available for the Navajo Settlement within New Mexico's apportionment of
water under the Upper Colorado River Basin Compact without displacing
any existing water uses within New Mexico.

S. 1171 authorizes the Secretary of Interior to sign the Settlement
Agreement and design and construct a project to bring a necessary, safe
and reliable water supply to many New Mexican families who currently
rely on hauling water or unsustainable, poor quality groundwater to meet
their domestic needs. The Upper Colorado River Commission has already
expressed support for the settlement project and this legislation
through resolutions dated June 19, 2003 and June 9, 2006. New Mexico
hopes that all Colorado River Basin states will support the Navajo
Settlement and S.1171.

Because the Navajo Reservation extends beyond one state's boundaries,
the settlement's water supply project contemplates a pipeline extension
to the Navajo Nation's capital in Window Rock, Arizona, on the border
with New Mexico. New Mexico believes the settlement agreement and S.
1171 preserve Arizona's right to negotiate its own settlement with the
Navajo Nation, and New Mexico encourages Arizona and the Navajo Nation,
as they continue to work toward a resolution of their outstanding
issues. Through consultation with Arizona, New Mexico has been able to
accommodate some of Arizona's concerns, but many of Arizona's concerns
go beyond the scope of our settlement, raising complicated issues that
can only be addressed through agreement among all Colorado River basin
states.

New Mexico is willing to continue conferring with any of the Colorado
River Basin states as necessary to explain the settlement agreement or
discuss concerns about the settlement. New Mexico recognizes the
complicated nature of the Law of the Colorado River and has worked with
other basin states on mutually acceptable legislative provisions. The
recent and on-going cooperation among the Colorado River Basin states in
connection with the coordinated operation of Lakes Mead and Powell has
given rise to a new spirit of open communication and compromise that New
Mexico hopes will continue for years to come.

Mr. Chairman and committee members, the State of New Mexico asks you to
support S. 1171. The costs of the Northwestern New Mexico Rural Water
Supply Project and of the Navajo settlement are high. But the costs of
delay in not addressing the vital and human needs of the communities of
Northwestern New Mexico are much higher. This legislation would settle
protracted and divisive litigation that casts a pall over the entire
area, and in its place would provide certainty of water supply and
economic development. It would also provide certainty regarding water
rights for all water users of the San Juan River. Finally, it would
authorize a regional rural water supply system that will afford the
habitability and enjoyment of the land for generations to come.