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[Senate Hearing 110-148]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 110-148
 
   NAVAJO NATION'S WATER RIGHTS AND MISCELLANEOUS WATER SUPPLY ISSUES 
=======================================================================
                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   TO

   RECEIVE TESTIMONY ON S. 1171, A BILL TO AMEND THE COLORADO RIVER 
      STORAGE PROJECT ACT AND PUBLIC LAW 87-483; TO AUTHORIZE THE 
CONSTRUCTION AND REHABILITATION OF WATER INFRASTRUCTURE IN NORTHWESTERN 
 NEW MEXICO; TO AUTHORIZE THE USE OF THE RECLAMATION FUND TO FUND THE 
  RECLAMATION WATER SETTLEMENTS FUND; TO AUTHORIZE THE CONVEYANCE OF 
     CERTAIN RECLAMATION LAND AND INFRASTRUCTURE; TO AUTHORIZE THE 
 COMMISSIONER OF RECLAMATION TO PROVIDE FOR THE DELIVERY OF WATER; AND 
  TO RESOLVE THE NAVAJO NATION'S WATER RIGHTS CLAIMS IN THE SAN JUAN 
                       RIVER BASIN IN NEW MEXICO

                               __________

                             JUNE 27, 2007

                       Printed for the use of the
               Committee on Energy and Natural Resources

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    CRAIG THOMAS, Wyoming *
TIM JOHNSON, South Dakota            LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana          RICHARD BURR, North Carolina
MARIA CANTWELL, Washington           JIM DeMINT, South Carolina
KEN SALAZAR, Colorado                BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
             Judith K. Pensabene, Republican Chief Counsel

----------
* Senator Thomas passed away on June 4, 2007.

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Artman, Carl, Assistant Secretary for Indian Affairs, Department 
  of the Interior................................................     4
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
D'Antonio, John R., Jr., New Mexico State Engineer, Santa Fe, NM.    14
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     2
Guenther, Herbert R., Director, Arizona Department of Water 
  Resources, Phoenix, AZ.........................................    27
Johnson, Robert, Commissioner, Bureau of Reclamation, Department 
  of the Interior................................................     8
Lundstrom, Patricia, Member of the New Mexico House of 
  Representatives and Executive Director, Northwest New Mexico 
  Council of Governments, Gallup, NM.............................    36
Sanchez, Mark, Executive Director, Albuquerque Bernalillo County 
  Water Utility Authority, Albuquerque, NM.......................    42
Shirley, Joe, Jr., President, Navajo Nation, Window Rock, AZ.....    20

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    53

                              Appendix II

Additional material submitted for the record.....................    75

   NAVAJO NATION'S WATER RIGHTS AND MISCELLANEOUS WATER SUPPLY ISSUES

                              ----------                              

                        WEDNESDAY, JUNE 27, 2007

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:30 p.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK, why don't we go ahead and start the 
hearing.
    It's a pleasure to welcome everyone this afternoon, we have 
a large contingent of people from New Mexico and Arizona who 
have traveled across the country to be here, and we appreciate 
everyone's efforts to be here today.
    The purpose of the hearing is to receive testimony on S. 
1171, that's a bill that I'm sponsoring, and that Senator 
Domenici's sponsoring. It authorizes a settlement of the Navajo 
Nation's water rights claims in the San Juan River Basin in New 
Mexico.
    Key features of the legislation include amendments to the 
law of the Colorado River, an authorization to construct the 
Navajo Gallup Rural Water Project, and an authorization to use 
the reclamation fund to ensure that this settlement, as well as 
other similar matters can be fully implemented.
    A settlement as complex as this has many moving parts, a 
number of the most critical ones have been delayed for years, 
such as the environmental impact statement for the Navajo 
Gallup Project. Secretary Kempthorne and his staff have worked 
hard to get the process moving again, I'd like to take the 
opportunity to acknowledge their hard work, and express my 
appreciation for that effort.
    Unfortunately, as the administration's testimony makes 
clear, the Federal Government does not have a consistent view 
on these matters. Over the last 4 years, the Federal Government 
has committed almost $2.5 billion to settle water rights claims 
in other parts of the West and has spent $1.6 billion to 
address water issues in developing countries. We've even spent 
$2.3 billion on water infrastructure and management in Iraq. 
But now the administration is strongly opposing S. 1171 due to 
its cost, which is less than a billion dollars, to be expended 
over 15 to 20 years.
    The basis of the legislation that we have introduced is an 
April 2005 settlement agreement between the State of New Mexico 
and the Navajo Nation, declaring the extent of the Nation's 
water rights in the San Juan Basin. The agreement was long in 
the making, but now appears to have a wide base of support. 
Once again, it's clear that negotiated settlements are much 
more productive than endless litigation.
    As is evident from today's testimony, though, there's much 
work left to be done, the bill involves a number of big issues. 
First, it implicates the Colorado River. Accordingly, as with 
everything involving the Colorado River, there are a number of 
people trying to ensure the bill does not undermine their 
interests, and others viewing this as an opportunity to further 
issues that are best left to other contexts.
    The hearing also involves the Federal Government's dealings 
and responsibilities toward Native Americans, a relationship 
the U.S. Supreme Court once characterized as, ``Moral 
obligations of the highest responsibility and trust.'' 
Unfortunately, the administration will be adding another sorry 
chapter to that ongoing story.
    At the heart of today's hearing, and hopefully not lost in 
the discussion, are the people who will be affected by this 
legislation and this project. For too long, a large percentage 
of Navajo people have gone without readily accessible drinking 
water supplies. That's a convenience that other Americans take 
for granted.
    I hope that we can do justice to this issue today, and have 
a productive hearing that will address the needs of these 
individuals, and bring a settlement that will benefit all New 
Mexicans.
    With that, let me turn to Senator Domenici for his opening 
statement, and then we'll turn to the first panel of witnesses.

   STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW 
                             MEXICO

    Senator Domenici. Thank you very much, Mr. Chairman.
    I wonder, before I proceed, if I might as just a matter of 
personal privilege, call to your attention, and to those that 
are here, the fact that this young man behind us here, an 
Albuquerquian, Nate Gentry, today is his last day. Maybe he 
could stand up, and you and I could at least say thanks to him, 
by applause.
    [Applause.]
    The Chairman. Yes, let me just interject, that Nate has 
done great work for you on the committee, and has been a great 
resource for the entire committee. He's doing what a lot of us 
look forward to doing some day, and that is, going back to New 
Mexico.
    Senator Domenici. He is. He's going to practice law, and 
he's going to practice, predominantly, water law, and he'll be 
good at it. He's stayed as long as I could ever expect for 
somebody as talented, and had other opportunities. That happens 
to us, it happens to those who work for us. He knows what I 
think of him, and I just wanted everybody to know that it's 
young, talented people like this that make us look good 
sometimes, like in this settlement that we're talking about 
here, they've come up with some exciting ideas that are going 
to make this settlement work, and he's been a part of that. So, 
I'm proud of him.
    Thank you, Senator Bingaman, for having this session, and 
for permitting me to participate in a few opening remarks.
    First, in a water-short State like New Mexico, decisions 
regarding water use and allocation are too important to leave 
up to the courts. As with all litigation, the outcome is 
uncertain. Some argue against the settlement because they 
believe the courts would allocate them more water than a 
settlement would provide. While this may be true, it's quite 
possible that the court could award a party much less.
    An enormous benefit of Indian water rights settlements is 
that they allocate water in a way that keeps everyone whole. 
This settlement, when signed into law, will forever resolve the 
water rights claims of the Navajo Nation in New Mexico.
    Since my first term in office, I have dreamt of bringing a 
reliable source of water to the Navajo Nation, and the city of 
Gallup. The lack of water infrastructure on lands the Navajo 
Nation owns and occupies is deplorable.
    As we hear today, 40 percent of the Navajos have to haul 
water. Since 1974, I've worked to further the Navajo Gallup 
Water Supply Project, and I am particularly pleased that this 
legislation provides for the construction of that project.
    This settlement is expensive, however, when viewed in the 
context of the Arizona Water Settlement Act, Mr. Chairman, and 
the Snake River Settlement, signed into law by the President, I 
believe that the proposed Federal contribution is reasonable.
    I'm interested to hear from our administration witnesses 
today as to why those settlements received the support of the 
administration, and this settlement does not.
    Secretary Kempthorne made a commitment to me before this 
committee that he would make the New Mexico Indian water rights 
settlements a priority--not just this one, there are two 
others, or three others. He has kept that commitment.
    He and his staff also deserve credit for advocating for New 
Mexico Indian water rights settlements within the 
administration. They have done so, and I am aware of that. 
However, it has become clear that despite my repeated requests, 
the Office of Management and Budget is not willing to provide 
funding--at least the funding that we think is necessary--to 
fulfill the terms of the New Mexico settlements.
    Now, they are willing to put up some money, they just don't 
believe that it's worth as much as we do, and we can't possibly 
settle for what they're talking about.
    I recently introduced legislation that would, in another 
way, create a fund so that money for the New Mexico settlements 
will be there when the settlements are ultimately approved by 
Congress. Senator Bingaman has also proposed a way to fund this 
settlement, contained in the bill that we're considering today.
    While the two approaches differ somewhat, I am confident 
that we can reach an agreement on how to ensure that New Mexico 
settlements--this one and the others we have--are funded as 
prescribed by the agreements and the court decrees.
    I know that some have concerns with this settlement, but 
please rest assured that I am committed, and I'm sure our 
Chairman is, to work with all parties to address their concerns 
as the bill proceeds through Congress.
    I would like to welcome our witnesses, as our chairman has, 
and look forward to their testimony.
    I thank you, Mr. Chairman, and hopefully we'll finish this 
today. Thank you.
    The Chairman. Well, thank you very much.
    Before I introduce the first panel, let me just do one 
housekeeping matter. The committee has received a number of 
additional statements and exhibits and testimony regarding the 
bill that is before us today, and those items--as well as the 
written submissions of all witnesses that testify today--will 
be made part of the official record of the hearing.
    Our first panel consists of two representatives from the 
Department of Interior, Bob Johnson, who is the Commissioner of 
the Bureau of Reclamation, and Carl Artman, who is the 
Assistant Secretary for Indian Affairs. We welcome both of you. 
Please go ahead and summarize your written statements. If you 
would do so, after that, I'm sure each of us will have some 
questions.

   STATEMENT OF CARL ARTMAN, ASSISTANT SECRETARY FOR INDIAN 
              AFFAIRS, DEPARTMENT OF THE INTERIOR

    Mr. Artman. Thank you, Mr. Chairman Bingaman and Ranking 
Member Domenici, for inviting us to this hearing.
    This is Commissioner Bob Johnson, from the Bureau of 
Reclamation, and I am Carl Artman, Assistant Secretary for 
Indian Affairs. We look forward to speaking to you about the 
proposed S. 1171, and the water issues impacting the Navajo 
Nation. We seek permission to submit our formal comments for 
the record.
    The water issues faced by the Navajo Nation, along with 
other tribes and pueblos, throughout the West, are critical. We 
are very aware of this fact by the nature of our 
responsibilities, the work we've done in this area, and our 
visits to the impacted reservations.
    In fact, in a recent visit to the Navajo Nation, the 
children shared with us some pictures they drew that highlight 
the needs in very simple terms. ``No good water, need fresh 
water.''
    Secretary Kempthorne has committed himself to engaging in 
the resolution of Indian water rights claims. He's committed to 
bring his energy and experience to the table to achieve forward 
progress, and tangible results. This commitment has not 
wavered, and his actions--and those of the Department of 
Interior--support this assertion.
    S. 1171 proposes answers to important questions. Our 
opposition to the bill, as drafted, is based in part on the 
fact that we have not yet had a chance to assess and analyze 
these issues, and develop our own baseline answers to these 
matters. We seek to do this.
    We believe that this analytical process--coupled with the 
history of collaborative negotiation with all of the 
stakeholders--will result in a settlement beneficial to all, 
and cost-effective for the American taxpayer.
    Again, thank you for holding this hearing, and for bringing 
together all of the parties to partake in this necessary 
discussion.
    [The prepared statement of Mr. Johnson and Mr. Artman 
follows:]
  Joint Prepared Statement of Robert Johnson, Commissioner, Bureau of 
  Reclamation, Department of the Interior and Carl Artman, Assistant 
        Secretary For Indian Affairs, Department of the Interior
    Chairman Bingaman and Ranking Member Domenici, we would like to 
thank you for the opportunity to appear today to present the 
Administration's views on S. 1171, the Northwestern New Mexico Rural 
Water Projects Act. The Department of the Interior's support for 
negotiated settlements as an approach to resolving Indian water rights 
remains strong. The Administration, however, has concerns that S. 1171 
would increase mandatory spending, delay the full cost of the 
legislation beyond the 10 year Congressional scorekeeping window, not 
provide for adequate cost sharing by non-Federal interests, and likely 
include costs that exceed the Federal government's underlying 
liability. The Administration did not participate in the drafting of 
the water rights settlement embodied in S. 1171, and does not support a 
water settlement under these circumstances. For these reasons, the 
Administration opposes the cost and cannot support the legislation as 
written. We would like to work with Congress and all parties concerned 
in developing a settlement that the Administration can support.
    S. 1171 would amend Federal statutes that relate to the Bureau of 
Reclamation and the use of water in the Colorado River basin. Major 
provisions include: (1) authorization for the Bureau of Reclamation to 
construct and operate a pipeline (formally titled the ``Northwestern 
New Mexico Rural Water Supply Project'', but generally known as the 
``Navajo-Gallup Pipeline Project'') to bring water from the San Juan 
River to the eastern portion of the Navajo Reservation, the Jicarilla 
Apache Reservation, and the City of Gallup, New Mexico; (2) creation of 
a Reclamation Water Settlements Fund in the Treasury that could be used 
to fund activities under this bill and future Indian water rights 
settlements, to be funded by the diversion of revenues from the 
existing Reclamation Fund; (3) authorization for the Secretary of the 
Interior to reserve up to 26 megawatts of power from existing 
reservations of Colorado River Storage Project power for Bureau of 
Reclamation projects for use by the Northwestern New Mexico Rural Water 
Supply Project; and (4) authorization for the Secretary to rehabilitate 
existing irrigation projects, develop groundwater wells, and establish 
other funds for the benefit of the Navajo Nation. The bill also 
includes provisions that would resolve the Navajo Nation's Federal 
Indian reserved water rights claims in the San Juan River in New 
Mexico, although the United States was not party to the final 
negotiations on this issue.
                the role of the criteria and procedures
    The Administration has been actively engaged in the New Mexico 
water settlements. You will recall, Mr. Chairman, that Secretary 
Kempthorne committed during his confirmation to bringing his energy and 
concern to the pending water settlements in New Mexico. Consistent with 
this pledge, we have made it a high priority to better understand the 
complex issues that must be resolved in each of the proposed New Mexico 
settlements. Our water rights team has made several trips to New Mexico 
to visit with the Pueblos, Tribes, the State, local communities, water 
users, and other constituencies to these proposed settlements. A few 
months ago, at the Secretary's request, key officials from the 
Departments of Justice and the Interior and the Office of Management 
and Budget traveled to Navajo country to observe first-hand the 
difficult issues related to water delivery on the Reservation.
    Mr. Chairman and members, we are keenly aware of the needs in this 
area of the United States. On the Navajo Reservation, some people 
routinely haul water for 20-30 miles several times a week to provide 
for their basic household needs. Families must travel extended 
distances to do laundry because washing machines require water hookups 
which they do not have. There is no question that the Administration 
officials who traveled to the Reservation came away with powerful and 
indelible images as well as a better understanding of the needs of 
Reservation inhabitants seeking access to basic services that are taken 
for granted by all but a few Americans.
    Nonetheless, despite our understanding of the human needs on the 
Navajo Reservation, we firmly believe that the resolution of 
substantive and procedural problems raised by this bill will require 
the active involvement of all parties to the proposed settlement. It is 
important to have an open and full discussion on all aspects of the 
settlement, including the specific goals of the Navajo Nation and the 
State of New Mexico for the settlement of these claims and whether 
these goals can be met by alternative and potentially less expensive 
means. This settlement was developed largely without Federal 
involvement, and, consistent with Secretary Kempthorne's commitment to 
address these issues, we would welcome the opportunity to continue to 
engage with the Committee and proponents of this settlement to see if 
we can identify areas of common ground sufficient to move forward with 
the full support of the Administration.
    One of the first steps in this process, Mr. Chairman, is for us to 
acknowledge the three New Mexico settlement proposals that are now 
being advocated to Congress. While the Navajo settlement in the San 
Juan River is the subject of today's hearing, there are other 
settlements proposed in New Mexico, as well as in other western states, 
that require active Federal participation in negotiations. If enacted, 
the cost of S. 1171, alone, is estimated to exceed 1 billion dollars. 
If the other two proposals from New Mexico, Aamodt (involving the 
Pueblos of Nambe, Pojoaque, San Ildefonso, and Tesuque) and Abeyta 
(involving the Pueblo of Taos), about which the Administration also has 
raised serious concerns, were to be enacted as currently envisioned by 
their proponents, total expenditures for Indian water rights 
settlements in New Mexico alone are likely to exceed $1.5 billion.
    The Administration believes that the policy guidance found in the 
Criteria and Procedures for the Participation of the Federal Government 
in Negotiations for the Settlement of Indian Water Rights Claims 
(``Criteria'') (55 Fed. Reg. 9223 (1990)) provides a flexible framework 
in which we can evaluate the merits of this bill. The Criteria provide 
guidance on the appropriate level of Federal contribution to the 
settlements, incorporating consideration of calculable legal exposure 
plus costs related to Federal trust or programmatic responsibilities. 
In addition, the Criteria call for settlements to contain non-Federal 
cost-share proportionate to the benefits received by the non-Federal 
parties, and specify that the total cost of a settlement to all parties 
should not exceed the value of the existing claims as calculated by the 
Federal Government. As we have testified previously, the Criteria is a 
tool that allows the Administration to evaluate each settlement in its 
unique context while also establishing a process that provides guidance 
upon which proponents of settlements can rely.
              provisions of particular concern in s. 1171
    We would like in the remainder of this statement to provide a 
synopsis of substantive concerns regarding S. 1171. We will start with 
the high cost of this settlement. The Administration has concerns about 
the costs associated with this legislation, and currently opposes the 
nearly $1 billion financial commitment embodied in this bill. We are 
also concerned about the large number of authorizations that the bill 
contains, including the indefinite amount authorized for construction 
of the Navajo-Gallup Pipeline. We have not yet been able to fully 
analyze the costs of this legislation. In 2005, the Bureau of 
Reclamation estimated that the price of the Navajo-Gallup pipeline 
would be approximately $716 million. Reclamation is in the process of 
updating this appraisal-level price estimate to better reflect current 
construction conditions, and expects an upward adjustment to nearly $1 
billion for this feature alone. In addition, S. 1171 would authorize 
Federal expenditures of $30 million for groundwater wells, $23 million 
for rehabilitation of Fruitland-Cambridge and Hogback-Cudei irrigation 
projects, $11 million for other irrigation projects, $5 million for 
hydrographic surveys, and $50 million to be placed in a Navajo Nation 
Water Resources Development Trust Fund to be used by the Navajo Nation 
for water facility construction and maintenance or implementation of 
water conservation measures.
    The Administration has serious concerns regarding the proposal 
contained in Title II of this bill to establish a ``Reclamation Water 
Settlements Fund'' within the United States Treasury. Title II provides 
that revenues of up to $100 million a year for fiscal years 2018 
through 2028, which is a time period outside the Congressional 
scorekeeping window, be diverted from the Reclamation Fund into the 
Water Settlements Fund. S. 1171 provides that moneys in the Water 
Settlements Fund would be available without further appropriation to 
fund water supply infrastructure authorized under this bill if there 
turns out to be insufficient funding available through the regular 
appropriations process to meet the funding and construction deadlines 
established in this bill. The second priority for the Water Settlements 
Fund would be to implement other Indian water rights settlements 
approved by Congress, including water supply infrastructure, 
rehabilitation of water delivery systems, fish and wildlife restoration 
or environmental improvement. The Reclamation Water Settlements Fund 
would terminate in 2030 and any remaining balance would be transferred 
to the General Fund of the Treasury.
    We believe the sponsors of this legislation are looking for stable 
mechanisms to ensure the availability of funding for Indian water 
rights settlements around the West. We are concerned, however, that 
this proposal would allow direct spending not subject to further 
appropriations for future settlements, preventing future Presidents and 
Congresses from setting their own priorities with regard to budgeting 
and appropriating Federal tax dollars. At the present time, use of 
monies from the Reclamation Fund are discretionary and subject to 
annual appropriations by Congress.
    While S. 1171 does require some cost-sharing in the form of a 
requirement for partial reimbursement of construction costs from the 
City of Gallup and the Jicarilla Apache Nation, it is limited. The City 
of Gallup and the Jicarilla Apache Nation would be required to repay 
the portion of the construction costs for the pipeline and associated 
facilities that the Secretary would allocate to them as their 
responsibility, but only to the extent of their ability to pay, or 
alternatively, a minimum of 25% of such allocated construction costs, 
within 50 years of project completion.
    Project proponents assert that the Navajo-Gallup Pipeline Project 
would qualify as a rural water project under the rural water program 
being established by the Bureau of Reclamation pursuant to the Rural 
Water Supply Act of 2006 (P.L. 109-451), legislation which was passed 
in December of 2006. However, the proposed pipelines envisioned by this 
bill have not received the level of scrutiny that this newly 
established program will provide. Under the rural water program, each 
project must be investigated prior to authorization, and the Secretary 
must consider whether the non-Federal project entity has the capability 
to pay 100 percent of the costs associated with the operations, 
maintenance, and replacement of the facilities constructed or developed 
as part of the rural water supply project. The Secretary must also 
recommend an appropriate non-Federal cost-share for the proposed rural 
water project based on the capability-to-pay of project sponsors, or at 
least 25% of total construction costs. The program allows the Secretary 
to consider deferring construction costs allocated to Indian tribes. 
Under this new program, the Secretary is to forward to Congress 
recommendations regarding whether or not the proposed rural water 
project should be authorized for construction based upon appraisal 
level and feasibility studies and the eligibility and prioritization 
criteria developed pursuant to the Rural Water Supply Act. The rural 
water program is intended to target communities of 50,000 inhabitants 
or fewer. The Secretary may require larger communities to pay a higher 
portion of project costs. Since Reclamation's rural water program is 
still under development, we have not evaluated the activities proposed 
in S. 1171 under the rural water project eligibility and prioritization 
criteria; these criteria are currently being developed by Reclamation. 
Upon development, we will actively evaluate whether this project would 
meet such criteria and could be recommended to Congress for 
authorization as a rural water project.
    We have identified a number of other concerns regarding this bill. 
These include potential interpretation conflicts concerning the Navajo 
Indian Irrigation Project; the timing of transfers of title to the 
Nation; the authorization of Federal grants to support the repair and 
rehabilitation of certain irrigation projects, and concern that this 
bill might give the State of New Mexico an inappropriate role in the 
operation of Federal facilities that are currently operated by the 
United States under the Colorado River Compact and Reclamation law. 
Also, the Department of Justice has concerns about the waivers and 
releases referred to in section 403. First, they are still reviewing 
these waivers and releases for adequacy. Second, waivers and releases 
should be stated in full in the legislation because they are critical 
to the finality of the agreements.
    We also note that the bill should require the Secretary of the 
Interior, rather than the Secretary of the Treasury, to invest amounts 
in the proposed Reclamation Water Settlements Fund, in order to make 
use of the investment expertise of Interior's Office of the Special 
Trustee for American Indians.
        comparing this bill with other water rights settlements
    Much has been said about the position taken by the Administration 
on water rights and other settlements over the past few years, 
suggesting that not supporting S. 1171 as written would be inconsistent 
with the positions we have taken on previously introduced water 
settlement bills. We want to squarely address these issues.
    First, we emphasize that each proposed settlement is unique. The 
Administration evaluates each proposed settlement individually. Just as 
we did with each of the water settlements that have been proposed in 
recent years, notably the Arizona Water Rights Settlement Act (P.L. 
108-451), the Snake River Water Rights Settlement Act (P.L. 108-447), 
and the San Joaquin River settlement that is proposed in legislation 
pending in this Congress (S. 27 and H.R. 24), the Administration must 
evaluate this proposed settlement in its unique context to determine to 
what extent it is consistent with our programmatic objectives and our 
responsibility to American taxpayers as well as our responsibility to 
protect the interests of the Navajo Nation. All of these previous 
settlements encompassed multiple objectives, providing comprehensive 
solutions to multi-faceted problems.
    In the case of the Arizona Water Rights Settlement Act, the 
settlement resolved a dispute over the financial repayment obligation 
of Arizona water users for the Central Arizona Project (CAP), with 
significant amounts of money at stake. Federal representatives 
recognized that the CAP operational flexibility necessary to resolve 
the dispute could only be granted if sufficient legal and legislative 
protection was achieved to assure tribal access to, and use of, CAP 
project water. Enactment of the Indian water rights settlements in that 
Act was key to resolving larger legal issues involving CAP repayments 
by Arizona water users. Achieving final settlement of these larger 
issues made the legislation generally acceptable to the Administration, 
although our testimony did express concern about the cost of the 
settlement.
    The Snake River Settlement in Idaho entailed several complex 
Endangered Species Act components that allowed further water resources 
development to occur for the Nez Perce Tribe and other water users in a 
manner that also fulfilled the Department's obligation to protect and 
recover listed species.
    The other settlement that has been compared to this bill, the San 
Joaquin Restoration Program, is in fact not connected to any Indian 
water rights settlement. The San Joaquin Restoration Program implements 
a settlement of a lawsuit that had been ongoing for over eighteen 
years, where a Federal judge had concluded that Reclamation's 
operations violated a provision of California law. The San Joaquin 
restoration program also involves cost shares, authorizing up to $250 
million of new Federal appropriations but only as a match for non-
Federal funding of the restoration costs. This means that the State of 
California and Friant water users are funding a significant portion of 
the restoration costs. Approximately $200 million of State bond funds 
for projects that will directly contribute to restoration efforts have 
already been approved by California voters.
    We wish to reiterate however that the Administration is committed 
to ensuring consistency with the Criteria and Procedures. The 
settlement of the Navajo claims to the San Juan River proposed in this 
bill has a high Federal cost without appropriate safeguards that 
carrying out the authorized activities would accomplish the goals and 
objectives of the proposed settlement. These kinds of analyses should 
be completed prior to the passage of such a large settlement proposal. 
In light of the goal of finality, it is especially troubling that this 
bill does not address the distribution systems that must be constructed 
before any water will actually reach the homes of those who need it.
                               conclusion
    The Administration and Secretary Kempthorne remain committed to 
supporting the Indian water right settlement process and ensuring that 
such settlements fulfill the Federal Government's responsibilities to 
Indian Tribes while also protecting the interests of the taxpaying 
public. The Bureau of Reclamation, the Secretary's Indian Water Rights 
Office, and many others in the Department are vigorously working to 
develop the information and documentation necessary to support a full 
and open discussion of this settlement. This includes already having 
developed a draft environmental impact statement on the proposed 
pipeline and completing the hydrologic determination on water 
availability in New Mexico. We expect to have an updated appraisal-
level estimate of the costs of constructing the pipeline completed in 
the near future.
    The Administration hopes that the entities proposing this 
legislation, including the Navajo Nation, the City of Gallup, the State 
of New Mexico, and the Jicarilla Apache Nation, will agree to work 
together with us towards the common goal: a settlement that will ensure 
that the Navajo obtain a secure, economically beneficial water supply 
consistent with our obligations to the taxpaying public. A clean, 
reliable water supply is of utmost importance to the members of the 
Navajo Nation, as it is to all Americans, and the United States is 
committed to working towards achieving it. While much work remains 
ahead, we are hopeful that this hearing will assist in advancing a 
process that results in a successful outcome.
    Mr. Chairman, this completes our statement. We would be happy to 
answer any questions the Committee may have.

    The Chairman. Mr. Johnson, did you wish to give us some 
testimony?

     STATEMENT OF ROBERT JOHNSON, COMMISSIONER, BUREAU OF 
            RECLAMATION, DEPARTMENT OF THE INTERIOR

    Mr. Johnson. Just a short statement, Mr. Chairman.
    It's a pleasure for me to be here and offer some oral 
remarks on the settlement and S. 1171.
    I might just say that it's been my personal pleasure to 
work with the Navajo Nation for a long time. Parts of the 
Navajo Nation are located within the lower Colorado region of 
the Bureau of Reclamation, where I served as Regional Director 
for approximately 11 years. I have visited the Nation a number 
of times, and am familiar with the water needs of the Navajo 
people.
    When I was regional director, we provided technical 
assistance and funding for a number of programs and projects on 
the reservation, most notably, the rehabilitation of the Ganado 
and many farms irrigation projects.
    Similarly, Reclamation's Upper Colorado Region has provided 
significant planning, technical and construction assistance to 
the Nation. That office has been involved in managing the 
construction of Navajo Indian Irrigation Project, and will also 
be constructing the water supply pipeline to serve the Navajo 
Nation from the Animus La Plata Project.
    Most recently, our Upper Colorado Region has led the effort 
on the planning and environmental analysis for the Navajo 
Gallup Water Supply Project, which is contemplated in S. 1171.
    This spring, Reclamation issued a planning report draft 
Environmental Impact Statement for the project, and very 
recently, conducted public hearings on the project. The public 
comment period ends this week, and over the next several 
months, we will be evaluating those public comments, and 
preparing a final Environmental Impact Statement and a Record 
of Decision.
    In addition to that, we're working hard on updating the 
cost estimate, we're going back and trying to provide some more 
detail into updating the pricing of the project. Our schedule 
calls for us to have that completed by September of this year.
    We've also, in a parallel effort, completed a hydrologic 
analysis, to affirm the availability of water supply for the 
project, as required in the Navajo Indian Irrigation Project in 
San Juan Chama Projects Act of 1962. After careful consultation 
with all 7 Colorado River Basin States, Reclamation has 
concluded that adequate water supplies are available to meet 
the additional water needs contemplated in the Navajo Gallup 
water supply pipeline.
    Secretary Kempthorne signed that hydrologic determination 
just a few weeks ago.
    While we do not support S. 1171, as written, we are 
committed to working with the Congress, and other parties 
involved in the settlement, to find common ground on the 
multitude of issues identified in our written testimony.
    Mr. Chairman, this concludes my oral statement, we would be 
glad to answer questions.
    The Chairman. OK, thank you very much.
    Let me start, and just ask a few questions. Obviously, I'm 
disappointed with the position that the administration has 
taken. As I understand part of the justification for your 
opposition, the administration's opposition is that you've 
indicated the Federal Government has not been involved in 
settlement drafting, and therefore opposes the legislation. I 
have a letter dated December 2001, where I requested the 
Federal Negotiating Team be appointed to work on this, and we 
also have a letter in June of the following year, 2002, 
agreeing to the appointment of a Negotiating Team, to work with 
the Navajo Nation and the State of New Mexico to try to get 
this resolved.
    So, I'm not clear what has happened in the 4 years since 
that Negotiating Team was appointed, I guess they have not been 
involved, is what you're now testifying, is that correct?
    Mr. Artman. Thanks for the question, Senator.
    You're correct--a team was appointed in 2002 to examine 
these issues, and there has been engagement with the tribe on 
these matters. Engagement has taken the form of the 
hydrological study that was referenced, the draft Environmental 
Impact Statement, public hearings, five separate meetings, 
recently, with the Navajo Nation to discuss these specific 
issues, and more meetings scheduled to come ahead.
    In drafting any settlement, we haven't reached the point 
yet where we have the settlement that we participated in, with 
all of the parties around the table, and that's something 
that's certainly necessary for us.
    The bill, S. 1171, represents a possible solution. But, a 
solution that--at the moment--doesn't have the administration's 
concerns reflected in it. Concerns about our trust 
responsibilities--what are the parameters of those trust 
responsibilities? In order to ascertain those sorts of issues, 
we need to have discussions with the tribe and other parties at 
the table and go through our own assessments and analysis of 
that.
    There may be other parties, Federal parties at the table, 
such as IHS, for the drinking water response, the drinking 
water pipeline, and those related responsibilities.
    So, we are currently engaged in the process, but we haven't 
reached the point where we've come up with a collaborative 
settlement, which is what we would request to do at this point.
    The Chairman. Well, I guess my frustration on this--of 
course, I think anyone who gets involved in water settlement 
issues knows that it's going to take many years. Certainly, 
this did take many years. The Navajo Nation worked hard at it, 
and the State of New Mexico worked hard at it, and everybody 
sort of agreed 2 years ago, in 2005, on a settlement of these 
various issues. Of course that's what's happened, and now it's 
almost as though the Federal Government's parachuting into this 
situation and saying, you know, ``What about us?''
    It's just not a credible response to come in 2 years after 
a settlement has been negotiated, and 4 years after a Federal 
Negotiating Team was appointed to work on this issue, and say, 
``We need to get involved.'' I mean, I don't know--at some 
point there's got to be closure to this, and it seems to me 
that the Navajo Nation and the State of New Mexico have worked 
in very good faith to try to bring this to closure, and the 
Federal Government's been AWOL, is essentially what you're 
saying.
    Mr. Artman. I certainly agree that the parties have--the 
State of New Mexico and the Navajo Nation have--come to the 
table and have discussed this settlement. As has been noted, 
Secretary Kempthorne committed to, and has exemplified a 
commitment to settling water issues in New Mexico--this one or 
others that are currently in discussion right now. I think that 
if you look at the actions of the Department of Interior, now 
and going forward, and in the recent past, we have exhibited 
that sort of forward-progress desire, and a desire for results. 
Also one for collaboration.
    The Chairman. I don't know how quickly you're expecting 
results, but this administration will be in office another 18 
months, and then we're on to a new administration. I have great 
difficulty seeing why we can't proceed on the basis of what has 
been agreed to by the Navajo Nation and the State, and proceed 
with this legislation.
    Let me ask about one other issue, and then defer to Senator 
Domenici. You also expressed grave concern about the use of 
these revenues from the Reclamation Fund as a way to help 
ensure implementation of the settlement. You object that our 
legislation on the use of these funds would bind future 
Presidents and Congresses. Why didn't you take that same 
position when considering the Lower Colorado River Basin Fund, 
and the Arizona Water Settlement Act? That certainly binds 
future Presidents and Congresses, as I understand it. The same 
question, as I understand it, the San Joaquin Water Settlement, 
that is currently pending in this committee, involved direct 
spending obligations, which bind future Presidents and future 
Congresses. Why object to that kind of a provision here, when 
you don't object to it in those circumstances?
    Mr. Johnson. I guess the first point that I would make is--
and I've been involved in a lot of Indian settlements, and a 
lot of water settlements over the years, and--there's no two of 
them that are alike, they're all unique, they all have a unique 
set of circumstances, and you have to evaluate those projects 
on a case-by-case basis.
    In the case of the San Joaquin, that's not an Indian 
settlement, it's a settlement of a longstanding environmental 
litigation where a judge had ruled against us, and where we 
needed to settle with the local parties on that issue, or risk 
substantial losses in other ways.
    The amount there is quite a bit smaller, and there was a 
significant amount of non-Federal cost-sharing, cost matching, 
in fact, that helped bring that one together.
    The monies that do come out of the Reclamation Fund are 
actual moneys that are part of a repayment obligation of the 
Friant Water users, so it's revenues that are flowing in from 
that project, that are being tapped to help fund that project 
over a period of time.
    So, that's the differences as it relates to that.
    The Central Arizona settlement was also, you know, very 
large, very complicated, no question about it. There we had a 
longstanding litigation over repayment of the project, which 
was a very complicated issue where there was a lot of Federal 
financial interests at stake. There was a significant new 
amount of water supply that was being obtained for Indian 
settlements in the future that had very significant value that 
made that project more attractive. Although, quite frankly, 
from the administration perspective, when that got passed, 
there was also concerns about costs there, as well.
    So, anyway, they're all unique, they're all complicated, 
and we have to evaluate them on a case-by-case basis.
    The Chairman. Senator Domenici.
    Senator Domenici. Well, I don't think it does much good to 
tell us that Secretary has really been interested, and has 
really been positive. He talked to me publicly during his 
confirmation process, and he talked to me in my office before 
the confirmation process.
    But, so he's interested--all of this time has passed, and 
here come his two chief people, and all they have to tell us is 
that we're not ready, that there's still a lot of work to be 
done. I tell you, for 5 years, I've been pleading with the 
administration to work with the parties to the New Mexico 
Indian Water Rights Settlement.
    Now, you state in your testimony that the administration is 
unable to support this settlement, because you were not 
involved in the negotiations relating to the settlement. I tell 
you, I find this very frustrating. From my standpoint, if the 
Chairman is ready, I'm ready to proceed. We'll see if you are 
needed, or not. Whether we need further consultation, as you 
speak about, or not.
    I believe that these rights are long overdue, and this 
settlement is long overdue. I think we have found the source of 
money that we will let the Congress pass on, here. You say it 
shouldn't be used, we say it's OK. You say it binds future 
Presidents, all direct spending binds future Presidents, and 
we'll just take our chance at it as we move through here. We 
may do it a little differently, but from my standpoint, it's 
the best source of money we've found.
    Mr. Chairman, I'm ready to--instead of relying on them, I 
think I'm ready to rely upon the Senate and the House, and hope 
they pass it, and then see what the President does. I believe 
that the President had this matter before him, he doesn't know 
anything about it, because nobody tells him.
    I mean, this case is stopped by the OMB, not you all. Just 
tell us the truth. OMB doesn't want this much money spent on 
this case, and they've done it on every water case in New 
Mexico. Now they've got a new fellow over there. I know him 
well, too. Believe it or not, just today I told him, we've got 
some water cases that might, you know, just might be that you 
won't get confirmed. But, we're going to find out what you 
have, what kind of guts you have in that, with reference to the 
water cases. I'm telling you the truth--I don't expect OMB to 
get in the middle of this case again, it's too late. From my 
standpoint, they've had their shot, and they have not been very 
constructive from what I can see.
    So, I don't have any further questions, because I don't 
know what to ask you, because you don't know anything. I mean, 
you weren't there, you aren't there, you weren't invited. I 
don't know what to ask.
    I don't know what to ask you, Commissioner. You know all 
about this--these kind of things, but I really, honestly, don't 
know--why don't you tell me, why can't we proceed with this 
case, quickly--why should it take very long? Based upon the 
facts as we understand them?
    Mr. Johnson. Well, I think all the concerns are laid out in 
the written testimony, but I think we are prepared to renew our 
commitment to sit down and work. I think that Secretary 
Kempthorne is, in fact, very sincere in his statements and in 
his desire to move forward on Indian settlements, all of the 
interaction that I have had with him, that's been reinforced. 
So, you know, I think we are ready to sit down and engage in a 
dialog.
    Senator Domenici. Maybe that's the case, and maybe dialog 
is what's needed. I kind of feel like we're past dialog, but 
maybe we're never past dialog until it's finished. But, we'll 
see.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Let me ask one other question before we go to the second 
panel.
    In your testimony, you also raise the question of whether 
this settlement can be met by alternative, and potentially less 
expensive means. You've made reference to this EIS, 
Environmental Impact Statement that identifies what they've 
called ``the superior alternative'' from an economic, and an 
environmental, and an overall perspective. What else is there 
that you're thinking of? I mean, I thought that that was what 
the EIS was focused on, was determining what is the best way to 
accomplish this objective, but your testimony seems to be 
suggesting that there's something else that should be done to 
determine what the best alternative is. Could you clarify what 
you've got in mind?
    Mr. Johnson. Well, there's no question we did identify a 
preferred--what we call a preferred alternative, in the draft 
EIS. That's usually the case when we put out an EIS, we 
evaluate a draft, a draft alternative--or a preferred 
alternative.
    I suppose I would differentiate between what we would call 
a preferred alternative among the alternatives that we 
evaluated, and given the planning objectives that were laid out 
and jointly worked on with all of the parties. Maybe contrast 
that with the proposed alternative. I don't think we could say, 
at this point, it's a proposed alternative, it's a little bit 
of a different beast than a preferred alternative.
    Again, I think we're ready to sit down with all of the 
folks that are involved and talk about that in more detail on 
what, if anything, can be done to reduce the costs of the 
project. I think a lot of it comes back to the costs, and the 
level of costs, and is there any way that we can find to reduce 
those costs. I think that's really what's being referred to.
    The Chairman. But, you're conceding that if you want to 
accomplish the objectives that have been agreed upon by the 
parties, you have already identified the preferred way to do 
that, through this Environmental Impact Statement.
    Mr. Johnson. Preferred among the alternatives that were 
evaluated, yes.
    The Chairman. But you're saying that you didn't evaluate 
the right alternatives?
    Mr. Johnson. Well, you know, I think that's something that 
we can, you know, have some dialog around and, again, you know, 
see if there's anything at all that's out there that's a way to 
reduce the costs. I don't know if there is or not, but I think 
that's part of the dialog that we think we can have.
    The Chairman. Well, to the extent that you want to have 
dialog, I would urge that it's long overdue, and I would urge 
that you do it quickly. Because we're planning to go ahead with 
this legislation, and if you have input that we haven't heard 
that is specific, we need to hear it, quickly.
    All right, thank you both very much for being here, and 
we'll just have the second panel come forward.
    Senator Domenici. Mr. Chairman, who would they do that 
with? Who would they get with, the Navajo Nation?
    The Chairman. I would assume, the Navajo Nation and the 
State of New Mexico.
    Senator Domenici. That's it, right?
    Mr. Johnson. That's primarily it, and you know, to the 
extent that there's other parties that have interests, 
certainly they could, would be part of that, too, if there's 
issues that affect them.
    The Chairman. Let me just check here.
    We're advised there's going to be a vote quickly, but 
knowing the way this place works, why don't we call the second 
panel forward and get started, and we'll see if the vote 
actually occurs when it's supposed to.
    OK, thank you all for being here, this second panel is made 
up of John D'Antonio who is our New Mexico State engineer, 
thank you for being here. President Joe Shirley of the Navajo 
Nation, thank you for being here, President Shirley. Herb 
Guenther is the Director of the Arizona Department of Water 
Resources. Patricia Lundstrom is a State representative from 
New Mexico, also the Executive Director of the Northwest New 
Mexico Council of Governments, and Mark Sanchez is here as the 
Director--Executive Director of the Albuquerque Bernalillo 
County Water Utility Authority.
    So, we welcome all of you, and we will include your entire 
testimony in the record, as I stated before, but why don't you 
summarize, in a few minutes, the main points you think we ought 
to understand. We'll just start with our State engineer and go 
right across.
    We may have to interrupt things in order to go vote. In 
fact, I see a light on up there. Before we start, should we go 
ahead and vote? I think, clearly we're not going to be able to 
get through all of the testimony, so why don't we give you all 
a break here, we'll go vote, and we'll be back in about 10 
minutes, and then we'll proceed with the testimony. Thanks.
    [Recess.]
    The Chairman. All right, thank you all very much. We 
apologize for the delay, but why don't we go right ahead, and 
each of you summarize your testimony, and then I'm sure Senator 
Domenici and I will each have questions.
    So, Mr. D'Antonio, thank you again for being here, and go 
right ahead.

STATEMENT OF JOHN R. D'ANTONIO, JR., NEW MEXICO STATE ENGINEER, 
                          SANTA FE, NM

    Mr. D'Antonio. Good afternoon, Chairman Bingaman, Ranking 
Member Domenici. Thank you for your supportive comments just a 
few minutes ago.
    My name is John D'Antonio, I'm the New Mexico State 
Engineer. I appreciate 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 Projects 
Act.
    The Act will authorize construction of an important rural 
water system for the Navajo Nation, the Jicarilla Apache 
Nation, and the city of Gallup, and will resolve the Navajo 
Nation's claims in the San Juan Basin of New Mexico.
    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 the backbone 
of a regional water supply system that will enable the Navajos 
to receive water, a basic need that virtually all other U.S. 
citizens take for granted.
    By 2040, the project is expected to serve approximately a 
quarter of a million people, including the residents of Gallup, 
and will serve a very large area, requiring over 800 miles of 
pipeline. The cost of the project is high, but the project 
costs can be appropriated over several years, and can be 
supplemented through the Reclamation Settlement Fund, created 
by title II.
    New Mexico has already stepped up to the plate by investing 
approximately $25 million toward settlement-related projects. 
Our legislature recently created the Indian Water Rights 
Settlement Fund, and has appropriated $10 million this past 
session.
    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, as with other settlements 
around the West.
    New Mexico is disappointed with the administration's 
position regarding the Navajo Settlement and this legislation, 
however, New Mexico is willing to discuss the administration's 
issues through the process proposed in their testimony.
    The legislation will approve a comprehensive settlement of 
the Navajo Nation's water rights claims in the San Juan Basin 
in New Mexico. After years of difficult negotiations, the State 
of New Mexico and the Navajo Nation entered into a settlement 
agreement in 2005 that represents a fair and equitable 
resolution.
    The settlement protects existing water uses within the 
Basin, and protects the San Juan-Chama Project. I firmly 
believe that we have come as close as possible to a resolution 
that provides maximum benefits and protections for all water 
users.
    New Mexico is willing to confer with water users to clarify 
any issues in this legislation. An important benefit of the 
settlement is that water supply will fit within New Mexico's 
Upper Colorado River Compact apportionment without displacing 
any existing water uses within New Mexico, and the Upper 
Colorado River Commission has already expressed support for the 
settlement project, and the legislation.
    The Secretary of the Interior recently confirmed that 
sufficient water is available for the settlement project 
without harm to other Federal projects, including the San Juan-
Chama Project.
    In response to the issues raised by the State of Arizona, 
New Mexico believes that the settlement agreement in Senate 
bill 1171, preserves Arizona's rights to negotiate its own 
settlement for the Navajo Nation, and New Mexico encourages 
Arizona, and the Navajo Nation as they continue to work toward 
a resolution of their outstanding issues.
    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. New Mexico is willing to confer with any of the 
Colorado River Basin States, as necessary, to explain the 
settlement agreement, or discuss their concerns.
    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 
ongoing, cooperation among the Colorado River Basin States, in 
connection with the coordinated operations 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 Ranking Member Domenici, the State of New 
Mexico asks for your support for Senate bill 1171, I know you 
do, and thank you for your time and consideration of this 
important piece of legislation that authorizes this critical 
project for New Mexico.
    That concludes my presentation.
    [The prepared statement of Mr. D'Antonio follows:]
    Prepared Statement of John R. D'Antonio, Jr., New Mexico State 
                         Engineer, Santa Fe, NM
    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.

    The Chairman. Thank you very much.
    President Shirley, please go right ahead.

STATEMENT OF JOE SHIRLEY, JR., PRESIDENT, NAVAJO NATION, WINDOW 
                            ROCK, AZ

    Mr. Shirley. The Honorable Chairman, Senator Bingaman, 
Ranking Member, the Honorable Senator Pete Domenici, the 
Committee on Energy and Natural Resources, thank you for the 
opportunity to testify concerning the Northwestern New Mexico 
Rural Water Projects Act.
    I would also like to thank both the State of New Mexico and 
the Department of Interior for their efforts to facilitate a 
settlement.
    As an initial matter, I want to make one point very clear. 
The Navajo Nation overwhelmingly supports the settlement of our 
water rights claims on the San Juan River, the Navajo/Gallup 
Water Supply Project, and the framework to provide sustainable 
water to the Navajo Nation, the city of Gallup, and the 
Jicarilla Apache Nation. In placing their marks on the Treaty 
of 1868, our predecessors pledged to keep the peace with the 
United States. In return, the United States promised to assist 
the Navajo people in the creation of the permanent homeland. I 
believe history will review this legislation as the most 
significant act of Congress concerning the Navajo people since 
the ratification of our Treaty, and a major step toward self-
sufficiency and independence.
    As I speak to you now, many of the 80,000 Navajo men, women 
and children who live within the Project Service Area are 
hauling water in the backs of their pickup trucks for drinking, 
cooking and washing. The centerpiece of S. 1171 will authorize 
the construction of the Navajo-Gallup water supply projects, 
which will supply water to thousands of Navajo people.
    While the Project will not entirely eliminate water hauling 
on the Navajo Nation, it is a giant step toward that goal, and 
provides the foundation that is essential for economic 
development.
    Last month I spoke at an EIS hearing in support of the 
Navajo-Gallup Water Supply Project. As I listened to the 
stories of the Navajo people who have spent their scarce 
economic resources hauling water for basic domestic use, it was 
impossible not to be moved. One of those people, Frank Chee 
Willeto, a Navajo Code Talker, and recipient of the 
Congressional Silver Medal, is here with us today.
    [Applause.]
    The Chairman. Very good. We welcome you to this hearing, 
thank you for coming.
    Mr. Shirley. Recently, representatives from the 
administration have witnessed firsthand, the hardships endured 
by Navajo families who haul water from public watering points.
    While I believe these officials were moved by what they saw 
and heard, I understand that there are concerns that the 
Project is too expensive.
    While the anticipated $714 million cost is a significant 
sum, the cost is that the project and the settlement must be 
put into perspective. OMB's assertion that S. 1171 is too 
expensive, may be based on an overly restrictive interpretation 
of the criteria and procedures for participating in Indian 
Water Rights Settlements. This view--as noted by Senators 
Bingaman and Domenici--is inconsistent with three water rights 
settlements signed into law by President Bush, and the Rural 
Water Supply Act of 2005. Further, the ramifications of not 
passing this legislation could force the Navajo Nation into 
litigation to determine its water rights. Such litigation could 
jeopardize the allocations made by interstate compacts 
concerning the Colorado River Basin. Congress simply cannot 
afford to let this settlement fail.
    Currently, 40 percent of the families in the Navajo Nation 
lack potable water in their homes. In the wake of Hurricane 
Katrina, Congress rightly recognized the emergency conditions 
faced by New Orleans residents, deprived of drinkable water, 
and quickly authorized billions of dollars to restore the water 
systems. The tragic circumstances experienced by these citizens 
are faced by the Navajo people every day. But yet, OMB didn't 
ask Congress to consider the limits of its liability, or its 
Federal Trust responsibility, before spending money to fix the 
problem.
    Congress was right to act to help the Katrina victims. We 
ask you to do the same with the Navajo people.
    Finally, we understand that the State of Arizona has 
concerns about both the settlement agreement and legislation, 
and is advocating a comprehensive settlement to protect its 
interests, including resolution of the litigation in Navajo 
Nation versus the United States. We strongly disagree. The 
settlement with New Mexico does not impair Arizona's ability to 
reach a settlement with the Navajo Nation, concerning its Lower 
Basin claims.
    While the settlement of the business of delivery of water 
to the Lower Basin in Window Rock, Arizona fund the project, 
nothing diminishes the right of Arizona to negotiate all of the 
terms for water delivery to Window Rock, as part of a separate 
agreement with the Navajo Nation.
    The Navajo Nation has attempted to quantify its Lower Basin 
claims with Arizona in the Navajo Nation versus the United 
States litigation. Settlement discussions with Arizona are 
ongoing, and will continue, regardless of the outcome of this 
settlement with New Mexico. However, resolution of Navajo 
claims in Arizona will likely take several years. If such a 
settlement can be reached without delay, or impairment of our 
settlement with New Mexico, we would not object to including an 
Arizona settlement in this bill. But to require an Arizona 
settlement in order for New Mexico to move forward, the Navajo 
Nation and the State of New Mexico will be punished for their 
good faith efforts that resulted in this concrete settlement.
    This settlement would keep the Navajo Nation rights within 
New Mexico's compact apportionment. As such, this settlement 
benefits all 7 Colorado River Basin States, and we should not 
jeopardize this achievement, by trying to settle unrelated 
issues with Arizona.
    The Navajo Nation and its people have respected their 
treaty obligations. In times of crisis, brave Navajo men and 
women have rushed to their country's aid, and fought and died, 
not only for the preservation of the American ideal, but also 
to preserve our Navajo culture, and to secure a Navajo homeland 
for our children. A homeland for the Navajo people is not 
merely a piece of land between our four sacred mountains, but 
is a place where our culture, our language, and our way of life 
and our people can live and grow.
    Without water, viable economic and social communities 
wither and die. So, I ask you today to honor the Treaty of 
1868, and to help bring water to the Great Navajo Nation.
    Thank you very much.
    [The prepared statement of Mr. Shirley follows:]
   Prepared Statement of Joe Shirley, Jr., President, Navajo Nation, 
                            Window Rock, Az
    Thank you Chairman Bingaman, Ranking Member Domenici, and members 
of the Committee on Energy and Natural Resources. My name is Joe 
Shirley, Jr., and I am President of the Navajo Nation, a federally 
recognized Indian nation with the largest reservation in the United 
States. I appreciate this opportunity to share with you the Navajo 
Nation's strong support for the Senate Bill 1171, the Northwest New 
Mexico Rural Water Projects Act. I also wish to convey the gratitude of 
the Navajo Nation to Senators Bingaman and Domenci for their commitment 
to improving the lives of the Navajo People and for their leadership in 
sponsoring this important legislation.
    The Northwestern New Mexico Rural Water Projects Act serves two 
important purposes. First, it would authorize the Secretary of the 
Interior to execute, on behalf of the United States, the Settlement 
Agreement to quantify the Navajo Nation's water rights in the San Juan 
River Basin in New Mexico. The Settlement Agreement was overwhelmingly 
approved by the Navajo Nation Council in December of 2004 and executed 
with the State of New Mexico in April of 2005. It reflects almost a 
decade of negotiations to carefully balance a variety of demands on a 
limited resource. Second, the Act authorizes construction of much 
needed water projects for the Navajo Nation. As such, this legislation 
represents an important step forward in moving the Navajo Nation 
towards self-sufficiency, and may represent the most significant act of 
Congress concerning the Navajo people since the ratification of our 
Treaty with the United States in 1868, 139 years ago this month.
    As witnesses to this important event, I am here with Mr. George 
Arthur, Chair of the Resources Committee of the Navajo Nation Council, 
Mr. Lorenzo Bates, Chair of the Budget and Finance Committee of the 
Navajo Nation Council, Ray Gilmore, Chair of the Navajo Nation Water 
Rights Commission, and Katie Gilbert, Navajo Nation Water Rights 
Commissioner. In addition, Navajo Code Talker Frank Chee Willeto from 
the Pueblo Pintado Chapter and Gloria Skeet from the Bread Springs 
Chapter have joined me as well. In the Treaty of 1868, the Navajo 
leaders pledged their honor to keep peace with the United States and, 
in return, the United States pledged to assist the Navajo People in 
creating a permanent homeland on their reservation lands. No lands can 
be a permanent homeland without an adequate supply of water, especially 
potable water.
                        the settlement agreement
    When New Mexico Governor Richardson and I signed the Settlement 
Agreement in April 2005, the State of New Mexico and the Navajo Nation 
set into motion the means to resolve a century-old controversy 
concerning water rights in the San Juan River basin, which could have 
persisted for decades to come through long, protracted litigation. The 
State of New Mexico and the Navajo Nation spent years crafting a 
settlement that would protect exiting uses from the San Juan River 
while ensuring that the Navajo Nation would receive a firm supply of 
drinking water to sustain the Navajo Reservation as a permanent 
homeland for the Navajo People. Senate Bill 1171 authorizes the 
Secretary of the Interior, on behalf of the United States, to join 
Governor Richardson and me in a Settlement Agreement that quantifies 
the Navajo Nation's water rights in the San Juan River Basin in New 
Mexico in a manner that represents a win-win outcome for all parties, 
including the Navajo Nation, the non-Navajo water users, the State of 
New Mexico and the United States.
    The San Juan River basin contains all the elements that have made 
Western water issues so contentious over the years: a limited supply of 
water, competition between Indian and non-Indian irrigators, the 
presence of federally protected endangered fish species, and not one, 
but four federal Reclamation projects. In other basins, that same 
mixture of interests has lead to contentious litigation and even 
violence. But in the San Juan River basin, the Navajo Nation has worked 
in cooperation with its neighbors on issues such as native fish 
recovery, shortage sharing during periods of drought, and water 
development for municipal and power interests. The history of this 
cooperation is reflected throughout the Settlement Agreement.
    For example, the Settlement Agreement contains provisions to 
protect the interests of the non-Navajo water users in the basin. The 
Navajo farmlands at the Hogback and Fruitland irrigation projects, 
downstream of the non-Indian water users on the river, possess the 
senior priority on the river. Thus, during the dry summer months, when 
there is insufficient water in the river to satisfy all water uses, the 
Navajo Nation could exercise its senior priority to make a ``call'' on 
the river and stop the upstream diversions. To minimize the likelihood 
of calls on the upstream diversions, under the Settlement Agreement, 
the Navajo Nation has committed to utilize a portion of its Navajo 
Reservoir supply at the Hogback and Fruitland projects to ensure that 
more ``run of the river'' water would be available for the non-Navajo 
water users. Without the settlement, a call would be necessary during 
the irrigation season almost every two years, but with the settlement, 
the risk that a call will be made is less than one year out of twenty 
(20).
    The Settlement Agreement also includes specific provisions to firm 
the water supply for existing federal Reclamation projects including 
the Animas-La Plata Project and the San Juan-Chama Project. The Animas-
La Plata Project is an important project for the basin, and is a 
necessary component of the settlement approved by Congress for the 
Colorado Ute Tribes. The San Juan-Chama Project provides drinking water 
for the cities of Albuquerque and Santa Fe. This transbasin diversion 
also helps New Mexico meet its compact obligations to the State of 
Texas and provides a supply of water that can be used for two separate 
water rights settlements involving the Pueblo of Taos and four northern 
Pueblos in the Aamodt litigation.
    In terms of protecting federal interests in New Mexico, including 
the San Juan-Chama Project, the importance of the Settlement Agreement 
to the United States cannot be overstated.
                 the navajo-gallup water supply project
    The centerpiece of the Bill, however, is the authorization for 
construction of the Northwest New Mexico Rural Water Project, commonly 
known as the Navajo-Gallup Water Supply Project. This project will 
provide a firm, sustainable supply of municipal water for the Navajo 
Reservation, the City of Gallup and the Jicarilla Apache Nation. Many 
of the 80,000 Navajo men, women, and children who live within the 
project service area, including Navajo Code Talker Frank Chee Willeto, 
presently haul water for drinking and cooking. Although construction of 
the project will not necessarily eliminate all water hauling on the 
reservation, this project will allow the Indian Health Service to 
expand distribution systems to provide potable water delivery to more 
homes, and creates growth corridors within the Navajo Nation where 
future communities can be built with ready access to roads, electricity 
and potable water. As such, this project represents a critical 
component of the Navajo Nation's economic development strategy. While 
construction of the pipeline may not represent a condition sufficient 
to ensure economic prosperity for the Navajo People, surely such 
prosperity will never be possible in the absence of a sustainable 
potable water supply.
    In March of this year, the Department of the Interior released the 
Planning Report and Draft Environmental Impact Statement for this 
project. I thank Secretary Kempthorne and his Counselor Michael Bogert 
for their leadership in releasing this critical document, in addition 
to the release of the hydrologic determination that there is sufficient 
water for the project.
    Earlier this month, I spoke at the public hearing in Farmington, 
New Mexico, concerning the project in order to deliver the message that 
the Navajo Nation strongly supports the construction of the Navajo 
Gallup Water Supply Project. At the hearing, I was moved by the 
testimony of the Navajo people, most of them water haulers. I believe 
that the federal officials at the hearings were also moved by their 
testimonies. Mr. Frank Chee Willeto, a Navajo veteran and former Navajo 
Code Talker, who recently received the Congressional Silver Medal, 
eloquently testified that he and other veterans, despite financial 
assistance from the Veterans' Administration and the Navajo Nation, 
were unable to secure a loan for his home due to the absence of water 
in his community for fire protection. Ms. Gloria Skeet spoke eloquently 
about how Bread Springs Chapter, south of Gallup, needs the project 
because her community currently faces water shortages. Ms. Skeet, a 
former educator, sees that the construction of the project will allow 
our children to build productive and meaningful lives at home. I also 
viewed drawings by Navajo school children from Lake Valley Chapter 
depicting trucks hauling drinking water to their homes. These drawings 
will be submitted to the Committee in our supplemental statement.* 
Based on these testimonies, I reiterate my message that the Navajo 
Nation strongly supports the construction of the Navajo-Gallup Water 
Supply Project.
---------------------------------------------------------------------------
    * Documents have been retained in committee files.
---------------------------------------------------------------------------
                        omb concerns about costs
    We recently invited representatives from the Administration, 
including the Department of the Interior and the Office of Management 
and Budget, to witness first-hand the hardships endured by Navajo 
families who must drive considerable distance to haul water from public 
watering points. They heard and saw everything I have just described to 
you. They also heard about the negative health effects that occur when 
they do not have access to potable water, including the story of Lucy 
Cayetano who suffers from various illnesses because she does not have 
easy access to potable water. Studies have shown empirically that the 
lack of potable water is a critical health issue for the Navajo people, 
but I also wonder what the psychological effects will be for our 
children who believe that water comes from trucks, rather than from 
drinking fountains or faucets.
    We believe the Administration representatives received a realistic, 
first-hand understanding of the enormity of the problem the lack of 
water brings. However, we also understand that the Office of Management 
and Budget believes the Navajo-Gallup Water Supply Project to be ``too 
expensive.'' Their belief is apparently based on the Planning Report 
for the project, in which the Bureau of Reclamation estimates that this 
project could cost as much as $714 million or more. While this is 
unquestionably a huge amount of money, the anticipated cost of the 
project and the other components of the Navajo Nation's water rights 
settlement must be put into perspective.
    As stated earlier, the Navajo Reservation is the largest Indian 
Reservation with the largest population of on-reservation members of 
any Indian tribe in the United States. Providing potable water for such 
a large reservation is indeed a costly venture, but studies conducted 
by the Bureau of Reclamation demonstrate that this project fares 
favorably when compared with other recently authorized water pipelines 
on a per acre-foot and per capita basis. This information will be 
provided to the Committee in our supplemental statement.
    We understand that OMB seeks to impose on this settlement an overly 
restrictive interpretation of the Administration's criteria and 
procedures for participating in this settlement. In particular, OMB 
apparently seeks to limit the federal contribution for this water 
rights settlement to their assessment of the monetary liability of the 
United States if it is sued by the Navajo Nation. Such a policy is a 
radical departure from previous Administrations, and is not even 
consistent with the position taken by the Administration in the three 
settlements recently signed into law by President Bush--the Arizona 
Water Rights Settlement Act, the Snake River Water Rights Settlement 
and the Zuni Tribe Water Rights Settlement. This inconsistency was 
described in a recent joint letter to OMB from Chairman Bingaman and 
Senator Domenici. Once again, I thank the Senators for their dedication 
to this settlement by having pointed out to OMB these inconsistencies.
    Moreover, OMB's interpretation flies in the face of the 
Administration's past support for the Rural Water Supply Act of 2005 in 
which the federal government would assume up to 75% of the cost of 
rural water projects. The federal contribution for such projects is not 
limited by any calculus of liability to the project participants. OMB's 
policy is especially appalling considering the trust responsibility and 
treaty obligations owed by the United States to the Navajo Nation. The 
United States Supreme Court has characterized these responsibilities as 
``moral obligations of the highest responsibility and trust.'' Simply 
put, the federal government should not be allowed to shirk its trust 
responsibility or its treaty commitments with Indian nations by hiding 
behind a veil constructed of legalese that can be applied to the 
detriment of the poorest of the poor in America.
    Of particular concern to the Navajo Nation is that OMB is now 
objecting to the construction of infrastructure projects as a mechanism 
for settling Indian water rights, even though the Administration 
apparently supports the concept of encouraging Indian water rights 
settlements. In the desert Southwest, where the available water 
resources are largely exhausted, the only way for settlements to work 
is by infusing the limited natural resource pool with the financial 
resources to allow the existing water supplies be used more 
advantageously. As a general premise, these settlements do not 
reallocate water from existing non-Indian water users for the benefit 
of an Indian tribe. In the San Juan River basin, there is very little 
unused water for the purpose of settling the Navajo claims. Under the 
terms of the Settlement Agreement, the Navajo Nation is awarded only 
the water it has historically used, the water set aside for the 
Nation's use at the Navajo Indian Irrigation Project, and the water for 
the Navajo-Gallup Water Supply Project. The Settlement Agreement is 
premised on the Navajo Nation receiving a substantial amount of ``wet 
water'' development to forgo claims for additional water. In short, 
without the federal government contributing the monetary resources to 
make this settlement work, the settlement would not be possible.
    Although we do not believe OMB should apply the criteria and 
procedures for participating in settlements in such a restrictive way, 
we are confident that if OMB considers all of the ramifications of 
letting this settlement fail, the ultimate costs to the federal 
government could be staggering. Consider first, the claims of the 
Navajo Nation. The Navajo Nation's water rights claims are based on 
legal precedent established by the United States Supreme Court. The 
Navajo Nation's water rights claims could exceed the amount of water 
apportioned to New Mexico by the Upper Colorado River Basin Compact, 
which was ratified by Congress in 1949. These claims have been 
described by various legal scholars as ``hypothetical shocks to the 
Colorado River system.'' If this is true, there are only two outcomes, 
neither of which are favorable to the United States. If the courts 
ultimately rule that the Navajo claims are limited by the compact 
because of the ratification by the United States, the Navajo Nation has 
a substantial claim against the United States for the lost water 
rights. On the other hand, if the courts ultimately rule that the 
Navajo Nation is entitled to water in excess of New Mexico's 
apportionment, then the entire system of allocation of Colorado River 
water would be in jeopardy exposing the United States to incalculable 
liability to a multitude of water users in the seven Colorado River 
states. The beauty of the Settlement Agreement is that by keeping the 
Navajo Nation's water rights within the State of New Mexico's compact 
allocation, the ``hypothetical shocks to the Colorado River system'' 
are avoided. But without the substantial water development 
infrastructure authorized by Senate Bill 1171, such a settlement is not 
possible.
    If the settlement were to fail, and the Navajo Nation were forced 
to pursue the litigation of its claims, the United States would still 
be exposed to horrific liabilities even if the Navajo Nation were to 
obtain only modest water rights. The federal government historically 
promoted the utilization of waters from the San Juan River by non-
Navajos through such projects as the San Juan-Chama diversion, the 
Hammond Irrigation Project, the Jicarilla Apache Water Rights 
Settlement, and the Animas-La Plata Project. However, because the 
Navajo Nation is the senior water user in the basin, an award of even a 
modest amount of water to the Navajo Nation would disrupt the water 
supplies for each of these federal interests and leave the United 
States exposed to considerable liability. As I mentioned earlier, the 
San Juan-Chama Project serves a myriad of federal interests in addition 
to providing a water supply to the cities of Albuquerque and Santa Fe. 
While OMB may frame the issue in terms of whether we can afford this 
settlement, we believe the issue is whether we can afford not to have 
the settlement. Under any measure, the Congress simply cannot afford to 
let this settlement fail.
    Currently, forty percent (40%) of the families on the Navajo 
Reservation are forced to transport water from regional water pumping 
stations to their homes to ensure that their families have potable 
water. In the wake of Hurricane Katrina, Congress rightly recognized 
the emergency that existed when so many people were deprived of potable 
water and infrastructure. Congress moved to fix this emergency through 
the authorization of billions of dollars to restore the water 
infrastructure in New Orleans and various coastal communities. The 
tragic circumstance experienced by the residents of New Orleans 
deserved swift and decisive action on the part of the federal 
government. Unfortunately, on the Navajo Nation, the lack of potable 
water and infrastructure is a condition that has existed for a long 
time. It appears that OMB is again applying a double standard when it 
comes to funding water infrastructure to remedy acute water supply 
problems. OMB did not ask Congress to consider the limits of its 
liability to victims of Katrina or to consider whether a federal trust 
responsibility required such action in order to avoid spending the 
money necessary to fix the problem. In the case of Katrina, Congress 
did the right thing. We ask Congress to do the right thing again by 
enacting Senate Bill 1171.
                            arizona concerns
    Finally, we know that the State of Arizona has concerns about the 
language in S. 1171 that deals with delivery of water to Window Rock, 
Arizona. The Settlement Agreement and the provisions of S. 1171 
preserve all rights for the State of Arizona to negotiate all of the 
terms and conditions for water delivery to Window Rock as part of a 
separate agreement with the Navajo Nation. We do not believe, as 
Arizona does, that a ``comprehensive'' settlement of all of the Navajo 
Nation's water rights claims is necessary to protect Arizona's 
interests. In the first instance, a ``comprehensive'' settlement should 
include all of the Navajo Nation's interests in Utah as well as the 
Upper and Lower Colorado River Basins in Arizona. The Navajo Nation has 
been actively attempting to quantify its Lower Basin claims through 
negotiations with Arizona water interests, but no negotiations 
concerning Upper Basin claims have been attempted. We have advised the 
Arizona water interests that we are willing to pursue a negotiated 
settlement of the Lower Basin claims, but we are not willing to 
jeopardize the authorization of our settlement with the State of New 
Mexico to accommodate the Arizona interests. Moreover, we have serious 
doubts whether a settlement of the Arizona claims can be achieved. It 
appears that after passage of the Arizona Water Settlements Act, there 
is very little Colorado River water remaining for purposes of a 
settlement with the Navajo Nation. Nevertheless, we are committed to 
continued dialogue with the Arizona interests to determine if a 
settlement is possible and to resolve any remaining issues they may 
have concerning the settlement with the State of New Mexico.
                               conclusion
    For more than one hundred and thirty nine years, the Navajo Nation 
and the Navajo People have taken their treaty obligations seriously. In 
times of crisis, brave Navajo men and women have rushed to the 
country's aide, and fought and died not only for the preservation of 
the American ideal, but also to preserve the Navajo culture and to 
secure a Navajo homeland. A homeland for the Navajo People is not 
merely a piece of land between our four sacred mountains but a place 
where our culture, our language, our people can grow and live. Without 
water, viable economic and social communities wither and die. I am 
asking you today to honor the Treaty of 1868 and help bring water to 
the Navajo Nation.

    The Chairman. Thank you very much.
    Mr. Guenther, go right ahead.

STATEMENT OF HERBERT R. GUENTHER, DIRECTOR, ARIZONA DEPARTMENT 
                OF WATER RESOURCES, PHOENIX, AZ

    Mr. Guenther. Thank you. Mr. Chairman, Ranking Member 
Domenici, thank you for the opportunity to present the views of 
the State of Arizona on S. 1171.
    This bill represents another important step toward the 
settlement of longstanding water rights claims of American 
Indian Tribes. The Navajo Nation lies within the boundaries of 
three States--Arizona, New Mexico, and Utah. The Navajo Nation 
is the largest tribe in Arizona, both in terms of population 
and land area.
    Senate bill 1171 contains provisions that will greatly aid 
that portion of the Navajo Nation in New Mexico, and 
potentially within a portion of Arizona, as well.
    Arizona is supportive of the efforts of New Mexico and the 
Navajo Nation in completing a water rights settlement 
agreement. We are supportive of the creation of the much-needed 
funding mechanism, to ensure that the associated water 
development projects are constructed in a timely manner. We are 
supportive of your creative efforts to include non-Indian 
beneficiaries, who will receive water from these proposed 
projects.
    But Arizona does have several concerns about S. 1171 as it 
was introduced. Arizona believes that the bill is in conflict 
with provisions of the Law of the River, including the 1922 
Colorado River Compact. We believe the bill should contain an 
explicit exception to the provisions of the compact reserving 
the right to use Upper Basin water exclusively in the Upper 
Basin, to allow the diversion and use of that Upper Basin Water 
in Gallup, New Mexico, located in the Lower Basin.
    Arizona would like to build to make a clear that the water 
from Window Rock, Arizona, should come from the CAP water that 
was set aside in the Arizona Water Settlements Act of 2004.
    Senate bill 1171 also needs to include specific provisions 
for accounting for that water at Lee Ferry, and authorizing the 
Secretary of the Interior to contract for the water at delivery 
point in the Upper Basin, which authority is currently lacking.
    Arizona and Arizona water users would like to see the bill 
amended to include additional titles which would settle water 
rights claims on the lower main and Colorado River, and the 
Little Colorado River in Arizona. We currently have ongoing 
negotiations and we are optimistic that the parties may reach 
consensus in a timely manner.
    We are also concerned about the Navajo Nation's lawsuit. As 
President Shirley mentioned a short while ago, that is against 
the Secretary of the Interior challenging operational programs 
of the Colorado River. That lawsuit is currently stayed pending 
settlement negotiations, but casts a serious cloud over the 
programs to conserve and deliver water to all of the basin 
States. We believe that resolution and dismissal of that 
lawsuit should be a prerequisite to final action on Senate bill 
1171.
    In 2004, Congress passed the Arizona Water Settlements Act, 
we would like the assistance of the Navajo Nation to bring that 
Act to a full enforceability stage. If we do not reach full 
enforceability for that Act, the benefits of that Act will 
become null and void, and that would include the potential 
supply for Window Rock, as well as the benefits accruing to 
Gila River water users in New Mexico.
    Again, Arizona remains willing to meet with the committee's 
staff, and the representatives of the other six Basin States, 
if necessary, to further discuss the suggested changes, and 
obviously we stand ready to meet with the Navajo Nation, as 
well. We would like to make sure that any proposed amendments 
are acceptable to all affected parties, and consistent with the 
Law of the River. We were successful in negotiating with you 
and your staff on the Arizona Water Settlements Act to satisfy 
your concerns before that Act was passed, and we think we can 
do the same here, without a delay of the process.
    Mr. Chairman and Senator Domenici, I stand ready to answer 
questions at the appropriate time. Thank you.
    [The prepared statement of Mr. Guenther follows:]
Prepared Statement of Herbert R. Guenther, Director, Arizona Department 
                    of Water Resources, Phoenix, Az
    Mr. Chairman and Members of the Committee, good afternoon and thank 
you for the opportunity to present the views of the State of Arizona on 
S. 1171, the Northwestern New Mexico Rural Water Projects Act of 2007.
    S. 1171 represents another important step toward the settlement of 
long standing water rights claims held by the United States government 
on behalf of American Indian Tribes. The Navajo Nation is the largest 
Tribe in Arizona measured both in terms of population and land area. 
The Navajo Reservation lies within the boundaries of three states: 
Arizona, New Mexico and Utah. It also lies within one of the most arid 
regions of the United States and the lack of water development and 
infrastructure has created a great hardship on the Navajo Nation's 
residents, both in terms of economic opportunity and general lifestyle. 
The geography of the Reservation is also complicated in a hydrologic 
sense because it encompasses land which is located in both the Upper 
and Lower Colorado River Basins.
    S. 1171 contains provisions that will greatly aid the portion of 
the Navajo Reservation within New Mexico and, potentially, within a 
portion of Arizona. Arizona is supportive of the efforts of the State 
of New Mexico and the Navajo Nation in completing a water rights 
settlement agreement. We are supportive of the provisions of S. 1171 
that create a funding mechanism to ensure that necessary water 
development projects will be constructed in a timely manner. We are 
supportive of the creative efforts of the New Mexico congressional 
delegation to ensure that there will also be non-Indian beneficiaries 
who will receive water from the rural water projects, and we are 
generally supportive of the opportunity for the State of New Mexico to 
make full use of its Upper Colorado River Compact entitlement. The 
Committee should remember that the San Juan River is part of the 
Colorado River system as defined in the 1922 Colorado River Compact 
(1922 Compact) approved by all seven Colorado River Basin States. In 
this regard programs and settlements in the San Juan Basin affect the 
Colorado River as a whole, and vice versa.
    While generally supportive of this settlement, we cannot support S. 
1171 as it has been introduced because we have several concerns about 
the implications of certain provisions to the existing ``Law of the 
Colorado River,'' and about the provisions that relate to uses of water 
from the Northwest New Mexico Rural Water Supply Project (Navajo-Gallup 
Pipeline Project) within Arizona and in portions of New Mexico located 
in the Lower Colorado River Basin. Specifically, as introduced, S. 1171 
would violate provisions of the 1922 Compact related to the use of 
Colorado River water allocated ``exclusively'' to the Upper Basin to be 
used in the Lower Basin. The bill does not make provisions for the 
proper accounting of water deliveries under the Compact at Lee Ferry. 
S. 1171 does not specify how the accounting and delivery of water for 
tribal use in Window Rock, Arizona would be handled. S. 1171 would also 
set a precedent in that it would subordinate Arizona's share of water 
in the Lower Basin of the Colorado River to allow new uses in the Lower 
Basin.
    Arizona and Arizona water users believe there is an opportunity to 
provide even more certainty for the Navajo Nation and the Hopi Tribe by 
including additional Titles which will settle water rights claims 
within the Lower Mainstem Colorado River and Little Colorado River 
basins within Arizona. The two Tribes are actively participating in 
ongoing negotiations with governmental and non-governmental interests 
in those basins. We are optimistic that the parties will complete a 
water rights settlement agreement in a timely manner so that S. 1171 
can be amended to become a more comprehensive solution. Therefore, we 
believe Congress should not take final action on S. 1171 until we have 
a chance to see if Arizona tribal and non-Indian parties can achieve 
this Arizona settlement goal.
    Additionally, an impetus for Arizona (as well as governmental and 
non-governmental entities in California and Nevada) to negotiate with 
the Navajo Nation is a direct response to the Navajo Nation lawsuit 
against the Secretary of the Interior about operation of programs on 
the Colorado River, including interim surplus guidelines, interstate 
water banking, overrun and payback provisions, certain Colorado River 
allocations, and protections of Lakes Mead and Powell. This 2003 U.S. 
District Court lawsuit has been stayed pending negotiations among the 
parties over Navajo Nation Colorado River claims. The lawsuit is a 
cloud over the programs to conserve and deliver Colorado River water to 
all the Basin States; threatening operations that benefit all seven 
Basin States. It is a logical conclusion that the recent historic 
agreement of the Seven Basin States of the Colorado River on shortage 
guidelines and the coordinated operations of Lakes Mead and Powell 
would also be challenged. Failure of that new agreement could mean 
years of dispute among the States. Of course a successful Arizona water 
rights settlement would remove this cloud. Therefore, we believe that 
Congress should not take final action on S. 1171 without a resolution 
and dismissal of the Navajo Nation lawsuit concerning the Colorado 
River.
    Title II of S. 1171 creates the Reclamation Water Settlements Fund. 
This Fund will be used to construct project features that are required 
to implement a congressionally authorized settlement agreement. The 
State of Arizona is supportive of the concept for funding that is 
described in Title II. However, we believe that the funding need is 
worthy of even greater consideration. Indian water rights settlements 
are being actively negotiated throughout the United States. Funding of 
these settlement agreements is the single greatest impediment to their 
successful completion. We believe it is time for Congress to address 
the funding issue on a more comprehensive basis.
    Many of the water rights being contested throughout the West are 
rights that were ``reserved'' by the United States at the time of the 
creation of the Indian reservations. In many instances, the United 
States has failed to fulfill its intent in reserving that water for the 
Reservations and has left the Tribes without the means to create a true 
tribal homeland. In Arizona and other Western states, many of the 
Tribes have recognized that they will have a better chance to obtain 
the necessary funding which will lead to on-Reservation development by 
entering into a water rights settlement rather than pursuing their 
claimed rights through lengthy and expensive litigation. In most 
instances the Tribes have settled for less water than they had claimed 
in Court, but they were provided with the funding mechanism to actually 
put that water to near-term beneficial use. This trade-off is essential 
for a Tribe to make such a major concession regarding their valuable 
water rights claims.
    Having a dedicated water rights settlement fund with a dedicated 
funding source will allow not only the Northwest New Mexico Rural Water 
Supply Project to be built but also many other worthy projects in other 
states. The Committee should look at expanding Title II so that the 
Reclamation Water Settlements Fund can have even greater potential for 
dedicated revenues. The time frame for those deposits should be at 
least fifty years. Withdrawals from the Settlements Fund for projects 
other than the Northwest New Mexico Rural Water Supply Project will 
still be subject to the conditions placed upon them by Congress when 
future settlements and projects are authorized. We urge the Committee 
to explore opportunities to build on the Settlement Fund concept by 
contacting the Western Governor's Association and the Western States 
Water Council. At a minimum, S. 1171 should contain provisions for the 
funding of a Navajo Nation/Hopi Tribe settlement in the Lower Basin of 
the Colorado River if a settlement is authorized by Congress. It would 
greatly benefit the Navajo Nation and Hopi Tribe in their water 
development plans.
    In addition to the need to first resolve the Navajo lawsuit and 
water rights claims in Arizona, Arizona is concerned that S. 1171, as 
currently drafted, conflicts with the Law of the River. S. 1171 
contains several provisions related to deliveries of water through the 
Northwest New Mexico Rural Water Supply Project to locations in the 
Lower Colorado River Basin, including the Window Rock area of the 
Navajo Reservation within Arizona. In an attempt to be non-committal 
about the source of water to be used for the Arizona component, the 
bill's drafters have created confusing and potentially troubling 
language. The problem arises because Window Rock, Arizona and Gallup, 
New Mexico are located in the Lower Basin of the Colorado River as 
defined in the 1922 Compact, but the point of diversion of the water 
from the San Juan River is in the Upper Basin portion of the Colorado 
River. Arizona believes that the terms of the Colorado River Compact 
prohibit the use of an Upper Basin water allocation in the Lower Basin, 
and vice versa. However, the State of Arizona can accept an explicit 
exception to this prohibition as long as it is clear that the use of 
water across the basin boundary is for a specific project and that the 
project is within the same state that holds the allocation. Arizona 
does not believe that the language of paragraph 303(g), which describes 
consistency with the Upper Colorado River Basin Compact adequately 
addresses the issue or meets the requirements of the Colorado River 
Compact. We believe that an explicit congressional exception to the 
provisions of the 1922 Colorado River Compact is required.
    The Arizona Water Settlements Act (AWSA) of 2004 (P.L. 108-451) 
contains a provision reserving for allocation 6,411 acre-feet per year 
of Central Arizona Project (CAP) water supply for use in the Window 
Rock area of the Navajo Nation pursuant to a future congressionally 
authorized settlement. This provision was agreed to by Arizona at the 
insistence of New Mexico. The terms and conditions for making this 
allocation are enumerated in Sec. 104(a)(1)(B)(ii) of the AWSA. This is 
the only water supply source that Arizona will agree may be utilized 
for delivery through the Northwest New Mexico Rural Water Supply 
Project to the Window Rock area. The CAP water is a Lower Basin 
Colorado River entitlement and the water will be used in the Lower 
Basin. We believe this comports with the provisions of the Colorado 
River Compact.
    However, Arizona is concerned that this source of water for Window 
Rock may be at risk. As the Committee may know, the Navajo Nation 
opposed the AWSA, and they continue to oppose approval of the Gila 
River Indian Community Settlement which is a requirement for bringing 
the AWSA to a full enforceability stage. If AWSA does not become fully 
enforceable all the benefits of the AWSA will become null and void, 
including the source of water for Window Rock, and those benefits 
accruing to Gila River water users in New Mexico. Therefore, we believe 
Congress should not take final action on S. 1171 without the withdrawal 
of the Navajo Nation's opposition to the implementation of the 
provisions of the AWSA.
    Assuming the CAP water source does prove to be available for Window 
Rock, the diversion of water from an Upper Basin location for use in 
the Lower Basin is unprecedented. Therefore, S. 1171 needs to include 
specific provisions authorizing and clarifying accounting methods and 
providing the Secretary of the Interior the authority to contract for 
delivery of CAP water from a new diversion point in the Upper Basin. 
Under current law, the Secretary has no authority to contract for 
delivery of Lower Basin Colorado River water at points of diversion 
above Lake Mead. Attached to this testimony, as part of a letter from 
myself to the New Mexico State Engineer, are proposed amendments which 
will correct this and other ``Law of the Colorado River'' problems 
Arizona finds with the bill as introduced.
    In 1968, Arizona's rights to develop in the Lower Colorado River 
Basin were subordinated to pre-1968 rights in the Lower Basin States. 
S. 1171 sets a precedent that New Mexico and Utah can increase 
development in the Lower Basin and further jeopardize Arizona rights. 
While Arizona does not challenge the right of any Upper Basin state to 
develop their apportioned Upper Basin water for use in the Upper Basin, 
we do want to be treated equitably for use of Upper Basin water in 
Lower Basin development. S. 1171 does not address this concern and it 
sets a precedent that is inequitable to the State of Arizona. 
Specifically, the bill, subordinates Arizona's Central Arizona Project 
(CAP) water to new Lower Basin uses developed with an Upper Basin water 
allocation. This also subordinates the rights of Arizona Indian Tribes 
that utilize CAP allocations.
    Staff from the Arizona Department of Water Resources has had an 
ongoing dialogue with the New Mexico State Engineer's staff for over a 
year on these issues, including those outlined in this testimony. I 
sent a letter to the Mr. D'Antonio several months ago about these 
issues. Mr. D'Antonio recently responded concerning Arizona's suggested 
bill changes. We have attached copies of both of these letters for the 
record. We do not agree with Mr. D'Antonio's response but we continue 
to be open to discussions with our friends in New Mexico to resolve 
these important Law of the River issues.
    The Law of the River has been under attack for decades. For 
example, in the early 1980s, a private group made what is known as the 
Galloway Proposal. It would have allowed the transfer of Upper Basin 
water rights to a California entity without regard to the prohibitions 
of the 1922 Compact. The Seven Basin States were united in fighting the 
proposal and rejecting this notion that the 1922 Compact was 
irrelevant. It now appears that New Mexico is not as concerned about 
the precedent that would be set if Congress does not address each 1922 
Compact issue explicitly. Arizona remains very concerned and will 
utilize all means available and necessary to protect its rights under 
the Compact and the Law of the River.
    Again, Arizona is willing to meet with Committee staff and the 
representatives of the other six Colorado River Basin States to further 
discuss our suggested changes, and to try to make sure that any 
proposed amendments are acceptable to all affected parties and 
consistent with the Law of the River.
    In summary, the State of Arizona is supportive of the purposes of 
S. 1171 in settling tribal claims and will work collaboratively with 
the bill's sponsors and New Mexico's interested parties. We believe 
that the bill should be expanded to include additional water rights 
settlements in Arizona that are actively being negotiated with the 
Navajo Nation and the Hopi Tribe. We urge the Committee to explore 
opportunities to expand upon the concepts contained in Title II dealing 
with the Reclamation Water Settlements Fund so that it can become the 
mechanism for not only the proposed New Mexico Navajo settlement, but 
potentially many other western tribal settlements as well. Before final 
enactment of S. 1171, the Navajo Nation's challenge to the operation of 
the Colorado River must be resolved, and the Navajo Nation's opposition 
to the AWSA withdrawn. Finally, we cannot support the bill as currently 
drafted as it relates to the source of the water supply for the Window 
Rock area within Arizona, and certain provisions dealing with the Law 
of the River. Ambiguity about the water source and the Law of the River 
implications related to both Window Rock water delivery and Gallup 
water delivery must be clarified.
    Thank you for the opportunity to present the views of the State of 
Arizona.
                              Attachments
                      Arizona Department of Water Resources
                                        Phoenix, AZ, April 5, 2007.
Mr. John D'Antonio, P.E.,
Office of the State Engineer, 130 South Capitol Street, Concha Ortiz y 
        Pino Building, P.O. Box 25102, Santa Fe, NM.
    Dear Mr. D'Antonio: Last January my staff met with your staff 
concerning the proposed ``Northwestern New Mexico Rural Water Projects 
Act'' (Act) introduced by the New Mexico delegation late last session 
as S. 4108. One title of the Act would confirm the water settlement for 
the Navajo Nation claims to water in the San Juan River basin.
    We have examined the proposed Act and have reviewed the San Juan 
settlement agreement. There are provisions in the settlement agreement 
and Act that are in conflict with the 1922 Colorado River Compact, the 
Decree in Arizona v. California, the Colorado River Basin Project Act, 
and the Arizona Water Settlements Act. Specific comments on some of the 
issues are enclosed for your review. There are additional provisions, 
such as the ``top water bank'' that are confusing, and we question 
whether those provisions are in conformity with the Compact and the 
``Law of the River''.
    The Compact and Decree issues may only be resolved with the 
concurrence of Arizona and the other Lower Division States. 
Additionally, the most likely source of water for the Arizona portion 
of the San Juan settlement is specifically reserved in section 104 of 
Public Law 108-451 under certain conditions. Some issues associated 
with this transfer of water are similar to Compact and Decree issues on 
use of water in New Mexico.
    We are currently consulting with water users in Arizona and may 
have other issues concerning the proposed settlement legislation. We 
would like to the opportunity to work with you and representatives of 
the Navajo Nation to address the concerns of Arizona. Should you have 
any questions please feel free to contact me, Tom Carr or Gregg Houtz.

                                       Herbert R. Guenther,
                                                          Director.

             comments on draft navajo-gallup pipeline bill
General Comments

   The bill is premised on a draft EIS and draft hydrologic 
        determination, neither of which has yet been accepted by the 
        Secretary of the Interior. This is not a good precedent, 
        particularly when the Lower Basin States have expressed concern 
        about the draft hydrologic determination.
   The bill leaves many unanswered questions about Colorado 
        River accounting, water delivery contracting and priority of 
        deliveries. The specific comments below attempt to clarify many 
        of these issues.

Specific Comments

    1. Priority within the San Juan River system.--The priority of the 
Navajo-Gallup pipeline water within the San Juan River system is not 
clear. Section 102(b) of the bill provides that the Secretary shall 
``allocate the shortage'' to the Navajo Reservoir water supply, with 
first priority going to the water for the Navajo-Gallup pipeline. This 
seems to say that the water for the pipeline is the first to be 
shorted. But this section of the bill is amending Sec. 11 of Pub. L. 
87-483, which directs the Secretary to apportion the water that is 
available during shortage on the San Juan, suggesting that the pipeline 
might be first to receive available water during a shortage. The bill 
should be revised to clearly express the intended result.
    2. Colorado River Compact Issues.--Section 103 of the bill states 
that it does not amend the Law of the River ``unless expressly provided 
in this Act.'' There is nothing in the bill that would expressly amend 
the 1922 Colorado River Compact. Accordingly, there is nothing in the 
bill that would:

   Allow the diversion of water in the Upper Basin for use in 
        the Lower Basin.
   Relieve the Upper Basin from any part of its Compact 
        obligation to deliver 75 million acre-feet to the Lower Basin 
        every 10 years.

    To address these problems, the following should be added to the end 
of Sec. 303 of the bill:

          (h) COLORADO RIVER COMPACT.--Notwithstanding any other 
        provision of law, water may be diverted from the San Juan River 
        in New Mexico for use within the Lower Basin, as that term is 
        used in the 1922 Colorado River Compact, either in New Mexico 
        or on the Navajo Reservation in Arizona. Water diverted from 
        the San Juan River and delivered for use on the Navajo 
        Reservation in Arizona shall be deemed to have been delivered 
        to the Lower Basin at Lee Ferry for purposes of Article III(d) 
        of the Colorado River Compact.

    3. Colorado River System Priority.--Section 303 of the bill should 
also include the following provision:

          (i) PRIORITY.--Colorado River system water diverted in the 
        Upper Basin for use in the Lower Basin, as those terms are used 
        in the Colorado River Compact, shall have the same priority of 
        delivery in time of shortage as the Central Arizona Project.

    4. Allocation to Navajo Nation Communities in Arizona.--Section 
303(b)(2)(D) of the bill should expressly state that the 6,411 acre-
feet of water allocated for use in Arizona is the water identified in 
Sec. 104(a)(1)(B)(ii) of the Arizona Water Settlements Act (AWSA), Pub. 
L. 108-451--i.e., CAP non-Indian agricultural (NIA) priority water--and 
is subject to the provisions of the AWSA, including but not limited to 
Sec.  104(a)(1)(B)(ii), Sec.  104(a)(1)(B)(iii), Sec. 104(a)(3), and 
Sec. 104(e).
    5. Conditions for Use in Arizona.

          a. Section 303(d)(1)(C) of the bill requires the Secretary to 
        determine that the Navajo uses within Arizona are within 
        Arizona's Colorado River apportionment. The bill does not 
        specify whether the water must be within Arizona's 50,000 of 
        Upper Basin entitlement (which was not the intent) or its 2.8 
        maf Lower Basin entitlement. This section should be deleted.
          b. In addition to any capital or OM&R costs associated with 
        the use of the Navajo-Gallup pipeline, the United States or the 
        Nation must pay CAP fixed OM&R costs for any water delivered to 
        the Navajo Reservation for use in Arizona. The United States 
        can pay those costs from the Lower Colorado River Basin 
        Development Fund in accordance with 43 U.S.C. Sec. 1543(f), as 
        amended by the AWSA.
          c. Section 303(d)(1)(A) of the bill requires the Secretary to 
        ``determine by hydrologic investigation that sufficient water 
        is reasonably likely to be available to supply uses from water 
        of the Colorado River system allocated to the State of 
        Arizona.'' Its not clear what this means. This provision should 
        be deleted.
          d. Section 303(d)(2) of the bill provides that water used by 
        the Navajo Nation in Arizona counts against Arizona's Colorado 
        River entitlement. Again, the bill should clarify that this 
        water counts against Arizona's Lower Basin entitlement.
          e. In summary, section 303(d) of the bill should be revised 
        to read as follows:

          (d) CONDITIONS FOR USE IN ARIZONA.--
                  (1) REQUIREMENTS.--Project water shall not be 
                delivered for use by any community of the Nation in the 
                State of Arizona under subsection (b)(2)(D) until all 
                of the following conditions have been satisfied--
                          (A) the Nation and the State of Arizona have 
                        entered into a water rights settlement 
                        agreement approved by an Act of Congress that 
                        settles the Nation's claims to water in 
                        Arizona; and
                          (B) the Secretary has entered into a contract 
                        with the Nation for the delivery of 6,411 acre-
                        feet of Central Arizona Project non-Indian 
                        agricultural priority water in accordance with 
                        Sec. 104(a)(1)(B)(ii) of Pub. L. 108-451.
                  (2) ACCOUNTING FOR USES IN ARIZONA.--Any depletion of 
                water from the San Juan River stream system in the 
                State of New Mexico that results from the diversion of 
                water by the Project for uses within the State of 
                Arizona (including depletion incidental to the 
                diversion, impounding, or conveyance of water in the 
                State of New Mexico for uses in the State of Arizona--
                          (A) shall be accounted for as a part of the 
                        2.8 million acre-feet of Colorado River water 
                        apportioned to the State of Arizona in Article 
                        II(B)
                        (1) of the decree of the Supreme Court of the 
                        United States in Arizona v. California (376 
                        U.S. 340); and
                          (B) shall not increase the total quantity of 
                        water to which the State of Arizona is entitled 
                        under any compact, statute, or court decree.

    6. Forbearance.--Section 303(e)(2) of the bill should expressly 
state that the Nation may not forbear deliveries in the State of New 
Mexico to allow the delivery of water for use in Arizona when there is 
a shortage in the Lower Basin that reduces the availability of CAP NIA 
priority water. Deliveries to the Navajo Reservation through the 
Navajo-Gallup pipeline must be reduced in the same proportion as other 
CAP NIA priority water during a Lower Basin shortage.
             comments on draft navajo-gallup pipeline bill
General Comments
   The bill is premised on a draft EIS and draft hydrologic 
        determination, neither of which has yet been accepted by the 
        Secretary of the Interior. This is not a good precedent, 
        particularly when the Lower Basin States have expressed concern 
        about the draft hydrologic determination. (Mike Conner has 
        indicated that the final determination reference will be 
        substituted when issued.)
   The bill leaves many unanswered questions about Colorado 
        River accounting, water delivery contracting and priority of 
        deliveries. The specific comments below attempt to clarify many 
        of these issues.
Specific Comments
    1. Priority within the San Juan River system.--The priority of the 
Navajo-Gallup pipeline water within the San Juan River system is not 
clear. Section 102(b) of the bill provides that the Secretary shall 
``allocate the shortage'' to the Navajo Reservoir water supply, with 
first priority going to the water for the Navajo-Gallup pipeline. This 
seems to say that the water for the pipeline is the first to be 
shorted. But this section of the bill is amending Sec. 11 of Pub. L. 
87-483, which directs the Secretary to apportion the water that is 
available during shortage on the San Juan, suggesting that the pipeline 
might be first to receive available water during a shortage. The bill 
should be revised to clearly express the intended result. See suggested 
changes in No. 5(e).
      2. Colorado River Compact Issues.--Section 103 of the bill states 
that it does not amend the Law of the River ``unless expressly provided 
in this Act.'' There is nothing in the bill that would expressly amend 
the 1922 Colorado River Compact. Accordingly, there is nothing in the 
bill that would:

   Allow the diversion of water in the Upper Basin for use in 
        the Lower Basin.
   Relieve the Upper Basin from any part of its Compact 
        obligation to deliver 75 million acre-feet to the Lower Basin 
        every 10 years.

    To address these problems, the following should be added to the end 
of  303 of the bill:

          (h) COLORADO RIVER COMPACT.--Notwithstanding any other 
        provision of law, water may be diverted from the San Juan River 
        in New Mexico for use within the Lower Basin, as that term is 
        used in the 1922 Colorado River Compact, either in New Mexico 
        or on the Navajo Reservation in Arizona. Water diverted from 
        the San Juan River and delivered for use on the Navajo 
        Reservation in Arizona shall be deemed to have been delivered 
        to the Lower Basin at Lee Ferry for purposes of Article III(d) 
        of the Colorado River Compact.

    3. Colorado River System Priority.--Section 303 of the bill should 
also include the following provision:

          (i) PRIORITY.--Colorado River system water diverted in the 
        Upper Basin for use in the Lower Basin, as those terms are used 
        in the Colorado River Compact, shall have the same priority of 
        delivery in time of shortage as the Central Arizona Project. 
        However, the diversion from the San Juan River for the Project 
        that is delivered for use in the lower Colorado River basin 
        within the State of New Mexico is subject to shortages and 
        priorities of water rights on the San Juan River, under the 
        jurisdiction of the New Mexico State Engineer. The reductions 
        in water use during shortage conditions on the San Juan River 
        for the Project deliveries in the lower Colorado River basin 
        mitigate the increased impacts caused by diversions of water 
        from the upper Colorado River basin in New Mexico, therefore 
        this Project diversion shall not be subject to lower Colorado 
        River basin priorities of the Colorado River Basin Project Act.

    4. Allocation to Navajo Nation Communities in Arizona.--Section 
303(b)(2)(D) of the bill should expressly state that the 6,411 acre-
feet of water allocated for use in Arizona is the water identified in 
Sec. 104(a)(1)(B)(ii) of the Arizona Water Settlements Act (AWSA), Pub. 
L. 108-451--i.e., CAP non-Indian agricultural (NIA) priority water--and 
is subject to the provisions of the AWSA, including but not limited to 
Sec. 104(a)(1)(B)(ii), Sec. 104(a)(1)(B)(iii), Sec. 104(a)(3), and 
Sec. 104(e). See, suggested changes in No. 5(e).
    5. Conditions for Use in Arizona.

          a. Section 303(d)(1)(C) of the bill requires the Secretary to 
        determine that the Navajo uses within Arizona are within 
        Arizona's Colorado River apportionment. The bill does not 
        specify whether the water must be within Arizona's 50,000 of 
        Upper Basin entitlement (which was not the intent) or its 2.8 
        maf Lower Basin entitlement. This section should be deleted.
          b. In addition to any capital or OM&R costs associated with 
        the use of the Navajo-Gallup pipeline, the United States or the 
        Nation must pay CAP fixed OM&R costs for any water delivered to 
        the Navajo Reservation for use in Arizona. The United States 
        can pay those costs from the Lower Colorado River Basin 
        Development Fund in accordance with 43 U.S.C. Sec. 1543(f), as 
        amended by the AWSA.
          c. Section 303(d)(1)(A) of the bill requires the Secretary to 
        ``determine by hydrologic investigation that sufficient water 
        is reasonably likely to be available to supply uses from water 
        of the Colorado River system allocated to the State of 
        Arizona.'' It's not clear what this means. This provision 
        should be deleted.
          d. Section 303(d)(2) of the bill provides that water used by 
        the Navajo Nation in Arizona counts against Arizona's Colorado 
        River entitlement. Again, the bill should clarify that this 
        water counts against Arizona's Lower Basin entitlement. See 
        suggested changes in No. 5(e).
          e. In summary, section 303(d) of the bill should be revised 
        to read as follows:

          (d) CONDITIONS FOR USE IN ARIZONA.--
                  (1) REQUIREMENTS.--Project water shall not be 
                delivered for use by any community of the Nation in the 
                State of Arizona under subsection (b)(2)(D) until all 
                of the following conditions have been satisfied--
                          (A) the Nation and the State of Arizona have 
                        entered into a water rights settlement 
                        agreement approved by an Act of Congress that 
                        settles the Nation's claims to water in 
                        Arizona;
                          (B) the Secretary has entered into a contract 
                        with the Nation for the delivery of 6,411 acre-
                        feet of Central Arizona Project non-Indian 
                        agricultural priority water in accordance with 
                        Sec. 104(a)(1)(B)(ii) of Pub. L. 108-451; and
                          (C) delivery by the Secretary of the water 
                        referenced in (B) shall be in accordance with 
                        the rules and regulations promulgated for the 
                        provisions of the Colorado River Basin Project 
                        Act, 43 U.S.C. 1521 et seq.
                  (2) ACCOUNTING FOR USES IN ARIZONA.--Any depletion of 
                water from the San Juan River stream system in the 
                State of New Mexico that results from the diversion of 
                water by the Project for uses within the State of 
                Arizona (including depletion incidental to the 
                diversion, impounding, or conveyance of water in the 
                State of New Mexico for uses in the State of Arizona)--
                          (A) shall be accounted for as a part of the 
                        2.8 million acre-feet of Colorado River water 
                        apportioned to the State of Arizona in Article 
                        II(B)(1) of the decree of the Supreme Court of 
                        the United States in Arizona v. California (376 
                        U.S. 340); and
                          (B) shall not increase the total quantity of 
                        water to which the State of Arizona is entitled 
                        under any compact, statute, or court decree.

    6. Forbearance.--Section 303(e)(2) of the bill should expressly 
state that the Nation may not forbear deliveries in the State of New 
Mexico to allow the delivery of water for use in Arizona when there is 
a shortage in the Lower Basin that reduces the availability of CAP NIA 
priority water. Deliveries to the Navajo Reservation through the 
Navajo-Gallup pipeline must be reduced in the same proportion as other 
CAP NIA priority water during a Lower Basin shortage.

                               Attachment
                               State of New Mexico,
                              Office of the State Engineer,
                                        Santa Fe, NM, June 5, 2007.
Herbert R. Guenther,
Director, Arizona Department of Water Resources, 3550 North Central 
        Avenue, Phoenix, AZ.
    Dear Mr. Guenther: All Colorado River basin states are to be 
congratulated regarding the execution of the Agreement Concerning 
Colorado River Management and Operations and the submission of joint 
comments to the Bureau of Reclamation regarding the coordinated 
operation of Lakes Mead and Powell and shortage sharing guidelines for 
the lower basin states. New Mexico hopes that the agreement will be a 
step toward continued cooperation among the basin states relating to 
each state's use and development of its share of water from the 
Colorado River system. For New Mexico, the Navajo Settlement and 
corresponding Navajo-Gallup pipeline are important projects to enable 
New Mexico to utilize its apportionment of water under the Upper 
Colorado River Basin Compact. Federal legislation relating to the 
Navajo Settlement has been re-introduced this Congress (S 1171 and HR 
1970) and New Mexico hopes that in the spirit of the recent Agreement, 
all basin states will support the Navajo Settlement.
    This letter responds to the State of Arizona's comments dated April 
5, 2007, and April 20, 2007, relating to New Mexico's Navajo Settlement 
and the corresponding federal legislation. Discussions with 
representatives of Arizona have helped New Mexico understand the issues 
raised by Arizona, and although some of Arizona's issues can be 
addressed, New Mexico cannot agree to all of the changes proposed by 
Arizona. As noted in more detail below, many of Arizona's proposed 
changes require consultation and agreement by the Navajo Nation and the 
other basin states.
    Arizona's general objection relates to the legislation's citation 
to the draft EIS and draft hydrologic determination. As you know, the 
basin states have agreed on language provided to the Secretary of the 
Interior for the draft hydrologic determination, and we expect the 
Secretary of the Interior to issue the final determination, at which 
point the legislation can be amended accordingly. Regarding the draft 
EIS, it is not uncommon for legislation to refer to a draft EIS or for 
a project to be authorized before the NEPA process begins, and this 
should not constitute a valid objection. Arizona also objects that the 
Settlement Agreement and legislation conflict with existing law. New 
Mexico does not agree that the Settlement Agreement violates any law, 
compact or decree. With respect to one issue raised by Arizona, Section 
303(g) of the legislation provides Congressional authorization of the 
use of upper basin water in the lower basin in New Mexico. The 
legislation also specifies that the water used by the project in New 
Mexico will be part of New Mexico's Upper Basin apportionment. New 
Mexico is willing to recommend to our congressional delegation that 
Section 303(g) be amended to state:

          (g) Colorado River Compacts.--Notwithstanding any other 
        provision of law, (1) water may be diverted by the Project from 
        the San Juan River in the State of New Mexico for use in the 
        lower basin, as that term is used in the 1922 Colorado River 
        Compact, in New Mexico; and (2) water diverted under paragraph 
        (1) shall be a part of the consumptive use apportionment made 
        to the State of New Mexico by Article III(a) of the Compact.

    Arizona also proposes that the legislation include a generic 
provision that water diverted in the upper basin for use in the lower 
basin must have the same priority date as the Central Arizona Project, 
but that the Navajo-Gallup project would be excluded from that 
requirement. There is no legal basis for Arizona's proposal and it is 
not appropriate or necessary to include Arizona's recommended language 
regarding priority in the legislation.
    Arizona's other comment relating to priority concerns Section 102 
of the legislation which amends Section 11 of the 1962 Act. Section 
102(b) amends the 1962 Act to provide specific guidance to the 
Secretary of the Interior in allocating physical supply shortages out 
of Navajo Reservoir and is consistent with Article IX of the Upper 
Colorado River Basin Compact.
    The remainder of Arizona's comments relate to the potential water 
supply to be allocated for Navajo Nation uses in Arizona. As you are 
aware, New Mexico's Settlement with the Navajo Nation includes a 
pipeline system from Navajo Reservoir to communities within New Mexico 
that also extends to Window Rock, the Navajo Nation capital city 
located in Arizona less than 30 miles from where the pipeline will 
service the City of Gallup in New Mexico. New Mexico's Navajo 
Settlement leaves open the determination of the source of water for 
uses in Arizona.
    Arizona would like to specify that the water supply for uses in 
Window Rock through the Navajo-Gallup pipeline will be the water supply 
identified in Section 104(A)(1)(B)(ii) of the Arizona Water Settlements 
Act. That provision of the AWSA authorizes the Secretary of the 
Interior to retain 6,411 acre-feet of water, out of a pool of 67,300 
acre-feet of Central Arizona Project ``agricultural priority water'', 
as that term is defined in the Gila River settlement agreement, for a 
future water rights settlement agreement with the Navajo Nation in 
Arizona. To my knowledge, there is currently no agreement among parties 
in Arizona regarding this issue, and therefore, it would be premature, 
at best, to specify a particular supply of water for the Window Rock 
uses until an agreement is reached within Arizona.
    In addition, even if an agreement among parties in Arizona existed, 
accounting for diversion of Central Arizona Project water from of an 
upper basin tributary would have to be agreed to by all basin states. 
It would not be appropriate to pre-determine this issue through New 
Mexico's Navajo Settlement legislation without the agreement of the 
other basin states and discussion with the Department of Interior.
    New Mexico hopes that this explanation will provide the basis under 
which Arizona can fully support New Mexico's settlement with the Navajo 
Nation. Please contact me if you have any questions.
    Sincerely,
                                     John R. D'Antonio, Jr.
                                                    State Engineer.

    The Chairman. Thank you very much.
    Representative Lundstrom, we're very glad to have you here.

 STATEMENT OF PATRICIA A. LUNDSTROM, MEMBER OF THE NEW MEXICO 
HOUSE OF REPRESENTATIVES AND EXECUTIVE DIRECTOR, NORTHWEST NEW 
           MEXICO COUNCIL OF GOVERNMENTS, GALLUP, NM

    Ms. Lundstrom. Thank you, and good afternoon Chairman 
Bingaman, and Ranking Member Senator Domenici. It's very good 
to see both of you today.
    As you know, I'm Patty Lundstrom and I'm the Executive 
Director of the Northwest New Mexico Council of Governments and 
that's been since 1985. I'm currently serving the fourth term 
in the New Mexico House of Representatives. Senators, with me 
today are Gallup Mayor pro tem, Bill Nechero and Gallup City 
Counselor Jay Azua, as well as our COG Deputy Director Jeff 
Kiely.
    Senators, I'd like to thank you for inviting me to 
participate in this historic hearing today.
    I come before you to speak in favor of Senate Bill 1171. 
This legislation is the essential instrument for authorizing 
and financing the Rural Water Project we have been working on 
for decades. We have known it as the Navajo Gallup Water Supply 
Project. Since 1991, I have served as chair of the Steering 
Committee for this project. The need for the project has been 
known to Congress and the Department of Interior for over 50 
years. Scientific studies have made it clear that the only hope 
for sustainable water supply for eastern Navajo land and Gallup 
lies in a surface water supply from the San Juan River.
    After years of work, through a minefield of legal, 
technical, political, environmental, and financial issues, we 
are finally at the point of bringing to you our plan for 
getting this water supply conveyed to this parched region. The 
Federal Government, through the involvement and support of the 
Congress, the Bureau of Reclamation and Indian Affairs, and the 
Fish and Wildlife Service, has been an active and constructive 
part of this consensus plan.
    The Steering Committee has been a unified working group 
with participation by State and Federal agencies, the Navajo 
and Jicarilla-Apache Nations, the city of Gallup, and technical 
partners in the process. In my 22 years as COG Director, this 
has been the most ambitious and complex project I've seen in 
our region. It has also invoked the highest levels of 
cooperation, professionalism, and commitment by the individuals 
and agencies involved.
    The needs for the project are clear. Many Navajo 
reservation households have never had a public water system. 
The Navajo economy already struggles well below poverty. It 
stands no chance of development without a sustainable public 
water supply for its communities. The Jicarilla-Apache Nation 
has a water rights settlement, but needs economic development 
in order to tap the fullness of these rights, as well as a way 
to obtain a water supply from the river. The city of Gallup's 
water table is dropping 20 feet a year and the city will face 
peak use shortages within 5 years and chronic shortages within 
15 years.
    Since I work closely with Gallup in both my public service 
roles, I will briefly outline Gallup's role in the project. 
Gallup is a transportation hub for the southwest and a major 
commercial center for the Navajo reservation. Within a few 
decades Navajos will likely make up one-half of Gallup's 
population. The partnership between Gallup and the Navajo 
Nation on this project has been remarkable. The Gallup regional 
water system, at the back-end of the Navajo-Gallup pipeline, is 
now under development in full cooperation with the Navajo 
Nation and the State of New Mexico.
    Under this system, city infrastructure will be used to 
convey water to neighboring Navajo communities, both now and 
the future when the rural water supply project is complete. The 
State has committed over $9 million to this regional system. 
Gallup also supported the State's commitment of over $15 
million in funding for the regional water infrastructure on the 
east side of the project area, which is, will ultimately tie 
into the Cutter reservoir. These regional system partnerships 
have generated broad commitment to the motto, ``Real water to 
real people in real time.''
    Since shortages are likely in Gallup, even before the 
project is completed, Gallup has proactively worked to secure 
its water future in both the short and long-term. It has 
adopted an aggressive water rate structure to spur conservation 
and to finance local water infrastructure and new water 
supplies. It has started developing a waste water reuse system 
using reverse osmosis technology. It is working to develop new 
ground water sources previously used by extractive industries 
and has worked on cooperative agreements with Navajo and 
Jicarilla to ensure a water source for the city's participation 
in the rural water supply project.
    The city of Gallup stands in support of this legislation. 
The city concurs, in particular, with the concept of a 75 
percent Federal cost share for the city's portion of project 
costs as reflected in Senate bill 1171. The affordability for 
the city is affected by a number of unique factors, most 
predominantly its commercial hub status for a broad rural area 
and the existence of pockets of high poverty, both within and 
outside the city. The city will need a water supply for its 
share of the project and the city is dependent on the project's 
two Indian tribes or alternatively, the Secretary of Interior 
for that supply. The city's purchase of its own water rights in 
the San Juan River would be high in cost, high in controversy, 
and low in feasibility at this point.
    Overall, this legislation represents a perfect storm of 
opportunity for the Federal Government to join forces with its 
State and local partners, to meet the critical water needs of 
this region of New Mexico, while settling the Navajo Nation's 
water rights claims. The project is essential to the economic 
viability of northwestern New Mexico.
    On behalf of the Steering Committee, the Council of 
Governments, and the New Mexico State Legislature, I urge your 
support for Senate bill 1171. The estimated costs for this 
legislation are high, but the State and the project partners 
are totally committed to getting this done with your help. We 
dare not delay any longer in meeting the human and economic 
needs represented in this initiative. For our Steering 
Committee, this worthy cause has been on our watch for a couple 
of decades and we hope, now that it's on your watch as well, 
that you will not let this opportunity fail.
    Thank you for your timely and favorable consideration. 
Thank you, Senators.
    [The prepared statement of Ms. Lundstrom follows:]
 Prepared Statement of Patricia A. Lundstrom, Member of the New Mexico 
 House of Representatives and Executive Director, Northwest New Mexico 
                   Council of Governments, Gallup, NM
    Mr. Chairman and Members of the Committee, I am Patricia Lundstrom, 
member of the New Mexico House of Representatives in my fourth term 
serving House District 9, and Executive Director of the Northwest New 
Mexico Council of Governments since 1985.
    State House District 9 encompasses about 3,000 square miles in 
northwestern New Mexico, including the western portion of the City of 
Gallup and 9 rural Navajo communities lying within McKinley and San 
Juan Counties. Navajos comprise about two-thirds of the population of 
this District.
    The Northwest New Mexico COG is the regional planning agency 
designated by the State of New Mexico and the Federal government to 
serve the State's three counties of the Four Corners region: Cibola, 
McKinley and San Juan Counties. This is about 15,000 square miles of 
high desert territory, including large reservation areas for four 
Indian tribes and a population of about 225,000 people residing in 6 
municipalities and 77 rural communities. About one-half of the land 
base and one-half of the population are Native American.
    I want to thank you for inviting me to participate in this historic 
hearing today.
    I come before you to speak in favor of the proposed Settlement of 
Navajo Nation water rights in the San Juan River and the other 
associated titles included in Senate Bill 1171. My primary interest in 
this bill and in the Settlement is that this legislation is an 
essential instrument for authorizing and financing the proposed rural 
water infrastructure project we have been working on for decades. We 
have known it as the Navajo-Gallup Water Supply Project, and in the 
context of this bill it is titled the Northwestern New Mexico Rural 
Water Supply Project.
    Since 1991, I have served as Chair of the Intergovernmental 
Steering Committee for the Navajo-Gallup Water Supply Project. This 
project is the flagship of the proposed water rights Settlement, as it 
plans to construct primary water pipelines to deliver water from the 
San Juan River to rural Navajo communities in northwestern New Mexico, 
to the southwestern portion of the Jicarilla Apache Nation, and to the 
City of Gallup.
    During these past 16 years, I have seen the Navajo-Gallup project 
revived from its prior stalemate condition and, with the consistent 
leadership and support of Senators Bingaman and Domenici, I have seen 
it sustained as a planning initiative to the present day through a 
minefield of legal, technical, bureaucratic, political, financial and 
environmental issues.
    The Steering Committee has been the primary nexus and forum in 
which these issues have been addressed and resolved by a persevering 
coalition of partners, including:

   The Navajo Nation, with representatives from the Nation's 
        Natural Resources Division, Division of Justice, President's 
        Office, and Water Rights Commission;
   The Jicarilla Apache Nation, with staff and policy 
        representation from the Nation's Water Rights Commission and 
        from the Office of the President;
   The City of Gallup, which serves as a project beneficiary 
        (for 20% of the project's eventual capacity) and as a hub 
        distribution system for the project's water supply at its 
        southern end, to water users not only within the City limits 
        but also in a number of neighboring Navajo communities;
   The State of New Mexico, primarily through its State 
        Engineer's Office and the Interstate Stream Commission; the 
        State is a party to the interstate compacts affecting the 
        Colorado River and its tributaries, as well as to a negotiated 
        settlement of the Navajo Nation's water rights in the San Juan 
        River, and (through its Legislature) the State is a major 
        contributor to infrastructure improvements in support of the 
        overall Navajo-Gallup Water Supply Project;
   The Bureau of Reclamation, which serves as federal lead for 
        the project out of its Western Colorado Area Office; and
   The Bureau of Indian Affairs, which is federal administrator 
        of the Navajo Indian Irrigation Project, and which has a 
        substantial role with regard to real properties and rights-of-
        way affected by the project;
   The Navajo Tribal Utility Authority, the Navajo Nation's 
        utility enterprise that operates all of the public water 
        systems on the Navajo Reservation;
   The Navajo Area Indian Health Service, a division of the 
        Public Health Service in the U.S. Department of Health & Human 
        Services, which is responsible for planning and constructing 
        water facilities in service to Navajo communities; and
   The Northwest New Mexico Council of Governments, a federal- 
        and state-designated regional planning agency which chairs the 
        Steering Committee.

    In addition to these Steering Committee groups, we have enjoyed the 
professionalism and cooperation of two agencies in particular that have 
also contributed greatly to the success of our planning efforts thus 
far:

   The Upper Colorado River Commission has worked thoughtfully 
        and cooperatively with the State of New Mexico and the Navajo 
        Nation in accommodating the unique needs and configurations of 
        this project. In particular, in 2003 the Commission resolved to 
        support and consent to diverting water from the Upper to the 
        Lower Basin of the Colorado River for the purposes of the 
        Navajo-Gallup project, and it certified its support for ``such 
        Congressional action as may be necessary to authorize the 
        Navajo-Gallup Water Supply Project.''
   The United States Fish and Wildlife Service worked 
        cooperatively with all parties to complete appropriate planning 
        studies in the San Juan River that would identify the 
        depletions from the river that could be made without negatively 
        impacting the recovery of endangered species of fish in the 
        river.

    This project is the most ambitious and complex of the many local 
and regional initiatives I have been a part of for over two decades. It 
has also evoked the highest levels of cooperation, professionalism and 
commitment by a group of agencies and individuals that I have ever 
seen. My Council of Governments staff and I have been working on this 
project continuously since the early 1990s, and there have been many 
other individuals from all the participating agencies who have worked 
with us on it for years at a time. For all of us, this is not just 
``any project''; it's personal. Getting it done makes so much sense, at 
so many levels, that we are all committed to it for the long-haul.
    Since the late 1950s, State and Federal officials have concurred 
with the Southwest region's top hydrologists that the only hope for 
long-term sustainable water supply for the eastern Navajo Reservation 
and for the City of Gallup lies in the surface water supply provided by 
the San Juan River. The San Juan is a tributary to the Colorado River, 
originating in the mountains of southwestern Colorado, flowing through 
a portion of northwestern New Mexico, and proceeding to join the 
Colorado River at Lake Powell in southern Utah and northern Arizona. 
Through allocations confirmed in the hydrologic determination recently 
approved by Interior Secretary Kempthorne, the San Juan River provides 
about 40% of New Mexico's surface water supply. The Navajo-Gallup 
project would divert nearly 38,000 acre-feet of water from the river, 
or about 5\1/2\ percent of New Mexico's river allocation.
    The needs for the Navajo-Gallup Water Supply Project are clear and 
evident:

   For the Navajo Nation, there is a significant population of 
        Navajo people in the northwestern New Mexico service area who 
        do not have, and have never had, a public water system. To this 
        day, nearly 40% of Navajo families in the service area still 
        haul water to meet basic household and livelihood needs. It is 
        also clear that the Navajo economy, already struggling well 
        below the poverty line, stands no chance of development without 
        the provision of water as the most basic of all human needs.
   For the Jicarilla Apache Nation, there is already in place a 
        settlement agreement under which this neighboring tribal 
        community has secured water rights, but for which significant 
        economic and infrastructure development is needed in order to 
        tap the fullness of these rights.
   For the City of Gallup, the water table is dropping 200 feet 
        every ten years, and the City will be facing peak-use shortages 
        within five years and chronic shortages within fifteen years.

    To focus further on the needs of the City of Gallup: Gallup serves 
as a multimodal transportation portal for the Southwest and a major 
commercial center for the Navajo Reservation. As such, it is as much a 
``home'' and integral part of Navajo life as most other places in the 
region. Within a few decades, we expect that Navajos will make up over 
50 percent of Gallup's population. Despite a checkered history of 
relationships between Gallup and the Navajo people, with some residue 
of tension and mistrust even today, the partnership that has been 
forged between Gallup and the Navajo Nation in the context of this 
project has been remarkable. I foresee only further progress in this 
relationship as this project moves forward.
    It is important to note that, in my 16 years with the Steering 
Committee, at no point has the City of Gallup attempted to insert its 
needs and priorities in front of those of the Navajo Nation. Rather, it 
has been a supporting partner, ensuring that its participation is 
mutually beneficial to the City and to its Navajo neighbors.
    As an example of this partnership, there has been a joint effort to 
provide municipal water supply to Navajo households bordering the City 
of Gallup on its east side. Past bureaucratic barriers to this service 
have been erased, and by this summer's end, those Navajo families will 
have running water for the first time.
    Another example is the multilateral partnership between the City, 
the State of the New Mexico, the Navajo Nation, the Indian Health 
Service and the Navajo Tribal Utility Authority to finance and build 
components of the Gallup regional water system, with the specific 
objective of moving water through the City's system to the neighboring 
Navajo communities adjacent to the City. The State has committed over 
$9 million to this initiative, which is being developed in accordance 
with the plans of the Northwestern New Mexico Rural Water Supply 
Project.
    The Navajo-Gallup partnership was further extended when the City 
concurred with the request by the Navajo Nation, the Governor's office 
and other agencies for State funding in support of urgently needed 
water infrastructure serving five rural communities in the northeastern 
sector of the Navajo-Gallup project service area. Over $15 million has 
now been committed by the State to what is referred to as the ``Cutter 
Lateral'' project, since this infrastructure will ultimately tie into 
and be served by the pipeline to be built under the Northwestern New 
Mexico Rural Water Supply Project.
    These regional system partnerships have generated broad commitment 
to the motto: ``Real water to real people in real time.''
    Realizing the shortages that are likely prior to the advent of 
surface water into the City's water supply, the City of Gallup has also 
risen to the challenge of the region's impending water crisis by 
exploring and implementing various initiatives to secure its water 
future--both leading up to and in conjunction with the completion of 
the Northwestern New Mexico Rural Water Supply Project.

   In 2003, the City sponsored a Town Hall on Water, co-
        facilitated by the public policy group New Mexico First, at 
        which participants adopted a consensus plan to establish Gallup 
        as a model town in the American West in terms of its commitment 
        to secure its water future and cooperate with its neighbors in 
        the ``water commons'' shared by all residents in the region.
   Emerging from the Town Hall was the formation the Gallup 
        Water Board, which assisted the City Council in the radical 
        revision of the City's water rate structure in support of 
        conservation and the generation of local financing for water 
        infrastructure and future water supply.
   Another initiative was a partnership with the Bureau of 
        Reclamation to study the feasibility of implementing a 
        comprehensive wastewater recycling program utilizing reverse 
        osmosis technology.
   Yet further, Gallup has pursued a permit to develop water 
        supply in water fields east of the City formerly owned and 
        developed by extractive industries.
   Finally, a Memorandum of Understanding is in its final draft 
        stages between the City, the Navajo Nation and the Jicarilla 
        Apache Nation, by which the parties will commit to ensure that 
        the City is afforded legal access to a share of the water to be 
        supplied by the Navajo-Gallup project.

    Within the overall scenario of the Navajo-Gallup project, the City 
of Gallup remains in full support of the project and of the water 
rights settlement which is its primary facilitating instrument. At the 
same time, the City is concerned about the cost of its participation in 
the project.
    The Economics analysis contained in the project's Planning Report 
and Draft Environment Impact Statement suggests that the City's ability 
to pay is fairly close to the threshold formula applied by the federal 
government in terms of median household income. The somewhat misleading 
conclusion that might be derived is that the City can afford to self-
fund its share of the project.
    A number of factors mitigate against such a conclusion:

   Gallup's status as a hub commercial center for a broad 
        geographic area results in a unique pattern of impact on the 
        City's infrastructure. Although the current municipal 
        population is about 22,000, the number of people moving around 
        and doing business within the City may soar to between 70,000 
        and 100,000 people--especially on weekends and on ceremonial 
        occasions. It is essential to understand that Gallup serves a 
        broader service area than its municipal boundaries would 
        indicate. Over 80 percent of the students in Gallup schools are 
        Navajo. The Gallup Indian Medical Center serves the regional 
        Native American population. Due to the lack of water service on 
        the Reservation, area residents regularly use City laundry, car 
        wash and other facilities that increase the demand for water. 
        Higher rates resulting from the City's cost for participating 
        in the new water supply project will be passed on to the low-
        income residents in the broader regional community, thus 
        affecting the overall ``affordability'' of the project.
   Although the influx of visitors generates a 
        disproportionately high level of gross receipts tax revenues in 
        the City, the City and surrounding County are severely limited 
        in the development of property tax revenues, and the City is 
        virtually land-locked by public, non-taxable lands on all 
        sides, for which compensation by such funds as Payment in Lieu 
        of Taxes (PILT) is only a fraction of the revenue shortfalls 
        actually occurring.
   Although Gallup's median household income is shown in the 
        Economics report as only a shade or two below the 
        ``affordability level'' of the project, yet this income figure 
        is deceptive as well, since there is a large gap between the 
        minority of well-to-do households and the majority of low and 
        moderate-income households in the City. Not surprisingly, two-
        thirds of the City's residential water revenues come from the 
        population group utilizing the lowest quantities of water, that 
        is, fewer than 6,000 gallons per month. These lower water users 
        are predominantly the City's lowest-income households. The 
        City's inverted water rate structure provides some cost 
        protections for these lower users, but these may be 
        insufficient to keep rates within the affordable range for this 
        population.
   The Economics analysis in the Final Report does not take 
        into account the need for replacing aging infrastructure. Even 
        with Gallup's new progressive water rate structure and at 
        maximum bonding capacity, the City's funds are insufficient to 
        meet even current operations, maintenance and replacement 
        costs, much less to develop new infrastructure or participate 
        in a new water supply initiative.
   The City's stake with respect to the Settlement of the 
        Navajo Nation's water rights in the San Juan River is clearly 
        secondary to that of the Nation, the State of New Mexico and 
        the Federal government. With respect to accessing a legal water 
        supply, the City is essentially at the mercy of the two Indian 
        tribes involved in the project. The City's pursuit of the 
        independent purchase of water rights in the San Juan River 
        would be high in cost, high in controversy and low in 
        feasibility at this point.
   It is the City's position, therefore, that it will need a 
        high level of Federal funding support for its share of the 
        project costs.

    All in all, the Northwestern New Mexico Rural Water Supply Project 
represents a ``perfect storm'' of opportunity for the Federal 
government to meet the critical water needs of the people in this 
region of New Mexico, while settling the water rights claims of the 
Navajo Nation as an essential component of the overall initiative. The 
project's promise of ``real water to real people in real time'' forms a 
primary basis for the economic viability of the northwestern quadrant 
of New Mexico.
    The Steering Committee for this longstanding and critical project 
effort, along with the institutions I represent--the Northwest New 
Mexico Council of Governments and the New Mexico State Legislature--
urge your support for Senate Bill 1171, and by implication, for 
authorization of the Northwestern New Mexico Rural Water Supply 
Project. I acknowledge that the projected costs for this project are 
high, but we dare not delay any longer in meeting the human and 
economic needs represented in this initiative.
    For our Steering Committee, this worthy cause has been on our watch 
for a couple of decades, and we hope--now that it's on your watch as 
well--that you will not let this opportunity fail.
    Thank you for your most favorable and timely consideration of 
Senate Bill 1171.

    The Chairman. Thank you very much.
    Mr. Sanchez, you're the cleanup hitter here, go right 
ahead.

  STATEMENT OF MARK SANCHEZ, EXECUTIVE DIRECTOR, ALBUQUERQUE 
   BERNALILLO COUNTY WATER UTILITY AUTHORITY, ALBUQUERQUE, NM

    Mr. Sanchez. Thank you, Senator Bingaman, Ranking Member 
Senator Domenici. My name is Mark Sanchez. I'm the Executive 
Director of the Albuquerque Bernalillo County Water Utility 
Authority, which provides water and waste water service to the 
Albuquerque metropolitan area. The Authority is successor in 
interest to the city of Albuquerque's rights to the San Juan-
Chama Project, authorized in Public Law 87-483. I stand before 
you today to clearly support settling the Navajo claims and 
strongly to endorse the need for providing drinking water under 
the Navajo-Gallup Water Supply Project.
    My testimony today is focused on the impact of the 
settlement, on the long-term availability of water from the San 
Juan-Chama Project, which diverts water from southern Colorado 
into New Mexico by way of the San Juan River in Rio Chama. 
Specifically, I'd like to provide some background on the 
project and explain why it's so critical to our future and 
share some concerns and recommendations on Senate bill 1171.
    First some background on the project. The city signed a 
contract for 48,200 acre-feet of San Juan-Chama water in 1965, 
which Senator Domenici, I'm sure, recalls. To date, we have 
invested more than $50 million for the San Juan-Chama water and 
will continue to make payments until 2020. At the time the 
contract was signed, the surface was intended to offset impacts 
of using ground water. The belief was that the San Juan-Chama 
water being diverted into the Rio Grande would continually 
recharge Albuquerque's aquifer, thereby ensuring adequate 
ground water supplies in perpetuity.
    However, in 1994 USGS published a report that completely 
changed our understanding and thinking about the aquifer. The 
recharge effect was not occurring as we had believed and the 
conclusion was that sole reliance on the aquifer would lead to 
its eventual depletion and wide-spread land surface subsidence.
    In 1995, the city immediately began a water conservation 
program and began looking at alternatives to ground water. The 
solution was to use surface water from the San Juan-Chama 
project as our new drinking water source and we have since 
undertaken a $450 million locally funded effort to make that a 
reality.
    This effort, which we call the San Juan-Chama Drinking 
Water Project, includes a new diversion dam, pump station on 
the Rio Grande, state-of-the-art water treatment plant, 46 
miles of raw water and transmission pipelines to enscrate the 
surface water into the existing water system. The project will 
come online in 2008 and will represent 90 percent of our 
drinking water supply. It will be our primary water source well 
into the future. From a population perspective, San Juan-Chama 
water will meet the demands of almost 40 percent of the State 
of New Mexico in the Rio Grande valley.
    It is critical that these interests are protected in the 
settlement. The authority does have some very specific comments 
and recommendations about the legislation. I have provided 
detailed discussion of these for inclusion in the record. I 
will attempt to briefly summarize our major concerns and 
recommendations for the committee.
    The Chairman. Why don't you do that very briefly, since 
we're about halfway through a vote and we're going to have to 
take another short recess.
    Mr. Sanchez. Very quickly, Senator.
    First on the issue of shortages, how they are portioned and 
calculated is of critical importance. In our opinion the 
legislation remains unclear on this point. The authority has 
commissioned and independent hydrological analysis of the 
settlement impacts and we look forward to providing that to all 
the parties.
    Second on the role of the State, the legislation includes 
language that allows the State of New Mexico to reduce the 
amount of water for the Navajo reservoir contractors in the San 
Juan-Chama project. We believe this should either be deleted or 
substantially clarified.
    Last, on the Bureau of Reclamation, they have produced many 
hydrologic analysis of water supply. It's unclear how much 
water will be available. It should also be noted that the 
Bureau is not operating the San Juan-Chama project to its 
maximum efficiency. Our view is that if that efficiency was 
increased, the impacts of shortages in the future would be 
minimal.
    In the interest of time, Mr. Chairman, I'll conclude my 
remarks.
    [The prepared statement of Mr. Sanchez follows:]
  Prepared Statement of Mark Sanchez, Executive Director, Albuquerque 
       Bernalillo County Water Utility Authority, Albuquerque, NM
    Mr. Chairman and members of the committee, my name is Mark Sanchez. 
I am the executive director of the Albuquerque Bernalillo County Water 
Utility Authority (the Authority). The Authority was created by the New 
Mexico State Legislature in 2003 as a partnership between the City of 
Albuquerque (the City) and Bernalillo County. The Authority is the 
successor in interest to the City for rights to the San Juan-Chama 
project which was authorized in Public Law 87-483.
    The Authority would like to thank the Committee for the opportunity 
to testify on Senate Bill 1171 and specifically the leadership of 
Chairman Senator Bingaman and Senator Domenici on this important 
settlement and legislation. We also would also like to recognize the 
State of New Mexico, the Navajo Nation and others who have worked very 
hard on negotiating this settlement.
    We understand that S. 1171 settles the Navajo Nation's water rights 
claims on the San Juan River in New Mexico in addition to providing 
water supplies for the Navajo-Gallup water supply project. The 
Authority supports settling the Navajo claims and strongly endorses the 
provision of drinking water under the Navajo-Gallup water supply 
project. We understand that resolving the Navajo's claims reduces the 
risk from potentially larger claims which could and most likely would 
affect the available water supply in the San Juan River for non-Indian 
uses.
    My testimony today is focused on the impacts of the settlement on 
the long-term availability of water from the San Juan-Chama project, 
which diverts water from southern Colorado into New Mexico by way of 
the San Juan River and the Rio Chama. The San Juan-Chama project was 
authorized in Public Law 87-483 along with the Navajo Indian Irrigation 
Project (N.I.I.P.). Specifically, I'll be providing some background on 
our involvement with the project and why it is so critical to our 
community. I will also be making you aware of the Authority's concerns 
about certain sections of the legislation as it is written. I wish to 
make it clear that we are committed to continue working with our 
Congressional delegation, the State, and the Navajo Nation in 
addressing our concerns and recommendations to preserve and protect the 
San Juan-Chama project.
 background on albuquerque's involvement in the san juan-chama project
    A conceptual framework for importing Colorado water into the Rio 
Grande basin from the San Juan River into the Rio Chama (hence San 
Juan-Chama) was developed in the technical documentation for dividing 
the waters of the Rio Grande in 1928. The Bureau of Reclamation at that 
time recognized that the City of Albuquerque was going to need 
additional supplies in the future and conceptually designed a couple of 
options for importing the water.
    The legislative history for the San Juan-Chama project clearly 
shows that the City was the primary beneficiary of the project. The 
water was needed because the Albuquerque was not specifically provided 
any native water supplies under the Rio Grande Compact. In 1963, the 
City signed the first contract for an annual amount of 53,200 acre-feet 
of San Juan-Chama water that was reduced in a contract amendment in 
1965 to 48,200 acre-feet per year.
    Under the City's and now the Authority's contract, we are required 
to fully repay the United States all the costs for municipal and 
industrial supplies apportioned under the San Juan-Chama project, 
including interest during construction. We are also required to pay our 
proportional share of the operation and maintenance costs for the 
project on an annual basis. To date, we have invested more than $50 
million for San Juan-Chama water and will continue to make payments 
until 2020.
              albuquerque's need for san juan-chama water
    In the early 1960s, the technical understanding in the Middle Rio 
Grande region was that the aquifer was a limitless resource that would 
meet the needs of the City in perpetuity. The City was required to 
provide surface water supplies to offset the impacts of using ground 
water and signed the contract for San Juan-Chama water to provide that 
offset.
    In 1994, the United States Geological Survey published a report 
that completely changed our understanding of the aquifer, the 
relationship between the Rio Grande and the aquifer, and which 
concluded that sole reliance on the aquifer will lead to widespread 
land surface subsidence.
    The City's response was almost immediate. In 1995, the City 
immediately began a water conservation program and began looking at 
alternatives for providing a sustainable supply. In 1997, the City 
Council adopted a new strategy to use San Juan-Chama water as a 
drinking water source. Since 1997, we have been working toward using 
surface water from the San Juan-Chama project as a drinking water 
source. The $450 million San Juan-Chama Drinking Water Project will 
come on-line in 2008 and will represent 90% of our supply at that point 
and will be our primary source of supply well into the future. The 
Drinking Water Project includes a new diversion on the Rio Grande, a 
state-of-the-art water treatment plant, and 46 miles of raw water and 
transmission pipelines to integrate the surface water into the existing 
water system.
                    other san juan-chama contractors
    The Authority's customers are not the only ones relying on San 
Juan-Chama water. In addition to Authority, there are more than fifteen 
San Juan-Chama contractors, including the City of Santa Fe and the City 
of Espanola, that are planning and developing direct diversion and use 
of San Juan-Chama water. From a population perspective, San Juan-Chama 
water will meet the demands of more than one-third of the State of New 
Mexico in the Rio Grande Valley. It is critical that these interests in 
the Rio Grande are protected in this settlement.
               authorizing legislation--public law 87-483
    Under Section 11 on the authorizing legislation, the San Juan-Chama 
project and the N.I.I.P. project and other contracts entered into for 
delivery from the Navajo Reservoir were required to share in the 
available supply in any year in which the Secretary anticipated a 
shortage.
    Specifically, the Secretary was required to determine that 
sufficient water to fulfill said contract is likely to be available and 
also the following:
    Section 11, (a), paragraph 2:

          The Secretary shall not enter into contracts for a total 
        amount of water beyond that which, in his judgment, in the 
        event of shortage, will result in a reasonable amount being 
        available for the diversion requirements for the Navajo Indian 
        irrigation project and the initial stage of the San Juan-Chama 
        project as specified in sections 2 and 8 of this Act.

    The April 2007 Hydrologic Determination was signed by Secretary of 
Interior, Dirk Kempthorne on May 23, 2007, fulfilling the obligation to 
determine that sufficient water is likely to be available for the 
settlement. However, the second requirement specifically relates to the 
sharing of shortages and the water supply that would be available to 
both the N.I.I.P. and the San Juan-Chama project. To date, we have not 
reached an understanding with the Bureau of Reclamation or the State of 
New Mexico regarding a determination about the water that could be 
available to the San Juan-Chama project during a shortage and how new 
contracts could affect the water supply.
    In the Section 8 of the authorizing legislation, Congress imposed 
several operational conditions for operating the San Juan-Chama 
project. Under paragraph (a) the project diversions are limited to 1.35 
million acre-feet in any ten year period and the maximum diversion in 
one year is 270,000 acre-feet. Paragraph (b) states that the project 
shall not cause injury, impairment, or depletion of existing or future 
beneficial uses of water within the State of Colorado. Under paragraph 
(b), each of the three diversions in Colorado have monthly bypass flow 
requirements which provide for passing water to downstream users in 
Colorado for uses in Colorado under the Upper Colorado River Basin 
compact.
                   hydrologic analysis of settlement
    The Authority has hired a consultant to complete an independent 
hydrologic analysis of the impacts of the Settlement on the San Juan-
Chama project as it relates to the frequency and extent of shortages. 
The Authority anticipates completion of the hydrologic analysis within 
the next few weeks and would like to share that information with 
interested parties at that time. There may be changes to the 
legislation which may affect our hydrologic analysis so we reserve the 
right to provide additional feedback during this process.
                      specific comments on s. 1171
Section 101--Navajo Reservoir Water Bank
    The creation and utilization of excess capacity in the Navajo 
Reservoir provides flexibility for users in the San Juan basin 
specifically downstream of the reservoir. It is unclear what water 
qualifies to be placed in the water bank and more importantly how that 
water is to be administered to prevent unintended consequences of 
reducing the ability to store native water in the Navajo Reservoir. 
Although the legislation states that the water bank shall be operated 
in a manner that ``does not impair the ability of the Secretary of the 
Interior to deliver water under contracts entered into under Public Law 
87-483,'' more specific language should be developed to address what 
impairment means. Does impairment mean that water that could be stored 
in the reservoir is lost because there is no capacity to store it? 
Although the water stored in the water bank is not subject to shortages 
or releases to meet environmental needs, could this banked water be 
used to exchange for offsetting implementation of shortages?
Section 102--Amendments to Public Law 87-483
    Section 102(a)(2)(b)(1)--the legislation provides for a maximum 
diversion right over a ten year period for the Navajo Indian Irrigation 
Project to be the lesser of 508,000 acre-feet per year or the quantity 
of water necessary to supply an average depletion of 270,000 acre-feet 
per year. Although these figures were the subject of intense 
negotiations, it seems that because there are two different figures 
that an effort to clarify how these are to be used or what they 
represent should be specified so as to avoid future misinterpretation.
    Section 102(a)(2)(b)(2)--this provision allows an increase of 
diversion, but does the 270,000 acre-feet of depletions still apply? It 
is unclear whether this provision allows for increases in consecutive 
years or just one year in a ten year period. If a shortage was declared 
for two years in a row, would increased diversions be allowed in the 
following years to make up the difference? We suggest adding language 
that this increase in diversion not be allowed in any year where the 
Secretary determines that the increase may increase the likelihood of a 
shortage in subsequent years.
    Section 102(a)(2)(d)--the language in this section does not appear 
to limit the use of Navajo Indian Irrigation Project water to New 
Mexico. As the water for the settlement is from New Mexico's 
apportionment of Upper Colorado River water, any use of the water 
should be limited exclusively in New Mexico. We suggest the addition of 
a provision limiting the uses to New Mexico.
Section 102(b)--Runoff Above Navajo Dam
    It appears that this section was intended to clarify the language 
in the original legislation, but the original language is left in the 
bill, which may lead to some confusion. Also, the additions that are 
provided in the section don't necessarily clarify how shortages are to 
be determined or apportioned. One of the Authority's primary concerns 
regarding this settlement is the potential for increases in shortages 
and who participates in the available supply when shortages are shared. 
The Authority would like to work with everyone involved to develop 
language that clarifies who participates in the available supply, how 
shortages are to be calculated, and specifically limiting the ability 
to add more shortage partners in the future.
    Section 102(b)(d)(1)--the term ``normal'' diversion requirements is 
used in describing the method of apportionment of water. It is not 
clear in the paragraphs following what ``normal'' diversion 
requirements mean except for the San Juan-Chama project, which provides 
a definite figure.
    Section 102(b)(d)(1)(A)--it is not clear who ``contractors'' are in 
this section and it appears that the language should clarify that the 
diversion requirement is either the normal diversion requirement or in 
accordance with cropping plans prepared, whichever is lower.
    Section 102(b)(d)(1)(B)--if we know who and what the water delivery 
contracts are, they should be specified in the legislation rather than 
referred to in general language so as to avoid confusion in the future 
and to provide certainty for those contracts that are part of the 
sharing of shortages.
    Section 102(b)(d)(3)--this new language allows the State to 
arbitrarily reduce the amount of water for Navajo contractors and the 
San Juan-Chama project to meet the Upper Colorado River Basin Compacts. 
The State of New Mexico has stated on a number of occasions that they 
have the ability to limit diversions under State law to meet compact 
requirements. In addition, this provision is unconstitutional because 
this provides the state the opportunity to avoid priority 
administration by arbitrarily deciding to reduce diversions by only 
some entities and not others. The Navajo Reservoir and San Juan-Chama 
contractors are not the only uses of the basin and should not be 
singled out to meet compact obligations nor pay the price for over-
diversions by others. This language does not appear in the Jicarilla 
water rights settlement nor any other settlement and does not belong in 
this legislation. It should be deleted.
    Section 102(b)(e)(1)--this language attempts to prioritize how 
shortages are allocated, but could also be read to say that this is the 
order in which entities get water. This should be clarified to meet the 
intent that Arizona, aquifer storage and recovery, etc., are the lowest 
priorities.
    Section 102(b)(e)(3)(g)--this section gives the Secretary the 
ability to revise a shortage, but it is unclear how water is to be 
physically administered. For example, if the early runoff predictions 
are low and a shortage percentage is applied during spring runoff and 
later in the summer months rainfall allows for removing the shortage, 
how can the San Juan-Chama project increase diversion given the bypass 
flow requirements? In other words, the San Juan-Chama project could 
suffer a shortage because of early runoff predictions while others 
don't suffer a shortage when intermittent rainfall allows for increased 
diversion later in the year and San Juan-Chama is not allowed to 
increase diversions due to bypass flow requirements.
    Section 102(b)(e)(3)(h)--the Authority advocates that a sharing-of-
shortage agreement between the parties be developed and approved such 
that the Secretary has specific direction as to how and when to apply 
shortages. This would simplify this difficult situation and would 
provide certainty to all of the parties about how and when shortages 
are to be applied.
Section 303--Delivery and Use of Northwestern New Mexico Rural Water 
        Supply Project Water
    Section 303(b)(3)--the ability to increase allocations is very 
troubling as additional uses from the Navajo Reservoir will obviously 
increase the likelihood of shortages to other contractors including the 
San Juan-Chama project. Why would the new users and contractors for the 
reservoir have the right to increased allocations when other 
contractors do not have the same ability? This should be clarified.
Section 307--San Juan River Irrigation Projects
            Section 307(a)(1) and (2)
    Under Section 11, paragraph (a) of Public Law 87-483, the water 
requirements for the existing Fruitland, Hogback, Cudia and Cambridge 
Indian irrigation was limited to a total amount of irrigation of 11,000 
acres. These two new sections increase that amount to more than 12,200 
acres of land, thereby increasing the amount that is not subject to 
sharing of shortages. We assume that the original language would govern 
the amount for sharing of shortages, but this should be clarified.
Section 401--Agreement
    Section 401--it is unclear whether this legislation defines the 
Navajo Nation's water rights or if there are additional documents that 
supplement their right. If in accordance with Section (a)(1), this 
legislation governs over other agreements, court decrees, etc., then we 
would suggest that this legislation be amended to avoid future 
confusion.
    Section 401(b)(1)(b) and (c)--this is the same comment as previous 
as it relates to how sharing of shortages are to be calculated. Which 
is the correct figure and how is it to be used for determining 
apportionments?
    Section 401(f)(2)(iv)--it is unclear what happens to the agreement, 
sharing of shortages, etc., if the agreement is null and void. If 
titles I and III are void, does that also void the authorization in 
Public Law 87-483? Does the acreage for Fruitland, etc. remain at 
11,000 acres? It seems that clarification is needed to provide 
direction about what happens in the event that titles I and III are 
void.
                          additional comments
          1. In earlier drafts of the legislation, the Authority 
        expressed concerns about protecting the use of San Juan-Chama 
        water in the Rio Grande under Public Law 108-447 (2004). We 
        would like to ensure that nothing in this settlement affects 
        that legislation.
          2. The Authority, other San Juan-Chama contractors and the 
        State of New Mexico have expressed concerns about how 
        efficiently the San Juan-Chama project is being operated. The 
        Secretary of Interior should be directed to efficiently operate 
        the San Juan-Chama project to maximize diversions on the San 
        Juan River that are allowed under Public Law 87-483. The 
        impacts from any future reductions in San Juan-Chama diversions 
        as a result of this settlement could be significantly reduced 
        by requiring the Secretary of Interior to maximize the 
        operations of the San Juan-Chama project. For example, the 
        Bureau of Reclamation UC Regional Director arbitrarily 
        increased the bypass flow requirements for the Little Oso 
        diversion in 1977 which had the effect of reducing firm yield 
        by 400 acre-feet per year. There are other operational issues 
        that affect the project which should be examined and reported 
        to the San Juan-Chama contractors.
          3. The Bureau of Reclamation has produced many different 
        hydrologic analyses of the available water supply for San Juan-
        Chama project diversions. The most recent average annual 
        diversion for the San Juan-Chama project as shown in the 
        Bureau's Hydrologic Determination signed by the Secretary of 
        Interior states that 105,200 acre-feet would be available on an 
        average basis. It is not clear whether the Draft 1999 Hydrology 
        Report to examine the San Juan-Chama Firm Yield used that 
        figure or something higher or lower. It is critical that the 
        hydrology that the Bureau is using on the San Juan river match 
        the figures used by the Bureau in the Rio Grande. This is very 
        important as the State and others are negotiating other Indian 
        and non-Indian water rights settlements based on the 
        availability of the 2,990 acre-feet of uncontracted-for-water. 
        The question is whether the revised hydrology shows whether the 
        2,990 acre-feet is really available or whether that use will 
        cause shortages for other San Juan-Chama contractors.
          4. The two legislative acts, the Settlement Act and Senate 
        1171, are supposed to complement each other as they relate to 
        Navajo water rights. There is differing language between the 
        two Acts as to how available supplies will be calculated and 
        how shortages will be allocated. The two Acts should use the 
        same language or be merged into one Act to avoid discrepancies.

    I would like to thank the members of the Committee for taking the 
time to hear the Authority's input on behalf of the community we serve.

    The Chairman. Thank you very much.
    Thank you all for your excellent testimony. We do have to 
take another short recess because of the ongoing vote and we'll 
be right back to ask a few questions.
    [Recess.]
    The Chairman. OK.
    Again we apologize for another interruption. Let me start 
with State Engineer D'Antonio and ask you to comment on Mr. 
Guenther's testimony. As I understand the position of the State 
of Arizona, it objects to S. 1171 for three reasons. No. 1, the 
Navajo Nation has ongoing litigation with Arizona concerning 
the Colorado River in Arizona and it wants to put off the New 
Mexico settlement until it settles those issues. I believe 
that's the first objection.
    No. 2, Arizona believes its interests are being 
disadvantaged by New Mexico using its full compact entitlement 
to the Colorado River.
    No. 3, as I understand, is that provisions in the bill need 
to be revised to more correctly address inconsistencies with 
the law of the river. I was going to just ask you, John, to 
give us your view on those objections as to whether you take 
issue with those.
    Mr. D'Antonio.  Mr. Chairman, thank you. I do take issue 
with some of the objections brought up by the State of Arizona. 
Know the, I feel that they're unreasonable in that the New 
Mexico settlement, this legislation does not prejudice them in 
any way and neither does New Mexico's use of our Upper Basin 
apportionment. We're using that Upper Basin apportionment in 
the Lower Basin of New Mexico. It's within our State boundaries 
and we think that's something we're entitled to.
    The, you know, the construction, the settlement also would 
authorize the construction of a pipeline to deliver water to 
Window Rock, Arizona, but it doesn't require that. So, and it 
doesn't specify what water should be used. So again, we feel 
like the New Mexico settlement doesn't prejudice Arizona 
regarding how to structure its settlement and really leaves the 
door open for them to be able to do that.
    We feel like we do need to settle our--it's a State issue 
with respect to settling our water rights issues in New Mexico. 
The Arizona issues could take years. We have, you know, half 
of, half or 40 percent of the 80,000 residents on Navajo Nation 
don't have drinking water in New Mexico and it's really urgent 
that we get a jump on this as quickly as we can.
    Senators, I think, you know, I really like your comments 
early on and I think the process that, that the administration 
suggested earlier may be too lengthy for us to kind of follow 
through with the administration's process. You know, if our 
delegation's ready to go with legislation, we're all for it to 
move it along. So, I just think we are, we do have issues with 
all of Arizona's statements.
    We actually, and maybe let me expand a little bit further. 
We did introduce some language in 303 G of the legislation, 
which we felt would specify that the water used by the project 
of New Mexico, again being part of New Mexico's Upper Basin 
apportionment, some of the language that Arizona wanted instead 
would cause problems with other basin States within the seven 
basin arena. So, for those reasons we refute Arizona's 
comments.
    The Chairman. Well, thank you very much.
    We've just been notified they've started another vote, so 
this is not a good day for us as far as this hearing. I think 
I'll just ask one or two more questions quickly and then defer 
to Senator Domenici for his questions. Then we'll conclude the 
hearing before we go vote and submit more questions to you in 
writing.
    But, let me ask Patty Lundstrom, are you confident the city 
of Gallup can afford the 25 percent cost share that is called 
for in this, in this legislation if we are able to pass this 
bill?
    Ms. Lundstrom. Thank you, Mr. Chairman. I believe that the 
city stands behind the 25 percent cost share. We've already 
started to talk about innovative financing and I believe, Mr. 
Chairman and Senator Domenici, between innovative city 
financing and the State of New Mexico's Water Trust Fund and 
our Indian Water Rights Fund that we set up through the New 
Mexico legislature that we'll be able to come up with that cost 
share.
    The Chairman. Let me ask one other question of President 
Shirley, and also Patty Lundstrom. Obviously, one of my 
objectives, I think one of Senator Domenici's objectives from 
the beginning on this was to try to provide some type of 
sustainable water supply for the city of Gallup, in addition to 
meeting the water needs of the Navajo people, which clearly is 
a priority. I know there was recently something in the 
newspaper in Gallup reporting that one of the committees of the 
Navajo Council had rejected a Memorandum of Understanding with 
Gallup and with the Jicarilla Nation that related to this. Are 
we confident that we can work out any disagreements between the 
Navajo Nation and the Jicarillas and the city of Gallup so that 
we don't have problems, if we're able to pass this legislation, 
in getting everyone's water needs addressed?
    President Shirley, did you have a view on that?
    Mr. Shirley.  Certainly Senator Bingaman and Senator Pete 
Domenici. Sir, I'm very confident that we can work things out 
between the Navajo Nation, the city of Gallup and the 
Jicarilla-Apache Nation. I had two honorable legislators from 
the Navajo Nation Council sitting on the, one sitting on the 
Budget and Finance Committee Chairman, Lorenzo Bates. He's here 
with me.
    Mr. Bates. Gentlemen.
    The Chairman. Welcome.
    Mr. Shirley. Then the honorable Mr. George Arthur, who is 
Chairman of the Resources Committee. These are the two 
gentlemen sitting on the Inter-governmental Relations 
Committee. They have redrafted the MOU such that, it's actually 
just calling for a working together to get at a water supply 
for the Gallup, city of Gallup. Working together, like we have 
been, we will get there. I'm very confident.
    The Chairman. Well, we appreciate that reassurance because 
I would certainly hate for us to go through this effort and 
pass legislation and then find that there's still a need out 
there that hasn't been adequately addressed. That would 
certainly not be ideal.
    Ms. Lundstrom, did you have any comment on that?
    Ms. Lundstrom. Mr. Chairman and Senator Domenici, my direct 
experience has been positive with many of the Navajo elected 
officials. I have been in communication with the city of Gallup 
and I understand that the Memorandum of Understanding is moving 
forward, that they've all agreed to continue working on it as 
quickly as possible. I just believe that this hearing 
committee, Mr. Chairman and Senators, is that we've gone 
through much and so many kinds of obstacles that is just one of 
many that we'll be able to work through.
    The Chairman. Thank you very much.
    Senator Domenici.
    Senator Domenici. Senator Bingaman, you hit the nail right 
on the head. It will serve very little for us to pass this and 
then not find that, or find that the Gallup arrangement didn't 
take place. I'm going to add this one and ask you about it, 
President Shirley, and/or that water pipeline, the big one will 
be there, but we won't have an infrastructure to deliver it.
    This project and its dream was to put the big pipelines 
down so that where we have thousands of acres with no water, 
you would have major trunk lines. But, that won't serve the 
Navajo people if there is not watering facilities, the little 
pipelines, actually how you hook the water on.
    I personally want to know quickly, Mr. President, do you 
intend to, does the Navajo Nation intend to proceed with a plan 
to make available the delivery system so the Navajo people 
won't be hauling water from these big pipes, but rather the 
water will get delivered in a normal way through little pipes 
like they do in all cities, with the infrastructure? Is that 
going to happen?
    Mr. Shirley. That is the plan, absolutely, Senator 
Domenici. That is the plan. I venture to say we're going to get 
there as planned.
    Senator Domenici. Well, I take it----
    Mr. Shirley. You wouldn't do us any good and you wouldn't 
do my people any good to just have that water line.
    Senator Domenici. No.
    Mr. Shirley. Water going to the communities, that's the 
intention.
    Senator Domenici. No, it wouldn't. I want to say that, you 
know, we're in control of this legislation up here, but we can 
probably finish it in 1 month or 6 months. The one thing I 
would like to see and I, Mr. Chairman I'd ask if we could ask 
the Navajo Nation to submit this. I would like to see some 
evidence of what you're going to do and where you're going to 
get the money to provide water. You know, you don't have to 
provide it every single acre, but somehow the Navajo Nation has 
to think through where we're going to get the resources. Are 
you going to charge the people for water? I think we ought to 
know that. That's the big one because the water is useless if 
that isn't done and I'm not critical, I just have been there 
and I'm, that you can wait and fight for 10 years over issues 
like this, that's not what we want.
    Mr. Guenther, I thought I recognized your name when I saw 
you there, but I wasn't sure. Now I kind of know you because 
whenever Arizona's involved in this, there you are. You're like 
Mr. Steve Reynolds from New Mexico who's gone, but was 
everywhere.
    I just want to tell you I hope your claims in this are 
really good or no good at all. Because we've done too much, 
both of us, to help Arizona, in fact, we helped them with a 
giant settlement just a couple years ago. It was right when 
Senator Kyle wanted it, needed it, and we didn't look for nits 
and nats. I hope you do the same for us. I'm not going to ask 
you to give away anything, but I am asking you not to think 
that we're going to take up, in this committee, frivolous 
things just to delay things. It's not going to happen. So, you 
better have them right or you better come and tell us we're 
your partners like you've been with us here before. That would 
be a good thing to have. You want to comment on that?
    Mr. Guenther. Thank you, Mr. Chairman and Senator Domenici. 
It's good to see you again as well.
    We take, we take issues with the Law of the River and the 
Colorado River Compact, obviously very seriously. Obviously, 
none of us, none of us in any of the seven States would want to 
see a breach in that Compact or that Law of the River that 
would jeopardize our share of the water. Arizona depends on the 
Colorado River for over a third of its annual water supply, so 
it's very dear and precious to us. But we also take our 
friendship with our neighbors to the east very seriously. We 
will do everything we can to work with you to make sure that 
our concerns are well founded.
    We have a lot of legal scholars. We have probably too many 
legal scholars dealing with water river issues, but we will, 
again, sit down with Mr. D'Antonio and his staff and Mr. 
Connor, your staff and see what we can work through and 
resolve, just as we did in that Arizona Water Settlement Act 
and dealt with some very difficult issues right toward the end 
of that one. So, we look forward to working with you and your 
staff.
    Senator Domenici. Mr. Chairman, I'm sure we have to leave, 
but let me say to Patty Lundstrom and representatives from 
Gallup, I'm going to, by coincidence, it's not planned, I'm 
going to be in Gallup next week and probably you will be 
getting notice that I'd like to meet with COG. I think I ought 
to take this opportunity to meet with some of the Gallup 
officials just to talk publicly about this obligation they have 
to come up with the money or we're doing something that's not 
worth, not worth much, you know. We really want Gallup to end 
up with water, right.
    Ms. Lundstrom. Thank you.
    Senator Domenici. Thank you very much, Mr. Chairman.
    The Chairman. Well, thank you very much.
    Thank you all for your testimony. This has been a little 
disjointed with our need to go back and forth to the floor and 
vote, but I think we made a good record here and we appreciate 
your participation.
    Thank you.
    [Whereupon, at 4:25 p.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              

                               Appendix I

                   Responses to Additional Questions

                              ----------                              

   Responses of Joe Shirley, Jr., to Questions From Senator Bingaman
    Question 1. In its testimony, the Administration indicates that it 
needs to determine what the Navajo Nation's specific goals are for the 
settlement.
    For the record, please articulate the Navajo goals for the 
settlement.
    Answer. As we told the federal assessment team and the federal 
negotiation team, the Navajo Nation seeks a water rights settlement 
that provides:

   CERTAINTY.--Certainty as to what our water rights are, 
        including the water rights for the Navajo Indian Irrigation 
        Project which were not fully described in the 1962 Act. To 
        fully develop a permanent homeland for the Navajo People 
        requires knowing the full extent of our water resources.
   WET WATER.--A ``paper'' water right does not benefit people 
        who must haul their drinking water. The Navajo Nation is 
        forgoing a large paper water right in exchange for a smaller 
        paper water right, conditioned on the wet water development 
        outlined in the settlement legislation, including the Navajo 
        Gallup Project.
   PEACE.--We want a settlement that will reduce the 
        possibilities of future conflicts with our neighbors. Our 
        settlement is structured to create partnerships between the 
        Navajo Nation and its neighbors--the City of Gallup, the 
        Jicarilla Apache Nation, and the City of Farmington, which has 
        passed a resolution in support of the settlement.

    Question 2. The Administration's testimony, as well as other 
testimony submitted for the record, indicate that there might be 
cheaper and more efficient means to deliver water to the Navajo 
Reservation.
    Has the Navajo Nation considered other alternatives to supplying 
water to the eastern part of the Reservation? If so, what problems 
exist with those alternatives?
    Answer. The Bureau of Reclamation, in the Planning Report and Draft 
Environmental Impact Statement for the Navajo-Gallup Water Supply 
Project (DEIS), identified various alternatives, including additional 
groundwater development, water conservation and water re-use. The DEIS 
concluded that these alternatives would not be sufficient to provide a 
sustainable, reliable water supply. See: DEIS at IV-4. Wherever 
groundwater can be utilized, the Navajo Nation plans to utilize those 
resources and S. 1171 includes authorization to develop conjunctive 
groundwater wells wherever possible to reduce costs. However, the 
analysis in the DEIS confirms that groundwater will not provide a 
sustainable long-term solution. The Navajo people have already 
perfected water conservation and water re-use through generations of 
water hauling. While water hauling ensures that water is conserved and 
re-used to the maximum extent possible, water hauling is not sufficient 
to provide the Navajo people with an adequate and reliable water 
supply.
    Question 3a. Part of the Administration's reasoning for objection 
to S. 1171 is that it claims that the likely cost of the settlement 
exceeds the Federal government's underlying liability. This issue has 
not been discussed much because so much of the focus has been on the 
critical need for water on the Navajo Reservation.
    Does the Navajo Nation believe that the Federal government has 
significant liability associated with the Navajo water rights claims? 
If so, can you generally summarize the basis for that liability? Are 
the Navajo water rights claims in the underlying adjudication 
significant enough to potentially displace non-Navajo water users in 
the basin?
    Answer. As you correctly point out, this settlement is about 
addressing basic human needs; it is not about ``counting beans'' by the 
federal bureaucracy. The federal government's trust responsibility and 
treaty obligations are difficult to quantify in dollar terms, but we 
are prepared to do so.
    We will provide the Administration with a more detailed analysis 
outlining how the federal government would be subject to significant 
liabilities in the event this settlement fails. We believe that the 
United States has substantial exposure for liabilities to the Navajo 
Nation for failing to protect our water rights, for failing to enjoin 
others from using water to the detriment of the Navajo Nation, and for 
encouraging non-Indian water development within the San Juan River 
basin. In addition to liability to the Navajo Nation, the United States 
faces potential liability not just to the Navajo Nation but to many 
other parties within and outside the San Juan River basin. Under almost 
any litigation outcome, the United States would be exposed to 
significant liability.
    In the event that the settlement fails, and the Navajo Nation were 
forced to litigate its water rights claims, the Navajo Nation would 
claim all of the water necessary to ensure a permanent homeland for the 
Navajo people. Such claims would include not only past and present 
water uses, but additional water for mining and energy development, 
domestic and municipal uses, commercial and industrial development, and 
additional irrigation. Experts working for the Navajo Nation and the 
United States have identified a number of water claim scenarios that 
range from modest to substantial claims. We believe that any litigation 
outcome would award the Navajo Nation more water than they would 
receive by way of the settlement. The water awarded to the Navajo 
Nation in this settlement is surely less than water that the Nation 
could obtain through litigation. (The water in the settlement is 
essentially: (1) water for existing Navajo irrigation projects at 
Hogback and Fruitland; (2) water for the Navajo Indian Irrigation 
Project promised by the 1962 Act of Congress; and (3) about 22,000 
acre-feet of ``new water'' for the Navajo-Gallup Water Supply Project.) 
Therefore, any litigation displaces existing water users and 
potentially creates federal liability with respect to those users.
    With the settlement the State of New Mexico will be extremely close 
to full water development under its compact apportionment. Therefore, 
any water the Navajo Nation would obtain over and above the water 
specified in the settlement threatens existing water users and 
jeopardizes the ability of New Mexico to stay within its compact 
apportionment. It does not take a significant claim by the Navajo 
Nation to achieve this result. For example, the settlement agreement 
limits Navajo acreage at the Hogback and Fruitland irrigation projects 
to 12,165 acres, but the Congressional record on Public Law 87-483 
makes reference to a possible 26,000 acres of irrigable land at just 
these two sites. See: Senate Report No. 2198. The water for this 
additional acreage would have to either come from existing water users 
or from water in excess of New Mexico's compact apportionment. In 
addition, experts for the Navajo Nation and the United States have 
identified additional irrigable acreage upon which substantial claims 
could be based. Even a modest award of additional acreage would cause 
disruption of existing water uses.
    Recent decisions in various water adjudications confirm that Indian 
tribes are entitled to all the water necessary to make their 
reservations livable as permanent homelands. Such water uses include 
water for municipal, commercial and industrial purposes. The Navajo 
Reservation has a substantial population and continued population 
growth can be expected if the Navajo Nation had sufficient water 
resources. The municipal water in the settlement agreement is based on 
a projected forty (40) year projection. If the Navajo Nation were to 
litigate its claims, it would seek a supply for a much longer period of 
time. In addition, the Navajo Nation possesses an abundance of natural 
resources including coal, oil and gas, and uranium. The Navajo Nation 
claims the waters necessary to develop these resources, including water 
for energy generation.
    Even a modest award of water to the Navajo Nation would prove 
disruptive to existing water users, including upstream irrigation uses, 
water diversions for two coal fired generating stations, and the water 
for the municipalities in the basin. In addition to impacts on these 
run-of-the river diverters, in order to meet additional downstream 
Navajo uses, water that would have otherwise been stored at Navajo 
Reservoir and in the Animas-La Plata Project would be bypassed creating 
potential shortages to the various federal interests that rely on this 
water including the Animas-La Plata Project, the Hammond Conservancy 
District, the Jicarilla Apache Nation, and the San Juan-Chama Project. 
With respect to the San Juan-Chama Project, it provides a portion of 
the water supply for the cities of Albuquerque and Santa Fe, and 
Project water is proposed as the supply necessary to settle the water 
rights claims of Taos Pueblo and the four Pueblos in the Aamodt 
litigation. By any measure, the United States cannot afford to let the 
settlement fail, even if the Navajo Nation were only to receive a 
modest amount of additional water.
    The scenarios for even greater exposure could accrue if the Navajo 
Nation were successful in bringing a more substantial claim in the 
adjudication. Numerous law review articles have been brought concerning 
the potential Navajo claims. These articles suggest that were the 
Navajo Nation to prevail on its claims, the implications on the entire 
Colorado River water system could be devastating. For example, some 
commentators refer to the unquantified rights of the Navajo Nation as 
posing a ``hypothetical shock'' to the Colorado River. Allen V. Kneese 
and Gilbert Bonem, Hypothetical Shocks to Water Allocation Institutions 
in the Colorado Basin, NEW COURSES FOR THE COLORADO RIVER: MAJOR ISSUES 
FOR THE NEXT CENTURY at 97 (Weatherford & Brown, eds. 1986). See also 
William Douglas Back & Jeffrey S. Taylor, Navajo Water Rights: Pulling 
the Plug on the Colorado River?, 20 NATURAL RESOURCES JOURNAL 71, 74 
(1980) (``If Navajo Winters rights ever are adjudicated, the potential 
award is staggering.'') Therefore, the proposed settlement not only 
benefits the Navajo Nation and the State of New Mexico, but the entire 
Colorado River system. If the settlement fails, the potential liability 
of the United States for disruption of water uses within the Colorado 
River system is too massive to calculate.
    Question 3b. If there is no settlement, will the Navajo Nation 
challenge the water rights claims of other parties in the adjudication? 
Has that already occurred?
    Answer. In the event that there is no settlement, the Navajo Nation 
would claim all of the water in the river as necessary to satisfy its 
homeland needs, including water for municipal, commercial, industrial, 
mining, livestock and agricultural uses. Because the Navajo Nation 
lands are largely downstream of all other water users, the upstream 
water uses would be aggressively challenged.
    The State Land Office recently made a claim for reserved water 
rights in the San Juan River basin. The Navajo Nation, together with 
several major claimants and the New Mexico State Engineer, has 
challenged such claims.
    Question 4. The State of Arizona objects to moving S. 1171 until it 
has a chance to negotiate a settlement on Navajo and Hopi water rights 
claims in Arizona. Your testimony indicates that the Navajo Nation does 
not view a settlement of those claims as imminent.
    What is your perspective on how a delay in moving S. 1171 might 
impact the negotiations? Would it help facilitate a resolution of 
issues or slow the process down even further?
    Answer. The Navajo Nation is committed to good faith water rights 
negotiations with the State of Arizona. In the late 1990's we engaged 
in serious settlement discussions with the Arizona water users 
concerning the Navajo Nation's water rights in the Little Colorado 
River basin. Those discussions broke down, but were revived only after 
the Navajo Nation filed its lawsuit in Navajo Nation v. United States 
concerning Navajo claims to the mainstream of the Colorado River in the 
Lower Colorado River Basin in Arizona.
    Although we are negotiating in good faith, we are not certain 
whether a negotiated settlement Arizona is even possible, let alone 
imminent. We have a settlement with the State of New Mexico because it 
is based on identifying and satisfying the needs of the Navajo people 
in New Mexico. We are disappointed that the Arizona testimony talks 
about the need to resolve litigation with the Navajo Nation, but no 
acknowledgment of the real needs of the Navajo Nation to obtain 
sufficient water rights to create a permanent homeland. And, continue 
to be frustrated in our settlement efforts with the Arizona parties 
because there is no real discussion of the needs of the Navajo Nation. 
Instead all discussions with Arizona focus only on the limited 
resources the Arizona parties are willing to offer. Frankly, we are 
unsure of whether a settlement is possible with Arizona given that the 
state parties insist that a Navajo settlement fits within the 
parameters of the Arizona Water Settlements Act which contains only a 
limited amount of water and money.
    If a settlement with Arizona can be achieved without compromising 
or delaying the New Mexico settlement, then we would be happy to have a 
more comprehensive settlement, but the New Mexico settlement is crafted 
in a manner that does not require resolution of the Navajo water rights 
issues with the State of Arizona, and Arizona's ability to reach a 
settlement with the Navajo Nation will not be impaired if a New Mexico 
settlement moves forward separately, Frankly we believe that Arizona is 
simply attempting to leverage a settlement with the Navajo Nation that 
fails short of meeting the Navajo Nation's needs, by demanding that the 
New Mexico settlement include a partial settlement with Arizona.
    Requiring a settlement with Arizona gives too many parties without 
an interest in New Mexico, including the Hopi Tribe, and various non-
New Mexico interests, veto power over our New Mexico settlement. In 
short, it is our view that linking the New Mexico settlement to the 
Arizona negotiations will only serve to slow the Arizona negotiations 
even further.
    Question 5. The Gallup Independent recently reported that the 
Intergovernmental Relations Committee of the Navajo Council rejected a 
proposed MOU with Gallup and the Jicarilla Apache Nation outlining a 
process to help Gallup secure a water supply for its share of the 
Project. Obviously, that's a strong concern if the partners to the 
Project are not working cooperatively with each other.
    What was the basis for the Committee's action and is there a 
process underway to resolve this issue to everyone's satisfaction?
    Answer. The Intergovernmental Relations Committee (IGRC) consists 
of the chairs of each of the eleven standing Committees of the Navajo 
Nation Council. As the President of the Navajo Nation, I am not a 
member of the IGRC. I have discussed the Committee's actions with the 
Chairperson of the Resources Committee, Delegate George Arthur. The 
Resources Committee is responsible for overseeing the management of the 
natural resources of the Navajo Nation.
    The Resources Committee unanimously approved the MOU in May; at a 
meeting where Chairperson Arthur was not present. The MOU was then 
presented to the IGRC in June. Subsequently, Chairperson Arthur was 
concerned that some of the language in the MOU created the impression 
that Project facilities--even those currently being constructed with 
State funding--could not deliver water to Navajo users until a water 
supply for Gallup for the San Juan Lateral of the NGWSP was identified. 
As you know, there are several phases of the Cutter Lateral and that 
Navajo/Gallup Regional System which are currently being constructed. 
The troubling language of the MOU has been deleted.
    The IGRC also expressed that although the staffs from the City of 
Gallup, the Navajo Nation and the Jicarilla Apache Nation had worked 
extensively on drafting the MOU, there have not been any recent 
meetings among the political leadership of the three entities. Because 
of the of the recent changes in leadership at the City, the Jicarilla 
Apache Nation, and among the eighty-eight delegates of the Navajo 
Nation Council, the IGRC felt very strongly that meetings among all the 
leaders were critical to ensure that the next steps in this process 
will be successful.
    I am pleased to report that since the June IGRC meeting a process 
has been developed to address these concerns. On June 22, Chairperson 
Arthur met with the City of Gallup and assured that the MOU would be 
put into place. On June 25, Chairperson Arthur met with Jicarilla 
Apache Nation (JAN). JAN indicated that it is supportive of the 
settlement and is still engaged in negotiations with the City of 
Gallup. On July 11, a meeting was held among all three parties. At that 
meeting, a schedule was developed to finalize the MOU and Chair Arthur 
committed to getting the MOU processed by mid-August.
    Response of Joe Shirley, Jr., to Questions From Senator Domenici
    Question 1. President Shirley, the Navajo-Gallup Water Supply 
Project would provide the Navajo Nation, the Jicarilla Apache Nation, 
and the City of Gallup with a long-term water supply. I was very 
disappointed to learn that the Navajo Nation Council's 
Intergovernmental Relations Committee recently rejected a MOU that 
would establish a framework for acquiring water for the City of Gallup. 
I have made it clear that I will not support a settlement that does not 
ensure a water supply for Gallup.Are you aware that nearly 30 percent 
of Gallup residents are Navajos?
    Answer. Yes, according to the 2000 Census data 36 percent of the 
Gallup residents are Native American. Furthermore, more than 85 percent 
of the students at the public schools within the City's boundaries are 
Navajo.
    Question 2. Do you share the views of the Intergovernmental 
Relations Committee?
    Answer. The Navajo Nation Council overwhelmingly approved of the 
Settlement Agreement. I support the position of the Navajo Nation 
Council on the Settlement.
    The Intergovernmental Committee (IGRC) is a committee of the 
chairpersons of each Standing Committee of the Navajo Nation Council 
for a total of eleven members with the Speaker of the Council sitting 
as the Chair. It appears that the positions of the Delegates on the 
IGRC reflect their personal views and not the views of the Council. In 
addition, it appears that at least one Delegate was concerned with 
language in the Memorandum of Understanding the created the impression 
that Project facilities, even those currently being constructed, would 
not be able to serve Navajo water users until a number of complicated 
water arrangements are resolved. I do agree that Navajo water users 
should not be prevented from benefiting from the infrastructure 
currently under construction.
    With respect to identifying a water supply for the City of Gallup, 
we all understand that this important issue needs to be resolved for 
the Project to move forward. I appreciate this need and will do what I 
can to live up to the Council's commitment to the Settlement Agreement.
    Question 3. How do you plan to ensure that a water supply is made 
available for the City of Gallup?
    Answer. I am committed to finding a water supply for the City of 
Gallup. Since the June IGRC meeting a process has been developed to 
address these concerns. On June 22, Chairperson Arthur met with the 
City of Gallup and assured that the MOU would be put into place. On 
June 25, Chairperson Arthur met with Jicarilla Apache Nation (JAN). JAN 
indicated that it is supportive of the settlement and is still engaged 
in negotiations with the City of Gallup for a long-term water lease. On 
July 11, a meeting was held among all three parties to discuss all 
water leasing options in the MOU, including leases between the Navajo 
Nation and the City of Gallup. At that meeting, a schedule was 
developed to finalize the MOU and Chair Arthur committed to getting the 
MOU executed by the middle of August.
    Question 1. The Draft Environmental Impact Statement for the 
Navajo-Gallup Water Supply Project does not include distribution 
systems.
    How do you plan to distribute the water supplied by the Navajo-
Gallup Water Supply Project?
    Answer. The Navajo Gallup Water Supply Project is guided in part by 
a Steering Committee that includes the Indian Health Service, the 
Navajo Department of Water Resources, the City of Gallup, the Navajo 
Tribal Utility Authority, the Bureau of Reclamation, the Bureau of 
Indian Affairs, the Jicarilla Apache Nation, and the Northwest New 
Mexico Council of Governments. One of the primary technical objectives 
of this group is to make sure the Project as it is planned and 
developed meets the real needs of the people in the region. This 
Steering Committee is coordinating the programmatic resources as they 
become available as much as possible. For example, to date the State of 
New Mexico has committed approximately $17 million in the 
infrastructure that will convey water from the Cutter Lateral through 
the local Navajo Trial Utility Authority public water systems, and 
approximately $7 million in the infrastructure that will regionalize 
the public water systems in the Gallup area. In addition, the Indian 
Health Service, through its P.L. 87-121 program, is spending resources 
to meet the distribution needs of the Navajo Nation's drinking water 
infrastructure and will continue to do so.
    The Navajo Gallup Water Supply Project will convey water to a 
service area that is largely served by the Navajo Tribal Utility 
Authority (NTUA). NTUA operates more than 90 public water systems on 
the Navajo Nation with more than 30,000 customers. As proposed in the 
Environmental Impact Statement appraisal level planning reports, the 
water conveyed from the San Juan River through the Project will be 
delivered to the NTUA's systems at more than 20 locations. At each 
location a tank and booster pump will ensure that the treated water can 
be further conveyed by NTUA through the current distribution network. 
As these plans are further refined through feasibility and final design 
level studies, every effort will be made to fully incorporate the 
existing NTUA infrastructure into the Project.
    Question 2. To what extent will the Navajo-Gallup Water Supply 
Project reduce water hauling on the Navajo Reservation in New Mexico?
    Answer. Many of the 80,000 Navajo men, women, and children in the 
Project service area presently do not have clean potable drinking water 
delivered to their homes; they must haul water, in some cases over many 
miles, for drinking and cooking. Although construction of the Project 
will not necessarily eliminate all water hauling on the reservation, 
the Project will allow the Indian Health Service to expand distribution 
systems to provide potable water delivery to more homes and would 
create growth corridors within the Navajo Nation where future 
communities can be built with ready access to roads, electricity and 
potable water.
    Question 1. Mr. President, you state in your testimony that the 
Navajo-Gallup Water Supply Project ``represents a critical component of 
the Navajo Nation's economic strategy.''
    Please explain the economic development strategy and how the 
Project will further economic development for the Navajo Nation.
    Answer. The Navajo Nation adopted the Water Resource Development 
Strategy for the Navajo Nation in July 17, 2000. That document 
concludes that ``the lack of a reliable and affordable potable water 
supply stifles economic growth throughout the reservation'' and that 
``[t]he lack of infrastructure, the lack of economic development and 
the sustained poverty are closely connected.'' Without developed water 
infrastructure economic development infrastructure is impossible. The 
Project will provide a backbone of water infrastructure for the Eastern 
portion of the Navajo Reservation.
    The Navajo Nation has identified economic development growth 
centers through the Nation, such as Shiprock, Crownpoint, and Window 
Rock. They are large population bases which have the potential to 
benefit from an economy of scale in infrastructure development. The 
Project will deliver in such a way to stimulate economic development in 
these growth centers.
    Question 2. What health benefits will the Navajo-Gallup Project 
bring to the Navajo People?
    Answer. For those families who will be relieved of water hauling, 
there should be a decrease in waterborne communicable diseases and 
other communicable diseases including Hepatitis A, Shigella, and 
Impetigo are associated with the limited hand washing and bathing 
practices often found in households lacking adequate water supplies. 
``The Navajo-Gallup Water Supply Project will ultimately provide water 
to over 100,000 people who would otherwise haul water, for an estimated 
total savings in medical expenses exceeds $318 million over the life of 
the project.'' See Economic Benefit/Cost Analysis, Navajo Gallup Water 
Supply Project, Dornbusch Associates, April 11, 2006, found at Appendix 
D of the Draft Environmental Impact Statement for the Navajo-Gallup 
Water Supply Project, March 2007.
    Question 1. According to the Draft EIS for the Navajo-Gallup Water 
Supply Project, the Navajo Nation would receive roughly 27,000 acre 
feet of water per year.
    Do you believe this amount is adequate to meet the Navajo Nation's 
long-term needs?
    Answer. The design criteria used in the Draft EIS for the Navajo-
Gallup Water Supply specifies capacity of 29,062 acre-feet per year for 
the Navajo Nation including, 6410 acre-feet in Window Rock, Arizona. 
These capacities are based on a projected forty (40) year demand in the 
project service area. Certainly this quantity of water will not be 
sufficient to meet the long-term needs; however, if the settlement is 
implemented, the Navajo Nation would have 325,670 acre-feet of annual 
depletions and the right to put those depletions to any beneficial use, 
including municipal and domestic uses.
    Question 1. Mr. President, the Navajo-Gallup Water Supply Project 
would provide water to the Navajo Nation, the Jicarilla Apache Nation, 
and the City of Gallup.
    Have you developed any agreements with Gallup and the Jicarilla 
Apaches for the operations and maintenance of the Project?
    Answer. The MOU between the Project entities contemplates that an 
agreement concerning the operation and maintenance of the Project is 
required. This agreement will be developed after the MOU is executed. 
We anticipate that the Navajo Tribal Utility Authority will have an 
important role in operating the Project. We are also looking at various 
joint utility options for the Project.
                                 ______
                                 
       Response of Mark Sanchez to Question From Senator Bingaman
    Question 1. Your testimony seems to raise a number of concerns with 
the settlement that the State seems to think have been addressed.
    Do you disagree with the State's analysis? So you believe that you 
can work through any remaining issues with the State so that you can 
support the settlement?
    Answer. Our primary concerns are the hydrologic impact on the San 
Juan-Chama project and how shortages are to be calculated and shared. 
Given that no formal hydrologic analysis on the impacts to the San 
Juan-Chama Project from the settlement has been completed, the 
Authority has engaged Daniel B. Stevens to examine the potential for 
increased frequency and magnitude of shortages. The Authority will be 
pleased to share this information will all parties when the work is 
complete. The extraordinary powers granted to the State Engineer 
provided in the bill need to be amended out of the legislation or 
substantially clarified. The Authority is committed to working with the 
State and feels that all of the issues raised can be addressed.
      Responses of Mark Sanchez to Questions From Senator Domenici
    Question 1. Mr. Sanchez, I appreciate you identifying portions of 
the bill that you believe need greater clarification. I look forward to 
working with you on these provisions. As you are aware, litigation to 
determine Indian reserve water rights has, in some instances, resulted 
in large awards for the Indian nations.
    Are you concerned that, if litigated, the Navajo Nation's court-
awarded water rights could ultimately result in a reduction of water 
diverted by the San Juan-Chama Project?
    Answer. The Authority is concerned about anything that could affect 
the San Juan-Chama project and understand that the settlement has the 
advantage of reducing the uncertainty that comes from litigation and 
court-awarded water rights.
    Question 2. Do you believe that settling the Navajo Nation's water 
rights claims is in the best interests of the Authority and other San 
Juan-Chama contractors?
    Answer. As stated in our comments, we are concerned about the 
frequency and magnitude of shortages and how shortages are to be 
calculated and implemented. The Authority would like to work out a 
sharing of shortages agreement in parallel with the legislation. We 
agree that resolving the Nation's water rights claims and the certainty 
that comes with that is in the best interest of the Authority and other 
San Juan-Chama contractors.
    You raise the concern that, pursuant to Public Law 87-483, the 
Secretary of the Interior, before entering into additional contracts at 
or below Navajo Reservoir, must make a determination that there will be 
``a reasonable amount'' of water for the San Juan-Chama project.
    Question 3. Based on your independent assessment, will the new 
contracts issued pursuant to this settlement adversely affect the 
amount of water provided to San Juan-Chama contractors?
    Answer. The Authority's assessment is not yet complete, but the 
Secretary and more specifically the Bureau of Reclamation should be 
required to address this issue. For example, the Bureau has used 
different figures for the amount of water that will be available for 
diversion by the San Juan-Chama project. These different hydrologic 
analysis and water availability needs to be rectified so that everyone 
is clear on what is to be diverted and how much water is available to 
divert on an average annual basis. In addition, the Authority supports 
adding language that provides for the Secretary to operate the San 
Juan-Chama project as efficiently as possible to ensure the maximum 
possible yield provided in the legislation. If the Bureau operated the 
project as efficient as possible, then the impact from this settlement 
will be significantly reduced or eliminated.
    Question 4. Do you agree with the assumptions underlying the April 
2007 hydrologic assumption signed by Secretary Kempthorne?
    Answer. We understand the hydrologic analysis to be a correct 
determination on the amount of water available for the settlement as it 
relates to New Mexico's apportionment under the Upper Colorado River 
Basin Compact. The average amount of water available for the San Juan-
Chama project, however, is different than the amount the Bureau has 
used to determine the amount available for contracts from Heron 
Reservoir (see previous discussion).
                                 ______
                                 
   Responses of Patricia Lundstrom to Questions From Senator Bingaman
    Question 1. The Administration suggests that the Navajo and State 
should stop and revisit the goals of the settlement, and consider 
whether those goals can be met by alternative and less expensive means. 
That would seem to throw away almost 2 decades of work.
    What do you think of the Administration's suggestion? Are there 
other alternatives out there that the Steering Committee has 
overlooked?
    Answer. I share the Senator's concern about ``revisiting'' the 
goals of the Settlement and of the Navajo-Gallup project, as well as 
the preferred alternative that has been so rigorously vetted over 
``almost two decades of work.'' Now is not the appropriate time for 
Administration officials to be recommending a return to the drawing 
boards, in that there has been ample opportunity all along to consider, 
negotiate, revise and evaluate all possible alternatives. If there are 
better ways to go (``by alternative and less expensive means''), then 
it would have behooved Administration officials to recommend specific 
alternatives well before the current 11th hour.
    If cost-cutting is indeed the issue of the hour, and if the 
Administration officials are on a ``mission'' to reduce cost for its 
own sake, then our technical partners are primed for further research 
and analysis in this regard. It should be noted, however, that the 
Navajo Nation and the State of New Mexico, in particular, have been 
literally begging the Administration to participate in substantial 
dialogue on the project's critical cost parameters, with disappointing 
results until this current nexus point.
    We believe the selected alternative to be appropriate to meet 
project goals, and given the criteria and information from which the 
Bureau of Reclamation (BOR) cost estimate was derived, the estimate is 
understandable and defensible.
    However this does not necessarily mean the project cannot meet its 
goals at a reduced price. Although the BOR work has been reviewed by an 
independent third party (Boyle 2004) and is currently undergoing an 
independent Design, Estimate & Construction (DEC) review process, these 
reviews have not--or may not--identify cost-cutting alternatives.
    The issue of cost cutting has been the topic of discussion at 
countless meetings and conversations of the Project's technical 
committee and its members. The general consensus of the committee 
members is that considerable cost savings might be achieved through a 
value engineering process, whereby alternative pipe materials, bedding 
requirements, building materials, design standards, treatment processes 
and other project components are analyzed.
    Committee members have also discussed taking a third-party design/
build approach to the project. However, this would not fit the standard 
BOR model and would require that BOR take a role of project management 
& oversight rather than its own internal design/build approach.
    With all due respect to the BOR, whose Western Colorado Area Office 
staff have served this Project with professionalism and effectiveness, 
the technical participants from the Project beneficiary entities have 
advocated a more aggressive look at engineering and cost alternatives, 
as well as a less bureaucratic and tentative approach to value 
engineering than would be suggested by BOR's procedures related to 
``appraisal-level'' and ``feasibility-level'' analyses. Some of our 
internal technical reviewers have been disappointed that BOR engineers 
have not been more interested in following up on various on-the-ground 
projects in the region for information on soils and other issues 
associated with the particular terrain of this region. Rather, their 
sense has been that BOR has been in a conservative, tentative and 
protective mode in its design work, as opposed to being motivated to 
``build the best and most cost-efficient project.''
    It is possible that a shift toward private engineering contracts 
under BOR's general oversight may generate designs and estimates that 
are more economical, while at the same time realistically meeting 
project objectives, given known work done in this region--for example, 
to lay natural gas pipeline, as well as the work currently being done 
on the local water pipeline projects in the ``Cutter Lateral'' area of 
the Project under State funding. Our technical representatives have 
expressed confidence in the high-level expertise and experience of, as 
well as the quality of work done by, a number of private firms working 
in the Four Corners region.
    Question 2. You note that it is the City's position that it will 
need a high level of Federal funding support for its share of the 
project costs.
    Can the City afford at least the 25% cost-share for the Project 
that is contemplated in the bill?
    Answer. The short answer is that the City of Gallup should be able 
to plan and carry out a financial strategy that meets the 25% cost 
share commitment. However, there are some unique factors to be 
addresses and resolved.
    On the surface, it appears that Gallup's rate-payers can afford 25% 
of Gallup's share of the project costs. However, the economic analysis 
work done as part of the Navajo-Gallup EIS leaves out one large 
component of Gallup's current and future expense, which is its need to 
replace aging infrastructure.
    Gallup presently has approximately 71 miles of water distribution 
piping installed prior to 1966, which will need to be replaced over the 
next 40 years at an estimated cost of $42.4 million. In addition, a 
large portion of the remaining 157 miles of pipe currently in service 
will be 40 to 60 years old at the time Gallup's cost share becomes due.
    Gallup has not stood idly by while its water system deteriorated. 
On the contrary, Gallup has always had a relatively vigorous capital 
improvement program, and more recently (2005) it leveraged increased 
water utility revenue projections to pass $21 million in revenue bonds 
($10 million for water and $11 million for wastewater) to address some 
of the more critical water and wastewater needs.
    It is also important to be mindful of the rising cost of other non-
discretionary household expenses such as wastewater, power, solid 
waste, natural gas and fuel when considering the ability of Gallup's 
rate-payers, a large segment of whom are at or below poverty level, to 
pay higher costs for this utility.
    Due to Gallup's aggressive capital improvement program and steeply 
inclining rate structure (well above the state average for the average 
user and second only to Santa FE for those in the top tier), Gallup's 
bonding capacity and rate-payers' capacity may be at their limits.
    Nevertheless, to proactively deal with the water financing 
challenge, Gallup is currently re-evaluating its financial position and 
developing its long-term strategy with respect to the Navajo-Gallup 
project. One key piece of the strategy will undoubtedly be investment 
by the State of New Mexico in a portion of Gallup's share of the 
project costs. City, County, Tribal and COG representatives met in 
Gallup on July 9th with staff from the offices of the Governor and the 
State Engineer, and I was very encouraged by the spirit of 
collaboration in this regard. I will be working with the Governor's and 
State Engineer's Offices and with the State Legislature on a mechanism 
to specifically include financial commitments to Gallup over time, such 
as via amendment or regulatory stipulation to the Indian Water Rights 
Settlement Fund and the Water Trust Fund.
    With regard to the City's own commitment to the project cost share, 
several options are currently under consideration, including:

   inviting the financial partnership of the County of 
        McKinley;
   potential utilization of local taxation and bonding options;
   earmarking a portion of utility revenues for a project 
        sinking fund, to be accelerated in the years 2014 and 2019 when 
        current long-term bond debts are retired;
   user surcharges, possibly ramped upward over time; and
   systematic increases in water rates over time.

    It is the City's plan to provide a preliminary report on its 
financial strategy to Senator Domenici on the occasion of his visit to 
Gallup on August 15th, 2007.
    However, until such time as factors such as the cost of water, 
final OM&R (operations, maintenance & replacement) and capital costs, 
and construction scheduling are determined, it will be difficult for 
Gallup to determine what its ultimate financial strategy will be and 
what its citizens can afford.
    In any event, the approach being pursued is that, in partnership 
with the State of New Mexico and McKinley County, the City will design 
and implement a strategy to meet the 25% local cost share.
    Question 3. The Gallup Independent recently reported that the 
Intergovernmental Relations Committee of the Navajo Council rejected a 
proposed MOU with Gallup and the Jicarilla Apache Nation outlining a 
process to help Gallup secure a water supply for its share of the 
Project.
    How has this action affected Gallup's perceptions of the Project? 
Is the situation being addressed so the issues with the MOU will be 
resolved?
    Answer. City officials understand that these kinds of agreements 
have to go through an extensive consultative process within the Navajo 
Nation bureaucracy, and it is not uncommon to see concerns raised in 
the parties' respective legislative forums, even after literally 
hundreds of technical, legal and jurisdictional details have been 
discussed and negotiated by experts and officials from all parties 
concerned.
    Some of the Navajo legislators' comments reported in the local 
press reflect long-lingering sentiments still held by various elements 
of that Nation's elected leadership. On the other hand, the majority of 
Navajo leaders, including President Shirley himself, appear to have 
seen the positive evolution in the relationship between the City of 
Gallup and its tribal neighbors, to be aware of the cooperative nature 
of the ``Gallup Regional System'' projects, and to be convinced that 
cooperation and partnership is the best policy going forward--
especially in sharing the resources of the region's ``water commons.''
    City of Gallup and tribal officials from the Navajo and Jicarilla 
Apache Nations have met twice recently to discuss this issue. In step 
with Navajo Nation President Joe Shirley per his June 27th testimony, 
the City of Gallup is likewise confident that the issues with the MOU 
can and will be resolved.
   Responses of Patricia Lundstrom to Questions From Senator Domenici
    Question 1. Ms. Lundstrom, as you point out in your testimony, the 
Navajo Nation, the Jicarilla Apache Nation, and the City of Gallup 
would all be served by the Navajo-Gallup Water Supply Project.
    What operational structure do you propose to ensure that the 
Project is maintained and operated properly so that all Project 
beneficiaries receive water from the Project?
    Answer. I would propose formation of a multi-jurisdictional 
authority, perhaps similar in nature to the model adopted by the 
Bernalillo Water Authority. We are in the process of researching models 
and preparing for consultation with our Steering Committee entities.
    Under funding appropriated by the 2006 New Mexico State 
Legislature, the Steering Committee (with staffing by the Council of 
Governments) is currently considering operational structure 
alternatives, with no conclusive recommendations to date. Although a 
secondary issue during the EIS planning stages, this question is now 
emerging as an important item to be addressed by the Project parties. 
The cooperative history of the Steering Committee entities has set a 
strong foundation for future planning and problem-solving in this 
arena.
    Clearly, residents of the Navajo Reservation stand in primary 
position to reap the Project's benefits, while another substantial 
Navajo population will be among the City of Gallup's project 
beneficiaries (possibly approaching 50% of the City's population during 
the course of the Project). Additionally, it is the settlement of the 
Navajo Nation's water rights claims in the San Juan River Basin that 
will serve as the primary vehicle for the authorization and financing 
of the Navajo-Gallup project. Thus, the Navajo Nation stands to have a 
role in defining the operational structure to ensure water delivery to 
all project beneficiaries.
    On the other hand, the Navajo-Gallup project has progressed as a 
multi-party and multi-jurisdictional initiative, and the other key 
players represented on the Steering Committee--including most 
prominently the City of Gallup, the Jicarilla Apache Nation and the 
State of New Mexico--will likewise have a role in helping to define 
operational structure, just as they have contributed to most other 
aspects of project planning. Notably, the City of Gallup has both the 
financially strongest customer base and the most highly developed water 
infrastructure among the Project parties, and it will also have a 
pivotal role in serving as a conduit for Navajo-Gallup project water, 
through its municipal system, to the rural Navajo communities 
neighboring the City. Thus, the City will undoubtedly be active in 
helping to pursue a suitable operational structure for the project.
    Question 2. Without the Navajo-Gallup Water Supply Project, please 
describe the water supply outlook for the City of Gallup.
    Answer. The status and trend of Gallup's dwindling groundwater 
reserve have been well documented, and it has been projected that given 
the status quo, Gallup may start experiencing water shortages during 
peak demands as soon as 2010 (Well Production Planning Report, Sterling 
& Mataya, 1998). It is no secret that groundwater sources within the 
Gallup region are being depleted and that none of these sources will 
provide a permanent supply for Gallup or other users in the region.
    Gallup has taken fairly drastic measures to extend its available 
supply by:

   strengthening and expanding the City's water conservation 
        efforts;
   exploring additional interim groundwater supplies (Gallup's 
        ``G-22'' application to appropriate up to 5,000 acre-feet per 
        year from the San Andreas-Glorieta Aquifer is pending before 
        the New Mexico State Engineer, and an exploratory well is under 
        construction);
   converting major recreational facilities to synthetic turf;
   utilizing treated wastewater to irrigate two athletic fields 
        and the municipal golf course;
   investigating the use of treated wastewater to augment the 
        drinking water supply (study & design of a pilot ``reverse 
        osmosis'' facility is underway); and
   implementing significant (nearly 60%) water rate increases 
        and an aggressive inclining block rate structure, with the 
        combined effect of reducing Gallup's annual usage from a high 
        of 4,286.5 acre feet/yr in 1995 to 3,460 acre feet/yr in 2006 
        (nearly 20% reduction)--with the most substantial decline 
        during the drought years of 2003 to the present.

    The City has not yet quantified the potential effects of this 
reduced demand on Gallup's ability to meet projected demands beyond 
2010. However, it is reasonable to predict that the effect would be 
positive--hopefully giving Gallup a few more years to develop 
alternatives.
    It should also be noted that Gallup's projected water demands 
(10,267.7 acre feet/yr in 2045) would greatly exceed (by over one-
third) the 7,500 acre-feet per year in Navajo-Gallup Water Supply 
Project water deliveries allocated to the City in the project's 
Planning Report. In this light, Gallup will need to continue its search 
for additional water sources, while accelerating its implementation of 
technologies such as reverse osmosis to utilize its supply in the most 
efficient manner possible.
    Question 3. You state in your testimony that the City of Gallup is 
concerned with its ability to fund the portion of the Project 
benefiting Gallup. S. 1171 currently provides that the City would pay 
at least 25 percent of the portion of the Project that serves Gallup.
    Do you believe that this amount exceeds what the City is able to 
pay?
    Answer. [Please note that this response replicates the written 
response to a similar question posed by Senator Bingaman, documented 
above.]
    The short answer is that the City of Gallup should be able to plan 
and carry out a financial strategy that meets the 25% cost share 
commitment. However, there are some unique factors to be addresses and 
resolved.
    On the surface, it appears that Gallup's rate-payers can afford 25% 
of Gallup's share of the project costs. However, the economic analysis 
work done as part of the Navajo-Gallup EIS leaves out one large 
component of Gallup's current and future expense, which is its need to 
replace aging infrastructure.
    Gallup presently has approximately 71 miles of water distribution 
piping installed prior to 1966, which will need to be replaced over the 
next 40 years at an estimated cost of $42.4 million. In addition, a 
large portion of the remaining 157 miles of pipe currently in service 
will be 40 to 60 years old at the time Gallup's cost share becomes due.
    Gallup has not stood idly by while its water system deteriorated. 
On the contrary, Gallup has always had a relatively vigorous capital 
improvement program, and more recently (2005) it leveraged increased 
water utility revenue projections to pass $21 million in revenue bonds 
($10 million for water and $11 million for wastewater) to address some 
of the more critical water and wastewater needs.
    It is also important to be mindful of the rising cost of other non-
discretionary expenses such as wastewater, power, solid waste, natural 
gas and fuel when considering the ability of Gallup's rate-payers, a 
large segment of whom are at or below poverty level, to pay higher 
costs for this utility.
    Due to Gallup's aggressive capital improvement program and steeply 
inclining rate structure (well above the state average for the average 
user and second only to Santa Fe for those in the top tier), Gallup's 
bonding capacity and rate-payers' capacity may be at their limits.
    Nevertheless, to proactively deal with the water financing 
challenge, Gallup is currently re-evaluating its financial position and 
developing its long-term strategy with respect to the Navajo-Gallup 
project. One key piece of the strategy will undoubtedly be investment 
by the State of New Mexico in a portion of Gallup's share of the 
project costs. City, County, Tribal and COG representatives met in 
Gallup on July 9th with staff from the offices of the Governor and the 
State Engineer, and I was very encouraged by the spirit of 
collaboration in this regard. I will be working with the Governor's and 
State Engineer's Offices and with the State Legislature on a mechanism 
to specifically include financial commitments to Gallup over time, such 
as via amendment or regulatory stipulation to the Indian Water Rights 
Settlement Fund and the Water Trust Fund.
    With regard to the City's own commitment to the project cost share, 
several options are currently under consideration, including:

   inviting the financial partnership of the County of 
        McKinley;
   potential utilization of local taxation and bonding options;
   earmarking a portion of utility revenues for a project 
        sinking fund, to be accelerated in the years 2014 and 2019 when 
        current long-term bond debts are retired;
   user surcharges, possibly ramped upward over time; and
   systematic increases in water rates over time.

    It is the City's plan to provide a preliminary report on its 
financial strategy to Senator Domenici on the occasion of his visit to 
Gallup on August 15th, 2007.
    However, until such time as factors such as the cost of water, 
final OM&R (operations, maintenance & replacement) and capital costs, 
and construction scheduling are determined, it will be difficult for 
Gallup to determine what its ultimate financial strategy will be and 
what its citizens can afford.
    In any event, the approach being pursued is that, in partnership 
with the State of New Mexico and McKinley County, the City will design 
and implement a strategy to meet the 25% local cost share.
                                 ______
                                 
  Responses of John D'Antonio, Jr., to Questions From Senator Bingaman
    Question 1. The state is making an up-front $25 million 
contribution to this settlement. Also, as you note, over the past 4 
years it has invested another $25 million towards distribution systems 
that will ultimately hook up to the Project. That seems to be much more 
substantial contribution than other states have historically provided. 
This settlement is, however, substantially larger than most.
    Is it possible that the State of New Mexico may be able to increase 
its cost-share commitment towards the Settlement to address at least a 
portion of the federal concerns? Are there other areas where the State 
is committing resources to move the settlement and project forward, 
which have not yet been recognized?
    Answer. To help assure that the substantial benefits promised by 
the settlement are realized, the state of New Mexico is willing to 
discuss increasing its cost-share commitment, subject to approval of 
the governor and the state legislature. To date, the federal 
administration has not engaged in discussions relating to the costs of 
the settlement.
    To expand on what was stated in my prior testimony, the state 
already appropriated $10 million to the Indian Water Rights Settlement 
Fund, established by the New Mexico legislature in 2005 for the 
explicit purpose of paying the state's portion of costs associated with 
Indian water rights settlements, and it is anticipated that future 
legislatures will continue appropriations in future years. In addition, 
approximately $25 million in funding from New Mexico's Water Trust 
Board and other appropriations will benefit the settlement and the 
pipeline project.
    With regard to other state activities that benefit this settlement, 
the state has worked tirelessly to hold public meetings regarding the 
settlement agreement and to meet with interested persons to explain the 
settlement. The state also cooperated with the Bureau of Reclamation to 
issue a draft Environmental Impact Statement, and contributed 
significant resources toward the development of the hydrologic 
determination issued by the Secretary of the Interior in May 2007. In 
June 2005, the state obtained approval for the hydrologic determination 
from the Upper Colorado Compact Commission. The state also obtained the 
approval of the Upper Colorado Compact Commission to use water 
apportioned to New Mexico's upper Colorado basin compact allocation in 
the lower basin within New Mexico to enable delivery of water to the 
City of Gallup. Without the state's proactive involvement on these 
issues, the settlement would not be able to move forward.
    New Mexico is anxious to see a federal commitment commensurate with 
the federal government's trust and statutory responsibilities for the 
benefit of Navajo communities that need water now. Again, 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.
    Question 2. Reviewing Mr. Guenther's testimony, it appears that 
Arizona objects to S. 1171 because (1) the Navajo Nation has ongoing 
litigation with Arizona concerning the Colorado River in Arizona, and 
it wants to delay the NM settlement until it settles those issues; (2) 
Arizona believes its interests are being disadvantaged by New Mexico 
using it's full compact entitlement to the Colorado River; and (3) 
provisions in the bill need to be revised to more correctly address 
inconsistencies with the law of the River.
    What is your perspective on Arizona's objections? Are there certain 
objections that New Mexico is prepared to address through changes to 
the legislation? Are there other objections that would undermine the 
support that has already been secured from the other Basin states?
    Answer. As I stated in response to a similar question from Senator 
Domenici during the hearing on June 27, 2007, I think Arizona's 
position is unreasonable. New Mexico's settlement with the Navajo 
Nation provides a large benefit to the state of Arizona because the 
settlement will authorize the construction of a drinking water pipeline 
to Window Rock, the Navajo Nation's capital, thus avoiding having to 
duplicate the cost of a pipeline to Window Rock in Arizona. New 
Mexico's settlement and S. 1171 preserve Arizona's right to negotiate 
its own settlement with the Navajo Nation. In general, the issues 
raised by Arizona do not require resolution through the New Mexico 
settlement, but should be more appropriately raised in connection with 
an Arizona settlement. Through consultation with Arizona, New Mexico 
has been able to accommodate some of Arizona's concerns. For example, 
New Mexico has proposed substitute language for Section 303(g) 
authorizing the use of New Mexico's upper basin water in the lower 
basin of New Mexico. Unfortunately, many of Arizona's requests go 
beyond the scope of the New Mexico settlement, and would raise 
objections from the other Colorado River Basin states.
    Question 3. The Albuquerque Bernalillo County Water Authority's 
testimony suggests that there's been no analysis of how new contracts 
could affect the San Juan-Chama water supply. There are several other 
issues raised by the Authority that seem to indicate that the 
settlement may pose a threat to the San Juan-Chama project. Your 
written testimony suggests the opposite.
    Has there been any analysis of the effect of new contracts? Do you 
still believe that the settlement protects the interests of the San 
Juan-Chama Project? And will you sit down with the Authority to provide 
clarification or resolve any differences that exist over the 
settlement?
    Answer. The 2007 Hydrologic Determination takes into account 
current and projected uses of water from the San Juan Basin, including 
water allocated to the San Juan Chama Project. In addition, New Mexico 
has analyzed the possible impacts of the Navajo settlement on the San 
Juan Chama Project and we believe the project is protected. Attached to 
these supplemental responses is a memorandum prepared by staff of the 
New Mexico Interstate Stream Commission on this subject and presented 
to Congressional staff and Water Authority staff in 2005.* To the 
extent necessary, New Mexico will work with the Albuquerque Bernalillo 
County Water Authority to clarify the shortage allocation procedures, 
or otherwise resolve any differences that exist over the settlement.
---------------------------------------------------------------------------
    * The memorandum has been retained in committee files.
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    In evaluating the effects of the settlement, we need to think about 
the alternative: what would the potential effects be on San Juan Chama 
Project contractors and on other water users without settlement? As my 
testimony in answer to other questions describes, the amount of new 
water under the settlement is relatively small, much less than the 
amount conceivably claimable by the Navajos.
    Question 4. Your testimony states that you believe the settlement 
benefits and protects the interests of all water users in the State.
    Please identify the key aspects of the settlement that protect 
other water users in the San Juan Rive basin.
    Answer. For decades Navajo claims to the San Juan River have 
threatened the security of water rights of all other water users within 
the basin. 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.
    A key feature of the settlement is the Navajo's willingness to 
limit the demand of their large irrigation project, the Navajo Indian 
Irrigation Project (NIIP). In 1962, Congress authorized an annual 
diversion of 508,000 acre-feet to supply NIIP; however, the Navajos 
through conservation are agreeing to limit diversions to 353,000 acre-
feet. The Navajos are also agreeing that both 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.
    As a result, even with new diversions required by the proposed 
rural water supply project, the settlement's net effect is a decrease 
in annual diversion of over 130,000 acre-feet from the amount already 
authorized by federal law and state permits. And supply of the two 
projects under a 1955 priority means that direct flow diverters, such 
as irrigators, municipalities and power plants, will be unaffected by 
the demands of either project. In addition, direct flow diverters will 
receive a substantial protection from priority calls by the Navajo 
Hogback and Fruitland projects, which retain an 1868 priority, because 
of the Navajos' agreement to call first on an alternate water supply 
from Navajo Reservoir of up to 12,000 acre-feet in any year. Based on 
the hydrologic record, Hogback and Fruitland priority calls would occur 
in one out of every twenty years instead of every other year.
    With respect to water users receiving supply from the Animas-La 
Plata Project (ALP), the settlement has valuable shortage sharing 
provisions that protect those supplies. 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, but that supply is vulnerable because of ALP's 1956 priority in 
New Mexico. In the event the Upper Colorado River Basin Compact 
requires curtailment of ALP uses in New Mexico, the Navajos agree to 
provide protection to New Mexico ALP contractors up to their project 
contract amount. Under this protection, the Navajos agree to forgo 
their uses in order to make water available at the same percentage 
supply available to the proposed rural water supply project.
    The settlement also benefits water users by promoting orderly 
administration of basin resources and conservation of water. The 
settlement provides that the State Engineer will serve as water master 
in the San Juan Basin and will administer water rights in priority as 
necessary to comply with interstate compact obligations and other 
applicable law, thereby confirming authority in the state to 
comprehensively administer water usage in the basin. In addition to 
over 150,000 acre-feet of conservation of NIIP irrigation water, S. 
1171 further fosters conservation of water by authorizing funding for 
rehabilitation and construction improvements to Navajo and non-Indian 
irrigation systems diverting from the San Juan River.
    I strongly believe the proposed settlement is comprehensive and 
fair, and represents a desirable outcome for all water users in the San 
Juan Basin.
    Question 5. One set of testimony submitted for the record asserts 
that the Navajo settlement will allow the Tribe to export New Mexico's 
water to other states including Nevada.
    Does the Navajo settlement and S. 1171 allow the Navajo Nation to 
export New Mexico's water to other States? What provisions of law exist 
to preclude that from happening?
    Answer. Multiple state and federal approvals are required to export 
any water from New Mexico to another state. Under the settlement 
agreement, the Navajo Nation has agreed to comply with state law. 
Although it is unconstitutional for a state to prohibit the export of 
water to another state, New Mexico's export statute, 72-12B-1 NMSA 
1978, requires a state engineer permit for export of water and sets 
strict criteria for evaluating any request to export water. Potentially 
impaired parties would be allowed to protest any application.
    In addition, under the settlement agreement, the Navajo Nation has 
agreed that it will not seek to export water without the approval of 
the New Mexico Interstate Stream Commission.
    With respect to federal constraints, it can be argued that the 
Colorado River compacts apportion uses to individual states and do not 
allow export of water from one state to another. Arguments have also 
been raised that water cannot be transferred from the Upper Colorado 
River Basin to the Lower Colorado River Basin. S 1171 would authorize 
the use of some of New Mexico's Upper Basin water in the Lower basin 
within New Mexico but this legislation would not authorize any export 
of water from New Mexico to any other state.
  Responses of John D'Antonio, Jr., to Questions From Senator Domenici
    Question 1. Mr. D'Antonio, thank you for joining us today. The 
state of New Mexico has one of the most important and difficult 
decisions to make regarding this settlement. As you know, Congress is 
not responsible for approving the allocation of water in this 
settlement, the State is.
    Do you believe that the water allocation agreed to by the state of 
New Mexico and the Navajo Nation adequately protects current non-Indian 
uses and provides for future needs?
    Answer. The state of New Mexico believes that the Navajo settlement 
protects existing non-Navajo uses. 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.
    As I have testified, the settlement contains numerous substantial 
provisions that protect existing water uses. In addition, the 
settlement affords an important protection for the future supply of the 
three municipalities of Farmington, Bloomfield and Aztec from the 
Animas-La Plata Project (ALP). Those cities will receive more than 
10,000 acre-feet per year of ALP water for their future needs, but 
ALP's 1956 priority in New Mexico makes it vulnerable to priority 
calls. Under the settlement, the Navajos agree to provide protection to 
New Mexico contractors up to their project contract amount, in the 
event that curtailment of New Mexico's water uses is required by the 
Upper Colorado River Basin Compact.
    To meet other demands in the future, water users in the basin, as 
in other basins in the state, can acquire existing rights and change 
their use by applying for a State Engineer permit. The settlement, 
combined with the existing adjudication, will give much more certainty 
to the status of existing rights and more readily will allow for a 
transfer of use. The settlement also authorizes the Navajos to market 
water within the basin and the state, further providing a source of 
supply for additional non-Navajo demands in the future.
    Question 2. Are you convinced that non-Indians are better off with 
this settlement than they would be without it?
    Answer. It is my firm belief that we have come as close as possible 
to a resolution that provides maximum benefits and protections for non-
Navajo water users, given limitations of water supply and potential 
uncertainties of its allocation if the Navajo claims were litigated. 
Without a settlement, the Navajo Nation would assert a right to much 
larger quantities, with the potential to displace junior non-Navajo 
water users. Under the settlement, those same water users are afforded 
numerous and substantial protections.
    If the claims were litigated, the Navajos would seek large 
quantities of water under the Winters Doctrine or Federal Reserved 
Water Rights Doctrine. The Navajos would seek water for future use to 
make the Navajo reservation a permanent homeland, including by claiming 
enough water to irrigate all practicably irrigable acreage (PIA) on 
their lands in New Mexico. The quantity of water could be very large.
    Under the settlement by contrast, 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 
proposed rural water supply project. The other major water components 
of the settlement consist of already existing or authorized irrigation, 
at the Hogback and Fruitland Projects and the Navajo Indian Irrigation 
Project (NIIP).
    The state of New Mexico strongly believes that the settlement 
represents a fair and equitable resolution of Navajo claims, both for 
the Navajo Nation and for the other water users that depend on the San 
Juan River.
    This settlement has enormous non-Indian benefits, including the 
construction of the Navajo-Gallup Pipeline that would serve the City of 
Gallup. Additionally, the legislation removes the possibility that the 
Navajo Nation would receive a large water rights award from the courts, 
curtailing non-Indian uses.
    Question 3. How do you respond to the San Juan Agricultural Users' 
Association's claim that they will be hurt by this settlement? Please 
describe the benefits of the settlement to them.
    Answer. In order to fairly consider the settlement, a water user in 
the San Juan Basin must honestly evaluate the substantial risk of 
litigating the Navajo claims. I believe that such an evaluation will 
provide compelling support for the settlement.
    I have previously described the two overarching protections 
incorporated into the settlement, regarding quantity and priority: the 
Navajo Nation accepts quantification of its water rights and 
administration of its priority dates, both so as to preserve other 
existing uses and projects.
    In addition, the settlement confers other protections on non-Navajo 
water users. When we met early in the process with the San Juan 
Agricultural Users, they told us the most important protection they 
sought was recognition by the United States and the Navajo Nation of 
the 1948 Echo Ditch Decree. Most non-Indian and municipal state-based 
rights were quantified by the Echo Ditch Decree, but the United States 
and the Navajo Nation were not parties. As a result of the agricultural 
water users' concern, the settlement agreement was revised to include 
provisions prohibiting the Navajo Nation and the United States from 
challenging the elements or validity of Echo Ditch Decree.
    In 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, the Navajos are subordinating 90 
percent of their water rights. Nonetheless, the agricultural water 
users felt threatened by the prospect of priority calls by the Hogback 
and Fruitland Projects, which retain an 1868 priority. The agricultural 
users also expressed a desire to receive the benefit of Navajo 
Reservoir storage, even though they only have rights to direct flow. To 
address these additional concerns, the alternate water supply was 
defined and made a part of the settlement, requiring the Hogback and 
Fruitland projects to refrain from priority calls against upstream 
junior appropriators and instead to call on up to 12,000 acre-feet per 
year of NIIP water stored in Navajo Reservoir. This sizeable stored 
water pool will serve as a buffer to priority calls and will prevent 
curtailment of direct flow diversions the great preponderance of the 
time.
    Another benefit of stored water for direct flow diverters like the 
agricultural water users is contained in paragraph 401(a)(4) of S. 
1171. When there is at least a million acre-feet in Navajo Reservoir, 
this provision authorizes the state of New Mexico to administer 
releases of stored water at a minimum of 225 cubic-feet-per-second 
(cfs), even when inflows to the reservoir are less than that amount. In 
other words, when the direct flow would otherwise drop below 225 cfs, 
water may be released from the reservoir to keep flows at a minimum 
amount, thereby increasing and making more reliable the supply 
available to direct flow diverters.
    The settlement would also make the direct flow go farther by 
providing funding for ditch improvements. Under Section 10.0 of the 
settlement agreement, the state will contribute $10 million for ditch 
improvements and water conservation projects to benefit the member 
ditches of the agricultural water users association. Section 309(c) of 
S. 1171 authorizes over $23 million to rehabilitate the Hogback and 
Fruitland projects and Section 309(d) authorizes $11 million of 
matching funds to rehabilitate the agricultural water users' ditches. 
These funds will mean that approximately $45 million will be 
appropriated to improve the efficiency and promote conservation of 
water of the direct flow diversions, as part of the Navajo settlement.
    In opposing the settlement, the San Juan Agricultural Water Users 
simply have not taken realistic stock of their litigation posture and 
of the potential jeopardy they face absent settlement. Although the 
settlement has required compromise on all sides, the state has worked 
hard to protect all existing uses in the basin and to advance a 
settlement that strikes an equitable balance of interests and maximizes 
the attainable benefits.
    Question 4. Considering its enormous benefits to the state of New 
Mexico, do you believe that the State could contribute more towards the 
settlement?
    Answer. Yes, we are willing to discuss increasing New Mexico's 
financial commitment to this settlement, with the concurrence of the 
governor and the state legislature. As stated in response to Senator 
Bingaman's question, New Mexico has already committed significant 
funding toward projects that will benefit the Navajo Settlement and we 
have also developed the Indian Water Rights Settlement Fund that will 
enable New Mexico to meet its spending obligations for Indian water 
rights settlements. New Mexico is depending on a commitment from the 
federal administration that it will support and fund this settlement 
commensurate with its obligations.
    Question 5. Will you commit to working with the state legislature 
to secure more state money for the settlement?
    Answer. Yes. This settlement is very important to the state of New 
Mexico and we will work very hard to secure the funds to meet the 
state's cost share obligations.
    Public Law 87-483 requires that the Secretary of the Interior make 
a hydrologic determination that water will be available under New 
Mexico's allocation under the Upper Colorado River Compact before new 
contracts are issued at Navajo Reservoir. This settlement legislation 
would require new contracts at Navajo Reservoir.
    Question 6. Are you confident that this water exists?
    Answer. Yes. The Bureau of Reclamation's April 2007 Hydrologic 
Determination was signed by the Secretary of the Interior on May 23, 
2007, after the Upper Colorado River Commission by unanimous resolution 
concurred in the findings of the determination and after consultation 
with all seven Colorado River Basin states. The 2007 Hydrologic 
Determination confirmed the finding of the 1988 Hydrologic 
Determination that the annual water yield available for development by 
the Upper Basin under the Colorado River Compact is at least 6.0 
million acre-feet (maf), including evaporation from Colorado River 
Storage Project (CRSP) reservoirs, based on the critical hydrologic 
period of record ending 1978. The 2007 Hydrologic Determination 
analyzed both the existing contracts associated with Navajo Reservoir 
and the new contracts proposed by the settlement agreement and 
determined that the water is reasonably likely to be available to 
supply needs of those contracts as required by PL 87-483.
    Question 7. Please describe the steps your office has taken to 
ensure that water will be available.
    Answer. My office was instrumental in the preparation of the 2007 
Hydrologic Determination, and in obtaining the support of the Upper 
Colorado Compact Commission. In addition, New Mexico participated and 
continues to participate in forums to protect its interests in Lake 
Powell operations pursuant to the Law of the Colorado River, and 
thereby to protect against possible years of Upper Basin use 
curtailments due to extended drought, and in forums to protect our 
interests in Navajo Reservoir operations so that water demands are met 
while still complying with federal environmental laws. Continued 
Congressional support for the San Juan River Basin Recovery 
Implementation Program helps allow New Mexico to proceed with 
development of its Upper Basin apportionment while also complying with 
the Endangered Species Act. We will continue to protect New Mexico's 
Colorado River apportionments as necessary to preserve future and 
existing uses.
    Question 8. Do you believe that water would be available to 
accommodate growth in the Four Corners area? If so, for how long?
    Answer. Yes. The 2007 Hydrologic Determination takes into account 
all existing uses in the San Juan Basin and will allow for growth in 
the basin for several decades. As is the case throughout the west, 
long-term continued and sustained growth will depend on increased 
conservation, market transactions, augmentation and development of new 
supplies utilizing technologies such as brackish water desalination. In 
particular, as I testified in answer to Senator Bingaman's question, 
ALP water to meet future needs of Aztec, Farmington and Bloomfield and 
water transfers and marketing facilitated by the settlement will help 
make substantial water available to accommodate growth in the future.
                                 ______
                                 
                     Arizona Department of Water Resources,
                                        Phoenix, AZ, July 12, 2007.
Hon. Jeff Bingaman,
Chair, Senate Committee on Energy and Natural Resources, 366 Senate 
        Dirksen, Washington, DC.
    Dear Chairman Bingaman:  Thank you for the opportunity to appear 
before your Committee and present the views of the State of Arizona on 
S. 1171, the Northwestern New Mexico Rural Water Projects Act, and the 
opportunity to answer additional questions from the Committee.
    Enclosed are my answers to the Committee questions. I would like to 
reiterate that we stand ready to work with the Committee to make S. 
1171 acceptable to the State of Arizona. Should you have any questions, 
please do not hesitate to call me or my staff.

    Sincerely,
                                       Herbert R. Guenther,
                                                          Director.
                                 ______
                                 
  Responses of Herbert R. Guenther to Questions From Senator Bingaman
    Question 1. In 2003, the State of Arizona testified before this 
Committee that it should move forward with the Arizona Water Settlement 
notwithstanding the fact that the San Carlos Apache Tribe was not 
included in the Settlement. At the time Arizona indicated that the 
settlement need not be comprehensive since the Tribe's rights were 
preserved in the legislation. That is the same approach taken in S. 
1171--preserving all of Arizona's rights and interests with respect to 
the use of water in Window Rock.
    If the bill were modified to simply state that no water would be 
delivered to Arizona except in accordance with an agreement with 
Arizona and appropriate Federal legislation (including Compact 
accounting), wouldn't 't this be analogous to the San Carlos situation, 
allowing the bill to move forward without objection? Are the changes 
already proposed by the State of New Mexico (D 'Antonio letter of June 
5, 2007) sufficient to address the Compact issues you raised regarding 
water use in New Mexico?
    Answer. The San Carlos Apache Tribe (SCAT) situation is very 
different. The primary settlements for the 2004 Arizona Water 
Settlements Act were the Central Arizona Project Repayment Settlement, 
the Gila River Indian Community Water Rights Settlement (GRIC), and 
Amendments to the Southern Arizona Water Rights Settlement Act of 1982 
(SAWRSA). The GRIC settlement comprehensively addressed all the GRIC 
claims. The SAWRSA amendments updated a previously congressionally 
approved settlement. These two tribal settlements were conditions for 
final approval of the CAP Repayment Stipulation and Settlement. No 
other tribal settlement was required under those terms. While the 
Arizona parties attempted to settle the SCAT claims, we were only able 
to provide a funding mechanism to the SCAT for further negotiations. In 
1992 Congress enacted the San Carlos Apache Water Rights Settlement Act 
that only settled a portion of the claims of the SCAT. The State of 
Arizona opposed that legislation based on several factors, including 
that it was partial. Arizona should have pushed harder for a full 
settlement. Since that time implementation has been difficult, and 
litigation has continued non-stop. We do not believe it is in the best 
interests of the Navajo Nation or the parties to the litigation 
involving the Navajo water claims to have a partial settlement.
    We believe that the better solution for the Navajo Nation would be 
a complete settlement of its claims in the Little Colorado River Basin 
and in the Colorado River for lands to be served by the Northwestern 
New Mexico Rural Water Project, especially in light of the ongoing 
Navajo Nation litigation against the Secretary. New Mexico states that 
Arizona's right to choose the source of water is preserved. We have 
chosen a source of water without hearing objection from the Navajo 
Nation. Additionally, the Secretary, in the August 25, 2006 Federal 
Register Notice (71 Fed. Reg. 50449, 50451) concerning Central Arizona 
Project (CAP) water allocations under the Arizona Water Settlements Act 
included 6411 acre feet of NIA priority CAP water for use in a future 
water rights settlement agreement approved by an Act of Congress that 
settles the Navajo Nation's claims for water in the State of Arizona. 
We believe there is no other source of water available for the Window 
rock portion of the Navajo Nation settlement. For some reason New 
Mexico, and maybe the other Upper Basin States believe that Arizona's 
meager 50,000 of allocation of Upper Basin water should be used for 
Window Rock. We do not agree.
    Our issues with Compact accounting and specific congressional 
authorization for using Upper Basin water in the Lower Basin, or 
wheeling Lower Basin water through the Upper Basin can easily be 
addressed. New Mexico's language for section 303(g) is an attempt to 
meet some of our concerns. We stand ready to work with Congress to 
fully address our concerns and work on language to accomplish those 
goals.
    One can argue that this could be left to another day, but we 
believe Arizona needs the protections that we have proposed as 
modifications to this legislation in order to prevent future violations 
of the Compact.
    Question 2. Your testimony appears to endorse the concept of 
creating a Settlement Fund that can be used for this, as well as other 
settlements. That is the approach set out in Title II of the bill, 
which is intended to be used for this settlement, as well as other 
similar matters.
    What expanded concepts, as set forth in your testimony, do you 
believe need to be incorporated into Title II?
    Answer. Over the past decade Arizona has worked with the Western 
States Water Council and the Native American Rights Fund to find 
funding solutions for all water settlements. Title II is a creative way 
to meet all the western states needs. What should be explored is 
additional amounts of the Reclamation Fund be added to the Reclamation 
Settlement Fund, and making the Fund available to settlements outside 
of New Mexico. Arizona specifically wants a portion of the Reclamation 
Settlement Fund to be set aside for the Arizona Navajo Nation Lower 
Colorado River Basin and Little Colorado River Basin settlements. The 
needs of the Navajo Nation are greater than any dedicated funding that 
is available to Arizona to offer for settlement. With an adequate 
settlement funding mechanism, settlement in Arizona is likely.
    Question 3. Your testimony states that ``S. 1171 sets a precedent 
that New Mexico and Utah can increase development in the Lower Basin 
and further jeopardize Arizona rights.'' Arizona seems to be raising a 
technicality to object to New Mexico making full use of its Compact 
entitlement. There is ample precedent for a basin state making use of 
its Compact allocation out of basin. New Mexico did it with the San 
Juan-Chama project. Utah and Colorado have several transbasin 
diversions and California takes Colorado River water to the coast. The 
bottom line is that despite New Mexico's place of use in the State, the 
Upper Basin is still required to deliver an amount of water to the 
Lower Basin consistent with the Compact.
    Given that background, how are Arizona's rights being jeopardized 
by S. 1171?
    Answer. The 1922 Colorado River Compact specifically states that 
the allocations made in Article III (a) and (b) to the Upper and Lower 
Basins were for exclusive use in each of those Basins. Only once 
Congress has authorized an exception to Article III of the Compact to 
specifically grant a modification of this requirement (see 1968 
Colorado River Project Act, 43 U.S.C. 1523(d)). However, this 
congressional exception was never exercised.
    It is true that the Upper Basin states transport water out of the 
Colorado River basin to other users within their states, but there is 
no case where Colorado River water is transported between the Upper and 
Lower Basins. We believe the Compact prohibits transfers from the Upper 
Basin to the Lower Basin and that the water allocations were intended 
for the exclusive use within each basin. The Compact definition for the 
term ``Upper Basin'' includes ``and also all parts of said States 
located without the drainage area of the Colorado River System which 
are now or shall hereafter be beneficially served by waters diverted 
from the System above Lee Ferry. The Compact negotiators recognized 
transfers out of basin such as the San Juan-Chama Project and others, 
which shows the negotiators intent in using the ``exclusive use'' 
provision.
    Arizona fully supports the Upper Basin states' right to develop 
their allocations made under the Compact, but only insofar as they are 
consistent with the Compact. Finding ways around the Compact that allow 
use of Upper Basin water in the Lower Basin, without first obtaining 
specific congressional recognition and authorization creates precedent 
for similar Compact violations in the future, thereby increasing the 
chance that Arizona will suffer the effects of a Lower Basin shortage. 
Under the 1968 Act the Central Arizona Project (CAP) and other post-
1968 users are first to take shortages. CAP is a primary water source 
for the cities in the Phoenix and Tucson metropolitan areas. Congress 
should carefully weigh the equities before allowing such a change in 
the Compact. Arizona has offered language which would address our 
concerns, and allow the Northwestern New Mexico Project to go forward.
    Question 4. Mr. Guenther, you oppose this settlement despite the 
fact that it would provide a reliable source of water to the water-
short town of Window Rock, Arizona?
    Answer. The San Juan settlement does not provide water to Window 
Rock. The settlement and legislation provide a pipeline that could 
carry water to Window Rock without a designated source of water. Under 
the present language in S. 1171, only an Arizona settlement with the 
Navajo Nation will provide water to Window Rock. Without an adequate 
funding mechanism for an Arizona settlement, as we suggest could come 
from Title II of S. 1171, we will not have an Arizona settlement and 
Window Rock will not receive water. The unintended consequence of S. 
1171 will be to divide the Navajo Nation into two classes. One part of 
the Nation will have a clear right and the necessary finances to 
provide water to its members, and the other part of the Nation will 
not.
    Question 5. As you'll recall, Senator Bingaman and I worked 
diligently with Senator Kyl to pass the Arizona Water Rights Settlement 
Act of 2004. You state in your testimony that you would like to delay 
the legislation we are considering today until we include additional 
Arizona Indian water rights settlements.
    Why did you believe it was appropriate to pursue the Arizona Water 
Rights Settlement Act of 2004 without including the Arizona Indian 
water rights settlements you reference in your testimony today?
    Answer. We do recall the great assistance that Governor Richardson, 
Senator Bingaman and yourself gave in final passage of the Arizona 
Water Settlements Act, and we thank you for that assistance. However, 
we also recall that it was the issues raised by New Mexico on the Gila 
River, both for additional water and new funding (a requested $200 
Million) from the Arizona legislation that delayed bringing the 
legislation to the full Committee and the Floor of the Senate.
    That Act settled the CAP repayment litigation, settled the water 
rights claims for the Gila River Indian Community, and amended the 
Southern Arizona Water Rights Settlement Act of 1982 to settle the 
claims of the Tohono O'odham Nation for a portion of its reservation. 
While the state parties attempted to settle the San Carlos Apache Tribe 
(SCAT) claims, we were only able to provide a funding mechanism to the 
SCAT for further negotiations. Those were the only claims ready for 
settlement in 2004. The driving force for the Act was the CAP repayment 
litigation that involved billions of dollars. As we note below in the 
answer to another of your questions Arizona has settled the claims of 
12 of the 21 Indian tribes within the state.
    Question 6. Mr. Guenther, please describe for the Committee the 
status of the negotiations surrounding the resolution of Indian water 
rights claims on the Lower Mainstem Colorado River and the Little 
Colorado River basins in Arizona.
    Answer. The negotiations among the state parties, Navajo Nation, 
Hopi Tribe and the United States are being conducted under a 
confidentiality order of the United States District Court for the 
District of Arizona. For that reason we are not at liberty to disclose 
the detail of those discussions. We can report that the state parties 
recently mad a comprehensive settlement proposal to Navajo Nation, Hopi 
Tribe and the United States. All the parties will meet again on July 
13. The state parties are struggling with the issues related to 
financing major water project construction to serve the western 
portions of the Navajo Nation. The state parties believe that it is a 
Federal obligation to fund these projects, but considering the 
difficulty in obtaining new appropriations, it may be unrealistic to 
expect that level of funding. Arizona is encouraged by the proposed 
Reclamation Water Settlements Fund contained in Title II of S. 1171, as 
we noted to Senator Bingaman in answer to his question. If the revenue 
sources for this Fund could be expanded and made available for Navajo 
and Hopi projects within Arizona, it is more likely that a settlement 
could be achieved fairly quickly.
    Question 7. When do you estimate these negotiations will be 
completed?
    Answer. It is hoped that with a funding solution we can complete 
the settlement quickly. Without a funding mechanism there will likely 
be no settlement.
    Question 8. Mr. Guenther, you state in your testimony that we 
should expand on Title II of this legislation to include funding for a 
Navajo Nation/Hopi Tribe settlement in Arizona. As you'll recall, the 
Arizona Water Settlement Act of 2004 contained $250 million for future 
Indian water rights settlements in Arizona.
     For what Arizona Indian water rights settlements do you plan to 
use the $250 million contained in the Arizona Water Rights Settlement 
Act for future Arizona Indian water rights settlements?
    Answer. Arizona seeks additional help with an Arizona Navajo Nation 
settlement because the needs of the Navajo Nation far exceed the amount 
available from the settlement fund of the Arizona Water Rights 
Settlement Act settlement fund. Arizona has 21 federally recognized 
Indian Tribes. Four of those tribes have had their rights fully 
determined by the U.S. Supreme Court in Arizona v. California. 
Congressionally enacted settlements (including the pending 
implementation of the Arizona Water Settlements Act) have fully settled 
the claims of another six tribes. Two other tribes have had portions of 
their reservations settled pursuant to federal authorization. This 
leaves the Navajo Nation, Hopi Tribe, Hualapai Tribe, Havasupai Tribe, 
Kaibab-Paiute Tribe, White Mountain Apache Tribe, Pascua Yaqui Tribe, 
Yavapai-Apache Nation, Tonto Apache Tribe, and portions of the San 
Carlos Apache Tribe and Tohono O'odham Nation. Even without the Navajo/
Hopi settlement it is unlikely that the $250 million set aside in the 
Arizona Water Settlements Act will be adequate.
    Question 9. How much additional funding do you anticipate will be 
necessary for the Arizona Hopi and Navajo Indian water rights 
settlements?
    Answer. As noted above, the confidentiality order constrains what 
we can say in response to this question. We can report that the Navajo 
Nation and the Hopi Tribe have both presented funding proposals based 
on their perceptions of the needs of people on the reservations. The 
state parties have countered with a much lower number. As yet, the 
United States has not proposed a funding amount. We believe that the 
Nation and the Tribe would be willing to confer with your staff about 
their funding needs.
                                 ______
                                 
      Responses of Carl Artman to Questions From Senator Bingaman
    [Responses to the following questions were not received at the time 
the hearing went to press.]

    Question 1. Does the Department recognize any responsibility for 
trying to address the serious drinking water crisis that exists on the 
Navajo Reservation? Does OMB? If so, what actions are being taken to 
address that situation?
    Question 2. Your testimony expresses concern about the use of a 
small percentage of surplus revenues into the Reclamation Fund to help 
ensure implementation of the Navajo settlement or other water 
settlements involving the Bureau of Reclamation--a concept endorsed by 
the Western Governors Association. In particular, you object because 
use of the Fund in this matter would bind future Presidents and 
Congresses.
    Does the Arizona Water Settlements Act involve direct spending? 
Does that spending bind future Presidents and Congresses? When was that 
bill signed into law?
    Does the San Joaquin legislation currently pending before this 
Committee (S. 27) involve direct spending? Would the capital cost 
repayments that are contemplated to be expended in S. 27, otherwise be 
deposited in the Reclamation Fund? Did the Administration support or 
oppose that legislation? Would the direct spending in that legislation 
bind future Presidents and Congresses if the bill were enacted into 
law?
    Should settlements involving the resolution of Federal issues in 
litigation, which have been approved by Congress, be implemented?
    Question 3. Based on information supplied by Reclamation staff, it 
appears that over the last 5 years, revenues into the Fund averaged 
$1.76 billion while appropriations from the Fund averaged $925 
billion--an annual difference of approximately $834 million. The Fund 
is intended to be used to provide revenues to fund projects authorized 
under Reclamation law.
    What happens with the surplus revenues flowing into the Fund which 
are not currently being expended for Reclamation purposes? Are they 
being used to fund other non-Reclamation governmental functions?
    For fiscal years 2005 and 2006, please identify the revenue that 
flow into the Reclamation Fund from each state. Please be sure to 
include State-specific revenue streams from Accounts 5000.24; 5000.25; 
5000.27; 5000.28; and 5000.29. For Account 5000.28, please include the 
following subaccounts: 601; 603; 604; 605; 609; 610; 611; and 614.
    Question 4. The Administration recently put together a $7 billion 
settlement proposal intended to resolve the Cobell trust fund 
litigation, and related matters. In announcing its proposal, Secretary 
Kempthorne indicated that the package was intended to strengthen the 
partnership between the Federal Government and Native Americans by 
transitioning to a relationship defined by ``economic prosperity, 
empowerment, and self-reliance for tribes and individual Indians''. At 
this time, it doesn't appear that the proposal is likely to result in a 
settlement.
    A stable and reliable supply of water is fundamental to economic 
prosperity, empowerment, and self-reliance.
    If the $7 billion budgeted for a Cobell settlement is not going to 
be used for that purpose, is it possible to make that funding available 
to help implement Indian water rights settlements?
    Question 5. The Administration testimony poses the question of 
whether or not the goals of the settlement can be met by alternative 
and potentially less expensive means. It's very late to be asking that 
question. This study, first authorized in 1971, has been proceeding 
since at least 1998, and has expended over $3.4 million in federal 
money (not counting the investment by New Mexico; Gallup; and the 
Navajo Nation). Moreover, the EIS finds that the Project as envisioned 
in the bill is the superior alternative from an economic, 
environmental, and overall perspective.
    Given all the background and analysis already undertaken by 
Reclamation, the Navajo Nation, the State of New Mexico, City of 
Gallup, and Jicarilla Apache Nation, do you really think that a less 
costly alternative is available to meet the water supply needs that 
exist in Northwestern New Mexico? If so, why was that alternative not 
analyzed as part of the EIS?
    Question 6. After earlier contemplating whether a cheaper 
settlement exists, your testimony then goes on to question whether or 
not S. 1171 will accomplish the goals of the settlement. You note it 
``especially troubling that the bill does not address the distribution 
systems that must be constructed before any water will actually reach 
the homes of those who need it.'' Of course adding distribution systems 
would simply add more cost, which I assume, would simply result in an 
even stronger objection. Your statement also reflects a lack of 
understanding of the range of activities already being undertaken by 
the State of New Mexico, City of Gallup, and the Navajo Nation to 
address critical drinking water needs.
    Are you aware that the State of New Mexico has invested 
approximately $25 million already for regional infrastructure and 
distribution systems over the last 4 years that will deliver 
groundwater for an interim period, but ultimately tie-into the Navajo-
Gallup pipeline? Are Reclamation and the Department taking this 
activity into account when it questions achieving the goals of the 
settlement?
    Question 7. Distribution systems that will eventually tie into the 
Navajo-Gallup Project, such as the Cutter lateral, are currently being 
constructed through mostly state and local efforts. BIA, however, is 
responsible for approving rights-of-way for the distribution lines that 
go through tribal and allotted lands. The approval process is critical 
to constructing the lines without undue delay.
    What is the status of the right-of-way approvals currently pending 
before the BIA? Is BIA efficiently processing the right-of-way 
applications so that the distribution systems can be constructed 
without bureaucratic delays?
    Question 8. The Draft EIS includes a detailed cost-breakdown for 
the Project.
    What is the estimated cost of the lateral that will take water from 
the main pipeline to Window Rock, AZ?
                                 ______
                                 
      Responses of Carl Artman to Questions from Senator Domenici
    [Responses to the following questions were not received at the time 
the hearing went to press.]

    Question 9. Assistant Secretary Artman, for roughly 5 years, I have 
been pleading with the Administration to work with the parties to New 
Mexico Indian water rights settlements. You state in your testimony 
that the Administration is unable to support this settlement because 
you were not involved in negotiations relating to the settlement. I 
find this very frustrating.
    Do you commit to working with the parties to this settlement and 
other New Mexico settlements from this date forward?
    Question 10. In 1990, President George H. W. Bush's Administration 
published ``Criteria and Procedures for the Federal Government's 
Participation in Indian Water Rights Settlement Negotiations.'' The 
``Criteria and Procedures'' provide that federal contribution for 
Indian water rights settlements should consist of the sum of (1) 
calculable legal exposure and (2) federal trust responsibilities to the 
Indian nations.
    Do the 1990 ``Procedures and Criteria'' reflect the current policy 
of this Administration?
    Question 11. Do you believe that providing a reliable water supply 
to the Navajo people falls under the federal government's trust 
responsibilities to the Navajo Nation? If not, why?
    Question 12. The Arizona Water Settlements Act of 2004 had an 
estimated cost of $2.2 billion and the Snake River Settlement Act had 
an estimated cost of $163 million. Both of these settlements were 
largely supported by the current Administration.
     How are these two settlements distinguishable from the Navajo, 
Aamodt, and Abeyta Settlements, particularly with respect to federal 
contribution?
    Question 13. Which of the components requiring federal funding in 
S. 1171 does the Administration oppose and which does it support?
    Question 14. Mr. Artman, in your testimony, you state that the 
Administration has ``serious concerns'' with the funding proposal 
contained in Title II of this bill. I have also introduced legislation 
creating a fund to pay for New Mexico Indian water rights settlements. 
With current annual budgets of $34 million for the Indian Land and 
Water Claims Settlement Fund, it has become very difficult to find the 
money for New Mexico Indian water rights settlements.
    Absent a provision providing greater sums of funding for Indian 
water rights settlements, how do you propose we fund the settlements?
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

                                  Secretary of the Interior
                                      Washington, DC, June 8, 2007.
Hon. Bill Richardson,
Governor of New Mexico, Santa Fe, NM.
    Dear Governor Richardson: I am writing this letter to inform you 
that I have approved and signed the 2007 Hydrologic Determination 
(Determination) for a proposed contract from Navajo Reservoir to 
support the Navajo-Gallup Water Supply Project (Project). The Project, 
if authorized through legislation, has been proposed to settle the 
water rights claims of the Navajo Nation in the San Juan River Basin of 
New Mexico.
    Each of the Colorado River Basin States has a vital interest in the 
Colorado River, and I wanted to personally inform you of the completion 
of the Determination in light of the importance of having direct and 
open communication on this valuable resource. A Determination for all 
proposed long-term contracts for water from Navajo Reservoir is 
mandated by Public Law 87-483, which requires the Secretary of the 
Interior to undertake an investigation of whether there is sufficient 
water within New Mexico's Compact apportionment to support any such 
long-term contract for water from Navajo Reservoir. That law further 
requires the Determination and the proposed contract be forwarded to 
Congress for its approval. Because the United States has not negotiated 
a contract with the Navajo Nation, the City of Gallup, or any other 
potential water users of the Project as of this time, it is premature 
to forward the Determination to Congress. As soon as such a contract(s) 
is(are) negotiated, we will forward them and the Determination to 
Congress.
    The finding in the Determination that there is likely to be 
sufficient water to support the proposed contract removes any 
Department of the Interior concerns about potential limitations on 
water supply. This is in keeping with my commitment to the New Mexico 
Congressional delegation that we will attempt to resolve all procedural 
requirements in order to facilitate a fair and open debate on the 
merits of the proposed settlement, even though the Administration has 
no position on the settlement at this time.
    In developing the Determination, the Bureau of Reclamation has 
worked closely with all of the Colorado River Basin States in a manner 
keeping with the spirit of cooperation the Basin is currently enjoying 
and is in compliance with the Colorado River Compact and the Law of the 
River. I am personally thankful for the assistance of all the Basin 
States in finding a way to allow the Determination to move forward.
    Please contact me if you have any questions or concerns in this 
matter.
            Sincerely,
                                           Dirk Kempthorne.
               Attachment.--Hydrologic Determination 2007
 water availability from navajo reservoir and the upper colorado river 
                      basin for use in new mexico
I. Executive Summary
    Determination as to the availability of water under long-term 
service contracts for uses from Navajo Reservoir involves a projection 
into the future of estimated water uses and water supplies. On the 
basis of this hydrologic investigation, water depletions by the Upper 
Basin states from the Upper Colorado River Basin can be reasonably 
allowed to rise to an annual average of 5.76 million acre-feet (maf) 
per year, exclusive of Colorado River Storage Project (CRSP) reservoir 
evaporation from Lake Powell, Flaming Gorge Reservoir, and the Aspinall 
Unit. This depletion level can be achieved under the same shortage 
criteria upon which the allowable Upper Basin yield was determined in 
the 1988 Hydrologic Determination.
    This document determines the availability through at least 2060 of 
water from New Mexico's Upper Basin allocation and Navajo Reservoir to 
service a proposed contract for the Navajo Nation's consumptive uses in 
New Mexico under the Navajo-Gallup Water Supply Project in the annual 
amount of 20,780 acre-feet (af) and the Navajo Indian Irrigation 
Project (NIIP) in the amount of 270,000 af per year on average over any 
period of ten consecutive years. It also is likely that sufficient 
water will be available from Navajo Reservoir to service the proposed 
contract after the 2060 planning horizon, depending upon future 
storage, hydrologic conditions, and other factors. This determination 
does not guarantee that the United States will be able to deliver water 
under the proposed contract without shortages in deliveries, and does 
not obligate the United States to maintain storage facilities beyond 
their useful lives. The proposed contract is part of a Navajo Nation 
water rights settlement in the Upper Basin in New Mexico, and the 
settlement provides that uses made pursuant to the contract will be 
subject to administration in accordance with the Upper Colorado River 
Basin Compact and New Mexico state law. Implementation of the Navajo-
Gallup Water Supply Project and the NIIP is subject to compliance with 
federal environmental laws including the National Environmental Policy 
Act and the Endangered Species Act.
II. Introduction
    The State of New Mexico has proposed the Navajo-Gallup Water Supply 
Project to provide a renewable water supply from the San Juan River for 
municipal and domestic uses for Indian and non-Indian communities 
located within New Mexico. Uses under the project by the Jicarilla 
Apache Nation and the City of Gallup would be supplied through the 
Jicarilla Apache Nation's Navajo Reservoir water supply contract 
approved by Congress in 1992. Uses in New Mexico under the project by 
the Navajo Nation would be supplied through a proposed new Navajo 
Reservoir water supply contract that is a component of the San Juan 
River Basin in New Mexico Navajo Nation Water Rights Settlement 
Agreement (hereinafter referred to as the Settlement Agreement) that 
the State of New Mexico and the Navajo Nation executed on April 19, 
2005. The new contract also would supersede the existing Navajo 
Reservoir water supply contract for the NIIP.
    On June 19, 2003, the Upper Colorado River Commission resolved that 
the States of the Upper Division consent to the Navajo-Gallup Water 
Supply Project, provided that water diverted by the project for use in 
New Mexico shall be a part of the consumptive use apportionment made to 
the State of New Mexico by Article III(a) of the Upper Colorado River 
Basin Compact. The maximum amount of consumptive use through the 
project by the Navajo Nation in New Mexico that would be permitted in 
any one year under the Settlement Agreement and the proposed contract 
is 20,780 acre-feet.
    Public Law 87-483 at section 11(a) requires that no long-term 
contract, except contracts for the NIIP and the San Juan-Chama Project, 
shall be entered into for the delivery of water stored in Navajo 
Reservoir, or any other waters of the San Juan River and its 
tributaries to which the United States is entitled, until the Secretary 
of the Interior has determined by hydrologic investigation that 
sufficient water to fulfill such contract is reasonably likely to be 
available for use in the State of New Mexico under the allocations made 
in Articles III and XIV of the Upper Colorado River Basin Compact, has 
submitted such determination to Congress, and Congress has approved the 
contract. The last such hydrologic determination was approved by the 
Secretary on February 2, 1989 (Hydrologic Determination, 1988, Water 
Availability from Navajo Reservoir and the Upper Colorado River Basin 
for Use in New Mexico, hereinafter referred to as the 1988 Hydrologic 
Determination). The 1988 Hydrologic Determination evaluated the 
availability of water from the Navajo Reservoir water supply for the 
Jicarilla Apache Nation's Navajo Reservoir water supply contract. The 
State of New Mexico, by letter dated May 3, 2005, requested that the 
1988 Hydrologic Determination be updated to evaluate the availability 
of water to service the proposed Navajo-Gallup Water Supply Project.
    This hydrologic investigation is made for the purpose of 
contracting for water from the Navajo Reservoir water supply for the 
Navajo Nation's uses in New Mexico under the Navajo-Gallup Water Supply 
Project. The Bureau of Reclamation prepared this hydrologic 
investigation in consultation with the Upper Colorado River Commission 
because of the critical nature of this determination of the Upper Basin 
water supply. The Upper Colorado River Basin Compact created and 
defined several areas of responsibility for the Commission that 
directly and indirectly relate to this investigation.
III. Upper Basin Yield
            A. General Upper Basin Hydrology
    Based on the Bureau of Reclamation's Colorado River Simulation 
System (CRSS), natural flows for the period 1906-2000, the natural 
runoff from the Upper Colorado River Basin averages about 15.3 maf per 
year at Lee Ferry. Of this amount, approximately 2 maf per year 
originates in the San Juan River Basin above Bluff, Utah. New Mexico 
can only develop its Upper Basin allocation from the San Juan River and 
its tributaries. The Bureau of Reclamation's Colorado River System 
Consumptive Uses and Losses Report for 1996-2000 indicates that current 
consumptive uses from the San Juan River Basin average about 382,400 af 
per year in New Mexico and about 192,500 af per year in Colorado. Only 
minor amounts of depletions are made in the San Juan River Basin in 
Utah and Arizona.
            B. Approach
    This hydrologic investigation considers and uses many of the same 
basic assumptions as the 1988 Hydrologic Determination. Both 
investigations assume use of the CRSS natural flows at Lee Ferry, 
minimum releases from Lake Powell of between 7.48 maf and 8.23 maf 
annually, an allowable overall shortage of no more than 6 percent for a 
critical period, either maintenance or use of the minimum power pools 
at CRSP units, reduced storage capacity in Lake Powell due to 
sedimentation, and inclusion of bank storage. The CRSS natural flows at 
Lee Ferry for the period 1971-1980 were increased to reflect 
recalculation of historic irrigation depletions in the Upper Basin 
using the Soil Conservation Service (SCS) modified Blaney-Criddle 
method with SCS effective precipitation. The revised CRSS natural flows 
for 1971-1980 are consistent with the CRSS natural flows at Lee Ferry 
determined for the remainder of the 1906-2000 period of record. Also, 
sedimentation in Lake Powell was adjusted to reflect a 2060 planning 
horizon, and a 4 percent bank storage factor was used in this 
investigation consistent with Reclamation's current CRSS model.
    Neither the Lower Division states nor the Upper Colorado River 
Commission agree with the modeling assumption for the objective minimum 
release used in this report. At the request of the Commission, this 
hydrologic investigation considers for planning purposes both the 
objective minimum release of 8.23 maf and a minimum release from Lake 
Powell of 7.48 maf annually. However, this hydrologic determination 
does not quantify the Colorado River Compact Article III(c) requirement 
or make or rely on a critical compact interpretation regarding Article 
III(c). The 1988 Hydrologic Determination also showed the Upper Basin 
yields under these minimum release scenarios.
    Mass balance analyses were used to analyze potential water use by 
the Upper Basin under 2060 conditions. The mass balance considers Upper 
Basin reservoir storage, natural flows at Lee Ferry, deliveries to the 
Lower Basin, consumptive use demands in the Upper Basin, and CRSP 
evaporation as a function of storage volume. All existing Upper Basin 
storage capacity was included in the analysis because all storage 
supports water use in the Upper Basin and impacts stream flows. The 
CRSP and non-CRSP reservoirs as groups were assumed to be the same 
percent full each year, and CRSP storage was assumed to be distributed 
between units in accordance with the average historic storage 
distribution. The CRSP reservoir evaporation that is used in the mass 
balance analyses includes evaporation from Lake Powell, Flaming Gorge 
Reservoir, and the Aspinall Unit that is shared among the Upper 
Division States, but excludes evaporation from Navajo Reservoir which 
is chargeable to the states based on use. Shared CRSP reservoir 
evaporation is modeled using a regression equation relating historic 
shared CRSP reservoir evaporation from Lake Powell, Flaming Gorge 
Reservoir, and the Aspinall Unit to the aggregate historic storage 
volume in these reservoirs plus Navajo Reservoir. Evaporation equations 
were developed for both active and live storage, and were applied to 
estimate annual shared CRSP evaporation based upon yearly reservoir 
storage volume (surface area). The 1988 Hydrologic Determination 
considered variations in shared CRSP reservoir evaporation with storage 
for conducting statistical trace analyses to evaluate possible 
frequencies and magnitudes of shortages; however, it deducted a long-
term average shared CRSP reservoir evaporation of 0.52 maf per year 
from the critical-period Upper Basin yield of at least 6.0 maf/yr to 
determine the amount of water available for Upper Basin uses through 
the critical period.
            C. Results
    Mass balance analyses were performed for various combinations of 
storage, Lower Basin deliveries, and overall shortages to evaluate the 
allocation of water to the Upper Basin (see mass balance analyses 
provided in Appendix A). The following is a summary of the results of 
the analyses:

------------------------------------------------------------------------
                                   Minimum        Yield      Yield with
                                 Lower Basin     without     6% Overall
      Storage Assumption          Delivery      Shortages     Shortages
                                    (maf)         (maf)         (maf)
------------------------------------------------------------------------
Maintain minimum power pools..         8.25          5.55          5.79
                                       7.50          6.30          6.57
Use minimum power pools.......         8.25          5.72          5.98
                                       7.50          6.47          6.76
------------------------------------------------------------------------

    The yield for this analysis is defined as the amount of water 
available at Lee Ferry for use, on average, by the Upper Basin, 
exclusive of shared CRSP reservoir evaporation. Shortages in the above 
table are defined as 6 percent or less overall computed shortage for 
any period of 25 consecutive years consistent with the 1988 Hydrologic 
Determination. Results are shown for minimum Lower Basin deliveries of 
8.25 maf and 7.50 maf as was done in the 1988 Hydrologic Determination. 
The analyses in this investigation should not be construed to prejudice 
the positions of either the Upper Colorado River Commission or the 
States of the Lower Division as to the interpretation or administration 
of Article Ill of the Colorado River Compact.
    For those analyses that use an allowable or tolerable overall 
shortage of 6 percent or less of the use over any period of 25 
consecutive years, the results indicate that there would be 5 years of 
shortage to meet all demands on the Upper Basin out of 95 years of 
record used in this investigation. However, the annual amounts of 
computed shortages for those five years would not fully materialize 
because Upper Basin consumptive uses will be below average under 
critical period hydrology due to physical water supply shortages at the 
sites of use in the Upper Basin. For example, the natural flow at Lee 
Ferry for 1977 was only 5.55 maf, and severe water supply shortages 
occurred throughout the Upper Basin in that year. The computations of 
shortage in this analysis give conservatively large estimates of annual 
shortages at Lee Ferry and do not fully reflect all factors, including 
physical shortages in the Upper Basin that might contribute or relate 
to a shortage condition at any given time. The computed shortages in 
this investigation do not equate to administrative calls to curtail 
Upper Basin uses.
            D. Comparison to 1988 Hydrologic Determination
    The 1988 Hydrologic Determination concluded that the total Upper 
Basin yield, including CRSP reservoir evaporation, is at least 6.0 maf 
per year for the 1953-1977 critical period hydrology with a 6 percent 
allowable overall shortage for the period. Under the conditions assumed 
in the current investigation, the shared CRSP evaporation varies with 
CRSP storage assumptions and storage levels. Assuming an average annual 
Upper Basin use of 5.79 maf, an annual Lower Basin delivery of 8.25 
maf, and maintenance of the power pools, the shared CRSP evaporation 
would range from an average of about 0.25 maf per year over the worst 
25-year period of reservoir storage draw down (1953-1977) to an average 
of about 0.49 maf per year over the period of record used in the 
analysis (1906-2000). Thus, the total Upper Basin depletion, including 
both Upper Basin uses and CRSP reservoir evaporation, would average 
about 6.04 maf per year or more over any period of 25 consecutive 
years. The total Upper Basin depletion amount for this scenario for the 
1953-1977 period is comparable to the total Upper Basin depletion of 
6.0 maf per year determined to be available for the period by the 1988 
Hydrologic Determination. The difference is due to the revisions made 
to the CRSS natural flows for 1971-1980. If the minimum power pools are 
used, the shared CRSP reservoir evaporation is reduced due to increased 
reservoir storage draw downs.
IV. Water Use Projections
            A. Upper Basin
    The Upper Colorado River Commission last approved depletions 
schedules for the Upper Division States for planning purposes in 1999. 
The depletions schedules, dated January 2000, project that the total 
Upper Basin use exclusive of shared CRSP reservoir evaporation will 
average about 5.37 maf per year under 2060 development conditions. 
Unless additional Upper Basin water development occurs by 2060 as 
compared to the January 2000 depletions schedules, the Upper Basin use 
may average less than about 5.40 maf per year from now through 2060. 
The time required to develop the Upper Basin allocation reduces risk of 
shortage within the 2060 planning horizon.
            B. State of New Mexico
    For use in this investigation, the New Mexico Interstate Stream 
Commission provided the Bureau of Reclamation with a preliminary 
revised schedule of anticipated depletions through 2060 from the Upper 
Basin in New Mexico dated May 2006 (see Appendix B). The revised 
depletions schedule includes irrigation depletions calculated using the 
SCS modified Blaney-Criddle method with SCS effective precipitation so 
that demands and supply for this hydrologic investigation are evaluated 
using consistent methodologies.
    The irrigation depletions for the Navajo Nation's irrigation 
projects are water right depletion amounts provided by the Settlement 
Agreement. Both this hydrologic investigation and the 1988 Hydrologic 
Determination assume use of the full depletion amount for the NIIP. 
This is a conservative assumption because the total NIIP depletion 
right is not expected to be fully utilized under normal farm management 
practices. The revised depletions schedule does not include New 
Mexico's allocation of shared CRSP reservoir evaporation. The revised 
New Mexico depletions schedule shows a total anticipated depletion of 
642,000 af per year, on average, for uses in New Mexico under 2060 
development conditions. This represents an increase in New Mexico's 
total Upper Basin depletion, excluding shared CRSP reservoir 
evaporation, of 23,000 af per year, or about 0.02 maf per year, as 
compared to the January 2000 depletions schedules.
V. Probabilities of Calls to Curtail Upper Basin Uses
    The 1988 Hydrologic Determination included a probabilistic risk 
analysis of administrative calls to curtail Upper Basin uses that 
indicated that: (1) such calls would occur rarely at an Upper Basin 
demand level of 6.1 maf per year, though their effects could have 
significant impact to the Upper Basin; and (2) the frequency and 
magnitude of such calls would diminish rapidly below this demand level. 
The risk analysis was made using the CRSS model. It is not necessary 
for this investigation to duplicate such a risk analysis.
    The computations of shortage in this current investigation give 
conservatively large estimates of annual shortages at Lee Ferry and do 
not fully reflect all factors, including physical shortages in the 
Upper Basin that might contribute or relate to a shortage condition at 
any given time. While this investigation uses a 2060 reservoir storage 
sedimentation condition for Lake Powell, a risk analysis should vary 
the storage development and sedimentation conditions over time. In 
addition, it will take decades to develop the Upper Basin allocation. 
Therefore, risk of shortage is reduced within a 2060 planning horizon. 
Even using the CRSS model, computed shortages would not necessarily 
equate to administrative calls to curtail Upper Basin uses.
VI. Physical Availability of Water from Navajo Reservoir
    The Bureau of Reclamation, using a detailed hydrologic model for 
the San Juan River Basin, has evaluated the physical availability of 
water from Navajo Reservoir and the San Juan River for the Navajo-
Gallup Water Supply Project, taking into account, among other things, 
the habitat needs of San Juan River populations of fish species listed 
as endangered under the Endangered Species Act. The physical water 
supply analysis contained in the Biological Assessment, Navajo-Gallup 
Water Supply Project, dated August 16, 2005, indicates that sufficient 
water is likely to be available from the Navajo Reservoir water supply 
for the Navajo Nation's uses under the project. Although the depletions 
for individual uses in New Mexico that were used in the Biological 
Assessment differ slightly from those in New Mexico's May 2006 revised 
depletions schedule, the physical water supply analysis in the 
Biological Assessment assumes up to about 640,500 af per year of 
depletion, on average, in New Mexico from the San Juan River. This 
amount of total average depletion in New Mexico is not significantly 
different than the amount of total average depletion in New Mexico 
shown in the May 2006 revised New Mexico depletions schedule under 2060 
development conditions.
VII. Conclusions
    It is concluded that based on the analysis performed by Reclamation 
in consultation with the Upper Colorado River Commission, the Upper 
Basin yield and New Mexico water allocation needed to support New 
Mexico's revised Upper Basin depletions schedule are reasonably likely 
to be available. The mass balance analyses results are sufficient to 
conclude that: (1) the Upper Basin yield is at least 5.76 maf per year, 
on average, excluding shared CRSP reservoir evaporation; (2) New 
Mexico's Upper Basin allocation is at least 642,400 af per year, 
excluding shared CRSP reservoir evaporation; and (3) the total 
anticipated average annual consumptive use in New Mexico from the Upper 
Basin, including Navajo Reservoir evaporation of 642,000 af per year as 
shown in the revised New Mexico depletions schedule is not likely to 
exceed New Mexico's Upper Basin allocation. This conclusion is reached 
assuming full use of the Navajo Nation's proposed depletion rights 
under the Settlement Agreement for both the Navajo-Gallup Water Supply 
Project and the NIIP.
    Based upon this hydrologic investigation for a planning horizon 
through 2060, the May 2006 revised New Mexico depletions schedule, and 
the Biological Assessment for the Navajo-Gallup Water Supply Project, 
sufficient water is reasonably likely to be available from the Navajo 
Reservoir water supply through at least 2060 to fulfill the contract 
that is proposed by the Settlement Agreement to provide water for the 
Navajo Nation's uses in New Mexico under the Navajo-Gallup Water Supply 
Project and the NIIP. If the term of the contract extends beyond 2060, 
or is perpetual as proposed by the Settlement Agreement, the risk of 
shortages in deliveries under the contract may increase after 2060 
depending upon future storage, hydrologic conditions, and other 
factors. Section 11(a) of Public Law 87-483 allows for contracting of 
water from Navajo Reservoir up to a total amount that, in the event of 
shortage, still results in a reasonable amount of water being available 
for the diversion requirements of the NIIP and the San Juan-Chama 
Project.
VIII. Disclaimers
            A. Interstate Compacts and Federal Laws
    Nothing in this report is intended to interpret the provisions of 
the Colorado River Compact (45 Stat. 1057), the Upper Colorado River 
Basin Compact (63 Stat. 31), the Water Treaty of 1944 between the 
United States of America and the United Mexican States (59 Stat. 1219), 
the decree entered by the Supreme Court of the United States in Arizona 
v. California. et al. (376 U.S. 340), the Boulder Canyon Project Act 
(45 Stat. 1057), the Boulder Canyon Project Adjustment Act (54 Stat. 
774), the Colorado River Storage Project Act (70 Stat. 105), or the 
Colorado River Basin Project Act. (82 Stat. 885). Implementation of the 
Navajo-Gallup Water Supply Project and the NIIP is subject to 
compliance with federal environmental laws including the National 
Environmental Policy Act and the Endangered Species Act.
            B. Proposed Navajo Reservoir Water Contract
    This determination is not to be construed as acceptance by the 
Department of the Interior of the terms of the Settlement Agreement, 
including the terms of the proposed contract. This determination also 
does not guarantee that the United States would be able to deliver 
water under the proposed contract without shortages in deliveries on 
account of drought or other causes outside the control of the 
Secretary. Nothing in this determination shall be construed to impose 
on the United States any obligation to maintain CRSP storage 
facilities, including Navajo Dam and Reservoir, or NIIP or Navajo-
Gallup Water Supply Project facilities beyond their useful lives or to 
take extraordinary measures to keep these facilities operating.
                           list of appendices
    APPENDIX A--Mass Balance Analysis*
---------------------------------------------------------------------------
    * Documents have been retained in committee files.
---------------------------------------------------------------------------
    APPENDIX B--Reservoir Storage*
    APPENDIX C--CRSP Evaporation Analysis*
    APPENDIX D--New Mexico Depletion Schedule*
    APPENDIX E--Upper Colorado River Commission Resolution**
---------------------------------------------------------------------------
    ** See Appendix 2.
---------------------------------------------------------------------------
                                 ______
                                 
         2003 RESOLUTION OF THE UPPER COLORADO RIVER COMMISSION
 regarding the use and accounting of upper basin water supplied to the 
 lower basin in new mexico by the proposed navajo-gallup water supply 
                                project
    WHEREAS, part of the State of New Mexico is within the Upper Basin 
and part is within the Lower Basin as defined in Article II of the 
Colorado River Compact (45 Stat. 1057); and
    WHEREAS, New Mexico has proposed the Navajo-Gallup Water Supply 
Project to divert water from the Upper Basin to serve communities 
located within the Lower Basin in New Mexico; and
    WHEREAS, New Mexico needs to provide a water supply for municipal, 
industrial, commercial and domestic purposes to Navajo and non-Indian 
communities located within the Lower Basin in New Mexico that do not 
have an adequate Lower Basin source of water; and
    WHEREAS, Subsection 303(d) of Public Law 90-537, the Colorado River 
Basin Project Act, authorized a thermal generating plant to be located 
within the State of Arizona and provided that if the plant was served 
by water diverted from the drainage area of the Colorado River system 
above Lee Ferry such consumptive use of water would be a part of the 
consumptive use apportioned to the State of Arizona by Article III (a) 
of the Upper Colorado River Basin Compact (63 Stat. 31) regardless of 
whether the plant was located in the Upper Basin or the Lower Basin; 
and
    WHEREAS, the states of Colorado, New Mexico, Utah and Wyoming all 
support the proposed Navajo-Gallup Water Supply Project, but the states 
are not in agreement as to whether, under the Law of the River, New 
Mexico may use a part of its Upper Basin apportionment to serve uses in 
the Lower Basin portion of New Mexico, without obtaining the consent of 
the other states. However, in the spirit of comity, and without 
prejudice to the position of any state regarding these unresolved 
issues, all the states support and to the extent necessary consent to 
the Navajo-Gallup Water Supply Project in New Mexico.
    NOW, THEREFORE, BE IT RESOLVED by the Upper Colorado River 
Commission that the States of Colorado, New Mexico, Utah and Wyoming, 
support and to the extent necessary consent to the diversion of water 
from the Upper Basin for use in the Lower Basin solely within New 
Mexico via the proposed Navajo-Gallup Water Supply Project; provided, 
that any water so diverted by said project to the Lower Basin portion 
of New Mexico, being a depletion of water at Lee Ferry, shall be a part 
of the consumptive use apportionment made to the State of New Mexico by 
Article III (a) of the Upper Colorado River Basin Compact; and
    BE IT FURTHER RESOLVED, that the use of any return flows which 
result from use of water through the Navajo-Gallup Water Supply Project 
within the Lower Basin shall be subject to applicable laws; and
    BE IT FURTHER RESOLVED, that nothing resulting from the 
implementation of this Resolution shall limit the right or ability of 
any Upper Basin State to develop the full apportionment made to it 
under the Colorado River Compact and the Upper Colorado River Basin 
Compact; and,
    BE IT FURTHER RESOLVED, that the construction and operation of, and 
use of water through, the Navajo-Gallup Water Supply Project shall be 
subject to all other applicable provisions of law; and,
    BE IT FURTHER RESOLVED, that the Upper Colorado River Commission 
supports such Congressional action as may be necessary to authorize the 
Navajo-Gallup Water Supply Project.
                              certificate
    I, WAYNE E. COOK, Executive Director and Secretary of the Upper 
Colorado River Commission, do hereby certify that the above Resolution 
was adopted by the Upper Colorado River Commission at its Meeting held 
at the Half Moon Lake Resort near Pinedale, Wyoming on June 17, 2003.
                                             Wayne E. Cook,
                                  Executive Director and Secretary.
                                 ______
                                 
    WITNESS my hand this 19th day of June, 2003.
         2006 RESOLUTION OF THE UPPER COLORADO RIVER COMMISSION
 regarding the availability of water from navajo reservoir for navajo 
               nation uses within the state of new mexico
    WHEREAS, the State of New Mexico has proposed the Navajo-Gallup 
Water Supply Project to provide a needed renewable water supply from 
the San Juan River for municipal and domestic uses for Indian and non-
Indian communities located within New Mexico in both the Upper Basin 
and the Lower Basin; and
    WHEREAS, the State of New Mexico and the Navajo Nation on April 19, 
2005, executed the San Juan River Basin in New Mexico Navajo Nation 
Water Rights Settlement Agreement (the ``Settlement Agreement''), which 
is conditioned upon, among other things, the implementation of the 
Navajo Nation components of the Navajo-Gallup Water Supply Project 
within New Mexico; and
    WHEREAS, the source of water supply for the proposed Navajo-Gallup 
Water Supply Project would be Navajo Reservoir and the San Juan River 
in New Mexico; and
    WHEREAS, water from Navajo Reservoir and the San Juan River would 
be delivered to the proposed Navajo-Gallup Water Supply Project to meet 
the water demands of Navajo Nation communities in New Mexico through a 
proposed Settlement Contract between the United States, acting through 
the Secretary of the Interior, and the Navajo Nation (Appendix 4 to the 
Settlement Agreement); and
    WHEREAS, Public Law 87-483 at section 11(a) requires that no new 
long-term contracts `` . . . shall be entered into for the delivery of 
water stored in Navajo Reservoir or any other waters of the San Juan 
River and its tributaries, as aforesaid, until the Secretary has 
determined by hydrologic investigations that sufficient water to 
fulfill said contract is reasonably likely to be available for use in 
the State of New Mexico during the term thereof under the allocations 
made in articles III and XIV of the Upper Colorado River Basin compact, 
and has submitted such determination to the Congress of the United 
States and the Congress has approved such contracts''; and
    WHEREAS, pursuant to Public Law 87-483, and in furtherance of the 
Jicarilla Apache Tribe Water Rights Settlement Act of 1992 and the 
Navajo Reservoir water supply contract approved by said Act, the 
Secretary of the Interior on February 2, 1989, approved the report on 
``Hydrologic Determination, 1988, Water Availability from Navajo 
Reservoir and the Upper Colorado River Basin for Use in New Mexico'' 
(the ``1988 Hydrologic Determination''); and
    WHEREAS, the 1988 Hydrologic Determination evaluated the 
availability of water from the Navajo Reservoir supply for uses in New 
Mexico through the 2040 planning horizon; and
    WHEREAS, an update and extension to the 1988 Hydrologic 
Determination is needed to evaluate the availability of water from the 
Navajo Reservoir supply through a 2060 planning horizon under the 
allocation of water made to the State of New Mexico by the Upper 
Colorado River Basin Compact for the purpose of furthering 
Congressional legislative approval of the Settlement Agreement, the 
authorization of the proposed Navajo-Gallup Water Supply Project, and 
the legislative approval of the proposed Settlement Contract for the 
Navajo Nation's project uses in New Mexico; and
    WHEREAS, the proposed Settlement Contract between the United States 
and the Navajo Nation would provide water supplies for Navajo Nation 
uses in New Mexico under both the Navajo-Gallup Water Supply Project 
and the Navajo Indian Irrigation Project which was authorized by Public 
Law 87-483, and would supersede the existing Navajo Reservoir water 
supply contract for the Navajo Indian Irrigation Project; and
    WHEREAS, the U.S. Bureau of Reclamation has presented to the Upper 
Colorado River Commission for its consideration a draft hydrologic 
determination, dated May 2006, that evaluates the availability of water 
from the Navajo Reservoir supply through 2060 and shows: (1) at least 
5.76 million acre-feet of water is reasonably available annually for 
use by the Upper Basin, exclusive of reservoir evaporation at Lake 
Powell, Flaming Gorge Reservoir and the Aspinall Unit reservoirs of the 
Colorado River Storage Project; and (2) sufficient water is reasonably 
likely to be available from the Navajo Reservoir supply to fulfill the 
proposed Settlement Contract for the Navajo Nation's uses in New Mexico 
under the Navajo-Gallup Water Supply Project and the Navajo Indian 
Irrigation Project, in addition to existing Navajo Reservoir water 
supply contracts for other uses, under the allocations made to New 
Mexico in Articles III and XIV of the Upper Colorado River Basin 
Compact; and
    WHEREAS, the Settlement Agreement would provide at subparagraph 
9.3.1: ``The Navajo Nation and the United States agree that the State 
of New Mexico may administer in priority water rights in the San Juan 
River Basin in New Mexico, including rights of the Navajo Nation, as 
may be necessary for New Mexico to comply with its obligations under 
interstate compacts and other applicable law''; and
    WHEREAS, the Upper Colorado River Commission supports water 
resource development in the Upper Colorado River Basin to enable the 
Upper Division States to fully develop their compact apportionments of 
Colorado River water while meeting compact obligations relating to the 
flow of the Colorado River at Lee Ferry; and
    WHEREAS, it is the position of the Upper Colorado River Commission 
and the Upper Division States that, with the delivery at Lee Ferry of 
75 million acre-feet of water in each period of ten consecutive years, 
the water supply available in the Colorado River System below Lee Ferry 
is sufficient to meet the apportionments to the Lower Basin provided 
for in Articles III (a) and III (b) of the Colorado River Compact; and
    WHEREAS, it is the position of the Upper Colorado River Commission 
and the Upper Division States that the obligation of the Upper Basin 
under Article III(c) of the Colorado River Compact to deliver water 
toward the Mexican Treaty obligation does not require the delivery at 
Lee Ferry of 0.75 million acre-feet of water annually; and
    WHEREAS, the Upper Colorado River Commission anticipates that the 
Upper Division States will take all actions necessary to ensure that 
all Upper Basin States have access to their respective apportionments 
as specified in the Upper Colorado River Basin Compact; and
    WHEREAS, the Upper Colorado River Commission on June 19, 2003, 
resolved that: (1) ``the States of Colorado, New Mexico, Utah and 
Wyoming, support and to the extent necessary consent to the diversion 
of water from the Upper Basin for use in the Lower Basin solely within 
New Mexico via the proposed Navajo-Gallup Water Supply Project; 
provided, that any water so diverted by said project to the Lower Basin 
portion of New Mexico, being a depletion of water at Lee Ferry, shall 
be a part of the consumptive use apportionment made to the State of New 
Mexico by Article III (a) of the Upper Colorado River Compact;'' and 
(2) ``the Upper Colorado River Commission supports such Congressional 
action as may be necessary to authorize the Navajo-Gallup Water Supply 
Project.''
    NOW, THEREFORE, BE IT RESOLVED by the Upper Colorado River 
Commission, that the Commission supports Congressional action to: (1) 
approve the Settlement Agreement; (2) authorize the proposed Navajo-
Gallup Water Supply Project; and (3) approve the proposed Settlement 
Contract for the Navajo Nation's uses in New Mexico from the Navajo 
Reservoir supply under the Navajo-Gallup Water Supply Project and the 
Navajo Indian Irrigation Project.
    BE IT FURTHER RESOLVED, that while the Upper Colorado River 
Commission does not endorse all of the study assumptions used by the 
Bureau of Reclamation in its May 2006 draft hydrologic determination, 
including an assumption of a 6 percent allowable overall shortage, and 
specifically disagrees with the modeling assumption of a minimum Upper 
Basin delivery of 8.25 million acre-feet annually at Lee Ferry, the 
Commission supports a determination by the Secretary of the Interior 
that at least 5.76 million acre-feet of water is available annually for 
use by the Upper Basin, exclusive of reservoir evaporation at Lake 
Powell, Flaming Gorge Reservoir and the Aspinall Unit reservoirs of the 
Colorado River Storage Project.
    BE IT FURTHER RESOLVED, that the Upper Colorado River Commission 
supports a determination by the Secretary of the Interior that 
sufficient water is reasonably likely to be available to fulfill the 
proposed Settlement Contract for the Navajo Nation's uses in New Mexico 
from the Navajo Reservoir supply under the Navajo-Gallup Water Supply 
Project and the Navajo Indian Irrigation Project, in addition to 
existing Navajo Reservoir water supply contracts for other uses, under 
the allocations made to New Mexico in Articles III and XIV of the Upper 
Colorado River Basin Compact.
    BE IT FURTHER RESOLVED, that nothing in this Resolution, or 
resulting from the adoption of this Resolution, shall limit the right 
or ability of any Upper Basin State to develop the full apportionment 
made to it under the Colorado River Compact and the Upper Colorado 
River Basin Compact.
    BE IT FURTHER RESOLVED, that a copy of this resolution be 
transmitted to the Regional Director, Upper Colorado Region, Bureau of 
Reclamation, Salt Lake City, Utah.
                              certificate
    I, Don A. Ostler, Executive Director and Secretary of the Upper 
Colorado River Commission, do hereby certify that the Upper Colorado 
River Commission adopted the above Resolution at its regular meeting 
held in Jackson Hole, Wyoming, on June 5, 2006.
    WITNESS my hand this 9th day of June 2006.
                                             DON A. OSTLER,
                                  Executive Director and Secretary.
                                 ______
                                 
Statement of Susan Bitter Smith, President, Board of Directors, Central 
                  Arizona Water Conservation District
    The Central Arizona Water Conservation District (CAWCD) is pleased 
to present written testimony regarding S. 1171, the ``Northwestern New 
Mexico Rural Water Projects Act.''
    CAWCD is a political subdivision of the State of Arizona, governed 
by an elected 15-member board of directors. CAWCD was created in 1971 
for the purpose of repaying the reimbursable costs of construction of 
the Central Arizona Project, authorized by the Colorado River Basin 
Project Act of 1968. CAWCD has since assumed responsibility for 
operating and maintaining the Project.
    CAWCD cannot support this legislation in its current form because 
(1) it fails to resolve the Navajo Nation's claims to the Lower 
Colorado River and Little Colorado River in Arizona and (2) it fails to 
resolve litigation filed by the Nation challenging Interior Department 
initiatives that are vital to the Central Arizona Project and other 
Colorado River water users in the Lower Basin. The legislation also 
fails to address critical issues related to its potential impact on the 
Law of the Colorado River. All of these matters must be addressed 
before the bill is permitted to move forward.
    This bill would authorize a settlement of the water rights claims 
of the Navajo Nation to the San Juan River in New Mexico and also 
provide funding for projects to deliver San Juan water to Window Rock 
and Gallup. The San Juan River is a tributary to the Colorado River, 
and the bill affects the accounting for Colorado River water required 
by the 1922 Colorado River Compact and the United States Supreme 
Court's 1964 Decree in Arizona v. California, the decision that 
confirmed that Arizona is entitled to 2.8 million acre feet of water 
each year from the Lower Colorado River. Most of that water is 
delivered to central and southern Arizona through the Central Arizona 
Project. While the New Mexico bill would affect Arizona's Colorado 
River entitlement, it fails to resolve the claims of the Navajo Nation 
to Arizona's water supplies or to require, as it should, that those 
claims be settled before the Nation receives the benefits of any water 
rights settlement.
    The Navajo Nation has asserted that it has rights to water from the 
Colorado River that are superior to the rights of the Central Arizona 
Project. The Nation has sued the United States in federal district 
court here in Phoenix in an effort to compel the Secretary of the 
Interior to assert those rights on the Nation's behalf. Unless and 
until the Secretary takes steps to resolve the Nation's claims to the 
Colorado River, the Nation seeks to stop the Secretary from 
implementing important programs put in place to better manage the water 
supplies of the Lower Colorado River for the benefit of the Central 
Arizona Project and others.
    In a separate action, the Navajo Nation has also sought to prevent 
the required court approval of another Indian water rights settlement 
that is vital to the citizens of central Arizona, a comprehensive water 
rights settlement with the Gila River Indian Community. This 
settlement, which was decades in the making, was authorized by the 
Arizona Water Settlements Act of 2004, but if the Navajos succeed in 
their challenge, all of the Arizona water settlements authorized by 
that act, including the Gila River settlement, will fail. Since the 
water rights of the Navajo Nation are not affected by the Gila River 
settlement, as a lower court has already found, one can only conclude 
that the Navajo Nation is seeking to hold the Gila River settlement 
hostage until its own water rights claims are resolved.
    These actions by the Navajo Nation lead us to conclude that we 
could only support authorization of a New Mexico settlement with the 
Navajo Nation if an Arizona settlement with the Nation is also 
concluded and included in the authorizing legislation. While New Mexico 
may object to this, it shouldn't. After all, New Mexico demanded and 
received significant benefits, in the form of project authorizations 
and money for that state, in the Arizona Water Settlements Act of 2004.
    From a public policy perspective, an Arizona settlement of the 
Navajo Nation's water rights claims should proceed hand in glove with a 
New Mexico settlement. As it stands, the New Mexico bill fails to deal 
comprehensively with the Navajos' claims to the river systems that 
cross or border the Navajo Reservation. The Navajo Reservation is the 
largest Native American reservation in the United States. It occupies 
parts of three states, but by far the largest part of the Reservation, 
as well as the greatest share of the Reservation population, is 
situated in Arizona. Within Arizona, the northwestern portion of the 
Navajo Reservation is near the mainstream of the Lower Colorado River, 
and the Little Colorado River traverses the southern portion of the 
Reservation. If anything, priority should be given to settlement of the 
Nation's claims to the waters of these rivers. Including a settlement 
of the Nation's Arizona claims in the New Mexico bill would go a long 
way toward fixing the public policy problems associated with the 
current version of this legislation.
    The Central Arizona Project has long supported the comprehensive 
settlement of Indian water rights claims. Our organization has 
participated in a number of such settlements, including most recently, 
the settlement of the claims of the Gila River Indian Community, the 
largest Indian water rights settlement in Arizona's history. While 
successfully crafting a settlement agreement is never easy, we are 
fully committed to doing the hard work necessary to achieve an Arizona 
settlement with the Navajo Nation, and to accomplishing that in a 
timely way, so that congressional authorization of an Arizona 
settlement can be included in what is now a New Mexico only bill.
    We look forward to the opportunity to work with you, the State of 
New Mexico, and the Navajo Nation to settle the claims of the Navajo 
Nation to the San Juan and the Lower and Little Colorado River basins, 
and to prepare a comprehensive settlement act that addresses the needs 
of all affected parties.
                                 ______
                                 
                                   Central Arizona Project,
                                        Phoenix, AZ, June 21, 2007.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, 304 Dirksen 
        Senate Building, Washington, DC.

Subject: S. 1171, the ``Northwestern New Mexico Rural Water Projects 
Act''

    Dear Chairman Bingaman: We cannot support this bill as introduced 
because (1) it fails to resolve the Navajo Nation's claims to the Lower 
Colorado River and Little Colorado River in Arizona and (2) it fails to 
resolve litigation filed by the Nation challenging Interior Department 
initiatives that are vital to the Central Arizona Project and other 
Colorado River water users in the Lower Basin. The legislation also 
fails to address critical issues related to its potential impact on the 
Law of the Colorado River. All of these matters must be addressed 
before the bill is permitted to move forward.
    This bill would authorize a settlement of the water rights claims 
of the Navajo Nation to the San Juan River in New Mexico and also 
provide funding for projects to deliver San Juan water to Window Rock 
and Gallup. The San Juan River is a tributary to the Colorado River, 
and the bill affects the accounting for Colorado River water required 
by the 1922 Colorado River Compact and the United States Supreme 
Court's 1964 Decree in Arizona v. California, the decision that 
confirmed that Arizona is entitled to 2.8 million acre feet of water 
each year from the Lower Colorado River. Most of that water is 
delivered to central and southern Arizona through the Central Arizona 
Project. While the New Mexico bill would affect Arizona's Colorado 
River entitlement, it fails to resolve the claims of the Navajo Nation 
to Arizona's water supplies or to require, as it should, that those 
claims be settled before the Nation receives the benefits of any water 
rights settlement.
    The Navajo Nation has asserted that it has rights to water from the 
Colorado River that are superior to the rights of the Central Arizona 
Project. The Nation has sued the United States in federal district 
court here in Phoenix in an effort to compel the Secretary of the 
Interior to assert those rights on the Nation's behalf. Unless and 
until the Secretary takes steps to resolve the Nation's claims to the 
Colorado River, the Nation seeks to stop the Secretary from 
implementing important programs put in place to better manage the water 
supplies of the Lower Colorado River for the benefit of the Central 
Arizona Project and others.
    In a separate action, the Navajo Nation has also sought to prevent 
the required court approval of another Indian water rights settlement 
that is vital to the citizens of central Arizona, a comprehensive water 
rights settlement with the Gila River Indian Community. This 
settlement, which was decades in the making, was authorized by the 
Arizona Water Settlements Act of 2004, but if the Navajos succeed in 
their challenge, all of the Arizona water settlements authorized by 
that act, including the Gila River settlement, will fail. Since the 
water rights of the Navajo Nation are not affected by the Gila River 
settlement, as a lower court has already found, one can only conclude 
that the Navajo Nation is seeking to hold the Gila River settlement 
hostage until its own water rights claims are resolved.
    These actions by the Navajo Nation lead us to conclude that we 
could only support authorization of a New Mexico settlement with the 
Navajo Nation if an Arizona settlement with the Nation is also 
concluded and included in the authorizing legislation. While New Mexico 
may object to this, it shouldn't. After all, New Mexico demanded and 
received significant benefits, in the form of project authorizations 
and money for that state, in the Arizona Water Settlements Act of 2004.
    From a public policy perspective, an Arizona settlement of the 
Navajo Nation's water rights claims should proceed hand in glove with a 
New Mexico settlement. As it stands, the New Mexico bill fails to deal 
comprehensively with the Navajos' claims to the river systems that 
cross or border the Navajo Reservation. The Navajo Reservation is the 
largest Native American reservation in the United States. It occupies 
parts of three states, but by far the largest part of the Reservation, 
as well as the greatest share of the Reservation population, is 
situated in Arizona. Within Arizona, the northwestern portion of the 
Navajo Reservation is near the mainstream of the Lower Colorado River, 
and the Little Colorado River traverses the southern portion of the 
Reservation. If anything, priority should be given to settlement of the 
Nation's claims to the waters of these rivers. Including a settlement 
of the Nation's Arizona claims in the New Mexico bill would go a long 
way toward fixing the public policy problems associated with the 
current version of this legislation.
    The Central Arizona Project has long supported the comprehensive 
settlement of Indian water rights claims. Our organization has 
participated in a number of such settlements, including most recently, 
the settlement of the claims of the Gila River Indian Community, the 
largest Indian water rights settlement in Arizona's history. While 
successfully crafting a settlement agreement is never easy, we are 
fully committed to doing the hard work necessary to achieve an Arizona 
settlement with the Navajo Nation, and to accomplishing that in a 
timely way, so that congressional authorization of an Arizona 
settlement can be included in what is now a New Mexico only bill.
    We look forward to the opportunity to work with you, the State of 
New Mexico, and the Navajo Nation to settle the claims of the Navajo 
Nation to the San Juan and the Lower and Little Colorado River basins, 
and to prepare a comprehensive settlement act that addresses the needs 
of all affected parties.
            Sincerely,
                                        Susan Bitter Smith,
       President, Central Arizona Water Conservation District (The 
                    District operates the Central Arizona Project).
                                 ______
                                 
             Statement of the Citizens Progressive Alliance
RE: THE NORTHWEST NEW MEXICO RURAL WATER PROJECTS ACT [``S. 1171'' or 
``Act'']

    The Act, S. 1171, is a bipartisan scheme so bizarre that it is 
understandable that the only two Committee members attending this 
hearing on the 27th were the Democratic and Republican senators from 
New Mexico. The Committee's Ranking Member and Chairman, New Mexico 
Senators Domenici and Bingaman, Navajo Nation President Joe Shirley, 
Governor Bill Richardson, and the City of Gallup are all in a mad rush 
to get their hands on billions of Federal tax dollars! New Mexican 
politicians warn that if the Navajo Nation's claims to San Juan River 
water in New Mexico are not resolved quickly, existing non-Navajo water 
users in the San Juan Basin could be displaced or have their economic 
well-being seriously impaired because of the magnitude of the Navajo 
Nation's ``unquantified'' right to San Juan River water in New Mexico 
and a paralysis of uncertainty borne of endless litigation. State 
Engineer John R. D'Antonio testified before the committee that, 
``Navajo claims to the San Juan River have long-threatened the security 
of water rights of all other water users within the basin.'' Navajo 
Nation President Joe Shirley, Jr. warns the tribe's ``water rights 
claims could exceed the amount of water apportioned to New Mexico by 
the Upper Colorado River Compact'' and that this type of court ruling 
would ``expose the United States to incalculable, horrific 
liabilities.'' They all may be blowing smoke. Nevertheless, use of the 
fear factor has worked wonders to secure other Indian water rights 
settlements, and promoters of the Navajo-Gallup Water Supply Project 
[``Project''] are betting such intimidation will be the winning ticket 
once again.
    The New Mexico Senators, the State of New Mexico, and the Navajo 
Nation spoke at the Hearing with one voice to vilify the Office of 
Management and Budget [``OMB''], which in Shirley's words, ``seeks to 
impose an overly restrictive interpretation of the Administration's 
criteria and procedures for participating in this settlement. In 
particular, OMB apparently seeks to limit the federal contribution for 
this water rights settlement to their assessment of the monetary 
liability of the United States if it is sued by the Navajo Nation.'' 
What Shirley and these New Mexico politicians fail to acknowledge is 
that these ``criteria and procedures'' (which will be treated in some 
depth below) form the backbone of a longstanding policy designed to 
protect the interests of the taxpaying public while honoring the 
Federal Government's trust obligations to the tribes. OMB is obligated 
to provide financial justification for the Project based on these 
``criteria and procedures''. Ironically (or maybe quite predictably), 
when OMB tries to exercise the proper budgetary oversight and 
restraint, they are excoriated by the Committee's Chairman and Ranking 
Member, the Navajo Nation, and, of course, their clients--the water 
development interests. Apparently, it is the intention of the Project 
promoters to sidestep or subvert the purposes of this Department of the 
Interior [``DOI''] policy, and by so doing cow the OMB and avoid the 
scrutiny this Project so richly deserves.
    For their part, Bureau of Reclamation [``Bureau''] Commissioner 
Robert Johnson and Assistant Secretary for Indian affairs Carl Artman 
stated in testimony before the Committee that ``the United States was 
not party to the final negotiations'' of the proposed Navajo Nation 
Water Rights Settlement on the San Juan River in New Mexico [``Proposed 
Settlement'']. These Administration spokesmen go on to say:

          The Administration believes that the policy guidance found in 
        the Criteria and Procedures for the Participation of the 
        Federal Government in Negotiations for the Settlement of Indian 
        Water Rights Claims (``Criteria'') (55 Fed. Reg. 9223 (1990)) 
        provides a flexible framework in which we can evaluate the 
        merits of this bill. The Criteria provide guidance on the 
        appropriate level of Federal contribution to the settlements, 
        incorporating consideration of calculable legal exposure plus 
        costs related to Federal trust or programmatic 
        responsibilities. In addition, the Criteria call for 
        settlements to contain non-Federal cost-share proportionate to 
        the benefits received by the non-Federal parties, and specify 
        that the total cost of a settlement to all parties should not 
        exceed the value of the existing claims as calculated by the 
        Federal Government. As we have testified previously, the 
        Criteria is a tool that allows the Administration to evaluate 
        each settlement in its unique context while also establishing a 
        process that provides guidance upon which proponents of 
        settlements can rely.

    Perhaps at least one fiscally responsible member of the Committee 
who will study the provisions of the Act and come to question its 
promotion as good and necessary public spending, while supporting the 
Administration's important evaluation criteria and procedures found in 
55 Fed. Reg. 9223. Resultantly, provisions of S. 1171 which commit 
taxpayers to unnecessary and unreasonable burdens and fail to fairly 
address the United States' trust responsibilities to the Navajo Nation 
will be rejected by the Committee.
             senate committee on energy & natural resources
    During the Committee's Hearing on S. 1171, the Northwestern New 
Mexico Rural Water Projects Act, ranking member Senator Pete Domenici, 
in his best ``Iglesias'' form, threatened Bureau Commissioner Robert 
Johnson (``I'm ready to proceed, and we'll see if you're needed.''), 
whined about objections to the Project's high costs by the Office of 
Management & Budget, and could be heard muttering disgustedly off-mike 
that he ought to ask the Army Corps of Engineers to do what the 
Department of the Interior would not.
    The Domenici/Bingaman bill seeks to raid the Reclamation Fund at a 
time when the balance of that account is extremely low due to reduced 
power revenues. Colorado River Storage Project [``CRSP''] power users 
will, no doubt, be less than thrilled with this prospect, as it would 
likely involve a spike in their utility rates.
    Construction of the Project proposes to fully deplete most of the 
35,893 AFY from the San Juan River Basin. Return flows would be 
essentially nonexistent, as the Project involves a major transbasin 
diversion. Colorado River Storage Project [``CRSP''] customers 
belonging to the Colorado River Water Users Association might like to 
know (indeed! the Committee should investigate) the value of lost power 
generation due to such large new Project depletions above Lake Powell/
Glen Canyon Dam, and the predicted impact of such reduced revenues on 
Western Area Power Association rates.
                        hydrologic determination
    After decades of data collection and interpretation, including tree 
ring studies by the University of Arizona and the U.S. Geological 
Survey, it is well understood that when the Colorado River was first 
divvied-up, overly generous allocations to the seven Colorado River 
Basin States were based on erroneous predictions. Now, rather than 
conducting a more objective, honest analysis of water availability, the 
Bureau's water experts are tempting fate by repeating the same mistake 
with a logic so twisted as to defy reason. On June 8th Secretary of the 
Interior Dirk Kempthorne [``Secretary''] concurred with the Bureau of 
Reclamation's [``Bureau''] new Hydrologic Determination 
[``Determination''] that the amount of water needed for the Navajo-
Gallup Water Supply Project [``Project'']--centerpiece of the proposed 
Navajo Nation water rights settlement on the San Juan River in New 
Mexico--is now available. This water has been found, magically as it 
were, by factoring in reduced evaporation rates due to our most recent 
drought. So, in a marvelous bit of circuitous reasoning, we are being 
asked by our government to accept the notion that we have more water 
because we have less water. That's right, because less water is 
evaporating from shrunken reservoirs, more water must be available. 
Eureka! Less is more!
    Consider for a moment the unmitigated gall of Bureau hydrologists 
and New Mexico water managers demanding the Public take seriously such 
a spurious argument. How in the world could reduced evaporation rates 
from reservoirs at historically low levels constitute proof that there 
is additional, ``new water'' in the already over-allocated Colorado 
River system? This magical math in the Bureau's new Determination is 
most suspect, as it has all the earmarks of a preordained outcome 
designed primarily to satisfy the appetites of its client developers 
for rampant growth. If true, indictments would be in order.
    Smoke and mirrors may work wonders to tilt the playing field toward 
benefit of corporate interests, but at the end of the day, the public 
cannot drink fuzzy math or the spiraling costs of political favors. 
This revamped Determination is essential for further water development 
of the San Juan River because New Mexico has bumped up against the 
ceiling of its share of Colorado River Compact Allocations. Based on 
controversial assumptions, the Determination represents a boon to 
development interests, as it invites New Mexico to further deplete and 
desiccate the San Juan River, jeopardizing the hydrologic future of the 
San Juan Basin and portending catastrophe for the Colorado River 
system. This new Determination is an assault on reason and represents 
the Bureau's latest scheme to be foisted on the unwitting taxpayers of 
this country. To date there has been no resolution between San Juan-
Chama Project contractors, the Bureau, and the State of New Mexico 
regarding a determination about the water that could be available to 
the San Juan-Chama Project during a time of shortage and how new 
contracts could affect the water supply. Given the high level of 
uncertainty and concern, it would be prudent of the Committee to call 
on the National Academy of Sciences to perform a critical review of the 
modeling and analysis which led to the Bureau's Determination.
  long hollow reservoir project & ute mountain ute indian tribe power 
                          generating facility
    How will the intent to expand water use from the La Plata River in 
Colorado be reconciled with and integrated into the Proposed 
Settlement, the revised Hydrologic Determination and S. 1171? Is it the 
opinion of the Interior, using the rubric of less is more, that 
increased diversion and storage on the La Plata River in the proposed 
Long Hollow Reservoir with its concomitant and high evaporation rate 
will also result in an increased water supply in the Colorado mainstem? 
Put another way, is it the Secretary of the Interior's view that 
substantial evaporative losses from the Long Hollow Reservoir would 
actually free-up more ``new water'' and allow for additional depletions 
downstream from the San Juan above Lake Powell?
    Ute Mountain Ute Indian Tribe [``UMUT''] claims to San Juan River 
water are senior to the Navajo Nation claims. The Ute Mountain Ute 
Indian Tribe has filed a claim to water rights on the San Juan River, 
and neither the United States nor the State of New Mexico has initiated 
negotiations to settle these claims. The UMUT claim rights to between 
7300AF and 9300AF of water for a power generation plant. The claim is 
being made at the same time the Navajo Nation is working to settle its 
claim on the San Juan River in New Mexico. How does the Ute Mountain 
Ute claim to water for a new power generating plant square with the 
Secretary's Determination? How might it affect availability of water 
for the San Juan/Chama Project contractors and others in the San Juan 
Basin?
                       navajo water rights claims
    The Proposed Settlement between the Navajo Nation [``Nation''] and 
the State of New Mexico shows total diversions for Navajo water 
projects at 626,470 acre feet and total depletions at 322,190 acre feet 
annually. This massive allocation of New Mexico's surface waters has 
yet to be justified to the Public from a technical standpoint. The 
citizens of New Mexico have a legal right to know the technical bases 
for the tribal entitlements proposed in a Navajo settlement, and 
officials have a fiduciary obligation to provide this documentation. 
New Mexico and the Nation have made a declaration of the extent of the 
Navajo water right, but this number is highly questionable, 
undocumented as it is, and should not be accepted as an article of 
faith. The technical component of any settlement entails the answers to 
scientific questions, such as, ``How much water is needed by the 
Tribe?'' and, ``What are the bases for quantification of the Tribe's 
entitlement to water?'' While these questions have been asked, no 
answers have been provided.
    No one--not the New Mexico State Engineer, not the Navajo Nation, 
not Bureau hydrologists--has the means to accurately measure or verify 
quantities of water depleted from a stream system. Only diversion 
quantities can be reliably calculated. The New Mexico State Engineer's 
Office does not possess the methodology or technology necessary to 
calculate consumptive usage, just as it is unable to determine the 
magnitude or source of return flows to a system. The 10-year averaging 
of diversions/depletions provided for in the proposed settlement 
involves a carry-over allowance which is contrary to State law and the 
public interest.
    On October 24, 1995, former Navajo Nation President Albert Hale 
opined that, ``[t]he Navajo Nation possesses sufficient `practicably 
irrigable acreage' [``PIA''. within the San Juan River Basin to fully 
utilize the entire flow of the San Juan River.'' What is the State 
Engineer's assessment of the Navajo Nation's PIA in the San Juan Basin? 
What is the Bureau's assessment of the Navajo Nation's PIA in the San 
Juan Basin? If the Navajo Nation has as many practicably irrigable 
acres as it claims, why are so few being irrigated? It is no secret to 
New Mexico's senators or Governor that the Navajo Indian Irrigation 
Project [``NIIP''] is a recurring fiscal nightmare. Recently the Navajo 
Nation was forced to allocate $10 million to offset operating deficits 
associated with NIIP. NIIP and the Navajo Agricultural Products 
Industry's [``NAPI''] audits reveal losses of millions of dollars 
annually on the operation of farm Blocks 1-8. The Navajo Nation is 
already the fifteenth largest recipient of Federal crop subsides 
nationally.
    Given the regularity of these losses, it seems only reasonable to 
predict that the irrigation of additional acreage in NAPI Blocks 9-11 
would be similarly unprofitable, resulting in even greater losses. So, 
increasing irrigation on the NAPI/NIIP will only add to the staggering 
Public costs. In short, the evidence is clearcut that NIIP/NAPI lands 
are not practicably irrigable, and the Proposed Settlement is an 
affront to the sensibilities of any Committee member studious enough to 
give careful consideration, because NIIP/NAPI are rooted in waste and 
fraud.
    Navajo PIA along with Navajo demographics in the San Juan Basin 
should be carefully evaluated in the determination of Navajo water 
entitlements for any realistic settlement agreement. While the 
variability of significant portions of Navajo reservation land within 
the San Juan Basin is indisputable, the actual ``practicability'' of 
irrigating much of that land remains highly debatable. This issue of 
``practicability'' is not only central to Navajo lands checker boarded 
throughout the San Juan Basin. It is pertinent to the NAPI farm blocks 
themselves--both those in production and those to come, because the 
test of practicability speaks to the very heart of any Federal tribal 
trust responsibility in a Navajo settlement.
    According to the Winters doctrine, as upheld in Arizona v. 
California by the Supreme Court, a Tribe shall have right to water 
sufficient to irrigate all of the practicably irrigable acreage within 
the borders of its reservation. The Supreme Court in Arizona v. 
California ruled that application of the PIA standard is the only 
``feasible and fair way'' by which reserved water rights for a Tribe 
can be measured. It must follow that the only ``feasible and fair'' way 
to quantify the Navajo right on the San Juan--and the first and 
foremost task of State and Federal hydrologists--is to measure the PIA 
of the Navajo reservation lands in the San Juan Basin. This must be 
done as a matter of fairness and accuracy in order to determine the 
Navajo tribal water right at issue, but to date requisite technical 
studies for assessing Navajo PIA in the San Juan River Basin do not 
even exist, and the basis for the Project and Proposed Settlement is 
anybody's guess. Instead, fear tactics by Project promoters regarding 
the possible outcome of ``prolonged'' and ``contentious'' litigation 
have become an old saw similar to the color-coded Terror Alerts of 
Homeland Security. A PIA analysis is pivotal as a basis for the 
negotiation of any settlement, and none yet exists.
                navajo indian irrigation project [niip]
    The Navajo-Gallup Water Supply Project, which would cost as much as 
three billion dollars if typical Bureau cost overruns materialize, is 
designed to settle the Navajo Nation's claims to the San Juan River in 
New Mexico. But it is hardly a secret, as we stated earlier, that the 
Navajo Indian Irrigation Project, the biggest straw in the San Juan 
River, habitually drowns in red ink.
    For example, the American people still pay the annual operating 
costs of NIIP even though the project is several decades old and 
Department of Interior policy expressly forbids it. In a letter to then 
Secretary Gail Norton, Navajo President Joe Shirley asserted those 
costs come to about $6 million annually and that they must continue 
indefinitely. The Navajo Nation leases NIIP irrigation land for farming 
by non-Navajo, and they have received well over $15 million in Federal 
farm subsidy payments in the last few years. Even so, the Navajo 
Nation, a relatively poor tribe, recently had to come up with over $10 
million in bailout funds for the tribal farming enterprise. Does this 
look like the kind of operation worth an investment of hundreds of 
millions, if not billions, of dollars more? After decades of funding 
approaching one billion dollars, NIIP is still only seventy percent 
complete. What does this say about the practicality of irrigating the 
Navajo Reservation lands high above the San Juan River and the real 
extent of their water right under the Winters doctrine? Will the Navajo 
become accustomed to more and even greater losses? This would be a 
logical presumption knowing what is known about the history of this 
operation.
    Thus a thorough, independent review of the NIIP/NAPI must be 
conducted before any more public money is squandered on it or its 
successors. Admittedly, NIIP/NAPI benefits a few Federal and Navajo 
bureaucrats, but it leaves little if anything for the average Navajo. 
Federal assistance should be tailored to benefit the people of the 
Navajo Nation, not designed to aggrandize worn out Federal 
bureaucracies such as the Bureau of Reclamation and the Bureau of 
Indian Affairs. A thorough study of federally funded Indian irrigation 
projects is long overdue, as is fiscal accountability to both the 
public and the tribes themselves.
   the northwest new mexico rural water projects act [``s. 1171'' or 
                                ``act'']
    The Northwestern New Mexico Rural Water Projects Act seeks to 
couple the Proposed Settlement of Navajo claims to water on the San 
Juan River with a free ride for those seeking to repair deteriorating 
rural water systems in northwest New Mexico. In S. 1171, Section 201, 
Reclamation Water Settlement Fund [``Fund''], certain provisions seem 
to be written to buy supportive silence for the Project and Proposed 
Settlement by providing subsidies to rehabilitate old facilities 
throughout northwest New Mexico. While this may be an effective means 
of squelching opposition, provisions in the Act directing the Bureau to 
administer the disbursement of funds for the repair of such rural water 
systems encroach on the mission of the Department of Agriculture, which 
has historically been charged with exclusive responsibilities for Rural 
Development.
    Implementation of S. 1171 is in no way feasible if the Reclamation 
Fund, per se, cannot be relied on to be flush for decades. The Public 
must be provided with certification from OMB or others competent in 
reliable principles of accounting that the Reclamation Fund will, in 
fact, enjoy longterm solvency with the liquidity to withstand the 
eleven-year drawdown envisioned in the Act. If the Reclamation Fund is 
siphoned to foot a variety of proposed Indian water rights settlements 
in New Mexico, as foreseen in S. 1171, the nature of the impacts on 
other social programs currently dependent on the Reclamation Fund must 
be fully assessed and mitigated. In accounting for the impact of S. 
1171, OMB must factor in the audacity of these two New Mexico Senators 
scheming to establish an exclusive Reclamation Water Settlements Fund 
in the Act, an exclusive fund which will literally double-drain the 
Bureau's Reclamation Fund. Operation of the Project would substantially 
reduce the Reclamation Fund due to lost power generation and increased 
salinity in the Colorado River, while funds for the Project would be 
allocated from that same depleted Reclamation Fund. Such a strategy is 
not only fiscally unsound, it is idiotic!
                    anticipated cost of the project
    No one is being told how much this Project could cost, and a 
feasibility level, design cost estimate for the Project has not been 
completed. In order to protect any Federal taxpayer commitment to 
investment, a sensitivity analysis of cost estimates for this multi-
billion dollar Project must be completed. The Committee should recall 
that the Bureau refused a similar request for such a sensitivity 
analysis of the Animas-La Plata Project [``ALP''], only to reveal 
within months that their cost estimates were off by fifty percent--this 
before construction had even begun. It is our understanding, with no 
users for most of ALP water and absolutely no way to deliver the water 
to these make-believe users, that the costs (even without the interest 
calculation) already exceed by 100 percent the original cost estimate. 
Further, all of the recent big Bureau projects have surpassed by at 
least 300 percent their original cost estimates. Reference the Dallas 
Creek Project, the Dolores Project, and Central Arizona Project. Given 
the dismal state of the Federal budget, adequate assurances are 
necessary to insure the cost estimates given to Congress are not 
grossly underestimated. To this end, an independent Peer Review must be 
incorporated into the review process. Publication of the interest on 
the public debt over the 100 year life of the project should also be 
documented and made public.
                              alternatives
    Robert Johnson and Carl Artman of the Department of the Interior 
conceded this week in Senate testimony that the process for selecting 
the various alternatives identified and analyzed in the Project DEIS 
was inadequate. The Project as proposed by the Bureau is too expensive 
and violative of existing policy. Based on this revelation that the 
Department of Interior will not support any of the Project alternatives 
examined in its Bureau's own DEIS, a new Environmental Impact Statement 
must be prepared. Despite the New Mexico senators' attempts to fast-
track S. 1171, the Criteria & Procedures of 55FR9223 must be 
implemented with full participation by the Department of Justice and 
the Office of Management and Budget, in order to ensure that Federal 
Trust responsibilities are honored--not just to the Navajo Nation, but 
to the wider taxpaying public as well. The 55FR9223 Policy includes 
provisions for an economic evaluation with a high level of assurance 
that the Public's money is being well spent. The Criteria & Procedures 
of 55FR9223 represent a vital safeguard against fiscal waste and 
guarantee the negotiation of a just settlement for all parties.
                             arizona issues
    The State of Arizona opposes the Act. The failure of the Department 
of the Interior to implement the Criteria and Procedures for the 
Participation of the Federal Government in Negotiations for the 
Settlement of Indian Water Rights Claims [``Criteria & Procedures''] in 
the Proposed Settlement subverts the State of Arizona's attempt to 
negotiate its own water rights settlement with the Navajo Nation. 
Window Rock, Arizona is located in the Lower Colorado River Basin. 
Inclusion of Window Rock or any other Arizona communities within the 
Project service area is at odds with the 1922 Colorado River Compact 
and at odds with a traditional interpretation of the Law of the River. 
Window Rock is eligible for water from the Central Arizona Project. 
Since it is unclear how allocations will be made under the Act, the 
Committee should request a full accounting of the water involved in the 
Project. What portion comes from New Mexico's Compact allocation? What 
portion comes from Colorado's Compact allocation? What portion comes 
from Arizona's Compact allocation?
                             city of gallup
    Apparently, New Mexico state representative Patti Lundstrom, who 
testified to the Committee this week, expects American taxpayers to 
join hands and march lockstep to ante-up at least seventy-five percent 
of the Project costs for the City of Gallup. This involves a breach of 
longstanding Reclamation law requiring all municipal & industrial water 
costs to be paid with interest by project beneficiaries.
    How are the interests of the City of Gallup pertinent to the 
settlement of Navajo claims on the San Juan River? Claims by the Navajo 
Nation to the San Juan River have absolutely nothing to do with the 
City of Gallup. So, why is Gallup being shoehorned into this project 
and the proposed Settlement? They can't afford a project on the scale 
proposed in S. 1171, and they are not eligible for or entitled to the 
massive federal government subsidies this multi-billion dollar Project 
would require. Sure, if the Navajo Nation wants to send its NIIP 
irrigation water to Gallup, so be it, but if the Federal Government is 
to be an honest broker, American taxpayers should not be required to 
support any part of the Navajo-Gallup Water Supply Project that is 
illegal or economically infeasible.
                       navajo depletion guarantee
    A little-known mechanism in the Project, the Navajo Depletion 
Guarantee, should be analyzed in detail. How might fulfillment of the 
terms of the Navajo Depletion Guarantee curtail the full operation of 
the Project or interfere with San Juan-Chama Project diversions to a 
host of contractors in Rio Grande Basin?
                        pipeline lateral system
    Who will pay for the vast network of pipeline laterals necessary 
for communities in Navajo Chapters intended to be served by the 
Project, and how much will this cost? In his testimony, President 
Shirley contends that the Navajo Nation has both the capability and 
intention to construct a system of lateral water lines necessary to 
provide potable water to Navajo chapters and families in the Eastern 
Agency. Where will he find the money? In addition, it is the 
responsibility of the Indian Health Service [``IHS''], not the Navajo 
Nation, to provide such facilities for the delivery of safe water 
supplies. How would IHS obtain funding for these feeder lines, when 
would they be completed, and which Navajos would be left out of the 
Project?
the criteria and procedures for the federal government's participation 
   in the negotiation of indian water rights settlements [``55fr9223/
 policy/criteria & procedures''] federal register, vol.55, no.48, 9223 
                                 et seq
    Both the Navajo Nation and the State of New Mexico are well (some 
might say painfully) aware of the Department of the Interior's Criteria 
and Procedures for the Participation by the Federal Government in 
Negotiations for the Settlement of Indian Water Rights Claims. 
Documents from former State Engineer Tom Turney's negotiation notebook, 
obtained through ``New Mexico Inspection of Public Records Act'' 
requests, provide a detailed description of these ``Federal Negotiating 
Guidelines''. Likewise, the Navajo Nation recognizes the overriding 
authority of these Criteria and Procedures, stating:

          The projected costs of these [wet water] projects is 
        substantial and the primary source of funding will invariably 
        come from the federal government. However, the Department of 
        the Interior's Criteria for Settlement of Indian Water Rights 
        requires a substantial state and local contribution. The Navajo 
        team understands that this settlement will require creative 
        innovation, and that it may require a combination of Federal 
        and State programmatic funding sources.

    Federal employees assigned to a formal Negotiating Team are 
expected to adhere to and comply with the DOI's ``Working Group in 
Indian Water Settlements; Criteria and Procedures for the Participation 
of the Federal Government in Negotiations for the Settlement of Indian 
Water Rights Claims'', Federal Register, Vol.55, No.48, 9223 et seq 
[see attached ``Policy 55FR9223''], as prescribed in a formal executive 
``Policy Statement'' March 12, 1990 [``Policy''.. The DOI Policy holds 
that, in settling Indian water rights claims, the Federal government 
shall ensure that Indians receive equivalent benefits for rights which 
they, and the United States as trustee, may release as part of a 
settlement. The United States has pervasive Endangered Species Act and 
Tribal trust responsibilities within the San Juan River Basin. These 
are overlapping and interconnected concerns which were not adequately 
addressed in the negotiation of a Proposed Settlement.
    The Office of Management and Budget is assigned a definite, 
indispensable role in the proper execution of the Federal Policy 
55FR9223, but repeated FOIA requests have failed to produce any records 
showing OMB has been involved in evaluating the terms of the Proposed 
Settlement. The Government's Policy at 55FR9223, criterion no. 6, 
states:

          Settlements should include non-Federal cost-sharing 
        proportionate to the benefits received by the non-Federal 
        parties.

    Language in S. 1171 authorizing the Navajo-Gallup Water Supply 
Project allows for Federal subsidies of up to 75 percent to both the 
City of Gallup and the Jicarilla Apache Tribe, requiring as little as 
25 percent cost-share for the substantial benefits those non-Federal 
parties are to receive through construction of the Project. In fact, 
Gallup city officials have been to Washington to persuade Congress to 
pay for almost all of the proposed Navajo-Gallup Water Supply Project, 
claiming that even a 25 percent repayment obligation would be too rich 
for this City's blood.
    Four years ago, the Secretary of the Department of the Interior 
established the ``Navajo-San Juan River Federal Indian Water Rights 
Negotiation Team'' [``Team''] for the purpose of negotiating a 
settlement of the claims of The Navajo Nation to waters within the San 
Juan River Basin of Northwest New Mexico. The Team, headed initially by 
DOI Solicitor Michael Schoessler (and subsequently by the Bureau's 
Brian Parry), in concert with Joy Nicholopoulos (Fish & Wildlife 
Service), Brad Bridgewater (Department of Justice) and the Bureau of 
Indian Affair's John Cawley, have imposed absolute secrecy while 
conducting a series of closed-door meetings with the Nation and the 
State of New Mexico in the ``Navajo-San Juan River Federal Indian Water 
Rights Negotiation''. As a direct result many legitimate stakeholders, 
the Public, and representatives of the media have been arbitrarily 
excluded and denied due process rights--being barred, as they have 
been, from proceedings which may ultimately involve the expenditure of 
billions of State and Federal dollars and undermine the value of 
certain personal property holdings.
    The binding DOI Policy for negotiating settlements of tribal water 
claims has been in force and preserved intact for some fourteen years--
not once having been the subject of amendment, modification, 
supercession or revocation. Sadly, DOI has a dismal history of 
haphazard and selective enforcement of its Policy, resulting in the 
repeated, irreversible betrayal of the Public Trust. Although the 
Policy requires an integrated and concurrent examination of competing 
claims in the San Juan River system because four Indian Tribes having 
pending reserved rights claims to a severely restricted water supply, 
the DOI has grossly and methodically misapplied its own Criteria & 
Procedures by negotiating in piecemeal fashion with the Jicarilla 
Apache, the Ute Mountain Ute and the Southern Ute Indian Tribes. Now, 
apparently, this deliberate failure with respect to Policy execution is 
being repeated by the DOI Team in ongoing settlement negotiations with 
The Navajo Nation and the State of New Mexico.
    In October 2003 the Western States Water Council and the Native 
American Rights Foundation held their biennial ``Indian Water Rights 
Settlement Symposium'' in Durango, Colorado. Timothy Glidden, author of 
the Federal Government's long-standing Policy Statement on the 
negotiation of Indian water rights claims (Criteria & Procedures), 
stated that it would be impossible to make progress in tribal 
settlement if a variety of interest groups and stakeholders were made 
formal members of a Negotiation Team. In other words, Mr. Glidden 
(former Chairman, Working Group on Indian Water Rights Settlements, and 
now Contractor to the U.S. Department of the Interior, Secretary's 
Office of Indian Water Rights) contends that the political, technical 
and financial momentum for securing a settlement is generated, by-and-
large, through the intentional exclusion of various parties with legal 
standing in the ultimate resolution and disposition of the tribal water 
claims. Glidden's pronouncement is at odds with the fact that nothing 
in the Policy's Criteria & Procedures direct the Interior Department to 
exclude any interested party with standing from participation in the 
process of negotiating the settlement of Indian water claims. As stated 
above, direct requests by legitimate stakeholders to participate in the 
settlement discussions were not granted. [see above ``12/09/02 letter 
to Michael Schoessler''.
    Numerous Freedom of Information Act [``FOIA''] requests have 
confirmed that Federal Policy has not, in fact, been followed in the 
Navajo settlement negotiations, just as it was not followed in the 
settlement negotiations with the Jicarilla Apache, the Ute Mountain 
Ute, or the Southern Ute tribes. So, while an adopted federal policy 
setting forth the ``Criteria and Procedures for Indian Water Rights 
Settlements'' has been in place and binding for over a decade, it has 
been wantonly subverted in tribal negotiations in the San Juan River 
Basin--twisted and riddled with bias in order to advance special 
interests in Indian water claims at the expense of the environment, 
junior water right holders, and the taxpaying public. It has become 
increasingly obvious that the State and the Federal Government are 
allowing non-Indian water developers to successfully use the pretext of 
Indian water rights settlement negotiations as leverage and license to 
engage in water speculation, further strangling western rivers and 
crippling the taxpaying public.
    Any settlement worth its salt must follow the guidelines 
established by the Department of Interior as set forth in its published 
policy for negotiating and settling Indian water rights, The Criteria 
and Procedures, 55FR9223, published in the Federal Register of March 
12, 1990. Among other things this policy holds that Indian settlements 
involving a single river system, in this case the San Juan, must be 
done so as to simultaneously evaluate and negotiate all Indian claims 
on that river system. Obviously, the clear intent is to avoid the 
dreaded ``unintended effect'' through piecemeal negotiations, awards, 
and settlements, and the secondary taxpayer costs of undoing what was 
mistakenly done through ignorance and bureaucratic imperiousness.
    When concerns about the judicious application of 55FR9223 were 
cited with regard to both the Animas-La Plata Project (Colorado Ute 
Indian Water Rights Settlement Act) and the Navajo Dam Reoperation EIS, 
they were dismissed as irrelevant. In fact, the Deputy Director of 
Interior's Indian Water Rights Office, Michael Conner, Esq., now a 
trusted aid to this Committee's Chairman, stated that while the policy 
still stood, it only had to be observed when the Department of the 
Interior found it convenient or appropriate to do so. Abuse of the 
Policy continues to open the door to graft and fraud. It is past time, 
whether convenient or not, for 55FR9223 to be taken seriously and for 
the Federal government to forthrightly fulfill its obligations to 
American citizens and the tribes.
    55FR9223, the Criteria & Procedures reads as noticed as follows:
 federal register / vol. 55, no. 48 / monday, march 12, 1990 / notices 
                               page 9223
                       department of the interior
    Working Group in Indian Water Settlements; Criteria and Procedures 
for the Participation of the Federal Government in the Negotiations for 
the Settlement of Indian Water Rights Claims.
    AGENCY: Department of the Interior.
    ACTION: Policy Statement.
    SUMMARY: It is the policy of this Administration, as set forth by 
President Bush on June 21, 1989, in his statement signing into law H.R. 
932, the 1989 Puyallup Tribe of Indians Settlement Act, that disputes 
regarding Indian water rights should be resolved through negotiated 
settlements rather than litigation. Accordingly, the Department of the 
Interior adopts the following criteria and procedures to establish the 
basis for negotiation and settlement of claims concerning Indian water 
resources.
    EFFECTIVE DATE: March 12, 1990.
    ADDRESSES: Comments may be addressed to: Mr. Tim Glidden, 
Department of the Interior, MS6217-MIB, 18th and C Streets, NW., 
Washington, D.C. 20240.
    FOR FURTHER INFORMATION CONTACT: Mr. Tim Glidden, Chairman, Working 
Group on Indian Water Settlements, 202-343-7351.
    SUPPLEMENTAL INFORMATION: These criteria and procedures were 
developed by the Working Group on Indian Water Settlements from the 
Department of the Interior.
    These criteria and procedures supersede all prior Departmental 
policy regarding Indian water settlement negotiations. The criteria 
provide a framework for negotiating settlements so that (1) The United 
States will be able to participate in water settlements consistent with 
the Federal Government's responsibilities as trustee to Indians; (2) 
Indians receive equivalent benefits for rights they, and the United 
States as trustee, may release as part of a settlement; (3) Indians 
obtain the ability as part of each settlement to realize value from 
confirmed water rights resulting from settlement; and (4) The 
settlement contains appropriate cost-sharing by all parties benefiting 
from the settlement.
    Dated: March 6, 1990, Timothy Glidden, Chairman, Working Group on 
Indian Water Settlements.
      criteria and procedures for indian water rights settlements
Preamble
    Indian water rights are vested property rights for which the United 
States has a trust responsibility, with the United States holding legal 
title to such water in trust for the benefit of the Indians.
    It is the policy of this administration, as set forth by President 
Bush on June 21, 1989, in his statement signing into law H.R. 932, the 
1989 Puyallup Tribe of Indians Settlement Act, that disputes regarding 
Indian water rights should be resolved through negotiated settlements 
rather than litigation.
    Accordingly, the Department of the Interior adopts the following 
criteria and procedures to establish the basis for negotiation and 
settlements of claims concerning Indian water resources. These criteria 
and procedures supersede all prior Departmental policy regarding Indian 
water settlement negotiations. The criteria provide a framework for 
negotiating settlements so that (1) The United States will be able to 
participate in water settlements consistent with the Federal 
Government's responsibilities as trustee to Indians; (2) Indians 
receive equivalent benefits for rights they, and the United States as 
trustee, may release as part of a settlement; (3) Indians obtain the 
ability as part of each settlement to realize value from confirmed 
water rights resulting from settlement; and (4) The settlement contains 
appropriate cost-sharing by all parties benefiting from the settlement.
Criteria
          1. These criteria are applicable to all negotiations 
        involving Indian water rights claims settlements in which the 
        Federal Government participates. Claims to be settled through 
        negotiations may include, but are not limited to, claims:

                  (a) By tribes and U.S. Government to quantify 
                reserved Indian water rights.
                  (b) By tribes against the U.S. Government.
                  (c) By tribes and the U.S. Government against third 
                parties.

          2. The Department of the Interior will support legislation 
        authorizing those agreements to which it is a signatory party.
          3. Settlements should be completed in such a way that all 
        outstanding water claims are resolved and finality is achieved.
          4. The total cost of the settlement to all parties should not 
        exceed the value of the existing claims as calculated by the 
        Federal Government.
          5. Federal contributions to a settlement should not exceed 
        the sum of the following two elements:

                  a. First, calculable legal exposure--litigation costs 
                and judgment obligations if the case is lost: Federal 
                and non-Federal exposure should be calculated on a 
                present value basis taking into account the size of the 
                claim, value of the water, timing of the award, and 
                likelihood of loss.
                  b. Second, additional costs related to Federal trust 
                or programmatic responsibilities (assuming the U.S. 
                obligation as trustee can be compared to existing 
                precedence.)--Federal contributions relating to 
                programmatic responsibilities should be justified as to 
                why such contributions cannot be funded through the 
                normal budget process.

          6. Settlements should include non-Federal cost-sharing 
        proportionate to the benefits received by the non-Federal 
        parties.
          7. Settlements should be structured to promote economic 
        efficiency on reservations and tribal self-sufficiency.
          8. Operating capabilities and various resources of the 
        Federal and non-Federal parties to the claims negotiations 
        should be considered in structuring a settlement (e.g. 
        operating criteria and water conservation in Federal and non-
        Federal projects).
          9. If Federal cash contributions are part of a settlement and 
        once such contributions are certified as deposited in the 
        appropriate tribal treasury, the U.S. shall not bear any 
        obligation or liability regarding the investment, management or 
        use of such funds.
          10. Federal participation in Indian water rights negotiations 
        should be conducive to long-term harmony and cooperation among 
        all interested parties through respect for the sovereignty of 
        the States and tribes in their respective jurisdiction.
          11. Settlements should generally not include:

                  a. Local contributions derived from issuing bonds 
                backed by or guaranteed by the Federal Government.
                  b. Crediting to the non-Federal share normal project 
                revenues that would be received in absence of a cost-
                share agreement.
                  c. Crediting non-Federal operation maintenance, and 
                rehabilitation (OM&R) payments to non-Federal 
                construction cost obligations.
                  d. Imposition by the Federal Government of fees or 
                charges requiring authorization in order to finance the 
                non-Federal share.
                  e. Federal subsidy of OM&R costs of Indian and non-
                Indian parties.
                  f. U.S. participation in an economically unjustified 
                irrigation investment; however, investments for 
                delivery of water for households, gardens, or domestic 
                livestock may be exempted from this criterion.
                  g. Per capita distribution of trust funds.
                  h. Crediting to the Federal share existing annual 
                program funding to tribes.
                  i. Penalties for failure to meet a construction 
                schedule. Interest should not accrue unless the 
                settlement does not get budgeted for as specified in 
                item 15 below.
                  j. Exemptions from Reclamation law.

          12. All tangible and intangible costs to the Federal 
        Government and to non-Federal parties, including the 
        forgiveness of non-Federal reimbursement requirements to the 
        Federal Government and items contributed per item 8 above 
        should be included in calculating their respective 
        contributions to the settlement.
          13. All financial calculations shall use a discount rate 
        equivalent to the current water resources planning discount 
        rate as published annually in the Federal Register.
          14. All contractual and statutory responsibilities of the 
        Secretary that affect or could be affected by a specific 
        negotiation will be reviewed.
          15. Settlement agreements should include the following 
        standard language: Federal financial contributions to a 
        settlement will normally be budgeted for, subject to the 
        availability of funds, by October 1 of the year following the 
        year of enactment of the authorizing legislation (e.g., for a 
        settlement enacted into law in August 1990, funding to 
        implement it would normally be contained in the FY 1992 Budget 
        request and, if appropriated, be available for obligation on 
        October 1, 1991).
          16. Settlements requiring payment of a substantial Federal 
        contribution should include standard language providing for the 
        costs to be spread-out over more than one year.
Procedures
            Phase I--Fact Finding

          1. The Department of the Interior (Department) will consider 
        initiation of formal claims settlement negotiations when the 
        Indian tribe and non-Federal parties involved have formally 
        requested negotiations of the Secretary of the Interior 
        (Secretary).
          2. The Department will consult with the Department of Justice 
        (Justice) concerning the legal considerations in forming a 
        negotiating team. If Department decides to establish a team, 
        the Office of Management and Budget (OMB) and Justice shall be 
        notified, in writing. Justice should generally be a member of 
        any negotiating team.

                  a. The Department's notification should include the 
                rationale for potential negotiations, i.e., pending 
                litigation and other background information about the 
                claim already available, makeup of the team (reason 
                that Justice is not a member of a team, if applicable), 
                and non-Federal participants in the settlement process.
                  b. The date of the notification marks the beginning 
                of the fact-finding period.

          3. Not later than nine months after notification, a fact-
        finding report outlining the current status of litigation and 
        other pertinent matters will be submitted by the team to the 
        Department, OMB, and Justice. The fact-finding report should 
        contain information that profiles the claim and potential 
        negotiations. The report should include:

                  a. A list of all involved parties and their 
                positions.
                  b. The legal history, if any, of the claim, including 
                such relevant matters as prior or potential litigation 
                or court decisions, or rulings by the Indian Claims 
                Commission.
                  c. A summary and evaluation of the claims asserted 
                for the Indians.
                  d. Relevant information on the non-Federal parties 
                and their positions to the claim.
                  e. A geographical description of the reservation and 
                drainage basin involved, including maps and diagrams.
                  f. A review and analysis of pertinent existing 
                contracts, statutes, regulations, and legal precedent 
                that may have an impact on the settlement.
                  g. A description and analysis of the history of the 
                United States' trust activities on the Indian 
                reservation.

          4. During Phase I, II, and III, the Government (through 
        negotiating team or otherwise) will not concede or make 
        representatives on likely U.S. positions or considerations.
            Phase II--Assessment and Recommendations

          1. As soon as possible, the negotiating team, in concert with 
        Justice, will conduct and present to the Department an 
        assessment of the positions of all parties and a recommended 
        negotiating position. The purpose of the assessment is to (1) 
        measure all costs presuming no settlement, and, (2) measure 
        complete settlement costs to all the parties. The assessment 
        should include:

                  a. Costs presuming no settlement--Estimates for 
                quantifying costs associated with all pending or 
                potential litigation in question, including claims 
                against the United States and claims against other non-
                Federal parties together with an assessment of the risk 
                to all parties from any aspect of the claim and all 
                pending litigation without a settlement. A best/worst/
                most likely probability analysis of the litigation 
                outcome should be developed.
                  b. An analysis of the value of the water claim for 
                the Indians.
                  c. Costs Presuming Settlement--quantification of 
                alternative settlement costs to all parties. This 
                includes an analysis showing how contributions, other 
                than those strictly associated with litigation, could 
                lead to settlement (e.g., facilities to use water, 
                alternative uses of water, and alternative financial 
                considerations).

          2. All analysis in the settlement should be presented in 
        present value terms using the planning rate used for evaluating 
        Federal water resource projects.
            Phase III--Briefings and Negotiating Position

          1. The Working Group on Indian Water Settlements will present 
        to the Secretary a recommended negotiating position. It should 
        contain:

                  a. The recommended negotiating position and 
                contribution by the Federal Government.
                  b. A strategy for funding the Federal contribution to 
                the settlement.
                  c. Any legal or financial views of Justice or OMB.
                  d. Tentative position on major issues expected to 
                arise.

          2. Following the Secretary's approval of the Government's 
        negotiating position, Justice and OMB will be notified before 
        negotiations commence.
            Phase IV--Negotiations Toward Settlement

          1. OMB and Justice will be updated periodically on the status 
        of negotiations.
          2. If the proposed cost to the U.S. of settlement increases 
        beyond the amount decided in Phase III, if the negotiations are 
        going to exceed the estimated time (or break down), or if 
        Interior proposes to make significant changes in the Government 
        negotiating position or in the U.S. contribution to the 
        settlement, the original recommendation and negotiating 
        position will be revised using the procedures identified above.
          3. Briefings may be given to the Congressional delegations 
        and the Committees consistent with the Government's negotiating 
        position.

    If nothing else, last week's Committee Hearing revealed that the 
requisite Criteria & Procedures are once again being twisted beyond 
recognition by proponents of the Project, the Act, and the Proposed 
Settlement. The fact that OMB, a necessary participant in any such 
negotiation, has been pointedly excluded from these proceedings, is an 
indication that the Proposed Settlement and the Project are not 
feasible and that S. 1171 constitutes abysmal legislation tailored to 
satisfy special, vested interests. The general Public, interested 
parties and a majority of legitimate stakeholders with their 
livelihoods and heritage on the line tried desperately for years to 
gain access to these closed, secret negotiations, to no avail.
    Witness this letter to Michael Schoessler, DOI Team Leader Navajo-
San Juan River Federal Indian Water Rights Negotiation Team from a 
group interested in good government and the thoughtful stewardship of 
natural resources:

                 Electors Concerned about Animas Water--CAW
                                  Farmington, NM, December 9, 2002.
Michael Schoessler,
Team Leader, Navajo-San Juan River Federal Indian Water Rights 
        Negotiation Team, U.S. Department of the Interior, Office of 
        the Solicitor, 505 Marquette Ave. NW Suite 1800, Albuquerque, 
        NM.
SUBJECT: Navajo-San Juan River Federal Indian Water Rights Negotiation 
(Negotiation)

    Dear Michael: Thank you for responding in advance of this week's 
meeting of your Navajo-San Juan River Federal Indian Water Rights 
Negotiation Team (Team). As you know, CAW has expressed an interest in 
the subject Negotiation, particularly regarding the Department of the 
Interior's (DOI) application of its policy for the negotiation and 
settlements of claims concerning Indian water resources, 55FR9223 
(Policy). Your observation that this Policy has been inconsistently or 
haphazardly applied over the past decade confirms our worst fears.
    At the same time, we are encouraged by your expressed intention to 
strictly adhere to the Policy as established in the ``Criteria & 
Procedures'' during your Team's ongoing two-year effort with the 
subject Negotiation. I suppose it would be reasonable to assume that, 
initially anyway, DOI personnel assigned to other negotiation teams had 
similar intentions of enforcing the required ``Criteria & Procedures'', 
but then, for one reason or another, found it more convenient, 
advantageous, or politically expedient to abandon their responsibility 
to uphold that Policy.
    In our opinion, only a full and careful implementation of the 
Policy in the subject Negotiation will fulfill the Secretary's 
obligation under the federal Indian trust responsibility. Indian Trust 
Assets (ITAs) in connection with Navajo Nation water rights claims to 
the San Juan River cannot be accurately assessed and adequately 
protected if the DOI's slipshod approach to Policy enforcement 
resurfaces in the subject Negotiation. Certainly the American people 
will be ill-served by any perpetuation of this willy-nilly system which 
leaves so much to chance, if not outright subterfuge.
    We sincerely appreciate your willingness to present the requests in 
CAW's October 22nd letter to the non-Federal parties for consideration 
and action at this week's negotiation session. However, your view that 
the Team has no independent ability or authority to provide for the 
involvement of additional non-Federal parties in the subject 
Negotiation seems to be incompatible with the ``Criteria & Procedures'' 
of the Policy.
    In fact, the Policy does not make allowance for the arbitrary 
exclusion of individual stakeholders or entities with competing claims 
and interests as a prerequisite to the subject Negotiation. Neither 
does the Policy support your determination that the current 
negotiations shall be closed to the public and conducted in absolute 
secrecy.
    If the subject Negotiation is to be kept free of bias and 
prejudice, the Team must act swiftly with authority to allow for the 
participation of additional interested parties, including legitimate 
stakeholders.
    Once again, we appreciate your time and consideration in this 
matter.
            Sincerely,
                       Steve Cone and Verna Forbes Willson.

    THE OBJECT LESSON IN ALL OF THIS IS AS FOLLOWS: IF THE ADOPTED 
POLICY OF THE UNITED STATES GOVERNMENT FOR PARTICIPATION IN THE 
NEGOTIATION OF INDIAN WATER RIGHTS SETTLEMENTS, 55FR9223, IS NOT TO BE 
FAITHFULLY AND THOROUGHLY IMPLEMENTED TO REACH A JUST WATER RIGHTS 
SETTLEMENT WITH THE NAVAJO NATION, THEN LITIGATION IS MUCH PREFERRABLE 
TO THE SECRECY AND SUBTERFUGE WHICH HAVE CHARACTERIZED THE NAVAJO 
SETTLEMENT NEGOTIATIONS LEADING TO THE PROPOSED SETTLEMENT.
                                 ______
                                 
                Statement of the Jicarilla Apache Nation
                                s. 1171
    The Jicarilla Apache Nation is pleased to submit this testimony 
supporting and commenting on S. 1171. The Jicarilla Apache Nation is a 
co-sponsor in the planning process for the Navajo Gallup Water Supply 
Project, a vital piece of this legislation and the Navajo Nation Water 
rights settlement package. We are a member of the Steering Committee 
for the Project. We have devoted substantial staff time and resources 
over the last several years to the planning and environmental 
compliance process for the Project.
    The Nation's water rights in the San Juan River Basin are the 
subject of a 1992 settlement agreement and the Jicarilla Apache Tribe 
Water Rights Settlement Act, Public Law 102-441, 106 Stat. 2237. We 
traveled a long road to successfully negotiate our settlement, and we 
find ourselves on an equally long road to secure the implementation of 
the settlement in order to fully realize its benefits for our people. 
When faced with obstacles to the use of our settled water rights, we 
have consistently shown leadership in finding solutions that benefit 
not only our people, but also our neighbors in the San Juan River 
Basin. We have, for example, provided leased water supplies to large 
and small water users, ranging from individual farmers and the Elks 
Lodge to BHP Billiton and PNM. We have also served as a founding member 
of the San Juan River Recovery Implementation Program to protect 
endangered species while water development is pursued.
    Most recently, we have stepped up to the plate to offer to 
negotiate a water lease, or subcontract, to the City of Gallup to 
provide their water supply for the Navajo-Gallup Water Supply Project 
that would otherwise be unavailable. The water rights that would be the 
subject of a subcontract to be negotiated between the Jicarilla Apache 
Nation and the City of Gallup are already adjudicated to the Nation. 
Consequently, these water rights are already within the recognized 
Upper Basin supply in New Mexico. It is important for the Committee to 
understand the Nation's pivotal role in the creative solutions that 
make the Project, and ultimately the Navajo Nation settlement, 
achievable.
    We share with the Navajo Nation a common interest in bringing 
clean, reliable water service to grossly underserved areas of our 
reservations. The Jicarilla Apache people desire to pursue our way of 
life by making their homes on our reservation lands throughout the 
basin, and not being crowded into increasingly limited space in Dulce, 
New Mexico because of the lack of potable water. To meet this need, we 
have worked with the United States Bureau of Reclamation and the other 
Project Participants to provide for the connection of a water line at 
Counselor, New Mexico from the Cutter Lateral portion of the Project. 
We are also separately planning construction of the approximately 
eight-mile portion of the additional water line that will be needed 
from Counselor to our lands at TeePees on New Mexico State Highway 550 
in order to deliver this water to our people, without the assistance of 
appropriations authorized under this bill. The water that would be 
delivered to us through the Project is water already adjudicated to us 
under the 1992 settlement and related Partial Final Decree. We will 
receive no additional water rights under this bill.
    For these reasons, the Jicarilla Apache Nation has a demonstrated 
commitment to and interest in a successful outcome to this legislation 
and the associated Navajo-Gallup Water Supply Project. It is imperative 
that the legislation recognize and support the Nation's role in the 
Project.
    In addition to the attached detailed comments that we are providing 
to the Committee staff, we share the following thoughts in the interest 
of ensuring that key provisions of the legislation are clarified. We 
look forward to continuing to work with members of the Committee and 
Congress, the State of New Mexico, the Navajo Nation, the City of 
Gallup, and the Administration to refine and implement the legislation.
    The Jicarilla Apache Nation does not object to the concept of a top 
water bank, provided that its implementation does not adversely affect 
the Nation's water rights, storage for the Nation, or costs under our 
contract for water from the Navajo Reservoir Supply, and provided also 
that the beneficiaries of the top water bank pay their fair share of 
construction and operation and maintenance costs associated with Navajo 
Reservoir.
    The provisions concerning shortages should be carefully 
reconsidered and redrafted in consultation with us to protect the 
Jicarilla Apache Nation's water rights, including entitlement to 
delivery in times of shortage, under the Jicarilla Apache Tribe Water 
Rights Settlement Act. We believe and expect that it is not Congress' 
intent to adversely modify the Nation's rights under our existing 
settlement. Indeed, the bill appropriately states that unless expressly 
provided, nothing in it modifies, conflicts with, preempts, or 
otherwise affects the Jicarilla Apache Tribe Water Rights Settlement 
Act (Section 103(1)), page 18 lines 2-4 and page 19 lines 1-2). The 
legislation must be crafted to protect the Nation from suffering a 
lower priority in time of shortage.
    We wish to share a few concerns the Nation has regarding what we 
view as unclear language referring to cost share provisions in the 
Bill. The Secretary is directed to determine the share ``based on the 
ability of the Jicarilla Apache Nation to pay the construction costs of 
the Project facilities that are allocable to the Jicarilla Apache 
Nation,'' and this share is specified to be at least 25 percent of the 
costs so allocable.
    We have some concerns with how the portion ``allocable'' to the 
Nation will be determined. The Nation's staff have reviewed the items 
allocated to us as reflected in the March 2007 Draft Planning Report 
and Environmental Impact Statement for the Project (``PR-DEIS''), and 
if our understanding is correct, the allocation reflected in that 
document is appropriate. The legislation should make clear that a 
different allocation will not be imposed on us. While we are not 
concerned with the items contemplated to be allocated to us, we are 
concerned that the Bureau of Reclamation's cost estimates for these 
items are substantially greater than they should be. Notably, the PR-
DEIS states that Reclamation is re-estimating costs and anticipates 
providing updated cost estimates through errata sheets to be made 
available during the public comment period on the PR-DEIS. To our 
knowledge, however, no such errata sheets have been made available and 
the public comment period ends on June 28, 2007. We are therefore 
reserving for further comment the issue of cost estimates in our 
comments on the PR-DEIS. To protect the continuing voice of the Project 
Participants in all cost determinations associated with the Project, 
the legislation should clarify that the construction costs reimbursable 
by the Jicarilla Apache Nation shall be reduced by the amounts that the 
Nation expends from its own funds or non-federal sources on pre-
construction activities for the Project.
    The draft legislation does not effectively define the ``ability to 
pay'' determination. This provision should specify that ``ability to 
pay'' will be determined on the basis of the per capita income, median 
household income, and poverty rate of the population on the Jicarilla 
Apache Reservation. This specificity will ensure that the determination 
of ``ability to pay'' reflects the true ability of our people to pay 
for the water supply.
    The requirement that the Nation should pay a minimum percentage of 
25 percent of the construction costs allocable to the Nation is 
inappropriate. A proper ability to pay determination based on the 
ability of our population will result in a cost share percentage below 
25 percent. Indeed, this minimum leaves the Nation unacceptably exposed 
to the burden of a cost share far greater than 25 percent that has no 
relationship to ability to pay. Notably, the April 2006 study by 
Dornbusch Associates entitled ``Social Impacts from the Navajo-Gallup 
Water Supply Project'' (Appendix D-IV, page 12, to the PR-DEIS) found 
that the Jicarilla Apache people earn median incomes far below the New 
Mexico state average.
    This requirement casts a shadow over the negotiating process in 
providing a leased water supply for the City of Gallup. Without fully 
understanding the entire exposure the Nation has in paying for its 
portion of the Project, it is extremely difficult to proceed with 
substantive negotiations with Gallup and the Navajo Nation in 
finalizing a secure water supply for the City.
    We would like to see in the bill a provision for establishment of a 
committee, including a seat for the Jicarilla Apache Nation, to set and 
review Project construction and operation, maintenance and replacement 
budgets and extraordinary expenditures.
                                 ______
                                 
                Statement of the Jicarilla Apache Nation
                      detailed comments on s. 1171
    Pages 8-11, Section 101(b), top water bank in Navajo Reservoir: The 
Jicarilla Apache Nation does not object to the concept of a top water 
bank, provided that its implementation not adversely affect the 
Nation's water rights, storage for the Nation, or costs under our 
contract for water from the Navajo Reservoir Supply, and provided also 
that the beneficiaries of the top water bank pay their fair share of 
construction and operation and maintenance costs associated with Navajo 
Reservoir. Page 9, lines 11-20, provides that the water bank shall be 
operated in a manner that does not impair delivery under contracts 
entered into under New Mexico State Engineer File Nos. 2847, 2848, 
2849, and 2917. This list should not omit the additional permits--file 
Nos. 2873 and 3215--that are included along with the listed file 
numbers in the definition of ``Navajo Reservoir Supply'' in the 
December 8, 1992 contract between the United States and the Jicarilla 
Apache Nation for delivery from this supply pursuant to the Jicarilla 
Apache Water Rights Settlement Act.
    Page 10, lines 17-24, describes a requirement for the operation of 
the top water bank as follows:

          water in the top water bank [shall] be the first water 
        spilled or released for flood control purposes in anticipation 
        of a spill, on the condition that top water bank water shall 
        not be released or included for purposes of calculating whether 
        a release should occur for purposes of satisfying releases 
        required under the San Juan River Recovery Implementation 
        Program [SJRRIP].

    For clarity, this subsection should be divided into two separate 
requirements: (1) top water bank water shall be the first to be spilled 
or released for flood control purposes and (2) top water bank water 
shall not affect the calculation of the release required under the 
SJRRIP. Since the Flow Recommendations of the SJRRIP consider reservoir 
storage without the top water bank present, it is appropriate to 
disregard the top water bank in calculating whether a release should 
occur. However, it is not appropriate to exclude top water bank water 
from the water that would be released. We do not believe that the 
intent is to exclude it, but as currently written, the provision could 
be misread to exclude top water bank water from a release.
    The legislation should clearly require the beneficiaries of the top 
water bank to enter contracts with the United States for storage, 
including an obligation to pay their proportional share of construction 
and operations, maintenance and replacement costs. The cost shares of 
the Jicarilla Apache Nation and other contractors should be reduced 
accordingly.
    Page 13, lines 10-22, use of the Navajo Indian Irrigation Project 
works to convey water: Planning for the Navajo-Gallup Water Supply 
Project has contemplated the use of NIIP works for conveyance. This 
provision authorizes that use, and importantly, prohibits the 
reallocation of NIIP construction costs because of such use. The 
legislation should also restrict the reallocation and repayment of NIIP 
operation, maintenance and replacement costs to the Navajo-Gallup Water 
Supply Project. The Jicarilla Apache Nation has expressed concern in 
the planning process for the possibility that NIIP OM&R costs that are 
unrelated to conveyance for the Nation's water through the Project 
might be charged to the Nation. We have felt assured that such costs 
would not be charged to us. The legislation should clarify this point.
    Pages 14-17, shortage determinations and allocations: The bill 
would establish a priority of allocation of shortages, not water 
supply, in the event of a shortage determination. The bill further 
includes provisions for determining which uses in New Mexico will be 
counted as normal diversion requirements. The quantity of water that 
reliably can be anticipated to be diverted or delivered under a 
contract from inflows to the San Juan River arising below Navajo Dam 
under New Mexico State Engineer File No. 3215 would be excluded from 
the normal diversion requirements. We are concerned about how these 
potentially confusing provisions will be interpreted and applied in 
practice.
    The provisions concerning shortages should be carefully 
reconsidered and redrafted in consultation with us to protect the 
Jicarilla Apache Nation's water rights, including entitlement to 
delivery in times of shortage, under the Jicarilla Apache Tribe Water 
Rights Settlement Act. We believe and expect that it is not Congress' 
intent to adversely modify the Nation's rights under our existing 
settlement. Indeed, the bill appropriately states that unless expressly 
provided, nothing in it modifies, conflicts with, preempts, or 
otherwise affects the Jicarilla Apache Tribe Water Rights Settlement 
Act (Section 103(1)), page 18 lines 2-4 and page 19 lines 1-2). The 
legislation must be crafted to protect the Nation from suffering a 
lower priority in time of shortage.
    The provision on page 17, lines 13-17 that preserves the 
Secretary's ability to reallocate water in accordance with cooperative 
agreements between water users is important to ensure that the 
constructive shortage sharing recommendations of recent years, to which 
the Nation has been a signatory, can continue to foster solutions that 
avoid a Secretarial shortage determination and the attendant potential 
for disruptive litigation.
    Page 27, lines 18-21: The bill states that the design and 
construction of the Project shall not be subject to the Indian Self 
Determination Act. The Jicarilla Apache Nation would like this section 
to be amended to allow the Nation to utilize the Act appropriately for 
our involvement in design and construction work.
    Page 30, lines 11-24 and page 31, lines 1-12 provide for conveyance 
of Project facilities to the City of Gallup or the Navajo Nation. The 
legislation should expressly state that such conveyance shall not 
adversely affect the cost allocations or repayment obligations of the 
Project Participants, and should further provide for the continuation 
of the committee to establish and review budgets as recommended in our 
comment below on cost allocation.
    Page 32, lines 11-18 provide, in part, that any payments for water 
under any subcontract with the Jicarilla Apache Nation shall not alter 
the construction repayments or operation, maintenance and replacement 
payment requirements of Project Participants. This language is 
important to clarify that our payment obligations will not be affected 
by revenues we may receive under a subcontract. However, when a payment 
is made for the use of unused Project capacity, the payments due from 
the Project Participants should be commensurately reduced.
    Title III of the bill uses the phrases ``allocate water supply'' 
and ``allocation'' in a way that may cause confusion. Section 301(2), 
page 24, lines 12-14 lists among the purposes of the subtitle ``to 
allocate the water supply for the Project among the Nation, the city of 
Gallup, New Mexico, and the Jicarilla Apache Nation.'' Section 
303(b)(2), pages 34-36, provides for ``allocation'' of the water 
diverted under the Project to these entities by specified amounts of 
water for use. These provisions should be revised to make it clear that 
they are specifying the use of delivery capacity, not the allocation of 
underlying water rights or contract rights to the Navajo Reservoir 
Supply. For instance, the bill describes an ``allocation'' of 7,500 
acre-feet per year to the City of Gallup (page 35, lines 1-5), but if 
that water is to be supplied by a potential subcontract from the 
Jicarilla Apache Nation under our 1992 contract rights to the Navajo 
Reservoir Supply, then the water allocation remains the Jicarilla 
Apache Nation's and Gallup will be entitled to delivery under the 
subcontract through the Project.
    Page 45, lines 11-13 provide the important clarification that the 
Jicarilla Apache Nation is not obligated to enter into a water 
subcontract with the City of Gallup. The phrase ``nothing in this 
paragraph'' is used, however, when the wording should be ``nothing in 
this Act'' (page 45, lines 1-2).
    We wish to share a few concerns the Nation has regarding what we 
view as unclear language referring to cost share provisions in the 
Bill. The Secretary is directed to determine the share ``based on the 
ability of the Jicarilla Apache Nation to pay the construction costs of 
the Project facilities that are allocable to the Jicarilla Apache 
Nation,'' and this share is specified to be at least 25 percent of the 
costs so allocable.
    We have some concerns with how the portion ``allocable'' to the 
Nation will be determined. The Nation's staff have reviewed the items 
allocated to us as reflected in the March 2007 Draft Planning Report 
and Environmental Impact Statement for the Project (``PR-DEIS''), and 
if our understanding is correct, the allocation reflected in that 
document is appropriate. The legislation should make clear that a 
different allocation will not be imposed on us. While we are not 
concerned with the items contemplated to be allocated to us, we are 
concerned that the Bureau of Reclamation's cost estimates for these 
items are substantially greater than they should be. Notably, the PR-
DEIS states that Reclamation is re-estimating costs and anticipates 
providing updated cost estimates through errata sheets to be made 
available during the public comment period on the PR-DEIS. To our 
knowledge, however, no such errata sheets have been made available and 
the public comment period ends on June 28, 2007. We are therefore 
reserving for further comment the issue of cost estimates in our 
comments on the PR-DEIS. To protect the continuing voice of the Project 
Participants in all cost determinations associated with the Project, 
the legislation should clarify that the construction costs reimbursable 
by the Jicarilla Apache Nation shall be reduced by the amounts that the 
Nation expends from its own funds or non-federal sources on pre-
construction activities for the Project.
    The draft legislation does not effectively define the ``ability to 
pay'' determination. This provision should specify that ``ability to 
pay'' will be determined on the basis of the per capita income, median 
household income, and poverty rate of the population on the Jicarilla 
Apache Reservation. This specificity will ensure that the determination 
of ``ability to pay'' reflects the true ability of our people to pay 
for the water supply.
    The requirement that the Nation should pay a minimum percentage of 
25 percent of the construction costs allocable to the Nation is 
inappropriate. A proper ability to pay determination based on the 
ability of our population will result in a cost share percentage below 
25 percent. Indeed, this minimum leaves the Nation unacceptably exposed 
to the burden of a cost share far greater than 25 percent that has no 
relationship to ability to pay. Notably, the April 2006 study by 
Dornbusch Associates entitled ``Social Impacts from the Navajo-Gallup 
Water Supply Project'' (Appendix D-IV, page 12, to the PR-DEIS) found 
that the Jicarilla Apache people earn median incomes far below the New 
Mexico state average.
    This requirement casts a shadow over the negotiating process in 
providing a leased water supply for the City of Gallup. Without fully 
understanding the entire exposure the Nation has in paying for its 
portion of the Project, it is extremely difficult to proceed with 
substantive negotiations with Gallup and the Navajo Nation in 
finalizing a secure water supply for the City.
    We would like to see in the bill a provision for establishment of a 
committee, including a seat for the Jicarilla Apache Nation, to set and 
review Project construction and operation, maintenance and replacement 
budgets and extraordinary expenditures.
    Page 59, lines 17-21, Section 401(a)(4) provides that the State of 
New Mexico may administer releases of stored water from the Navajo 
Reservoir in accordance with subparagraph 9.1 of the Navajo Nation 
settlement agreement. The effect of this provision is unclear. The 
referenced subparagraph of the agreement states that the Navajo Nation 
and the United States will not challenge the State's making available 
water under specified circumstances. It seems that bill language should 
be revised to simply provide for the waiver by the United States of the 
objection as contemplated by the agreement.
    Page 68, lines 24-25, and page 69, lines 1-3 and lines 14-19 
literally require the court to enter the partial final decree and 
supplemental partial final decree described in the Navajo Nation 
settlement agreement by specified dates. The bill could be clearer on 
the effect of a failure to meet these deadlines.
    Page 73, lines 9-13 states that ``nothing in the Agreement, the 
Contract, or this section quantifies or adversely affects the land and 
water rights, or claims or entitlements to water, of any Indian tribe 
or community other than the rights, claims, or entitlements of the 
Nation.'' This provision should specify that nothing in the Act, rather 
than merely the section, quantifies or adversely affects, and should 
also specify that nothing in the hydrologic determination by the 
Secretary quantifies or adversely affects such rights, claims or 
entitlements.
                                 ______
                                 
   Statement of Mike Sullivan, Chairman, San Juan Agricultural Water 
                           Users Association
    Thank you for giving us the opportunity to testify about the 
proposed legislation entitled ``Northwestern New Mexico Rural Water 
Projects Act.'' If carried out, this legislation would draw water from 
the San Juan River (one of the largest tributaries of the Colorado 
River) for a pipeline to be built to the Gallup area at a cost of more 
than $1 billion in public funds. The legislation would also affect 
water rights throughout New Mexico and the entire Colorado River 
system.
    The San Juan Agricultural Water Users Association represents 36 of 
the 38 irrigation ditches in the San Juan river system. Our members 
consist of about 15,000 landowners and their families. The members of 
our association have water rights from the Echo Ditch Decree (1948) and 
appropriations for approximately 35,000 acres of irrigated land with a 
farm delivery of over 110,000 acre-feet of water. We are also entitled 
to divert approximately 1,000 cfs from the rivers of the Basin. Our 
members also have water rights for household, livestock, and other 
uses, which have not yet been quantified by the court. The members of 
the association have been putting the waters of the San Juan to 
beneficial use for more than 100 years. Our ancestors, Anglo, Hispanic, 
and Navajo, were the first ones to divert water from the river, long 
before New Mexico became a state. Since then, our members have 
maintained our community ditches with their own labor and their own 
money, through ditch assessments, without government subsidies.
    We appreciate the invitation to testify in person, but 
unfortunately our group cannot afford to send someone to Washington. So 
we are submitting testimony in writing. Although we are unable to be 
present with you, we ask that you give careful attention to the facts 
which we are outlining, because you will not hear these facts from 
anyone else. In our absence, our opponents will pooh-pooh these facts 
and our position, but we respectfully request that you and your 
staffers conduct an independent investigation of the points we outline 
here. Any objective inquiry will demonstrate that there are serious 
questions about this bill, which the proponents are trying to gloss 
over.
    If this legislation is passed in its present form, it will hurt us 
and many other people in New Mexico. With all due respect, the proposed 
legislation is so fundamentally flawed that it should not be enacted in 
its present form. This legislation has been pushed by certain special 
interests as a solution to the problems all along the San Juan and 
Colorado Rivers, but in reality it will only make those problems worse. 
And this legislation as presently written will create new problems for 
the entire State of New Mexico, which increasingly depends on the San 
Juan River to supply its water.
the legislation attempts to give one-third of new mexico's river water 
 to a very small group--less than 40,000 people--at the expense of the 
            other 1,800,000 citizens who live in new mexico
    The San Juan River provides 60% of all the surface water in New 
Mexico. As a water source for New Mexico, the San Juan River is twice 
as big as all the other rivers in the state, combined--the Rio Grande, 
Pecos, the Gila, etc. Cities and tribes on the Rio Grande are 
increasingly depending on water supplied from the San Juan via the San 
Juan-Chama Project, which carries water across the Continental Divide.
    Albuquerque is finishing a $275 million project to use San Juan 
water, while Santa Fe is spending $145 million. Taos, Espanola, Los 
Alamos, San Juan Pueblo, and Belen are also counting on water from the 
San Juan River. The proposed settlements of Indian water rights for 
Taos Pueblo and Nambe-Pojoaque (the Aamodt case) also are demanding a 
share of water from the San Juan-Chama Project. But these communities 
may be disappointed, because there is a crisis on the San Juan that 
will soon affect the entire state.
    This legislation is based on the false assumption that there is 
enough water in the Colorado to satisfy the claims of the Navajo tribe 
and the other tribes and communities that are competing for water from 
the San Juan. This proposed settlement, just like the proposals for 
Taos and Aamodt (and the unfulfilled settlement with the Jicarilla 
tribe), is based upon wishful thinking, which we can no longer afford 
in an era of global warming. The latest estimate by the Bureau of 
Reclamation is just another in a long series of unrealistic 
hydrological estimates of the amount of water that will be available 
for all uses in New Mexico. The sheer size of this proposed water deal 
makes it a threat to the rest of the state. If enacted in its present 
form, the statute would give a grossly unfair share to a very small 
group of people.
    The ostensible purpose of this legislation is to settle a water 
rights claim for the portion of the Navajo reservation that lies within 
New Mexico. According to the 2000 census, there are only 44,636 persons 
who live on the reservation in New Mexico. U.S. Census Bureau, New 
Mexico--American Indian Area, GCT-PH1, Population, Housing Units, Area, 
and Density, http//factfinder.census.gov. The census figure includes 
non-Indians as well as tribal members, so it is almost certain that 
there are fewer than 40,000 tribal members living on reservation land 
in New Mexico. These are the only persons who would have claims under 
the so-called ``Winters Doctrine.'' This group amounts to only 2.5% of 
the total population of New Mexico, which is 1,819,046 according to the 
2000 census.
    The proposed legislation would give one-third of all the surface 
water in New Mexico to this very small group. The settlement proposes 
to give the tribe rights to 56% of the water in the San Juan River, 
which accounts for 60% of the state's stream water. So the settlement 
would allocate 33.6% of the state's entire supply to satisfy the claims 
of less than 2.5% of the population.
    The legislation would give each tribal member much more river 
water, per person, than the other citizens of New Mexico. If this draft 
legislation were passed and fully implemented, the Navajo tribe would 
be entitled to a depletion of 348,550 acre-feet annually from the San 
Juan River for the 44,636 tribal members who live on the reservation in 
New Mexico. This works out to a depletion of 7.8 acre-feet per capita 
for a tribal member living on the reservation in New Mexico. On a per 
person basis, this is far more river water than would be left for the 
rest of the people who live in New Mexico.
    According to the best estimates, which are admittedly imperfect, 
New Mexico has about 2.1 million acre-feet annually in stream flow, 
after meeting its commitments to other states. New Mexico Water Quality 
Control Commission, 2006-2008 State of New Mexico Integrated Clean 
Water Act  303(d)/ 305(b) Report at 4. This means that there is about 
1 acre-foot of river flow available for each person in this state, on 
average. To keep some flow in the rivers, the amount of allowable 
depletion per person would be considerably less than 1 acre-foot. Yet 
the proposed legislation would allocate 7.8 acre-feet of depletion to 
each Navajo tribal member on the reservation in New Mexico. This is 
completely unfair to all the rest of the citizens of New Mexico. The 
legislation advances the special interests of a very small group, while 
it damages the long-term future of the entire state.
    We request that your staff and the OSE prepare estimates of the per 
capita water amounts that would be allocated by the proposed 
settlements in New Mexico, and compare them to the per person amounts 
that would be left to the rest of the population in this state. These 
analyses will show that this settlement gives an unfair amount of water 
to one very small segment of the state's population, at the expense of 
the rest of the population.
    As a matter of sound public policy and water planning, New Mexico's 
scarce river water should be shared equitably by all of the citizens in 
the state, so that all citizens have a roughly equal per capita share, 
whether they are tribal members or not. We support a fair share for 
everyone, but this legislation does not do this.
this legislation will impair the water supplies of local residents who 
                  already depend on the san juan river
    To make room for the proposed Navajo settlement, this legislation 
squeezes the non-Indian users of the San Juan River. It would leave 
only 16% of the river to the local people who have actually used the 
river for more than a century. Under New Mexico's Constitution and 
water laws, those who have actually put the water to beneficial use 
have priority, but the settlement tries to push these rights aside. 
Here is the allocation proposed by the supporters of this bill:

------------------------------------------------------------------------
                                      Allocation
                User                   (Percent)          Comment
------------------------------------------------------------------------
Navajo Nation.......................         56   Irrigation and
                                                   domestic uses.
Jicarilla Apache Nation.............          5   Most leased for power
                                                   plants/municipal
                                                   uses.
San Juan--Chama Project.............         17   Municipal/irrigation
                                                   uses in Rio Grande
                                                   Basin.
Power Plants........................          6   Use 9% of total
                                                   including lease with
                                                   Jicarilla.
Non-Indian uses in San Juan Basin...         16   Irrigation and
                                                   municipal uses.
------------------------------------------------------------------------
Executive Summary of the Navajo Nation Water Rights Settlement at 4
  (Apr. 19, 2005).

    The situation for local residents is even worse than these figures 
show. First, the tribal claims would be given a retroactive higher 
priority than many local users, even though local people put the water 
to actual beneficial use, in accordance with New Mexico law, while the 
tribes have never used most of the water allocated to them. Second, 
this legislation gives the Navajo Nation control of the entire river, 
from Navajo Lake at the top, to Shiprock at the bottom.
    Third, to make this settlement fit, the OSE is trying to reduce our 
members' water rights under the 1948 Echo Ditch Decree. In the ongoing 
San Juan adjudication, the OSE is falsely claiming that our members 
have abandoned large parts of their water rights under the Echo Ditch 
Decree. To make this legislation look feasible, the projections by the 
OSE wrongly assume that non-Indians are only using about half of their 
Echo Ditch rights, so that non-Indian uses will be reduced from 16% to 
about 8%. To accomplish this, the OSE, the tribes, the United States, 
and the power plants are all litigating against our members, to cut 
back on our vested water rights.
    According to one set of projections by the State Engineer's staff, 
the result will be a reduction of 40% in water use on the Upper San 
Juan River, a 36% reduction to ditches on the Animas River, and a 
reduction of 58% to ditches on the La Plata River. (The OSE now claims 
that these projections are no longer operative, because the OSE and the 
BOR keep changing their numbers to make them fit.) These reductions 
would ruin many water users who have depended on this water, and 
actually used it for more than a century, in order to give the water to 
new users in the Gallup-Window Rock area, who have never depended upon 
or used water from the San Juan.
    The legislation does not solve the problems associated with the 
Hogback-Cudei Project and the Fruitland-Cambridge Project. These 
projects draw water at the downstream end of the San Juan River in New 
Mexico, so they provide no return flow which can be used in the state. 
The legislation authorizes the diversion of more water than will be in 
the river on many occasions.
    The Richardson settlement provides for the release of up to 12,000 
acre-feet per year from Navajo Dam for use by the tribe for irrigation 
in the Hogback-Shiprock area. This provision is inadequate and 
ineffective: the maximum amount is 12,000 acre-feet in any one year, 
but this amount could be depleted in two or three weeks under really 
dry conditions. If the shortage in the river is 500 cfs, the water will 
be gone in about 3 weeks. To have an adequate buffer, there needs to be 
at least a 65-day supply for both Indian and non-Indian users. As 
proposed in this legislation, the 12,000 acre-feet is only for tribal 
users, so it does not increase the water that can be used by non-
Indians. And in dry conditions it may still be necessary to place calls 
on upstream users in order to get this water to the Hogback-Shiprock 
area at the low end of the river. Under this legislation the tribe will 
effectively control both ends of the river--Navajo Dam at one end and 
Shiprock at the other.
     this legislation continues a pattern of unrealistic piecemeal 
 settlements with indian tribes, which will make it impossible for new 
              mexico to formulate a coherent water policy
    Unfortunately, New Mexico does not yet have a coherent and 
comprehensive master plan for the state's water resources. For example, 
the major rivers have not been fully adjudicated by the courts. 
Furthermore, there are 19 Indian pueblos, 3 tribes, and 3 Navajo bands 
in New Mexico. Tribal Map, New Mexico Indian Affairs Department, 
www.iad.state.nm.us. Most of their water rights have not been settled 
or adjudicated. Passage of this legislation would make it virtually 
impossible for the state to develop a realistic long-term plan.
    Throughout this process, we have asked some very basic questions, 
but no one has been able (or willing) to answer them. Some of the basic 
questions are:

          (a) How much stream water does New Mexico have?
          (b) After allowing for interstate obligations, rainfall 
        variations, and climate trends, how much river water can be 
        diverted for use within New Mexico?
          (c) How much water can New Mexico consume, while still 
        leaving an adequate flow in our rivers?

    Obviously, one cannot devise a water plan for New Mexico without 
some idea of the overall water resources available in the state. But 
the OSE and the ISC say they have no idea of the aggregate water supply 
and demand.
    At the request of Senator Bingaman, the OSE and the ISC met with us 
on March 28, 2007, in Farmington. The purpose of this meeting was to 
give the state's technical experts an opportunity to answer these very 
basic questions. When we asked these questions, the OSE and ISC 
representatives said that they had absolutely no idea of the amount of 
water that might be available for use in New Mexico, not even a 
ballpark estimate. We repeatedly asked them to give us some idea of the 
water resources that might be available to the state, recognizing that 
such estimates are quite imperfect. The OSE/ISC said, repeatedly, that 
it had no idea whatsoever. The ISC representatives said that New Mexico 
was currently in compliance with its compact obligations, but the ISC 
had no idea of how much water would be left after those obligations 
were met, not even a range of figures from dry years to wet years.
    We find this hard to believe. If the OSE and the ISC have no idea 
of the aggregate water resources of the state, then they are not doing 
their job. The first step in any long-term water plan is to use the 
best available and most current data to estimate future water flows, so 
the state can learn to live within them. Neither the state nor the 
federal government should make any long-term commitments until these 
rudimentary questions have been addressed and answered.\1\
---------------------------------------------------------------------------
    \1\ In our dealings with the OSE and the ISC, we have observed that 
they are reluctant to provide data and offer their best professional 
estimates about the proposed Indian settlements, because those 
purported settlements have been widely touted by Governor Richardson. 
Governor Richardson is running for president, and we believe that the 
OSE and ISC personnel understand that they must stick closely to the 
script for the Richardson presidential campaign, for fear that their 
best information and estimates might undermine the campaign. Of course, 
the personnel at OSE and ISC will deny this, but we have observed first 
hand that they are operating under political orders from candidate 
Richardson.
---------------------------------------------------------------------------
    The legislation conflicts with other proposed water settlements 
that depend on water from the San Juan River, such as the proposed 
Aamodt and Taos settlements, and the incomplete Jicarilla settlement. 
There simply is not enough money, or water, to carry out all of these 
settlements proposed by Governor Richardson's administration. For 
example, both Aamodt and Taos are conditioned upon the supply of more 
water from the San Juan River via the San Juan-Chama project. And both 
settlements demand unrealistic amounts of funding by the federal 
government.
    Under the Jicarilla settlement, the federal government is obligated 
to buy back 11,000 acre-feet of private water rights beginning in 2000, 
if requested by the State of New Mexico. For unexplained reasons, the 
state has not yet made this request \2\ but this is likely to occur as 
pressure on the river increases. In short, the federal government 
already has outstanding commitments for the Jicarilla settlement, and 
it should fulfill its existing commitments first.
---------------------------------------------------------------------------
    \2\ We believe that the OSE and the ISC are under political 
pressure from the Richardson administration not to make this request, 
because it would puncture the pretense that there is enough water for 
all the settlements that Governor Richardson has proposed.
---------------------------------------------------------------------------
    The Jicarilla settlement allots 32,000 acre-feet of depletion to 
the Jicarilla Apache Tribe. Jicarilla Apache Tribe Water Rights 
Settlement Act of 1992, Pub. L. No. 102-441. According to the 2000 
Census, there are 2,755 persons (tribal and non-tribal) living on the 
Jicarilla reservation. So the Jicarilla settlement allocates an average 
of roughly 11.6 acre-feet to each resident on the reservation, which is 
more than 10 times the average amount available to each resident in the 
rest of the state. Also, the Jicarilla reservation has substantial 
water sources on the reservation itself. This settlement is grossly 
unfair and inequitable to the rest of the state. It illustrates the 
damage that can be done by water settlements that are negotiated in 
secret by special interests and lobbyists, without public scrutiny and 
without regard to the interests of the entire state as a whole.
    When the Jicarilla allocation is added to the 33.6% share proposed 
by this legislation, the Jicarillas and the Navajos would control more 
than 40% of New Mexico's entire stream flow. New Mexico is already 
short on water, and passage of this legislation would allow these two 
tribes to corner the market of New Mexico's water. Once these two 
tribes control all this water, they will try to lease it to non-Indian 
users in the downstream states in the Lower Basin. To do this, the 
tribes merely have to let the water flow down the San Juan River to 
Lake Meade, which is right next to Las Vegas.\3\
---------------------------------------------------------------------------
    \3\ Candidate Richardson is campaigning hard for the Nevada 
caucuses in January 2008. As part of his campaign, Richardson has 
pledged to find ways to get Nevada more water from the Colorado River. 
Richardson's settlement is one way to get more water to Nevada--at New 
Mexico's expense.
---------------------------------------------------------------------------
    To cover up the fact that the tribe will export New Mexico's water 
to other states, Governor Richardson and the tribe have agreed to 
mislead the public. In their settlement agreement, Richardson and the 
tribe added a provision that the tribe must apply to the New Mexico 
State Engineer for a permit to export water for use in other states. 
This provision is carefully calculated to create the false impression 
that New Mexico can prevent the Navajo tribe from selling New Mexico 
water to other states. Pointing to this provision, Richardson and his 
appointees have been quick to claim that they have protected New 
Mexico's interests by preventing the water from being exported. For 
example, in an Op-Ed article in The Albuquerque Journal on April 8, 
2007, New Mexico State Engineer John D'Antonio claimed that the tribe 
has agreed not to export water without the approval of the OSE and the 
ISC. See attached Exhibit 7.* The supporters of this bill repeated this 
deception in The Albuquerque Journal on June 24, 2007.
---------------------------------------------------------------------------
    * Exhibits 1-7 have been retained in committee files.
---------------------------------------------------------------------------
    These assertions are false, and the Richardson administration knows 
that they are false. The Navajo tribe has not agreed that it needs 
permission from the State of New Mexico in order to export water. At 
our meeting on March 28, 2007, we asked the OSE and the ISC about this 
provision. We asked them what would happen if the tribe applies for 
permission to export water, and the OSE denies them a permit. They 
admitted that, under existing case law, New Mexico cannot prevent the 
tribe from exporting water to another state. And the tribe also takes 
the position that, once the tribe gets the water, the state cannot 
prohibit the tribe from selling or leasing the water to other states.
    In the proposed partial final decree, there is a provision that 
purports to deal with the export of water, but the provision is 
unintelligible and self-contradictory: it allows the tribe to litigate 
its right to export water from New Mexico. Furthermore, the partial 
final decree will never be entered, because the pre-conditions laid 
down by the tribe will never be met.
    In other words, Richardson and the tribe have tried to create the 
illusion that the tribe will not export water, but this is legal 
double-talk. Perhaps the tribe has agreed to apply for a permit to 
export water, but if it does not get one, it will still export the 
water. So the Richardson administration is just blowing smoke to cover 
up the tribe's plans to sell New Mexico's water to Lower Basin states--
like Nevada. If the tribe is allowed to get all this water, it will 
export most of it.
    Therefore, this bill is not just another public works project. This 
legislation poses a broad question of public policy that must be 
addressed to the collective wisdom of Congress: Is it the policy of 
Congress to give 40% of a state's entire water supply to a very small 
group of Native Americans, so that they can sell the water to other 
states?
the proposed legislation damages the environment by drawing more water 
      out of the colorado river system, which is already overdrawn
    This legislation will inflict severe environmental damage on the 
Colorado River, because the projects will draw down the river to pump 
water far away, where there is no return flow to the river, and no 
recharge to the soils in the river bed. When our members irrigate their 
lands along the river, a lot of the water is returned to the river by 
return flows and recharge. This is not the case with NAPI, or with the 
proposed pipelines.
    The San Juan is one of the biggest tributaries of the Colorado 
River, which is already overdrawn. When New Mexico signed the Colorado 
River Compact in 1922, it was assumed that the water flow in the 
Colorado was 16.4 million acre-feet annually. But in 2007, a report 
from the National Academy of Sciences indicates the flow may be only 13 
million acre-feet and dropping, due to global warming. Colorado River 
Basin Water Management: Evaluating and Adjusting to Hydroclimatic 
Variability, Executive Summary, www.nap.edu, attached as Exhibit 1.* 
When the BOR and the OSE offer their opinions that there is enough 
water, their opinions are not based on the best and most current 
scientific data from independent studies.
---------------------------------------------------------------------------
    * Exhibit 1 has been retained in committee files but is also 
available at http://www.nap.edu/catalog/11857.html.
---------------------------------------------------------------------------
    From an environmental point of view, this legislation simply 
repeats the mistakes of the Animas-La Plata project. The government 
told our members that we would benefit from that project, but the 
project has been a disaster.
         the proposed legislation will generate more litigation
    This legislation will not accomplish its objectives, which is to 
settle the competing claims to the San Juan River. Instead, passage of 
this legislation in its present form will simply produce more 
litigation. The legislation is not a comprehensive settlement, because 
it has not been agreed to by most of the people who have water rights 
in the San Juan.
    These water rights are now being adjudicated in the San Juan 
Adjudication lawsuit, which is more than 30 years old. San Juan River 
Basin Adjudication, State of New Mexico, ex rel. The State Engineer v. 
The United States of America, et al. v. The Jicarilla Apache Tribe and 
the Navajo Nation, Eleventh J.D. Dist., No. D-111 6-CV-1975-184 (Mar. 
12, 1975). If this bill passes, it will just prolong the lawsuit for 
many more years.
    For example, the proposed settlement does not resolve the other 
claims of the federal government, or of the Ute Mountain tribe.
    It is also our understanding that the legislation does not even 
settle all of the Navajo water claims in New Mexico, such as the claims 
for the Rajah Band, south of Gallup, in the basin of the Little 
Colorado River. We do not know whether it settles the claim of the 
To'hajiilee Band, near Albuquerque, in the Rio Grande Basin.
    Moreover, this legislation will not even settle the claims of the 
Navajo tribe because the purported settlement is a ``conditional 
settlement.'' The settlement is not effective until future conditions 
are performed, but it is unlikely that these conditions will be met. 
Congress has not fully funded the projects that must be completed 
before the settlement becomes final and binding. Nor has the State of 
New Mexico. It is highly unlikely that the federal and state 
governments will provide the money to complete these projects, so the 
purported settlement will never become final and binding on the Navajo 
tribe. However, in the meantime, the tribe will claim huge amounts of 
water for projects which will never be completed. Then the tribe will 
attempt to lease this water to non-Indian users off the reservation, a 
use that is contrary to the Winters line of cases. So this legislation 
will create a whole new set of legal controversies that will have to be 
litigated, on top of all of the difficult legal questions which already 
exist.
the proposed settlement leaves no water rights for the lands of the new 
 mexico state land office, which congress reserved as an endowment for 
                new mexico's public schools and colleges
    This unsettled issue is currently being litigated in the San Juan 
River Basin Adjudication. The District Court has ruled against the New 
Mexico State Land Office, and the case is currently being appealed to 
the New Mexico Court of Appeals. It is likely that the case will 
ultimately wind up in the New Mexico Supreme Court, and quite possibly 
in the United States Supreme Court, because it presents a question of 
overriding importance to New Mexico, Arizona, and the other Western 
states. The question is this: When Congress reserved sections of land 
as a permanent endowment for New Mexico's schools and colleges, did it 
impliedly reserve the water necessary to develop those lands?
    The San Juan Agricultural Water Users Association does not take any 
position on this question. However, it seems inconsistent for the 
Richardson administration and Congress to say that the federal 
government impliedly reserved water for Indian tribes but not for 
public schools.
 the projections by bor and ose are faulty, because they do not allow 
 for any other reserved water rights that the united states might claim
    The projections by the BOR and the OSE are incomplete, because they 
do not make any allowance for any other federal reserved rights. It is 
certain that the United States will assert claims for other reserved 
water rights for Indian tribes besides the Navajos. It is also possible 
that the United States will assert reserve rights for national forests, 
especially as global warming increases and the national forests dry up. 
The United States might also claim reserved water rights for other 
purposes.
    Before this legislation proceeds any further, we request this 
committee to ask the following questions: Is the United States going to 
claim any other reserved rights against the Colorado River system? Is 
the United States going to claim any reserved rights for national 
forests, or national parks, or national monuments, or for any other 
purposes? How much is the United States claiming, or going to claim, on 
behalf of other Indian tribes in the Colorado basin?
    If the answer to any of these questions is ``yes,'' then these 
demands against the Colorado River need to be quantified and factored 
into the projections by the BOR and the OSE. These projections do not 
make adequate allowance for these claims. In finding that water 
supplies are likely to be adequate, the projections incorrectly assume 
that there will be no other claims for reserved water rights.
    This question needs to be asked and answered for the entire 
Colorado River basin, not merely for New Mexico, because a federal 
reservation of water anywhere along the river will affect every other 
state. A federal reservation of water, when used, reduces the amount of 
flow in the river, so it creates shortages that must be adjusted in 
some fashion. However, the Colorado River compacts are silent on the 
issue of Indian water rights.
    It makes no sense for one agency of the federal government--the 
BOR--to opine that water supplies will be adequate, without making any 
allowance for the reserved water rights that will be claimed by other 
federal agencies.
        the proposed settlement is not supported by a pia study
    This legislation creates a dangerous precedent, because it does not 
require a study of practicably irrigable acreage (PIA) to substantiate 
the Navajo water claims. Under the Winters line of cases, and as a 
matter of sound public policy, a tribe cannot be awarded water for 
irrigation of reservation lands unless it can demonstrate that the 
acreage can be practicably irrigated, that is that irrigation is 
economically viable.
    This legislation sidesteps this requirement, because there has been 
no study analyzing the amount of acreage on the Navajo reservation in 
New Mexico that is viable for irrigation, and no analysis of the amount 
of water that would be necessary to irrigate those acres. Before this 
legislation precedes any further, an independent PIA must be conducted.
    The New Mexico OSE has stated that the Navajo tribe insisted in its 
negotiations that no PIA would be performed. In fact, the Navajo tribe 
is trying to avoid a PIA because it will show that the reservation 
includes very little practicably irrigable acreage--acreage down in the 
river bottom around Shiprock.
    From decades of personal experience, the San Juan Agricultural 
Water Users Association can testify that irrigation is a very hard way 
to make a living, even on the sheltered land down in the river valley. 
Up on the mesa lands, almost 1,000 feet above the river, irrigation is 
completely uneconomic, due to high winds, high evaporation rates, and 
short growing seasons. The experience of Navajo Agricultural Products 
Industries proves that irrigation is not economically viable. NAPI has 
been attempting to grow viable crops by irrigation on the mesa top, 
using pivot sprinklers and water supplied by the Navajo Indian 
Irrigation Project. Unfortunately, NAPI has been a complete financial 
failure, even though it is supplied with water at no cost from Navajo 
Dam, and even though NAPI is heavily subsidized by the federal 
government and the Navajo tribe. NAPI loses large amounts of money 
every year. The revenues from NAPI do not even cover its annual 
operating costs, much less all of the cost of water and the huge 
capital costs for Navajo Dam and the Navajo irrigation canal.
the navajo tribe has already received more water than it is entitled to 
                    under the winters line of cases
    This legislation proposes to grant an additional 20,780 acre feet 
of water to the Navajo tribe in settlement of their claims under the 
so-called ``Winters Doctrine.'' However, the Navajo tribe is not 
entitled to any more water from the San Juan River, because it 
relinquished its claims as part of the creation of the Navajo Indian 
Irrigation Project.
    On May 20, 1960, Paul Jones, the chairman of the Navajo Tribal 
Council appeared before Congress, accompanied by his Washington 
attorney. The Navajo chairman testified in favor of the Navajo Indian 
Irrigation Project, which was ultimately enacted in 1962 as part of 
Public Law 87-483. In his prepared testimony, he described the Navajo 
Indian Irrigation Project and made the following statement*:
---------------------------------------------------------------------------
    * San Juan Reclamation Project and Navajo Indian Irrigation 
Project: Hearing on H.R. 2352, H.R. 2494, and S. 72 Before the House 
Subcommittee on Irrigation and Reclamation of the Committee on Interior 
and Insular Affairs, 86th Cong. 64 (1960) (statement of Paul Jones, 
Chairman, Navajo Tribal Council), attached as Exhibit 2.

          All water uses from Navajo Dam would have equal priority. The 
        Navajo Tribe has consented to this, and relinquished its right 
        under the Winters doctrine for the water necessary to irrigate 
        the Navajo Indian irrigation project, in order to provide a 
        practicable plan for comprehensive development of the resources 
---------------------------------------------------------------------------
        and industrial potential of the San Juan Basin.

    The next year, the executive secretary of the tribe reiterated to 
Congress that the tribe was accepting the Navajo Indian Irrigation 
Project in satisfaction of its claims for water under the ``Winters 
Doctrine.'' San Juan Reclamation Project and Navajo Indian Irrigation 
Project: Hearing on H.R. 2552, H.R. 6541, and S. 107 Before the House 
Subcommittee on Irrigation and Reclamation of the Committee on Interior 
and Insular Afairs, 87th Cong. 33 (1961) (statement of J. Maurice 
McCabe, Executive Secretary, Navajo Tribal Council), attached as 
Exhibit 3.
    Therefore, the tribe's claim for additional water under the 
``Winters Doctrine'' is without merit. The tribe accepted an allocation 
of water for NIIP in satisfaction of its water claims, as part of the 
compromises that were necessary to pass the 1962 legislation. The 
tribe's current claims for water are inconsistent with its agreement 
almost 50 years ago. Instead of demanding more water, the tribe should 
honor the agreement it made to get water from NIIP.
    Furthermore, the Navajo tribe has already received far more water 
than it would be entitled to under the Winters line of cases. The cases 
hold that tribes are entitled to water for irrigation only for 
practicable irrigated acreage within the boundaries of the reservation, 
that is, for irrigation that is economically viable. The cases also 
hold that tribes are not entitled to water for projects that are 
economically wasteful.
    In every instance, an analysis of Winters claims necessarily 
depends upon the specific facts for each reservation, including its 
geography, its climate, and economic factors such as distance from 
major markets. In the case of the Navajo reservation, there is very 
little practicably irrigatable acreage in New Mexico. The original 
Navajo reservation was established by Congress as a reservation for a 
pastoral tribe, predominantly dependent on sheep herding. Congress did 
not impliedly reserve water from the San Juan River for irrigation of 
the original Navajo reservation, because anyone familiar with the 
terrain knows almost none of the reservation's acreage could have been 
viably irrigated from the San Juan River. Most of the land is too far 
from the river, too high, too dry, too hot, too cold, and too windy. 
Within the boundaries of the original reservation, there may be a few 
small plots that are suitable for irrigation from local water sources, 
but otherwise irrigation there is not even close to meeting any 
standards for economic viability.
    Some of the later additions to the reservation included land along 
the San Juan River, and some of this land is economically viable for 
irrigation. The rest of the reservation in New Mexico is not 
economically viable for irrigation, because it is too high and too dry. 
This fact is demonstrated by the complete failure of the Navajo 
Agricultural Products Industries. The Navajo Indian Irrigation Project 
was supposed to provide ``1,120 family farms for Navajo Indians. It 
will give a livelihood in related service activities to another 2,240 
families, thus providing a decent living for at least 12,000 Navajo 
Indians. These figures have been supplied by the Bureau of Indian 
Affairs. Actually, I feel they are excessively conservative.'' 
Testimony of Navajo Tribal Chairman Paul Jones on May 20, 1960, Exhibit 
2, at 65.
    The federal government built Navajo Dam in the 1950s and 1960s, 
during the happy days when everybody thought that the Colorado River 
would never run out of water. Navajo Dam supplies huge amounts of water 
to the Navajo Agricultural Products Industry (NAPI), which grows crops 
with sprinkler irrigation on the windy high desert, almost 1,000 feet 
above the river. Much of this water is wasted, because NAPI ``has been 
a huge financial failure,'' as the Albuquerque Journal reported in a 
1999 news article. This ``Navajo farm project struggles financially 
despite millions of dollars in government funding.'' Even though NAPI 
loses money almost every year, the Journal also reported that the 
Navajo tribe wants to expand this money-losing operation in order to 
protect its water claims. ``When more acreage is farmed, the project 
uses more water. If the tribe doesn't use the water, it is in danger of 
losing its right to it.'' Since this article was written, NAPI 
continues to lose money for the tribe and taxpayers. And despite all 
the money and water that has been showered on the project, NAPI employs 
only a few tribal members.
    This is an absurd situation, where the tribe feels it must waste 
water to protect its rights. We believe that the present problem can be 
solved if the tribe is allowed to make better use of the water it now 
wastes on NAPI. The San Juan Agricultural Water Users Association is 
willing to work with the tribe, the OSE, and members of Congress to 
come up with a solution that allows the tribe to put this water to 
better use than trying to grow crops on the high mesa. The Navajo 
Gallup Pipeline might be one of these uses.
    Proponents of this legislation contend that this legislation is a 
fair compromise because they claim that the so-called ``Winters 
Doctrine'' would otherwise entitle New Mexico's Indian tribes to 
virtually all of New Mexico's river water in the San Juan River, with a 
priority over all non-Indian uses. This is a gross misconception and 
exaggeration of the Winters line of cases.
    In 1907, the Supreme Court ruled that when Congress established the 
Fort Belknap Reservation on the Milk River in Montana, Congress 
impliedly reserved some water to fulfill the basic purposes of the 
reservation, even though Congress said nothing about water rights in 
the act which created the reservation. The Winters decision might be a 
reasonable judicial extrapolation of congressional intent, for a 
particular reservation, but not for others.
    The proponents of this legislation are asserting an exaggerated and 
self-serving version of the ``Winters Doctrine.'' The legislation 
tacitly and wrongly assumes that the ``Winters Doctrine'' would give 
Indian tribes a priority over almost all non-Indian uses for whatever 
water the tribes could use for any purpose at any time after the 
reservation was established. The logic of this ``pseudo-Winters'' 
doctrine runs as follows:
    When Congress established Indian reservations in this area in the 
19th century, they impliedly reserved all the water that might be used, 
even though the Indians were using little, if any, river water at the 
time. Even though the water would not be used until indefinite times in 
the future, the priority of all those future uses would date back to 
the establishment of the reservation.
    The problem with this ``pseudo-Winters'' doctrine is that it gives 
tribes a retroactive priority over all non-Indian settlers, taking 
water away from the settlers that have actually used and relied upon 
water from these rivers for more than a century. This is a bizarre 
misinterpretation of the Winters line of cases. This pseudo-Winters 
doctrine is the creation of a small group of lawyers, not Congress. 
Congress never intended such a result. When Congress opened the West to 
settlement, it intended the settlers to have permanent water rights, 
protected like other property rights. When Congress encouraged settlers 
to move West and develop the land, Congress certainly did not intend to 
confiscate the settlers' water, without compensation, after the 
settlers had toiled on the land for a century and a half. Yet this is 
the result of the pseudo-Winters doctrine that has been invented by a 
small group of water lawyers acting as advocates for tribal interests. 
If Congress accepts this misinterpretation of the Winters line of cases 
by passing this legislation, it would be ratifying the concept that 
Indian tribes have priority rights to all the waters in the Colorado 
River system, the Rio Grande, and most other major river systems in the 
West. In short, this misinterpretation of Winters takes away the waters 
that our Anglo and Hispanic predecessors have relied upon since they 
settled in this region.
  the water which the federal government provides to the navajo tribe 
   cannot be charged to new mexico's share under the colorado river 
                                compacts
    The State of New Mexico has no legal obligation to provide water to 
Indian tribes, so it cannot be charged with the water that is supplied 
to the Navajos. That water is the responsibility of the federal 
government, not the state. So the water provided to the tribe in 
settlement of their water claims must be charged to the federal 
government, not to New Mexico's share of the Colorado River under the 
various compacts.
    The compacts do not deal with Indian water rights, except to say 
that they are the responsibility of the federal government. Article VII 
of the Colorado River compact states that ``Nothing in this compact 
shall be construed as affecting the obligations of the United States of 
America to Indian tribes.'' Article XIX of the Upper Colorado River 
Basin Compact states that ``Nothing in this compact shall be construed 
as: (a) affecting the obligations of the United States of America to 
Indian tribes.'' NMSA 1978,  72-15-26.
    Furthermore, it is not clear how this legislation relates to the 
settlement of Navajo water claims in Arizona and Utah. Although this 
legislation is touted as a settlement, it appears that it does not 
settle the tribe's claims for Colorado River water in Arizona, where 
the majority of tribal members live, or in Utah. Under the Colorado 
River Compact, Arizona is a lower basin state, while Utah and New 
Mexico are upper basin states. If there is to be a settlement of Navajo 
water claims, it should be a comprehensive settlement of all Navajo 
claims at once. And any settlement must specify how these claims will 
be treated under the various compacts affecting the Colorado River 
system. Any comprehensive settlement must also specify how the federal 
government is going to obtain the water it needs to settle its 
obligations (if any) to Indian tribes.
   the governor does not have the authority to sign away water that 
                  belongs to the public, not the state
    Although Governor Richardson has signed a proposed settlement with 
the Navajo tribe, it is doubtful that he has unilateral authority to 
sign away water that belongs to the public, not the State of New 
Mexico. Article XVI,  2 of the New Mexico Constitution provides that 
``the unappropriated water of every natural stream, perennial or 
torrential, within the state of New Mexico, is hereby declared to 
belong to the public and to be subject to appropriation for beneficial 
use, in accordance with the laws of the state. Priority of 
appropriation shall give the better right.'' Congress approved this and 
the other articles of the New Mexico Constitution as part of the 
process by which New Mexico was admitted to the Union in 1912.
    NMSA 1978,  72-1-1 says that ``All natural waters flowing in 
streams . . . within the limits of the state of New Mexico, belong to 
the public and are subject to appropriation for beneficial use.'' 
Therefore, the water in the San Juan belongs to the citizens who use 
it, not to the State of New Mexico. So how could the Governor have the 
authority to sign a binding deal that purports to commit water which 
the state does not own? Governor Richardson's unilateral attempt to 
sign away this water to the Navajo tribe poses serious questions under 
the New Mexico Constitution, its statutes, and the takings clause of 
the Fifth Amendment.
    the proposed pipeline will not solve the water problems on the 
                           navajo reservation
    The Gallup pipeline would cost more than $1.5 billion to complete, 
in current dollars without cost overruns, which are inevitable. As a 
preliminary step, Congress and the State of New Mexico should 
commission an independent engineering and cost study by experts who 
have no vested interest in the project, so that the federal and state 
governments do not start a project which they cannot finish at a 
reasonable cost. Without an independent analysis, this project 
resembles a typical military procurement project: the project boosters 
are trying to get Congress to buy into the project by using low-ball 
cost estimates.
    Even if the Gallup pipeline is built, it will not supply drinking 
water to homes on the Navajo reservation. The legislation authorizes, 
but does not fund, a main trunk pipeline to Gallup and Window Rock. The 
legislation does not include the distribution pipelines that are 
necessary to supply water to homes on the reservation, so many tribal 
members will still be forced to haul water to their homes even if the 
main pipeline is built. A network of pipes to distribute water from the 
trunk line is likely to be more expensive than the main pipeline 
itself. For the amount of money that would be spent building the main 
trunk line, Congress could deliver water to more households and 
communities across the reservation by funding local projects to supply 
and conserve water. These smaller scale projects would be based on the 
development of local ground and surface water, with strict conservation 
measures. This alternative approach has several major advantages:

          A. It actually delivers water to the households and 
        communities that need it most.
          B. It is cheaper and much more cost-effective.
          C. It avoids drawing down the Colorado River.
          D. It encourages conservation rather than consumption.

    The San Juan Agricultural Water Users Association could support 
legislation that provides an adequate supply of drinking water to the 
reservation and to the Gallup area, so long as it does not draw more 
water from the San Juan, which is already over-committed. This can be 
accomplished by a combination of local projects, conservation measures, 
and perhaps a pipeline that uses some of the water that currently goes 
to NAPI, where it is wasted.
                               conclusion
    In the 1950s, many of our families were removed from their homes 
and ranches to make way for Navajo Dam and Navajo Lake. All of us were 
told that the project would protect us from floods, and this has turned 
out to be true.
    But we were also told that the dam would provide us with water in 
dry times. This has turned out to be untrue.
    We were told that there was plenty of water in the Colorado for 
everyone. This has turned out to be untrue.
    We were told that the project would satisfy the tribe's water 
claims. This has turned out to be untrue.
                                 ______
                                 
                           State Engineer's Office,
                                          State of Wyoming,
                                       Cheyenne, WY, June 28, 2007.
Hon. Jeff Bingaman,
Chairman,
Hon. Pete V. Domenici,
Ranking Member,
Committee on Energy and Water Development, United States Senate, 304 
        Dirksen Senate Office Building, Washington, DC.
Re: Support for the Northwestern New Mexico Rural Water Projects Act--
S. 1171

    Dear Chairman Bingaman and Senator Domenici: The State of Wyoming 
is writing to express our support for enactment of S. 1171, the 
Northwestern New Mexico Rural Water Projects Act. We respectfully 
request the Committee's favorable consideration of this necessary 
authorizing legislation. The State of New Mexico's water rights 
settlement with the Navajo Nation and the Northwestern New Mexico Rural 
Water Supply Project will provide a secure, safe source of drinking 
water necessary to meet basic human needs for Navajo citizens. 
Thousands of Navajo citizens currently haul water from coin-operated 
filling stations to their homes and use that water as their only source 
of domestic supply. The proposed Water Project will also connect to a 
regional municipal water system to enable New Mexico communities to 
draw upon a renewable surface water supply, rather than continuing to 
rely on a depleting groundwater supply for water.
    The water supply necessary for New Mexico's Navajo settlement fits 
within New Mexico's Upper Colorado River Basin Compact apportionment. 
The settlement provides only approximately 22,000 acre-feet of newly 
recognized water for the Navajo Nation that will be supplied out of 
Navajo Reservoir. The settlement confirms and limits the Navajo 
Nation's ability to use water for previously authorized irrigation 
projects. New Mexico's Navajo settlement resolves Indian reserved water 
rights claims and avoids prolonged litigation.
    We are advised New Mexico's Navajo Settlement protects existing 
agricultural and municipal water uses within New Mexico. The Navajo 
reservation is very large and the reserved water rights claims of the 
Navajo Nation, absent the Settlement that has been negotiated, could 
have displaced many existing uses and jeopardized the water supply for 
some of New Mexico's largest cities. New Mexico's Navajo settlement 
contains administrative provisions that will enable New Mexico to 
administer the Navajo Nation's water rights in the event the state 
needs to curtail rights pursuant to the Upper Colorado River Basin 
Compact or the Colorado River Compact.
    The Secretary of the Interior has approved the hydrologic 
determination required by Public Law 87-483 confirming that sufficient 
water is reasonably likely to be available within New Mexico's Upper 
Colorado River Basin Compact apportionment. The Upper Colorado River 
Commission adopted resolutions dated June 19, 2003 and June 9, 2006 
expressing support for New Mexico's Navajo Settlement and authorizing 
legislation to implement the provisions of the Settlement. Further, the 
April 23, 2007 Agreement Concerning Colorado River Management and 
Operations executed by the seven Colorado River Basin States affirms 
each State's right to develop its Compact apportionment.
    Thank you for the opportunity to submit this letter in support of 
the Committee's favorable consideration of S. 1171, the Northwestern 
New Mexico Rural Water Projects Act. Should I be able to answer any 
questions, please don't hesitate to contact me.
            With best regards,
                                        Patrick T. Tyrrell,
                                            Wyoming State Engineer,
                                              Wyoming Commissioner,
                                   Upper Colorado River Commission.
                                 ______
                                 
 Statement of Gerald R. Zimmerman, Executive Director, Colorado River 
                          Board of California
    Mr. Chairman and Members of the Committee, thank you for this 
opportunity to submit written testimony regarding S. 1171. Set forth 
below are initial comments regarding the provisions in S. 1171 from the 
perspective of the Colorado River Board of California.
    I am the Executive Director of the Colorado River Board of 
California (CRB), the agency in California created by State statute to 
protect California's rights and interests in the resources provided by 
the Colorado River and to represent California in discussions and 
negotiations regarding the Colorado River and its management. 
California's rights and interests in the water and power resources of 
the Colorado River System are vital to the State's economy. Seven 
counties in Southern California, with more than half of the state's 
population, receive water and hydroelectric energy from the Colorado 
River. All ten members on the CRB are appointed by the Governor.
    The CRB has reviewed S. 1171, and its companion bill H.R. 1970. 
From our initial review of the proposed legislation, CRB does not, in 
any way, oppose the Navajo-Gallup Project; and it fully recognizes the 
value and importance of the Project to the State of New Mexico and to 
the residents of the Navajo Nation. However, the CRB does want to 
ensure that legislation of this nature is consistent with the law of 
the river and is reflective of broader concerns of the State of 
California. In that regard, the CRB does have a number of comments on 
the proposed legislation, primarily from the perspective of the law of 
the Colorado River. These comments are listed in order of the topic's 
appearance in the legislation.
                      section 101--top water bank
    Arrangements of this nature are being utilized in various parts of 
the West where the reservoir circumstances facilitate this sort of 
interim water storage. However, in this situation the legislation does 
not clarify how the water to be stored in the top water bank must be 
developed. It is the position of the CRB that the legislation should be 
modified to provide that only water created through extraordinary 
conservation may be stored in the top water bank. In other words, water 
could only be stored if that water would have otherwise been 
beneficially used except for the implementation of extraordinary 
conservation measures. Furthermore, as provided in S. 1171, it should 
be the first water to be spilled.
                 section 102--amendment of the 1963 act
    This section amends 43 USC 615 jj, which was enacted in 1962 as a 
component of the Navajo Irrigation Project and San Juan-Chama Project 
authorizing legislation. Section 2 of the 1962 Act is eliminated and a 
much more detailed provision has been substituted. While the CRB does 
not have any substantive concerns related to Section 102, it notes that 
the wording in subpart (b), relating to priorities in times of 
shortages is not clear as to whether the first rights listed are to 
have priority over the others or are the first to be cut back. 
Clarification of this provision would be useful in obtaining a full 
understanding of the intention behind the proposed legislation.
         section 201--funding via the 1902 act reclamation fund
    This section of the proposed legislation provides a creative 
mechanism for funding implementation of settlement agreements and 
completion of the Navajo-Gallup Project. The CRB understands that 
Section 201 provides that $1.1 billion would be deposited into the 
treasury before it is set to terminate on September 30, 2030.
    Section 201 (c)(3) provides that completion of the Navajo-Gallup 
Project will be given a priority, for up to as much as $500 million, if 
the federal share of Project costs has not been otherwise provided by 
January 1, 2018. Since the Reclamation Fund is made viable through the 
repayment of reclamation projects from around the West, many of which 
are in the State of California, the CRB questions the fairness of 
providing to the Navajo-Gallup Project a priority position to receive 
up to one-half of all funds designated for deposit into the new 
settlements fund. Prior to any decision to support or oppose this 
section of the bill, the CRB will need to consider this matter further 
accounting for the likely needs of California projects that are linked 
to settlement agreements involving the United States. One approach may 
be to have the new fund be a source of revenue for the Navajo-Gallup 
Project should additional federal funding be necessary by 2018 on a 
basis of sharing with other deserving projects in the West, instead of 
with a priority as set forth in Section 201.
                 section 303--delivery and use of water
    This section of the bill gets to the heart of the concerns of the 
CRB regarding the law of the Colorado River and the need to be 
consistent with the Colorado River Compact of 1922. One concern is the 
clear provision of authority to use water in the lower basin even 
though that water will be diverted in the territory of the upper basin. 
S. 1171 needs to specifically address: 1) the diversion and use 
authority in the context of the 1922 Colorado River Compact, and 2) 
water use in the lower basin both in New Mexico and Arizona.
    A related concern is with the use of such water in the territory of 
the lower basin within the State of Arizona so as to serve the 
community of Window Rock on the Navajo Reservation. The State of 
Arizona has asserted that such water will need to be viewed as a 
portion of Arizona's lower basin apportionment and should also come 
with certain attributes linked to the Central Arizona Project (CAP), 
such as priority date and repayment of project operations, maintenance, 
and replacement costs. Mr. D'Antonio for New Mexico has asserted that 
S. 1171 should ``leave open the determination of the source of water 
for use in Arizona'' and that accounting for the water as a diversion 
of CAP water would ``have to be agreed to by all basin states,'' which 
has not yet occurred. This issue needs to be resolved among the 
Colorado River Basin states and the agreed upon solution included in S. 
1171.
    In the current era of pipelines being proposed to transport water 
from the upper basin to the lower basin, it is imperative that 
precedent-setting situations that will impact the law of the river in 
one form or another be appropriately addressed. In this regard, the 
transport of water from the upper basin into the lower basin within New 
Mexico is a rather significant matter, but the further transport of 
that water into Arizona is an additional significant step. The CRB 
suggests that legislation authorizing the transportation of water 
should be clear as to the attributes of the water to be used in such 
circumstances; for example, the source of water (including linkage to 
the Arizona Water Settlements Act, if appropriate), the priority 
position of that water supply, the U.S. Supreme Court decree accounting 
arrangements, and any other important attributes such as project 
operations, maintenance, and replacement costs that may be associated, 
for example, with the CAP water supply. Thus, the CRB recommends that 
Section 303 of the bill be amended to provide these points of 
clarification. In the alternative, authorization for the construction 
of facilities that move water from the upper basin to the lower basin 
should be eliminated from S. 1171.
    If the Arizona position regarding the use of CAP-related water is 
adopted, the CRB also suggests that attention be given to what 
additional authority may be needed so as to clearly provide that CAP-
related water may be delivered by the Secretary to a portion of Arizona 
not contemplated as a part of the CAP service area at the time of its 
authorization in 1968.
               section 306 (f)(3) and section 302 (f)(3)
    Application of the Endangered Species Act--These sections of the 
bill address the ``application of the'' ESA, but it is unclear as to 
the intended effect of these provisions.
    The State of Arizona has taken the position that S. 1171 and H.R. 
1970 should not be enacted without a parallel settlement of the rights 
of the Navajo Nation in Arizona, arguing that all Indian water rights 
settlements should be comprehensive if possible. Although the CRB 
understands and appreciates the position of Arizona on this issue, the 
CRB is not prepared to advance a position on this specific issue at 
this time.
    Nevertheless, it is important to express our concern over the 
lawsuit filed by the Navajo Nation in 2003 in the United States 
District Court in Arizona. California agencies represented on the CRB 
have intervened in that litigation. That suit contains claims that 
challenge some very important lower basin water management programs. 
For example, the suit challenges a number of matters related to 
California's Quantification Settlement Agreement (QSA): 1) that the 
National Environmental Policy Act (NEPA) compliance process for the QSA 
was flawed; 2) that the Record of Decision associated with the 
Secretary's approval of the QSA and the Inadvertent Overrun and Payback 
Policy (IOPP) is flawed; 3) that the NEPA compliance process for the 
IOPP is flawed; and 4) that the NEPA compliance process for the Interim 
Surplus Guidelines was flawed.
    Similarly, the Navajo Nation has challenged the Arizona Water 
Banking Authority's interstate storage program and the federal 
regulations promulgated to facilitate that program. The Navajo Nation 
asserts these claims on the foundation that these kinds of water 
management actions have an impact on the Nation's claim to Colorado 
River water in Arizona and its eventual use of that water. However, in 
reality none of these actions or programs impacts the amount of water 
available to the Nation as a part of the Nation's federal reserved 
rights claims, as a practical matter (actual water supply) or in 
relation to the availability of Arizona's unused apportionment to 
satisfy the Nation's lower basin claims. This lawsuit presents a cloud 
over these important river management programs that are of benefit to 
the basin states. As a result, the CRB suggests that it be a high 
priority to obtain a dismissal of that suit whether in the context of 
the Arizona settlement, the New Mexico settlement, or both.
    In closing, I want to reiterate that the CRB does not oppose the 
Gallup-Navajo Project; however, it does want to ensure that 
legislation, such as S. 1171, is consistent with the law of the river 
and is reflective of the broader concerns of the State of California. 
Additionally, the comments set forth above have been advanced on the 
basis of a rather rushed review of the proposed legislation and the 
comments of others. As such, the CRB would like to reserve its 
opportunity to revise any of the positions advanced above and to add 
its comments, if additional points of concern come out of this process.
    On behalf of the CRB, I want to thank the subcommittee and 
committee for the opportunity to provide this testimony and for giving 
attention to the comments of the CRB.
                                 ______
                                 
                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                     Washington, DC, June 15, 2007.
Rob Portman,
Director, Office of Management and Budget, 725 17th Street, N.W., 
        Washington, DC.
    Dear Director Portman: We are writing in hopes of initiating a 
constructive dialogue with the Office of Management and Budget (OMB) 
regarding several pending Indian water rights settlements in New 
Mexico. The settlements would resolve litigation involving the United 
States through a negotiated agreement of Indian water rights claims 
filed in several ongoing genera] stream adjudications, many of which 
were initiated by the United States. One such case has tasted more than 
40 years. Resolution of these claims have numerous benefits, including 
(1) improving water management by providing certainty as to the rights 
of water users; (2) avoiding the direct and indirect costs of 
litigation to all parties; (3) acting consistent with the Federal trust 
responsibility to Native Americans; and (4) settling all liability 
issues associated with the claims.
    As your staff is aware, we have three settlements in New Mexico for 
which we expect legislative action this year. The largest involves the 
Navajo Nation's water rights claims in the San Juan River basin. We 
have introduced legislation to implement this settlement (S. 1171) and 
expect to have a hearing before the Energy & Natural Resources 
Committee this month. The other settlements involve the Aamodt case, 
addressing the claims of four Pueblos in the Rio Pojoaque, and the 
Abcyta case, addressing Taos Pueblo's claims in the Rio Pueblo de Taos 
(see our earlier letter of May 22, 2007).
    The Administration's recent testimony on the Duck Valley Water 
Rights Settlement Act, and statements by Administration officials 
regarding the New Mexico settlements, give us strong concern that the 
Administration is changing its policies on Indian water rights 
settlements to the detriment of New Mexico. In particular, it now 
appears that the Administration is interpreting it criteria and 
procedures for participating in settlements in an overly restrictive 
manner, unprecedented by any Administration.
    The Duck Valley testimony is replete with statements asserting that 
the State of Nevada should pay a substantial portion of the costs of 
the settlement. With respect to New Mexico, Administration officials 
have also stated that there should be no federal contribution for any 
non-Indian benefits contained in a settlement. These statements are 
inconsistent with the Administration's position on three recent 
settlements signed into law by the President: (1) the Arizona Water 
Rights Settlement Act (P.L. 108-451); (2) the Snake River Water Rights 
Settlement Act (P.L. 108-447); and (3) the Zuni Indian Tribe Water 
Rights Settlement Act (P.L. 108-34). The Administration's testimony on 
these settlements did not raise these issues, nor did the testimony 
discuss federal liability as the basis for determining the level of 
federal contribution. Moreover, asserting that there should be no 
Federal contribution for non-Indian benefits in a settlement makes 
little sense when put into context. The Administration has actively 
supported legislation to authorize the Water 2025 and Rural Water 
programs which contain provisions to allow for a 50% and 75% federal 
cost-share respectively. The projects included in the New Mexico 
settlements all fall within those programs and, at a minimum, should 
not be held to different standards merely because they are associated 
with settlements. The contrary is true. They should engender more 
support since they are helping to resolve long-standing Federal claims 
and issues.
    Finally, much has been made of the cost of the New Mexico 
settlements. Granted, they are expensive, but the delegation has worked 
closely with the parties to reduce the costs. Also, the federal 
contribution being sought will be spread out over 15-20 years. As noted 
earlier, over the past four years the President has signed into law 
three settlements that will ultimately cost the Federal treasury almost 
$2.5 billion. The Administration has followed that with active support 
for a non-Indian water-related settlement involving the San Joaquin 
River in California that will cost approximately $650 million. It's 
also worth noting that during this same time period, the Administration 
has invested over $1.6 billion in international water supply programs 
and spent an additional $2.3 billion on water infrastructure and 
management in Iraq. While these expenditures have been necessary to 
meet acute needs, the situation that exists on the Navajo Reservation, 
where over 40% of the residents must haul water and have incomes below 
the national poverty level, is no less acute.
    We sincerely hope that OMB reassesses the position it's been 
signaling on the New Mexico settlements. Failure to support these 
settlements will result in endless litigation and do nothing to address 
the pressing need for water that exists in many areas of the country. 
These matters involve long-neglected federal responsibilities and it is 
unacceptable policy to have OMB arbitrarily determining winners and 
losers in the realm of western water. Having worked with you before, we 
are appealing to you for a better result. We appreciate your 
consideration of this matter and look forward to hearing from you in 
the near future.
            Sincerely,
                                             Jeff Bingaman,
                                                          Chairman,
                                          Pete V. Domenici,
                                                    Ranking Member.

                                    

      
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