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1 Contract No. 11-WC-40-435 

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8 UNITED STATES 

9 DEPARTMENT OF THE INTERIOR 

10 BUREAU OF RECLAMATION 

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12 NAVAJO-GALLUP WERATER SUPPLY PROJECT 

13 COLORADO RIVER STORAGE PROJECT 

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15 REPAYMENT CONTRACT BETWEEN THE UNITED STATES AND 

16 THE CITY OF GALLUP, NEW MEXICO 

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21 PREAMBLE ................................................................................................................................... 3 

22 EXPLANATORY RECITALS ....................................................................................................... 3 

23 1. GENERAL DEFINITIONS ............................. .. ..................................................................... 4 

24 2. PROJECT FACILITIES CONSTRUCTED BY THE UNITED STATES ............................ 7 

25 3. PROJECT FACILITIES CONSTRUCTED BY THE CITY OF GALLUP ........................... 9 

26 4. PROJECT COORDINATION COMMITTEES ..................................................................... 9 

27 5. MEASUREMENT AND RESPONSIBILITY FOR DISTRIBUTION OF 

28 DELIVERY CAPACITY ALLOCATION ..................................................... ............................... 10 

29 6. DELIVERY CAPACITY ALLOCATION ........................................................................... 10 

30 7. METHOD OF PAYMENT FOR PROJECT CONSTRUCTION COSTS ........................... 11 

31 8. REASSESSMENT OF ABILITY TO PAY ANALYSIS ..................................................... 16 

32 9. NOTIFICATION OF SUBSTANTIAL COMPLETION ..................................................... 17 

33 10. PAYMENT OF OPERATION, MAINTENANCE, AND REPLACEMENT COSTS ........ 18 

34 11. USE AND DISPOSAL OF WATER DURING CONSTRUCTION ................................... 20 

35 12. WATER SHORTAGES ........................................................................................................ 21 

36 13. PAYMENT OBLIGATIONS .......................... ..................................................................... 21 

37 14. COVENANT AGAINST CONTINGENT FEES ................................................................. 21 

38 15. TITLE TO PROJECT FACILITIES ..................................................................................... 22 

J 39 16. SEVERABILITY .................................................................................................................. 23 
1 17. CHARGES FOR DELINQUENT PAYMENTS .................................................................. 23 

2 18. CITY OBLIGATION--BENEFITS CONDITIONED UPON PAYMENT ......................... 23 

3 19. CONFIRMATION OF CONTRACT ................................................................................... 24 

4 20. NOTICES .............................................................................................................................. 24 

5 21. CONTINGENT ON APPROPRIATION OR ALLOTMENT OF FUNDS ......................... 24 

6 22. OFFICIALS NOT TO BENEFIT ......................................................................................... 24 

7 23. CHANGES IN CITY'S ORGANIZATION .......................................................................... 24 

8 24. ASSIGNMENTS LIMITED - SUCCESSORS AND ASSIGNS OBLIGATED ................. 25 

9 25. BOOKS, RECORDS AND REPORTS ................................................................................ 25 

10 26. RULES, REGULATIONS, AND DETERMINATIONS ..................................................... 25 

11 27. PROTECTION OF WATER AND AIR QUALITY ............................................................ 25 

12 28. WATER CONSERVATION ................................................................................................ 26 

13 29. EQUAL EMPLOYMENT OPPORTUNITY ....................................................................... 26 

14 30. COMPLIANCE WITH CIVIL RIGHTS LAWS AND REGULATIONS ........................... 27 

15 31. MEDIUM FOR TRANSMITTING PAYMENTS ................................................................ 27 

16 32. CONTRACT DRAFTING CONSIDERATIONS ................................................................ 28 

17 33. CONSTRAINTS ON AVAILABILITY OF WATER .......................................... 28 

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Contract No. 11-WC-40-435 

UNITED STATES 

DEPARTMENT OF THE INTERIOR 

BUREAU OF RECLAMATION 

NAVAJO-GALLUP WATER SUPPLY PROJECT 

COLORADO RIVER STORAGE PROJECT 

REPAYMENT CONTRACT BETWEEN THE UNITED STATES AND 

THE CITY OF GALLUP, NEW MEXICO 

PREAMBLE d 

THIS REPAYMENT CONTRACT, made this ~ day a.? 

pursuant to the Act of Congress approved June 17, 1902 (32 Stat. 388), and acts 

amendatory thereof or supplementary thereto, all of which acts are commonly known and 

2-0/2.. 

' 2()}-1, 

referred to as the Federal Reclamation Laws, between the UNITED STATES OF 

AMERICA, hereinafter referred to as the United States, represented by the officer 

executing this contract, and THE CITY OF GALLUP, hereinafter called the City, located 

in McKinley County, New Mexico, a municipality duly incorporated and existing 

pursuant to chapter 32, session act of 1891 , in the territory ofNew Mexico, and the laws 

of the State ofNew Mexico, acting through its representatives. 

EX PLAN A TORY RECITALS 

WITNESSETH, That: 

WHEREAS, the following statements are made in explanation: 

The Act of Congress approved December 15, 197 1 (85 Stat. 664), authorized the 

planning and investigation of the Navajo-Gallup Water Supply Project (Project); 

subsequently, the construction, operation, and maintenance of the Project was authorized 

by the Northwestern New Mexico Rural Water Projects Act of March 30, 2009 (123 Stat. 

1367), and the United States has investigated, planned, and is preparing to construct said 

Project for the diversion and distribution of the waters of the San Juan River, which 

Project has among its authorized purposes the furnishing of water for municipal, 

industrial, commercial, domestic, and stock watering purposes. The water rights 

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settlement purposes of the Project were authorized by the Northwest New Mexico Rural 

2 Water Projects Act of March 30, 2009 (hereafter referred to as the Navajo Settlement 

3 Act). 

4 The Navajo Settlement Act authorizes the design and construction of the Project 

5 Facilities as described in Article 2. 

6 The City is in need of a reliable supply of municipal and industrial water. 

7 Provisions of the Navajo Settlement Act require the City to secure a water supply 

8 for a term of not less than fo1ty ( 40) years prior to execution of this contract or initiation 

9 of the Project. 

10 The City has entered into an agreement with the Jicarilla Apache Nation to secure 

11 a reliable water supply for 40 years. 

12 The City and Reclamation have determined that Reclamation will provide the 

13 funds necessary for the City to construct Reach 13 and Reach 27, and the City will have 

14 ownership and sole responsibility over all aspects of Reach 13 and Reach 27. 

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16 NOW, THEREFORE, in consideration of the mutual and dependent covenants 

17 herein contained, the parties hereto agree as follows: 

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1. GENERAL DEFINITIONS 

Where used in this contract: 

21 a) "City" means the City of Gallup, New Mexico a municipality duly incorporated 

22 and existing pursuant to chapter 32, session act of 1891 , in the territory of New Mexico. 

23 b) "Consultation" or "Consult" refers to an ongoing obligation of both parties to 

24 implement the provisions of this Contract with a full exchange of information so as to 

25 assure that each party is provided full participation in the decision making process. 

26 Consultation shall be required of each party with respect to each section of the Contract 

27 regardless of whether the section itself sets forth a consultation requirement. The 

28 Consultation required shall be reasonable under the circumstances, and except in exigent 

29 circumstances Consultation shall be undertaken in advance of decision making. In the 

30 event that agreement cannot be reached and the United States makes a decision, appeals 

31 are available to the extent allowed under applicable laws. 

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c) "Cooperative Agreement" or "Financial Assistance Agreement" means 

2 agreement number R11AC40002, which provides support in order to accomplish a public 

3 purpose authorized by a law or regulation of the United States to include all work 

4 associated with project planning, management, design, acquisition of all land, easements 

5 and right-of-way, permitting, construction, construction management, Operation, 

6 Maintenance, and Replacement (OM&R) during construction and transfer of the facilities 

7 to "in service" for Reach 13 and/or Reach 27. 

8 d) "Delivery Capacity Allocation" means the portion of the Project capacity 

9 reserved for use by the City to deliver the City's Project Water, described in Article 6 

10 herein, pursuant to Sec. 1 0603(b )(1 )(B) of the Navajo Settlement Act. 

11 e) "Estimated Repayment Obligation" means the estimated reimbursable 

12 construction costs allocated to the City's Municipal and Industrial (M&I) uses associated 

13 with the construction of Project Facilities plus any appropriate Interest During 

14 Construction (IDC) as identified in the Construction Cost Estimate further defined in 

15 Article 7(a) below. 

16 f) "Final Repayment Obligation" means the final reimbursable construction costs 

17 allocated to the City's M&I uses associated with the construction of Project Facilities, 

18 plus any appropriate IDC, as determined through the Final Cost Allocation described in 

19 Article 7(m) below. 

20 g) "Fixed OM&R costs" means costs of administration, overhead, labor, materials, 

21 and equipment required to maintain all pumps, storage tanks, pipelines, and diversion 

22 facilities. 

23 h) "Gallup Regional System" also known as Reach 27 for Project identification 

24 purposes, means all Project facilities starting at the end of Reach 13 and ending at the 

25 beginning of Reach 14. The term Reach 27 will be used to describe the Gallup Regional 

26 System in this document. 

27 i) "Non-Project Water" means water that is not allocated by Section 10603(b) of 

28 the Navajo Settlement Act but is authorized to be treated and conveyed through Project 

29 Facilities pursuant to Section 1 0602(h) of the Navajo Settlement Act. 

30 j) "Northwestern New Mexico Rural Water Projects Act", or "Navajo Settlement 

31 Act", means Subtitle B ofTitle X the Act ofMarch 30, 2009 (123 Stat. 1367). 

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1 k) "Operation and Maintenance Facilities" means those Project Facilities necessary 

2 to support operation, maintenance, and replacement ("OM&R") work(s), including, but 

3 not limited to operation and maintenance headquarters, office space, shop for repair of 

4 equipment, storage place for supplies, and equipment yard. 

5 1) "Operation, Maintenance, and Replacement (OM&R) Contract" means the 

6 contract between the United States and the Project Operator for the OM&R of the Project 

7 Facilities. 

8 m) "Project" means the Navajo-Gallup Water Supply Project, a participating project 

9 of the Colorado River Storage Project, authorized by the Navajo Settlement Act. 

10 n) "Project Construction Committee" means the committee made up of 

II representatives of the Project Participants and the Bureau of Reclamation. 

12 Representatives of the State ofNew Mexico may also participate in the committee if the 

13 State so desires. 

14 o) "Project Facilities" means for the purpose of this contract, the San Juan Lateral 

15 portion of the Project that is necessary to dive1t water from the San Juan River, treat, and 

16 deliver treated water to the City of Gallup, including Reach 27, as further described in 

17 Articles 2 and 3. 

18 p) "Project Operations Agreement" or "Operations Agreement" means the 

19 agreement approved by the Secretary and the Project Participants pursuant to Section 

20 1 0602(f), that sets forth terms and conditions that the Secretary determines necessary to 

21 ensure the continuation of the benefits of the Project, and the allocation and payment of 

22 annual OM&R costs of the Project, and replaces the applicability of the OM&R Contract 

23 to those reaches for which title has been transferred. 

24 q) "Project Operator" means the entity operating the Project Facilities excluding 

25 Reach 13 and Reach 27. 

26 r) "Project Participants" means the Navajo Nation, the City of Gallup and, should 

27 it choose to participate through a separate repayment contract, the Jicarilla Apache 

28 Nation. 

29 s) "Project Water" means the municipal and industrial water supply allocated to 

30 the City pursuant to Section 10603(b)(2)(B) of the Navajo Settlement Act and secured by 

31 the City to satisfy requirements of Section 1 0604(b )(7) of the Navajo Settlement Act. 

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t) "Reach 13" means all Project facilities starting at the end ofReach 12located 

2 near the north line of Section 17, T 16N, Rl 8W, and ending at the beginning of Reach 27. 

3 The final determination of the actual facilities that are included in Reach 13 will be made 

4 during the final design process for that reach. The City will have constmction 

5 responsibility and retain ownership of Reach 13. 

6 u) "Reach 14" means all Project Facilities beginning at the end of Reach 27 which 

7 serve the following Navajo communities: Church Rockllyanbito, Mariano Lake/Pinedale, 

8 Red Rock/Chichi1tah/Breadsprings, and Manuelito. 

9 v) "Reach 27" means all project facilities conveying water from the end of Reach 

10 13 to Reach 14, and will be used to describe the Gallup Regional System in this 

11 document. The City will have construction responsibility and retain ownership ofReach 

12 27. 

13 w) "Remaining Repayment Obligation" means the amount ofthe Final Repayment 

14 Obligation as determined through the Final Cost Allocation described in Article 7(m) 

15 below that is in excess of any payments made by the City toward its Estimated 

16 Repayment Obligation. 

17 x) "Right of Capacity Agreement" means the agreement 11 -WC-40-437 allocating 

18 the sufficient capacity right in Reaches 13 and 27 to provide 7,500 AF/yr to the City in 

19 Reach 27, and 4,647 AF/yr to the Navajo communities in Reach 14. 

20 y) "San Juan River Basin" means the San Juan River and its tributaries. 

21 z) "United States" or "Contracting Officer" or "Secretary" means the Secretary of 

22 the United States Department of the Interior or his/her duly authorized representative. 

23 aa) "Variable OM&R costs" means the costs of power including power 

24 consumption and a proportional percentage of power demand costs for the pumping of 

25 water and costs associated with the treatment of water by Project Facilities. 

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27 2. PROJECT FACILITIES CONSTRUCTED BY THE UNITED STATES 

28 a) The features of the Project are generally described in Section 10602(b) of the of 

29 the Navajo Settlement Act, and are described in more detail in the Navajo-Gallup Water 

30 Supply Project Planning Report and Final Environmental Impact Statement dated July 

31 2009, and the subsequent Record ofDecision dated October 1, 2009. Subject to the terms 

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and conditions of this and other applicable contracts related to this Project, the United 

2 States will construct the following Project Facilities and appurtenant facilities that, in the 

3 opinion of the United States in Consultation with the Project Construction Committee, 

4 are necessary for Project purposes, without being limited by enumeration and within the 

5 limit of funds made available by the Congress and the contracting pat1ies: 

6 (1) Project Facilities to be constructed by Reclamation and having capacity 

7 allocated to the City are shown on the map included herein as Exhibit A, and are 

8 defined as Reaches I through 12, excluding Reaches 10.1, I0.2, 10.3, 12.1, 12.2, 

9 and all turnout facilities including pumping plants and storage tanks which are 

10 solely constructed for the benefit of the Navajo Nation. 

1I (2) Reach 14 will be constructed by Reclamation at no cost to the City. 

12 (3) Reach I3 and Reach 27 will be constructed by the City of Gallup under the 

I3 provision of Article 3. 

14 b) Operation and Maintenance Facilities will be constructed as determined 

I5 necessary by the United States, after Consultation with the Project Construction 

16 Committee, for the required OM&R of Project Facilities. 

I7 c) As a condition of construction of the facilities, the City shall provide all land or 

18 interest in land already owned by the City, as appropriate, that the United States identifies 

I9 as necessary for acquisition under Section I 0602(c) of the Navajo Settlement Act at no 

20 cost to the United States. 

21 d) The United States, after Consultation with the City, shall have the right at any 

22 time to increase the capacity of the Project Facilities or any unit or feature thereof for 

23 other than currently authorized project purposes without additional capital or OM&R 

24 costs to the City; provided, that the City's use of the Delivery Capacity Allocation shall 

25 not be impaired thereby. The right of use of such increased capacity is reserved to the 

26 United States. 

27 e) Any additions or changes to Project Facilities or project operations, or changes 

28 in use of the water allocations pursuant to Section I0603(b)(l)(B) ofthe Navajo 

29 Settlement Act that vary from that stated in the Navajo-Gallup Water Supply Project 

30 Final Environmental Impact Statement (FEIS) dated July 2009 and subsequent Record of 

31 Decision dated October 1, 2009, will, as required by law, be subject to further compliance 

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1 with applicable environmental statutes, which shall include an analysis of potential 

2 impacts on other Project Participants. 

3 f) Construction and OM&R of the Project will be in accordance with the 

4 Environmental Commitments in Chapter VI of the FEIS, which are attached as Exhibit B 

5 to this contract. 

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7 3. PROJECT FACILITIES CONSTRUCTED BY THE CITY OF GALLUP 

8 a) Subject to the tem1s and conditions of this Contract and Cooperative Agreement 

9 and the Right of Capacity Agreement, the City of Gallup will construct Reach 13 and 

10 Reach 27, and take full design and construction responsibility of all of Reach 13 and 

11 Reach 27 subject to Reclamation's oversight. The City will maintain ownership of Reach 

12 13 and Reach 27. The City will be solely responsible for OM&R ofReach 13 and Reach 

13 27 and for the transmission and distribution of water within Reach 13 and Reach 27 to 

14 Reach 14. 

15 b) The United States will provide funding for construction by the City. The City's 

16 acceptance of this financial assistance from the United States creates a legal 

17 responsibility on the part of the City to ensure water delivery to Reach 14 as set fmth in 

18 the Right of Capacity Agreement, and a legal responsibility on the part of the City to 

19 repay the United States the reimbursable construction costs and any Interest During 

20 Construction (IDC) costs, if applicable, for the financial assistance to construct and 

21 Reach 13 and Reach 27, as is provided under Article 7 of this contract. 

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23 4. PROJECT COORDINATION COMMITTEES 

24 Consultation concerning, and coordination of, Project construction, and OM&R 

25 activities will be accomplished through the establishment of two committees: one to 

26 focus on those activities associated with the construction of the Project Facilities, the 

27 other to oversee the OM&R activities. The committees will be made up of 

28 representatives of the Project Participants and the Bureau of Reclamation. The State of 

29 New Mexico may also appoint a representative to the Project Construction Committee. 

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1 a) The Project Construction Committee will serve to review cost factors and 

2 budgets for construction; improve construction management through enhanced 

3 communication; and seek additional ways to reduce overall Project costs. 

4 b) The Project Operations Committee will determine the appropriate entity to 

5 contract with Reclamation for the OM&R of the Project excluding Reach 13 and Reach 

6 27; will review cost factors and budgets for OM&R activities; and develop a common 

7 understanding among the Project Participants of the appropriate level of annual OM&R 

8 activities to be performed on the Project Facilities to assure the Project's long term 

9 operational integrity and public safety. 

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11 5. MEASUREMENT AND RESPONSIBILITY FOR DISTRIBUTION OF 

12 DELIVERY CAPACITY ALLOCATION 

13 a) This is not a water supply contract between the United States and the City. The 

14 terms and conditions of the delivery and conveyance of Project and Non-Project Water 

15 through Project facilities to the Project participants will be set fotth in separate 

16 agreements. 

17 b) The Project water diverted through Project Facilities for use by the City shall be 

18 measured at the San Juan Lateral diversion from the San Juan River with measuring 

19 facilities installed by the United States as a part of the Project. 

20 c) The City will hold the United States harmless on account of damage or claim of 

21 damage of any nature whatsoever arising out of or connected with the control, carriage, 

22 handling, treatment, use, disposal, or distribution of Project and Non-Project Water by the 

23 City, upon delivery said water. 

24 d) All non-Project facilities required for conveying Project and Non-Project Water 

25 from Project Facilities and putting it to use by the City and its users will be acquired, 

26 constructed or installed, and operated and maintained by the City or its users. These 

27 facilities are not part of the Project and are not authorized for funding through the Navajo 

28 Settlement Act. 

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6. DELIVERY CAPACITY ALLOCATION 

a) The City's Delivery Capacity Allocation is based on the City's share of the 

design capacity of each Project feature that is used to deliver water to the City. Facilities 

are designed to meet the 7 -day peak demand which is computed as 1.3 times the peak 

average annual demand. The City's share of the design capacity of Project features 

changes as deliveries are made to Navajo communities from the Project Facilities. The 

City's share of the capacity of each reach of the Project Facilities is shown in Volume II 

-Technical Appendices for the Planning Report and Final Environmental Impact 

Statement, Appendix D, Part I, Allocation of Capital and OM&R Costs among Project 

Participants, Table B2. The City's Delivery Capacity Allocation of Reach 27 shall be as 

presented in Table C1 of Part I of Appendix D of Volume II of the July 2009 Planning 

Report, unless revised as provided in Article 7(b) below. 

13 b) Any use of the Delivery Capacity Allocation other than that contemplated in the 

14 July 2009 Final Environmental Impact Statement and subsequent Record of Decision 

15 dated October 1, 2009 for the Project shall be subject to compliance with applicable 

16 environmental statutes. 

17 c) The City's Delivery Capacity Allocation shall be used for delivery of Project 

18 Water, which the City has secured through the subcontract dated November 22, 2011 

19 with the Jicarilla Apache Nation, excess Project Water as allowed by Section 

20 l0603(b)(3), and Non-Project Water pursuant to Section 10602(h) of the Navajo 

21 Settlement Act. The subcontract shall be for delivery of Project Water at the point of 

22 diversion of not more than 7500 acre-feet in any one year. 

23 d) As provided in the Right of Capacity Agreement the City shall assure 

24 continuation of the intended benefit by allowing the United States the right of capacity 

25 for the life of the system for water delivery to Reach 14. 

26 e) In order to assure continuation of the intended benefit to the City and the City's 

27 right of capacity for the life of the system for water delivery to Reach 13 and Reach 27, it 

28 shall be necessary to execute a separate agreement between the Project Participants and 

29 the Project Operator and to execute the OM&R Contract. 

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7. METHOD OF PAYMENT FOR PROJECT CONSTRUCTION COSTS 

2 a) Reclamation has published the July 2009, Navajo-Gallup Water Supply Project 

3 Planning Report and Final Environmental Impact Statement (July 2009 Planning Report). 

4 Part I of Appendix D of Volume II of the July 2009 Planning Report, using January 2007 

5 price levels, which establishes the cost allocation that will be used to allocate Project 

6 construction costs, Interest During Construction (IDC) costs, and OM&R costs among 

7 the Project Participants with the exception of the allocation for Reach 27, as further 

8 explained in Article 7(b) below. The Use of Facilities Methodology employed in the July 

9 2009 Planning Report to allocate Project costs will not be changed for the administration 

10 of this Contract. The July 2009 Planning Report allocation is based upon the 

11 proportionate share of Project Facilities used by the Project Participants for delivery of 

12 water. 

13 b) It has been recognized by the City, the Navajo Nation, and the United States that 

14 the allocation of Reach 27, as presented in Table C1 of Part I of Appendix D ofVolume 

15 II of the July 2009 Planning Report, requires greater detail and precision. Pursuant to 

16 Section 10604(d)(l) ofthe Navajo Settlement Act, the Secretary shall review and, as 

17 appropriate, perform a supplement to the July 2009 Planning Report cost allocation with 

18 the concurrence of the City and the Navajo Nation. The Reach 27 Cost Allocation 

19 Supplement will employ the Use of Facilities Methodology, based upon the proportionate 

20 share of Project Facilities used by the Project Participants for delivery of water, and will 

21 become an appendix to this Contract. Upon completion of Reach 27 Cost Allocation 

22 Supplement, the Secretary will notify the City by registered letter, of the change in the 

23 construction costs and OM&R costs allocable to the City, and the change in the City's 

24 obligation to repay estimated reimbursable costs, and estimated IDC. The Reach 27 Cost 

25 Allocation Supplement will become integrated into the final cost allocation of the Project. 

26 c) Using January 2007 price levels, the July 2009 Planning Report estimated the 

27 total Project construction costs to be $865,000,000 and estimated the construction costs 

28 allocable to the City's Delivery Capacity Allocation to be $ 154,600,000. This amount 

29 included an estimated $7,300,000 of cultural resources and fish and wildlife mitigation 

30 costs allocated to the City, which were later deemed non-reimbursable pursuant to 

31 Section 10609(e) and (f) of the Act. Therefore, the July 2009 Planning Report estimated 

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Project construction costs allocable to the City's Delivery Capacity Allocation, at the 

2 January 2007 price level, to be $147,300,000. 

3 d) As a refinement to the cost estimate used in the July 2009 Planning Report, the 

4 Secretary has prepared a detailed Construction Cost Estimate (CCE) based upon the 

5 summary project cost estimates used in the July 2009 Planning Report at the same 

6 January 2007 price levels. The total Project construction costs estimated by the January 

7 2007 price level CCE is $865,000,000 and the construction costs allocable to the City's 

8 Delivery Capacity Allocation are estimated from the CCE to be $147,605,000 rounded to 

9 the nearest thousand dollars. As provided in Section 10602(d)(l)(D) ofthe Navajo 

10 Settlement Act, the Secretary of the Interior and the State of New Mexico are required to 

11 enter into an agreement "under which the State of New Mexico will provide a share of 

12 the Project construction costs of not less than $50,000,000, except that the State ofNew 

13 Mexico shall receive credit for funds the State has contributed to construct water 

14 conveyance facilities to the Project Participants to the extent that the facilities reduce the 

15 cost of the Project as estimated in the Draft Impact Statement." The City has agreed on 

16 the methodology to be implemented regarding how to apply the New Mexico cost-share 

17 to reduce the cost of the Project and how it subsequently affects their respective 

18 repayment obligations. The document, signed by both the City and the Jicarilla Apache 

19 Nation and, describing the methodology to be implemented is included herein as Exhibit 

20 C. Exhibit C provides an attachment entitled, "Cost and Repayment Summary", which 

21 presents the New Mexico cost-share methodology using October 2011 price levels and 

22 using current estimations of the amount of credit received by the State toward its 

23 contribution to the construction of water conveyance facilities. 

24 e) The CCE was subsequently indexed for inflation to October 2011 price levels 

25 making the total Project construction costs $994,858,000. Based upon an estimate of the 

26 amount of credit received by the State toward its contribution to the construction of water 

27 conveyance facilities, as describe above in Article 7(e), and as presented in the Cost and 

28 Repayment Summary attachment to Exhibit C, the remaining Federal construction costs 

29 allocable to the Project Patticipants are estimated to be $922,097,000 with the portion of 

30 those costs allocable to the City's Delivery Capacity Allocation estimated to be 

31 $155,202,000, rounded to the nearest thousand dollars. 

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1 f) The construction costs allocated to the City, and determined to be reimbursable, 

2 shall accrue IDC, and the unpaid balance of the City's repayment obligation shall accrue 

3 amortization interest, at the interest rate for Federal water resource planning, pursuant to 

4 Section 10305 of the Navajo Settlement Act, to be established as of the beginning of the 

5 fiscal year in which construction is initiated, pursuant to the provision of Section 5(f) of 

6 the Act of April11 , 1956 (70 Stat. 105) as amended by the Act of June 27, 1960 (74 

7 Stat.255). IDC shall start when the first disbursement is made to initiate construction on 

8 a reach/feature. IDC shall stop accruing on a reach/feature when that reach/feature has 

9 been declared substantially complete, as provided in Article 9 below. 

10 g) Based upon the October 2011 price level CCE prepared by the Secretary, the 

11 construction costs allocable to the City's Delivery Capacity Allocation are estimated to 

12 be $155,202,000, and for the purposes of establishing a contract amount, the repayment 

13 obligation is assumed to be 35 percent of these allocable construction costs, taking into 

14 account the remaining balance of the New Mexico cost-share funds allocated to the City, 

15 is estimated to be $1,134,000. Based upon the planning interest rate for fiscal year 2012 

16 of 4.000 percent and an estimated construction completion by fiscal year 2025, the 

17 accrued IDC on the reimbursable construction costs of $54,321,000 is estimated to be 

18 $20,363,000, rounded to the nearest thousand dollars, for a total Estimated Repayment 

19 Obligation of $73,550,000. This figure does not include increases to the cost as a result 

20 of inflation which the City would be obligated to pay. The City's Final Repayment 

21 Obligation will be based upon the final Project cost allocation described in Article 7(m). 

22 h) As provided in Section 10604(b)(3)(B) of the Navajo Settlement Act, the City 

23 may demonstrate, to the satisfaction of the Contracting Officer, that the City has an 

24 ability-to-pay of a lesser amount than the maximum of 35 percent of allocated 

25 construction costs. The Contracting Officer may reduce the City's share of allocated 

26 construction costs, but such reduction cannot be less than 25 percent of construction costs 

27 allocated to the City, plus accrued IDC. The ability-to-pay analysis for the City shall 

28 hereby be incorporated as part of this Contract. Adjustments made to the ability-to-pay 

29 analysis, as provided in Article 8, will be provided as a supplement to this contract. 

30 i) Pursuant to Section 10604(b)(2) of the Navajo Settlement Act, the City may 

31 elect to prepay their repayment obligation prior to the initiation of construction. The 

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prepayment will be based upon the most recent repayable construction cost estimate 

2 available, currently estimated to be $54,321,000 at October 2011 price levels. The 

3 prepayment amount will be adjusted to reflect any change in the reimbursable percentage 

4 if an ability-to-pay reduction has been approved by the Contracting Officer, as provided 

5 in Article 7(g) above. No IDC shall accrue on the construction costs that have been 

6 prepaid. 

7 j) After the initiation of construction, the City may at any time elect to prepay their 

8 remaining repayment obligation on those features or reaches that have yet to be 

9 constructed. No IDC shall accrue on the construction costs that have been prepaid. 

10 However, IDC would accrue on any of the City's allocable construction costs that had 

11 been expended to date but not paid by the City, and IDC would continue to accrue on the 

12 principle until those costs were paid. Prepayment would be used to reduce the amount of 

13 annual Federal appropriations necessary to construct the Project. 

14 k) If the City does not elect to prepay under Article 7(j) above, then upon a 

15 Notification of Substantial Completion of each reach or feature, as provided in Article 9 

16 of this contract, the City will pay the portion of the Estimated Repayment Obligation 

17 assigned to that Notification of Substantial Completion in not more than 50 annual 

18 installments at the interest rate described under Article 7(f) herein. The repayment 

19 schedule assigned to each Notification of Substantial Completion shall be revised by the 

20 Contracting Officer at intervals of no longer than 5 years to conform to the current cost 

2 1 estimates at that time or other changes that have occurred which justify amendment to the 

22 notice. 

23 1) Although the City retains title to the facilities of Reach 13 and Reach 27, the 

24 City will continue to repay, with amortization interest, that portion of Reach 13 and 

25 Reach 27 costs under repayment status and a part of the Estimated Repayment 

26 Obligation, as provided in Article 7(k) above. Upon final cost allocation the Secretary 

27 will amend the Estimated Repayment Obligation assigned to Reach 13 and Reach 27 to 

28 conform to the Final Repayment Obligation, as provided in Article 7(m). The City must 

29 repay any reimbursable construction costs in excess of the Estimated Repayment 

30 Obligation (if any), plus the IDC accrued on any excess construction cost as provided in 

31 Article 7(m), subject to reassessment under the provisions of Article 8. 

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m) At the end of the construction period of the Project Facilities, the Secretary will 

2 perform a final cost allocation, pursuant to Section 10604(d)(2) of the Navajo Settlement 

3 Act, and, after consultation with the City, shall give the City written notice of the City's 

4 Final Repayment Obligation as established by the final cost allocation, subject to 

5 reassessment under the provisions of Article 8. Once the City's Final Repayment 

6 Obligation has been established: 

7 ( 1) If the City did not elect to prepay the total reimbursable construction cost 

8 estimate as provided in Article 7U), then all Notice of Substantial Completion 

9 repayment schedules will be amended to conform to the Final Repayment 

10 Obligation, or; 

11 (2) If the City elected to prepay as provided in Article 7U), then it will have the 

12 option to prepay the reimbursable construction costs in excess of the estimated 

13 prepayment amount (if any), plus the IDC accrued on any excess construction 

14 costs, within 180 days from the date of written notice. After the 180-day final 

15 payment option has expired, the reimbursable construction costs in excess of the 

16 estimated prepayment amount, plus the IDC accrued on those excess construction 

17 costs shall become a repayment obligation of the City to be repaid in not more 

18 that 50 annual installments, at the amortization interest rate described in Article 

19 7(f) herein. 

20 n) During construction, the United States will consult annually with the City 

21 concerning the allocation of construction costs and any IDC to be payable by the City 

22 under this Contract. All payments required under this Contract are due on the specified 

23 due date and will be made by electronic fund transfers. 

24 o) Pursuant to section 9(c)(1) ofthe Reclamation Project Act of 1939,43 U.S.C. § 

25 485h, following payment of the Final Repayment Obligation described herein, all other 

26 contract terms will remain in full force and effect until mutually agreed upon by the City 

27 and the United States. 

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29 8. REASSESSMENT OF ABILITY TO PAY ANALYSIS 

30 a) As provided in Section 10604(b)(3)(B) of the Navajo Settlement Act, the City 

31 may demonstrate, to the satisfaction of the Contracting Officer, that the City has an 

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ability-to-pay of a lesser amount than the maximum of35 percent of allocated 

2 construction costs. The Contracting Officer may adjust the City's share of allocated 

3 construction costs, but such reduction cannot be less than 25 percent of construction costs 

4 allocated to the City, plus accmed IDC. At intervals of not less than 5-years, starting the 

5 year of contract execution, either the City or the Contracting Officer may elect to initiate 

6 the process for a reassessment ofthe City's Ability to Pay (ATP) analysis. Initiation of 

7 the reassessment process shall be by written notification as provided in Article 20. The 

8 last and final reassessment of the A TP analysis shall be conducted no later than the 40th 

9 year of the City's repayment term. On the year the City has ten (10) annual payments 

10 remaining to fully repay its capital obligation to the United States, the A TP analysis that 

11 is in effect at that year shall be the final reassessment that determines the final percentage 

12 of reimbursable allocated construction costs that will be the City's obligation. 

13 b) Upon written notification by either party to initiate the reassessment process, the 

14 Contracting Officer will be responsible for the reassessment analysis and will draft and 

15 publish the final report, in consultation with the City. All future reassessments of the 

16 A TP analysis shall conform to the methodology employed in the original analysis unless 

17 otherwise approved by the Commissioner. The cost of a reassessment analysis will be 

18 borne by the party that initiated the reassessment through formal written notification. 

19 c) If a reassessment of the ATP analysis confirms that the reimbursable percentage 

20 of allocated construction costs has changed for the City, then the Contracting Officer will 

21 adjust and amend all repayment obligations and repayment schedules to conform to that 

22 change in the reimbursable percentage, in accordance with the Navajo Settlement Act. 

23 Upon implementing the change in the reimbursable percentage of construction costs, the 

24 Contracting Officer shall also recalculate reimbursable IDC based upon the new 

25 percentage and will adjust repayment obligations and schedules accordingly. All 

26 adjustments to the City's obligation will be addressed through the repayment schedules at 

27 the project interest rate. No credit because of an adjustment will ever be made to the 

28 City's obligation to account for alternative investment rates. 

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9. NOTIFICATION OF SUBSTANTIAL COMPLETION 

2 a) When features or reaches of the Project have been declared to be substantially 

3 complete and when Project or Non-Project Water is available to the City for its use, the 

4 City may utilize Project facilities to deliver such water and the United States shall, after 

5 consultation, give the City written notice, refetTed to herein as the "Notice of Substantial 

6 Completion". The Notice of Substantial Completion shall contain: ( l) a list of the 

7 feature(s) or reach(es) of Project Facilities that have been determined to be substantially 

8 complete for water delivery, (2) the effective date of that substantial completion 

9 declaration, (3) a repayment schedule, as provided in Article 7 herein, for the portion of 

10 the City's Estimated Repayment Obligation assigned to the Project Facilities declared 

11 substantially complete, and (4) the proportionate share ofOM&R costs associated with 

12 each completed Project Facility allocated to the City. The OM&R responsibilities and 

13 cost provisions associated with each completed Project Facility where title is held by the 

14 United States will be identified in the OM&R Contract between Reclamation and the 

15 Project Operator. 

16 b) Each Notice of Substantial Completion shall become a part ofthis contract. 

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18 10. PAYMENT OF OPERATION, MAINTENANCE. AND REPLACEMENT COSTS 

19 a) The City's OM&R cost obligation for those features or reaches for which they 

20 have received a Notification of Substantial Completion pursuant to Article 9, shall be 

21 paid to the United States, or its designee if some organization other than the United States 

22 is operating the Project Facilities. 

23 1) For any feature or reach of the Project through or by which water cannot 

24 be delivered to the City for its beneficial use, the City shall not pay any Fixed or 

25 Variable OM&R costs associated with that feature or reach. 

26 2) For any feature or reach of the Project through or by which water can only 

27 be delivered to the City for its beneficial use, the City shall pay all OM&R costs 

28 associated with water delivery, until such time water can be delivered through or 

29 by that feature or reach to other Project Participants, at which time Article 

30 1 O(a)(iii) below, shall apply. 

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3) For any feature or reach of the Project through or by which water can be 

delivered to the City and other Project Participants, the City's OM&R cost 

obligation will be comprised of: 

(A) The City's share of Fixed OM&R costs shall be based upon its 

proportionate share of the design capacity for all Project Facilities, or 

reaches of those facilities, which have identified through a Notice of 

Substantial Completion pursuant to Article 9(a) of this contract, Fixed 

OM&R costs include costs of labor, materials, equipment and 

replacements required to maintain all Project Facilities, as well as, the 

administration and overhead costs of the Project. 

(B) The City's share of Variable OM&R costs shall be based on actual 

costs of power including energy consumption and that share of power 

demand costs for operation of the water treatment plants and pumping 

plants based on the proportionate share of water treated and delivered, as 

well as water treatment chemical costs. 

b) Billing and payment for the City's OM&R cost obligations shall be conducted as 

follows: 

1) Fixed OM&R costs for the Proj ect shall be paid on the basis of annual 

cost estimates made by the Contracting Officer, or the Project Operator, based 

upon the proportionate share of the design capacity for those Project Facilities 

which have been identifi ed in the Notice of Substantial Completion pursuant to 

Article 9(a) of this contract. An estimate from the Contracting Officer, or the 

Project Operator, will be sent to the City on or before March 1 for the next 

Federal fiscal year, which begins October 1 of the same calendar year and ends 

September 30 of the next calendar year. The City shall advance its share of the 

OM&R costs for each Federal fiscal year in quarterly payments which will be 

due on September 30, December 31, March 31, and June 30 of the Federal fiscal 

year of applicability. The first such billing will be issued immediately following 

aN otice of Substantial Completion as provided in Article 9( a) of this contract. In 

the event the first notice shall be for costs of service of less than a full year, such 

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costs shall be prorated for the period covered. An itemization of the estimated 

Fixed OM&R costs will accompany the billing. 

2) Variable OM&R costs for the Project shall be paid on the basis of an 

annual notice provided by the City to the Contracting Officer, or the Project 

Operator, on or before March 1 for the next Federal fiscal year, which begins 

October 1 of the same calendar year and ends September 30 of the next calendar 

year. The annual notice will provide an estimate of the City's anticipated water 

delivery requirements on a quarterly basis. Based upon these anticipated water 

delivery requirements, the Contracting Officer, or the Project Operator, will bill 

the City quarterly on September 30, December 31, March 31, and June 30 of the 

Federal fiscal year of applicability. An itemization of the estimated Variable 

OM&R costs will accompany the billing. 

c) In the event either the OM&R cost estimates fall short of the actual costs in any 

period, or whenever it is anticipated by the Contracting Officer that a deficit will occur 

during the fiscal year, supplemental notices may be issued by the Contracting Officer 

requesting additional funds. OM&R funds not spent during one fiscal year will be 

carried over for use during the next fiscal year with funds required for that year being 

reduced accordingly. An itemized statement of actual costs incurred during each year 

shall be furnished to the City. Billing adjustments will be made to correct for differences 

in the estimated and actual costs at the beginning of the next fiscal year, and in the case 

of Variable OM&R costs, for differences in the City's estimated water delivery 

requirements and the actual metered flow. Upon transfer of the OM&R responsibilities 

from the Contracting Officer to a Project Operator, the Contracting Officer will also 

transfer to the Project Operator any outstanding billing adjustments of the City as either a 

credit or a debit to the City's OM&R obligation. 

d) OM&R responsibilities and the City's share ofOM&R costs associated with 

the Project shall be further identified and provisions for payment made in the Project 

Operations Agreement identified in Section 1 0602(f) of the Navajo Settlement Act. If 

title is not conveyed on a feature or reach, the OM&R responsibilities and the City's 

share of OM&R costs associated with those Project features and reaches shall be further 

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identified and provisions for payment made in a separate OM&R contract that will be 

required between Reclamation and the Proj ect Operator. 

11 . USE AND DISPOSAL OF WATER DURING CONSTRUCTION 

Prior to the completion of all Project Facilities as defined in Article 2(a), the City 

may use a completed portion of the Project for delivery of water. Payment ofOM&R 

costs for such use shall be made pursuant to Article 10, above. 

12. WATER SHORTAGES 

There may occur at times during any year a shortage in the quantity of water 

available from Project Water for furnishing to the City through and by means of the 

Project, but in no event shall any liability accrue against the United States or any of its 

officers, agents, or employees for any damage, direct or indirect, arising from a shortage, 

on account of errors in operation, drought, or any other causes, other than damages 

caused by acts of negligence committed by the United States, or by employees or agents 

of the United States, prior to the date of conveyance. 

13. PAYMENT OBLIGATIONS 

19 No provision of this contract shall create or be deemed to create a general 

20 obligation debt of the City, nonetheless, the City shall, to the extent allowed by law, 

21 utilize all available revenues to pay the United States in full and shall make all payments 

22 pursuant to this contract on or before the date such payments become due. Provided, if 

23 the City fails to perform under this article for any reason, Reclamation or the Project 

24 Operator may cease all deliveries of water to the City, and the City shall hold 

25 Reclamation or the Project Operator harmless for any damages that occur as a result of 

26 water not being delivered under this contract. In meeting its obligation, the City may 

27 adopt an ordinance or ordinances establishing special fund obligations or other 

28 obligations to pay the United States as provided in this contract, which irrevocably pledge 

29 the revenues under the ordinance or ordinances and which pledge may be subordinate to 

30 the prior lien of outstanding special fund bonds and future special fund bonds that may be 

31 issued in the normal course of City business. Provided further, the City shall be 

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responsible for payments regardless of whether any ordinances establishing special funds 

2 are adopted. 

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4 14. COVENANT AGAINST CONTINGENT FEES 

5 The City wanants that it has not employed or retained any person or selling 

6 agency to solicit or secure this contract upon an agreement or understanding for a 

7 commission, percentage, brokerage or contingent fee, excepting bona fide employees or 

8 bona fide established commercial or selling agencies maintained by the City for the 

9 purpose of securing business. For breach or violation of this wananty, the United States 

10 shall have the right to annul this contract without liability, or at its discretion, to add to 

11 the repayment obligation or consideration the full amount of such commission, 

12 percentage, brokerage, or contingent fee. 

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14 15. TITLE TO PROJECT FACILITIES 

15 a) Title to Reach 13 and Reach 27 that have both been constructed by the City 

16 shall be retained by the City 

17 b) Title to other Project Facilities shall be held by the United States, unless 

18 conveyed to the City or the Navajo Nation as authorized under Section 1 0602(f) of the 

19 Navajo Settlement Act. Effective on the date of the conveyance authorized by Section 

20 10602(f),the City of Gallup agrees to indemnify the United States for, and hold the 

21 United States and all of its representatives harmless from, all damages resulting from 

22 suits, actions, or claims of any character brought on account of any injury to any person 

23 or property arising out of any act, omission, or occunence relating to the land, buildings, 

24 or facilities conveyed under this subsection, other than damages caused by acts of 

25 negligence committed by the United States, or by employees or agents of the United 

26 States, prior to the date of conveyance. 

27 c) The City, as owner and/or operator of Reach 13 and Reach 27 being constructed, 

28 modified, or rehabilitated with funds being provided by the United States under 

29 provisions of this contract, accepts all responsibility for the structural integrity and safety 

30 of Reach 13 and Reach 27 and related facilities being constructed, modified, or 

31 rehabilitated. The City hereby releases the United States and its officers and employees 

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1 from any liability whatsoever relating to the planning, design, construction, OM&R for 

2 Reach 13 and Reach 27 and related facilities other than damages caused by acts of 

3 negligence committed by the United States, or by employees or agents of the United 

4 States, prior to the date of conveyance. 

5 d) Pursuant to Section 10604(b)(6) of the Navajo Settlement Act and Article 7(1) of 

6 this contract, the City recognizes that the retention of title or the conveyance of title for 

7 any Project Facility will not reduce the City's obligation to repay all allocated 

8 reimbursable costs, as established by the final cost allocation. 

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10 16. SEVERABILITY 

11 If any provisions of the contract shall, for any reason be determined to be illegal 

12 or unenforceable, the parties, nevertheless, intend that the remainder of the contract shall 

13 remain in full force and effect. Furthermore, any adjustments or variations to this contract 

14 necessitated by future negotiations with other Project Participants can be accomplished 

15 by amending this contract. 

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STANDARD ARTICLES 

17. CHARGES FOR DELINQUENT PAYMENTS 

a) The City shall be subject to interest, administrative and penalty charges on 

delinquent installments or payments. If a payment is not received by the due date, the 

City shall pay an interest charge on the delinquent payment for each day the payment is 

delinquent beyond the due date. If a payment becomes 60 days delinquent, the City shall 

pay, in addition the interest charge, an administrative charge to cover additional costs of 

billing and processing the delinquent payment. If a payment is delinquent 90 days or 

more, the City shall pay, in addition to the interest and administrative charges, a penalty 

charge for each day the payment is delinquent beyond the due date, based on the 

remaining balance of the payment due at the rate of 6 percent per year. The City shall 

also pay any fees incurred for debt collection services associated with a delinquent 

payment. 

b) The interest charge rate shall be the greater of either the rate prescribed quarterly 

in the Federal Register by the Department of the Treasury for application to overdue 

payments, or the interest rate of 0.5 percent per month. The interest rate charged will be 

determined as of the due date and remain fixed for the duration of the delinquent period. 

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c) When a partial payment on a delinquent account is received, the amount 

received shall be applied first to the penalty charges, second to the administrative 

charges, third to the accrued interest, and finally to the overdue payment. 

18. CITY OBLIGATION--BENEFITS CONDITIONED UPON PAYMENT 

a) The obligation of the City to pay the United States as provided in this contract is 

an obligation of the City notwithstanding the manner in which the obligation may be 

distributed among the City's water users and notwithstanding the default of individual 

water users in their obligations to the City. 

b) The payment of charges becoming due pursuant to this contract is a condition 

precedent to receiving benefits under this contract. The United States shall not make 

water available to the City through Project Facilities during any period in which the City 

is in arrears in the advance payment of any operation and maintenance charges due the 

United Stated or in an·ears for more than 12 months in the payment of any construction 

charges due the United States. The City shall not deliver water under the terms and 

conditions of this contract for parties that are in arrears in the advance payment of water 

rates or operation and maintenance charges as levied or established by the City. 

19. CONFIRMATION OF CONTRACT 

Promptly after the execution of this contract, the City shall provide evidence to the 

Contracting Officer that, pursuant to the laws of the State of New Mexico, the City is a 

legally constituted entity and the contract is lawful, valid, and binding on the City. This 

contract shall not be binding on the United States until such evidence has been provided to 

the Contracting Officer's satisfaction. 

20. NOTICES 

Any notice, demand, or request authorized or required by this contract shall be 

deemed to have been given, on behalf of the City, when mailed, postage prepaid, or 

delivered to the Regional Director, Upper Colorado Region, Bureau of Reclamation, 125 

South State Street, Room 6107, Salt Lake City, Utah 84138-1102, and on behalf of the 

United States, when mailed, postage prepaid, or delivered to the City of Gallup, 110 West 

Aztec, Gallup, New Mexico 87301. The designation of the addressee or the address may 

be changed by notice given in the same manner as provided in this article for other 

notices. 

2 1. CONTINGENT ON APPROPRIATION OR ALLOTMENT OF FUNDS 

The expenditure or advance of any money or the performance of any obligation of 

the United States under this contract shall be contingent upon appropriation or allotment 

of funds. Absence of appropriation or allotment of funds shall not relieve the City from 

any obligations under this contract. No liability shall accrue to the United States in case 

funds are not appropriated or allotted. 

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22. OFFICIALS NOT TO BENEFIT 

No Member of or Delegate to Congress, Resident Commissioner or official of the 

City shall benefit from this contract other than as a water user or landowner in the same 

manner as other water users or landowners. 

23. CHANGES IN CITY'S ORGANIZATION 

While this contract is in effect, no change may be made in the City's organization 

which may affect the respective rights, obligations, privileges, and duties of either the 

United States or the City under this contract including, but not limited to, dissolution, 

consolidation, or merger, except upon the Contracting Officer's written consent. 

24. ASSIGNMENTS LIMITED - SUCCESSORS AND ASSIGNS OBLIGATED 

The provisions of this contract shall apply to and bind the successors and assigns 

of the parties hereto, but no assignment or transfer of this contract or any right or interest 

therein by either party shall be valid until approved in writing by the other party. 

25. BOOKS, RECORDS AND REPORTS 

The City shall establish and maintain accounts and other books and records 

pertaining to administration of the terms and conditions of this contract, including the 

City's financial transactions; water supply data; project operation, maintenance, and 

replacement logs; project land and rights-of-way use agreements; the water users' land 

ownership, land-leasing, and water-use data; and other matters that the Contracting 

Officer may require. Reports shall be furnished to the Contracting Officer in such form 

and on such date or dates as the Contracting Officer may require. Subject to applicable 

Federal laws and regulations, each party to this contract shall have the right during office 

hours to examine and make copies of the other party's books and records relating to 

matters covered by this contract. 

26. RULES, REGULATIONS, AND DETERMINATIONS 

a) The parties agree that the delivery of water or the use of Federal facilities 

pursuant to this contract is subject to Reclamation law, as amended and supplemented, 

and the rules and regulations promulgated by the Secretary of the Interior under 

Reclamation law. 

b) The Contracting Officer shall have the right to make determinations necessary to 

administer this contract that are consistent with its provisions, the laws of the United 

States and the State of New Mexico, and the rules and regulations promulgated by the 

Secretary of the Interior. Such determinations shall be made in Consultation with the 

City. 

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27. PROTECTION OF WATER AND AIR QUALITY 

a) Project Facilities used to make available and deliver water to the City shall be 

operated and maintained in the most practical manner to maintain the quality of the water 

at the highest level possible as determined by the Contracting Officer: Provided, That the 

United States does not warrant the quality of the water delivered to the City and is under 

no obligation to furnish or construct water treatment facilities to maintain or improve the 

quality of water delivered to the City. 

b) The City shall comply with all applicable water and air pollution laws and 

regulations of the United States and the State ofNew Mexico; and shall obtain all 

required permits or licenses from the appropriate Federal, State, or local authorities 

necessary for the delivery of water by the City; and shall be responsible for compliance 

with all Federal, State, and local water quality standards applicable to surface and 

subsurface drainage and/or discharges generated through the use of Federal or City 

facilities or project water provided by the City within the City's Project Water Service 

Area. 

(c) This article shall not affect or alter any legal obligations of the Secretary to 

provide drainage or other discharge services. 

28. WATER CONSERVATION 

Prior to the delivery of water provided from or conveyed through federally 

constructed or federally financed facilities pursuant to this contract, the City shall 

develop a water conservation plan, as required by subsection 210(b) ofthe Reclamation 

Reform Act of 1982 and 43 C.F.R. 427.1 (Water Conservation Rules and Regulation. 

29. EQUAL EMPLOYMENT OPPORTUNITY 

During the performance of this contract, the City agrees as follows: 

a) The City will not discriminate against any employee or applicant for 

employment because of race, color, religion, sex, or national origin. The City will take 

affirmative action to ensure that applicants are employed, and that employees are treated 

during employment, without regard to their race, color, religion, sex, or national origin. 

Such action shall include, but not be limited to the following: employment, upgrading, 

demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates 

of pay or other forms of compensation; and selection for training, including 

apprenticeship. The City agrees to post in conspicuous places, available to employees and 

applicants for employment, notices to be provided by the Contracting Officer setting 

forth the provisions of this nondiscrimination clause. 

b) The City will, in all solicitations or advertisements for employees placed by or 

on behalf of the City, state that all qualified applicants will receive consideration for 

employment without regard to race, color, religion, sex, disability, or national origin. 

c) The City will send to each labor union or representative of workers with which it 

has a collective bargaining agreement or other contract or understanding, a notice, to be 

provided by the Contracting Officer, advising the said labor union or workers' 

representative of the City's commitments under Section 202 of Executive Order 11246 of 

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September 24, 1965 (EO 11246), and shall post copies of the notice in conspicuous 

places available to employees and applicants for employment. 

d) The City will comply with all provisions of EO 11246, and of the rules, 

regulations, and relevant orders of the Secretary of Labor. 

e) The City will furnish all information and reports required by EO 11246, and by 

the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will 

pexmit access to its books, records, and accounts by the Contracting Officer and the 

Secretary of Labor for purposes of investigation to ascextain compliance with such rules, 

regulations, and orders. 

f) In the event of the City's noncompliance with the nondiscrimination clauses of 

this contract or with any of the such rules, regulations, or orders, this contract may be 

canceled, terminated, or suspended in whole or in part and the City may be declared 

ineligible for further Government contracts in accordance with procedures authorized in 

EO 11246, and such other sanctions may be imposed and remedies invoked as provided 

in EO 11246 or by rule, regulation, or order of the Secretary of Labor, or as otherwise 

provided by law. 

g) The City will include the provisions of paragraphs (a) through (g) in every 

subcontract or purchase order unless exempted by the rules, regulations, or orders of the 

Secretary of Labor issued pursuant to Section 204 of EO 11246, so that such provisions 

will be binding upon each subcontractor or vendor. The City will take such action with 

respect to any subcontract or purchase order as may be directed by the Secretary of Labor 

as a means of enforcing such provisions, including sanctions for noncompliance: 

Provided, however, that in the event the City becomes involved in, or is threatened with, 

litigation with a subcontractor or vendor as a result of such direction, the City may 

request the United States to enter into such litigation to protect the interests of the United 

States. 

30. COMPLIANCE WITH CIVIL RIGHTS LAWS AND REGULATIONS 

a) The City shall comply with Title VI of the Civil Rights Act of 1964 (Pub. L. 88-

352; 42 U .S.C. § 2000d), the Rehabilitation Act of 1973 (Pub. L. 93-112, Title V, as 

amended; 29 U.S.C. § 791 , et seq.), the Age Discrimination Act of 1975 (Pub. L. 94-135, 

Title III; 42 U.S.C. § 6101, et seq.), [Title II of the Americans with Disabilities Act of 

1990 (Pub. L. 101-336; 42 U.S.C. § 12181, et seq.),] and any other applicable civil rights 

laws, and with the applicable implementing regulations and any guidelines imposed by 

the U.S. Department of the Interior and/or Bureau of Reclamation. 

b) These statutes prohibit any person in the United States from being denied the 

benefits of, or be otherwise subjected to discrimination under any program or activity 

receiving financial assistance from the Bureau of Reclamation on the grounds of race, 

floor, national origin, disability, or age. By executing this contract, the City agrees to 

immediately take any measures necessary to implement this obligation, including 

permitting officials of the United States to inspect premises, programs and documents. 

c) The City makes this agreement in consideration of and for the purpose of 

obtaining any and all Federal grants, loans, contracts, property discounts or other Federal 

financial assistance extended after the date hereof to the City by the Bureau of 

Reclamation, including installment payments after such date on account of arrangements 

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for Federal financial assistance which were approved before such date. The City 

recognizes and agrees that such Federal assistance will be extended in reliance on the 

representations and agreements made in this article and that the United States reserves the 

right to seek judicial enforcement thereof. 

d) Complaints of discrimination against the Contractor shall be investigated by the 

Contracting Officer's Office of Civil Rights. 

31. MEDIUM FOR TRANSMITTING PAYMENTS 

a) All payments from the City to the United States under this contract shall be by 

the medium requested by the United States on or before the date payment is due. The 

required method of payment may include checks, wire transfers, or other types of 

payment specified by the United States. 

b) Upon examination of the contract, the City shall furnish the Contracting Officer 

with the City's taxpayer's identification number (TIN). The purpose for requiring the 

City's TIN is for collecting and reporting any delinquent amounts arising out of the 

City's relationship with the United States. 

32. CONTRACT DRAFTING CONSIDERATIONS 

This Contract has been, negotiated and reviewed by the parties hereto, each of whom 

is sophisticated in the matters to which this Contract pertains. Articles l through 15 of this 

Contract have been drafted, negotiated, and reviewed by the parties, and no one party 

shall be considered to have drafted the stated articles. 

33. CONSTRAINTS ON AVAILABILITY OF WATER 

a) In its operation of the Project, the Contracting Officer will use all reasonable 

means to guard against a condition of shortage in the quantity of water to be made 

available to the City pursuant to this Contract. In the event the Contracting Officer 

determines that a condition of shortage appears probable, the Contracting Officer will 

notify the City of said determination as soon as practicable. 

b) If there is a condition of shortage because of errors in physical operations of the 

Project, drought, other physical causes beyond the control of the Contracting Officer or 

actions taken by the Contracting Officer to meet current and future legal obligations, then 

no liability shall accrue against the United States or any of its officers, agents, or 

employees for any damage, direct or indirect, arising therefrom. 

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IN WITNESS WHEREOF, the parties hereto have 

caused this contract to be duly executed as of the day and year first above written. 

~~ Solicitor's Office 

,, ..... • ~ 0 • ' 

' .. , ~ '1: I • ~ ' . ,; I \ ,. ,.., 

Attest: , ' <. ,. ·~ ,' :./ r •,, I 

THE UNITED STATES OF AMERICA 

Jt1.I3y ~~ {12-te_L- [J Regional Director 

Upper Colorado Region 

Bureau of Reclamation 

CITY OF GALLUP, NEW MEXICO 

List of Attachments: Exhibit A: Project Map 

Exhibit B: Environmental Commitments 

Exhibit C: Agreement on Methodology Regarding Application of 

New Mexico Cost-Share to Cost Allocation and Repayment 

Exhibit D: Right of Capacity Agreement 

29 
EXHIBIT A 

NAVAJO-GALLUP WATER SUPPLY PROJECT 

PROJECT MAP 
Legend 

e Pumping Plants 

Water Treatment Plant 

Cutter lateral 

- San Juan l ateral 

Interstate 

State Highway 

US Highway 

--- NTUALine 

Navajo Nation Non-Serviced Chapters 

Navajo Nation Serviced Chapters 

- Jicarilla Apache Nation 

REACH 4 , Pumping Plant 02fRUITtANO UPPE 

NENAHNEZAO 

I 

• Cutter Reservoir 1 Pumping Pf•nt 01 

, I ""' 

• ~r{! g Ploot 02A 

ter Treatment Plant 

Pumping Plant 03 

Navajo Gallup Water Supply Project 

N 

~ s 

0 5 10 20 

- -

30 

Miles 

RECLAMATION 

Ma11agi11g Water for the West 

1695-529-537 

Date: 12/6/2011 
EXHIBIT B 

NAVAJO-GALLUP WATER SUPPLY PROJECT 

ENVIRONMENTAL COMMITMENTS 
INTRODUCTION 

Chapter VI 

ENVIRONMENTAL COMMITMENTS 

AND MITIGATION MEASURES 

Introduction 

General Commitments 

This chapter discusses the environmental and related commitments that have been made 

by the Bureau of Reclamation (Reclamation) during the development of the San Juan 

River Public Service Company of New Mexico (SJRPNM) Alternative (Reclamation's 

preferred alternative). Reclamation would share responsibility of implementing measures 

that would avoid or reduce potential environmental impacts of the Navajo-Gallup Water 

Supply Project (proposed project). This responsibility would be shared with other 

Federal agencies, the Navajo and Jicarilla Apache Nations, and the city of Gallup, as well 

as third-party entities that could include New Mexico and Arizona State agencies and 

local governments. 

This chapter summarizes the commitments made during the planning process and 

incorporated into the proposed project plan. Commitments are discussed in chapter IV, 

and mitigation measures are proposed in chapter V to reduce or avoid impacts that would 

otherwise occur as a result of the implementation of the preferred alternative. 

As described below, the commitments would be implemented by Reclamation, or 

Reclamation would require their implementation by construction contractors or 

management authorities. Commitments for pre-construction activities would generally be 

completed by Reclamation or by the contractors during the final design process and prior 

to construction activities. Wildlife, wetland, cultural resource, and other mitigation 

would be completed by Reclamation as described in the following paragraphs. Some 

commitments, such as monitoring, would continue beyond completion of construction of 

structural facilities. 

GENERAL COMMITMENTS 

Throughout the planning process for the proposed project, efforts have been made to 

avoid impacts where practicable. If avoidance was not possible, then mitigation 

Vl-1 
Navajo-Gallup Water Supply Project---------------------

measures have been developed to reduce the level of impact. The proposed mitigation 

measures for each resource, if appropriate, were discussed in chapter V, and key 

measures are summarized here. In addition to specific mitigation measures identified in 

chapter V, other management practices would be employed during construction activities 

to minimize environmental effects and would be included in construction specifications. 

Many of these measures are required in order to comply with Federal, State, or local laws 

and regulations, regardless of whether they are specifically identified in this document. 

Reclamation would comply with all relevant Federal, State, and local laws, ordinances, 

regulations, and standards during the implementation of the preferred alternative. 

Reclamation would prepare and implement an environmental commitments plan for the 

proposed project to document and track the completion of the environmental 

commitments. 

Navajo Reservoir Operations 

Reclamation would be able to issue water service contracts to meet project demands from 

Navajo Reservoir now that a successful hydrologic determination was signed. At full 

San Juan River Basin (Basin) development, depletions would increase by 5,270 acre-feet 

from the Basin over the baseline presented in chapter V, table V-3. 

Releases would be similar to those described in the Navajo Reservoir Operations Final 

Environmental Impact Statement, Navajo Unit - San Juan River, New Mexico, Colorado, 

Utah (Reclamation, 2006) to meet the San Juan River Flow Recommendations; however, 

additional flows would be released from Navajo Reservoir downstream when needed to 

meet project demands at the SJRPNM intake structure. The demands for the Cutter 

Lateral portion of the proposed project would be delivered from Navajo Reservoir 

through the existing Navajo Indian Irrigation Project (NIIP) intake structure in Navajo 

Reservoir. 

Water Uses and Resources Commitments 

Until depletions in the Basin reach the baseline depletion in table V -3 plus the 

5,270 acre-feet added to the baseline for this project, the San Juan River Basin 

Recovery Implementation Program (SJRBRIP) Flow Recommendations can be met or 

only missed less than 0.01 percent of the time for only one category. When the total 

depletions reached this new baseline depletion, the Navajo Nation would reduce an 

amount from one or more projects that are presently in the baseline to ensure that the 

total depletions in the Basin remain below the baseline depletions (Navajo Depletion 

Guarantee). 

Vl-2 
---------- Chapter VI - Environmental Commitments and Mitigation Measures 

Navajo Depletion Guarantee 

The Navajo Depletion Guarantee is a commitment by the Navajo Nation which ensures 

that depletions for its uses under the proposed project will be offset by unused Navajo 

Nation depletions included in the San Juan River Basin, including forbearance of Navajo 

Nation uses on NIIP and/or Hogback and Fruitland Irrigation Projects as necessary, if and 

when required to keep the total depletions in the Basin from exceeding the following 

threshold (referred to as the depletion threshold): 

The sum of the actual annual depletions from all uses listed in the 

hydrologic baseline shown in table V -3 (excluding San Juan-Chama 

Project exportation) and all Navajo-Gallup Water Supply Project uses 

equals a total depletion amount of752,127 acre-feet per year (AFY).

1 

Full proposed project depletions of35,893 AFY would be made without requiring any 

forbearance of uses in excess of the 6,740 acre-feet of change in use baseline depletions 

shown in tables V-5 and VI-I. The city of Gallup may subcontract with either the 

Jicarilla Apache Nation or the Navajo Nation, or both in combination, for the diversion of 

up to 7,500 acre-feet of water per year from the Navajo Reservoir supply for its proposed 

project uses (depicted in table VI-1 as scenario 1 and scenario 2). 

Depletions by the San Juan-Chama Project and other projects that may be added to the 

hydrologic baseline (table V-3) after the U.S. Fish and Wildlife Service's (Service) 

issuance of the Final Biological Opinion for the Navajo-Gallup Water Supply Project 

(volume II, appendix C, patt III) would not be used when comparing actual future 

depletions against the 752,127 AFY depletion threshold. 

If the threshold depletion is reached in the future, the Navajo Nation would reduce its 

total depletion in the Basin so that its consumptive uses under the proposed project do not 

cause the total actual depletions in the Basin to exceed the threshold depletions. The 

Navajo Nation could accomplish the required reductions in use by changes in the 

operation of any of the Navajo Nation's projects that deplete water from the San Juan 

River. The maximum Navajo Depletion Guarantee requirement in any year is a reduction 

in Navajo Nation depletions of20,782 acre-feet. 

When the depletion threshold condition is reached and the Navajo Depletion Guarantee 

must be implemented, the quantification of the threshold depletion amount will be 

recalculated using the baseline uses identified in table V-3 that are estimated in the most 

recent San Juan Hydrology Model. Changes in the Flow Recommendations for the 

San Juan River or the status of listed species may result in reduction or removal of the 

1 The total includes 854,3 70 AFY for all depletions in the hydrologic baseline, less I 07,5 14 AFY 

average depletion by the San Juan-Chama Project, plus 5,27 1 AFY of new depletions included in the 

proposed project. 

Vl-3 
Navajo-Gallup Water Supply Project---------------------

Table VI-1.-Summary depletions for full proposed project development 

Change in use Met within total 

of baseline New depletions threshold depletion 

depletion (approved in excess for Navajo Depletion 

(changed used) of baseline) Guarantee Total 

Water provider (acre-feet) (acre-feet) (acre-feet) (acre-feet) 

Scenario 1 - City of Gallup subcontract with the Jicarilla Apache Nation 

Jicarilla Apache 1

6,740 2 Nation 1,960 0 8,700 

Navajo Nation 0 6,411 20,782 27,193 

Proposed project 

total 6,740 8,371 20,782 35,893 

Total reduced for 

3,1 00 acre-feet 

NIIP returns 35,271 

Scenario 2 -City of Gallup subcontract with the Navajo Nation 

Jicarilla Apache 4 Nation 1,200 0 0 1,200 

Navajo Nation 55,540 8,371 20,782 34,693 

Proposed project 

total 6,470 8,371 20,782 35,893 

Total reduced for 

3,100 acre-feet 

NIIP returns 35,271 

1 Includes forbearance by the Jicarilla Apache Nation of 6,750 AFY of consumptive use on the Jicarilla 

Apache Nation Navajo River Water Supply Project (JANNRWSP) and 170 acre-feet of consumptive use 

under Jicarilla water rights for historic uses. 2 The Final Biological Opinion for the Navajo-Gallup Water Supply Project does not establish any right in 

the Jicarilla Apache Nation to retain approval for 1 ,960 AFY of new depletions in excess of the baseline 

depletions listed in table V-3 should this amount of Jicarilla water rights, over and above the change in use of 

6,750 acre-feet of baseline depletion, not be required for the proposed project due to the city of Gallup 

subcontracting with the Navajo Nation, as shown in scenario 2. 3 By the time the Navajo Nation's water demands under the proposed project reach the full 27,193 acrefeet of depletion, the return flows from the NIIP to the San Juan River are anticipated to have increased by 

approximately 3,100 AFY, on average, over and above the current rate of return flow from the NIIP. This 

increase in return flows from the NIIP offsets an equivalent amount of new depletion by the proposed project 

and reduces the net new depletion from the river in the proposed project's biological opinion from 8,371 AFY 

to 5,271 AFY. 4 Includes a forbearance by the Jicarilla Apache Nation of 1 ,200 AFY of consumptive use on the 

JANNRWSP. 5 Includes forbearance by the Navajo Nation of 5,540 AFY of consumptive use on the NIIP or other 

Navajo projects for which depletions are in the baseline. 

Vl-4 
---------- Chapter VI - Environmental Commitments and Mitigation Measures 

Navajo Depletion Guarantee based upon reconsultation. Additional information 

regarding the Navajo Depletion Guarantee is included in volume II, appendix C, part III 

(final biological opinion). 

Monitoring Requirements.- No specific, detailed accounting of depletions will be 

required unless the sum ofNIIP and Animas-La Plata Project (ALP) depletions reaches 

290,000 acre-feet (table V-5). Since these projects are more easily tracked than 

depletions in the entire Basin, it will limit monitoring requirements. If this condition is 

met, all the depletions listed in the baseline for the proposed project will be monitored 

and reported on a 5-year cycle to coincide with the Reclamation Consumptive Use and 

Loss report. Depletions will be reported by the categories listed in the hydrologic 

baseline shown in table V -5 and the total computed. As discussed above, San JuanChama Project depletions will be removed for comparison to the Navajo Depletion 

Guarantee threshold depletion. 

If the sum of these depletions reaches the depletion guarantee threshold, the elements of 

the Navajo Depletion Guarantee will be implemented. At that point, modeling will be 

completed for the limits the Navajo Nation proposes putting in place to meet flow 

conditions specified in the biological assessment. 

Responsibilities.-

San Juan River Basin Recovery Implementation Program.- The SJRBRIP 

Hydrology Committee will be responsible for reviewing the accounting of depletions. 

The committee will also ensure that the San Juan River Basin Hydrology Model is 

implemented for compliance with the Flow Recommendations as specified in the 

proposed project's biological assessment. The biological assessment contains limits 

identified by the Navajo Nation at the time the Navajo Depletion Guarantee is 

implemented. 

Reclamation.-Reclamation will identify the point at which ALP and NIIP annual 

depletions reach 290,000 acre-feet. If that target depletion is reached, Reclamation will 

initiate reporting of depletions for the categories listed in the hydrologic baseline for the 

proposed project (table V -5) on a 5-year cycle as a part of the consumptive use and loss 

reporting procedure. As a result of the monitoring, Reclamation will identify the point at 

which the sum of actual uses reaches the Navajo Depletion Guarantee threshold. If this 

level of depletion is reached, Reclamation will limit deliveries to Navajo projects, as 

directed by the Navajo Nation, to levels required by implementation of the Navajo 

Depletion Guarantee. In the event that the SJRBRIP terminates, Reclamation will 

assume the responsibilities listed above for the SJRBRIP. 

Vl-5 
Navajo-Gal/up Water Supply Project--------------------

Navajo Nation.- The Navajo Nation will limit uses as specified in the Navajo 

Depletion Guarantee if the conditions stated above are reached and provide to the 

SJRBRlP and Reclamation the projects it wishes limited. 

Conditions.- None of the actions and conditions listed herein shall limit the ability of 

Reclamation to reinitiate consultation on the proposed project to increase its baseline 

depletion or alter the requirements of the Navajo Depletion Guarantee. 

Reclamation will notify the SJRBRIP and the States ofNew Mexico and Colorado of any 

such requests to reinitiate consultation on the proposed project. Any reconsultations on 

the proposed project will be performed in conformance with the SJRBRlP's Principles 

for Conducting Endangered Species Act Section 7 Consultations on Water Development 

and Water Management Activities Affecting Endangered Fish Species in the San Juan 

River Basin that is described in the SJRBRIP's Program Document, Appendix C, dated 

September 7, 2006, as may be modified by the SJRBRlP and the Service. 

The depletion levels discussed are conditioned upon cunent estimates of natural flow and 

baseline depletions for 1929- 93 and are subject to change as hydrology or models are 

updated. If such updates occur, a newly computed Navajo Depletion Guarantee shall 

be computed and utilized based upon the same depletion categories as described 

herein. 

Indian Trust Assets Commitments 

There are no mitigation measures proposed for Indian Trust Assets. One of the goals of 

the SJRBRlP is to" ... proceed with water development in the Basin in compliance with 

federal and state water law, interstate compacts, Supreme Court decrees, and federal trust 

responsibilities to the Southern Utes, Ute Mountain Utes, Jicarillas, and the Navajos." 

(SJRBRlP, 1995). 

Water Quality Commitments 

Reclamation would develop and implement a program to reduce, minimize, or eliminate 

temporary, short-term increases in suspended sediment loading or other water quality 

constituents potentially caused by project construction through the incorporation of 

permits, Best Management Practices (BMPs), and sediment control structures as 

described under mitigation measures for water quality in chapter V. 

Vl-6 
---------- Chapter VI - Environmental Commitments and Mitigation Measures 

Vegetation Commitments 

Reclamation would: 

• Ensure that construction contractors limit ground disturbance to the smallest 

feasible areas and that they implement BMPs along with the planting or 

reseeding of disturbed areas using native plants to assist in the re-establishment 

of native vegetation as described under mitigation measures for vegetation 

resources in chapter V. 

• Use accepted erosion control measures during construction, supplement grass 

seeding with native shrub seed in upland areas where shrub cover is diminished 

due to pipeline disturbance, monitor planting to ensure establishment, and 

control noxious weeds in disturbed areas. 

• Replace riparian and wetland habitat with the creation of acre-per-acre 

replacement or enhancement of 3 acres for each acre lost to mitigate for impacts 

to riparian and wetland habitat. This includes revegetation of 17 acres of 

non-native riparian (Russian olive and tamarisk) and 3.6 acres of wetland 

temporarily removed during pipeline construction. Approximately 0.9 acre of 

non-native riparian and 1.1 acres of wetlands would be permanently removed 

for project features. 

Wildlife Commitments 

Reclamation would: 

• Ensure that construction contractors limit ground disturbance to the smallest 

feasible areas and that they implement BMPs along with the planning or 

reseeding of disturbed areas using native plant species to assist in the 

re-establishment of native vegetation as described under mitigation measures for 

vegetation resources in chapter V. 

• To minimize disturbance to raptors, major construction activities along the 

Nutria and Defiance Monoclines, Cutter Canyon, Blanco Canyon, and the 

corridor from Cutter to Largo Canyons should be restricted during the nesting 

season (January 15 to August 15). If that is not possible, extensive nest 

searches should be made up to three-quarters of a mile of proposed activities 

immediately prior to construction and active nests avoided. 

Vl-7 
Navajo-Gallup Water Supply Project---------------------

• Conduct extensive nest searches within one-quarter mile of proposed activities 

immediately prior to construction and avoid active nests if construction 

activities could not be scheduled outside the January 15 to July 15 timeframe. 

• Incorporate raptor perch guards or raptor safe configurations on all new 

transmission structures. 

• A void removal of riparian and wetland vegetation between March 15 and 

August 15 to avoid potential impacts to migrat01y bird nesting. 

• Trench and bury pipeline concurrently to minimize trapping of small wildlife as 

possible. Reclamation would construct escape ramps for trenches left open 

overnight. 

Aquatic Resources Commitments 

The SJRBRIP would monitor and report total depletions in the Basin as described 

previously in the "Water Uses and Resources Commitments" section. The Navajo Nation 

would implement a Navajo Depletion Guarantee when needed to keep the Navajo 

Nation's depletions within the Endangered Species Act depletion baseline. Reclamation 

would also incorporate BMPs, as previously described in the "Water Quality 

Commitments" section, to avoid or minimize project impacts to aquatic resources. 

Special Status Species Commitments 

Reclamation would: 

Vl-8 

• Implement conservation measures found in the final biological opinion on the 

proposed proj ect (see appendix C, part III). These measures address the 

Colorado pikeminnow, razorback sucker, Southwestern willow flycatcher, and 

Mesa Verde cactus. 

• Implement conservation measures for Navajo Nation listed species as described 

under "Special Status Species - Mitigation Measures" in chapter V. 

• Conduct surveys for ferruginous hawk and bald eagle in proposed construction 

areas 1 year in advance of construction for pipeline routes and construction sites 

not adjacent to highways, well-traveled roads, or areas of regular human 

activity. 
---------- Chapter VI - Environmental Commitments and Mitigation Measures 

• Implement appropriate protective measures to avoid or minimize nest 

disturbance if active nests were found. 

• Conduct surveys for Southwestern willow flycatcher in riparian and wetland 

habitat prior to construction within one-qua1ter mile of disturbed areas and 

avoid construction activities during the nesting season (March 15 to August 15) 

if active nesting is found. 

• Delineate and avoid beautiful gila plants where possible. 

• Refine the pipeline alignment to avoid individual Mesa Verde cactus and 

suitable habitat where possible. 

Reasonable and prudent measures (RPMs) for Colorado pikeminnow and razorback 

sucker included in the final biological opinion are not included as environmental 

commitments. RPMs are measures to reduce incidental take of threatened or endangered 

species and are described as terms and conditions. The terms and conditions are 

nondiscretionary actions required by the action agency and are not included as mitigation 

measures. 

Recreation Commitments 

No environmental commitments are made for recreation resources. 

Land Use Commitments 

Reclamation would: 

• Ensure that construction contractors limited ground disturbance to the smallest 

feasible area and that they implemented BMPs along with the planting or 

reseeding of disturbed areas to minimize impacts to existing land uses as 

previously described in the "Vegetation Commitments" section. 

• Ensure that construction contractors fenced revegetated areas to prevent grazing 

activities until disturbed areas became re-established. 

• Work with the Navajo Nation to provide temporary relocation assistance to 

affected livestock owners along the pipeline corridor. 

• Provide relocation assistance to affected residences displaced by construction of 

the San Juan River water treatment facility. 

Vl-9 
Navajo-Gallup Water Supply Project---------------------

Hazardous Materials Commitments 

Reclamation would contact pipeline and gas well companies prior to construction 

activities to identify and avoid existing hazards. Pipeline alignments would be adjusted, 

as needed, to avoid impacts to pipelines and wells. 

Soils Commitments 

Reclamation would mandate that construction contractors use and implement measures 

contained in erosion control guidelines and BMPs to control soil erosion from 

construction areas as described under mitigation measures for soils in chapter V. 

Geology Commitments 

No environmental commitments are made for geologic resources. 

Paleontologic Commitments 

During construction activities, Reclamation would monitor areas with exposure of 

geological units or settings that indicated a high likelihood of yielding vertebrate 

fossils or noteworthy occurrences of invertebrate or plant fossils. In the event of 

discovery, Reclamation would evaluate the significance before construction could 

continue. 

Reclamation would manage, on a case-by-case basis, construction activities adjacent 

to the Lynbrook and Betonnie Tsosie Fossil Areas. Reclamation would conduct 

paleontologic clearances prior to any surface-disturbing activities along the pipeline 

corridor in the Lynbrook and Betonnie Tsosie Fossil Areas. 

Air Quality and Noise Commitments 

Reclamation would require that construction contractors implement measures to control 

fugitive dust during construction as described under mitigation measures for air quality 

and noise in chapter V. No environmental commitments are made for noise abatement. 

Vl-10 
---------- Chapter VI - Environmental Commitments and Mitigation Measures 

Socioeconomics Commitments 

No environmental commitments are made for socioeconomic resources. 

Environmental Justice Commitments 

No environmental commitments are made for environmental justice. 

Cultural Resources Commitments 

Reclamation would: 

• Implement a program to compensate for losses of archaeological sites that 

would occur as a result of construction and operation of the proposed project 

and the construction of conveyances as defined in the mitigation measures for 

cultural resources in chapter V. 

• Coordinate the program with the New Mexico State Historic Preservation 

Officer, Navajo Nation Tribal Historic Preservation Officer, Bureau of Land 

Management, Bureau oflndian Affairs, city of Gallup, and the Advisory 

Council on Historic Preservation. 

• Ensure compliance with mitigation measures developed in accordance with the 

Native American Graves Protection and Repatriation Act and Executive 

Order 13007 as described under "Cultural Resources- Mitigation Measures" in 

chapter V. 

Vl-11 
EXHIBIT C 

NAVAJO-GALLUP WATER SUPPLY PROJECT 

AGREEMENT ON METHODOLOGY REGARDING 

APPLICATION OF NEW MEXICO COST-SHARE TO COST 

ALLOCATION AND REPAYMENT 
United States Department of the Interior 

BU REAU OF RECLAMATION 

IN REPLY REFER TO: 

FCC0-110 

WTR-4.00 

Honorable Jackie McKinney 

Mayor of Gallup 

P.O. Box 1270 

Ga llup, NM 87305 

Upper Colorado Region 

Four Corners Construction Office 

2200 Bloomfield Highway 

Farmington, NM 87401-81 10 

OEC 0 1 2011 

Subject: Agreement on Methodology Regarding Application ofNew Mexico Cost-Share to Cost 

AUocation and Repayment, Navajo-Gallup Water Supply Project 

Dear Mayor McKinney: 

Enclosed for your records is a copy of the final signed subj ect agreement. The agreement 

acknowledges consultation occuned and allows the Bureau ofRe.clamation to begin 

implementation of the methodology described in the agreement for applying and allocating costs 

associated with the State ofNew Mexico's cost-share requirement. 

To ftnther memorialize this agreement, this letter, along with the enclosed signed agreement, will 

be included in yom repayment contract as an exhibit. 

We appreciate all of your efforts in approving this agreement. 

If you have any questions, please contact Pat Page at 505-324-5027. 

In Duplicate 

Enclosure 

Identical Letter Sent To: 

Honorable Mr. Levi Pesata 

President, Jicarilla Apache Nation 

P.O. Box 507 

Dulce, NM 87528-0507 

cc: See Next Page 

~c,~'\ 

~<!> '\iarry C

~ 

onstru

Longwe ction Engineer ~ 
cc: Mr. Lance All

good 

Executi ve Direc

tor 

Gallup Joint Utilities 

P.O. Box 1270 

Gallup, NM 87305-I 270 

Mr. I lerb 13ecker, Jicarilla Apache Nation 

JA Associates ofNM, LLC 

2309 Renard Place, SE, Suite 200 

Albuquerque, NM 87 I 06 

(w/ent.:l to ca) 

2 
·-. 

United States Department of the Interior 

BUREAU OF RECLAMATION 

It\ REPLY R.HER TO: 

FCC0-110 

WTR-4.0~ 

F /IV -IJJ, .J-o 

Honorable Jackie McKinney 

Mayor of Gallup 

P.O. Box 1270 

Gallup, NM 87305 

Uppe.r Colorado Region 

Four Comers Construction Office 

2200 Bloomfield Highway 

Farmington, New Mexico 87401-8110 

SEP 2 7 lOU 

FlfiJ- & dtJWtiaJ5~ 

}J /) ) C't-I) f 37 oQ./t{~ 

Subject: Methodology Regarding Application of New Mexico Cost-Share to Cost Allocation 

and Repayment, Navajo-Gallup Water Supply Project (NGWSP), New Mexico 

Dear Mayor McKinney: 

Public Law 111-11 authorized the Secretary of the Interior to design, construct, operate, and 

maintain the Navajo-Gallup Water Supply Project (NGWSP). In addition; the legislation 

(Section 10602 (d)(l)(D)) requires that the Secretary ofthe Interior and the State ofNew Mexico 

enter into an agreement "... under which the State of New Mexico will provide a share of the 

Project construction costs ofnot less than $50,000,000, except that the State of New Mexico 

shall receive credit for funds the State has contributed to construct water conveyance facilities to 

the Project Participants to the extent that the facilities reduce the cost of the Project as estimated 

in the Draft Impact Statement. " 

The purpose of this document is to record and acknowledge the decision made by the Bureau of 

Reclamation, after consultation with the Jicarilla Apache Nation and the City of Gallup, 

regarding the application of the State's cost-share contribution of not less than $50,000,000 

towards NGWSP costs and how the State's cost-share would be applied towards the repayment 

obligations of those NGWSP Participants who have a repayment obligation. 

Application Methodology 

A. Cost-Share Obligated Amount (a.k.a. credit) which refers to monies provided directly to 

NGWSP Participants- Navajo Nation, Jicarilla Apache Nation, and City of Gallup) 

The detennination of allowable credit shall be made pursuant to Paragraph 2 of the Cost~Share 

Agreement between the United States and the State ofNew Mexico, dated June 27, 2011 

(CostShare Agreement). Once the detennination of allowable credit has been made, the credit 

shall be applied to those reaches or features that were constructed and the corresponding costs of 

those applicable reaches or features in the NGWSP Construction Cost Estimate (CCE) shall be 

reduced by the amount of the approved credit. The remaining NGWSP costs (if any) of those 

reaches or features shall then be allocated to each NGWSP Participant following the Use of 

Facilities Methodology, and the repayment obligations on those allocated costs will take into 

account the repayment Participants' Ability to Pay percentage. If there are no remaining costs, 

then no costs would be allocated to the NGWSP Participants. 
-. 

B. Cost-Share Balance (monies provided directly to Reclamation) 

The balance of the cost-share obligation of the State of New Mexico (i.e., the total amount of 

cost-share provided by New Mexico minus the amount of credit allowed) shall be provided 

by the State pursuant to Paragraph 3 of the Cost Share Agreement. The cost-share balance 

shall be applied to the remaining NGWSP costs (as is stated in Part A above) and be 

allocated to each NGWSP Participant following the Use of Facilities Methodology, and 

taking into account the repayment Participants' Ability to Pay percentage. 

The Fiscal Year 2012 Interim Cost Allocation (October 2011 price level) incorporated the 

methodology described above using estimated New Mexico Cost-Share obligations. The Cost 

and Repayment Summary page from the Fiscal Year 2012 Interim Cost Allocation is enclosed. 

Conclusion and Signature 

The repayment Participants' signatures on the enclosed signature sheets acknowledge that: 1) 

Reclamation has consulted with them regarding the substance of this memorandum, 2) 

Reclamation will implement the methodologies for applying the New Mexico Cost-Share 

contributions to the NGWSP CCE identified in this memorandum, and 3) without waiving any of 

their rights under statute or their repayment contracts, they will not object to Reclamation 

implementing the methodologies identified in this memorandum. Finally, the repaying 

Participants acknowledge that, pursuant to Section 10604 ofPubtic Law 111-11, each entity's 

repayment obligation shall be subject to the final cost allocation. 

If you concur, please sign the appropriate signature sheet and transmit the signed original to this 

office, Attention: Pat Page, Deputy Construction Engineer. 

If you have any questions, please contact Pat Page at 505-324-5027. 

In Duplicate 

Enclosure 

Identical Letter Sent To: 

Honorable Mr. Levi Pesata 

President, Jicarilla Apache Nation 

P.O. Box 507 

Dulce, NM 87528-0507 

cc: Mr. Lance Allgood 

Executive Director 

Gallup Joint Utilities 

P.O. Box 1270 

Gallup, NM 87305-1270 

cc: See Next Page 

2 
cc: Continue From Previous Page 

Mr. Herb Becker, Jicarilla Apache Nation 

JA Associates ofNM, LLC 

2309 Renard Place, SE, Suite 200 

Albuquerque, NM 87106 

(w/encl to ea) 

be: UC-446, FCCD-5000 (Ehat), WCD-RChristianson 

(w/encl to ea) 

WBR:PPage:bfox:09/l4/2011 

3 

V:\FCF Correspondence\Navajo Gallup Water Supply Project(NGWSP)-General Corresp\Memo 

to Sponsors~ NM CostShare Methodolgy_rvsd 6-6-20ll.docx 
Cultural 

Construction Cost SummarY. Re~u(J;!s 

• 

Total Cost 35,766,032 

Less NM Cost Share - Obligated Amount 1/ 

Remaining Federal Cost 

less NM Cost Share - Remaining Balance 

Federal Cost 

New Mexico Cost Share Totals 

Repayment SummarY. 

Anocation of Remaining Federal Cost 

Allocated Cost to United States 

less NM Cost Share- Remaining Balance - US Allocation 

Responsibility to the United States 

Allocated Cost to be Repaid by Participant (35%) 21 

Navajo-Gallup Water Supply Project 

Cost and Repayment Summary 

October 2011 Pnce Level (FY2012) 

San Juan Cutter 

Mi!jgation Lateral ~ Readl27 

6,202,202 723,159,538 172,005,955 57,723,831 

3,981,569 118,423,494 8.387.518 

719,1n,969 153,582,461 49,336,313 

14,980,589 3,199,147 1,027,683 

704.197,380 150,383,315 48,308,630 

18,952,158 21,62.2,141 9.415.201 

719,177,969 153,582,461 49,336,313 I 

bess NM Cost Share - Remaining Balance - Particcpant Allocation 

Participant Construction Cost Obligation 

Interest During CoMtruction (IDC) 31 41 

Participant lnYe5tment Cost Obligation 

1/ Based upon estimations from preliminary submittals from State; final amount dependent upon Reclamation approval. 

2/ The actual percentage wiR be no less than 25% and no more than 35%, based upon ability to pay. 

3/ Alii DC estimates are based upon total project completion in the year 2025. 

4/ IDC rate based on FY2010 Planning Rate. 2 of 57 

6/13/2011 

AMocation Allocation Allocation 

to to to 

Total Navaio Nation Citv of Galluo Jicarilla Nation 

994,857,558 

30,792,581 

922,096,743 736,904,338 ~ 55,202,322 29,990,083 

19,207,419 15,341,684 3,241,037 624,698 

902,889,325 721.562.655 151 ,961,285 29.365,385 

50,000,000 

r 22.096,743 736,904,338 155,202,322 29,990,083 

857,279,401 736,904,338 100,881,509 19,493,554 

17,854,412 15,341,684 2,106,674 406,054 

--- -- 839,424,990 721,562,655 98,774,835 19,087,500 

54,320,813 10,496,529 

1,134,363 218,644 

$53,186,452 $10,277,885 

+ + 

$21,113,482 $6,997,176 

$74,299,934 $17,275,061 

TotaiAIIocation06.13.11 (FY2012Price).xlsx 
Methodology Regarding Application of New Mexico Cost-Share to Cost Allocation and 

Repayment, Navajo-Gallup Water Supply Project 

Signnturc Sheet 

__, 

~~City of Gallup l?~~ ./ n •: k i •'! N r: K i n n e y , N n yo r 
Methodology Regarding Application of New Mexico Cost-Share to Cost Allocation and 

Repayment, Navajo-Gallup Water Supply Project 

~~ Jicarilla Apache Nation 

Signature Sheet 

t o f.J +I u 

Date 
EXHIBIT D 

NAVAJO-GALLUP WATER SUPPLY PROJECT 

RIGHT OF CAPACITY AGREEMENT 
United States Department of the Interior 

BUREAU OF RECLAMATION 

Upper Colorado Regional Office 

125 South State Street, Room 6107 

IN REPLY REFER TO: 

UC-430 

WTR-4.00 

Mr. Lance Allgood 

Executive Director 

City of Gallup 

P.O. Box 1270 

Gallup, NM 87305-1270 

Salt Lake City, UT 84138-1102 

SEP 2 7 2011 

Subject: Contract No. 11-WC-40-437 Between the United States and the City of Gallup for 

Right of Capacity in Reaches 13 and 27, Contract, Navajo-Gallup Water Supply 

Project, New Mexico 

Dear Mr. Allgood: 

We received two signed originals ofthe subject contract you sent with your letter of September 8, 

2011. After review by my staff and the Office of the Solicitor, the contract has been signed and is 

therefore in full force and effect. 

We arc transmitting one signed original of this contract to you for your use and one signed 

.original is being sent to the official documentary files by copy of this memorandum. 

If you have any questions, please contact Mr. Pat .Page in the Four Corners Construction Office 

at 505-324-5027. 

Enclosure 

be: FCCD-110 (w/encl) 

Documentary File (w/original) 

Indispensable File (w/encl) 

Sincerely, 

ANAMARIE GOLD 

Larry Walkoviak 

Regional Director 

WBR:MWilson:abaker:jjacobson:9/27/20 11 :801-524-3709 

T:\ WRG\Malcolm\Contract City of Gallup 9-8-ll.docx 
UNITED STATES 

DEPARTMENT OF THE INTERIOR 

13UREAU OF RECLAMATION 

Contract No. 11-WC-40-437 

NAVAJO GALLUP WATER SUPPLY PROJECT, NEW MEXICO-ARJZONA 

CONTRACT BETWEEN THE UNITED STATES AND 

THE CITY OF GALLUP, NEW MEXICO 

FOR RIGHT OF CAPACITY IN REACHES 13 AND 27 

THIS RIGHT OF CAPACITY AGREEMENT hereinafter referred to as the 

Agreement, is made this Z.1 ~ day of S"ytlelftg~. 20 II, pursuant to the Reclamation 

Act of June 17, 1902 (32 Stilt. 388), and acts amendatory thereof and supplemental thereto, and 

particularly pursuant to the Act of Congress approved December 15, 1971 (85 Stat. 664) between 

the UNITED STATES OF AMER.JCA, hereinaFter referred to as the United States, represented 

by the Regional Director, Upper Colorado Region, Bureau of Reel am at ion; hereinafter referred 

to as Reclamation, and the CITY OF GALLUP; hereinafter referred to as the City. The Act of 

Congress approved December IS, 1971 authorized the planning and investigation of the NavajoGallup Water Supply Project (Project). Subsequently, the construction, operation, and 

mnintcnanc..: of the Project was authori7.cd by the Northwestern New Mexico Rural Water 

Projects Act of March 30, 2009 (123 Stat. 1367), and the United States has investigated, planned, 

and is prcpari ng to construct said Project for the diversion and· distribution of the waters of the 

S;~n Jtian Ri vcr, which Project has among its authorized purposes the furnishing of water for 

municipal, industrial, commercial, domestic, and stock watering purposes. Th.: water rights 

scHlcment purposes of the Project were authorized by the Northwest New Mexico Rural Water 

Project~ Acl of March 30, 2009 (hercaficr referred to as the Navajo Settlement Act). 

The Navajo Settlement Act authorizes the design and construction of the Navajo Gallup Water 

Supply Project, h~~ei Aner referred to as the Project. Project facilities pertaining to tlli~ 

agreement include those for Reaches 13 and 27 extending from near Yah-ta-hcy Junction 

throup,lwut the City and ending at various Navajo Nation storage locations (known as Rench 14). 

WITNESSETH: 

WHEREAS, Reclamation has been authorized by Congress to construct and operate the 

Navajo Gallup Water Supply Project pursuant to the Navajo Settlement Act. 

a) The Gallup Regio nal System, also known as Reach 27 for Project identification 

purposes, means all Project facilities starting at the end of Reach l3 and ending at the 

beginning ot' Reach ·14. The term Rench 27 will be used to describe the Gallup 

Regional System in this document. 

b) Reach 13 means all Project facilities starting at the end of Reach 12 and ending at 

the beginning of Reach 27. The final determination of the actual facilities that arc 

included in Reach 13 will be made during the final design process for that reach. 

c) Reach 13 and Reach 27 when referred to together mean all Project Facilities 

conveying water from the end of Reach I 2, located near the north line of Section 17, 

TI6N, R 18W, to the beginning of Reach 14. The City will have construction 

responsibility and ownership ofRcach 13 and Reach 27. 

d) Reach 13 and Reach 27 shall have the capacity to deliver 7,500 acre-ft:ct/year 

(AF/yr) to the City of Gallup and 4,647 AF/yr to the Navajo communities in Reach 

14 with a 13.47 cubic feet per second (cfs) peak demand for the City of Gallup and an 

8.34 cfs peak demand for the Navajo communities in Rench 14. 
e) Reach 14 means all Project facilities beginning at the end of Reach 27 which 

serve the following Navajo communities: Church Rock!lyanbito, Mariano 

Lake/Pinedale, Red Rock/Chichiltah/Breadsprings, and Manuelito. Reach 14 will be 

constructed by others and is not the subject of this agreement. 

WHEREAS, the Navajo Settlement Act, authorized Reclamation to construct facilities 

and a water line known as Reaches 13 and 27. 

WHEREAS, the overall pipeline authorized under the Navajo Settlement Act is known as 

the Navajo Gallup Water Supply Project (Project); 

WHEREAS, "Delivery Capacity Allocation" means the portion of the Project capacity 

reserved for use by the City to de liver the City's Project Water, pursuant to Sec. I 0603(b)(2)(B) 

of the Navajo Settlement Act and pursuant to the Repayment Contract between the Un itcd States 

and the City of Gallup, New Mexico. 

WHEREAS, Reclamation and the City of Ga llup have been engaged in ongoing 

discussions on how to augment the capacity of that portion of the existing Project facil ities that 

lies within the City of Gallup so that the intent oft he Novajo Settlement Act mny be met while 

also recognizing and acknowledging the City of Gallup's sovereign ownership of that portion of 

the existing facilities which run inside the City boundary; 

WHEREAS, Reclamation has authority to augment the existing facilities, and the City of 

Gallup desires to help meet the needs of Reclamat ion and its neighbors the Navajo Nation, while 

also meeting its current and potential future needs . . ; 

WHEREAS, the requirements of federal law mandate that in return for providing 

appropriated funds for augmenting the existing facil ities that lies at or near the boundary of the 

City of Gallup, Reclamation must receive a perpetua l right to utilize Reaches 13 and 27, for the 

life of these Reaches and not subject to alienation, such that the intent of Congress to provide the 

allocated capacity of water per year for the beneficial usc of the Navajo Nat ion can always be 

met. 

The Parties Agree as follows: 

I . The City of Gallup will ougmcnt its existing facilities in order to provide for the 

capacity sufficient to meet the needs of Reclamation under the Navajo Settlement 

Act. 

2. Reclamation will provide financial assistance to lhe City of Gallup in an amount 

sufficient to meet the costs of that portion of the faci litics necessary to convey 

water to the Nation under the Navajo Settlement Act and permit the City of 

Gallup to connect Reaches 13 and 27 to other Project fac iliti es. 

3. For the life of Reaches 13 and 27, Rcclurnation shall have access to suflicicnt 

capacity to provide 7,500 AF/yr to the City of Gallup in Reach 27 ond 4,64 7 

AF/yr to the Navajo communities in Reach 14 for the beneficial usc of the Nation. 

This right of capacity shall run for the life of the pipeline, estimated to be fif\y 

(50) years or until the conditions of the Term of Agreement result in expiration. 

This right of capacity shall not be alienable or otherwise subject to diminishment 

and shall be an obligation upon all assignees, successors in interest or agents or 

the City of Gallup except as provided in section I 0603(b)(3) of the Navajo 

Settlement Act. Prior to the end of fifty (50) years of delivery, Reclamation will 

determine the status of the Reaches. If Reclamation finds that Reaches 13 and 27 

arc no longer necessary to meet the requirements of the Navajo Setllcment Act, 

Reclamation will execute the process for transfer of the federally held capacity 

rights to the City, in accordance with Reclamation and federal policies. 

2 
4. The parties further agree that the remedy for failure by the City of Gallup to 

provide sufficient capacity in Reaches 13 and 27 to allow Reclamation to provide 

4,647 AP/ycar of water to the Navajo Nation is either: (I) specific performance. 

or (2) the City shall transfer to Reclamation or, at Reclamation's sole discretion, 

to Reclamation's designee, full use, control and possession of the water project 

infrastructure in Reaches 13 and 27 with appurtenant land rights, subjcctto all 

applicable U.S. Department of Justice standards and procedures governing the 

acquisition of real property by Federal agencies. 

5. In the event Reclamation assumes operations per the latter remedy described in 

paragraph 4, the following procedures, tc1ms. and conditions set forth in this 

paragraph shall apply. The assumption or operations shall not include 

conveyance of title for these project facil ities or any real property. Reclamation 

agrees to provide the City with n reasonable period, determined nt its sole 

discretion, to correct the situation. Reclamation will not nssume operations 

without consultation with the City. The City shall be responsible for all costs 

associated with Reclamation or its designee's usc and operation of Reaches 13 

nnd 27 water project infrastructure including all operation, maintenance and 

replacement (OM&R) costs. Reclamation shall take all reasonable steps to 

perform the OM&R in an efficient and cost effective manner. Reclamation will 

make all reasonable efforts, at no additional cost to Reclamation, to provide 

adequate service to City customers while providing service to Reach 14. 

Assumption of operations by Reclamation or its designee shall continue only so 

long as the City is unwilling or unable to perform its obligations hereunder. 

6. Rcclamat ion hereby grants the City of Gallup perm iss ion to connect Reaches 13 

and 27 to the federally owned and constructed portion of the Project where they 

connect with Reach 12b and Reach 14. 

i The City of Gallup indemnifies and holds harmless Reclamation for any aud all 

claims made by the Navajo Nation for failure to meet th e requirements of the 

Navajo Settlement Act due to the failure of the City, or its assigns and successors, 

to perform in accordance with the terms and conditions ofthi ~ document. 

8. Officials Not to Benefit: No Member of or Delegate to the Congress, Resident 

Commissioner shall benefit from this Contract other than as a water user or 

landowner in the same manner as other water users or landowners. 

9. The terms of this agreement arc subject to the Project operations being capable of 

delivery to Rench 13 the ncccssnry capacity. up to the authorized capacity, to 

meet unintcn·uptcd needs for Reach 27 and Reach 14 . Assurance of delivery of 

sufficient Project water to Rench 13 and Reach 27 shall be set forth In a separate 

agreement between the Project Participants and the Project operato r. 

I 0. Notices: Any notice, demand, or request authori zed or required by this Contract 

shall be deemed to have been given when mailed, postage prepaid. or delivered to 

the Regional Director. Upper Colorado Region, Oureau of ReclamAtion, 125 

South State Street, Room 6107, Salt Lake City, Utah 84 148-1192; orto the City 

Manager, City of Gallup, PO Box 1270, Gallup, NM 87305. The designation of 

the addressee or the address may be changed by notice given in the same manner 

as provided in this article for other notices. 

II. Assignment Limited-Succes ~o rs and Assigns Obll gated: The provisions of this 

Contract shall npply to and bind the successors and assigns of the parties hereto. 

All parties must provide wriuen notification, pursuant to Article I 0 above, of any 

assignment or transfer of this Contract or any right or interest therein. 

3 
12. Contingent Upon App.r.Qllii£tion or Allotment of Funds: The expenditure or 

advance of any money Of the pcrfonnonee of any obligation of the United States 

und~r this Contract shall be contingent upon appropriation or allotment of funds, 

subject to the completi on of Reaches 13 and 27. Absence of appropriation or 

allotment of funds shall not relieve the City from any obligations under this 

Contract. No liability shall accrue to the United States in case funds are not 

appropriated or allotted. 

13 . Books. Records. and Reports· The City shall establish and maintain accounts and 

other books and records pertaining to administration of the terms and conditions 

of this Contract, including the financial transactions; water supply data; operation, 

maintenance, and replacement logs and other matters that Reclamation may 

require. Rcpons shall be furnished to Reclamation no later than 45 days after such 

a request is made by Reclamation, with a provision for extending the time with 

reasonable justification. Subject to appl icablc Federal laws and regula I ions, each 

party to this Contract shall have the right during office hours to examine and 

make copies of the other party's books and records relating to matters covered by 

this Contract upon reasonable notice to the other party. 

14. Term of Agreement: This agreement shall become effective upon the date of 

execution listed above, and shall remain in full force and effect until the execution 

ofthc Project Operations Agreement as described in Navajo Settlement Act, 

Section I 0602(!)( l )(8) at which time this agreement shall expire. 

IN WITNESS WHEREOF, the parties have exect•tcd ihis Agreement the day and year 

first above written. 

CITY Of GALL UP 

May

lf or 

BUREAU OF RECLAMATION 

4 

\TI ~S . 

Uy 1J, ! __ . 

APPROVAL: 

Department of the Interior 
'• 

RESOLUTION NO. R2011-l._9 

A RESOLUTION AFFIRMING GOVERNING BODY APPROVAL OF THE REPAYMENT CONTRACT BETWEEN 

THE UNITED STATES AND CITY OF GALLUP, NEW MEXICO THROUGH RESOLUTION R2011-25 ON AUGUST 

17, 2011 ESTABLISHING TERMS AND CONDITIONS FOR THE REPAYMENT OF CAPITAL COSTS RELATED TO 

THE CONSTRUCTION OF THE NAVAJO-GALLUP WATER SUPPLY PROJECT, AND APPROVING THE 

REPAYMENT CONTRACT IN ITS FINAL FORM 

WHEREAS, the governing body of the City of Gallup, New Mexico approved t he Repayment Contract 

(Contract) between the United States and the City of Gallup, New Mexico on August 17, 2011, and 

WHEREAS, its approval of the Contract on August 17, 2011 was conditioned upon minor technical edits 

to the Contract, and 

WHEREAS, the Contract is now in final form, and 

WHEREAS, it is necessary that the Governing Body acknowledge the minor technical edits and approve 

the Contract in its final form; and 

NOW THEREFORE BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF GALLUP, NEW MEXICO 

that the Repayment Contract between the United States and City of Gallup, New Mexico as attached 

hereto in its final form is hereby approved, and that the Mayor is hereby authorized to execute the 

Contract. 

PASSED ADOPTED AND APPROVED THIS 13th DAY OF DECEMBER, 2011. 

CITY OF GALLU P, NEW MEXICO 

... \• ~ • A \• 

....... . :...... \ t: 

~· . Jackie McKinney, Mayor \ . .