1

1 Draft 07/06/2012CLEAN VERSION

2 Negotiation Meetings - 05/30/2012, 

3 and 06/29/2012. 

4 Contract No. ___________________

5

6 UNITED STATES OF AMERICA

7 DEPARTMENT OF THE INTERIOR

8 BUREAU OF RECLAMATION

9

10 ANIMAS-LA PLATA PROJECT 

11 NAVAJO NATION MUNICIPAL PIPELINE

12 COLORADO RIVER STORAGE PROJECT

13

14 OPERATIONS AGREEMENT BETWEEN THE UNITED STATES, 

15 THE NAVAJO NATION, 

16 AND

17 THE CITY OF FARMINGTON, NEW MEXICO

18

19

20

21

22 THIS OPERATIONS AGREEMENT, hereinafter referred to as the Operations 

23 Agreement, entered this________ day of_________________, 2012, pursuant to the 

24 Reclamation Act of June 17, 1902 (32 Stat. 388), and acts amendatory thereof or supplementary 

25 thereto, and particularly pursuant to the Colorado River Storage Project Act of April 11,1956 (70 

26 Stat. 105), the Colorado River Basin Project Act of September 30, 1968 (82 Stat. 896), the 

27 Colorado Ute Indian Water Rights Settlement Act of 1988 (P.L. 100-585), as amended by the 

28 Colorado Ute Settlement Act Amendment of 2000 (P.L. 106-554), which authorized the 

29 construction of the Animas-La Plata (A-LP) Project (A-LP Project), and Section 10605(b)(1)of 

30 Public Law 111-11 (Omnibus Public Land Management Act of 2009); among the UNITED 

31 STATES OF AMERICA, hereinafter referred to as the United States, acting through the 

32 Secretary of the Department of the Interior (Secretary), Bureau of Reclamation 

33 (Reclamation),and the NAVAJO NATION, a Federally recognized Indian Tribe; and the CITY 

34 OF FARMINGTON, New Mexico, hereinafter called the City; (collectively, “the Parties” to this 

35 Operations Agreement) acting through their representatives.

36

37 WITNESSETH, That: 

38

39 WHEREAS, Reclamation has constructed the Navajo Nation Municipal Pipeline 

40 (NNMP), a feature of the A-LP Project; and

41

42 WHEREAS, the City has the right and authority to manage, construct, alter, and perform 

43 Operations, Maintenance, and Replacement (OM&R) of the facilities and properties of the City’s 

44 water supply distribution system; and

45

Comment [BG1]: The following edits, as 

discussed in the June 29, 2010 negotiation meeting, 

have been implemented into this “CLEAN 

VERSION” draft.

1.Additional descriptions for Contracts for Water 

Delivery article.

2. Corrected sub article numbering.

3.Provided language under 4.3 C. 7&8

4.Not Discussed in Neg Meeting – Recommend 

“NTUA” instead of “the Navajo Nation” in 

section 3.2

5.Added language - 4.3 A. 4.
2

1 WHEREAS, The Navajo Nation has established the Navajo Tribal Utility Authority 

2 (NTUA) as an enterprise of the Navajo Nation, with authority to acquire and perform OM&R of 

3 utility systems throughout the Navajo Nation, including the performance of OM&R of a water 

4 supply distribution system for water users within, and in the vicinity of, the community of 

5 Shiprock, New Mexico, and to accomplish this purpose, NTUA requires a supply of treated 

6 water; and

7

8 WHEREAS, the City owns and operates the Farmington water supply distribution system 

9 with a capacity currently capable of serving the present customers of the City’s system, and those 

10 reasonably expected to become customers of the City in the future, and with sufficient capacity 

11 to furnish NTUA with treated potable water; and

12

13 WHEREAS, by approval from the Farmington City Council and signature by the mayor, 

14 the City has granted to NTUA a utility easement for access to Tract 1 for the purpose of OM&R 

15 of the Crossing Section; and 

16

17 WHEREAS, by letter dated June 13, 2008, NTUA agrees to OM&R the NNMP in 

18 accordance with conditions stated within the letter; and

19

20 WHEREAS, by Public Law 111-11, Section 10605(b), states that on completion of the 

21 NNMP, the Secretary may enter into separate agreements with the City and the Navajo Nation to

22 convey title to each portion of the NNMP facility or section of the NNMP to the City and the 

23 Navajo Nation after execution of a A-LP Project operations agreement approved by the 

24 Secretary, the City, and the Navajo Nation that sets forth any terms and conditions that the 

25 Secretary determines are necessary; and 

26

27 WHEREAS, by Public Law 111-11, Section 10605(b)(2)(A), the Secretary shall convey 

28 to the City, the facilities and any land or interest in land acquired by the United States for the 

29 construction, operation, and maintenance of the NNMP that are located within the corporate 

30 boundaries of the City; and

31

32 WHEREAS, by Public Law 111-11, Section 10605(b)(2)(B), the Secretary shall convey 

33 to the Navajo Nation, the facilities and any land or interests in land acquired by the United States 

34 for the construction, operation, and maintenance of the NNMP that are located outside the 

35 corporate boundaries of the City; and 

36

37 WHEREAS, the Parties hereto desire to enter into this Operations Agreement in order to 

38 secure operations protocol for this Municipal and Industrial (M&I) water supply, pursuant to the 

39 terms and conditions of Public Law 111-11, for the use of such water in and for the benefit of the 

40 Navajo Nation as hereinafter provided; and

41

42 WHEREAS, the United States will deliver to the Navajo Nation, an M&I water allocation 

43 with an average annual depletion not to exceed 2,340 acre feet per year from the A-LP Project 

44 water supply under New Mexico State Engineer file number 2883, pursuant to the Navajo 

45 Settlement Contract (number 10-WC-40-384), dated December 18, 2010, parts I, III, V & VI. 
3

1 THEREFORE, the Parties recognize the following terms and conditions herein to 

2 constitute an Operations Agreement for the NNMP and the Parties agree as follows: 

3

4

5 1. DEFINITIONS

6

7 When used in this Operations Agreement, unless otherwise distinctly expressed or 

8 manifestly incompatible with the intent hereof, the following definitions shall apply:

9

10 1C Water Zone – The area served by gravity flow from the Farmington 1C water tank. 

11

12 2000 Amendments – Title III of Public Law 106-554 referred to as Colorado Ute 

13 Settlement Act Amendments of 2000.

14

15 City-Nation Boundary Point – The point where the centerline of the NNMP crosses the

16 boundary between the City and the Navajo Nation in the approximate vicinity of 36° 43' 

17 56.2" N, 108° 15' 8.58" W, (San Juan County, New Mexico). 

18

19 Conveyance Contract – The City of Farmington and Navajo Tribal Utility Authority 

20 Water Treatment and Conveyance Contract entered December 18, 2007, provided herein 

21 incorporated as Exhibit A.

22

23 Crossing Section– The pipeline section of the Farmington Reach, constructed by the 

24 United States, located within the corporate boundaries of the City, straddling the San 

25 Juan River, from the Delivery Point to the City-Nation Boundary Point. 

26

27 Delivery Point – the point at the meter/valve vault on the Farmington Reach, located on 

28 the northeast side of the San Juan River in the approximate vicinity of 

29 36°44’05.61493”N, 108°14’55.30147”W, (San Juan County, New Mexico). 

30

31 Farmington Reach – The portion of the NNMP extending approximately 2.8 miles from 

32 the City’s 1C water tank and appurtenances to the City-Nation Boundary Point. 

33

34 MOU – Memorandum of Understanding, dated November 27, 2006 among the Navajo 

35 Nation, City, and Reclamation for the design, construction, and ownership of the 

36 Farmington Reach of the NNMP, provided herein incorporated as Exhibit B. 

37

38 NNMP – The Navajo Nation Municipal Pipeline means the pipeline used to convey the 

39 water of the Animas-La Plata Project of the Navajo Nation from the City of Farmington,

40 New Mexico, to communities of the Navajo Nation located in close proximity to the San 

41 Juan River Valley in the State of New Mexico, as authorized by Section 15(b) of the 

42 2000 Amendments.

43

44 Statutory Water Allocation – The M&I water allocated to the Navajo Nation through 

45 the use of NNMP components, pursuant to Sec. 6(a)(1)(ii)(VII) of the 2000 Amendments.

46

Comment [WCAO2]: City to look further into 

coordinate 

Comment [PW3]: City of Farmington to field 

verify location at valve vault – and possible language 

to further define
4

1 Tract 1 – The tract of land designated as Tract 1 in the Utility Easement and Temporary 

2 Construction Easement, and recorded with the San Juan County Clerk at Book 1478 Page 

3 904, on July 16, 2008, provided herein incorporated as Exhibit C. 

4

5 2. CONTRACTS FOR WATER DELIVERY

6

7 2.1 The Navajo Nation, City, and Reclamation entered into; Memorandum of 

8 Understanding, executed November 27, 2006. This understanding is for the design, 

9 construction, and ownership of the Farmington Reach of the NNMP, herein

10 incorporated as Exhibit B. 

11 2.2 The City and NTUA entered into; Water Treatment and Conveyance Contract,

12 executed December 18, 2007. This contract is a 40-year term with a 10-year 

termination notice on the 30th 13 year of the contract, herein incorporated as Exhibit A. 

14 This Conveyance cContract supersedes the December 22, 1998 dated contract, herein 

15 incorporated as Exhibit A.

16 2.3 The United States and the City entered into Contract Number 07-WC-40-270;

17 Contract between the United Stated and the City of Farmington, New Mexico for 

18 Right of Capacity in Farmington Reach, herein incorporated as Exhibit D. This 

19 contract obligates sufficient capacity in the Farmington Reach to make available

20 4,680 acre-feet of water per year for the beneficial use of the Navajo Nation.

21 2.4 The United States and the Navajo Nation entered into Contract Number 10-WC-40-

22 384, Navajo Settlement Contract, executed December 17, 2010. This contract

23 provides terms and conditions for the Statutory Water Allocation including, but not 

24 limited to, the Navajo Nation’s OM&R responsibilities and water delivery provisions 

25 associated with the NNMP. 

26

27 3. GENERAL PROVISIONS

28

29 3.1 Compliance with Federal Law

30 The terms of this Operations Agreement are subject to and governed by applicable 

31 federal law. 

32 3.2 Other Agreements

33 This Operations Agreement is not intended to conflict with terms of any prior 

34 agreements or contracts between the City and NTUA, or the City and the United 

35 States, or NTUA the Navajo Nation and the United States, or among all of the 

36 Parties; however, this Operations Agreement represents the current conditions and 

37 present understanding that future OM&R shall be as provided for herein unless 

38 further modified upon having reached unanimous consent of the Parties.

39 3.3 Appropriations

40 Nothing contained in this Operations Agreement shall be construed as binding the 

41 United States to expend in any one fiscal year any sum in excess of appropriations 

42 made by Congress for the purposes of this Operations Agreement for that fiscal year 

43 or as involving the United States in any contract or other obligation for the further 

44 expenditures of money in excess of such appropriations. 

45 3.4 Modification of Agreement
5

1 The Parties may modify any provisions of this Operations Agreement upon having 

2 reached unanimous written consent. 

3 3.5 Assignment Limited – Successors and Assigns Obligated

4 The provisions of this Operations Agreement shall apply to and bind the successors 

5 and assigns of the Parties hereto. No assignment of any right of obligation shall be 

6 made by any Party without first obtaining written approval by the other Parties. 

7 3.6 Notices

8 Any notice, demand, or request authorized or required by this Operations Agreement 

9 shall be deemed to have been given, on behalf of any Party when mailed, certified 

10 postage prepaid, or delivered to the respective authorized representatives of the 

11 Parties to this Operations Agreement. The designation of the addressee or the 

12 address may be changed by notice given in the same manner as provide in this article 

13 for other notices.

14

15 For The Navajo Nation:

16

17 President

18 The Navajo Nation

19 P.O. Box 9000 

20 Window Rock, AZ 86515

21 (928) 871-6000

22

23 Director 

24 Navajo Department of Water Resources

25 P.O. Box 678

26 Ft. Defiance, AZ 86504

27 (928) 729-4003 

28

29 For The Navajo Tribal Utility Authority:

30

31 Deputy General Manager

32 P.O. Box 170

33 Ft. Defiance, AZ 86504

34 (928) 729-5721

35

36 For The City of Farmington, New Mexico:

37

38 Mayor and Director of Public Works

39 City of Farmington

40 800 Municipal Dr.

41 Farmington, NM 87401

42 (505) 327-7701 

43

44 For Reclamation:

45

46 Area Manager
6

1 Western Colorado Area Office

2 2764 Compass Drive Suite 106

3 Grand Junction, CO 81506

4 (970) 248-0600

5

6

7 NOW, THEREFORE, in consideration of the mutual and dependent covenants herein 

8 contained, the Parties hereto agree as follows:

9

10 4. TERMS AND CONDITIONS

11

12 4.1 Terms and conditions the Secretary determines necessary include:

13 A. The Navajo Nation and the City, at their own expense, without expense to the

14 United States shall own and be responsible for the OM&R of their respective 

15 portions of the NNMP in full compliance with the terms of this Operations

16 Agreement.

17 B. The Navajo Nation will receive 4,680 AFY (2,340 AFY depletion) and will

18 use it in accordance with Parts I, III, V and VI of the Navajo Settlement 

19 Contract.

20 C. Any additions, changes to, or operation of ALP Project works or changes in 

21 use of the water allocations pursuant to Sec. 6(a)(1)(A)(ii) of the Colorado Ute 

22 Settlement Act Amendments of 2000, as amended, from that stated in the 

23 Animas-La Plata Final Supplemental Environmental Impact Statement 

24 (FSEIS) dated July 2000 and subsequent Record of Decision dated September 

25 25, 2000, shall, as required by law, be subject to further compliance with 

26 applicable environmental statutes, which shall include an analysis of potential 

27 impacts on ALP Project Sponsors. 

28 D. To ensure the continuation of the intended benefits of the NNMP.

29

30 4.2 Operation, Maintenance, and Replacement:

31 A. The accounting and management of water conveyance and NNMP finances, 

32 as necessary to administer and fulfill the conditions required for the 

33 conveyance of water

34 B. The allocation and payment of annual OM&R costs of the NNMP or section 

35 of a NNMP facility based on the proportionate uses of NNMP facilities.

36 C. The City and NTUA would conduct ground inspection of the pipelines, 

37 pumping plants, water treatment plants, and water storage facilities on a 

38 regular basis for evidence of excavation activity on or near the right-of-way 

39 by landowners or other parties, erosion and wash-out areas, areas of sparse 

40 vegetation, damage to permanent erosion control devises, exposed pipe, and 

41 other potential problems that might affect the safety and operation of the 

42 pipeline and all associated facilities from the 1C water tank to the Delivery 

43 Point. 

44

45

46 4.3 Responsibilities:

Comment [BG4]: From PART III (11) (d) of 

Navajo Settlement Contract. 

Comment [BOR5]: NN - Is this an expansion of 

5.1A? Is there some reason why the U.S. feels the 

need to tell these utilities how to conduct OM&R 

activities?
7

1 A. The Navajo Nation agrees to the following:

2 1. The Navajo Nation and/or their representative enterprise will work 

3 diligently to enter into future mutually beneficial water delivery 

4 contract(s) with the City.

5 2. The Navajo Nation and/or their representative enterprise will work 

6 diligently to enter into an ownership transfer agreement with the City 

7 for the Crossing Section.

8 3. The Navajo Nation has entered into the Conveyance Contract and 

9 hereby agrees to comply with the terms and conditions within.

10 3.4.The NTUA shall be responsible for OM&R of all portions of the

11 NNMP downstream from the Delivery Point. 

12 

13 B. The City agrees to the following:

14 1. The City shall owns, and shall be responsible for OM&R of the

15 portion of the Farmington Reach from the City’s 1C Water Tank to the 

16 Delivery Point. 

17 2. The City shall abide by the terms and conditions of the Right of 

18 Capacity Agreement.

19 3. The City will work diligently to enter into future mutually beneficial 

20 water delivery contract(s) with the Navajo Nation and/or their 

21 representative enterprise.

22 4. The City will work diligently to enter into an ownership transfer 

23 agreement for the Crossing Section with the NTUA.

24 5. The City has entered into the Conveyance Contract and hereby agrees 

25 to comply with the terms and conditions within.

26 6. The City has designed, and constructed, and after title transfer will 

27 owns, and OM&R the portion of the Farmington Reach from the 

28 City’s 1C Water Zone through the meter/valve vault to the Point of 

29 Delivery Point. The City also has will OM&R responsibilities for the 

30 metering equipment, which includes an adequately sized meter, a 

31 meter housevault, and required standard devices for properly 

32 measuring the quantity of water delivered to NTUA. The City will 

33 calibrate this metering equipment, within two (2) percent of the test 

34 result, at least once every twelve (12) months 

35 

36 C. Both the Navajo Nation and City agree to the following:

37 1. The United States has constructed and after conveyance of title, the 

38 City will own the Crossing Section. During the life of the Farmington 

39 Reach, Reclamation will own a capacity right to furnish NTUA with 

40 the quantities of water agreed to in the Right of Capacity Agreement. 

41 Upon its completion, the City shall OM&R the pipeline and equipment 

42 upstream of, and through, the meter/valve to the Delivery Point. And, 

43 after title transfer by the Secretary, the City will own, and NTUA will 

44 OM&R the Crossing Section pipeline and all equipment downstream 

45 from the meter/valve at the Delivery Point. 

Comment [BG6]: Moved from NN agrees 

section. 

Comment [PW7]: See comments above
8

1 2. Reclamation will have a right of capacity in the Farmington Reach 

2 such that the capacity of water for delivery to NTUA discussed in 

3 Section 15b of the 2000 Amendments is protected. At such time in the 

4 future, if the Navajo Nation and the City determine that it is no longer 

5 necessary to utilize the Farmington Reach in order to obtain its water 

6 supply, Reclamation and the City will enter negotiations over the 

7 potential transfer of the right of capacity, subject to applicable state 

8 and federal law and potential approval by Congress, if required. The 

9 City may not transfer ownership of any portion of the necessary 

10 facilities constructed pursuant to the MOU, or this Operations 

11 Agreement, nor alienate or encumber such facilities in any manner 

12 without the express written consent of Reclamation or its assignee.

13 3. After title transfer, outlined in Article 54.4 herein, of the Crossing 

14 Section from the Secretary to the City, the City will own, and NTUA 

15 will OM&R the Crossing Section downstream from the Delivery 

16 Point. After title transfer from the Secretary to the City, the City may 

17 transfer ownership of the Crossing Section pipeline to the Navajo 

18 Nation. During such time, NTUA shall perform OM&R of the 

19 Crossing Section pipeline

20 4. The City and Navajo Nation both agree to conform to the Operation 

21 and Maintenance Procedures and Impacts within the A-LP FSEIS, 

22 Volume 1, Chapter 2.

23 5. The City and Navajo Nation both agree OM&R of the NNMP will be 

24 in accordance with the Environmental Commitments in Chapters 4 and 

25 5 of the FSEIS.

26 6. In the event of an Act of God or Force Majeure event that impacts the 

27 City’s water treatment or conveyance capacity, the supply of water to 

28 NTUA will be reduced in the same ratio or proportion that the supply 

29 of water to the City’s other users is reduced.

30 7. Effective on the date of the conveyance of title authorized by Public 

31 Law 111-11, Section 10605, the United States shall not be held liable 

32 by any court for damages of any kind arising out of any act, omission, 

33 or occurrence relating to the facilities conveyed, other than damages 

34 caused by acts of negligence committed by the United States or by 

35 employees or agents of the United States prior to the date of 

36 conveyance.

37 8. Upon execution of this Operation Agreement, United States shall not

38 be further responsible for OM&R of any portion of the NNMP. 

39 OM&R shall be performed by the City or the NTUA for their 

40 respective responsibility.

41

42 D. The United States agrees to the following

43 1. 

44

45 4.4 Conveyance of Title:

Comment [BG8]: Moved from NN section.

Comment [BG9]: Moved from NN section.

Comment [BG10]: Proposed language being 

drafted. 
9

1 A. Conveyance of titles shall occur after execution of this Operations Agreement 

2 in separate title transfer agreements with the City and the Navajo Nation.

3 

4 5. DISTRIBUTION OF WATER

5

6

7 5.1 The Parties to this Operations Agreement agree that any unforeseen restriction in the 

8 capacity for the augmentation of water in NNMP will be shared by such Parties on a 

9 pro-rata basis.

10 5.2 If there is a shortage in capacity and/or delivery because of errors in physical 

11 operations of the Project, drought, other physical causes beyond the control of 

12 Reclamation or actions taken by Reclamation to meet current and future legal 

13 obligations, then no liability shall accrue against the United States or any of its 

14 officers, agents, or employees for any damage, direct or indirect, arising therefrom.

15 

16 5.6.TERM OF THIS OPERATIONS AGREEMENT

17

18 This Operations Agreement shall become effective upon the date of execution and 

19 shall remain in effect for a period of 25 years from the date of execution. Prior to 

20 expiration, this Operations Agreement may be renewed for an additional term of 

21 25 years upon mutual agreement of the Parties hereto. Any such renewal shall be 

22 subject to federal and state law in existence at the time of renewal. Upon transfer 

23 of title to the City and the Navajo Nation in accordance with Section 10605(b)(1) 

24 of P.L. 111-11 and the MOU, this Operations Agreement shall either be assumed, 

25 or terminated as provided. In either event, all rights of Reclamation hereunder, 

26 and all duties and obligations owed by the City and Navajo Nation to Reclamation 

27 hereunder, shall cease and terminate, and Reclamation shall no longer be 

28 considered a “Party” hereunder, effective upon such title transfer.

29

30

31

32

33

34

Comment [BG11]: End of June 29, 2012 

Negotiation Meeting. 

Comment [BOR12]: NN – What does this 

mean?

Comment [WCAO13]: . Should have been 

covered in NN Settlement Contract.

Comment [BG14]: Reclamation believes all of 

Article 5 can “go away”. 

Comment [BOR15]: NN – Is there a required 

timeframe between the execution of the operations 

agreement and the transfer or title?

Comment [WCAO16]: This Operations 

Agreement may go “hand in hand” with the Title 

Transfer Agreement(s). Other documents will also 

be required for the Title Transfer. 
10

1 IN WITNESS WHEREOF, the Parties hereto have caused this Operations Agreement to be duly 

2 executed on the date first above written.

3

4

5

6

7 ATTEST: THE NAVAJO NATION

8

9

10

11 By: _____________________________ By: ____________________________

12 Ben Shelly

13 President

14 Navajo Nation

15

16

17

18 ATTEST: CITY OF FARMINGTON, NEW MEXICO

19

20

21

22 By: _____________________________ By: _____________________________

23 Dianne Fuhrman Tommy Roberts

24 City Clerk Mayor

25 City of Farmington, NM City of Farmington, NM

26

27

28

29 ATTEST: UNITED STATES OF AMERICA, BUREAU OF RECLAMATION

30

31

32

33 Approved: _______________________ By: __________________________

34 Office of the Solicitor Larry Walkoviak

35 Regional Director, Upper Colorado Region

36

37

38

39 List of Attachments: Exhibit A – City of Farmington and Navajo Tribal Utility Authority Water 

40 Treatment and Conveyance Contract

41 Exhibit B – Memorandum of Understanding

42 Exhibit C – Letter from City of Farmington containing Tract 1 recording

43 Exhibit D – Right of Capacity in Farmington Reach Contract

44

45