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F I S C A L I M P A C T R E P O R T

SPONSOR Neville

ORIGINAL DATE

LAST UPDATED

2-4-2008

2-8-2008 HB

SHORT TITLE Approve Navajo Water Rights Settlement

SM 37/aSRC

ANALYST Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to: HM 43, SJM 18.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Indian Affairs Department (IAD)

Office of the State Engineer (OSE)

SUMMARY

Synopsis of SRC Amendment

As included on page 1, line 22; and page 2, line 9, Senate Rules Committee amendment to

Senate Memorial 37 clarifies language. Specifically, the amended sections now read:

1. “WHEREAS, the priority date of these diversions, 1868, is significantly older than non-

Navajo rights;" and

2. “BE IT FURTHER RESOLVED that, as part of the settlement, congress be requested to

support provisions for storage up to thirty thousand acre-feet of water in Navajo lake to be

used by non-Navajo irrigators in times of severe drought and water shortages;"

The amendment adds no appropriation to the legislation.

Senate Memorial 37/aSRC – Page

2

Synopsis of Original Bill

Senate Memorial 37 requests that the New Mexico Senate request the United States Congress to

approve the Navajo Nation Water Rights Settlement negotiated by the State of New Mexico and

the Navajo Nation.

SIGNIFICANT ISSUES

IAD advises that the State of New Mexico and the Navajo Nation, on April 19, 2005, signed a

water rights settlement agreement to resolve the claims of the Navajo Nation for the use of

waters of the San Juan River Basin in northwestern New Mexico.

1

Further, according to the

Office of the State Engineer (“OSE"), the settlement agreement is intended to adjudicate the

Navajo Nation’s water rights and provide associated water development projects for the benefit

of the Navajo Nation.

2

This is in exchange for a release of claims to water that could potentially

displace existing non-Navajo water users in the San Juan basin and seriously impact the local

economy.

3

Additionally, the settlement agreement would establish the water rights of the Navajo

Nation in the San Juan Basin in New Mexico.

4

The OSE further provides that the settlement

agreement would draw to a close more than 20 years of efforts to adjudicate the Navajo Nation’s

water right owners, protect existing uses of water, allow for future growth, and would do so

within the amount of water apportioned to New Mexico by the Colorado River Compacts.

5

The

Settlement Agreement will become effective if the Congress passes the Settlement Act and the

President signs the act into law.

6

Currently, the Northwestern New Mexico Rural Water Supply

Act, which would authorize the Settlement Agreement and authorize the construction of the

Navajo-Gallup Water Supply Project, is pending in the United States Congress. As background,

IAD offers the following timeline and commentary:

On December 7, 2006, Senator Bingaman and Representative Udall introduced

legislation - S. 4108 and HR 6436 - to authorize and fund the settlement.

7

On April 12,

2007, the legislation was reintroduced in the 110

th

Congress by Senators Bingaman and

Domenici (S.1171) and Representative Udall (HR 1970).

8

On June 27, 2007, Mr. John D’Antonio, New Mexico State Engineer, gave testimony

9

to

the Senate Energy and Natural Resources Committee regarding the settlement

legislation.

10

On July 24, 2007, Mr. Jim Dunlap, Chairman of the Interstate Stream

1

http://www.ose.state.nm.us/legal_ose_proposed_settlements_sj.html

, last accessed January 12, 2008.

2

Ibid.

3

Ibid.

4

Ibid.

5

Ibid.

6

Executive Summary of the San Juan River Basin in New Mexico Navajo Nation Water Rights Settlement, April

19, 2005. Can be accessed at: http://www.ose.state.nm.us/water-

info/NavajoSettlement/NavajoExecutiveSummary.pdf

.

7

Office of the State Engineer and Interstate Stream Commission, 2007 Indian Water Rights Settlement Fund Report.

The 2005 Indian Water Rights Settlement Fund Act (2005 N.M. Laws, ch. 172, §1.B; NMSA 1978, § 72-1-11 (B))

requires the State Engineer and the Interstate Stream Commission to report by November 15

th

every year to the

Interim Indian Affairs Committee and to the Legislative Finance Council.

8

Ibid.

9

Mr. D’Antonio’s written testimony can be accessed at

http://energy.senate.gov/public/index.cfm.FuseAction=Hearings.Hearing&Hearing_ID=1637

.

10

The archived webcast can be downloaded at

http://energy.senate.gov/public/index.cfm.FuseAction=Hearings.Hearing&Hearing_ID=1637

.

Senate Memorial 37/aSRC – Page

3

Commission, gave testimony to the House Subcommittee on Water and Power of the

Natural Resources Committee.

11

In general, Mr. D’Antonio believes “the Navajo

settlement is fair to both Navajo and non-Indian water users in the San Juan Basin in New

Mexico because it removes the cloud of unsettled Navajo water rights and brings real

promise of safe drinking water to Northwest New Mexico."

12

In his testimony before the United States Senate Committee on Energy and Natural

Resources concerning S. 1171, Navajo Nation President Shirley testified that:

[m]any of the 80,000 Navajo men, women, and children who live within the project

service area, including Navajo Code Talker Frank Chee Willeto, presently haul

water for drinking and cooking. Although construction of the project will not

necessarily eliminate all water hauling on the reservation, this project will allow the

Indian Health Service to expand distribution systems to provide potable water

delivery to more homes, and creates growth corridors within the Navajo Nation

where future communities can be built with ready access to roads, electricity and

potable water. As such, this project represents a critical component of the Navajo

Nation’s economic development strategy. While construction of the pipeline may

not represent a condition sufficient to ensure economic prosperity for the Navajo

People, surely such prosperity will never be possible in the absence of a sustainable

potable water supply.

13

IAD concludes that the City of Gallup and the Jicarilla Apache Nation would also be

beneficiaries of the Northwestern New Mexico Rural Water Supply Project. According to State

Engineer D’Antonio “[i]t is estimated that by 2040, the Navajo Settlement pipeline will serve

approximately 250,000 people in Northwest New Mexico, including residents of Gallup."

14

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

IAD notes:

SM 37 relates to HM 43 in that the language is similar. However, SM 37 would be an

expression of the New Mexico Senate’s desire to request the United States Congress to

approve the Navajo Nation Water Rights Settlement. HM 43 would be an expression of

the New Mexico House’s desire to do the same.

SM 37 relates to SJM 18 which would request both houses of the New Mexico

Legislature to express its support of the Navajo Nation Water Rights Settlement

Agreement and request Congress to approve the Northwestern New Mexico Rural Water

Projects Act. SM 37 differs from SJM 18 in that SJM 18 was endorsed by the Interim

Indian Affairs Committee

11

Mr. Dunlap’s written testimony can be accessed at

http://resourcescommittee.house.gov/index.php.option=com_jcalpro&Itemid=32&extmode=view&extid=90

.

12

“Op-Ed: The San Juan Basin Settlement is Good for New Mexico" by John D. Antonio, NM State Engineer.

http://www.ose.state.nm.us/PDF/News/2007/pr-2007-03-30-oped-SanJuanSettlement.pdf

.

13

Testimony of President Joe Shirley, Jr., Navajo Nation, Before the Senate Committee on Energy and Natural

Resources Concerning S. 1171 – Northwest New Mexico Rural Water Projects Act. Can be accessed at:

http://energy.senate.gov/public/index.cfm.FuseAction=Hearings.Hearing&Hearing_ID=1637

.

14

Ibid.

Senate Memorial 37/aSRC – Page

4

TECHNICAL ISSUES

OSE advises that on page 1, line 22: Change “1858" to “1868", the correct priority date for the

diversions referenced in that paragraph.

OTHER SUBSTANTIVE ISSUES

OSE indicates that the Navajo Settlement Agreement would resolve the water rights claims of

the Navajo Nation to the use of waters of the San Juan basin in New Mexico. Federal legislation

for Congress to approve the Settlement Agreement was introduced in Congress early in 2007 (S.

1171 and H.R. 1970, the Northwestern New Mexico Rural Water Projects Act). Hearings on the

legislation were held in June and July 2007. SM 37 requests that Congress support a provision

for storage of water at Navajo Reservoir for the benefit of non-Navajo irrigators that does not

currently exist in the Settlement Agreement or the federal legislation. Therefore, amendments

may be required in the Settlement Agreement and/or federal legislation to fulfill the intent of SM

37. Under section 11(a) of Public Law 87-483 (authorizing the Navajo Indian Irrigation Project

and the San Juan-Chama Project), no person or entity is entitled to water stored in Navajo

Reservoir without a contract with the Secretary of the Interior. Therefore, no new contract for

storage in Navajo Reservoir could be issued without negotiation with, and approval of, the

United States. In addition, PL 87-483 provides that the Secretary of the Interior must certify to

Congress that sufficient water is reasonable likely to be available to satisfy the terms of the

contract.

OSE further indicates that the Hogback irrigation project has an 1868 priority date, which is

senior to the non-Indian irrigation diversions in the basin, and thus priority administration under

state law could cause non-Indian irrigation diversions to be curtailed so that the Hogback

project’s diversion needs are met first. To reduce the potential for such priority administration,

an existing provision in the Settlement Agreement provides that the Navajo Nation would be

required to transfer up to 12,000 acre-feet of its Navajo Reservoir storage water from the NIIP to

the Hogback project in any one year as an alternative to meeting the Hogback project demands

before any priority administration would occur. This alternative water supply for the Hogback

project, in effect, provides a measure of protection to non-Indian irrigators against the possible

occurrence of curtailment in all but the most severe drought years.

OSE concludes that further means of firming water supplies for existing non-Indian irrigation

uses in the basin during times of severe drought, including the potential for additional storage at

Navajo Reservoir, are being evaluated by the Interstate Stream Commission. Some of the issues

currently being evaluated include: (1) limitations on the transfer of non-Indian irrigation rights to

storage and on the utility of using a top water bank to store water for later use by the non-Indian

irrigators; (2) possible rules and regulations for operating a top water bank; (3) conditions for the

non-Indian irrigation ditches to ensure that storage water is used for supplemental irrigation of

existing farmland and not project expansions; (4) identification of an appropriate contracting

entity that can ensure payment for storage water and ensure that the non-Indian ditches and

irrigators comply with any conditions for providing water under a contract; and (5) impacts of a

Navajo Reservoir supply contract for supplemental irrigation uses under non-Indian ditches on

other Navajo Reservoir supply contracts for uses in New Mexico; (6) impacts on flows for

conservation of San Juan River populations of endangered fish species.

Senate Memorial 37/aSRC – Page

5

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

IAD suggests that if SM 37 is not enacted, “the United States Congress may not be made aware

of the support that the New Mexico House has expressed about the Navajo Nation Water Rights

Settlement Agreement."

BFW/mt