News Release

Oct. 29, 2003

Regional Entities To Consider 2004 San Juan Basin
Shortage Sharing Principles and Recommendations

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NEWS MEDIA CONTACT Susan Sponar Telephone: (505) 241-2768

Farmington: For the second consecutive year, shortage sharing principles and recommendations on water usage have been developed for consideration by 10 entities to address a serious drought in the Four Corners region.

The principles and recommendations, which will require approval by all signatory parties and acceptance by the State Engineer and the Bureau of Reclamation (BOR), outline a voluntary shared shortage water plan based on reasonable use to address anticipated shortages for next year. Mid January of 2004 is the target date for approvals by the signatory entities.

The entities to be involved in the 2004 principles include the Navajo Nation; the Jicarilla Apache Nation; Public Service Company of New Mexico (PNM, owner and operator of the San Juan Generating Station); Arizona Public Service Co. (APS, owner and operator of the Four Corners Power Plant); BHP Billiton (BHP, owner and operator of the Navajo, San Juan and La Plata mines); the Hammond Irrigation Project; the City of Farmington; the Jewett Valley Ditch; the Farmers Mutual Ditch; and the Bloomfield Irrigation District.

Without setting precedent for resolution of regional water rights issues, the 2004 recommendations, if adopted, will allow all signatory parties to benefit from storage in Navajo Reservoir while protecting the dam as well as the irrigation outlet works and water deliveries for the Navajo Indian Irrigation Project. State water rights holders (direct flow users from the river) benefit from the lake water used to supplement the natural river flow during the low flow summer months.

In connection with the shortage sharing arrangement, PNM, APS and BHP will contract to lease water from the Jicarilla Apache Nation during 2004 for use at the power plants and mines. The contracts with the Jicarillas, which require final approval by the BOR, will allow the plants to use up to 16,000 acre-feet (AF) of Navajo Reservoir water to replace water that power plants would ordinarily have during a normal year but may not be available during 2004 if a shortage occurs.

As part of the 2004 agreement, PNM, APS and BHP have once again committed to paying between $240,000 and $1.2 million into a fund to assist signatory party irrigators who voluntarily take water shortages. Even though late season rains resulted in the 2003 irrigation season ending without a shortage, the signatory party irrigators are currently in the process of obtaining their portions of the minimum payment of $240,000 as promised under the 2003 agreement.

The10 entities considering the 2004 plan entered into a similar agreement for the summer of 2003. Through conservation efforts and capital improvements made in 2003, all of the entities used less water than in previous years. The power plants and mines voluntarily reduced consumption by five percent. Navajo Agricultural Products Industries (NAPI) led the conservation efforts by saving an estimated 25,000 AF of water in the region. A small portion of this conservation water may be utilized by NAPI under the 2004 recommendations.

"These shortage sharing arrangements are unprecedented examples of tribal, governmental, agricultural and industrial water users working together to establish water priorities and address shortage issues without litigation," said John Whipple, Basin Manager, New Mexico Interstate Stream Commission. "This kind of agreement is an excellent model to use as this region continues to face tough challenges regarding water usage and conservation."