Volume 7 Issue 3 March 2016

Life After Title Transfer in the Loup Basin: A Conversation With Matt Lukasiewicz

Title Transfer By Kris Polly

T

he Bureau of Reclamation developed irrigation projects in the 17 western states that provide water to over 10 million acres of farmland. Managed directly by irrigation districts with locally elected boards of directors, the districts are responsible for the operation and maintenance of their facilities; however, the title or actual ownership of the districts is held by Reclamation. Historically, Congress appropriated funding to Reclamation for the construction of the irrigation projects and large scale repairs that would be paid back through negotiated contracts with the respective districts. In times of limited federal budgets, however, obtaining needed funding through Reclamation and its various programs is problematic. The money simply is not available in the amounts and terms needed. While districts have the ability to issue bonds, those districts owned by the federal government may only use their revenue streams as collateral. They cannot borrow against their land or facilities because they do not own them. This issue of Irrigation Leader discusses title transfer from the perspectives of managers and board members of five separate successful title transfers and the work they have been able to do as a result of their respective title transfers. Matt Lukasiewicz, Tom Knutson, and Arlan Hosteltler share their experiences related to the Loup basin transfer. Bennie Hodges, Rick Dieker,

Dale Swensen, and Gary Esslinger all discuss the many extraordinary challenges associated with their transfers. Additionally, we have a guest column from James Hess of Reclamation, who does an excellent job of outlining the various issues that must be addressed when considering title transfer. Chairman Rob Bishop of the House Natural Resources Committee correctly points out that of the hundreds of irrigation districts created by Reclamation, only 27 have successfully obtained title transfer in the last 20 years. Chairman Bishop extols the virtues of title transfer for districts and the federal government while offering his commitment to work with Reclamation and those interested in pursuing transfers. It is our hope this issue of Irrigation Leader is helpful to those who may be in need of the borrowing collateral a title transfer can provide and a contact list of seasoned title transfer veterans. I know everyone in this issue would welcome your phone calls and questions about title transfer. Kris Polly is editor-in-chief of Irrigation Leader magazine and president of Water Strategies LLC, a government relations firm he began in February 2009 for the purpose of representing and guiding water, power, and agricultural entities in their dealings with Congress, the Bureau of Reclamation, and other federal government agencies. He may be contacted at Kris. [email protected].

Are you Advertising in Irrigation Leader? Do you have a product or service of value to the agricultural producer or water provider communities? Are you a leader in your field? If so, we invite you to advertise in Irrigation Leader magazine.  Published 10 times a year, Irrigation Leader is a forum for water professionals and policymakers to discuss key issues and challenges of the day.

Irrigation Leader is distributed to more than 10,000 agricultural water professionals, including irrigation district managers and boards of directors in the 17 western states, Bureau of Reclamation officials, members of Congress and committee staff, and irrigation-associated businesses.

For more information, please contact Kip Polly at

(308) 350-8183 or [email protected] 2

Irrigation Leader

MARCH 2016

C O N T E N T S 2 Title Transfer

VOLUME 7

ISSUE 3

Irrigation Leader is published 10 times a year with combined issues for July/August and November/December by Water Strategies LLC 4 E Street, SE Washington, DC 20003

By Kris Polly

4 Life After Title Transfer in the

Loup Basin: A Conversation With Matt Lukasiewicz

10 Life Before Title Transfer in the Loup Basin

STAFF: Kris Polly, Editor-in-Chief John Crotty, Senior Writer Robin Pursley, Graphic Designer Capital Copyediting LLC, Copyeditor

14 Transfer From the Board

SUBMISSIONS: Irrigation Leader welcomes manuscript, photography, and art submissions. However, the right to edit or deny publishing submissions is reserved. Submissions are returned only upon request. For more information, please contact John Crotty at (202) 698-0690 or [email protected].

15 Bold Thinking Needed on Title

ADVERTISING: Irrigation Leader accepts one-quarter, half-page, and full-page ads. For more information on rates and placement, please contact Kris Polly at (703) 517-3962 or [email protected]. CIRCULATION: Irrigation Leader is distributed to irrigation district managers and boards of directors in the 17 western states, Bureau of Reclamation officials, members of Congress and committee staff, and advertising sponsors. For address corrections or additions, please contact our office at [email protected]. Copyright © 2016 Water Strategies LLC. Irrigation Leader relies on the excellent contributions of a variety of natural resources professionals who provide content for the magazine. However, the views and opinions expressed by these contributors are solely those of the original contributor and do not necessarily represent or reflect the policies or positions of Irrigation Leader magazine, its editors, or Water Strategies LLC. The acceptance and use of advertisements in Irrigation Leader do not constitute a representation or warranty by Water Strategies LLC or Irrigation Leader magazine regarding the products, services, claims, or companies advertised.

COVER PHOTO: Matt Lukasiewicz, general manager of the Loup Basin Reclamation District and the Farwell and Sargent Irrigation Districts.

Perspective: A Conversation With Arlan Hostetler Transfers By Congressman Rob Bishop

16 Transfer of Title

By James Hess

22 Seeing a Strong Conviction Through: The Humboldt Project Title Transfer

By Bennie Hodges

24 Transferring Properties:

A Lesson in Perseverance

By Rick Dieker

26 Transferring Water Conveyance Facilities: Fremont–Madison Irrigation District

By Dale Swensen

30 The Benefits of Transfer:

Running the District Like a Farm

By Gary Esslinger

32 New Dam Liability: Risk

Management and Title Transfer

By Joel Pearson

THE INNOVATORS

34 Blasting New Life Into Wells: Scott’s Pump Service

Irrigation Leader

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The Arcadia Diversion Dam diverts Middle Loup River water into the feeder canal that supplies Sherman Reservoir. Built in 1961 as part of the Farwell Unit, it has 13 gates total: 1 sluice gate and 12 radial gates. The diversion dam spans 550 feet across the river with a spillway capacity of 20,000 cubic feet per second. Peak flows average 1,500 to 1,700 cubic feet per second.

Life After Title Transfer in the Loup Basin A Conversation With Matt Lukasiewicz 4

M

att Lukasiewicz is the general manager of two irrigation districts and one reclamation district in central Nebraska. The Loup Basin Reclamation District supplies water to both the Farwell and Sargent Irrigation Districts. Farwell Irrigation District serves 53,414 acres via 110 miles of main canal, 35 pumping plants, and 255 miles of laterals. The Arcadia Diversion Dam diverts water from the Middle Loup River and carries it via the Sherman Feeder Canal to the 69,000-acre-foot Sherman Reservoir, the district’s storage reservoir. Sargent Irrigation District serves 14,287 acres. The district diverts water from the Middle Loup River at the Milburn Diversion Dam to the 40-mile Sargent Canal and then out to the fields of corn and soy through more than 40 miles of laterals. In 2002, the districts received title to all of their facilities, infrastructure, and lands from the U.S. Bureau of Reclamation, completing an eight-year process. The flexibility derived from ownership has enabled the districts to embark on an extensive water conservation and project improvement program. Mr. Lukasiewicz is in a unique position: For the entirety of his managerial career, he has led three former Reclamation districts without the input of Reclamation. Irrigation Leader’s editor-in-chief, Kris Polly, spoke to Mr. Lukasiewicz about managing a district after title transfer and what it has meant for water delivery in the Middle Loup River basin. Irrigation Leader

Mr. Lukasiewicz at the west end of Sherman Reservoir, which has a storage capacity of 69,000 acre-feet. 

Kris Polly: What led the districts down the path of title transfer? Matt Lukasiewicz: The districts were concerned with some of the rules that Reclamation was trying to enforce with respect to our projects. The board of directors recognized that if we didn’t have to live under those rules, perhaps it would create a better situation for the district as a whole. To the best of my knowledge, we are one of the only districts in the United States to have had a full transfer of title. Kris Polly: What was the result of that process? Matt Lukasiewicz: During the transfer process, we signed memorandums of understanding with Reclamation to use its rules as guidelines, but we still have the flexibility to change those guidelines. Now, under our control we have two small regulatory reservoirs, the larger Sherman Reservoir, our two diversion dams, the water delivery infrastructure, and the surrounding acres. We have developed a strong relationship with the Nebraska Game and Parks Commission. As I mentioned, we own the land and the lake, but the commission manages the outside operations with regard to most of the surrounding grasslands, the camping areas, and recreation. That is same around Sherman and our two diversion dams. There is some ground on both sides of the river Irrigation Leader

that we have allowed Game and Parks to convert into a wildlife management area or a recreation area. We meet with the commission on an annual basis to discuss any operational changes with regard to irrigation works or the recreational services. When and if we want to make any structural changes, for example, to Sherman Reservoir, we can investigate and undertake them in a way that were not able to do when we were with Reclamation. Those types of activities could take years if you have to work through Reclamation— permitting studies, engineering studies, paperwork, and everything that goes into doing a structural project. Kris Polly: One of the big concerns that managers have about title transfer is liability. Have any of your districts experienced liability issues, and how does that affect district operations? Matt Lukasiewicz: There are state statutes that protect us regarding the reservoir and any accidents that may happen up there. With the facilities themselves—the dam and some of our infrastructure—there is some liability there. For example, if a gate was left open, somebody trespassed into a restricted area, and we didn’t have a structure that was properly blocked off—if that person was injured, we could be found liable. With infrastructure, there is liability. With the lake, state statutes protect us. The same is true at our diversion dam. People want 5

POSTTRANSFER ACCOMPLISHMENTS • Major safety upgrades to Sherman Dam suggested by our own engineer, such as installing six dewatering wells below the dam to help with seepage

- automating dewatering wells and monitoring wells to the extent that the district can view what is going on at the dam back in the office - pouring a fiber-crete liner overtop of the existing rip rap on the face of the dam to prevent damages created by excessive wave action • Technological advances using automation within our canal and lateral system, including the infrastructure, to best suit our operations • Installation of new river gates and automation at Milburn Diversion Dam

• Construction of fish-way bypass to assist with fish migration on the Middle Loup River (in collaboration with Nebraska Game and Parks Commission) to get up on the diversion dam and fish, so we have to protect against that. We put up proper signage and gates to protect against that.

Kris Polly: How has ownership of the project enabled the districts to finance maintenance and construction projects?

Kris Polly: Is the requisite insurance to cover your facilities more expensive as a result of the transfer?

Matt Lukasiewicz: We still have the luxuries that we had prior to transfer, including the opportunity to bond major projects. The big benefit is that we do not have to go through Reclamation engineering studies, environmental studies, permitting, and the paperwork to make our initial decisions. Instead, we reach out to an engineer who will do an assessment, and then we will make a decision to proceed at our pace. If additional financing is needed, we have bonding authority. If it is a smaller project, we have the option to raise our water tolls and assessments.

Matt Lukasiewicz: No. We have an insurance company that is reasonable and easy to work with. It provides a great umbrella policy up to $10 million. Generally, in the case of a major disaster, that will not cover everything, but you are also not going to find an insurance company that will cover much more than that. The same company that provides my districts with insurance also insures most of the irrigation districts in Nebraska, including a lot of the NRDs [Nebraska natural resources districts]. They have a lot of business with recreation and natural resources entities that own and operate multimillion-dollar infrastructure. Kris Polly: They have expertise. Matt Lukasiewicz: Exactly. And prior to title transfer, that was the pitch to the board: We were paying for that insurance already. If we are already paying for insurance, if we are already paying for engineers and studies, then why do we need the federal government standing over our shoulders to tack on another charge or drag out the process? It all comes back to local control, which is best for any situation. Where you have an outside agency looking in, it does not always have the necessary details to make the proper judgment.

6

Kris Polly: What do you say to other districts and managers about title transfer? Matt Lukasiewicz: At least here in Nebraska, there is enough local and state support to undertake many of the maintenance or improvement projects that districts needs to operate. Local control provides us with the flexibility we need to deliver water efficiently and effectively. In my career, I have never had the experience of working with the federal government, but I can say that while working on multiple projects, my board has indicated that if we had still been with Reclamation, the projects may not have been possible.

Irrigation Leader

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Life Before Title Transfer in the Loup Basin

M

att Lukasiewicz’s predecessor, Tom Knutson, helped guide Farwell Irrigation District, Sargent Irrigation District, and the Loup Basin Reclamation District through the title transfer process. For eight years, Mr. Knutson led his boards of directors through the political, financial, and operational negotiations necessary to reach a workable deal. Irrigation Leader’s senior writer, John Crotty, spoke with Mr. Knutson about the road to title transfer. John Crotty: What led your three districts to title transfer? Tom Knutson: Our decision came about as a result of [former U.S. Bureau of Reclamation] Commissioner Dan Beard changing the rules of contract renewal and the discussions about what would happen during the term of the renewed contract. We were concerned about water rights. The irrigation districts were used to a particular reservoir level being the standard below which the water would have to go off. Reclamation was discussing raising that level to address environmental concerns. The proposed change would affect water users during a critical time—the month of August. In addition, we always thought the renewal would be for 40 years, and Reclamation was proposing 25. Then, we looked at the liability issue. When I came to the district in 1985, we had three lawsuits against the districts. The districts were sued for damages due to seepage on grounds adjacent to our canal. I went to Reclamation and asked if it would join us on these cases. Reclamation claimed that the cause of the issue was our operation and maintenance, and it did not join us in the suit. Reclamation would not even help the districts as a friend of the court. Reclamation disappeared on us. I told the districts that liability will be on our backs no matter what happens. Anytime we have to get something fixed, Reclamation will send engineers out, and we’ll get the bill. Then, Reclamation will tell us to go to Congress and get the money secured in an appropriations bill to fix the problem. And then, it will take some money off the top of that for administrative purposes. My solution was to propose cutting out the middleman. I knew we could use our own engineers at half the cost and get the repair work done. We proved that after title transfer. 10

John Crotty: Your pursuit of title transfer in the mid-1990s aligned your districts with many across Nebraska and Kansas. How did that coalition come together and what became of it? Tom Knutson: A number of districts were trying to get their contracts renewed as well. They were all concerned about the proposed 25-year term for renewed contracts. We thought we could increase the political pressure if we joined hands with 10 irrigation districts in two states. So, we organized the Irrigation Project Reauthorization Council in 1995. As a group, we decided to go for title transfer. Senator Roberts of Kansas introduced a bill to transfer all 10 districts. Then all hell broke loose. There was a news story painting the transfer effort as a way for irrigation districts to have control over recreation. The bad press swayed the other districts against pursuing title transfer. Farwell and Sargent Irrigation Districts stayed the course. The Irrigation Project Reauthorization Council did stay together: The other districts supported us in title transfer; and our districts supported them in contract renewal. We stayed together until those goals were accomplished. John Crotty: Was there a change in strategy when the other districts decided not to move ahead with transfer? Tom Knutson: Not really. We did not want to go through a renewal with the threat of losing our storage rights in the reservoir. Our farmers were concerned that they would not have a water supply by the end of August when they most needed it. The big difference was that we had to start speaking for ourselves. We hounded our congressional delegation that we wanted to stay the course. We were blessed to have Senator Bob Kerrey on our side. He was a friend of Secretary of the Interior Bruce Babbitt. At the advice of Senator Kerrey, I met with Reclamation in Denver, Billings, Washington, DC—anywhere I could—to basically create a format for how a transfer would take place. We had to work out the requirements for environmental and cultural resources compliance. These negotiations were from 1996 to 2000. Irrigation Leader

The 90-inch outlet pipe under Sherman Dam that feeds Farwell Irrigation District canals.

The real battles were during that time, especially over what we would pay. Reclamation started out asking for tens of millions of dollars that it thought the federal government was entitled to over the course of a number of years under a water service contract. There was no way we would write a check for that. We battled over those numbers. In the late 1990s, Reclamation set up a conference call in which we were going to arrive at a final number. Unannounced to Reclamation, I invited Senator Kerrey to get on the call with us. It was really the turning point. We are going along and arguing about numbers; then, all of a sudden, the senator got on the line and said, “Hello, this is Senator Bob Kerrey.” Silence. He said that he was introducing the bill and that we worked out the number of $5 million. Again, silence. But the Reclamation officials were very cordial to the senator, and we moved on from there. Senator Kerrey called me later that afternoon and asked if I could get on a plane to Washington, DC, by 8:00 a.m. the following morning to attending a meeting with Secretary Babbitt. I was up all night, making my way through St. Louis, and I made the meeting. Senator Kerrey introduced me to Secretary Babbitt, who said, “I understand you are serious about title transfer.” I said to him, “I have my checkbook in pocket,” and he quipped, “Senator, I believe that this young man is serious.” They asked me to leave and discussed the number for the bill. In the end, the $5 million ended up in the bill, and we ended up only paying $2.2 million with credits. The legislation passed in 2000 and the actual transfer took place on November 21, 2002. From 2000 to 2002, we had to work on the environmental compliance. We put together a memorandum of understanding, which was referenced in the legislation, to guide those efforts in preparation of transfer. John Crotty: How did the transfer effect the district’s liabilities? Tom Knutson: Prior to transfer, we did not have insurance on the reservoir at all. The federal government owned it, and it was their liability. We had insurance on all of our grounds, buildings, and equipment. We also had insurance in the event that the canal broke, and the breach destroyed a farmer’s crops.

After transfer, we sat down with our insurance company and worked out $10 million in liability insurance. I look at this way: If Sherman Reservoir breached today, causing millions of dollars worth of damages, the governor would declare a disaster. That opens up the opportunity for federal and state assistance. You still have your insurance on top of that, and the district purchased insurance with a very high deductible. John Crotty: How did the transfer benefit the district? Tom Knutson: Transfer created opportunities for the districts to undertake projects that we could not do before. We were able to go outside Reclamation for federal, state, and local dollars to do studies that cost so much less than if Reclamation had participated. One of the best examples is Milburn Diversion Dam, which was built in 1958 as part of the Sargent unit. After the dam was built, the district notified Reclamation that there were problems that needed to be fixed. Reclamation shrugged it off for years. Finally, in the 1970s, Reclamation encouraged Sargent Irrigation District to reach out to Congress to obtain appropriations for the repairs. Nothing came out of that effort. When title was transferred, the district went in to make $1.2 million in repairs. The district paid about $400,000 of that, while the rest was covered by grants. If the district had still been with Reclamation, and the repairs had actually moved forward, the cost could have easily tripled. And, those repairs would have been funded by a loan, not grants. John Crotty: What is your message to districts contemplating title transfer? Tom Knutson: Reclamation has done a wonderful job developing the West, but I really encourage districts to just go for it. To me, it just makes good sense.

The outlet structure below Sherman Dam.

Irrigation Leader

11

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Transfer From the Board Perspective: A Conversation With Arlan Hostetler

A

rlan Hostetler is the current secretary-treasurer of the Farwell Irrigation District. He has been on the Farwell Irrigation District board of the directors for more than 30 years, bringing experience and a sense of perspective to the issue of title transfer. He was part of the decisionmaking process that led to title transfer at Farwell Irrigation District and reaped the benefits down the line after that process was complete. Irrigation Leader’s senior writer, John Crotty, spoke with Mr. Hostetler about title transfer in the Loup River basin from the perspective of a board director. John Crotty: Who originally proposed the transfer, and what was your initial reaction? Arlan Hostetler: Tom [Knutson] proposed the title transfer when it came time to renew the contract with Reclamation. It was not something the board had contemplated before. It was an interesting thought. Could this be done? How long would it take? John Crotty: How did the board go about making its decision? Arlan Hostetler: We followed Tom’s lead. As we met with Reclamation, and things began to look more positive—that the transfer could get done—with the regional director, the board gave its support. John Crotty: What were some of the board’s concerns at that time? Arlan Hostetler: Could we handle the transfer as a local entity? As I looked at things and followed it through, I knew that we were doing the things necessary for ownership of the project anyway. That convinced me that we would be able to handle it without Reclamation’s oversight, which was costing us extra dollars to begin with. John Crotty: Your process took 10 years. Did you ever lose hope during that time? Arlan Hostetler: There was mostly frustration. Every time we would take a step forward, we would take a step back. But we knew that there would be support in Congress, and we continued on in that direction. Local

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business people were all in favor. That was a very positive thing. John Crotty: Were there any differences in operations and management after the transfer occurred? Arlan Hostetler: Not that I recall. After transfer, we could make our own decisions without consulting Reclamation. Prior to transfer, we had to let Reclamation know what we were doing and get its approval, which took much more time. It was a cloud hanging over us. After transfer, we didn’t have to think about that cloud; we made our decisions and moved ahead. John Crotty: What advice do you have for board members of other districts that might be considering title transfer? Arlan Hostetler: First of all, the board members and management have to be on the same page. They have to be together and behind it. You can’t have second thoughts. The next thing I would say is that it will take a lot of time. Don’t get discouraged. There may be a state or federal agency, for example, that is looking to become part of the process as you are moving ahead. Don’t get upset with them. You have to handle these agencies with caution. You don’t want them to get upset because it will prolong the process. John Crotty: Looking back, was it worth it? Arlan Hostetler: Yes, definitely. We don’t miss working with Reclamation oversight. Irrigation Leader

Bold Thinking Needed on Title Transfers By Congressman Rob Bishop

T

hroughout much of the last century, U.S. Bureau of Reclamation projects have played a significant role in western settlement and development. These projects have provided those in Utah—and elsewhere in the West— critical access to water, emissions-free hydropower, and water-based recreation. Water and power users continue to pay their fair share in these projects, and in many cases, they operate and maintain them at world-class levels. Yet in times of very limited federal budgets and an ever-growing federal regulatory presence, we must look at alternatives to federal ownership in order to provide local users more control of their destinies. Local ownership will improve projects that would otherwise stagnate under federal control. The solution is to facilitate more title transfers of water projects out of federal ownership, but we must first overcome hurdles that make the job more difficult than it needs to be. As you read this issue of Irrigation Leader, it is obvious why title transfers are beneficial for some water users. Local ownership (1) promotes nonfederal financing to improve projects as opposed to relying on the unpredictable federal appropriations process, (2) cuts down on onerous federal paperwork requirements, (3) means that water users do not have to rely on artificially expensive federal studies and overhead costs when they actually own the facility, (4) increases the value of lands and water rights that are tied to an improved local project, (5) can help the environment and enhance human safety, and (6) reduces federal liability. Reclamation and Congress must reengage in conveying some of these facilities, particularly for those projects that can truly be low-hanging fruit for a potential title transfer. The Provo River Project in Utah is a case study of a title transfer win-win. The local water users wanted to pipe an open canal to enhance public safety and conserve water for humans and wildlife species, but they lacked the financing to accomplish it. With little to no funding for project development coming from the federal government, the Provo River Water Users Association aimed to enact a title transfer in order to finance the project themselves. After Congress took action to convey the facility, the water users leveraged their ownership to obtain the needed collateral to acquire a loan for piping the canal. The federal government also benefitted because it no longer held the liability associated with the project. But the process was Irrigation Leader

anything but easy. Local water users navigated through years of federal bureaucracy and awaited congressional action on two bills to accomplish the title transfer. This was time consuming and costly to the ratepayers. That transfer process is similar to the delays encountered by other water users. In fact, one thing stands out among the many case studies: The title transfer process is much costlier and time consuming than anticipated. The word expedited is not synonymous with the Reclamation title transfer process. There have been only 27 title transfers in the last 20 years. Many of those occurred in the late 1990s and early 2000s. They are down to a trickle, and only two title transfers are now pending before the U.S. House of Representatives. To be sure, title transfers may not be appropriate for every local water user organization due to many circumstances, including liability. But we can and should do more to facilitate additional transfers, particularly for federal projects paid out by local water users. The Utah legislature recognized this when it recently passed H.J.R. 4 to support title transfers of the Strawberry Valley, Moon Lake, Emery County, Sanpete, and Provo River projects. Change begins with Reclamation. It must improve its communication with water users and have proactive goals when it comes to title transfers. Some water users are frustrated with the agency’s cumbersome and lengthy process, and as a result, good title transfer ideas sometimes die by Reclamation red tape strangulation. It also rests with Congress, which must do its part to reduce bureaucratic delay substantially by reducing the time it takes to consider title transfers. As chairman of the House Natural Resources Committee, I want to work with Reclamation and those of you who pay the agency’s bills and operate and maintain its projects on improving this process. We need bold thinking to harness the leadership, innovation, and responsible management of local water users on the ground. Local water users have proven they can do a better job with something they own rather than a project owned by federal bureaucracy. Congressman Rob Bishop (R-UT) is the chairman of the House Committee on Natural Resources. He has represented Utah’s first congressional district since 2003. Prior to becoming a congressman, Rep. Bishop spent 28 years as a high-school teacher in Utah, focusing on American history and government. 15

Transfer of Title By James Hess

F

or the purposes of the U.S. Bureau of Reclamation, title transfer divests Reclamation of the responsibility to oversee the operations, maintenance, management, regulation, and liability for project lands and facilities—passing those responsibilities on to a nonfederal entity. In general, the transfer of title severs Reclamation’s ties with that project or those conveyed facilities. Section 6 of the Reclamation Act of 1902 essentially says that the projects built by Reclamation are to be owned by Reclamation until such time as Congress determines that ownership of the projects or facilities should be conveyed to someone other than Reclamation. Reclamation projects are authorized for federal ownership, and there is no provision in Reclamation law that says once an irrigation district has paid out, it takes title. Congress envisioned that while project beneficiaries might take operational responsibility, full ownership would remain with the United States until Congress decides something else. Not a Mortgage Often, people describe Reclamation project repayment like a mortgage. Similar to the relationship between a lender and a borrower, there is a financial and technical relationship between the United States and water users. And if we were to complete that analogy, once the district has completed its financial obligation, it would take ownership. But that is where the analogy breaks down— since the Reclamation Act says otherwise. When a district enters into a repayment contract with Reclamation, there are requirements that have nothing to do money but have to do with how and on whose behalf to operate the project. Even after a district has paid its obligations, these operational conditions continue in perpetuity. And unlike a mortgage, after payout, title remains with Reclamation. Why Transfer? For most of Reclamation’s history, the reason the United States got involved in the development, construction, and operation of Reclamation projects is that communities lacked the technical and financial

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wherewithal to build and manage a project to develop their water supplies. Those communities needed the United States to provide the financing, the engineering, and the hydrologic expertise. In many cases, the United States still provides those kinds of services or has other legal obligations to fulfill that require that it retain title. In other cases, however, the day-to-day operational and financial responsibility for managing the facilities has been handed over to the water users, so Reclamation has a very limited role. However, Reclamation’s ownership, and the associated obligations, can get in the way of efficient management. For example, if an electricity provider approaches the district about a crossing of project lands, or the district wants to change a canal to make it more efficient, it must get permission from Reclamation. Even though the water users operate and maintain the project, they must get permission from Reclamation, and they may have to complete an environmental assessment on a part of a canal that may not have been disturbed in 100 years. Since the project is owned by the United States, it is a federal action for the purposes of the National Environmental Policy Act (NEPA). But, when you take the United States out of the mix, it is not a federal action and does not require federal environmental compliance. In many cases, the relationship between Reclamation and the water users has evolved—needs have changed both for the water users and for Reclamation—which begs the question: Is it time to explore whether title transfer is appropriate and could benefit the water users, Reclamation, and any other stakeholders involved? So for some projects, title transfer may be worth exploring—but how? Early Transfer Efforts When water users first began to pursue title transfer in the late 1980s and early 1990s, they recognized that

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since the transfers required an act of Congress, they went to their congressional representatives first and sought legislation to authorize the title transfer they were seeking. But that often did not go so well. What we found was that instead of conducing discussions in Grand Island, Nebraska, or somewhere else out West, those discussions took place in Washington, DC, with congressional staff and lobbyists who may have known where the facilities were but knew little of district operations or of the unique characteristics of the lands and facilities under consideration for transfer. Instead of reaching an agreement between those most familiar with the projects and then seeking legislation, the whole process of developing the terms and conditions of the legislation got negotiated in the halls of Congress, going back and forth with Reclamation and other interested stakeholders. That process could take years. In some cases, where legislation was enacted, this process resulted in errors that, either because of the way the law was written or a misunderstanding of what the water users wanted, prevented the transfer from taking place. In some cases, this required a second act of Congress, which took years to clean up the issues to enable the transfer to be implemented. In addition, that approach can result in important community members being left out of the process, which can slow the progress even more. For example, in the late 1990s some water users in Nebraska and Kansas were pursuing legislation to authorize the title transfer of water delivery facilities in those two states. In response, a bill was introduced to transfer all the Reclamation projects in Kansas and Nebraska. Upon the bill’s introduction, however, some of the stakeholders in Kansas who had concerns but were not included referred to the legislation in press reports as “a fire sale of reservoirs that would keep the public from recreational opportunities.” Within 24 hours of introducing the bill, its sponsor withdrew the proposal. In hindsight, there was not enough public engagement on the issue, and as a result, the water users who were trying to move their proposal through quickly had to start over from the beginning to build trust and consensus at the local level. Ultimately, some of the facilities included in that legislation were transferred, but it took a whole lot longer than was originally expected. So, in response to those early efforts and lessons learned, Reclamation developed a process whereby the terms and conditions of title transfers would be developed at the local level and the process would be open and

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public. To memorialize this process, Reclamation, in consultation with a variety of interests, developed a general document that sets broad and general sideboards but allows flexibility to address the unique circumstances associated with each project. The Framework for the Transfer of Title Bureau of Reclamation Projects sets forth that process and a broad set of general criteria that govern this effort. The Process—What Do You Do First? So, if you think you may want to explore title transfer, the most important first steps are to have an internal conversation about why you might want to pursue transfer title. Once that has happened, you should contact Reclamation to jointly work through the Title Transfer Checklist, a document jointly developed by Reclamation and stakeholders that is intended to help to identify all the issues that will need to be addressed during the title transfer process; it also includes an explanation of all the steps and the potential stakeholders to identify. As part of that process, the water users need to clearly understand both the potential benefits of taking title and the costs to complete the process—in a sense, do an informal cost-benefit analysis and weigh how much the transfer process is going to cost against the benefit of taking title. This needs to be done early in the process to determine whether it is worth it. One example of why these initial steps are important is a case in which a district was seeking title to a dam and reservoir. This example took place prior to the development of the Title Transfer Checklist, so the necessary in-depth discussions about the steps or the longterm needs of the project did not take place. Consequently, we got fairly far along in the process, expending lot of money and resources on both sides, only to discover that the state where this project was located did not have an established office to take the place of Reclamation’s Safety of Dams program to ensure that the project was structurally sound. As such, no insurance company would give the district the level of coverage it needed at a price it could afford. So, after all that time, money, and effort, the title transfer was abandoned. Had we explored all the issues in advance, we could have identified this issue, realized it was a major problem, and abandoned the process before we spent a lot of time and money. It is also necessary for districts, in conjunction with Reclamation, to identify key stakeholders. The more open

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and public the process is from the beginning, the less likely there will be objections down the line. At a National Water Resources Association meeting many years ago, someone asked for the definition of a stakeholder. My answer was that a stakeholder is anyone who cares about the operations of the project and can gunk up the works if you do not include them or consult with them. The more inclusive you are, the less likely anyone will be caught by surprise and oppose the transfer. In the short term, being inclusive takes a little longer, but in the long run, it improves both the quality and the sustainability of the end agreement. Although it is important to get external buy-in from project stakeholders, it is equally important to focus on your internal stakeholders. Reclamation has worked with districts and general managers who have portrayed the title transfer as a quick process to achieve total project management control at little or no cost. However, when the process starts to take a lot of time, we have seen board members surprised that it is not moving as it had been originally characterized. They begin to question whether the expected long-term benefits are worth the cost. We have seen some drop out because the board members pulled the plug, even after a significant investment of time and resources. Having that candid and realistic conversation with internal stakeholders about the process, the steps, the risks, and the costs and benefits at the beginning is crucial. One tool that has been effective to ensure that the internal stakeholders are on board is for the district board to consider and adopt a formal resolution of support for pursuing title transfer. That way, there must be a formal discussion on the issues that goes on the record. This also sends a signal to Reclamation, the congressional delegations, and the local community that this is a serious effort that requires attention. Once the district is clear that it is ready to move forward, the next step is for Reclamation and the water users to enter into a memorandum of agreement (MOA). This document spells out the steps that are needed to complete the title transfer. It also identifies who will be responsible for what activities and costs. For example, it should spell out who is completing the NEPA process, including public scoping. This MOA could also include provisions about regular check-ins, designate the points of contact for all of the entities involved, and provide an opportunity to exit the title transfer process if it is not proceeding in a way that works for the parties.

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The MOA also needs to address issues of funding and resources. Unfortunately, Reclamation does not have a formal title transfer program or specific authority to budget for or expend appropriated funds to undertake title transfer. So, Reclamation lacks a dedicated funding source for title transfer. As a result, Reclamation cannot budget for each title transfer and has limited general authority to obligate funding for it. Thus, in addition to spelling out the steps, it is necessary for the district, through the MOA, to provide some funds up front to do the work that needs to be done. Those funds are used for the environmental studies and other steps that are necessary to move the process forward. At the end of the process, we share the costs of the process, but Reclamation needs these advanced funds to get started. A Title Transfer Agreement and Legislation Once we work our way through the required steps in the title transfer process—completing the NEPA analysis and the cultural resources review process, identifying the issues that need to be addressed, and identifying solutions—we are ready to prepare a title transfer agreement. Developed together, this is the document that spells out the terms and conditions of the title transfer. It will include an identification of the assets, lands, and facilities that are to be transferred; any payments necessary by either side to the other; and any conditions necessary for posttransfer operations. This could include commitments to manage recreational sites or agreed-upon operational conditions for protecting environmental or cultural resources. Once we have reached agreement on the terms and conditions memorialized in the title transfer agreement, the next step is to work on legislation. Since Congress

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authorized the project originally, it has to authorize the transfer, which essentially deauthorizes the project. To do this, Reclamation and the water users, working together with Congress, develop the legislative language to authorize implementation of the title transfer agreement. At that point, if the process has been done correctly, there will be local consensus on the terms and conditions of the transfer so the legislation will be noncontroversial and it can move smoothly through the legislative process. The Wrong Motivations It has been our experience that water users are more likely to be successful, both in the title transfer process and in operating the transferred facilities after taking title, when they are crystal clear about why they want to take title. Having long-term operational goals and objectives make it more likely that you will be successful. It means that you have thought it through and are looking at the big picture. However, if the reason you want title is because of a personality conflict with the area manager or dislike of a current policy, those are short-term issues and the individual or policy may not be in place by the time you get to the end of the process. If that is the case, the original reasons for pursuing title transfer in the first place are gone, and suddenly, the benefits of transfer really do not outweigh the transaction costs and efforts you went through. The efforts to transfer title to the canals and other features of the Provo River Project in Utah are a good example of the appropriate level of analysis and keeping long-term goals in mind. In that case, the Provo River Water Users Association wanted to put an entire canal into pipe in a highly urbanized area to reduce the risk of injuries, reduce evaporation, save water, and help meet Endangered Species Act requirements. But because the association did not have title to its facilities, it did not have the collateral necessary to get a loan or issue a bond. Taking title would address those concerns, and the association was successful.

been single-purpose facilities. This might include the entirety of a single-purpose project or the single-purpose features—canals and laterals—of a larger project. In general, the more issues and stakeholders there are, the more complexities we will face. Where there are multiple beneficiaries of a project that Reclamation has managed, there is the added complexity of how the project will be managed after Reclamation is removed from the picture. The entities that are taking title will need to develop agreements on management and governance of the project’s lands and facilities to ensure that operations and maintenance practices and costs are fair and the facilities are managed in a way that meets the needs of all the beneficiaries. For multipurpose projects in which the beneficiaries cannot agree on an alternative governance structure, keeping Reclamation involved may be preferable. Do We Need to Be Paid Out? Another question that many ask is whether being paid out is a requirement. The short answer is no. Being paid out does not necessarily simplify a title transfer and does not necessarily suggest that it is a good candidate. It just means that the financial arrangements are satisfied. By the same token, having an outstanding repayment obligation does not mean it is not a good candidate. Conclusion In conclusion, while title transfer is not right for every district, it is a good option for some. But what it requires is patience, a willingness to engage in a collaborative partnership with Reclamation, transparency with stakeholders and the public, creativity in looking for good solutions, and a vision for why you want to take title and how you would operate the facilities in the long term. For information about general policies and title transfer activities, please contact James Hess, Reclamation’s title transfer coordinator, at [email protected].

What Makes a Good Candidate for Title Transfer? Reclamation’s history of successes and failures with title transfer has shown that even the simplest title transfers have complexities, and there are no specific criteria that guarantee success. However, we have had more success in title transfers with some types of projects than others. To date, most of the completed transfers have, in general,

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Seeing a Strong Conviction Through: The Humboldt Project Title Transfer By Bennie Hodges

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his March 11, the Pershing County Water Conservation District (PCWCD), located in northwestern Nevada near the edge of the Great Basin, marked the transfer of title of the Humboldt Project to the district. It was a long journey for the district to get to this point. Project History Farmers have been irrigating in this valley off the Humboldt River since 1862. Back in 1910, the farmers of the valley built two small reservoirs upstream in the vicinity of Rye Patch, which stored a total of 50,000 acrefeet of water. That was still not enough storage to get them through the summer months, however, so the district approached Reclamation to build a reservoir at the Rye Patch site. Reclamation responded positively to the site but was concerned that the district did not have enough water rights to justify the construction. So, some of the farmers and a banker made their way upriver, 120 miles northeast of Lovelock, to Valmy and Battle Mountain. They signed purchase options on seven ranches in that area to gain an extra 50,000 acre-feet of water. Reclamation signed off on the deal and signed an agreement with the district to lend the money to construct Rye Patch Dam and purchase the ranches. In 1933, Congress authorized Reclamation to construct the Rye Patch Reservoir and include the Humboldt Sink and the Battle Mountain community pasture, which included lands withdrawn from the public domain and lands purchased by the federal government. PCWCD subsequently entered into a repayment contract with Reclamation and began delivering water to PCWCD irrigators in the early 1940s. In the early 1950s, PCWCD took over operations of the pasture ground up by Battle Mountain. The project was paid off in full in 1976. The District Today Today, PCWCD covers 40,000 acres and delivers water through 120 miles of irrigation canals to grow alfalfa hay for dairies in California and Nevada. Drought has been a challenge to water deliveries. Over the last three years, we have not had any water. In 2013, we had 3/10 acre-foot per acre; in 2014 and 2015, our water allotment was zero acre22

feet per acre. Title transfer will help us do some of things we need to do to ensure that our irrigators get available water to grow their crops.

The Path to Transfer The PCWCD board always held a strong conviction to pursue title transfer. Our constituents initially just wanted title to that community pasture. That was the way these things were supposed work—you pay off the obligation and receive title. However, our contract with the Reclamation stated that all lands were to remain in the name of the federal government unless authorized by Congress. My predecessor, Myron Goldsworthy, got a couple of bills introduced that would have conveyed the pasturelands, but those bills did not gain any traction in Congress. I started working on the transfer in the early 1990s. In 1997, Reclamation began developing guidelines and a framework for title transfers. That same year, PCWCD entered into an agreement with Reclamation to work within that framework. Reclamation recommended that we transfer the entire project: the pasturelands on Battle Mountain, the Rye Patch Dam and Reservoir, and lands in the Humboldt Sink. To do that, we had to involve all the potential stakeholders. We held scoping sessions to inform the general public. We met with entities and outside interest groups to address their concerns. Pershing County requested 990 acres of land to expand its airport. Lander County wanted 1,100 acres to expand an industrial park and sewer plant. The Nevada Department of Wildlife requested lands in Lander County to recreate a swamp. As our negotiations with stakeholders and Reclamation moved forward, we reached out to our Looking down the Humboldt River from Rye Patch Irrigation Leader

congressional delegation to get the necessary legislation. We made a couple of trips to Washington, DC, and I testified before the Senate Subcommittee on Water and Power. Our primary champion was Congressman Jim Gibbons, who worked hard to get the legislation through. In 2002, the Humboldt Project Conveyance Act conveyed all right, title, and interest in and to the lands, features, and water rights of the Humboldt Project to PCWCD, the state of Nevada, Pershing County, and Lander County.

Environmental Compliance In many ways, the legislation was only the beginning. We did the process backwards. The district did not want to spend significant time and money to complete the National Environmental Policy Act (NEPA) process, only to not have it go through Congress. So with the help of Congressman Gibbons, we were able to condition the transfer on the completion of the NEPA work. However, the NEPA process took 13 years from the passage of the legislation in 2002 to 2015. First, we had to address endangered species. Then we had to go through cultural resources and the section 106 process. There seemed to opposition at every stage of the process. There were concerns over artifacts related to the Oregon Trail. Reclamation and the Nevada State Historic Preservation Office were at odds for over a year. It took the intervention of then–Nevada State Senator Mark Amodei over the course of multiple meetings in Nevada and Washington, DC, to get the agencies working together. Then we went through a land appraisal. Some of our lands, like the pasturelands at Battle Mountain, were acquired for the construction of the project and had already been paid off. The district had also bought lands around Rye Patch for construction of the reservoir. But some lands were originally with the U.S. Bureau of Land Management and had been with withdrawn for the construction of the project. We had to identify the lands withdrawn from the public domain, have them appraised, and pay fair market value for them. h Dam in wetter years. Irrigation Leader

Over the years, there was a lot of frustration with the negotiations and mitigations involved in the NEPA process. Consequently, there were many times when I thought the process had died. But, over the years, I kept my board informed and worked closely with my legal team and a consultant who had worked with Reclamation for many years. The board remained resolute in its conviction that we could do it. Looking Back When we first started off on the guidelines and framework in 1997, Reclamation estimated that the process would take five years. It took 20 years. On January 15, 2016, Reclamation executed a quitclaim deed to convey to PCWCD more than 36,000 acres, 49,000 of water diversion rights from the Humboldt River, and 115,000 acre-feet of water storage rights in Rye Patch Reservoir. The only major management change has involved dam safety and jurisdiction. Once we transferred out of Reclamation, we came under state jurisdiction for the safety of dams. As a result, we wrote an emergency action plan and standard operations plans. The state came out and did inspections. The process went smoothly. PCWCD is now responsible for updates to the plans as required by Nevada’s safety of dams program. Looking back, there were several key factors to think about with title transfer. Make sure your lead person plans to be with district long enough to see the project through. In addition, whatever your cost estimate was, double it. Each year of the transfer process, we budgeted for it and passed the cost along to the water users through increased assessments. Some of the issues you will address are unexpected and not based on sound reasoning or science, but you still have to address them. Finally, have someone working with you who understands the transfer process thoroughly. I have had the same team on board since day one. The Value of Title Transfer Title transfer increases the value of these lands on a per-acre basis. Our constituents now own their lands and their water rights. That makes those lands and rights more valuable. Bennie Hodges has served as general manager of the Pershing County Water Conservation District for 28 years. You can reach him at (775) 273‑2293 or [email protected].

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Transferring Properties: A Lesson in Perseverance YTID headquarters. The office was part of the title transfer, even though it had been remodeled several times over the years with YTID funds.

By Rick Dieker

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he Yakima–Tieton Irrigation District (YTID) delivers water to 28,000 acres in the Yakima River basin in central Washington State. Through its pressurized delivery system, YTID delivers water to orchards, pastureland, and residences. Delivering water since the early 1900s, YTID was the first project in the nation to satisfy its capital repayment obligations to the U.S. Bureau of Reclamation. In 1947, the district assumed operations and maintenance of its water conveyance infrastructure.

Looking for Management Flexibility

Starting in 1995, the district sought title to federally owned buildings and 120 acres of land within its boundaries, including a warehouse, an office building, and two houses. We wanted to get all of the buildings under our ownership to better manage them. YTID no longer required ditch riders to live in district housing, so some of the residences were not used anymore. In addition, doing any kind of work on the buildings, from repairs to replacement, was always a long process. All work had to be approved by Reclamation. YTID’s situation was not so straightforward. Of the 120 acres of land it sought title to, 50 percent was owned by Reclamation and the other 50 was owned by the U.S. Bureau of Land Management (BLM). BLM had

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withdrawn those lands for Reclamation project purposes. Reclamation- and YTID-funded facilities, including our headquarters, remained on the land after the property had been withdrawn. This created mixed ownership and confusion when it came to managing the facilities.

The Process

By the time I came on board as manager in 1998, the district had already begun initial discussions with Reclamation to move in the direction of title transfer. We initially thought we could go through the process in a year or two, but it ultimately took a lot longer than we thought. We began environmental reviews in the early 2000s. There were challenges there with environmental concerns because some of the houses had lead‑based paint on them. In addition, some of the buildings were more than 100 years old. We had to work through archaeological and historical studies and investigations with federal and state historic preservation officers. By the end of 2004, YTID and Reclamation had entered into a title transfer agreement for the federally owned facilities that set forth the terms and conditions for the title transfer.

Legislation

There had been preliminary discussions with local congressional staff early on. After hammering out the details of the project with Reclamation, YTID began Irrigation Leader

The Tieton Pump Station is located on one of the transferred parcels.

working in earnest with its congressional delegation. In November 2005, Senator Maria Cantwell introduced standalone title conveyance legislation. Former Congressman Doc Hastings introduced a companion measure in the House that was passed by a voice vote. Unfortunately, the Senate legislation was held up due to some issues raised by a local conservation group. Senator Cantwell and Congressman Hastings reintroduced the legislation in 2007, and it successfully made its way through Congress. The legislation became public law as a part of the Consolidated Natural Resources Act of 2008.

The BLM Process

BLM has a different transfer process by which land can be purchased outright. It did not require legislative action to transfer ownership. In our case, in February 2002 Reclamation revoked its withdrawal on the property so that BLM could work directly with the district to make the exchange.

Funding

YTID water users funded the transfer. We budgeted enough each year to cover our costs. While the transfer ultimately cost more than anticipated, we were able to spread those costs across multiple years because the process took so long.

Posttransfer

was not livable. In addition, we sold some parcels through a public bid process. Ultimately, ownership of the parcels and buildings enabled YTID to consolidate its facilities and manage its properties.

Looking Back

The process took much longer than we initially projected—about 10 years total. We were dealing with the bureaucratic nature of the federal government and some stakeholders with differing views of local priorities. Paperwork can get on someone’s desk and sit there. We dealt with a few scenarios in which Reclamation staff members were telling us why the transfer process could not move forward instead of helping to move it along. But we were diligent and reached out to key stakeholders along the way to help move the process along. Any title transfer process requires the full support of the board of directors—they are the ones explaining it to water users and their constituents. Given the length of our transfer, that support was essential. And, if your district is committed to title transfer, stick with it. It is a process that requires perseverance. Rick Dieker is the secretary-manager of the Yakima–Tieton Irrigation District. You can reach him at (509) 678‑4101 or [email protected].

We demolished three houses over a period of three years because they were not needed for project purposes. There were lead paint issues with two of the houses and the third

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Transferring Water Conveyance Facilities: Fremont–Madison Irrigation District By Dale Swensen

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remont–Madison Irrigation District (FMID) delivers water to 1,500 farmers across 285,000 irrigated acres of the Upper Snake River Valley. The district relies on its operational flexibility to ensure that its growers get the water they need. In 1996, the U.S. Bureau of Reclamation turned the operation and maintenance of Island Park and Grassy Lake Dams over to the district. At that point, we hoped to reduce costs and some of the bureaucratic challenges of working on a Reclamation project, so we began to investigate a title transfer of project facilities. We thought it would be good business.

Working Toward a Full Transfer

One of the five wells that were transferred to FMID.

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Initially, we tried to negotiate a transfer of the entire project, including the two dams, the Cross Cut Diversion Dam, the 7-mile Cross Cut Canal, and five groundwater wells with an associated water right. The 17-foot-high concrete gravity Cross Cut Diversion Dam diverts water from the Snake River into FMID’s Last Chance and Cross Cut Canals. The Cross Cut Canal conveys water to users along the Teton River as well as some in the Fall River Irrigation Company. The five Teton exchange wells serve as a backup supply for the district during times of drought. FMID worked with Reclamation, which provided a long list of things to do to get the transfer done. However, the district decided to go another route and secure legislation first. We were concerned that if we went through the Reclamation process, spent a lot of money, and then the legislation failed, it would be all for naught. In addition, we had to create an agreement with the environmental community to transfer the dams. FMID had been a long-standing participant in the Henry’s Fork Watershed Council and reached out to the groups that participated in the council, including Henry’s Fork Foundation, Trout Unlimited, and American Rivers. The two biggest concerns Irrigation Leader

of these groups were (1) liability if a dam failed without the backing of Reclamation and (2) the management of the Henry’s Fork River from Island Park Dam. FMID and the environmental groups negotiated a management agreement that included input from the groups and promised minimum flows out of Island Park to increase the survivability of rainbow trout. We were able to agree on those things and address the environmental groups’ concerns about liability. American Rivers’ local representative took the agreement to the national organization, which proceeded to shoot it down. So after two years’ worth of negotiation and work, we decided to drop the dams out of the transfer.

Securing a More Limited Transfer

At that point, in 2001, FMID and the Henry’s Fork Foundation worked with Reclamation to put together a memorandum of agreement, setting forth the parties’ responsibilities to transfer the facilities. FMID continued to engage its congressional delegation and gained full support. The district hired a lobbyist to help shepherd the legislation through Congress. In 2003, Congress passed the Fremont–Madison Conveyance Act, which required the transfer of the Cross Cut Diversion Dam, the Cross Cut Canal, a water right permit, and land and easements before September 2004. The legislation provided for the creation and implementation of a drought management plan for the Henry’s Fork watershed. We agreed to work with environmental groups and fisheries interests on the management of releases from Island Park Dam. We had done that informally for years, but the conveyance legislation formalized the process. The legislation also required the district to cover the costs of an environmental assessment. Reclamation performed the assessment and found that the transfer would not have a significant effect on the environment. In addition, FMID had to pay the remainder of its obligations to the United States with respect to the facilities conveyed. The district had already paid out two of those facilities—the Cross Cut Diversion Dam and the Cross Cut Canal. After working through the environmental and payment requirements, Reclamation delivered title to the properties and facilities set forth in the legislation in January 2005.

Life After Transfer

There were immediate and tangible benefits to the transfer. We do not have Reclamation coming out to inspect our facilities on a regular basis. Before we got title transfer of the wells, we had a lease from Reclamation to operate them. When the legislation was passed, the lease expired, but we still had not purchased the wells. So we had to do Reclamation Reform Act reporting. Title transfer eliminated that requirement. Also, we now take care of our own easements. The transfer empowered the district to take control of small

Irrigation Leader

The 3.3-megawatt Chester (Cross Cut) Diversion Hydroelectric Project.

hydropower projects on district facilities. When Reclamation owned the Cross Cut Diversion Dam, a third party that met Reclamation’s criteria could install a hydro project without district consent. After title transfer, the district was in control. We made a deal with a local utility to build a 3.3-megawatt project at the diversion dam. We worked with our partner and the Federal Energy Regulatory Commission and completed the project in 2014. While the FMID board was really supportive throughout the process, it certainly had questions along the way. The board wondered if the district gave up too much by agreeing to formalize the drought management program. However, the district did not give up anything in terms of filling Island Park. FMID did agree to a management plan at Island Park but within the constraints of its rights to fill the reservoir and how much water is available. There were no operational changes. All in all, the whole process cost around $300,000, borne by the water users over the 10 years it took to transfer the facilities. While the transfer process was time consuming and expensive, the district is happy with the end result. Dale Swensen is the general manager of the Fremont–Madison Irrigation District. For more information about FMID’s experience with title transfer, you can reach Mr. Swensen at [email protected].

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The Benefits of Transfer: Running the District Like a Farm By Gary Esslinger

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lephant Butte Irrigation District (EBID) was probably one of the first reclamation projects in the country to pay off its debt obligation to the United States. We did that in 1972, and by 1978, the district took over operation and maintenance of the project’s conveyance facilities. By 1987, EBID took over the operation and maintenance of its projects diversion dams. As was contemplated by the Reclamation Act, the district kept assuming more and more functions from Reclamation with the ultimate goal of gaining title to project drains, canals, laterals, and rights-of-way.

A Legislative Solution

My predecessor at the district gave me the green light to push the district in a more independent direction. When I became general manager in the late 1980s, the district had three champions on Capitol Hill: Senators Pete Domenici and Jeff Bingaman and Congressman Joe Skeen. These three were instrumental in getting the project transferred. After repeated attempts to pass legislation to transfer the project, our delegation was able to place title transfer language into the Reclamation Projects Authorization and Adjustment Act of 1992. The legislation was passed in the late stages of the act, and fortunately for EBID, Congress instructed the secretary of the interior to convey title to EBID at no cost to the district. The legislation transferred the distribution and drainage facilities in New Mexico to the district, but left title of Elephant Butte and Caballo reservoirs and three project diversion dams with Reclamation. The legislation also prompted the creation of an agreement among EBID, El Paso County Water Improvement District No. 1 (EPCWID), and Reclamation to address management, operation, and maintenance issues between the two districts.

Postlegislation Efforts

Prior to 1992, Reclamation had not done a federal facility title transfer. The legislation also provided for a title transfer of Texas facilities to EPCWID, so it took a coordinated effort to address both districts’ issues. Because EBID delivers water into the Texas portion of the Rio Grande Project and vice versa, the districts had to negotiate an operational agreement to share the responsibilities of delivering water between the two states. The memorandum of understanding, approved by the districts’ respective boards in 1995, set forth those responsibilities and addressed liability issues surrounding EBID personnel and equipment performing tasks in Texas as well as EPCWID personnel performing tasks in New Mexico.

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After the passage of the legislation, EBID had to address National Environmental Policy Act requirements before the transfer could take place. Because the title transfer constituted a major federal action, EBID was required to conduct environmental, historical, and cultural assessments. The hazardous materials study required that EBID conduct mitigation on 30 sites. EBID hired an archaeologist to conduct a cultural resources study. Overall, the process went relatively smoothly. Many nonstakeholders raised issues after the legislation was passed, and the New Mexico congressional delegation was comfortable with EBID addressing nonstakeholder concerns about how the project works would continue to be operated. We worked with every group that reached out to us. Ducks Unlimited wanted to preserve duck habitat in EBID drains, so we worked with that group to adopt drains and turn them into duck habitat. The group provided EBID with information about when ducks or quail were hatching, and we made sure our maintenance operations did not disturb them.

Issues of Liability

One of the first things the district did when investigating title transfer was to have our attorneys investigate whether the district had sufficient state protections against tort claims. Our canals were here before New Mexico became a state, so state law Irrigation Leader

has provided protections to irrigation projects that predate statehood. The district has always felt that it had better protection from the state tort claims act than the federal government. As long as the district uses its canals for storage and the diversion of water, it is protected. So, if one of the canals or ditches breaks and floods private property, the district is protected. The legislature has recognized that canals and ditches are like rivers. They are obvious to the people who move next to them, and they must take precautions to protect their property. However, EBID was under pressure to allow multiple uses of its canals. The problem is that if the use of the canal or its banks changes to a trail or a bike path, then the district loses those state tort protections. So in 2004, we worked with the state legislature and the city of Las Cruces to amend the New Mexico State Trails Act to include other government entities to use their tort claims act protection when they entered into an agreement with EBID to use EBID property. So now, if Las Cruces wants to turn a canal bank into a trail, it enters into an agreement with EBID for the use, and the act protects EBID because the city’s tort claims act protection now protects EBID from the different use.

The Benefits of Title Transfer

EDID had grappled with encroachment issues over the years. Reclamation did not take care of enforcing rights-of-way, so utilities and structures were illegally placed throughout the project. When EBID took over operation and management of project facilities, it became the enforcement agency in charge of making sure utilities had permits to use the rights‑of‑way. However, even the though the district performed all the inspection, review, and approval of the permits, Reclamation collected the money. The title transfer changed all of that. Gas, electric, cable, phone, sewer, and water crossings—they are all permitted through the district now. It has been a financial benefit to the district’s budget. In addition, we can now work with developers when they build subdivisions in the farming community and make sure they provide the necessary easements and structures to continue to deliver water. This ensures an efficient delivery of water and reduces the possibility of flooding these new homes. Transfer has given us a lot of clout regarding the use of former project rightsof-way. Prior to title transfer, when district crews designed a project for our facilities, they had to run it through Reclamation for approval. That is not the case now. Transfer has enabled us to bring all our work in house and expand our engineering department. Our engineering staff designs

Irrigation Leader

our projects; our crews construct them. We rarely call in an outside contractor to work for the district. It has always been my thought to run an operation like a farmer would. A farmer has his own maintenance shop and welding crew. That is the way I was raised. If something was not broken, you did not fix it. When something did break, you tried everything you could to fix it before you went into town to buy a part. That is the mentality of the board, and it has allowed me to do the work I need to do to ensure the district delivers water as effectively as possible, such as putting canals into pipe and building our own radial gates and propellers for our hydropower turbines. We can do it cheaper, and we invest our labor into the capital asset. That is all because we have title to our drainage and distribution system.

Things to Consider

If you are considering title transfer, be prepared to persevere and be patient. The success of our transfer was all about having the right people in the right place at the right time. We had a motivated board that wanted to prove that it could manage the system better and more cost effecively than the federal government could. History has proven us right. Take inventory of your aging infrastructure and consider the cost of its replacement or rehabilitation. Consider taking only those portions of your project that you can afford to operate, maintain, and replace. In addition, think about delivery responsibilities. In the Rio Grande Project, the dams serve interests in Texas and Mexico. We do not want to take over the dams because of compact obligations to deliver water to Texas and Mexico. If anything happened to those dams, there are international and interstate issues. That complication would also help to make sure those dams are functioning and that money would be made available to make sure the United States can carry out its obligations. It was not in our best interest to take on the dams. Finally, assess whether you have the wherewithal, the maintenance capability, and the equipment to operate and maintain your facilities. It helps to have the ability to fix things and a budget that allows you to do that. If you farm out repairs, you can go broke. Contractors can charge a lot more than what it costs to do the work in-house. Gary Esslinger is the treasurer-manager of the Elephant Butte Irrigation District. You can reach him at (575) 526‑6671 or [email protected].

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NEW DAM LIABILITY: Risk Management and Title Transfer By Joel Pearson

W

hen contemplating title transfer of U.S. Bureau of Reclamation property to irrigation districts, the greatest new exposure is the liability associated with dams and reservoirs.

Dam Risks

Insurance companies are concerned about this exposure, and some will not insure districts if they have that exposure. All insurance carriers inquire whether a district owns dams or reservoirs and requires separate applications if the district does. Based on a district’s responses to the application, at best, the premiums will increase, and at worst, the company will not agree to insure the facility. Clear Risk Solutions has an insurance pool program for many of the districts in Washington State. Its representatives share the following comments on dam transfer: • Insurers take into consideration the potential exposures that are upstream and downstream that could be affected by the failure of a dam.  • Developed areas with businesses, housing, farming, and other structures surrounding the areas of the dam will be more difficult to insure than rural and less-developed areas.  • An engineer should complete inspections for safety and the structural integrity of the dam before title transfer of the dam. Even if an unsafe condition existed prior to transfer, it could very well become the new owner and operator’s liability after transfer.  • In the experience of Clear Risk Solutions, insurance carriers have required current inspection reports (within the last 12 months at most) to obtain coverage, so an inspection report will very likely be required for insurance purposes as well. Having a completed inspection of the structure and public safety exposures is an important step in this process.  Districts also need to evaluate their limits of liability for the potential loss exposure. Owning a dam and reservoir will likely warrant higher liability limits, which increases insurance costs. Additionally, it is essential to consider state laws for

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the safety of dams and reservoirs. Once a district accepts title to its dams and reservoirs, it can no longer have the U.S. Bureau of Reclamation address its liability concerns.

Getting to the Transfer Agreement

A district should avoid accepting liability for design and construction issues, such as for scenarios in which a dam fails and a third party alleges improper design or construction. Ideally, a district should only assume exposures after the transfer, such as operation of the facility. Insurance companies will review the title transfer agreement to be executed with the U.S. Bureau of Reclamation, so it is important for a district to do its homework on the title itself. You would not buy a house without title insurance, and the same thought process should go into district facilities and lands. It is necessary to account for such things as easements and rights of way, which can vary in type, term, and condition. Similarly, it is important to consider the nature and condition of the facilities and lands to be transferred. For example, a district could take on a lot of risk if a facility is nearing the end of its life. Or, some districts experience significant drainage issues for which the associated costs can be significantly high. Transfer agreements should address those conditions because there is the potential for tremendous liability for aging water storage and distribution facilities.

Available Coverage

There are some standard areas that insurance companies will easily cover after a title transfer, such as Reclamationowned buildings that come into the district’s fold that were not already covered. However, coverage for rebuilding a dam that fails will be difficult, if not impossible, to obtain. Joel Pearson is managing director at Wells Fargo Insurance Services in Yakima and Wenatchee, Washington. PayneWest Insurance is purchasing those offices on April 1, 2016. Mr. Pearson can be reached at [email protected]. Irrigation Leader

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he two pillars of Scott Moser’s young life were farming and rehabilitating groundwater wells. His dad was a farmer in southwestern Kansas, and his maternal grandfather had drilled irrigation wells for nearly 50 years. According to Mr. Moser, “If I wasn’t in a tractor, I was in a mudpit.” That experience prepared him for his present career: rehabbing unproductive wells with a family-created solution called blast fracturing. After Mr. Moser’s grandfather retired, his uncles followed in his footsteps. They carried on their father’s work for years and are now both retired. Scott Moser is the third generation. He started his company, Scott’s Pump Service, with his wife in 2009 to repair irrigation pumps and rehabilitate irrigation wells for the agricultural industry. Based in Imperial, Nebraska, the company services wells and pumps on farms in Nebraska, Kansas, Colorado, and Wyoming.

Unproductive Wells

A lot of wells in central Nebraska were drilled in the late 1960s and early 1970s. According to Mr. Moser, many of those wells, while still producing water, are not even half as efficient as they originally were. While water still enters them because of the existing cone of depression, over the years, the steel well screens start to rust shut. Rust can build up on screens with slots as narrow as 1/8 inch, impeding the movement of water into the well.

Shaking Off the Rust

Blast fracturing a well.

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Mr. Moser’s team goes to a well site and runs a camera down the well shaft. There are generally two main factors impeding the flow of water into a well: a rusted screen and compacted gravel. “A lot of times, you don’t see anything because there is so much rust. There might be an inch or more of rust buildup and a few Irrigation Leader

small holes—that is where the water enters the well—but the rest is just sealed up solid.” After diagnosing the particular issue with the well, Mr. Moser will place an explosive down the well to blast fracture the old well. He describes it as “a big percussion, like hitting a steel pipe with a hammer. The explosive shoots a ball of flames 150 feet into the air like a big cannon.” The explosive rattles the steel casing, knocks the rust off, and opens up the slots. In addition, the gravel packed at the bottom of the well, which may have been stagnant for 40 years, loosens and opens the space between the casing and the drill hole.

Practical Examples

Mr. Moser recalled a well he recently worked on that had been drilled in the early 1960s. The well was made of a galvanized, thin casing that was rolled and riveted together. Because of the well material, he would not blast it without putting a new sleeve in. He installed a brand new steel casing down inside the well and ran the explosive between the old casing and the new sleeve. According to Mr. Moser, “That way, if we blasted a hole in the old casing, or it collapsed entirely, then it would collapse into the new sleeve and the gravel would fall right in. And that is what happened. It was like we drilled a new well.”

Looking down the well, this mill slot casing has rust built up ½ inch on each slot cut in the casing.

Nuts and Bolts

Scott Moser and his crew can work on a well of any depth. He explained, “The deepest well that I have done—and really it is because we have not had wells that go deeper in this area—is in the 700-foot range. The majority of the wells we work on are in the 300‑ to 500foot range.” The depth of the well is the most important factor driving the cost of well rehabilitation. For many of Mr. Moser’s customers, the service costs up to $5,000. The turnaround is quite fast. A project can last 24 to 48 hours. Mr. Moser’s crew can pull the pump and run the camera down in a morning, blast the well in the afternoon, and install the pump the next day.

Bringing New Life to a Well

For the Moser family, the blast fracturing method has been a successful one. In some cases, Mr. Moser has been able to double the production of wells. The way he sees it, the water is there, but it just cannot get inside the casing. “After blast fracturing, there are times that the wells produce better than when they were originally drilled. We are giving them new life.” “I love it when someone comes to me and says that

Irrigation Leader

A side view of a mill slot. It is difficult to identify where the slots were cut in. 

they have a well that used to be very productive but that is no longer pumping water like it used to. Time and time again, when we pull the pump out and put the camera in, the well owner is shocked at the condition of his well screen. . . . Especially when you show him what the screen should look like.” For Mr. Moser, his service ultimately rests on cost savings for farmers and well owners. As he explained it, “The alternative is redrilling a well, which could cost hundreds of thousands of dollars with no guarantee of production as before.” When wells are plugged up, “farmers are losing efficiency, which is costing them money. They are not getting the water down on the crops like they used to.” To learn more about well rehabilitation, contact Scott Moser at (308) 882‑7746 or [email protected]. 35

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2016 CALENDAR March 12–16

Nebraska Natural Resources Districts, DC Meeting, Washington, DC

March 14–16

Utah Water Users Association, Utah Water Users Workshop, St. George, UT

April 11–14

National Water Resources Association, Federal Water Issues Conference, Washington, DC

May 3–6

Association of California Water Agencies, Spring Conference and Exhibition, Monterey, CA

May 20

Agribusiness & Water Council of Arizona, Annual Meeting and Water Conference, Tempe, AZ

June 13–14

Idaho Water Users Association, Summer Water Law and Resource Issues Seminar, Sun Valley, ID

June 15–17

Texas Water Conservation Association, Mid-Year Conference, Horseshoe Bay, TX

June 29–July 1

Groundwater Management Districts Association, Summer Session, Yakima, WA

July 26–27

Kansas Water Congress, Summer Conference, Wichita, KS

For more information on advertising in Irrigation Leader magazine, or if you would like a water event listed here, please phone (703) 517-3962 or e-mail [email protected]. Submissions are due the first of each month preceding the next issue.

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