Bureau of Reclamation: Middle Rio Grande Native Water Leasing and Habitat Restoration Pilot Program

This Cooperative Agreement is a 5-year project for development and implementation of a Native Water Leasing Pilot Program for the Middle Rio Grande (MRG) to be developed and implemented jointly by the National Fish and Wildlife Foundation (NFWF) and the Bureau of Reclamation (Reclamation) in coordination with the Middle Rio Grande Conservancy District (MRGCD). Water acquired under the Program will be used to support implementation of the December 2016 Final Biological Opinion for Bureau of Reclamation, Bureau of Indian Affairs, and Non-Federal Water Management and Maintenance Activities on the Middle Rio Grande, New Mexico (2016 BiOp). Initially, Reclamation intends to use the acquired water to support river flows during the irrigation season when and where the river channel is prone to drying (Isleta and San Acacia reaches of the MRG). However, water needs for meeting other flow and restoration goals developed through adaptive management under the 2016 BiOp will be considered as the Program develops.

The primary focus of the Cooperative Agreement is to develop and implement the cooperative pilot Program with MRGCD and willing sellers over a 5-year implementation period to acquire water for environmental use in the MRG. Through pilot implementation, the Program will set the stage for expanded native water leasing and other voluntary measures at scale as win-win solutions for the river, local communities, agricultural producers, and MRGCD over the long term. Further, it provides a key component of a large-scale long-term opportunity to combine instream water leasing with the restoration of riparian and upper watershed habitats along with other initiatives to advance landscape-scale restoration in the MRG. Areas where collaboration with other agencies and partner organizations will broaden the scope of the effort, leverage additional funding, and increase the prospects for long-term success will be identified throughout the effort. The Program will also serve as a core implementation component of several conservation actions identified in the 2016 BiOp.

RECIPIENT INVOLVEMENT

The substantive work of the Program is described in two phases: Phase I, Program Development (to occur primarily in the first two years); and Phase II, Program Implementation (to occur in years 3 – 5). Phase II tasks and activities are dependent on the outcomes of Phase I program development work (e.g., water acquisition milestones in Year 3 will be determined by the outcomes in Phase I). The Phase I Base Period for the Cooperative Agreement is focused on program development with several interrelated tasks. The Cooperative Agreement also includes Program Operations and Management related to Recipient Program administration, contract management, and coordination with Reclamation and stakeholders.

Phase I: Base Period – Program Development (Years 1 and 2)
• Cooperative Agreement Launch and Mobilization
Development of RFPs and competitive solicitation of one or more local partners to assist with Program development and implementation.

• MRGCD Agreement
A Memorandum of Understanding (MOU) will be used to establish the terms of the Program partnership with MRGCD.

• Restoration Water Inventory/Scenario Development
This task focuses on building a Program that can meet critical needs of the river, its riparian habitat, and the fish and wildlife that depend on the river and its habitat. It will include an inventory of water rights designed to identify potential leasing program participants, as well as development of leasing scenarios matched to different restoration goals. This will include goals quantity of water leased in acre-feet by scenario.

• Water Acquisition Strategy
The preliminary water right inventory and scenarios defined by the 2016 BiOp goals and the Restoration Water Inventory/Scenario Development task will bound the size of the initial acquisition Program. This phase will build on the restoration water inventory to develop a strategy to acquire leases of the type and number sufficient to meet restoration objectives. Focus will include acquisition tactics, basic feasibility, costs, and contribution of each strategic component to the water inventory. This task will take into account the design of the Pilot Program Development.

• Pilot Program Development
This task will include the construction of the management and operational framework for an agricultural water leasing program that will be tested and refined in subsequent years. Generally, the framework will be built on consideration and inclusion of: a plan to validate pre-1907 water rights enrolled in the Program; a plan to advertise for, and maximize enrollment of, pre-1907 and other eligible water rights in the Program; farmer participation agreements; the approach to measuring, administering, and managing non-use on leased acreage; establishment of acreage objectives, enrollment prioritization, and other program guidelines; flexibility for MRGCD to concurrently manage farm-to-farm transfers; and the mechanisms by which farm-to-river transfers will be implemented.

• Regulatory and Institutional Compliance
This task includes assessment of existing NEPA and other required compliance coverage based on the program design, followed by Reclamation-led compliance activities.

• Program Refinement Plan Development
The Program Refinement plan will be designed to integrate and track water leases and deliveries, monitor any changes to water needs for supporting listed species and restoration projects in the MRG, and ensure that the Program strategy is updated so that implementation is aligned with and adapted to changing needs. At a minimum, it is expected that this will involve substantial coordination work between Program managers and 2016 BiOp agencies, as well as a deliberate monitoring and evaluation component to track program effectiveness (in conjunction with ongoing efforts).

Phase II: Option Years – Leasing Pilot Program Implementation (Years 3 – 5)
An annual planning and budgeting process will be used to define specific activities, milestone deliverables, and program budgets for each implementation year based on program plans and evolving needs. There are three tasks for each implementation year that reflect different aspects of implementation including:
• Program Implementation
Consistent with the program design, annual implementation activities are expected to fall into three general areas: i) water leasing and other environmental water transactions, ii) irrigation infrastructure improvements, and iii) habitat restoration. Execution of water leases and other transactions is the core area of Water Leasing Pilot Program activity, with any new or modified infrastructure needed to support measurement and delivery of water to priority in-channel locations also installed during the implementation phase.

• Program Expansion
After the pilot program framework has been established, the capacity for expansion and for including acquisitions of different types will be explored and implemented where feasible. While this aspect of the Program will depend largely on the outcomes of Program Development activities, ideally the Program can be scaled during implementation to provide for a variety of transfers and water management options, including for example: transfer size, transfer type, transaction types, and market mechanisms for expanding participation.

• Program Refinement
Program implementation will be flexible and informed throughout by feedback and modification from the program refinement process established during the Base Period.

• Pilot Program Report (final 6 months)
A concise final report will document the pilot program activities, accomplishments, and challenges.

RECLAMATION INVOLVEMENT

Substantial involvement on the part Reclamation is anticipated for the successful completion of the objectives to be funded under this Cooperative Agreement. Reclamation will monitor and provide Federal oversight of activities performed under this Cooperative Agreement. Monitoring and oversight includes review and approval of financial status and performance reports, payment requests, and any other deliverables identified as part of the scope of work. Additional monitoring activities may include site visits, conference calls, and other on-site and off-site monitoring activities. At the Recipient’s request, Reclamation may also provide technical assistance to the Recipient in support of the scope of work and objectives of this Cooperative Agreement. In particular, Reclamation will be responsible for the following:

• Active participation, coordination and consultation with the program team, including providing input on relevant Reclamation policies where applicable. Reclamation will be substantially and significantly involved in any and all agreements that will require Reclamation approval, such as the anticipated agreement with MRGCD and any negotiated agreements with State agencies regarding permitting of the program or operational modifications.

• Review and comment on all program documents. It is anticipated that the specific oversight and review required by Reclamation for various elements of the program including, but not limited to, Reclamation’s involvement in and oversight of: water lease agreements with willing sellers, due diligence of the water rights being pursued, negotiations with other third parties regarding water acquisitions or operational modification agreements, and effective integration of activities under this Cooperative Agreement with other 2016 BiOp elements and commitments.

• Reclamation will be an active participant in the integration of transaction opportunities into a single market strategy that will be effective, practicable, and financially sustainable. In particular, Reclamation will help guide and facilitate the leveraging of other sources of water, including: existing leases held by Reclamation; San Juan-Chama Project water expected to be available through Reclamation’s Supplemental Water program; water acquired by private or non-profit conservation buyers for environmental uses; and identification of commercial and municipal water rights owners who are interested in long-term leases of water to Reclamation.

• Guidance and information on Reclamation’s role in MRG water delivery and management and direct oversight of any anticipated or negotiated operational modification agreements.

• Federal compliance requirements, including NEPA requirements.

• All other necessary approvals related to the expenditure of federal funds for water leasing, habitat restoration, infrastructure improvements and monitoring under this Cooperative Agreement.

• Participation in, and support to, development and approval of annual scoping and budgeting activities (particularly in Phase 2, Years 3 – 5).