Internal Document – Pre-Decisional – Not for Public Release
UC-44X
ADM-1.10
MEMORANDUM
To: Director, Policy and Administration
Attention: 84-
From: LarryWalkoviak
Upper Colorado Regional Director
Subject: Basis of Negotiation (BON) to Request Delegation of Authority (DA) to Negotiate the Transfer of Operation and Maintenance Responsibilities in the Strawberry Valley Project from the Strawberry Water Users Association and the Strawberry High Line Canal Company to the Central Utah Water Conservancy District; Strawberry Valley Project, Utah.
A. Purpose of the Request: To request a delegation of the Commissioner of Reclamation’s authority to negotiate an amendatory contract to remove all operation and maintenance (O&M) responsibilities from the Strawberry Water Users Association (SWUA) and the Strawberry High Line Canal Company (SHLCC) and enter into an amendatory contract with the Central Utah Water Conservancy District (CUWCD) to accept O&M of all Strawberry Valley Project (SVP or Project) facilities (except maybe the laterals?).
B. Contracting Action: Execute an amendment to the Repayment Contract of 1965 between the Central Utah Water Conservancy District and the United States, for CUWCD to take over O&M of all SVP facilities.
C.
Contracting Entities: The CUWCD is a water conservancy district organized and existing under the laws of the State of Utah, which entered into Repayment Contract No. 14-06-400-4286 dated December 28, 1965 (Repayment Contract), with the United States to repay the construction costs, and accept O&M for the Bonneville Unit of the Central Utah Project (CUP).
D.
Relevant Legal Authorities: The Reclamation Act of 1902 (32 Stat. 388), and the Reclamation Extension Act of 1914 (38 Stat. 687) allow for the transfer of O&M by the Secretary of the Interior to legal entities which are deemed capable to perform O&M responsibilities.
E.
Project Background:
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The Secretary of the Interior authorized the SVP on December 15, 1905, under the provisions of the Reclamation Act of June 17, 1902. Primary Project facilities included the Strawberry Dam and Reservoir; the Strawberry Tunnel (a trans-basin diversion from the Colorado River drainage to the Great Salt Lake Basin); power generation, transmission, and diversion facilities; the Springville-Mapleton Lateral; and the Strawberry High Line Canal.
In 1906, the United States entered into a contract with the Strawberry Valley Water Users Association, providing for it to assess and collect payments from individual farmers for water received from the Project, with Reclamation retaining responsibility for water delivery and O&M. In 1916, the SHLCC accepted O&M of the High Line Canal, a distribution artery of the SVP carrying approximately 4/7 of all Project water. In 1918, the Springville-Mapleton Irrigation Company (SMIC) accepted O&M of the Springville-Mapleton Lateral which carried Project water from the Spanish Fork River north to Hobble Creek in Springville, UT. The remaining 3/7 of Project water is divided between the SMIC and various private canal companies which deliver Project and non-Project water in southern Utah County. Pursuant to the Fact-Finders Act of 1924, the SWUA was formed and in 1926 entered into a contract with Reclamation to take over repayment for the SVP as a whole, and O&M of Strawberry Dam and Reservoir, Strawberry Tunnel, a diversion dam on the Spanish Fork River, and the power generation, transmission, and distribution facilities; specifically excluding any O&M responsibilities for the Springville-Mapleton Lateral and High Line Canal. This contract was amended in 1928, 1940, and 1991. Under its 1926 contract, SWUA obtained Subsection I provisions of the 1924 Fact Finders Act, to use net revenues from the power plants, mineral leases, and grazing lands to assist in repaying construction costs and defraying O&M expenses for the Project.
In 1956, the Central Utah Project (CUP) was authorized under the Colorado River Storage Project Act. The Bonneville Unit of the CUP relies on additional trans-basin diversions from the Colorado River drainage into the Great Salt Lake Basin, and was designed to be laid on top of the SVP. In 1974, Soldier Creek Dam was completed as a feature of the CUP, which enlarged Strawberry Reservoir from approximately 280,000 AF to 1,100,000 AF. With the completion of Soldier Creek Dam and additional transmission and diversion features which duplicated previous SVP features, CUWCD became the O&M contractor for a majority of the Project features previously operated by SWUA. Reservoir operations relating to the CUP and SVP are outlined in Agreement No. 1-07-40-R1330 (1991 Agreement) dated July 29, 1991, which included a provision for 61,500 AF of water would be released annually with a 50,000 AF one-time bank which has been allocated to the recipient companies of SVP water.
In 2005, CUWCD took over OM&R of the Springville-Mapleton Lateral and accompanying diversion structure per Contract No. WS-04-150 dated March 15, 2005. In accordance with the Central Utah Project Completion Act, a joint funding agreement was executed to replace the Springville-Mapleton Lateral with an enclosed pipeline that would deliver water to the Springville and Mapleton Irrigation companies.
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The CUWCD currently operates and maintains Reclamation facilities in six Utah counties, which include many major storage and regulating reservoirs, along with hundreds of miles of interconnecting conveyance systems equaling more than 2 billion dollars in asset value.
F.
Proposed Contract Terms and Conditions:
1. Operation and Maintenance: Reclamation is requesting authority to terminate the O&M provisions of SWUA’s and SHLCC’s contracts and transfer O&M of remaining SVP facilities from the SHLCC to the Central Utah Water Conservancy District, by way of an amendatory contract. Per the proposed contract, CUWCD will become the successor-in-interest for all O&M activities within the Project.
2. Water Delivery: In the amendatory contract, CUWCD will continue delivering water to the SMIC, SHLCC, and the canal companies which deliver Spanish Fork River water, as well as Project water, based on conveyance, carriage, and delivery rights as outlined in previous SVP agreements. All entities with water delivery contracts currently with SWUA, and SHLCC, will now look solely to Central Utah Water Conservancy District for delivery of Project water (Aug 5, 1942, Contract w/ SHLCC).
3. Water Bank: The 1991 Agreement created a 50,000 AF water bank which could be drawn down and refilled by the participants of the SVP. SWUA, SHLCC, SMIC, and the associated river companies would continue to operate the bank in accordance with the 1991 Agreement; the water would be delivered by CUWCD.
4. Direct Flow Rights: Direct flow rights in the Spanish Fork River would be unchanged. The only modification would be the assessments would be paid to CUWCD instead of to SWUA.
5. Return Flows: All Project return flows would revert back to the United States. (Would we place these rights with CUWCD or keep them for future use?)
6. Subsection I Revenues: All subsection I revenues would accrue to the operation and maintenance entity of the SVP. Compensation in the amount of XXXX would be required to make SWUA and SHLCC whole. Calculated on X interest rate for 50 years – PV.
7. SWUA / SHLCC Staff: CUWCD will strive to find positions for current staff members of the SWUA and SHLCC. (Don’t know if this needs to be in an amendatory contract)
8. Laterals: (Do we wish to leave O&M of the laterals with HL?)
9. OM&R Assessments: CUWCD will be responsible for operation, maintenance, and replacement of all current and future SVP facilities (do we exempt laterals and leave with SHLCC?). Project recipients will pay CUWCD annually for their proportionate shares of water delivered.
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10. Power Transmission System: Currently the SWUA has a long-term agreement with Southern Utah Valley Power System group for O&M of the 46kV Project Transmission Line. Reclamation requests permission to make that agreement permanent in this proposed contract.
G. Stipulations:
1. NEPA Compliance: For transfers of O&M?
2. Previous Commitments: Any and all existing commitments and obligations between the shareholders in SWUA and SHLCC will remain in force unless modified in this Agreement.
3. Conversion: Reclamation will act in accordance with PEC P-05 and PEC-P09 for conversions of project water from irrigation to other purposes.
4. Irrigation Season: Do we wish to change the dates from April 1 to October 1 of each year?
5. Carriage – Same as other CUP facilities as provided by CUPCA.
6. Public Participation: Reclamation is accommodating public participation through the NEPA / contracting process.
7. Standard Articles: Same as O&M Std Articles
8. Office of the Solicitor finding of Sufficiency: This BON has been reviewed for legal sufficiency and has been approved by the Office of the Regional Solicitor.
If you have any questions, please contact Mr. Jeff Painter of my staff at 801 524-3711 or
Mr. Jeff Hearty in the Provo Area Office at 801 379-1221.
