The Weak Get Weaker as Muni Bonds Are Sold Off

By TOM LAURICELLA And JEANNETTE NEUMANN

Amid the recent selloff in the municipal-bond market, investors are increasingly differentiating between state and local governments with strong finances and those facing big fiscal woes.

That trend could have significant implications for holders of bonds issued by weaker state and local governments, some of which are already paying higher interest rates and have seen the prices of their bonds decline in value.

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The growing gap between what the strongest and weakest government issuers pay to borrow brings unpleasant echoes of the European debt crisis, where escalating yields paid by countries such as Greece and Ireland made their fiscal situations untenable.

For muni investors, the scenario could prove similar—a series of rolling crises as the spotlight goes from one troubled issuer to the next.

Underlying this dynamic are issuers struggling not just with budget woes but with higher borrowing costs that end up inflating budget deficits. That prompts still more borrowing and also can result in ratings downgrades that can further raise borrowing costs.

“It’s a downward spiral,” said George Rusnak, national director of fixed income for Wells Fargo Private Bank.

Editors’ Deep Dive: Rocky Road for Muni Market

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The news isn’t great for investors in the $2.8 trillion municipal market, who include individual investors and property- and casualty-insurance companies, as well as more-recent investors, such as pension funds and foreign investors, attracted by a relatively new type of taxable muni bond.

Over the past month and a half, the municipal-bond market has taken it on the chin. The yield on 30-year, triple-A-rated municipal bonds closed at 4.66% on Friday, according to a widely watched index published by Thomson Reuters Municipal Market Data. That is up from 3.86% on Nov. 1.

The hardest-hit borrowers generally have been those seen as in the most dire fiscal shape. The market typically punishes creditors perceived as riskier by demanding higher yields. Some analysts anticipate yields paid by the most troubled municipal borrowers will only continue to widen next year in comparison with the broader market.

For Illinois, rated the worst in the country by Moody’s Investors Service at A1-negative, the gap between what the fiscally strapped state pays on its 10-year-maturity bonds is now 1.9 percentage points above that for the broader muni market. Just a month ago, the spread for Illinois stood at 1.6 percentage points, according to data from Municipal Market Data. A year ago, that gap was less than one percentage point. Spreads on Illinois bonds could reach as high as two percentage points next year, says Wells Fargo’s Mr. Rusnak.

State-by-State Variations

Nevada, which carries a slightly better credit rating of Aa1-negative from Moody’s and is seen as especially hard hit by the housing-market collapse, has seen its borrowing spread rise to 0.80 percentage point from 0.5 point on Nov. 1.

In comparison, Pennsylvania, which has the same rating as Nevada but whose fortunes are perceived by the market as relatively brighter, is paying just 0.2 percentage point above that of the broader muni market, about the same as it was both a month ago and in late 2009.

For states with greater perceived risks, “investors are asking to be compensated for it,” said Tom Kozlik, municipal credit analyst at Janney Capital Markets.

The potential for spreads to widen comes as some analysts expect the level of yields on muni bonds broadly to be on the rise next year. One big reason is the end of the Build America Bonds program, which helped the muni market by diverting some $150 billion in issuance into the taxable-bond market.

Bank of America Merrill Lynch, for example, expects muni yields to rise 0.35 to 0.50 percentage point without the program.

In the case of Illinois, which sold $10.9 billion in longer-term debt in 2010, an extra 0.35 percentage point on its debt would have meant an extra $38.2 million in interest payments.

Could Problems Spread?

A key unknown for investors is whether severe financing problems will remain isolated to individual struggling issuers or instead spread to healthier issuers.

John Longo, investment strategist at advisory firm MDE Group in Morristown, N.J., thinks that as long as any defaults remain few and far between, the impact will localized to those issuers. However, “if there are many defaults, it could result in a macro, contagion-type risk,” Mr. Longo said.

Comparisons to Europe are ill-placed, said John Sinsheimer, director of capital markets for Illinois, because Illinois doesn’t roll over its debt in the same way some European countries do. “In Illinois, all our debt is paid off like clockwork every year,” Mr. Sinsheimer said.

There are other differences between the European government-bond market and munis. For example, local governments can try to turn to their states for support, and there are existing frameworks for municipalities to work through restructurings.

Janney’s Mr. Kozlik notes that there also has long been the option to sell so-called deficit-reduction bonds, as Massachusetts did in 1990 to bridge a huge budget deficit. However, he notes, such bonds will still cost an issuer more money in interest.

On the flip side, the European bond market has been propped up by bond purchases by the European Central Bank. Analysts say they can’t recall a large-scale purchase of muni bonds by the Federal Reserve, and the law limits the Fed’s ability to buy muni debt to only certain kinds of very short-term securities. However, some in the market speculate that, should a third round of quantitative easing—injecting cash into the market through bond buying—become needed to boost the economy, the Federal Reserve might buy munis.

The big question is whether the recent muni selloff will continue. Some of its catalysts could prove transitory, such as the rise in U.S. Treasury yields, which long-term munis tend to track. In addition, a burst of heavy selling by mutual-fund investors came close to the year’s end, just as Wall Street brokerage firms are trying to keep inventories of bonds on their books as low as possible

But 2011 could see increasing strains on state and local governments’ balance sheets. That is partly because of expectations that the job market will remain weak, depressing revenues brought in from payroll taxes and making it politically unpalatable to raise taxes on unemployed residents.

Diminishing Collections

At the same time, property taxes are “poised to decline” in coming years, the Congressional Budget Office said in a report this month. That is because homes aren’t reassessed every year, so local property-tax revenue lags behind falling house prices by three years on average. “Even small declines in collections could cause fiscal stress when the cost of providing public services is growing,” the report said. Also, state aid to local governments has already declined in many states and is expected to be cut by more states next year.

This is no small issue. Towns and cities rely on property taxes for nearly one-fourth of their revenue and state aid for another third, according to the CBO.

“Municipalities are going to be doing belt tightening, but there’s only so much belt tightening they can do,” said MDE’s Mr. Longo. If they are hit with higher borrowing costs and lower property-tax revenues, “that becomes an unsustainable position.”

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Water Heist in the Plains of San Augustin By Jack Loeffler

The Plains of San Augustin—a vast graben that spans the Continental Divide, a grassland surrounded by pine-forested mountains, once a great lake whose waters disappeared at the end of the Pleistocene, the last ice age that ended around 12,000 years ago when mammoths, dire wolves, and even horses that had roamed the Southwest for millennia were slowly chased into extinction by climate change and early human hunters.

Within today’s ephemeral geopolitical context, the Plains of San Augustin are contained within western Socorro and eastern Catron Counties of southwestern New Mexico.  Near the south end of this enormous dry lake bed, the surface of which extends to nearly a mile and a half above sea-level, is Bat Cave, a site of early human habitation whose middens revealed corn cobs of different sizes and periods that give some idea as to just how deep into antiquity maize was harvested and consumed in southwestern North America. Bat Cave is thought to have been inhabited by humans of the Cochise culture at least five thousand years ago, and possibly earlier.  These hunter-gatherers left remnants of their passage around the area in other sites as well, especially in nearby mountains about twenty-five miles due west of Bat Cave.

Thirty years ago, I camped at Bat Cave with my old pal, Michael Harner who had been an undergraduate in 1948 when he was a member of the archaeological team headed by Herbert Dick who excavated the site, and found the corn-cobs that chronologically placed southwestern maize within time’s continuum.  Those young archaeologist-anthropologists missed an arrowhead that I found that now lies before me as I write, a treasured artifact that connects me, somehow to a fellow human who preceded me by a hundred generations, someone who worked very hard to survive, and whose consciousness was still wild, unencumbered by the technofantasy that dominates today’s western culture.

Sitting at dawn in the entrance to Bat Cave, I looked out over the Plains of San Augustin, a beautiful habitat that I have loved for nearly fifty years, since before the arrival of the Very Large Array (VLA) of radio telescopes constructed by the National Observatory to use the heart of this enormous natural parabola as the place from which to observe cosmological phenomena in the firmament. This VLA is one of humankind’s highest technical applications of modern scientific consciousness—listening to the cosmos, finding echoes of the Big Bang that ushered our universe into being over thirteen billion years ago.

Scattered around the Plains of Saint Augustine are cattle ranches run by a curious breed of true individuals who prefer to govern their lives as they see fit through hard work and John Wayne-ian true grit.  They prefer to be left alone in this enormous span of grassland that elicits fits of agoraphobia in visiting urbanites who happen to be driving from Magdalena to Datil.  This is indeed a habitat perfectly suited to itself, a biotic community contained within a geophysical cradle sculpted by volcanic activity with an ancient tectonic nudge that resulted in an exquisitely defined watershed that apparently drains to either side of the Continental Divide.  Both the Río Grande to the east and the Gila River to the west are fed by waters from the San Augustin aquifer.

*****

Today, a family of speculators is seeking legal right to drill thirty-seven wells deep into the San Augustin aquifer and pump 54,000 acre feet of water per year for 300 years, or until the aquifer runs dry, for undetermined purposes other than to sell this water to the highest bidder.    Or, put another way, a family of modern-day carpetbaggers wants to pump the lifeblood of a living bioregion, create a water hemorrhage with no thought of tourniquet, despoil a vibrant habitat, rape the Earth—for money, lots of money to satisfy the insidious greed that has come to dominate so much of the darkening consciousness of western culture.  The privatization of common waters for profit is absolutely unethical.

The local population is aghast at the evil frivolity being visited upon them by a neighbor who acquired a ranch two decades past, for the sole purpose of reaping vast profit at the expense of habitat, of common waters, of a watershed held in common by the human population as well as the rest of the inhabiting biotic community—a watershed that contributes to both the already over-allocated Río Grande and Gila River, the lifeblood of the O’odham Nation and various riverine communities that it nurtures in both New Mexico and Arizona before it empties into the Colorado River in Yuma hundreds of miles west of its headwaters near Silver City.

Bruce Frederick, an attorney with the New Mexico Environmental Law Center in Santa Fe who also holds a Masters degree in hydrology from New Mexico Tech in Socorro, is representing the inhabitants of the Plains of San Augustin with the intention of thwarting this debacle.  I conducted a recorded interview that is included in its entirety that portrays the nature of water law in the West.

“From a western water law perspective, where the Prior Appropriation Doctrine grew up around miners, the ‘‘forty-niners’ really, the practice they had was to divert water from a stream and use it for their mining practices, and they could take as much they needed for their particular mining practices, and they would leave the rest in the river for the next person to use.  Obviously, if the first person who arrived dammed up the entire river, and sold it to everybody else, he obviously would have been lynched.  So for the last 150 years, essentially, that’s been the law.  The law of prior appropriation in all western states is written into their constitutions, is the beneficial use– the basis, the measure, and the limit of the right to use water.

“Before the state engineer was invented in 1907, essentially, you established a water right by actually taking water out of the stream, diverting it out of the stream and applying it to beneficial use.  So everyone around you could see how you were using the water. The state engineer started the application process in 1907, but the concept is still the same– the basis, the measure, and the limit of the right to use water.  But now you file an application first and then the state engineer determines whether there is any water– called un-appropriated water– available, and whether your new use is going to impair existing water rights.  He should also look at your application– and this is clear in other states that are well-developed, particularly in Colorado—to see if your intended use is speculative.  It’s one thing if you intend to use the water yourself on your land, say for irrigation or domestic purposes.  That’s very easily quantified.  So we can tie what you want to use the water for with how much you’re applying for, and put the two together to see if they are reasonable. So historically what an applicant does is, say they have a particular use in mind at a particular place, they ask for a particular amount of water, then the state engineer can assess the amount of water they’re asking for, and measure that against the water needed for their anticipated use.

“The San Augustin application turns that whole concept on its head.  Instead of looking at a particular use, what they’re doing is looking at a basin, an enormous basin with potentially lots of water, and they’re saying, ‘We think there is enough there to take 54,000 acre feet of water per year for 300 years until we drain it dry, and we want it all.  We don’t want it for our own use.  We want to sell it to third parties.’  And there are people they haven’t identified…. the highest bidder.  They want to sell it to the state if the state has trouble complying with its Compact.  Well the state has protested the application.

“They (applicants) want to offset diversions, for example Río Rancho hundreds of miles upstream– the idea is that if Río Rancho pumps ground water, eventually that’s going to deplete flows into the Río Grande because the ground water’s connected to the surface water.  And because the Río Grande is fully appropriated, Río Rancho can’t do that unless they either buy up surface rights, or find some source and dump that into the river.  That’s the role that San Augustin says they might want to play.

“Of course there’s a big disconnect between where Río Rancho’s depletions occur, hundreds of miles upstream, and where San Augustin will pipe water into the river from groundwater.  It’s also somewhat absurd because the San Augustin Basin, pumping that much water will eventually deplete the Río Grande, because it’s connected to the Río Grande via the Alamosa Creek, which is spring-fed creek which drains into the Río Grande, and those springs are fed by the San Agustin aquifer, we think.  The San Augustin aquifer also drains into the Gila Basin and eventually ends up as surface flows in the Gila.  So pumping that much water out of the Augustin (Basin) will eventually deplete flows in the Gila River and deplete flows into the Río Grande.

“Those are issues of fact.  We’re going to contest this application on the anti-speculation doctrine.  Our position is that this application is invalid on its face, because neither the state engineer, nor the people with existing water rights…can tell when this water will be taken out of the aquifer, where it’s going to be used, how much return flow there might be, or anything else.  We’re saying that the application is invalid on its face for that reason.

“The Augustin Plains Ranch, or APR as it’s sometimes referred to, is a New Mexico corporation owned by foreign investors, as far as we can tell.  One in particular is an Italian speculator—somewhat mysterious—named Bruno Modena.  His son might be involved in this as well.  His name is Vito. Bruno may be a holocaust survivor.  He’s Italian.  …  He’s apparently a wealthy person. …He’s proposing a lot of speculative things, and nobody knows for sure who he is and what he wants to do.

“Anyway, APR has owned thousands of acres of land out there in the San Augustin Plains for about 20 years.  Whether they bought this land purely for its own value, or whether they had this intention all along, we don’t know.  The ranch is an active ranch, apparently.  There’s no irrigation on that ranch as far as I know.  Now, after 20 years, they’re saying that they want to irrigate 4000 acres of high desert land.  We don’t know if they really have plans to do that or not.

“It’s about 20 miles east of Datil.  The Very Large Array (VLA) is close to it.  They are protesters in the case.  Pueblos have protested it, federal agencies have protested it, state agencies have protested it, numerous individuals have protested it. The Middle Río Grande Conservancy District has protested it.  The original application and the amended application together drew about a thousand protests…  As far as I know, it’s the most protested application in the history of the state engineer’s office.

“It would be unconstitutional, I think, because one of the fundamental tenets in prior appropriation doctrine is that you put water to beneficial use after you apply, and there’s no way to determine when, if ever, this water would be put to beneficial use.  It’s entirely speculative.  We can assume that in a hundred years, we’ll be more desperate for water than we are now.  We can assume that an individual, or a group of investors would like to corner the market on water. And that’s what they’re trying to do essentially, to corner the market on water in this particular area.  It’s unethical, and in this case it’s unconstitutional. You can’t use water in the west for speculative purposes like that.  It’s for use, not for speculation.”

*****

Carol and Ray Pittman are residents of Catron County.  In an interview, Mrs. Pittman told of how several residents happened to read legal notices in late 2007 that mentioned the application to pump 54,000 acre feet per year from the Plains of San Augustin Aquifer.  A meeting was held that drew over 400 residents. They formed the San Augustin Water Coalition.  An excerpt from the Coalition overview published in February, 2009 reveals: “At a public meeting in December, 2007, hundreds of residents met to consider the threat.  The overwhelming consensus was that local people should decide appropriate use of local ground water, not predatory and far-removed speculators whose sole aim is to profit financially at the expense of local residents.”

Shades of John Wesley Powell!!  Appearing before the House Committee on Irrigation in 1890, Powell vigorously advocated for local governance from within individual watersheds claiming that local residents were the most appropriate to determine how water and other natural resources should be used, and that indeed each watershed of the arid west should be regarded as a commonwealth.  He also advocated that there should be no inter-basin transfers of water, that each watershed should be self-sustaining.

Carol Pittman and her fellow residents are working indefatigably to forestall this theft.  They work closely with Bruce Frederick from the New Mexico Environmental Law Center and are determined to thwart the application placed before the state engineer by the Augustin Plains Ranch.  They formalized their Coalition and applied for a 501(c) 3 status to provide for tax-deductible donations to help defray expenses.  She said, “All of the people of this area, some in Socorro, some in Reserve and some even as far south as Glenwood, everyone came together to oppose this application.  I think some people are mostly afraid about what will happen to them and their water rights and their way of life.  It’s a very bad idea.  It’s a precedent-setting thing…We’re not going to let it happen…It’s been apparent from the start that this application moved forward because somebody somewhere in the system wants it to move forward.  Bruce (Frederick) told us that this is a speculative application and it should have been thrown out on the simple face of it.  That makes us all very suspicious.”

She went on to say, “We need Bruce very much, but we also need the entire state to look at this and say ‘this is not the right way to go.’  And if this happens, the way that I look at it anyway, there will be new policies, a new vision, a new way of looking at things.  It’s very difficult for the state engineer, because he has to deal with all these little political entities who are constantly approving more and more development, and what does he do about that? The way I envision the state engineer is that he’s constantly scrambling with the applications with this day-to-day stuff. How does he ever have time to think about what really should be done, what changes should be made?…I think this case might really bring that kind of thing to a head so that people all over the state concerned about water will think in terms of a new vision.”

It’s high time for another kind of speculation here—philosophical speculation, or perhaps a query into ethical considerations about transfusing water, the life-blood from this vibrant, evolving habitat known to humans as the Plains of San Augustin into another as yet undisclosed over-burdened oasis. First, what are the moral implications of privatizing this finite common waters into vast sums of money for carpetbaggers whose collective mindset precludes any known intuitive understanding of what a miracle the integrated biotic community of the Plains of San Augustin really is.  Second, to transfuse its waters into the Río Grande, or elsewhere to satisfy legal requirements rendered three-quarters of a century ago before we, as a culture began to perceive that “growth for the sake of growth is the ideology of the cancer cell”, as Edward Abbey so blatantly articulated, is but a failing bulwark that exacerbates rather than relieves the water disaster that is already imminent for the over-abundant human population of New Mexico– to say nothing of the rest of this extraordinarily diverse biotic community.  Thus we are about to trip over yet another stop-gap measure.  It’s as though we’re concurrently siphoning off our wisdom pool, our common sense as we pander to a failing economic paradigm.

The Plains of San Augustin is a beautiful living organism unto its own.  Metaphorically, because of the VLA, it is a sensory apparatus from whence we “listen” to the cosmos for information about radio galaxies, remnants of supernova, gamma ray bursts, radio-emitting stars, our solar system, black holes, and other phenomena.  It will also serve as a model for how we comport ourselves through the coming decades as we face very real global warming and climate instability. Human over-population in a high desert habitat where common waters are already strained does not bode at all well for our children, and especially their children.  We wash our cars and irrigate golf courses with the drinking water of our grandchildren.  We must not only thwart the madness of the water heist in the plains of San Augustin, but also triumph over our prevailing lack of commons sense, and use our preservation of this fragile, beautiful habitat as a banner leading us to ethical recovery in this time of desperation when all too often human intent and law violate natural law.

 

To register your opinion, contact:

Office of the State Engineer:

130 South Capitol Street

Concha Ortiz y Pino Building

P.O. Box 25102

Santa Fe, NM   87504-5102

Phone:   (505) 827-6091

Fax:  (505) 827-3806

 

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Lake Meade Reaching Emergency Management Levels (via newmexicowaterandpolitics)

We are in a multi-year drought and it is time to take special interests out of the decision making process.
Water is our life blood.

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Lake Meade Reaching Emergency Management Levels

This is a major water alert!!                                                                                                       Lake Meade is within a few feet of Emergency Management Status!  The level of the lake is down almost 140 feet. To avoid Federal Emergency Management control the head of the Las Vegas Water Authority, Pat Mulroy is requesting release of water from Lake Powell to make up for the shortfall even though water levels in Lake Powell are low. Lake Meade is drawing down of more than 5 inches per month, but it maybe more. This is very serious because the implications are far reaching. Lake Meade is fed by the Colorado River. Both the Colorado and our Rio Grande River is fed by the same head water region. Parts of New Mexico depend on water from the Colorado River.

We will update this post as facts are made available.

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Congressman-Elect Steve Pearce Believes in Local Control of Our Water! We have a Congressman that Listen’s and Cares!!

Steve Pearce, who is the newly-elected representative to the United States House of Representatives from the District that includes Socorro and Catron Counties, told those in Datil who attended his listening session on December 2nd that we need to participate, to be involved, to be sure that we inform our elected representatives at every level about our concerns.
That admonition certainly applies to those of us opposing the Augustin Plains Ranch LLC attempt to move 54,000 acre feet of water each year from northern Catron County to the Rio Grande 60 miles distant.  Mr. Pearce stated that he is opposed to water being moved from one region to another, within the state or out of state.  He promised to send materials that show how Lea County has gained some local control over their water resources, and he has followed through on that promise.  The more we are involved in this process the more likely it will be that we can bring about change in the way water issues are dealt with.
At any rate, it seems we have an important ally in our water fight.  The future of water use in New Mexico must be uppermost in every citizen’s mind for the foreseeable future and at the top of our lawmakers’ agendas.  Make your voices heard.

Immediate Post to Follow because we must let our lawmakers where we stand on our Water!!
Please comment on this post because your voice counts!

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Presentation to Interim Legislative Committee on Water and Natural Resources by Eileen Dodds and Anita Hand-Gutierrez October 19, 2010

Presentation to Interim Legislative Committee on Water and Natural Resources

by Eileen Dodds and Anita Hand-Gutierrez

October 19, 2010

We’re here to express our concern for the proposed water mining of the San Augustin Plains by a foreign entity for profit, and by extension, what that approval could mean to the State of New Mexico. As you’re aware, there’s a petition at the Office of the State Engineer (OSE) to permit the drilling of 37 large-bore wells to a depth of at least 3000 feet, and mine 54,000 acre feet of water annually from the San Augustin Plains.  54,000a.f.equates to l7.6 BlLLION gallons of water. Annually. Until it’s gone….

To put that in perspective, according to figures supplied by the Albuquerque Water Dept., 2008 usage for Albuquerque and greater Bernalillo County was 32.3 BB gallons, serving a population of 550,000. This means that over 1/2 of the annual usage of all of Albuquerque will be mined from the deep aquifer in Catron and Socorro counties for the application’s stated purpose of “providing water by pipeline to supplement or offset the effects of existing usage, and any new usage, thereby reducing the current stress on the Rio Grande Basin in New Mexico”.

For monetary consideration, their plan is to send this water down the Rio Grande to Texas to meet Compact requirements.

Upon filing this application, and thru the amended process, almost 1000 people and organizations in Catron and Socorro Counties filed formal protests with the OSE–the largest ever received by that office.

Protestants include the Catron and Socorro County Commissions, Socorro Soil and Water Conservation District, State of NM Game and Fish Dept., the Interstate Stream Commission, Divisions of the US Depts. of the lnterior and Agriculture, the Navajo Nation Dept. of Justice, several Native American pueblos including Acoma, Laguna, and Zuni, the Univ. of New Mexico, the Nat’l Radio Astronomy Observatory, and a multitude of individual landowners.

Today, approx. 250 protesters remain to be heard by the OSE, after that office required a $25.00 fee from each party requesting to be heard. The OSE raised over $6000………. .. .

Catron and Socorro Counties won’t survive the mining of this aquifer. There’s a delicate balance between usage and supply that these counties have always nurtured for their needs. Ranching, farming, hunting, tourism and recreation, State and National forestry, wildlife habitat, and just plain quality of life will be destroyed.

Water is our life.

In 2009, hunting generated about $7 million circulating dollars in Catron County.  In 2007,US Dept. of Agriculture figures indicate that ranching generated about $11 million in Catron, and about $40 million in Socorro Counties.

Socorro is also home to the State Fire Academy, which Anita and I have attended in our capacity as Datil volunteer firemen. We

can attest to the fact that people from all over the US use this excellent facility for training. They need water for training…………

According to City-Data.com, 86.4% of the farms ans ranches in Catron County are owned and operated by individuals or families. Our family roots run deep. 58% of the county’s residents have lived in the same house for 5+ years; another 21% moved from one place to another within the county. That means only about 20%of the population of Catron County has moved into the county in the

last 5 years. The newcomers, myself included, came here for a variety of reasons, but we are all here for its quality of life.

Currently, there are approx. 905 wells on the SA Plains. 14 belong to the BLM, 47 to the Nat’l Forest, and 53 to the State of New Mexico. The rest are in private hands on the ranches. These figures were derived from data supplied by the OSE.

We believe that if the drilling permits are granted to the Augustin Plains Ranch, LLC, that these 905 wells will cease to have water almost immediately. Ultimately, the rest of the wells in the region will follow suit. This excessive mining of our groundwater is not sustainable. Ranching will die. Wildlife, including the Mexican grey wolf, will die or leave. The human populations of both counties will be forced to leave, thereby reducing county and state tax revenues.

We are aware of little legislation now in NM that protects our population from water mining. ln the 20’s and 30’s, when times were vastly different and populations much smaller, our legislative ancestors negotiated Compacts with neighboring states that are no longer in the best interests of the people of NM. We are not here today to malign their decisions, nor are we here to ask you to

renegotiate those Compacts. They surely did what they thought right at the time, but they lacked the foresight as to the consequences of population growth, especially in Arizona and Texas. Now we are fighting those giants to our east and west as they again try to take advantage of the citizens of NM. Big out-of-state developers and foreign entities have come here to do the same thing.

Our protection rests in your most capable hands. We don’t believe that this generation wants to be responsible for letting our great grandchildren inherit a wasteland.

We are here today to ask you to consider the following legislation:

‘1) The protection of surface and subsurface waters within the State for our current use, and for the use of all future generations, with emphasis on long term sustainability.

2) Limit interbasin transfers.

3) Close the practice of automatic approval of the drilling of domestic wells. They should require an impact statement too.

4) Prohibit the mining of the deep aquifers (statewide) by requiring the proponents of this drilling to demonstrate that any and all waters

extracted are in excess of the area’s future needs.

5) Restrict commercial and residential development until the proponents can prove they have the long-term water allotment necessary to support growth. Prevent developers from “borrowing” for future development from today’s finite resource.

6) Consider the effect on public welfare in rural areas and protect the rights of all New Mexicans to have the sustainable use of clean water.

7) Provide oversight of the OSE process for hearing appeals from the citizens of New Mexico.

We believe that water is best kept where it is for use by the citizens of that area. This includes wildlife. This is NOT TO SAY that it can’t be removed at a REASONABLE rate, allowing for normal recharging and replenishment.

Whatever happens at the OSE regarding this matter of water mining on the San Augustin Plains, we the citizens of Catron and Socorro

Counties—–Democrats and Republicans alike—–have united in a single purpose:

Protecting our way of life.

Whatever happens, we are in it for the long haul. We believe it will end up in the courts. We believe it will become a landmark case that will eventually find its way to the United States Supreme Court.

We here today may not be alive to see the outcome, but we may well determine, by the decisions we make in the immediate future, the water usage not only for New Mexico, but for the entire western United States.

Help us. Help the citizens of the Great State of New Mexico. Protect our resources from all those who seek to use them for selfish monetary interests that aren’t conducive to conservation for future generations. Thank you for your time.

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San Augustin Water Coalition, New Mexico

San Augustin Water Coalition
The San Augustin Water Coalition was formed when a foreign entity posed a threat to the
Augustin Plains water basin. The Italian owner of the Augustin Plains Ranch LLC
applied to the Office of the State Engineer to move 54,000 acre feet or water each year
from eastern Catron County to the Rio Grande 60+ miles away. This proposal has
generated more than 1000 protests from residents of Catron, Grant, and Socorro counties
(and some beyond those boundaries); federal, state and local government entities;
businesses; and Indian tribal governments. A largely rural area, sparsely populated, the
area must have resembled a third world country to the owners of the ranch, and they
proposed to exploit it for their own profit
The Coalition is a loosely defined organization, consisting of those persons who wish to
be a part of an organized protest. The By-Laws state:
“Membership in SAWC shall be open to any person or organization that supports the
purposes of this organization as stated in Article III.”
Article III states:
Section 1-Purpose. The purpose for which SAWC is organized is to protect the water
resources of the San Augustin and adjacent water basins, and the public welfare
and conservation of water associated with those water resources, now and in the
future.
Section 2-Goals. SAWC works to accomplish the following goals:
1. Educate and inform the public about the protection of water rights and quality
and other water resource issues of the San Augustin and adjacent basins;
2. Raise money for water litigation and legal expenses for litigation associated
with the protection of water rights and quality and other water resource issues
of the San Augustin and adjacent basins;
3. Encourage participation in the Augustin Plains Ranch, LLC drilling permit
protesting process;
4. Encourage individuals to actively participate in local, state and federal water
legislation processes.
At first there existed an informal Steering Committee to monitor the process and it
morphed into a more formal Board that is now meeting regularly and setting policies. The
Board members are old time ranchers, new residents of subdivisions, and people like Ray
and me who don’t fit in either of those categories. We all realize that we have a stake in
helping each other. In addition to setting policies, we are raising money to meet
expenses, monitoring the progress of the application, and making contacts with other
like-minded groups and individuals around the State.
SAWC is incorporated as a non-profit organization under the laws of the State of New
Mexico and is looking into becoming a federal non-profit group.
Carol Pittman, Board Member, Datil, New Mexico

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