Arch Hurley Conservancy District

Tucumcari Irrigation Project

101 East High Street ~ PO Box 1167

Tucumcari, NM 88401-1167

PHONE: (575) 461-2351 — FAX: (575) 461-4061

EMAIL:

2012, A YEAR IN REVIEW AND A LOOK INTO 2013

The Arch Hurley Board of Directors and I would like to take this opportunity to inform the landowners of our District of some of this past years work and what we are working on and have planned for 2013 and beyond.

In an effort to be pre-emptive, the Board has approved several Bureau of Reclamation grants in 2011 and 2012. This has allowed our men to apply bentonite in areas of our canals that were identified as high loss areas from seepage. These grants were in excess of $400,000.00 which paid for all of the bentonite to be spread throughout these high loss areas of the delivery system making our water delivery system more efficient.

In January of 2012, the Directors were dealing with a premium increase on our Workers Compensation insurance. The premiums had increased three fold to an excess of $64,000.00 per year creating a budget crisis. The Directors approved and adopted a proactive Employee Safety Training and Incentive Program that has proven to be very successful. Arch Hurley did not file a single accident report in 2012. As a result of this Program, our premium cost will be less than $20,000.00 for 2013. This is a savings that can be passed on to the landowners in the future.

In November of 2012, Larry Perkins, Phillip Box and I attended the annual National Water Resources Association (NWRA) Conference. We met with the Deputy Director, David Murillo and Regional Director, Larry Walkoviak from the Bureau of Reclamation. We explained the long term drought over the past 11 years our District has faced with very little to no irrigation water available to be released to the landowners. We detailed the financial impact it has had on Arch Hurley and the landowners due to this severe and ongoing drought. We discussed many ideas and options for Arch Hurley and the landowners. Some topics we discussed were the annual debt payments Arch Hurley is required to make during the drought and other financial relief the Bureau of Reclamation could provide for us. They were committed to look at all of the options that the Bureau of Reclamation could offer to Arch Hurley and said they would be in contact with us after they reviewed everything discussed.

On December 12, Larry Perkins, Phillip Box, UV Henson and I traveled to Albuquerque to meet with the Bureau of Reclamation Area Director, Mike Hamman and staff member Randy Rust. This meeting was a follow up to the discussion that we had at the NWRA conference in November. Mr. Hamman proposed that the Bureau of Reclamation begin working on a Supplemental Contract that would defer Arch Hurley`s annual debt payments for 2014, 2015, 2016 & 2017. At the same time, they would begin working to draft legislation to introduce in the upcoming session for Congressional action on a Title Transfer to the Arch Hurley Conservancy District. The Title Transfer will forgive all of Arch Hurley`s debts to the Federal Government and transfer all of the buildings and property that is currently titled in the Federal Governments name to Arch Hurley Conservancy District.

At the January Arch Hurley Board meeting the Board of Directors approved to retain Chuck Dumars from Law & Resource Planning Associates. Mr. Dumars is a water attorney from Albuquerque and will advise Arch Hurley through the entire process from the Supplemental Contract to the Title Transfer.

On the State level, Arch Hurley has submitted a request for Capital Outlay funding from Senator Woods and Representative Roch for heavy equipment purchases. As everyone knows, we have miles and miles of laterals that have blown full with sand. We will start cleaning them out after we receive some moisture and the vegetation starts growing next to the laterals so they don`t become full of sand again. We are looking into Bureau of Reclamation Grants for some of these areas to install underground pipe in the open laterals that will help with future maintenance cost and increase our future water delivery efficiency rate.

At Conchas Dam, the US Army Corps of Engineers has approved a $2,000,000.00 contract to repair all six gates at the base of the Dam. These gates are currently leaking approximately 6.6cfs daily. The Arch Hurley maintenance department has been able to provide some expertise custom work for this company.

The Board of Directors has also met with Joe Martinez from the United States Army Corps Engineers (USACE) to discuss the cleaning of the channel from Conchas Lake to the inlet works of the main canal. There is currently four feet of sediment in this channel that needs to be removed while we have access to the area due to the drought. The USACE and the Arch Hurley Directors will be meeting soon to resolve this problem.

We would like to invite everyone to our monthly Board of Directors meeting held on the second Tuesday of every month at 9:00 AM. You can also review the monthly agenda and read the minutes of Arch Hurley meetings from our web site at www.archhurley.com

Sincerely,

Franklin McCasland, District Manager

Larry Perkins, President Phillip Box, Vice President

UV Henson, Secretary/Treasurer J.D. McEwen, Director

Robert Evans, Director