Attachment	Memorandum of Understanding Between the Bureau of Reclamation and the Loup Basin Reclamation District, Sargent Irrigation District, and Farwell Irrigation District, and Amendment

MOU No.99AG601285

MEMORANDUM OF UNDERSTANDING
BETWEEN
UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF RECLAMATION
GREAT PLAINS REGION
NEBRASKA-KANSAS AREA OFFICE
AND
LOUP BASIN RECLAMATION DISTRICT
FARWELL IRRIGATION DISTRICT
SARGENT IRRIGATION DISTRICT
CONCERNING PRINCIPLES AND ELEMENTS
OF PROPOSED TRANSFER OF TITLE
TO WORKS, FACILITIES AND LANDS IN THE
MIDDLE LOUP DAFISION

This Memorandum of Understanding (hereafter referred to as the Understanding), made this __________ Day of , __________ 1999, is between the United States of America, Bureau of Reclamation (hereafter referred to as the United States or Reclamation) and Loup Basin Reclamation District, Sargent Irrigation District, and the Farwell Irrigation District (hereafter referred to as the District;). The purpose of this Understanding is to acknowledge and define the principles and elements by which title to the Missouri River Basin Project, Middle Loup Division works, facilities and lands can be transferred from the United States to the Districts, known locally as the Sargent Irrigation Project and the Farwell Irrigation Project (hereinafter known as the Project).

EXPLANATORY RECITALS

Reclamation desires to transfer title to, and the Districts desire to accept transfer of, title now vested in the United States to the Middle Loup Division works, facilities and lands, and;

Reclamation and the Districts recognize the Framework and the Reclamation method and that the Districts and Reclamation have worked through the process resulting in this agreement, and;

Reclamation and the Districts recognize such transfer is dependent upon the approval or direction of the Congress of the United States, and cannot be completed absent express congressional authorization;

DEFINITIONS

1. Unless otherwise noted, the following definitions apply only to the terms used in this Understanding:

A. "Assets" are all Project property owned by the United States, Department of the Interior, Bureau of Reclamation as of the date of the transfer of title which. have been acquired by it for the purposes of building, operating and maintaining the Project.

B. "Project" means the facilities known as the Sargent Irrigation Project and the Farwell Irrigation Project, constructed by the United States under the 1944 Flood Control Act (Public Law 78-534, chapter 665; 58 Stat. 887) and the Act of August 3, 1956, titled "Farwell Unit, Missouri River Basin Project" (70 Stat. 9875) and described as the "Missouri River Basin, Middle Loup Division."

C. "Project Purpose" is defined as the use of the Project property and the water supply of the Project to: (1) provide irrigation water for project land to which the project water rights are. assigned; (ii) stabilize the water supply from both surface and ground water sources in the areas served by the Project; (iii) support the development and protection of fish and wildlife resources; and (iv) support the development and management of water and land based recreation facilities in the area related to the Project property.

D. "Project Property" includes: (1) all Project distribution and drainage facilities, all reservoir and related diversion facilities and af.lands necessary for the operation currently held by the United States which are deemed by the government to be related to the projects subject to this agreement; (ii) all lands and interest in lands acquired by the United States for the construction and operation of the Middle Loup Division including common varieties of sand and gravel, if any, excluding all other minerals, if any; (iii) all water and water storage rights held by the United States relating to the respective project facilities; and (iv) all operating equipment, tools, material, and other tangible personal property, held in the name of the United States for the purposes of operating the Projects or serving the Project facilities and which are used exclusively for Project purposes and located at the Project facilities.

E. "Secretary" is the Secretary of the Department of the Interior of the United States of America, with jurisdiction over the Project property subject to this Understanding.

STATEMENT OF PRINCIPLES
AND ELEMENTS OF THE PROPOSED TRANSFER

2. This Understanding shall protect the financial interest of the United States. The following principles shall guide the transfer:

A. Legislation required: The United States holds title to works, facilities, and lands in the Middle Loup Division, Pick-Sloan Missouri Basin Project, Nebraska; the Secretary is not authorized to transfer title of assets of the United States without express authorization by Congress through legislation. This title transfer shall not occur unless, and until, authorized by duly enacted legislation. The Districts and Reclamation desire that Congress incorporate the principles and elements of this Understanding into the title transfer legislation.

B. Transfer: Upon authorization from Congress to do so, and with appropriate NEPA compliance by Reclamation; Reclamation will sell, transfer, convey and assign to the Districts by quit claim deed or other similar appropriate instrument and the Districts will purchase and accept the assets from Reclamation as hereinafter identified in this Understanding.

C. Public Meeting Accommodation: Consistent with Reclamation's "Framework for Title Transfer," both Reclamation and the Districts have conducted several public meetings to discuss the options and alternatives regarding title transfer issues related to the Project. Those meetings included five meetings conducted by the Districts or by the Irrigation Projects Reauthorization Council, to which the Districts are members; and four meetings conducted by Reclamation, for discussions of title transfer NEPA compliance. Nevertheless, at least two additional meetings will be conducted in the Project areas as soon after legislation is introduced as reasonably possible, to which all Reclamation identified "stakeholders shall be invited for the purpose of providing comments'under the NEPA process on details of proposed Congressional action to transfer title to the assets.

D. Purchase Price: The Districts will pay to the United States the purchase price. Determination of the purchase price is in accordance with Reclamation's "Framework for Title Transfer" dated August 1995. The purchase price includes credit for the value of all allowable deductions consistent with the "Framework for Title Transfer:"
The purchase price as hereinabove determined will be subject to further credits at the time of title transfer for the following additional deductions:

1. A credit equal to the total amount the Districts have remitted to the United States for National Environmental Policy Act (NEPA) costs less one half the total costs of NEPA compliance required for title transfer;

2. Any payments made by the Districts under their existing contracts with Reclamation between the execution of this Understanding and the date of transfer but only to the extent these payments were included in the value to be paid by the Districts;

3. The present value of future operation and maintenance required for historical preservation upon Project lands for the Shcrman Reservoir site, but not less than $185,000;

4. Any other credits identified and agreed upon by Reclamation and the Districts prior to the transfer of the project and,

5. Any credits authorized and directed by Congress.

E. Environmental Documentation: must be completed in a manner that allows for public disclosure consistent with NEPA for the proposed action of title transfer.

F. Public Values: will be maintained, and third parties will not be adversely affected.

G. Congressional Authority: Transfer of title is contingent upon congressional authorization and public law.

H. Protection of Public Values and Third Party interests: Public values and third party interests will be protected.

1. Transfer of Rights and Responsibilities under Nebraska Game and Parks Commission General Nebraska Projects Lease: Lease Agreement (Contract No. 14-06-700-3816-A) became effective on May 1, 1995, between Reclamation and the State of Nebraska Game and Parks Commission ("Commission") and applies to certain lands and water surface areas in all Reclamation projects subject to administration by Reclamation's KansasNebraska Area Office in Grand Island, Nebraska. This lease included lands at Sherman Reservoir, the Arcadia Diversion Dam, the Milbum Diversion Dam and certain mitigation sites in the Middle Loup River Basin. Assignment of the current lease is deemed to not be possible by Reclamation and, therefore, a new agreement must be developed by the Districts and the Commission prior to completion of NEPA compliance and shall be contingent upon the actual transfer title of the Project to the Districts.

The Districts and the Commission have agreed upon principles for a new agreement regarding interests in the same lands as are presently the subject of the above referenced "Contract" which provides no less rights and responsibilities of the parties thereto than the present lease agreement. The new agreement will, to the greatest extent possible, provide a permanent right to the Commission or to its successors to develop, provide, and protect the public interests in fish, wildlife and recreation facilities now a part of the projects. The new agreement also will establish a procedure by which the Commission may review and provide input on operating practices for the project to provide optimum benefits for fish, wildlife and recreation uses compatible with the primary operation of the facilities which is irrigation of the lands served by the Project.

A copy of a letter of intent executed by the Commission setting forth the actions contemplated by it and the Districts is attached to and made a part of this Understanding, and

2. Assignment of Rights and Responsibilities under Middle Loup Public Power and Irrigation District Agreement: A contract between Reclamation and the Middle Loup Public Power and Irrigation District ("Middle Loup") for water service to Middle Loup, was executed on August 17, 1960, for a term of 40 years. The said contract is assignable by Reclamation by action of the Secretary and will be properly assigned to the Districts by Reclamation at the time title transfer is completed. Such assignment will be accepted by the Districts upon completion of the title transfer and serve as the minimum status of such contract thereafter unless and until renewed between the Districts and Middle Loup.

The District will negotiate, in good faith, for the continuation of service after the expiration of the existing contract and state that they have been negotiating future possible arrangements for water service to Middle Loup upon the transfer of title to the Districts. The Districts will continue negotiations with Middle Loup to develop and execute a new contract agreement for water service from and after the end of the existing contract. To the extent possible, the Districts will develop this new contract with Middle Loup prior to the consummation of title transfer; however, such a new contract need not be in place prior to that title transfer.

3. Protection of Historically Significant Resources: There are several sites of historical or archeological significance that have been identified by Reclamation in conjunction with Sherman Reservoir and the Arcadia Diversion Dam, which may require further study and investigation and which may require preservation actions in accordance with the provisions of the "National Historic Preservation Act." The Districts will execute a preservation easement to be held by the University of Nebraska - Lincoln State Museum for the preservation and further study of the identified sites and shall undertake certain other obligations to assist in the preservation or recovery of artifacts which may be located at identified sites. The easement will be completed prior to the completion of NEPA compliance and will be contingent upon the actual transfer of the Project.

I. Continuation of Payments in Lieu of Taxes: The United States.has provided payments in lieu of taxes to local governments in which facilities of the Project subject to this Understanding are situated. Those payments have been made at such levels and on such occasions as Federal appropriations have been made available. In order to assure that such sources of replacement tax revenues continue to be available, the Districts will continue to make such payments in lieu of taxes to local governments and have provided that assurance to each of the counties impacted by Project facilities. Copies of appropriate actions reported in District minutes, accepted and appropriately signed committing the Districts to those payments to the subject counties, are attached.

J. Assumptions of Existing Rights and Obligatians: Upon transfer of title as authorized by . Congress, Reclamation and the Districts intend that Reclamation will assign all rights of use, leases, licenses, and permits to the Districts, other than those specifically dealt with elsewhere in this Understanding, and the Districts will accept and immediately assume the rights and obligations thereunder and will during the continued terms thereof keep and carry out all responsibilities agreed and accepted by Reclamation under all such rights of use, leases, licenses, and permits, unless or until released by the holders thereof.

Reclamation and the districts also intend that the Districts will, upon consummation of the title transfer, assume the responsibilities for reporting, working with or cooperating with all Nebraska and United States agencies with regard to, but not necessarily limited to, the following activities: monitoring and reporting requirements for water quality programs administered by the Nebraska Department of Environmental Quality, hazardous materials inventory and remediation activities administered by the Nebraska Department of Environmental Quality, water rights administration reporting and safety of dams inspections administered by the Nebraska Department of Water Resources. Letters from those State agencies acknowledging the assumption of these responsibilities by the Districts are attached hereto and made a part hereof.

K. Flood Control Benefits Adjustments: The Project was originally authorized with only nominal benefits allocated to flood control - partially because of the storage facilities for the project being "off stream" and not normally influenced by high water flows, even under natural conditions of the Middle Loup River system. Reclamation has recommended to the United States Army, Corps of Engineers that flood control benefits be eliminated and, that while incidental flood operations associated with Sherman Dam shall continue, Federal involvement in this operation is not required. The Corps has acknowledged and agreed with that recommendation. As provided above in "Project Purpose" of this Understanding, flood control shall not be a project purpose after title tansfer.

L. Liability : Effective on the date of conveyance, the Districts will hold the United States harmless and will indemnify the United States for any and all claims, costs, damages, and judgments of any kind arising out of any act, omission, or occurrence related to the Projects, except for such claims, costs, or damages arising from acts of negligence committed by the United States or by its employees, agents, or contractors prior to the date of conveyance. for which the United States is found liable under the Federal Tort Claims Act, 28 U.S.C. 2671 et se.

M. Middle Loup Valley Drains: It is the intent of Reclamation and the Districts that apart of the assets to be transferred includes the facilities and land rights to which Reclamation has an interest in the valley of the Middle Loup River in. Sherman County, Nebraska, in and around the city of Loup City, which facilities and land rights have been developed or acquired by Reclamation for the purposes of collecting and draining excess ground wafer in the area. Any addition, modifications and operation and maintenance of said facilities and land rights will be the responsibility of the Districts.

N. Maintenance of Existing Project Operation: Prior to completion of the United States transferring title to the Districts and subject to this Understanding:

1. Reclamation will make every effort to maintain the Project Property in good working order, less normal deterioration (caused by usage and wear and tear) pending transfer of title. Any unexpected deterioration in conditions shall be brought to the Districts and/or Reclamation's attention as soon as practicable.

2. Information pertaining to the operation of the facilities will be available from Reclamation to die Disiits, after reasonable notice, to copy and retain. This includes, but is not necessarily limited to, public documents including interim reports associated with the Project.

3. All land and water rights currently held by the United States for the Project will be maintained until all necessary transfer documents have been completed and filed in the necessary offices.

4. The Districts will provide Reclamation advance written notification of any fact or occurrence which may make the representations of the Districts set forth in this Understanding invalid or not contemporary at the time of expected title transfer.

5. When any cooperative activities are requested by the Districts from Reclamation, both prior to and after transfer of title, the Districts will reimburse Reclamation for all reasonable costs associated with such activities by Reclamation.

6. Reclamation will provide the Districts copies of all active leases, licenses, unrecorded easements, unrecorded contracts, rights of use agreements, and other documents with third parties related to the Projects within 90 days after the Secretary is authorized by the public law to transfer the title of the Projects to the District.

O. Contract Termination: Upon transfer of title to the Middle Loup Division to the Districts, all contracts between the Districts and the United States for the repayment of capital costs and payment for water supply or other Reclamation charges to the United States will be deemed to be fully completed as to actions required therein and will terminate without further action. Reclamation and the Districts will waive any rights thereunder for defaults from obligations to act or to not act under the said contracts in the past unless otherwise provided herein.

P. Termination of this Understanding: Unless specifically extended by Reclamation and the Districts, this Understanding will terminate by its own terms on January 1, 2002. Should the Districts determine not to further pursue title transfer, prior to congressional authorization, the Districts will notify Reclamation in writing. The parties will meet within 30 days of such notice to determine the payment of costs accrued by Reclamation and to re-initiate the process for water service contract renewals as requested by the Districts. Any such contract renewal efforts will be conducted and implemented consistent with the agreements established by the Irrigation Projects Reauthorization Council on behalf of its members with Reclamation.

Q. Expenses: Reclamation and the Districts will each pay its own expenses incurred relating to this Understanding and to the consummation of e transfer, except for the costs which have been or will be incurred for the compliance with requirements of the NEPA. Any such NEPA costs will be shared equally by Reclamation and the Districts and adjusted or credited in accordance with the provisions stated above.

UNITED STATES OF AMERICA
DEPARTMENT OF THE INTERIOR
BUREAU OF RECLAMATION

Duplicate Original MOU No. 99AG601285