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<br />unable to pay the operation and maintenance costs of the irrigation system, as some <br />preliminary Bureau evaluations suggest, we believe that the Bureau should ask the <br />Congress for permission to restructure the size and scope of the Project to eliminate <br />any Project irrigation that cannot be justified. <br /> <br />:~ <br /> <br />Since there were no engineering data available on ways in which the <br />Animas-La Plata Project could be restructured, we developed estimates of the <br />reduced construction costs that would result from eliminating all or a portion of the <br />non-Indian irrigation water supply to be developed, Based on our computations, we <br />determined that the reduction in Federal construction costs could range from <br />$134 million, by eliminating the full-service, non-Indian irrigation, to $171 million, <br />by eliminating all non-Indian irrigation, These estimates, which were based on the <br />per acre-foot Federal development cost of Animas-La Plata Project water, illustrate <br />the cost-saving potential of a smaller water project. <br /> <br />:; <br /> <br />Water Commitments <br /> <br />During our review, we did not find any information that would substantiate that <br />Indian agriculture would be more viable than non-Indian agriculture in the <br />Animas-La Plata Project area. We noted that the Navajo Indian Irrigation Project, <br />located near the proposed Animas-La Plata Project, had a history of losses despite <br />heavy operating subsidies provided by the Bureau of Indian Affairs to the Navajo <br />Agriculture Products Industry, which operates the Navajo Indian Irrigation <br />Project.10 According to the Manager of the Navajo Indian Irrigation Project, <br />operating results have improved since our report was issued in 1988; however, he <br />informed us that Federal subsidies continue to be required to fully cover the costs <br />of operating the Project. <br /> <br />We noted that under the Settlement Act, the Colorado Ute Indian Tribes have a <br />right to market their water supplies. Thus we believe that the Bureau should work <br />with the Tribes to eValuate the feasibility of water marketing alternatives and to <br />determine whether the Tribes are interested in receiving compensation in lieu of <br />constructing the irrigation distribution systems for agricultural development. Such <br />compensation would provide the Tribes with funds for alternative economic <br />development opportunities and prevent construction of an irrigation water <br />distribution system that may not be cost effective to use. If the Bureau could convert <br />the 29,700 acre-foot Indian irrigation water supply to municipal and industrial use <br />with tribal approval, we estimated that the Government could recover up to an <br />additional $59 million of its construction cost investment in the Project based on the <br />per acre-foot Federal development cost of the Project. <br /> <br />100fflCe of Inspector General reports "Navajo Indian Irrigation Project, Bureau of Indian Affairs" <br />(No. 8843), issued in February 1988, and "Navajo Agricultural Products Industry, A Navajo Tribal <br />Enterprise" (No. 88-110), issued in September 1988. <br /> <br />14 <br /> <br />II <br />I <br />