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[Summary of Water Code, Fees, Taxes]

I. The Code

As stated on our homepage, the Navajo Nation Council passed a comprehensive Water Code in 1984 (22 N.N.C. §§ 1101 et seq.) The Code is applicable to “all the waters of the Navajo Nation,” which include all surface and groundwater.  The Code further declares that “… [I]t shall be unlawful for any person … to … make any use of … water within the territorial jurisdiction of the Navajo Nation unless … this Code [has] been complied with. No right to use water, from whatever sources, shall be recognized, except use rights obtained under and subject to this Code."
     The TCOB has numerous detailed provisions addressing such topics as: related powers and responsibilities of the Resources Committee of the Navajo Nation Council; related powers and responsibilities of the Director of the Division of Natural Resources; water use permits; and numerous administrative guidelines and procedures.

II. The Fees

It is important to point out the Navajo Nation Water Code, in § 1103, declares "The Navajo Nation is the owner … of the waters of the Navajo Nation … ."  Because the Nation is the owner of its waters, only the Nation can actually "sell" or charge for the waters.  Thus, the fees charged by Navajo Tribal Utility Authority (NTUA), for example, are water service fees.  In other words, NTUA is charging for the service of delivering water through its pipe and pumping system.  NTUA also charges to collect and treat water that goes through its sewer lines and wastewater treatment lagoons.  But when the Navajo Nation charges a water-related fee through the Water Code Section, it is charging for the water itself.

A. Application Fees
The TCOB Water Code Section issues two basic types of permits--water use permits and well drilling permits. A non-refundable application fee of $25 is charged for each type of permit.  Individuals and other entities that have water service to their homes, schools, government offices, and businesses from the NTUA system are not required to have water use permits.  This is because NTUA has already applied for and received permits for those uses.  Other entities, like contractors and industries who use water from numerous sources for construction and industrial uses, are generally required by the TCOB Water Code to have water use permits for each lake, stream, or well they divert water from.  Farmers who are part of an irrigation project are operating under the project's own permit or set of permits.

B. Water Use Fees
The Water Code legislation was amended in 1997 and 2010 by resolutions of the Resources Committee of the Navajo Nation Council (RCAP-65-97 and RCJA-04-10). Those amendments set out specific water use fees for various water uses.  Construction and industrial uses of water, for example, carry a fee of $4.00 per thousand gallons.  Regular "commercial" water use, which includes business use (such as by stores and trailer parks, and other non-domestic water use), has a fee of $0.27 (27 cents) per thousand gallons.  In the case of local, state, and federal government tap water use, the commercial fee is cut in half, making it $0.135 (13 1/2 cents) per thousand gallons.
     Navajo Nation water use fees are "waived" for irrigated agriculture, domestic, fish and wildlife, and livestock water uses.  Fees are also waived for tap water use by non-profit institutions, such as churches and other organizations that have a federal 501(c)(3) non-profit tax status.

        C. Summary Water Use Fee Table

Construction and Industrial Use: $4.00 per 1,000 gallons (government fee is $2.00)
Normal Commercial Use: $0.27 per 1,000 gallons (90% discount)
Local, State, Federal Govt. Use: $0.135 per 1,000 gallons (95% discount)
Commercial use of less than 40,000 gallons per quarter Fees Are Waived
Livestock, Irrigated Agriculture, Fish
& Wildlife, Domestic, & Nonprofit
Fees Are Waived

D. No "New Fees" Involved
A routine, multi-year, programmatic audit of the TCOB Water Code Section by the Auditor General of the Navajo Nation concluded, in 2000, the Navajo Nation Water Code laws, including the fee structure, needed to be more modernly implemented.  As a result, the TCOB Water Code Section, in concert with the Department of Water Resources and the Division of Natural Resources, upgraded and automated its water use billing system for commercial/government uses. This has resulted in some entities (which have escaped billing since the fee structure was established in 1997) receiving water use bills from the Navajo Nation through the TCOB Water Code Section.  Therefore, it is not a new fee that is being charged, but an old fee that some entities have benefited from not paying before.  Consistent with earlier Resources Committee policy, the TCOB Water Code Section has not charged for unbilled fees that pre-date 2004.

III. The Taxes

The Navajo Nation has instituted a sales tax. That tax is not applicable to permit application fees, but it is generally applicable to water use fees.  According to the Navajo Tax Commission, the current tax rate is 4%.  Also, "the Navajo Nation government [is] fully subject to the tax at the regular rate." Therefore, the TCOB Water Code Section is obliged to apply the Navajo Nation sales tax to all billable users, except for federal government entities. The separate and higher-level constitutional sovereignty of the federal government serves as a legal roadblock to taxation of the federal government and its subunits (e.g., BIA and IHS) by the Navajo Nation. See, e.g., McCulloch v. Maryland, 17 U.S. 316 (1819).  But state, county, and tribal government water users within Navajo Nation territory are taxed, as are private contractors doing construction and other work for federal agencies.