Overall, I have good news to report. Despite drought conditions in 2001, dry conditions at the start of this year, and BPA’s poor financial circumstances, the Northwest region of the National Oceanic and Atmospheric Administration (“NOAA Fisheries”) recently verified that the Federal Columbia River Power System (FCRPS) Action Agencies (i.e. BPA, the Bureau of Reclamation and the U.S. Army Corps of Engineers) are fully implementing over 95 percent of the measures called for in the NOAA Fisheries BiOp. These ESA actions are also helping to fulfill our responsibilities under the Northwest Power Act to protect and enhance fish and wildlife affected by the FCRPS. As you know, the Federal District Court has remanded the NOAA Fisheries BiOp for revision, and NOAA has approximately one year to revise it in accordance with the court’s ruling. While the BiOp is being revised, BPA will continue to meet its 2003 and 2004 commitments under the Northwest Power Act and the Endangered Species Act.

The court, however, is now considering a motion by the plaintiffs to vacate the Biological Opinion while it is undergoing revision. Briefing on the motion was completed June 20 and the court may rule at any time. A decision by the court to vacate the Biological Opinion could have severe consequences on NOAA Fisheries, on the Federal Action Agencies and on the entire FCRPS. Improved Fish Survival

As NOAA Fisheries will testify, the steps the FCRPS Action Agencies have taken over the last decade have significantly improved juvenile fish survival through the federal hydro system. Today, young fish survive their passage downriver at roughly the same rates as in the 1960s, when fewer dams were in place.

In addition to improved survival rates through the dams and reservoirs, we are seeing rebounds in the numbers of returning adult fish throughout the Columbia River Basin. For example, in 2001, the upriver Spring Chinook return of 405,500 fish counted by the Washington Department of Fish and Wildlife (WDFW) at the Bonneville Dam was the largest return on record (since 1938), and resulted in 172,000 fish counted by WDFW, over Lower Granite. This year (2003), we had the third-highest return on record – 195,770 – despite the severe drought and emergency power operations in 2001, when many of these returning adults were migrating to the ocean. For the first time in many years, there are enough surplus fish to allow full-scale commercial fisheries on this stock. Returns for other stocks have seen similar results. For example, upriver steelhead saw record returns of nearly 640,000 fish. Generally good to excellent returns and spawning have continued for most stocks in 2002 and so far in 2003.

Some of this recent good news is attributable to favorable ocean conditions, which are cyclical. However, we believe it also reflects the combined benefits of FCRPS Action Agencies’ efforts to improve juvenile fish survival, habitat, hatchery management, and harvest control. We see these strong returns as indicators that we are on the right long-term path with our salmon recovery program.

Today, I will review our progress to date under the Northwest Power and Conservation Council’s (Council) Fish and Wildlife Program and Endangered Species Act mitigation. Jointly, these actions are coordinated and carried out through the Council’s Fish & Wildlife Program and are referred to as the Integrated Program. I will talk about the accountability that we have built into our fish and wildlife efforts, including our focus on monitoring and evaluation and other work that is laying the foundation for achieving biological benefits for the least cost. Finally, I will address BPA’s financial situation and how it has affected our fish and wildlife efforts. We have continued to meet our fish and wildlife obligations despite our financial difficulties. But the unpredictability of water conditions and electricity prices will continue to cause BPA’s revenues to fluctuate considerably from year to year. In the face of this continued volatility, we are taking steps to provide greater budget stability and predictability for our fish and wildlife efforts.

A Performance-Based Approach to Salmon Recovery

Before highlighting some of BPA’s specific fish and wildlife accomplishments, I would like to summarize the approach we’ve been taking since the release of the 2000 BiOps. Earlier efforts, rather than targeting and measuring biological performance, merely specified actions – habitat improvement, hatchery operations, and the like. Starting with the 2000 BiOp, we began using a performance-based, least-cost approach.

The transition to performance standards as the measure of fish enhancement has been difficult at times. BPA has taken a leadership role in showing that it is not how much money we spend that is the gauge of our success – it is the results we have to show for the money spent. In the words of the Northwest Power Act, the Council’s Fish and Wildlife Program seeks to “utilize, where equally effective alternatives means of achieving the same sound biological objectives exist, the alternative with the minimum economic cost . . ..” Under this approach, we are using a biological yardstick, while still keeping our eye on costs.

Consider spill for example. Under the BiOp, we are measuring the biological effectiveness of spill at individual dams. We have learned that spill is not a “one size fits all” formula. Spill amounts and patterns vary in their effectiveness in supporting fish survival. BPA, together with the U.S. Army Corps of Engineers (Corps) and the Bureau of Reclamation (Bureau), has analyzed river operations looking for opportunities to achieve the BiOp performance standards while reducing costs. Research studies at John Day and Ice Harbor Dams have suggested that lower spill levels (from those called for in the BiOp) may enhance juvenile passage survival during spring and/or summer migration. This year, we are conducting tests of reduced spill levels at these projects, consistent with the BiOp implementation planning process, to determine optimum levels of spill for improved survival. In addition, we are working with the Council and others to carry out the summer spill test recommendations in the 2003 Mainstem Amendment to the Council’s Columbia River Basin Fish and Wildlife Program.

In a related area, we have seen some promising results at Lower Granite Dam from the use of removable spillway weirs (RSWs), which may allow greater fish passage with less water spilled and less dissolved gas. As the Corps notes in its testimony, we are accelerating investigation of RSWs at key dams, with the endorsement of the Council.

BPA’s Recent Accomplishments Under the Biological Opinion

I am proud of what BPA and its partners have accomplished for salmon recovery. Here are some of our notable actions in 2002:

In the hydrosystem:

* With the Corps and Bureau, we completed ten major configuration projects at the federal dams. With the completion of these measures, we have improved adult fish passage at Bonneville, Ice Harbor, and Lower Granite, assisted adult fish migration in the Lower Snake River, and improved juvenile fish passage at Lower Monumental and Lower Granite Dams.

* Water management and fishery operations generally followed the expectations in the BiOp. Over 21 million juvenile salmonids were collected, and approximately 14 million of those were transported by truck or barge and released below Bonneville Dam. The remaining seven million went through a bypass system to the tailrace.

* We managed flow and spill on the river to improve juvenile fish migration through the spring and summer seasons, using the storage in the upriver reservoirs to supplement natural stream flows.

To improve habitat:

* BPA funded implementation of hundreds of new and continuing projects to protect and enhance habitats important to fish. Over 260 habitat projects were implemented in 25 subbasins.

· Through the Council’s Fish and Wildlife Program, BPA acquired at least 164 cubic feet per second (cfs) of instream tributary flow enhancements. We also removed or improved more than 70 fish passage barriers to open nearly 700 miles of habitat.

· Also through the Council’s program, we protected or enhanced over 198 river miles and 19,600 acres of riparian buffers and habitat.

For hatcheries:

· The new Nez Perce Tribal Hatchery was completed and began operation.

· BPA funded the operation and maintenance of over 30 major anadromous fish hatcheries.

· BPA funded four captive broodstock programs to protect the basin’s most endangered populations.

· The Kootenai River White Sturgeon aquaculture program produced and released juvenile resident fish.

· BPA funded development of hatchery genetic management plans for the Grande Ronde and Tucannon spring/summer chinook safety net programs. The safety-net program is intended to provide artificial propagation contingency plans that, if implemented, would prevent further decline in the status of the most at-risk ESA-listed species, to buy time for other recovery measures to take effect.

· BPA funded the marking of key populations of hatchery fish, protecting listed fish by allowing more selective fisheries.

For harvest:

· BPA tested alternative fishing gears and provided improved gillnets to tribal commercial fishers.

· BPA funded the location and removal of eight submerged fishing nets that could have continued to take ESA-listed fish in the Columbia River.

In addition:

· Research, Monitoring and Evaluation (RM&E): We have developed a comprehensive RM&E program framework that will provide information to assess needs of fish and the effect of mitigation efforts and continued to fund monitoring and research programs for dams, habitat, and hatcheries.

· Subbasin Planning: Working with the Council, States, and Tribes, BPA has funded a regional process of subbasin planning for 62 watersheds, with plans that are locally developed under a common template, subject to independent science review, and coordinated with NOAA Fisheries and the United States Fish and Wildlife Service (USFWS) to ensure ESA consistency. This process is expected to be completed in 2004. Completed subbasin plans will further the protection of fish by identifying particular improvements and projects to undertake.

These efforts came at a substantial cost to the ratepayers of the Northwest. At an annual estimated cost exceeding $600 million, BPA believes its efforts to preserve salmon and other fish and wildlife species is among the largest and most notable environment mitigation programs in the nation. Fish enhancement has become one of our three largest responsibilities, along with power supply and transmission service.

Funding for Fish and Wildlife

BPA is currently managing through a difficult financial situation. Since the West Coast electricity crisis in 2000, we have had to raise rates by 46 percent. We have recently proposed another rate increase. Through cost cuts and deferrals in the remainder of the wholesale power rate period, as well as the turn in water and market conditions, we have managed to reduce the size of this rate increase to under five percent. We will continue to work with our cost partners to reduce this further.

Throughout our efforts to manage costs, we have sought efficiencies from all parts of our budget, including fish and wildlife. Key among these was that BPA faced a potential liquidity problem and needed to manage to the budgeted accrual level for the Integrated Program, which was $139 million. The $139 million is an increase of almost 40 percent over our direct program spending for fish and wildlife in the previous rate period. BPA also funds capital projects for fish and wildlife, including physical improvements at the dams to improve fish passage and similar capital projects. The Integrated Program level of available capital is $36 million – a 33 percent increase over the previous rate period.

In the fall of 2002, internal estimates indicated that forecasted expenditures for the Integrated Program in 2003 could be as high as $180 million. The forecasted overage (amounts above $139 million level) was the result of a number of complex factors. It was not the result of poor planning by the Council.

In December 2002, BPA asked that the Council – in consultation with the region’s fish and wildlife managers – take the lead to ensure that spending for the Integrated Program did not exceed $139 million in FY 2003. In addition, we asked the Council to re-order priorities to create the opportunity to spend less than $139 million annually for the remainder of the rate period, through 2006.

BPA emphasized that the Council’s prioritization must assure that BPA meet its obligations to fish and wildlife. Core to these obligations, we said, were projects needed to meet the requirements of the various biological opinions that apply to BPA, in particular for the 2003 and 2005 check-ins for the 2000 FCRPS BiOp. We have made every effort in this process with the Council to ensure that our BiOp-related projects remain priorities.

I am pleased to report that the Council has responded affirmatively to our request. We are proceeding to work with the Council on implementing this approach, consistent with our statutory responsibilities, for FY 2003 and the remainder of the rate period.

At the same time, the Council is understandably concerned about recent events. The States and other parties have asked BPA to consider development of a long-term agreement to govern spending for the Integrated Program in the post-2006 period. Regional tribes and the four Northwest Governors have also asked BPA to clarify the process for planning and management of the program for the remainder of the rate period. We agree this is an important matter to discuss. Our goal is to work toward creating greater funding predictability, while also assuring we can manage to budgets.

With the establishment of performance standards and related tools, we have made tremendous progress defining benchmarks for evaluating progress toward meeting the biological needs of ESA-listed species. To develop a successful long-term agreement for the fish and wildlife program, we must establish similar standards and tools to gauge progress under the Northwest Power Act. Such a discussion would make sense in parallel with the regional dialogue discussions that we are having regarding BPA power service post-2006. I would hope it could clarify our joint objectives, priorities and a least-cost planning approach for the Integrated Program. It could also look at management options for navigating through financially difficult times, or during poor water years when the capability of the FCRPS is stretched.

Regional Cooperation and Coordination

With BPA’s difficult financial situation and the demand on the capabilities of the FCRPS, BPA believes it is more important than ever that all of us work collaboratively to benefit the region’s fish and wildlife in the most cost effective way possible. The recent recommendations from the four Northwest Governors underscore this same point.

A very positive foundation is our clear agreement with the States that successful BiOp implementation is critical to the region. BPA is working closely with NOAA Fisheries and others to ensure a coordinated position on what constitutes successful implementation. BPA is particularly focused on carrying out a legally and scientifically sound program, achieving successful check-ins mandated by the BiOp for 2003, 2005, and 2008. Not only is this essential to verify that the Integrated Program is achieving the desired biological results, it is also critical to ensuring that those results are achieved at the lowest cost.

We are in agreement with the four Northwest Governors that successful implementation of research, monitoring, and evaluation is key to assessing our progress toward accomplishing biological objectives and meeting and refining performance standards. We will work closely with our State, federal, and tribal partners to take advantage of ongoing efforts in RM&E, and integrate them with the new ones that are needed.

Subbasin planning is also a key focus for BPA. With its watershed-by-watershed approach, subbasin planning maximizes local participation, knowledge and consensus, involving states, tribes, and local entities. Consistent with the four Governors’ recommendations, BPA has provided substantial funding for development of subbasin plans throughout the region. We expect that subbasin plans will provide an important foundation for recovery planning throughout the Columbia River Basin, and that they will guide habitat, hatchery and harvest actions in the years to come.

In addition, it is important to keep in mind that BPA expenditures for salmon recovery are mitigation for the power effects of the dams – not for the impacts caused by other users of the river basin. Every contributor to the salmon problem has a share of the responsibility for achieving improved recovery.

Finally, we support the NOAA Fisheries and Corps budget requests in the President’s budget for FY 2003 and FY 2004 and the activities they are targeted to fund. We join those agencies in asking Congress to provide support for those requests. We also support the Bureau’s request for authority to conduct fish restoration activities in the tributaries in the Columbia River Basin.

The other agencies in the Federal Caucus, including the U.S. Fish and Wildlife Service (USFWS), the Environmental Protection Agency (EPA), the Bureau of Indian Affairs (BIA), the U.S. Forest Service (USFS), and the Bureau of Land Management (BLM), as well as the Federal Energy Regulatory Commission (FERC), have worked successfully together over the years to implement habitat, water quality, fisheries management, and the multitude of other actions that contribute to an “All-H” (hydro, habitat, hatchery and harvest improvements) approach to salmon recovery.

Conclusion

The effort to recover salmon in the Pacific Northwest is one of the nation’s largest and most notable environmental recovery programs. We are collaborating on successful projects and implementing cutting edge actions throughout the Columbia River Basin. In the face of some very challenging financial circumstances, BPA remains fully committed to meeting our obligations. Together with our partners, we are focused on results, and we are getting them – in the most cost effective way possible.

Mr. Chairman, I thank you for the opportunity to testify and would be pleased to answer your questions.