<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:32736.wais]
S. Hrg. 109-781
MISCELLANEOUS WATER AND POWER BILLS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON WATER AND POWER
of the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
on
S. 1106 S. 3851
S. 1811 S. 3798
S. 2070 H.R. 2563
S. 3522 H.R. 3897
S. 3832
__________
SEPTEMBER 21, 2006
Printed for the use of the
Committee on Energy and Natural Resources
______
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska RON WYDEN, Oregon
RICHARD BURR, North Carolina TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri DIANNE FEINSTEIN, California
CONRAD BURNS, Montana MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia KEN SALAZAR, Colorado
GORDON SMITH, Oregon ROBERT MENENDEZ, New Jersey
JIM BUNNING, Kentucky
Frank J. Macchiarola, Staff Director
Judith K. Pensabene, Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
------
Subcommittee on Water and Power
LISA MURKOWSKI, Alaska, Chairman
GORDON SMITH, Oregon, Vice Chairman
LARRY E. CRAIG, Idaho TIM JOHNSON, South Dakota
RICHARD BURR, North Carolina BYRON L. DORGAN, North Dakota
MEL MARTINEZ, Florida RON WYDEN, Oregon
CONRAD BURNS, Montana DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky MARIA CANTWELL, Washington
JAMES M. TALENT, Missouri KEN SALAZAR, Colorado
ROBERT MENENDEZ, New Jersey
Pete V. Domenici and Jeff Bingaman are Ex Officio Members of the
Subcommittee
Nate Gentry, Counsel
Mike Connor, Democratic Counsel
C O N T E N T S
----------
STATEMENTS
Page
Allard, Hon. Wayne, U.S. Senator from Colorado................... 5
Craig, Hon. Larry E., U.S. Senator from Idaho.................... 2
Donnelly, Thomas F., Executive Vice President, National Water
Resources Association.......................................... 46
Feinstein, Hon. Dianne, U.S. Senator from California............. 4
Hatch, Hon. Orrin, U.S. Senator from Utah........................ 2
Johnson, Hon. Tim, U.S. Senator from South Dakota................ 4
Long, Bill, President, Southeastern Colorado Water Conservancy
District....................................................... 38
McNulty, Hon. Michael R., U.S. Represenative from New York....... 59
Murkowski, Hon. Lisa, U.S. Senator from Alaska................... 1
Radanovich, Hon. George, U.S. Represenatative from California.... 14
Rinne, William, Acting Commissioner, U.S. Bureau of Reclamation.. 17
Robinson, Mark, Director, Office of Energy Projects, Federal
Energy Regulatory Commission................................... 26
Salazar, Hon. Ken, U.S. Senator from Colorado.................... 15
Schumer, Hon. Charles E., U.S. Senator from New York............. 8
Smith, Hon. Gordon H., U.S. Senator from Oregon.................. 35
Thalacker, Marc, Manager, Three Sisters Irrigation District, on
behalf of the Oregon Water Resources Congress.................. 41
APPENDIXES
Appendix I
Responses to additional questions................................ 53
Appendix II
Additional material submitted for the record..................... 59
MISCELLANEOUS WATER AND POWER BILLS
----------
THURSDAY, SEPTEMBER 21, 2006
U.S. Senate,
Subcommittee on Water and Power,
Committee on Energy and Natural Resources,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:32 p.m., in
room SD-628, Dirksen Senate Office Building, Hon. Lisa
Murkowski presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
ALASKA
Senator Murkowski. I call to order the subcommittee. It is
a pleasure to welcome everyone today to the Water and Power
Subcommittee. We have Senator Allard with us this afternoon at
the subcommittee. We are expecting Senator Schumer and
Congressman Radanovich will be joining us a little bit later.
He is in a committee over on the House side, but will be coming
across.
But we do have a busy agenda, so I would like to begin with
the bills that we have before us today. We have nine pieces of
legislation: S. 1106, sponsored by Senators Allard and Salazar,
to authorize construction of the Arkansas Valley Conduit in
Colorado; S. 1811, sponsored by Senators Hatch and Bennett,
which authorizes a feasibility study to enlarge the Arthur V.
Watkins Dam; S. 2070, sponsored by Senator Schumer, to provide
requirements for hydropower projects on the Mohawk River; S.
3522, sponsored by Senators Wyden, Smith, Craig, and Murray, to
reauthorize and amend the Fisheries Restoration and Irrigation
Mitigation Act of 2007; S. 3798, sponsored by Senator
Feinstein, to address Folsom Canal costs; S. 3832, sponsored by
Senators Domenici and Bingaman, to direct the Interior
Secretary to establish transfer title criteria for reclamation
facilities; S. 3851, which I have sponsored, which extends FERC
preliminary permits for hydro projects in Alaska; H.R. 2563,
sponsored by Mr. Otter, to authorize feasibility studies to
address water shortages within the Snake, Boise, and Payette
River systems.
We also have H.R. 3897, which is sponsored by Mr.
Radanovich, to authorize the Secretary of the Interior to enter
into a cooperative agreement on the Madera water supply and
groundwater enhancement project.
The subcommittee has received written testimony on several
of the bills before us today and that testimony will be made
part of the official record. After we hear from our
congressional witnesses, we will have two panels which we will
welcome at that point in time.
Before we get started, I would like to ask, Senator Craig,
if you have any opening statements that you would like to
present.
[The prepared statement of Senator Hatch follows:]
Prepared Statement of Hon. Orrin G. Hatch, U.S. Senator From Utah
Mr. Chairman, I am grateful for the opportunity to share my support
for the Arthur V. Watkins Dam Enlargement Act of 2005 (S. 1811). The
bill, if enacted, would authorize the Bureau of Reclamation to conduct
a feasibility study on raising the height of the Arthur V. Watkins Dam
in Weber County, Utah.
The dam is a 14.5 mile long earthfill dam which encloses Willard
Bay Reservoir. The reservoir has a storage capacity of roughly 215,000
acre-feet of water. It is estimated that raising the dam by five to 10
feet would increase the reservoir's storage capacity by 50,000 to
70,000 acre-feet. My bill simply authorizes a feasibility study to
determine whether enlarging the dam is an appropriate way to help
address the Weber Basin's expanding water needs. I believe it is, and I
believe it will be an easy, cost effective, environmentally sound way
to increase water storage capacity in the Weber Basin.
Thousands of Utah residents and businesses already rely on the
reservoirs in the Weber Basin system to provide both culinary and
secondary water. But, Mr. Chairman, the Weber Basin is one of the
state's fastest growing areas. In order to meet the area's growth
demands, we must find additional water sources and make better use of
existing resources.
Further, Utah is the second most arid state in the union, and
increasing water storage capacity will help citizens in the Weber Basin
better manage the state's frequent drought cycles. I believe that my
bill is a simple way to help improve water management in Utah and
provide citizens in the Weber basin with increased capacity to meet
their rapidly-growing needs.
Again, Mr. Chairman, thank you for holding this hearing today. I
recognize that we are quickly running out of time in this legislative
session, but I hope that the Committee will make S. 1811 one of its
priorities and send it to the Senate floor this year. Thank you.
STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR
FROM IDAHO
Senator Craig. Well, thank you very much, Madam Chairman,
for holding this hearing and for getting all of these bills
before the subcommittee and therefore the full committee. As
you have mentioned, I am here on S. 3522, the Fisheries
Restoration and Mitigation Act. Also, H.R. 2563, put in by my
fellow colleague from Idaho, Congressman Otter, as it relates
to studies in the Snake and the Payette River watersheds for
purposes of looking for additional storage.
Let me ask unanimous consent that my full statement be a
part of the record and I will make some brief comments.
Senator Murkowski. It will be included.
Senator Craig. In fact, this afternoon I am flying out to
San Diego to host a water conference. It will be the second
that the Center for the New West, once in Denver, now in Boise,
has hosted dealing with water in our Western arid States. I and
my colleagues are putting a special emphasis now on the West
and our very limited water resources, for obvious reasons,
Madam Chairman. Three of the most arid States in the Nation are
now some of our fastest populating States: Arizona, Nevada, and
my State of Idaho. New Mexico is beginning to grow and there
will be in time some very fundamental decisions to be made as
to the allocation of water or the reallocation of water as it
relates to human uses versus agricultural, fisheries, all of
those other important issues.
H.R. 2563 embodies an approach toward looking to see if we
cannot retain more runoff, storage water. Obviously, more water
is a part of a solution, but making decisions as it relates to
how water gets used or where it gets used as a finite resource
is another approach. So it is critical that through the Bureau
of Reclamation we reenergize the reality that the West may some
day need to build more storage, while at the same time
recognizing the critical nature of water quality within our
systems for fish and fish habitat, mitigation, all of those
types of things that are addressed in S. 3522.
So it is an issue that I am spending a good deal more time
on, as are my Western colleagues, and I thank you very much for
holding these hearings today. It is an issue in the West that
we worry about because we do not have enough of it, whereas in
some areas of our country they worry about it because there is
too much of it. It is an interesting juxtapose.
Thank you.
[The prepared statement of Senator Craig follows:]
Prepared Statement of Hon. Larry E. Craig, U.S. Senator From Idaho
Madam Chair and members of the committee, the arid West is what it
is today, with vast fields of green and growing, healthy, vibrant
communities, because of our ability to store water and channel it
through irrigation. The West is also fortunate to have a variety of
fish populations that at times creates multiple demands from providing
increased flows to fish screens.
I would like to join my colleagues from Oregon in supporting S.
3522, the Fisheries Restoration and Irrigation Mitigation Act (PRIMA)
of 2006. It is important that we pool our resources and work together
in the region to get serious about fish restoration. PRIMA has proven
to be cost effective and efficient at this goal and, therefore, should
be reauthorized.
The FRIMA program exemplifies the great potential of forward-
thinking public-private partnerships, and the wisdom of working closely
with local communities. Since it was enacted in 2000, we have achieved
real results. In my home state of Idaho, according to the Fish and
Wildlife Service, 13 projects have been completed and 206 miles of
streams have been ``protected, enhanced, or made accessible to fish.''
One example of work being done is in the Salmon River Basin near
Salmon, Idaho, where partners such as the Lemhi Soil and Water
Conservation District and the U.S. Forest Service have installed fish
screens on three irrigation water diversions. These screens protect
salmon and other fish species and allow farmers to continue to irrigate
their farms. Let me emphasize that in supporting the reauthorization of
this program, there are important projects such as these that are yet
to be completed.
This program makes sense, especially from a financial perspective.
FRIMA extends the reach of federal dollars by enlisting other
interested parties. This results in more money for FRIMA projects and
more talent and experience working to achieve success. In fact, from
fiscal years 2002 to 2004, local and state government, businesses,
irrigation districts, and environmental groups, to name just a few,
have shouldered 58% of the cost. This cost-sharing surpassed the 35%
threshold required in the original legislation. This program is making
a difference on the ground and deserves to be reauthorized.
Also helping fish is Idaho's storage capacity that is being
stressed by increasing demands from irrigation, power generation,
industrial users, municipal users, and also fish habitat.
Idaho is growing at an unprecedented rate, particularly in the
Treasure Valley. The assessment has already pointed out that, in less
than 30 years, over 100,000 additional acre feet of water per year will
be needed to meet increased demand. Beyond additional water, there is
concern over current flood control because the increasing development
and channelization of the Boise River is decreasing flood control
capacity. Additionally, Idaho has four species of salmonids that are
listed as threatened or endangered under the Endangered Species Act
that require a significant amount of water for flow augmentation. This
will reduce the pressure of other impoundments that are losing
significant amounts of water causing different resource concerns.
These increasing demands, coupled with limited storage, have caused
concern for me and many of my constituents. In 2003, dialogue regarding
needed water supplies began and a Stakeholder Working Group was created
from many interest groups from federal, state and local partners to
address irrigation, municipal, and environmental interests. These
parties have worked collaboratively with the Bureau of Reclamation to
locate appropriate storage options from adding to existing impoundments
to building new structures to recharge.
As you know, Madam Chair, the Bureau of Reclamation needs
congressional authorization to take the next step and do feasibility
studies in the areas identified by the Stakeholder Working Group. I
support this legislation and hope through the feasibility study
process, we can determine needed additional storage for my constituents
in Idaho.
Again, I support Representative Butch Otter and H.R. 2563 that
authorizes the Secretary of the Interior to conduct feasibility studies
and address certain water shortages within the Snake, Boise, and
Payette River systems in Idaho.
I ask unanimous consent that the Idaho Water Users Association
testimony be made part of the record.
Thank you Madam Chair.
Senator Murkowski. Thank you, Senator Craig, and your full
comments will be included as part of the record.
Senator Johnson, did you want to make an opening statement?
STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA
Senator Johnson. Just briefly, Madam Chairman. Thank you
for convening today's hearing. We have got a large number of
bills before us today that address a diverse set of interests,
so I will keep my remarks very short.
I would like to extend a quick welcome to Senators Schumer
and Allard and Congressman Radanovich, who are providing their
statements today. I would also like to welcome back Acting
Commissioner Rinne of the Bureau of Reclamation and Mark
Robinson of FERC, who are once again giving testimony to the
subcommittee, and thank our second panel of witnesses for
making themselves available this afternoon.
From the testimony we have received from the administration
witnesses, it looks as if a number of today's bills will
require some additional work before they can move through the
committee. Nonetheless, this afternoon's hearing is an
important first step in that process and I am ready to work
with you, Madam Chairman, and the sponsoring members to try to
address the identified issues and secure committee action on
these bills in the near future. I look forward to receiving
today's testimony and appreciate everyone's input, and thank
you again, Madam Chairman.
Senator Murkowski. Thank you, Senator.
Senator Feinstein, would you care to make an opening
statement?
STATEMENT OF HON. DIANNE FEINSTEIN, U.S. SENATOR
FROM CALIFORNIA
Senator Feinstein. No, Madam Chairman. Thank you. I want to
thank you. You have been just terrific and I really appreciate
it. There are a couple of bills on the calendar that relate to
California and I just want to be here just in case.
[Laughter.]
Senator Murkowski. I appreciate you being here and again
appreciate your cooperation as we work through the title 16.
With that, we welcome to the committee Senator Allard and
Senator Schumer. Senator Allard, if you would care to present
your comments here this afternoon, and again welcome.
STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR
FROM COLORADO
Senator Allard. Madam Chairman, thank you.
Today Colorado is experiencing the fifth year of an
unprecedented drought. This drought is a strong reminder that
water is indeed our most precious natural resource. This is
true most especially in rural Colorado. In southeastern
Colorado, home of the Arkansas River, it is difficult to find
clean, inexpensive water that can meet the ever-increasing
Federal water standards. It is for this reason that I, along
with my colleague Senator Salazar, introduced S. 1106.
Identical legislation has been introduced by Congresswoman
Musgrave in the House of Representatives.
S. 1106 will ensure the construction of the Arkansas Valley
Conduit, which is envisioned as a pipeline that will provide
the small, financially strapped towns and water agencies along
the lower Arkansas River with safe, clean and affordable water.
By creating an 80 percent Federal and 20 percent local cost-
share formula to help offset the construction costs of the
conduit, this legislation will protect the future of
southeastern Colorado's drinking water supplies and prevent
further economic hardships.
It is extremely important to note that the Arkansas Valley
Conduit was originally authorized by Congress in 1962, over 40
years ago, as a part of the Fryingpan-Arkansas Project. The
original Fry-Ark Project authorizing legislation grants the
Secretary of the Interior the authority to construct the
Arkansas Valley Conduit. Our legislation simply authorizes that
authority and adds a cost share provision.
Due to the authorizing statute's lack of a cost share
provision and southeastern Colorado's depressed economic
status, the conduit was never built and until recently there
was no urgent need for it. The region was fortunate to enjoy an
economical and safe alternative to pipeline transportation of
project water and that was the Arkansas River itself.
Unfortunately, this is no longer the case. While the
Federal Government has continued to strengthen its unfunded
water quality standards, these communities have fallen further
and further behind in attaining those standards. As far back as
1950, the Bureau of Reclamation determined that the quality of
local drinking water supplies were simply unacceptable, and you
can see that in House Document No. 187, 83rd Congress.
In response to a number of water providers falling out of
compliance with existing EPA water quality standards, the local
communities formed a committee to evaluate alternative
approaches to solving this problem. The committee ultimately
hired an independent engineering firm to evaluate two competing
options: constructing a series of treatment facilities and
constructing the Arkansas Valley Conduit.
That evaluate resulted in the recommendation to construct
the conduit because of greater savings in taxpayer dollars. The
engineers concluded that local communities were unable to fund
either solution under existing circumstances. The long-term
costs of operating individual water treatment facilities,
including potential new Federal standards and the costs of
disposal of treatment facility water, removed treatment as a
viable long-term solution.
The fixed long-term cost of the conduit contributed to the
engineers' recommending this solution. In other words, the
communities may be too poor not to spend the millions of
dollars they would have to spend in partnership with the
Federal Government to build the Arkansas Valley Conduit. When
you weigh the promise of the conduit versus the fate of
building new individual water treatment facilities, it is clear
that the conduit is the best choice of action.
S. 1106 is essential if we are to bring local water
providers into compliance with Federal water quality standards
and it will finally provide a long-term solution to the
region's water quality concerns. The Arkansas Valley Conduit
would deliver fresh, clean water to dozens of valley
communities and thousands of people along the river. To be
exact, the conduit will supply 16 cities and 25 water agencies
in Bent, Crowley, Kiowa, Prowers, Pueblo, and Otero Counties
with water when completed. The largest city served by the
conduit is La Jonta, Colorado, population of 12,000.
At this time, if the members would direct their attention
to the maps--they should have those in their folders--you will
see exactly where the conduit's beneficiaries are situated. One
of the most stunning facts that I would like to point out is
that the conduit will serve an area slightly larger than the
State of New Hampshire.
As I mentioned, the local sponsors of the project have
completed an independently funded feasibility study of the
conduit and have developed a coalition of support from water
users in southeastern Colorado. I am also pleased that the
State of Colorado has contributed a great deal of funding for
the study through the Colorado Water Conservation Board. These
local stakeholders continue to explore options for financing
their share of the costs and are working hard to complete the
final details surrounding the organization that will oversee
the conduit project.
Now, I would like to turn my attention to the Bureau of
Reclamation, some of the questions they have raised pertaining
to the legislation. I first want to make it clear that the
purpose of the legislation is to provide an 80 percent Federal,
20 percent local cost share formula for the cost of
construction. The local beneficiaries are to be 100 percent
responsible for operation and maintenance. If the Bureau of
Reclamation believes that the language of S. 1106 does not
reflect this commitment, I am prepared to make such changes as
the Bureau believes are necessary to ensure local payment of
operation and maintenance.
I also understand that the Bureau of Reclamation is
concerned about the cost of the project in light of the current
project backlog. As a member of the U.S. Senate Appropriations
Committee, you have my full commitment that if the cost share
language is approved I will work tirelessly on behalf of this
project to make sure that it does not impact other important
Reclamation projects. This project was authorized 40 years ago.
If the money is not spent now it will be spent later as
communities seek Federal grants to fund their projects
individually instead of using a systemwide conduit approach.
The Bureau of Reclamation is also concerned that the cost
share legislation will create a new precedent that it opposes
changes to the Bureau's standard 100 percent repayment policy.
I realize that my legislation is a change to standard policy.
Indeed, that is the very purpose of this legislation. However,
there are a number of other authorized projects that
legislatively change the standard repayment policy. Therefore
the Arkansas Valley Conduit cost share would not set a
precedent. The precedent has already been set.
With the help of my colleagues, the promise made by
Congress 40 years ago to the people of southeastern Colorado
will finally become a reality.
Madam Chairman, thank you for your leadership and for
holding this hearing today. I apologize for going over my time,
but I felt like it is important that the committee get the full
picture on this, and thank you for your patience.
[The prepared statement of Senator Allard follows:]
Prepared Statement of Hon. Wayne Allard, U.S. Senator From Colorado
Madam Chairman, today Colorado is experiencing the fifth year of
unprecedented drought. This drought is a strong reminder that water is
indeed our most precious natural resource. This is true most especially
in rural Colorado. In Southeastern Colorado, home of the Arkansas
River, it is difficult to find clean, inexpensive water that can meet
the ever increasing federal water standards.
It is for this reason that I, along with my colleague Senator
Salazar, introduced S. 1106. Identical legislation has been introduced
by Congresswoman Musgrave in the House of Representatives. S. 1106 will
ensure the construction of the Arkansas Valley Conduit, which is
envisioned as a pipeline that will provide the small, financially
strapped towns and water agencies along the lower Arkansas River with
safe, clean, affordable water. By creating an 80 percent federal--20
percent local cost share formula to help offset the construction costs
of the Conduit, this legislation will protect the future of
Southeastern Colorado's drinking water supplies, and prevent further
economic hardship.
It is extremely important to note that the Arkansas Valley Conduit
was originally authorized by Congress in 1962, over forty years ago, as
a part of the Fryingpan-Arkansas Project. The original Fry-Ark Project
authorizing legislation grants the Secretary of the Interior the
authority to construct the Arkansas Valley Conduit. Our legislation
simply reauthorizes that authority and adds a cost-share provision.
Due to the authorizing statute's lack of a cost share provision,
and Southeastern Colorado's depressed economic status, the Conduit was
never built. And, until recently, there was no urgent need for it--the
region was fortunate to enjoy an economical and safe alternative to
pipeline-transportation of project water: the Arkansas River.
Unfortunately, this is no longer the case. While the federal government
has continued to strengthen its unfunded water quality standards, these
communities have fallen further and further behind in attaining them.
As far back as 1950, the Bureau of Reclamation determined that the
quality of local drinking water supplies were ``unacceptable'' (House
Document Numbered 187, Eighty-third Congress).
In response to a number of water providers falling out of
compliance with existing EPA water quality standards, the local
communities formed a committee to evaluate alternative approaches to
solving this problem. The committee ultimately hired an independent
engineering firm to evaluate two competing options: constructing a
series of treatment facilities and constructing the Arkansas Valley
Conduit. That evaluation resulted in the recommendation to construct
the Conduit.
The engineers concluded that local communities are unable to fund
either solution under existing circumstances. The long-term costs of
operating individual water treatment facilities, including potential
new federal standards and the cost of disposal of treatment facility
waste, remove treatment as a viable long-term solution. The fixed long-
term costs of the Conduit contributed to the engineers recommending
this solution. In other words, the communities may be too poor not to
spend the millions of dollars they would have to spend, in partnership
with the federal government, to build the Arkansas Valley Conduit.
When you weigh the promise of the Conduit versus the fate of
building new individual water treatment facilities, it is clear that
the conduit is the best choice of action. S. 1106 is essential if we
are to bring local water providers into compliance with federal water
quality standards and it will finally provide a long term solution to
the region's water quality concerns.
The Arkansas Valley Conduit will deliver fresh, clean water to
dozens of valley communities and thousands of people along the river.
To be exact, the Conduit will supply 16 cities and 25 water agencies in
Bent, Crowley, Kiowa, Prowers, Pueblo and Otero counties with water
when completed. The largest city served by the Conduit is La Junta,
Colorado (population nearly 12,000). At this time, if the members would
direct their attention to the maps, they will see exactly where the
Conduit's beneficiaries are situated. One of the most stunning facts
that I would like to point out is that the Conduit will serve an area
slightly larger than the state of New Hampshire.
As I mentioned, the local sponsors of the project have completed an
independently funded feasibility study of the Conduit, and have
developed a coalition of support from water users in Southeastern
Colorado. I am also pleased that the State of Colorado has contributed
a great deal of funding for the study through the Colorado Water
Conservation Board. These local stakeholders continue to explore
options for financing their share of the costs, and are working hard to
complete the final details surrounding the organization that will
oversee the Conduit project.
Now I would like to turn my attention to the Bureau of Reclamation
and some of the questions they have raised pertaining to the
legislation. I first want to make it clear that the purpose of the
legislation is to provide an 80 percent federal--20 percent local cost
share formula for the costs of construction. The local beneficiaries
are to be 100 percent responsible for operation and maintenance. If the
Bureau of Reclamation believes that the language of S. 1106 does not
reflect this commitment, I am prepared to make such changes as the
Bureau believes are necessary to ensure local payment of O&M.
I also understand that the Bureau of Reclamation is concerned about
the cost of the project in light of their current project back-log. As
a member of the United States Senate Appropriations Committee, you have
my full commitment that, if the cost-share language is approved, I will
work tirelessly on behalf of this project to make sure that it does not
impact other important Reclamation projects. This project was
authorized 40 years ago. If the money is not spent now, it will be
spent later as communities seek federal grants to fund their projects
individually instead of using a system-wide conduit approach.
The Bureau of Reclamation is also concerned that the cost-share
legislation will create a new precedent and that it opposes changes to
the Bureau's standard 100 percent repayment policy. I realize that my
legislation is a change to standard policy--indeed that is the very
purpose of the legislation. However, there are a number of other
authorized projects that legislatively change the standard repayment
policy. Therefore, the Arkansas Valley Conduit cost-share would not set
a precedent the precedent has already been made.
With the help of my colleagues, the promise made by Congress forty
years ago to the people of Southeastern Colorado, will finally become a
reality.
Madam Chairman, thank you for your leadership and for holding this
hearing today.
Senator Murkowski. We appreciate your comments and your
attendance here today, Senator Allard.
Senator Schumer, if you would like to give us your
comments. Welcome.
STATEMENT OF HON. CHARLES E. SCHUMER, U.S. SENATOR FROM NEW
YORK
Senator Schumer. Thank you, Madam Chairman. First I want to
thank you for replacing my sign. It said ``Sentor Schumer.'' It
reminds me, I was once in New York City and I had an
appointment with somebody I wanted very much to see and I said:
It is Senator Schumer. She called back a few minutes and said:
``Sendar''--she thought that was my first name--``you have no
such appointment.'' Anyway----
Senator Murkowski. Well, we are glad that you are here with
us.
Senator Schumer. So my staff kept joking that I was Sendar
from some foreign planet or something like that.
Anyway, I am glad to be here and I thank you all for your
time. I want to thank my two dedicated staff people, Christine
Parker and Bridget Petruczok, and one other gentleman who has
been running my capital region office--that is Albany area--
since I have been Senator, and does a great job and has been,
as they say up in Albany, like white on rice about this issue,
and that is Steve Mann.
The purpose of S. 2070, the Mohawk River Hydroelectric
Projects Licensing Act, is to require FERC to reopen the
relicensing proceeding for the School Street project. It is
currently a 38 megawatt hydroelectric project located in the
city of Cohoes on the Mohawk River near Albany. The bill simply
asks that FERC consider all valid license applications when a
facility has been operating under annual license for 10 years
or more.
My view, Madam Chairman, is that we should not let a
technicality of the Federal licensing process stand in the way
of progress. The existing situation, temporary annual licenses,
should not continue when there are alternatives that will
provide more power in an environmentally friendly way.
The history goes like this. In 1991 when the relicensing
proceeding for this facility started, the then owners, Niagara
Mohawk Power, operated as a monopoly in New York's regulated
energy industry. Given that a State-approved monopoly was
operating and applying, it came as no surprise there was no
competition. No one else applied.
The original license for the current School Street project
expired in 1993 and since then FERC has only issued annual
licenses, which include no requirement to make improvements, as
would the longer license. So this is the 15th year that this
relicensing procedure has been before FERC. I understand that
it often takes several years for FERC to work through one of
these proceedings, but by any measure 15 years is an
extraordinary amount of time. It is the second oldest
application still pending before FERC.
When former Chairman Patrick Wood attempted to address the
backlog of these thorny relicensure cases a few years ago, this
was one of the few that was left uncleared. They made an effort
to clear all the others.
When alternative projects attempted to raise the issue in
the licensing case, relicensing case, the Commission issued a
decision that stated it was barred from considering any
alternative because of FERC's rules, that they prohibit
consideration of applications that were not filed at the time
the license expired. As I already mentioned and will explain in
more detail, at the time the license was set to expire Niagara
Mohawk had a monopoly. It was the only logical applicant.
But unless FERC can look at other applicants who were not
around at the time, this problem is going to be left in limbo
for another 15 years. Now, I appreciate FERC is in a bind here.
In 2005, in response to a letter I sent on this issue, Chairman
Wood said: ``Should you decide that you would like to propose
legislation to allow this type of application to be considered,
we would be glad to provide technical assistance.'' FERC really
wanted us to do this because they are sort of stuck as well.
Now, absent such legislation, I have been informed by the
Chairman of FERC that the Commission believes it is barred by
law from considering any alternative. So we are going to be
stuck with this [indicating] instead of that [indicating]
forever. According to FERC, it cannot consider any alternative
for Cohoes because the Federal Power Act requires them to only
consider proposals that were 24 months before the expiration of
the existing license. That was in 1991 in this case.
But as I said, the circumstances were different then. We
now have the opportunity to have low-cost, pro-environmental
power. It is GIPA, the Green Island Power Authority, which is a
public authority, that wants to do this. Everyone is on board,
but we are stuck by this technicality.
Cohoes Falls is a natural and historical landmark. It is on
the Mohawk River. It is the second largest river waterfall in
our State. I guess you can all guess the first. It is over
there in Niagara. It was featured in paintings by John James
Audubon, a poem by Thomas Moore, the national poet of Ireland.
They are beautiful. But since 1911 these falls have remained
dry on all but the rarest of occasions, because when the
project was built it diverted the river through a canal, which
leaves a one-mile stretch of the Mohawk River dry.
The current situation prohibits an alternative. We could
bring back the beauty of the falls. There are fish lanes that
are proposed that would allow fishing. Most important of all,
you would get much more power at a much lower cost. So it is a
win-win-win for the one million people of the capital region.
Our bill will allow FERC simply to consider other
applications, to ensure the public does not lose the benefits
of more energy production and a revitalized falls through a
more environmentally sound and friendly approach.
My bill takes into account the sweeping changes that have
occurred since deregulation of the energy market and the
important technological advances like the state of the art fish
screens. Those did not exist 15 years ago and they would
preserve the fish, and fishing again is a recreational activity
that is very much appreciated and prized on the Mohawk.
Most important, it would permit alternative applications
that are supported by all of the surrounding communities. The
existing owner does not want to change things. It is just
sitting there. The new owner has great plans, as you can see,
for lower cost energy, preserving the fish, and bringing back
the beauty of the falls.
So I hope that the committee will consider that. We do not
want to be stuck with this for another 15 years. I have tried
to abbreviate my statement. I feel pretty strongly about this,
Madam Chair. But in the interest of time I would like that--I
will conclude my remarks and ask that my full remarks be
written into the record.
[The prepared statement of Senator Schumer follows:]
Prepared Statement of Hon. Charles E. Schumer, U.S. Senator
From New York
Thank you Madam Chair and members of the committee for welcoming me
here today to talk about a critically important project for the Capital
Region in upstate New York. The purpose of S. 2070, the Mohawk River
Hydroelectric Projects Licensing Act of 2005, is to require the Federal
Energy Regulatory Commission (FERC) to reopen the re-licensing
proceeding for the School Street Project, currently a 38 Mega-Watt
hydroelectric project located in the City of Cohoes on the Mohawk
River.
This bill simply asks that FERC consider all valid license
applications when a facility has been operating under annual license
for 10 years or more. We should not let a technicality of the. federal
licensing process stand in the way of progress. The existing situation,
temporary annual licenses should not continue when there are
alternatives that will provide more power in a more environmentally
friendly way.
In 1991, when the re-licensing proceeding for this facility
started, the then owners, Niagara Mohawk Power Corporation, operated as
a monopoly in New York's regulated energy industry. Given that a state-
approved monopoly was operating and applying for the re-license, it
should come as no surprise that there was no competition from other
entities for the application.
The original license term for the current School Street Project
expired in 1993. Since then, FERC has issued only annual licenses,
which include no requirements to make any improvements
Madam Chairwoman, this is the fifteenth year that this re-licensure
proceeding has been before FERC. I understand that it often takes
several years for FERC to work through one of these proceedings, but by
any measure, fifteen years is an extraordinary amount of time. Indeed,
it is the second oldest application still pending before it.
And, when former FERC Chairman Patrick Wood attempted to address
the backlog of thorny re-licensure cases a few years ago, this project
was one of the few that was left uncleared.
When alternative projects attempted to raise the issue in the
School Street re-licensing case, the Commission issued a decision that
stated it was barred from considering any other alternative because of
FERCs rules prohibit consideration of applications that were not filed
at the time the license expired. As I already mentioned, at the time
the license was set to expire in 1993, Niagara Mohawk had a monopoly
and thus was the only logical applicant. But unless FERC is permitted
to look to other applicants who were not around at the time of the re-
licensure, I am afraid this the problem could be left in limbo for
another fifteen years. That in sum is why we are here today.
I appreciate that FERC is in a bind here. In March, 2005 in
response to a letter that I sent on this issue, former FERC Chairman
Wood said, ``Should you decide that you would like to propose
legislation to allow this type of application to be considered under
the Federal Power Act, we would be glad to provide technical
assistance.'' Soon after, based in large part on Chairman Wood's
response, I proposed this legislation.
Absent such legislation, I have been informed by the Chairman that
FERC believes it is barred by law from considering any other
alternatives, even a superior alternative. According to FERC, it cannot
consider any alternative proposal for Cohoes Falls because the Federal
Power Act requires them to only consider proposals that were filed 24
months before the expiration of the term of the existing license, which
in this case was all the way back in 1991.
But circumstances were very different then. At that time, New
York's regulated electric industry permitted Niagara Mohawk (NIMO) to
have a monopoly. New Yorkers knew that this low-cost power would remain
in the Region at state-regulated prices. But with deregulation, the
world has changed. The monopoly is gone, and NIMO has long since sold
off this facility. In fact, it has been sold and resold several times.
In addition, the region served by the facility has changed. Any
plant licensed at Cohoes Falls should meet the power needs of the
growing Capital Region and protect the aquatic life and scenic beauty
that have been nearly ravaged by the current facility.
Cohoes Falls is a true natural and historical landmark and is
located on the Mohawk River, just west of its confluence with the
Hudson River. It's the second largest waterfall in New York State and
the site is still considered sacred to the Iroquois. It is also was
featured in a painting by John James Audubon and a poem by Thomas
Moore, the National Poet of Ireland.
Since 1911, these majestic falls have remained dry on all but the
rarest of occasions. When the School Street Project was built, it
diverted the flow of the river through a canal, which leaves a one mile
stretch of the Mohawk River, including the Cohoes Falls dry on all but
a handful of days a year.
The current situation prohibits consideration of alternative
projects or additional evidence into the existing School Street re-
licensing record despite the need of the electricity consumers in my
State for clean, renewable resources. Existing regulations have thus
created a situation where it has but one choice and that one choice is
to re-license a power plant that under-utilizes the waters of the
Mohawk River and wreaks adverse environmental effects. Now, 15 years
have passed and it makes no sense to pretend, at the time of decision
making, that we are back in 1991, when the world was a very different
place.
This is especially true when the decision making involves the next
fifty years as well. Here, where the application of the existing law in
this case works so patently against the public interest, then it is
time for Congress to take steps to remedy the situation. My bill will
allow FERC to consider other applications to ensure that the public
does not lose benefits of more energy production and revitalized falls
through a more environmentally friendly approach.
My bill will take account of the sweeping changes that have
occurred since the deregulation of the energy market and important
technological advancements in areas like state of the art fish screens,
which didn't exist fifteen years ago.
Most important, however, it would also permit consideration of
alternative applications that would be supported by the surrounding
communities. The communities around the Projects are very enthusiastic
both about the benefits of the new Cohoes Falls power project and the
prospects of replacing the School Street Project, which has long been
an eyesore. Local interests and associations thus support consideration
of alternative applications in the re-licensing proceeding.
I hope the committee will agree with me that this proceeding has
gone on too long. In fact, it has been going on for twice the length of
a FERC Commissioner's term. If a re-licensing proceeding cannot be
worked out in that length of time, I believe it is in the best interest
of the community that the process be opened up for alternative
proposals.
I believe that S. 2070 would preserve the integrity of FERC's
procedures while allowing for new applicants to compete for this
license. I look forward to working with the committee to move this
important matter forward.
As the Committee knows well, the Federal Power Act requires FERC to
license only the ``best adapted'' proposal that will be in the public
interest. Federal Power Act (``FPA'') Sec. 10(a)(1),16 U.S.C.
Sec. 803(a)(1). I believe Congress gave FERC clear instructions that
the public deserves ``the best'' project when FERC issues a license and
that it authorized FERC to include conditions to protect the public
interest. It is unfortunate that other provisions of FERC regulations
have hampered this mandate from Congress in this case.
Under these circumstances, the most appropriate way to avoid a bad
result for the public and the Nation lies in the passage of a law to
remove the barrier to FERC's inability to consider other applicants in
the School Street re-licensing case. Specifically, S. 2070 would
require the Commission to reopen the current School Street proceeding
within 90 days of the enactment of this legislation, for a reasonable
period of time to permit the filing of other license applications that
would use the same waters as the School Street Project.
After that time period, which must include adequate time to process
a license application under the Commission's own regulations, the
Commission would proceed to process all timely-filed applications and
promptly make its decision as to which of the proposals before it
constitutes the best adapted Project. If no acceptable license
applications are filed, FERC would issue a license to the existing
licensee, with appropriate conditions to protect the opportunity in the
future for a better project to be developed.
FERC may also want to consider the benefits of local ownership in
the development of local resources when reviewing additional
applications. Productive power projects can initiate other beneficial
projects in local communities, whether economic, recreational or
environmental. Local populations are highly aware of the potential uses
for the natural resources in their respective communities and should be
given the opportunity to develop them. All they ask for is an equal
opportunity to participate in the process Congress established to issue
licenses for these public natural resources in the public interest.
I want to emphasize the uniqueness of this situation at Cohoes
Falls. For almost 15 years, the public has been denied the benefits
that could be achieved if a competitive application process were
available including lower cost electricity and environmental
protections and enhancements. Because the existing licensee has
received annual temporary licenses, it has recouped substantial
economic benefits of an outdated license, especially as the prices for
electricity have sharply risen, without having to invest in the
facility.
FERC's role is to consider all options and select the one that best
ensures the public interest will be served. That is what my legislation
will do in this very unique circumstance where previous regulation of
the industry created a monopoly and no other applicant was eligible. In
other words, it will free FERC to allow it to engage in the very kind
of reasoned and comparative decision making intended by the provisions
of the Federal Power Act. I urge the Committee to move this bill
forward as quickly as possible. I thank my colleagues for their time
and consideration of this important bill.
Senator Murkowski. They will be include as part of the full
record.
Senator Schumer. Thank you.
Senator Murkowski. We appreciate you being here today.
Senator Schumer. Thank you. I thank all the members of the
committee for taking the time here.
Senator Murkowski. Thank you.
Senator Feinstein.
Senator Feinstein. Could I ask a question of Senator
Schumer?
Senator Schumer. Please.
Senator Murkowski. Certainly.
Senator Feinstein. Let me ask you, talk about these two
charts. Now, this is today [indicating].
Senator Schumer. Correct.
Senator Feinstein. And this was when at the latest
[indicating]?
Senator Schumer. I cannot see that, but----
Senator Feinstein. When the falls were there.
Senator Schumer. That is how it was and would be in the
future.
Senator Feinstein. When? When was it?
Senator Schumer. 1911. That is a rendition.
Senator Feinstein. When did it stop being that way?
Senator Schumer. 1911.
Senator Feinstein. Ah. And now, so you are----
Senator Schumer. See, what they did is they built--back
then, Niagara Mohawk built a bypass, so the falls are gone.
Even though they were very famous in the 19th century, they
were less environmental then, less environmentally oriented.
It was a monopoly, so no one, when the license came up, no
one tried to change it in 1991. Since then we have had
deregulation and you have a group of people interested in going
from this [indicating] to that [indicating]----
Senator Feinstein. Oh, I see.
Senator Schumer [continuing]. Which would provide three
benefits----
Senator Feinstein. So what is it you need?
Senator Schumer. We simply need this legislation, which
would--the rules of FERC are you can only consider a license
within the 24 months. This license has not been renewed since
1991. This would make an exception and allow--we do not even
tell FERC what to do. We say just consider alternatives as if
they have applied a year and a half ago.
Senator Feinstein. Thank you.
Senator Murkowski. Thank you for the clarification.
Congressman Radanovich, your timing is impeccable. We have
just concluded with the comments by Senator Allard and Senator
Schumer on their respective pieces of legislation. We are
delighted to have you come across to the Senate side and give
us your comments to the subcommittee this afternoon. Welcome.
STATEMENT OF HON. GEORGE RADANOVICH, U.S. REPRESENTATIVE FROM
CALIFORNIA
Mr. Radanovich. Thank you very much, Madam Chairwoman. I do
appreciate your indulgence. We had votes on the other side, and
also chairing a hearing on California water as well.
But the bill that I wanted to speak today to is H.R. 3897,
which is the Madera Water Supply Enhancement Act. It is
legislation that is vital to the economic wellbeing of Madera
County in the San Joaquin Valley. Water is the lifeblood of
this region and the project ensures that Madera County has a
stable, reliable, and efficient water supply. Specifically, the
project will enable water users to store excess river flows in
a nearby aquifer underground. This stored water bank would then
be used during dry years and could prove critical to meeting
water demands.
The over 13,000-acre ranch where the water bank is located
is well suited for this project. The soils on and underneath
the land are ideal for percolating water from the surface into
the aquifer for storage. In addition, the land is valuable
habitat for numerous species and contains large sections of the
region's native grasslands. In fact, this is a rare part of the
San Joaquin Valley that has never been tilled since man arrived
on the scene.
Funding for the project is under way. The Madera Irrigation
District which will operate and maintain the project issued a
$37.5 million bond to purchase the property. Also, a fiscal
year 2006 energy and water appropriations measure allocated
$200,000 to conduct an appraisal study of the water bank, which
is nearly complete.
Further, H.R. 3897 includes a 50 percent Federal cost share
for a feasibility study and a 25 percent Federal cost share for
the capital cost of the project. The remainder of the funding
will come from local and State funds.
I recognize that there may be some questions raised as to
why this legislation both authorizes a feasibility study and an
underlying project in one bill. A little bit if history, if you
will indulge me, will explain why we have chosen to take this
comprehensive approach. For over a decade the Madera Ranch
property on which the project will be located has been
recognized as an ideal site for a water bank. In 1996 the
Bureau of Reclamation began water bank investigations on the
property. Two years later in 1998, the Bureau finalized plans
to fund a water on the property in the amount of approximately
$60 million.
But the Bureau withdrew from the project due to local
concerns regarding sizing, water quality, and the lack of
ownership. As a part of this process, the Bureau conducted
numerous studies of the property and the feasibility of
utilizing it for a water bank, including the Madera Ranch
groundwater bank phase 1 report in 1998 and other studies and
reports.
Following the Bureau's efforts to fund a water bank
project, Azurex, which was an Enron subsidiary, attempted to
pursue the same water bank project, but ran into the same local
concerns.
In 2003, millions of dollars were spent on feasibility
studies for a reformulated project to ensure local concerns
were addressed. To date over $8 million have been spent on
studies related to the project, not counting the Bureau's own
substantial efforts to fund a water bank at the site. All of
this work, including four successful pilot tests, has verified
that the project is not only feasible, but, with a certified
environmental impact report now in place, is ready to move to
the construction phase.
I would like to submit for the record a document prepared
by the Bureau entitled ``Suggested Content Feasibility Report
and/or Planning Report, IES.'' And I am also submitting an
annotated version of the Bureau document that identifies the
specific studies and reports that have been done by the Bureau
itself, the Madera Irrigation District and others that address
each of the subject matter categories that the Bureau wants
covered in a feasibility report and corresponding material for
such category.*
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*The additional material has been retained in subcommittee files.
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This project may be studied more than any other comparable
project in the history of the Bureau. As such, the Bureau
should be able to utilize previously prepared material, updated
required information, and complete the feasibility study soon
for a modest cost.
Madam Chairwoman, thank you so much for consideration of
H.R. 3897. It does enjoy broad, widespread support in the
district and I appreciate its fair consideration.
Senator Murkowski. Thank you. We appreciate your being here
and the reports that you referenced in your comments will be
made a part of the full committee record.
Mr. Radanovich. Thank you very much.
Senator Murkowski. So we appreciate that and appreciate
your willingness to come over this afternoon.
Senator Salazar, I have given other members of the
subcommittee time to make opening comments, if you would like
to do the same.
STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR
FROM COLORADO
Senator Salazar. Thank you. Thank you very much, Madam
Chairman. I appreciate the opportunity. And thank you, ranking
member Johnson, for holding this hearing today.
I will submit a much longer comment for the record, but I
want to summarize just a couple of points if I may. I join my
colleague Senator Allard in support of S. 1106 for the
construction of a conduit that would essentially fulfill a
promise that was made back in 1962, take a pipeline from Pueblo
Reservoir and essentially provide clean water supply for about
100 miles downstream of Pueblo to an area in the lower Arkansas
Valley which is very rural and struggles economically, perhaps
more than any other region in the State of Colorado.
Without us being able to build this pipeline to provide
clean water into those communities, many of those communities
do not have any economic development opportunities and will
wither on the vine and we are going to have a southeastern part
of Colorado that essentially is going to dry up and blow away.
So I very much look forward to working with this committee,
working with my colleague Senator Allard and all the
stakeholders of the communities in the Lower Arkansas River
Valley to get this project finally done after some 44 years in
waiting.
With that, Madam Chairman, I do have a more formal
statement that I will submit for the record.
[The prepared statement of Senator Salazar follows:]
Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
Thank you Madam Chair and Ranking Member Johnson for holding this
hearing today to consider S. 1106, the Arkansas Valley Conduit Act. I
want to welcome County Commissioner Bill Long and thank him for coming
all the way from Las Animas, Colorado to be here today.
In 1962, Congress authorized the Fryingpan-Arkansas project, a
water diversion and delivery project that brings water from the Western
Slope of Colorado to communities in the Arkansas Valley on the Eastern
Slope of the Rockies.
Much of the Fry-Ark Project is complete. Each year, over 69,000
acre-feet of water flow from the Roaring Fork Basin through the Fry-
Ark's tunnels and reservoirs to farms and households in the Arkansas
Valley. This water is the lifeblood of southeastern Colorado.
But one key piece of the Fryingpan-Arkansas Project remains
unfinished. Congress envisioned that the Bureau of Reclamation would
not only help bring water for agricultural and municipal use to
southern Colorado, but also that it would help deliver clean, safe,
drinking water to towns like Eads, La Junta, Ordway and Lamar. Congress
envisioned the construction of a pipeline, or conduit, which would pipe
drinking water from the Pueblo Reservoir down the Arkansas River
corridor to the communities in the southeastern corner of Colorado.
Unfortunately, the original legislation did not include the
federal-local cost-share provision needed for the conduit's
construction. As a result, these communities have to rely on the
compromised Arkansas River to deliver water for their citizens,
factories and farms. Unfortunately, by the time the Arkansas River
winds its way through eastern Colorado and reaches these small
communities in the Lower Arkansas Valley, it is laden with natural
contaminants like selenium and has picked up effluent from upstream
communities and users.
The small towns of Southeastern Colorado have been struggling for
years under the weight of protracted drought, soaring energy costs and
low commodity prices. Farms are drying up, Main Street shops are
shuttering their windows, and families are struggling to pay the bills.
And Washington seems to have forgotten its four-decade old commitment
to help build the Conduit. Like so many other communities in Rural
America, the southeastern corner of the state is withering on the vine.
It is time for the federal government to keep its promise from 40
years ago, and to help provide clean, safe, drinking water to
southeastern Colorado. If we fail to fulfill this commitment, I am
afraid that we will see more small farms dry up and more towns
disappear. Colorado will lose a large component of its economic base.
The agricultural heritage that built this country will be one step
closer to becoming a quaint memory.
Many of the towns and municipal water treatment systems in the
Lower Arkansas Valley have already received notices from the Colorado
Department of Public Health and Environment, advising them of the need
to upgrade or replace their water treatment systems to treat water
taken out of the Arkansas River. The fact is, these communities cannot
afford to pay the estimated $640 million for new treatment systems that
would be necessary to meet the new federal water quality standards. And
if those communities were forced to upgrade their water treatment
systems individually, they would have to come to the federal government
for help--because they simply cannot afford to do it themselves.
Therefore, Madam Chair, even though this is an expensive project
and has a large federal cost-share, the conduit will be far more
economical in the long run. And as you will hear today, it still places
a sizable burden of funding on the local communities.
I am proud to report, however, that the affected towns and counties
have shown that they are able and willing to cover the local cost-
share. Remarkably, they have collected letters of intent for 94% of the
Conduit's projected capacity, at a sufficient price to cover the local
cost-share. The local communities have made this financial commitment
because they understand that this is a valuable and wise long-term
investment for the region.
As one who feels that it is critical that local communities
participate in and support these types of water projects, I am pleased
that this bill has such strong backing in southeastern Colorado.
And I am optimistic that the construction of the conduit will help
spur a rural renaissance in southeastern Colorado. Farmers and ranchers
are already excited about the new opportunities that renewable energy
production offers--from hosting huge wind turbines to growing fuel for
biodiesel. With a reliable, affordable source of clean drinking water,
these communities can be at the forefront of our renewable energy
economy. We need to get the conduit built for this to happen, and we
need to do so as quickly as possible.
Madam Chair and Ranking Member Johnson, I again thank you for
holding this hearing today and I thank you for responding to my request
that Mr. Long be invited to testify. This bill is of great importance
to the future of tens of thousands of people across my state and I hope
we will soon have an opportunity to pass it out of committee.
Senator Murkowski. Your full comments will be included as
part of the record.
With that, we will go to our first panel and invite up
William Rinne, the Acting Commissioner of the U.S. Bureau of
Reclamation, as well as Mark Robinson, Director of Energy
Projects at the Federal Energy Regulatory Commission.
Welcome, gentlemen. Mr. Rinne, if you would like to proceed
with your comments first.
STATEMENT OF WILLIAM RINNE, ACTING COMMISSIONER,
U.S. BUREAU OF RECLAMATION
Mr. Rinne. Thank you, Madam Chairwoman. members of the
subcommittee, I am Bill Rinne, Acting Commissioner of the
Bureau of Reclamation. Thank you for the opportunity to present
the Department's view on S. 1106, S. 1811, S. 3832, S. 3798,
H.R. 2563 and H.R. 3897. Madam Chairman, I am sensitive of the
committee's time and will be as brief as possible, although I
may go a little over the 5 minutes since there are 6 bills to
address, and I request my full statement be submitted for the
record.
Senator Murkowski. It will be included.
Mr. Rinne. S. 1106 is a redraft of the Arkansas Valley
Conduit legislation previously introduced. We commend the
sponsors for addressing a number of Reclamation's concerns
expressed in our prior testimony before this subcommittee in
October 2003. Among these concerns was the assurance that the
costs of the operation, maintenance, and replacement of the
conduit will not be borne by the Federal Government. However,
the current bill states that the Federal share of planning,
design, and construction costs shall be 80 percent. This is
contrary to the original Fry-Arkansas authorizing legislation,
general Reclamation law, and current policy, in that generally
municipal and industrial beneficiaries pay 100 percent interest
of the M&I project costs. Therefore the administration cannot
support the bill as introduced.
S. 1811 authorizes study of enlarging Arthur Watkins Dam in
Utah. The proposed feasibility study would analyze alternatives
for water storage and consider environmental issues, foundation
stability, and public safety. Due to the limited focus of the
one to two-foot dam raise, the estimated cost of this study is
$2 million. The Department cannot support S. 1811 in its
current form. However, if the bill were amended to include the
appropriate Federal cost ceiling and a minimum of 50 percent
non-Federal cost sharing in the financing of the feasibility
study in line with Reclamation policy and practice, the
Department would not oppose enactment of S. 1811. Of course,
any potential authorization to raise the dam would have to
compete with the many other Reclamation projects vying for
funding.
S. 3832 would require the Secretary of the Interior to
establish criteria to transfer title to Reclamation facilities,
and for other purposes. The Department believes that S. 3832 is
consistent with an initiative that the Bureau of Reclamation
currently has under way under its Managing for Excellence
Action Plan. The goals of S. 3832 would be furthered by those
efforts and the Department supports passage of the measure.
S. 3798 would defer payment and the cost of unused water
capacity in Folsom South Canal in California. It would also
authorize CVP customers to convey an equivalent amount of non-
CVP water through the canal without additional payment. Because
of the incomplete status of the Auburn Dam, water deliveries
from the canal have never occurred at the levels anticipated.
This act would compute the deferred use of the canal based upon
the unused capacity and adjust the reimbursable costs
accordingly.
However, the Department has not prepared a detailed cost
estimate for this bill and has unanswered questions about its
fiscal impact. The Department cannot support S. 3798 as
written, but is willing to work with the sponsor on this
legislation.
Turning to H.R. 2563, it authorizes feasibility studies to
address water shortages within the Snake, Boise, and Payette
River systems in Idaho. I previously provided testimony before
the House Subcommittee on Water and Power in November 2005 and
said that the administration could not support H.R. 2563
because it did not contain time or funding limitations and had
no requirement for a 50 percent non-Federal cost share, as is
required by Reclamation policy.
Since that time Reclamation has worked with congressional
staff to modify the legislation. I am pleased to testify that
the administration now supports H.R. 2563 as passed by the
House and referred to this committee.
H.R. 3897 would authorize a feasibility study for the
Madera Water Supply Enhancement Project in Madera County,
California. The bill would also authorize construction of the
project and would allow the Secretary to enter into a
cooperative agreement with the Madera Irrigation District for
planning, design, and construction.
The Department does not support this bill. An appraisal
report for this project is expected to be complete by the end
of calendar 2006, so sufficient information about this project
is not yet known. H.R. 3897 also directs that a feasibility
report, which usually requires up to 3 years to complete, be
completed by the end of 2006. Additionally, H.R. 3897 does not
set a construction cost ceiling, but only limits the Federal
share of the construction cost not to exceed 25 percent of the
total cost of the project, which is not known at this time.
This underscores the Department's position that it is premature
to authorize construction of the project and establish the
Federal share of the cost prior to completion of the
feasibility level cost estimates and a determination of Federal
interest.
Madam Chairman, this concludes my remarks and I would be
pleased to try to answer any questions.
[The prepared statements of Mr. Rinne regarding S. 1106, S.
1811, S. 3798, S. 3832, H.R. 2563, and H.R. 3897 follow:]
Prepared Statement of William Rinne, Acting Commissioner, Bureau of
Reclamation, Department of the Interior
S. 1106
Madam Chairwoman, I am William Rinne, Acting Commissioner of the
Bureau of Reclamation. I appreciate the opportunity to provide the
Department of the Interior's views on S. 1106, legislation to authorize
the construction of the Arkansas Valley Conduit in the State of
Colorado. The Administration cannot support S. 1106.
The Conduit is an authorized feature of the 1962 Frying-Arkansas
Project, but was never constructed. The Conduit would transport water
from Pueblo Dam, a feature of the Fry-Ark Project, to communities along
the Arkansas River, extending about 110 miles to near Lamar, Colorado.
The Lower Arkansas River Basin is comprised of rural communities, with
the largest town, Lamar, having an estimated population of 8,600. The
population anticipated to be served by the Conduit is approximately
68,000. This proposed rural water project would tap into an existing
reservoir and provide municipal, residential, and industrial water via
160 miles of pipeline to a series of small towns and surrounding rural
areas; one option would also include a water treatment plant. Total
project costs are roughly estimated at between $265 million and $340
million, depending on the particular project features. While the
project is technically do-able, the project sponsors have not
identified where they would get all the water identified as needed for
the project, and the financial capabilities of the project sponsors is
unclear.
The Fryingpan Arkansas Project Act required that municipal water
supply works either be constructed by communities themselves or, if
infeasible, by the Secretary, with repayment of actual costs and
interest within 50 years.
During development of the original Project, Reclamation found the
Conduit to be economically feasible, but the beneficiaries lacked the
bonding capability to construct the works themselves. The beneficiaries
of the Conduit found that it also was financially infeasible to repay
Reclamation within 50 years if Reclamation were to construct the
Conduit.
Increased water treatment costs, due to the poor quality of locally
available groundwater, and requirements of the Safe Drinking Water Act
have renewed local interest in the need for alternative means of
obtaining safe and clean water supplies. We understand that the
beneficiaries are looking for Federal financing for the Conduit, given
that some of the communities in the Arkansas River Valley may be facing
considerable expense to comply with federally mandated water quality
standards.
S. 1106 is a re-draft of legislation previously introduced. The
legislation addresses a number of Reclamation's concerns, including
some that the previous Commissioner Mr. John Keys discussed in
testimony before this Subcommittee on October 15, 2003. This includes
clarification that the cost for operation, maintenance and replacement
of the Conduit will not be borne by the Federal Government.
The current bill, as introduced, again contains a Federal and a
Non-Federal cost share. The legislation states that the Federal share
of total costs of the planning, design, and construction of the Conduit
shall be 80 percent. This is contrary to the original Fry-Arkansas
authorizing legislation, general Reclamation law and current policy, in
that generally municipal and industrial beneficiaries pay 100 percent,
plus interest, of M&I project costs. The legislation as drafted is also
inconsistent with the 35 percent local cost share set forth in the
Administration's proposed rural water legislation that was transmitted
to Congress on March 3, 2004. Therefore, the Administration does not
support the bill.
At the request of Otero County Water Works Committee, and with
funding provided in fiscal years 2003 and 2004 appropriations bills,
Reclamation prepared a Re-evaluation Statement on the feasibility and
viability of the conduit. The Statement assesses if the construction of
the conduit would be responsive to current needs and are consistent
with the Principles and Guidelines; and the National Environmental
Policy Act. The Re-evaluation statement contains updated implementation
costs for construction and O&M, and provides an assessment of the
Conduit sponsors' ability to pay. The final Statement incorporates
comments received from direct beneficiaries and includes a revised
draft cost estimate, which compares favorably with the cost estimate
recently prepared by Black & Veatch, under a contract with Conduit
proponents.
In addition, Reclamation has a concern about the requirement in the
current legislation requiring the Federal Government to pay the entire
cost of fundamental design changes conducted at the request of any
person other than the lead non-Federal entity. This language leaves
open the possibility that design changes recommended by the direct
beneficiaries become the sole financial responsibility of the Federal
Government. This provision is not in the best interest of the taxpayer.
Furthermore, we are concerned about the implications this has to
restrict the ability of Reclamation's engineers to exercise their
professional judgment in designing projects. The legislation as written
could create undue pressure to avoid changes to the original project,
even if those changes would be in the best public interest.
In conclusion, Madam Chairwoman, the Administration cannot support
a bill with a Federal cost share that is inconsistent with Fry-Ark
legislation, general Reclamation law and current policy. There are also
many uncertainties regarding project water supply and the financial
capability of the project sponsors to go forward with project
authorization. I would like to emphasize that the existing Fry-Ark
Project authorization appropriately address the responsibility of the
beneficiaries to pay for associated reimbursable costs. Finally, if
authorized, this project would need to compete with other, ongoing
rural water projects for scarce funds. Although we cannot support this
bill, the Administration recognizes the water quality issues facing the
Arkansas River Valley and we are open to working with the project
sponsors and members of the Committee to explore other options.
This concludes my statement. I would be pleased to answer any
questions.
S. 1811
Madam Chairwoman, thank you for the opportunity to present the
Department of the Interior's views on S. 1811, a bill to authorize the
Secretary of the Interior to study the feasibility of enlarging the
Arthur V. Watkins Dam. I am William Rinne, Acting Commissioner of the
Bureau of Reclamation. The Department regrets that it is not possible
to support S. 1811 in its current form because it contains neither non-
federal cost sharing for the study nor an overall Federal cost ceiling.
Arthur V. Watkins Dam, built in 1964, is located 12 miles northwest
of Ogden, Utah, on the shore of the Great Salt Lake. It is an off
stream structure which extends into the Great Salt Lake and is
constructed on lake deposits. The embankment is 14.5 miles long, has a
structural height of 36 feet, and contains about 17 million cubic yards
of material. It encloses a reservoir of 215,000 acre-feet, with a
surface area of more than 9,900 acres.
Arthur V. Watkins Dam forms Willard Bay Reservoir. The dam is a
Reclamation feature of the Weber Basin Project and was authorized by
Congress in the Weber Basin Project Act of August 29, 1949 (PL 81-273).
The Weber Basin Project was constructed in the 1950's.
The original design anticipated settling of the foundation of the
embankment during the life of the dam. In the early 1990's, the
embankment was raised, re-establishing the original elevation of the
embankment. The project was completed by the Weber Basin Water
Conservancy District (WBWCD) under a Rehabilitation and Betterment
loan.
The proposed feasibility study would analyze viable alternatives
for water storage and consider environmental issues, foundation
stability, and public safety. In addition, the feasibility study would
evaluate potential future foundation settling. Due to the limited focus
of the 1 to 2 foot dam raise, the estimated cost of this study is $2
million.
Growth in the project area has been significant during the last
decade. The State population projections for the future show continued
growth. With the extensive growth, water development projects and
supplies are being investigated for the northern part of the Wasatch
Front. The WBWCD has asked Reclamation to provide additional storage in
Willard Bay for approximately 10,000 acre-feet of annual yield
available under existing Weber Basin Project water rights.
The additional storage of water would be used for municipal and
industrial, flood control, fish and wildlife enhancement, and
recreation purposes along the Wasatch Front in northern Utah. The added
capacity could postpone the need for the State of Utah to begin
development of the water resources of the Bear River in northern Utah.
The additional storage of water would be consistent with the purposes
identified in the original authorizing legislation (PL 81-273) and
current contracts.
If the legislation were amended to include a reasonable Federal
cost ceiling and a minimum of fifty percent non-federal cost-sharing in
the financing of the feasibility study, in line with Reclamation policy
and practice applied in virtually every similar situation, we would not
oppose enactment of S. 1811. Of course, we will be happy to work with
the bill's sponsors, Senator Hatch and Senator Bennett, and this
Committee to make this improvement. However, any potential
authorization to raise the dam would have to compete with the many
other Reclamation projects vying for funding.
This concludes my testimony. I am happy to answer any questions.
S. 3798
Madam Chairwoman, I am William E. Rinne, Acting Commissioner of the
Bureau of Reclamation. For the reasons discussed below, the Department
cannot support S. 3798. This legislation would defer repayment of the
capital cost of the unused capacity in the Folsom-South Canal, Auburn-
Folsom South Unit, Central Valley Project (CVP), Public Law 89-161 (79
Stat. 615). It would also authorize entities that pay capital and
operation costs associated with CVP water assigned to the Folsom-South
Canal service area to substitute for conveyance through the Folsom-
South Canal up to an equivalent amount of non-CVP water without
additional payment.
Only the initial two reaches of the planned five reaches of the
Folsom-South Canal were constructed. Both reaches contained deferred-
use capacity for the East Side Division. However, because of the
incomplete status of the Auburn-Folsom South Unit, water deliveries
have never developed as anticipated. Annual water deliveries generally
average less than 2% of the designed capacity of the canal. This act
would allow the Secretary to compute the deferred use capacity of the
facility based upon the overall unused capacity of the canal rather
than just that portion of the facility that was provided for the East
Side Division.
Under the bill, these computations would be reevaluated ``as
appropriate'' to reflect any changes in the use of the canal and
reflect those changes in the pooled reimbursable capital conveyance
costs of the CVP. This act would not be retroactive to previous year
payment computations. As current and future capital costs are
identified for CVP cost repayment purposes they will be calculated in
accordance with the then-current CVP water rate setting policies.
Reclamation is still in the process of trying to ascertain the
costs of implementing this bill, but the bill sponsors estimate the
reduced revenues to the Treasury at $2.2 million per year. The
Department has concerns about deferring the repayment of the costs of a
Reclamation facility based on the amount of capacity in use and its
implications for other projects. This precedent, if applied to other
projects, could result in significantly reduced revenues to the United
States.
Estimating unused capacity also poses implementation challenges.
This is illustrated by the ambiguous language contained in this bill
requiring that the minimum unused conveyance capacity in the canal
should ``be based upon actual historic measured flows in the canal and
planned future flows.'' Given the many factors that impact actual use
of a facility, making a determination about how to balance between
historic flows and planned future flows would not necessarily be
straightforward.
Reclamation would support section 1(e) of the bill. This provision
allows entities that are paying costs associated with the Folsom-South
Canal to substitute for conveyance through the Folsom-South Canal up to
an equivalent amount of non-CVP water without additional payment. This
bill addresses a situation where an assignor may have use of the
Folsom-South Canal but assigns all or part of their share of project
water entitlement to an assignee that does not use the facility. In an
assignment of this water, the assignee is required to pay for the canal
facilities so that the costs are not stranded for repayment by either
the federal government or other water users. The bill addresses the
concern that payments are made for the canal facilities but that the
assignee should be able to receive some benefit of Folsom-South Canal
use for non-project water without additional payment.
While Reclamation cannot support S. 3798 as written, we are willing
to continue to work with the sponsors and this subcommittee to address
issues of fairness in the allocation of Folsom Canal costs. That
concludes my prepared remarks. I would be pleased to answer any
questions.
S. 3832
Madam Chairwoman and members of the Subcommittee, I am William
Rinne, Acting Commissioner of the Bureau of Reclamation. I am pleased
to provide the views of the Department of the Interior on S. 3832, The
Reclamation Facility Title Transfer Act of 2006. We support passage of
this measure.
S. 3832 would require the Secretary of the Interior to establish
criteria to transfer title to Reclamation facilities and for other
purposes. The Department believes that S. 3832 is consistent with an
initiative that the Bureau of Reclamation currently has underway, that
I will outline in my statement. We also believe that the goals of S.
3832 would be furthered by those efforts and we would appreciate the
opportunity to work together to develop a comprehensive approach to
title transfer.
BACKGROUND
In 1995, the Bureau of Reclamation began an effort to facilitate
the transfer of title to Reclamation projects and facilities in a
consistent and comprehensive way. Reclamation developed a process known
as the Framework for the Transfer of Title--establishing a process
whereby interested non-Federal entities would work with and through
Reclamation to identify and address all of the issues that would enable
the title transfer to move forward. Once completed, Reclamation and the
entity interested in taking title would work with the Congress to gain
the necessary authorization for such a title transfer. Over the past
ten years, the process has evolved and improved as we worked through
various transfers--some were successful and some not. Over that time
period, we've learned important lessons and have modified the process
to improve the efficiency and reduce the associated costs.
Since 1996, the Bureau of Reclamation has transferred title to
eighteen (18) projects or parts of projects across the west--pursuant
to various Acts of Congress. On October 2, 2006, several features of
the Provo River Project including the Salt Lake Aqueduct, as authorized
by P.L. 108-382, are scheduled to be conveyed to the Metropolitan Water
District of Salt Lake and Sandy. The remaining features of this
project, that are authorized to be transferred by that Act, are
scheduled to be transferred by the end of 2007. Before that can take
place, however, several water districts and municipalities that benefit
from these facilities are working together to address a number of
complicated post-transfer project management operational issues. There
are two additional transfers that are authorized and awaiting
completion. In both of these cases, the districts receiving title are
completing real estate surveys and preparing the quit claim deeds
necessary to record the change of ownership with the county. In
addition, there are two other authorized transfers which require
compliance with various Federal laws including the National
Environmental Policy Act (NEPA) and the National Historic Preservation
Act (NHPA) as called for by the authorizing legislation.
Since each project is unique, each of the authorizing laws enacted
has different terms. Each requires that different actions be taken
prior to transfer such as the completion of the process under NEPA, or
agreements with State and local agencies over recreation or cultural
resources management.
LESSONS LEARNED
While Reclamation has had success with title transfer of projects
and facilities over the past ten years, we remain concerned that the
process still takes too long, is potentially too costly and the number
of new proposed transfers is declining. We believe that there may be a
number of opportunities of mutual benefit that could come from the
transfer of projects or facilities that are not being realized.
As such we have undertaken a number of important activities that I
want to outline that fit in with the goals of S. 3832.
Comprehensive Review of Title Transfer: In 2003, a Team lead by the
Department of the Interior's Office of Policy Analysis undertook a
comprehensive review of Reclamation's title transfer effort. The review
looked, not only at the process, but also at the individual transfers
that succeeded and those that did not move forward. This effort
included a survey of Reclamation employees involved in title transfer,
a water users workshop and numerous interviews with water users that
both pursued title transfer and those that opted not to pursue title
transfer. It also included interviews with stakeholders from states,
local governments, the environmental community and congressional staff
members who were involved in various legislative efforts related to
individual transfers at the time.
With that data, the Team identified a number of important lessons
and a number of programmatic changes were implemented to make the
process more efficient and cost effective.
I would like to highlight some of the lessons that this Team
identified:
Each Project is Unique: One of the early lessons that we
learned and that is reinforced with each new title transfer
effort is that each project and set of facilities is unique.
Each project was authorized to address a particular set of
circumstances, both hydrologic as well as economic. As such, a
``cookie cutter'' or ``one size fits all approach'' wouldn't
meet the needs of the water users, the customers, other
stakeholders or Reclamation. That isn't to say that there
cannot be a set of criteria developed, but those would need to
be flexible.
No Such Thing As a ``Simple Project'': Many Reclamation
projects may appear to be ``simple'' title transfers or
``simple'' projects for title transfer because complex or
controversial issues are absent. However, even the ``simple''
title transfers such as those involving the American Fall
Reservoir District #2 in Idaho, the Carpinteria Valley Water
District in California, and the San Diego Aqueduct in
California, had unique complexities that were unknown when we
started the process that must be identified and addressed.
Older projects or projects with facilities that cover a
relatively large geographical area and particularly those where
significant amounts of land or structures, such as houses or
warehouses, are to be conveyed, tend have complicating issues
that arise unexpectedly. Land records associated with older
projects may be missing or the quality of the information in
existing records is poor. Projects covering a wide geographical
area, such as the San Diego Aqueduct, have a large volume of
land records which must be located, assembled, and reviewed.
Develop Local Agreements Prior to the Legislative Process:
While Reclamation's title transfer process has evolved, we
believe that one central tenet of the process continues to hold
true. Since each project is unique and has their own
potentially complex circumstances, the analysis of the
implications of that transfer should be completed and an
agreement should be reached on the terms and conditions before
seeking authorization of the transfer of projects and
facilities.
Early on in the title transfer effort, some districts opted
not to go through Reclamation's locally negotiated process.
Instead, they immediately approached their congressional
representatives in hopes of getting legislation passed and the
facilities transferred quickly. In most cases, this proved to
be a slower route than those that went through Reclamation's
cooperative process. In many of these cases, there were issues
or controversies related to the facilities that were not
addressed at the local level between customers and stakeholders
of the facilities. Instead, they were being negotiated through
the legislative process. In some situations, where legislation
was authorized prior to the analysis being completed,
circumstances or problems were identified that required further
legislative action to address, thereby delaying the ultimate
transfer even further.
In many recent cases, we have seen districts and interested
non-Federal entities work with Reclamation to complete all the
necessary analysis and public involvement, then reach an
agreement prior to pursuing the legislative authorization from
Congress. This has made the legislative process less
controversial and has made implementation, once the transfer
was authorized, smoother, less costly and more efficient. Two
excellent examples are two proposed transfers currently before
this Committee--S. 2129, the American Falls Reservoir District
#2 Conveyance Act of 2005 and S. 1965, the Yakima Tieton
Irrigation District of 2005. In both these cases, Reclamation
worked closely with the districts, the states involved and
other stakeholders to identify all the issues and concerns and
reached agreements. In doing so, we worked through some
complications that arose, we reached agreement and the
Administration was able to enthusiastically support both bills
in testimony before this Committee.
Not a Significant Budgetary Savings Available: When the title
transfer effort began in 1995, there was an expectation that
title transfer would result in a smaller Bureau of Reclamation
(in terms of fewer staff and/or lower appropriations levels).
While Reclamation's budget declined by 19% (between 1992 and
2000) and the number of Reclamation employees (FTEs) was
reduced by 26 percent during this timeframe, this result has
not occurred as a result of title transfer. The explanation for
this is multifaceted:
1. Nearly all those facilities transferred to date
were already being operated and maintained by non-
Federal entities. This means that neither Reclamation
employees nor Reclamation appropriated funds were being
used to operate and maintain the facilities. Therefore,
there is limited budgetary savings, related to project
operations, to be identified.
2. Reclamation's administration of the facilities
prior to transfer involved relatively few Reclamation
employees (by FTE) and limited appropriated funds were
associated with the projects and facilities that have
been transferred. In those cases where some staff time
may have been freed up, those resources have been
redirected to other ongoing issues faced by their
offices.
3. The administration costs avoided due to the
transfers have been relatively minor.
4. Only relatively small facilities which tend to be
widely scattered across Reclamation's jurisdictional
areas have been transferred--thereby diluting any
potential Reclamation-wide, region or even area office
impacts. In other words, there has not been a
concentration of title transfers which would result in
a significant savings.
MANAGING FOR EXCELLENCE
While Reclamation's work thus far has lead to procedural
improvements and efficiencies, we determined that we needed to take
further steps to find ways to reap the benefits of title transfer for
Reclamation and for its customers. In 2006, as part of the Secretary's
Managing for Excellence initiative (M4E), a Team was established to
``determine if opportunities exist for mutually beneficial transfer of
title to project sponsors in order to eliminate Reclamation's
responsibility and costs for those facilities. ``This M4E Team is
following up on the previous effort to identify the barriers that exist
and the incentives that may encourage more entities to pursue title
transfers.
The M4E Team, using the data, conclusions and analysis of the
previous effort is developing a set of recommendations on how
Reclamation might reinvigorate its title transfer effort--finding ways
to reduce the barriers that discourage entities from pursuing title
transfer and identifying appropriate incentives that might encourage
entities to pursue title transfer.
The Team received significant input from stakeholders at the
Managing for Excellence workshop held in July, 2006 in Las Vegas, NV
and they are expected to complete their effort early in 2007.
We believe that the result of that effort will provide a
significant benefit to meeting the goals that the sponsors have
identified, and which we share, for title transfer. We hope we will
have the opportunity to continue to work with this Committee when that
Team's effort has been completed.
We laud and share the goal identified in S. 3832 for title transfer
of Reclamation projects and facilities. Transferring title can result
in increased efficiencies and other benefits that would be of
significant importance to both the project beneficiaries as well as
Reclamation. Furthermore, we believe that our M4E effort will add
significant value to meeting this goal and we look forward to working
with the Committee in this effort.
That concludes my statement. I would be happy to answer any
questions.
H.R. 2563
I am William Rinne, Acting Commissioner for the Bureau of
Reclamation. I am pleased to be here today to provide the
Administration's views on H.R. 2563, legislation to authorize the
Secretary of the Interior to conduct feasibility studies to address
water shortages within the Snake, Boise, and Payette River systems in
Idaho.
I previously provided testimony before the House Resources
Committee's Subcommittee on Water and Power on November 3, 2005,
regarding the Administration's views on H.R. 2563. At that time, I
testified that the Administration could not support H.R. 2563 as
introduced because it did not contain any time or funding limitations
and it had no requirement for a 50 percent non-federal cost share, as
is required by Reclamation policy. Since that time, Reclamation has
worked with congressional staff to modify the legislation. I am pleased
to testify that the Administration now supports H.R. 2563 as passed by
the House and referred to this committee on July 11, 2006.
The State of Idaho continues to experience the effects of a
prolonged drought as well as tremendous growth and urbanization in the
Boise and Payette River basins. Projected population growth will
eventually over-extend existing ground water supplies for these rapidly
growing areas. In light of this and other water resource issues
elsewhere in the state, the Idaho House of Representatives issued Joint
Memorial No. 24 in 2004, which ``recognizes the need for additional
water to meet Idaho's emerging needs and encourages Federal and State
agencies to cooperate with Idaho in identifying and developing such
water supply projects.''
Under existing authorities, Reclamation initiated an assessment
level water supply study specifically in the Boise and Payette basins.
Stakeholders with wide representation from the State, Federal,
agricultural, environmental and municipal sectors participated in that
study. The Final Boise/Payette Water Storage Assessment Report was
completed in July 2006 and was distributed to local State, Federal,
agricultural, environmental and municipal parties.
H.R. 2563 would go the next step by authorizing Reclamation to
conduct feasibility studies within the Boise and Payette River basins.
Reclamation supports focused, basin-by-basin water resource studies
with input and local involvement from the State and the stakeholder
communities. We recognize the need to address projected water supply
shortages in the Boise and Payette River systems. We would welcome the
opportunity to be an active partner in addressing these water supply
issues with the State of Idaho and its water users. However, even
though the technical difficulties with the legislation have been
addressed, any studies conducted under this new authority would still
need to compete with other needs within the Reclamation program for
priority for funding in the President's Budget.
That concludes my testimony. I would be pleased to answer any
questions.
H.R. 3897
My name is William Rinne, and I am Acting Commissioner of the
Bureau of Reclamation. I am pleased to provide the Department of
Interior's views on H.R. 3897, a bill to authorize the Secretary of the
Interior, acting through the Bureau of Reclamation, to prepare a
feasibility study for the Madera Water Supply Enhancement Project,
Madera County, California. The bill would also authorize construction
of the Project and would allow the Secretary to enter into a
cooperative agreement with the Madera Irrigation District for planning,
design, and construction. The Department does not support this bill as
currently written.
In Fiscal Year 2006, Congress appropriated $200,000 to conduct an
appraisal investigation. The purpose of the appraisal investigation is
to determine if the project is potentially feasible and if there is a
potential Federal interest. The Appraisal Report is in draft form at
this time. It is our hope to have it completed by the end of Calendar
Year 2006. Since the appraisal level report is not yet completed
sufficient information about this proposed project is not yet known.
H.R. 3897 would authorize the Secretary to (1) study the
feasibility of the Madera Water Supply Enhancement Project, that would
provide additional water supply, reduce the overdraft of the
groundwater aquifer, and improve water management reliability through
the development of new groundwater storage, extraction, and conveyance
facilities; (2) enter into a cooperative agreement with the Madera
Irrigation District for planning, design, and construction; and (3)
construct the project. Clearly there are many water supply issues in
the San Joaquin Valley and in Madera County in particular. Many of
these issues, related to the Central Valley Project, have a clear
federal nexus. The federal nexus with this project is unclear and
speculative.
H.R. 3897 directs the Secretary, not later than December 30, 2006,
to complete and transmit to the Committee on Resources of the House of
Representatives and to the Committee on Energy and Natural Resources of
the Senate, a feasibility study. Although the bill does not establish a
ceiling for the Federal share of the cost to complete the study, under
current Reclamation policy the Federal share would not exceed 50
percent of the total study cost. Feasibility studies, which integrate
National Environmental Policy Act compliance documentation, and are
completed in conformance with the Principles and Guidelines for such
studies, typically require a minimum of 3 years to complete, contingent
upon appropriation of funds by Congress. Legislation authorizing a
feasibility study should allow a minimum of 3 years for completing the
feasibility study after the appraisal investigation is concluded, and
should be separate from legislation to authorize project construction.
Moreover, project authorizing legislation should not be considered
until the results of the feasibility study are known.
It is premature to authorize a feasibility study before the
appraisal study has been completed and reviewed. Moreover, this study
would compete for funding with other currently authorized projects,
including several authorized storage feasibility studies authorized
under CALFED.
I should also note that Reclamation did not seek funding for this
project in the President's Fiscal Year 2007 budget.
H.R. 3897 would also authorize the construction of the Madera Water
Supply Enhancement Project. However, the bill does not set a
construction cost ceiling, but only limits the Federal share of the
construction cost to not exceed 25 percent. We appreciate that the
total cost of the project may not be known at this time. This
underscores our belief that it is premature to authorize construction
of the project and establish the Federal share of the cost prior to
completion of the feasibility level cost estimates and the
determination of the Federal interest.
The Administration appreciates local efforts to address future
water issues. However, in light of the concerns expressed above, the
Department cannot support this bill authorizing Reclamation
participation in a feasibility study for, and construction of, the
Madera Water Supply Enhancement Project. We would be happy to work with
local sponsors when the time is right to make improvements to the bill,
at which time the Administration will also consider whether pursuing
further studies for this project is in the best federal interest. That
concludes my prepared remarks. I would be pleased to answer any
questions.
Senator Murkowski. You did that in pretty good order. I
think it was 13 seconds over your 5 minutes. Very fine job. We
will probably have some questions for you.
Mr. Robinson.
STATEMENT OF MARK ROBINSON, DIRECTOR, OFFICE OF ENERGY
PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION
Mr. Robinson. Thank you, Madam Chairman. My name is Mark
Robinson. I am the Director of the Office of Energy Projects at
FERC. We are responsible for LNG terminals, natural gas
pipelines, and, more appropriate to the discussion today, the
1,600 hydroelectric projects that we monitor and authorize
across the United States.
I would like to thank you for the opportunity to discuss S.
2070, which would provide for the commission to review an
application for a project at an existing project on the Mohawk
River in New York, and S. 3851, which would provide for
extensions of preliminary permits for three preliminary permits
in Alaska.
First I would like to say I have to do a disclaimer. I do
not speak for the Commission or for the Chairman. I just
represent my own views here.
First, on S. 2070. As you heard earlier, specifically this
goes to the School Street Project, which has been under
relicensing since 1991. The Commission--I want to make this
very clear up front. The Commission has been unable to
relicense that project for one reason specifically. The Clean
Water Act, section 401, requires that we have a Clean Water Act
certification from the State prior to licensing. We do not have
that certification from the New York Department of
Environmental Conservation--New York DEC--and therefore by law
we are precluded from relicensing.
However, it has gone through the relicensing process and in
2005 the School Street----
Senator Feinstein. Madam Chairman.
Senator Murkowski. Senator Feinstein.
Senator Feinstein. Could I ask a favor, Mr. Robinson. When
you mention the bill number, because there are so many of them,
would you mention the subject as well.
Mr. Robinson. Oh, okay.
Senator Feinstein. Thank you.
Mr. Robinson. S. 2070 is the bill that would allow the
Commission to review a license application from Cohoes Falls or
from Green Island Power actually for the Cohoes Falls Project
on the Mohawk River in New York.
As I was saying, we have been precluded from issuing a
license to this project because we do not have the 401 from the
State of New York. However, the New York DEC in 2005 signed a
settlement agreement with the School Street licensee on how
that project would operate, and so they have reached agreement
on everything from flows over the falls to fishery protection
to recreational development, protection of archaeological and
historic resources. All of those things have been reached in an
agreement with the New York DEC.
In 2004, Green Island Power came in for a preliminary
permit on the same site as the existing School Street Project
and the Commission rejected that filing for a preliminary
permit pursuant to section 15(c)(1) of the Federal Power Act.
It is not a regulation of the Commission. It is not a policy of
the Commission. It is the law in the Federal Power Act that
competition for a particular site at relicensing can only be
accomplished at a period in time set by the Federal Power Act,
which is 2 years prior to the license expiration. That means
anyone who wanted to compete for that site had to file by 1991,
now 15 years ago. That is just the law, and the Commission has
repeatedly made that clear to the applicant for the Cohoes
Falls Project.
If this bill would pass, it would provide a special
advantage to a proponent of a proposal of a project that does
not exist in the act and it would act in this way. The existing
licensee filed their application in 1991, has pursued it during
that entire period, passed the competition period when they
would have had an opportunity to make a decision whether or not
to pursue this project or not back in 1991 if in fact there had
been competition and they had seen what that competition
entailed. They have spent that money. They have pursued it.
They have reached agreement and are moving forward with the
project and it is ready to be relicensed once we get the 401
from the State. So that would be, I think, sort of an injustice
in the way the act is set up, if in fact this bill would pass
as is.
I want to just spend one more minute on this project and
compare the two. There have been assertions about the Cohoes
Falls Project, like the pictures that you saw here. Those are
assertions. They have not been tested by the licensing
procedure. The School Street Project has not only been tested,
it has been redefined. It is now proposed under the settlement
agreement to be expanded by 11 additional megawatts. Under this
proposal it will use, on the flow duration curve, up to about
20 percent of all the water that passes that site, except for
perhaps the last 20 percent, which are the high flow periods.
Typically rule of thumb, hydro projects are sited or sized in
the 20 to 30 percent range, with 20 being the high end. As you
go on the flow duration curve, it is sort of reverse logic.
So this is a well sized by rule of thumb project to capture
economically about as much of the water and the power as you
can produce out of that site.
There are assertions about what the Cohoes Falls Project
would do. But those assertions have not been tested. We have
not reviewed them because we have no application. The agencies
have not reviewed them because it has not been before them. It
is just, here is what we could do. That is the difference
between what you are hearing right now. We have a project that
has gone through the licensing process and we have assertions
about another project, some of which I think would--well, I
will just leave it at that.
Turning to S. 3851, this would provide for license
extension--or, I am sorry, for preliminary permit extensions in
Alaska for three projects known as the Thomas Bay Project.
Currently the preliminary--not currently. Preliminary permits
are provided to ensure that someone can maintain priority over
a site during the period when they would study the feasibility
of it. They offer no opportunity to construct or get on the
lands or anything like that. It is just a place in time that is
held through the preliminary permit so that they can spend
their money and study the site.
Should somebody do that with all due diligence and 3 years
turns out to be not enough, which is the term of a preliminary
permit, then that permittee can come back in and ask for a
successive permit, and the Commission has a history of granting
successive permits where somebody has pursued a project and not
completed those studies.
Since the Commission has a mechanism for handling that type
of scenario, I would not support S. 3851, which would give
legislatively mandated extensions for those preliminary
permits.
Thank you very much. I appreciate the opportunity.
[The prepared statement of Mr. Robinson follows:]
Prepared Statement of J. Mark Robinson, Director, Office of Energy
Projects, Federal Energy Regulatory Commission
Madam Chairman and members of the subcommittee, my name is J. Mark
Robinson and I am the director of the Office of Energy Projects at the
Federal Energy Regulatory Commission. Our office is responsible for the
licensing, administration, and safety of non-federal hydropower
projects; the certification of interstate natural gas pipelines and
storage facilities; and the authorization, safety, and security of
liquefied natural gas (LNG) terminals. I appreciate the opportunity to
appear before you to comment on two bills: (1) S. 2070, a bill to
provide certain requirements for hydroelectric projects on the Mohawk
River in the State of New York; and (2) S. 3851, a bill that would
allow extension of preliminary permit periods by the Federal Energy
Regulatory Commission for the Thomas Bay projects in Alaska, defined as
FERC Project Nos. 12495, 12619 and 12621.
I appear today as a Commission staff witness speaking with the
approval of the Chairman of the Commission. The views I express are my
own and not necessarily those of the Commission or of any individual
Commissioner.
Under Part I of the Federal Power Act (FPA), the Commission issues
licenses to non-federal interests authorizing the construction,
operation and maintenance of water power projects on navigable waters
of the United States, on federal lands and on streams, over which the
Congress has jurisdiction. Licenses are also required to utilize
surplus water or waterpower from government dams.
Licenses are issued under the FPA for terms up to 50 years and
contain conditions that reflect consideration of all environmental and
developmental aspects of the project, including such factors as the
effect of project construction and operation on fish and wildlife
resources, irrigation, flood control, water supply, recreation, and the
safety of the public. Section 15 of the FPA, authorizes the Commission,
at the expiration of an existing license and where the United States
does not exercise its right to take over the licensed project, to issue
a new license to the existing licensee or to a new licensee. Where
there is no federal takeover and where the Commission does not issue a
new license before the existing license expires, the Commission must
issue from year to year an annual license to the current licensee under
the terms and conditions of the current license until the project is
taken over or a new license is issued. Section 15(c)(1) provides that
``[e]ach application for a new license pursuant to this section shall
be filed with the Commission at least 24 months before the expiration
of the term of the existing license.''
S. 2070
S. 2070 would require the Commission to accept other valid license
applications, if submitted not later than July 31, 2006, to develop the
project works or water resources of a hydroelectric project located on
the Mohawk River in the State of New York that has been operating under
annual licenses for 10 or more years. S. 2070 would require that the
Commission expeditiously process any pending valid license applications
and issue a license only if the Commission determines that the project
will best develop the affected water resources. S. 2070 further
requires that any such new license issued shall include the same
license conditions relating to the use of affected waters provided in
articles 32 and 33 of the license for Potomac Light & Power Company's
Millville Project, FERC No. 2343. The Commission included Article 32 in
the Millville license to reserve its authority to issue a license for a
project that was recommended in a comprehensive plan by the Department
of the Army, Corps of Engineers to be constructed downstream of the
Millville Project and would more completely utilize the water resources
of the Shenandoah River. Article 33 requires the Millville Project
licensee to surrender its license if its project becomes inoperative by
reason of inundation by a more complete hydroelectric project.
S. 2070 would affect one project licensing proceeding currently
pending before the Commission. On December 23, 1991, Niagara Mohawk
Power Corporation filed an application to relicense the 38.8-megawatt
School Street Project, FERC No. 2539. The project is located at river
mile 2.5 on the Mohawk River in Albany and Saratoga counties, New York.
Since the application was filed, the license was transferred to
Erie Boulevard, LP (Erie). The School Street Project was among a group
of 10 projects filed in 1991 by Erie's predecessor for which the New
York Department of Environmental Conservation (New York DEC) denied
Clean Water Act water quality certification, the grant or waiver of
which is a prerequisite to the Commission issuing a hydropower license.
Following these denials, the state, along with Erie's predecessor and
other interested parties, entered into settlement negotiations for each
project. Settlement negotiations have been concluded for each of the 10
projects. The New York DEC has issued water quality certifications and
the Commission has issued licenses for nine of the projects. The School
Street Settlement Agreement, dated March 7, 2005, was signed by Erie
and seven other parties including the New York DEC, although New York
DEC has not yet issued water quality certification for the project. The
School Street Project, the last of the 10 projects, has been operating
under annual licenses since 1993.
In response to the draft water quality certification notice issued
by New York DEC on March 7, 2005, Green Island Power Authority (GIPA)
and the Town and Village of Green Island sought party status in the
certification proceeding and challenged various aspects of the project.
The water quality certification process before the New York DEC is
currently undergoing adjudication proceedings. Because the New York DEC
has not yet issued water quality certification for the project, the
Commission has been unable to act on the School Street license
application.
On July 19, 2004, GIPA filed an application for a preliminary
permit to study the potential development of the 100-megawatt Cohoes
Falls Project and asked the Commission to waive its regulations to the
extent necessary to consider GIPA's application. As described in its
application, the project would be located at the site of the existing
School Street Project. GIPA proposes to construct, slightly downstream
of the School Street Project's dam, a new dam, remove part of the
existing School Street dam, and decommission various other facilities
of the School Street Project.
On January 21, 2005, the Commission dismissed GIPA's application
for preliminary permit for the proposed Cohoes Falls Project, stating
that the statutory deadline established by FPA section 15(c)(1) for
filing relicense applications for the Cohoes Falls Project (including
competing applications) fell in 1991, 2 years before the School Street
license would have expired, and that any development application GIPA
might file would be more than 13 years late. Because such applications
are not permitted by section 15(c)(1), the Commission found that there
was no reason to process a preliminary permit to study a project for
which an application cannot lawfully be filed.
On February 22, 2005, GIPA filed a timely request for rehearing
which was denied by the Commission on March 24, 2005. Subsequently,
GIPA filed an appeal of the Commission's orders with the U.S. Circuit
Court of the District of Columbia. The appeal was voluntarily dismissed
in December 2005.
On May 15, 2006, GIPA filed its offer of settlement in the
proceeding to relicense Erie's School Street Project. GIPA's offer
proposed two alternatives: (1) terminate Erie's license and dismiss its
relicense application; or (2) issue a relicense to Erie that would
terminate upon the licensing and construction by GIPA of its Cohoes
Falls Project. GIPA attached to its offer of settlement an application
for licensing the Cohoes Falls Project. By notice issued May 24, 2006,
the Commission rejected GIPA's offer of settlement on the previously
stated grounds that its competitive proposal was not filed within the
time frame established by section 15(c)(1) of the FPA. On June 5, 2006,
GIPA and Adirondack Hydro Development filed a motion to present
evidence or, in the alternative, offer of proof and if necessary,
motion to reopen the record in the proceeding to relicense the School
Street Project. The motion sought to put into the record GIPA's
previously rejected pleading. As before, the Commission rejected the
motion by notice issued June 28, 2006. Rehearings of both Commission
notices are currently pending.
The FPA provides a complete and well-reasoned method for the
orderly development of the nation's non-federal hydropower resources.
It also provides hydropower licensees certainty regarding the period
when competitive license applications may be filed. This bill would
negate that certainty in the case of the School Street Project.
In addition, this bill would provide a special advantage to an
entity which did not meet the requirements of the FPA to the
disadvantage of an entity which met the statutory deadline. Approval of
this bill could encourage applicants in other cases and locations to
petition Congress for similar relief in order to promote their
interests at the expense of the FPA's well-established procedures and
of other existing licensees and could introduce further uncertainty
into the licensing process.
As a result of these concerns, I do not support S. 2070.
S. 3851
This legislation provides that notwithstanding section 5 of the FPA
or any other provision of law (including regulations), on receipt of a
request from the preliminary permit holder of a Thomas Bay project and
after providing reasonable notice, the Commission may extend the period
for the Thomas Bay project for not more than two consecutive three-year
periods following the expiration of the initial preliminary permit for
the Thomas Bay project, in accordance with applicable procedures of the
Commission. S. 3 851 defines the term ``Thomas Bay project'' as
including: (1) the hydroelectric project of the Commission at Cascade
Creek, Alaska, preliminary permit number 12495; (2) the hydroelectric
project of the Commission at Ruth Lake, Alaska, preliminary permit
number 12619; and (3) the hydroelectric project of the Commission at
Scenery Lake, Alaska, preliminary permit number 12621.
Section 5 of the FPA allows for the filing of applications for
preliminary permit by a potential hydroelectric project developer
before the filing of a license application. The Commission issues
preliminary permits for three years for the following purpose. The
purpose of a preliminary permit is to maintain priority of application
for a license during the term of the permit while the permittee
conducts investigations and secures data necessary to determine the
feasibility of the proposed project, and if the project is found to be
feasible, prepares an acceptable license application.
Cascade Creek LLC filed applications for preliminary permits for
the proposed 80-megawatt (MW) Cascade Creek Project, FERC No. 12495, on
May 4, 2004; 20-MW Ruth Lake Project FERC No. 12619, on October 12,
2005; and 80-MW Scenery Creek Project, FERC No. 12621, on October 11,
2005.
The Cascade Creek permit was issued on October 8, 2004, and will
expire September 30, 2007. The Ruth Lake and Scenery Creek permits were
issued on February 23, 2006, and will expire January 31, 2009. Standard
Article 4 of all issued preliminary permits requires a permittee to
file six-month progress reports. If the permittee fails to comply with
these conditions, the permit is subject to cancellation.
As required by Article 4 of the issued permits, Cascade Creek LLC,
the permittee, filed six-month progress reports for Project No. 12495
on May 25, 2005, September 29, 2005, and March 31, 2006, generally
describing for that report period, the nature and timing of what it has
done under the pre-filing requirements, and other applicable Commission
regulations and what studies it was planning on conducting the
following six months. The first report shows that the permittee
obtained information from previous studies, from the British Columbia
Transmission Corporation, and from British Columbia, Canada; on
transmission line routing, characteristics, and permitting
requirements. The second report indicates the permittee provided
drawings and consulted with U.S. and Canadian government agencies and
private companies. The third report shows the permittee persuaded the
State of Alaska and British Columbia Transmission Corporation to
conduct feasibility studies for an interconnection, which found the
interconnection to be feasible.
Likewise, Cascade Creek, LLC filed timely progress reports for
Project No. 12619 and Project No. 12621 on July 31, 2006. The initial
progress reports for these two projects indicate the permittee has
developed stream flow data and did reconnaissance inspections of the
sites.
In general, if a permittee has not completed the studies and
consultation at the expiration of a permit necessary to file an
application for license, it may file an application for a new
preliminary permit. The Commission may grant another permit if it
concludes that the applicant has diligently and in good faith pursued
the requirements of its prior permit. Because there is already a
mechanism whereby a permittee can apply for a new three-year permit to
pursue development of a proposed hydroelectric project, I do not
support the proposed legislation.
I appreciate the opportunity to present my views to the
Subcommittee. Thank you.
Senator Murkowski. Thank you, Mr. Robinson.
I will turn to my colleagues here before I ask my series of
questions. Senator Feinstein, would you like to propound some
questions?
Senator Feinstein. I would if I might. Mr. Rinne, if I
might. My understanding is that, while the Folsom South Canal
capacity is 2.5 million acre-feet of water per year, it is used
for a maximum of 20,000 acre-feet a year. This means California
water payers are paying a bill that is 1,200 percent or 12
times greater than the amount of water they are actually
getting.
I think you think that this is a fine arrangement, and I
think that it is not a fine arrangement. I think government
ought to charge people fees that are reasonably related to the
benefits they are receiving and that is the point. If you would
respond to that I would appreciate it.
Mr. Rinne. Senator Feinstein, I appreciate your point, and
I would just say that it is a challenging issue. It is one that
we have been trying to work with some of the contractors on. I
know that you are real familiar with the area and the
arrangement there. But the fact that it is part of what is
called the CVP pool for the repayment there, that is where that
gets picked up.
Senator Feinstein. Wait a minute. You are saying that money
is used to pay the capital costs of the CVP, is that right?
Mr. Rinne. What I am saying is for the M&I, the CVP
ratepayers have pooled costs for the capacity that they are
helping to repay the CVP features that are paid back, that is
correct. The end use capacity there, as I started to say, was
not--while it is an unfortunate thing, it is the type of
thing--and I know you are aware of it--only the first two
sections, the first two reaches of the Folsom South Canal were
completed. So you have a situation where that is part of the
reason for the capacity not being used. Auburn Dam was not
completed.
But the repayment of that project on the CVP on the M&I
repayment, I think you have somewhere in the neighborhood of 58
entities that would share in the capital cost repayment along
with the interest. So it is a hard thing just to separate that
out, so it is when I say pooled costs.
Senator Feinstein. Madam Chairman, I think what happened
was this canal was built with the predicate that the Auburn Dam
would be built and then a fracture zone was located under the
dam and a lot of conflict with the area. In any event, it has
not been built. But the water coming into this canal is
drastically reduced, but the contractors are paying fees as if
it were full. That is a shorthand version of what I understand
in any event.
So I would like to talk to you a little bit more about it
and see if there cannot be some way fairness can be worked into
this situation.
I also wanted to ask: You oppose the Madera Water Bank bill
because it authorizes the project without formal completion of
a feasibility study. Now, here is a draft appraisal study and
it seems to me the Bureau has already conducted extensive
feasibility investigations in the late 1990's. In 1998 the
Bureau finalized plans to fund a water bank on the property.
The Bureau did not go ahead then.
Another private property, private party, subsequently
analyzed the feasibility. So have not enough reports been done?
Mr. Rinne. I guess the best way I can respond to that--and
I am aware of the earlier studies that you are speaking of and
were mentioned in some of the earlier testimony. At the current
time, Senator Feinstein, that we are talking about, I believe
it is probably the draft report that shows there the appraisal
level. I think that is the one that was authorized to get done
at the end of 2006.
Senator Feinstein. That is correct, September 2006.
Mr. Rinne. So underneath our process that would be the
appraisal level study, and it would be my sense--and I have not
looked at it in detail, but it would be my sense that much of
the information you talk about in they early studies, we would
try to draw from it. As I understand this proposed legislation,
we would be talking about authorizing a feasibility study. I
will just call that the next step. Then that feasibility
study--it would also authorize construction.
What our concern is is that the draft appraisal report you
have there would be finalized at the end of the year. We
technically would finish----
Senator Feinstein. The second week of October is my
understanding.
Mr. Rinne. Is the final report?
Senator Feinstein. Yes.
Mr. Rinne. Due at the end of calendar 2006, and you may
have more updated information than I do.
Senator Feinstein. I can show this to you. This is rebuttal
to the Bureau's testimony, so I would be happy to share it with
you.
Mr. Rinne. Okay. We would want to have the appraisal level
study completed and it is always on that basis, then we would
move to the feasibility study that is in fact proposed in here.
So what we are saying is that you would authorize the
feasibility study before we have the results of the appraisal
study, which is what you typically do to identify are there
feasible things here and do you move forward.
So it is sort of like there----
Senator Feinstein. Well, is it possible then to give a
conditional opinion based on a draft, which is September? The
final will come out in October. Now, this is our one shot to
move something. It has passed the House. We are ready. It is on
the priority list. It will be signed by the President. Is there
a possibility of putting a condition on it that if the final
report reflects the findings of the draft?
Mr. Rinne. Well, I am not sure if I am being real
responsive here, but let me try anyway. The appraisal level
study that you have there, the draft, when that gets--it will
move to be finalized, and if your dates on the October, let us
just talk about that. Then based on what is there in that
appraisal level study, it will talk about the next step and is
there something there feasible to move forward.
Obviously, if this legislation is passed we will do exactly
what we are directed and move into a feasibility study. But our
preference would be, as in the process--it is sort of, it is
like we start out now, we call some things an assessment level.
Then we move to an appraisal level. The whole idea is to
scrunch down and throw off alternatives that really do not have
feasibility, and I know you would be aware of that.
That is what I am saying, is we are sort of at that step.
It is sort of like jumping into a feasibility before you get an
appraisal done.
Senator Feinstein. It is just that for many of us when
there is a pressure of so much that needs to be done, all of
the money that is spent by study after study after study just
wastes it. This is the frustration. I do not understand why the
two cannot be combined in one or why--this seems to me to be a
rather thorough study--why another one is necessary.
Mr. Rinne. If I had just one last thing----
Senator Feinstein. Sure.
Mr. Rinne. One of the things--this probably will not
relieve all your frustration on this, but I would just like to
say that what we have experienced on some other projects is
sometimes when they move to--the feasibility of course will
lead to authorization or can lead to authorization of a project
for construction. We have actually experienced one and one
example I give would be where we probably did not do our
homework well enough in Reclamation and moved on the Animas-La
Plata Project, for example. It ended up with a cost that we
missed the boat. I mean, it was not fair to people.
So the problem with costs is they are only as good as the
data behind them, and if we are not quite there and we put
something out for being authorized and we have missed it by
quite a few factors, that is the difficulty. That is sort of
the rationale for why we are doing it. I appreciate your
concern and I understand about studies and studies and studies.
Senator Feinstein. Since this has passed the House, I would
just ask that you take another look at it and see if there
cannot be some accommodation made.
Mr. Rinne. We will definitely work with you. I think that
is fair, yes.
Senator Feinstein. I would appreciate that very much. Thank
you.
Senator Murkowski. Let us go on to Senator Salazar.
Senator Salazar. Thank you. Thank you very much.
Commissioner Rinne, I have a question concerning S. 1106.
Reading your testimony, it is very clear that the
administration has taken a position in opposition to the
legislation that Senator Allard and I have proposed, and my
sense of the opposition is that you do not like the proposed
Federal-State cost share that we have included in there and
that is the centerpiece of your opposition for it.
If I look back at the testimony that you provided in front
of this committee a few months ago, you said that since the
1980's there had been 13 separate single purpose reclamation
projects for municipal and industrial water supply in rural
communities in the reclamation States. So is it not true that
we have had these Federal-State cost share proposals that have
been in fact authorized for other rural communities in the
reclamation States?
Mr. Rinne. Certainly, Senator, we certainly have had in the
rural water type projects I am speaking of, we definitely have
had individual, individually authorized rural water projects.
And they all had their own uniqueness, I might say, in the
Federal/non-Federal arrangement, that is correct.
Senator Salazar. Now, knowing, Mr. Rinne, how well you know
my State of Colorado and knowing how you also are familiar with
the Fryingpan-Arkansas Project and the communities downstream
of Pueblo, I would imagine that you would reach the same
conclusion that I have reached for many years, and that is that
those rural communities are very poor, struggling on the vine
just to keep alive.
So if this Congress were to pass some kind of a legislation
that would have a Federal-State cost sharing proposal, do you
think it would be beneficial to those rural communities in the
same way that these previously 13 authorized projects that have
helped rural communities, I am sure have been helpful to those
13 communities.
Mr. Rinne. Yes, and I do want to say--and I understand--and
this is not about need. I certainly concur with you on needs,
that we see this throughout. The thing that I would want to
say, and you did get right on the main point or the main
concern, is this. Typically on a municipal or industrial type
project, generally I would say in policy and law that we would
look for 100 percent of the capital repayment with interest.
So when this one is proposed as 80 percent Federal and 20
percent non-Federal, then, as you would recognize, that is a
departure from what we would desire to see. It is not saying
that there have not been other ones because sometimes they are
authorized in that manner. So that is really where a lot of the
opposition. We do appreciate that there was a lot of work done
by people on the O&M cost, which is now I understand would be,
under this bill, would be all non-Federal. In other words,
Southeastern in this case would pick that up, and I think that
is an improvement. We would like to work with people on this.
Senator Salazar. Well, I appreciate that very much. I note
that, for example, one of the rural reclamation projects in
South Dakota actually had a zero local cost share. I know there
are others that have had 10 percent cost shares, 15 percent
cost shares, and the like. The fact of the matter is that Mr.
Long, who is here to testify in the succeeding panel, who is
the president of the Southeast Water Conservancy District and
who comes from Bent County, will tell you that getting those
very poor, very poor communities together to agree to come up
with a 20 percent Federal cost share has been a monumental
undertaking and achievement, and I am very proud of his work
and the work of the Southeast Water Conservancy District. And I
am hopeful, very hopeful, that we will be able to work with the
Bureau and with the members of this committee in making this
legislation a reality, because it is very essential to the
future of those communities.
Madam Chairman, I know I have just 50 seconds. I am going
to have to leave because I am not going to be able to stay for
the next panel, but I do want to recognize Bill Long, who is
the president of the Southeast Colorado Water Conservancy
District. I will not be here for his testimony. Next to him is
former Congressman Ray Cagosic, also from Pueblo, Colorado--two
champions of rural and forgotten America. Thank you for being
here.
Thank you, Madam Chairwoman.
Senator Murkowski. Thank you, Senator Salazar.
Senator Smith, if you would like to ask any questions of
our administration witnesses.
STATEMENT OF HON. GORDON H. SMITH, U.S. SENATOR
FROM OREGON
Senator Smith. I do not have any questions for them, Madam
Chairman, but I am grateful for this hearing. I know you have
got a number of bills that you are considering, one of which is
S. 3522, the Fisheries Restoration and Irrigation Mitigation
Act of 2004, of which I am a cosponsor. It will reauthorize an
important partnership program in the Pacific Northwest that has
provided Federal funding for screening of water diversions and
other facilities to protect the fish in our region. It is
supported by the Oregon Water Resources Congress, the Idaho
Water Users, and the Washington State Water Resources
Association.
It goes without saying, madam, in our dry part of the
country that this is very important, both to keeping the
livelihoods of our farm community up as well as the life of the
fish in our region going as well. So it is very important that
we continue this.
I wanted to welcome and recognize Mark Thalacker, who is
here from Oregon. He is the manager of the Three Sisters
Irrigation District, a member of the Oregon Water Resources
Congress, who is here to testify about this very bill.
Other than that, I have no questions, Madam Chair.
Senator Murkowski. Thank you for your comments on behalf of
that legislation.
Mr. Rinne, I want to follow up with the question that
Senator Salazar had asked, and this is in regards to S. 1106,
the Arkansas Valley Conduit. You are discussing the non-Federal
cost share. In your written testimony you mention the rural
water legislation that the administration had submitted to
Congress in 2004 sets a 35 percent non-Federal cost share.
Would you be willing to support, would the administration
support, this legislation if it contained a 35 percent non-
Federal share, cost share?
Mr. Rinne. I think if the legislation had a 35 percent cost
share that would certainly help, it would help lots. I mean,
that would be there. Now, I do not know. There may be other
issues that the administration wanted to address. Not like
there is another one pulled out of the hat, but I think that
would help a lot.
Senator Murkowski. All right.
On S. 1811, this is the Arthur Watkins Dam enlargement.
Again referring to your written testimony, you state that
raising the Arthur Watkins Dam would postpone the need for Utah
to begin development of the Bear River. Do you think that by
raising the Arthur Watkins Dam, this would be cheaper than
developing the Bear River?
Mr. Rinne. It could be. I am not 100 percent sure. Let me
say why. I do not think the Bear River development, looking at
that, has been extensively studied. So I suppose it is a
question of what kind of things come with it. But it could
help.
Senator Murkowski. You think it could make a difference?
Mr. Rinne. We think it would, yes.
Senator Murkowski. In response to Senator Feinstein's
question on the Folsom South Canal deferment, S. 3798, she
brought up the issue of the inequities that are at issue there.
It is my understanding that the Central Valley Project
contractors are paying for canal capacity that they are not
using and this is the point here.
Do you have any specific suggestions as to how the current
arrangement could be made more equitable?
Mr. Rinne. You know, that is the real challenge. You have
got your finger right on it. Very challenging. I do not have a
specific. I think the answer probably lies in trying to
continue to work with the contractors and talk this through.
The things Senator Feinstein raises, they are concerns to us
too. But it is the way the repayment structure is set up on
capital costs.
I think the best way through it is to probably sit down and
continue to work with the contractors.
Senator Murkowski. And that effort is ongoing, then?
Mr. Rinne. There are discussions back and forth, but at the
current time, just so that I am real clear, that repayment
arrangement remains in place. So I mean, we need to try to
figure out a way to get through this. But it sort of--it is
there right now and they will continue to be paying for this in
their rates unless there is some change made.
Senator Murkowski. Well, we would certainly encourage the
ongoing dialogue there.
The legislation relating to the Snake, Boise, and the
Payette River System study was addressed by several of my
colleagues here this afternoon. You have stated in your
testimony that Reclamation completed a water supply study for
these basins in July. What did you identify as perhaps the most
promising opportunities to increase the water supplies in these
basins?
Mr. Rinne. I think there were, Madam Chairman, I think
there were like eight kind of--it kind of goes back to this
assessment level and now an appraisal. There are about eight
out of a whole suite of ones studied that we were looking at. I
am trying to remember. We had--well, we had eight, yes, eight
sites, two possible--excuse me. Eight sites for new surface
storage. Two were sort of retrofits of existing facilities. In
other words, that would be maybe you enlarge and can get more
storage through some modification. The others would all be new
projects, new surface storage projects.
So there were many. I think there was actually several
hundred that were looked at in those systems, and so you just
sort of weed that down and now these we would think could move
from appraisal, from assessment level forward.
Senator Murkowski. Mr. Robinson, the Mohawk River
hydroelectric project. You had indicated that the one reason
you are not able to go forward right now is the Clean Water
Act, the certification requirement. You have got that
procedural hurdle in place. Has that been requested?
Mr. Robinson. Oh, yes, repeatedly. The licensee has been
pursuing a 401 certification with the State for over 10 years.
I believe the status of it right now is that it is under some
appeal process within the State, reviewing a concern raised by
Green Island Power about the actual authorization. So the
agency that would issue the 401 has reached settlement with the
licensee for the existing School Street project. They are just
now going through their final procedural steps to issue or to
take action on the 401.
Senator Murkowski. But if that certificate were then
issued, what then is the next step?
Mr. Robinson. The Commission's licensing step.
Senator Murkowski. And the Commission--but you are saying
that the Commission could not license because of the FPA
relicensing requirements?
Mr. Robinson. The Clean Water Act requires that anybody
that is authorizing a project, like the Commission under the
Federal Power Act, have a clean water certificate or a waiver
of that certificate in hand prior to issuance of their action.
So we are precluded from acting under the Federal Power Act by
the Clean Water Act. And the State controls the Clean Water Act
process.
Senator Murkowski. Are you aware of any other instances
where the Congress has modified the relicensing requirements in
order to benefit a competitor that did not meet the deadlines
for the relicense applications? Does this happen?
Mr. Robinson. I have been in hydropower licensing for
almost 29 years now and I can say with pretty good confidence
it has never happened.
Senator Murkowski. I just want to make sure I understand
the situation with the Thomas Bay hydroelectric and just how
this process works. As you know, with the Thomas Bay project we
have got three different projects there. We have got an
applicant who has spent several million dollars during this
preliminary permit period, and there is a time limit on those
preliminary permits. My understanding is that, what they are
telling me is, this money is basically going to go down the
drain if those preliminary permits expire and the money is
gone.
Now, it is my understanding that FERC has the authority to
grant a new preliminary permit once the old one has expired,
provided that the applicant has acted in good faith. So you
have got the authority to go ahead and do it. But if the
applicant who is--if a municipal entity is the applicant and
they come seeking a new preliminary permit, that FERC is
obligated to give the preference to the municipal entity? Am I
understanding this right?
Mr. Robinson. You are correct. Under section 7 of the
Federal Power Act there is a municipal preference for the
preliminary permit.
Senator Murkowski. But if it were a private entity that
were to come in, then you would be required to give--to reissue
an extension to the entity that had sunk the initial investment
in. But if it is a municipal entity you are required to give it
to them regardless of the fact that they have invested no
dollars?
Mr. Robinson. The second is correct. The first part--if
there are two privates that come in and one is the previous
permit holder, there is no legislative, statutory or regulatory
preference in place for either of those parties. Further, I
cannot recall where the Commission has had to address that,
where you had competing preliminary permits, one being
successive where there has been due diligence and one being
new. So it would be a new condition for the commission.
Senator Murkowski. But really what it comes down to is
whether or not you have a municipal entity that might be eyeing
the same project, and as long as they come in, make that
application, they can bump the private entity regardless of the
dollars that have been spent to further that project?
Mr. Robinson. That is correct.
Senator Murkowski. Regardless of the due diligence?
Mr. Robinson. That is correct.
Senator Murkowski. Okay, I thought I understood it right
and I did. I do not like it, but at least I understand what
your regulations provide for at this point and why it is
important that we figure out a way to address this for Thomas
Bay.
Thank you. If there are no further questions, we will
excuse you gentlemen, appreciate your testimony this afternoon,
and we will call up the second panel. Thank you.
At this time we will bring up panel two. We have Mr. Bill
Long, who is the president of the Southeastern Colorado Water
Conservancy District, based out of Pueblo, Colorado. We also
have Mr. Marc Thalacker, manager for the Three Sisters
Irrigation District, on behalf of the Oregon Water Resources
Congress, based out of Salem, Oregon; and Mr. Thomas Donnelly,
the executive vice president of National Water Resources
Association here in Virginia.
Gentlemen, good afternoon.
Mr. Long. Good afternoon.
Mr. Donnelly. Good afternoon.
Senator Murkowski. Let us start, for no particular reason,
with you, Mr. Long, and move right down the line. Welcome and
we appreciate the distances you have traveled to join us here
this afternoon.
STATEMENT OF BILL LONG, PRESIDENT, SOUTHEASTERN COLORADO WATER
CONSERVANCY DISTRICT
Mr. Long. Thank you. Madam Chair, I am Bill Long, president
of the Southeastern Colorado Water Conservancy District. I
would like to thank you and the committee for the opportunity
to present testimony in support of S. 1106. I would also like
to take this opportunity to thank both Senator Allard and
Senator Salazar for their leadership in sponsoring this
legislation.
The Fryingpan-Arkansas legislation enacted in 1962 created
a multi-purpose project that includes a water collection system
on the west slope of Colorado that collects and delivers water
to the east slope of Colorado. The project also includes three
storage facilities to assist in the delivery of clean water to
both municipal and agricultural users in the Arkansas River
Basin of southeast Colorado.
Poor water quality and quantity concerns in the Arkansas
River identified by the Bureau of Reclamation as early as 1950
were the reasons why the Arkansas Valley Conduit was included
in the original Fry-Ark legislation. Although construction of
the conduit was not funded, the problems it would have
addressed have only gotten worse, much worse. In addition,
utilizing the current raw water supply it is extremely
difficult to meet the Safe Drinking Water Act standards.
In the year 2000, over 40 communities and water providers
joined together to evaluate solutions to water quality and
supply problems they faced. During the past 5 years, two
project design engineering studies have been completed. Most
recently, a third study to reconfirm the results and answer
questions raised by the previous studies.
Two other questions that were a part of this most recent
study were at the request of Senator Allard and Senator
Salazar, and those two questions were: one, is there enough
water for this project; and two, can the participants afford
their share of the project?
Some of the relevant conclusions reached include: First,
the cost of the project compares favorably with any no-action
alternative, which would still require the communities involved
to make substantial financial investments to address current
water quality and safe drinking water standards. A single water
plant as proposed in this project would be 60 percent less
expensive than each community trying to build their own.
Second, the financial capabilities of the participating
agencies are inadequate to fund the construction of the
proposed Arkansas Valley Conduit under the 100 percent funding
requirement. But the conduit participants could afford to pay
back the 20 percent cost share as provided in S. 1106.
Third, there is more than an adequate supply of water to
make the Arkansas Valley Conduit feasible. With all due respect
to the Bureau's written statements, our last study did in fact
indicate there was a great deal of water available for the
project proposed. The Bureau study, look-back study, looked at
the original GEI study--that was our first study--and in fact I
believe the Bureau drew the correct conclusions based on that
study.
But our most recent study, that was again at the request of
Senator Salazar, there is in fact more than enough water.
Although it may not be project water, we have other water and
water rights in the Arkansas River available for the project.
The conduit project and this legislation are needed today
to assist the communities of the Lower Arkansas River Basin.
Water quality concerns are only increasing. Many of our water
providers do not satisfy or only marginally satisfy current
drinking water standards. In fact, one-third of the providers
are currently under active enforcement orders from the State of
Colorado to improve water quality.
Other providers who have previously received enforcement
orders have made improvements that provide temporary
compliance, but now cannot meet discharge regulations. In
addition to the difficulty in meeting water quality standards,
the current raw water supply also has very high concentrations
of unregulated water quality constituents such as iron,
manganese, and hardness. These constituents cause accelerated
infrastructure decay, loss of tax base, and economic impacts
associated with businesses locating elsewhere. The Federal
funding authorized in S. 1106 is necessary to make this project
a reality and to provide the means necessary to address water
quality concerns of the Lower Arkansas Valley.
Southeastern and other project proponents are prepared for
the hard work ahead and ask for your help. Madam Chair, in
closing I would request that my oral presentation be included
in the permanent record and I once again thank you and the
committee and would be happy to answer any questions you may
have.
[The prepared statement of Mr. Long follows:]
Prepared Statement of Bill Long, President, Southeastern Colorado
Water Conservancy District@
Madam Chair, my name is Bill Long, president of the Southeastern
Colorado Water Conservancy District, and I am testifying today in
support of S. 1106, a bill to provide a cost-sharing requirement for
the construction of the Arkansas Valley Conduit in the State of
Colorado. I would like to thank the Subcommittee for the opportunity to
testify today. I also thank Senators Allard and Salazar for their
leadership in introducing this legislation and the Subcommittee for
holding this hearing today.
The Southeastern Colorado Water Conservancy District (Southeastern)
is the local sponsor of the Fryingpan-Arkansas Project (the Fry-Ark
Project), a multipurpose project constructed by the Bureau of
Reclamation (Reclamation) that stores and delivers water for municipal
and agricultural use within the nine-county service area of the
District, Arkansas River basin, Colorado. Southeastern, through its
Water Activity Enterprise, has agreed to manage and organize the
efforts necessary to make this project a reality.
The Fry-Ark Project was originally authorized by Congress in 1962
and that authorization was amended in 1978. The goal of the legislation
was to provide a supplemental supply of water, and storage for native
agricultural and municipal water supplies. Both the 1962 and 1978 Acts
contemplated the construction of the Arkansas Valley Conduit.
Like many other regions in the western United States, southeastern
Colorado is growing. The need for the Arkansas Valley Conduit is driven
by projected population growth, the economically-disadvantaged nature
of the lower Arkansas Valley, and increasingly costly water treatment
requirements being experienced by certain water providers in the basin.
In addition to population growth pressures, the District's smaller
communities, especially those east of Pueblo, Colorado, who rely on
groundwater for their main water supply, need to develop a higher
quality drinking water supply for their residents. As early as 1953,
the Secretary of the Interior acknowledged that additional quantity and
better quality of domestic and municipal was critically needed for the
Arkansas Valley, and in particular for those towns and cities east of
Pueblo. House Document 187, 83d Congress, 1st Session, and the
Fryingpan-Arkansas Final Environmental Statement dated April 16, 1975
(``1975 FES''), both of which have been incorporated by reference into
the Fry-Ark Project Act, recognized that the Arkansas Valley Conduit
would be an effective way to address this need. The local water
available from the Arkansas River alluvium has historically been high
in Total Dissolved Solids (TDS), sulfates, and calcium, and has
objectionable concentrations of iron and manganese. Additionally,
various water suppliers have recently reported measurable
concentrations of radionuclides in their water. This extremely poor
groundwater quality, combined with increasingly stringent water quality
regulations of the Safe Drinking Water Act, has caused several local
water suppliers to invest in expensive water treatment facilities to
assure a reliable water supply for their customers.
Generally, all drinking water systems in the Lower Arkansas River
Basin, from St. Charles Mesa in eastern Pueblo County to Lamar in
Prowers County, are concerned with the poor water quality in this
region. Many of the water providers do not satisfy, or only marginally
satisfy, current drinking water standards. More than 40 water providers
in the Lower Arkansas River Basin could benefit from this project, if
implemented.
All communities must meet the state and federal primary drinking
water standards through treatment or source replacement. Less
documented, however, is the potential burden placed upon communities by
high raw water concentrations of various unregulated water quality
constituents such as iron, manganese and hardness. These constituents
can cause accelerated infrastructure decay and loss of tax base and
economic impacts associated with factories and businesses locating
elsewhere.
To address these issues, representatives of local and county
governments, water districts and other interested citizens of the Lower
Arkansas River Basin formed a committee in 2000 to consider a
feasibility study of the Arkansas Valley Pipeline. These interested
parties formed the Water Works! Committee and, along with Southeastern,
began to review the feasibility of developing the Arkansas Valley
Pipeline. Some of the relevant conclusions reached are as follows:
<bullet> The cost of the project compares favorably with any ``no
action alternative,'' which would still require the communities
involved to make substantial financial investments to address
current water quality and safe drinking standards.
<bullet> The financial capabilities of the participating agencies are
estimated to be inadequate to fund the construction of the
proposed Arkansas Valley Conduit, under a 100 percent funding
requirement, but Conduit participants could afford to pay the
20 percent cost-share provided in S. 1106.
<bullet> There is an adequate water supply to make the Arkansas
Valley Conduit feasible.
As mentioned above, the Arkansas Valley Conduit was included in the
originally Fry-Ark reports integrated into the Fry-Ark Act. The project
was not built because communities in the Lower Arkansas River Basin
could not fully fund the Conduit project. A study of the Arkansas
Valley Conduit was prepared for Southeastern, the Four Corners Regional
Commission and the Bureau of Reclamation in 1972. The report's
recommendations for construction of a water treatment plant, pumping
station and conduit to serve 16 communities and 25 water associations
east of Pueblo were not implemented at that time due to the lack of
federal funding. Evaluations on the quantity of water needed to satisfy
long-range objectives for water users in the Southeastern District area
were prepared in 1998. Additionally, an update of the estimated
construction costs presented in the 1972 report was prepared in 1998.
The citizens and communities of the Lower Arkansas River Basin have
waited 30 to 50 years for this project that will improve their water
quality and supply. The need for this project has been well established
for more than 50 years. S. 1106 fulfills the promise of the Arkansas
Valley Conduit nearly 45 years ago with the passage of the Fry-Ark Act
by providing the one thing that has been missing for all of these
years: a realistic acknowledgement of these communities' ability to pay
and a partnership to allow this much-needed project to move forward.
I understand that there are some who have concerns with this
legislation as it is currently written. Southeastern and the other
project proponents are prepared to work with anyone who has realistic
concerns and suggestions for improving this legislation. It is my hope
that, to the extent there are issues regarding conflicts of funding and
priorities between and among federal agencies, the Administration, with
the help of our fine Senators, would quickly bring these agencies
together to resolve these interagency issues.
I urge this Subcommittee to act quickly to move this legislation
towards enactment. I would be happy to answer any questions the Chair
or Committee members may have on this legislation.
Senator Murkowski. Thank you, Mr. Long, and your full
statement will be included as part of the record, as will the
comments of all of our individuals giving testimony.
I have been asked as a courtesy to move next to Mr.
Thalacker, if we can skip you for a second, Mr. Donnelly.
Senator Smith has got to excuse himself and he wanted to make
sure he was here for the testimony from Mr. Thalacker.
STATEMENT OF MARC THALACKER, MANAGER, THREE SISTERS IRRIGATION
DISTRICT, ON BEHALF OF THE OREGON WATER RESOURCES CONGRESS
Mr. Thalacker. Thank you very much. Madam Chairman and
members of the subcommittee: My name is Marc Thalacker and I am
manager of the Three Sisters Irrigation District in Oregon, and
I am here on behalf of the Oregon Water Resources Congress.
OWRC is a statewide association founded in 1912 to represent
local governments that supply water for irrigation, primarily
irrigation districts, drainage and water control districts.
These entities operate water management systems, including
water supply reservoirs, canals, pipelines, and hydropower
production.
OWRC strongly supports the reauthorization of the Fisheries
Restoration and Irrigation Mitigation Act, along with the
amendments embodied in S. 3522. We greatly appreciate the
leadership efforts of Senators Wyden, Senator Smith, Senator
Craig, and Senator Murray to continue this vital program for
fish screening and passage in the Pacific Northwest. We are
joined in this support by our sister organizations in Idaho and
Washington, the Idaho Water Users Association and the
Washington State Water Resources Association.
OWRC strongly believes this has been one of the most
successful programs for our members. Fish passage and fish
screens have become critical to fishery protection. There are
over 200 irrigation and water control districts in Oregon that
provide water supplies to over one million acres of cropland in
the State. Almost all of these districts are affected by either
State or Federal Endangered Species Act lists of salmon,
steelhead, bull trout, and other sensitive, threatened, or
endangered species. This program, which is cost-shared on a 65
percent Federal and 35 percent non-Federal basis, has been
overwhelmingly supported by all involved.
From a water user's standpoint it has been a success
because it keeps protected fish species out of the water canals
and delivery systems and power generation facilities, allows
fish to be safely bypassed around reservoirs and facility
structures, and provides local funding to local governments for
construction of facilities to protect fish.
The FRIMA program was authorized to receive $25 million a
year divided among four States. We have been disappointed that
the administration through the U.S. Fish and Wildlife Service
has not requested funding for the FRIMA program in any of the 5
years since it was authorized. Our members appreciate the
limited funding Congress has written into the annual Interior
appropriations bills these several past years for the program.
FRIMA was intended for local governmental entities to carry
out the work to mitigate the impacts of irrigation diversions
on fish, rather than face loss of their water if their
facilities were not screened. We greatly appreciate codifying
what is already in practice with respect to the use of
Bonneville Power Administration funding in the Pacific
Northwest. This legislation makes clear that BPA funds coming
from ratepayers should be considered nonfederal share money.
One of the strengths of the FRIMA program is the return on
the Federal investment. The States do a tremendous amount of
work as their part of the partnership, including project
review, ranking, and selection. Turning against the history--
again to the history behind this legislation, there was a
strong feeling that, rather than have the U.S. Fish and
Wildlife Service incur administrative activity, funding would
pass through to the individual States, who had a stronger
understanding and responsibility for the inventories on the
need and priority for projects.
Dividing the funding evenly with the States helps ensure
the collective effort is never put to risk because of
unforeseen circumstances at the State level and recognizes the
role the States play in the FRIMA partnership.
While the report prepared by the U.S. Fish and Wildlife
Service is not the report called for in the authorizing
legislation, it does nevertheless provide an excellent overview
to the projects built using FRIMA funding. We encourage the
committee members to look at this report with regard to the
accomplishments of the program in the four respective States. I
would like to submit this report for the record.*
---------------------------------------------------------------------------
* The report has been retained in subcommittee files.
---------------------------------------------------------------------------
Senator Murkowski. We will include it.
Mr. Long. Thank you very much.
A lot has been accomplished with little funding, but
greater good could occur if the Service requested the funding
authorized. We strongly believe that the success of the FRIMA
program as evidenced by the projects that have been built and
the partnerships that have been developed provide the
justification for a continuation of this program through the
year 2012. The report and the last page of my testimony provide
a number of good examples.
We strongly support the improvements to the program as
contained in S. 3522. We would also ask that, even though this
is the authorizing committee, that you would let the
Appropriation Committee know the importance of this program and
how noncontroversial and successful the effort has been with
the limited resources that have been provided.
FRIMA is an excellent example of cooperative conservation
and FRIMA now and in the future will play a key role in
complying with the Columbia Basin 2004 buyup remand.
I want to thank the committee for hearing my testimony and
I am happy to answer any questions. Thank you.
[The prepared statement of Mr. Thalacker follows:]
Prepared Statement of Marc Thalacker, Manager, Three Sisters Irrigation
District, on Behalf of Oregon Water Resources Congress
Madam Chairman and members of the subcommittee, my name is Marc
Thalacker and I am the manager of the Three Sisters Irrigation District
in Oregon and am here on behalf of the Oregon Water Resources Congress
(OWRC). The OWRC is a statewide association founded in 1912 to
represent local governments that supply water for irrigation, primarily
irrigation districts and water control districts, and including member
ports, other special districts and local governments. The association
represents the entities that operate water management systems,
including water supply reservoirs, canals, pipeline, and hydropower
production.
OWRC strongly supports the reauthorization of the Fisheries
Restoration and Irrigation Mitigation Act along with the amendments
embodied in S. 3522. We greatly appreciate the leadership efforts of
Senators Wyden, Smith, Craig and Murray to continue this vital program
for fish screening and passage in the Pacific Northwest. We are joined
in this support by our sister organizations in Idaho and Washington:
the Idaho Water Users Association and the Washington State Water
Resources Association.
As one of the lead organizations with Congress to help create the
Fish Restoration Irrigation Mitigation Act (FRIMA) in 2000, and with
five years of experience of active involvement in the implementation of
the program, OWRC strongly believes this has been one of the most
successful programs for our members and for similar water supply
entities in Idaho, Washington and Montana.
FRIMA created a new Federal partnership fish screening and passage
program in the Pacific Ocean Drainage areas of Oregon, Idaho,
Washington and western Montana. The U.S. Fish and Wildlife Service
administers the program in partnership with state fishery agencies.
Fish passage and fish screens have become critical to fishery
protection. There are over 200 irrigation and water control districts
in Oregon that provide water supplies to over one million acres of
cropland in the state. Almost all of these districts are affected by
either state or Federal Endangered Species Act lists of salmon and
steelhead, bull trout, or other sensitive threatened or endangered
species. This program, which is cost-shared on a 65% Federal/35% non-
Federal basis, has been overwhelmingly supported by all involved. From
a water user standpoint, it has been a success because: 1) it keeps
protected fish species out of water canals and delivery systems and
power generation facilities; 2) allows fish to be safely bypassed
around reservoirs and facility structures; and 3) provides funding to
local governments for construction of facilities to protect fish.
The FRIMA program was authorized to receive $25 million a year,
divided among the four states. We have been disappointed that the
Administration, through the U.S. Fish and Wildlife Service, has not
requested funding for the FRIMA program in any of the five years since
it was authorized. Our members appreciate the limited funding Congress
has written into the annual Interior Appropriations bills these several
past years for the program. As you can see from the attachment to my
testimony, projects in Oregon have provided a much larger non-federal
match than required and as a result have been able to maximize the
limited FRIMA resources. Further, much FRIMA's success comes from the
large proportion of the federal appropriations that is used for
projects rather than for federal or state administrative costs.
SPECIFIC COMMENTS ON S. 3522
We are disappointed that the U.S. Fish and Wildlife Service, the
partner in this effort, never produced the report called for in section
9 of P.L. 106-502 that would have recommended changes to the program
based on experience in constructing projects under the Act. In lieu of
that report, OWRC surveyed its membership and talked with our fellow
partners and recommended changes that are incorporated in S. 3522.
Project Eligibility
Our members' experience in defining the type of projects that
provide the most cost-effective solution to needs has demonstrated that
we no longer need to be concerned with the likelihood of very expensive
solutions to problems. Reducing the cap on the size of the project,
from $5 million to $2.5 million, is appropriate at this time.
As we understand the history of the original authorizing
legislation, this program was intended for local governmental entities
to carry out the work to mitigate the impacts of irrigation diversions
on fish rather than face loss of their water if their facilities were
not screened. With that in mind, we also believe the original intent
was to have the funding passed through to the states that would, in
turn, provide the funding to the local governments. It was never
envisioned that the Federal government or the Tribes were to get part
of the $25 million authorized per year, other than for the up to 6% of
the funding to cover administrative expenses.
If it was determined that a project on Federal land or land in the
Native American community is the most effective approach to addressing
a fish-screening or fish passage problem in a system, the costs for
those projects should be non-reimbursable. This was to provide the
flexibility to use a common sense approach that would be
environmentally, economically sound with regard to the facility that
needed to be addressed in a watershed.
We do not believe Congress intended FRIMA be used by municipal,
Federal or Tribal governments to fund their facilities. While they may
all have needs for this type of funding, the need for fish protection
at irrigation diversions remains high and exceeds divertors' ability to
pay.
Cost Sharing
We greatly appreciate codifying what is already in practice with
respect to the use of Bonneville Power Administration (BPA) funding in
the Pacific Northwest part, but not all, of the time. There is a lack
of consistency among federal programs with some allowing the use of BPA
funding as local share to address fish and wildlife recovery, but not
for FRIMA. This legislation makes clear that BPA funds, coming from
ratepayers, should be considered non-federal share money.
Federal Administrative Expenses
We believe that S. 3522 takes an appropriate step in addressing
administrative expenses at the Federal and state level. One of the
strengths of the FRIMA program is the return on the Federal investment.
Part of this success can be attributed to the limited draw of the
funding for administrative costs in order to ensure that most of the
funding is used to build projects to protect fish.
The states do a tremendous amount of work as their part of the
partnership including project review, ranking, and selection. Turning
again to the history behind this legislation, there was a strong
feeling that rather than have the U.S. Fish and Wildlife Service incur
an administrative activity, funding would pass through to the
individual states who had a stronger understanding and responsibility
for the inventories on the need and priority for projects. Dividing the
funding evenly with the states helps ensure the collective effort is
never put at risk because of unforeseen circumstances at the state
level and recognizes the role the states play in the FRIMA partnership.
We think the graduated levels that determine administrative costs
based on Federal appropriation levels is the type of incentive-based
approach that sends a signal for all to understand. This graduated
administrative allocation reflects the fact that as more money is
appropriated, the time required for Federal and state program
administration will expand.
Technical assistance requested by a project sponsor after receiving
a grant is one thing; technical assistance designed to recruit and
assist potential project sponsors is quite different. That kind of
recruitment and assistance is part of the administration of the program
and should fall under the administrative expense provisions, not be
handled outside that limitation. To do otherwise limits the funding
available for actual projects.
We do agree that technical assistance provided by the U.S. Fish and
Wildlife Service at the request of the local government grantee should
not be part of the administrative expenses for the agency. Such
technical assistance should be part of the overall project costs and be
subject all the other requirements under FRIMA including local match.
Given the critical need for on-the-ground work under this program,
and the history of limited funding, there is an important need for the
U.S. Fish and Wildlife Service to understand the intent of the program
to provide for projects that protect fish rather than cover federal
administrative and staff costs.
Expansion of the FRIMA Program
While the report prepared by the U.S. Fish and Wildlife Service is
not the report called for in the authorizing legislation, it does,
nevertheless, provide an excellent overview to the projects built using
FRIMA funding. We encourage the Committee Members to look at this
report with regard to the accomplishments of the program in the four
respective states.
A lot has been accomplished with little funding, but a greater good
could occur if the Service requested the funding authorized. Before any
thought is given of expanding the program beyond its originally
authorized purpose, the total work program as identified by the state
inventories needs to be completed. Those inventories indicate a need
for irrigation diversion mitigation that continues to exceed the
available funding.
We strongly believe that the success of the FRIMA program as
evidenced by projects that have been built and the partnerships that
have developed provide the justification for the continuation of this
program through year 2012.
CONCLUSION
OWRC is asking Congress to continue to improve conditions for
threatened and endangered fish species in Oregon and the rest of the
Pacific Northwest by passing this legislation into law and
reauthorizing the FRIMA program. We strongly support the improvements
to the program as contained in S. 3522. We would also ask that even
though this is the authorizing committee, you let the Appropriation
Committees know of the importance of this program and how non-
controversial and successful the effort has been with the limited
resources that have been provided.
______
Oregon's FRIMA Project Benefits
The following are examples of how Oregon has used some of its FRIMA
money:
Santiam Water Control District Project: fishscreen project on
a large 1050 cfs multipurpose water diversion project on the
Santiam River (Willamette Basin) near Stayton, Oregon. Partners
are the Santiam Water Control District, Oregon Department of
Fish and Wildlife, Marion Soil and Water Conservation District,
and the City of Stayton.
Approved FRIMA funding of $400,000 leverages a $1,200,000
project.
Species benefited include winter steelhead, spring Chinook,
rainbow trout, and cutthroat trout.
South Fork Little Butte Creek: fishscreen and fish passage
project on a 65 cfs irrigation water diversion in the Rogue
River Basin near Medford, Oregon. Partners are the Medford
Irrigation District and Oregon Department of Fish and Wildlife.
Approved FRIMA funding is $372,000 and leverages a $580,000
total project cost.
Species benefited include listed summer and winter steelhead,
Coho salmon, and cutthroat trout.
Running Y (Geary Diversion) Project: fishscreen project on a
60 cfs irrigation water diversion in the upper Klamath Basin
near Klamath Falls, Oregon. Partners are the Wocus Drainage
District, Oregon Department of Fish and Wildlife, and Jeld-Wen
Ranches.
Approved FRIMA funding of $44,727 leveraged a total project
cost of $149,000.
Species benefited included listed red-band trout and short-
nosed sucker.
Lakeshore Gardens Project: fishscreen project on a 2 cfs
irrigation water diversion in the upper Klamath Basin near
Klamath Falls, Oregon. Partners are the Lakeshore Gardens
Drainage District and Oregon Department of Fish and Wildlife.
Approved FRIMA funding is $5,691, leveraging a total project
cost of $18,970.
Species benefited include red-band trout, short-nosed sucker
and Lost River sucker.
Oregon Department of Fish and Wildlife Inventory Project: an
inventory to be conducted by Oregon Department of Fish and
Wildlife to identify FRIMA-eligible passage and screening
projects within the Rogue and Klamath basins of southwestern
Oregon.
Approved FRIMA funding is $76,000. Estimated total project
cost is $125,000.
WHY FUND NOW
Dollar-for-dollar, providing screening and fish passage at
diversions is one of the most cost--effective uses of restoration
dollars, creating fishery protection at low cost, with low risk and
significant benefits. That is why it is important that this program be
funded now.
We urge the full authorization funding for FY 2007 and urge
Congress' oversight in encouraging the Service to budget for this
successful program in the future.
Senator Murkowski. Thank you, Mr. Thalacker.
Now, Mr. Donnelly, we will turn to you.
STATEMENT OF THOMAS F. DONNELLY, EXECUTIVE VICE PRESIDENT,
NATIONAL WATER RESOURCES ASSOCIATION
Mr. Donnelly. Thank you, Madam Chairwoman. Our association
has worked hand in hand with the Bureau of Reclamation since it
first raised the prospect of transferring title of facilities
to project beneficiaries in August 1995. The first several
years were difficult and a learning exercise for both
Reclamation and its customers. Project beneficiaries harbored
some unrealistic expectations. For example, some districts
wanted title to their facilities, but expected the Federal
Government to retain all liability for failure and the
resulting loss of property and life. Others expected the
transfer of project operations would exempt them from the
provisions of national environmental law. Costs were also a
huge impediment for some districts. Some of Reclamation's
managers were slow to embrace the concept of title transfer. In
addition, many unanticipated issues and concerns developed
which were difficult to resolve.
Combined, these factors contributed to bringing the whole
process of title transfer to an abrupt halt. Both Reclamation
and its customers persevered through these difficult efforts
and ultimately we developed a framework for negotiations and a
checklist for districts to follow in preparation for their
initial meetings with Reclamation and the subsequent title
transfer process.
In 1996 the first title transfer bills were signed into
law. Since then title to 18 projects or parts thereof have been
transferred to project beneficiaries. Five are authorized
pending transfer and several more are currently before
Congress.
Through these difficult early years we learned some
valuable lessons. It is important for districts pursuing
transfer of title to engage Reclamation early in the process
and work through the various issues and circumstances unique to
each individual project. There is no such thing as a simple
transfer. Even single-purpose projects present unique
challenges for Reclamation and its customers.
We are in agreement that it is impractical and in some
cases not in the public interest to transfer large multi-
purpose projects. It is also important that Reclamation and
Congress is satisfied that title transfer applicants have the
financial and technical resources to adequately and efficiently
operate and maintain transferred works into the future.
While we have struggled over the past 10 years to get where
we are today, a process and procedures are in place that
provide project beneficiaries the opportunity to accomplish the
transfer of title to their facilities. It is not a perfect
process. It is still too expensive for most and in many cases
unnecessarily time-consuming. Regardless, we are satisfied that
Reclamation is attempting to make the process more user-
friendly.
I returned last night from the public meeting on
Reclamation's Managing for Excellence process and if it is
helpful to the committee I would provide for you an overview of
their title transfer work so far.
Senator Murkowski. Great. Thank you.
Mr. Donnelly. In closing, Madam Chairman, we support S.
3832 and believe it is complementary to efforts being
undertaken by the Bureau of Reclamation in their Managing for
Excellence process. This legislation will codify the process
and procedures of an important management tool. Thank you very
much.
[The prepared statement of Mr. Donnelly follows:]
Prepared Statement of Thomas F. Donnelly, Executive Vice President,
National Water Resources Association
The National Water Resources Association (NWRA) is a nonprofit
federation of state associations and individuals dedicated to the
conservation, enhancement, and efficient management of our Nation's
most precious natural resource--WATER. The NWRA is the oldest and most
active national association concerned with water resources policy and
development. Its strength is a reflection of the tremendous
``grassroots'' participation it has generated on virtually every
national issue affecting western water conservation, management, and
development.
BACKGROUND
The U.S. Bureau of Reclamation (Reclamation) first raised the
prospect of transferring title of facilities to project beneficiaries
in August of 1995. Given the contentious debate and subsequent
legislation over the rules and regulations implementing the 1982
Reclamation Reform Act in the late 80's and early 90's, many of our
members were looking for an opportunity to get out from under the
onerous reporting requirements and resulting rules and regulations.
Title transfer appeared to provide that opportunity for many irrigation
districts. To give the Committee an idea of the interest that the
prospect of title transfer raised in the West, NWRA held a two day
conference on the subject of title transfer in June 1996 expecting
approximately 50-60 project managers to attend. Over 250 project
managers from throughout the West attended.
Early on project beneficiaries harbored several unrealistic
expectations. Many districts wanted title to their facilities, but
expected the federal government to retain all liability for failure and
the resulting loss of property and life. Some expected the transfer of
title project operations would exempt them from the provisions of the
Endangered Species Act, the Clean Water Act and other environmental
laws. Others expected the Bureau of Reclamation to bear all costs
associated with the transfer including the costly requirements of the
National Environmental Policy Act. Within the agency, some of
Reclamation's managers were slow to embrace the concept of title
transfer. Also, many unanticipated issues and concerns developed which
were difficult to resolve. Combined these factors contributed to bring
the whole process of title transfer to an abrupt halt.
Frustrated with the lack of progress in working through
Reclamation, some districts chose to bypass the agency altogether and
appeal directly to Congress. For the most part, this resulted in a
stalemate where Reclamation was forced to testify in opposition to
proposed project transfer legislation.
After months of frustrating delay, then Commissioner Eluid Martinez
facilitated a working session of NWRA's leadership and Reclamation's
managers. We analyzed the problems associated with the existing process
and procedures from both perspectives. This meeting led to the
development of a framework and ``road map'' for districts to follow in
preparation for their initial meetings with Reclamation and the
subsequent title transfer process.
In 1996 the first title transfer bills were signed into law. Since
then, title to eighteen projects or parts thereof have been transferred
to project beneficiaries, five are authorized pending transfer and
several more are currently before Congress.
LESSONS LEARNED
In the past ten years, the Bureau of Reclamation and project
beneficiaries have learned several lessons related to the transfer of
title to Reclamation facilities.
We have learned that little is gained by attempting to circumvent
the process. It is important for districts pursuing the transfer of
title to engage Reclamation early in the process and work through the
various issue and circumstances unique to each individual project. It
has become clear to us that there is no such thing as ``low hanging
fruit'' when it comes to title transfer. The simplest projects present
unique challenges for Reclamation and the districts.
We acknowledge that it is impractical and, in some cases, not in
the public interest to transfer large multi-purpose regional projects.
It is also important that Reclamation and Congress is satisfied that
title transfer applicants have the financial and technical resources to
adequately and efficiently operate and maintain transferred works into
the future.
SUMMARY
While we have struggled over the past ten years to get where we are
today, a process and procedures are in place at Reclamation that
provide project beneficiaries the opportunity to accomplish the
transfer of title to their facilities. It's not a perfect process. It's
still too expensive for most districts and in some cases unnecessarily
time consuming. Regardless, we are satisfied that Reclamation is
attempting to make the process more user-friendly. Also, they are
cooperatively pursuing those projects that are in the best interest of
the American taxpayer to transfer to the project beneficiaries under
reasonable terms and conditions.
In closing, Mr. Chairman and Senator Bingaman, we support S. 3832
and believe it is complementary to the efforts being undertaken by the
Bureau of Reclamation in their ``Managing for Excellence'' process.
Therefore it should be quite easy for the Bureau to implement the
provisions of S. 3832 in a timely manner. More important, this
legislation will codify the process and procedures of an important
management tool.
Senator Murkowski. Thank you, Mr. Donnelly.
Senator Wyden, would you care to ask some questions first?
Senator Wyden. Madam Chair, thank you very much, and thank
you on behalf of Senator Smith and myself for scheduling our
witness. We appreciate your courtesy.
I think I just wanted to ask Mark Thalacker one question.
We are going to try to secure the funds. That has been a
priority for Senator Smith and I. I think it would be helpful
if you could lay out the consequences of not having this kind
of program. It seems to me in plain simple English a lot of
fish are going to die. Is that pretty much it? If that is the
case, why do you not lay this out in something resembling
English that people can really see as being the consequences of
an important Federal program.
Mr. Thalacker. Well, one of the things that makes FRIMA so
important is--currently I personally serve on the Mid-Columbia
Steelhead Recovery Team, and one of the things that I have seen
through this process is that screening projects tend to come to
the various granting agencies one by one. What FRIMA has
allowed is it has allowed basically the Columbia Basin States
to target key screens that help comply with the Endangered
Species Act.
I think that when we eventually get final decision on the
remand from Judge Reddon, FRIMA is going to be a key tool. So
if it was authorized and funded going forward--it is something
that the Power Planning Council has made a specific request
that it be authorized and funded because, as you can see from
the list of all the projects that have been done, it has been a
very successful program. And yes, if we leave all these
diversions unscreened a lot of fish will perish and there will
be litigation and regulation.
Senator Wyden. Well, thank you for making the journey
eastward and we appreciate all your good work. Suffice it to
say, after what has happened in the Klamath, we have had one
instance after another of Federal policies not being built
around cost-effective ways to both balance the needs of fish
and the needs of people. I think you found one. I think that is
why Senator Smith and I have been such strong supporters of it.
So you continue to do the advocacy work that you are doing.
We will try to back you up.
Thank you very much, Madam Chair, for your courtesy.
Mr. Thalacker. Thank you, Senator.
Senator Murkowski. Absolutely.
Mr. Thalacker, let me continue with some questions for you.
In your written testimony you state that you do not believe
that Congress intended FRIMA to be used by municipal, Federal,
or tribal governments to fund their facilities. Is this
happening? Are there any cases that you are aware of where
there has been an effort to use the FRIMA funding to fund
facilities?
Mr. Thalacker. Not that I was aware of. There are a number
of other programs, screening programs, that are available
through the Corps and also BPA works with the tribes quite a
bit on their screens. So this is a program that basically
reached out to literally thousands of diversions, large and
small, all over the Columbia Basin, as well as other States,
where there were Endangered Species Act problems.
Senator Murkowski. But so far as you know we do not have an
issue with municipal or Federal entities?
Mr. Thalacker. We have not had a problem that I am aware
of.
Senator Murkowski. The other question that I have for you,
the legislation would give priority to projects costing less
than $2.5 million and this is down then from the current
threshold of $5 million. Why do you support the decrease?
Mr. Thalacker. The decrease is, one, a lot of the larger
screens, the more expensive ones, have been completed. So what
this does is this spreads the resource even farther and gets
more screens accomplished. Large screens tend to be on Federal
projects and so, once again, there are other funding sources
available for those bigger projects.
Senator Murkowski. Thank you for clarifying that.
Mr. Donnelly, you mentioned the Reclamation's Managing for
Excellence process. I do appreciate you bringing the Powerpoint
there and we will include that as part of the record. But it
sounds from your testimony that you are optimistic that there
is a process that is being set forward, that initially when it
came to title transfer things were slow, you mentioned that
they were expensive, but it sounds from your testimony that
there is an increasing satisfaction with the process and that
the efforts to improve the title transfer process is really
proceeding in a positive vein.
Mr. Donnelly. I believe that is accurate. I think what the
Bureau is now doing under Managing for Excellence is very much
in keeping with the legislation that has been introduced.
Senator Murkowski. Good. Well, we will look forward to
reading that that you will submit in the written record.
Mr. Long, in talking about the Arkansas Valley Conduit
project, what progress have you made toward securing a water
right for that project?
Mr. Long. There currently exists project water that is
allocated to the lower valley. That water is adequate to meet
the current request that we now have. So we actually have the
water necessary to meet today's need.
Senator Murkowski. What about tomorrow's need?
Mr. Long. Tomorrow's need. There is more than adequate
supply. Many of our cities and communities actually own water
rights in the Arkansas River Basin. To meet the first initial
need we will use the project water that has been allocated to
the valley.
Senator Murkowski. All right.
I have got a piece of legislation. I am a cosponsor on a
Rural Water Supply Act which would authorize a loan guarantee
program within the Reclamation loans. It allows that the loans
be repaid over a 40-year period. Do you think that the
communities in your region could benefit from this type of a
loan guarantee program? This is something that would work out
there?
Mr. Donnelly. Absolutely. We are actually working too with
the State of Colorado with a similar program that they have. We
still could not afford the full 100 percent funding of the
project. But we can handle the 20 percent. And yes, a program
like that would be beneficial.
Senator Murkowski. Good. You also mentioned in your
comments here this afternoon, you spoke to some of the water
quality issues. Would the water then that is to be supplied
under the Arkansas Valley Conduit--is this going to require
treatment?
Mr. Donnelly. Minimal treatment. Currently the city of
Pueblo, Colorado, is using basically the same water that we
would use. They just filter it and treat it with disinfectant.
Senator Murkowski. So even though you have got some solids
and some other things in there that you would rather not have,
it is a pretty minimal treatment?
Mr. Donnelly. Absolutely. In relation to that, in the lower
valley to meet water standards today we need to build reverse
osmosis plants, which are very expensive to build, very
expensive to operate, and cause a secondary problem in what to
do with the reject from reverse osmosis plants. So we are faced
with a new problem when we do build reverse osmosis plants.
So providing a better quality raw water is absolutely by
far the best way for us to proceed to meet our needs.
Senator Murkowski. Good.
Well, that is all the questions I have. I appreciate again
the opportunity to have you all in front of us, appreciate your
willingness to come this far and help us out with this
legislation. I appreciate it.
With that, we stand adjourned.
[Whereupon, at 4:02 p.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Responses of Marc Thalacker to Questions From Senator Murkowski
Question 1. In your written testimony you state that you ``do not
believe Congress intended FRIMA be used by municipal, Federal or Tribal
governments to fund their facilities.''
Are you aware of any cases where this has been occurred?
Answer. As OWRC has reviewed the respective Congressional Committee
reports that accompanied the legislation that became Public Law 106-502
and as we have spoken with the parties involved who developed the ideas
and concepts and worked on the language that became that Public Law,
and further as we participated in the process that implemented the
program once funding was provided, it is clear to our members that the
intent of the program was to mitigate the diversions of irrigation
systems of local governmental entities, of which water districts are
defined as stipulated in the preface of the Act
Furthermore, municipal governments do not irrigate agricultural
lands; Tribal governments are sovereign governments and thus not local
government entities; and the Federal government is not a local
governmental entity. There was to be a ``commonsense'' approach to
these facilities if it made sense to have a fish screen, fish passage
device or related feature placed on a water diversion that passed
through Federal, Tribal, or municipal lands. The intent was to allow
for such placement and provide authorization so someone couldn't say
``the law doesn't allow that'. The whole idea was to do what made the
most sense for the fish resource that was in need of mitigation
assistance. Examples of this appear in the USFWS Fisheries Restoration
and Irrigation Mitigation Program FY 2002-2004 report
Question 2. Why do you believe it is necessary to specify that BPA
funds be considered non-federal share money? Has any entity been
prohibited from accepting BPA funds as part of the non-federal share?
Answer. It is OWRC's understanding that the Bonneville Power
Administration (BPA) believes that its funds can be used as the non-
Federal match for Federal grants. We would like to submit along with
this answer, two letters from BPA stating its position the ratepayer
funds are non-federal funds and a guidance statement from USFWS
concerning FRIMA/BPA funds. Unfortunately USFWS has taken the position
that BPA funds are not allowed to be used for non-federal cost sharing
purposes. This provision would make it clear that BPA funds may be used
for non-Federal cost share purposes.
Responses of Marc Thalacker to Questions From Senator Johnson
Question 1. According to the Fish & Wildlife Service's 2002-2004
Report, $8.8 million was appropriated to support the Fisheries
Restoration and Irrigation Mitigation Program. Of that, $675,000 was
used for Administrative purposes--about 7.8%.
Have the Administrative costs been excessive in your view?
Answer. It is our understanding that when discussions were taking
place for the concepts resulting in Public Law 106-502 that 3 percent
was seriously considered as an administrative cap figure. The six
percent figure was arrived at in recognition of the need to ramp up for
a new Federal program with the expectation that this was to be a pass
through program of funding to the local governments to carry out the
work. Further, it was expected that the states, not the Federal
government, would play a strong role in this program because they had
the best understanding of the work that needed to take place and were
to do the inventories.
It was also expected that the full $25 million a year would be
appropriated and 6 percent of that funding for ``administration'' was a
significant amount of money. Unfortunately the Administration has never
requested any money in the Budget submission to Congress.
Question 2. Do you know how much was appropriated for the program
in fiscal years 2005, and 2006?
Answer. $2.0 in funding was provided in FY05. The FY 06
appropriation of $2.0 million was subject to budget rescissions. We do
not have information about rescissions for other years' appropriations.
Because USFWS has never requested funding for the program, it is
difficult to understand their budgeting/accounting for the money since
it is to be allocated among the four states and not more than 6% is
available for administrative costs.
We are concerned that the funding that Congress has provided in
FY07 is at risk because of the authorization lapse.
Question 3. Your testimony seems to indicate that you would like to
exclude tribal irrigation projects from participating in the FRIMA
program. Is that the case, and if so, why?
Answer. It is not a question of exclusion, but more of
clarification as we stated in our response to question 1 from Senator
Murkowski. There are other Federal programs available to the tribes for
this work. Currently the tribes seek funding for screening projects
through BPA's capital fund and BPA's fish and wildlife program.
Further, it is unclear what work needs to be done, if any, because
the inventories conducted by the states do not cover Federal and Tribal
lands.
As an example of the partnerships using FRIMA funding, tribes have
provided funding to Soil and Water Conservation Districts and Watershed
Councils who in turn work on smaller screening projects that use FRIMA
funds.
R1 FRIMA Program Policy Guidance:
Use of BPA funds as the Non-federal Cost-share of a FRIMA Project.
The DOI Regional Solicitor's Office was consulted on this issue and
has indicated the following.
BPA dollars cannot be used as non-federal match. The letter from
the BPA legal advisor clearly states that BPA funds are federal funds.
BPA has no specific legislation regarding this issue. FRIMA has
specific legislation regarding this issue, hence the FRIMA legislation
takes precedence. The FRIMA language is prohibitive, not permissive,
regarding the use of federal funds as non-federal matching funds.
Hence, BPA dollars cannot be used as the non-federal cost-share of a
project. The BPA legal advisor agreed with the Solicitor's view.
J. Van Meter
Fish Passage Program Manager
September 17, 2004
______
Responses of Bill Long to Questions From Senator Johnson
Question 1. What do you expect to be the source of water that will
supply the communities participating in the Arkansas Valley Conduit?
Answer. Initially, an allocation of Fryingpan-Arkansas Project
water, including re-use of return flows, will adequately address water
needs for the participating communities. Over the longer life of the
Conduit, additional non-Project water supplies may be necessary to
fully address water needs. These additional supplies may be acquired by
interruptible supply agreements, rotational crop management leasing
programs, adaptive management of existing community water supplies or
by purchasing water from willing sellers.
Question 2. Is Reclamation's suggested minimum 35% cost-share for
construction costs beyond the ability-to-pay of the participating
communities?
Answer. We have not made an analysis of a 35% cost-share, since S.
1106 proposes to use a 20% cost-share. Prior to the hearing,
Reclamation consistently stated its position that the participating
communities must repay 100% of construction costs. Because the average
household incomes in the counties served by the conduit are
significantly lower than the state average (approximately 55% of the
state average), we are concerned that a cost-share significantly higher
than the one provided in S. 1106 may be beyond the ability-to-pay of
the participating communities.
Question 3. What are the estimated OM&R costs for the Conduit
project? Have the participating communities worked out a cost-
allocation arrangement to ensure that they can pay those annual costs?
Answer. Based on project cost estimates, annual debt service and
O&M costs range between $2.5 and $4.8 million. The estimated annual O&M
cost alone ranges from $775,000 to $1.9 million. To assist the
participating communities in working out a cost-allocation arrangement,
consultants to the Southeastern Colorado Water Activity Enterprise, a
water enterprise created by the Southeastern Colorado Water Conservancy
District, developed two approaches to establish cost allocations: a
cost of service approach and an all-equal approach. The participating
communities are still discussing these approaches, with assistance from
state funding agencies.
Responses of Bill Long to Questions From Senator Murkowski
Question 1. How much water would be conveyed by the Conduit?
Answer. The Arkansas Valley Conduit is designed to convey about
22,100 acre-feet of water in one year. The flow rate will be 30.94 cfs
or about 20 million gallons per day.
Question 2. Do you believe the communities that would receive water
from the proposed project could use this loan guarantee program
[contained in the Rural Water Supply Act of 2005]?
Answer. The participating communities intend to use all of the
financial resources available for which they appropriately qualify.
Because the Rural Water Supply Act of 2005 loan guarantee program
requires the Secretary of the Interior to develop eligibility criteria
following passage of the Act, it is unclear whether the participating
communities will be able to effectively utilize this program.
Question 3. Is there also a concern that the aquifer on which the
lower Arkansas Valley currently relies is being depleted at an
unsustainable rate?
Answer. No, the primary water supplies utilized by the communities
that would benefit from the Arkansas Valley Conduit are surface water
supplies or tributary ground water. As discussed in my testimony, water
quality of those surface and tributary ground water supplies, is the
primary concern. Other communities in Colorado, not proposed to be
served by the Arkansas Valley Conduit, including some in other areas of
southeastern Colorado, may face problems with aquifer over-draft.
[Responses to the following questions were not received at
the time the hearing went to press:]
Questions for J. Mark Robinson From Senator Murkowski
S. 2070, MOHAWK RIVER HYDROELECTRIC PROJECTS LICENSING ACT
I understand that the licensee, the federal and state resource
agencies, and other significant stakeholders in the School Street
Project relicensing proceeding have reached a settlement.
Question 1. Is it correct that the only procedural hurdle to FERC
issuing the license is a delay caused by the green Island Power
Authority's appeal of New York's water quality certification for the
Project?
Question 2. Are you aware of any other case in which Congress has
required FERC to issue a license that contemplates the destruction of
the licensed project in the foreseeable future?
S. 3851, THOMAS BAY HYDROELECTRIC PROJECT
Question 1. It is my understanding that all three of these proposed
hydropower projects depend upon the applicant securing a power purchase
agreement. The applicant will likely spend several millions of dollars
during the preliminary permit period but is concerned that the money
will ``go down the drain'' when those preliminary permits expire. One
permit expires about a year from now.
Pursuant to the Federal Power Act, FERC has the authority to grant
a new preliminary permit once the original permit expires--as long as
the applicant has acted in good faith. However, if a municipal entity
also applies for that new preliminary permit, FERC is obligated to give
preference to that municipal entity--regardless of how much work and
money the original permit holder invested. Is that correct?
Questions for J. Mark Robinson From Senator Johnson
S. 2070, MOHAWK RIVER HYDROELECTRIC PROJECTS LICENSING ACT
Question 1. It sounds like the only thing holding up the issuance
of a license for the School Street project is the water quality
certification by New York.
Do you have any estimate on when the certification might be issued?
Once that occurs, has the applicant met all the other licensing
requirements pursuant to FERC's regulations?
Question 2. There is a provision in S. 2070 that would require in
any license the inclusion of Articles 32 & 33 of the Millville Project
license issued by FERC.
What applicability would these articles have in this situation? Has
the Corps of Engineers developed a comprehensive water resource plan
for the Mohawk River?
______
Questions for Secretary Kempthorne From Senator Murkowski
S. 1106, ARKANSAS VALLEY CONDUIT
Question 1. In your testimony, you mention that the re-evaluation
statement of the Conduit included an assessment of the sponsor's
ability to pay.
In that study, what was Reclamation's determination?
S. 1811, ARTHUR V. WATKINS DAM ENLARGEMENT
Question 1. It is my understanding that the dam was raised in 1990.
Based on this experience, do you believe that raising the Dam an
additional one to two feet is technically feasible?
S. 3798, FOLSOM SOUTH CANAL DEFERMENT
You state in your testimony that you have concerns with deferring
the repayment of the costs associated with a Reclamation facility based
on the amount of capacity in use.
Question 1. Please explain more fully to the Subcommittee your
concerns with the precedent this would establish.
Question 2. Are there any other parties who could benefit from the
unused Canal capacity?
S. 3832, RECLAMATION FACILITY TITLE TRANSFER
Question 1. What types of Reclamation projects do you believe
should not be transferred?
Question 2. What changes, if any, would you make to S. 3832?
Question 3. As you mention in your testimony, Reclamation is
currently investigating opportunities for the transfer of title to
Reclamation facilities as part of its Managing for Excellence Plan.
How is this progressing? When do you anticipate it will be
completed?
H.R. 2563, SNAKE, BOISE, PAYETTE RIVER SYSTEMS STUDY
Question 1. If H.R. 2563 is enacted, does Reclamation plan to
solicit stakeholder comment as it did for the Boise and Payette Basin
studies?
Question 2. H.R. 2563 authorized $3 million to be appropriated for
the feasibility studies.
Do you believe that this amount is adequate?
H.R. 3897, MADERA WATER SUPPLY ENHANCEMENT PROJECT
Question 1. What do you believe the total cost of a feasibility
study would be for the proposed project?
Question 2. How long would the feasibility study take to complete?
Question 3. You state in your testimony that Reclamation is
undertaking an appraisal level study of the proposed project.
What involvement have the stakeholders had in this process?
Questions for Secretary Kempthorne From Senator Johnson
S. 1106, ARKANSAS VALLEY CONDUIT
Your testimony indicates that the water supply for the Arkansas
Valley Conduit is not identified.
Question 1. How much water is needed for the project on an annual
basis?
Question 2. Won't the water come from the existing Fry-Ark project?
If not, what are the potential sources for the water rights needed for
the project?
The Re-evaluation statement mentioned in your testimony contains
updated construction and annual O&M costs as well as an assessment of
the sponsors' ability to pay.
Question 3. Will you please provide a copy of the Re-evaluation
statement for the Subcommittee?
Question 4. What additional work is necessary to go beyond the
Statement to provide Reclamation with the information necessary to
determine whether or not the Project should go forward?
S. 1811, ARTHUR V. WATKINS DAM ENLARGEMENT
You mention that the feasibility study for raising the height of
the Arthur V. Watkins Dam would cost approximately $2.0 million.
Question 1. How long would the study take?
Question 2. Does the Project have sufficient water rights under
state law to store additional water if the Dam height is raised?
S. 3798, FOLSOM SOUTH CANAL DEFERMENT
The construction of the Folsom-South Canal sounds like it was a
significant error in judgment based on its under-utilization.
Question 1. Why does Reclamation think it's fair that the CVP
contractors pay for the construction of a canal that benefits hardly
anyone?
Question 2. What are the overall construction costs of the Folsom-
South Canal? How much has been repaid to date?
Question 3. Is there any potential use for this canal in the
future? Will it simply go on with only 2% of its capacity used?
S. 3832, RECLAMATION FACILITY TITLE TRANSFER
Your testimony indicates that Reclamation has an existing framework
for title transfer, and is currently working on improving that
framework.
Question 1. Does the existing framework address the transfer of
complex multi-purpose projects?
Question 2. Does Reclamation think that Congress should hold off on
considering S. 3832 until it has completed its Managing for Excellence
review?
H.R. 3897, MADERA WATER SUPPLY ENHANCEMENT PROJECT
Question 1. Is the appraisal-level work for the Madera water supply
enhancement project sufficiently far along to provide some type of cost
estimate for the project as currently configured?
Question 2. What are the type of project features being looked at
in the appraisal-report?
Question 3. What is your estimate of the cost to complete a
feasibility study of the project?
Questions for Secretary Kempthorne From Senator Salazar
I have a list of 13 community public water systems in Southeastern
Colorado that are under an active enforcement order from the Colorado
Department of Public Health and Environment for failure to comply with
drinking water standards. These are all small towns and rural water
associations that simply cannot cover the costs of upgrading their
water treatment facilities on their own. They, along with many other
communities in the region, will need to seek federal assistance to
upgrade their water treatment systems, at an estimated cost of $640
million, most of which will be born by the federal government.
Question 1. Given that the Conduit is estimated to cost
approximately $300 million, of which 20% will be provided by the local
communities, and upgrading individual water systems in southeastern
Colorado is estimated to cost $640 million, most of which would be born
by the federal government through grants and other funding mechanisms,
isn't it true that, from a financial standpoint, the Conduit will end
up costing the federal government less than it would spend if it had to
help upgrade all of these water treatment systems?
In your testimony you raise a concern with the 80-20 cost share
provision in this bill. But as you noted in your testimony before the
House Resources Committee in July, since the early 1980s, Congress has
authorized thirteen separate single purpose Reclamation projects for
municipal and industrial water supply in rural communities in
Reclamation States, at a total federal budget authorization for of over
$2.3 billion.
Question 2. Isn't it true that the non-Federal cost shares for each
of the currently authorized rural water projects range from zero for
the Indian portion of the Mni Wiconi Project in South Dakota to 25
percent for the non-Indian Dry Prairie Rural Water System connected to
the Fort Peck Reservation Rural Water System in Montana.?
Question 3. Do you stand by your statement that these types of
water supply projects, like the Arkansas Valley Conduit, should be
based on a community's ``capability to pay?''
______
Questions for Thomas F. Donnelly From Senator Murkowski
Question 1. From your perspective, what are greatest problems with
Reclamation's existing title transfer process and what improvements
would you make?
Question 2. What are some of the benefits to project beneficiaries
associated with receiving title to Reclamation projects?
Question for Thomas F. Donnelly From Senator Johnson
Question 1. In your view, is Reclamation's process to review its
title transfer procedures sufficient to warrant holding off on any
legislation until that process is complete?
Appendix II
Additional Material Submitted for the Record
----------
Statement of Hon. Michael R. McNulty, U.S. Representative From New York
Madam Chairwoman, thank you for this opportunity to address an
issue that has been a cause of concern for many of my constituents: the
relicensing of a hydro project known as the School Street Project (FERC
Project No. 2539).
The license for this project, which is located on the Mohawk River
near Albany, New York, expired in 1993 and only the Federal Energy
Regulatory Commission (FERC) can issue a new license.
The School Street Project, in place since the early 1930's, is an
antiquated, sub-optimal hydro facility that has robbed my community of
a wonderful, natural waterfall, the Cohoes Falls. The School Street
Project also diverts water from amile of the Mohawk River so that this
mile of the river is mostly dry during the summer, is fish unfriendly,
and produces less than half the power that could be generated by a
modern hydroelectric power plant.
The Green Island Power Authority (GIPA), a publicly owned municipal
power authority created under the laws of the State of New York, would
like to file an alternative proposal with FERC for consideration prior
to the Commission issuing another 30 to 50 year exclusive license to an
existing hydroelectric project.
GIPA's proposal would address four important generation,
environmental, and community concerns. It would:
<bullet> replace the antiquated existing hydro project with a state
of the art facility that will produce more hydropower;
<bullet> restore what the School Street project took away, the visual
beauty of a continuously flowing waterfall;
<bullet> save fish, which have been dying due to the setbacks of the
current hydroelectric project;
<bullet> give a real boost to the economic health of the community.
Under current Federal law, competing applications must be submitted
two years prior to the School Street Project's license expiring. The
School Street project license expired 14 years ago. As a result,
despite the existence of a more energy efficient project that would
better serve the public interest, FERC has mandated that GIPA's Cohoes
Falls Project cannot even be considered.
I support S. 2070, one of the bills being reviewed today. This
legislation, proposed by Senator Schumer, is simple but effective. It
requires FERC to allow the introduction of new evidence about a better
project into the record in the School Street case. It does not disturb
the right of FERC to make the final decision, but it does require FERC
to make a fair record. It makes FERC accountable to the courts if they
don't apply the law the way Congress intended.
This legislation is badly needed now in a community that is losing
confidence in the ability of its national government to understand or
even permit fair play when it comes to giving out exclusive licenses to
private entities for the valuable natural resources belonging to the
public.
For the people in my district and the region, the restoration of
the Cohoes Falls, the rewatering of the Mohawk River, and the beauty
and value they could bring to our local communities in the future are
profound issues. It is not simply another case to be dealt with in the
large pile of casework.
Because of my community's great interest in the new license, I have
been personally involved in this effort since 2001. To date, I have
failed to persuade FERC to make even the most simple changes:
<bullet> Update a stale record to accept current information;
<bullet> consider a superior alternative project to the status quo;
<bullet> permit participation by local community organizations;
<bullet> actively protect the public interest.
Thus far, I have been unable to persuade this federal agency to
allow my constituents and local organizations and communities to
participate in any meaningful way in the School Street relicensing
process. Instead, the community has been excluded from the hearing
process and denied party status, so they cannot appeal any decision
issued by FERC in court.
When the public is prevented from making its case before a federal
agency, citizens and local officials alike have wonder what's going on.
For whom was this agency created and what did Congress intend it to do?
The applicable law is clear: Congress intended in 1920 when it
enacted the Federal Power Act, that the agency it created, now the
Federal Energy Regulatory Commission, should pick the ``best project''
to comprehensively develop our Nation's rivers, in the public interest.
When the Commission strayed from its original mission, the courts
stepped in to remind the Commission that its duty was to see that ``the
record is complete. The Commission has an affirmative duty to inquire
into and consider all relevant facts.'' Scenic Hudson Preservation
Conference v. FPC, 354 F. 2d 508 (1965), at 620. The Court said this in
a case involving the location of a huge pumped storage project on the
Hudson River, proposed by Consolidated Edison Company, just south of
the Capital Region of New York. Moreover, the Court noted that the
agency's refusal to receive the testimony about alternative sources of
power and information about fish protection devices and underground
transmission facilities, even in some cases offered by a non-party to
the case, was inappropriate and ``exhibits a disregard of the statute
and of judicial mandates instructing the Commission to probe all
feasible alternatives.'' That quote comes from the same case and the
same page.
In Scenic Hudson, the Court noted that the agency had denied
participation to some of the interests, thereby depriving the record of
their evidence; in other words, the same kind of activity that has been
occurring in the present School Street case. Quoting from another case,
the Scenic Hudson Court found persuasive a holding that ``it is not
fair play for it (i. e., the agency) to create an injustice, instead of
remedying one, by omitting to inform itself and by acting ignorantly
when intelligent action is possible . . .'' Scenic Hudson at 621. I
note that Scenic Hudson occurred in the mid-1960s and it seems as if
the current FERC is suffering the same problems that afflicted the
agency back then.
Unlike the existing School Street Project, the new Cohoes Falls
Project would double the renewable energy available from the waters of
the Mohawk. It would restore the historic Cohoes Falls to the way they
used to be. It would rewater a mile of the Mohawk River where it now
runs dry. GIPA proposes to dedicate a portion of the additional power
input to create jobs in the community, and we could use those jobs.
Another portion of the hydro power would be earmarked for public
institutions, to help those communities with their budgets and maintain
our local institutions. Recreation and public access to the river and
to the falls would be enhanced, after consulting with the Tribal groups
that have a special religious interest in preserving certain aspects of
the falls and site. How to meet these objectives is the information
being excluded by FERC.
This is why my community needs S. 2070. I thought the Federal Power
Act was clear, as did the courts. In 1965 however, the courts had to
remind the agency administering the Federal Power Act of its duty,
despite the clarity of the law. It seems that the time is here again.
But rather than burdening the court system with this case and delaying
the resolution for another three to five years, Congress should act to
pass S. 2070. Otherwise, the bottom line is that delay only benefits
the current Licensee, who has taken an old Project that should be
costing the consumers less than a penny per kwh and instead is selling
it to them at 5-10 cents/kwh, under the new rules of the electricity
market. That's taking a lot of money out of the community and the
pockets of my constituents, and preventing us from using our own
region's resources to ensure our own future.
Delay also means that the current Licensee, a Canadian corporation,
will be able to take those profits and invest them elsewhere and not in
the surrounding community. I submit this testimony today because my
community has been waiting for 15 years for FERC to take an affirmative
step to improve the conditions at the School Street site, and FERC is
choosing to ignore an opportunity to do just that.
I am attaching two letters I have written to the Commission in the
past, including one signed by Senators Schumer and Clinton.* The
results are the same: FERC continues to reject the community's efforts
and gives every intention of closing down the case and issuing a
license for pretty much the same antiquated project that provides
little benefit to the surrounding community. And this is at a time when
prompt development of an alternative would give us double the energy!
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* The letters have been retained in subcommittee files.
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The development of a new Project and the restoration of the Cohoes
Falls and the Mohawk River flows will do much to restore pride and
beauty to my community and it will bring economic benefits to a
community that has already been abandoned by the large corporations who
found it more efficient to move than to invest money for modernization
and new industries in the same communities.
Madame Chairwoman, thank you for including S. 2070 within the scope
of today's hearing. I look forward to further discussions on how we
might proceed in enacting legislation that would level the playing
field so that the people in my district might have a fair chance to
obtain and develop their own natural resources.
______
Statement of Brookfield Power
Clarification on Matters Raised at the 9/21 Hearing on S. 2070
It was suggested at the hearing that the existing owner (Brookfield
Power) does not want to do anything to improve the (School Street)
facility, the environment, or its surrounding community and that the
surrounding community supports the GIPA proposal over the Brookfield
proposal.
In fact, Brookfield has negotiated an extensive settlement
agreement--years in the making and supported by hydropower experts,
resource agencies, environmental advocates and the surrounding
community--to make facility improvements benefiting the community and
the environment. Brookfield's settlement agreement for School Street
provides for continuous flows over historic Cohoes Falls; new
recreational amenities including two viewing areas and a new
footbridge; new foot trails; new fish protection and passage systems
that have been approved by the U.S. Fish and Wildlife Service; an
Historic Properties Management Plan; and ongoing work with indigenous
peoples to ensure they have continued access to the falls for cultural
purposes. This agreement is supported by the New York State Department
of Environmental Conservation (NYS DEC), the NY Power Authority, NOAA
Fisheries, U.S. Fish and Wildlife Service, the Mayor of the City of
Cohoes NY, the NYS Conservation Council, and NY Rivers United.
School Street is also seeking to become one of only two locations
in the nation to install and test cutting edge fish-friendly turbine
technology developed with the United States Department of Energy.
Brookfield will enhance School Street to 50 MW capacity which should
generate more than 200,000 MWh of energy annually. FERC Director of the
Office of Energy, Mark Robinson, called this capacity addition ``well-
sized'' for the area.
It was suggested that GIPA's proposal would enhance the environment
and give New Yorkers better access to clean energy than would the
Brookfield School Street proposal.
GIPA's claims have not been tested or verified by the major
resource agencies, environmental advocates, or a range of hydropower
experts as Brookfield's proposal has. In order to achieve its claimed
energy output, GIPA will have to build a new, larger dam on top of the
falls and blast a section of the face to insert a massive powerhouse.
This new dam would mean the certain inundation of one of the last
stretches of natural flow and habitat left on the Mohawk River, but it
is uncertain whether GIPA's energy claims can ever be realized.
It was suggested that the amount of time Brookfield has been
operating on an annual license is unduly long.
Brookfield's School Street facility was one of nine of its project
licenses in NY that expired in 1993. Through an agreement with FERC and
stakeholders, those licenses were settled one at a time, with School
Street designated as last in that settlement agreement process.
Therefore, while waiting its turn, the School Street facility was given
annual licenses. Additionally, once the licensing process began at
School Street, time was put into negotiating a thorough settlement
agreement, one which would ensure proper upgrades and the benefit of
the surrounding community. The fact is, that but for GIPA's
intervention and repeated appeals, the licensing process would be over.
It was suggested that FERC has rejected GIPA's request to apply for
a license at School Street because of technicalities.
In fact, FERC has refused to permit GIPA to apply for a license at
the School Street facility because the Federal Power Act and its rules
prohibit a new license application from being filed on an ``untimely''
basis--in this case, more than thirteen years after the deadline for
such applications. It is the law that FERC follow clear timelines for
licensing set forth in the Federal Power Act. It is important not only
for Brookfield, but for licensees across the nation, that the law
governing relicensing has certainty and integrity and is not subject to
undue political interference.
It was suggested that GIPA was somehow precluded from competing for
the School Street license when the window of opportunity lawfully
existed in the early 1990's.
GIPA, like any other prospective applicant, was free to file a
competing application for the School Street project during the window
of opportunity that existed in the early 1990's. The fact that Niagara
Mohawk, the owner at that time, operated as a regulated monopoly in New
York has no bearing, and that business structure in no way precluded
GIPA from competing. GIPA simply chose not to compete when the lawful
opportunity existed.
______
Southeastern Colorado Water Activity Enterprise,
Pueblo, CO, June 13, 2006.
Senator Ken Salazar,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senator Salazar: At last summer's July 16 Arkansas Valley
Conduit Forum in La Junta, Colorado, Senator Wayne Allard,
Representative Marilyn Musgrave, and yourself agreed that key
information was needed before legislation would be moved through
Congress. Additionally, Representative John Salazar agreed with the
request from the Forum. Specifically, it was requested the District
verify that enough water is available for the conduit, and the
participants can afford their portion of the cost of the conduit.
In November of 2005, Black & Veatch Engineering was hired to
perform an Investigation Study to obtain answers to these questions. As
part of this Investigation, all the water-providing entities were
contacted and information was gathered. Black & Veatch has completed
that Investigation and we are excited to provide you with the
Investigation results. Enclosed is a copy of the Executive Summary for
your perusal, and the complete study can be made available should you
wish to see more detail.
The Investigation found that there is an adequate water supply for
the conduit. Project water is available to meet the current demands of
the participants. Regarding the funding question, cost ranges were
determined by the minimal size of the conduit as the lower bookend, and
the largest size with some water filtration included in the upper
bookend. To assure that each entity was on board and understood the
costs, Letters of Intent were obtained from each entity. Attached is
the list of the Letters of Intent in hand to date, representing all but
a few very small providers who have not yet completed the letter
process.
Additionally, the District will be submitting a loan application in
August to the Colorado Water Conservation Board. In discussions with
them, we have learned that they have money available to loan for this
project at rates between 3.0% and 3.5%. The final rate would be
determined by the per capita income of the participating entities
versus the state average.
Now that the Investigation has been completed and the findings
enclosed, it is the hope of the participants that our congressional
delegation will undertake the effort necessary for Congress to act upon
the authorizing legislation for this critical project, and seek the
subsequent funding needed to build it. The District's staff, legal
counsel, and consulting firm Kogovsek & Associates, look forward to
meeting with you at your earliest convenience in an effort to finalize
the language in the legislation.
Thank you for your support.
Respectfully,
Bill Long, President,
Chairman, Conduit Committee.
______
American Rivers,
Washington, DC, September 21, 2006.
Senator Pete Domenici, Chairman,
Senator Jeff Bingaman, Ranking Member
Senate Energy and Natural Resources Committee, Washington, DC.
Dear Mr. Chairman and Senator Bingaman: American Rivers is a
national non-profit conservation organization dedicated to protecting
and restoring healthy natural rivers and the variety of life they
sustain for people, fish, and wildlife. American Rivers has a
membership of more than 45,000, with members in each of the fifty
states.
We have significant concerns about S. 2070. Our concerns are not
based on the relative merits of the competing hydropower projects that
are the subject of this legislation, but rather a policy principle:
Congress should not legislate the results of individual hydropower
licensing proceedings or the terms of a hydropower license. Instead,
Congress should allow FERC and appropriate state and federal agencies
to implement the Federal Power Act and other applicable laws. The
hydropower licensing process must operate in a consistent, pre-defined
manner in every hydropower project. Any legislation that creates case-
by-case exceptions to these rules sets a dangerous precedent that
creates uncertainty and could severely undermine the confidence of
participants in this lengthy and complex process.
Because we only just became aware of the September 21st hearing and
consideration of S. 2070, we have not yet had time to discuss our
concerns with Senator Schumer or his staff. We look forward to
discussing our concerns with them in the near future.
BACKGROUND
Erie Boulevard Hydropower (Erie) owns the School Street hydropower
project on the Mohawk River in New York. When its license for the
project expired in 1993, Erie engaged in settlement talks with state
and federal agencies, environmental and recreation groups, and other
stakeholders to negotiate a new license. Based upon those settlement
talks, Erie has a license application pending before FERC. In January
2005, Green Island Power Authority (GIPA) filed a preliminary
application with FERC to construct the Cohoes Falls hydropower project,
which would require usurpation of the site of the School Street
Project. In rejecting GIPA's application, the Commission concluded that
the Federal Power Act barred it from considering a competing license
application filed more than 13 years after the statutorily-defined
deadline for such applications. FERC also determined that it could not
issue a license that would require that another existing licensed
project be decommissioned over the objection of its licensee (in this
case, by issuing a license that would allow a new, larger dam to bury
an older dam under water).
We do not wish to take sides in the debate over which project would
be a better use of the Mohawk River. GIPA claims that its proposed
hydropower project will offer even more significant improvements that
would benefit the environment and other public values than the
negotiated deal arrived in the School Street settlement. If they are
right, then it is unfortunate that they did not act at the appropriate
time during the licensing process. Many stakeholders come in late to
hydropower licensing proceedings with ideas or proposals that they
believe to better represent the public interest, but they are not
considered because to do so would invite a process with no end. And
before anyone can accept GIPA's assertion that its application is more
in the public interest than Erie's, the project would have to undergo
the same level of scrutiny and evaluation as the School Street Project
settlement agreement. But allowing this process to drag on any further
would set a very dangerous precedent and throw licenses and settlement
agreements into an environment of great uncertainty.
CONGRESS SHOULD NOT ENGAGE IN HYDROPOWER LICENSING BY LEGISLATION
When Congress created the Federal Power Commission with the passage
of the Federal Power Act in 1920, it delegated the responsibility for
making decisions about individual projects to an independent regulatory
agency with the high level of expertise necessary to make informed
decisions about how best to allocate the nation's limited number of
sites with hydropower potential. As a result, federal hydropower
licensing is governed by a set of rules that are generally consistent.
These rules provide utilities and other stakeholders with a process
that guarantees a reasonable amount of stability and certainty.
We are worried by the idea of direct Congressional involvement in
licensing decisions. When a piece of legislation attempts to circumvent
FERC's rules and delegated authority--especially to benefit a single
utility on a single hydropower project--the very stability of the
licensing process is threatened. Once individual license applicants or
other licensing stakeholders with political connections believe that
they can skirt this process by asking Congress to legislate the terms
of a hydropower license, we will be on a very slippery slope. Each
exception further erodes the underlying stability and fairness of the
regulatory environment.
In order to maintain the integrity of the licensing process,
American Rivers must object just as strongly where Congress is
intervening in a case that may result in greater environmental
protection as we must in a case where Congress is allowing a licensee
to avoid those protections. As a matter of principle, American Rivers
has opposed even minor attempts by Congress to bend or make exceptions
to the rules of hydropower licensing. One fairly common exception takes
the form of a preliminary permit extension,\1\ which requires that FERC
grant a licensee additional time to commence construction of a project
when it has missed the deadlines specified in its license. Our
opposition is based on a simple principle: If Congress begins to
arbitrarily extend license terms, then it might go further, requiring
the Commission to issue a license in a case where issuing a license may
not be justified. Or it might choose to dictate specific conditions in
a license, even if the Commission has determined that those conditions
are not in the public interest. Neither situation is acceptable.
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\1\ For example, see S. 3851, a bill which is also currently
pending before this Committee (and to which we are opposed for the
reasons described here).
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American Rivers has had many quarrels with both the hydropower
industry and FERC and we remain strong advocates for reforms of both,
but we cannot support the kind of piecemeal approach suggested in S.
2070. While extraordinary circumstances may some day arise when
American Rivers may believe that Congressional involvement at this
level is necessary, this case does not meet that threshold.
EXTRAORDINARY CIRCUMSTANCES DO NOT EXIST
Proponents of this legislation have argued that extraordinary
circumstances do exist that warrant Congressional involvement in the
Mohawk River cases. They claim that much has happened between the
deadline for filing a license application (which was in 1991)--an
alternative use of the hydropower site has been conceived, community
attitudes have changed, and economic and other conditions warrant a
reexamination of what is in the public interest. While we can empathize
with their perception of the situation, it does not represent an
extraordinary circumstance worthy of Congressional intervention.
When the Commission is unable to issue a new license for an
existing project before its license expires, FERC issues an ``annual
license,'' that allows the utility to operate the project under the
terms of its original license. In many cases, an annual license gives
utilities an opportunity to delay. If the status quo conditions are
cheaper than the terms of a new license, then some utilities will do
what they can to delay and maintain those original, cheaper conditions.
This behavior is a clear abuse of the provisions of the Federal Power
Act that guide hydropower licensing, and we encourage Congress to
consider ways in which it might curb this practice. However, there are
instances when annual licenses are valuable tools that give
stakeholders the necessary time and freedom to work out differences and
settle disputes outside of the traditional FERC licensing process that
can then feed back into the establishment of a new license. It is this
very set of circumstances that we find on the Mohawk River.
The School Street project is one of dozens of licenses in New York
that all expired in 1993. To deal with the glut of licensings,
stakeholders reached an agreement in which the New York State
Department of Environmental Conservation would address each of the
relicensing applications sequentially. The School Street project was at
the bottom of this list, and has therefore been issued annual licenses
for the past 13 years. However, we believe that the owners of the
School Street Project acted in good faith during those 13 years to work
towards obtaining a license from FERC and other necessary permits from
other federal and state agencies. If FERC had issued Erie a license for
the School Street Project back in 1993, GIPA would find itself in
almost the same position as it is today--unable to develop the site
until the current license expires. They can and perhaps should argue to
FERC that within its legal discretion, it issue a shorter license term
since Erie benefited from 13 years of annual licenses. This would at
least give GIPA the opportunity to compete for the contested site
sooner.
If Congress intends to do something about the abuse of annual
licenses, it should look to a broader and more equitable solution.
S. 2070 DICTATES UNREASONABLE LICENSE TERMS
The most troubling aspect of this bill is that it dictates specific
conditions which FERC must include in any hydropower license issued on
the Mohawk River. Subsection (d) of the bill requires that FERC ``shall
include the same license conditions relating to the use of affected
waters provided in articles 32 and 33 of the license included in
Potomac Light & Power Company, Project No. 2343, 32 F.P.C. 584, 588
(1964).'' Those articles read as follows:
Article 32. The right, power, and authority is reserved to
the United States to construct or to the Commission to issue a
license authorizing the construction, operation and maintenance
of hydroelectric project which will more completely utilize the
water resources of the reach of the Shenandoah River in which
the project is located.
Article 33. The acceptance of this license by the Licensee
shall constitute its stipulation, consent and agreement made
upon its own behalf and upon the behalf of its successors and
assigns for the benefit of the United States, or the person or
persons hereinafter constructing, operating and maintaining
such more complete water resource project or his or their
successors and assigns that said Licensee, its successors or
assigns, shall surrender its license at such time as the
project becomes inoperative by reason of inundation by such
more complete hydroelectric project; provided, that Licensee
shall be paid the net investment in Project No. 2343 upon
surrender of its license; and provided further that Licensee
shall not be entitled to any compensation for severance damages
sustained by reason of inundation or destruction of the project
or project works of Project No. 2343.
By legislating the specific conditions of a license, this bill
would set a very dangerous precedent. If Congress begins to insert
line-item provisions into licenses, then a member of Congress could
conceivably strip--or add--environmental protections from a license
allowing a license to never expire or require it be decommissioned. The
result would be undermine the public's and the industry's confidence in
the integrity of the hydropower licensing process.
S. 2070 WILL DISRUPT A SETTLED HYDROPOWER LICENSING AND CAUSE FURTHER
DELAYS
Stakeholders (State and federal agencies, NGOs, and others) have
already invested significant time and resources into the relicensing of
the School Street project, and have reached a settlement. This bill
would throw the licensing process and settlement into chaos, despite
years of work. By requiring FERC to consider a competing application at
the end of the process, it would extend the period that the School
Street project may operate under an annual license, further delaying
the implementation of environmental improvements.
In conclusion, we thank you for considering our perspective, and
strongly urge you to oppose this bill at this time. If you or your
staff have any questions or concerns regarding this testimony, I would
be happy to discuss them.
Sincerely,
Andrew Fahlund,
Vice-President for Conservation.
______
National Hydropower Association,
Washington, DC, October 2, 2006.
Senator Pete Domenici, Chairman,
Senator Jeff Bingaman, Ranking Member,
Senate Committee on Energy and Natural Resources, Dirksen Senate Office
Building, Washington, DC.
Re: Statement for the Record of the National Hydropower Association
(NHA) on S. 2070
Dear Senators Domenici and Bingaman: The National Hydropower
Association \1\ writes to express its concerns regarding S. 2070, the
Mohawk River Hydroelectric Projects Licensing Act of 2005. On September
21st, the Committee's Water and Power Subcommittee held a hearing on
the bill.
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\1\ NHA is a non-profit national association dedicated exclusively
to advancing the interests of the U.S. hydropower industry. The
association represents 61 percent of domestic, non-federal
hydroelectric capacity. Its membership consists of more than 140
organizations including public utilities, investor-owned utilities,
independent power producers, equipment manufacturers, environmental and
engineering consultants, and attorneys.
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S. 2070 would prohibit the Federal Energy Regulatory Commission
(FERC) from issuing a new license for a hydroelectric project on the
Mohawk River in New York if the project has been operating under annual
licenses for 10 or more years, unless FERC issues a public notice that
it will accept other valid license applications to develop the project
works or the water resource, and FERC approves a license application
with terms consistent with the legislation.
Under the Federal Power Act, FERC is given the authority over the
licensing of hydropower projects. The FERC regulatory regime provides a
comprehensive process to determine necessary license terms and includes
procedures governing competing license applications. S. 2070 would
usurp FERC's authority in this one case, inserting the Congress into
the middle of an ongoing licensing proceeding. Simply put, this is bad
public policy.
While NHA does not intervene in proceedings regarding individual
licensees, the Association is concerned that S. 2070 sets a precedent
for the licensing of hydropower projects that is disconcerting and
should be carefully and deliberatively reviewed prior to Congress
taking such a dramatic departure from practice.
NHA believes it is inadvisable for the Congress to dictate by
legislation hydropower licensing outcomes. FERC is the appropriate
decision maker with the necessary expertise and experience to fully
analyze and equitably resolve licensing issues. FERC should be allowed
to conduct its work free from legislative intrusion. This arbitrary
involvement would create instability and uncertainty in the licensing
of hydropower projects.
Over the years, NHA has advocated for regulatory and legislative
improvements to the licensing process aimed to bring transparency,
accountability, and equitable treatment for licensees and stakeholders.
Responding to this call, FERC, in 2003, adopted the new integrated
licensing process (ILP) and Congress enacted several licensing reform
procedures in the Energy Policy Act of 2005.
S. 2070 appears to be a step backward from these advancements and
NHA encourages the Committee to consider the effects this intervention
could cause. Also, American Rivers, a non-profit conservation
organization that regularly participates in hydropower licensing
proceedings has urged the Committee to oppose S. 2070. NBA agrees and
respectfully urges the Committee to do the same.
NHA appreciates this opportunity to share its views on S. 2070 and
its potential effect on the hydropower licensing process. Please feel
free to contact me if there are any additional questions regarding S.
2070 or NHA's position on the bill.
Sincerely,
Linda Church Ciocci,
Executive Director.
______
Statement of Thomas P. Graves, Executive Director, Mid-West Electric
Consumers Association
The Mid-West Electric Consumers Association appreciates the
opportunity to submit testimony on S. 3832, the ``Reclamation Facility
Title Transfer Act of 2006.''
The Mid-West Electric Consumers Association was founded in 1958 as
the regional coalition of consumer-owned utilities (rural electric
cooperatives, public power districts, and municipal electric utilities)
that purchase hydropower generated at federal multi-purpose projects in
the Missouri River basin under the Pick-Sloan Missouri Basin Program.
In Pick-Sloan, power generated at Bureau multi-purpose projects is
marketed by the Western Area Power Administration and is under long
term contracts.
The legislation before the committee, S. 3832, the ``Reclamation
Title Transfer Act of 2006,'' directs the Bureau of Reclamation to
establish criteria for the title transfer to irrigation districts and
to recommend facilities appropriate for such transfer. In his remarks
introducing the legislation, Senator Domenici noted that he intended to
broaden the Bureau's current efforts, which have heretofore focused on
single-purpose projects, to address title transfer of Bureau of
Reclamation multi-purpose facilities as well.
Mid-West has supported title transfer of single-purpose Bureau
facilities in the past and will continue to do so where the proposed
transfer is fair to federal power users. Mid-West has concerns about
the process outlined in the legislation as it might apply to the
Bureau's multi-purpose facilities.
Title transfer of federal assets to the private sector is a
complicated business. Mid-West has worked with the Bureau of
Reclamation and irrigation projects in Pick-Sloan where there has been
an interest in title transfer of these single-purpose projects. Single-
purpose projects have dams and reservoir storage, along with all the
appurtenant irrigation facilities to serve the project (canals, etc.).
There are no existing hydropower generation facilities in the project
nor are any authorized for federal development. Recreation may or may
not have developed around a project's reservoir.
Nonetheless, federal power is still involved in those projects, at
least those projects that are in the Pick-Sloan Missouri Basin Program
(Pick-Sloan). Whatever power that may be needed to provide ``first-
lift'' of irrigation water is sold to irrigators during the irrigation
season at the ``project use'' rate, currently calculated at 10 mills/
kWh. That rate is significantly below the firm power rate of 18.74
mills/kWh, which is already scheduled to increase to 19. mills/kWh in
January 2007. Where the Bureau project is not directly served by
federal transmission, federal firm power customers also pay the
transmission costs of the transmission to deliver that power.
In addition, Pick-Sloan firm power customers subsidize the
construction costs of the project through ``aid-to-irrigation.'' In
practical terms, that means that Pick-Sloan federal firm power
customers are responsible for repayment to the U.S. Treasury of roughly
80% (on average) of an irrigation project's construction costs.
These can be thorny issues, but they are not insurmountable so long
as all parties are treated equitably.
Mid-West not only supported but also lobbied for the title transfer
of the Middle Loup irrigation project in Nebraska. Mid-West supported
transfer of that project because the terms of the legislation were fair
to all parties--both water and power users. The terms of the settlement
called for the irrigation district to repay the U.S. Treasury the net
remaining present value of their federal debt. Power users repaid the
aid-to-irrigation at the net present value of that debt as determined
by the rate-setting Power Repayment Study of the Western Area Power
Administration. Since the transfer of the project removed ownership
from the federal government, the irrigation district gave up the
project-use power rate. The irrigation district was deemed eligible to
receive seasonal Pick-Sloan power at the firm power rate. Mid-West
supported that allocation. For Pick-Sloan firm power customers the
critical elements to the settlement were:
<bullet> proper application of net present value to the remaining
federal obligations of water and power users; and
<bullet> title transfer to the irrigation project beneficiaries
without continued federal subsidies, including withdrawal of
subsidized federal power rates and transmission costs.
Negotiations have failed in other instances where Bureau project
beneficiaries in Pick-Sloan were attempting to transfer title while
retaining federal benefits of the project use power rate and power
delivery.
Transfer of multi-purpose Bureau projects is far more complicated.
The legislation before the committee (S. 3832) directs the Bureau
to include four criteria that require: (1) project beneficiaries or an
entity that the project beneficiaries approve of be willing to take
title to the project; (2) project beneficiaries be capable of assuming
operation, maintenance and rehabilitation of the facility if they have
not already done so; (3) where there are multiple project beneficiaries
they be in agreement on taking title; and (4) project beneficiaries be
willing to assume any liability associated with the reclamation
facility. Sec. 3(b)(A)(B)(C)(D). These are the only directions given to
the Bureau.
The rest of the legislation calls for:
<bullet> assessments of a variety of issues associated with a title
transfer, including an assessment whether stakeholders would be
adversely affected. Sec. 3(b)(2)(E); and an assessment of any
legal considerations associated with title transfer
Sec. 3(b)(2)(G);
<bullet> procedures for ``soliciting stakeholder involvement in the
transfer of title to a reclamation facility'' Sec. 3(b)(3)(A),
and ``involving appropriate Federal, State, and local entities
in evaluating and carrying out the transfer of title to a
reclamation facility'' Sec. 3(b)(3)(B); and
<bullet> a comprehensive list of actions that must be accomplished
prior to transfer and procedures to allow the Secretary to
address real property, cultural and historic preservation
issues ``in a more efficient manner'' Sec. 3(b)(4)(5).
Mid-West believes that the legislation does not provide sufficient
direction to the Bureau on issues relating to federal hydropower
facilities. Assessments and procedures are certainly needed and
important, but the legislation does not provide Congressional guidance
on what to do with the results of those assessments.
For example, the legislation is silent as to the treatment of
federal power facilities, requiring no criteria and providing no
guidance to the Bureau relating to treatment of power generation at
Bureau facilities.
Neither the Western Area Power Administration nor its federal power
customers--who are, in large part, the financial engine of these
projects--is included in the process. Instead, power interests are
relegated to stakeholder status, where the only requirement is that
stakeholders have been involved in the ``transfer of title to a
reclamation facility.'' (Project beneficiaries are also included as
stakeholders, in addition to their status as project beneficiaries.)
The hydropower generation at the Bureau's multi-purpose projects is
an important part of the resource mix of Pick-Sloan firm power
customers. The rural electric cooperatives, municipal electric
utilities, and public power districts in the region chose not to
develop electric generation development but rather joined with the
federal government in a partnership under the Flood Control Act of
1944.
Transfer of the Bureau's hydropower generation could seriously
threaten the financial and operational viability of the federal power
program. Federal firm power customers would be stunned to find that,
after paying for 100% of the hydropower costs of a project
(construction and operations and maintenance), and after paying
hydropower's allocated share of joint costs, and after paying roughly
80% of the construction costs of Bureau irrigation projects, and after
subsidizing power rates to Bureau irrigation projects that the
hydropower generation is to be transferred to a third party. In fact,
under the terms of the legislation, federal firm power customers would
not even be eligible to purchase those assets, unless the project
beneficiaries, i.e. the irrigation project, agreed.
Mid-West believes that Congress should provide specific direction
to the Bureau to involve the Power Marketing Administration and their
affected power customers as fully participating parties in any
negotiations relating to federal hydropower facilities and operations
at Bureau multi-purpose projects. Further, Mid-West suggests that the
Power Marketing Administrations and their customers should be consulted
while criteria that provide a clear road map on how to treat an
enormously complicated and sensitive issue are developed.
Thank you for the opportunity to provide written testimony to the
Committee on these important issues. We stand ready to respond to any
questions.
______
Statement of Walter J. Bishop, General Manager, Contra Costa
Water District
The Contra Costa Water District (CCWD) appreciates the opportunity
to submit testimony in support of S. 3798 introduced by Senator Dianne
Feinstein with a request that it be amended to include an additional
provision to address an issue associated with O&M costs for the Folsom
South Canal, the Freeport Project and related Central Valley Project
(CVP) facilities. The language of S. 3798 regarding the deferral of
capital costs on the Folsom South Canal addresses only part of the
inequitable allocation of costs associated with the operation of this
facility. While the bill appropriately deals with relieving East Bay
Municipal Utility District (EBMUD), Sacramento Municipal Utility
District (SMUD) and Santa Clara Valley Water District (SCVWD) of
capital costs for the Folsom South Canal, it does not deal with the
allocation of annual Operations and Maintenance (O&M) costs for EBMUD,
which are now being paid by other Central Valley Project Municipal &
Industrial (M&I) contractors.
This was an important issue in the CCWD/EBMUD Freeport Settlement
Agreement. Specifically, the settlement agreement between the Freeport
partners and CCWD in Paragraph 18 states the following:
``18. The parties will work together immediately after
execution of this Settlement Agreement on Federal Legislation
to:
A. Increase Folsom South Canal Deferred Use to reflect actual
municipal and industrial (M&I) use and capacity needs (similar
to Sly Park and Sugar Pine). Revise M&I conveyance cost pool to
realign cost to reflect repayment obligation for contractors on
the basis of percentage of individual facility use.
B. Revise M&I conveyance cost pool to realign cost to reflect
repayment obligation for contractors on the basis of percentage
of individual facility use.
C. Include the concept of a ``stand-by'' charge in the
current evaluation and update of the Interim M&I Rate Policy.''
We are disappointed that all three of the agreed to cost allocation
issues associated with the Freeport Agreement are not addressed by this
legislation. It has been estimated that without the implementation of
an O&M stand-by charge assessed to the sponsors of the Freeport
Project, over the term of the current contract other CVP M&I
contractors will be unfairly assessed over $25 million in Folsom South
Canal and related CVP facilities O&M charges.
In an effort to constructively address CCWD's concerns consistent
with the settlement agreement and enable our District to actively
support the bill, we respectfully provide the following specific
amendment language and request that it be considered for inclusion in
the bill at markup:
The Secretary of the Interior shall establish a ``stand-by''
charge for the East Bay Municipal Utility District consistent
with the Settlement and General Release Agreement between
Contra Costa Water District and Freeport Regional Water
Authority, East Bay Municipal Utility District, Sacramento
County Water Agency executed in January 2004. The ``stand-by''
charge shall contribute toward the annual operations and
maintenance expenditures of the Central Valley Project
allocated to the Central Valley Project municipal and
industrial water contractors for repayment. The ``stand-by''
charge shall be implemented in the 2008 Central Valley Project
rate year beginning March 1, 2008.
We believe that the inclusion of this language in federal
legislation will bring to a conclusion the successful implementation of
the Freeport settlement agreement. We have reviewed the Freeport
settlement agreement and have been unable to identify any term or
condition that is either not already completed, or near completed,
except for the assurances described in Paragraph 18 (A-C). In fact,
after the history of more than six years of conflict on negotiating
resolution to the litigation on the water supply and water quality
impacts of the Freeport Project, implementing the settlement agreement
to date has been a model of interagency cooperation. Our respective
Districts have completed the design of the Mokelumne pipeline and Los
Vaqueros Pipeline Intertie Project and awarded the construction
contract to complete that connection. The property rights necessary for
the Intertie Project have been exchanged, the operations and
maintenance agreement has been developed and is near completion. With
the passage of legislation which addresses all three of the outstanding
cost allocation issues raised in the Freeport Settlement Agreement, all
components of the agreement will have been successfully accomplished.
Thank you.
______
Statement of Tage I. Flint, General Manager and CEO, Weber Basin
Water Conservancy District
The Weber Basin Water Conservancy District (District) appreciates
this opportunity to present written testimony in support of S. 1811 to
authorize a feasibility study to enlarge the Arthur V. Watkins dam. The
District was created in 1950 to serve as the local sponsor to operate,
maintain and repay the U.S. Bureau of Reclamation's (USBR) Weber Basin
Project (Project). The District is a regional water-supply agency,
which develops and supplies both urban and agriculture water to lands
and municipalities within Weber Davis, Morgan, Summit and part of Box
Elder Counties. These areas are experiencing explosive growth rates.
Utah as a whole grew nearly 30 percent in the last decade. Some urban
areas are growing at a rate of double digits per year. Utah, being the
second driest state in the nation, with an average annual precipitation
of only 13 inches per year, faces unique challenges with inadequate
existing water supplies compounded with high growth rates and widely
varying annual precipitation.
The USBR has prepared an assessment of where existing water
supplies are likely to be inadequate to meet water demands for farms,
ranches, cities, recreation and the environment over the next 25 years.
The greater Wasatch Front areas (including Davis, Summit and Weber
Counties) were identified by the USBR as to where the next crisis over
water may occur. This conflict potential was identified as ``highly
likely'', the highest potential on the scale.
The Arthur V. Watkins Dam, Willard Bay Reservoir, (Willard Bay) a
major Project feature, was constructed in four planned phases. The
first three phases were constructed between 1957 and 1964 and the
fourth phase occurred between 1989 and 1990. Willard Bay is a vital
water source for the Project. It stores and regulates winter power
releases, surplus high flows originating below the upstream reservoirs,
upstream spills, fish releases, and return flow from higher diversions.
These flows are diverted at the Slaterville Diversion Dam built on the
Weber River, and travel through the Willard gravity canal to Willard
Bay.
Willard Bay is a multiple use reservoir providing water for: a)
irrigation of approximately 190,000 acres of project lands, b)
municipal and industrial water for a growing population of over 500,000
people, c) recreation; Willard Bay has one of the very highest use
rates for recreation in the state of Utah, and d) fish and wildlife
including the Harold S. Crane and Ogden Bay Water Fowl Management
Areas.
Currently, the Willard Bay water rights (Utah Water Right Number
35-831) are approved at 250,000 Acre Feet per year. However, Willard
Bay was constructed to capture and store only 215,000 Acre Feet. The
difference of 35,000 Acre Feet could be stored and utilized in an
enlarged Willard Bay. Additional storage capacity is needed to utilize
the full Willard Bay water right. In addition, since the Weber Basin
Project has already received Warren Act Authority to store non project
water in an enlarged Willard Bay facility to better manage and
coordinate water deliveries. Because of the large surface area of the
reservoir, the additional storage capacity can be achieved by adding
just a few feet to the height of the dam.
The most recent drought cycle demonstrated the absolute reliance
the District has on Willard Bay water to bridge between prolonged
drought cycles. In each of the last five drought years, Willard Bay
levels were lowered and used. In 2004, the water level was so low that
extensive dredging was required to access and pump practically all the
stored water. The reservoir was drawn down to only 10 percent of its
capacity.
In order to continue serving water to the growing population of the
District and to help bridge the certain reality of future droughts,
additional stored water in Willard Bay is vital. A study is recommended
to investigate the feasibility of enlarging Willard Bay, Utah to
provide additional water for the Project to fulfill the purposes for
which the Project was authorized.