[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
 OVERSIGHT HEARING ON BUREAU OF RECLAMATION FUNDING OPTIONS FOR WATER 
    PROJECT CONSTRUCTION, ENHANCEMENT, REHABILITATION AND MITIGATION

=======================================================================

                           OVERSIGHT HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   on

                     BOR FUNDING FOR WATER PROJECTS

                               __________

                      MAY 6, 1997--WASHINGTON, DC

                               __________

                           Serial No. 105-31

                               __________

           Printed for the use of the Committee on Resources


                                


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                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                EDWARD J. MARKEY, Massachusetts
JIM SAXTON, New Jersey               NICK J. RAHALL II, West Virginia
ELTON GALLEGLY, California           BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee       DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado                PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California        ENI F.H. FALEOMAVAEGA, American 
WAYNE T. GILCHREST, Maryland             Samoa
KEN CALVERT, California              NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California         SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming               OWEN B. PICKETT, Virginia
HELEN CHENOWETH, Idaho               FRANK PALLONE, Jr., New Jersey
LINDA SMITH, Washington              CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     CARLOS A. ROMERO-BARCELO, Puerto 
WALTER B. JONES, Jr., North              Rico
    Carolina                         MAURICE D. HINCHEY, New York
WILLIAM M. (MAC) THORNBERRY, Texas   ROBERT A. UNDERWOOD, Guam
JOHN SHADEGG, Arizona                SAM FARR, California
JOHN E. ENSIGN, Nevada               PATRICK J. KENNEDY, Rhode Island
ROBERT F. SMITH, Oregon              ADAM SMITH, Washington
CHRIS CANNON, Utah                   WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   CHRIS JOHN, Louisiana
JOHN PETERSON, Pennsylvania          DONNA CHRISTIAN-GREEN, Virgin 
RICK HILL, Montana                       Islands
BOB SCHAFFER, Colorado               RON KIND, Wisconsin
JIM GIBBONS, Nevada                  LLOYD DOGGETT, Texas
MICHAEL D. CRAPO, Idaho

                     Lloyd A. Jones, Chief of Staff
                   Elizabeth Megginson, Chief Counsel
              Christine Kennedy, Chief Clerk/Administrator
                John Lawrence, Democratic Staff Director

                                 ------                                

               Subcommittee on Water and Power Resources

                JOHN T. DOOLITTLE, California, Chairman
KEN CALVERT, California              PETER A. DeFAZIO, Oregon
RICHARD W. POMBO, California         GEORGE MILLER, California
HELEN CHENOWETH, Idaho               OWEN B. PICKETT, Virginia
LINDA SMITH, Washington              CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     SAM FARR, California
WILLIAM M. (MAC) THORNBERRY, Texas   ADAM SMITH, Washington
JOHN B. SHADEGG, Arizona             RON KIND, Wisconsin
JOHN E. ENSIGN, Nevada               LLOYD DOGGETT, Texas
ROBERT F. SMITH, Oregon              ---------- ----------
CHRIS CANNON, Utah                   ---------- ----------
MICHAEL D. CRAPO, Idaho

                  Robert Faber, Staff Director/Counsel
                    Valerie West, Professional Staff
                     Steve Lanich, Democratic Staff


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held May 6, 1997.........................................     1

Statement of Members:
    Doolittle, Hon. John T., a U.S. Representative from 
      California; and Chairman, Subcommittee on Water and Power..     1

Statements of witnesses:
    Cody, Betsy A., Specialist in Natural Resources Policy, 
      Congressional Research Service.............................     7
    Donnelly, Thomas F., Executive Vice President, National Water 
      Resources Association......................................    27
    Flicker, Eric L., Vice President, American Consulting 
      Engineers Council..........................................    25
    Martinez, Hon. Eluid L., Commissioner of Reclamation, 
      Department of the Interior.................................     3
    McCollom, David C., General Manager, Olivenhain Municipal 
      Water District.............................................    29
    Rezendes, Victor S., Director, Energy, Resources, and Science 
      Issues, U.S. General Accounting Office.....................     5
    Smith, James N., Executive Director, Council of 
      Infrastructure Financing Authorities.......................    24

Additional material supplied:
    Cody, Betsy A., Specialist in Natural Resources Policy, 
      Congressional Research Service, prepared statement of......    53
        Charts...................................................    00
    Donnelly, Thomas F., Executive Vice President, National Water 
      Resources Association, prepared statement of...............    87
    Flicker, Eric L., Vice President, American Consulting 
      Engineers Council, prepared statement of...................    65
    Jamison, Warren L., Manager, Garrison Diversion Conservancy 
      District, prepared statement of............................   102
    Libeu, Larry, Deputy Assistant General Manager, Eastern 
      Municipal Water District, prepared statement of............   104
    Martinez, Hon. Eluid L., Commissioner of Reclamation, 
      Department of the Interior, prepared statement of..........    38
    McCollom, David C., General Manager, Olivenhain Municipal 
      Water District, prepared statement of......................    97
    Rezendes, Victor S., Director, Energy, Resources, and Science 
      Issues, U.S. General Accounting Office, prepared statement 
      of.........................................................    43
    Smith, James N., Executive Director, Council of 
      Infrastructure Financing Authorities, prepared statement of    60


 OVERSIGHT HEARING ON BUREAU OF RECLAMATION FUNDING OPTIONS FOR WATER 
    PROJECT CONSTRUCTION, ENHANCEMENT, REHABILITATION AND MITIGATION

                              ----------                              


                          TUESDAY, MAY 6, 1997

                  House of Representatives,
                   Subcommittee on Water and Power,
                                    Committee on Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:02 p.m., in 
room 1324, Longworth House Office Building, Hon. John T. 
Doolittle (Chairman of the Subcommittee) presiding.

STATEMENT OF HON. JOHN T. DOOLITTLE, A U.S. REPRESENTATIVE FROM 
   CALIFORNIA; AND CHAIRMAN, SUBCOMMITTEE ON WATER AND POWER

    Mr. Doolittle. The Subcommittee on Water and Power will 
come to order. The Subcommittee is meeting today to hear 
testimony concerning funding options for Bureau of Reclamation 
projects. I would like to welcome our witnesses here today. 
Since the beginning of this century the Federal Government has 
played a major role in the development of water resources in 
the Western United States.
    The Bureau of Reclamation was created by the Reclamation 
Act of 1902 to reclaim arid and semiarid lands. Over the past 
95 years, the Federal Government has invested more than $16 
billion in reclamation projects, 80 percent of which is subject 
to repayment to the U.S. Treasury.
    The purpose of this hearing is to explore various funding 
mechanisms available to help finance reclamation projects in 
the future. The witnesses have been asked to address a wide 
range of funding options, including traditional repayment 
programs, modifying the existing Small Loan Program, loan 
guarantees, grants, revolving funds, and the increased use of 
private capital.
    Today we stand at a crossroads with two opposing forces in 
view. There is a need to expand and improve our existing water 
supply system to meet agricultural, urban, rural, tribal and 
environmental needs. At the same time, we must find ways in 
every government program to reduce costs as we move toward a 
balanced budget.
    The Congress is determined to eliminate the Federal budget 
deficit, and we must find ways in our area of responsibility to 
reach that goal. In a recent draft of its Strategic Plan, the 
Bureau stated generically that ``there is no `new' water to 
develop, no new dams to store water for the dry season and 
little groundwater resources to pump from the earth.''
    What a tragedy that the Federal Government's primary water 
supply agency has no greater vision. While it remains to be 
seen what role the Bureau and the Federal Government should 
play, we certainly do not, as a nation, lack opportunities to 
develop new water. There are onstream and offstream reservoirs 
under construction and available to be built.
    There are groundwater basins in need of recharge to hold 
water resources. There are emerging technologies that make it 
economical to recycle our water and to convert ocean water to 
freshwater. And every year, there are floods throughout the 
west that currently destroy homes, lives, and the environment 
and which could be harnessed to meet productive needs.
    The challenge we face today is how to encourage the 
development and management of water resources in an 
economically responsible manner. If the purpose of future 
developments is to meet general public benefits such as 
environmental enhancement or Indian water settlements or if it 
is to avoid Federal costs for disaster relief, there is, it 
seems to me, the need to consider a higher Federal cost-share.
    If the purpose is to meet growing needs for water to 
support food production or urban needs we can look to the water 
users to provide a greater portion of the funding. Indeed, as 
we will hear from some of our witnesses, we can use innovative 
ways to finance these projects. If we design these programs to 
maximize the use of the private sector in financing, 
constructing, and managing future water resource projects, we 
can greatly reduce the cost and the involvement of the Federal 
Government in many of these endeavors.
    Historically, the Reclamation Program does not flow from a 
single organic Federal statute. There have been various acts 
since the 1902 Reclamation Act which have shaped the program. 
Since 1939, every project has been individually authorized with 
its own terms and conditions.
    Although the authorizing language in each was developed 
with careful consideration of the project beneficiaries in 
mind, little was done to step back and look at the overall 
trend or to anticipate future needs and requests. With this 
hearing, we are going to begin looking to the future and 
assessing new options for funding future requests.
    In recent years, the Subcommittee has not considered 
requests for the traditional multi-purpose projects that 
deliver irrigation water. Today, the Subcommittee is being 
asked to authorize rural water supply systems, water delivery 
systems for Indian reservations, environmental enhancement/
mitigation projects for existing Reclamation projects, and 
water reclamation and reuse facilities.
    I do not believe that the seemingly conflicting goals of 
enhanced water supply and cost control present insurmountable 
obstacles. Rather, they represent reasonable parameters and 
provide attainable goals which should help us develop a 
blueprint for how the government will participate in meeting 
these needs.
    New water development has the potential to be used to 
enhance the water quality and environmental resources in the 
west. How we go about designing and financing these projects 
will be a test of the Federal Government's ability to 
transition to a smarter, more efficient, less costly mode of 
operation. After the ranking member has a chance to make his 
statement, I will look forward to hearing from the witnesses. 
Now let me invite Mr. Pickett, if he would like to make a 
statement.
    Mr. Pickett. Mr. Chairman, I do not have an opening 
statement.
    Mr. Doolittle. OK. Let me ask our first panel to come 
forward. If you will come forward and remain standing for just 
a minute, please. I do want to make this observation. Before we 
call upon our witnesses, I would like to indicate that since 
the intent of the hearing is to look at both the historic 
funding arrangements as well as to consider innovative ways to 
fund or encourage such projects in the future, we will be 
hearing from witnesses both inside and outside the Reclamation 
Program.
    As such, with some of the witnesses we are only looking to 
them to answer questions limited to private, State and other 
Federal programs with which they are familiar. We have as 
witnesses today the Honorable Eluid L. Martinez, Commissioner 
of Reclamation; Ms. Betsy A. Cody, Specialist in Natural 
Resources Policy, Congressional Research Service; and Mr. 
Victor S. Rezendes, Director, Energy, Resources, and Science 
Issues, U.S. General Accounting Office.
    Would you please raise your hands and take the oath?
    [Witnesses sworn.]
    Mr. Doolittle. Thank you. Each answered in the affirmative. 
We welcome you here today for your testimony and, Commissioner, 
we will recognize you and begin this panel.

     STATEMENT OF HON. ELUID L. MARTINEZ, COMMISSIONER OF 
            RECLAMATION, DEPARTMENT OF THE INTERIOR

    Mr. Martinez. Thank you, Mr. Chairman, members of the 
Subcommittee, thank you for the invitation to discuss funding 
and cost-sharing options for the Bureau of Reclamation. Given 
our mutual interest in reducing costs and balancing the budget, 
this hearing is timely.
    With your permission I would like to summarize my remarks 
and have the full text of my prepared statement entered into 
the hearing record. Since fiscal year 1985 Reclamation's 
construction budget has declined by more than one-half in real 
terms. Over the same period, appropriations for operation and 
maintenance activities have nearly doubled.
    For fiscal 1988 about 60 percent of Reclamation's budget 
requested is for the completion of ongoing projects and the 
promotion of an integrated approach to water management. The 
remaining 40 percent is for operation, maintenance, and 
rehabilitation of existing infrastructure.
    Now I would like to turn to the specific items mentioned in 
your letter of information beginning with cost sharing for 
traditional projects. While Reclamation has not established a 
hard and fast rule for the required level of cost sharing, in 
recent years Reclamation has advocated that beneficiaries pay 
at least 35 percent of the nominal cost for traditional 
Reclamation projects.
    A portion of the cost sharing can be provided up front in 
cash or in-kind services. With respect to the Small Reclamation 
Projects Act Loan Program, loan guarantees, and the 
rehabilitation and betterment program, Reclamation believes 
that in this budget climate the private sector may be better 
equipped than the Federal Government to provide financing for 
these projects.
    In 1995 the Administration recommended in the National 
Performance Review that the Small Reclamation Projects Act Loan 
Program should be phased out. Since then, Congress has provided 
only limited funding needed to complete grandfathered projects. 
As I previously testified, the Administration is opposed to 
loan guarantees and the authorization of a new comprehensive 
program.
    However, I do believe that there might be meritorious small 
reclamation projects and all projects should receive 
authorization on an individual basis rather than through 
generic legislation. Reclamation is working hard to cut costs 
and adapt stringent physical constraints within our budget 
limitations.
    However, we are prepared to discuss options for the water 
users and interested organizations and commerce and we intend 
to continue our dialog to see what, if any, alternatives may 
exist for this particular program. Except as related to dam 
safety, Dam Reclamation is no longer seeking congressional 
appropriations to replace, rehabilitate or renovate facilities 
related to the reimbursable functions of our projects.
    In the event the water district cannot obtain private 
financing Reclamation will evaluate its options to address 
these problems. With respect to dam safety, the Reclamation 
Safety of Dams Act requires that 15 percent of the costs be 
reimbursable. Our policies require repayment of dam safety 
costs allocated to reimbursable project purposes such as 
irrigation, municipal and industrial uses and hydro power.
    These reimbursable costs are paid by the beneficiaries of 
the corrective action within 25 years. Last year upon becoming 
Commissioner I commissioned a peer review team consisting of 
dam safety professionals from outside the Department of the 
Interior to review the Department's Dam Safety Program. That 
team has issued its findings and recommendations and a copy of 
that report has been provided to Congress.
    The report basically said in addition to supplementing 
Federal funds the reimbursable policies of both the Safety of 
Dams Program and the operation and maintenance programs of 
Reclamation provide a useful check for the water districts on 
the amount of money and expenditures that Reclamation has 
undertaken for these programs.
    Reclamation is reviewing the findings and recommendations 
of the peer review team. In the future, Mr. Chairman, I expect 
to come before Congress to request an increase in the cost 
ceiling authorized by the Dam Safety Program and will address 
the issue of cost sharing for dam safety in that context.
    Your letter of invitation also asked me to discuss the 
Bureau's position regarding appropriate cost sharing for rural 
water distribution projects. Longstanding Reclamation policy 
for municipal, rural, and industrial water supply projects 
requires that non-Federal interests pay, at current interest 
rates, 100 percent of the cost of the projects.
    Other Federal agencies such as the Department of 
Agriculture might be a more appropriate agency for the project 
sponsors to seek for funding. In the past the Administration 
has supported rural water supply systems where the needs of the 
Indian communities justified Federal involvement and 
Reclamation in my opinion should be involved with Federal 
funding as needed to encourage innovation or otherwise serve a 
basic national purpose.
    Finally, I would like to discuss water reuse projects. Last 
year, the Congress in Public Law 104-266 authorized 16 new 
water reclamation and reuse projects, in addition to the four 
projects that Reclamation is already funding under the 
authority of Public Law 102-575. There is a growing demand to 
devote a greater portion of Reclamation's budget to water reuse 
projects.
    With fewer Federal dollars available Reclamation will have 
to make difficult choices even to fund the most deserving 
projects. Let me put this in context. Reclamation's overall 
budget request for fiscal year 1988 is about $764 million. If 
all authorized wastewater reuse projects were funded at optimum 
levels in fiscal year 99 Reclamation estimates that $130 
million would be required.
    An estimated $550 million would be required to fund all 
authorized projects to the year 2005. Given these budget 
realities Reclamation has adopted an internal self-imposed cap 
of about $30 million annually in its budget request for 
wastewater reuse projects. I would like to commend the 
Congress, especially this Subcommittee for taking some 
important steps in Public Law 104-266 to alleviate some 
problems, in particular, the feasibility study and financial 
capability requirements to improve the Federal Government's 
ability to control expenses and ensure that Federal funds are 
used appropriately.
    Nevertheless, there is a need to establish criteria and 
prioritize projects for funding to determine what constitutes a 
sponsor's financial capability and to develop requirements for 
feasibility studies. I have appointed a water recycling team 
and that team has reviewed Reclamation's Program and developed 
recommendations on how it intends to address these issues.
    Last year the water recycling team held a series of public 
meetings where individuals presented their ideas. Attendees 
suggested that Reclamation explore alternative funding 
mechanisms such as competitive annual grants.
    Reclamation is hopeful that the team will provide 
additional insight based on public participation that will be 
useful to this committee and to Reclamation in our efforts to 
fund water recycling projects. Mr. Chairman, that concludes my 
prepared remarks. I would be pleased to answer any questions.
    [Statement of Mr. Martinez may be found at end of hearing.]
    Mr. Doolittle. Thank you. Mr. Rezendes, you are recognized 
for your testimony.

 STATEMENT OF victor s. rezendes, director, energy, resources, 
       and science issues, u.s. general accounting office

    Mr. Rezendes. Thank you, Mr. Chairman. It is a pleasure to 
be here. I have two basic points I want to make today. One is 
talk a little bit about the evolution of the Reclamation laws 
and second, talk a little bit about water project cost 
recovery. The Federal Government initially got involved with 
Reclamation with the passage of the Reclamation Act of 1902. 
Basically that act was to fund irrigation projects in the west 
but it was also basically a development pact.
    It was intended to settle the West. And right from the 
outset basically the intent was for the program to be self-
sufficient. No appropriation funds were intended to be used pro 
rata. A revolving fund was set up using moneys from the sale of 
Federal lands. Once loans were made and paid back, additional 
loans would be made for additional irrigation projects out of 
that revolving fund.
    Also, from the outset, the Federal Government chose to 
forego any interest on these loans. The notion was they wanted 
to settle the West and the government felt content with just 
receiving the payments for principal in lieu of giving up the 
interest for the farmers to settle the West.
    Early on though it was also very clear that both the cost 
of farming and the cost of building these water projects was 
more than anybody expected. Starting in around 1906 came a 
series of pieces of legislation to provide not only relief to 
farmers in terms of their ability to pay but also extended over 
various time periods the requirement on pay back.
    Repayment went from 10 years, to 20 years, to 40 years. 
Legislation also provided periodic relief to farmers in the 
form of charge-offs and provided that funds obtained from the 
use of water to generate electricity could offset some of the 
costs of the projects.
    Probably 1939 was the most significant year. The Congress 
fundamentally changed the program. At that point all projects 
were funded with appropriated funds rather than through the 
revolving fund. Congress also established multi-purpose 
projects, basically municipal water, flood control, that sort 
of thing, and allocated the cost among the project uses so they 
could all be judged individually in terms of the economic 
viability. They also changed the payment system for the 
irrigators by providing for both a variable annual payment 
based on crop returns as well as providing an interest-free 
development period of up to 10 years beyond the 40 years 
already established.
    The last piece of legislation I want to talk about was 
enacted in 1982 which was the Reclamation Reform Act. That was 
the first time Congress established the notion of full cost 
recovery. The legislation required, for specific leased acres, 
over 960 acres, full recovery of the cost of irrigation. For 
the first time Congress charged not only the cost of 
construction but also the operation and maintenance as well as 
the interest cost for those specific uses.
    I now want to call your attention to appendix I of my 
testimony and just talk a little bit about how these costs are 
defined in terms of reimbursable and nonreimbursable and who 
pays them. I will quickly walk you through that. Basically you 
see on the top of that chart it shows reimbursable construction 
costs. In essence, irrigation pays the cost of construction 
based on their ability to pay but is relieved of any interest 
payment. The next is municipal and industrial users. They pay 
the cost of construction plus interest during construction and 
interest during the repayment process.
    The last one is general power generation. They pay similar 
to municipal and industrial users construction plus interest 
but they also pay a good part of the irrigation costs that the 
irrigators, the farmers, cannot pay.
    The bottom of the chart shows nonreimbursable costs. Those 
are pretty much construction costs that are defined as national 
in scope. They include things like fish and wildlife purposes, 
recreation and flood control. Historically, the Federal 
Government has borne the cost of those aspects of projects.
    Through the end of fiscal year 1994, there were 133 
projects that had some sort of irrigation involved with them 
and the total cost was about $22 billion. Of that $22 billion, 
roughly about 77 percent is in the reimbursable cost category 
and 23 percent is in the nonreimbursable. That is probably a 
good place for me to stop and turn it over to Ms. Cody who is 
going to bring you up to date on the most recent legislation.
    [Statement of Mr. Rezendes may be found at end of hearing.]
    Mr. Doolittle. Thank you. Ms. Cody, you are recognized.

  STATEMENT OF BETSY A. CODY, SPECIALIST IN NATURAL RESOURCES 
             POLICY, CONGRESSIONAL RESEARCH SERVICE

    Ms. Cody. Thank you. My testimony focuses on repayment 
obligations established in law for capital projects authorized 
or modified since 1979. In particular, I will discuss the 
projects authorized over the last two decades and the breakdown 
between reimbursable and nonreimbursable costs. There are two 
points I would like to make before summarizing my analysis.
    First, it appears that projects authorized or modified 
within the last 18 years that are similar to traditional 
Reclamation projects have generally followed the typical 
repayment pattern that GAO has described. Many projects 
authorized in recent years have had a higher proportion of 
nonreimbursable costs such as for flood control, fish and 
wildlife and Indian water right settlement purposes.
    This may raise the question of whether Federal policy has 
changed regarding reimbursable costs. My review does not find 
any major alteration in overall policy. However, there are some 
instances where Congress has departed from past reimbursement 
procedures, particularly for rural water supply projects.
    Based on information gathered from the Bureau of 
Reclamation, Congress has authorized at least 55 projects since 
1979. I have placed these authorizations in a table 
accompanying my testimony which you should find on page 7. Of 
the 55 projects authorized that I analyzed, 24 percent were for 
the relatively traditional multi-purpose/irrigation projects or 
project modifications, 7 percent were for rural water supply 
systems, 36 percent were for reclamation water reuse and 
recycling, also known as Title XVI projects, 18 percent were 
for water quality, fish and wildlife, or conservation purposes, 
and 15 percent were for Indian water rights settlement.
    The repayment obligations authorized for these projects and 
modifications vary greatly. They vary depending both on 
reimbursement provisions established in law and upon the 
percentage of project costs allocated to non-reimbursable 
purposes such as flood control, fish and wildlife, Indian water 
rights.
    For the traditional multi-purpose projects, repayment 
obligations range from 0 percent non-reimbursable to 100 
percent non-reimbursable. The two totally non-reimbursable 
projects are flood control projects, which under reclamation 
law are typically non-reimbursable. Outside of these two 
projects, reimbursement responsibilities ranged from 33 percent 
to 93 percent with the average being 79 percent reimbursable. 
This is very close to the 77 percent average reimbursable rate 
that GAO estimated for the 133 projects it looked at since 
1902.
    When the two flood control projects are considered, the 
average comes to 66 percent, still roughly in the same 
ballpark. For the rural water supply projects, the non-
reimbursable component is higher than typical for traditional 
reclamation projects. Here the non-reimbursable share ranged 
from 75 percent to 85 percent with one exception, the Mni 
Wiconi project in South Dakota.
    In each case here, Congress specified the reimbursement 
ratio in the authorizing legislation. These projects differ 
from the more traditional reclamation projects in that they 
focus on municipal and industrial water supplies for rural 
areas with specific water quality and quantity concerns.
    For the reclamation water recycling and reuse projects the 
non-reimbursable component established in law is generally 25 
percent. Again, this ratio is similar to the ratio that has 
evolved over time for the traditional projects. However, the 
financing arrangements, as have been described by GAO, are 
quite different. Instead of financing and building the projects 
up front and requiring repayment of reimbursable costs through 
contract the Federal Government funds only a portion of project 
costs with the rest shared by local participants. Essentially 
the Federal Government funds the 25 percent non-reimbursable 
share as a grant.
    For the water quality/fish and wildlife, and conservation 
projects, the non-reimbursable costs ranged from 35 percent to 
100 percent. All of the projects in this category outside of 
California have been 100 percent non-reimbursable by law. All 
of the California projects, however, as authorized under CVPIA 
have a significant reimbursable cost share, some paid by the 
State, some paid by local project users. I should note, 
however, that some of these costs may be offset by payments in 
the CVP Restoration Fund.
    Finally, the Indian water rights settlement projects are 
all 100 percent non-reimbursable (although, there is local 
cost-share with some). Unlike other reclamation projects, both 
new and old, these projects have been authorized as part of 
settlement agreements between tribes, the Federal Government, 
and other interested parties. Therefore, they do not really 
fall within the realm of traditional reclamation law and 
consequently are not directly comparable to other reclamation 
projects.
    In conclusion, it appears that projects authorized or 
modified in the last 18 years have followed a typical repayment 
pattern, with a few exceptions, most notably three of the four 
rural water supply projects have a significantly higher non-
reimbursable share than has been typical for other industrial 
and water supply projects attached to the traditional 
irrigation projects. However, these projects in total represent 
less than 7 percent of all the projects analyzed since 1979.
    Most of the rest of the projects where the non-reimbursable 
cost exceeds 50 percent involve project purposes that Congress 
has declared as non-reimbursable, flood control, fish and 
wildlife, water quality, and Indian water rights settlement. In 
other words, the reimbursement provisions generally have not 
changed, rather, the typically reimbursable functions of these 
projects as a percent of total project functions, have 
declined. Thank you.
    [Statement of Ms. Cody may be found at end of hearing.]
    Mr. Doolittle. Commissioner, in your testimony you state 
that Reclamation no longer requests congressional 
appropriations to replace rehabilitative facilities related to 
reimbursable functions in a project with the exception of dam 
safety. And yet the government, Reclamation, hold title to 
these projects. Does that strike you as paradoxical?
    Mr. Martinez. I think on the face of it, it looks like an 
inconsistency. But we spent about 40 percent of our budget on 
rehabilitation, maintenance and operation. Reclamation 
continues to expend moneys to make sure that our facilities are 
kept up in a good operational status.
    As I understand the betterment and rehabilitation activity 
that we are talking about was a separate act. It enabled moneys 
to be used by districts for projects or for work that was not 
funded under regular operation and maintenance programs. In the 
two years that I have been involved with the Bureau of 
Reclamation I have not had an irrigation district or 
representative of irrigation districts raise concern to me that 
they have not been able to address rehabilitation and 
maintenance on district properties and government properties as 
a result of the Reclamation not requesting funds for this 
program.
    So I think we are talking about two distinct efforts by 
Reclamation. We are talking about this program versus operation 
and maintenance for our facilities.
    Mr. Doolittle. You went on to state that in the event 
private financing could not be obtained, Reclamation will need 
to evaluate its options, including revision of operating 
standards. Is that then telling us that it is going to be the 
Administration's policy to allow the infrastructure to 
deteriorate to the point that operations would have to be 
modified rather than to seek the necessary appropriated funds 
to rehabilitate these facilities?
    Mr. Martinez. I think we need to put this in context. If 
what we are talking about is an internal water distribution 
system within a district facility that delivers water from a 
canal to another canal and to the extent that that facility 
might deteriorate because the district is not maintaining that 
facility then it might be possible that if the district does 
not obtain financing of some sort and if the Federal Government 
does not provide financing that water might not be able to 
become available.
    And in that case the facility might be inoperable. But if 
we are looking at a facility such as a dam or a structure that 
has a national interest, I do not think it is in the Federal 
Government's best interest to let those kind of facilities 
deteriorate because of a lack of funding. Those are the kind of 
facilities that we would continue to make sure that they are 
adequately maintained if it comes to a situation where we had 
to come to Congress to get authorization. You have to look at 
the different facilities.
    Mr. Doolittle]. But for the ones you deemed to be the 
highest priority, you would not let them fall into disrepair 
but would come and seek appropriate funds if necessary?
    Mr. Martinez. That would be my recommendation.
    Mr. Doolittle. Mr. Flicker on the panel to come will state 
in his testimony that the Bureau of Reclamation no longer needs 
to do in-house engineering and in fact it is competing with the 
private sector to provide those services. Could you comment on 
that issue?
    I realize this is not your testimony, but I want to address 
that question to you, Commissioner. Mr. Flicker is going to 
testify in the next panel that the Bureau of Reclamation in-
house engineers are competing with the private sector to 
provide those services, apparently now competing both 
domestically as well as internationally. Could you comment on 
that?
    Mr. Martinez. That is an issue I am sensitive to. We have 
engineers in Denver that work on a cost reimbursable basis. 
They are primarily charged to provide engineering services to 
regional areas in the Bureau of Reclamation. There are 
instances where governmental entities such as cities and 
counties and States ask the Bureau of Reclamation because of 
their expertise to provide assistance.
    What I have told my engineers is I do not want them 
competing with the private sector and going out and soliciting 
business but if we have these entities that come to us and seek 
assistance and we can work out something that is in their best 
interest and our best interest we will proceed.
    We have an international arm in the Bureau of Reclamation 
and we have other countries that seek our assistance in certain 
areas but I think if you look at our record, and I will be glad 
to provide you the information, even Reclamation goes out to 
quite a few private entities seeking engineering services.
    Mr. Doolittle. Thank you. Mr. Dooley is recognized.
    Mr. Dooley. Thank you, Mr. Chairman. Thank all of you for 
attending. I guess, Mr. Martinez, just for a little bit of 
clarification in your statement you talked about how there has 
been a change in direction and allocation of funds with 
Reclamation which we all I think are fairly well aware of.
    You talk about, in one sentence you say that reflects the 
need to focus on the Federal funding on higher Federal 
priorities such as addressing adverse impacts of existing 
projects. You then go on to say Reclamation has organized this 
program so almost 40 percent of its fiscal year budget request 
is allocated to operation, maintenance, rehabilitation of the 
existing structure and the other 60 percent is for completion 
of ongoing projects and a promotion of an integrated approach 
to management of water.
    My question is what is the amount of the Bureau's budget 
that really is being allocated and indeed can you account for 
that that is allocated for addressing the adverse impacts of 
existing projects? I guess what I am looking at is 
environmental enhancement and do you have that figure that it 
also does not account for the reimbursable funding as we are 
doing with the CVPIA?
    Mr. Martinez. I am sorry, Mr. Dooley, I do not have that 
information handy but I will be glad to provide it to the 
committee and to you.
    Mr. Dooley. What I am a little interested in is we see the 
mission of the Bureau of Reclamation changing and that it is no 
longer being directed in terms of construction and new projects 
which the periods are quite evident even within your testimony 
is that the issue as it relates to reimbursable or 
nonreimbursable also appeared to be changing too because the 
issue of what is reimbursable really often times has been a 
function of who the primary beneficiary was and assuming that 
if the environmental enhancement would be more allocated as a 
side benefit are we seeing a change in a reduction in what we 
are expecting from reimbursable contributions that reflect what 
appears to be a traditional nonreimbursable function of the 
Bureau?
    Mr. Martinez. To the extent that our budget is increasing 
for addressing environmental issues, restoration issues and 
wetlands and to the extent that our budget has increased for 
operation and maintenance at facilities where there are 
nonreimbursable purposes then we would begin heading down the 
road toward situations where you would get less reimbursement 
for expenditures in our budget.
    Mr. Doolittle. Mr. Thornberry is recognized.
    Mr. Thornberry. Thank you, Mr. Chairman, and I appreciate 
your efforts and the interest in trying to update and modernize 
funding of Bureau of Reclamation projects. I listened to the 
testimony and cannot help but think the issues are not strictly 
funding issues because as you are well aware some of the 
difficulties that we have experienced in just trying to 
modernize and put some flexibility into the Bureau and getting 
them to follow the law are not funding issues but seemingly 
just common sense issues.
    I will not go into the details of what we have been trying 
to do. We talked to Commissioner Martinez about that before 
when he has been before this Subcommittee. It is not getting 
better. I think we can also see as evidence going back several 
years to Vice President Gore's reinventing government proposal 
where title transfers were part of what he suggested and 
encouraged.
    It does seem like if we could have title transfers it could 
free up resources and maybe look at other projects or more 
maintenance of existing projects. And as I understand it there 
has not been a single title transfer occurred since he first 
made that proposal. So from our perspective I think it is 
rather discouraging as to the Bureau's attitude toward putting 
more flexibility and modernization into the way that projects 
are funded or for that matter the operation and maintenance and 
rehabilitation of existing projects. It has been extremely 
difficult.
    I am going to ask Commissioner Martinez, are you going to 
have any title transfers this year? Where do we stand with 
that?
    Mr. Martinez. I think I testified last time that from my 
perspective I think we need to bring some of these to closure. 
I continue to work with the Administration to make sure we 
bring some of these to closure and I am hopeful that we will 
have some this session.
    Mr. Dooley. I think the difficulty, Mr. Chairman, as you 
know, is that in some of the negotiations so far have been drug 
out for years and in others there are just unbearable 
conditions that get put on by the Administration which has the 
effect that none occur.
    And so it is unfortunate. I think this is an area where the 
Federal Government could do more on behalf of the taxpayers and 
the people that are served but we seem to have a difficult time 
getting there and I certainly want to continue working with you 
to help move it along.
    Mr. Doolittle. Mr. Farr is recognized.
    Mr. Farr. Thank you very much, Mr. Chairman. I want to 
first of all thank you for having the hearing. I think this is 
one that this Congress needs to really focus on. It is kind of 
a misnomer that the Bureau of Reclamation reclaims all this 
water because my idea of reclaim is reuse and I think we ought 
to put more emphasis on it.
    I am a little bit disturbed because I am not sure which way 
your testimony wants to lead us. At one point you point out 
that you commend Congress for cutting out the small loan 
program and on the other part of your paper you say that there 
is a growing demand to devote a greater portion of the 
Reclamation budget to water reuse projects.
    How can we meet the demand which I think is an appropriate 
one, to use essentially very expensive water that we are 
cleaning up; sewage water that we are treating and move that 
treated water from dumping it in rivers and oceans to moving it 
to Reclamation. As you know, the area I represent in Salinas 
Valley has been a very successful project thanks to the 
Department, and frankly, thanks to the Department being able to 
grant the last large loan.
    These projects are going to be opening in the latter part 
of this year and it will be the largest amount of agricultural 
land in the United States that is being irrigated by reclaimed 
water. The point is that I do not find in the Bureau's new 
strategic plan under the reinventing government initiative any 
language regarding new projects which the Bureau intends to 
undertake regarding reuse of reclaimed water.
    And I would like to see us put more emphasis on that. Mr. 
Garamendi, when he was here on the CVPIA oversight hearing, 
discussed water that we needed in the Pajaro Valley. They have 
been on the list to get CVP water for a long, long time. They 
are not able to get it. And the question was how do you resolve 
this problem because you can't just drop that ball.
    So my point of interest here is to see what we can do to 
expedite the stand to get some moneys to those communities who 
really want to go to effective reuse for Reclamation projects.
    Mr. Martinez. Mr. Chairman, my personal perspective is that 
reclamation and reuse of these water resources is a good way to 
create for lack of a better word new water supply. What I am 
trying to point out here is that Reclamation has a budget to 
work with, $764 million, with competing interest.
    To the extent that we would aggressively fund wastewater 
reuse projects it indicates that in the next year we will need 
$130 million. The question is where are we going to get the 
$130 million? If we turn to our $764 million budget, this will 
impact our ability to continue to construct the projects that 
have been authorized.
    It will further complicate our ability to maintain and 
operate our system. The question is, if we are going to move 
forward on some of these initiatives how are we going to fund 
them?
    Mr. Farr. Well, exactly. The loan program seems to me a way 
to work that. I understand it was very cumbersome. It was too 
long. It took years and years to qualify for the loan and some 
of the loans were not paid back but if indeed when you say that 
reuse is the newest source of water and it is a high priority 
for you then why isn't there an emphasis in moving that 
priority into the fiscal arena as well?
    Mr. Martinez. I think my testimony in the past has 
indicated that it is my belief that the Small Projects 
Reclamation Loan Act as it currently exists has outlived its 
usefulness. I think that perhaps there might be a 
reformulation, from my personal perspective, a reformalization 
of that program that might allow Reclamation to fulfill its 
mission and I will continue to engage other parts of the 
Administration to try and see if we can move forward in that 
initiative.
    Mr. Farr. We need some leadership here. That is what I am 
asking. Where is the leadership to say that what you just 
stated, that this is the best new source of water. It might be 
it is all paid for because it is already in--you know, it is 
being collected and delivered to the households and businesses 
and it is being delivered back to its treatment plant.
    It is just a matter of upgrading those treatment plants and 
getting the distribution system in. It seems to me a very cost 
effective way of gaining new water and environmentally without 
any problems. But where is the leadership from the Bureau of 
Reclamation saying that this is going to be one of our agendas?
    Mr. Martinez. We are taking an aggressive approach to try 
and move these projects forward. The bottom line is that the 
demand for these programs is expensive. The Federal commitment 
on the four projects that have been authorized already and 
where construction is taking place in California requires a 
Federal commitment of over $300 million.
    Mr. Farr. And those were loan programs, they were not 
grants.
    Mr. Martinez. They were grants.
    Mr. Farr. Well, not the one that I am involved with. It was 
a loan.
    Mr. Martinez. Yes, the loan but these are--and I am talking 
about the wastewater reuse projects in California are grants. 
Over $300 million.
    Mr. Farr. And yet, excuse me, it turns out that your paper 
says you do not support the loan program, you are glad it is 
phased out and you would like to encourage the grants. See, I 
do not see where the leadership is coming from to try to get to 
move in that direction.
    Mr. Doolittle. Mrs. Chenoweth is recognized.
    Mrs. Chenoweth. Thank you, Mr. Chairman. Mr. Martinez, the 
Chairman in his opening remarks made reference to the recent 
draft as a strategic plan of the Bureau of Reclamation and I 
studied that plan also and I was pleased to see that the 
Chairman pointed out the fact the Bureau has said there is no 
new water and yet just two pages away you talk about acquiring 
more water espe-

cially for conservation practices in the movement of fish 
especially in the west. Where do you intend to get that water?
    Mr. Martinez. If I might try to put it in context. I think 
the GPRA plan basically says that we need to turn our attention 
away from the concept that we are going to provide new water 
resources by building water projects, building new dams, new 
reservoirs for two practical reasons. One is the expense of 
these projects, and second of all is the mood of the country.
    But if there are other forces to create additional water 
supply, wastewater reuse would be one source, water marketing 
would be another, water conservation or the improved management 
of water resources would be another. So in summary where we are 
headed is to make better use of the resource that we have 
developed to provide the needs out west rather than creating a 
new water supply project.
    Out west there is a tremendous amount of water underground 
that is saline. To the extent that we take the leadership in 
reclaiming saline water in a cost effective way it would be 
providing new resources. Wastewater reuse we just finished 
talking about. But those are expensive projects and my 
testimony indicates that with the Bureau of Reclamation's 
existing budget there is not enough money to fund all projects.
    On the 16 projects that have been authorized for 
construction for the next few years, they require almost half a 
billion dollars. I support these projects but I cannot support 
them at the expense of moving money from one part of my budget 
to another part because I got a commitment, other commitments, 
I have to live with.
    Mrs. Chenoweth. In your draft strategic plan you talk about 
acquisition or leasing of water rights and ways to improve 
environmental conditions and I found that beginning on page--
you also discuss it on page 2 of your testimony. How do you 
intend to finance this kind of acquisition and when and where 
did the Congress give the authority or confer the authorization 
to the Bureau for this kind of acquisition whether it be 
leasing of water rights or selling of storage rights?
    And then the second part of my question--the first part, 
where is the money going to come from, secondly, did Congress 
defer that on your Department? And, thirdly, isn't a storage 
right a contract obligation rather than a right that was 
somehow acquired by the Bureau to be able to sell or rent?
    Mr. Martinez. The authorization to use those kind of moneys 
would have to come from Congress. In the absence of a new 
allocation to the Bureau of Reclamation for those purposes, we 
would have to look within our existing resources and make 
recommendations as to how to best utilize those resources.
    And if the national priority to purchase water to address 
certain environmental concerns outweighs the use of the money 
for other purposes, we would be making those kind of 
recommendations to the Congress.
    With respect to the acquisition of water the one that comes 
to mind is the Thunder River Basin where based on the 
biological opinion issued by the National Marine Fisheries 
Service Reclamation is charged with acquiring water. We are 
acquiring it from willing sellers under Idaho law for the 
purpose of addressing fish con-

cerns. We have requested the appropriations in our budget and 
Congress has seen fit to appropriate the money to us.
    Mrs. Chenoweth. Thank you, Mr. Chairman. I have no more 
questions.
    Mr. Doolittle. Commissioner, how many in-house engineers 
does the Bureau employ?
    Mr. Martinez. I would be glad to provide that information 
to you but I would probably say that the Bureau of Reclamation 
is primarily an engineering organization.
    Mr. Doolittle. And yet you are abandoning the structural 
solutions in favor of non-structural, as I understand your 
testimony.
    Mr. Martinez. Well, we have a large infrastructure out west 
and it is imperatively important that we maintain an expertise, 
an engineering expertise, to maintain that infrastructure. So 
one of the things that I did when I became Commissioner is I 
created an in-house task force, to look at how we were going to 
be able to maintain an engineering capability to make sure that 
our facilities remained adequately maintained and sound 
replacements were made from an engineering standpoint. And we 
are not going to lose that expertise.
    Mr. Doolittle. So where there is a trend toward 
privatization going on all around the world, why couldn't you 
maintain that expertise largely through contracting out and 
terminating the in-house engineers that you have, retaining a 
few who you need to supervise the work of the contractor? I do 
not know how many hundreds you have but you have a lot, I 
presume.
    Mr. Martinez. Let me try to answer it from this 
perspective, Mr. Chairman. The Bureau of Reclamation at the 
height of its dam building in the 1960's had, I understand, 
about 35,000 employees. We have cut back in the last two years 
approximately 20 percent of our employees and we are reducing 
the number of engineers. We are hoping to maintain an adequate 
work force to address our needs. And we are down to about 6,000 
employees now.
    Mr. Doolittle. So you went from 35,000 in the 1960's to 
6,000 now?
    Mr. Martinez. About 6,000 now.
    Mr. Doolittle. And what percentage of those, and I realize 
you can submit the precise number for the record, but what you 
get, what percentage of the remaining employees are engineers?
    Mr. Martinez. I would venture to say--I would be happy to 
provide the information to you but in terms of overall 
percentages we probably have less engineers percentage wise now 
than we did back then but I will provide that information to 
you.
    Mr. Doolittle. What about the idea of contracting out to 
the private engineering firms that have demonstrated an ability 
now to design big complex projects like we used to build and 
hopefully will build in the future?
    Mr. Martinez. I will provide you the information but I 
believe, like I said, we are contracting out but it would still 
be my recommendation and I think it would be remiss as long as 
the Federal Government holds title to some of these facilities, 
especially facilities such as the dam on the Columbia River, 
Grand Coulee Dam, and Hoover Dam and these large dams that it 
is imperative that we maintain in-house expertise to address 
those issues.
    Mr. Doolittle. Well, couldn't you maintain in-house 
expertise and simultaneously accelerate the amount of work 
going out to the private companies? Are we so lean in the 
Bureau of Reclamation that we are not capable of further 
reducing in-house engineers without damaging the minimum level 
of necessary expertise?
    Mr. Martinez. If what you are asking me is should the 
Bureau of Reclamation operate with entirely outside consultants 
I think that my advise to this commission, to the 
Administration would be, no, we need to maintain some in-house 
expertise.
    Mr. Doolittle. Just so we have a meeting of the mind--if 
the private sector can do it, and if by definition they can do 
it less expensively than the government, do you really need to 
have in-house engineers beyond the minimum necessary to 
supervise the work of the private contractors?
    Mr. Martinez. I see your objective and I believe that the 
record will reflect that we have reduced our in-house 
engineers. We do contract but we need to have a balance and I 
will revisit that and I do believe that we ought to be as cost 
efficient as possible but we need to make sure that we protect 
the Federal Government's interest in doing that.
    Mr. Doolittle. I still do not feel like you have given me a 
direct answer to that question. I am not trying to badger you 
to say something you do not want to say, but--well, maybe you 
do not want to say it. To me, the answer should clearly be, 
yes, we can make further reductions. Now is that not the case 
in your mind?
    Mr. Martinez. Mr. Chairman, I would have to look because we 
have reduced substantially in the last two years. What I do not 
want to do is leave you with an impression that I can reduce 
much further than that. I need to go back and revisit that and 
find that information because of the 2,000 positions that we 
have lost in the last two years, the majority of those have 
been highly technical engineering positions.
    I do not think I can tell you that I am going to reduce my 
staff by another 2,000 engineers. I might not have that 
flexibility but I can provide that information.
    Mr. Doolittle. I agree with you. I think we have suffered a 
tragic loss in expertise out of the Bureau of Reclamation, but 
it must be very demoralizing for these highly trained engineers 
to find themselves being converted into an environmental 
restoration agency instead of a water management agency, which 
is what the law intended and I believe intends them to be. Mr. 
Farr is recognized.
    Mr. Farr. Thank you, Mr. Chairman. I would like to follow 
up with a question for Mr. Rezendes. If we are going to have a 
fixed budget for the Bureau of Reclamation in this downsizing 
era, if indeed there is an agenda out there that, we need to 
find some capital funds for moving into the new reuse issues. I 
guess the question then comes to where you can cut the Bureau's 
budget.
    And it seems to me we have gone through a process here, 
that is the same in the military, where we went to the BRAC 
Commission to suggest to Congress what bases ought to be 
closed; and it was a recognition that we really did not need 
all that Federal real estate for the mission.
    I come from a State where you have a California State water 
canal and you have a Federal canal, two canals running right 
next to each other, one run by one government and one run by 
the State. The price of water is different in each canal. It 
begins to appear that maybe we have reached a time of maturity 
in this country where a lot of those projects that we run at 
the Federal level be run by the States or by a consortium of 
States.
    Should we consider the unloading of some of those projects 
to a local level and then reserve whatever savings we get then 
to move into these new agenda items?
    Mr. Martinez. We have not specifically looked at that. I 
can tell you the cost effectiveness of what the implication of 
that would be but I think that certainly is an option, I think 
you put your finger on it. I think a decision has to be made 
here in the Congress as to what the missions and the roles or 
responsibilities of the Bureau of Reclamation and which 
business you want to be in at the Federal level.
    And once you decide that then it is easy for GAO and other 
people to come in and then tell you how best that could be 
played out through either the State level or contracting out or 
various other kinds of options.
    Mr. Farr. Well, I have a vested interest in this law 
because my great-great uncle was Senator Newlands who wrote the 
new Reclamation Act, but on the other hand we are in a 
different era now where we have different sources of water and 
we need to practice water conservation.
    I live in a coastal area that gets no water except for what 
comes out of the sky and if we get a dry year we live with it 
and we have learned to--we have a water bank for every 
community that essentially you are given an allocation of 
water. In that community that is all they get. If they want to 
build water-intensive projects and use up their water 
allocation that is it, but once they have reached that limit 
they cannot get any more water so people have become very 
conscientious about water and I think we probably done a better 
conservation job than anywhere in the United States.
    And we have allowed with that savings to provide for 
growth. It just seems to me that we need to in the 1990's to 
relook at the way we govern water and suggest that perhaps 
there is some governance at the local level that could be more 
progressive than at the Federal level and be more cost 
effective.
    And I would think that your agency, the general county 
agency, ought to be coming to this Congress and making some of 
those recommendations.
    Mr. Doolittle. Mrs. Chenoweth.
    Mrs. Chenoweth. Thank you, Mr. Chairman. I am interested, 
Mr. Martinez, in your telling us how the Bureau intends to 
address the continuing O&M backlog at many of our projects. I 
know in Idaho we have a backlog of operation and maintenance. 
With the financial picture that you have presented and so forth 
could you please let us know when you are going to bring that 
up to date?
    Mr. Martinez. It is my understanding that the Bureau of 
Reclamation is addressing operation and maintenance in all 
facilities to the point where we do not have any unsafe 
projects. Now there are some needs out there that need to be 
addressed and we have identified those needs and we will seek 
funding to address those needs over the next few years.
    In California, we will be seeking funding over the next few 
years to complete those items on our RACS lists. But I do not 
want to leave you with the impression that we have unsafe 
facilities. We are adequately addressing the maintenance of our 
facilities to make sure that they are in safe condition.
    And I have told my management team that I place great 
emphasis on that and in the last two budgets we put more money 
into that area because I am concerned as you are concerned 
about those facilities.
    Mrs. Chenoweth. Thank you, Mr. Martinez. With regard to 
your answer on a previous question where I asked where did the 
Congress confer the power to the agency to move water or 
managed water for environmental purposes, I believe that your 
answer was because the money has been appropriated for that 
purpose, is that correct?
    Mr. Martinez. Well, we have several Federal laws, and I 
will be more than glad to provide the information, but with 
respect to the appropriations our budget document specifies and 
documents how those moneys will be used.
    And I am assuming that when Congress appropriates our money 
for our budget it appropriates under the conditions that we 
have requested for.
    Mrs. Chenoweth. I wonder, Mr. Chairman, if it would be all 
right with you if we can ask for a copy of that for this 1997-
98 year.
    Mr. Martinez. Yes, we can provide it.
    Mrs. Chenoweth. How much of a percentage of your budget has 
been allocated in that document for acquisition of water in one 
form or another either rental or leasing or purchased?
    Mr. Martinez. I am advised that it is under 1 percent but 
we will provide you that information.
    Mrs. Chenoweth. Thank you. And then we also ran out of time 
last time when I asked you how is it possible to sell storage 
rights as a water right? Since it is a contract it is a concept 
in contract and it was never a condition of the bargain that 
storage rights could be sold and it tortures the whole concept 
of contracting.
    Mr. Martinez. Well, I am not prepared--I am not familiar 
enough with the concept to answer that question but I will get 
an answer to it.
    Mrs. Chenoweth. Would you, please? Mr. Leshy has been very 
aggressive in pushing for the sale of storage rights and 
storage rights are much like a building that you drive your car 
into to rent that space. The Bureau does not own the car when 
it is driven out. It does not even own the car when it is in 
the space and so we are very concerned. This is an issue that I 
am watching very, very carefully.
    I hope we do not have to resolve this issue in the courts 
because, Mr. Martinez, I very sincerely believe that you do 
exude leadership and I have not been entirely pleased with the 
philosophy and the direction of the Bureau but I believe you 
are a very, very capable man. And to that end I want to 
congratulate you. Thank you.
    Mr. Martinez. Thank you. In New Mexico where I am from, we 
do not have any storage right conflicts so I am not familiar 
with that but I will find out about that and visit with you.
    Mr. Doolittle. Mr. Smith is recognized.
    Mr. Robert Smith. Thank you, Mr. Chairman. I apologize for 
being late and to the other members as well. Thank you very 
much for holding this hearing and I am pleased to be able to 
say hello again to Mr. Martinez who has been to Oregon and is 
very familiar with an issue that I want to raise with him today 
which has to do exactly with the climate of irrigation projects 
which is in northern California and southern Oregon which has 
been, Mr. Chairman, under great debate of late with respect to 
the questions of increased demand of water between the BIA and 
the environmentalists, Fish and Wildlife, and of course the 
concern by those who irrigate in the climate's region of about 
12,000 families, by the way, who take their living from the 
project which was completed in '95 by the Bureau of Reclamation 
and probably is the most efficient use of water, everyone 
agrees, maybe in the nation.
    It is an immense effort and one that everybody I think 
agrees is an engineering wonder. Of late, however, as I say, 
under the increased competition for water there has been 
increased concerns that water that comes through that region be 
identified for other purposes than irrigation.
    And, Mr. Martinez, though I might add, Mr. Chairman, two to 
four decisions have been made on the distribution of water 
which really is in the area of the Bureau of Reclamation by the 
Bureau of Reclamation. Normally it is done at a local level by 
those people that are in charge. Recently, however, in the last 
year and a half or two years the decisions have been seized 
from the Bureau of Reclamation and are now being made in 
Washington, D.C., by the Department of Interior.
    Now that creates a whole different cast on the 
decisionmaking process and the question I am about to ask Mr. 
Martinez may be involved with decisions that he had nothing to 
say about because he was not consulted. And they go like this. 
Mr. Martinez, let me review again, the question I have of you 
some time ago regarding the reimbursable cost to the climate 
project and we went through that and I would ask you if you 
have it to further identify those costs that are reimbursable 
or non-reimbursable to water users simply because there is 
great concern.
    For instance, I have before me here the previous five-year 
repayment history of the climate project which indicates an 
item called investigation cost--I think it means fish cost from 
$189,000 in September to $3.797 million in 1995. That is so far 
as I can understand it the reimbursable cost which means water 
users have to pay for it.
    The question is should the water users pay for a public 
interest item like the advancement of fish or should they only 
be paying for project direct costs for approving the project?
    Mr. Martinez. I am aware that the costs for that project 
have gone up and I am aware that the irrigators are concerned 
about the portion that they have to pay. I will be glad to look 
at that and then visit with you. That is sort of an issue that 
also is tied in with this facility transfer issue and the cost 
studies.
    Mr. Robert Smith. Well, let me ask one other point, as you 
well know about, but, for instance, as short a time ago as 
three years--I may want to correct that. Yes, a short a time 
ago as three years the districts were about to repay the total 
cost of the Reclamation project, Mr. Chairman, that started in 
1995. Irrigators must pay, as you know, for all of these costs 
over a period of time.
    Since that time there have been loaded up on the district 
enough questionable payments to indenture the district for 20 
years and at the same time that the irrigators were never asked 
whether they supported or opposed these additional charges. And 
so that brings the next question. If I might ask unanimous 
consent to continue, Mr. Chairman.
    Mr. Doolittle. Just reasonably follow the redlight. There 
are not too many of us here so please just go ahead.
    Mr. Robert Smith. I will be happy to yield back----
    Mr. Doolittle. Just quickly.
    Mr. Robert Smith. Thank you, Mr. Chairman. The question 
that follows again, Mr. Martinez, is I want to ask you indeed 
in the future if there is a reimbursable cost that you have 
identified for the irrigation district would you consult with 
the irrigation district prior to the time you went forward with 
that sort of an endeavor?
    Mr. Martinez. I can commit to you that from the Bureau of 
Reclamation's perspective we will do that. But I think that 
what you have hit is a very interesting issue and the issue is 
this. As the Bureau of Reclamation is charged with relooking at 
how it should operate its projects to meet either Indian trust 
responsibilities or environmental issues.
    And to the extent that it undertakes expenses and studies 
is it proper to charge the irrigators for those studies or 
should that be a national expenditure and that is what you are 
asking really. And at this point in time the irrigators are 
being asked to pay a certain percentage of it and they have a 
concern. And I know what your concern is and I will follow up 
on that.
    Mr. Robert Smith. And I will take that with anybody. If we 
are pursuing an endangered species that is a nationwide problem 
brought on by an act of Congress. If we are pursuing the Bureau 
of Indian Affairs rights that is again a national problem. It 
has nothing to do with the Bureau of Reclamation project in the 
climate project. I would yield back, Mr. Chairman, and wait for 
another round. I had one more question.
    Mr. Doolittle. Why don't you just go ahead and ask it.
    Mr. Robert Smith. Thank you very much. I thank the members 
of the committee for indulging me here. Mr. Martinez, you may 
know, I know you know, there is a water supply initiative that 
is being proposed which I welcome, that everybody does, the 
satisfaction of the climate project issue can be solved with 
either increased storage or groundwater or both. We need 70,000 
to 100,000 acre feet of water that satisfies the Endangered 
Species Act, that satisfies the tribes, and it would protect 
water coming from--for irrigators.
    In the water supply initiative do you have money in your 
budget to begin either pumping water or determining the aquifer 
for trying to find a method to put more water in that river 
below Iron Gate going into California which would really 
support the full system immensely?
    Mr. Martinez. I became aware of the water augmentation 
initiative that you are talking about. I have not been engaged 
in discussions to date but to the extent that there is support 
for that proposal within the Department of Interior and the 
water users and if I have the flexibility within my financial 
resources I will direct the money to that.
    Mr. Robert Smith. Thank you, gentlemen.
    Mr. Doolittle. Commissioner, following up on the question 
Mr. Smith raised with you, does it seem strange to you, it 
seems strange to me, that for fully reimbursable costs for 
operation and maintenance the Federal Government is not 
undertaking these obligations on the one hand and yet on the 
other hand they are more than happy to mandate costs on the 
irrigators, etc., for environmental purposes? What an upside 
down world we live in. Doesn't that seem strange to you?
    Mr. Martinez. In that context it does seem strange to me. 
And I have been trying to come to grasps with that issue and I 
guess the issue is that we could put before the Congress a 
budget request for instead of $764 million--$864 for an 
additional rate program for efficiency. They do occur out 
there.
    Even though they are reimbursable we still would need the 
appropriation and I think that is the crux of the question. 
That is based on the limited resources that we have and the 
competing mass we have put together, our budget proposal we 
think best meets the needs that exist out there.
    Mr. Doolittle. Mr. Martinez, I hold you in high regard, so 
I apologize that sometimes my questions seem hostile, because 
really they are not directed at you personally. You are in the 
position you are in and you are defending the Administration of 
which you are a part.
    But this philosophy of smaller is better reminds me of a 
bygone era, namely, the Jimmy Carter-Jerry Brown era and I find 
it very frustrating to sit here and to maintain that we do not 
need to develop new sources of water. In one of the counties I 
represent, and one I used to represent, they are busily 
overdrafting their groundwater basins just so we can make sure 
we are in tune to the so-called national climate that I believe 
you mentioned which I think there is no national climate at all 
opposed to dam building.
    It is a tiny minority which has incredible clout with the 
public officials and with the media. I think the national 
climate would support having ample supplies of clean water. 
When I witness this overdraft of the groundwater, we are 
ruining our aquifer in San Joaquin County because of the 
overdrafting.
    But that is OK because it fits in with the environmental 
agenda and dams do not anymore. Let me ask one of the three of 
you if you could comment. Don't these multi-purpose dams that 
we have pay for themselves many times over? Could someone 
comment upon that?
    I know that it has to be addressed dam by dam but I have 
been told, for example, the Folsom Dam completed, I believe, in 
1955 or thereabouts has paid for itself two or three times 
over. Could one of you comment upon that?
    Mr. Martinez. Let me just answer from a general 
perspective. To the extent that the Bureau of Reclamation 
projects in my opinion, personal opinion, have opened the west 
to development that have prevented flooding in certain areas, 
they have paid for themselves. Now whether that is good or bad 
can be debated.
    Mr. Robert Smith. Well, I am not going to debate. I think 
it is good, don't you?
    Mr. Martinez. But we have an infrastructure and a develop 
list that has basically come about because of water development 
projects.
    Mr. Doolittle. Well, do you think that is good?
    Mr. Martinez. I personally believe it is good.
    Mr. Doolittle. Does the Clinton Administration think it is 
good?
    Mr. Martinez. But now that we have completed that task we 
are turning our attention to other issues and that is what the 
mirror of this discussion is.
    Mr. Doolittle. Well, I am not going to argue with you about 
it. I would ask the question, why are we turning our attention 
to other issues? It seems to me that as the population 
continues to grow, the demands on the limited resource, unless 
we develop more of it, are going to get more intense. So, we 
ought to be responding.
    I am in favor of water conservation like everybody else but 
to pretend that that is going to be the main source of our 
future water supplies is absurd because we are not going to be 
willing to live with the restrictions that go along with 
extreme conservation measures.
    All right, let me ask you this. We have talked about 
transfers. Have we had any transfers under the Clinton 
Administration since their policy on transfers was announced?
    Mr. Martinez. Facility transfers?
    Mr. Doolittle. Pardon me? Facility transfers, yes.
    Mr. Martinez. Yes, we have had the transfers on the lower 
Rio Grande project and the project in New Mexico but I believe 
the legislation most probably passed before the Clinton 
Administration.
    Mr. Doolittle. Those were the ones that were in the 
pipeline before the reinventing government policy came along, 
weren't they?
    Mr. Martinez. That is my understanding.
    Mr. Doolittle. Have we had any out there since the policy 
was set forth?
    Mr. Martinez. No.
    Mr. Doolittle. And I am trying to transfer one little 
isolated unit of the Central Valley project and the Clinton 
Administration opposes it.
    Mr. Martinez. We are working toward making sure that we get 
some on board. Hopefully we will be successful this session.
    Mr. Doolittle. I see my time is up, but if Mr. Smith, who 
is the only one who could possibly object, will indulge me. 
What is the present backlog of operation and maintenance for 
the Bureau of Reclamation?
    Mr. Martinez. I do not have that and I do not believe we 
have any eminent backlog but there is a list of RAC items in 
the California region. I would be glad to provide you that. I 
will be glad to provide you our response to that in writing if 
I can.
    Mr. Doolittle. Well, the figure just for the CVP strikes me 
as about $80 million. Does that ring a bell?
    Mr. Martinez. I will be glad to respond to that.
    Mr. Doolittle. OK, well, it is my impression it is tens of 
millions of dollars at a minimum.
    Mr. Martinez. That is not my understanding but I will be 
glad to----
    Mr. Doolittle. All right, then we will wait for the written 
response. My point is, wouldn't privatization relieve the 
Federal Government of millions and millions of dollars worth of 
liabilities?
    Mr. Martinez. Let me answer from this perspective. Leaving 
aside whether there is or is not a backlog right now we have a 
large infrastructure out west and the Federal Government has a 
large responsibility to maintain that infrastructure. That 
infrastructure is aging and it is going to require more and 
more Federal monetary commitments.
    So it is in the Federal Government's best interest to get 
some projects in private hands if it can so that others bear 
the cost. The issue is going to be if you do transfer that you 
put in place a provision where the project owners then do not 
come back to the Federal Government at some point in the future 
to seek funding if they are not able to correct the actions.
    So there is benefit in transferring the projects to private 
hands if they are going to assume all liability and all 
financial risks in the future.
    Mr. Doolittle. Well, I was under the impression that the 
ones who want to do it have been willing to go for that but 
this has met with resistance by the same national climate that 
opposes the development of more water supplies or opposes doing 
anything that is not consistent with their own narrow agenda.
    Because I can tell you this. This is the most anti-transfer 
Administration I think I could say I have ever seen. The 
Administration's actions are so contrary to what it says in 
public, which is it supports transfers. When you attempt one, 
it erects every possible barrier to accomplishing it.
    Mr. Martinez. Mr. Chairman, I commit to working with other 
parts of the Administration to make sure that we bring some of 
these to closure.
    Mr. Doolittle. Well, let me tell you. I hope they increase 
your power and influence, Mr. Martinez, because I do believe if 
you have the ability to implement some of these policy 
directives, you would produce solutions. I simply express my 
frustration that it appears as someone else, I think Mr. Smith, 
was talking about many of these decisions being made at a 
higher level than yours so your hands are in effect tied.
    But I value your good will and practical problem-solving 
oriented approach. If you could, Commissioner, I would 
specifically ask for information that you can submit 
supplementary to the hearing, regarding the issue of the Folsom 
Dam, its construction cost and the amount returned to the 
Treasury over the years from the dam.
    Let me ask our General Accounting Office and the 
Congressional Research Service also to please look into this 
general subject area on the issue of the dams and provide the 
committee with the information that you turn up.
    And I will be happy, if you want further specificity, to 
put it in a letter. It is my belief that in the terms of both 
the actual costs recovered from the sale of power and in terms 
of the avoided costs and natural disasters these things have 
paid for themselves many times over, and I would like to see 
that documented. I am finished with my questions and I 
recognize Mr. Smith.
    Mr. Robert Smith. Thank you, Mr. Chairman.
    Mr. Doolittle. All right. We thank the first panel and we 
will have perhaps further questions. I would ask you to please 
respond expeditiously when they are tendered. Thank you. With 
that we will excuse you and ask our second panel to come 
forward.
    We have on the second panel James Smith, Executive 
Director, Council of Infrastructure Financing Authorities, Mr. 
Eric L. Flicker, Vice President, American Consulting Engineers 
Council, Mr. Thomas F. Donnelly, Executive Vice President, 
National Water Resources Association, Mr. David C. McCollom, 
General Manager, Olivenhain Municipal Water District. Let me 
ask you, please, to rise to raise your right hands.[Witnesses 
sworn.]
    Mr. Doolittle. Let the record reflect that each answered in 
the affirmative. Well, gentlemen, we are just here together. 
Let me recognize Mr. Smith if he will begin the panel's 
testimony.

  STATEMENT OF JAMES N. SMITH, EXECUTIVE DIRECTOR, COUNCIL OF 
              INFRASTRUCTURE FINANCING AUTHORITIES

    Mr. James Smith. Thank you, Mr. Chairman. I am James Smith, 
Executive Director of the Council of Infrastructure Financing 
Authorities referred to as CIFA. It is a non-profit association 
representing state and local public financing authorities. 
Members of the organization have the capacity to issue debt 
mostly in terms of bond indebtedness for infrastructure 
financing and most administer at least the financial aspects of 
the State Revolving Loan Funds for wastewater and drinking 
water facilities. I am pleased to be here today to describe 
that program and its successful operation to the committee at 
their request.
    In 1987 the Clean Water Act was amended to alter the 
fundamental approach to financing municipal wastewater 
treatment improvements. The construction grant program, which 
had provided grant assistance for municipal wastewater 
treatment projects, was transformed into a revolving loan 
program.
    Under the loan program, capital grants are now made to each 
state. They are matched by a state contribution of 20 percent, 
and they provide a source of low-cost borrowing for localities 
to finance their wastewater treatment needs with 20-year loans 
to municipalities and communities.
    Managed as a revolving loan fund, with the retainment of 
principal and interest returning to the fund to be lent again, 
Congress envisioned a loan fund that could effectively operate 
in perpetuity, providing low-cost financing well into the next 
century.
    In addition, Congress provided one other unique feature 
which has proven to greatly enhance the growth and lending 
capacity of the funds, that is, the capacity to leverage the 
dollars in the fund by borrowing in the municipal tax-exempt 
market. This capability to leverage the funds is one of the 
most innovative and successful features of the SRF.
    About one-half of the states have used this funding device 
to increase their lending capacity, and a number of other 
states, while not directly leveraging the Federal dollars, 
combine the SRF fund with other state funds which are leveraged 
in the bond market, also increasing the overall pool for 
lending. Some states leverage their funds at ratios as high as 
4:1. I mention this because it is an example of the flexibility 
and ingenuity that can be demonstrated in the management of 
these loan funds.
    Together, the Clean Water SRF lending pool, according to 
recent EPA data, has grown to approximately $22 billion. 
Through state match, fund leveraging and the return flow of 
interest and principal back to the fund, the Federal capital 
contribution of approximately $11 billion has been more than 
doubled.
    Over 4,400 low-interest loans have been made; 1,000 just in 
the last year. The average rate, the lending rate, for these 
loans which I mentioned are 20-year loans is roughly about 3 
percent and so far I am very pleased to say that in the 
experience of the program there has not yet been a default.
    SRFs are a true success story. Loan repayments are 
approaching $1 billion a year, returning to the fund to be 
relent again. Does the SRF loan prototype have potential for 
application to other types of infrastructure investments? Well, 
obviously, as a loan program, the SRF is most adaptable to 
those types of financings with a revenue stream for repayment, 
such as a public utility.
    Congress, in last year's reauthorization of the Safe 
Drinking Water Act, created a State Revolving Loan Fund to 
finance needed public drinking water supply improvements. Here 
I might just parenthetically add that EPA has restricted the 
use of those funds for funding any kind of reservoir or dam 
facility even though it may be associated with water supply. I 
think this reflects a colossal misunderstanding of how water is 
supplied, domestic water is supplied, particularly in the west.
    The loan fund concept is being advanced for other areas as 
well. The State Infrastructure Banks created by the National 
Highway Designation Act of 1995, initiates a system of loan 
project financing that can be a revolving loan system.
    In closing, I am not closely familiar with the project cost 
allocation and repayment requirements of the Bureau of 
Reclamation's water projects, so I am not prepared to provide 
an opinion on the adaptability of the loan funds, especially 
with its leverage capacity, to those types of projects.
    However, I am willing to provide the committee and its 
staff with any additional information you may wish on the SRF 
operations, or answer any of your questions. Thank you.
    [Statement of Mr. Smith may be found at end of hearing.]
    Mr. Doolittle. Thank you. Mr. Flicker, you are recognized 
for your testimony.

    STATEMENT OF ERIC L. FLICKER, VICE PRESIDENT, AMERICAN 
                  CONSULTING ENGINEERS COUNCIL

    Mr. Flicker. Good afternoon, Mr. Chairman, and thank you 
for inviting me to testify before the Water and Power 
Subcommittee. I am Eric Flicker, Vice President of Pennoni 
Associates, Inc., and also a Vice President for the American 
Consulting Engineers Coun-

cil, or ACEC, a trade association representing approximately 
5,000 engineering firms.
    Each year, our member firms design over $100 billion in 
completed public and private infrastructure projects. Our firms 
are overwhelmingly small business with 80 percent of our 
members employing 30 people or less. Nevertheless, ACEC member 
firms have worked in nearly every country in the world.
    I will first touch on the infrastructure crisis that our 
country faces. The United States faces a critical challenge to 
provide sufficient infrastructure investment to meet the ever 
increasing demand placed upon our roads, water and solid waste 
systems, ports, and other public works. Today, all we must do 
is look around and we will see evidence of neglect all around 
us, particularly in the area of water pollution and the 
availability of a ready supply of clean drinking water.
    Why is infrastructure important? Both the quality of life 
our citizens enjoy and our nation's overall competitiveness are 
at stake. We know, for example, that countries that invest a 
higher percent of GDP in public works than the United States 
enjoy a higher productivity growth.
    Truly the value of infrastructure is not the jobs that 
construct it, but in the way the completed infrastructure 
underpins the quality of life of a region. Just ask those who 
have suffered a natural disaster if infrastructure is 
important. The arguments for infrastructure impact directly on 
the issue before this committee, providing for the water 
resource needs of our western states.
    Lack of adequate resources will impact cities, farms, and 
industry, which will have a tremendous effect on the economic 
vitality of the region. Privatization is an important tool. Let 
me take a moment to talk about it.
    As the Federal source of infrastructure funding decreases 
others must pick up the slack.
    The states, counties and municipalities are now turning to 
the private sector to help them achieve their mission of 
assuring there is adequate infrastructure to protect the health 
and safety of their constituents. Drinking water, wastewater 
treatment, prisons, highways and airports are all being 
privatized under a number of schemes.
    In some cases, the asset is actually sold to the private 
sector. In most cases, particularly wastewater treatment, the 
facility is leased to the private sector for a length of time, 
which saves considerable amounts of money for the municipality. 
In my written statement, I highlight the tremendous growth of 
privatization in this country and particularly in other nations 
around the world.
    The United States is behind a number of developed and 
developing nations in this area. It is my hope that we will 
soon catch up. There are significant funding mechanisms that 
have potential to improve this situation. Let me touch on them.
    Over the years, well-intentioned regulations have been 
issued to protect the public's interest.
    Unfortunately, they are having the opposite effect by 
limiting the ability of government to use innovative financing, 
or partnering with the private sector, to deliver 
infrastructure. In my written statement, I highlight four 
Federal changes that would facilitate private sector 
infrastructure investment.
    I urge you to work with your colleagues on the Ways and 
Means Committee to address these issues. I have shared with you 
a number of ways to use the private sector to help the 
government and this subcommittee achieve their goals of 
providing for the water resource needs of the nation. The 
important question to answer now is how to use the private 
sector and what is the role of the government in delivering 
infrastructure.
    There may have been a time in this country when the Bureau 
of Reclamation needed to do in-house engineering to meet a 
specific need. This is no longer the case because it can 
contract out to the private sector. Unfortunately, not only 
does the Bureau of Reclamation maintain a significant in-house 
capability, it is marketing that capability in competition with 
the private sector.
    I have attached to my written statement a copy of a 
marketing brochure used by the Bureau that has been provided by 
our Washington State affiliate. ACEC has also received 
complaints from our members that the Bureau of Reclamation is 
competing with them for design at state, local, and tribal 
projects. They are not only competing with us domestically but 
internationally.
    Mr. Chairman, I have included a report in my written 
statement that shows that agencies that contract out the 
majority of their engineering work are the most efficient. The 
lessons of this study apply to Federal agencies and to the type 
of work that the Bureau of Reclamation is doing. I hope that 
the relevance of this report to the issues we are discussing 
today is clear, the subcommittee can stretch its project 
resources further by assuring that the Bureau of Reclamation 
contract out to the maximum extent practical.
    Even quasi Federal agencies are competing with us. For 
example, Bonneville Power Authority has increased the size of 
its internal engineering resources and begun marketing them to 
clients in competition with consulting engineers. Let me 
conclude, Mr. Chairman, and members of the subcommittee by 
saying that ACEC stands prepared to assist you in achieving 
your goal of assuring that the water resource needs of this 
country are met as efficiently as possible. Again, thank you 
for this opportunity to testify before the subcommittee. I look 
forward to answering your questions.
    [Statement of Mr. Flicker may be found at end of hearing.]
    Mr. Doolittle. Thank you. Mr. Donnelly, you are recognized.

  STATEMENT OF THOMAS F. DONNELLY, EXECUTIVE VICE PRESIDENT, 
              NATIONAL WATER RESOURCES ASSOCIATION

    Mr. Donnelly. Thank you, Mr. Chairman. Before I begin, I 
have two statements from member agencies within our association 
that I have been asked to submit for the record.
    Mr. Doolittle. We will include them in the record.
    Mr. Donnelly. Thank you. In the west water infrastructure 
needs continue to exist. However, on the whole they are quite 
different from those of the past. No one envisions a future 
infrastructure development program and financing arrangements 
like the Reclamation Program. It is time to recognize and 
address a new generation of infrastructure development needs 
and financing realities.
    Future projects are more likely to feature non-structural 
solutions, environmental enhancement, proven best management 
practices, innovative approaches to water quality/quantity 
problems, and greater levels of non-Federal financing. 
Meanwhile, however, the Bureau of Reclamation must continue to 
maintain and improve upon existing projects and programs.
    An essential element, which is currently missing from the 
planning equation, is a basin by basin infrastructure needs 
assessment. Such assessment cannot be developed without the 
active involvement and, perhaps, the leadership of the Western 
governors, water resources professionals, and state and local 
officials.
    Over the years, several Federal water projects have been 
authorized by Congress but remain unfunded. These projects 
should be reviewed to determine if they still meet the needs 
that they were authorized to address. Additionally, Congress 
should determine what projects benefits remain in the Federal 
interest for funding purposes.
    The Bureau of Reclamation recently published its draft 
Strategic Plan. The plan calls for the Bureau to complete 
construction of all sixteen water and energy supply projects 
which are currently under construction. These projects should 
be completed as rapidly as possible in an effort to minimize 
cost and keep faith with the states and project beneficiaries 
involved.
    Congress should not allow special interests to continue to 
unnecessarily delay these projects until the cost to complete 
the projects has undermined the Federal investment. Congress 
should take a more aggressive role to ensure that projects 
which facilitate the settlement of longstanding Native American 
water rights claims against the Federal Government are funded 
and completed expeditiously.
    There are urgent needs in existing programs that are not 
being completely met. These include the Colorado River Salinity 
Control Program, annual operation and maintenance, Native 
American water rights settlements, rehabilitation and 
betterment, and the Small Reclamation Loan Program projects.
    Without an adequate annual operation and maintenance budget 
the question simply becomes how many balls you can keep in the 
air at one time. Given the fact that Bureau of Reclamation 
project water users are required by law to reimburses the 
Federal Government for operation and maintenance expenditures 
on an annual basis, there seems to be little justification for 
annual O&M budgets that require deferred maintenance to occur 
and accumulate to a crisis level.
    Generally, throughout the Federal Government, small project 
programs provide the most bang for the buck. Nowhere has this 
been truer than the Bureau of Reclamation's Small Reclamation 
Projects Program. One comment that Mr. Farr made earlier about 
possibly being several defaults. To my understanding, in the 
Small Reclamation Program there has not been one default since 
1956 since its inception in 1956.
    In early 1995 the Administration announced the termination 
of several Department of Interior programs, one of which was 
the Small Reclamation Program. Rather than accept the 
Administration's bad decision NWRA took a more responsible 
course and developed ideas that culminated with the 
introduction of H.R. 3041 during the 104th Congress.
    The changes proposed by H.R. 3041 are contained in my full 
statement. Loan guarantees remain an unresolved issue for us. 
We have committed to sit down with the proponents of loan 
guarantees. We would like to get that done in May so that 
legislation could be reintroduced and hearings held in June.
    We do not have a problem with the concept of loan 
guarantees. However, at this time our position remains only to 
support such guarantees if they are made to governmental 
entities with specific conditions. There is no question that 
the financing of future project development will be necessarily 
different than in the past.
    Times have changed and the national goals accomplished 
through the Reclamation Program are generally satisfied. A 
significantly higher percentage of the cost of future 
development must be borne by state and local governments and 
project beneficiaries. However, other important sources of 
revenue must continue to be utilized.
    Power revenues in particular must continue to be made 
available as a funding source for water resources development. 
The National Water Resources Association strongly supports the 
position that tidal and operational control should be 
expeditiously transferred to Reclamation project beneficiaries 
where the contracting entity is willing and able to assume full 
responsibility for the project.
    In order to concentrate on its future goals and objectives 
the Bureau of Reclamation should be anxious to transfer those 
projects that can be operated and maintained more efficiently 
by local beneficiaries. Congress should take the appropriate 
steps to facilitate transfers that make sense from a financial 
and public policy perspective.
    Thank you, Mr. Chairman. At this time I will attempt to try 
to answer any questions that the committee might have.
    [Statement of Mr. Donnelly may be found at end of hearing.]
    Mr. Doolittle. Thank you. Mr. McCollom is recognized.

  STATEMENT OF DAVID C. McCOLLOM, GENERAL MANAGER, OLIVENHAIN 
                    MUNICIPAL WATER DISTRICT

    Mr. McCollom. Thank you Mr. Chairman and members of the 
subcommittee for this opportunity to testify today. My name is 
David McCollom. I am the General Manager of the Olivenhain 
Municipal Water District in Encinitas, California. Our agency 
serves in the cities of Encinitas, Carlsbad, San Diego, Solana 
Beach, San Marcos, and unincorporated communities of 
Olivenhain, Leucadia, Rancho Santa Fe, Fairbanks Ranch and 4S 
Ranch.
    I note with great interest the variety of opinions and 
issues that are before the committee today and before the 
Bureau and I have to assure you that north San Diego County and 
the Olivenhain Water District faces the same kinds of problems 
as any of the agencies in southern California and for that 
matter the arid west.
    And in California, particularly in my part of California, 
we have a more particular problem in terms of the importance 
source of all of our water. Our water runs from 500 miles away 
in the Bay Delta or from 200 miles away in the Colorado River. 
And what I would like to focus on today are ways that we can 
improve and help our communities and our people with financing 
options through the Bureau of Reclamation.
    I am very glad to hear the expertise of yourself, Chairman 
Doolittle, and the knowledge that Congressman Farr expressed 
today. It shows that perhaps the issue here as Congressman Farr 
was mentioning is not a leadership issue as much as urging the 
subcommittee to put together the directives and the programs 
that we need to manage the next generation of water projects.
    I heard a lot from the Bureau today with regard to 
tradition and I think it is incumbent on all of us to be 
thinking of tradition. That is how our country maturated but it 
is also incumbent to think of the future and have vision. And 
somebody had vision when they built the Grand Coulee Dam. In 
fact, that vision helped us so much that probably without the 
Grand Coulee there would have been insufficient electrical 
energy to smelt the aluminum that was necessary to defeat 
Hitler's Third Reich.
    So we never know what these projects may end up doing. The 
fact of the matter is that we at some point in time in this 
country's history decided to settle the arid west and make more 
water available and we did that and that is certainly extremely 
good. But the job is not over. The job is far from over and we 
heard about the environmental problems that we have.
    And the programs that I am going to briefly give you an 
overview on today help cure a lot of those problems and also 
set the stage for more innovative public and private partnering 
that really gets us outside the box of having government do for 
us but puts government in a position of helping the people help 
themselves while the people pay for the projects.
    I think this is necessary for the Bureau to change to this 
kind of a role. I do not think the Bureau should be going out 
of business. They should be taking a very forward looking 
position with regard to getting outside the box, outside I 
guess the current buzz word is the paradigm of traditional 
government.
    First of all, we are here to discuss the loan guarantee 
proposal. Congressman Duke Cunningham has introduced 
legislation that is pending before this committee. The 
legislation is called H.R. 134 and it would demonstrate by the 
Olivenhain Water Storage Project the loan guarantee program of 
which we speak and the one we are interested in working with 
the Bureau of Reclamation on.
    These loan guarantee programs could be very, very helpful 
in the future for the EPA which we are estimating that the Safe 
Drinking Water Act is going to require $200 billion in the next 
20 years. In Olivenhain our price of wholesale water has gone 
up 55 percent in the last five years. That is well over $250 
per acre foot increase in price that our customers have to pay.
    It is very difficult for local agencies to meet these 
increasing financial challenges. In addition, I named cities 
that we serve in and cities have terrific financial pressures 
today. A loan guarantee would help the cities avoid layering of 
traditional municipal debt which eventually as the municipal 
debt layers and layers and layers lead the risk factor goes up. 
The rating agencies rate the interest rates higher and higher.
    It would keep low interest rates for other forms of 
infrastructure and public service projects like schools, 
police, fire, and some of those programs that are not 
entrepreneur and enterprise programs that ought to be run more 
like a private entity. We have a product to sell. We ought to 
be managing our water resources like a company that is selling 
the product reserving the elected officials to maintain the 
public trust for the benefit of the people.
    So our loan guarantee program would go a long way toward 
leveraging money from the Federal Government, allow the Federal 
Government to maintain a balanced budget and improve the level 
of service to our customers, the quality of life, and assure 
good quality of life in the future.
    Additionally, we are here to talk about Title XVI Program 
for water reclamation. I just wanted to reiterate some of the 
things that I heard. The issue of environment. The Secretary of 
the Interior has a responsibility to control and operate the 
Colorado River. 100 percent of Olivenhain's water is currently 
coming from the Colorado River.
    We are willing to make a substantial investment in water 
reclamation programs that will recycle Colorado River water. As 
Congressman Farr said it is already paid for and the sewer 
plants have treated it. We ought to be reusing that resource. 
There is a new source of water in the west. The new source of 
water is reclaimed water and it ought to be used as many times 
as possible.
    You may have heard there are not customers for reclaimed 
water in the west. That is not correct. It is pretty difficult 
to get started in this business because it starts slowly but 
there are customers out there. Olivenhain has six golf courses 
and hundreds and hundreds of acres of greenbelt that reuse 
water to be used to offset the cost of new infrastructure to 
deliver scarce resources from the Colorado River.
    And this infrastructure is partially in the ground now. We 
can put it to good use immediately and we urge your support on 
both of these bills. And if I may, I will be glad to answer any 
questions. I hope we can stimulate a little bit of conversation 
like we had in the previous panel. Thank you.
    [Statement of Mr. McCollom may be found at end of hearing.]
    Mr. Doolittle. Thank you. Let's begin with you. When you do 
reclaim water don't you tend to have a separate distribution 
for that?
    Mr. McCollom. Yes, you do, and that is why we are here 
asking for Federal help. It is a separate distribution system 
and some day we may not have separate distribution systems but 
for now it can be most economically handled that way but the 
separate distribution systems are really the problem. The 
problem is at the treatment plant it is getting the water out 
to the customers.
    Mr. Doolittle. So when you build these distribution systems 
they all line up at the treatment plants, is that where they 
begin?
    Mr. McCollom. These distribution systems need to connect 
with treatment plants. In our particular case in the case of 
the north San Diego County project much of the infrastructure 
is in place. We need the connecting pipelines to the treatment 
plant to transfer this water and so what we are looking for is 
some seed money to take care of that.
    Once the project is operative and selling water it will 
become an enterprise of the various agencies, Olivenhain 
included, and then we will be self-funding. And so a short-term 
investment by the Federal Government turns into a long-term 
benefit for the community.
    Mr. Doolittle. I am trying to envision how this would work. 
If you got six golf courses then there would be a pipeline 
built between the treatment plant and each of the six golf 
courses or any other additional customers, is that right?
    Mr. McCollom. That is essentially correct.
    Mr. Doolittle. And so then you are involved in tearing up 
the streets, because you have a completely separate pipeline, 
right?
    Mr. McCollom. In our particular case we have already laid 
close to eight miles from pipeline. A goodly portion of it has 
been laid in developing communities in preparation and so while 
yes, there is the drawback of having to rip up streets in some 
cases to make the full connection to the system our district 
and many of the districts in north San Diego County as well as 
others under the Title XVI Program have been planning for this 
for a long time. This is not something that just arose quickly 
and it is very thoroughly planned in most communities.
    Regrettably, any kind of infrastructure improvements or 
additions require some inconvenience to the general public but 
in our communities people are very anxious to see this kind of 
inconvenience and very, very supportive of water reclamation 
and the need to recycle.
    Mr. Doolittle. Just out of curiosity, what is the diameter 
of these pipes that are attaching to the water treatment plant?
    Mr. McCollom. In our particular project most of the 
pipelines would not exceed 21 to 24 inches and the majority of 
them would be in the 10 and 12 inch category. Most of the--we 
have part of our 7\1/2\ mile system is as large as 18 inches 
for a short ways.
    Mr. Doolittle. This water is treated to secondary 
standards?
    Mr. McCollom. It would be treated to secondary standards, 
yes.
    Mr. Doolittle. And if it were to be drinking water under 
the current rules it would have to be tertiary standards?
    Mr. McCollom. It would have to go to some sort of tertiary 
standard. And in addition, I might add some might argue that 
the secondary standards are actually tertiary standards and we 
did put it through a final filtration so it would be a very 
advanced secondary. When I say that to a point of a confusion 
between tertiary in terms of what is consumable.
    Mr. Doolittle. And the reason that you are doing it as a 
separate system is just the concern over the public reaction 
mainly to intermingling that with the existing water supply?
    Mr. McCollom. Public reaction and the ability to create a 
product competitively that can be used for alternative uses and 
so perhaps the expense isn't necessary in terms of what has to 
be done at a treatment plant.
    Mr. Doolittle. OK, because it is just for irrigation so you 
do not have to----
    Mr. McCollom. That is correct. I would envision throughout 
the west that there would always be parallel systems in the 
future just like there are grades of gasoline but the ability 
to make this water drinkable and put it into the total system 
is actually here and the city of San Diego to the south of us 
has done considerable work toward this and I believe we will 
see that as a reality very shortly and that will also be very 
significant in terms of the benefits and the impacts that it 
will have on the arid west and recycling water.
    Mr. Doolittle. Is San Diego devoid of aquifers?
    Mr. McCollom. San Diego County is for all intents and 
purposes devoid of aquifers. There are very small local 
pockets. In fact, in our district we had been working on the 
San Dieguito Basin but it presents a very small pocket. It is a 
very low quality water. Historically we have had tremendous 
amounts of natural occurring salt in the water and so our 
aquifers are very poor.
    And so we do not have the benefit to be able to inject 
treated groundwater in and pumping it out later. We have to do 
everything on the surface but that may be seen as an advantage 
in the case of our Title XVI project because we are going to be 
delivering from the plant to the customer and with the 
exception of the small amount of storage that has to be built 
in the form of tanks this is a much more direct use and could 
be managed and controlled much more thoroughly than a 
groundwater recharge program. And we may do some groundwater 
recharge on the side, Mr. Chairman, but it is not really a 
great resource that we can depend upon.
    Mr. Doolittle. Mr. Flicker, you have heard my exchange with 
the Commissioner about the in-house engineers and I think it is 
true he has lost a lot of expertise which I think anybody 
committed to the traditional function of the Bureau would 
regret. Nevertheless, do you have an impression as to the 
number of in-house engineers the Bureau retains at this time?
    Mr. Flicker. I do not.
    Mr. Doolittle. I thought your suggestion there was 
interesting. Of course we will have to be careful or they will 
cut that back and we will have them going to the Americorps or 
some other Clinton Administration social program but I think if 
it could be used to stretch the dollar and enable them to do 
their operation and maintenance backlog and to help develop 
some of these water projects can be a very good thing including 
the reclamations and interesting technology coming out of line 
beginning to expand.
    You mentioned in your testimony, you gave us those four 
things that you thought were very useful. One of the 
impediments you said was the limitations on private activity 
bonds which are contained in the '86 Tax Act. And I want to ask 
Mr. Smith probably about these--let's see, you called them SRFs 
which actually stands for State Revolving Loan Fund, right?
    Mr. James Smith. Correct.
    Mr. Doolittle. And are those private activity bonds, funds, 
are those covered by that cap, do you know?
    Mr. James Smith. No, sir, they are not. At the present time 
because under the wastewater SRF only the public entity can 
access the fund so there is no limitations under the private 
activity bond rules. With the new drinking water program, 
however, for the first time the privatizer may access this 
revolving loan fund and in doing that they will if there are 
bonds that are issued in conjunction with that they will become 
private activity bonds. If more than 10 percent of the use of 
bond proceeds goes to the privatizer.
    Mr. Doolittle. Therefore, they come under the caps, you 
mean?
    Mr. James Smith. They would come under the caps, that is 
right, sir.
    Mr. Doolittle. Well, it would seem if we are serious about 
privatization that those caps should be removed or altered.
    Mr. James Smith. We would certainly support that and there 
is legislation before the Ways and Means Committee to consider 
that and expand the cap availability. It is something though 
that requires a revenue offset and that has always been a 
difficult situation.
    Mr. Doolittle. And the purpose of the cap is what, to make 
sure we do not have too much infrastructure?
    Mr. James Smith. The purpose of the cap originally was to 
limit the access of the private sector to tax exempt proceeds 
on the assumption that there should not be--these preferred 
interest rates should not be available to the private sector. 
They were intended for the public sector.
    Mr. Doolittle. Yes, the view being that the public sector 
is going to be the one that met these needs but now we are in a 
new era where it may be the private sector.
    Mr. James Smith. That is true.
    Mr. Doolittle. Let's see now. Mr. Flicker, in your 
testimony you indicated that $137 billion worth of 
infrastructure in just wastewater treatment was going to be 
needed here between now and the year 2012?
    Mr. Flicker. Yes, that was based EPA's 1992 needs survey.
    Mr. Doolittle. Right, and that is just the sewage treatment 
facilities.
    Mr. Flicker. That is correct.
    Mr. Doolittle. And you pointed out that it has been at 
about $2 billion per year for the last ten years. Then you gave 
us this chart. Let me ask you what happened between 1982 and it 
looks like 1984 was the zenith of it and it began to decline 
after that. What was that?
    Mr. Flicker. We do not have a copy of the chart in front of 
us. I apologize.
    Mr. Doolittle. It says Federal investment in infrastructure 
as percent of GDP and this little peak I think--our consultant 
is bringing it to you but it went up. Something good must have 
happened.
    Mr. Flicker. I cannot explain that. We will get back with 
some explanation.
    Mr. Doolittle. But since that point it has been quiet and 
then declining rather precipitously. You testified, Mr. Smith, 
and I did not quite catch everything you said but it sounded 
like the EPA restricted on its own the application of the SRF 
Program to anything that might involve dams, is that right?
    Mr. James Smith. That is right, Mr. Chairman. In the 
implementation of the new drinking water State Revolving Loan 
Fund they specifically restricted the use of those loan funds 
for anything that would involve the construction or dam or 
reservoir storage.
    Mr. Doolittle. Was there anything in the authorizing 
statute or the appropriation that granted them the authority to 
do that or did they have some authority?
    Mr. James Smith. There is no restriction whatsoever in the 
authorizing legislation nor is there in the appropriation. It 
was purely on their own volition.
    Mr. Doolittle. And when was that done?
    Mr. James Smith. That was done about three months ago.
    Mr. Doolittle. Would you please provide the subcommittee 
with the documentation for that?
    Mr. James Smith. I will indeed.
    Mr. Doolittle. Because that is something we ought to follow 
up on with the oversight powers that we have now in Congress. 
Has the engineering community ever thought of trying to 
challenge that?
    Mr. James Smith. Some of the states have suggested a 
challenge to it and there may be the possibility of actually a 
court case on it although I am not familiar specifically with 
what is happening on that issue. The engineering community I do 
not believe has considered it although you may know better than 
I.
    Mr. Flicker. Not that I am aware of.
    Mr. Doolittle. Well, I want to encourage you gentlemen. As 
you are aware, where the agencies do these things it is 
usuallly by an executive order, some agency rule or something. 
We now have the ability to overturn that by majority vote in 
both houses and then the President of course can veto it and 
then we are back at the two-thirds situation.
    But this is a whole new area that is now going to be 
thoroughly tested and explored so as you become aware, as I am 
sure you will since you work in the intricacies of these areas 
where actions are being taken like that and you think something 
like the dam and reservoir regulation suggests, I would 
appreciate hearing about it.
    Mr. James Smith. Very well.
    Mr. Doolittle. That will allow us to elevate the issue. Mr. 
Donnelly, you talked about supporting privatization efforts 
where the recipients are willing to assume full responsibility. 
What is your impression of the record of the Clinton 
Administration on this issue?
    Mr. Donnelly. What record? They have not transferred 
anything that I am aware of. And I agree with Mr. Smith that 
that is not the Commissioner's fault. Those decisions are being 
made at a much higher level. I think he is doing everything he 
can to make the process work.
    Mr. Doolittle. How many such projects are you aware of, 
roughly, that people would like to have transferred?
    Mr. Donnelly. I probably could not give you an accurate 
number west wide or how many projects--initially when we first 
started the discussion about project transfer a lot of the 
people that came forward and wanted to get involved in having 
their projects transferred back to them both title--and for the 
most part operation and maintenance has been transferred on a 
number of projects but title transferred to them have second 
thoughts about it, particularly those that were involved--that 
were concerned about the liability.
    What we have told our members is if you are concerned about 
the liability issue, you do not belong in the debate of title 
transfer. You cannot expect the Federal Government to turn over 
title and everything to the beneficiaries and then expect the 
Federal Government to retain the liability for the structure. 
That is just not the way it goes.
    We feel that there are a number of projects out there that 
should be transferred. They make more sense from an efficiency 
standpoint, from a cost standpoint as far as the Federal 
Government is concerned. I sense there are probably also 
projects out there that should not be transferred simply 
because--for several reasons, because the involve multi-state, 
multi--the projects like the Hoover Dam, something like that 
where it is not one state or one water district that is 
controlling the title to it.
    There are other reasons too. I believe that there are water 
districts out there that do not have the capability financial 
or otherwise to continue to operate and maintain those projects 
in a safe manner.
    Mr. Doolittle. Mr. McCollom, how much do you presently pay 
per acre-foot of water?
    Mr. McCollom. Currently our wholesale price for treated 
potable water is $511 per acre foot.
    Mr. Doolittle. You said that in the last five years that 
went up by $250?
    Mr. McCollom. That is correct.
    Mr. Doolittle. How come it went up so much?
    Mr. McCollom. Cost of infrastructure, government 
regulation, costs for meeting service water treatment rules, 
things of that nature.
    Mr. Doolittle. What is the cost to lay a mile of 12-inch 
pipeline anyway?
    Mr. McCollom. Well, a 12-inch pipeline in an extremely 
general rule of thumb would probably cost about $2 to $2.50 a 
foot per diameter inch. That is very general. If you have rock 
or if you have issues such as pumping, pressure reduction, that 
price would be considerably higher.
    Mr. Doolittle. OK, I will have to work out the numbers on 
that. So if it is 12-inch pipe----
    Mr. McCollom. $25 to $40 a linear foot. On average around 
$32 a linear foot.
    Mr. Doolittle. It does sound pretty expensive.
    Mr. McCollom. Oh, it is very expensive, yes. Very 
definitely but these kind of facilities last and today even 
more so I believe that the facilities we are building today 
instead of being 25 or 30-year construction projects we are 
really building for 100 years into the future due to improved 
engineering techniques and improved construction techniques and 
improved material.
    Mr. Doolittle. You mean you only had to dig up the street 
the first time and the pipe will last 100 years?
    Mr. McCollom. Well, I started this business 25 years ago. 
We had to dig up the streets regularly. When I started at the 
Olivenhain Water District we have a regular leak crew that went 
around. Today if we have one or two leaks a year it is unusual. 
These are due to improvements with knowledge of pothotic 
protection from the oil industry. These are due to improvements 
of materials for service connections and diligent maintenance. 
You cannot let your maintenance go to the point where you are 
just using bubble gum and baling wire.
    But I would like to point out that all these innovations 
came from private companies and I am a lifelong public servant 
and very proud of it. I have not had time to invent anything or 
develop anything. I use public sector knowledge and I put that 
into good use and so just as the Department of Defense 
employees do not build airplanes, Boeing and Douglas does, the 
things that we are proposing here today are really not at all 
unusual or new. They are just business as usual using 
ingenuity.
    Mr. Doolittle. Well, I would like to recommend you to the 
Bureau of Reclamation. Maybe your views on operation and 
maintenance could have some positive effect.
    Mr. McCollom. Well, thank you, Mr. Chairman, and if you 
stay around long enough and I get my dam and lake built perhaps 
I do want to do a stint in Washington if all the days would be 
like today but I bet you won't promise that. It was a glorious 
day today in Washington, D.C.
    Mr. Doolittle. It is indeed. Well, I think I have concluded 
my questions. I really appreciate the suggestions you gentlemen 
have offered. I think there are some very good ones in here and 
we will look forward to getting any further responses some of 
which we have talked about for the record.
    And I would like to thank you all for your time and trouble 
to be here today and we will excuse you and with that the 
hearing is adjourned.
    [Whereupon, at 4:15 p.m., the subcommittee was adjourned; 
and the following was submitted for the record:]

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