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



 
                      ENERGY AND WATER DEVELOPMENT
                        APPROPRIATIONS FOR 1999

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

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

              SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT

                JOSEPH M. McDADE, Pennsylvania, Chairman

HAROLD ROGERS, Kentucky              VIC FAZIO, California
JOE KNOLLENBERG, Michigan            PETER J. VISCLOSKY, Indiana
RODNEY P. FRELINGHUYSEN, New Jersey  CHET EDWARDS, Texas
MIKE PARKER, Mississippi             ED PASTOR, Arizona
SONNY CALLAHAN, Alabama              
JAY DICKEY, Arkansas                 

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

       James D. Ogsbury, Jeanne L. Wilson, and Donald M. McKinnon,
                            Staff Assistants
                                ________

                                 PART 3
                                                                   Page
 Bureau of Reclamation............................................    1
 Testimony of the Secretary of the Interior.......................    1
 Appalachian Regional Commission..................................  699
 Tennessee Valley Authority.......................................  833

                              

                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
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                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director














          ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR 1999

                               ----------

                                         Wednesday, March 25, 1998.

                         BUREAU OF RECLAMATION

                               WITNESSES

HON. BRUCE BABBITT, SECRETARY, DEPARTMENT OF THE INTERIOR
PATRICIA J. BENEKE, ASSISTANT SECRETARY FOR WATER AND SCIENCE, 
    DEPARTMENT OF THE INTERIOR
ELUID L. MARTINEZ, COMMISSIONER, BUREAU OF RECLAMATION
ROGER K. PATTERSON, DIRECTOR, MID PACIFIC REGION, BUREAU OF RECLAMATION

                      Mr. McDade's Opening Remarks

    Mr. McDade. The Committee will come to order.
    We have with us this morning three witnesses representing 
the subject matter before the Committee. All of you have been 
here before, I believe. You know that in this Committee, as in 
so many, we encourage you to file your official statement with 
the staff and for the record and to proceed extemporaneously to 
the extent you wish.
    In that connection, we recognize the Secretary of the 
Interior. Mr. Secretary, proceed in your own way.

                  Secretary Babbitt's Opening Remarks

    Secretary Babbitt. Mr. Chairman, Committee members, it is a 
pleasure to be back. This is the sixth consecutive year I have 
come here as Secretary. I acknowledge with nostalgia and regret 
that this will be the last hearing, Mr. Chairman, that you and 
I will share together. I just want to say that it has been an 
extraordinary pleasure working with you in a bipartisan 
atmosphere, dealing with some very complex issues in a very 
productive way. So I just want to thank you for your attention.
    Mr. McDade. Thank you very much. I will miss the functions 
and the people in the building and a lot of other people around 
the town.
    Secretary Babbitt. I notice Mr. Fazio is now here and that 
I guess I could say much of the same of him. It is rumored that 
this is his last year with this Committee.
    Mr. Fazio. The filing deadline passed. It is no longer a 
rumor.
    Secretary Babbitt. Okay. Well, it has been a great 
pleasure, and your watchdog approach to California issues has 
been noted throughout the Department, and it has been very 
productive.
    I have with me most of my team this morning, including two 
regional directors. To the extent that you actually want to get 
into details, I have with me Roger Patterson from Sacramento; 
and John Keys, the Director of the Northwest Region in Boise.
    This will be John's last appearance as well. This is really 
kind of auld lang syne or something, because John will be 
leaving this summer.
    Patty Beneke, the Assistant Secretary for Water and 
Science; and Eluid Martinez, the Commissioner of Reclamation, 
are here as well.
    Mr. Chairman, I will be very brief; and then you can get 
into the substantive witnesses.
    The President's budget request this year for the Bureau of 
Reclamation in direct funding is $776 million, nearly identical 
to last year's appropriation. There are, in addition to that, 
requests of $143 million for the restoration of the Bay-Delta 
system in California and approximately $40 million appropriated 
to my office for disbursement toward completion of the Central 
Utah Project.
    There are, of course, many specific items that need 
discussing. I will leave that to Mr. Martinez.
    In dam safety, I think we are making real progress. The 
water reclamation issues, I believe, are progressing very well. 
So I will confine myself to a brief discussion of the Bay-Delta 
issues, and then I would like to call your attention to two 
issues that are on the horizon. They are not reflected in any 
substantial requests this year. One is a Montana water 
settlement, and the second is a discussion about the 
restoration of the Salton Sea out in California.

               CALIFORNIA BAY-DELTA ECOSYSTEM RESTORATION

    Let's start with CALFED and the Bay-Delta.
    Mr. Chairman, we are on the verge of an historic success in 
California. This process has been unfolding over the last 5 
years, with the assistance of this committee. In essence what 
has happened is that, for the first time in this century, it 
looks like we have brought the warring interests in California, 
north, south, urban, agriculture and environmental, together to 
see if we can meet the objectives of all the different parties 
for water supply, flood control, water quality management and 
environmental restoration.
    The process began with the so-called Bay-Delta Accord in 
1994, which set environmental standards for San Francisco Bay 
and the Delta. It proceeded on this year to the allocation of 
the so-called B-2 water under the Central Valley Project 
Improvement Act. It also involves, remarkably enough, a bond 
issue from the State of California of nearly a billion dollars, 
which was passed in 1996 by the voters for the purpose of cost 
sharing 50/50 the restoration requests before this committee.
    Last week, the draft programmatic environmental impact 
statement for the overall water management plans was issued. 
Building pyramid fashion on all of these steps, the Accord, the 
B-2 allocations, the State bond issue, the joint consortium of 
State and Federal agencies, we now proceed toward what in the 
minds of some would have been impossible to even conceive of 2 
or 3 years ago and that is a final water management plan 
bringing all of these strands together.
    Now it is in that context that we are back again this year 
with the President's request for $143 million which would be 
disbursed by the Bureau of Reclamation on a cost-sharing basis 
pursuant to a public process carried out by the CALFED 
consortium. It is a remarkable, historic convergence of problem 
solving, of collaboration between State and Federal agencies 
and 50/50 cost sharing.
    Mr. McDade. Mr. Secretary, let me interrupt you because you 
know we had concerns last time--and Mr. Fazio couldn't have 
worked harder on this project if the day had been 48 hours 
instead of 24--but we all had concerns about kind of an open-
ended approach to the Bay-Delta in terms ofcost. There was some 
fuzziness about who was going to do what and where the responsibilities 
were. And we know that this year the budget is increased by almost 70 
percent, which is a very large increase.
    Let me ask you in that connection just a couple of 
questions. What do you anticipate the completion costs to be of 
this project?
    Secretary Babbitt. Mr. Chairman, the requests that we are 
making are keyed to the contribution level established by the 
State bond issue, which is about half of the bond issue; I 
think about $450 million. That is all driven by an overall 
program which is now reflected in the draft environmental 
impact statements. There will be, in future years, additional 
costs, particularly for water augmentation and water storage.
    This could be a 20 or 30 year program. We are talking here 
only about a significant start on ecosystem restoration on a 
cost-share basis.
    Mr. McDade. I am trying to get, as best we can, a ballpark 
number on the project.
    Secretary Babbitt. Mr. Chairman, for the entire project?
    Mr. McDade. Yes.
    Secretary Babbitt. A ballpark number for the entire 
project, including the water management and storage components 
in the Bay-Delta, will depend upon which alternative is 
selected under the environmental impact statement.

                   california bay-delta alternatives

    There are three alternatives. One is to essentially stay 
with the existing configuration, in which case there would be a 
relatively modest cost. Bear in mind we have a 3-year 
authorization right now, only 3 years.
    Mr. McDade. And you are in the second year of that, right?
    Secretary Babbitt. And we are in the second year, yes.
    But if the third option were chosen, which involves a 
reconfiguration of the Bay-Delta system, that would undoubtedly 
give rise to another authorization debate.
    Mr. McDade. As we look at this project, are you able to 
give me a scenario of potential costs, ballpark figures, 
depending upon the options that are chosen?
    Secretary Babbitt. For the long term?
    Mr. McDade. Well, the short term and the long term.
    Secretary Babbitt. Short term----
    Mr. McDade. If we look at the end of your authorization 
period just as a hypothetical.
    Secretary Babbitt. Yes.
    Mr. McDade. And I assume you are not going to complete 
within that time?
    Secretary Babbitt. Well, again, it depends on which 
alternative is selected.
    Mr. McDade. Well, would you kindly spell it out a little 
bit for us so that the Committee has a better understanding of 
what the options are, what kind of financial commitment, 
depending upon what happens, this committee can look forward to 
in the future?
    Secretary Babbitt. Okay. If option one is selected and the 
3-year authorization expires, that is the minimal scenario. And 
those ecosystem improvements stand, you know, in their own 
context. You could walk away from this at the end of the 3-year 
authorization and say that the existing water supply system 
will remain the same.
    Bear in mind that there are expenditures being made under 
the Central Valley Project Improvement Act as well, which are a 
separate item in our request. I believe that is an open-ended 
user contribution process that we can discuss.
    At the other end is the so-called option 3, which would 
call for the construction of water conveyance facilities from 
the Sacramento River around the Bay-Delta into the Federal and 
State conveyance systems. That would surely be a 30-year 
project with a price tag of several billion dollars.

                 cost sharing for bay-delta restoration

    Mr. McDade. Several billion. Would you anticipate--I know 
this is a hypothetical--a 50/50 cost-share? How would you see 
that paid for?
    Secretary Babbitt. I would anticipate that any Federal 
contribution would be a maximum of 50 percent, but that would 
require an authorization debate.
    Mr. McDade. Yes, I understand.
    Secretary Babbitt. I believe that the cost-sharing concept 
is really coming home in all of these projects, these 
restoration projects that we are working on, and that the 
presumptive figure is 50/50. Just as it has been in many Corps 
projects, I think it is now becoming the standard.
    Mr. McDade. Are you comfortable that within the chain of 
decision-making in this process, there is accountability for 
those who make decisions. I used to have an old saying that you 
never ask a planner to do something unless he identifies the 
funding streams. Otherwise, you get 16 volumes of plans; no way 
to pay for it.
    What about the administration of it? I know last year there 
was a lot of concern about a kind of an open-ended decision-
making process. Is there, in your judgment, a clear-cut line of 
authority and responsibility?
    Secretary Babbitt. Mr. Chairman, I believe there is a 3-
year plan for what it is we expect to do with this restoration 
process.
    Now what is a little different about this process is that 
the Interior Department is passing these cost-shared funds 
through to 10 Federal agencies, four State agencies and some 
nonprofit groups which are involved in all of this. And it 
seems to me, if I may, the real issue is, is that process 
working? I believe it is. It is a highly public process.
    There are two kinds of projects being funded here. One is 
projects proposed by the lead Federal agencies. Others are 
projects that come up from all sectors. They are vetted through 
two public processes. One is the Bay-Delta Advisory Council. 
The other one is the CALFED Steering Committee. The projects 
then come for my signature and distribution.
    Mr. McDade. I know we talked to the Governor about it at 
some length with respect to the nonprofits on the State side, 
and he provided the Committee some information. Do you have a 
general organizational chart and one that would show a 
decision-making process--whether it was nonprofit or State 
agency or a Federal agency--that we might look at for further 
education? Could you supply that to the Committee?
    Secretary Babbitt. I would be happy to provide that.
    Mr. McDade. That would be very helpful.
    [The information follows:]


[Page 6--The official Committee record contains additional material here.]



    Mr. McDade. I didn't mean to interrupt you. It is an 
important subject.
    Secretary Babbitt. These are important issues. Because I 
view my responsibility, as the disbursing agent, number one, to 
make sure that the process is appropriate and focused and, 
secondly, to follow up by auditing and accounting for the 
funds. I mean, the buck does stop here. We are not expending 
the money, but we are passing it through. We are making the 
grants.
    Mr. McDade. Yes, you are the pass-through; and a lot of 
decisions are made downstream from you. I don't know that there 
is a level of interchange that is comfortable. I mean, there 
are a lot of decisions to be made, a lot of agencies involved; 
and I am sure coordination of all of those decisions is very 
difficult.
    Secretary Babbitt. Well, this is a new way of doing 
business. There is no question about it. This is a brand new 
model, and so they are fair questions.
    Mr. McDade. Sure. We want a good model, all of us.
    Secretary Babbitt. Yes. I also have Roger Patterson here. 
To the extent that you want to follow this up, he is the guy on 
the subject.
    Mr. McDade. We may do that later on, Mr. Secretary. You 
proceed with your statement, please.

                               salton sea

    Secretary Babbitt. Okay. Just very briefly, the Salton Sea 
issue, I think, merits your attention. We have a very modest 
request for the Bureau in this year's budget for about a half a 
million dollars. I think we may seek to modify that slightly if 
it appears that the authorizing legislation is really moving.
    Now, the Salton Sea issue, in a word, is basically this is 
a dead sea. It has no outlet. There are two problems on it.
    Mr. McDade. By the way, the authorization appears to be 
kind of fast tracking, doesn't it?
    Secretary Babbitt. Well, that is the intention of the House 
sponsors, to fast track it, yes.
    Mr. McDade. Okay. Go ahead, Mr. Secretary.
    Secretary Babbitt. The issues are twofold. One is the 
increasing salinity from evaporation and concentration and, 
secondly, the fluctuating level of the lake.
    The House proposal that is being fast tracked I think 
merits some attention. I think we all agree that the important 
thing is to put together an adequate environmental analysis 
process, rather than jumping to any conclusion about what needs 
to be done. There are proposals that range from a fairly modest 
diking program to connecting this body of water to the Sea of 
Cortez down in Mexico and actually making it a functional 
extension of the Gulf of California, the Sea of Cortez.
    Obviously, there are cost implications in all of this; and 
our proposal is that the Bureau of Reclamation and the local 
authority, known as the Salton Sea Authority, undertake a 
rigorous look at all of the alternatives and that they be given 
the time and the latitude and a modest amount of funding to do 
that and to make certain that the scientific research about the 
causes of these wildlife die-offs in the sea are adequately 
taken care of.
    Now, the House legislation is also written to fast track 
this process of analysis; and it is our judgment that it is 
probably unworkable in its current form. It also contains a 
$300 million advance authorization.
    Mr. McDade. What do you mean?
    Secretary Babbitt. Pardon me?
    Mr. McDade. Why did you say it is unworkable?
    Secretary Babbitt. Because it has a fast track mandate to 
do the analysis. It waives some of the NEPA environmental 
procedures. It mandates us to be ready with construction design 
specs on an alternative chosen by us within 12 months, backed 
up by a $300 million advance authorization.
    Mr. McDade. You think that is too much, too soon?
    Secretary Babbitt. Yes.
    Mr. McDade. Okay. Go ahead.

                        montana water settlement

    Secretary Babbitt. Okay. Finally, I would like to give you 
some advance notice on a Montana water settlement that is now 
in the authorizing process. The budget has a request for the 
Bureau to continue working on the outline of that settlement.
    It would involve a water supply and water rights settlement 
for an Indian reservation, water development for rural 
communities in Montana, and participation in cost sharing by 
the State of Montana. It would look analogous at least to the 
so-called Mni Wiconi project, which has been funded year by 
year by this committee.
    That would be a new start. It is in the authorizing 
process. We are working very actively on it, and I just want--
--
    Mr. McDade. What is the level of cost sharing in that 
project?
    Secretary Babbitt. I am not certain that it has been 
entirely worked out at this point, because we have said to 
Montana, we are responsible for the Indian water settlement 
side of it, and your cost-sharing should be linked to the 
development of water for rural communities beyond the 
reservation boundary.
    The authorized amount for the whole Federal participation 
in the draft legislation is, I think, about $50 million.
    Mr. McDade. Okay.
    Secretary Babbitt. Is that about right?
    Ms. Beneke. I think so.
    Secretary Babbitt. Mr. Chairman, that is all. There are a 
whole variety of other issues; but in light of time and the 
other witnesses, I think I would rest my case right there.
    Mr. McDade. Thank you. We may be back to you.
    [The prepared statement of Secretary Babbitt follows:]


[Pages 9 - 13--The official Committee record contains additional material here.]



    Mr. McDade. Madam Secretary, we are pleased to have you 
here; and please proceed in your own fashion.

              assistant secretary beneke's opening remarks

    Ms. Beneke. Thank you very much, Mr. Chairman. I am 
delighted to be here again this year; and I, too, will be very 
brief.
    My written statement underscores the importance of the 
California Bay-Delta budget request and also highlights several 
key aspects of the Bureau's budget.
    In addition, consistent with the Central Utah Project 
Completion Act, the Secretary has delegated responsibility for 
that project to my office; and I would be very pleased to 
answer any questions you might have with respect to the CUP 
here this morning.
    With that, again, it is a pleasure to be here; and I will 
pass the baton on to Eluid.
    Mr. McDade. We will give you the award for observing the 
brevity that the House usually doesn't engage in. Thank you, 
Madam Secretary.
    [The prepared statement of Ms. Beneke and the Central Utah 
Project budget justification materials follow:]


[Pages 15 - 26--The official Committee record contains additional material here.]



    Mr. McDade. We are delighted to have you back again, and 
please proceed in your own fashion.

                commissioner martinez's opening remarks

    Mr. Martinez. Before I address the Bureau's budget, I would 
like to personally extend my appreciation to you and 
Representative Fazio for your leadership and interest in the 
Bureau of Reclamation projects and programs over the years.
    Having worked in this arena for almost 30 years and being a 
State official in charge of water for 4 or 5 of those years, I 
know that water is paramount to the economy, the environment 
and the social well-being of the West. Your leadership will be 
missed, both of you; and I extend my appreciation to you and 
thank you.
    Mr. McDade. Mr. Martinez, we thank you for a 30-year career 
in public service.
    Mr. Martinez. Thank you.
    The Bureau of Reclamation is requesting $919 million in its 
fiscal year 1999 budget, of which $893 million is new budget 
authority and approximately $26 million is a transfer of 
unobligated balances from our working capital fund.
    The request includes approximately $776 million for 
Reclamation's traditional programs. That reflects a decrease of 
about $8 million from our fiscal year 1998 level. The request 
includes $143.3 million for the California Bay-Delta Ecosystem 
Restoration Account, which has been discussed. Before I go on 
to the specific programs, I would like to touch on some issues 
that I think might be of interest.

                      reclamation's strategic plan

    The Bureau of Reclamation has completed its 5-year 
Strategic Plan. It has been an interesting exercise by virtue 
of the fact that the Bureau of Reclamation's mission is 
evolving, and I know that you have asked some questions about 
that and that there are some concerns.
    The Bureau of Reclamation, from my perspective, faced an 
interesting problem when it went into its 5-year Strategic 
Plan, because most agencies were not in the process of changing 
a mission or at least seeking to change a mission. The Bureau 
of Reclamation has undertaken that change and not without 
controversy. We solicited substantial input from our 
stakeholders and from water users out West. We took seriously 
the comments presented to us by Congress. We have put in place 
a 5-year plan, although it might not address all the specific 
concerns of every stakeholder. In this business of water you 
will never be able to do that. But I think it is a plan that 
has general acceptance. I travel extensively across the West, 
and I have heard generally good reactions to that plan.
    Our annual plan has been presented to Congress, and it 
outlines how we will implement the 5-year plan and, hopefully, 
what we are going to be all about in the next few years.

                      year 2000 computer problems

    Another issue that I know is not in my written testimony, 
but an issue that concerns Congress, is whether Reclamation has 
identified and will correct all its year 2000 computer 
problems. We have identified those issues, and I feel confident 
we will address all of those concerns by mid-1999.
    Mr. McDade. Good for you.
    Mr. Martinez. That should not be a problem for the Bureau 
of Reclamation.
    Mr. McDade. How about the Department, Mr. Secretary? How 
does it look in the Department?
    Secretary Babbitt. Mr. Chairman, OMB ranks the agencies. 
They have got a little ranking system.
    Mr. McDade. OMB does a lot of ranking.
    Secretary Babbitt. Yes. I guess that is not the final 
answer, but we are in the top ranking from the OMB watchdogs. 
There are going to be surprises in this year 2000 problem.
    Our major issue is this: I believe that, internally, we are 
on top of our systems, but we have got a very substantial 
interface problem with some of our user groups. The Indian 
tribes are a good example of that. I am not confident that we 
have uniform progress on this, and to have the originating 
system up but not the user systems up is going to have a result 
that is not good.
    Mr. McDade. Flesh that out on the record a little bit, will 
you? Because we have to really educate a lot of people about 
the issue. They hear it talked about, but they don't understand 
some of the Draconian effects that could occur. Would you flesh 
that out a little bit, using the example, that you just 
mentioned, if you wish?
    Secretary Babbitt. Well, the user agencies have been all 
over the map on this. Some, I think, are up-to-date; others 
aren't. And it applies to all of the Interior agencies.
    But the specific issue that I would emphasize is the Indian 
nations. Now the importance of that is that is the one area 
where the Interior Department administers human resource 
programs, including a general welfare system, and a whole 
variety of individual entitlement programs. We do not 
administer them directly. We administer them--
    Mr. McDade. Well, it seems to me, from what I have heard 
over the years, it is even higher than that. You are the 
trustee for those people; and, you have a more direct 
responsibility to that group than any in the country, it seems 
to me. So, I want to hear you tell me what the consequences 
could be if it isn't fixed and what you are going to do to try 
to make sure it is fixed.
    Secretary Babbitt. Okay. The consequences, of course, are 
the systems might crash and we would not have the capacity to 
get the information, the checks, the assistance, out to the 
beneficiaries.
    Mr. McDade. The tribal funds, all sorts of----
    Secretary Babbitt. That is correct.
    Mr. McDade. And I suppose you would just describe it as 
cutting the link between the trustee and the people that are 
supposed to be the beneficiaries?
    Secretary Babbitt. That is correct. And we have been taking 
extra steps to make this problem known to the tribal 
governments.
    Now, you know, there may be some things we can do beyond 
that. I am not entirely clear what they are. But I understand 
your concern and will go back and have another look at this.
    Mr. McDade. Yes, we encourage your attention to it, Mr. 
Secretary.
    Mr. Martinez, I didn't mean to interrupt you. Go ahead, 
sir.

                               Dam Safety

    Mr. Martinez. That is fine.
    Mr. Chairman, approximately 50 percent of Reclamation's 600 
dams were constructed between 1900 and 1950; and continued 
safety performance becomes a great concern with this aging 
infrastructure. We continue to place high priority on this 
initiative, and our budget reflects that concern.
    Looking at the specific figures, it will reflect that there 
is a decrease in our request for dam safety this year, which 
might, on the face of it, appear to be contradictory; but the 
reason for that is that we have completed construction on some 
dams. That is the reason that the budget request is lower.
    The other issue I want to bring to your attention is that 
the Bureau of Reclamation continues to operate its systems and 
dams West-wide to minimize the impact of El Nino effects.
    We were instrumental in working with the Corps of Engineers 
in minimizing damage in California last year, and this year we 
put in place processes that to date we have not had to use to 
protect life and property in case of devastating floods out 
West.

                  Water Reclamation and Reuse Program

    The specific request for the particular projects are 
mentioned in our budget, and I won't get into those. But I do 
want to draw your attention to one program that has generated 
considerable interest in the Bureau of Reclamation, and that is 
the Water Reclamation and Reuse Program.
    Our fiscal year 1999 request of $37 million includes 
funding for four ongoing projects that were authorized by 
Congress in 1992 in California, plus funding of minor amounts 
for Arsenic Wellhead Project in New Mexico, a wastewater reuse 
study in South Dakota and a comprehensive water reclamation and 
reuse study in California.
    The 30 some million dollar budget request also includes $1 
million for Orange County for a regional water reclamation 
project in California and includes $6.8 million for research 
and feasibility studies and to continue or initiate new 
construction starts.
    The $6.8 million, which is new in the budget, is proposed 
to be used as follows: $1.1 million for assisting other project 
sponsors with feasibility studies and to review and prioritize 
projects for possible funding; $1 million for research and 
development activities; $4.7 million is for continuation of an 
existing project and three new projects which I know are of 
some interest to the folks in this room today.
    We propose to spend $800,000 for continuation of the Tooele 
project in Utah; $1.3 million for new construction of the North 
San Diego County Project in California; $1.3 million for new 
construction of the Long Beach Project in California, and $1.3 
million for new construction of the Calleguas Project in 
California.
    Mr. Chairman, we in Reclamation went through an extensive 
process of ranking, using a criteria process, for determing 
those projects that should be recommended for initiation of 
construction funding, and I can provide that for the record.
    Mr. McDade. Please do so, without objection.
    Mr. Martinez. Yes.
    [The information follows:]


[Page 31--The official Committee record contains additional material here.]



    Mr. Martinez. This particular program, as you know, has 
significant implications in the outyears, in terms of funding. 
I want to recall that for the four projects in California, plus 
the 18 new projects that were authorized in 1996 under Title 
XVI, the outyear Federal commitment approximates $346 million; 
and I know there is extensive interest out West of other 
municipalities that are looking at this particular program. So 
we plan to work with you in addressing the needs of the 
municipalities and interests out West; but, at the same time, 
it has potential impacts on the Bureau of Reclamation's budget.
    Mr. Chairman, that generally concludes my comments, other 
than specific issues dealing with the budget.
    Mr. McDade. We thank you, Mr. Martinez, for your usual fine 
statement.
    [The prepared statement of Mr. Martinez and the Bureau of 
Reclamation budget justification materials follow:]


[Pages 33 - 598--The official Committee record contains additional material here.]



                  mission of the bureau of reclamation

    Mr. McDade. Let me just ask a question that seems to be 
being asked with some frequency now. My memory is that the 
Bureau of Reclamation goes back to the administration of 
President Roosevelt, Theodore Roosevelt, in 1900; and its 
purpose was to assist in the colonization, if you will, the 
development of the West. Some people think the West is now 
overdeveloped; and some people say, why do we need the Bureau 
of Reclamation? What is your answer to that?
    Mr. Martinez. Mr. Chairman, that same question was asked of 
me by Senator Domenici initially when I came to this office 2 
years ago.
    I believe, personally, that there is and will continue to 
be a need for the Bureau of Reclamation. The Bureau of 
Reclamation's original mission was to develop irrigation 
projects and water projects for development of the West, but it 
also managed those projects and continues to manage them. It 
wasn't just an agency that built the physical project and 
walked away. It managed the projects for the purposes that 
those projects were authorized.
    Over time, Congress has passed laws dealing with 
environmental issues, that require the Bureau of Reclamation to 
manage those projects consistent with those laws.
    The Bureau of Reclamation today delivers water to 10 
million acres of land in the West and provides municipal and 
industrial water, to over 30 million people. It is the 
Country's largest water wholesaler. We generate a lot of 
electricity.
    Mr. McDade. Excuse me, Mr. Martinez. I recognize that, and 
the committee is aware of the tremendous impacts that the 
Bureau has had in the West. But a lot of those impacts date 
from the huge construction projects--Hoover, Shasta, et 
cetera--that really did open up the West and created incredible 
wealth in the country. Those days are over, aren't they?
    Mr. Martinez. The days of building dams----
    Mr. McDade. Yes.
    Mr. Martinez [continuing]. For practical purposes, might be 
over.
    Mr. McDade. The water resource system, outside of the 
maintenance and management of it, is in place. Some people say, 
for example, if you consolidated, there would be no impact on 
the mission but a lot of saving to the taxpayers at a time of 
stress on the budget. Do you agree with that?
    Mr. Martinez. No. Who would you consolidate with?
    Mr. McDade. You don't think there would be any savings to 
be had if that occurred?
    Mr. Martinez. In my personal opinion, the costs would 
remain the same, if not go up.
    Mr. McDade. Go up. Okay. Would you explain that to me, 
please?
    Mr. Martinez. Unless the functions and the duties and the 
responsibilities were to be done away with, you would still 
have the same charge, the same tasks that have to be performed.
    Mr. McDade. When you get up in the morning and look over 
your domain, what is the first question you ask yourself?
    Mr. Martinez. What am I doing here in Washington?
    Mr. McDade. You have got a lot of company in that one.
    We are glad you are here.
    Mr. Martinez. No, seriously----

                priorities for the bureau of reclamation

    Mr. McDade. What is the top priority that the Bureau has 
now?
    Mr. Martinez. The top priority, aside from dealing with 
these issues of wastewater reuse and helping rural water 
systems trying to put systems in place to deliver water, is the 
management of water out West, working with States, with cities, 
with the counties in trying to manage water, and bringing to 
the table the Federal perspective on issues.
    For instance, in my State of New Mexico, we have a Rio 
Grand compact involving three States. The Bureau of Reclamation 
continues to be a vital player in how that water is managed and 
provides resources to help resolve issues.
    On the Platte River, the Bureau of Reclamation can usually 
work with those States.
    I visited the State engineer of Kansas. They are about 
ready to enter a lawsuit with Nebraska. His question to me is, 
what can you bring to the table to try to help Kansas and 
Nebraska to resolve some of these issues?
    So there is a place out there.
    Mr. McDade. There is no argument that there are 
responsibilities to be carried out. The question is, what is 
the best way to do it in terms of efficiency for the taxpayers, 
et cetera?

             possible consolidation with corps of engineers

    For example, the Corps of Engineers comes in here and 
testifies; and they do very much the same things that you are 
talking about. Should there be a consolidation between the 
Bureau and the Corps?
    Mr. Martinez. Mr. Chairman, if you wish to consolidate the 
Corps of Engineers with the Bureau of Reclamation, I would 
entertain that.
    Mr. McDade. Were you in the Army? Do you want to reup?
    Mr. Martinez. I believe the two agencies have different 
roles. Having been in the business of water administration, the 
first thing I noticed when I came to the Bureau of Reclamation 
was--I think I expressed this to you--that we had put out a 
``Blueprint for Reform'' that says, basically, the Bureau of 
Reclamation is going to not emphasize construction and gointo 
water management. And I said, good luck. Because it is more difficult 
than it appears to move from construction to water management.
    I want to leave this thought with you. The Bureau of 
Reclamation has been in the area of management of water since 
its inception. This is not a new activity.
    Mr. McDade. Indeed.
    Mr. Martinez. What is different today than in the past is 
that the water resources that the Bureau of Reclamation 
developed primarily for agricultural purposes are now being 
viewed as a source of water for other uses, whether those be 
environmental or municipal and industrial purposes. The role 
that the Bureau of Reclamation will play in the Federal 
Government on movement of that water from agricultural purposes 
to M&I purposes is a role that is evolving, and I think there 
is a place for the Bureau of Reclamation to serve in that 
capacity.
    Mr. McDade. That connects, doesn't it, to your concept 
about a new mission?
    Mr. Martinez. It plays into that.
    Mr. McDade. I beg your pardon?
    Mr. Martinez. It plays into that new mission of being a 
manager of water resources.
    Mr. McDade. Yes. I mean, I think even in the reinventing 
government treatise it is suggested that, without a new 
mission, the Bureau should be excessed.
    Mr. Martinez. Well, we have a large staff that operates and 
maintains facilities. In the absence of the Bureau of 
Reclamation, that staff would have to be put someplace else.
    Mr. McDade. We are not arguing about those 
responsibilities. We are talking about the most efficient way 
to do something. And a lot of people say that the reason for 
the so-called new mission is that the old mission is completed. 
There are ways to consolidate and save a lot of money. Nobody 
is arguing that.
    Mr. Martinez, let me make it clear to you that you do not 
do a good job. We think you do an excellent job. We are talking 
about whether it is time to look at a reorganization, whether 
it is time to look in new areas.

              authorization for reclamation's new mission

    For example, the Committee last year in its report said 
that the Committee is not indicating its agreement that you can 
simply create a new mission for yourself, which appears to us 
up here to be a little bit of what is going on. We further 
stated in our Committee report that the roles and missions of 
Federal agencies are established through the legislative 
process and cannot and should not be changed by the agencies. 
In other words, you have to get authority from the Congress to 
begin a new mission.
    It doesn't seem to us that you have had a vetting of that 
authority. You have a generic statute, but you are really 
making a transition from what had been a long-time, successful 
program--which still needs management--into a new area that 
hasn't really been explained in detail to the committee that 
has general responsibility, i.e., the authorization committee.
    You don't have specific authorization for the new mission, 
do you, sir?
    Mr. Martinez. It is my understanding that everything the 
Bureau of Reclamation does today and continues to do is under 
authorization that we have from Congress.
    Mr. McDade. Your generic authorization?
    Mr. Martinez. Yes, and specific authorizations, like Title 
XVI programs.
    Mr. McDade. Yes. Well, I'll tell you what to do. I don't 
want to spend an inordinate amount of time on this, but I would 
appreciate it if you would at this point in the record explain 
your legal justification and send a note up to the Committee 
that shows the legislative underpinnings of your mission. Will 
you?
    Mr. Martinez. I will do that.
    [The information follows:]


[Page 603--The official Committee record contains additional material here.]



                     need for bureau of reclamation

    Mr. McDade. Go ahead, Mr. Secretary.
    Secretary Babbitt. Mr. Chairman, I can't resist. Could I 
just add a word or two to this? These are important questions, 
I think.
    When I became Governor of Arizona, I was a hard-charging 
young Turk; and I looked around and I said, we ought to kick 
the Bureau of Reclamation out of Arizona. I looked around, and 
Jerry Brown was Governor of California, and Dick Lamm was 
Governor of Colorado. We were all hot-blooded, you know, young 
reinventors; and we said, by golly, we can run the Colorado 
River system and just discharge the Bureau of Reclamation and 
take over Hoover Dam, Glen Canyon Dam, Flaming Gorge and do it.
    That conversation lasted for about 6 months. Because my 
constituents who are sitting here and their predecessors said, 
are you kidding? Let California have a voice in the operation? 
We have been fighting, drawing blood in a battle for 50 years. 
No way.
    The upper basin came screaming down and said, ``The 
political power's in the lower basin, but Glen Canyon Dam is 
ours. It may be located in Arizona, but it belongs to the upper 
basin.'' These interstate issues are very real.
    Secondly, the Corps of Engineers, Bureau of Reclamation 
interface is something that ought to be examined. I can tell 
you that war has been going on for all of this century.
    Mr. McDade. We don't want a war. I remember when I was 
assigned to the Interior Subcommittee 36 years ago, as an 
Easterner to keep Westerners like you honest.
    Secretary Babbitt. Exactly.
    Mr. McDade. The first thing I learned was that if you want 
to get the attention of a Westerner, you simply say, ``water.''
    Secretary Babbitt. You got it.
    Mr. McDade. We know about all of those fights and the 
Supreme Court arguments, and the record is replete with them. 
We are really trying to get down to a question not of avoiding 
responsibility but whether or not there might be a potential, 
as you just mentioned, to examine this issue--not in a war-like 
fashion--of whether we can consolidate.
    Every budget that comes up here is under enormous pressure, 
and I don't know whether there is any potential for huge 
savings. You would have much of the same responsibility. But 
maybe there is. Maybe there is some duplication that could be 
avoided. That is what we are trying to get to.
    Secretary Babbitt. It is----
    Mr. McDade. It is an important question.
    Secretary Babbitt. It is indeed. It is indeed.
    Mr. McDade. I appreciate your Western history, and I know a 
little bit about it, and we appreciate it.
    Mr. Martinez, did you want to finish up?
    Mr. Martinez. No, that is fine. I will provide that 
information.
    Mr. McDade. I am delighted to yield to my friend from 
California.

                      mr. fazio's opening remarks

    Mr. Fazio. Thank you, Mr. Chairman.
    I would like to welcome everybody, and I would begin my 
history lesson for the day by reminding everybody about what 
was termed Jimmy Carter's ``War on the West,'' which was the 
last time anybody seriously proposed merging the Corps and the 
Bureau, as I remember. He vetoed a bill or two. He would have 
really enjoyed the line item veto, but that interlude had not 
occurred.
    So Ronald Reagan came riding into office, in part because 
of the War on the West, and promptly--in effect with one 
letter--undid the traditional subsidies that really created the 
Bureau as we knew it up until those days in the early 1980s. 
The transformation of the Bureau occurred during that era, and 
I think today it is functioning very differently.
    While the Bureau may not be--and we will get to Animas-
LaPlata later--carrying on the same kind of dam-building 
tradition, it is, I think, important to the way the West works 
out its issues. Regional problems continue--and we will talk 
about the Salton Sea, too--to be a very, very high-priority 
concern for all of us out there, and I think the role that 
Eluid and his people play has been increasingly important as we 
sort out who gets the water in the West. And every one of these 
issues we are going to talk about today essentially involves 
that debate.
    So, Mr. Chairman, I guess I am a little bit jaded. The 
ongoing discussion of merger has been around longer than even 
we have, and I am sure will continue to be. But, ultimately, we 
have to look to Federal agencies. Certainly I think the Bureau 
has been doing an excellent job in helping us sort out our 
dilemmas; but those dilemmas are deeply troublesome, even 
within a watershed, even within a basin, let alone between 
them.
    I would simply like to say, having worked with the Bureau 
directly on this Committee for the last 19 years, how much I 
appreciate the excellent work that we have had from the 
Department and from various commissioners and also, frankly, 
our regional directors.

                             calfed process

    Roger Patterson is here today, and he is doing an 
outstanding job for the Bureau and the CALFED process, and I 
think he is typical of the many people who have been part of 
this institution and who continue to make a real contribution 
to the public interest.
    So I want to begin by thanking all of you for what you 
continue to do to help us sort out our problems.
    The one that, of course, is at the top of the Chairman's 
list is CALFED. I would be interested to hear perhaps from 
anyone at the table, but Roger as well, as to his evaluation as 
to how that is going.
    Mr. Chairman, we do have a $440 million authorization which 
we are whittling down more slowly than we had initially 
anticipated, having appropriated $85 million instead of $143 
million last year. I am assuming we are going to have to 
stretch that out a year or two in order to get it done; and I 
think Mr. Ogsbury would appreciate that, given the dilemma this 
Committee was presented with by the Corps' budget which was 
reduced so deeply as to be unbelievable.
    I do think we all anticipate further authorization should 
some of the CALFED issues be resolved and funded at the State 
level as well. That billion dollar bond act we passed was 
pretty impressive for cost-sharing purposes. We have another, 
related one that may be on the ballot this fall. But it all 
comes down to whether the stakeholders--the various players in 
the State/Federal picture as well as the interests, the 
environmentalists, the urban water users and the traditional ag 
users--are going to agree.
    I hope Roger can, for the benefit of the Committee, give us 
perhaps an update, if the members at the table would be 
forebearing, as to where we are in this process.
    I want to thank the Committee staff, by the way, for its 
investment in time to try to come to grips with this issue, 
because it is different than the traditional line item approach 
we have taken here. I think we are, at the same time, making 
progress, with the Federal agencies playing a very key role in 
sorting out how we spend our money.
    Welcome, Roger.

            Regional Director Patterson's Remarks on Calfed

    Mr. Patterson. Thank you very much. I appreciate this 
opportunity.
    CALFED is still a work in progress. I think we all 
acknowledge that. It has come a long way in the last year. I 
think the issue of accountability and decision-making, at least 
to me, is very clear how that is working. It is the most public 
process that I have been involved in and is moving ahead. 
Decisions are made, and I think good decisions, on how we are 
going to spend the money. It is a very deliberate process of 
sorting out priorities.
    We have filed and started public debate with the draft 
environmental document. Several months now will be consumed in 
trying to bring people together around that; and the money 
continues to flow on the California side, which is important.
    So I am optimistic. I am encouraged at the way it is going. 
To take 15 agencies and have them move together as we have is 
quite an accomplishment, and I feel good about the way that 
CALFED is going and will go in the future.
    Mr. Fazio. You might discuss, for the Committee's benefit, 
some of the dilemmas we are facing right now in terms of: 
whether we are going to be doing water marketing; whether we 
are going to have something the Secretary knows well, 
groundwater management controls; or whether we are going to 
have new surface water impoundments. We used to call those dams 
and reservoirs. But, are we going to be doing more storage, 
whether it is underground or not?
    These are some of the dilemmas. You might give the 
Committee a brief thumbnail as to where we are in the 
deliberative process. You might even use the politically 
incorrect term ``peripheral canal.''
    Mr. Patterson. I will be careful on that one.
    We are in the middle of the process. At this point, all of 
those things are on the table. The document that was put out 
has everything from more aggressive management on the demand 
side, conservation, recycling, et cetera, to legitimately 
looking at additional storage, both surface storage, new 
reservoirs but particularly additional groundwater storage. I 
mean, these are all on the table, and they are being hotly 
debated, and I think that is the way it should be.
    They have been debated for 30 years but never in the 
fashion that it is now. There is so much riding on the outcome 
of this discussion, and I think all sides realize that and are 
going to push hard for their interests. But, ultimately, the 
success will be in arriving at some place in the middle so that 
we can resolve some of these problems.
    Mr. Fazio. Just for the Chairman's benefit, how do we go 
about making the decisions as to how the money will be spent? 
He is concerned, I think, as others would be, that we provide 
the funds and don't have enough accountability at the level of 
Federal expenditure.

                  The Ecosystem Roundtable--California

    Mr. Patterson. We will try to get additional information 
because it is a fairly complicated process. However, by and 
large, priorities for what are called stressors and the various 
species are set by a combined government and private sector 
group. This group is called the Ecosystem Roundtable, a subset 
of the overall stakeholder group called the Bay-Delta Advisory 
Council. Through that group, we do the debate on what are the 
priorities for available funding. A preliminary decision is 
made on how much might we spend in each of these categories.
    There is a public solicitation process to allow anyone that 
has a good idea, from the university to a government agency to 
a nonprofit, to come in, in some fairly high level of detail, 
describing projects that would meet these goals.
    [The information follows:]


[Page 608--The official Committee record contains additional material here.]



    Those are evaluated by the Ecosystem Roundtable. They then 
come to a group that includes folks----
    Mr. McDade. How many people is that?
    Mr. Patterson. I think it is about 20 to 24, something like 
that.
    Mr. McDade. How many represent either the State of 
California, the Federal Government and how many the nonprofits?
    Mr. Patterson. These essentially are all non-State, Federal 
agency folks. These are all basically from the interest groups. 
From there, there is a group that we call the integration panel 
that is made up--and that is where a lot of the technical 
expertise and program expertise of the agencies comes in.

                   CALFED Management and Policy Team

    The Ecosystem Roundtable recommendations are filtered 
through another review process--the CALFED Management Team who 
massages and gets questions answered, then makes a 
recommendation to the CALFED Policy Team, which is co-chaired 
by----
    Mr. McDade. Who is on that?
    Mr. Patterson. Doug Wheeler, who is the Secretary of 
Resources.
    Mr. McDade. I don't need names, but I mean what is the 
team's composition?
    Mr. Patterson. California Resources----
    Mr. McDade. Yes.
    Mr. Patterson. California Resources Agency, which is 
essentially the Department of Interior for the State of 
California. It is co-chaired on the Federal side by Bob 
Perciasepe at EPA, and it includes policy level people from all 
ten of the Federal agencies and all five of the State agencies.
    Those decisions then are made there for ratification by 
Secretary Babbitt and Secretary Wheeler.
    Mr. McDade. Are decisions made by a majority vote? Is that 
how these things are done?
    Mr. Patterson. We have had consensus so far.
    Mr. McDade. So you haven't had to have a vote; but, if you 
did, that is the way it would occur?
    Mr. Patterson. We have never laid down that rule.
    Mr. McDade. I beg your pardon?
    Mr. Patterson. We have never had to define the rule of 
whether we are going to vote.
    Mr. McDade. So far you are encouraging consensus then?
    Mr. Fazio. They talk each other into submission.
    Mr. McDade. I wouldn't be surprised.
    Mr. Patterson. If one of the agencies has a strong 
objection, we take it seriously and try to work our way through 
it. So far, we have been able to resolve those. Maybe in the 
future we will have to refine the rules.
    Mr. McDade. Go ahead and just discuss that policy group 
that you were talking about. Tell us how that is composed, 
please.
    Mr. Patterson. It is made up of membership of the 15 State 
and Federal agencies, co-chaired by the Secretary of Resources 
on the State side and Bob Perciasepe from EPA on the Federal 
side. Those decisions then go to Secretary Wheeler and to 
Secretary Babbitt for the final sign-off.
    So it takes--you know, it takes 60 days, basically, to go 
through the public discussion, review and final buy-off. But by 
the time we have done that, we think we have got a pretty solid 
program.
    Mr. Fazio. There probably are a number of other things we 
could get into on that subject, but I think at the moment we 
will move on to some others.

                 Central Valley Project Improvement Act

    The Central Valley Project Improvement Act, the so-called 
Miller-Bradley Act, passed a few years ago; and we have a 
restoration fund made up of user fees that we basically 
appropriate here. We had some discordant notes last year when 
we provided funds in a way that caused some people to think we 
had lost sight of our purpose. Could you tell us about the 
budget this year for the CVP restoration fund and reassure 
anybody who might have any doubt about what our real purpose 
is?
    Mr. Patterson. We have a very strong program this year for 
the Central Valley Project Improvement Act. We have about $27 
million, $28 million in appropriations, another $30 million-
plus from the restoration fund, which is water and power 
surcharges. Then the State of California is putting about $30 
million of cost share money. So it is about a $100 million 
program in fiscal year 1998.
    And we have at least that much in needs. We have been 
struggling with getting priorities to make sure that we are 
spending that $100 million on the highest priorities, but there 
was a lot of debate last year about a so-called water 
acquisition reserve set-aside.
    We have not moved further with that idea. We continue to 
think there is some merit there, and we are working with some 
of the stakeholders to refine that. But we are going to have--
we are estimating only about $5 million carryover into 1999, 
and that is primarily just working money to get us through 
until the collections will start again in 1999.
    Mr. Fazio. The point is, the carryovers will always be 
spent. It may not be spent quite as rapidly as some would want.
    This, for my colleagues' benefit, is all money that is 
generated within the State by the beneficiaries, so to speak, 
even though we do appropriate it. It really has, in effect, 
relieved this Committee of some of its burden; and I want to 
make clear that this is not just more Federal taxpayers' 
dollars flowing into one place.

                               Salton Sea

    On the Salton Sea, Mr. Secretary, you mentioned a concern 
you have, and I share it: are we talking about getting water 
from northern California for the Salton Sea or from the 
adjacent Colorado River Basin States?
    You mentioned the Sea of Cortez. Is that the Gulf of Mexico 
in some other lexicon? I just wondered.
    You know, it would be divisive in any direction we went for 
this water; and to do it all in a year seems to me rather 
optimistic, if not politically opportune.
    Secretary Babbitt. Mr. Fazio, I would say there are two 
categories of proposals for dealing with the salinity problem 
and stabilization. The Bureau has actually done some studies, 
which you may have seen. They are on the modest side. They 
relate to the concept of diking off portions of the lake. You 
can actually keep diked areas, where there is some inflow, 
fresher by pumping the water over the dike into the larger 
evaporation area of the lake. It is a common, understood 
technique.
    There are larger proposals which would have both new 
freshwater inflow and an outlet, because if you are going to 
put a lot more water in, you have got to have it flowing out 
the other end of the lake. And the various proposals have 
included building a canal southward across the Mexican border 
into the Sea of Cortez.
    Now, there are two variants. One is the canal would be the 
outlet and also the intake, and you would pump water because 
sea water is much less saline than what we have got in the 
Salton Sea. We circulate the whole thing through.
    The other variant is to bring in water from the Colorado 
River and then have an outlet into the Sea of Cortez.
    Mr. Chairman, those are large proposals, even by historic 
standards of reclamation projects.
    Mr. McDade. I remember years ago the Department was 
proposing a saline water project at the end of the Colorado 
River because they weren't delivering the agreed upon amount to 
Mexico. That has got to be, what, 15 years ago?
    Secretary Babbitt. Well, that is correct.
    Mr. McDade. And I assume we are still in the same 
situation, without the saline water plant.
    Secretary Babbitt. Well, we have the plant. We just don't 
use it.
    Mr. McDade. The good news is we have it. The bad news is it 
isn't working. Is it one of the osmosis plants?
    Secretary Babbitt. It is a reverse osmosis plant, yes.
    Mr. McDade. Thank you.
    Mr. Fazio. This is a long-standing bipartisan concern that 
our delegation has, but the resolution of it is not going to be 
just an engineering problem. The politics of allocating 
Colorado River water at this point have already gotten to be 
pretty complex.
    I do want to simply state for the record that I share your 
concern for coming up with an answer under the circumstances. I 
know it is being driven by events that you know we all 
understand, but I don't believe it is going to be that simple 
to do, although I think we do need to press on.
    Commissioner, did you have a point you wanted to make on 
that?

                          yuma desalting plant

    Mr. Martinez. On the question of the desalting plant, the 
plant down in Yuma is in standby operation. It is capable of 
being put back in operation within one year. It has not been 
used because of high flows in the Colorado River which have 
made it unnecessary to use that plant. However, in case it ever 
is needed, it is capable of being used.
    Mr. McDade. Yes. I know the one that was in San Diego is 
now in Guantanamo Bay supplying water at the naval base in 
Gitmo for, I guess, about 30 years now.
    Mr. Martinez. We have put in place a research institute at 
the Yuma plant that we are using to develop new technologies.
    Mr. McDade. In saline water?
    Mr. Martinez. In saline water, yes.
    Mr. McDade. I should tell you that years ago I went to San 
Diego to visit the saline water projects the Department was 
operating on the West Coast, and I had a very interesting tour 
with a Ph.D. who was in charge of the research. And on the 
first day before we got to the first plant, he said to me, 
``Congressman, go back to Washington; close these stands.'' I 
said, ``Close them?'' And he said, ``Yeah. We have learned 
everything we can in this process. Don't spend any more tax 
dollars.''
    He was the first person I think I met, maybe then or since, 
who said don't spend any more money here. He wanted to shift 
over to a reverse osmosis process. And ultimately the office 
was closed, as you know.
    Mr. Martinez. Yes.

                    endangered species act concerns

    Mr. Fazio. Let me ask about the Endangered Species Act as 
we have top level department management here. We had an 
apparently successful effort to tighten up the time frame that 
the Fish and Wildlife Service has required for flood protection 
projects. As you know, we attempted to fix our flood system in 
California rapidly. The Corps did an excellent job, and Fish 
and Wildlife apparently contributed to shortening the time 
frame very dramatically.
    But I would be interested in your overall thoughts about 
how we continue to do water development and flood protection in 
California, with the cooperation of this very important agency 
of your department. We have several fish runs that are 
threatened, some that are already listed as endangered, such as 
steelhead salmon runs. Are we coordinating as well as we can 
with all the other agencies, including, I might add, the 
National Marine Fisheries Service that has authority to list 
most of these species? It is obviously a major economic issue 
for much of the area I represent.
    Secretary Babbitt. Congressman, our experience, I think 
almost without exception, has been that we can reconcile the 
demands for municipal, industrial and agricultural water with 
flows and water quality protections required by the Endangered 
Species Act if we are inventive enough and smart enough to look 
at conjunctive use, water efficiency, water conservation, water 
storage, and market transfers of water. I think we are now 
crossing that divide. It has been a slow and painful kind of 
process, because the concepts are new.
    The most striking example of this is the current discussion 
going on between the Metropolitan Water District in Los 
Angeles, the City of San Diego and the Imperial Valley 
Irrigation District about the transfer of agricultural water 
rights in a market purchase and sale transaction across into 
the San Diego water market. Those are going to become more and 
more common. It is just one example of how it is I believe we 
can reconcile these competing demands.
    Mr. Fazio. The Salton Sea is not very far from the Imperial 
Valley, is it?
    Secretary Babbitt. The Salton Sea borders the Imperial 
Valley, and we will have an interesting set of consultation 
issues under the Endangered Species Act there as these 
transfers go forward, I mean unavoidably. But I am confident it 
can be worked out.
    Mr. Fazio. So we are talking about bringing water in on the 
one hand, and on the other hand, we are talking about exporting 
water to M&I users either through the MET in Los Angeles or 
over to San Diego?
    Secretary Babbitt. That is it.
    Mr. Fazio. That is kind of the typical irony of California, 
isn't it?
    Secretary Babbitt. It absolutely is.
    Mr. Fazio. Yes.
    Mr. Babbitt. It absolutely is, although in fact the 
transfer is really easy to do because the water would never 
reach the Imperial Valley. It would simply be diverted through 
the Parker Aqueduct.

                             animas-laplata

    Mr. Fazio. Yes. I would like to ask a Colorado question 
now.
    By the way, Mr. Chairman, we are pleased to have with us 
Jay Rhodes and Ray Kogovsek, two of our former colleagues 
today. This has nothing to do with my question, I want to make 
clear.
    Animas-LaPlata has been before this Committee for years, 
predating my time here, and I know it will postdate it as well. 
I am wondering if the Department might give us some sense as to 
what it might recommend and what it is doing to evaluate the 
process that the Governor and Lieutenant Governor of Colorado 
have been engaged in, which is to try to scale back the Animas-
LaPlata--the traditional project that we have talked about 
forever--to something that would either be, as some have termed 
it, Animas Lite, or something that would reflect the dug-in 
position of some environmentalists: a simple water rights buy-
out plan without any construction. The Committee inevitably has 
to deal with this, even if you don't ask us to.
    Secretary Babbitt. Sure.
    Mr. Fazio. This is always fodder for a food fight and we 
would like to know if the Department would like to participate 
in it.
    Secretary Babbitt. Well, we are not eager to get into the 
middle of this, but let me tell you what we have done.
    Mr. Fazio. That has been evident over a number of years.
    Secretary Babbitt. About a year and a half ago, I went to 
Governor Romer because we had had considerable success working 
with the Governor getting consensus solutions on a whole 
variety of things. We actually put together a plan for the 
Platte River, and Governor Romer was in the front of that.
    The final grazing regs were thrashed out with his help in a 
roundtable in Colorado. With high expectations we said, okay, 
now having done the impossible in the Platte, let's try Animas-
LaPlata.
    Those discussions, as you know, went on for approximately a 
year searching for a consensus. It didn't happen. I mean, there 
are limits on what you can do in a consensus process.
    As you described, two alternatives came out of that 
process. One, settle the Indian water rights by purchase of 
existing water rights; secondly, the so-called Animas Lite.
    Now, there was language in this Subcommittee's 
deliberations last year asking the Bureau of Reclamation to 
study the work product of this Commission. The Commissioner, 
back in, I believe, November, started that study and said we 
can do it within 6 months, and I believe he is on track. He can 
tell you about that, but he is on track to an analysis of 
Animas Lite and the water purchase alternative, which should be 
completed within the next couple of months, I think, within the 
next 60 days.
    Now, in the meantime, Senator Campbell has introduced a 
bill which would give us direction from this Congress to 
proceed with the Animas Lite version. That is where we are.
    Mr. Fazio. And the Department is doing a study which will 
be terminated at what point?
    Secretary Babbitt. The Bureau's study of these----
    Mr. Fazio. The Bureau's study.
    Secretary Babbitt [continuing]. Options should be 
available--it has to be cleared by OMB, and obviously we don't 
have control over that. But I believe our study will be sent up 
to OMB, Eluid, within the next 60 days?
    Mr. Martinez. That is correct. I have reviewed the 
preliminary draft. The study is looking at some basic questions 
with respect to both of these proposals--the amount of 
environmental studies required to advance either proposal, 
whether either proposal meets the intent of the settlement act, 
and whether they are feasible.
    I came under some criticism for doing the study of both 
alternatives, but I realized that there were going to be 
questions with respect to both alternatives. There are Members 
of Congress that are supportive of one or the other 
alternative. And I needed to be prepared to be able to respond 
to those questions. I believe that report will be completed 
from the Bureau of Reclamation's perspective in a couple of 
weeks and will be forwarded for review. I have no control as to 
how long it will take to go through the review process. But I 
hope to be prepared to respond to questions at the time that 
Senator Campbell's bill is debated.
    Mr. Fazio. But you wouldn't anticipate making any budget 
amendment this year? This budget, as you have introduced it, 
would be, from your standpoint, adequate?
    Mr. Martinez. It is adequate for us to continue the 
activities that we have got in place. There would be no intent 
to amend the budget request unless the recently introduced 
legislation is passed or we receive new direction from 
Congress.
    Mr. Fazio. So if Senator Campbell is not successful this 
year, we should leave the item as is in the bill. Is that your 
position, simply to guide the ongoing efforts of the Bureau 
until we do get a resolution?
    Mr. Martinez. I think I would defer to Congress as to what 
the final language would be but we don't foresee any additional 
funding unless Congress, were to direct us to initiate 
construction.
    Mr. Fazio. Okay. Thank you.
    Mr. McDade. The Chair recognizes the gentleman from 
Alabama.

                     mr. callahan's opening remarks

    Mr. Callahan. I thank you, Mr. Chairman. And I recognize 
that most of the activity of your agency is directed west of 
the Mississippi, and that is fine with me. I have long 
supported that and, thus, when I have problems I always get the 
support of my friend from California, because my problems are 
so small compared to his. And I am going to solicit that 
support, and I am optimistic that I am going to have that 
support, because the Chairman of the Committee is coming to my 
district to visit me, and I am going to the gentleman from 
Michigan's home district to visit him, and I am a next-door 
neighbor to Visclosky. Chet and I are related by the fact that 
we were common allies during the Civil War.
    I have a lot of friends on this committee, and I want to 
make it simple.

                       dog river--mobile, alabama

    We have a project. I live on a river in Mobile that 
has,because of excessive siltation and rainwater runoff, actually been 
devastated. The city and the state and the county are willing to put up 
90 percent of the funds to reclaim that, to make it, once again, a 
pristine system. However, the Corps has to do it. And, as you know, 
there are rules and regulations about new starts, especially 
restrictive when a project is not feasible from an economic point of 
view. So we need $2 million from the United States of America to match 
the State, local and county monies to return this body of water to a 
pristine situation.
    Now, I want to make it simple for you. I think with my 
allies, and considering the fact that I am supporting all these 
projects for their districts, the Committee would be responsive 
to my request. If you will tell me where to put the $2 million 
request, I will do it, rather than go through this lengthy 
process of me contacting one of your aides or your aide 
contacting one of my aides. I want to make it as simple for you 
as I possibly can.
    Now, where do you want me to put the $2 million request?
    Secretary Babbitt. Mr. Callahan, this may be an historic 
opportunity for the Bureau of Reclamation to establish a 
beachhead East of the Mississippi River. So I ask you all to 
take note.
    Seriously, I would like to respond, with the leave of the 
chairman, to you in writing, because if this is, in fact, a 
restoration-type project, that is the sort of thing that we 
have been doing in Florida, I think, with great success, and in 
a variety of other places. Whether or not that money should be 
appropriated, that is the Committee's decision, and could be 
profitably expended by the Fish and Wildlife Service or some 
other agency, I think, depends in large measure on what it is 
that the restoration is to consist of.
    It may be that if you are looking for a Federal cost share 
to flow straight through to the agencies, you could appropriate 
it to me and give it----
    Mr. Callahan. That is what I think would be the simplest 
thing if we can't get it through the Corps of Engineers because 
we can't economically justify the project from a commercial 
point of view.
    Secretary Babbitt. Yes.
    Mr. Callahan. Thus they would have to almost establish it 
as a new start. But I think that the uniqueness of the State of 
Alabama putting up 90 percent of the matching monies represents 
a pilot program that certainly should be investigated as a way 
to reclaim destroyed estuaries or destroyed rivers such as the 
Dog River in Mobile.
    Secretary Babbitt. Mr. Callahan, I don't want to get out on 
a limb with the rest of the Committee here, but you should 
probably have a look at the precedent created for the Central 
Utah Project, where the money was----
    Mr. Callahan. Well, I know that, but I want to tell my 
staff person or you to tell me where to put it in this bill.
    Secretary Babbitt. Secretary of the Interior.
    Mr. Callahan. Secretary of the Interior? Should I mention 
specifically what it is for?
    You are not planning on going to South America, are you?
    If you would get with me, prior to the markup of this bill, 
we could discuss something to give you the discretion to make 
absolutely certain it is a reclamation project. I realize that 
there are a lot of more important things like the Jazz Festival 
in New Orleans, which, incidentally, is on the west side of the 
Mississippi River. That is all right, too.
    Mr. Secretary, before markup, if you would, please provide 
me with a suggested route as to where we could put this $2 
million.
    Secretary Babbitt. All right.

                      MNI WICONI PIPELINE CONTRACT

    Mr. Callahan. Secondly, since we are spending all this 
money west of the Mississippi, and I totally support that, we 
do have contractors in Alabama who sometimes supply the needs 
of some of these water projects. Such as one contractor to the 
Mni Wiconi pipeline venture, the subject of a letter you 
received from the entire Alabama delegation. There is an 
apparent lack of transparency in that contractual arrangement, 
with the Mni Wiconi people arranging the details of the 
contract so it could only apply to one piping company. And we 
think that that should be looked at in great depth by your 
agency.
    As you know, we are going through a rescission process now, 
and I think that you should convey the seriousness of our 
concerns to the people that are running this project. I am 
going to be on that Conference Committee and we are going to be 
looking for all kinds of money to rescind, and we very likely 
might look at rescinding the third stage of this project if 
they do not have transparency, which gives an opportunity to 
all people in America to bid on a pipeline project.
    The United States is going to be responsible for the 
maintenance of that project, and I think that your agency has 
the authority to instruct them, number one, to be a little bit 
more transparent and, number two, to make certain that they are 
building a system that is not going to require extensive 
maintenance some time in the future.
    Secretary Babbitt. Mr. Chairman, I have been briefed on 
this issue and I concur with your suggestions. This project has 
been delegated out to the Ogalala Sioux under a 638 contract, 
but I think we retain the responsibility to see that it is done 
correctly. And it is my understanding that the bid specs 
include the kind of pipe that you are concerned about, and that 
we should therefore make certain that those bids are being 
broadcast and selected on the merits, because your people do 
qualify.
    Mr. Callahan. Well, just make certain that the Mni Wiconi 
people understand that, that the project is in jeopardy----
    Secretary Babbitt. Good.
    Mr. Callahan [continuing]. As a result of that.
    Secretary Babbitt. I hear you clearly.
    Mr. Callahan. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Mr. McDade. The Chair recognizes the gentleman from 
Indiana.

                    MR. VISCLOSKY'S OPENING REMARKS

    Mr. Visclosky. Thank you, Mr. Chairman. I don't think 
philosophy gets you very far in the United States Congress, but 
I just enjoy these conversations as someone east of the 
Mississippi, north of the Mason-Dixon line and with too much 
water along my lake shore right now. I am just fascinated by 
these conversations.
    I would, for the record, note that Mr. Pastor and I have 
had a number of conversations where he has tried to educate me 
about the value of sunlight and photovoltaic cells, accusing me 
of not necessarily having a great quantity of sunlight in my 
district and indicating that he has a lot inhis. I have water 
in mine and apparently many people don't.
    I appreciate the responsibilities that the Bureau does 
have. And I started my career, Mr. Chairman, on the Interior 
Committee, and that was an educational experience. Water is 
something that, as a child and as an adult, I have always just 
taken for granted. It is something that many times we have had 
too much of. Obviously, it is of great concern and importance 
to the people out West.
    Having said that, I also associate myself with the 
Chairman's remarks earlier, recognizing that there are 
responsibilities here. But Mr. Secretary, in your opening 
statement, the point is made that the history of the Department 
of Interior has been one of change. So I do think that the 
Chairman has made a valid point as far as always looking for 
efficiencies in how government is going to meet these 
responsibilities.

                            TITLE TRANSFERS

    The couple of questions that I have regard asset transfers. 
Over the last few years, there have been efforts in Congress 
and among water users to initiate title transfers of selected 
reclamation facilities to local water districts. Assuming that 
those users are willing to assume title and future 
responsibility, are there any compelling reasons to retain 
Federal ownership for those facilities?
    Secretary Babbitt. Congressman, the Bureau has been 
actively engaged in looking at this issue of title transfer. I 
believe there are projects that can be transferred, but there 
are a number of screens, I think, we need to get through. Where 
there are interstate interests, obviously that is a very 
different matter and that includes virtually all of the large 
projects.
    For the smaller projects, I think there are probably three 
issues that we need to look carefully at. One is whether the 
people who would operate the project can be relied upon to 
represent the interests of all the stakeholders, because on any 
river stream, even intrastate, the operation of a project 
typically affects downstream and often upstream users, fish and 
wildlife, municipal users, and seasonal withdrawals.
    What we found in some of these intrastate cases is that the 
local irrigation district, the ones seeking title, is one 
thing. But there will be a lot of other folks showing up saying 
we oppose that because we are not certain that a single 
interest can represent the multiplicity of indirect interests. 
I would include the environmental interests in that.
    Now, lastly, there is the issue of accumulated debt which 
is still hanging over some of these districts.
    All of that said, we are looking at this on a case-by-case 
basis. I believe that there are several intrastate transfers 
that meet those criteria in the pipeline now, and we will 
continue to look at others. We are not here to justify the 
status quo.
    Mr. Visclosky. Mr. Secretary, in 1995, the Vice President 
talked about these types of transfers. You indicate there may 
be a couple in the pipeline. Does the Department have any 
specific proposals before Congress at this time?
    Secretary Babbitt. I am not certain that we need 
congressional approval for all of those transfers. Anybody want 
to pick that up, Eluid?
    Mr. Martinez. When we have an asset transfer, we need 
congressional authorization. There are some discussions taking 
place with some districts out West where the Administration 
will be in a position to make recommendations on the transfer 
of some facilities in the near future.
    The transfers pending before Congress are the highest 
priority, and we have been trying to work through the issues. 
Notwithstanding the Bureau's desire to move these initiatives 
forward, there are a lot of other vested interests that come 
into play, fish and wildlife, Treasury issues, OMB issues, 
Forest Service issues and so forth. We continue as the Bureau 
of Reclamation to try to move these initiatives forward, and I 
think we are going to be successful.
    Mr. Visclosky. If you could, for the record, provide a list 
of projects that potentially are in the pipeline, and using the 
Vice President's Demarcation 95, if that could be the baseline, 
I would appreciate it very much.
    Secretary Babbitt. Good, good. We will respond.
    Mr. Visclosky. Great. Thank you very much.
    [The information follows:]


[Pages 619 - 620--The official Committee record contains additional material here.]



    Thank you, Mr. Chairman.
    Mr. McDade. The gentleman from Michigan, Mr. Knollenberg.

                   mr. knollenberg's opening remarks

    Mr. Knollenberg. Mr. Chairman, thank you. Thank you very 
kindly.
    I am sorry I missed, Mr. Secretary, some of the initial 
testimony regarding reclamation, but I think you pretty well 
covered that base.

                 sleeping bear dunes national lakeshore

    I have a topic that relates to a specific problem for those 
of us from Michigan. I am talking about the entire State. It is 
the Sleeping Bear Dunes National Lake Shore. It is within the 
jurisdiction of the Department of Interior and specifically 
within the National Park Service, as you know. You may not know 
about the specific national park--perhaps you do--but I would 
like to give you just a very, very brief history of what 
happened to over 300 homeowners. Many built their homes up 
there with their own hands. Some are year round; some are not.
    But in 1970, these 300 or so homeowners were given their 
eviction notice when the Sleeping Bear Dunes National Lake 
Shore was created. And in that 28-year time frame, it has been 
kind of a struggle, maybe a war, between the National Park 
Service and those homeowners over the terms offered by the 
National Park Service to the various leaseholders and when they 
must leave their homes. It varies substantially.
    Now, there are still over 100 homes held by their original 
owners, who would like to enjoy the possession of their homes 
for the remainder of their lives. And these leaseholders have 
been very frustrated because many of the abandoned homes, as 
those leases come up, are in such a state of disrepair, that 
they have become havens for folks to just use for their own 
purposes, for drug use, et cetera. They are an eyesore, in 
addition. And they have become a hazard to park visitors.
    As a matter of fact, many of the homes that were removed by 
the National Park Service were removed in such a manner that 
suggests almost a callousness, a disregard, by the Park 
Service.
    I have got a photo that I am going to leave with you--I 
have others, so it is not the only one--that gives you some 
indication of the quality of things. Is it upside down? I can't 
even tell. But these are for you.
    This is a primarily a septic system that you are going to 
be looking at here. It has fallen into Lake Michigan, and this 
is where the Park Service failed to return one of the 
properties to an acceptable state, let alone a natural state.
    What has been very frustrating is that we tried to work 
with the National Park Service to allow these remaining 
leaseholders to keep possession of their homes for a fee. They 
have been willing to pay a fee. These fees would be used to 
return those abandoned structures to some kind of natural 
state, and the National Park Service has rejected this proposal 
out of hand.
    As I say, remember, these leaseholders are the eyes and 
ears of the lake shore and many of them have been coming there 
for forty, fifty years, long before the 1970 determination was 
made.
    There will be a proper time for them to leave, but it 
doesn't make sense to throw them out when the other abandoned 
homes continue to remain in their current condition, which is a 
state of disrepair.
    Section 327 of the 1998 Interior appropriations bill 
prohibits the Park Service from evicting leaseholders unless it 
has sufficient funds to remove the structures from that 
property within 90 days of the eviction.
    The purpose of this was to ensure that there was not going 
to be an increase in the number of abandoned structures that 
currently litter the lake shore. The claim is made, by the way, 
by the Park Service that they have the money, but they aren't 
spending it, and I refer back to an item from sometime back 
about the $580,000 per unit cost of some construction on 
employee housing I have to say this, Vic, in California's 
Yosemite National Park.
    I don't know if that is where the money went, but it isn't 
going for the purpose of bringing those buildings back into a 
state where at least it looks natural or it is protected in 
some way.

                       letter to director stanton

    I joined with other Members of Congress, particularly 
Michigan Members, in writing a letter to Director Stanton. I 
have a copy of that letter as well. I believe that the letter 
gives Mr. Stanton until the 31st of March, which comes up very 
quickly, to respond to our concern. So he still has some time. 
But it is rapidly diminishing. And I would appreciate it if you 
would impress upon Mr. Stanton the significance of this, and 
really all we want to do is to assure that the people, the 
residents who live there, that if there are going to be 
abandoned homes, they aren't abandoned very long; that there is 
a 90-day closure on that problem.
    The crime rate has picked up. And I think the pictures tell 
a story that I couldn't begin to tell about the condition of 
things.
    So what we are really trying to do is to get the Park 
Service to acknowledge that either they have the money or they 
don't, and then if they don't, I am not suggesting we take it 
from Yosemite, but I am suggesting that we look into the matter 
and, with your help, perhaps we can come to a solution. But we 
would like to work out a compromise that is good for the people 
up there, for the Department, and for the lake shore, so that 
we have a scenic beach area. And it is a beautiful area.
    So I am just imploring you, if you will, to look into it, 
and urge his response by the 31st of March, so that we can help 
remedy the problem and give our homeowners up there some 
indication of where they are in the scheme of this thing.
    And I have no questions, but if you have some significant 
comments you would like to make, I would be happy to hear from 
you.
    Secretary Babbitt. Congressman, I don't know whether they 
are significant or not, but I would like to respond. This is 
obviously a very valid concern that you have. I am not familiar 
with the details, but I will avow to you that you will receive 
a response from Mr. Stanton by the end ofthe month, and it will 
be a response which will have been reviewed by me personally. If you 
have any problems with it, I would invite you to call me on April 1st.
    Mr. Knollenberg. I will. Thank you, Mr. Secretary.
    Secretary Babbitt. Sure.
    Mr. Knollenberg. I appreciate that.
    Mr. McDade. It is April 2.
    Mr. Knollenberg. It is April 2. I think we have to do it, 
but thank you, Mr. Secretary. I would appreciate you looking 
into that.
    Thank you, Mr. Chairman.
    Mr. McDade. I am pleased to recognize at this time the 
gentleman from Arizona, Mr. Pastor.

                      mr. pastor's opening remarks

    Mr. Pastor. Thank you, Mr. Chairman.
    Mr. Secretary, Madam Secretary, Commissioner, good morning 
and welcome.
    First of all, Mr. Chairman, I would like to thank the 
Commissioner and the personnel of the Bureau of Reclamation for 
the promptness and attention they have given to many concerns 
we have had in Arizona. I know that in Yuma County we are 
dealing with sediment in the Colorado River and with land 
exchanges, and I know that we continue to work with you in 
trying to resolve the issue of the Central Arizona Project 
water settlement distribution. I would like to thank you for 
the attention that you have given in assisting us to solve 
those problems.
    Mr. Secretary, the expectation on the Salton Sea is that 
the water will be coming from northern California, and the 
salinity will be removed, I suppose, with the plant in Yuma so 
we can return it back to the Salton Sea. So maybe we can work 
it out in a win/win situation.
    Mr. Chairman, most of my questions will be submitted for 
the record dealing with CAP and the other issues that we have 
in Arizona, but I would like to ask one question.
    [Mr. Pastor's questions and answers for the record 
follows:]


[Pages 624 - 632--The official Committee record contains additional material here.]



    Mr. McDade. Without objection, they will be received.

                 habitat restoration on gila salt river

    Mr. Pastor. Thank you, Mr. Chairman. We have a project that 
is unique in terms of its objective and also unique in terms of 
a partnership between various parties in a metropolitan area in 
western Maricopa County. You have the City of Phoenix, you have 
Glendale, all the cities that are co-partners with the Corps of 
Engineers, Bureau of Reclamation and EPA. So we are trying to 
bring together a partnership, and it is very interesting 
because we are trying to restore a habitat out in the Gila Salt 
River and we are using reclaimed waste water.
    Again, how do you deal with the resources that you have--in 
this case wastewater--so that we can restore the habitat and 
bring it to a positive use?
    Under the authority provided in 1992, Mr. Commissioner, the 
Bureau is participating with the City of Phoenix and EPA in the 
construction of a cost-shared research demonstration project, 
which thus far is showing that constructed wetland technology 
is feasible in the arid Southwest. The Bureau has budgeted 
$400,000 to continue engineering and environmental analysis of 
the project, an amount that is far below the $1.5 million 
needed to keep this important project on schedule.
    My question is, Mr. Commissioner: What level of funding is 
necessary to match the commitment of the project's local 
sponsor and keep the project on schedule during fiscal year 
1999?
    Mr. Martinez. Mr. Chairman, Representative Pastor, our 
$400,000 budget request was formulated to continue the normal 
operations of the project. Since we put our budget proposal 
together, I am advised that three issues have arisen that 
warrant the expenditure of an additional $1.1 million by the 
Federal Government. We have some problems dealing with the 
details of mosquito habitat, muskrat infestation and 
reconfiguration of the site. Since our budget formulation, 
these issues have come up, and if we are going to move that 
project forward, we would probably need some additional 
resources.
    Mr. Pastor. Thank you, Mr. Commissioner.
    Thank you, Mr. Secretary, Madam Secretary.
    Mr. Chairman, those are my questions. Thank you.
    Mr. McDade. We thank the gentleman from Arizona. We 
appreciate his questioning.
    That concludes the formal part of the hearing. We have a 
series of questions we will present you for detailed answers 
for the record. We thank you all for your attendance. We 
enjoyed the opportunity to hear your testimony.
    Secretary Babbitt. Mr. Chairman, thank you.
    Mr. McDade. We thank you again, Mr. Secretary. The 
committee stands in recess until 10:00 tomorrow morning.
    [The questions and answers follows:]


[Pages 634 - 697--The official Committee record contains additional material here.]



                                          Thursday, March 26, 1998.

                    APPALACHIAN REGIONAL COMMISSION

                               WITNESSES

HON. CECIL H. UNDERWOOD, GOVERNOR, STATE OF WEST VIRGINIA
HON. JESSE L. WHITE, JR., FEDERAL CO-CHAIRMAN, APPALACHIAN REGIONAL 
    COMMISSION
TOM HUNTER, EXECUTIVE DIRECTOR, APPALACHIAN REGIONAL COMMISSION

                      Mr. McDade's Opening Remarks

    Mr. McDade. The committee will come to order.
    We are pleased this morning to have in front of us the 
Appalachian Regional Commission, and we are doubly pleased to 
have our colleague, Alan Mollohan from West Virginia, who does 
such a superb job here in Washington. I understand you brought 
somebody that you would like to present to the Committee, and 
the gentleman from West Virginia is recognized for such time as 
he deems necessary.

                     Mr. Mollohan's Opening Remarks

    Mr. Mollohan. Thank you, Mr. Chairman. I appreciate the 
compliment, but it is doubly high praise coming from you, who 
are so distinguished.
    Mr. Chairman, Mr. Fazio, Mr. Edwards, good morning. Thank 
you for the opportunity to appear here today with West 
Virginia's distinguished Governor, Cecil Underwood. It is good 
to be here.
    As I hope all of you know, we have a very high regard for 
this subcommittee. As I know the Chairman and the Ranking 
Member know, I have a very high regard for this subcommittee. 
And we respect the work each of you does in finding and funding 
creative strategies to meet our Nation's energy and water 
development needs. Without exception, you have been responsive 
to the needs of our State, especially in regards to helping us 
enhance the quality and usefulness of our water resources. Your 
concern for, and confidence in, our future is greatly 
appreciated by me and I know by our special guest, Governor 
Underwood.
    Again, my thanks for your past support, and I look forward 
to working with this subcommittee and each of you throughout 
the year's appropriations cycle.
    Mr. Chairman, Mr. Fazio, my purpose in being here today is 
not connected with any individual project, but it is connected 
to an organization that has played an absolutely vital role in 
the development of the Appalachian region and is crucial to its 
future progress.
    I would like to pause to acknowledge the arrival of my 
chairman, Mr. Rogers, who is very supportive of the Appalachian 
Regional Commission, as is the chairman of this subcommittee.
    That organization, of course, is the Appalachian Regional 
Commission, and this morning I have the honor and pleasure of 
introducing to you one of the ARC's leading supporters, the 
Governor of West Virginia, the Honorable Cecil Underwood. As 
you are about to learn, Governor Underwood's support for the 
ARC is based upon his long involvement in economic development 
in West Virginia from public and private sector perspectives.
    I know you will be favorably impressed by his analysis of 
how the Commission has improved the economy and quality of life 
of West Virginia and its companion ARC States. And I think you 
will be further impressed by how he has used the ARC program to 
promote partnerships among different levels of government, as 
well as in the private and nonprofit sectors.
    Appalachian States have made historic advances, thanks to 
the Commission's role in infusing new technologies, 
establishing basic services, building transportation corridors 
and offering skills training. Clearly, this is a Federal-State 
partnership that works, and I appreciate very much how Governor 
Underwood has worked it as a partnership at the State level.
    When it comes to getting ARC funding priorities, he has 
cast a wide net, seeking a broad range of input and soliciting 
the views of constituencies across the State, and in the end 
making sound judgments based on the needs and the opportunities 
at hand. That inclusive approach to ARC funding by the governor 
serves West Virginia well, it serves the region well, and 
ultimately it serves the country well.
    I believe this subcommittee will appreciate the 
observations of Governor Underwood, a man who has devoted many 
years of his life and service to the people of West Virginia as 
a State legislator and then as a minority leader in the forties 
and fifties; as the youngest governor in the State's history 
when he was first elected in 1956; as a high school and college 
teacher; as president of Bethany College; as president of the 
Software Valley Foundation, a very important movement in our 
State; and in a host of private sector and educational 
capacities, Mr. Chairman.
    Mr. Chairman, Mr. Fazio, members of the committee, I am 
pleased to introduce to you a strong and knowledgeable advocate 
of the Appalachian Regional Commission, West Virginia Governor 
Cecil Underwood.
    Mr. McDade. Alan, we thank you very much for taking the 
time. It means a great deal to us that you would come over to 
introduce the governor. We appreciate very much your putting 
your seal of approval on the program and what the governor is 
doing.
    We know you are a bipartisan group here and we are 
delighted, Governor, to have you here this morning. We are 
honored by your presence. The degree of public service you have 
rendered is awesome and we all appreciate it. Governor, you may 
proceed as you wish.
    Mr. Mollohan. I am going to leave this in very capable 
hands, Mr. Chairman.
    Mr. McDade. Thank you for being here.

                  governor underwood's opening remarks

    Governor Underwood. Thank you, Mr. Chairman, members of the 
Committee. I am very honored to be here today, and I am 
certainly honored to be presented so eloquently by Congressman 
Mollohan. He and I and his father before him have been long-
time friends and have worked together on many, many projects. I 
am particularly impressed with his knowledge of economic 
development and in the field of technology.
    He mentioned Software Valley. Senator Byrd and I and a 
dozen other people created Software Valley in 1985, in an 
effort to develop high technology in West Virginia, and 
Congressman Mollohan has taken some of the activities we 
started and has developed a very significant high tech 
consortium in his district, and it is one of our fastest 
growing activities in the State.
    I have an interesting history with the Commission. In a 
very hot, steamy August afternoon in 1959, three Governors met 
in a hotel in Annapolis, Maryland. Governor Tawes had been 
elected Governor of Maryland in 1958, Bert Combs was in his 
last year as Governor of Kentucky, and I was midway through my 
first term. The advantage I have of being around so long from a 
political standpoint, the political opponents I couldn't 
defeat, I have outlived.
    Governor Tawes said, ``I committed myself to helping the 
high unemployment in the three mining counties of western 
Maryland during the campaign, and I want the two of you, who 
have the same problems, to see what we can come up with in the 
way of a creative approach to the high unemployment in the coal 
fields of Appalachia.'' This giant stride of full mechanization 
took place in the middle of my term, and in a little over a 
year, 25 percent of the work force of our entire State was 
displaced. That is not an easy thing to deal with when one is 
governor because the governor is the focal point.
    And so we came up with the idea of a regional compact, and 
it didn't come into fruition until a few years later, when 
President Johnson proposed the creation of the Appalachian 
Regional Commission. But during the last two years of my term 
we had a number of meetings, working with the Appalachian 
governors, trying to come up with some sort of a cooperative 
arrangement. That is where it was born, and so I have followed 
it with great interest through all of the years since that 
time.
    I am here today on behalf of Governor Pataki of New York, 
who is the co-chair of the Commission this year. He was unable 
to come, and I am delighted to participate in this hearing. And 
I certainly appreciate the capable work of our Federal co-
chairman, Dr. Jesse White, who is here with me today and will 
be testifying more in detail as soon as I complete my 
presentation.
    All of the governors support President Clinton's fiscal 
year '99 budget in which he proposes $67 million for the 
Appalachian Regional Commission, and the support is unanimous 
from the nine Republican and four Democratic governors because 
we recognize the importance of this program for our people.
    Since ARC's inception, the employment across the region has 
increased by 48 percent, and this is a significant development. 
My own State last year was number one in the Nation in the 
creation of new jobs in relation to our size. We had announced 
last year the creation of 9,613 new jobs, and that is an all-
time record for our State. And we have set a goal of a thousand 
jobs a month for '98. I am happy to tell you that, with a few 
days left to go in March, we are at 2,800 jobs since the 
beginning of the new year.
    These are very diversified geographically, they are 
diversified economically, they are not clustered, as we used to 
be in the coal industry. Half of the jobs last year were 
expansion of existing businesses and industries already in the 
State. I give the ARC a major credit for this kind of 
development because, with the investments in the infrastructure 
and particularly in the highways, we have made our State, as 
the rest of the region, very accessible. Since 1988 in the 
region, we have had over 1 million new jobs. The goal of the 
governors is to get the unemployment rate across Appalachia 
below the national level, if that is possible.
    I mentioned retention and expansion as being as important 
to us as finding new jobs and new industries, to bring to the 
State. For that reason, the ARC leadership has placed major 
emphasis on training and education programs. We are linked 
heavily to technology because technology provides us the 
roadbed for the information superhighway, just as the 
Appalachian corridors provide us with the roadbeds for the 
earthly highways. The technology gives us an electronic 
proximity that pulls us together as we never have been before.
    The mountainous terrain of Appalachia historically has kept 
us very isolated with a lot of provincialism. I see that fading 
in the 40 years between my terms. It is just a 180 degree 
difference. We can now think as a State, whereas before we 
thought of very small regions. Even with as much progress as we 
have made, we still have too many pockets of illiteracy, too 
many pockets of high school dropouts, too many pockets of 
poverty, and for that reason the governors have allocated 
consistently, 30 percent of the total allocation to the States, 
to address the most distressed areas.
    When I go back home tonight, I am going to McDowell County 
in our State for the annual Chamber of Commerce dinner, and 
that is probably the most depressed county in the State. It has 
lost 30 percent of its population in 40 years. There is high 
unemployment, and I am going to spend a couple of days there in 
the next few weeks trying to see how we can find things to 
initiate new activity.
    Just two days ago I was very happy to participate in a very 
important announcement of a new water system for an entire 
county like McDowell County, which was one of the coal 
counties. This will be the 155th infrastructure project for 
which we have used ARC for seed money. ARC has spent $36.4 
million in infrastructure during the last--well, during its 
existence. The Boone County project requested $1 million of ARC 
funds, to be used as seed money. Although the commitment for it 
hasn't been approved yet, we were able to develop a $28 million 
project serving an entire county, much of which did not have a 
water system. The systems that were in place in public service 
districts were inadequate and in need of replacement and they 
had no hope of replacing them.
    But by using $1 million of ARC money, some abandoned mines 
funds that were available, some small city block grants, and we 
used a mitigation fund in the State, and although this is not a 
flood-prone area, we used some flood money the governor has 
available, and the West Virginia American Water Company stepped 
up and committed itself to $16 million for this project. So we 
have under construction now a $28 million project that will 
serve 82 percent of the entire county and will serve over 
21,000 residents, and many of them did not have water before. 
When completed, it will be 71 miles of water pipe.
    It has another important promise for the future. Going 
through that county is Appalachian Corridor D, going south from 
Charleston to the Kentucky border and crossing at Williamson in 
the direction of Pikeville. As the highway was completed mile 
by mile, growth and development flourishedalong its way, but 
that kind of growth and development can't flourish unless the 
infrastructure is there.
    So with the addition of this county, we are moving south 
with infrastructure, with water service that will make it 
possible for a very underdeveloped area to grow over the next 
several years. We hope eventually to take the water system all 
the way to Williamson, using the right-of-way of the 
Appalachian corridor as the route for the development.
    We know and we appreciate the fact that the President and 
the Congress are moving now with making the corridors a 
priority for completion in the new ISTEA reauthorization, and 
all the governors are very pleased with this development. In 
the Appalachian regional budget this year we have not asked for 
highway funds because they have become a priority on their own.
    Traditionally our policy has made it possible for us to 
take a small percentage of the highway funds to develop 
individual projects to meet specific local needs, such as 
access to an industrial development site or access to 
hospitals, health care sites, something of that kind locally. 
We hope that we will be able to continue that flexibility even 
with the new funding approach.
    I think that ARC is a model partnership. The Federal 
Government provides substantial financial assistance but the 
States, through their governors, work as partners, and it takes 
unanimous approval both at the State level and the Federal 
level for a project to become a reality. So for that reason I 
think it is an ideal kind of working relationship between the 
Federal Government and the State. I think it is good 
government, it is good philosophy, and it doesn't build up a 
huge bureaucracy. The administration of the funds is a very 
small percentage of the amount actually budgeted; most of the 
money is invested in growth.
    The governors had been somewhat concerned about the 
President's proposal to create the Delta Regional Commission as 
an expansion or a part of ARC, and we were concerned about this 
move that might diffuse the efforts and weaken our structure, 
and the governors wrote to President Clinton. He has responded 
and has asked Dr. White to work on a new proposal, using the 
ARC as the model, but creating a separate commission. We 
certainly couldn't be opposed to that because we have been so 
successful in our own right, and it is my understanding it will 
have a different funding route and will not be in competition 
before your Subcommittee for ARC funds.
    With that, I certainly express my appreciation to you for 
providing the time. I am honored to share in your meeting this 
morning, and to appear here with Dr. White.
    [The prepared statement of Governor Underwood follows:]


[Pages 705 - 709--The official Committee record contains additional material here.]



                           Origins of the ARC

    Mr. McDade. Governor, we thank you for a truly eloquent and 
illuminating statement about the history of ARC in your area. I 
was very impressed. I never knew the origins of the concept of 
the Commission, and to hear about you and your colleagues 
meeting over at Annapolis--what was the year, again?
    Governor Underwood. 1959, and I give great credit to 
Governor Bert Combs. He had four years of experience in going 
through the same problems I had, but he really did a super job. 
He also was the architect of the Appalachian Regional Hospital 
chain. United Mine Workers, under John L. Lewis's leadership, 
created 10 hospitals in three States to serve the miners of 
Appalachia. But then when the Depression in the coal fields 
hit, they had to jettison the hospitals or else they were going 
to break the union.
    Governor Combs created a nonprofit corporation and gave 
strong leadership to it during those years, and I have been on 
that board for 20-some years, and we have gone from a 
struggling, almost bankrupt organization now to one of the 
strong models of health care in rural America and a much more 
stable financial structure. It was Governor Combs who, using 
essentially the same approach, developed the Appalachian 
Commission.
    Mr. McDade. Governor, I think we are all at this table in 
this room because we want to make it a better country and a 
better world, and certainly you and your colleagues have done 
that.
    Mr. Rogers. Would the chairman yield briefly?
    Mr. McDade. I am delighted to yield to my friend from 
Kentucky.
    Mr. Rogers. I do not want to take time from the others 
here, but I did want to quickly sketch what you said about 
Governor Combs. He was the first Kentucky governor in many, 
many years from the eastern mountain part of the State where I 
am from, and he had during his term started in the eastern part 
of the State essentially what ARC now is doing there. And out 
of that, I think, grew his motivation to join with you and 
others in trying to do an Appalachian-wide copy of what he had 
been trying to do in that small part of Appalachia.
    Anyway, I wanted to add my thanks to you for all the work 
you have done in founding this organization and working so 
assiduously over the years, both as governor and when you were 
out of the office, to make the ARC the success that it 
certainly is.
    Mr. McDade. Thank you. We are pleased now to recognize the 
Federal Co-Chairman of the Commission, Dr. White. Dr. White, 
you are most welcome. As you know, we encourage you to file 
your official statement with the Committee for the record and 
to proceed extemporaneously as you wish. You may proceed in 
your own way.

                      Dr. White's Opening Remarks

    Dr. White. Thank you very much, Mr. Chairman and members of 
the Committee. It is always a pleasure to appear before you. 
You are our great friends and we appreciate everything you have 
done for us. We want to say a particular word of thanks to you, 
Mr. Chairman, for your 36 years of service in the Congress and 
how much we are going to miss you.
    Mr. McDade. Thank you.
    Dr. White. I feel like I am in the presence of the living 
history of the ARC. I think we are going to need to get the 
governor to come give a history lesson to the staff up there. I 
am sitting here learning myself. It is a great honor to be with 
Cecil Underwood. He has been a living witness in his own State 
from pre-ARC West Virginia and what has happened in West 
Virginia for 30 years, and I can't imagine any testimony more 
eloquent than that he has just given.
    I would also like to introduce to the Committee someone 
most of you know, Tom Hunter, sitting to my right, who is the 
executive director of the commission. As you all know, we are a 
Federal-State partnership, and that is actually reflected in 
the administrative structure of the commission, in that Tom and 
his staff, some 50 strong, are actually funded half with 
Federal dollars and half with State dollars. So Tom is working 
for me and 13 governors, which may explainhis advancing gray 
hair on some occasions.
    I will just very briefly go over the contours of the 
budget, Mr. Chairman, if I may, as set forth in detail in the 
budget and in my statement. As Governor Underwood mentioned, we 
are requesting $67 million from this Committee this year for 
our nonhighway work, which includes our area development, 
support for local development districts, research and technical 
assistance, and administrative expenses both for the Federal 
office and half of the expenses of the Commission staff.
    For the first time, the administration is not requesting 
money from this Committee for our highway system but is 
instead, as a part of the proposal in the so-called NEXTEA 
legislation, requesting that our highways be funded out of the 
Highway Trust Fund. The President's proposal is for $2.19 
billion over the life of NEXTEA. As you know, the Senate has 
already acted and come up with the same number, and Wednesday 
the House Transportation and Infrastructure Committee marked up 
its bill and earmarked $2.25 billion for the Appalachian 
Development Highway System.
    So there seems to be a strong consensus, both from the 
executive branch and both houses of Congress so far, to shift 
our funding into the Highway Trust Fund, which would be a more 
stable and predictable and larger source of funding. As you 
know, our system is about 79 percent complete, either open to 
traffic or under construction, and the interstate system is 
about 99 percent complete. So we are still lagging behind, and 
we very much welcome this new effort to advance completion of 
the system.
    Highways, of course, have always been at the core of the 
ARC's approach to economic development. Governor Underwood 
mentioned the isolation of the region. Our 3,025-mile highway 
system has been designed to open up the mountains and open up 
the region to the rest of the American economy by connecting 
our communities to the interstate grid, because the interstates 
had by and large bypassed many of our communities.
    The economic impact of our corridor system is undeniable. 
Every study we have done has shown strong job growth. In fact, 
Rodney Slater and I drove Corridor G from Charleston to 
Williamson a couple years ago, and it was truly amazing to see 
the economic development that had occurred. It was also amazing 
when the road played out and we got back on the winding 
mountain road, how difficult it was to finally get on to 
Williamson.
    Probably the most objective study of the impact of our 
highway system so far was the National Science Foundation study 
in 1993, which examined 27 years of impact and compared the 110 
counties in ARC which had a corridor with those that did not, 
and found that income grew 69 percent faster, earnings 49 
percent faster, and population 6 percent faster than those 
counties that did not have a corridor.
    We have just launched and are about, I guess, halfway 
through a major new study of 12 of our corridors that are at 
least 75 percent complete, to examine the economic impact along 
those corridors. Of interest to this Committee today would be, 
we are going to look at economic growth in Kentucky along 
corridors B, F, I and J and in West Virginia, Governor, D, E, L 
and Q, and in Pennsylvania, Mr. Chairman, P and T. We will be 
sharing the results of that study with the Committee as soon as 
it is available.
    Last year we did for the first time, I guess, in five or 6 
years, I guess '92 was the last formal cost-to-complete, we did 
a formal cost-to-complete study of the system and found that 
the remaining miles of our system would cost about $8.5 
billion, the Federal share of that, $6.8 billion. There is 
about $600 million already in the States, so the remaining 
Federal share would be about $6.2 billion to complete our 
system. So as you can see, under the NEXTEA proposal, we end up 
with about $2.2 billion. We can complete another third of our 
system.
    Unfortunately, we are at the point now where because of 
inflation, and the terrain we are going through, the remaining 
miles are some of the most expensive to build, and in fact the 
average cost per mile for the remaining 21 percent is about $11 
million a mile. So even though the funding request now is 
through the Highway Trust Fund, I want to keep this Committee 
fully informed, as I know you are interested in our highway 
system and how it is proceeding and what the results are.
    The area development, the nonhighway work, as the governor 
so eloquently pointed out, is the necessary handmaiden of the 
highways, because if you don't work on the other elements of 
economic development, it may not occur. We work in of course a 
broad range of community and economic development activities, 
and we are requesting $67 million to continue that work.
    Just a few key points in that request. We plan to continue 
setting aside 30 percent of that money, off the top, to work in 
our 97 distressed counties. As I have said before, this is an 
impressive act that the commission takes every year, because 
four of our States have no distressed counties, and they 
actually stand aside and give up some money to work in our 
neediest counties, and there has never been a negative vote on 
the Commission to make that special allocation.
    I think even more impressive is when you run the numbers, 
we actually spend about 36 percent of our money in the 
distressed counties, because States actually pony up extra 
money in the States that have distressed counties, so 
theCommission makes a determined effort to target our resources almost 
40 percent, in fact, to one-fourth of the counties where the need is 
the greatest.
    We are continuing to work on the five goals in our 
strategic plan. Those are: a trained and educated work force; 
an adequate physical infrastructure; leadership and civic 
capacity; dynamic entrepreneurial economies at the local level; 
and health care. We are making substantial progress, we think, 
in those five areas.
    I wanted to share with the Committee an inspector general 
report which came out last year which was reassuring to us. Our 
inspector general was interested in looking at our industrial 
parks, because every time a project comes along, there is a 
projected number of jobs that is going to come in that 
industrial park. We were curious to see if it lived up to the 
billing, you know, if they were inflating or if we were 
actually getting those numbers of jobs.
    Our inspector general looked at 105 projects from 1987 to 
1993, and actually found there were twice as many jobs created 
as were projected in the project applications. And in 65 
percent of the projects there was a substantially larger number 
of jobs created, and I think in only about 10 percent of the 
projects did they fall short, so we were real encouraged by 
that.
    Mr. McDade. You may be the only entity in government that 
has gotten a good report from an IG, so we congratulate you.
    Dr. White. We were reassured Mr. Chairman, thank you.
    We have also finished three years' work on our regional 
initiatives in the area of export trade, leadership development 
and telecommunications. We feel like those regional initiatives 
have left footprints in the sand of Appalachia. We have gotten 
some exciting programming going in the areas and we are seeing 
some real results. We have this year launched, as you know, a 
three-year initiative in entrepreneurship, which is something I 
am particularly committed to--the idea of moving our 
communities to a more entrepreneurial model of economic 
development, not always looking to the outside for investment 
or the outside for jobs, but trying to create the 
infrastructure for small business creation and growth in our 
communities.
    We spent a year developing this initiative. Again, the vote 
was unanimous between the 13 States and me, and we are 
identifying what we call the five pillars of an entrepreneurial 
economy to work on. Those are the access to financial capital, 
particularly risk and venture capital; technical assistance for 
small business start-ups and expansion; a technology transfer--
that is, capturing innovation that may be occurring in our 
colleges and labs in our communities and commercializing that 
innovation for small business creation; getting more 
entrepreneurial education in our public schools; and, finally, 
creating networks of the services for entrepreneurs so it is 
easier for entrepreneurs to access the services available. We 
will keep the Committee informed of this initiative. As I say, 
we are in the first year of it right now.
    I would like to say a special word about the role of our 69 
local development districts, which are really the kind of third 
leg on our intergovernmental stool. They are storm troopers on 
the ground level, often the ones that develop the projects, and 
our LDDs are essential to our work. They have an association 
that has grown since I have been here. They do a lot of 
training. They help implement our strategic plan. They will be 
instrumental in us trying to conform with the GPRA requirements 
as they gather data about our outcome measures. We have 
recommended a slight increase of support to the LDDs this year, 
and I think they are certainly entitled to that.
    A word about the Delta Regional Commission that the 
Governor mentioned. As you know, the President originally, or 
in the budget, requested $26 million to create a mirror image 
commission to the ARC to serve the lower river Mississippi 
Delta. This region is 219 counties that were identified in 1988 
by the Congress when it set up the Lower Mississippi Delta 
Study Commission that was chaired by then-Governor Bill 
Clinton. The idea was to create in parts of those 7 States, 219 
counties and parishes, a regional commission that would operate 
like the ARC, this kind of intensive care model to get this 
region up and running.
    This is a region that, except for the terrain, in 1998 
looks a lot like Appalachia looked in 1965. Whereas a quarter 
of our counties are distressed, half of those Delta counties 
are distressed. Black poverty in the Delta is 10 percentage 
points higher than the inner cities, some 44 percent, and I 
could go on and on and on. The Administration felt that our 
intensive care model that worked well in Appalachia could work 
well in the Delta.
    The governors expressed to the President concern about the 
two commissions being linked. We have tried to address those 
concerns in a proposal that in essence would allow the ARC for 
12 to 18 months to sort of incubate the Delta Regional 
Commission, since we have the experience in that sort of work, 
to get it up and running, and then it would spin off and become 
a self-standing commission, unconnected to the ARC, with its 
own Federal Co-Chairman, its own set of governors.
    In addition, the President plans to submit an amendment to 
his budget that would shift funding for the Delta Regional 
Commission from this Subcommittee to the Agriculture 
Subcommittee, because the distress, really one of the reasons 
for the distress in the Delta is a legacy of agricultural 
mechanization and so forth. That would also relieve some 
concerns about competition in the same subcommittee for funding 
from these two commissions. So in essence, we would be 
proposing, Mr. Chairman, to sort of remove the issue from your 
subcommittee with the formal amendment to the budget.
    Let me just end by citing for the Committee some of the 
accomplishments of the ARC in 1997, of which we are very proud. 
Projects in which ARC money was a key component gave water and 
sewer systems to some 26,000 households. It provided 
infrastructure to industrial parks that created or retained 
some 32,000 jobs. It provided funding to business development 
programs that created another 6,600 jobs.
    About 5,000 people participated in ARC-funded leadership 
programs. Some 74,000 students and trainees were involved in 
ARC-funded education and skills programs, and 39 new miles of 
our Appalachian Development Highway System were opened to 
traffic. So we are very proud of our accomplishments and we are 
pleased for this Committee's support.
    Again, I am honored to be here with my State partner, 
Governor Underwood, and I would be pleased to answer any 
questions you might have.
    [The prepared statement of Dr. White and the ARC budget 
justification materials follow:]


[Pages 716 - 796--The official Committee record contains additional material here.]



                       delta regional commission

    Mr. McDade. Doctor, we thank you for a very fine statement. 
Let me say that we are glad to hear that the Delta Regional 
Commission is going to be a separate commission rather than 
linked to the ARC. We think using your expertise to get it up 
and running is a good idea. It would be efficient for the 
taxpayers and efficient for achieving the objective.

                          arc reauthorization

    You are beginning to talk about reauthorization. You have a 
bill submitted, don't you, from the Administration, to 
reauthorize the Commission?
    Dr. White. Yes, sir. That is now in the authorizing 
committee.
    Mr. McDade. It is filed in the committee?
    Dr. White. Yes, sir, that is correct.
    Mr. McDade. Are there any substantial changes in the model 
or is it pretty much a continuation of what you are doing?
    Dr. White. Pretty much a continuation of the way we 
operated in the past. I don't think any substantial changes 
over our current legislation are in that bill, except that we 
have put language in that bill that reinforces the targeting of 
our resources to distressed counties and away from the 
attainment counties.
    Mr. McDade. I am led to believe it is contemplated to be a 
5-year authorization. Is that about the term of it?
    Dr. White. That is correct, yes, sir.
    Mr. McDade. Would both of you like to comment on that? Is 
that a useful way to go at it, or do you have a different 
opinion? Should it be longer, shorter, or is five years enough?
    Dr. White. I think we would be delighted to have 5 years. 
We of course have not been reauthorized since 1982, and 5 years 
would give us a chance to take a little longer perspective, and 
we would be very pleased with that.

                         accomplishments of arc

    Mr. McDade. Well, you know, I have an old saying that 
nothing succeeds like success, and when I look at the record of 
the Commission, it is impressive. You have cut poverty 
substantially and infant mortality by about two-thirds. 
Outmigration has stopped. As you mentioned, Governor, some 
people say that is a reason to stop the Commission, not to 
congratulate the Commission and keep its work going. Would you 
comment on that for me, Governor?
    Governor Underwood. I think the longer reauthorization 
period, it is important to the States because it gives us 
stability and makes it possible to do longer range planning. I 
tend now, based on my experience in the private sector, to put 
a great deal more emphasis on strategic planning, and we want 
to get so far this year, and if we know that this source of 
finance will be there, then we can develop our State resources 
and attract private--I am a very strong advocate of bringing 
the private sector and private dollars in to go with these 
government dollars and we are being very successful in that 
approach. So if we have that assurance, it makes it possible to 
think in the future, much more than the normal political 
environment.

                          distressed counties

    Mr. McDade. Thank you, Governor. Doctor, you mentioned the 
targeted counties. How many of them are there?
    Dr. White. Ninety-seven.
    Mr. McDade. Do you have any idea what the unemployment rate 
would be in those counties?
    Dr. White. We can get that for you.
    Mr. McDade. Supply that information about the status of the 
counties to the Committee. We were very interested and happy to 
hear the Commission unanimously decided how to deal with that 
problem.
    Dr. White. I will say this, Mr. Chairman: to be designated 
as a distressed county, the unemployment has to be at least 150 
percent of the national average, so it is that or worse.
    Mr. McDade. I thought we ought to have an explanation of 
that on the record.
    Dr. White. We will be glad to give you a profile of those.
    [The information follows:]

    Dr. White. An ARC distressed county is defined as a county 
with a three-year average unemployment rate of 150% of the U.S. 
rate or higher; a per capita market income that is 67% of the 
U.S. or lower; and a poverty rate that is 150% of the U.S. rate 
of higher. A county with twice the U.S. poverty rate can 
qualify as distressed if either per capita market income or 
unemployment is measured at the distressed level.
    In Appalachia 97 counties were categorized as distressed in 
FY97 out of a total of 399 counties. The U.S. unemployment rate 
for 1993-1995 was 6.2% and the Appalachian distressed county 
unemployment rate was 9.3% or higher. The unemployment rate in 
Calhoun County, West Virginia was 21.6% and the rate in 
Dickerson County, Virginia, was 17.8%.
    The poverty rate for the U.S. was 13.1% in 1990 compared to 
a rate of 19.7% or higher for distressed counties in 
Appalachia. The poverty rate for Owsley County, Kentucky, was 
52.1% and 41 counties in Appalachia had a poverty rate higher 
than 30%.
    In 1994 the U.S. per capita market income was $18,021 while 
the per capita market income for distressed counties in 
Appalachia was $12,074. McCreary and Owsley Counties in 
Kentucky had less than $6,000 per capita market income.

    Mr. McDade. I am delighted to recognize my friend from 
California.

                      Opening Remarks of Mr. Fazio

    Mr. Fazio. Thank you, Mr. Chairman. I would like to welcome 
you, Governor Underwood and Dr. White. GovernorUnderwood, you 
are one of those figures in American history that I think we all have 
come to admire. To have a 40-year hiatus in your service as Governor in 
West Virginia and be as popular as you are today says a lot about the 
kind of human being you are.
    Governor Underwood. Thank you.
    Mr. Fazio. We are happy to have you represent the governors 
here today.
    I have probably paid insufficient attention to Appalachia 
throughout my life, but as a member of this Committee for 19 
years, I have had your budget come before us, and have 
supported the Commission on the floor, under whatever attack 
may have been forthcoming from one particular point of view or 
region or another.
    But it is a little difficult for me at times to go home to 
my constituents and focus on the fact that we have got counties 
in my part of northern California with 15 to 20 percent 
unemployment which don't get the kind of attention from the 
State--let alone the Federal Government--that we provide to the 
distressed counties in your region. So I am kind of glad it has 
never come up, because somebody might accuse me of not looking 
out for my own people.
    But this Committee has always tried, I think, to take a 
national view and not to take advantage of each other. You 
know, we had a debate yesterday about the Bureau of Reclamation 
and whether or not it had a future, and certainly in the 
western part of the country we hope it does; and, you know, we 
have taken a few shots at the TVA here in the past; and again, 
we have certainly had some interesting debate among ourselves 
on the various power marketing administrations.
    So there are a lot of regional issues that come before this 
subcommittee, and I might say parenthetically, I am not greatly 
relieved you are going over to the Ag Committee for the Delta 
Commission, since I sit on that subcommittee, and I think their 
problems are just as great as ours in finding the funds to do 
what we need to do. But I have a funny feeling with Senator 
Bumpers and Senator Cochran, you might not do too badly over 
there, and that might have been a good strategic decision if it 
hadn't been for the decline of agriculture in that region.
    But I think the point is that we all have to take a hard 
look at these programs and try to make the best we can of the 
money we have. I must say I am very pleased the highway bill 
will take care of your highway needs in the future, but I think 
what you have left in the budget for economic development is 
very important, and frankly there isn't a lot of EDA money for 
the whole country. I don't know how much your States get in 
addition to what you get for ARC, and that might be good if you 
could provide it for the record, but it isn't a lot for 
anybody, I realize.
    [The information follows:]

    Dr. White. The Economic Development Administration spent 
$43,670,432 in Appalachia during FY 1996, according to the 
Consolidated Federal Funds Report for FY 1996 (the most current 
data available for county-by-county analysis). This total 
includes Economic Development Grants for Public Works and 
Development Facilities ($25,730,665), Support for Planning 
Organizations ($2,539,877), Technical Assistance ($1,176,200), 
Public Works Impact Projects ($116,000), State and Local 
Economic Development Planning ($269,000) and Special Economic 
Development and Adjustment Assistance ($13,838,690).

                          distressed counties

    And I guess I would be one who has always in the past, Dr. 
White, wanted to emphasize the counties that have the highest 
level of distress. I just can't frankly emphasize enough the 
need to constantly force more of your funding into the places 
where the obvious need is the greatest, and I hope the Delta 
Commission would do the same.
    As you have indicated, there are a number of States that 
don't really have any distressed counties. I have a hard time 
providing the governors of those States with grant money to go 
out and spend as they wish, when I realize those other counties 
continue to get less as a result of that. Could you tell us how 
much the governors get to independently allocate? What was the 
amount that the governors were able to allocate on their own?
    Dr. White. The allocation table is right in front of me. In 
the area of development, the total was about $60 million. Of 
that, about $35 million was allocated among the States with 
basically no strings attached.
    Mr. Fazio. And the governors essentially get to decide 
where that money goes?
    Dr. White. Right. And then the distressed allocation was 
almost $14 million, and that could only be spent in the 97 
counties. Then we had regional initiative money and so forth. 
So really, even within the distressed counties, the governors 
still have a lot to say about how the money is spent. The 
gubernatorial prerogative is strong, as you know, in our model.
    I would like to say also, Mr. Fazio, if I could, I told the 
Chairman how much we are going to miss him, and how much we are 
going to miss you too, because you have been a faithful 
supporter of ours and we appreciate it.
    Mr. Fazio. Thank you. I guess I am concerned--and I won't 
bring up the Carolina Panthers stadium this year.
    Dr. White. Thank you.
    Mr. Fazio. But I am concerned we have States that don't 
have any distressed counties and yet the governors get to make 
allocations that obviously don't target the areas of greatest 
poverty. As the authorization moves forward, and maybe even as 
this committee tries to decide what it can afford, I would 
really like to focus increasingly on those areas that have the 
highest rates of poverty.
    I realize that we need to think regionally. We can't just 
attack a given county. It does have roads in and out of it; it 
does have adjoining counties that may have greater economic 
development potential and that might employ people who live in 
it. I don't want to be a purist, but I think we have to 
continue to drive the dollars to places where we truly have the 
kind of poverty in Appalachia that we did 40 years ago 
whenAmerica woke up to it, for example, in your State, Governor, during 
the Kennedy-Humphrey primary, and in the ensuing 5 or 6 years, when the 
Great Society programs were put together and this program certainly 
took off and grew.
    So, you know, I think we do have to kind of remind the 
Commission of the tightening budget this Committee faces, and 
the degree to which we all hope our dollars will be spent in 
places where they will do perhaps the most good to remove a 
problem 50 years later that we know was hundreds of years in 
the making.
    Dr. White. Could I make one comment on that? We have got 
our distressed counties at one end of the spectrum. I think it 
is important to say that at the other end of the spectrum we 
also have criteria for what we call attainment counties, and 
they are not eligible for any ARC money, except for highways 
and the local development district, the administration money. I 
think we have 11 attainment counties. And then we have what we 
call competitive counties, which are near national averages, 
that is another 25, and they are eligible only for limited ARC 
money.
    So we do try to, within our model, be responsive to 
targeting. Our definition of distress is 150 percent or more of 
poverty, 150 percent or more of unemployment, and only two-
thirds per capita income, so even the counties that are not 
distressed, a lot of them are pretty close, I mean----
    Mr. Fazio. And they go back and forth, because we have a 
couple more counties this year that are distressed than we had 
when you came before us last year.
    Dr. White. Two more, yes, sir.
    Mr. Fazio. I think it went from 94 to 97, and that is in 
the roaring economy where, as you know, the country at large is 
doing extremely well. What has caused that?
    Mr. Hunter. One issue I think is important is many of the 
counties have small populations, so one plant closing for 
whatever the reason will push it right over the edge. And we do 
have quite a number of counties right on the cusp of our stick. 
So it is important, I think, to bear down on those counties to 
keep them from backsliding if we can.
    Mr. Fazio. I know the Committee will want to be supportive, 
and I think the key here is the degree to which we can make 
sure these dollars go to the people in the greatest need and 
that the governors--particularly in the States that don't have 
any of these counties and even those that do--have perhaps less 
discretion to spend it in places that might be more politically 
popular, and might even be more beneficial, shall we say, to 
the majority, but which don't really in the long run help the 
people the program is really targeted for. Thank you.
    Mr. McDade. The gentleman from Kentucky is recognized.

                     Opening Remarks of Mr. Rogers

    Mr. Rogers. Thank you, Mr. Chairman. And let me recognize 
at the outset, and I will be brief, the dedication that 
Chairman McDade has given to the ARC, not just since he has 
been Chairman of this subcommittee but for the many years he 
served in the Congress. All the way through his career he has 
been one of the biggest boosters of this outfit that we have 
had, and we are going to sorely miss his leadership of this 
subcommittee but also his general goodness in helping this 
program, among a lot of other things. So there is a big hole 
that is going to be left on the horizon for us, and I don't 
know how we are going to find ways to fill that gap.
    Then Vic Fazio also is leaving us, and he has been very 
understanding and supportive of this distressed region of the 
country, and I know being from California that is difficult to 
imagine, but he has been very, very helpful.
    Mr. Fazio. We have got to hang together.
    Mr. Rogers. We have got to hang together, or separately. 
But we are going to miss Vic, too. He has been a real big help 
to this program, as we all know, over the many years.
    Like Dr. White and Joe McDade have said, I feel somewhat 
awed by the presence of Governor Underwood, one of the three 
founders of this movement back in another era, at a time when 
the region was beginning or perhaps was well into its dive into 
the depths. That region of course had ridden the ups and downs 
of the coal booms and busts for so many years, and finally 
machinery came along and left us in a permanent bust from which 
we are still trying to dig our way out.
    But things are beginning to change, not only in West 
Virginia and Pennsylvania and the other States, but in eastern 
Kentucky as well. The Census Bureau figures came out just the 
other day, and I was heartened to see that in the Appalachian 
counties of Kentucky, most all of them now have reversed the 
outmigration, and we are beginning to keep more of those high 
school graduates. And that is going to be like compound 
interest; that is going to feed on itself as time passes.
    My own home county grew since 1990 by 13 percent; the 
adjoining county grew by 15 percent. That is phenomenal growth 
in formerly distressed counties, which no longer are 
distressed. And the number of counties in my State that are 
truly distressed is receding even as we speak. Those population 
figures indicated there were about 9 counties that were still 
losing some population in the very most remote areas of the 
mountains or coal fields.
    But things are beginning to happen and economic growth is 
occurring, and as the Governor said, with much credit to the 
programs of the ARC. And I have to say the area development 
districts, the local development districts, have been one of 
the most important engines in helping lead that growth and 
organize that growth and give us some staff people who know 
what they are doing in areas that previously had no such 
resources. They continue to be absolutely vital parts of the 
economic revitalization of that region.

                           budget reductions

    Certainly in my region, we know that. Yet, Dr. White, you 
are requesting $1 million less this year than you did last year 
for the area development programs of the ARC. Why is that?
    Dr. White. We are requesting an amount for that account 
which we think will be adequate to get the job done. I can't 
remember exactly where we did the trimming on that. Tom, can 
you, right offhand?
    Mr. Hunter. It is $966,000.
    Dr. White. $966,000.
    Mr. Rogers. Below.
    Dr. White. Below last year. And I ought to have that 
number, Congressman, but I don't, about where we trimmed that 
off of.
    Mr. Rogers. Well, I will give you time to provide that for 
the record. I would be interested to know why the request is 
down for what I think all of us would agree is the core success 
of the ARC program, the local development district activities 
and the area development initiatives of the ARC, particularly 
when you are losing the funding of the highway portion to the 
ISTEA program. This is the main remnant of ARC, it seems to me. 
Do you agree with that?
    Dr. White. I do. We will try to provide you a good answer 
for that.
    [The information follows:]

    Dr. White. ARC's area development request as well as ARC's 
total funding request of $67 million was decided within the 
Administration based on the balanced budget agreement, and the 
President's spending priorities. This necessitated a small 
decrease in area development funding.

    Mr. Rogers. I think it would be helpful if we had in the 
record some of the specific achievements that we can attribute 
to the ARC in distressed counties. I know that must exist 
somewhere, in some fashion that would be intelligible to us 
common folk, and I think it is important that we have that here 
because that is where the action is. That is where the raison 
d'etre is for the ARC and I think we ought to have that 
available to us.

                          distressed counties

    Now you are mandated to allocate, under your own rules, 30 
percent of your monies for distressed counties. What is the 
actual percentage of area development funds that go to those 
distressed counties? Can you tell us that?
    Dr. White. About 36 percent, $16.5 million, but it was 
about 36 percent of the total area development money, so some 
States were actually putting in more money than just the 
distressed county allocation.

                      local development districts

    Mr. Rogers. Well, I noticed the LDD, local development 
district support, is the same as last year's level. Why the 
level funding there?
    Mr. White. We actually gave, the Commission gave the LDDs 
an additional $1.1 million last year from recovered funds, and 
we put that in the budget this year to be sort of a permanent 
marker, so they actually are getting $1 million more than last 
year's budget request. Is that not right, Tom?
    Mr. Hunter. Yes.

                         budget request to omb

    Mr. Rogers. I would be interested to know what your request 
to the OMB was in your budget for the year. Do you have that 
available?
    Dr. White. For the LDDs?
    Mr. Rogers. And the ARC.
    Dr. White. I don't have that with me, but we can certainly 
provide that.
    Mr. Rogers. Did you get all you asked for?
    Dr. White. I can't really remember. Probably not. We never 
do.
    Mr. Rogers. File that for the record for us, please.
    [The information follows:]

    Dr. White. The Federal Co-Chairman's OMB budget for ARC 
programs requested $72 million for ARC's non-highway programs 
including $61.666 million for area development, $5.5 million 
for LDDs, $900 thousand for technical assistance, and $3.934 
million for salaries and expenses (which did not include 
funding for the Alternate Federal Co-Chairman position).

                       delta regional commission

    I want to talk briefly before closing on the Delta Regional 
Commission, and like the chairman, I am pleased it will not be 
in competition with ARC for funding. I think that would have 
been a mistake, for that to have occurred, and I am pleased 
that you are going a separate route there. I am somewhat still 
concerned that we not drain off energy, attention, focus from 
what you are doing, what you are supposed to be doing with ARC, 
toward another region which is not your charge.
    I understand imitation is the best form of flattery, and I 
think you should be flattered they are looking to this 
organization as a model for another. It proves what we have all 
long said, that this is a model for Federal, State, local 
participation in a project. But nevertheless, one tends to get 
sidetracked onto things other than what your mission is. Now, 
do you worry about that?
    Dr. White. Well, we are concerned, obviously, that during 
this sort of incubation year, that our resources are in no way 
lessened in terms of what we are here to do, which is to serve 
Appalachia. The States have requested that I meet with them in 
the next couple of weeks to talk about how that year would go, 
and I have agreed to do that. We are looking for a date now.
    We will keep faith with the Committee, Congressman, not to 
dilute our efforts. We have, in the proposal, funding that 
would enable us to hire an executive director of the Delta 
Regional Commission very quickly. In fact, we were even hoping 
for a November or December hire there, so that that person then 
would be devoting his or her attention to staffing up for the 
Delta Regional Commission. So our plan would be to get it up 
and running very quickly and to make the transfer as soon as 
possible.
    Mr. Rogers. How soon could the transfer take place?
    Dr. White. Well, we think in terms of the staffing 
transfer, it could probably be done in--as soon as the 
executive director was on board and started hiring staff of his 
own, so probably a 6-month period. Now under the proposal, I 
would be the acting Federal Co-Chairman until the President 
nominated, and the Senate confirmed, a Federal Co-Chairman of 
the Delta Regional Commission. So that would be dependent on 
that process, so that could be 9 months, something of that 
order, which I think is about the average time it takes to 
nominate and confirm somebody.
    We also have in our budget this year, money for the 
alternate Federal Co-Chairman, which has not been filled at the 
ARC. If the President so decided, that position could be 
filled, which would give us a little more fire power in our 
office. So we will do everything we can to be sure that there 
is no dilution of effort for Appalachia.
    Mr. Rogers. Governor Underwood, does that concern you?
    Governor Underwood. All the governors were concerned. We 
think this is a vast improvement over the initial proposal, and 
I am sure that we will all be watching very carefully to make 
sure that the staff efforts are not diluted.
    Mr. Rogers. Okay. Well, I rest assured then.

                 appalachian development highway system

    Now lastly, let me talk to you briefly about the highway 
situation. Will you still administer the funds for the 
Appalachian Highway Development System? Now that they have been 
moved to the trust fund, what role will you have in the 
administration of those funds?
    Dr. White. The net effect will really be no change over the 
way we do business now. The way it is proposed is that the ARC 
will still have control over the Appalachian Development 
Highway System. It will still be up to the Commission to 
allocate funds among the States, it will still be up to the 
governor to sequence the building of the corridors each year 
within his State. It will still be up to the Commission to 
designate the corridor routes, it will still be up to the 
Federal Co-Chairman to sign off on the center line designation. 
It is our understanding, the way it is written is that there be 
no change, really, in the way the Commission administers our 
highway program. I think that is explicitly stated.
    Mr. Rogers. Governor, do you have a perspective on that 
from the governors' point of view, on the change of the 
Appalachian highway funding source, at least?
    Governor Underwood. It is my understanding, and I have had 
several conversations with Senator Byrd, whose leadership we 
depend on in a very significant way for that program, it is my 
understanding that what Dr. White has just said is accurate, 
that it will not change and we will just be blessed with more 
funds drawn.
    Mr. Rogers. Well, I thank you for your testimony. And, 
again, I thank Mr. Hunter, you and Dr. White and the staff for 
the fine work you are doing over there. You make us all look 
good by running a good agency that is devoid of fraud or 
corruption or any of the things we hear about. And Governor, 
thank you for your dedication to your State and to this region 
of the country. You are an inspiration to a lot of people.
    Mr. McDade. The gentleman from Indiana is recognized.

                    Opening Remarks of Mr. Visclosky

    Mr. Visclosky. Thank you, Mr. Chairman.

                       expansion of arc counties

    Dr. White, are there any proposals to expand the number of 
counties included in the Commission boundaries?
    Dr. White. There are no proposals from the administration. 
The Senate, when it passed the highway bill a couple weeks ago, 
added I think six counties to the ARC. The Commission is 
prohibited by law from taking any position on the addition of 
counties, and the administration has not taken any position on 
the addition of counties.
    I will say for the record that the Congress has been very 
reluctant to add counties to the Commission. In fact, since our 
very beginning days only three counties have been added, 
basically, in the last 30 years. I am not exactly sure if that 
is the right number of years, but since the early days only 
three counties have been added, but six were added in the bill 
in the Senate, the highway bill.
    Mr. Visclosky. Without taking a position, could you 
characterize those counties, pursuant to your earlier remarks 
about distressed, competitive, attainment? Using your criteria, 
how do those six stack up?
    Dr. White. None of them are competitive or attainment. Two 
are distressed, and four are what we call transitional, that 
is, they are neither distressed nor economically strong.
    Mr. Visclosky. Where are they?
    Dr. White. There is one county in Alabama, Hale; two 
counties in Georgia, Elbert and Hart; one county in 
Mississippi, Yalobusha; two counties in Virginia, I guess those 
are Montgomery and Rockbridge. And as I say, none of those meet 
our criteria for economically strong counties. I believe in the 
House markup two counties were added, and those were the 
Georgia counties.
    Mr. Visclosky. And those were the two counties that had 
also been included in the Senate recommendation?
    Dr. White. Correct.
    Mr. Visclosky. Under your charter, are counties eligible 
for inclusion absent congressional action?
    Dr. White. No, only Congress can add counties to the 
commission.

                        non-arc funding sources

    Mr. Visclosky. Okay. In your testimony, you indicated that 
last year, you had 32,000 jobs created or retained, 26,000 
households with improved water, 72,000 students, trainees, 
benefiting by education. Were any of these programs solely 
funded through the ARC?
    Dr. White. Probably not. We seldom fund 100 percent of the 
project. Our whole sort of thrust is to be supplemental funding 
to other basic agency programs. Now some of the education and 
training and some of the leadership projects might have a 
preponderance of ARC funding. We can go up to 80 percent 
funding on certain types of projects. But generally the 
infrastructure projects, the industrial infrastructure 
projects, we would not have that high a percentage. We would 
often be partnered with EDA or Rural Development or some other 
basic agency.
    Mr. Visclosky. For the record, could you provide a detail 
of the amount of funding provided through other Federal 
programs, State and local entities, which contributed to the 
ARC accomplishments listed in your testimony, since you 
specifically enumerated those?
    Dr. White. Certainly.

                             strategic plan

    Mr. Visclosky. In your testimony you also talked about a 
strategic plan, and Governor, you mentioned the importance of 
strategic planning as well. That took place in, as I understand 
it, September of '97, last year. The plan identified specific 
goals and objectives in five key areas. Were there time goals 
attached to those, as well?
    Dr. White. In the original strategic plan we talked about 
sort of a decade time horizon, and we have obviouslygotten much 
more specific in terms of addressing the GPRA [Government Performance 
and Results Act]. We have kind of retooled that plan to meet the 
requirements of GPRA, and that is on a year-by-year basis. But the 
original horizon, the original strategic plan which we did before GPRA 
mandated that, we sort of did one on our own, it was a decade-long 
horizon for those goals and objectives.
    Mr. Visclosky. I appreciate the work you have done, as 
well. Mr. Fazio had earlier mentioned that we had power 
marketing people in, we had the Reclamation people in, we had a 
number of other agencies. And I can remember from my staff 
experience many years ago an agency we dealt with before the 
Legislative Branch subcommittee that was created for a specific 
18-month period of time. And 10 years later, it hadn't 
promulgated the first rule it was charged with 10 years 
earlier. And they were still organizing 10 years later.
    I am not suggesting you are still organizing and that you 
have not done a lot of good work, but I must tell you I am 
troubled. With the best of intentions and the best of results, 
agencies and commissions are created, and have done great work. 
Problems in many of the distressed counties remain, but we find 
ourselves pulling offshore and saying, the world evolves, these 
problems evolve, and you have many other programs out there 
trying to address these.
    So I don't have distressed counties per se. I have 
incredibly distressed communities, and they are obviously 
trying to pull together through all the various Federal 
programs, as many other people throughout the United States 
are. And I must tell you I am troubled, 30 and 40 years later, 
we continue to roll on.
    Thank you very much, Mr. Chairman.
    Mr. Rogers [presiding]. Mr. Edwards.

                     Opening Remarks of Mr. Edwards

    Mr. Edwards. Thank you, Mr. Chairman. I have no questions. 
I just want to thank you, Dr. White and you, Governor, for 
being here. And Governor, a special thanks to you for showing 
it can be a noble thing to commit a lifetime to public service. 
And as a Texan I want to say with envy, there was a time in 
this Congress's history that the Texas delegation was as 
powerful as the West Virginia delegation is today. Perhaps in 
my lifetime it might return to some of that. But 
congratulations to you and your delegation for the great work 
you do on behalf of the people of your area of this country. 
Thank you, Mr. Chairman.
    Mr. Rogers. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman, Governor, Dr. 
White, Mr. Hunter. I would associate myself with the remarks of 
Mr. Rogers, when he gave you a salute as being an agency that 
does its job well. And I know that you have an end game in 
sight, too. I think it is 2015. Has that changed, or is that 
still the same? So hopefully you will continue to be the 
stewards you have been in bringing that about, so thank you for 
your testimony.

              area development projects selection criteria

    I just had a question. Mr. Fazio wouldn't bring this up but 
I will, but not in the sense of turning this into a problem it 
is not. But on the issue of the football stadium, I suspect 
that is a blip out there. It seems to me that it is, but there 
must be criteria that is followed in making a determination as 
to what does qualify and what doesn't. What criteria is there 
that you use to properly qualify these projects for inclusion? 
And perhaps you can reflect on whether that process, that 
criteria, was used in the stadium controversy?
    Dr. White. I think that controversy probably led us to look 
a little bit more thoroughly at our policies that particularly 
relate to tourism development, which that project generally 
fell into. I mean, the economic development rationale was that 
that would bring tourism and create jobs in the inner city of 
Spartanburg, so forth and so on.
    We have taken a pretty hard look at that, and we do require 
tourism-related projects to meet a fairly high standard of 
economic development payoff. We in fact encourage tourism, of 
course. I think is a legitimate economic development strategy 
for a lot of rural areas that may not have a lot of other 
things going for them. Of course, that is very legitimate.
    We encourage our funds now to be used for planning, for 
development, for marketing and not so much for capital 
investment. If it is used for capital investment, it has to 
meet a pretty high level of cost-benefit return. As a matter of 
fact, just a couple years ago I had to say ``no'' to the 
Governor of Maryland for a $1 million investment in western 
Maryland for a multimillion dollar Jack Nicklaus golf course 
and tourism project, and of course we are in the same party. 
That was not an easy thing to do.
    So sometimes, you know, it is the few ``yes's'' we make 
that end up creating controversy that makes the news, and 
sometimes the ``noes'' we say don't get out in the public. But 
we do try to be good stewards, and I think that particular 
controversy over that did have the effect of making us tighten 
up our policies.

                          distressed counties

    Mr. Knollenberg. Thank you for that comment, that response. 
In regard to the issue of distressed counties that has been 
talked about by a number of my colleagues, I understand that 
the rule of the distress designation is that a county must have 
an unemployment and poverty rate of 25 percent greater than the 
national average. That is kind of an arbitrary number, but it 
is a number and it is one you deal with. I assume that is the 
one you use. Now is there other emphasis or other focus or 
criteria that ARC uses to designate a county, a distressed 
county?
    Dr. White. Well, the basic criteria is the poverty rate and 
unemployment rate, at least 150 percent of the national 
average.
    Mr. Knollenberg. 150.
    Dr. White. 150 percent, and the market per capita income, 
two-thirds or less of the national average; poverty and 
unemployment, 150 percent.
    Mr. Knollenberg. There must be some of these counties that 
move out of, and some perhaps that move back into, being 
designated distressed areas. Are they the same counties all the 
time that kind of blip up and down, in and out of this?
    Dr. White. Quite often they are the ones on the cusp. As a 
matter of fact, we have had three since last year that dropped 
back into the distressed category.
    Mr. Knollenberg. Is that caused by this great surge in the 
economy country-wide? If some counties don't catch up with that 
surge, do they fall back a bit? Is that part of the reason for 
that?
    Dr. White. Part of the reason is--yes.
    Mr. Knollenberg. In my State of Michigan, it is thelowest 
in memory. We can't remember when it was this low.
    Mr. Rogers. Will the gentleman yield?
    Mr. Knollenberg. I will.
    Mr. Rogers. I can give you an example. It is next to my 
home county, Russell County, Kentucky. That unemployment rate a 
couple years ago was probably 6 or 7 percent or less; 
Appalachian County, not a distressed county, graduated because 
of manufacturing and the like, but these were textile 
operations.
    Fruit Of The Loom had 5,000 employees in the two counties I 
am talking about. All of a sudden that factory moved to Mexico, 
as textiles are doing, and Russell County went from 5 or 6 
percent unemployment to something like 31 percent overnight, 
and distressed, all of a sudden. It will come back, but that is 
what happens.
    Mr. Knollenberg. In line with that--and I appreciate Mr. 
Rogers' illustration--things have been going well for a great 
deal of this country of ours, and perhaps if there wasn't some 
of that same glue and grease in that area of the country, it 
does reflect--things may not be any better or worse than they 
were last year but in terms of national average, they are a 
little worse and they fall into that gray area. I suspect that 
might be some of that, would you say?

                      entrepreneurship initiatives

    Dr. White. Well, it would. I would also like to comment, if 
I could, and say that to me that reflects the weakness that we 
find in much of rural America, rural and small town America, of 
basically being branch plant economies. And that is why I am so 
committed to this entrepreneurial initiative we have, because 
branch plant economies are highly vulnerable to these decisions 
made in Tokyo or Chicago or some place outside the community. A 
plant closes and all of a sudden the unemployment rate goes 
from 6 to 30 percent. I think if we can get more 
entrepreneurship in the communities and more home-grown, 
locally-owned growing industries and a more diversified 
economy, these counties will be less vulnerable and you will 
see less of this up and down phenomenon.
    Mr. Knollenberg. Is it risk-taking kinds of operations you 
are suggesting for the counties that fall into that category? 
What kind of innovations? Let's take the county Mr. Rogers 
mentioned. What do you do in a situation like that with respect 
to entrepreneurship?
    Dr. White. Let me just tell you what we did in Knoxville. 
Now that is a little different because it is a large city. But 
Levi Strauss closed in Knoxville, and I think they laid off 
2,000 workers, and we went in with--and of course the State 
came in with a--they have a strike team that comes in in 
situations like that.
    But we came in with a $100,000 grant from the ARC to add to 
that, to work on two things, one, hard-to-place workers, and, 
two, to make money available to those displaced workers who 
were interested in going through an entrepreneurship program 
and start up their own business. We have been pleasantly 
staggered at the numbers of Levi Strauss workers who are now 
wanting to go through that program and start their own 
businesses. So it seems to me if we can put in place those kind 
of programs where displaced workers can go and go through an 
entrepreneurship program, and then have a little seed capital 
available, they can perhaps become their own businesspeople.
    So one of the five elements of this entrepreneurship 
initiative is risk and venture capital, another one is 
technical assistance, so I think that is one of the answers. It 
is not the only answer.
    Mr. Knollenberg. Are you attracting venture capital from 
outside of the ARC umbrella?
    Dr. White. Well, it is very spotty. We have a great deficit 
of that in Appalachia. Some--Kentucky highlands, for example, 
in Kentucky--there are a few examples of rural-based venture 
capital operations that have been successful, but we need to 
try to replicate that.
    Mr. Knollenberg. Well, thank you very much, I appreciate 
the testimony.
    Governor, did you have a comment?
    Governor Underwood. Congressman, we have in West Virginia a 
tax credit that can be used by corporations who participate in 
venture capital funds. It has had some abuse and has become 
controversial, but it is still very important.
    I worked two years with the small business development 
program in our State, and that has been a tremendous help, 
providing assistance to start-up companies, but the one missing 
link is still the need for venture capital to get started. They 
don't need big money. It is not worth their while to go through 
a major financing program. We are still looking for some way to 
create that source of money for a start-up company.
    The Software Valley movement, these were practically all 
start-ups, and we have had some phenomenal growth starting with 
one or two people. We had a couple who were graduates of Ohio 
State University and they started a metals research laboratory, 
and this was about 20-some years ago, and they really 
struggled. I was with the small business program at the time, 
and we got them together with some private individuals who 
helped them. Fortunately they had a nice uncle that came along.
    But now they have moved from a basement, a piece of junk 
equipment that they bought at a sale, that no one thought had 
any use at all. They now occupy two brand new buildings with 
state-of-the-art metals technology. It is called Touchstone 
Laboratory, located up in Wheeling, along the interstate. That 
convinces me, if we could find that kind of money to get the 
people started, they are now a national and international 
laboratory serving people all around the world, and I saw their 
presentation just last week at a small business conference. 
They had slides showing the junk equipment and the basement in 
which they started.
    They are now husband and wife, they weren't then, they were 
just good classmates, and she has come through a major bout 
with cancer during that time. She even showed slides in her 
presentation when she was wearing a wig because of 
chemotherapy. That is a real inspiration, and I don't know 
where we find this kind of money but I keep looking for it.
    Mr. Knollenberg. Where did they find it?
    Governor Underwood. They got it from some metals companies 
who thought they could see in their research capability things 
that they could use, and then the uncle who was a doctor came 
to help on a family basis. I would say a half dozen different 
sources, and we provided them help from the Small Business 
Development Program, not cash but free planning and financial 
advice.
    Mr. Rogers. Thank you, Governor. Thank you, Mr. Chairman.
    Mr. McDade. Thank you. We thank you very much for being 
here. Governor, we especially appreciate your attendance. We 
know the duties you have in West Virginia, and it is wonderful 
to have one of the founding members of the ARC here with us, 
and we very much appreciate it.
    Governor Underwood. Well, I appreciate your kindness, your 
courtesy, and above all your support of the program over a long 
period of time.
    Mr. McDade. It is going to be around a long time, I think. 
Doctor, we thank you for your testimony, and at this time the 
Committee will recess subject to the call of the Chair.
    [Questions and answers for the record follow:]




[Pages 812 - 966--The official Committee record contains additional material here.]


















                           W I T N E S S E S

                              ----------                              
                                                                   Page
Babbitt, Hon. Bruce..............................................     1
Beneke, P. J.....................................................     1
Hunter, Tom......................................................   699
Martinez, E. L...................................................     1
Patterson, R. K..................................................     1
Underwood, C. H..................................................   699
White, J. L., Jr.................................................   699












                               I N D E X

                              ----------                              

                         BUREAU OF RECLAMATION

                                                                   Page
Advance Appropriations...........................................   675
Ak Chin Water Rights Settlement Act Projects.....................   201
Anadromous Fish..................................................   653
Animas-LaPlata Project....................................259, 613, 649
Annual Performance Plan....................................34, 506, 508
    Goals and Indicators.......................................515, 534
    Mission Statement............................................   509
    Table of Contents............................................   507
Appendices.......................................................   556
Appropriation Ceilings...........................................    66
Appropriation Chart..............................................    54
Arbuckle Project.................................................   347
Authorization for Reclamation's New Mission......................   601
Babbitt, Secretary Bruce Opening Remarks.........................     1
Babbit, Secretary Bruce, Statement...............................     9
Bay-Delta Restoration, Cost Sharing..............................     4
Beneke, Assistant Secretary Patricia J. Opening Statement........    15
Boise Area Projects..............................................    79
Bonneville Power Administration.................................63, 273
Budget Authority.................................................    51
Budget Justifications and Annual Performance Plan, FY 1999.......    38
Bureau of Reclamation:
    FY 1999 Budget...............................................11, 47
    Mission...............................................599, 603, 634
    Need For.....................................................   604
    Priorities...................................................   600
Bureau wide:
    Budget Summary...............................................   412
    Overview.....................................................   415
    Table of Contents............................................   413
Cachuma Project..................................................   129
CALFED Bay-Delta Program.........................................   671
CALFED Decision making Process...................................     6
CALFED Management and Policy Team................................   609
CALFED Process...................................................   605
CALFED Project Selection Process.................................   608
Callahan, Representative Sonny, Opening Remarks..................   614
California Bay-Delta Alternatives................................     3
California Bay-Delta Ecosystem Restoration:
    FY 1999 Request..............................................    49
Canadian River Project...........................................   348
Carlsbad Project.................................................   276
Castroville Irrigation Water Supply Project......................   482
Central Arizona Project, Colorado River Basin Project.....202, 624, 658
    Letter to Honorable Joseph M. McDade.........................   659
Central Oregon Irrigation System Conservation Project Feasibility 
  Study..........................................................    81
Central Utah Project Completion Account..........................    22
Central Utah Project Completion Act.........................16, 18, 675
Central Utah Project:
    Bonneville Unit..............................................   273
    FY 1999 Budget...............................................    13
Central Valley Project...........................................   135
    American River Division......................................   137
    Central Valley Project Improvement Act.....................142, 610
        Anadromous Fish Screen Program...........................   691
        Annual Report............................................   677
        CALFED ``Toolbox''.......................................   688
        Dry Year Water Acquisition Reserve Fund..................   691
        Garamendi Process........................................   694
        Implementation.........................................688, 689
        Land Retirement..........................................   690
        O&M Budget Process.......................................   691
        Overhead Costs...........................................   687
        Overhead Survey..........................................   690
        Programmatic Environmental Impact Statement..............   683
        Program Obligations......................................   678
        Rules and Regulations....................................   683
        Work plans...............................................   684
    Delta Division.............................................143, 662
    East Side Division...........................................   148
    Friant Division..............................................   150
    Miscellaneous Project Programs...............................   153
    Overview.....................................................   135
    Sacramento River Division....................................   158
    San Felipe Division..........................................   162
    San Joaquin Division.........................................   165
    Shasta Division..............................................   168
    Trinity River Division.....................................172, 664
    Water and Power Operations...................................   176
    West San Joaquin Division..................................178, 663
    Yield Feasibility Investigation............................183, 664
Central Valley Project Restoration Fund..........................36, 48
    Appropriation................................................   464
    FY 1999 Request..............................................    49
    Budget Summary...............................................   462
Chino Basin Desalination Project.................................   483
Collbran Project.................................................   278
Colorado-Big Thompson Project....................................   349
Colorado River Basin Salinity Control Project, Title I...........   212
Colorado River Basin Salinity Control Project, Title II:
    Basinwide Program............................................   280
    Grand Valley Unit............................................   297
    Lower Gunnison Basin Unit....................................   300
    Paradox Valley Unit..........................................   311
Colorado River Dam Fund..........................................   494
Colorado River Front Work and Levee System.......................   215
Colorado River Storage Project, Section 5........................   283
Colorado River Storage Project, Section 8........................   287
Colorado River Water Quality Improvement Program.................   217
Colorado Water Management and Technical Assistance Program.....290, 351
Columbia and Snake River Basin Salmon Recovery Project..........82, 652
Columbia Basin Project...........................................    84
Corps of Engineers, Possible Consolidation with Bureau of 
  Reclamation....................................................   600
Crooked River Project............................................    86
Dakota Water Management and Technical Assistance Program.........   355
Dakotas Tribes Water Management and Technical Assistance Program. 
                                                               353, 665
Dam Safety Program.................................29, 34, 63, 417, 671
Departmental Irrigation Drainage.................................   422
Deschutes Ecosystem Restoration Project..........................   653
    Working Group................................................   654
Deschutes Project................................................87, 88
Dog River--Mobile, Alabama.......................................   615
Drain Water Management Study, Boise Project......................    89
Ecosystem Round table--California................................   607
Efficiency Incentives Program..............................64, 423, 649
El Nino..........................................................    34
Endangered Species Act Concerns..................................   612
Endangered Species Recovery Implementation Program.........91, 357, 654
Endangered Species Recovery Programs and Activities..............   293
Endangered Species Conservation/Recovery Project...............218, 658
Energy and Water Conservation, Building..........................    50
Environmental Program Administration.............................   425
Examination of Existing Structures...............................   426
Explanation of Changes in Appropriation Language, FY 1999........   554
Facility Operations, Increase....................................   666
Fazio, Representative Vic, Opening Remarks.......................   604
Federal Building Seismic Safety Program..........................   428
Fruitgrowers Dam Project.........................................   296
Fryinpan-Arkansas Project........................................   359
Full Funding.....................................................    65
Funding Partnerships.............................................    63
Garrision Diversion Unit.......................................361, 665
General Planning Activities......................................   429
Geographically Defined Programs..............................52, 67, 68
Gila Salt River, Habitat Restoration.............................   633
Government Performance and Results Act of 1993...................    48
Grande Ronde Water Optimization Study............................    92
Great Plains Region:
    Budget Summary...............................................   341
    Map..........................................................   339
    Overview.....................................................   345
    Projects/Programs............................................   340
    Table of Contents............................................   343
Highlights of the Department's FY 1999 Budget....................    10
Hungry Horse Project.............................................    94
Hyrum Project....................................................   299
Idaho Water Management and Technical Assistance Program..........    96
Kansas Water Management and Technical Assistance Program.........   366
Kendrick Project.................................................   368
Klamath Project..................................................   184
Land Resources Management........................................   431
Leadville/Arkansas River Recovery Project........................   370
Letter to Director Stanton.......................................   622
Loan Program:
    Administration...............................................   488
    Appropriation................................................   481
    Budget Summary...............................................   479
    FY 1999 Request..............................................    49
    Index........................................................   480
Los Angeles Area Water Reclamation and Reuse Project.............   222
Lower Colorado Region:
    Budget Summary...............................................   197
    Map..........................................................   195
    Overview.....................................................   199
    Projects/Programs............................................   196
    Table of Contents............................................   198
Lower Colorado River Basin Development Fund:
    Central Arizona Project......................................   498
    Colorado River Basin Salinity Program--Cost Sharing..........   500
    Revenues.....................................................   501
Lower Colorado River Operations Project..........................   225
Lower Colorado River Water Management and Technical Assistance 
  Program........................................................   227
McDade, Chairman Joseph M., Opening Remarks......................     1
McGee Creek Project..............................................   372
Mancos Project...................................................   301
Martinez, Commissioner Eluid, Opening Remarks....................    33
Middle Rio Grande Project........................................   302
Mid-Dakota Rural Water Project...................................   373
Mid-Pacific Region:
    Budget Summary...............................................   125
    Map..........................................................   123
    Overview.....................................................   127
    Projects/Programs............................................   124
    Table of Contents............................................   126
Milk River Project...............................................   376
Milltown Hill Project--Douglas County, Oregon....................   484
Minidoka Area Projects...........................................    99
Minidoka Northside Drainwater Management Projects................   102
Mirage Flats Project...........................................378, 666
Miscellaneous Flood Control Operations...........................   433
Miscellaneous Permanent Appropriations...........................   496
Mni Wiconi Project.............................................379, 696
    Pipeline Contract............................................   616
Montana Water Management and Technical Assistance Program......104, 382
Montana Water Settlement.........................................     8
Moon Lake Project................................................   306
Mountain Park Project............................................   384
National Fish and Wildlife Foundation............................   434
Native American Affairs Program................................435, 670
National Heritage Tours..........................................   634
Nebraska Water Management and Technical Assistance Program.......   385
Negotiation and Administration of Water Marketing................   438
Newlands Project.................................................   186
Newton Project...................................................   307
Norman Project...................................................   387
Northern Arizona Water Management and Technical Assistance 
  Program........................................................   229
Northern Utah Water Management and Technical Assistance Program..   308
North Platte Project.............................................   388
Nueces River Project.............................................   390
Ogden River Project..............................................   310
Oklahoma Water Management and Technical Assistance Program.......   391
Operation and Maintenance........................................   674
Operation and Maintenance Program Management.....................   439
Orange County Regional Water Reclamation Project, Phase I........   231
Oregon Water Management and Technical Assistance Program.......106, 656
Orland Project...................................................   188
Pacific Northwest Region:
    Budget Summary...............................................    71
    Map..........................................................    69
    Overview.....................................................    75
    Projects and Programs........................................    70
    Table of Contents............................................    73
Palmetto Bend Project............................................   393
Parker-Davis Project.............................................   233
Pastor, Representative Ed, Opening Remarks.......................   623
Patterson, Regional Director Roger, Remarks on CALFED............   606
Pecos River Basin Water Salvage Project..........................   313
Permanent Appropriations.........................................   493
    Budget Summary...............................................   492
    FY 1999 Request..............................................    49
Pick-Sloan Missouri Basin Program................................   334
Pine River Project...............................................   314
Policy and Administration.......................................36, 489
Policy and Administration, FY 1999 Request.......................    49
Power Program Services...........................................   440
Procurement......................................................   671
Programmatic Budget Structure....................................    48
Provo River Project..............................................   315
Public Access and Safety Program.................................   442
Rapid City Wastewater Reuse Study................................   399
Rapid Valley Project.............................................   400
Reclamation Asset Transfers......................................   636
Reclamation Law Administration...................................   443
Reclamation Recreation Management Act--Title XVIII...............   444
Reclamation's Strategic Plan.....................................    27
Recreation and Fish and Wildlife Program Administration..........   446
Regional Boundaries Map..........................................    53
Revenue Financed Programs.......................................53, 497
Rio Grande Project...............................................   317
Rocky Boys Indian Water Rights Settlement......................401, 666
Rogue River Basin Project, Talent Division.......................   109
Safety of Dams:
    Salt River Project, Horse Mesa Dam...........................   245
Salinas Valley Water Reclamation Facility for Crop Irrigation....   485
Salton Sea Research Project.................................7, 236, 610
San Angelo Project...............................................   402
San Diego Area Water Reclamation Program.........................   238
San Gabriel Basin Project........................................   241
San Jose Area Water Reclamation and Reuse Program................   189
San Juan River Basin Water Management and Technical Assistance 
  Program........................................................   319
San Luis Valley Project..........................................   321
San Sevaine Creek Water Project..................................   486
Science and Technology Program...................................   448
Scofield Project.................................................   323
Shoshone Project.................................................   403
Site Security...................................................64, 454
Sleeping Bear Dunes National Lakeshore...........................   621
Snail Life History and Trumpeter Swan Management.................   651
Soil and Moisture Conservation...................................   455
Solano Project...................................................   191
South/Central Arizona Water Management and Technical Assistance 
  Program........................................................   244
Southern Arizona Water Rights Settlement Act Project.............   247
Southern California Comprehensive Water Supply and Reclamation 
  Study..........................................................   249
Southern California Water Management and Technical Assistance 
  Program........................................................   251
Southern Nevada/Utah Water Management and Technical Assistance 
  Program........................................................   254
Southern New Mexico/West Texas Water Management and Technical 
  Assistance Program.............................................   324
Southern Utah Water Management and Technical Assistance Program..   326
Strawberry Valley Project........................................   328
Summary of Request by Project....................................    55
Temescal Valley Project..........................................   487
Texas Water Management and Technical Assistance Program..........   405
Title Transfers..................................................   617
    Past and Potential...........................................   619
Title XVI, Water Reclamation & Reuse Projects..................456, 637
Tres Rios Habitat Restoration Project............................   632
Tres Rios Wetlands Demonstration.................................   255
Tualatin Project.................................................   111
Umatilla Basin Project, Phase III Study..........................   112
Umatilla Project.................................................   113
Uncompahgre Project..............................................   329
United States/Mexico Border Issues--Technical Support............   330
Unscheduled Maintenance..........................................   458
Upper Colorado Region:
    Budget Summary...............................................   261
    Map..........................................................   259
    Overview.....................................................   267
    Projects/Programs............................................   260
    Table of Contents............................................   263
Upper Colorado River Basin Selenium Survey.......................   331
Upper Rio Grande Basin Water Management and Technical Assistance 
  Program........................................................   332
Velarde Community Ditch Project..................................   334
Visclosky, Representative Peter J., Opening Remarks..............   617
Washington Water Management and Technical Assistance Program.....   115
Washita Basin Project............................................   407
Washoe Project...................................................   193
Water Acquisition................................................   655
Water and Energy Management and Development......................   636
Water and Related Resources......................................35, 61
    Federal Employees and Contractors............................   672
    FY 1999 Request..............................................    48
Water Conservation Field Services Program........................   656
Water Management and Conservation Program........................   459
Water Management and Technical Assistance........................   647
Water Reclamation and Reuse Program..........................29, 31, 64
W.C. Austin Project..............................................   408
Weber Basin Project..............................................   335
Weber River Project..............................................   337
Wetlands Development.............................................   460
Wichita Project..................................................   409
Working Capital Fund Appropriation..............................50, 491
Wyoming Water Management and Technical Assistance Program......117, 410
Yakima Project...................................................   118
Yakima River Basin Water Enhancement Project.....................   120
Year 2000 Computer:
    Conversion...................................................   673
    Problems.....................................................    27
Yuma Area Projects...............................................   256
Yuma Desalting Plant.............................................   611

                    APPALACHIAN REGIONAL COMMISSION

Accomplishments..................................................   797
Administration of Area Development Program.......................   761
Agency Administered Projects.....................................   820
Appalachian Development Highway System......717, 747-754, 804, 815, 829
Area Development Program......................755-763, 818-824, 826-827
Budget Reductions................................................   802
Budget Request by Subprogram.....................................   737
Budget Request to OMB............................................   803
Budget Summary by Program........................................   734
Commission Technical Assistance..................................   766
Delta Regional Commission........................728, 797, 803, 827-829
    Budget Request...............................................   733
    Economic Status of Appalachia and the Mississippi Delta......   743
    Impact of Proposal on ARC....................................   745
    Legislative Proposal.........................................   742
    Outline of a Proposal........................................   745
    Reasons for Approving Proposal...............................   744
Delta Region Needs Identification................................   789
Distressed Counties..................................762, 798, 803, 808
    Map..........................................................   763
    Project Output Measurements..................................   831
Edwards, Representative Chet, Opening Remarks....................   807
Entrepreneurship Initiatives.....................................   809
Expansion of Counties............................................   805
Fazio, Representative Vic, Opening Remarks.......................   798
Fiscal Year 1999 Program.........................................   730
    General Statement and Summary................................   733
    Table of Contents............................................   731
Local Development Districts...............................726, 764, 803
Lower Mississippi Delta Counties and Parishes....................   791
McDade, Chairman Joseph M., Opening Remarks......................   699
Mollohan, Representative Alan, Opening Remarks...................   699
Non-ARC Funding Sources..........................................   806
Non-Highway Programs.............................................   720
Origins..........................................................   710
Partnership Model................................................   736
Project Examples, FY 1997........................................   793
Project Performance..............................................   760
Project Selection Criteria.......................................   807
Questions........................................................   812
Reauthorization..................................................   797
Regional Initiatives...........................................723, 759
Rogers, Representative Harold, Opening Remarks...................   801
Salaries and Expenses.....................................727, 769, 825
    Appalachian Regional Commission Operating Expenses...........   772
    Federal Co-Chairman and Staff................................   770
    Inspector General............................................   770
Socio-Economic Data..............................................   776
    Implications for Development.................................   782
    Net Migration................................................   788
    Per Capita Income chart....................................781, 785
    Poverty Rates of Appalachia Counties.........................   786
    Strategies for Development...................................   783
    Unemployment Rates...........................................   787
Strategic Plan and Accomplishments.............................720, 806
Strategic Plan Implementation....................................   756
Summary of Appropriation and Budget Request......................   732
Total Operating Budget...........................................   739
Underwood, Governor Cecil H., Opening Remarks....................   701
Underwood, Governor Cecil H., Statement..........................   705
Visclosky, Representative Peter J., Opening Remarks..............   805
Water and Sewer System Projects..................................   824
White, Dr. Jesse L., Opening Remarks.............................   710

                       TENNESSEE VALLEY AUTHORITY

Budget Proposal..................................................   837
Capital Investment...............................................   919
Chickamauga Lock:
    Cost Category Schedule.......................................   897
    National Importance..........................................   840
    Program Financing Schedule...................................   896
    Replacement..................................................   894
Comprehensive Land Strategy......................................   883
Crowell, Chairman Craven, Tennessee Valley Authority, Testimony 
  Submitted......................................................   833
Cultural Resources...............................................   893
Daily Reservoir Operations.......................................   861
Dam Safety, Capital Improvements.................................   867
Dam Safety, Operations and Maintenance...........................   865
Economic Development.............................................   907
    Cost Category Schedule.......................................   909
    Program Financing Schedule...................................   908
Emergency Preparedness and Operations............................   863
Environmental Compliance, Muscle Shoals..........................   913
Environmental Research Center (ERC)..............................   910
    Cost Category Schedule.......................................   912
    National Clean-up Obligations................................   842
    Program Financing Schedule...................................   911
Fiscal Year 1999 Budget Program..................................   847
    Appropriation Request........................................   851
    Cost Category Schedule.......................................   856
    Employment Summary...........................................   856
    Government Performance and Results Act Performance Plan......   853
    Highlights.................................................852, 853
    Introduction.................................................   849
    Power Program................................................   853
    Summary of Budget............................................   854
    Table of Contents............................................   847
Fuel and Power Expenses..........................................   917
Integrated River-System Management:
    Continuing Need..............................................   836
    National Benefits............................................   834
Land Between The Lakes National Recreation Area................839, 898
    Camping......................................................   901
    Cost Category Schedule.......................................   900
    Day Use Services.............................................   902
    Program Financing Schedule...................................   899
    Resident Center..............................................   903
    Resource Stewardship.........................................   904
    Support and Infrastructure...................................   905
Land Use Services................................................   888
Mosquito Management..............................................   881
Navigation, Capital Improvements.................................   871
Navigation, Operations and Maintenance...........................   869
Navigation, Waterway Development.................................   873
Operations, update...............................................   843
Performance Plan.................................................   923
    General Goals and Objectives.................................   926
    Goals for Continuing Service to the Nation...................   845
    Introduction.................................................   925
    Mission Statement............................................   925
    Strategies to Achieve Goals..................................   926
    Table of Contents............................................   924
Plant Management.................................................   882
Power Program:
    Borrowing....................................................   820
    Income Statement.............................................   918
    Overview.....................................................   914
Regional Natural Heritage........................................   892
Regional Water Supply............................................   879
Reservoir Release Improvements:
    Capital......................................................   876
    Operations and Maintenance...................................   875
Reservoir Shoreline Erosion and Stabilization....................   885
Revenue from Power Operations....................................   916
River Action Teams...............................................   877
River Basin Land, Operations and Maintenance.....................   890
Shoreline Construction Approvals.................................   886
Statement of Changes in Indebtedness.............................   921
Water and Land Stewardship.......................................   857
    Continuing Need..............................................   838
    Cost Category Schedule.......................................   860
    Program Financing Schedule...................................   858