[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




 
       WATER SUPPLY AND RELIABILITY: THE ROLE OF WATER RECYCLING

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

                           OVERSIGHT HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                        Thursday, March 27, 2003

                               __________

                           Serial No. 108-11

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
W.J. ``Billy'' Tauzin, Louisiana     Eni F.H. Faleomavaega, American 
Jim Saxton, New Jersey                   Samoa
Elton Gallegly, California           Neil Abercrombie, Hawaii
John J. Duncan, Jr., Tennessee       Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland         Frank Pallone, Jr., New Jersey
Ken Calvert, California              Calvin M. Dooley, California
Scott McInnis, Colorado              Donna M. Christensen, Virgin 
Barbara Cubin, Wyoming                   Islands
George Radanovich, California        Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Jay Inslee, Washington
    Carolina                         Grace F. Napolitano, California
Chris Cannon, Utah                   Tom Udall, New Mexico
John E. Peterson, Pennsylvania       Mark Udall, Colorado
Jim Gibbons, Nevada,                 Anibal Acevedo-Vila, Puerto Rico
  Vice Chairman                      Brad Carson, Oklahoma
Mark E. Souder, Indiana              Raul M. Grijalva, Arizona
Greg Walden, Oregon                  Dennis A. Cardoza, California
Thomas G. Tancredo, Colorado         Madeleine Z. Bordallo, Guam
J.D. Hayworth, Arizona               George Miller, California
Tom Osborne, Nebraska                Edward J. Markey, Massachusetts
Jeff Flake, Arizona                  Ruben Hinojosa, Texas
Dennis R. Rehberg, Montana           Ciro D. Rodriguez, Texas
Rick Renzi, Arizona                  Joe Baca, California
Tom Cole, Oklahoma                   Betty McCollum, Minnesota
Stevan Pearce, New Mexico
Rob Bishop, Utah
Devin Nunes, California
VACANCY

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

                    SUBCOMMITTEE ON WATER AND POWER

                   KEN CALVERT, California, Chairman
        GRACE F. NAPOLITANO, California, Ranking Democrat Member

George Radanovich, California        Calvin M. Dooley, California
Greg Walden, Oregon                  Jay Inslee, Washington
Thomas G. Tancredo, Colorado         Raul M. Grijalva, Arizona
J.D. Hayworth, Arizona               Dennis A. Cardoza, California
Tom Osborne, Nebraska                George Miller, California
Rick Renzi, Arizona                  Ciro D. Rodriguez, Texas
Stevan Pearce, New Mexico            Joe Baca, California
Devin Nunes, California              Nick J. Rahall II, West Virginia, 
Richard W. Pombo, California, ex         ex officio
    officio
                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 27, 2003...................................     1

Statement of Members:
    Calvert, Hon. Ken, a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     2
    Gonzalez, Hon. Charles A., a Representative in Congress from 
      the State of Texas.........................................     3
    Napolitano, Hon. Grace, a Representative in Congress from the 
      State of California........................................     2
    Pearce, Hon. Stevan, a Representative in Congress from the 
      State of New Mexico........................................     4
    Renzi, Hon. Rick, a Representative in Congress from the State 
      of Arizona.................................................     4

Statement of Witnesses:
    Cody, Betsy A., Specialist in Natural Resources Policy, 
      Resources, Science and Industry Division, Congressional 
      Research Service, Library of Congress......................     5
        Prepared statement of....................................     7
    Grindstaff, P. Joseph, General Manager, Santa Ana Watershed 
      Project Authority..........................................    15
        Prepared statement of....................................    17
    Gritzuk, Michael, P.E., Vice President, WateReuse 
      Association, and Director, Water Services Department, 
      Phoenix, Arizona...........................................    24
        Prepared statement of....................................    26
    Habiger, General Eugene E., USAF (Retired), President and 
      CEO, San Antonio Water System..............................    13
        Prepared statement of....................................    14
    Neely, Hon. Peggy, Councilmember, City of Phoenix, Arizona...    10
        Prepared statement of....................................    12
    Scott, Doug, Director, U.S. Water/Sewer Group Coordinator, 
      Fitch Ratings..............................................    33
        Prepared statement of....................................    34

Additional materials supplied:
    DeLoach, Robert A., General Manager, Cucamonga County Water 
      District, Letter submitted for the record..................    52


 OVERSIGHT HEARING ON WATER SUPPLY AND RELIABILITY: THE ROLE OF WATER 
                               RECYCLING

                              ----------                              


                        Thursday, March 27, 2003

                     U.S. House of Representatives

                    Subcommittee on Water and Power

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 1324, Longworth House Office Building, Hon. Ken Calvert 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Calvert, Tancredo, Osborne, Renzi, 
Pearce, Nunes, Napolitano, Inslee and Baca.
    Also Present: Representative Gonzalez.

STATEMENT OF THE HON. KEN CALVERT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Calvert. The oversight hearing of the Subcommittee on 
Water and Power will come to order.
    The Subcommittee is meeting today to hear testimony on the 
role of water recycling and reliability. Under Committee Rule 
4[g], the Chairman and Ranking Minority Member can make opening 
statements.
    Recent drought conditions, critical water shortage, and 
increasing water competition are requiring communities to look 
beyond the traditional ways of developing and maintaining 
dependable and safe water supplies. Nontraditional water supply 
projects are being demonstrated nationwide and implemented to a 
greater extent than ever before in response to increasing 
demands on limited, high-quality water supplies.
    This hearing is one of a series of hearings that will focus 
on such mechanisms and projects that seek to improve water 
supply availability and reliability in not only the Western 
United States but throughout the country. It is also part of 
our examination of how Federal resources can be most effective 
in developing new water supplies while protecting our 
environment. Today we will focus on how communities are meeting 
their water needs through recycling.
    In water deficit regions, such as southern California, 
recycled water is considered a dependable, controlled, and 
renewable source of water, which is often utilized in the same 
context as traditional water supplies. Overutilization of the 
Rio Grande, California's need to comply with the Colorado River 
4.4 plan, and a need to decrease diversions from 
environmentally sensitive waters, have helped us to become 
acutely aware that expanded water reuse will be a critical 
component of a comprehensive water management solution. Water 
recycling allows communities to become more drought resistant 
and less dependent upon imported and traditional water sources.
    Today, we have the privilege of hearing from several 
leaders who have first hand knowledge of successful water reuse 
projects. I thank the panel for being here today and look 
forward to hearing your views on water recycling and your 
vision of an appropriate Federal responsibility in this area.
    [The prepared statement of Mr. Calvert follows:]

Statement of The Honorable Ken Calvert, Chairman, Subcommittee on Water 
                               and Power

    Recent drought conditions, critical water shortages and increasing 
water competition are requiring communities to look beyond the 
traditional ways of developing and maintaining dependable and safe 
water supplies.
    Non-traditional water supply projects are being demonstrated 
nationwide and implemented to a greater extent than ever before in 
response to increasing demands on limited high quality water supplies.
    This hearing is one of a series of hearings that will focus on such 
mechanisms and projects that seek to improve water supply availability 
and reliability in not only the Western States but throughout the 
country. It is also part of our examination of how Federal resources 
can be most effective in developing new water supplies while protecting 
our environment.
    Today, we will focus on how communities are meeting their water 
needs through recycling. In water-deficient regions such as southern 
California, recycled water is considered a dependable, controlled, and 
renewable source of water which is often utilized in the same context 
as traditional water supplies.
    Over-utilization of the Rio Grande, California's need to comply 
with the Colorado River 4.4 Plan, and a need to decrease diversions 
from environmentally sensitive waters have helped us to become acutely 
aware that expanded water reuse will be a critical component of 
comprehensive water management solutions. Water recycling allows 
communities to become more ``drought resistant'' and less dependent on 
imported and traditional water sources.
    Today, we have the privilege of hearing from several leaders who 
have first-hand knowledge of successful water reuse projects. I thank 
the panel for being here today and look forward to hearing your views 
on water recycling and your vision of the appropriate Federal 
responsibility in this area.
                                 ______
                                 
    It is now my privilege to recognize Mrs. Napolitano, the 
Ranking Democrat Member, for her opening statement.

  STATEMENT OF THE HON. GRACE NAPOLITANO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Napolitano. Thank you, Mr. Chairman, for convening 
this hearing on water recycling. I am eternally grateful to you 
for opening the door so that we can move on this very important 
issue for not only California but all the southern region of 
the United States.
    It is entirely appropriate that this Subcommittee take the 
initiative to learn more about water recycling and explore 
other uses of technology that can help improve and stabilize 
water supplies not only, as I said, in California and the 
southwest, but in many other states that are facing a critical 
shortage of water.
    I trust that today we will hear firsthand from witnesses 
who are already successful in making and using recycled water 
to improve their communities and quality of life, improve 
business, many things that affect our everyday life. We also 
will develop a better understanding and learn more about the 
frustrations that our many community leaders and water 
districts have faced as they have tried to obtain Federal 
financial assistance for their projects under Title XVI, Public 
Law 102-575.
    The Title XVI water recycling program offers tremendous 
potential to help solve problems of water supply shortages and 
water use conflicts in some critical areas of the western 
States. It is, indeed, frustrating that this administration has 
little or no interest in this program. They keep decimating the 
budget and I think it's important for us to bring this to light 
and show how important, how valuable, how critical the water 
is, the recycled water and the water we use is to the many 
states that have benefited from it. We want to be sure that, as 
the fresh water supply pressures and demands mount throughout 
the United States, especially in our western States, that we do 
not ignore our most valuable entire class of water development 
options.
    Mr. Chairman, again your leadership is laudable and very 
encouraging to me, and I agree with your proposal to use our 
Subcommittee hearing process as a means to thoroughly 
investigate how we can help bring to light how our local 
governments successfully apply technologies to their water 
supply programs. I look forward to hearing from our witnesses 
and welcome all of you.
    Thank you, Mr. Chairman.
    Mr. Calvert. Thank you.
    Our colleague, Mr. Gonzalez from Texas, is here with us 
today. I would ask unanimous consent that Mr. Gonzalez be 
allowed to sit with us and be able to question the witnesses. 
Without objection, so ordered.
    Mr. Gonzalez, we have a special guest from San Antonio, and 
I understand you would like to introduce him. You are 
recognized.

STATEMENT OF THE HON. CHARLES A. GONZALEZ, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Gonzalez. Thank you very much, Mr. Chairman, and 
Ranking Member Napolitano, members of the Committee. First of 
all, thank you for allowing me to sit up here with you.
    It is a great privilege and pleasure today to introduce one 
of my constituents, General Gene Habiger, who will actually be 
testifying today. The General became president and CEO of the 
San Antonio Water System in 2001. Prior to his service with 
SAWS, General Habiger served 35 years with the United States 
Air Force, rising to the rank of a four-star general, and 
served as Commander in Chief of the U.S. Strategic Command, 
where he was responsible for all United States Air Force and 
United States Navy Strategic Nuclear Forces.
    As Commander in Chief of the Strategic Command, he 
established an unprecedented military-to-military relationship 
with his Russian counterparts that dramatically improved 
relationships between the nuclear commands of the United States 
and Russia. His work in this area was highlighted by both ``60 
Minutes'' and CNN.
    After retiring from the United States Air Force, he served 
as the Department of Energy's security tzar, where he was 
responsible for implementing the Secretary's security reform 
plan and changing the security culture at the Department of 
Energy.
    General Habiger's tenure at SAWS has seen the long overdue 
fluoridation of the San Antonio water supply, as well as the 
aggressive development of water recycling efforts. 
Additionally, it is not surprising, given General Habiger's 
career, that SAWS quickly developed an effective security and 
cyber security plan after 9/11. I am sure we're going to have 
him testify before Homeland Security. He was the right man, at 
the right time, at the right place.
    San Antonio, like most of Texas, faces serious, long-term 
water supply challenges that will inevitably endanger its 
economic growth in the future if they are not handled now. The 
San Antonio Water System under the General has faced these 
challenges head on, both in a visionary yet practical way. San 
Antonio has been very fortunate to have the contribution of 
General Habiger's talent and experience at this critical time, 
and I thank you for holding these hearings and I think you're 
going to find his testimony informative and refreshing.
    Mr. Calvert. I thank the gentleman.
    Any other opening statements? The gentleman from Arizona.

STATEMENT OF THE HON. RICK RENZI, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ARIZONA

    Mr. Renzi. Mr. Chairman, thank you. I just want to welcome 
from my home State of Arizona the Honorable Peggy Neely. Thank 
you so much for your testimony today. I know your expertise is 
going to be invaluable to us today. Coming from the desert 
community of Arizona, it's an absolute that we must maximize 
every drop of water, and your experience in that is something 
that I'm looking forward to hearing.
    As you know, up in Flagstaff, Arizona we're trying to find 
ways to recycle our water, and in particular to use it to make 
snow. There's a real controversy up there, whether that water 
is pure enough, whether it contains carcinogenics. Recently we 
are finding out that it is pure water. It is going to be a 
quality water supply that we'll be able to use to make snow up 
there.
    In addition, I ran on a platform of conservation of water, 
trace area uses of water where we grow fish, and then use that 
water for aquaculture to grow plants, and then sell the water 
to the golf courses, particularly up there in the Prescott 
area. So for me, it's a real valuable lesson to have you here 
today, and I welcome you from my home State.
    Thank you, Peggy.
    Mr. Calvert. I thank the gentleman.
    Any other opening statements? Mr. Pearce.

   STATEMENT OF THE HON. STEVAN PEARCE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW MEXICO

    Mr. Pearce. Thank you, Mr. Chairman.
    The concept of water reuse is especially important all 
through the West. In New Mexico, we have a source of water that 
in the State legislature I began to submit legislation for, and 
that is produced water from oil wells. The Pecos River runs 
through the eastern side of my district, up above the Pecos 
River, and some small hills. We have produced water that is 
actually cleaner, except for the hydrocarbons, and has less 
salt content than the Pecos River. Current regulation requires 
that we dispose of that water in a salt zone so that the water 
is contaminated then to about 200,000 parts per million instead 
of about 1,000 parts per million. So the next time we clean 
that water up, Mr. Chairman, it's going to be extremely 
expensive.
    I think that, for the West, that it is not enough to 
recycle water. We have got to begin to clean up these new 
sources of water and to use the brackish waters that are 
available underneath the Earth's surface.
    Mr. Chairman, I look forward to working with you on this 
Committee and thank you for calling this hearing.
    Mr. Calvert. I thank the gentleman.
    Mr. Pearce. Thank you.
    Mr. Calvert. We have an extensive panel today, and we 
certainly want to hear from everyone. I would state that we 
attempt to try to stay within the 5-minute rule, especially 
when we have such a large panel, so we would appreciate your 
attempting to do that.
    Miss Betsy Cody, Specialist in Natural Resources, 
Congressional Research Service, is with us today. The Honorable 
Peggy Neely, Councilwoman from Phoenix, Arizona; General Eugene 
Habiger, United States Air Force [Retired], President and CEO 
of the San Antonio Water System; Mr. Joseph Grindstaff, General 
Manager, Santa Ana Watershed Project Authority, accompanied by 
Mr. Richard Atwater, CEO and General Manager of the Inland 
Empire Utilities Agency; Mr. Mike Gritzuk, the First Vice 
President, WateReuse Association; and Mr. Doug Scott, Director 
of the U.S. Water/Sewer Group Coordinator, Fitch Ratings.
    With that, I would now recognize Miss Cody for your 5-
minute testimony. There are some lights on the table that 
indicate when your time has concluded. Certainly any additional 
information will be included in the record.
    With that, I recognize Miss Cody.

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

    Ms. Cody. Good morning, Mr. Chairman, and thank you for the 
opportunity to appear before the Subcommittee today.
    I should say at the outset that CRS's comments are for 
background and analytical purposes only, as CRS takes no 
position on pending legislation or amendments to existing 
programs.
    In providing an overview of the Federal Government's 
involvement in wastewater reclamation, I would like to submit 
for the record, with your permission, of course, a CRS report 
that describes current Federal water supply and treatment 
programs.
    Mr. Calvert. Without objection, so ordered.
    [NOTE: The CRS Report entitled ``Federally Supported Water 
Supply and Wastewater Treatment Programs'' updated March 25, 
2003, has been retained in the Committee's official files.]
    Ms. Cody. This report also describes the Federal 
Government's historical role in providing assistance for 
municipal water projects.
    Although my testimony will focus on the Bureau of 
Reclamation's reuse and recycling program, Title XVI, it is 
important to note that to date the States have been most active 
players in pursuing water reuse technologies. In particular, 
Florida and California, in partnership with other private and 
public entities, appear to have pretty well-established water 
reuse programs, although growing programs.
    It appears that there are more than 460 recycling projects 
in Florida, and more than 230 in California. Although it is not 
clear how many projects there are nationwide, some have 
estimated that they number close to 1,500.
    I focus today on the Bureau of Reclamation's Title XVI 
program because it is the only active Federal program providing 
localities with financial and technical assistance for the 
development of water reclamation and reuse facilities. Although 
both Corps and the EPA have some limited authority to provide 
assistance to local entities for recycling projects, neither 
has an established, regularly funded program for these 
activities.
    The genesis of the Bureau's Title XVI program appears to 
have been the longstanding drought of the late 1980's and early 
1990's. The drought hit California and the Southwest 
particularly hard. As such, this Committee spent much time 
debating Federal water supply policies. The result of several 
years effort in addressing these issues was the Reclamation 
Projects Authorization and Adjustment Act of 1992.
    While much attention has been given to Title XXXIV of that 
Act, the CVPIA, Title XVI authorized five reclamation water 
reuse and recycling projects. Additionally, the Act authorized 
some studies, including a comprehensive reuse study, for 
Southern California. The latter appears to provide specific 
statutory authority to activities that were underway in 1991. 
And those were related to an announcement by Secretary Lujan 
for a comprehensive water reuse initiative for Southern 
California to potentially decrease the area's dependence on 
imported water supplies from the Colorado River.
    Title XVI has since been amended six times since 1992, 
resulting in a total of 27 authorized projects. To date, the 
Bureau has undertaken planning, design, and engineering 
activities on 18 projects. The Bureau has largely completed its 
funding obligations for three projects, two in California and 
one in Utah. Total obligations and expenditures for the 
Bureau's Title XVI program are expected to hit about $285 
million by the end of 2003. The total amount of non-Federal 
investment in Title XVI projects appears to be between $800 
million and one billion, although that is a little sketchy.
    The projects on line so far are producing an estimated 
98,000 acre-feet of water annually. For a perspective, that's 
roughly 25 percent of what California water recycling programs 
were producing in the year 2000.
    The projected water yield for the 27 authorized projects 
ranges from 500,000 acre-feet up to about 640,000 acre-feet 
annually, depending on changes that the programs go through 
once they come on line.
    Questions relating to the Bureau's Title XVI program appear 
to have increased in recent years, possibly because of the 
nature of the project authorization and the lack of a clear 
program funding process that is typical of other Federal water 
programs, such as EPA's state revolving loan funds for 
wastewater and drinking water.
    Unlike these other programs, each Title XVI project is 
specifically authorized by Congress and funded via the annual 
appropriations process. As such, there appears to be no 
specified or promulgated development or evaluation criteria for 
Title XVI projects prior to authorization. That being said, it 
has been noted that the Bureau's guidelines for developing 
water reclamation and reuse projects provide solid criteria 
prior to funding of those projects.
    These issues were highlighted during development of the 
Fiscal Year 2004 budget request, whereupon OMB reviewed the 
program to assess its strengths and weaknesses. While the Title 
XVI program fared reasonably well on most of its evaluation 
criteria, it was found to be weak in providing a clear link 
between Federal funding progress and specific outcomes and in 
planning long term.
    The Title XVI OMB review concludes by stating that the 
program should be scaled back because it serves a largely local 
function and local responsibility, and that it is not one of 
Reclamation's ``core functions.'' However, I should note here 
that documents leading up to that report did imply that it was 
linked to the mission of that program very clearly. 
Consequently, the Administration's budget request for Fiscal 
Year 2004 is $12.6 million, 59 percent less than what was 
enacted in 2003 and 65 percent less than what the Congress 
appropriated for Fiscal Year 2002.
    The OMB review and, of course, the congressional response, 
including this hearing, raise several policy issues not unique 
to the Title XVI program. First, it highlights the tension 
between congressional and administration priorities; second, it 
raises questions regarding the appropriate Federal role in 
water supply development for M&I uses, including recycling. For 
example, is Congress redefining the Federal Government's role 
in M&I water supply as it authorizes new site-specific 
projects? To what degree should the Federal Government provide 
incentives for water supply development via new technologies 
such as recycling, and what factors should be considered? Is 
there any need for coordination or realignment of Federal water 
activities? Last, is there a need for technical evaluation of 
these projects prior to project authorization?
    This concludes my testimony. I will be happy to answer any 
questions from the Chairman or other members of the 
Subcommittee. Thank you.
    [The prepared statement of Ms. Cody follows:]

  Statement of Betsy A. Cody, Specialist in Natural Resources Policy, 
   Resources, Science, and Industry Division, Congressional Research 
                                Service

    Thank you Mr. Chairman for the opportunity to appear before the 
Subcommittee today. My name is Betsy Cody. I am a specialist in natural 
resources policy with the Congressional Research Service, Library of 
Congress, where I have worked on western water policy and natural 
resources issues since 1989. I have been asked to provide Members of 
the Subcommittee with an overview of the Federal Government's 
involvement in wastewater reclamation, recycling, and reuse. With 
permission of the Subcommittee, I would like to submit for the record a 
CRS report that outlines current Federally supported water supply and 
water treatment programs. 1 This report provides an overview 
of current projects and programs, as well as a description of the 
historical role of the Federal Government in providing assistance for 
municipal water supply development and treatment. Although the Federal 
Government has a significant role in developing water quality 
regulations and standards for municipal and industrial (M&I) water use, 
historically it has provided a relatively small percentage of direct 
funding for construction of M&I water supply and treatment facilities. 
In recent years, Congress has been asked more and more to fund 
development of M&I water supplies, including providing Federal support 
for water reuse and recycling projects.
---------------------------------------------------------------------------
    \1\ U.S. Library of Congress, Congressional Research Service, 
Federally Supported Water Supply and Wastewater Treatment Programs, CRS 
Report RL30478, updated March 24, 2003.
---------------------------------------------------------------------------
    Although my testimony will focus on the Bureau of Reclamation's 
Reclamation Reuse and Recycling Program (Title XVI of P.L. 102-575, or 
Title XVI), it is important to note that, to date, the states have been 
the most active players in pursuing water reuse technologies. In 
particular, Florida and California have well established water reuse 
programs. It appears that there are more than 460 water recycling 
projects in Florida and more than 230 in California; however, it is not 
clear how many projects are on-line nationwide. Efforts to track these 
activities more precisely are currently underway. Standards for 
recycled water quality are set at the state level; however, U.S. 
Environmental Protection Agency (EPA) guidelines provide 
recommendations for reuse practices and technical information to assist 
states in formulating state-level regulations. 2
---------------------------------------------------------------------------
    \2\ U.S. Environmental Protection Agency, Guidelines for Water 
Reuse, EPA/625/R-92/004 available at: [http://www.epa.gov/ordntrnt/ORD/
NRMRL/Pubs/625R92004/625R92004prel.pdf].
---------------------------------------------------------------------------
Title XVI: Reclamation Water Reuse and Recycling
    The Bureau of Reclamation's Title XVI program is the only active 
Federal program providing localities with financial and technical 
assistance for the development and construction of water reclamation 
and reuse facilities. 3 Although both the U.S. Army Corps of 
Engineers and the EPA have limited authorities to provide assistance to 
local entities for recycling projects (e.g., specific provisions in 
1992 and 1999 Water Resources Development Acts, 4 and a 
pilot program by EPA under the Alternative Water Sources Act), 
5 neither has an established, regularly funded program for 
such activities.
---------------------------------------------------------------------------
    \3\ U.S. Executive Office of the President, Office of Management 
and Budget, Performance and Management Assessments. Budget of the U.S. 
Government, Fiscal Year 2004 (Washington, DC: U.S. Govt. Print. Off., 
Feb. 2003), p. 173. See also, PART worksheets for the Department of the 
Interior's Title XVI water reclamation and reuse program at: [http://
www.whitehouse.gov/omb/budget/fy2004/pma.html] p. 2.
    \4\ Sec. 217 of P.L. 102-580, and Sec. 502 of P.L.106-53, 
respectively. Some of these activities received funding for Fiscal Year 
2003 in Title I of the Energy and Water Development Appropriation Act 
for Fiscal Year 2003 (P.L. 108-7; Division D). The Corps also has 
authority for design and construction of Everglades wastewater reuse 
technology (P.L. 106-541). In all, it appears $110.5 million in 
assistance has been authorized for Corps water reuse activities, with 
approximately $22.6 million appropriated to date.
    \5\ Title VI of P.L. 106-457.
---------------------------------------------------------------------------
    The genesis for the Bureau's wastewater reclamation, recycling, and 
reuse program was the long-term drought of the late 1980s and early 
1990s. The drought hit California and the Southwest particularly hard. 
As such, this Committee spent much time debating Federal water supply 
policies, including how to address conflicts between the need and 
desire for continued operation of the Federal Central Valley Project 
and the application of state and Federal environmental laws that could 
potentially limit water deliveries to protect certain species or comply 
with water quality standards. The result of several years' effort in 
addressing this conflict was the Reclamation Projects Authorization and 
Adjustment Act of 1992 (P.L. 102-575). While much attention has been 
given to Title 34 of that Act (the Central Valley Project Improvement 
Act), Title XVI (the Reclamation Wastewater and Groundwater Studies and 
Facilities Act) authorized construction of five reclamation water reuse 
and recycling projects in Arizona and California. Additionally, the Act 
authorized a comprehensive reuse study for Southern California, 
including Colorado River hydrologic regions as defined by the 
California Department of Water Resources. The latter language appears 
to provide specific statutory authority for activities that were 
underway in 1991 in response to Secretary of the Interior Manuel 
Lujan's announcement of a ``Comprehensive Water Reuse Initiative'' for 
Southern California. 6 It was envisioned that a 
comprehensive water reuse program would help to decrease the area's 
dependence on imported water supplies from the Colorado River.
---------------------------------------------------------------------------
    \6\ Department of the Interior News Release, Office of the 
Secretary, dated August 5, 1991. According to materials provided to CRS 
on October 25, 1991, the Bureau undertook a number of activities that 
fall, including developing a detailed action plan for promoting the 
initiative. By October 23, 1991, the Bureau had held its first pre-
planning committee meeting for the Southern California Water 
Reclamation and Reuse Study.
---------------------------------------------------------------------------
    Title XVI has been amended six times since 1992, 7 
resulting in the addition of 22 specific projects for a total of 27 
authorized projects. The Federal share of project costs is limited to 
25% of total project costs; however, amendments in 1996 added 18 new 
projects (of the current 27) and new program guidance, which retained 
the 25% Federal/non-federal cost share, but also limited the Federal 
share of project costs to no more than $20 million. To date, the Bureau 
has undertaken planning, design, and engineering activities on 18 
projects. The Bureau has completed its funding obligations for two 
projects: 1) the Los Angeles (CA) area water reclamation and reuse 
project, and 2) the Tooele (UT) wastewater treatment and reuse project. 
Bureau involvement with a third project, the Mission Basin/Oceanside 
(CA) groundwater desalting demonstration project is nearly complete. 
Obligations and expenditures for the Bureau's Title XVI program to date 
have totaled approximately $255 million and are expected to reach $285 
million by the end of Fiscal Year 2003. The total non-federal 
investment in Title XVI projects is estimated to be between $800 
million $1 billion. The projects on line so far are producing an 
estimated 98,000 acre-feet of water annually (roughly 25% of all 
recycled water in California in the year 2000), according to the Office 
of Management and Budget. The projected water yield for the projects 
authorized ranges from 500,000 - 640,000 acre-feet annually. While the 
Bureau has guidelines for the development of water reclamation and 
reuse projects, 8 no official rules or regulations for the 
program have been promulgated.
---------------------------------------------------------------------------
    \7\ P.L. 104-266 (1996 amendments) authorized specific construction 
projects in California, Utah, New Mexico, Nevada, and Texas; P.L. 105-
321 (1998) authorized a project in Oregon; P.L. 106-554 (1998) 
authorized an additional project in Nevada; P.L. 106-566 extended the 
Secretary's research and planning authority to include projects in the 
State of Hawaii; P.L. 107-344 (2002) authorized a project in Washington 
state; and P.L. 108-7 (2003) authorized an additional project in 
Nevada.
    \8\ U.S. Department of the Interior, Bureau of Reclamation, 
Guidelines for Preparing, Reviewing, and Processing Water Reclamation 
and Reuse Project Proposals Under Title XVI of Public Law 102-575, as 
Amended, (Washington DC: Bureau of Reclamation, 1998).
---------------------------------------------------------------------------
    Questions relating to the Bureau's Title XVI program appear to have 
increased in recent years possibly because of the nature of project 
authorization and the lack of a clear program funding process that is 
typical of other Federal wastewater and drinking water programs. Unlike 
other Federal water assistance programs, such as state revolving loan 
funds for wastewater and drinking water, each recycling project is 
specifically authorized by Congress and funded via the annual Energy 
and Water Development appropriations bill. As such, there appear to be 
no specified or promulgated development criteria and no competitive 
grant processes for Title XVI projects; however, it has been noted that 
the Bureau's guidelines for developing water reclamation and reuse 
projects provide ``solid criteria ... to evaluate potential projects 
prior to funding, and also to monitor and evaluate projects under 
construction.'' 9
---------------------------------------------------------------------------
    \9\ U.S. Executive Office of the President, Office of Management 
and Budget, OMB Program Assessment Rating Tool (PART), Competitive 
Grant Programs. PART worksheet for the Department of the Interior's 
Title XVI water reuse and recycling program at [http://
www.whitehouse.gov/omb/budget/fy2004/pma.html], p. 6.
---------------------------------------------------------------------------
    These programmatic issues were highlighted during development of 
the Fiscal Year 2004 budget. The Office of Management and Budget (OMB) 
reviewed the program using the Program Assessment Rating Tool (PART)--
an analytic tool used to assess program strengths and weaknesses. While 
the Title XVI program fared reasonably well on most evaluation 
criteria, it was found to be weak in providing a clear linkage between 
Federal funding and progress toward specific outcomes, and in planning 
for the long-term. The supporting Fiscal Year 2004 PART review 
documents prepared by OMB describe the program as an ``earmark-driven 
grant program for local projects'' for which there is no competitive 
grant process. While supporting documents state that the program helps 
the Bureau ``meet its mission to manage and develop water and related 
resources in an economically and environmentally sound manner'' (and 
specifically notes the role of the program in assisting Southern 
California to reduce its reliance on Colorado River water), the OMB's 
summary overview of the PART review opines that the water reclamation 
and reuse activity is ``not one of Reclamation's core functions.'' The 
Title XVI PART review concludes by stating that the program should be 
scaled back because it serves a largely local function and local 
responsibility. Consequently, the Administration's budget request for 
Fiscal Year 2004 is $12.6 million--65% less than was enacted for the 
program for Fiscal Year 2002 and 59% less than was enacted for Fiscal 
Year 2003.
    The OMB's Fiscal Year 2004 PART review raises several specific 
policy issues not unique to the Title XVI program. First, it highlights 
the tension between Congressional and Administration priorities. 
Second, it raises questions regarding the appropriate Federal role in 
water supply development for M&I uses; for example, is Congress 
redefining the Federal Government's role in M&I water supply and 
treatment as it authorizes new site-specific projects? To what degree 
should the Federal Government provide incentives for water supply 
development via new technologies, and what geographic, regional, or 
social factors should be considered? Lastly, is there needed 
coordination or realignment of certain Federal water activities to 
ensure efficient use of scarce Federal resources.
    This concludes my testimony. I will be happy to answer questions 
from the Chairman and other Members of the Subcommittee. Thank you.
                                 ______
                                 
    Mr. Calvert. Thank you.
    The Honorable Peggy Neely, Councilwoman, Phoenix, Arizona. 
You're recognized for 5 minutes.

         STATEMENT OF HON. PEGGY NEELY, COUNCILMEMBER, 
                    CITY OF PHOENIX, ARIZONA

    Ms. Neely. Thank you.
    Chairman Calvert and members of the Subcommittee, thank you 
for the opportunity to appear before you today to testify in 
support of stronger Federal participation in water reuse and 
water recycling initiatives.
    My name is Peggy Neely. I serve on the City Council for the 
City of Phoenix, Arizona, representing the growing northern 
portion of the City. I serve on the City's Natural Resources 
Subcommittee. In my work with the City, I have developed an 
appreciation for the foresight and dedication needed to 
maintain the quality of life we now enjoy in our thriving 
metropolitan area of over three million people. Nowhere is this 
more important than in the acquisition and management of 
sufficient high-quality supplies for our desert environment.
    Over many decades, our Federal, state and local leaders 
have ensured that the water supply needs of this rapidly 
growing region can be met, most notably through the acquisition 
of the Colorado River water through the Central Arizona 
Project. As our population is expected to double in the next 40 
years, we realize that our need for sustainable water supplies 
will extend far beyond the availability of these supplies, 
which took the better part of the last century to plan, 
litigate and construct. The job is nowhere near complete. Yet, 
there are no projects of the scope of the CAP on the horizon.
    As we are continually reminded of the finite nature of our 
water resources, we must ask an uneasy question: where will our 
next supplies come from? It is widely speculated that the 
ancient Hohokam Indians, who were the builders of the first 
system of canals in our area, did not find a satisfactory 
answer to that question. The Hohokams were peaceful farmers who 
inhabited the Salt Valley River for about a thousand years, 
from 300 A.D. to about 1450. The University of Arizona's 
research provides evidence that the region encountered a 
devastating drought at the tail end of the tribe's existence in 
the area, giving us the best explanation yet of the Hohokam's 
demise.
    In the Phoenix area, reclaimed water will be a key source, 
and one that could ultimately serve between one-quarter and 
one-third of the region's municipal water demand. Our ability 
to effectively utilize this supply will be highly dependent on 
safe and cost-effective means to treat and distribute the 
supply for a wide range of uses, including potable delivery. 
However, to get there, we will need a stronger Federal 
participation in the research and demonstration of expanded 
technologies.
    The City of Phoenix currently operates three significant 
water reclamation facilities that together serve a population 
of over two million. The largest of these facilities is co-
owned by Phoenix and four other cities, providing water for the 
cooling towers at the Palo Verde Nuclear Generating Facility. 
Water from this plant is also used for area farmlands and for 
restoration of wildlife habitat at the City's Tres Rios River 
Restoration Project. Tres Rios, which is currently being 
expanded to a full-scale project from its demonstration phase 
in partnership with the U.S. Army Corps of Engineers, is a 
remarkable example of how reclaimed water can be used to 
benefit the environment while enhancing education and other 
quality of life objectives. I invite you, when you visit the 
Phoenix area, to tour this remarkable project.
    The City of Phoenix and our municipal partners in the 
Valley of the Sun continue to lead the way in planning and 
utilizing reclaimed water for landscaping areas, agriculture, 
and for the storage of highly treated water underground to 
restore the depleted ground water tables. Reclaimed water is, 
by nature, drought proof, an important feature in Phoenix, 
where our surface water supplies are subject to periodic 
shortfalls.
    In addition, reclaimed water will also help reduce the need 
for additional water treatment plant capacity and help us meet 
the state's requirement to use sustainable water supplies. For 
these and many other reasons, we value this resource highly in 
our future water supply planning efforts, and encourage 
continued Federal efforts to facilitate more effective use of 
this important resource.
    One of the challenges we face in using reclaimed water is 
the high salinity content, which limits its effective 
utilization for certain uses. Much of this salinity originates 
in source water, but additional salts are contributed through 
the urban disposal to our wastewater systems. Phoenix has been 
a driving force in bringing this and other salinity-related 
issues to a national forum through the efforts of the Multi-
State Salinity Coalition. Your Subcommittee staff participated 
in our first salinity summit last December in Las Vegas. At the 
summit, we emphasized that one of our top challenges in 
addressing salinity is how to dispose of the salt concentration 
from the treatment process. We appreciate the continued Federal 
participation in salinity-related research to meet our water 
supply objectives.
    Arizona's rural communities, which are critical to the 
state's tourism economy, are rapidly coming to grips with water 
supply shortfalls. These communities are growing rapidly, and 
the vast majority lack access to adequate sustainable water 
supplies. The problem has been seriously compounded by the 
recent drought in our state, necessitating significant water 
use cutbacks by many of these communities. Rural Arizona could 
also benefit substantially from further water reclamation 
research, technological advancements, planning and 
infrastructure assistance.
    In summary, our reclaimed water supplies will be 
increasingly relied upon to sustain the high quality of life we 
enjoy in the desert community, while accommodating our new 
residents who are attracted to this lifestyle. I appreciate the 
opportunity to provide this testimony to you today, and ask 
your support for funding the projects necessary to effectively 
utilize this important water resource.
    Thank you.
    [The prepared statement of Ms. Neely follows:]

   Statement of Peggy Neely, Councilmember, City of Phoenix, Arizona

    Chairman Calvert and members of the Subcommittee, thank you for the 
opportunity to appear before you today to testify in support of 
stronger Federal participation in water reuse and water recycling 
initiatives.
    My name is Peggy Neely. I serve on the City Council for the City of 
Phoenix, Arizona, representing the northern portion of the City. I also 
serve on the City's Natural Resources Subcommittee. In my work with the 
City, I have developed an appreciation for the foresight and dedication 
needed to maintain the quality of life we now enjoy in our thriving 
metropolitan area of over 3 million people. Nowhere is this more 
important than in the acquisition and management of sufficient high 
quality water supplies for our desert community.
    Over many decades, our Federal, state and local leaders have 
ensured that the water supply needs of this rapidly growing region can 
be met--most notably through the acquisition of Colorado River water 
through the Central Arizona Project. We realize, though, that the 
region's need for sustainable water supplies will extend far beyond the 
availability of this important supply, which took the better part of 
the last century to plan, litigate and construct.
    As we are continually reminded of the finite nature of our water 
resources, we must ask an uneasy question: Where will our next supplies 
come from? It is widely speculated that the ancient Hohokam Indians, 
who were the builders of the first system of canals in our area, did 
not find a satisfactory answer to that question. The Hohokam were 
peaceful farmers who inhabited the Salt River Valley for about a 
thousand years, from about 300 A.D. to about 1450. The University of 
Arizona's research provides evidence that the region encountered a 
devastating drought at the tail end of this tribe's existence in the 
area, giving us the best explanation yet of the Hohokam's demise.
    Though our present culture is fortunate to have access to imported 
water sources, advanced water treatment technologies and sophisticated 
infrastructure to serve our cities, our job is nowhere near complete. 
Our population is expected to double in the next 40 years, and there 
are no large imported water sources of the scale of the Central Arizona 
Project on the horizon.
    As we plan our water supply future, it is clear that reclaimed 
water will be a key source, and one that could ultimately serve between 
one-quarter and one-third of the region's municipal water demand. Our 
ability to effectively utilize this supply will be highly dependent on 
safe and cost-effective means to treat and distribute the supply for a 
wide range of uses--including potable delivery. However, to get there, 
we will need stronger Federal participation in the research and 
demonstration of expanded technologies.
    The City of Phoenix currently operates three significant water 
reclamation facilities that together serve a population of over 2 
million. The largest of these facilities, which is co-owned by Phoenix 
and four other cities, provides water for cooling towers at Palo Verde 
Nuclear Generating Facility. Water from this plant is also used for 
area farmlands and for restoration of wildlife habitat at the City's 
Tres Rios River Restoration Project. Tres Rios, which is currently 
being expanded to a full scale project from its demonstration phase in 
partnership with the U.S. Army Corps of Engineers, is a remarkable 
example of how reclaimed water can be used to benefit the environment 
while enhancing education and other quality of life objectives. I 
invite any of you who visit the Phoenix area to tour this remarkable 
project.
    The City of Phoenix and our municipal partners in the Valley of the 
Sun continue to lead the way in planning and utilizing reclaimed water. 
An example is our effort to store highly-treated reclaimed water 
underground. This will restore depleted groundwater supplies, provide a 
reliable source during surface water shortages, and provide a 
dependable future supply for our community. Numerous local parks and 
golf courses use reclaimed water, and we are continually identifying 
additional large institutional, industrial, commercial, and 
recreational customers.
    The major sources of water to the Phoenix area are surface water 
supplies that are subject to periodic, but inevitable, shortfalls. 
Because reclaimed water is, by its nature, substantially drought proof, 
a solid water reclamation and reuse program can significantly reduce 
the impacts of these shortages. In addition, reclaimed water use should 
also help reduce the need for additional water treatment plant capacity 
and help us meet the State's requirement to use sustainable water 
supplies. For these and many other reasons, we value this resource 
highly in our future water supply planning efforts, and encourage 
continued Federal efforts to facilitate more effective use of this 
important resource.
    One of the challenges we face in using reclaimed water is the high 
salinity content, which limits its effective utilization for certain 
uses. Much of this salinity originates in our source water, but 
additional salts are contributed through urban disposal to our 
wastewater systems. Phoenix has been a driving force in bringing this 
and other salinity-related issues to a national forum through the 
efforts of the Multi-State Salinity Coalition. Your Subcommittee staff 
participated in our first Salinity Summit last December in Las Vegas. 
At the Summit, we emphasized that one of our top challenges in 
addressing salinity is how to dispose of the salt concentrate from the 
treatment process. We appreciate the continued Federal participation in 
salinity-related research to meet our water supply objectives.
    Arizona's rural communities, which are critical to the State's 
tourism economy, are rapidly coming to grips with water supply 
shortfalls. These communities are growing rapidly, and the vast 
majority lack access to adequate sustainable water supplies. This 
problem has been seriously compounded by the recent record drought in 
our state, necessitating significant water use cutbacks in many of 
these communities. Rural Arizona could also benefit substantially from 
further water reclamation research, technological advancements, 
planning and infrastructure assistance.
    In summary, our reclaimed water supplies will be increasingly 
relied upon to sustain the high quality of life we enjoy in our desert 
community, while accommodating our new residents who are attracted to 
this lifestyle. I appreciate the opportunity to provide this testimony 
to you today, and ask your support in funding the programs necessary to 
effectively utilize this important water resource.
                                 ______
                                 
    Mr. Calvert. Thank you.
    General Eugene Habiger.

    STATEMENT OF GENERAL EUGENE E. HABIGER, USAF [RETIRED], 
PRESIDENT AND CHIEF EXECUTIVE OFFICER, SAN ANTONIO WATER SYSTEM

    General Habiger. Thank you, Mr. Chairman, members of the 
Committee. My name is Gene Habiger and I very much appreciate 
the opportunity to come before you this morning to tell you the 
story of the successes of recycled water in San Antonio, TX.
    Today in San Antonio, 100 percent of our water source comes 
from one pool of water. That's the Edwards Aquifer. The Texas 
State legislature, in 1997, mandated that the entire State be 
broken down into 16 regions, and each of those regions would 
come up with a water plan to ensure that viable water supplies 
were available through the year 2050. We were part of that 
process. By the year 2030, instead of being 100 percent reliant 
on the Edwards Aquifer, we will be 30 percent reliant.
    The first step in that journey was our recycled water 
program. We have, over the past 6 years, invested $125 million 
to build a 72-mile pipeline system to ensure that recycled 
water was an integral part of getting us to the point where we 
had viable water sources by the year 2050. We have 35,000 acre-
feet of recycled water available for use in the City of San 
Antonio to our 300,000 customers.
    Conservation has also played a critical role in our process 
to wean ourselves off the Edwards Aquifer. Over the past 15 
years, San Antonians have reduced water consumption by 32 
percent, while our population has increased by 50 percent. That 
is extraordinary. The closest city that we've been able to find 
in the State of Texas to our conservation efforts is El Paso. 
Consumption per capita in San Antonio today is 143 gallons per 
person per day. El Paso is at 155. Fort Worth, Dallas, Houston, 
Austin, are in excess of 200 gallons per capita today. We have 
done extraordinary things with conservation, and we're going to 
do extraordinary things with water recycling.
    It's a viable program. There are over a hundred different 
communities in the State of Texas that have viable programs. 
For example, we're watering five of our six municipal golf 
courses with recycled water. Many of our educational 
institutions in San Antonio are using recycled water for 
landscape irrigation. It works, it's effective, and it's safe. 
It's the right thing to do, and it's a sign of the future.
    Mr. Chairman, I appreciate the opportunity to come before 
you today, and I would like to submit my entire testimony for 
the record, if that meets your approval.
    Mr. Calvert. Thank you, General. Certainly your testimony 
will be submitted for the record, without objection.
    [The prepared statement of General Habiger follows:]

  Statement of General (Ret.) Eugene E. Habiger, President and Chief 
              Executive Officer, San Antonio Water System

    Good morning. I am Gene Habiger, President/CEO of the San Antonio 
Water System (SAWS). Thank you for inviting me to share with you the 
importance of recycled water not only for San Antonio, but also for 
many communities in Texas and our nation. SAWS is a municipally owned 
water utility serving approximately one million people in South Central 
Texas.
    We provide drinking water, wastewater and recycled water service to 
nearly 300,000 connections including three military bases (Lackland 
AFB, Brooks City Base, Fort Sam Houston). Reclaimed, or recycled, water 
is an important tool for the nation's cities as they work to manage the 
water demands of a growing population.
    Nowhere is this more true than in Texas--where over 100 recycled 
water systems put recycled water to beneficial use. The reasons for 
such an abundance of reclaimed water applications in Texas range from 
the need to dispose of reclaimed water to meet water quality concerns 
in receiving streams or from the need to develop ``drought proof'' 
supplies for business and industry. San Antonio provides a good example 
of the critical role of recycled water for meeting water resource 
needs.
    In 2002, SAWS completed the first phase of its system to recycle 
treated wastewater effluent for irrigation and industrial uses. For San 
Antonio, recycled water is an important part of our integrated approach 
to water resource management that relies on reducing, reusing and 
recycling our water supplies before developing new fresh water 
resources. Our recycled water is of very high quality--almost to 
drinking water standards. Two cities that are comparable to our water 
quality levels are San Jose and San Diego.
    We have reduced our per capita water demands by approximately 32% 
over the last 15 years, so that we are using less water today than we 
did in 20 years ago even though our population has grown by 55%.
    To further supplement our water supply, we began using recycled 
water for cooling lakes required for the cities electrical utility. 
This system was expanded to include a 35,000 acre-foot/year direct 
reuse, or recycled water, system which provides a firm, drought-proof 
supply for industries, cooling towers, military bases, universities, 
municipal parks, golf courses and river maintenance.
    This 72-mile pipeline system took about 6 years to design and 
construct at a cost of over $125 million dollars.
    San Antonio is well recognized for its ``River Walk''. The City of 
San Antonio welcomes over 8 million visitors a year--generating over $4 
billion of economic impact. Our Recycled Water System is designed to 
supply 4,250 acre-feet per year, or over a billion gallons, into the 
San Antonio River--thus assuring a reliable source of water year round.
    San Antonio has determined that we must do everything we can to 
conserve and reserve our existing resources. Additionally, the decision 
to invest in this source of supply was especially important for our 
community as we faced limits on our historic water supply due to 
pumping from the Edwards Aquifer, home to threatened and endangered 
species.
    For this reason, San Antonio may be uniquely positioned for 
achieving clear Federal purposes as it implements its long-range water 
resources programs including recycled water. These purposes include, as 
a minimum, ecosystem restoration and protection of endangered species.
    In addition to the funds expended for the recycled water program, 
SAWS will invest in excess of $2.6 billion dollars over the next 50 
years to diversify its water supply. This will reduce our reliance on 
the Edwards Aquifer, provide us with a reliable water supply for San 
Antonio and help maintain the habitat of Federally protected species.
    Other communities, which are not faced with endangered species 
issues, are using recycled water as a way to ensure that key industries 
and business interests are provided a secure source of water even 
during drought. Especially during these times of economic uncertainty, 
ensuring reliable water is critically important for protecting our 
local, state and Federal economies; for protecting jobs.
    Just as local users are helping to achieve Federal purposes, the 
Federal Government can assist communities further the use of recycled 
water by:
    1. Providing grants or cost-share funds for studies related to 
water quality and the treatment needed for use of recycled water in 
certain applications (e.g. concrete for highway construction, 
industrial uses such as micro-chip or other specialty manufacturing, 
etc.);
    2. Providing assistance and training for design, construction and 
operation of recycled water systems;
    3. Creating incentives for the reuse of water from wastewater 
treatment plants rather than discharging it into streams to further the 
goals of Clean Water Act when low-flow conditions in the receiving 
stream is not a concern;
    4. Requiring the use of recycled water at Federal installations, 
Federal office buildings, for projects funded with Federal funds, and 
by contractors when such supply is available; and
    5. Funding such use from the Federal budget rather than shifting 
those costs to the local communities.
    These are just a few ideas of policies and programs that could be 
developed to encourage the development of recycled water facilities 
throughout the nation. Such use of our precious natural resources is an 
important component of managing the needs of a growing population, 
protecting the environment and keeping our economy vibrant.
    Again, thank you for inviting me to speak today. I will be happy to 
answer any questions you have.
                                 ______
                                 
    Mr. Calvert. Our next witness today is Mr. Joseph 
Grindstaff.

    STATEMENT OF JOE GRINDSTAFF, GENERAL MANAGER, SANTA ANA 
WATERSHED PROJECT AUTHORITY, ACCOMPANIED BY RICHARD W. ATWATER, 
    CEO AND GENERAL MANAGER, INLAND EMPIRE UTILITIES AGENCY

    Mr. Grindstaff. Thank you, Mr. Chairman. I also would like 
for my testimony to be submitted for the record, and I will 
just summarize that briefly.
    Mr. Calvert. Without objection, your testimony will be 
entered into the record.
    Mr. Grindstaff. Thank you.
    I represent the Santa Ana Watershed Project Authority, 
which the Santa Ana River is the largest coastal river in 
southern California. For those of you who don't know, Orange 
County, Riverside, and San Bernardino Counties are the primary 
areas that we serve, and there are something over five million 
people. In the 2000 Census, there were five million people in 
that region. We expect that number to be seven million people 
within 20 years.
    We are tied to two Federal projects, the Colorado River and 
to the Central Valley project through the Bay-Delta. In both 
cases, we expect that our water supply will either be reduced 
or, at best, remain the same. Yet, as our population grows, we 
have to find ways to supply water.
    At the present time, we currently have about 100,000 acre-
feet per year of recycled water in our region. We have plans 
that will allow us to add an additional 270,000 acre-feet of 
water, and our goal is to be able to totally drought proof the 
region such that we can come off of both the Colorado River and 
northern California water supplies in times of drought. That 
provides significant benefit not only to the residents in our 
area but to the entire Colorado River Basin and to the entire 
area in northern California that gets water through the Bay-
Delta. That's a very significant program. Water recycling is 
key to making that happen.
    Typically in our region, water recycling projects are 
leveraged on average to Federal dollars 10 to 1. The largest 
project in our region is leveraged more than 20 to 1, with 
local funds to the Federal funds. The largest recycled water 
project in the Nation is the Orange County Groundwater 
Replenishment System, which will provide 70,000 acre-feet of 
water per year, every year, in southern California. That's a 
significant contribution to our water supply.
    As we look ahead, it is really important that the Federal 
Government provide seed money to help these projects move. I 
don't know that the Orange County Groundwater Replenishment 
System would have been able to be developed if the Bureau of 
Reclamation hadn't been able to commit $20 million to that 
project. That $20 million is a small part of the total project 
cost of $450 million, but it was a significant seed that helps 
people say yes, we need to get this done.
    I want to point out that grant programs sometimes have a 
bad name, but my experience with grants is that local agencies 
perform very well when their own money is on the line. So if a 
grant program is developed that gives five or 10 percent, 
twenty percent or thirty percent of the money--and in the case 
of Title XVI, it's up to 25 percent--the local agency still 
retains real financial interest in that. That is very important 
for the management of the program. It caps the responsibility 
of state and Federal Government. I think that's a significant 
benefit. It causes local agencies to attempt to manage their 
projects better. I have personally been involved in projects 
that were built by my agency as a regional entity, where local 
agencies did not feel as compelled to reduce costs. But when we 
find a way to make the local agencies responsible by giving 
them grants, they feel much more motivated, to cut out 
everything but the essentials. I think that's a really 
important benefit for grant programs. I think project 
proponents are much more likely to get them done on time, so I 
think that's an important benefit for the program.
    I guess last, when you do a grant program, there is no 
ongoing O&M and no ongoing liability for the Federal 
Government. I see that, if you look at our past, a large part 
of what we're spending money on in the Bureau of Reclamation is 
ongoing O&M and ongoing liability for water supplies. That was 
necessary at the time. It seems to me that, as we develop new 
water supplies in the future, the water recycling program 
offers an opportunity to limit the liability of the government 
and yet inspire people to do more.
    Thank you.
    [The prepared statement of Mr. Grindstaff follows:]

   Statement of Joe Grindstaff, General Manager, Santa Ana Watershed 
                           Project Authority

    Chairman Calvert, Ranking Member Napolitano, Members of the 
Subcommittee, thank you for providing me this opportunity to address 
the vital role that recycling must play in meeting growing water 
demands in Southern California and the suitability of a Federal grants 
program in achieving this objective.
    The Santa Ana River Watershed has been recycling water for over 100 
years. This hearing is very important not only to Southern California, 
but to all metropolitan areas throughout the United States; water 
recycling will become significant to all cities.
    The Santa Ana Watershed Project Authority (SAWPA) represents the 
Santa Ana River Watershed. This river is the largest coastal river 
system in Southern California and flows from the San Bernardino 
Mountains over 100 miles southwesterly to the Pacific Ocean at 
Huntington Beach. The watershed covers over 2,650 square miles of 
widely-varying terrain. This area, which includes parts of San 
Bernardino, Riverside, Los Angeles and Orange Counties, was home to 5.1 
million people during the 2000 census. The population is expected to 
increase to 7 million by 2020.
    SAWPA was founded in 1972 after 80 years of controversy and court 
battles, at one time including more than 3,000 parties. Thus, SAWPA 
came into being some 30 years ago as a way to solve problems, rather 
than just litigate. Today, SAWPA has five member agencies--Eastern 
Municipal Water District, Western Municipal Water District, San 
Bernardino Valley Municipal Water District, Inland Empire Utilities 
Agency and Orange County Water District. Each agency has specific 
individual interests, but shares the ``watershed-wide'' responsibility 
of insuring that there is reliable, high-quality water available for 
the 5 million residents.
    Integrating the management of surface water, groundwater, water 
recycling, habitat, groundwater cleanup and groundwater banking are the 
tasks that SAWPA faces. When fully implemented, this integrated program 
offers the realistic capability of drought proofing the entire region. 
In saying this term, I mean that SAWPA's five member agencies will be 
able to roll off or significantly decrease sources of imported water 
from the Colorado River and Northern California that are the region's 
lifeblood. Recycling and the clean-up of contaminated groundwater are 
at the heart of this innovative plan to reduce our dependence on 
imported water demand.
[GRAPHIC] [TIFF OMITTED] T6099.001


    By storing or ``banking'' recycled water in groundwater basins 
during normal and wet years, we will be able to withdraw it during 
droughts and watershed wide offset the need for any imported water 
during the drought. Given the problems facing California water agencies 
by reason of the failure of the QSA, our plan to become essentially 
self-sufficient in times of drought should come as welcome news in 
other regions of the state and throughout the Colorado River Basin, 
since our program is the only resource plan that literally leaves water 
in both the State Water Project and the Colorado River in times of 
crisis, rather than taking more out. In this respect, SAWPA is 
completely unique among those state and local agencies that bear the 
burden of providing water to their residents.
    To accomplish this ambitious objective in an efficient and 
effective way, all components of our plan must be tightly coordinated 
and all activities integrated. Our efforts to provide such a program 
were greatly improved by the passage of the State Water Bond on March 
7, 2000. Chapter 6, Article 5, the Southern California Integrated 
Watershed Program, or ``SCIWP,'' was intended by the legislature to 
fulfill this opportunity. Many members of the legislature worked to 
assure this section was included in the water bond.
    More recently, the passage of yet another state water bond, 
Proposition 50, has given SAWPA potential access to additional state 
funding for implementation of the SCIWP. What is needed now is Federal 
funding through a carefully conceived and developed grants program 
under the direction of the U.S. Bureau of Reclamation. This will help 
us to leverage these state and local resources to the greatest extent 
possible. It will also help to further advance the national interest by 
developing recycling technology and applications for use throughout the 
West and elsewhere in the nation.
    Orange County Water District and Central & West Basin have received 
funding from Title XVI. Many other local projects were funded by 
Proposition 13. For example, Inland Empire Utilities Association's $120 
million investment of 70,000 AFY of new water recycling by 2010 at a 
total capital cost of $125 million. Title XVI grant is $20 million or 
about a 15% cost share. Further, the Orange County Water District's GWR 
project is $450 million with current authorization of $20 million grant 
from the U.S. Bureau of Reclamation.
    In the Santa Ana Watershed, about 100,000 AFY is currently recycled 
by SAWPA and its member agencies. Funding for some of our projects has 
been through Title XVI, and some through other Federal, state, regional 
and local programs. In testimony presented before this Subcommittee on 
June 18, 2001 at a field hearing in Cerritos, California, I enumerated 
several of our success stories.
    The bottom line for SAWPA is for us to implement the SCIWP which 
will triple the amount of recycled water from the current level of 
100,000 AFY to 300,000 AFY or more over the next twenty years. We can 
achieve this important goal using existing technology, but only with 
the assistance of state and Federal cost sharing programs such as the 
Southern California Comprehensive Water Reclamation and Reuse Study 
(``SCCWRRS'').
    In 1993, the U.S. Bureau of Reclamation, seven Southern California 
water agencies and the California DWR agreed to fund and initiate a 
multi-million comprehensive feasibility study on the potential to 
recycle and reclaim water throughout the coastal plain of Southern 
California. This eight-year study was completed over two years ago. The 
draft report, although never submitted to Congress, identified cost 
effective projects that would develop over 800,000 AF of new supplies 
that could be developed and implemented by 2010. The Federal investment 
under Title XVI would be approximately $150 million. The rest of the 
costs, over $1 billion, would be borne by Proposition 50 and the local 
sponsors. This is a very cost effective investment given the incredible 
issues facing the Colorado River and the CAL-FED Bay-Delta Program.
    For many years, dedicated and highly competent staff members of the 
U.S. Bureau of Reclamation have promoted the concept of water 
recycling. In many studies, not just limited to the SCCWRRS report, the 
benefits of water reclamation and reuse have been analyzed and found to 
be the most feasible way of meeting the demands of an ever-growing 
populace. These benefits extend throughout our region, our state and 
the 17 reclamation states, and even arguably the entire world as 
undeveloped water resources become increasingly scarce.
    On numerous occasions, representatives of the U.S. Department of 
the Interior have rendered testimony before this and other 
Congressional committees and published a significant body of literature 
on the value of recycling on the website of the U.S. Bureau of 
Reclamation. In summarizing those statements, it is apparent that water 
recycling and reuse contribute significantly to the accomplishment of 
many Federal objectives at the least possible cost to the U.S. 
Treasury:
    1. LThe U.S. Bureau of Reclamation is charged with the important 
responsibility of developing and implementing innovative solutions that 
encourage the efficient use of precious water resources throughout the 
17 western states. Through the promotion of financially feasible and 
environmentally sound watershed plans like the SCIWP, the U.S. Bureau 
of Reclamation is able to advance new, cost-effective technologies 
through research and real-world applications to fulfill this important 
national mandate.
    2. LUsing more efficient water use measures to stretch limited 
water supplies, the U.S. Bureau of Reclamation can improve water 
quality and reduce or entirely avoid the costs associated with the 
development of new water storage projects and treatment facilities.
    3. LBy promoting regionally planned and implemented programs like 
the SCIWP, the U.S. Bureau of Reclamation can promote economically and 
environmentally sound decision-making by state and local governments 
and promote regional and/or watershed-based planning perspectives.
    4. LRegionally-based programs, like the SCIWP, will promote the 
formation of collaborative partnerships between the Federal Government 
and such other entities as state, tribal and local governments to 
integrate water supply and water quality issues, thus narrowing the gap 
between those who supply, use, treat and regulate water.
    Why then, in the face of such overwhelming evidence, is the 
Administration backing away from such cost effective and 
environmentally sound approaches to fulfilling this aspect of the 
Bureau of Reclamation's core mission?
    When Congress enacted the legislation authorizing the SCCWRRS in 
1992, it called for a cooperative partnership between the U.S. Bureau 
of Reclamation and the local agencies that would benefit from the 
study. Pursuant to that partnership, SAWPA and other local agencies 
contributed millions of dollars to the cost of the report with the 
understanding that upon completion in six years, the SCCWRRS would be 
presented to Congress. In fact, the authorized legislation directed the 
Bureau to complete and return its report within that timeframe. Now, 
Mr. Chairman, some 11 years later, the Bureau has yet to return the 
SCCWRRS to Congress.
    Out of a sheer sense of frustration, SAWPA sent a letter to 
Regional Director, Robert Johnson in Boulder City, Nevada on February 
21, 2003 again urging that the SCCWRRS immediately be returned to 
Congress or, the alternative, that the $300,000 contributed by SAWPA 
for the cost of the study be refunded (copy of letter attached as 
Exhibit A). To date, no reply has been received.
    SAWPA recommends that this Subcommittee immediately schedule 
legislative hearings to authorize funding for the water recycling 
projects determined to be feasible and identified in the SCCWRRS and 
then mark up and report appropriate legislation. More than $6 million 
has been invested in this study by the U.S. Bureau of Reclamation in 
partnership with the California Department of Water Resources and 
several regional water agencies, including SAWPA, MWD and others. As a 
result, feasibility studies have been completed on an aggregation of 
local projects that will develop more than 450,000 AFY of new water by 
2010. Even more remarkable is the fact that more than 270,000 AFY of 
this total will be developed within the Santa Ana River Watershed, 
specifically in the Inland Empire and Orange County.
    Turning to another subject, I would like to address some issues 
that arise from my own personal experience with the management of 
projects where there is a cost sharing arrangement that implicates 
Federal, state and local sources of funding.
    Cost sharing is a tried and true principle that has proven its 
worth in many areas of involvement by the Federal Government. From the 
standpoint of the U.S. Government, it is an absolute necessity to 
ensure local commitment and support for the project. It also provides a 
significant opportunity for the Federal Government to obtain the 
greatest leverage for its investment in a local project. For example, a 
25% Federal share results in a 3:1 return for each Congressionally-
appropriated dollar.
    Additionally, there are other, albeit more subtle benefits to be 
obtained through the use of cost sharing in a Federal grants program 
like Title XVI:
     Local agencies perform a lot better when their own money 
is on the line.
     Since there is a cap on both the Federal and the state 
share, the responsibility for any project overruns devolves entirely 
upon the local entity. Thus, there is no incentive to ``gold plate'' 
projects.
     Project proponents are more likely to get done on time, 
thereby avoiding added expense through escalating costs of construction 
or costly claims procedures for delay damages.
     Significantly, both title to a cost-shared project and 
the responsibility for on-going operation and maintenance (O&M) remain 
with the local sponsors, thereby avoiding a never-ending obligation 
that would otherwise be borne by the Federal Government.
     The burden of construction management normally remains 
with the local project proponent, again relieving the U.S. Bureau of 
Reclamation of a costly responsibility and permitting it to focus its 
efforts on broader Federal activities such as feasibility analyses, 
research and technology transfer.
    In conclusion, as I again express my appreciation for this 
invitation to address your Subcommittee, I would observe that water 
recycling must be at the heart of any sound resource management plan in 
this new century. The reason for this conclusion is clear: Until we 
master a cost effective way to desalinate sea water, there will be no 
other ``new water,'' only existing water put to additional uses through 
recycling.
    Recycling is the last ``river'' that we will harness for the 
benefit of our customers in Southern California. We invite your 
leadership and active participation in this great venture.
    Mr. Chairman, I would be pleased to respond to any questions.
                                 ______
                                 
                 Santa Ana Watershed Project Authority

                       COMMISSION FOR THE PROJECT AUTHORITY
                            EASTER MUNICIPAL WATER DISTRICT
                             INLAND EMPIRE UTILITIES AGENCY
                               ORANGE COUNTY WATER DISTRICT
             SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT
                           WESTERN MUNICIPAL WATER DISTRICT

                                            GENERAL MANAGER
                                       P. JOSEPH GRINDSTAFF

February 21, 2003

Mr. Robert Johnson
Regional Director, Lower Colorado Region
U.S. Bureau of Reclamation
P.O. Box 61470
Boulder City, NV 89006-1470

Dear Mr. Johnson:

    The Board of Directors and Member Agencies of the Santa Ana 
Watershed Project Authority (SAWPA) request that the U.S. Bureau of 
Reclamation refund the $300,000 advanced to your agency to fund the 
preparation of the Southern California Comprehensive Water Reclamation 
and Reuse Study (Final Report) which Congress authorized in 1992. 
1
---------------------------------------------------------------------------
    \1\ Reclamation Projects Authorization and Adjustment Act of 1992, 
P.L. 102-575, Title XVI, Section 1606.
---------------------------------------------------------------------------
    The U.S. Bureau of Reclamation completed the Feasibility Study in 
April 2001, twenty-two months ago, but it was not submitted to 
Congress, notwithstanding the mandatory statutory requirement, in 
Section 1606(c), that:
    the Secretary shall submit the [feasibility] report authorized by 
this section to the Committee on Energy and Natural Resources of the 
Senate and the Committee on Interior and Insular Affairs of the House 
of Representatives not later than six years after appropriation of 
funds authorized by this title.
    SAWPA was, as you and your staff are aware, one of the eight cost-
share partners 2 who, together, advanced approximately $3 
million for the $6 million study. SAWPA's apportionment of those costs 
was $300,000.
---------------------------------------------------------------------------
    \2\ The cost-share partners, in addition to SAWPA, include the 
California Department of Water Resources, Central and West Basin 
Municipal Water Districts, City of Los Angeles, City of San Diego, 
Metropolitan Water District of Southern California, San Diego County 
Water Authority, and the South Orange County Reclamation Authority.
---------------------------------------------------------------------------
    After April 2001, almost two-years since the completion of the 
Feasibility Study, SAWPA was repeatedly informed that the Feasibility 
Study would be submitted to Congress. For reasons not disclosed to 
SAWPA or its member agencies, it was not. This is not right. 
Furthermore, letters from Senator Feinstein and others have been as yet 
unheeded in releasing this report.
    More than a decade ago, Secretary Lujan and the U.S. Bureau of 
Reclamation invited the State of California and local and regional 
water agencies in Southern California to form a partnership to examine 
the feasibility of constructing and operating local and regional water 
recycling projects. The State of California, SAWPA, and others 
responded to the challenge. All together, more than 50 local water 
agencies, cities, and municipalities participated in the effort. As a 
result, the Lujan Initiative was subsequently incorporated into the 
1992 Act.
    The U.S. Bureau of Reclamation conducted a comprehensive, detailed 
and multi-phased feasibility study, over more than a six-year period. 
The table below sets forth the U.S. Bureau of Reclamation's conclusion 
for both a Short-Term Program and a Long-Term Program.

                       U.S. Bureau of Reclamation

               Comprehensive Feasibility Study Conclusion

    New Water Supplies in Southern California from Water Recycling 
                              4
---------------------------------------------------------------------------

    \4\ Final Report, Southern California Comprehensive Water 
Reclamation and Reuse Study, April 2001, Executive Summary, Page ES-31.

 
 
 
Timetable New Supplies  2010...................  2040
Amount of Water         451,500 Acre Feet......  747,800 Acre Feet
 

    According to the U.S. Bureau of Reclamation's Study, more than 
270,000 acre-feet of the 451,500 acre-feet of the new water to be 
developed from water recycling by 2010 will occur within Orange County, 
and the area designated within the Study as the Inland Empire, within 
the Santa Ana Watershed.
    This Feasibility Study and the construction of the projects 
recommended are essential to SAWPA's mission and crucial to the future 
within our watershed. A recent and more complicating factor has now 
occurred. On January 1, 2003, the Secretary of the Interior abruptly 
reduced more than 600,000 acre-feet of water deliveries to Southern 
California from the Colorado River, further challenging our region.
    The U.S. Bureau of Reclamation's Study states, ``the need for [the] 
study...is based on the premise that the increased use of recycled 
water will reduce pressures on imported water supplies and provide a 
continuous and dependable local source of supplemental water for 
Southern California.
    The immediate need to implement the recommendations found in the 
U.S. Bureau of Reclamation's Feasibility Study is greater than ever.
    Requests for completion and filing and inquiries have been made by 
many members including:
     Rep. John Doolittle, Chairman, Water and Power (106th 
Congress);
     Rep. Grace Napolitano, Ranking Member, Subcommittee on 
Water and Power;
     Rep. Ken Calvert, Chairman, Subcommittee on Water and 
Power;
     Rep. Jim Hansen, Chairman, Committee on Resources (107th 
Congress);
     Rep. George Miller, former Ranking Member, Committee on 
Resources;
     Rep. Nick Joe Rahall, Ranking Member, Committee on 
Resources;
     Senator Dianne Feinstein; and
     Senator Barbara Boxer.
    On February 4, 2003, I met with Commissioner Keys in Washington 
D.C. When I inquired as to the status of this Feasibility Study, he was 
unable to tell me its status or anything about it.
    Since the Feasibility Study has not been submitted to Congress as 
required by law, and it is now almost two years since the Study was 
finalized, SAWPA requests that:
    (1) LThe U.S. Bureau of Reclamation provide three full and complete 
copies of the Study to SAWPA; and
    (2) LThe U.S. Bureau of Reclamation refund, in full, the $300,000 
SAWPA paid to the U.S. Bureau of Reclamation for this Study.
    In closing, SAWPA extends its thanks and appreciation to you and 
your staff in Boulder City and at the Southern California office for 
the professional manner in which you organized and conducted this 
undertaking.
    Thank you for your prompt attention to this matter.

Sincerely,

Santa Ana Watershed Project Authority
P. Joseph Grindstaff
General Manager
                                 ______
                                 
                                 [GRAPHIC] [TIFF OMITTED] T6099.002
                                 
    Mr. Calvert. Thank you.
    I now recognize Mr. Gritzuk to testify, the First Vice 
President of WateReuse Association.

    STATEMENT OF MICHAEL GRITZUK, VICE PRESIDENT, WATEREUSE 
ASSOCIATION, AND DIRECTOR, WATER SERVICES DEPARTMENT, PHOENIX, 
                            ARIZONA

    Mr. Gritzuk. Thank you, Mr. Chairman, and members of the 
Subcommittee. The WateReuse Association is pleased to have the 
opportunity to present this testimony on the role of water 
reuse in ensuring an adequate water supply for the Nation in 
the 21st century. I am Mike Gritzuk, Vice President of the 
WateReuse Association, and I am also Director of the City of 
Phoenix Water Services Department.
    I want to commend you, Mr. Chairman, for convening this 
hearing today. The hearing is especially timely, given the 
numerous challenges facing local agencies in their quest to 
ensure future sources of water and water supply.
    The WateReuse Association is a national organization whose 
mission is to increase the amount of high-quality water 
available to communities and the environment by promoting 
increased reclamation, recycling, and reuse.
    The association has grown rapidly since it became a 
national organization. WateReuse now has members that total 
more than 270 nationwide, including more than 125 local water 
and wastewater agencies.
    The practice of recycling water in the United States is a 
large and growing industry. An estimated 1.7 billion gallons 
per day is reused daily in the U.S. Recycled water use on a 
volume basis is growing at an estimated 15 percent per year. 
While four States--Arizona, California, Florida and Texas--
accounted for an estimated 91 percent of all recycled water in 
1995, various other States have growing programs, including 
States such as Nevada, Colorado, Georgia and Virginia.
    Water reclamation and reuse will play an expanding role in 
water management in the 21st century, not only in the semi-arid 
Western States and the Sun Belt States, but perhaps in all 50 
States. There are several reasons why this is true. Populations 
are growing rapidly in States such as Nevada, Arizona, 
California, Texas and Florida. There are no readily available 
sources of new water supplies in many geographic areas.
    Drought events, such as the one being experienced by more 
than half the country, debilitate available sources, and 
alternative sources of supply such as desalinization, are 
currently, in most cases, more expensive than recycled water.
    Long-term water projections in States such as Texas, for 
example, show that the demand will exceed supply by the year 
2020. More rivers in the West, such as the Colorado and Rio 
Grande, have allocations that greatly exceed their supply. The 
only dependable, controllable and reliable supply of water in 
several fast-growing cities, such as Phoenix, Tucson, and El 
Paso, is recycled water in the long term.
    I would like to underscore a statement which you made in 
early 2001, Mr. Chairman, and one which the Association 
strongly agrees with. Referencing the energy crisis of a couple 
of years ago, you said, ``Without adequate water supplies, the 
power crisis of today will become our water crisis out of 
tomorrow.'' How true.
    The Federal Government must adopt the leadership role in 
promoting water reclamation and reuse. If appropriate actions 
are taken now, it will be possible to avoid the coming water 
crisis.
    We also believe it is critically important for the Federal 
Government to provide adequate funding for research. One of the 
many issues faced by water researchers today is to understand 
the meaning and potential health and ecological impacts of 
hundreds of organic compounds that have been identified at 
trace levels in drinking water and wastewater.
    We believe the first appropriate action for the Federal 
Government would be to establish a multiagency task force, 
including the U.S. Bureau of Reclamation, the Environmental 
Protection Agency, the Department of Defense, the Department of 
Energy and others, to conduct a governmentwide study of reuse 
issues. Possibly headed by the Council on Environmental 
Quality, this task force would assemble an inventory of Federal 
agency efforts in the areas of water reuse and water use 
efficiency.
    The task force could produce a report to the President and 
Congress which would identify opportunities for improving and 
promoting water use efficiency. The net result of this effort 
would be to increase the visibility and importance of the issue 
of water reuse and water use efficiency to the Nation's future 
well-being.
    I would also like to touch briefly on the Bureau of 
Reclamation's Fiscal Year 2004 budget request. I understand 
that decisions on funding levels are a matter for another 
congressional committee, but I also believe the 
Administration's request for Fiscal Year 2004 deserves this 
Subcommittee's attention and involvement.
    The Administration's funding request for a total of only 
about $12.7 million to support a few Title XVI projects has 
been significantly decreased compared to prior years. This 
eliminates support for authorized projects that have not 
received funding in the past. Equally troubling, the budget 
request contains an explicit statement that water reuse has 
been determined not to be part of the core mission of the BOR. 
It further suggested this is a program without controls or 
sound management.
    This evaluation could not be further from the truth. The 
Administration may believe that water reuse is not part of the 
Bureau's core mission, but the statutory obligations of Title 
XVI suggest otherwise. We request that you contact your 
colleagues on the Committee on Appropriations and urge them to 
increase Title XVI funding levels and to include language that 
reinforces water reclamation and reuse as part of the core 
mission of the BOR.
    In summary, we believe that increased beneficial water 
reuse will be a critical component of the Nation's water supply 
in the 21st century. To ensure that this important resource is 
fully utilized and that appropriate actions are taken now in 
order to avoid a future water crisis, the Federal Government 
must play a leadership role. Some of the specific actions that 
should be taken by the Subcommittee include the following:
    Support the formation of a multiagency task force, as I 
have indicated; support additional research on water reuse that 
is essential to developing answers to questions on 
environmental pollutants of concern and to gaining public 
acceptance; direct the U.S. Bureau of Reclamation to continue 
to include water reuse as part of its core mission; and support 
increased funding for the Title XVI program.
    Once again, the WateReuse Association wants to thank you, 
Mr. Chairman, for convening this hearing. We would be happy to 
work with you in addressing critical issues related to water 
reuse, and we are strongly supportive of your efforts to ensure 
adequate and safe supplies of water in the future.
    One further request. Recently there was a video news clip 
on recycled water from ABC News on January 9th, which featured 
the Orange County Water District. We ask that that video, which 
was provided to your staff, be included in your official 
record.
    Thank you, Mr. Chairman.
    Mr. Calvert. Without objection, so ordered.
    NOTE: The ABC News video entitled ``Groundwater 
Replenishment System''' submitted for the record has been 
retained in the Committee's official files.
    [The prepared statement of Mr. Gritzuk follows:]

     Statement of Michael Gritzuk, P.E., Vice President, WateReuse 
 Association, and Director, Water Services Department, Phoenix, Arizona

Introduction
    Mr. Chairman and members of the Subcommittee, the WateReuse 
Association is pleased to have the opportunity to present this 
testimony on the importance and role of water reuse in ensuring an 
adequate water supply for the nation in the 21st century. I am Mike 
Gritzuk, Vice President of the WateReuse Association, and I am 
representing the Association today. I am also Director of the Water 
Services Department of the City of Phoenix. On behalf of the 
Association's Board of Directors, I want to commend you, Mr. Chairman, 
for convening this hearing. The hearing is especially timely, given the 
numerous and increasing number of challenges facing local agencies in 
their continuing quest to ensure future sources of water supply.
    As a way of introduction, the WateReuse Association is a national 
organization whose mission is to increase the amount of high-quality 
water available to communities and the environment by promoting 
increased reclamation, recycling, and reuse (``reuse''). One of the 
Association's primary goals is to assist our members in implementing 
water reuse projects that yield valuable benefits to their communities. 
We accomplish this overarching goal by encouraging more Federal, state 
and local involvement in water reuse efforts such as sponsoring 
research that demonstrates to the public that reclaimed water is a safe 
and reliable water resource, engaging in outreach services to provide 
information to the public about the safety and benefits of recycled 
water, and in funding partnerships.
    WateReuse has been especially effective in California--where the 
Association began--in successfully eliminating barriers to reuse and in 
securing grant and loan funding for local agencies to build projects 
and conduct research. For example, the Association was instrumental in 
getting legislation enacted in 2001 that established the Department of 
Water Resources (DWR) Water Recycling Task Force, which is directed to 
advise DWR on opportunities for using recycled water in industrial and 
commercial applications and in identifying impediments and constraints 
to increasing the industrial and commercial use of recycled water in 
California.
    The Association has grown rapidly since it became a national 
organization three years ago. WateReuse now has more than 270 members 
nationwide, including more than 125 local water and wastewater agencies 
in six states. One of the reasons the Association has been effective is 
due to its diverse membership which, in addition to local agencies, 
includes state and Federal Government agencies, consultants, equipment 
suppliers, and prominent researchers from the academic community.
    The Association also has a long-standing and productive working 
relationship with the U.S. Bureau of Reclamation (USBR) and its Title 
XVI program. WateReuse testified on behalf of the original legislation 
that created this important funding program in 1992 and also actively 
supported the updated legislation in 1996. We have worked closely with 
USBR in the development of Title XVI guidelines (i.e., Guidelines for 
Preparing, Reviewing, and Processing Water Reclamation and Reuse 
Project Proposals Under Title XVI of Public Law 102-575, As Amended) 
and the overall implementation of the program to date.
    The Association has also been successful in developing a cost-
shared research program with the USBR and other research organizations 
through its WateReuse Foundation. The Foundation is engaged in 
conducting ``leading edge'' applied research on important and timely 
issues, including: 1) evaluating ways to advance public acceptance of 
indirect potable reuse; 2) evaluating methods for managing salinity, 
including the disposal of concentrates from membrane treatment systems; 
and 3) understanding the occurrence and fate of emerging contaminants, 
such as endocrine disrupting compounds, in conventional and advanced 
water recycling systems.
    Conducting research on these issues is particularly important to 
cities such as those in the Phoenix metropolitan area. In the semiarid 
Southwest, the only new available source of water is reclaimed water. 
To use reclaimed water for both non-potable and indirect potable 
applications, the public must be convinced of the safety and efficacy 
of this approach. Although much research has already been conducted 
regarding the safety of water recycling, new contaminants and concerns 
emerge as analytical capabilities advance. Often a ``pollutant dejour'' 
is discovered in water or wastewater before the science explaining its 
significance is completed. Thus, our research efforts related to water 
reuse must keep up with the latest science so that we can continue to 
demonstrate to the public that recycled water is chemically and 
microbiologically safe--and the only way to accomplish that worthwhile 
goal is through research.
Current Status of Water Reuse in the U.S.
    The practice of recycling water in the U.S. is a large and growing 
industry. An estimated 1.7 billion gallons per day (bgd) is reused 
daily in the U.S. Recycled water use on a volume basis is growing at an 
estimated 15% per year. In 2002, Florida reclaimed 584 mgd of its 
wastewater and California ranked a close second with an estimated total 
of 525 mgd of recycled water per day. Florida has an official goal of 
reclaiming one billion gallons per day by the year 2010. California, 
likewise, has a statutory goal of a doubling of current beneficial use 
by 2010. Texas currently reuses approximately 230 mgd while Arizona 
reuses an estimated 200 mgd. This is but a small fraction (4.87%) of 
the total volume of wastewater generated--34.9 billion gallons per 
day--according to EPA's soon to be released 2000 Clean Water Needs 
Survey. Hence, the future potential for reclaiming treated wastewater 
is enormous.
    While four states--Arizona, California, Florida, and Texas--
accounted for an estimated 91% of all recycled water in 1995 (source: 
USGS), several other states have growing programs, including Nevada, 
Colorado, Georgia, North Carolina, Virginia, and Washington. At least 
27 states now have planned recycled facilities and the overwhelming 
majority of states have regulations dealing with water reuse.
    There is a long history of water reuse throughout the country, 
encompassing a wide variety of applications including landscape and 
agricultural irrigation, industrial processing, power plant cooling, 
and groundwater replenishment. There are numerous examples of water 
reuse success stories, dating from the 1950s. Some of the best known 
facilities and programs are described in Appendix A. To document the 
extent of water reuse in the U.S., the Association and the WateReuse 
Foundation are currently developing a national database of all reuse 
facilities. We would be pleased to make this information available to 
the Subcommittee once the project has been completed.
Importance and Benefits of Water Reuse
    A growing body of evidence suggests that water reclamation and 
reuse will play an expanded role in water management in the 21st 
century, not only in the semiarid western states and ``sunbelt'' 
states, but perhaps in all 50 states. There are at least five good 
reasons why this is true:
     Populations are growing rapidly in states such as Nevada, 
Arizona, California, Texas, and Florida;
     There are no readily available sources of new water 
supplies in many geographic areas;
     Reuse meets the needs of industrial uses for non-potable 
supply and solving environmental discharge problems;
     Drought events such as the one experienced by more than 
half the country in 2002 debilitate available sources; and
     Alternative sources of supply such as desalination are 
currently, in most cases, more expensive than water reuse.
    While all five factors are driving the growth of water reuse, 
perhaps none is as important as population growth. In a recent Awwa 
Research Foundation (AwwaRF) study to assess the future of water 
utilities, AwwaRF cited a U.S. Bureau of Census projection that 
predicted the U.S. population would double by 2100 using moderate 
fertility, immigration and longevity assumptions. The same projections 
quadruple using aggressive assumptions. State estimates support these 
projections. California's population is growing at a rate of 700,000 
per year which means that the state's population will reach 50 million 
by 2020. Florida's population will increase from 14.2 million to 20 
million by 2020. The population of Texas is increasing by 3000 people 
per day and is expected to increase from its current level of 20 
million to approximately 50 million by 2050. Nevada and Arizona are the 
two fastest growing states in the country, according to the 2000 U.S. 
Census.
    Long-term water projections in states such as Texas show that 
demand will exceed supply by the year 2020. Major rivers in the West 
such as the Colorado and Rio Grande have allocations that greatly 
exceed supply. The only dependable, controllable, and reliable supply 
of water in several fast growing cities such as Phoenix, Tucson, and El 
Paso is recycled water. Denver, Salt Lake City, Albuquerque, Las Vegas, 
Phoenix, Tucson, and Southern California depend heavily on water 
imported from the Colorado River to satisfy growing demands; this fast 
growing area is exploring various options, including water reuse and 
desalination, to keep up with demand. These hard facts suggest, as many 
knowledgeable observers routinely predict, that the U.S. will be facing 
a population-based water crisis, perhaps as early as 2015. If these 
projections take into account the impacts of localized droughts, then 
the crisis is already occurring in many parts of the country.
    Think of how important water is to the nation's economy. A good 
example of the importance of water to industrial production can be 
illustrated by the requirements of Silicon Valley. The South Bay Water 
Recycling Project in San Jose, CA produces recycled water that provides 
benefits to 1.3 million area residents. By reusing this water instead 
of releasing it to the Bay, San Jose has avoided the imposition of a 
sewer moratorium that would put the brakes on the Silicon Valley 
economy'' an economy which is one of the nation's largest in the 
development and export of computer hardware and software. It takes 10 
gallons of water to make one microchip, and larger manufacturers in 
Silicon Valley require over a million gallons of water each day.
    This one example, of many which could be cited, serves to 
underscore a statement which you made in early 2001, Mr. Chairman, and 
one with which the Association strongly agrees. Referencing the energy 
crisis of a couple of years ago, you said, ``Without adequate water 
supplies, the power crisis of today will become our water crisis of 
tomorrow.''
    Water reuse is one of few alternative sources of supply that 
represents a viable, long-term solution to the challenges presented by 
growing municipal, industrial, and agricultural demands for water. 
Reclaimed water has numerous benefits, including the following:
     produces a reliable water supply;
     produces a sustainable supply of water to offset the need 
to find or develop alternative sources of drinking water supplies;
     uses much less energy than importing water;
     provides local control;
     avoids construction impacts;
     enhances water quality;
     costs less than ocean desalination;
     protects sensitive habitats; and
     reduces the quantity of treated wastewater discharged to 
sensitive or impaired surface waters.
Technologies, Costs, and Applications
    Technologies employed to treat recycled water depend almost 
entirely on the application, or the ``highest treatment for the highest 
use.'' As in Title 22, of the California Code of Regulations, 
bacteriological water quality standards are established based on the 
expected degree of public contact with recycled water. For example, if 
the primary application is landscape irrigation or cooling tower water, 
sand or duel media filtration and disinfection after secondary 
treatment is sufficient to achieve California's standards. If, on the 
other hand, the intended application is injection of reclaimed water 
into groundwater aquifers, advanced technologies such as 
microfiltration, reverse osmosis (RO), and ultraviolet irradiation must 
be employed to ensure chemical and microbiological safety of the 
reclaimed water.
    The capital and operation and maintenance (O&M) costs of water 
recycling treatments depend on several factors including: the 
technologies employed, which will be dictated by the application; 
applicable regulations; and customer needs. The costs are lowest for 
reclaiming wastewater effluent for irrigation of non-edible crops such 
as cotton, grasses, orchards, and vineyards. As the quality of water 
increases, so do the costs. The good news is that the costs of advance 
technologies are dropping with improvements and innovations as the 
result of applied research and increasing use. For example, the cost of 
RO has dropped over the past 30 years from over $5 per 1000 gallons of 
water to less that $2 per 1000 gallons. Costs also vary by region of 
the U.S. due to a number of factors including labor and capital costs.
    New technologies supported by applied research are critical to 
providing safe and reliable treatment for recycling to meet our future 
urban, industrial, agricultural, and ecosystems demands. Research is 
needed to provide a scientific basis to use new technologies to 
facilitate the development of future water supplies using recycled 
water. New and innovative technologies will need to be developed to 
address a number of concerns. For example, technologies may need to be 
developed to cost effectively address trace organic chemicals that have 
unclear long-term health effects, such as endocrine disrupting and 
pharmaceutically active compounds, and newly identified pathogenic 
microorganisms.
The Federal Role in Water Reuse
    In the opinion of our Association, the Federal Government must not 
only be a key player, but must adopt a leadership role in promoting 
water reclamation and reuse, water use efficiency, and conservation. If 
the appropriate Federal role is identified now and appropriate actions 
are taken, it may be possible to delay or avoid the coming water 
crisis.
    There are numerous ways in which the leadership role of the Federal 
Government could manifest itself. Federal subsidies for local water 
reuse projects and targeted investment through demonstration grants, as 
well as tax incentives, could be used to promote reuse practices. The 
Federal Government could mandate increased use of recycled water at 
Federal facilities (e.g., military bases and new GSA buildings); these 
could be examples of good stewards of water efficiency and examples of 
water reuse.
    We also believe it is critically important for the Federal 
Government to provide adequate funding for research. One of the many 
issues faced by water researchers is to understand the meaning and 
potential health and ecological impacts of thousands of organic 
compounds that have been identified at trace levels in drinking water 
and wastewater. The challenge is that analytical methods, which allow 
identification of emerging chemical contaminants for both drinking 
water and wastewater, are ahead of the science that allows us to 
understand what these emerging contaminants mean in terms of protection 
of public health and the environment, and ultimately what treatment 
technologies are needed to ensure safe and appropriate water 
reclamation. The same challenge is true for microbial contaminants. 
This is not only a water reuse challenge, but one that also applies to 
every municipality whose source of water supply is a major river or 
whose groundwater is impacted by septic tanks or the of wastewater via 
land application. Only through conducting substantial research can 
local, state, and Federal Governments provide proper assurance to the 
public that both drinking water and reclaimed water are safe.
    We believe the first appropriate action for the Federal Government 
would be to establish a multi-agency task force to conduct a 
government-wide study on reuse issues. Headed by the Council on 
Environmental Quality (CEQ), this task force would assemble an 
inventory of Federal agency efforts in the areas of water reuse and 
recycling, water use efficiency, and conservation. Federal agencies 
covered would include, but would not be limited to, the Department of 
Interior's Bureau of Reclamation, the Department of Defense, Department 
of Energy, Environmental Protection Agency, Department of Agriculture, 
and the Tennessee Valley Authority.
    The Federal task force would produce a report for the President and 
Congress. In addition to the inventory of current programs, the report 
would identify opportunities for improving and promoting water use 
efficiency. The net result of this overall effort would be to increase 
the visibility and importance of the issue of water reuse and water use 
efficiency to the nation's future well being.
Title XVI and Proposed FY-2004 USBR Budget Request
    Mr. Chairman, I would like to take this opportunity to touch 
briefly on the USBR's Fiscal Year 2004 budget request. I understand 
that decisions on funding levels are a matter for another congressional 
committee, but I believe the Administration's request for Fiscal Year 
2004 deserves this Subcommittee's attention and involvement. The 
request upends years of a policy understanding on the role of the 
Federal Government in water reuse and generally in the effort to 
develop substantial additional water yield, while minimizing 
disruptions to the nation's ecosystems.
    The Administration has requested a total of $12.7 million to 
support 10 Title XVI projects. This denies any support for authorized 
projects that have not received funding in the past. In addition, the 
Administration has stated that other programs that support reuse 
technologies such as research are to be redirected to desalination 
program needs. We believe that desalination--like water reuse--has an 
important and vital role to play in ensuring adequate water supplies in 
the future. However, the Administration's budget abandons a decade old 
commitment to a balanced approach to developing new water supplies. 
This is exacerbated by the Administration's decision to seek $9 million 
in new program assistance for desalination efforts at the expense of 
ongoing reuse projects. Simply put, if these resources were equitably 
distributed, we would see new water reuse projects becoming operational 
in a timely manner. Instead, the decision to reduce funding commitments 
for reuse and to shift resources into desalination research means 
extended construction schedules, leading to more expensive projects 
because of the delays attributable to this decision. If Congress 
decides to reverse this attempt to eliminate the Federal-local 
partnership, the dividends will be realized in the production of new 
supplemental water supplies that are safe, reliable, and impervious to 
droughts.
    Equally troubling is the direction the Administration is pursuing 
on water reuse policy. Many of the members of this Subcommittee may be 
aware of the innovative budget and program review tool contained in the 
Fiscal Year 2004 request. This tool, referred to as the Program 
Assessment Review Tool (PART), was used by the Office of Management and 
Budget. It seeks to conduct a seemingly impartial evaluation of Federal 
programs to determine whether they deserve continued funding and 
support. The budget request for USBR contains an explicit statement 
that, based on PART findings, water reuse is determined not to be part 
of the ``core mission'' of USBR. It further suggests that this is a 
program without controls or sound management. This evaluation could not 
be further from the truth. In fact, if one were to review the internal 
documents that served as the core research for PART, you would be 
astonished to learn that the analysis found the program to be effective 
in creating new water supplies to meet the purposes of Title XVI. Title 
XVI projects are professionally designed and engineered. Projects must 
have local cost-share and the Federal exposure is limited to providing 
the much needed assistance to leverage non-Federal resources to build 
these projects. These are projects that, I wish to emphasize, help to 
comply with Federal environmental mandates by providing protection to 
the environment and ensuring safe water supplies.
    One does not need to delve into reams of paper to question the 
direction the Administration is heading, however. The Administration 
may believe that water reuse is not part of the Bureau's core mission, 
but the statutory obligations of Title XVI suggest otherwise. Congress 
explicitly authorized these projects. We request that you contact your 
colleagues on the Committee on Appropriations and urge them to reject 
the proposed budget level and policy direction of the budget by 
increasing Title XVI funding levels to at least $30 million and to 
include language that reinforces what is obvious, namely that water 
recycling and reuse is part of the core mission of USBR.
    I also want to take a moment to express our concern about the USBR 
not providing to Congress to date the reports detailing the results of 
the Southern California Comprehensive Water Reclamation and Reuse Study 
(SCCWRRS) and the Bay Area Regional Water Recycling Project (BARWRP). 
For several years, the projects' co-sponsors have waited patiently for 
the final reports to be released. Each time an effort is made to secure 
the studies, we have been told that it is only a matter of weeks before 
it will be available. More than 70 communities have contributed to the 
funding of these studies. The time has long passed for patience. We 
urge the Subcommittee to direct the immediate release of these studies 
without further delay. Once the Subcommittee and the public has access 
to these studies, we can then proceed with the development of regional 
projects that will support compliance with the quantification 
settlement agreement (QSA), advance the knowledge of water reuse, and 
enhance economic productivity through increased yield based on reliable 
sources of water.
    The projects specified in SCCWRRS present excellent opportunities 
for the Federal Government to support the development of water projects 
that will benefit all Colorado River basin states and substantially 
leverage Federal resources that would be intested. Benefit-cost ratios 
in the draft report show that an investment of approximately $500 
million in the 34 projects specified in the report would yield $2 
billion in benefits.
    In summary, we believe that Title XVI is part of the core mission 
for USBR and the way to bring about water reliability throughout the 
West is through a solid partnership between the Federal and local 
governments. With regard to the SCCWRRS and the BARWRP reports, we 
further believe that ``a deal is a deal.'' When local communities 
contribute to Federal studies as partners, based on an understanding 
that reports would be developed and published, the act of preventing 
the publication of such studies must be dealt with in a clear and 
forceful manner.
Summary and Recommendations
    In summary, we believe that increased beneficial water reuse will 
be a critical component of the nation's water supply in the 21st 
century. To ensure that this important resource is fully utilized and 
that appropriate actions are taken now in order to avoid a future water 
crisis, the Federal Government needs to play a leadership role. Some of 
the specific actions that should be taken by the Subcommittee include 
the following:
     support the formation of a multi-agency taskforce in CEQ 
to inventory water reuse programs within the Federal establishment and 
identify opportunities for enhanced water reuse and water use 
efficiency;
     support additional research on water reuse that is 
essential to developing answers to questions on environmental 
pollutants of concerns and to gaining public acceptance;
     direct the U.S. Bureau of Reclamation to continue to 
include water reuse as part of its ``core mission;'' support increased 
funding for the Title XVI program;
     support the enactment of legislation that would put in 
place a comprehensive program to authorized much needed water reuse 
projects similar to the kind of commitment Congress has made to 
wastewater and drinking water treatment needs; and
     increase Federal ``venture capital'' targeted grants 
(e.g., Title XVI) to assist communities in developing innovative reuse 
projects.
Conclusion
    Once again, the WateReuse Association wants to thank you, Mr. 
Chairman, for convening this hearing. We would be happy to work with 
you in addressing critical issues related to water reuse, water use 
efficiency, and salinity management. We are strongly supportive of your 
efforts to ensure adequate and safe supplies of water in the future for 
the western United States.
                               Appendix A
        examples of successful water reuse projects in the u.s.
    ``Water Factory 21'' in Orange County (CA)--'' The Orange County 
Water District (OCWD) manages and protects the vast groundwater basin 
in northern and central Orange County, CA that supplies approximately 
75 percent of the water used by over two million residents in the 
agency's service area. For four decades, the District has advocated 
treating and recycling municipal wastewater as a reliable supplemental 
water supply to make its service area as self-reliant as possible. 
OCWD's premier water recycling project is a groundwater recharge 
program that has been designed to prevent salt water from infiltrating 
and contaminating the groundwater basin. OCWD takes wastewater from the 
neighboring Orange County Sanitation District and processes it through 
an advanced treatment system that includes granular filtration, reverse 
osmosis and ultraviolet radiation disinfection. This is OCWD's ``Water 
Factory 21,'' which is designed to reclaims over 15 mgd of recycled 
water. After treatment, the recycled water is blended with local well 
water and is injected into the groundwater basin through a series of 23 
multi-point injection wells. The fresh water forms a ``water mound,'' 
blocking further passage of seawater. The project has been operating 
since 1976.
    City of Phoenix (AZ)--The City of Phoenix operates three water 
reclamation facilities. The largest facility operates in cooperation 
with four other municipalities that also own the plant. The reclaimed 
water produced by this plant is the sole source of water for cooling 
towers at the regional Palo Verde Nuclear Generating Facility. 
Reclaimed water is also used for area farmlands and for restoration of 
wildlife habitat at the City's Tres Rios River Restoration Project. 
Tres Rios River is an example of how reclaimed water can by used to 
benefit the environment and enhancing quality of life.
    County Sanitation Districts of Los Angeles County (CA) Reclaimed 
Water Projects--The Sanitation Districts of Los Angeles County 
(Districts) provide for the wastewater and solid waste management needs 
of over five million people in 78 cities and unincorporated areas of 
Los Angeles County, CA. The Districts operate 11 wastewater treatment 
facilities, 10 of which are involved in water reclamation. These 10 
facilities produce 200 mgd of reclaimed water ranging in quality from 
undisinfected secondary effluent to filtered, disinfected tertiary 
effluents. The reclaimed water is reused for a variety of applications 
including landscape and agriculture irrigation, industrial process, 
recreational impoundments, wildlife habitat maintenance and ground 
water replenishment. There are over 450 water reuse projects serving 26 
cities.
    Pinellas County Utilities (FL)--Pinellas County Utilities provides 
drinking water, wastewater, reclaimed water, and solid waste serves to 
almost 1 million people in the Pinellas County which includes 24 
municipalities. Pinellas County has a reclaimed water system that 
serves golf courses, residences, and commercial customers. The County 
is in the process of upgrading of two utilities treatment plants to 
expand capacity from about 13 mgd to 30 mgd and to upgrade the 
treatment process to an advanced wastewater treatment (AWT) process. 
These upgrades will allow the continued safe use of reclaimed water in 
the distribution system as well as allowing for discharges to surface 
waters during wet weather periods without adverse environmental 
impacts. The project will also provide for construction of major 
reclaimed water transmission mains. The use of reclaimed water helps to 
extend, conserve and protect valuable drinking water resources by off-
setting demand.
    Harlingen (TX)--'' Harlingen, Texas, a city of about 57,000, is an 
excellent example of a municipal and industrial partnership to reuse 
reclaimed water. Harlingen provides 65 to 70 million gallons per month 
of reclaimed municipal wastewater to a hosiery manufacturer for 
manufacturing, and there is a demand for increased supplies in the 
future.
    West Basin Water Recycling Project (CA)--West Basin Municipal Water 
District is a public agency that provides imported Colorado River Water 
and State Project Water to residential customers and water companies in 
southwest Los Angeles County, CA. In addition, the District provides 
its customers with recycled water that is used for municipal, 
commercial and industrial applications. The West Basin Water Recycling 
Project provides almost 22,000 acre-feet of recycled water annually, 
distributed to more than 150 sites. These sites use recycled water for 
a wide range of applications. Based in El Segundo, California, the 
state-of-the-art Water Recycling Facility is among the largest projects 
of its kind in the nation, with the ultimate capacity to recycle 
100,000 acre-feet per year of wastewater. The150 plus sites use 7.1 
billion gallons of West Basin's recycled water for non-drinking 
applications including irrigation, barrier water and industrial 
processes. West Basin has been successful in changing the perception of 
recycled water from merely a conservation tool with minimal 
applications to a cost-effective business tool that can reduce 
production costs, water filtration costs, and limit the need for 
expensive chemicals and dyes. Local oil refineries are major customers 
for West Basin's recycled water. The Chevron Refinery in El Segundo and 
the ARCO Refinery in Carson use recycled water for their cooling 
towers. The Mobil Torrance Refinery uses the water not only in its 
cooling towers but also in its boiler feed system.
    San Antonio's Water Recycling Centers--San Antonio Water System 
(SAWS) provides drinking water, wastewater, and water reclamation 
services to over 1 million people in San Antonio, the seventh largest 
city in the U.S., and the surrounding area. SAWS has one of the largest 
water recycling systems under development in the U.S. SAWS, which calls 
its four award-winning wastewater treatment plants ``Water Recycling 
Centers'', produce 120 mgd of tertiary treated recycled water (sand 
filtration followed by chlorination and then dechlorination). By 
recycling its wastewater, SAWS is improving and protecting receiving 
stream quality and increasing water supply reliability and redundancy. 
Making greater use of recycled water will be one of the keys to making 
more water available for economic growth and development in San 
Antonio. Recycled water use is growing in San Antonio and includes 
agricultural irrigation, irrigation of public parks, and improving 
water quality in the Medina and San Antonio Rivers.
    Water Conserv II (FL)--Water Conserv II, one of the largest water 
reuse project of its kind in the world, is the first water reuse 
project in Florida to irrigate crops produced for human consumption 
with reclaimed water. Jointly owned by the City of Orlando and Orange 
County, it has taken a wastewater effluent previously discharged to 
surface water bodies and turned it into reclaimed water, as asset that 
benefits the City, the County, and the agricultural community. The 
system encompasses two water reclamation facilities connected by 
transmission pipeline to a distribution center. From the distribution 
center, reclaimed water is distributed to 76 agricultural and 
commercial customers. The reclaimed water that is not used for 
irrigation is distributed to Rapid Infiltration Basins for ground water 
replenishment. The reclaimed water is monitored and controlled from a 
central computerized control system.
    Monterey County Water Recycling Projects--Monterey Regional Water 
Pollution Control Agency (MRWPCA) and the Monterey County Water 
Resources Agency operate a regional water recycling project for 
agriculture. Nearly 20,000 acre-feet per year of water is used to 
irrigate over 12,000 acres of food crops. The recycled water reduces 
coastal seawater intrusion, as well as replaces groundwater that is 
often too salty for long-term irrigation. Implementation of the project 
was made possible by an 11-year study that verified the safety of food 
crop irrigation. An extensive public outreach program was developed to 
address the needs and concerns of local growers. MRWPCA and the Marina 
Coast Water District want to further expand water reuse to urban uses 
including landscape irrigation and possible industrial applications. 
This project would involve ground water storage during the winter which 
has the additional benefit of slowing salt water intrusion.
                                 ______
                                 
    Mr. Calvert. Now we will recognize Mr. Scott.

 STATEMENT OF DOUGLAS SCOTT, DIRECTOR, U.S. WATER/SEWER GROUP 
                   COORDINATOR, FITCH RATINGS

    Mr. Scott. Thank you, Mr. Chairman, Committee members.
    My role in the financial industry, as a rating analyst, is 
to evaluate water and sewer credits, and also State revolving 
fund loan credits, to ensure their economic viability. The tact 
that I have taken with my submitted testimony is that I 
consider it the most effective means as far as maximizing 
Federal appropriations purely from an investment perspective, 
much in the same way that an investor would evaluate 
investments for restructuring a portfolio.
    My conclusion in my testimony is that, under this approach, 
Federal moneys utilized to seed capital for a perpetual loan 
fund is the most economically viable method, as the interest 
generated would compound and ultimately provide more money for 
water projects.
    Having said this, however, opportunities exist for the 
Federal Government to participate in types of projects or in 
individual projects with direct grants which would leverage 
local dollars and possibly decrease the need for Federal 
involvement on a larger scale in the future.
    I would like to take the rest of my time to briefly discuss 
the perceived benefits of the Federal involvement in projects 
from a credit perspective.
    In evaluating a credit, one of the areas that a rating 
agency looks to is the borrower's historical and projected 
financial operations. With any debt financing in the open 
market, an investor wants assurances that the debt will be 
repaid in a timely fashion. To gauge the likelihood of 
financial performance, the rating agency looks to an issuer's 
debt service coverage levels; that is, the amount that revenues 
exceed the liabilities. Stronger credits typically exhibit 
higher coverage levels than weaker credits, but in order to 
increase coverage levels, revenues must increase, liabilities 
must decrease, or a combination of both must happen.
    In generating additional revenues, most local governments 
are limited in their ability to raise additional capital in 
ways that do not affect their constituencies, so those 
increased funds typically are borne by local residents in the 
form of increased taxes or increased utility rates. As a 
result, Fitch takes into consideration the impact of these 
increases in terms of economic burden. If Federal funds are 
available to reduce the needs to generate additional revenues, 
this is viewed as a credit positive because the financial 
burden to local residents will be reduced.
    Another area of evaluation in the credit process is the 
amount of debt that a local government has and is expected to 
incur within the foreseeable future. Obviously, less debt is 
viewed more favorably than more. So the greater the Federal 
subsidy, the less need there is for local government to finance 
debt or raise cash for needed projects. In this case, a direct 
grant would be more beneficial to an individual borrower from a 
credit perspective than a loan from the Federal Government, 
even one that is heavily subsidized.
    Another aspect of the debt analysis is the equity 
contributed to a project. The more equity contributed, the more 
perceived the security to bondholders and the less for the 
amount needed to finance a project. In simplistic terms, this 
is similar to someone applying for a home loan. A home buyer 
contributing a sizable amount of cash toward the down payment 
is seen as less of a credit risk because that person has a 
vested interest to assure that the mortgage will be repaid in 
order to avoid repossession. Alternatively, a home buyer who 
contributes very little up front is typically perceived as less 
creditworthy because the investor is assuming more equity risk.
    There are many other factors considered in the rating 
process, but one last area that's relevant for discussion 
purposes here is the perceived benefit to investors from a 
feasibility and willingness to pay perspective. In evaluating 
credit, Fitch contemplates the necessity of projects within the 
framework of the local government's primary mission. Projects 
which further the primary mission are more likely to receive 
support from the public and, therefore, debts supporting such 
projects is more likely to be repaid.
    From a credit perspective, Federal involvement in a project 
is typically viewed favorably, in the sense that oversight by 
the Federal Government is generally assumed to ensure project 
viability or feasibility, as well as necessity.
    I hope this answers some of your questions regarding the 
perceived benefits of Federal contributions from a rating 
perspective, and I'll be happy to answer any questions you may 
have.
    [The prepared statement of Mr. Scott follows:]

Statement of Doug Scott, Director, U.S. Water/Sewer Group Coordinator, 
                             Fitch Ratings

    The U.S. population increased by 13.2% between 1990-2000, with the 
West and South regions leading the nation in terms of growth at 19.7% 
and 17.3%, respectively.(1) Future projections indicate this trend will 
continue through 2025, albeit at a slightly reduced rate of growth 
overall.(2) To meet the consumptive water needs of this increase in 
population, additional water supply, treatment, and distribution 
infrastructure will be required. Historically, the Federal Government 
has played an important role in financing water projects through direct 
and indirect funding measures: directly, as in funding the construction 
of dams through the Bureau of Reclamation and the Army Corps of 
Engineers, and indirectly, as in the funding of water and wastewater 
infrastructure through Environmental Protection Agency (EPA) grants to 
the State Revolving Fund (SRF) programs. While future Federal funding 
will be driven by policy decisions of the President and the Congress, 
the method of how those funds are dispersed will determine the 
leveraging capabilities of the appropriations.
    Direct grant funding is arguably the most cost-effective mechanism 
for disbursing Federal funds on a project basis, but no opportunity 
exists for leveraging of those dollars. Because direct funding is 
targeted to specific projects, administrative costs potentially can be 
minimized thereby providing more actual dollars for a project than if 
monies are appropriated as part of a Federal or state program. This 
ultimately would reduce the cost of a project. However, the primary 
limitation to direct grant funding from a fiscal perspective is that a 
grant by nature is a one-time source of funds for one specific purpose. 
This means that funding for other projects would require additional 
grants. So simply providing direct grants for a specific project, while 
there may be political, environmental, or economic justification for 
such funding, typically limits the benefits of the grant to the 
immediate recipient and fails to leverage those monies for additional 
needs.
    A method of maximizing Federal dollars is to provide ``seed 
capital'' for investment in an interest-bearing account. Additional 
monies could then be generated and utilized indefinitely or over a set 
period of time. In the case of a defined spending timeline, the 
required appropriation to fund a project or set of projects would be 
reduced based upon the rate of return of the capital investment and the 
timeframe over which the fund was depleted, essentially functioning in 
the same manner as an individual retirement account. For purposes of 
funding water projects, this would mean that grant funds would generate 
interest earnings, with the interest earnings and a portion of the 
grant dollars being used as direct grants for projects. The leveraged 
amount in this case would equal the total interest generated over the 
lifetime of the draws.
    To maximize Federal leveraging further and ensure perpetuity of 
available funding, the ``seed capital'' should remain intact and 
continually be invested (i.e. loaned). For practical purposes, the 
appropriation could be utilized as a zero-percent loan to entities. 
This particular method of funding projects enhances the leveraging 
capacity of the Federal funds over an extended period of time in that 
repayment of principal would be available for additional projects. At 
the same time, borrowers receive a direct benefit in the form of an 
interest subsidy. However, because no interest earnings would be 
generated, the amount available for future projects would be limited 
both as to the initial investment and the timeframe of the repayment of 
the loan or loans.
    To enhance the perpetuity of the appropriations and provide the 
most in terms of leveraging the ``seed capital'', the principal should 
be reinvested in loans to prospective entities which are repaid with 
interest. The Clean Water and Drinking Water SRFs are perhaps the best 
example of this type of funding program. Federal grants, along with 
state match monies, are deposited into the respective SRFs. Monies 
within the SRF fund are then loaned to recipients at rates below that 
which the applicants could receive on their own in the open market, but 
the fund continually expands as principal and interest repayments are 
received and then reloaned to other entities.
    To meet the vast water and wastewater demands across the nation, 
many SRFs also issue leverage bonds in the open market which provide 
additional sources of revenue for funding water and wastewater 
infrastructure needs beyond that which could be accommodated from 
available program funds. These leverage bonds are overcollateralized by 
Federal grants and state matching monies, meaning that pledged 
resources exceed projected debt service liabilities, and this 
overcollateralization typically allows the bonds to achieve Fitch's 
highest credit rating. By achieving such superior ratings, SRF 
borrowing costs are typically less than what an individual borrower 
would achieve if such borrower were to access the open market on their 
own. Because of this leveraging, use of Federal funds is enhanced as 
opposed to funding loan projects on an individual basis.
    Indicative of the success of the SRF programs to leverage Federal 
dollars for water and wastewater infrastructure funding is the ratio of 
Federal capitalization grants contributed to the amount of actual 
assistance provided. Moreover, for those states that have issued 
leverage bonds, the ratio of assistance provided is greater than states 
that have yet to do so. As of June 30, 2002, the EPA reports that the 
total amount of Clean Water SRF assistance as a percentage of Federal 
capitalization grants for states issuing leverage bonds was 228%, 
compared to 144% for states which have not leveraged.(3) Likewise, for 
the same period Drinking Water SRF assistance as a percentage of 
Federal capitalization grants for states issuing leverage bonds was 
222% compared to 90% for states which have not leveraged.(4) While the 
SRF programs are perhaps the best example of leveraging Federal 
dollars, the concept of utilizing Federal monies to provide ``seed 
capital'' for a perpetual loan fund and issuing leverage bonds to 
increase the immediate source of funding availability has the potential 
to maximize Federal funding for many types of public projects.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman.
    Obviously, as we all know, a large part of our country is 
experiencing drought conditions. Happily, we had some snow in 
the Rockies recently that may help a little bit, but certainly 
was not enough. We have long-term water needs that we must 
address. In getting that water, obviously, from Mother Nature, 
sometimes she's not willing to let loose and we end up with 
these long-term droughts. So this Committee, and certainly the 
Federal Government, over the last number of years, has looked 
at reclamation as a viable way of having certainty in water 
supply.
    I want to ask this panel generally, what is the importance 
of Federal assistance to a project's planning, design and 
construction? What are the benefits of Federal contribution to 
the construction of local projects that are primarily financed 
through local mechanisms? As an individual who is more or less 
a fiscal conservative, as was pointed out by the gentleman in 
how these projects are financed, this is a great deal, it seems 
to me, but I don't want to pre-answer the question. Just how 
can we leverage Federal money?
    With that, I will ask the panel in no particular order. I 
guess we can go from left to right.
    Ms. Cody. That's an interesting and difficult question. 
Obviously, from what we've heard today from the project 
proponents' point of view--and I've already said that CRS takes 
no position on these types of things--but certainly, from all 
I've gathered from reading this material, and also the 
testimony today, the benefits, as I think we just heard, 
include this leverage issue. It is one that comes up 
consistently. Another is how recycling compares to other 
alternatives. Whether they be factors such as firm or yield or, 
the ability to go on line right away, those are some of the 
things I think that have been highlighted by project proponents 
today.
    Others on the panel?
    Mr. Gritzuk. If I can just add to that, the normal way that 
a public entity finances a water reclamation project today is 
by itself, with funds raised by the ratepayers. In light of all 
the other pressures that we have confronting the water industry 
today, that is becoming an increasingly more difficult task.
    Title XVI is probably the most popular way to fund water 
reclamation projects today. In Title XVI itself, there is a 
limit of funding, $20 million, and there is also a percentage 
limit that Federal funds cannot exceed 25 percent of the 
overall cost of the project. So you have to look at this as 
Federal funding provides kind of the seed money and the 
incentive to get the project going. But the long-term 
commitment still lies with the entity that is building that 
project. Also, in the longer term, it is the ratepayer that 
primarily pays for that.
    Picking up on one more point from Mr. Scott here, that seed 
money that the Federal Government can provide also helps in the 
municipal bonding, in the bonding rating that the project gets.
    Mr. Calvert. Thank you.
    General Habiger. Mr. Chairman, San Antonio is entering this 
fight late because, as I said, we've been relying on the 
Edwards Aquifer. All we had to do was put wells beneath the 
City and pump the water out, put a little bit of chlorine in 
it, and we had a viable water source. But we are going to be 
more and more involved in Federal funding mechanisms in the 
future.
    Our water plant right now, to wean ourselves off the 
Edwards Aquifer, in a worse case scenario, is in excess of $2.5 
billion over the next 15 years. In terms of Title XVI, we 
received $200,000 about 6 years ago, which proved to be 
invaluable with our recycled water program. These Federal 
programs are viable. They shouldn't be considered as ``cash 
cows'', in my view, but to leverage, as Mike pointed out.
    Mr. Calvert. Thank you.
    Mr. Grindstaff. Mr. Chairman, very quickly, it seems to me 
that throughout the West we have overcommitted ourselves, and 
if we're going to have sustainable systems over the long run, 
water recycling has to be a key component of that.
    I really like the analogy of seed money. It helps people 
make the decision to move ahead and do the right thing.
    Mr. Calvert. Thank you.
    Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair.
    I have listened with great interest to all of your 
testimony and I have about 50 questions for each one of you, 
but I'll try to hone it down to some of the ones that really 
stand out.
    Generally, all of you agree that there is a great need, a 
great demand and a great benefit in continuing the use of 
recycled water projects and water reuse. I'm hoping that 
somebody can tell me how can we get together and get the 
Bureau--and I'm sure the Bureau has somebody upstairs who is 
asking them to do with less--but how do we convince the 
Administration or the powers that ben that have made the 
decisions to do away eventually with the actual recycling, 
against the public law that set that up for the Bureau of 
Reclamation. Would somebody answer that for me?
    Mr. Grindstaff. I'll make an attempt.
    Back in 1992, the Congress authorized the Southern 
California Comprehensive Water Reclamation and Reuse Study--the 
SCCWRRS study it's been called--and they authorized a companion 
piece in Northern California. The Bureau of Reclamation has 
done an outstanding job of developing that report. They haven't 
brought it back to Congress, although I understand from the 
Department of Interior they are committed to bringing that back 
this next month.
    It seems to me that that kind of work needs to continue, 
that throughout the West those kinds of studies ought to be 
done so you can identify the long-term opportunities for doing 
recycling in every State, and identify, as you do that, how 
that helps make the systems truly sustainable that have been 
built in the past.
    Then it comes down to this body authorizing those projects 
after those studies are completed, authorizing the seed money 
to help really finish the implementation of the core mission of 
the Bureau of Reclamation, the development of the West. Their 
core mission was to help develop the West by providing water 
supplies, and they've done that wonderfully well. But in some 
cases it's not sustainable, and doing this, I think, helps them 
implement that core mission.
    Mrs. Napolitano. Anybody else?
    Mr. Gritzuk. Yes. Particularly in the West, but it's also a 
national issue, our traditional water supplies, the fresh 
water, is running out. We don't have enough to sustain the 
population projections that we're seeing in the future.
    So it would seem to us that, if the Federal Government, 
through what I suggested in my testimony, have the Council of 
Environmental Quality conduct a credible, technical study of 
what the future needs are, particularly in those geographic 
areas of the country where they have virtually run out of their 
fresh water supplies. It would become very obvious that the 
next water resource for those geographic areas is reclaimed 
water. They have nothing else. So I think that could be another 
approach that the Federal Government could take, just do a 
credible study and see for yourself what the needs are in 
reclaimed water.
    Mrs. Napolitano. The problem is they haven't released the 
study, even though this Committee, this body, has asked for it 
more than once. I know I have asked for it twice. We are not 
able to get them to give us the information. One of the replies 
I received was that they were working on doing some adjustments 
to it, whatever that means.
    Mr. Grindstaff, as former Mayor of Norwalk, I was very 
involved in the sanitation district that developed a lot of the 
recycled water in the area, that serviced a lot of the cities 
that are basically poor and disenfranchised communities that 
needed this seed money. I read some of the testimony and I 
noticed that some of it's only 10 or 15 percent, so it really 
is basically seed money.
    Where would we be, like in San Gabriel, where we had a 
tremendous clean-up problem, that recycled water played a major 
part in the economic sustainability for that area, could you 
tell me where would we be if we had not had the Bureau step in 
and help out?
    Mr. Grindstaff. Well, I think, without the Bureau helping, 
many of the projects would not have been done. In fact, 
Southern California would be more dependent on Colorado River 
water and more dependent on importing water from Northern 
California. The consequences of that are immense economically.
    As a water professional, I often just think about the 
water, but I am reminded, when I meet with community leaders, 
that when we have impacts on our water supply, it has dramatic 
impacts on the economic development of the region.
    As I was talking with the General before the meeting here, 
Toyota just located a new facility in San Antonio, and water is 
a key element to them being able to have that in San Antonio. 
That kind of thing is very true in Southern California. Every 
city, every part of the Nation, really needs that fundamental 
infrastructure in place. Without that kind of assistance, that 
might not happen and, in fact, the communities might have 
untold kinds of impacts that are negative.
    Mrs. Napolitano. Thank you, Mr. Chair. I will wait for the 
next opportunity.
    Mr. Calvert. Thank you.
    Mr. Renzi.
    Mr. Renzi. Thank you, Mr. Chairman.
    I failed in my obligations to also introduce a good 
Arizonan. Mr. Gritzuk, it's good to have you here. I thank you 
for your leadership with the WateReuse Association, and more so 
for your help in the State of Arizona as our Director of the 
Water Services Department in Phoenix. I was interested in your 
testimony, particularly in the summary and recommendations, 
with the idea of putting together a task force.
    I mentioned in my opening remarks that we have a ski resort 
up in Flagstaff, Arizona that sits on public lands, that right 
now is being debated as to whether or not we should be able to 
use reclaimed water to make snow. It would be a great economic 
impact for the City of Flagstaff to be able to produce snow up 
there. If the temperatures allow it, you would probably be able 
to ski an additional four to five months a year, which brings 
millions of dollars to the economy. The idea that reclaimed 
water would be used for snow making, the idea that we have 
heard today, how it's used for irrigation and landscaping.
    Given the fact that you have this beautiful association 
that you've pulled together of members all over the country, 
and even have insights into the world use historically of 
reclaimed water and water reuse, what kind of exciting 
breakthroughs or advancements are you seeing when you talk 
about identifying opportunities and looking to the future, if 
you don't mind?
    Mr. Gritzuk. Well, the breakthroughs are primarily in some 
of the research efforts associated with reclaimed water. We are 
seeing that the treatment processes, for example, that we use 
to reclaim water, are becoming more cost-effective. We are 
seeing that there are processes now where you can take out 
certain constituents out of the reclaimed water so that the 
water has greater use. There are technologies available now 
where you can develop a quality of reclaimed water by just 
naming it and you can do it.
    Now, getting to your ski resort, what is the difference of 
using reclaimed water for crop production, for irrigation, and 
in your case, you use water to generate snow through another 
process? Reclaimed water is a perfectly acceptable product for 
that purpose.
    Mr. Renzi. Thank you. There were some real discussions of 
whether or not early on we would be able to get to a purity 
level that, when we made the snow and it perculated back down 
into the aquifer, whether or not we would be tainting the 
aquifer. We found that argument to be wrong.
    Mr. Gritzuk. I agree. That's a totally false argument. 
Today, reclaimed water is widely used to recharge the aquifer. 
Science has proven that this is a perfectly safe method to do 
that.
    Mr. Grindstaff. Can I add to that? Both Vail and Big Bear 
already recycle water for use as snow in those ski resorts.
    Mr. Renzi. And I would add the Sunrise Ski Resort on the 
White River Indian Reservation, the Apaches, does. Yet we're 
not able in Flagstaff right now to overcome the 
environmentalists who won't allow us right now to do it.
    General, I appreciate your service to our Nation, and also 
you go right back into service for the Great State of Texas, 
particularly in an area of need involving the water.
    You talked about reducing the water use in your area by 33 
percent, while the population increased 50 percent. I'm asking, 
could you share with me just real quick where that kind of a 
breakthrough comes from.
    General Habiger. Thank you, sir, for your kind comments.
    We have a multifaceted program. Low flow toilets, low flow 
showerheads, are classic examples of what we've done. Our 
education program from kindergarten through 12th grade is 
recognized as being probably the best in the country. The young 
kids today, if they were to see one of us older individuals 
brushing our teeth by turning on the cold water and leaving it 
on while we brush our teeth, would have a fit if they saw that, 
because we teach them that that's a terrible thing to do.
    We have gone off and done some extraordinary things in 
terms of sending our agriculture expert and our community 
conservation expert to Israel for 8 days to pick their brains. 
They've got some of the best water conservation programs in the 
world. It is through those series of things, and incentivizing 
people with a rate structure where you have lower rates with 
less water used, improving the types of unaccounted for water 
issues--in other words, leaks, to get those water main leaks 
fixed quickly--all those things in combination have resulted in 
a conservation program that, in my view, makes us world class 
in San Antonio.
    Mr. Renzi. Well, sir, you have become a great teacher. I'm 
grateful. Thank you, Mr. Chairman.
    Mr. Calvert. Thank you.
    Mr. Baca.
    Mr. Baca. Thank you very much, Mr. Chair. It's an honor to 
sit here on this Committee with you, and being with my 
colleague adjacent to my district. I look forward to working 
with you and trying to solve some of these problems that are 
impacting not only California but throughout our Nation.
    I have a couple of questions. I would like to follow up 
with a question the Ranking Minority Member asked, a question 
in reference to the feasibility study that was done. Why do you 
feel the study has not been released by Interior? Does anybody 
have an idea?
    Mr. Grindstaff. I have spoken with both the commissioner 
and Assistant Secretary about the issue. They informed me that 
they are making some minor changes in the text and that they 
expected to have that study released within--well, they said a 
month, and it's been a couple of weeks ago. So it should be 
within a couple of weeks.
    Mr. Baca. But beyond that, is there any other reason why 
they are not releasing it, besides minor changes?
    Mr. Grindstaff. I could speculate as to political reasons, 
but I would rather not do that.
    Mr. Baca. Is it out of fear that we could produce a safe 
supply of water and their fear of the connotation that it can 
possibly be used as another alternative? I don't know. I'm just 
asking.
    Mr. Grindstaff. I don't want to speculate about why it 
hasn't been released.
    Mr. Baca. OK. Anybody else want to tackle that?
    Mr. Calvert. I can speculate, but...
    [Laughter.]
    Mr. Baca. Thank you.
    A couple of other questions. Has the Federal Government 
been responsive to local government needs in this area, and if 
not, what do we need to do?
    Mr. Grindstaff. I think that the Federal Government has 
very often been responsive. I think the study that was done, 
the study that we're talking about here, was a very useful 
study. It identified that, in Southern California, we could 
develop 450,000 acre-feet of new water supply, so I think that 
was a very good thing to do. They did a similar thing in 
Northern California. Obviously, they can help in Texas, in 
Arizona, and throughout the West, so I think they have that 
ability.
    I think the problem has been funding, honestly, getting 
money so that, rather than lots of talk, people actually say, 
hey, if I want to go build a program that develops 20,000 acre-
feet of recycled water that's going to cost me $20 million, I 
can go to the Federal Government and they will help me get the 
seed money necessary so I can make that decision and move 
ahead. So that's the biggest difficulty, honestly.
    Mr. Gritzuk. I would like to add to that answer.
    Absolutely, the Federal Government has been responsive to 
the needs of the communities. Our request here is to continue 
the involvement of the Federal Government and maybe increase 
the involvement of the Federal Government.
    But the experience we've had in Arizona, for example--and 
let me just use that as an example--we have had the involvement 
of the Bureau of Reclamation, the involvement of the Corps of 
Engineers, but the involvement basically was in study work, in 
providing some seed money, and the benefit of that, it does 
kick off a project and in the long term it's a very useful and 
beneficial project.
    The negative of that is that the community itself has to 
come up with the overwhelming amount of funds to fund that 
particular project.
    Mr. Baca. And that is a burden for a lot of the communities 
right now that are strapped, because they're not receiving the 
funding from the State because the States right now are in a 
deficit. So I believe the Federal Government has to come in and 
play a part if we're really going to look at the critical 
problems that is affecting our communities, and it's urgent 
that we look at other alternatives as well.
    Doug?
    Mr. Scott. Can I add one point to this, one thing I didn't 
mention in my oral testimony?
    Water supply is obviously a critical component when we 
evaluate a water and sewer system, because if the supply is not 
there, the customer base cannot grow and the needs will not be 
met, and the utility system will ultimately suffer.
    Having said that, I have worked on many of the credits in 
Southern California, including the metropolitan water district 
of Southern California, the Los Angeles Department of Water, 
San Diego and Irvine Ranch. One thing that becomes apparent in 
looking at areas, particularly in the West and the Midwest, 
where water supplies are stretched, is that as the economic 
growth has developed in those areas, it then becomes 
increasingly important for those areas to be able to 
demonstrate to us that they can sustain that growth over a long 
period of time. For many of those, recycled water is playing a 
part in it. As a result, if it's meeting the needs and it's 
able to sustain the growth, we typically have viewed that very 
favorably. As a matter of fact, one of the things we have cited 
as a weakness in Southern California is the conflict that has 
gone on with the surface water supplies there, so any 
enhancement to available water sources would be seen as a 
credit positive.
    Mr. Baca. One final question that I have.
    How can you suggest that the Federal budget priorities 
might be changed to accommodate water recycling? Do you have 
any ideas? Can you suggest how Federal budget priorities might 
change to accommodate water recycling?
    Mr. Atwater. Richard Atwater.
    Certainly, Congressman Baca, I think, as has historically 
been the case since 1992, when this was authorized, the 
Appropriations Committee, clearly with the oversight and 
recommendations of this Committee, are a powerful voice to 
making sure that the priorities for projects are clearly 
identified, that this is western-wide. And certainly from the 
water resource association's perspective, when you look at the 
activities in Florida and Georgia and Virginia, and the water 
problems throughout the country, it really is a national issue.
    But certainly for the Bureau of Reclamation, I think this 
Committee, as Mike Gritzuk pointed out, if you can articulate 
to the Appropriations Committee these priorities, I think it 
will carry a lot of weight.
    Mr. Baca. Thank you.
    Mr. Calvert. I thank the gentleman.
    Mr. Inslee.
    Mr. Inslee. Thank you. I appreciate your description of 
your conservation efforts. It's really good to hear about the 
good results that you've talked about today.
    I wanted to ask you about the phenomenon of global warming 
and how it may impact your operations. As you know, the 
concentrations of carbon dioxide are anticipated to double in 
the next several decades from preindustrial times, which almost 
all reputable scientists believe is at least a partial result 
of our industrial activities on Earth.
    I have been talking to a lot of water folks--and I'm from 
the Seattle area, and we're heavily dependent on the snow pack 
in the Cascades for our water supplies. We have very, very 
significant concerns in our part of the world, that it will 
raise the freezing level and we'll have less snow. Where we 
store our water in the Northwest, it's stored in snow pack, 
because we don't have as much storage capacity as we would need 
otherwise. We're really concerned about it up in our neck of 
the woods. I think most scientists believe there are a lot of 
significant changes in the rain cycle across the country that 
we can't entirely predict at this moment they're going to cause 
us some real grief.
    I just wonder if that's something that any of your 
organizations have thought about, projected, talked to your 
Members of Congress about and the like.
    Mr. Atwater. If I may, I do serve on the California Water 
Commission, and over the last decade, the Cal-fed Delta-Bay 
program, where the Federal agencies and the state water 
agencies have looked at this issue of global warming, and much 
like the Northwest, in the Sierra Nevadas, one of the things we 
predict is, because of global warming, there will be less snow 
pack and more rainfall.
    That goes back to the earlier discussions in the 
presentations. If we have less snow pack, that means our 
reservoirs will not fill, so we will have more droughts and 
more unreliable surface supplies, which shows the critical 
nature, whether in San Antonio or Phoenix or Southern 
California or, for that matter, Seattle. If we have less snow 
pack and less rainfall, that's more unpredictable, that means 
the recycled water firm supply is going to be more important 
because our surface supply is going to be much more variable. 
They're going to have extreme floods, and then you're going to 
have sustained droughts. So on the Colorado River, if we have 
less snow pack, that's going to affect everybody from Denver to 
San Diego.
    Mr. Inslee. So I guess you're saying that this--I'm sorry, 
Mr. Grindstaff. Did you want to say something?
    Mr. Grindstaff. I would also like to add to that. There 
have been models of what might happen in a local region. The 
models are contradictory. The first set of models said that 
Southern California--I'll use that because that's the area I'm 
from--would have more rain under that scenario. The newest 
models that are out say there will actually be less 
precipitation than there currently is. We just don't know the 
impacts. I think it's clear that if the temperatures warm and 
the snow pack goes higher, we will store less water in the snow 
pack.
    It's also clear there are major impacts on the flood 
control infrastructure, something we don't talk a lot about 
here. But that is a huge potential problem for water supply 
agencies that store water behind reservoirs now, where for use 
as drinking water they may, in fact, have to give up some of 
that storage to use it as flood protection. There are a whole 
series of issues that are tied to that.
    Mr. Inslee. Right. Well, I'm going to make an appeal to all 
of you. I know you come and lobby us, so I'm going to lobby you 
right back across the aisle just for a moment.
    There are a lot of things we're going to need to do. 
Conservation, you've had great success in San Antonio, 
recycling water. Obviously, we're talking about that today. But 
I would appeal to you to try to talk to your legislators about 
this issue and how it may impact potentially your operations 
some day. The reason I say that is because I think this is an 
issue that, because it's sort of long term, we tend to not 
address it here in the U.S. Congress. I would appeal to you, 
when you have an opportunity to at least discuss this with your 
legislators, that you ask them to consider it and ask what 
Congress is doing about this. Because we can do all the 
recycling in the world, and all the conservation in the world, 
but if we have these very significant changes in our climate, 
we're just not going to be able to enjoy the lifestyle that 
we've enjoyed in the West for the last several decades.
    I just hope that you will sort of add that to your 
portfolio issues that you talk to your Members about, because 
it's one that has gone on for three decades and there's no 
turning back from this problem. So I want to thank you for your 
efforts.
    Thank you.
    Mr. Calvert. I thank the gentleman.
    Mr. Pearce.
    Mr. Pearce. Thank you, Mr. Chairman.
    I give my thanks to the panel for the presentations. The 
idea of water and water uses is long overdue, and in the West 
we find it sooner than in the East, but soon enough, worldwide, 
we'll all have this discussion. Water not only will be but 
currently is the most valuable resource and most strategic 
resource, far, far more valuable than oil.
    Miss Neely, what do you all do currently with your treated 
brine, your brine concentrates?
    Ms. Neely. I'm going to have to defer that question to Mr. 
Gritzuk, who is more of a technical person, so if I could, I'll 
have Mr. Gritzuk answer that for you.
    Mr. Gritzuk. I would be happy to.
    Brine disposal, as you are aware, is probably a major 
problem for an inland community or an inland State. The normal 
way to dispose of brine, which is the waste product normally 
from a membrane treatment process, like reverse osmosis, is to 
dispose of it to the ocean or down to the sewer. In a 
landlocked State like Arizona, we don't have the luxury of an 
ocean to dispose of it. So our methods are either to bring it 
to the sewer, or to go to something like evaporation ponds.
    There has been a study by the Bureau of Reclamation that 
was done in Arizona, that indicated that for a metropolitan 
area like the Phoenix metropolitan area, if we were just to 
treat a portion through this type of method, it would require 
ten square miles of evaporation ponds, at a cost of over $400 
million. Where do you find that kind of money, and where do you 
find ten square miles of vacant property in a metropolitan 
area? These are not doable.
    Dumping it into the sewer is also a problem, because that 
salt winds up in your wastewater, and if you reclaim that 
wastewater, the salt remains in the wastewater. As far as 
reclaimed water with a high salt content, it has very little 
value.
    So the answer here is that you need to have some 
breakthroughs in technology. There has to be a lot of research 
done so that the brine streams can be diminished or recycled 
and reused.
    Mr. Pearce. Thank you, Mr. Chairman.
    Miss Cody, you were talking about the Bureau of Reclamation 
and the value of the projects. The Bureau of Reclamation went 
in and did a lot of projects, building dams, I think, and in 
New Mexico they lodged the first lawsuit, claiming ownership of 
all the waters that were behind the dam because they built the 
dam. They ignored the fact it was the first and only project 
that has ever been paid off completely. They didn't bring the 
suit against one of the others. I think they brought it because 
they thought New Mexico would not respond strongly. But the 
idea of ownership, Federal ownership of State water, is one--
and I have one more question, so if you can narrow the response 
down. If we fund the Bureau of Reclamation and then they claim 
that these recycled waters belong to the Federal Government, 
I've got deep concerns.
    Ms. Cody. Well, you've raised a very interesting question, 
and a complicated one. But the water rights situation is very 
complicated, as you know, coming from a Western State. But 
typically, the Federal Government, in terms of the ownership of 
the water itself, the Federal Government has tended over time 
to defer to State primacy in water rights in particular. There 
are some exceptions, like reserved water rights for Federal 
lands and things like that.
    I'm not an attorney, so I won't get too far into it, but we 
do have people on our staff at CRS who are legislative 
attorneys and have water rights expertise. But the typical way 
that the Bureau has handled this since 1902--and the 1902 Act 
itself expressly said that it wouldn't interfere with State 
water rights--but the typical fashion is for the Bureau to go 
into the State and apply for the water right under State law. 
Sometimes, though, you have situations where irrigators may 
have a preexisting right for a water. So it can get complicated 
as far as who actually has the right.
    But as far as the Bureau projects, it's a right held in 
trust for the water districts--generally, I should say, except 
where there are people who have run of the river rights. In 
California you have some situations where people had run of the 
river rights prior to the CBP being built, things like that.
    Mr. Pearce. Thank you, Mr. Chairman. I think my response 
would be that that water held in trust 40 miles north of the 
Texas border, where El Paso and the Nation of Mexico are having 
tremendous water shortages, I suspect, with five electoral 
votes, the water held in trust would not necessarily reflect 
the needs of the five electoral vote State.
    My last question, Mr. Chairman, is for General Habiger. You 
mentioned that you had made a 72 mile long pipeline. I have 
three pieces to this question. What area is the water coming 
from, and what did the residents of that county and that 
municipality that's closest to that have to say about the 
taking of the water from one area to the next, and if we 
shorten that up, then the next piece of the question is really 
where the meat is?
    General Habiger. The recycled water comes from three of our 
wastewater treatment plants that belong to us. They are within 
the city limits of San Antonio. The pipeline circumvents the 
City, at about eight miles out. There were no complaints 
whatsoever about where that water was going.
    Mr. Pearce. So, Mr. Chairman, the pipeline only carries 
your water in a loop back around to you.
    General Habiger. Yes, sir.
    Mr. Pearce. I would like to go ahead and ask the question 
to anyone on the panel. You all would be doing this in one way, 
but a lot of the cities in the Nation are going to end up 
moving water. Again, I look at that as a small state. I know 
it's not recycled water that we're kind of focused on here, but 
it all comes together as we consider.
    For instance, Texas is buying water--they're buying farms 
in New Mexico, and they're asking that they receive the water 
at the State line of Texas. If dollars, if sheer economic size 
is allowed to solve the problems of water, then all of the 
water in the State of New Mexico could eventually be bought and 
delivered at the border of another State.
    So, Mr. Chairman, as we go through this--and I'll leave 
this question for anyone who wants to address it, as my time is 
well over--but that contemplation about what do we do when we 
take water from one area to the next, and the entire economic 
base and population base of the previous area is completely 
left behind. I know that's not your case and I appreciate that, 
but any addressing of that would be appreciated.
    General Habiger. If I could, Mr. Chairman, just address 
that very, very quickly. I would submit, sir, that you carry 
that problem from a State to a State to the problems we have in 
Texas, where those issues go from county to county. We're in 
negotiations to try to get water from an adjacent county, but 
the State legislature passed a law saying that the pipeline 
could not be built to get water from one county to another. So 
this issue goes to the very core of water.
    Mr. Pearce. Thank you, Mr. Chairman. I think the response 
indicates that it's going to be an ongoing discussion and one 
that gets fairly flavorful before the next century is over.
    Mr. Calvert. As you'll find out, Mr. Pearce, water disputes 
go on in every State in this union, and have been going on for 
a long time.
    Mr. Grindstaff, obviously I am from the area that you 
represent, and certainly the Southern California wastewater 
reclamation and reuse study, as authorized by Congress, how 
would that help achieve the goal of drought-proofing the 
region?
    Mr. Grindstaff. Well, Mr. Chairman, thank you for the 
question.
    The Southern California reuse study identifies in our 
region 270,000 acre-feet per year of new water supply that we 
could develop, and should that study be reported to Congress 
and be authorized, then it would spur the development of that 
water supply and significantly allow us to reduce our demands 
for imported water.
    Our goal is to reduce the amount of water we import, even 
while our population grows dramatically. That study would help 
immensely.
    Mr. Calvert. How much water do you import now?
    Mr. Grindstaff. We import half a million acre-feet of water 
per year.
    Mr. Calvert. So this would cut back by 50 percent the 
amount of imported water?
    Mr. Grindstaff. If it were built immediately, it would. The 
way we expect it to be implemented is over a period of years, 
as the population grows. So what it probably does in reality is 
reduce what we import by 150,000, maybe 100-150,000 acre-feet 
per year, if we implement it over 20 years. If we do it sooner, 
then obviously we would have as bigger--
    Mr. Calvert. If, in fact, we can negotiate our way into a 
soft landing on the quantification settlement agreement, do you 
believe we could have that--if we focused on this, to have that 
in effect within the 15-year time line of the--
    Mr. Grindstaff. Absolutely. We have an outline of a plan 
that would allow us to get it done by 2010. As years go by, we 
need to probably stretch that to 2012, but I believe we could 
get that done within that timeframe.
    Mr. Calvert. Good.
    On Title XVI, Reclamation has responsibility for 
implementing the only congressionally authorized water 
reclamation reuse program we have. Yet the agency says the 
program was not meant to be a grant program.
    Are there concerns that you have with the program, and if 
so, please suggest to us how we can reshape the present program 
to make it more effective. I put that out there to all of you. 
Obviously, you all like Title XVI, I believe. We'll start with 
anyone who wants to address that question first.
    By the way, we have been joined by Mr. Atwater from the 
Inland Empire Utilities Agency.
    Mr. Atwater. Thank you very much, Mr. Chairman.
    Since I was involved in 1991 and 1992, when Congress 
authorized Public Law 102-575 and talked about Title XVI, and 
also active in 1996, what I would say is that this is only a 
recent phenomenon over the last year or so. Previous 
Secretaries--Certainly, if you look at the press release that 
Secretary Lujan articulated before the authorization, the 
Bureau of Reclamation initiated the Southern California study 
before Congress even enacted the statute and recommended it.
    Back in the 1980's, when I worked at the Bureau of 
Reclamation, worked for the Department of Interior, water 
recycling, reuse, was always thought of strategically as an 
important part of the Colorado River solution and Cal-Fed Bay-
Delta issues.
    Mr. Calvert. Maybe I can even rephrase this question and 
make it very simple for everybody to be on the record.
    Do you believe that water recycling and water reuse is a 
core function of the Bureau of Reclamation?
    Mr. Atwater. Yes, without question.
    Mr. Calvert. Anybody else who would like to answer that 
question?
    Mr. Gritzuk. Yes.
    Mr. Grindstaff. Absolutely.
    Mr. Calvert. General?
    General Habiger. Absolutely.
    Mr. Calvert. The gentlelady from Arizona?
    Ms. Neely. It's vital. Thank you.
    Mr. Calvert. So there's no disagreement. I presume that's 
unanimous at the table.
    Ms. Cody. In true CRS fashion, I could tell you it depends 
on what you look at. But looking at the Bureau's current 
mission statement, it does say one of the mission components is 
development of water supply. Historically, that's been for 
irrigation.
    I think the big question you're facing is water for 
municipal and industrial use. That has not been in the 
traditional mission of the Bureau, but Congress, of course, has 
the prerogative to change that.
    Mr. Calvert. Obviously, congressional intent has been and 
continues to be that reclamation and reuse is a vital function 
of the department.
    Mrs. Napolitano. Mr. Chairman, would you yield?
    Mr. Calvert. I would be happy to yield.
    Mrs. Napolitano. I'm going to quote the public law, that 
one specific area, section XVI(O)(2), the general authority. 
``The Secretary of the Interior, hereafter Secretary, acting 
pursuant to the Reclamation Act of 1902, the Act of June 17, 
1992, 32 stat. 388, and acts amendatory thereof and 
supplementary thereto, hereafter Federal reclamation laws, is 
directed to undertake a program to investigate and identify 
opportunities for reclamation and reuse of municipal, 
industrial, domestic, agricultural wastewater and naturally 
impaired groundwater and surface waters, for the design and 
construction of demonstrated and permanent facilities to 
reclaim and reuse wastewater and to conduct research, including 
desalting, for the reclamation of wastewater and naturally 
impaired ground and surface waters.''That has not been changed.
    Mr. Calvert. Duly noted.
    Mrs. Napolitano. Thank you.
    Mr. Calvert. Does the gentlelady have any other comment to 
make?
    Ms. Cody. Of course, that's absolutely right. I'm trying to 
just give the perspective as a point in time over the last 200 
years. But certainly we have noticed a trend in the last 10 or 
15 years, since this law has been enacted, with not only the 
Bureau of Reclamation but other Federal agencies--and I've 
testified before on this point--that Congress is being asked 
more and more to fund these types of programs, whether it's 
ecosystem restoration connected with water supply, water 
recycling, an interest in desal, those kinds of things. So 
there is a trend here in that way, and there are laws on the 
books for this.
    Mr. Calvert. Thank you.
    Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair. I took a little of 
your time. Do you want it back?
    Like I said, I have a whole slew of questions. But I would 
certainly like to ask the General a question about the 
statement he made, that Texas has 16 regions that have 
projects. Are any of those located along what is now the belt 
of drought, along the river?
    General Habiger. Yes, ma'am. The entire State is 
encompassed in those 16 regions.
    Mrs. Napolitano. No. I'm talking about are any of those on 
the border in the area where you now have critical drought.
    General Habiger. Yes, ma'am, they are.
    Mrs. Napolitano. Where are they?
    General Habiger. Well, it includes those--you're talking 
about the counties in the southern part of the State?
    Mrs. Napolitano. Right. What I'm trying to figure out is if 
any of these projects are able to produce water to help the 
farmers, because they have been starved of water from the Rio 
Grande for the last...is it 7 years, 5 years?
    General Habiger. Yes, ma'am. All of the counties along the 
Rio Grande River have developed viable plans that have been 
approved by the Texas Water Development Board. They've all been 
deconflicted so that one region is not counting on the water 
from another region. Those plans were all approved, all 16 
plans, in the spring of last year, 2002.
    Mrs. Napolitano. Have any of them been funded or 
implemented?
    General Habiger. We're in the process of--They have not 
been funded. Implementation has begun. I cannot tell you about 
the other regions, but I can tell you about my region. We are 
very aggressively implementing those programs with not only our 
recycling program, which as I said was our first step, but our 
second step is an aquifer storage recovery program in the 
southern part of our county, second only in scope and size to 
Las Vegas, which is the largest in the country. And then we're 
going after alternative water sources in other areas of the 
State. The entire State, as I said, have these plans.
    Across the State of Texas, as I recall, the bill is in 
excess of $14 billion.
    Mr. Scott. If I could add a point to that, prior to working 
at Fitch I worked for the Texas Water Development Board and was 
there when they did develop those plans. The short answer to 
your question is yes, there are a couple of regional planning 
groups that are there on the border.
    Bear in mind that the regional plans were developed in 
response to a drought in Texas during the Eighties. It was 
determined that the plans were needed to ensure that there were 
source water supplies during a drought of record. So what the 
regional plans have contemplated, as far as developing those 
supplies, particularly along the border, does include recycled 
use water, which I believe is probably what you're interested 
in knowing.
    Mrs. Napolitano. So you're talking over 10 years ago. Are 
there any plans now operating to be able to assist those areas 
deal with the current drought?
    Mr. Scott. The funding requirements that were for those 
projects--there were two parts to it. Yes, some funding has 
occurred for the projects that were listed on the plans. In 
conjunction with that, though, when the bill was passed to 
create the regional water planning groups, it also determined 
that, once the plans were approved, that in order for those 
projects to receive State assistance, they must conform with 
the projects on the plans so that you didn't have conflict, so 
that the basins were not conflicting over water.
    Mrs. Napolitano. So the short answer is they're not up and 
running?
    Mr. Scott. It is up and running, because many of the 
projects have been funded through the Water Development Board. 
Now, as far as specific projects for water recycling, I can't 
address that because I'm not there and--
    Mrs. Napolitano. Those are the ones I'm more interested in, 
because that's the topic of what--
    Mr. Scott. I do believe that some of those projects have 
been funded, but I'm not sure if they've been funded with the 
State or if they've been funded through bonds in the open 
market.
    Mrs. Napolitano. My question is not really of whether 
they've been funded. I'm trying to figure out if that has been 
of any aid to those drought stricken areas that are losing 
financially and many people are losing their farms because of 
that.
    I'm very thankful to hear, General, that you have indeed 
focused on a lot of education, to be able to inform and educate 
the user about the value of water. I hope that others begin. I 
have long been of the opinion that it does take somebody's 
leadership to begin a process, and that is all water agencies' 
responsibility.
    I have one more question, to both you, General, and to Mr. 
Gritzuk, and also to Richard. One question. Who owns recycled 
water?
    Mr. Gritzuk. I believe there has been some litigation about 
it in the State of Arizona, and recycled water is owned by the 
entity that recycles it, at least that is Arizona law. I don't 
know what it is in other States.
    General Habiger. Not being a lawyer, I'm probably going to 
step on a land mine here. But from my perspective, that water 
belongs to the ratepayer, because that ratepayer, as we 
discussed earlier, funded the program in large part.
    Mr. Atwater. Like most things with California, it's always 
more complicated than Arizona and Texas. But generally 
speaking, in California, because our water laws have a 
hodgepodge of rules and such, generally it is similar to 
Arizona, in that the agency that produces the water owns it. 
What gets complicated is that, over time, if it's discharged 
down a stream, and then somebody else diverts it, and then the 
State water board would have to have a water right permit to 
divert it, and all those sorts of issues.
    For example, on the San Gabriel River, which you're 
familiar with, and the Santa Ana River, we have river judgments 
that allocate and provide for the use of recycled water as a 
supplemental supply, for both the San Gabriel Valley and the 
Central Basin area. That's a court decree. So it's always a 
little bit more complicated. But generally you need to hire a 
lawyer and figure out what the rules are.
    Mrs. Napolitano. Thank you. It seems to me that maybe 
Congress should be able to determine who is the actual owner, 
as was stated before, who is the actual owner of that water, 
regardless of what agency claims it. I can remember sanitation 
telling me that they claimed it and were charged to buy it 
back.
    Mr. Atwater. The only thing I would say, from a 
programmatic and policy standpoint, one of the positive aspects 
of the way Congress in 1992, when you enacted the Title XVI 
statute, and you talked about the Bureau of Reclamation's 
mission, if the Federal Government is providing the seed money, 
the venture capital, if you will, and they're not involved in 
owning, operating, or future liability, then you have solved 
the issues that we've talked about from New Mexico or Texas or 
Arizona, Nevada or California's perspective. It's a local 
responsibility and we're going to comply with the applicable 
State law.
    So if New Mexico and Arizona have unique different laws 
than California or Texas, the Federal role is to encourage the 
project to be built, but the local responsibility and the water 
right procedures of how that's accounted for will be consistent 
with both history and that unique circumstance in each State. 
So you solve that problem.
    If the Bureau owned the project and was operating it, then 
you get into all those messy issues that you've been dealing 
with for a long, long time, like the Central Valley project, 
the Central Arizona project, who owns the water. Because now 
you've got this nexus of Federal ownership and you're going to 
have to come back to your Committee to resolve those issues 
over time.
    From my standpoint, from working at the Bureau of 
Reclamation, that's one of the very strong positive aspects of 
having a grant, a targeted funding program, where the Federal 
Government is providing the leadership to encourage the 
projects to go forward, but you avoid having that future 
liability, and it's local control and it's local 
responsibility.
    Mr. Calvert. Thank you. I thank the gentleman.
    I want to thank this panel. I have one quick question, and 
then we'll close this hearing.
    On the issue of brine for the inland States, I know that 
that probably is, from a technical standpoint, the single-most 
difficult issue you must deal with. Is it possible--and I guess 
anything is possible--to work out an agreement with Mexico on a 
brine line down to the Sea of Cortez that would connect not 
just Arizona but Nevada, Utah, and be able to move that brine, 
or do you believe that may be impossible?
    Mr. Gritzuk. From a technical point of view, Mr. Chairman, 
and given enough money, I would suspect that that's possible. 
But I would also offer that that's the wrong direction to take. 
And let me give you an example.
    In Arizona and other States, we import Colorado River 
water. That water is very expensive to us. And then, if we take 
that water and put it through a membrane treatment process, 15 
to 20 percent of the original source becomes your brine waste 
stream. Here we are, where we import it at a high expense, and 
now we're exporting 15 to 20 percent of that at also a very 
high expense.
    So I would offer that the answer here is to improve the 
treatment processes so that there's a lesser amount of the 
brine stream, and also invest in research on ways that brine 
can be reduced and reused, so that we're not just throwing that 
product away.
    Mr. Calvert. Thank you. I appreciate this panel being here. 
Obviously, from all of us here, I think you understand the 
congressional intent is that we support water reclamation. It 
is a certain source of water in an uncertain time, especially 
in this country. We spend a lot of money on droughts, in trying 
to fix a problem after the fact. I think we can be more 
proactive here in the House and in this government to support 
reclamation that is both a good value for Federal dollars to 
leverage a significant amount of water supply to this country. 
So I appreciate your coming out here and traveling great 
distances to give us good testimony and answering our 
questions.
    [The prepared statement of Mr. DeLoach follows:] 

    [GRAPHIC] [TIFF OMITTED] T6099.003
    
    [GRAPHIC] [TIFF OMITTED] T6099.004
    
    Mr. Calvert. With that, this hearing is adjourned.
    [Whereupon, at 11:48 a.m., the Subcommittee adjourned.]

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