[Senate Hearing 108-668]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-668
 
  WATER RECLAMATION IN THE TULAROSA BASIN; NEW MEXICO WATER PLANNING 
 ASSISTANCE ACT; REDESIGNATE RIDGES BASIN RESERVOIR, COLORADO; CHIMAYO 
WATER SUPPLY SYSTEM, ESPANOLA, NEW MEXICO; AND EASTERN NEW MEXICO WATER 
                          FINANCIAL ASSISTANCE

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                                   on


                        S. 1211           S. 2460

                        S. 2508           S. 2511

                        S. 2513

                               __________

                             JUNE 17, 2004




                       Printed for the use of the
               Committee on Energy and Natural Resources

                                _______

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                            WASHINGTON : 2004
96-598 PDF

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
DON NICKLES, Oklahoma                JEFF BINGAMAN, New Mexico
LARRY E. CRAIG, Idaho                DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
LAMAR ALEXANDER, Tennessee           RON WYDEN, Oregon
LISA MURKOWSKI, Alaska               TIM JOHNSON, South Dakota
JAMES M. TALENT, Missouri            MARY L. LANDRIEU, Louisiana
CONRAD BURNS, Montana                EVAN BAYH, Indiana
GORDON SMITH, Oregon                 DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky                CHARLES E. SCHUMER, New York
JON KYL, Arizona                     MARIA CANTWELL, Washington

                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel

                                 ------                                

                    Subcommittee on Water and Power

                    LISA MURKOWSKI, Alaska, Chairman
            BEN NIGHTHORSE CAMPBELL, Colorado Vice Chairman
GORDON SMITH, Oregon                 BYRON L. DORGAN, North Carolina
JON KYL, Arizona                     BOB GRAHAM, Florida
LARRY E. CRAIG, Idaho                RON WYDEN, Oregon
JAMES M. TALENT, Missouri            TIM JOHNSON, South Dakota
JIM BUNNING, Kentucky                DIANNE FEINSTEIN, California
CRAIG THOMAS, Wyoming                CHARLES E. SCHUMER, New York
                                     MARIA CANTWELL, Washington

   Pete V. Domenici and Jeff Bingaman are Ex Officio Members of the 
                              Subcommittee

                        Kellie Donnelly, Counsel
                    Mike Connor, Democractic Counsel



                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Allard, Hon. Wayne, U.S. Senator from Colorado...................     2
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     2
D'Antonio, John R., Jr., PE, New Mexico State Engineer, Santa Fe, 
  NM.............................................................    11
Keys, John W., III, Commissioner, Bureau of Reclamation, 
  Department of the Interior.....................................     3
Lansford, David M., Mayor of Clovis, NM, and Chairman, Eastern 
  New Mexico Rural Water Authority, Clovis, NM...................    16
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................     1

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    29

                              Appendix II

Additional material submitted for the record.....................    35


  WATER RECLAMATION IN THE TULAROSA BASIN; NEW MEXICO WATER PLANNING 
 ASSISTANCE ACT; REDESIGNATE RIDGES BASIN RESERVOIR, COLORADO; CHIMAYO 
WATER SUPPLY SYSTEM, ESPANOLA, NEW MEXICO; AND EASTERN NEW MEXICO WATER 
                          FINANCIAL ASSISTANCE

                              ----------                              


                        THURSDAY, JUNE 17, 2004

                               U.S. Senate,
                   Subcommittee on Water and Power,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:32 p.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Lisa 
Murkowski presiding.

           OPENING STATEMENT OF HON. LISA MURKOWSKI, 
                    U.S. SENATOR FROM ALASKA

    Senator Murkowski. Good afternoon. I call to order the 
hearing of the Subcommittee on Water and Power. It is my 
pleasure to welcome everyone to the subcommittee this 
afternoon. We have a total of five bills before the 
subcommittee today.
    We will be taking up: S. 1211, the Reclamation Wastewater 
and Groundwater Study and Facilities Act, introduced by Senator 
Domenici; S. 2460, the New Mexico Water Planning Assistance 
Act, introduced also by Senator Domenici; S. 2508, a bill to 
redesignate the Ridges Basin Reservoir in Colorado as Lake 
Nighthorse, also introduced by Senator Domenici; S. 2511, the 
Chimayo Water Supply System and Espanola Filtration Facility 
Act of 2004, introduced by Senators Domenici and Bingaman; and 
S. 2513, the Eastern New Mexico Rural Water System Act of 2004, 
introduced by Senator Bingaman.
    I would like to extend a special welcome to our 
administration witnesses. On the first panel we have 
Commissioner Keys from the Bureau of Reclamation and 
Commissioner Keys will testify on S. 1211, S. 2460, S. 2511, 
and S. 2513. We will look forward to your testimony, as we 
always do, Commissioner.
    I would also like to welcome the witnesses who will testify 
before the subcommittee's second panel this afternoon. We have 
John D'Antonio, the New Mexico State Engineer, who will testify 
on S. 2460, S. 2511, and S. 2513. We also have David Lansford, 
the Mayor of Clovis, New Mexico, and the Chairman of the 
Eastern New Mexico Rural Water Authority.
    The remaining bill on the subcommittee's agenda will be 
addressed via statements submitted for the record. The 
subcommittee has already received written testimony from 
Senator Allard in support of S. 2508 and letters from the 
cities of Chimayo and Espanola in support of S. 2511. These 
statements will be made an official part of the hearing record.
    Once again, I look forward to the testimony of the 
witnesses. Before we do that, Senator Bingaman, do you have any 
opening comments that you would like to make at this time?
    [The prepared statement of Senator Allard follows:]
         Prepared Statement of Hon. Wayne Allard, U.S. Senator 
                             From Colorado
    Thank you, Madam Chairman and thank you for allowing me to 
participate. It is an honor for me today to extend my support in 
recognizing the hard work and dedication of my fellow friend and 
colleague Colorado Senator Ben Nighthorse Campbell. It is a privilege 
to honor him through re-designating Ridges Basin Reservoir as ``Lake 
Nighthorse'' in recognition of his unwavering commitment to the 
citizens of Colorado.
    The Ridges Basin Reservoir was originally constructed under the 
Colorado Ute Indian Water Rights Settlement Act of 1988, as part of a 
resolution to end an ongoing water dispute between the Ute Indian tribe 
and the federal government. However, it wasn't until 2000, when the 
historic Animas-LaPlata agreement brought the end to over three decades 
of conflict in Colorado. Now, four years later, and thanks to the 
efforts of Senator Campbell, ground has been broken, and the Ute Tribes 
are finally seeing their water treaties being fulfilled.
    The results of the ALP agreement were due much in part to the hard 
work of Senator Campbell, in bringing both parties to the table. 
Senator Campbell was at the forefront of negotiations and was 
instrumental in facilitating open-minded, rational and progressive 
discussions. His relentless pursuit of ensuring the fulfillment of our 
treaties with the Ute Tribe was beyond compare. It would only be 
suiting to recognize Senator Campbell's valiant efforts in resolving 
these conflicts by naming a portion of the project in memory of Senator 
Campbell's innumerous services to Colorado.
    But Senator Campbell's efforts are not limited to the Animas-
LaPlata project. Through his many dedicated years of service, Senator 
Campbell worked on several other environmental issues in Colorado 
including the Black Canyon of the Gunnison, tamarisk control, and farm 
and ranch drought assistance to name a few. Senator Campbell also 
fought hard to bring about POW awareness and created a welcoming 
atmosphere in Washington for his Colorado constituents. I am proud to 
call Ben Nighthorse Campbell my friend.
    Thank you Madam Chairman.

         STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR 
                        FROM NEW MEXICO

    Senator Bingaman. Thank you very much, Madam Chairwoman, 
for holding this hearing.
    I would just like to say a few words, particularly about 
the legislation with regard to eastern New Mexico, S. 2513, 
which I recently introduced. The other bills I certainly 
support and have co-sponsored several of them. I also join in 
welcoming Mayor Lansford from Clovis and also John D'Antonio, 
our State Engineer in New Mexico, and thank them for coming to 
testify.
    This S. 2513 would authorize planning, design, and 
construction of the Eastern New Mexico Rural Water System. It 
is a system designed to serve nine communities in three 
counties in eastern New Mexico. I know that the administration 
position is in opposition to this bill. I regret that. I think 
rural water projects have generally not been highly supported 
by the administration. There was a proposal to zero out funding 
for those projects in the 2004 budget, and although we have 
restored some of that funding, the 2005 request is still 
significantly less than what we have had in the previous 3 
years.
    I do think that the Bureau of Reclamation has an important 
role to play in assisting with rural water programs throughout 
the West and in my view this New Mexico Rural Water Authority, 
Eastern New Mexico Rural Water Authority Project, is certainly 
one that deserves support. So I hope very much that we can gain 
the administration's support as we go through the process and I 
look forward to the testimony.
    Thank you.
    Senator Murkowski. Thank you, Senator Bingaman.
    I understand that Senator Domenici is in the Appropriations 
markup, but will be joining us later in this hearing.
    So with that, let us turn to Commissioner Keys. Welcome and 
good afternoon.

    STATEMENT OF JOHN W. KEYS, III, COMMISSIONER, BUREAU OF 
            RECLAMATION, DEPARTMENT OF THE INTERIOR

    Mr. Keys. Madam Chairman, it is an absolute pleasure to be 
here today. Before I get into the legislation in the testimony, 
let me tell you that this is a momentous day. June 17, 102 
years ago, President Roosevelt signed the Reclamation Act of 
1902 that established the Reclamation Service as part of the 
Geological Survey in the Department of the Interior. This 
committee at that time was the Committee on Public Lands, but 
it was this committee that actually had worked the Reclamation 
Act and made it ready for the President to sign on June 17, 
1902. So it is a good day to be here.
    Senator Murkowski. Happy birthday.
    Mr. Keys. Thank you.
    With your approval and for the record, I would submit four 
separate testimonies for those four bills that we are 
testifying on today: S. 1211, S. 2460, S. 2511, and S. 2513.
    Senator Murkowski. Those will all be included as part of 
the record.
    Mr. Keys. Thank you.
    Madam Chairman, let me first discuss S. 1211, the Tularosa 
desalination facility. The project is already authorized for 
construction, and we are scheduled to break ground for 
construction of the test facility later this month. In our 
view, if desalination can be made more economic it could 
contribute significantly to water supply solutions in the West. 
We are actively engaged in several desalination projects 
already. In particular, desalination of brackish inland water 
needs research, development, and demonstration that might not 
otherwise occur without the Tularosa test facility.
    There are a couple of aspects of that legislation that we 
would like to work further with the committee on, particularly 
with Senator Domenici, who has already invested a great deal of 
effort in this area. First, while we welcome opportunities to 
partner with other Federal agencies, we are concerned that as 
originally drafted our research role under the bill could be 
reduced to merely a funding path through the Department of the 
Interior to other government agencies and laboratories. We 
would like to take more direct stewardship for the underlying 
work associated with the lab.
    Likewise, if we are to build, manage, and maintain the 
facility, as provided in section 1(a) of the bill, we think 
that the legislation should also clarify that we will have more 
than a physical custodial role. In other words, our underlying 
program responsibilities should be clarified there.
    Madam Chairman, desalination is a new and dynamic policy 
area for Congress and the administration. It has a significant 
role in the Water 2025 effort that we have under way in 
Reclamation and Interior at this time. Our thinking on it will 
continue to grow and mature as the research field does. 
Applying the Federal research and development investment 
criterion, in other words relevance, quality, performance, and 
addressing industry issues, should help to guide all of us in 
our efforts on desalination.
    We welcome the opportunity to work closely with your 
committee as that process unfolds.
    Turning to the New Mexico Water Planning Assistance Act, S. 
2460, S. 2460 represents a long-term response to those 
challenges by starting with actual scientific measurements for 
managing on the ground water resource issues in New Mexico. We 
commend Chairman Domenici for his vision to develop a more 
comprehensive scientific and technical foundation for water 
resource planning in New Mexico.
    The bill directs Reclamation and the U.S. Geological Survey 
to provide technical assistance and grants to the State for the 
development of comprehensive State water plans, conduct water 
resource mapping in the State, and conduct a comprehensive 
study of groundwater resources to assess the quantity, quality, 
and interaction of groundwater and surface water resources in 
New Mexico.
    The technical assistance role that this bill identifies for 
the Geological Survey matches their leadership role in 
interpretation, research, and assessment of the earth and its 
biological resources. Reclamation conducts the most extensive 
water and river storage and delivery operations and related 
research in the West. So the bill comes to the right agencies 
for the work.
    However, the administration does have a few concerns with 
S. 2460. First, the Department is concerned about the financial 
resources required for Reclamation and the Geological Survey to 
carry out S. 2460 in the context of the availability of 
resources overall for administration programs.
    Second, the requirement that any assistance or grants not 
be cost-shared is inconsistent with the funding requirements 
for similar Reclamation and Geological Survey programs. We 
believe the non-Federal cost share for work performed under 
this legislation should be a minimum of 50 percent and that 
section 3(d) in the bill should be modified to reflect 50 
percent cost-sharing.
    A third concern is that section 3(e) seems to give the 
State the authority to direct the transfer of funds 
appropriated under this act to other Federal agencies. This 
could prevent Interior from meeting its stewardship 
responsibilities in a lot of other areas. We believe that the 
bill should authorize the funds for one agency or the other and 
not make them subject to a State Governor's decision to 
transfer them after appropriation across Federal agency lines. 
We recommend that subsection 3(e) be deleted from that bill.
    Also, we think that other Western States should have a 
chance to compete for this technical and financial assistance 
as they do in our Water 2025 program.
    For these reasons, the administration cannot support S. 
2460 as written.
    With regard to S. 2511, we view both the Chimayo and 
Espanola projects as case studies for why we need to enact 
rural water legislation. While our familiarity with the Chimayo 
especially is limited, we think both projects might benefit 
from a systematic rural water program within Reclamation, such 
as the bill that we have previously testified to in this 
subcommittee.
    Rural water legislation would help Reclamation help 
communities as they shape proposals for rural water solutions 
based on sound economics and best practices. All three rural 
water bills before the Senate agree that the Federal cost for 
rural water legislation would help Reclamation help communities 
as they shape proposals for rural water solutions based on 
sound economics and best practices.
    All three rural water bills before the Senate agree that 
the Federal cost for rural water project planning should 
generally not exceed 50 percent. S. 2511 specifies a Federal 
cost share of 75 percent for the Chimayo feasibility study.
    With regard to the Espanola filtration project, Reclamation 
is cooperating with the city of Espanola on a feasibility 
study. So far we have contributed $400,000, but we have not yet 
received that study. We need it to determine whether the plan 
for the proposed filtration facility is comprehensive and 
viable.
    For example, if it does not contemplate providing water to 
Chimayo it may need to be expanded. After reviewing the 
feasibility study provided by Espanola, we would be in a far 
better position to advise the committee. Until then it is not 
ready for construction authorization.
    Finally, Madam Chairman, let me comment on S. 2513, the 
Eastern New Mexico Rural Water System. Again, we commend 
Senator Bingaman for putting so much effort into meeting the 
needs of his rural constituents and we commend the local 
sponsors for bringing the project as far as they have since 
1972, when the first of four reports on it were completed.
    Eastern New Mexico faces an impending water shortage and 
with continued effort we hope a successful project for these 
communities can be formulated. However, whenever we examine a 
project proposal at the appraisal or even feasibility study 
phase, we ask several questions about the project. Many of 
these questions are the same ones that Congress asks and local 
sponsors ask when considering a project: Is the proposal the 
most economic alternative? Have we included everything in the 
construction cost estimate? Have the right materials been 
selected? Have the studies been adequately peer reviewed? Do 
communities have an accurate idea of how much their cost share 
will come to, both for the initial construction and the 
operation and maintenance of that facility? And is the 
construction schedule realistic?
    These are some of the questions we need to explore in depth 
with the Eastern New Mexico Rural Water System before we know 
whether we can support construction authorization. In addition, 
the cost share percentage set forth in the legislation is 
beyond the Federal cost share for rural water projects 
contemplated in our rural water legislation now pending in the 
Senate. We hope the local sponsors can resolve these concerns 
and we would be happy to work with them, Senator Bingaman, and 
the committee toward getting that done.
    Thank you, Madam Chairman, for the opportunity to be here 
and present this testimony. I would certainly try to answer any 
questions that you might have at this time.
    [The prepared statements of Mr. Keys regarding S. 1211, S. 
2460, S. 2511, and S. 2513 follow:]
   Prepared Statement of John W. Keys, III, Commissioner, Bureau of 
                Reclamation, Department of the Interior
                               on s. 1211
    Madam Chairman and members of the Subcommittee, I am John Keys, 
Commissioner of Reclamation. I am pleased to be here today to present 
the Department of Interior's views on S. 1211, a bill to undertake a 
demonstration program for desalination of brackish, inland groundwater 
in the Tularosa Basin of New Mexico, as well as to provide Reclamation 
additional authority to undertake desalination research through a 
variety of institutional arrangements, or outside the United States.
    The Tularosa desalination test and evaluation facility will be 
capable of processing at least 100,000 gallons of water per day at the 
Tularosa Basin in New Mexico. In the FY 2002 Energy and Water 
Appropriations Act, Congress directed the Bureau of Reclamation, in 
cooperation with Sandia National Laboratories, to evaluate the 
potential for developing such a desalination research facility in the 
Tularosa Basin of New Mexico. The facility study began in January 2002. 
Reclamation entered a phased design/build contract with Laguna 
Construction Company, Inc. in July 2003. Congress provided $4 million 
for the continuation of this project in fiscal year 2004. Construction 
will begin this month.
    The Administration supports Congressional interest in pursuing 
avenues of research that look at potential long-term methods of 
augmenting scarce water supplies, including both technical and market 
approaches. We are interested in working with the Congress to determine 
whether the research program identified in S. 1211 meets the federal 
Research and Development Investment Criteria. These criteria were 
developed over several years through a process of intense, thorough 
consultation with the research community. They include four main 
elements:

   Relevance;
   Quality;
   Performance; and
   Criteria for R&D Programs Developing Technologies That 
        Address Industry Issues.

    Applying the criteria to the proposed research will help determine 
the appropriate federal R&D role, if any. As the Administration 
considers the appropriate level of federal involvement, there are a few 
provisions of the bill that we would like to work with the Committee 
on.
    Reclamation's Science & Technology program, which plans and 
coordinates the bulk of our research activities, is our main program 
for identifying and implementing our research priorities. This program 
received a high rating during its recent evaluation under the 
Administration's Program Assessment Rating Tool (PART), which rated it 
as `Effective'. This recently revamped program should play a central 
role in the determination of which research priorities the Bureau 
should pursue. We are concerned that the bill as currently written does 
not make use of this well-established expertise. If we are to build, 
manage, and maintain the facility, as provided for in Section 1(a) of 
the bill, the legislation should also clarify that we will have more 
than a physical custodial role, i.e., our underlying program 
responsibility should be delineated, and that should include a central 
role in determining research priorities. Our process, in turn, is 
subject to the federal R&D Criteria sketched out above.
    Additionally, while we welcome opportunities to partner with other 
agencies of the federal government, particularly where we have 
complementary missions and. capabilities, we are concerned that, as 
originally drafted, our role under the bill could be reduced to a 
funding path through the Department of the Interior to other government 
agencies and laboratories. If funds are ultimately appropriated to 
Interior, we want to take more direct stewardship responsibility for 
the underlying work. We suggest that funds for other agencies should be 
appropriated directly to those agencies, for there is no compelling 
reason to funnel them through Reclamation.
    The Administration suggests that the portion of the bill that would 
provide treated water to local communities at no cost be rewritten to 
say that any such sale of water must be for fair market value.
    Furthermore, facility operation and maintenance should be based on 
user fees. Larger demonstration projects, in most cases, would be 
conducted off-site at urban and rural locations under field conditions, 
and are not contemplated in the construction of Tularosa.
    While some facility users would be funded out of Reclamation's 
research budget, supplemental fees could come from the many other 
agencies currently funding desalination research, such as the Office of 
Naval Research or the Department of Energy when they perform work at 
Tularosa. In the future we would hope that additional agencies would 
join the list of desalination researchers using the facility.
    We would be happy to work with the Subcommittee to further develop 
these concepts.
    Madam Chairman, our thinking on desalination will continue to grow 
and mature as the research field does, and as the federal government 
further subjects desalination research to scrutiny under the federal 
R&D criteria. We welcome the opportunity to work closely with the 
Committee as that process unfolds, beginning with adjustments to S. 
1211.
    Madam Chairman, this concludes my remarks and I would be happy to 
answer any questions.
                                 ______
                                 
                               on s. 2460
    Madam Chair, my name is John W. Keys, III, Commissioner of 
Reclamation (Reclamation). I am pleased to be here today to present the 
views of the Department of the Interior (Department) regarding S. 2460, 
which would authorize assistance to be provided to the State of New 
Mexico for the development of comprehensive State water plans, and for 
other purposes.
    We share the views of the sponsor of this bill, Senator Domenici, 
that is, the importance of sound science for use by water resource 
planners. However, the Department is concerned about the financial 
resources that would be required for Reclamation and the United States 
Geological Survey (USGS) to carry out S. 2460 in the context of the 
availability of resources overall for Administration programs. Further, 
the provision for any assistance or grants to be made on a non-
reimbursable basis and without a cost-sharing requirement is 
inconsistent with the funding arrangements that Reclamation and the 
USGS have for similar activities in other states. For these reasons, 
the Administration cannot support the bill as currently written.
    The bill directs the Secretary of the Interior, acting through 
Reclamation and the USGS, to (1) provide technical assistance and 
grants to the State for the development of comprehensive State water 
plans; (2) conduct water resources mapping in the State; and (3) 
conduct a comprehensive study of groundwater resources (including 
potable, brackish, and saline water resources) to assess the quantity, 
quality, and interaction of groundwater and surface water resources in 
the State. This would be accomplished through technical assistance and 
grants.
    The technical assistance role identified for the Department in this 
bill is consistent with the USGS's leadership role in interpretation, 
research, and assessment of the earth and biological resources of the 
nation. It is likewise consistent with the Reclamation's leadership 
role in water resources research, modeling, analysis, assessment and 
management. However, the direction to provide these grants to the State 
on a noncompetitive basis is not in harmony with the Administration's 
efforts, such as through Water 2025, to use a competitive process to 
focus our existing resources in those areas where future water 
conflicts are most likely to occur. Even though some New Mexico 
projects would likely be very competitive in that process, the 
Administration would prefer that New Mexico's needs compete on an equal 
footing with other meritorious projects that apply for assistance. Let 
me briefly describe the activities of the USGS and Reclamation in this 
context.
    As the nation's largest water, earth, biological science, and 
civilian mapping agency, USGS conducts the most extensive groundwater 
and surface water investigations in the nation in conjunction with 
state and local partners. The USGS New Mexico District currently 
operates 209 streamflow stations and routinely measures groundwater 
levels at 1,658 well sites through cooperative programs with several 
local, state, tribal, and federal agencies. In addition to hydrologic 
monitoring programs, the USGS is providing hydrologic understanding to 
water agencies through the Cooperative Water Program by conducting 
several investigative projects that include describing the interaction 
of surface water and ground water in the Mesilla and Middle Rio Grande 
basins, evaluating modeling approaches in the Santa Fe Embayment and La 
Cienega areas of the Espanola Basin, and quantifying streamflow gains 
and losses in the Espanola Basin along the Rio Grande mainstem and its 
tributaries. In support of all water agencies within New Mexico, USGS 
technical specialists participate on work groups and committees each 
year. Currently, USGS personnel are involved in the New Mexico Brackish 
Water Task Force, the Rio Grande Environmental Assessment for Upper Rio 
Grande water operations, and the Department of the Interior's Southwest 
Strategy.
    Reclamation, as the nation's largest western water and 
hydroelectric power supplier and water management agency, conducts the 
most extensive river storage and delivery operations and related 
research in the seventeen western states in conjunction with tribal, 
state and local partners. Reclamation has provided technical and 
monetary assistance to two of the New Mexico state regional water 
plans, reviewed and commented on the draft State Water Plan, and 
provided water resource-related technical assistance through 
Reclamation's Technical Assistance to States planning program. In 
addition, Reclamation is actively involved in several Indian water 
supply projects within New Mexico, and has developed and maintains 
state-of-the-art, internet-delivered decision support data on 
evapotranspiration depletions to the Rio Grande system, and conducts 
daily river system modeling for water accounting, contracted deliveries 
and endangered species support.
    In summary, the goals of the bill are commendable, and the bill 
contains provisions that are within the scope and expertise of 
Reclamation and the USGS. However, it is the position of the 
Administration that funding for the activities in this bill be pursued 
through existing authorities and procedures, and not through specific 
Congressional direction that supersedes established processes, 
competitive or otherwise. Also, we believe that the cost-sharing 
provisions of this bill should conform to other similar programs 
undertaken by Reclamation and the USGS, such as Reclamation Title XVI 
program, which requires a 50 percent local share, or the USGS 
Cooperative Water Program, which requires a dollar for dollar match of 
federal and non-federal funds. Requiring these cost-shares not only 
stretches limited federal funds, but also emphasizes that States are 
primarily responsible for managing the water resources within their 
borders, and not the Federal government. Finally, we find that S. 2460 
is sufficiently vague regarding the relative roles and functions of 
Reclamation and the USGS, which could cause significant delay in 
implementation, as well as the fact that the bill, as written, 
duplicates some existing agency programs and authorizations and sets a 
major precedent of providing federal funding for State water plans.
    Thank you, Madam Chair, for the opportunity to present this 
testimony. I will be pleased to answer questions you and other Members 
of the Subcommittee might have.
                                 ______
                                 
                               on s. 2511
    Madam Chairman, I am John W. Keys III, Commissioner of Reclamation. 
I am pleased to be here today to present the views of the Department of 
the Interior regarding S. 2511 which would authorize a feasibility 
study for a Chimayo water supply system, and for planning, design, and 
construction of a water supply, reclamation, and filtration facility 
for Espanola, New Mexico.
    We share the views of the sponsor of this bill, Senator Domenici, 
regarding the importance of safe and reliable water supplies for 
cities, towns, and villages. The goals of the bill are commendable. 
While the Administration cannot support S. 2511 in its current form, we 
do think that it points out the urgency for Congress to enact rural 
water legislation now pending before the Senate. Both the Espanola and 
Chimayo communities may directly benefit from establishment of a 
systematic rural water program within Reclamation.
    Rural water legislation would provide Reclamation with authority 
and guidelines to assist rural communities as they develop proposals 
for rural water solutions based on sound economics and best practices. 
Among three separate versions of rural water legislation now pending 
before the U.S. Senate, there is bipartisan, interbranch consensus that 
the federal cost share should not exceed 50% for planning on rural 
water projects, at least until a capability-to-pay analysis that is 
consistently utilized indicates that a different cost-share is more 
equitable.
    The rural water legislation would provide a mechanism for 
Reclamation and the communities to calculate that capability to pay for 
both construction and operation and maintenance. This helps in tow 
ways. Reclamation and Congress will be able to identify fair 
construction cost-sharing requirements, and local sponsors will be able 
to objectively assess whether they will have the resources to properly 
operate and maintain projects constructed under the program.
    By contrast, Title I of S. 2511 provides that any assistance or 
grants for Chamayo would be made on a non-reimbursable basis, and with 
only a 25 percent local cost-sharing requirement.
    Title II of the bill directs the Secretary of the Interior, acting 
through the Bureau of Reclamation to provide financial assistance to 
the city of Espanola, New Mexico, for the construction of an Espanola 
water filtration facility.
    Reclamation has already provided financial assistance of about 
$400,000 to the City of Espanola to perform a feasibility study, 
including environmental reviews under the National Environmental Policy 
Act. However, Reclamation has not yet received the feasibility study 
from the City of Espanola required under Section 1604 for review and 
acceptance. We believe this is a critical step that should preceded 
construction authorization of the proposed filtration facility for 
three reasons: 1) Reclamation has not yet reviewed the feasibility 
study for adequacy; 2) the feasibility report never contemplated 
providing water to Chimayo; and 3) the Espanola feasibility study may 
need to be expanded to include these additional concerns.
    Until these questions are resolved, construction authorization is 
not appropriate. Reclamation believes that after reviewing the 
feasibility study provided by Espanola, we would be in a far better 
position to help shape legislation to authorize construction. 
Furthermore, regarding the Chimayo project, with which we are only 
minimally familiar, the needs of the Community may be better met by one 
of the other numerous Federal rural water programs.
    Thank you, Madam Chairman, for the opportunity to present this 
testimony. I will be pleased to answer questions you and other members 
of the subcommittee might have.
                                 ______
                                 
                               on s. 2513
    Madam Chair, I am John W. Keys III, Commissioner of Reclamation, 
and I am pleased to be here today to present the views of the 
Department of the Interior regarding S. 2513, which would authorize the 
planning, design, and construction of the Eastern New Mexico Rural 
Water System.
    We commend the Eastern New Mexico Rural Water Authority (ENMRWA) 
for bringing this project as far as it has since 1972 when the first of 
four reports on it was completed. Eastern New Mexico needs to address 
an impending water shortage and, with continued effort, additional 
reports can be developed to ensure a successful project for these 
communities. However, because of several questions and issues discussed 
below, the Administration cannot support this bill as written.
    The communities that form the ENMRWA, the local sponsor of the 
Eastern New Mexico Rural Water System, need a long-term renewable water 
supply. All of these communities take water from the Ogallala aquifer 
which is experiencing water quantity and quality problems. The 
viability of the Ogallala is hard to predict and heavily reliant on 
agricultural use in the area. Estimates on when it will be fully drawn 
down range from 20 to 40 years at current consumption rates. The 
Eastern New Mexico Rural Water System is proposed to provide a long-
term renewable water supply and includes a wastewater treatment 
facility. In general, participation in the design and development of 
wastewater systems is beyond the purview of Reclamation's mission, and 
detracts resources from core activities.
    Reclamation received authorization to develop a feasibility study 
for the Eastern New Mexico Water Supply Project in 1966, P.L. 89-561. 
The 1972 feasibility study was followed by special reports developed in 
1989 and 1993. The most recent report, dated August 2003, the 
Conceptual Design Report (CDR), was developed by Smith Engineering 
Incorporated with funds provided through Reclamation at the direction 
of Congress
    Madam Chairman, anytime that Reclamation undertakes appraisal and 
then feasibility phase planning on a proposed project we ask ourselves 
a series of critical questions. We feel examination is even more 
important when Reclamation, itself, did not perform the appraisal or 
feasibility work. Here are some of the questions that we ask:

   Have the most economic alternatives been considered?
   Does the construction cost estimate include all likely items 
        and anticipate items that may not yet be listed?
   How do estimates for services such as design and 
        construction management compare with our experience with 
        comparable projects?
   Have the right materials been selected?
   Do assumptions in the construction estimate match 
        assumptions in the operation, maintenance, and replacement 
        costs?
   Have the studies supporting a proposal to proceed with a 
        project been adequately peer reviewed?
   Do communities who will be sharing project costs have an 
        accurate estimate of how much those costs might be, and do they 
        have agreement on how to apportion those costs among 
        themselves?
   Is the proposed construction project schedule realistic 
        given the design uncertainties and the backlog of already 
        authorized Bureau of Reclamation rural water projects?
   Does the work otherwise meet the Administration's principals 
        and guidelines for construction authorization?

    Madam Chairman, we would like to sit down with the project sponsors 
and the consultants who are working on Eastern New Mexico and carefully 
go over each of these questions. Until then, we are not prepared to 
support authorization of construction as currently contemplated by the 
Conceptual Design Report.
    In general, the Administration will not support authorization of a 
project that has not undergone a thorough review, which is necessary to 
ensure sound stewardship of taxpayer funds, and to help both the 
Administration and Congress in developing the budget. The 
Administration must have full oversight of the development and final 
review of reports that could form the basis for any authorized project.
    Finally, the cost share percentage set forth in the legislation is 
beyond the normal federal cost share for rural water projects. 
Legislation proposed by the Administration to establish a systematic 
rural water program in Reclamation would base the non-federal cost-
share for a project such as the Eastern New Mexico Rural Water System 
on a capability-to-pay calculation, but in no event less than 35%.
    The Eastern New Mexico Rural Water Authority has plans to develop 
additional studies, including a pipe corrosion evaluation, bench and 
pilot water treatment testing, energy management, threat assessment, an 
operation and maintenance plan, and a storage assessment. All of the 
studies planned by the Eastern New Mexico Rural Water Authority will 
impact the accuracy of cost estimates for construction as well as OM&R. 
Because the CDR currently does not meet Reclamation standards for a 
feasibility level study, it is impossible to estimate construction 
costs accurately enough to warrant project authorization. While the 
Administration cannot support this bill at this time, we pledge to work 
more closely than ever with the project sponsors and Senator Bingaman 
to develop answers to our questions.
    Thank you, Madam Chairman, for the opportunity to present this 
testimony. I will be pleased to answer questions you and other members 
of the subcommittee might have.

    Senator Murkowski. We are dealing with the fact that we 
have got a roll call vote that has just started and I am told 
that we will have three more roll call votes immediately 
following that. So we are going to have a little bit of 
difficulty getting all of the testimony in. What we may want to 
do, since we have three--just two witnesses, we could take the 
testimony from the witnesses now so that we can get that before 
us.
    I know that I have some questions of you, Commissioner, and 
I know that Senator Bingaman does as well. But if we could get 
the testimony in and perhaps then have an opportunity to either 
question you or to present our questions to you in writing, we 
are going to proceed that way.
    Mr. Keys. Madam Chairman, I would be glad to do that and I 
would be glad to stand by until you return, if that is the best 
thing.
    Senator Murkowski. Well, let us ask you to stand by if you 
would not mind.
    Mr. Keys. I would be glad to do that.
    Senator Murkowski. While we bring up the other two 
gentlemen for their testimony so that we can get that on the 
record.
    [Pause.]
    Senator Murkowski. Gentlemen, thank you for joining us. I 
apologize that we might not have the opportunity for questions 
afterwards, but maybe that gets you off the hook. I am sure we 
will have the questions in writing.
    Mr. D'Antonio, if you would like to present first we would 
appreciate it.

   STATEMENT OF JOHN R. D'ANTONIO, JR., PE, NEW MEXICO STATE 
                     ENGINEER, SANTA FE, NM

    Mr. D'Antonio. Sure. Thank you, Madam Chair. The order of 
my presentation will be--I have three that I am going to 
provide testimony for. Does it matter the order? Okay, I have 
S. 2460, S. 2511, and S. 2513, in that order.
    Thank you for the opportunity to submit testimony on S. 
2460. It is a bill to provide assistance to the State of New 
Mexico for the development of comprehensive State water plans 
and for other purposes as well. As State Engineer and on behalf 
of the State of New Mexico, we support this bill with 
enthusiasm as it is critical to assist both the State and the 
Federal agencies in response to the drought in New Mexico. The 
State Engineer is tasked with investigating the numerous stream 
systems and groundwater basins located within New Mexico to 
assist New Mexico's available water supply. The State Engineer 
does this through completing hydrographic surveys and 
developing hydrologic models.
    Federal agencies who have a long history of cooperation 
with New Mexico in State water management will have available 
current information that is essential to making informed 
decisions based on current hydrologic conditions, such as flood 
assessment, land management, tribal water resource assessment, 
and Federal water project management.
    The New Mexico Office of the State Engineer lacks adequate 
resources to perform comprehensive hydrologic models and data 
collection in a manner that is required for the State to 
respond to its citizens' needs during this protracted period of 
drought. Additional resources will aid the State Engineer's 
ability to make informed decisions concerning the State's water 
resources, participate in State-Federal water management 
decisions, effectively perform water rights administration, and 
comply with New Mexico's compact deliveries.
    S. 2460 would provide Federal financial and technical 
assistance through the Secretary of the Interior acting through 
the Bureau of Reclamation and the USGS, U.S. Geological Survey, 
to New Mexico so New Mexico may expeditiously develop 
comprehensive water management plans as a response to the 
drought.
    S. 2460 would provide $12.5 million to the State of New 
Mexico to undertake statewide digital orthophotography mapping, 
develop hydrologic models, and acquire associated equipment for 
those ground and surface water systems having priority within 
the State. S. 2460 would also authorize $2.5 million per year 
for each fiscal year from 2005 through 2009. That is the total 
of $12.5 million.
    The State of New Mexico supports this bill. I believe it 
will provide New Mexico and Federal agencies the best 
opportunity to continue their collaborative efforts to 
efficiently manage New Mexico's water and to do so at a point 
never more critical to the State and Federal interests.
    That concludes testimony for S. 2460.
    S. 2511 is the Chimayo Water Supply System and Espanola 
Filtration Act. Madam Chair and members of the subcommittee: 
Again, thank you for the opportunity to submit testimony on S. 
2511. It is a bill to direct the Secretary of the Interior to 
conduct a feasibility study of Chimayo water supply system, to 
provide for the planning, design, and construction of a water 
supply, reclamation, and filtration facility for the city of 
Espanola, New Mexico, and for other purposes.
    As New Mexico State Engineer, I supervise all diversion and 
uses of New Mexico's water supply. The magnitude of water 
availability and quality have become serious problems for New 
Mexico and its communities. Given its limited tax base, these 
problems could become insurmountable if preventive action is 
not taken now.
    While water quality is not my direct responsibility, its 
degradation is directly impacting on my duties. Additionally, 
in my role with the New Mexico Water Quality Control Commission 
I have first-hand knowledge of the water quantity and quality 
challenges confronting New Mexico. Most Western States 
unfortunately are the same and are similarly challenged.
    The unincorporated community of Chimayo, New Mexico, is an 
example of a type of water quality problem confronting small 
communities throughout New Mexico and the West. Chimayo 
residents rely on individual wells for their potable drinking 
water and septic systems to dispose of that wastewater. This 
picturesque canyon setting limits water supply availability and 
septic system sitings, causing the degradation of water supply, 
with the deterioration of septic systems resulting in 75 
percent of the wells sampled having significant contamination 
in both total coliform and fecal coliform and high levels of 
total dissolved solids.
    There exists no community-wide supply and-or treatment 
infrastructure, so many residents have resorted to the use of 
free-flowing irrigation ditch water for drinking. Yet it also 
contains high levels of fecal coliform contamination. Since 
2001 the region has been declared an emergency area, 
necessitating the National Guard to provide potable water to 
the areas with tanker trucks.
    Chimayo's situation remains unchanged. While the city of 
Espanola has its own water quality challenges, the more 
important immediate challenge is to address its current 
situation, which is a water system that produces approximately 
1,000 gallons per minute less than is needed to provide for its 
current population. This has resulted in inadequate water 
pressure throughout the city, which is especially problematic 
for Espanola Hospital that serves the region. The lack of 
adequate water and water pressure has twice led to declared 
states of emergency. Like in Chimayo, the National Guard has 
been called to supply water to the hospital.
    The city of Espanola has an allocation of 1,000 acre-feet 
per year of San Juan-Chama water by contract with the Bureau of 
Reclamation. This bill will aid the city in developing the 
infrastructure necessary if it is to divert this water, as the 
existing infrastructure is inadequate. Until it can use its San 
Juan-Chama water, the city will continue to deplete its limited 
groundwater supplies and continue to suffer from water pressure 
and water supply problems.
    S. 2511 would direct the Secretary of the Interior, in 
cooperation with the State and local authorities, to conduct a 
feasibility study of constructing a water supply system for 
Chimayo. In conducting the feasibility study, the Secretary is 
to consider various options for supplying water, long-term 
operation and maintenance costs, and local water resources. S. 
2511 would authorize $2 million at a 75 percent Federal cost 
share for the feasibility study.
    Senator Murkowski. Mr. D'Antonio, I hate to cut you off, 
but in order to get to Mr. Lansford before we have to go to the 
vote, are you just about done with your summation on S. 2511?
    Mr. D'Antonio. Yes.
    Senator Murkowski. Because what we might want to do is for 
your third, the third bill that you are testifying to, just 
submit that written testimony for the record. So are you just 
about complete with S. 2511?
    Mr. D'Antonio. Yes, I have two short paragraphs and I will 
be done and I will give it over to the Mayor.
    The bill would direct the Secretary to provide emergency 
water assistance to Chimayo, which may include water treatment, 
installation of an emergency water supply system, and 
installation of transmission and distribution lines. S. 2511 
would authorize $3 million at a 75 percent Federal cost share 
for emergency water assistance. It would also authorize the 
Secretary of the Interior to provide financial assistance to 
the city of Espanola for the construction of a water filtration 
facility and also authorize the Secretary to provide financial 
assistance to the Pueblos of Santa Clara and San Juan for water 
infrastructure as a component of the facility. The bill 
authorizes $3 million at a 25 percent Federal cost share for 
the filtration facility and associated pueblo infrastructure.
    This is the type of legislation that is essential to the 
viability of rural and small communities throughout not only 
New Mexico but the western States.
    Madam Chair, with that I will let Mayor Lansford talk about 
the next, Eastern New Mexico.
    [The prepared statements of Mr. D'Antonio on S. 2460, S. 
2511, and S. 2513 follow:]
           Prepared Statement of John R. D'Antonio, Jr., PE, 
                       New Mexico State Engineer
                               on s. 2460
    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to submit testimony on the S. 2460, a bill to provide 
assistance to the State of New Mexico for the development of 
comprehensive State Water Plans, and for other purposes as well.
    As State Engineer and on behalf of the State of New Mexico, we 
support this bill with enthusiasm as it is a critical measure that will 
assist both the state and federal agencies respond to the drought. The 
State Engineer is tasked with investigating the numerous stream systems 
and ground water basins located within New Mexico to assess New 
Mexico's available water supply. The State Engineer does this through 
completing hydrographic surveys and developing hydrologic models. 
Federal agencies, who have a long history of cooperation with New 
Mexico in state water management, will have available current 
information that is essential to making informed decisions based on 
current hydrologic conditions, such as flood assessment, land 
management, tribal water resources assessment and Federal water project 
management. The New Mexico Office of the State Engineer lacks adequate 
resources to perform comprehensive hydrologic models and data 
collection in a manner that is required for the state to respond to its 
citizens needs during this protracted period of drought. Additional 
resources will aid the State Engineer's ability to make informed 
decisions concerning the state's water resources, participate in State-
Federal water management decisions, effectively perform water rights 
administration, and comply with New Mexico's compact deliveries.
    S. 2460 would provide federal financial and technical assistance 
(through the Secretary of the Interior, acting through the Bureau of 
Reclamation and the United States Geologic Survey) to New Mexico so New 
Mexico may expeditiously develop comprehensive water management plans 
in response to the drought.
    S. 2460 would provide $12.5 million to the State of New Mexico to 
undertake statewide digital orthophotography mapping, develop 
hydrologic models and acquire associated equipment for those ground and 
surface water systems having priority within the state. S. 2460 would 
authorize $2.5 million per year for each fiscal year of 2005 through 
2009.
    The State of New Mexico supports this bill. I believe it will 
provide New Mexico and federal agencies the best opportunity to 
continue their collaborative efforts to efficiently manage New Mexico's 
water, and do so at a point never more critical to state and federal 
interests.
    Note: S. 2460 was introduced by Senator Pete Domenici on May 20, 
2004 and was referred to the Committee on Energy and Natural Resources.
                                 ______
                                 
                               on s. 2511
    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to submit testimony on the S. 2511, a bill to direct the 
Secretary of the Interior to conduct a feasibility study of a Chimayo 
water supply system, to provide for the planning, design, and 
construction of a water supply, reclamation, and filtration facility 
for the City of Espanola, New Mexico, and for other purposes.
    As New Mexico State Engineer, I supervise all diversions and uses 
of New Mexico's water supply. The magnitude of water availability and 
quality have become serious problems for New Mexico and its 
communities. Given its limited tax base, these problems could become 
insurmountable if preventative action is not take now. While water 
quality is not my direct responsibility, its degradation is directly 
impacting on my duties. Additionally, in my role with the New Mexico 
Water Quality Control Commission, I have first hand knowledge of the 
water quantity and quality challenges confronting New Mexico. Most 
western states, unfortunately, are or will be similarly challenged.
    The unincorporated community of Chimayo, New Mexico is an example 
of the type of water quality problems confronting small communities 
throughout the New Mexico and the west. Chimayo residents rely on 
individual wells for their potable water to drink and septic systems to 
dispose of waste water. This picturesque canyon setting limits water 
supply availability and septic system sitings causing the degradation 
of the water supply with the deterioration of septic systems resulting 
in 75 percent of wells sampled having significant contamination of both 
total coliform and fecal coliform and high levels of total dissolved 
solids. There exists no community water supply and/or treatment 
infrastructure, so some residents have resorted to the use of free-
flowing irrigation ditch water for drinking, yet it also contains high 
levels of fecal coliform contamination. Since 2001, the region has been 
declared an emergency area necessitating the National Guard to provide 
potable water to the area with tanker trucks. Chimayo's situation 
remains unchanged.
    While the City of Espanola has its own water quality challenges, 
the more important immediate challenge is to address its current 
situation, which is a water system that produces approximately 1,000 
gallons per minute less than is needed to provide for its current 
population. This has resulted in inadequate water pressure throughout 
the city, which is especially problematic for the Espanola Hospital 
that serves the region. The lack of inadequate water and water pressure 
has twice led to declared states of emergency. Like Chimayo, the 
National Guard was called in to supply water to the hospital. The City 
of Espanola has an allocation of 1,000 acre-feet per annum of San Juan-
Chama Project water by contract with the Bureau of Reclamation. This 
bill will aid the City develop the infrastructure necessary if it is to 
divert this water as the existing infrastructure is inadequate water. 
Until it can use its San Juan-Chama water, the City will continue to 
deplete its limited groundwater supplies and continue to suffer from 
water pressure and water supply problems.
    S. 2511 would direct the Secretary of Interior, in cooperation with 
State and local authorities to conduct a feasibility study of 
constructing a water supply system for Chimayo. In conducting the 
feasibility study, the Secretary is to consider various options for 
supplying water, long-term operation and maintenance costs and local 
water resources. S. 2511 would authorize $2 million at a 75 percent 
federal cost share for the feasibility study. The bill would also 
direct the Secretary to provide emergency water assistance to Chimayo 
which may include water treatment, installation of an emergency water 
supply system and installation of transmission and distribution lines. 
S. 2511 would authorize $3 million at a 75 percent federal cost share 
for emergency water assistance. S. 2511 would authorize the Secretary 
of Interior to provide financial assistance to the City of Espanola for 
the construction of a water filtration facility. It would also 
authorize the Secretary to provide financial assistance to the Pueblos 
of Santa Clara and San Juan for water infrastructure as a component of 
the facility. The bill authorizes $3 million at a 25 percent federal 
cost share for the filtration facility and associated Pueblo 
infrastructure.
    This is the type of legislation that is essential to the viability 
of rural and small communities throughout, not only New Mexico, but the 
western states.
    Note: S. 2511 was introduced by Senator Pete Domenici on June 8, 
2004 and was referred to the Committee on Energy and Natural Resources.
                                 ______
                                 
                               on s. 2513
    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to submit testimony on the S. 2513, a bill supporting an 
Eastern New Mexico Rural Water System pipeline.
    This bill would authorize the Secretary of Interior to provide 
financial assistance to the Eastern New Mexico Rural Water Authority 
for the planning, design, and construction of the Eastern New Mexico 
Rural Water System, and for other purposes.
    The New Mexico Interstate Stream Commission completed construction 
of Ute Dam and Reservoir in 1962 at a cost in today's dollars of over 
$125 Million. The Interstate Stream Commission owns and operates the 
dam and reservoir for the benefit of New Mexico pursuant to the 
Canadian River Compact and the 1993 U.S. Supreme Court Stipulated 
Judgment. The reservoir was constructed for the specific purpose of 
providing a sustainable water supply to the communities of eastern New 
Mexico.
    In 1997, the Interstate Stream Commission entered into an agreement 
with Eastern New Mexico communities and counties for the purchase of 
24,000 acre-feet per year of Ute Reservoir water. The Eastern New 
Mexico Rural Water Authority will manage the pumping and storage 
facilities and delivery of Ute water through the Eastern New Mexico 
Rural Water System (ENMRWS) pipeline.
    The development of this Ute Reservoir water is critical. 
Communities in eastern New Mexico rely on non-renewable groundwater 
from the Entrada aquifer and Southern High Plains Ogallala aquifer for 
their municipal and industrial water supply. Historical pumping in the 
area has resulted in water level declines exceeding 100 feet. Both 
aquifers are deteriorating in water quality. The remaining saturated 
thickness of the aquifer in some locations near Clovis and Portales 
cannot sustain demand for more than 10 to 20 years, even at current 
usage levels.
    The rapid depletion of these aquifers places the economic viability 
and perhaps the very existence of these eastern New Mexico communities 
at risk. Ute Reservoir provides the only significant source of 
renewable water supply in the region. Without the ENMRWS pipeline, 
Eastern New Mexico Communities cannot access their only sustainable 
water supply.
    Saline aquifers have been considered as potential sources of 
additional water supply in the area. We have limited knowledge 
regarding the quantity and characteristics of saline aquifers in the 
area. Reliable, cost-effective production from these saline sources is 
likely decades away and in any event is not renewable.
    In December 2003, the Interstate Stream Commission solicited an 
independent peer review of the updated ENMRWS Conceptual Design Report 
(CDR). The report findings correlated well with the review conducted by 
the ENMRWA and we feel there should be little or no unforeseen costs.
    Interstate Stream Commission staff completed preliminary ecological 
surveys and document collection in 2004 in anticipation of the NEPA 
process. These studies revealed no anticipated significant 
environmental impacts. The inclusion into the project of the Logan 
Sewer Project and Tucumcari Advanced Wastewater Treatment facility is 
an important feature that will protect the project source water supply.
    The Interstate Stream Commission completed a sediment survey in 
2003 that indicated the pipeline project will be viable for at least 
the next eighty years. Completion of this project will provide the 
eastern New Mexico communities in Curry, Quay, and Roosevelt counties a 
reliable and renewable source of water to support economic development 
and current and future needs. In March 2004, the New Mexico Water Trust 
Board approved $2 million for the ENMRWS. The communities in Eastern 
New Mexico provide option payments of $36,000 per year. We believe the 
communities can pay for their share of this project economically and 
support the OM&R Plan language in the draft legislation requiring the 
ENMRWA to consult with the Secretary and develop a framework of rates 
and fees that will finance their share of the project.
    Madam Chair, the State of New Mexico, the Office of the State 
Engineer, and the Interstate Stream Commission support the development 
of the ENMRWS and endorse the federal authorization request. I 
appreciate the opportunity to address the Committee on this important 
water project.

    Senator Murkowski. We will include all of the testimony 
part of the record.
    Mr. Lansford.

   STATEMENT OF DAVID M. LANSFORD, MAYOR OF CLOVIS, NM, AND 
           CHAIRMAN, EASTERN NEW MEXICO RURAL WATER 
          AUTHORITY, CLOVIS, NM, ACCOMPANIED BY SCOTT 
       VERHINES, CIVIL ENGINEER, PROGRAM MANAGER, ENMRWA

    Mr. Lansford. Thank you, Madam Chair.
    I am David Lansford. I am the mayor of the city of Clovis 
and in addition I serve as the chairman of the Eastern New 
Mexico Rural Water Authority. The city of Clovis represents 
over 50 percent of the population served by the Eastern New 
Mexico Rural Water System. In addition, the city of Clovis 
serves as the fiscal agent for the project.
    Along with me is Scott Verhines. Mr. Verhines is a civil 
engineer and he is also the program manager for the Water 
Authority.
    Again, thank you for the opportunity to be before you today 
to make a presentation regarding the need and support for the 
Eastern New Mexico Rural Water System Project.
    Today, because of the prospect of the Eastern New Mexico 
Rural Water System, we are very optimistic about the long-term 
sustainability of the water supply in eastern New Mexico. This 
project is not new. It was first conceived in the 1950's when 
the New Mexico legislature appropriated funding to construct a 
dam on the Canadian River near Logan, New Mexico, to create Ute 
Reservoir. Following the completion of the dam, the first 
feasibility study was conducted to determine the steps 
necessary to deliver surface water to eastern New Mexico for 
the principal purposes of supplying domestic and industrial 
water to the region.
    Water is the most vital of all resources and New Mexicans 
have consistently ranked the availability of quality water as 
the most important issue facing those who make public policy. 
This is evidenced by Governor Bill Richardson's efforts under 
the direction of the Interstate Stream Commission to develop 
the New Mexico State Water Plan, which consists of 16 planning 
regions. In addition, the New Mexico legislature created the 
Water Trust Board to fund water projects which principally are 
regional in nature and will leverage local, State, and Federal 
dollars to the fullest extent possible.
    On the local level, many communities throughout the State 
are developing and implementing water conservation measures, 
which clearly demonstrate that stewardship of our water supply 
is of paramount importance to New Mexico's economic future.
    This project is viewed by many as the only long-term 
sustainable source of water for eastern New Mexico. There are 
currently no viable alternatives to this project. Eastern New 
Mexico sits above and at the west end of the Ogallala Aquifer. 
The aquifer is declining at a rapid rate relative to its 
recharge rate. No one can know with certainty how long this 
aquifer can provide our water supply, but estimates range from 
15 to 25 years based on current demand.
    The prospect of not having a sustainable water supply has 
clearly given rise to the widespread belief that this project 
is needed. Support for this project exists at all levels of 
government as well as from the citizens which the project will 
benefit.
    The current initiative for the Eastern New Mexico Rural 
Water System Project began 5\1/2\ years ago. The Ute Water 
Commission and the Eastern New Mexico Rural Water Authority 
have conducted over 50 public meetings around the region. In 
August 2003 the conceptual design report was completed and 
since then has been subjected to two peer reviews. We have 
consistently asked the question, have we developed the project 
to a level at or exceeding other similarly authorized projects. 
The answers have all been yes.
    We recognize the financial burdens that would be placed on 
all levels of government for this project to be completed and 
on the local governments' financial responsibility for the 
system to be maintained and operated. Considerable work is 
being done to develop financial plans for the member 
communities and develop cost pro-ration methods and water rates 
that are affordable to all members of the authority. Many 
member communities are acting proactively by passing gross 
receipts taxes dedicated to this project.
    Much discussion has taken place regarding the member 
communities' ability and willingness to pay for this project, 
can we afford the cost. The more pressing question to me is not 
can we afford to do this project, but rather can we afford not 
to.
    Again, I want to thank you for the opportunity to make 
these comments today in this presentation and will be happy to 
answer any questions when it is convenient for your committee.
    [The prepared statement of Mr. Lansford follows:]
   Prepared Statement of David M. Lansford, Mayor of Clovis, NM, and 
     Chairman, Eastern New Mexico Rural Water Authority, Clovis, NM
                              introduction
    The purpose of this project is to address an established critical 
need. The Eastern New Mexico Rural Water System (ENMRWS) will, when 
implemented, provide east-central New Mexico communities, counties, and 
a military base with a sustainable source of water for municipal and 
industrial use. The project is not new and the need for a renewable 
water supply has not diminished. On the contrary, the need for potable 
water grows annually as existing supplies are depleted.
    Groundwater reserves in the east-central New Mexico region 
represent a limited resource that is both declining in quantity and 
deteriorating in quality. Two groundwater basins generally serve the 
region, the Entrada Aquifer to the north and the Southern High Plains 
(Ogallala) Aquifer to the south. The western edge of the Ogallala 
formation extends from Texas into eastern New Mexico with relatively 
shallow saturated thickness. The formation was discovered in 1912.
    Water levels in the vicinity of Clovis have declined in excess of 
100 feet in the ensuing period with estimated recharge being on the 
order of only \1/2\ inch per year. Even though voluntary conservation 
efforts and continued improvements in agricultural water use efficiency 
can extend the available supply of groundwater, the depletion problem 
in most of the area makes sustainability over the next 15-25 years a 
virtual impossibility.
    Groundwater hydrologists in the Office of the NM State Engineer 
(Musharrafieh, May 2004) recently reported to the ENMRWA that average 
annual water level decline in the Clovis area is 1.8 ft., approximately 
1.2 ft. in the Portales area, and 1.8 ft. in the Tucumcari region. 
Saturated aquifer thickness remaining in the Ogallala formation in the 
vicinity of Clovis is less than 50 ft. and less than 20 ft. in the 
Portales area. Precipitation is the primary source of recharge to the 
aquifer, and only a small portion of precipitation infiltrates.
    The New Mexico Legislature recognized the water supply problems in 
eastern New Mexico when it passed an Act authorizing the State Engineer 
to construct a dam on the Canadian River near Logan in 1959. At the 
time, it was recognized that existing groundwater supply sources were 
declining and demand from Texas for more water was coming from both the 
Canadian and Pecos River basins. In 1964, almost 40 years ago, a major 
feasibility study was completed by a Consulting Engineering firm to 
furnish water from the newly constructed Ute Reservoir to communities 
in eastern New Mexico as a supplemental source of water. In 1975, 1978 
and 1981, the New Mexico Legislature authorized and funded improvements 
to the spillway to increase storage at Ute Reservoir. A 1994 study by 
the New Mexico Interstate Streams Commission (ISC) estimated the firm 
annual yield to be 24,000 acre-feet per year in all but extreme drought 
years.
    Regional water planning in eastern New Mexico is an active and 
involved program and the ENMRWS serves as the cornerstone of the 
planning efforts. Decline in water availability to the region will 
constitute a major economic impact. Local officials have consistently 
ranked water as the most serious long-term development issue facing the 
area. Inaction with respect to implementation of the ENMRWS project 
will result in lost opportunity for economic development and may result 
in serious losses to the existing economic base.
    Bi-partisan Congressional and Legislative support, and Federal 
Agency support for the ENMRWS has been ongoing since the completion of 
Ute dam in the late 1950's. The United States Bureau of Reclamation 
(USBR) has participated with a number of studies since the 1970's to 
help advance the project and has served as the federal sponsor for 
funding of ongoing project development activities.
    The project has received the support of Governor Richardson and 
bipartisan support from the New Mexico State Legislature. The most 
recent examples include the creation and implementation of the New 
Mexico Water Trust Fund (WTF) and Water Project Fund (WPF) specifically 
to advance projects such as the ENMRWS, and dedication of 10% of the 
State's severance tax backed bonding capacity to the WTF. The 2002 NM 
State Legislature appropriated $2 million under HB.88a specifically to 
provide state assistance to the ENMRWA. Locally, members of the ENMRWA 
are committed to moving forward with project development activities and 
have taken steps to finance their share of capital funding in advance 
of the project. Each of the twelve member entities are currently 
preparing financial plans specific to their community. In addition, 
members of the Ute Water Commission (UWC) have spent in excess of 
$400,000 in local funds legally reserving water under the terms of the 
purchase agreement with the ISC since 1983.
    A team of Consultants began their activities in February 1999, 
under contract to the Eastern Plains Council of Governments (EPCOG), 
and on behalf of the participating member agencies, to prepare a plan 
to advance the ENMRWS project to a final conceptual and fundable stage. 
The resulting document, the October 2003 Conceptual Design Report 
(CDR), serves as the project roadmap.
    Subsequently, the ENMRWA solicited a Peer Review of the CDR that 
was completed in December 2003. The PRT validated the project as 
detailed in the CDR as ``a sound, well thought-out project. It provides 
the structure of a reliable and appropriate water supply system''. The 
Peer Review team's recommendations resulted in an approximate increase 
in actual construction costs of $26.2 million. The additional $26.1 
million increase includes $16.3 million in nonconstruction activities 
and $9.8 million in expected ``premium'' costs necessitated by building 
the project over several years in smaller construction packages. The 
ENMRWA took action at their Dec. 2003 regular meeting to adopt the 
recommendations of the Peer Review Team (PRT), and the associated 
financial ramifications, in moving forward with the project. Those 
recommendations are included in ongoing project development efforts, 
and reflected in the cost estimates and implementation plan detailed 
herein.
    Participating agencies making up the UWC, and the ENMRWA, include 
the communities of Clovis, Elida, Grady, Logan, Melrose, Portales, San 
Jon, Texico, and Tucumcari; and the counties of Curry, Roosevelt, and 
Quay. The City of Clovis and Cannon Air Force Base (CAFB) have a water 
lease/purchase agreement in place, since 1996, for a portion of Clovis' 
reservation. The UWC was formed by Joint Powers Agreement (JPA) in 1987 
for the purpose of contracting with the NM Interstate Stream Commission 
for the purchase, acquisition and distribution of water from Ute 
Reservoir. The ENMRWA was formed subsequent to the UWC, initially in 
November 2001, for the purpose of advanced planning, financing, design, 
construction and operation of the facilities. The USBR has a long 
history of involvement in the project and is the cooperating federal 
agency for funding and technical support.
    Specifically, the scope of work associated with the CDR included:

   Research, review and update of prior study efforts.
   Data collection and review relative to mapping availability, 
        land ownership, availability of water quality data, existing 
        and projected water usage, existing community water systems and 
        their operation,. existing water rate structures, pertinent 
        environmental process and status, assessment of current 
        applicable materials and technologies, identification of 
        comparable facilities, and water yield from Ute Reservoir.
   Development of a conceptual design for the project and 
        associated documentation. It is intended that the CDR report be 
        used as the basis for pursuing local, state and federal 
        funding, and as the basis for detailed design of the facilities 
        once funding is secured.
   Evaluation of funding/financing mechanisms and availability 
        for the project.
   A determination of water needs and uses for the individual 
        participating entities.
   Development of a plan for staffing and administration of the 
        system once operational.
   Development of an implementation plan and schedule for the 
        project.
   Development of a plan for operation and maintenance of the 
        facilities to deliver the water.
                              demographics
    The need for the project stems from both a declining and 
deteriorating water supply and the rural environment of eastern New 
Mexico. Population density associated with the area represented by the 
ENMRWA ranges from 0.5 to 30 persons per square mile and averages less 
than 4.5 persons per square mile. The current population within the 
three county service area (2000 census) is 73,000 and is approximately 
32% Hispanic and 68% Non-Hispanic.
    The land area used for agricultural purposes, ranching, farming, 
feedlots, and dairies accounts for approximately 93 percent of the 
total area. Approximately 68 percent of the region's population resides 
within the municipalities and the remainder reside in non-urban 
incorporated and unincorporated communities or the farms and ranches in 
the area. The ENMRWA members in the region to be served by the project 
are geographically remote. The pipeline system that will connect them 
all extends approximately 100 miles north-south and 40 miles east-west.
    On average, the current cost of producing water from existing 
groundwater sources accounts for 30 to 50% of the total cost of system 
operation for the members. Approximately 30 to 50% of current water 
sales are to commercial and industrial users, and 50 to 70% to 
residential customers.
                     options previously considered
    The initial study phase of the CDR was completed in October 1999, 
and addressed the supply of Ute Reservoir water to the Quay Working 
Group (QWG) members of the UWC including the communities of Logan, San 
Jon, and Tucumcari, and Quay County--the nearest neighbors to the 
Reservoir. That effort evaluated three water system alternatives 
defined for the QWG. They were the outcome of a number of public 
meetings with input from the QWG members, prior work by the USBR and 
EPCOG, newly enacted groundwater storage and recovery legislation 
(GWSRA), completion of an extensive data collection effort, and site 
visits to similar surface water supply projects in South Dakota, Texas, 
and Arkansas. The three previously considered options were as follows:

   QWG Option A--Conventional Treatment and Pumping (CTP) with 
        the QWG as an initial phase of a full UWC project. Option A, 
        initially sized to deliver to the QWG communities, included:

     A lakeside intake structure and raw water pumping station.
     Raw water storage tanks.
     A water treatment plant.
     A treated water pump station.
     Treated water elevated storage.
     A main transmission pipeline, which would be extended in 
            future phases to serve the remaining agencies of the UWC.
     Lateral pipelines to each of the QWG communities.

   QWG Option B--Conventional Treatment and Pumping (CTP) 
        serving the QWG as a stand-alone project. Option B includes:

     A lakeside intake structure and raw water pumping station.
     Raw water storage tanks.
     A water treatment plant.
     A treated water pump station.
     Direct transmission pipelines to each of the QWG 
            communities.

   QWG Option C--Aquifer Storage and Recovery (ASR). Option C 
        was made possible by the recently (at the time) passed GWSRA 
        legislation, and includes:

     A lakeside intake structure and raw water pumping station.
     Raw water storage tanks.
     A water filtration plant.
     A filtered water pump station.
     Direct transmission pipelines to each of the QWG 
            communities.
     Infiltration basins above the existing well fields at each 
            member community that would serve to recharge the existing 
            groundwater basin.
     Existing water well and transmission infrastructure would 
            be used to extract and distribute water stored in the 
            underground aquifer.

    Of the previously considered options, Option A was found to be the 
most cost effective for the QWG and formed the framework for the ENMRWS 
to serve the entire UWC membership. The possibility of significant 
state and federal funding assistance, and the economies of scale 
realized by the distribution of common facilities costs over 24,000 ac-
ft of total reservation, by inclusion of the entire UWC membership, 
favored QWG--Option A. Since QWG--Option A was the only option that 
considered expansion to a regional water supply project, this option 
also helps solve the regional water supply problem. In November 1999, 
both the QWG and the UWC voted unanimously to expand the scope of 
Option A to address the full UWC membership. The extension of Option A 
to serve the full UWC membership is the focus of the Conceptual Design 
Report and includes analysis of the water system to deliver 24,000 
acre-feet per annum to all twelve UWC members.
    While ASR is not considered as a primary system configuration for 
the ENMRWS project, it is certainly considered as a long-term adjunct 
to the system as a means to store water that would otherwise spill from 
the reservoir in years of abundant rainfall. During 1999 while the 
outlet works were being repaired on Ute Dam, the ISC estimates that 
150,000 acre-feet overflowed the spillway. According to the USBR 
Special Environmental Report of 1993, it is estimated that in the 
forty-seven years from 1943 to 1989, a total of 874,000 acre feet in 
excess of the regular project withdrawals would have spilled during 
fifteen of these years.
    With this ENMRWS project in place, the existing well fields at each 
delivery point may be configured to periodically inject these spill 
waters to effectively increase the yield by a factor of 1.8 times 
24,000 acre-feet/year over forty seven years.
    Logan's proximity to the lake affords it a unique alternative. An 
excellent case may be made that the existing geohydrologic connection 
between the reservoir and Logan's well field already recharges Logan's 
localized aquifer. If so, Logan could file with the Office of the State 
Engineer Office (OSE) to extract its reservation from its existing well 
fields without the need for significant additional infrastructure. 
However, as a backup source, to take advantage of treated water 
associated with future water quality regulations, and to potentially 
provide service to the south side of the reservoir, a connection from 
the project to Logan is included and associated costs developed.
                        key project assumptions
    The following underlying assumptions are pertinent to this report:

   Water delivery to ENMRWA members is based on satisfying 
        peak-day demand, and 24,000 ac-ft annual delivery.
   Water is centrally-treated and potable water is delivered to 
        the members.
   Water will be delivered in bulk (wholesale) to members.
   County reservations will be available for future wholesale 
        delivery to currently. unincorporated areas--for fire 
        protection, livestock taps and for redistribution as domestic 
        water supply.
   The infrastructure has been sized, and associated costs 
        developed, assuming that each participating member uses or pays 
        for their reserved allocation of Ute water annually (``take or 
        pay'').
   Pipeline easements will be donated. Single payment damages 
        could be reimbursed where warranted. Fee simple property will 
        be purchased.
   The expanding development of wind energy resources in the 
        region is potentially key to maintaining affordable operation 
        and maintenance project costs. New Mexico's renewable wind 
        energy resources rank 12th among the 50 states in value.
   Water costs have been developed for each member agency on 
        the basis of possible funding arrangements described in the 
        following section.
   It is intended that the system will deliver potable water 
        for domestic, commercial and industrial uses, and it will not 
        be used for the purposes of irrigated agriculture.
                          key project features

   A lakeside intake structure and raw water pump station.
   1.7 million gallon raw water storage (equalization) tanks.
   39 million gallon per day (mgd) capacity central water 
        treatment, administration and maintenance facility.
   A high service pump station at the water treatment facility.
   Treated water elevated storage--Quay Co. storage and 
        pressure control.
   Approximately 87.5 miles of main transmission pipeline 
        ranging in size from 30" dia. to 54" dia.
   A booster pump station at the base of the Caprock.
   2.4 million gallon ground storage at the top of the Caprock.
   Gravity flow from the top of the Caprock to all downstream 
        members in Curry and Roosevelt Counties.
   Approximately 94.8 miles of lateral pipelines to serve 
        individual communities and county demand, ranging in size from 
        8" dia. to 36" dia.
   Telemetry and control systems.
   Infrastructure security enhancements.
   The ENMRWA has endorsed three (3) infrastructure projects as 
        adjuncts to the core water project, as follows:

     $100,000 Energy recovery at Portales (PRT recommendation)
     $3,000,000 Advanced wastewater treatment at Tucumcari (PRT 
            recommendation).
     $6,000,000 Logan wastewater collection and treatment 
            project.

    The first item listed above takes advantage of the amount of energy 
available in the trunkline opposite Portales. In lieu of using a 
pressure reducing valve, or similar appurtenance to reduce the pressure 
to a match Portales' distribution system, the PRT recommends a small 
``hydropower'' system that will accomplish a similar pressure reduction 
while generating usable power at the same time. An initial investment 
in the associated infrastructure will pay for itself many times over in 
energy recovered.
    The second and third items above are directly related to helping 
ensure long-term water quality in the reservoir for the benefit of all 
the authority members. Effluent from Tucumcari's wastewater treatment 
plant discharges to Ute Reservoir. These funds would be used to add 
tertiary treatment to improve effluent water quality, or alternatively 
for effluent reuse back to the City of Tucumcari reducing or 
eliminating discharge to Ute Reservoir. Tucumcari is presently studying 
these options. Logan's project will reduce or eliminate the potential 
for discharge from existing septic tanks and cesspools along the north 
shore into the reservoir. Since the reservoir is intended to become the 
primary source for municipal and commercial water supply to the water 
authority membership protection of its long-term water quality, and 
quantity, is paramount.
                       funding and cost proration
    Fiscal evaluation of the feasibility of the ENMRWS is predicated on 
an 80-10-10 funding mechanism for capital costs: 80% Federal assistance 
in the form of grant, 10% State matching funds, and 10% Local members 
share. This is based on an evaluation of the members' ability and 
willingness to pay, on experience drawn from the successes of rural 
water supply projects in South Dakota and other mid-western and western 
states, and the fact that the ENMRWS is similar in both size and in 
demographics of the population served by those projects. Estimated 
costs are prorated to the members on the basis of these primary 
considerations:

   ``Common facility'' capital costs, core to and necessary for 
        the water supply system to function, are prorated on the basis 
        of the amount of water reserved on the system. Examples of 
        common facilities are the intake structure at Ute Reservoir, 
        raw water pumping facilities, and the water treatment facility.
   Infrastructure capital costs specific to serving each member 
        entity are accounted for and the associated costs applied to 
        the respective entity. For example, the lateral pipelines from 
        the main transmission trunk pipeline to the member communities. 
        In the case of the three counties, where specific locations for 
        water demand are not completely identified at this time, county 
        level capital costs were prorated for the common facilities, 
        along the transmission pipeline, and along lateral lines to 
        member communities.
   Fixed non-construction costs necessary to implement the 
        project, such as engineering, special studies, funding and 
        programmatic activities, NEPA level environmental documentation 
        and permitting, public involvement programs and construction 
        management are prorated to the member entities on the basis of 
        their relative share of construction costs (including pro-rata 
        share of the common facilities).

     The main transmission trunk pipeline is prorated on the 
            basis of Ute water reservation and pipeline length from 
            treatment plant.
     Operation, maintenance and replacement costs are prorated 
            on the basis of member's relative share of the construction 
            cost, and are adjusted for anticipated phasing of the 
            improvements.

   100% of recurring costs will be born by ENMRWA members and 
        associated water users over the project life. Recurring costs 
        are included in computed wholesale water rates. Recurring costs 
        include the cost of raw water, system operation and 
        maintenance, ISC Ute Reservoir operation and maintenance fee, 
        debt retirement on capital cost, and replacement costs.
                         probable project cost
    The total core project cost estimate is $296.6 million, including 
construction and nonconstruction items. The three adjunct projects 
added by the ENMRWA take the total project cost to $305.7 million. The 
population potentially served is approximately 73,000 and the total 
project cost per capita is $4,188. The average wholesale cost to ENMRWA 
members, considering a 10% cost share plus 100% of operation and 
maintenance, is $1.92 per 1,000 gallons. Four major project phases are 
anticipated. Assuming the proposed funding model, it is expected that 
the four major phases will encompass approximately twelve (12) separate 
construction packages over seven to eight years. The following graph* 
approximates the local, state and federal funding necessary to meet the 
aggressive goals defined in the implementation plan and schedule for 
the project over the next 11 years.
---------------------------------------------------------------------------
    * All graphs and tables have been retained in subcommittee files.
---------------------------------------------------------------------------
            capability to pay and regional economic benefits
    The USBR Denver Technical Service Center prepared an economic 
analysis of the project. The analysis includes an estimate of the 
capability of water users to pay for construction of a Ute Reservoir 
pipeline, the potential willingness to pay of water users for water 
supply improvements associated with the pipeline, and the potential 
regional economic impacts and tax impacts from building the pipeline.
    The estimates of payment capability include both households and 
commercial water users. The capability of households to pay for water 
supply improvements is based on an analysis of household income, 
expenses, and residential water payments made in similar areas. The 
payment capability of commercial water users is based on the results of 
previous rural water system studies and current business activity in 
eastern New Mexico.
    The total net payment capability was estimated to range from $2.8 
million to $11.3 million annually for all households in the study area 
and $1.6 million to $4.9 million annually for commercial 
establishments. The most likely range of net payment capability is $10 
million to $11 million annually for households and $2.6 million to $4.9 
million for commercial establishments. The most likely range of 
estimates is based on the maximum payment capability factors observed 
for comparable water suppliers used in the payment capability analysis. 
The payment capability estimates would cover operation, maintenance, 
repair, raw water costs, and operation and maintenance fees associated 
with the proposed pipeline project.
    The willingness to pay estimates measure the amount water users 
would be willing to pay to improve the water supply under current 
conditions. The willingness to pay of households is estimated to be 
$2,278,600 annually and the willingness to pay of commercial water 
users is estimated to be $425,000 annually, for a total willingness to 
pay of a little over $2.7 million each year given current levels of 
population and commercial development. Both of the willingness to pay 
estimates are based on the benefits transfer method, which can result 
in a significant level of error.
    The eastern New Mexico region has experienced a decline in 
groundwater levels over recent years. If this trend were to continue 
over time without planning for future use, it is very likely that the 
cost of providing water supplies would increase significantly in the 
future. As a result, the true benefit from providing water through an 
alternate surface water supply will be greater than the estimated 
willingness to pay. Assuming future water payments without an 
alternative water source double, the benefits from the pipeline could 
be $5 million annually.
    Construction and operation expenditures associated with the 
proposed eastern New Mexico Rural Water System will generate regional 
economic impacts. It is estimated that the project would generate an 
estimated $100 million in regional output, $25 million in employee 
compensation, and a little over 1,500 jobs during construction. Annual 
impacts from operation and maintenance activities would be about $16.5 
million worth of regional output, $3.6 million in employee 
compensation, and 170 jobs.
    It should also be recognized that any commercial activity 
attributable to the water supply project, either through the attraction 
of businesses due to improved water supplies or through the retention 
of businesses that would have left if water supplies became worse in 
the future, would also generate positive regional economic impacts. The 
magnitude of these impacts cannot be estimated with any certainty 
because the extent to which business activity is affected is not known.
    Construction of the pipeline will also generate tax revenues. It is 
estimated that the project will generate as much as $8.5 million in 
gross receipts tax revenues. Gross receipt tax revenues from operation 
and maintenance expenditures to all levels of government are estimated 
to be over $450,000 annually. Pipeline construction will also have an 
impact on state income tax payments. Income tax payments are estimated 
to increase by $360,000 as a result of construction and $53,000 
annually from operation and maintenance expenditures. Implementation of 
an additional gross receipts tax could increase the financial resources 
available to pay for a pipeline significantly.
                      implementation and schedule
    The proposed approach to project development and implementation is 
anticipated to take approximately I 1 years, from the delivery of the 
Conceptual Design Report in October 2003, to the completion of 
construction of Phase 4 improvements in October 2014. A copy of the 
detailed Implementation Plan and Schedule presented in Section 7 of the 
CDR is included at the end of this brief. The main activities 
envisioned are as follows:

   Project Development Activities--July 2004 through January 
        2012.

     Funding and supporting activities
     Pilot treatment testing
     Public involvement activities
     Environmental Investigations and Documentation (NEPA)
     Preliminary and Final Design

   Construction Activities--November 2007 through October 2014

     Phases 1 though 4

    Based on the detailed analysis presented in the CDR, the ENMRWA 
concludes that:
    1. The ENMRWS is a feasible solution to the regional water supply 
problem. From an engineering standpoint, the system as conceptually 
conceived is viable. From a funding and project cost standpoint, it is 
the potential leverage of local and state funds with significant 
federal participation that makes the project feasible with respect to 
the regional users ability to pay for and operate the system.
    2. The formation of the ENMRWA (the ``Authority'' as was 
recommended in the October 2000 Conceptual Design Report) representing 
the interests of the UWC members is a prudent step, and provides the 
mechanism for establishing operating procedures, seeking federal and 
state funding, and initiating planning and design efforts. The ENMRWA 
hired a Program Manager to serve as the point of contact for the 
Authority and to represent the membership in subsequent project 
development activities.
    3. It should immediately concentrate its efforts on seeking federal 
authorization and subsequent funding support, working with the State of 
New Mexico within the framework of the Water Project Fund for 
dedication of a state match to the project, and on initiating a public 
awareness/education program.
    4. The Authority should initiate negotiations with Farmer's 
Electric Co-op over a satisfactory long-term power rate. Additionally, 
the Authority should continue to strongly pursue renewable energy from 
wind power development in the region as a potential long-term operation 
and maintenance cost shaving measure.
    5. The Authority should initiate the appropriate selection of 
consultants to assist the members with funding, planning, design, 
construction and public awareness activities in support of project 
development. The consultant team's efforts should initiate pilot 
testing to finalize the water treatment program, preliminary property 
owner contacts to identify property acquisition opportunities and 
constraints, and NEPA investigations and documentation.
    6. Planning efforts should include development of detailed 
operating and administrative procedures to be followed, and a process 
for intra-authority interim water transfers between members within the 
operating procedures of the Authority.
    7. The Authority, in collaboration with the ISC and the Village of 
Logan, must remain committed to long-term water quality monitoring and 
source water protection at Ute Reservoir.
    8. A great deal of work and background has been developed in 
support of the ENMRWS over a 40-year period. A healthy, participative, 
and collaborative effort between the project sponsors and stakeholders 
is crucial to ensuring that the surface water resource will be put to 
beneficial use in a timely and cost-effective manner.
                      current and ongoing efforts

   Studies are nearing completion regarding development of 
        individual ENMRWA member financial plans.
   Studies are nearing completion on an update to water rate 
        setting and cost proration.
   The Authority has established a Public Involvement 
        Committee, developed a structured public involvement program 
        and initiated the public education component.
   The Authority has established a By-Laws Committee that is 
        actively developing operating rules and procedures.
   The Program Manager is currently updating the 2003 CDR 
        Implementation Plan and Schedule to reflect ongoing activities 
        at the local, state and federal level.
   The Program Manager, in conjunction with the Authority's 
        consultants working on financial plans and water rate setting, 
        is developing a temporal cost estimate showing costs incurred 
        by the member entities and the associated impact to water rates 
        on an annual basis.
   The Authority has approved a plan to solicit and select 
        consultants for Preliminary Design of the entire project, 
        associated special studies, and NEPA investigations and 
        documentation.

    Senator Murkowski. Thank you.
    I appreciate the testimony of both gentlemen. We will have 
to depart to go vote. I do understand, though, that Senator 
Domenici has already voted and is perhaps on his way back here 
and wants an opportunity to pose about 5 minutes of questions. 
So if I can ask, Commissioner, you to hold tight, and 
gentlemen, if you can stay with us, we will hold the record 
open for Senator Domenici to come. It is correct he is coming?
    So Senator Bingaman, if you wanted to make a couple of 
comments.
    Senator Bingaman. Let me just thank you again for having 
the hearing. Sorry these votes have interrupted our hearing. I 
do not know if I will get back or not, but we will submit a 
couple of questions for the record for both Commissioner Keys 
and for these witnesses. I know they have come a great 
distance, these two witnesses have, to testify today and we 
very much appreciate it. We will continue to move ahead with 
this legislation.
    Thank you very much.
    Senator Murkowski. Thank you.
    I also have questions that will be submitted for the record 
in the event that we do not get to all of them. But if we can 
just take an at-ease here until Senator Domenici is able to 
join the group and that allows us to vote. Thank you. Again, 
thank you for making the commitment to come all this way. We do 
appreciate it.
    [Recess from 3:02 p.m. to 3:38 p.m.]
    The Chairman [presiding]. Mr. Keys, why do you not come and 
join at the table. I want to go rather quickly. I first want to 
apologize to all of you. This has just been one of those days. 
I would have let you go and called off the meeting, let it go 
at the subcommittee level. But there are things here that are 
very important to New Mexico and so I wanted to get a couple of 
them out on the record and make sure.
    Has Senator Bingaman been here? OK, so I imagine he got the 
issues.
    First, from New Mexico, I want to thank you, Mr. D'Antonio, 
for coming. You have a tough job in New Mexico. From the last 
time I have seen you, you look slimmer, your eyes look a little 
bit more indented in your head. But I assume you still like it, 
is that right?
    Mr. D'Antonio. Yes, Senator Domenici. I am loving my job. 
It needs to snow and rain more, but yes.
    The Chairman. You got it.
    Let me talk for a minute to you, Commissioner. New Mexico, 
as many other Western States, has limited fresh water but 
abundant brackish water, as you know. We plan to have a 
groundbreaking later this month for a Bureau desalination 
research and development facility in New Mexico. I thank you 
for agreeing to attend that event.
    Does the Tularosa facility fit well within the Bureau's 
existing desalinization research program? I am asking you.
    Mr. Keys. I am sorry. Say again, sir?
    The Chairman. Does the Tularosa Basin facility fit within 
the Bureau's existing desalinization research programs?
    Mr. Keys. Mr. Chairman, our existing program runs out at 
the end of 2004 and certainly would need to be reauthorized. It 
extends that program and we think that the bill that you have 
proposed here is a good way to extend that to include Tularosa.
    The Chairman. What role do you foresee the Bureau having in 
advancing desalinization technology as it pertains to 
addressing our Nation's depleting water, fresh water resources?
    Mr. Keys. Mr. Chairman, we think that the Bureau of 
Reclamation has a lot to offer to the desalination effort. Our 
comments on the bill that is before us today actually ask that 
we be put into a better role with that facility than just being 
a caretaker, in other words to define the effort that 
Reclamation can do to be part of that research and development 
effort to forward desalinization.
    We have several programs under way that we are working with 
now. We have some of the experts in the field working for us. 
It is a significant part of the Water 2025 effort that we have 
going. We certainly want to be part of that.
    The Chairman. Now, let me move a minute to the S. 2460. 
This is the New Mexico Water Planning Assistance Act. 
Commissioner Keys, assessments have been made by the New Mexico 
Office of the State Engineer assisting the Federal agencies, 
including the Bureau, providing important information on 
hydraulic conditions, important for flood assessments, flood 
management, tribal water resources.
    My staff has taken great care to solicit the 
administration's concerns on S. 2460. As a result, my staff has 
addressed an amendment to be offered at markup that would make 
the grants to the State subject to a 50 percent cost share. 
Would the administration support S. 2460 with such an 
amendment?
    Mr. Keys. Mr. Chairman, that is one of the problems that we 
had addressed in our comments, this cost share. That would be 
acceptable to us. We still have a couple of other hesitations 
about the bill. One is section 3(e) that says that the Governor 
of New Mexico could actually redirect Interior funding to 
someone else, and we would request that section 3(e) be dropped 
from that bill also.
    Other than the general concern about it being a drain on 
our budgets and so forth, those are our concerns.
    The Chairman. Well, we are going to have to decide what is 
most important around here. I can take the case to the Senate 
that there is nothing more important out there in the West. 
They tell us now that these have not been exceptionally dry 
years, that we are kind of in the middle. That is what I hear. 
I do not know what John has heard, but this drought is not 
going away next year. It is going to be here pretty long, which 
is very, very tough.
    Let me ask you, Mr. D'Antonio. The subject matter is S. 
2460, the Water Planning Assistance. Will S. 2460, the Senate 
bill, help New Mexico make decisions about limited water 
resources? Does S. 2460 better equip the office to deal with 
years of drought?
    Mr. D'Antonio. Senator, yes, S. 2460 would greatly enable 
and enhance our ability to assess our water resources in the 
State of New Mexico, both groundwater and surface water. We are 
in probably a 5-year drought cycle right now and with no end in 
sight and no rains in April or May. The drought--we are going 
to be in a severe--most of the entire State is going to be in a 
severe drought condition as the new data comes out. And yes, 
this funding is critical for us to do our active water resource 
management in New Mexico.
    The Chairman. Mayor Lansford, would you please understand 
that I fully support the importance of the Eastern New Mexico 
pipeline as far as the future of that part of the State. I 
commend you and others who have been involved for all the hard 
work that you put in the project. I have some concerns about 
the ability of some of the communities to raise their portion 
of the moneys.
    What are the findings of the financial assessments to 
investigate the ability of the beneficiary communities to pay 
for the non-Federal portion?
    Mr. Lansford. Thank you, Senator, for your comments. The 
study that we have looked at in general says that as a region, 
as 12 member communities, collectively we have the ability to 
pay. But individually there is a few communities that do not, 
and as a result of that analysis we are looking at some pro-
rationing and some rates that will make it affordable for all.
    An example would be the people of Clovis paying an 
additional penny per thousand gallons would reduce the rate in 
a neighboring community by as much as 7 to 8 dollars per 
thousand gallons. So doing a little bit of cost-sharing and so 
forth, I think we can come up with some formulas to make it 
affordable to all the member entities.
    The Chairman. Well, I thank you for that. I think we can 
apply a little ingenuity, maybe give more flexibility to how 
you can put that together, so it does not have to be exact if 
you can meld it together. In doing that, we have got to make 
sure that the result is fair, and if we can work on that in 
putting it together we will.
    I do not want to keep you any longer. I just want to thank 
you. Some of these are not thought to be important bills, 
Chimayo and the others, but anything we can do, a little bit 
here and there, is helpful.
    With that, we stand adjourned at the call of the Chair. 
Thank you so much.
    [Whereupon, at 3:47 p.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

                        Department of the Interior,
           Office of Congressional and Legislative Affairs,
                                   Washington, DC, August 27, 2004.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: Enclosed are responses prepared by the Bureau of 
Reclamation to questions submitted following the June 17, 2004, hearing 
before the Subcommittee on Water and Power on S. 2513, ``To authorize 
the Secretary of the Interior to provide financial assistance to the 
Eastern New Mexico Rural Water Authority for the planning, design, and 
construction of the Eastern New Mexico Rural Water System.''
    Thank you for the opportunity to provide this material to the 
Committee.
            Sincerely,
                                             Jane M. Lyder,
                                               Legislative Counsel.
[Enclosure.]
                                s. 2513
    Question 1. Your testimony on S. 2513 states that ``the cost share 
percentage set forth in the legislation is beyond the normal federal 
cost share for rural water projects.'' That statement is not correct. 
The cost-share set out in the legislation is well-established by recent 
precedent--for example:

   The Lewis & Clark Rural Water System in South Dakota was 
        authorized in 2000 at an 80% Federal cost-share ($214 million);
   The Dry Prairie Rural Water System in Montana was authorized 
        in 2000 at a 76% Federal costshare ($51 million); and
   The Rocky Boys Rural Water System in Montana was authorized 
        in 2002 at an 80% Federal cost-share ($203 million).

    Moreover, Reclamation's own capability and willingness to pay study 
questions whether the communities in Eastern New Mexico can absorb any 
more costs.
    Isn't an 80% Federal cost-share appropriate under these 
circumstances?
    Answer. The three projects you mention were all authorized at the 
high levels you stated. Nevertheless, as we have previously testified, 
the Administration does not believe an 80% Federal cost-share is 
appropriate for any rural water project. On March 25, 2004, I appeared 
before the Energy and Natural Resources Subcommittee to discuss the 
merits of S. 1732, S. 1085 and S. 2218. S. 2218 is the Reclamation 
Rural Water Supply Act of 2004, which was introduced by Senator 
Domenici on behalf of the Administration. S. 2218 would require the use 
of a well-established Reclamation methodology for identifying the 
``capability to pay'' of rural communities to determine the appropriate 
level of their contribution for development and construction costs and 
would establish a 35% minimum non-Federal contribution. Reclamation's 
rural water activities were assessed in 2002 under the Program 
Assessment Rating Tool (PART), a method of assessing the performance of 
program activities across the Federal government. The conclusions of 
the review were clear--stronger controls for rural water project 
development are needed and lack of Reclamation involvement during 
project development increases the probability of projects that are not 
successful according to the Federal program assessment measurements. So 
even though the two Montana projects and the one South Dakota project 
were all authorized at, or close to, an 80% Federal cost-share, the 
Administration's objective with respect to rural water projects is to 
follow the policies that would be mandatory under S. 2218 and require a 
minimum non-Federal contribution of at least 35%.
    Question 2. I agree with your assessment that the communities 
participating in the Eastern New Mexico project need to have an 
accurate estimate of the annual costs and an agreement on how to 
apportion those costs. S. 2513 requires just such a plan to be in place 
prior to initiating construction of the Project.
    Doesn't this contingency in the legislation address Reclamation's 
concerns?
    Answer. As stated in my testimony, Reclamation has questions about 
the construction and Operation, Maintenance and Replacement Plan (OM&R) 
costs. The URS Corporation, which was hired by the State of New Mexico 
to review the project Conceptual Design Report (CDR), raised many of 
the same questions. Few of these lingering questions were addressed in 
the August 2003 CDR developed by Smith Engineering, Inc. or the Jarnis 
Consultants peer review conducted in December 2003.
    Additionally, the Eastern New Mexico Rural Water Authority (ENMRWA) 
is planning studies that will further refine construction and OM&R cost 
estimates. Whether the additional studies will increase or decrease the 
cost estimate is unknown at this time. If either the construction or 
OM&R cost estimate changes significantly, the ability of the ENMRWA to 
afford the project will also change. If the cost estimates increase, 
the ENMRWA may not be able to afford the project, even with an 80 
percent federal grant. If the cost estimates decrease, the ENMRWA may 
be able to afford a larger portion of the construction cost. The 
contingency in the legislation only addresses one of Reclamation's 
questions: Do the communities have agreement on how to apportion the 
construction and OM&R costs among themselves? The question of ability 
to pay cannot be answered with certainty until more definite cost 
estimates are developed.
    We would like to work with the ENMRWA to obtain firmer estimates of 
construction and OM&R costs as well as to establish a clear breakdown 
of how these costs are to be apportioned among participating 
communities, in order to eliminate the contingency in the legislation. 
We note, however, that Reclamation's authority to participate in 
developing this project, as with any other rural water project, is 
severely limited by our lack of authority to develop rural water 
projects.
    Question 3. You also note the need to peer review the conceptual 
design report for the Eastern New Mexico project. Both the Authority 
and the New Mexico Interstate Stream Commission conducted a peer review 
of the design report.
    Does Reclamation have objections to the findings of those two peer 
review efforts?
    Answer. A cursory review of the peer review report commissioned by 
the New Mexico Interstate Stream Commission reveals that a large 
majority of comments made by URS Corporation were not addressed by the 
ENMRWA. For example, the URS recommended project contingencies of 30 to 
35 percent, engineering design of 8 percent, unidentified item 
allowance of 10 to 15 percent, a contingency applied to Operation 
Maintenance and Replacement (OM&R) of 30 to 35 percent, and included 
costs for rock excavation and pipe bedding. The costs provided in the 
Jarnis peer review and the Final CDR contain only a 25 percent 
contingency, 5 percent for engineering design, no unidentified item 
allowance, no identifiable contingency applied to the OM&R costs, and 
no costs for rock excavation and pipe bedding. The Jarnis peer review 
also contains OM&R line items that are disproportionate with the 
construction costs.
    In light of the inconsistencies between the two peer reports and 
the Final CDR, we would like an opportunity to perform our own detailed 
independent review and to work with the ENMRWA to develop a final 
report that incorporates appropriate recommendations from each peer 
review report. A full Administration review is necessary to ensure that 
the project is in line with the best interests of the federal taxpayer, 
and to help both the Administration and Congress assess what priority 
this project should have, relative to other projects all awaiting 
limited federal resources.
    Question 4. The Administration is objecting to the design and 
development of wastewater systems as ``beyond the purview of 
Reclamation's mission and detract[ing] resources from core 
activities.''
    The wastewater systems included in the project are a small part of 
the project ($9 million) and key to protecting the quality of the 
source water. Has Reclamation implemented source water protection with 
respect to other water projects that it is associated with?
    Answer. Reclamation has constructed small sewage systems for 
recreational or office use around various reservoirs, typically small 
collection systems and septic tanks. Reclamation is also involved in 
the Jicarilla Apache Nation Municipal Water and Wastewater Project. 
Reclamation's involvement is the result of special circumstances that 
posed a health hazard to the Nation in and around Dulce, New Mexico. 
P.L. 106-243 (July 2000) directed the Secretary of the Interior to do a 
study and submit a report on this problem. The Jicarilla Project is a 
non-traditional Reclamation water project, and is not supported in the 
Administration's budget.
    One example of sewage handling for the purposes of source water 
protection is the Arbuckle Project near Sulphur, Oklahoma. Effluent 
from the Sulphur, Oklahoma sewage disposal plant is pumped four miles 
to a different drainage than the Arbuckle Dam, avoiding possible 
contamination of water stored at Arbuckle Dam.
    The term source water protection can be viewed broadly and applying 
a more expansive definition, Reclamation has implemented several source 
water protection projects. These include the Colorado River Basin 
Salinity Control Project and the Leadville hazardous waste treatment 
plant. However, most of these projects are associated with Reclamation 
Projects and are considered ``issue-related'' to any core activities. 
Our position is that wastewater systems are appropriately the 
responsibility of local and State stakeholders and that Reclamation can 
leverage its funding most effectively when our activities focus on 
water storage and supply augmentation.
                                 ______
                                 
                        Department of the Interior,
           Office of Congressional and Legislative Affairs,
                                   Washington, DC, October 7, 2004.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: Enclosed are responses prepared by the Bureau of 
Reclamation to questions submitted following the June 17, 2004, hearing 
before the Subcommittee on Water and Power on S. 1211, S. 2460, and S. 
2511.
    Thank you for the opportunity to provide this material to the 
Committee.
            Sincerely,
                                             Jane M. Lyder,
                                               Legislative Counsel.
[Enclosure.]
 s. 1211, reclamation wastewater and groundwater study and facilities 
                                  act
    Question 1. Commissioner Keys, Title 16 directs the Secretary of 
the Interior to develop programs to ``investigate and identify'' 
opportunities to reclaim and reuse naturally impaired ground and 
surface water. Do you feel that the Tularosa facility will further this 
statutory mandate?
    Answer. Construction and operation of the Tularosa facility is in 
line with Section 1605 of Title XVI, which authorizes Reclamation to 
conduct research and demonstration projects.
    The focus of work at the Tularosa facility will be research on 
desalination of naturally impaired groundwater as well as investigation 
of means of disposal of the concentrate stream that is produced by 
almost any desalination process.
    Question 2. What do you believe the appropriate role of the federal 
government is in helping communities make use of desalination 
technology to meet their water needs?
    Answer. The federal government has a history of involvement in 
desalination research. The Administration is currently reconsidering 
the appropriate role of the federal government in conducting research 
in this area, which worldwide is linked to a multi-billion dollar 
industry.
         s. 2460, the new mexico water planning assistance act
    Question 1. Last time that you and Director Groat testified before 
this subcommittee, Director Groat said that we need a more detailed 
assessment of our water resources. S. 2460 would enlist the expertise 
of the USGS, in collaboration with the New Mexico Office of the State 
Engineer in surveying and modeling stream systems in New Mexico.
    Do you feel that the aim of S. 2460 is consistent with Director 
Groat's testimony before this subcommittee on May 17 that we need a 
more detailed assessment of our water resources?
    Answer. Yes, the stated purpose of S. 2460, the New Mexico Water 
Planning Assistance Act, ``to provide assistance to the State of New 
Mexico for the development of comprehensive State water plans,'' is 
consistent with Dr. Groat's testimony on May 19, 2004, in which he 
states:

        Water quantity and quality will most likely be the determining 
        and limiting factors that ultimately control future economic 
        development, population growth, and human health. . . . the 
        lack of basic inventory and monitoring information pertaining 
        to border water resources and water resources environments 
        prevents a comprehensive understanding of watershed and 
        regional processes and issues, and hinders the ability of 
        science to provide the essential predictive capability to 
        characterize or describe potential cause and effect relations 
        associated with alternative land and water use and management 
        actions.

    While the stated purpose of S. 2460 is consistent with Dr. Groat's 
testimony this past May, the Administration does not believe that S. 
2460, as currently drafted, is an appropriate vehicle for improving 
knowledge about New Mexico's water resources. As noted in my testimony, 
funding for these activities should be pursued through existing 
authorities and procedures. Also, cost-sharing provisions should 
conform to other similar programs undertaken by Reclamation and the 
USGS Cooperative Water Program. S. 2460 is too vague regarding the 
relative roles and functions of Reclamation and USGS to promote 
efficient implementation. Finally, the bill duplicates some existing 
agency programs and authorizations and sets a major precedent of 
funneling funds through the Department of the Interior for State water 
plans.
    Question 2. Do you believe that the federal government should 
contribute to data gathering that benefits federal agencies?
    Answer. Yes, in fact, it is within the missions of both USGS and 
Reclamation to provide data to Federal agencies, and appropriate local 
cost sharing is a normal part of this process. However, for the reasons 
stated above, I do not believe that S. 2460 is the appropriate vehicle 
to accomplish these objectives.
    Question 3. Do you believe that the data that would be produced as 
a result of this bill would help State and Federal governments plan to 
ensure a sustainable water supply for the State?
    Answer. Many local, State, and tribal New Mexico water agencies are 
already using information produced through cooperative work with 
Reclamation and USGS. Data produced as a result of this bill could 
potentially help New Mexico and the Federal government plan for the 
development of a sustainable water supply. But again I emphasize that 
S. 2460 is not the appropriate vehicle towards this end.
    Question 4. Do you agree that the Bureau, the USGS, and local 
entities should work in concert to assess the region's groundwater 
needs?
    Answer. Yes, it is important that the Bureau, USGS, and local 
entities work in concert to bring their collective expertise to 
understanding and managing the region's groundwater resources. 
Reclamation and the USGS have a history of working with local 
governments regarding groundwater resources. The High Plains States 
Groundwater Recharge and Demonstration Act (P.L. 98-434) legislation 
authorized Reclamation, as lead agency, in conjunction with the USGS 
and the EPA, to investigate opportunities and methods for enhancing 
groundwater resources in the seventeen western states. The Bureau, the 
USGS, and local entities should work in concert to assess the region's 
groundwater needs. But assessment is only the first step toward the 
development of reliable water supplies.
    Question 5. As you know, this bill would direct the USBR and USGS 
to provide technical and financial assistance to the State of New 
Mexico for hydrologic modeling. Do you agree that this bill would help 
plan for effective water management in times of drought?
    Answer. The goals of S. 2460 are commendable. Clearly, water 
management is primarily a matter for State authority, and the State of 
New Mexico has invested significant state effort and resources for this 
purpose. A key facet of Reclamation's support for local water 
management strategies is in our Water 2025 program by which we make 
grants to local water resource managers on a competitive, cost-shared 
basis. Projects supported by Water 2025 are not only valuable for their 
own local areas but can often become models for others.
    On the other hand, we are not sure that S. 2460, as currently 
drafted, will necessarily yield optimum water management for New Mexico 
in times of drought. We would hope that the uncertainty as to the 
respective roles of USGS and Reclamation, and the extent to which S. 
2460 seems to overlap other existing authorities, would not complicate 
our mutual effort to focus directly on the most pressing area for 
information collection and action.
             s. 2511, the chimayo water supply system and 
                espanola filtration facility act of 2004
    Question 1. S. 2511 authorizes small projects that would provide a 
clean, reliable water supply where it is desperately needed. Since 
1980, Congress has approved and the Bureau of Reclamation has built 
numerous rural water supply projects.
    Do you feel that providing assistance for communities that are in 
emergency water status is an appropriate use of the Bureau's resources?
    Answer. With respect to municipal water supplies, the Bureau of 
Reclamation's traditional role has been to develop water supplies in 
the western states on a large scale for the benefit of multiple 
communities. Once the Bureau's facilities are constructed and water is 
stored, the allocation of that water must proceed in accordance with 
state water law, compacts, sales contracts, power contracts and other 
obligations. After a water supply has been developed, small 
communities, such as Chimayo, have access, on an individual basis, to 
other federal programs and agencies that can assist in the design and 
construction of the smaller, community-specific, water systems for 
transmission and distribution of water. However, if drought is causing 
a true emergency, those traditional roles can be set aside and the 
Bureau would be prepared to act under our drought authority.
    Question 2. Do you believe that the federal government should 
contribute to data gathering that benefits federal agencies?
    Answer. Yes, in fact, it is within the missions of both USGS and 
Reclamation to provide data to Federal agencies, and appropriate local 
cost sharing is a normal part of this process (as is work done on a 
reimbursable basis for other agencies). As I stated in my testimony, 
among the three separate versions of rural water legislation now 
pending before the U.S. Senate, there is bipartisan, inter-branch 
consensus that the federal cost share should not exceed 50% for 
planning on rural water projects, at least until a capability-to-pay 
analysis that is consistently utilized indicates that a different cost-
share is more equitable. By contrast, Title 1 of S. 2511 provides that 
any assistance or grants for the Chimayo water supply system would be 
made on a non-reimbursable basis, with only a 25 percent local cost-
share. In addition, Title 2 of S. 2511 directs the Secretary of the 
Interior, acting through Reclamation, to provide financial assistance 
to the City of Espanola for construction of an Espanola water 
filtration facility. Reclamation has provided the City with $400,000 to 
perform a feasibility study, including environmental reviews under 
NEPA, which did not contemplate providing water to Chimayo. The 
feasibility report has yet to be received from the City.
    Question 3. Do you believe that the data that would be produced as 
a result of this bill would help State and Federal governments plan to 
ensure a sustainable water supply for the State?
    Answer. Many local, State, and tribal New Mexico water agencies are 
already using information produced through cooperative work with 
Reclamation and USGS. Data produced as a result of this bill could 
potentially help New Mexico and the Federal government plan for the 
development of a sustainable water supply. However, because of issues 
discussed in the previous question concerning cost sharing requirements 
for the Chimayo water supply system, and problems with the scope of the 
feasibility study for the Espanola water filtration facility, along 
with the fact that it has not been received by Reclamation yet, the 
Administration does not feel that S. 2511, as drafted, will help State 
and Federal governments plan to ensure a sustainable water supply for 
the State of New Mexico.
    Question 4. Do you agree that the Bureau, the USGS, and local 
entities should work in concert to assess the region's groundwater 
needs?
    Answer. Yes, it is important that the Bureau, USGS, and local 
entities work in concert to bring their collective expertise to 
understanding and managing the region's groundwater resources. 
Reclamation and the USGS have a history of working with local 
governments regarding groundwater resources. The High Plains States 
Groundwater Recharge and Demonstration Act (P.L. 98-434) legislation 
authorized Reclamation, as lead agency, in conjunction with the USGS 
and the EPA, to investigate opportunities and methods for enhancing 
groundwater resources in the seventeen western states. The Bureau, the 
USGS, and local entities should work in concert to assess the region's 
groundwater needs. But assessment is only the first step toward the 
development of reliable water supplies.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

                                  City of Espanola,
                                       Office of the Mayor,
                                        Espanola, NM, June 9, 2004.
Hon. Lisa Murkowski,
Chairperson, Water and Power Subcommittee, Committee on Energy and 
        Natural Resources, U.S. Senate, Washington, DC.
    Dear Senator Murkowski: The City of Espanola is in the process of 
developing a new Water Filtration Facility (WFF) on property that it 
has acquired in order to address current and future water system 
demands for the City and surrounding communities. The City of Espanola 
proposes to implement this project to capitalize on the availability of 
the 1,000 acre-ft per year (AFY) of consumptive water rights that the 
City owns contractually with the U.S. Bureau of Reclamation for San 
Juan-Chama Project water.
    The City of Espanola is considered a regional community to the 
surrounding area, capable of extending community services to outlying 
communities. The completed Water Filtration Facility will allow the 
City to expand its service area and infrastructure to allow surrounding 
communities' access to the regional water system. The Community of 
Chimayo is one of those surrounding communities that is in dire need of 
a water supply system and currently relies on potable water from the 
City of Espanola through deliveries from the National Guard.
    The City of Espanola is in full support of ``The Chimayo Water 
Supply System and Espanola Water Filtration Facility Act of 2004 (S. 
2511) introduced by Senator Pete Domenici and cosponsored by Senator 
Jeff Bingaman. This legislation includes a $3.0 million authorization 
for the City's water filtration facility that will conclude the 
necessary funding needed to complete the project.
            Sincerely,
                                         Richard L. Lucero,
                                                             Mayor.
                                 ______
                                 
           Greater Chimayo Mutual Domestic Water Consumers 
                                               Association,
                                                      June 11, 2004
Hon. Pete Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
Hon. Lisa Murkowski,
Chairperson, Water and Power Subcommittee, Committee on Energy and 
        Natural Resources, U.S. Senate, Washington, DC.
    Dear Senator Murkowski: The Greater Chimayo Mutual Domestic Water 
Consumers Association would like to extend our sincere gratitude for 
holding a hearing on ball 2511. The development of a reliable water 
system is vital to the sustainability of our community. As you are 
aware, the New Mexico Department of Health and the New Mexico 
Environment Department identified fecal and total coliform 
contamination in our water supplies in August 2001. Since then, the New 
Mexico National Guard has been supplying potable water to our residents 
using a portable water tank or ``water buffalo."
    We have been diligently working on behalf of our community to 
implement a community water system. We have initiated discussions with 
the City of Espanola and Quatro Villas Mutual Domestic Water Consumers 
Association, which would link a distribution system to the City of 
Espanola's water system to ensure a continuous reliable supply of water 
for our community. We need to prepare a Preliminary Engineering Report 
(PER) and conduct an environmental assessment to determine the 
feasibility of linking our system to the City of Espanola and to 
evaluate site locations for system components, such as water storage 
facilities, pipelines, and pump stations.
    We have completed preliminary plans and specifications for design 
of a Phase I of the Community Water System. We will require additional 
funding to extend the distribution system to other areas of Chimayo. 
Our service area encompasses approximately 6 square miles with an 
estimated population of 5,500. We have funding to address the most 
critical areas of the community, which will serve 175 residential 
connections.
    We look forward to working with you to establish a long-term, 
reliable water supply for our community. If we can provide you with 
further information, please contact me by phone at (505) 351-4311 or 
via email at [email protected].
            Sincerely,
                                            Ilean Martinez,
                                                         President.

                                   
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