[Senate Hearing 109-400]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-400
 
                       TITLE XVI OF P.L. 102-575

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                   TO

 RECEIVE TESTIMONY ON THE BUREAU OF RECLAMATION'S REUSE AND RECYCLING 
                  PROGRAM (TITLE XVI OF P.L. 102-575)

                               __________

                           FEBRUARY 28, 2006


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


                                 ______

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho                JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee           BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
RICHARD M. BURR, North Carolina,     TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida                MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri            DIANNE FEINSTEIN, California
CONRAD BURNS, Montana                MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               KEN SALAZAR, Colorado
GORDON SMITH, Oregon                 ROBERT MENENDEZ, New Jersey
JIM BUNNING, Kentucky

                     Bruce M. Evans, Staff Director
                   Judith K. Pensabene, Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                                 ------                                

                    Subcommittee on Water and Power

                    LISA MURKOWSKI, Alaska, Chairman
                  GORDON SMITH, Oregon, Vice Chairman

LARRY E. CRAIG, Idaho                TIM JOHNSON, South Dakota
RICHARD M. BURR, North Carolina      BYRON L. DORGAN, North Dakota
MEL MARTINEZ, Florida                RON WYDEN, Oregon
CONRAD BURNS, Montana                DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky                MARIA CANTWELL, Washington
JAMES M. TALENT, Missouri            KEN SALAZAR, Colorado
                                     ROBERT MENENDEZ, New Jersey

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

                        Kellie Donnelly, Counsel
                    Mike Connor, Democratic Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Atwater, Richard, Chief Executive Officer, Inland Empire 
  Utilities Agency, on behalf of WateReuse Association...........    30
Cody, Betsy A., Specialist in Natural Resources Policy, 
  Resources, Science and Industry Division, Congressional 
  Research Service, Library of Congress..........................    15
Donnelly, Thomas F., Executive Vice President, National Water 
  Resource Association...........................................    37
Grebbien, Virginia, General Manager, Orange County Water 
  District, Fountain Valley, CA..................................    39
Johnson, Hon. Tim, U.S. Senator From South Dakota................     2
Keys, John W., III, Commissioner, Bureau of Reclamation, 
  Department of the Interior.....................................     3
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     1
Pack, Anthony J., General Manager, Eastern Municipal Water 
  District.......................................................    53

                                APPENDIX

Additional material submitted for the record.....................    55


                       TITLE XVI OF P.L. 102-575

                              ----------                              


                       TUESDAY, FEBRUARY 28, 2006

                               U.S. Senate,
                   Subcommittee on Water and Power,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:44 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. I call to order the Water and Power 
Subcommittee hearing of the Energy Committee. It is my pleasure 
to welcome you all here today. We have a pretty packed house, 
which is nice.
    We have before us this afternoon an oversight hearing on 
the Bureau of Reclamation's Title XVI Water Reclamation and 
Reuse program. I understand that joining us in the audience 
today are some members of the Association of California Water 
Agencies. I appreciate your interest in the hearing.
    The Bureau's Title XVI program originated in 1992 in 
response to the Southwestern drought in the late 1980's and 
early 1990's. At that time, Congress authorized the program in 
an attempt to alleviate pressure on the Colorado River system 
by augmenting existing supplies and developing new water 
sources. Since then, Congress has authorized some 31 projects 
and appropriated about $325 million for the program. However, 
only three of these projects have received full Federal 
funding. Nine are listed as inactive, meaning that they have 
received little or no Federal moneys. The administration has 
not been supportive of these new authorizations, arguing that 
M&I water supply is largely a State and local responsibility 
that is outside of the Bureau's core functions of delivering 
power and irrigation water. Last Congress, Commissioner Keys, 
who will be our first person to testify this afternoon, 
testified that there was a 15-year funding backlog for 
authorized projects that threatened to overwhelm the Bureau's 
budget. Now currently, there are some 11 Title XVI bills that 
would authorize an additional 19 projects pending before 
Congress. Before acting on these bills, this subcommittee asked 
the Congressional Research Service to undertake the first ever 
overview of the program. This process has taken several months 
and has led us to today's oversight hearing.
    We are pleased this afternoon to welcome Betsy Cody, the 
CRS analyst who performed the study, as a witness this 
afternoon. It's my understanding that shortly after this 
hearing, CRS will finalize its report and make it available to 
the public.* Now, in undertaking this review, we have been 
faced with some important and fundamental questions. First, 
what should the Federal role be in developing new sources of 
M&I water supply? Second, should the Title XVI program be 
terminated? Should we maintain the status quo, or should we 
work to reshape the program to make it more effective? And 
finally, if we develop legislation, what should the legislation 
look like? Should we decrease the Federal cost share, require a 
regional focus?
---------------------------------------------------------------------------
    * CRS Reports are made available to Congress. Members of Congress 
may then make them available to the public.
---------------------------------------------------------------------------
    So, this afternoon, we have a number of witnesses to help 
us address the question of Title XVI's future. First off, I 
would like to welcome Commissioner John Keys from the Bureau of 
Reclamation. It is my understanding that the administration is 
currently developing a legislative proposal to reform the Title 
XVI program. So, I'm pleased that the administration is taking 
a proactive approach in this area and look forward to hearing 
more about the forthcoming proposal.
    We will also have a second panel this afternoon, the 
stakeholder panel. We'll be hearing from Mr. Rich Atwater from 
the WateReuse Association, Mr. Tom Donnelly from the National 
Water Resources Association and Ms. Virginia Grebbien from the 
Orange Country Water District, which is a member of the 
Metropolitan Water District.
    The subcommittee is interested in learning about these 
stakeholders' experiences with the Title XVI program and any 
suggestions that they might have in order to make the program 
more effective. With that, Commissioner Keys, I'm delighted to 
have you here this afternoon and look forward to your testimony 
and your input on this issue of great importance to many of our 
States. Welcome.
    [The prepared statement of Senator Johnson follows:]
 Prepared Statement of Hon. Tim Johnson, U.S. Senator From South Dakota
    Thank you, Madame Chairman, for convening today's hearing. I would 
like to extend a welcome to Commissioner Keys of the Bureau of 
Reclamation, and to the other witnesses who have traveled here to 
provide us with their views on the Bureau of Reclamation's Title XVI 
Water Reclamation and Reuse Program.
    While we haven't yet made use of the Title XVI program in South 
Dakota, it does appear to me that water reuse and recycling is going to 
be a key part of the overall set of actions needed to meet future water 
demands--particularly in areas of rapidly increasing population. For 
that reason, I think this oversight hearing is a very valuable exercise 
to determine whether there is a consensus on some changes that can be 
made to the Program to strengthen it, and make it much more likely to 
gain support from the Administration in future budget cycles.
    I appreciate that the witnesses have come here today prepared to 
discuss their ideas for moving forward with the Title XVI program, and 
therefore look forward to a very good discussion this afternoon.
    Thank you again for your leadership on the subcommittee Madame 
Chairman. I look forward to working with you on this issue.

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

    Mr. Keys. Madam Chairman, it's a pleasure to be here today 
and discuss the Title XVI program with you and what we can do 
together to make it better for the American people. I have 
submitted a formal statement, and I would appreciate it being 
included for the record.
    Senator Murkowski. It will be included in its entirety.
    Mr. Keys. Madam Chairman, in the early years of Title XVI, 
the projects that were authorized and funded demonstrated new 
technologies that, once proven, could be adopted by others to 
improve water resources for communities in the Western United 
States. Since that new technology was demonstrated, Title XVI 
has not been producing the benefits for the taxpayers, Congress 
and the administration, the benefits that we should expect from 
that program. Since that new technology's been demonstrated, 
the program has gone a different direction, and that's what we 
would like to talk about.
    To understand why, let me start with a brief overview of 
Title XVI's history. In 1992, Congress authorized five Title 
XVI projects. The Secretary was also authorized to identify 
other water recycling opportunities throughout the 17 Western 
States and to conduct appraisal-level and feasibility-level 
studies to determine if those opportunities were worth pursuing 
at that time. Even though we have authority to conduct 
appraisal investigations and feasibility studies to help 
Congress evaluate those proposals, Title XVI project sponsors 
have sought project authorizations from Congress before 
completion of those studies in most cases.
    The result? They have been authorized without consistent 
criterion to determine whether they are technically and 
fiscally sound and whether they would help fulfill regional and 
Western water supply goals. Not applying these tests to Title 
XVI projects is inconsistent with the scrutiny and the analysis 
that we, in Reclamation, and you, in Congress, apply to every 
other water management infrastructure decision that we make. In 
1996, Congress authorized 18 additional projects, including two 
desalination research and development units.
    Since 1996, additional Title XVI amendments and other 
pieces of legislation have been enacted, and there are now 32 
projects authorized for construction in nine States.
    Since 1974, construction projects have generally been 
initiated by Congress. The administration has confined its 
funding requests to previously budgeted projects. Of the 32 
specific projects authorized to date, 21 have received funding. 
Of those, nine have been included in the President's budget.
    Reclamation will have spent nearly $325 million on these 
projects by the end of this fiscal year. Three projects have 
been fully funded. Two will complete their full funding in 
fiscal year 2006. The remaining projects are currently in 
various stages of planning or construction. Thirteen of the 21 
projects are currently producing reclaimed water. Based on 
current project plans, more than $340 million in post-2006 
Federal funding could be required to complete just those 
projects that have already received funding. Neither detailed 
project specifics nor feasibility analysis are currently 
available for most of the 11 projects that have yet to receive 
Federal funding assistance. Some of these projects are not 
being pursued by project sponsors at this time. That's the 
history.
    Now, let's talk about possible reforms of the Title XVI 
program. First, we believe that before projects are authorized 
for construction, their appraisal and feasibility studies 
should be completed, reviewed and approved by the Bureau of 
Reclamation and the Office of Management and Budget and 
submitted to Congress just as other conventional Reclamation 
projects are. That is not the current practice.
    Congress is asked to authorize projects without the benefit 
of adequate analysis that a feasibility study can and should 
provide at early stages of project screening. Second, we 
believe that the program needs explicit criterion by which 
project sponsors, Reclamation, and the Congress can measure the 
merit of the proposed projects. Some of these criterion could 
determine threshold eligibility in the earliest stages of the 
project planning. For example, does the project qualify for 
funding under some other Federal program? Does the project 
sponsor have a comprehensive water conservation program? Is the 
project located where it could help Reclamation carry out its 
core mission? Can the project proponent show that it can and 
will pay its share of the study, ultimately construction and 
operation and maintenance of the project?
    Beyond threshold eligibility criterion, we think that as 
projects progress through appraisal and feasibility, they 
should be rated among several ranking criteria that would help 
Congress and the administration prioritize those projects. For 
example, would the project actually alleviate water conflict or 
shortage? Would it add water supply in one of the hot spot 
areas that we have focused on in the Water 2025 program of 
Reclamation? Can it be brought on-line in a reasonable length 
of time?
    Now, solving the problem of how to justify these projects 
for future construction is one issue. Dealing with projects 
that have already been authorized for construction is another. 
These currently authorized projects fall into three categories: 
projects that have received Federal construction funds; 
projects that have not yet received funding, but whose project 
sponsors remain interested in their construction; and the third 
are projects that our best information says are no longer being 
pursued at this time. We believe that eligibility criteria 
similar to ones we suggest for use in pre-authorization studies 
and appraisals should also be legislated for projects that have 
not yet initiated construction.
    We would certainly like to explore with the committee 
solutions to the problems of obsolete authorizations. By that, 
I mean authorizations to build projects that the projects' own 
sponsors are now not pursuing. The administration is currently 
developing a legislative proposal to bring such proposals 
reforms to Title XVI. We need a framework under which Title XVI 
projects will be screened to ensure that they complement 
Reclamation's mission rather than simply consuming scarce 
budget dollars needed to meet our core obligations.
    Madam Chairman, we're looking forward to a project 
evaluation process similar to what we're doing in S. 895, the 
Rural Water Supply Act, reported by this committee and approved 
by the U.S. Senate last year. We're committed to working with 
this committee on this critical effort. The Title XVI program 
has a future. The reuse of wastewater and recycled water, we 
think, at times could be the next river of the Western United 
States to tap for critical water supply. It's up to us to 
figure the best way to do that. We think that having 
feasibility studies that show how those projects are done and 
that they meet a certain criterion before they are authorized 
for construction is the right way to go. We also think that 
there should be some criteria that says where they go, how 
they're built and what they address in the areas.
    Madam Chairman, that completes my statement, and I would be 
happy to answer any questions you may have.
    [The prepared statement of Mr. Keys follows:]

   Prepared Statement of John W. Keys, III, Commissioner, Bureau of 
                Reclamation, Department of the Interior

    Mr. Chairman and Members of the Subcommittee, I am John Keys, 
Commissioner of the Bureau of Reclamation. I am pleased to appear today 
to talk about Reclamation's Title XVI water recycling and reuse 
activities, including the history of Title XVI and the current status 
of authorized projects. I will also outline Reclamation's proposal to 
refocus Title XVI in the context of Reclamation's broader mission as 
the leading water resource agency in the West

                               BACKGROUND

    Beyond demonstrating then-new technology in the program's early 
years, Title XVI has not been producing the benefits that taxpayers, 
Congress, the Administration, and potential project sponsors deserve. 
To understand why, let me start with a brief overview of Title XVI's 
history. In 1992, Congress enacted the Reclamation Projects 
Authorization and Adjustment Act (Public Law 102-575). Title XVI of 
this Act, the Wastewater and Groundwater Study and Facilities Act, 
authorized the Secretary of the Interior to participate in the 
planning, design, and construction of five water reclamation and reuse 
projects. The Secretary was also authorized to develop a program that 
would identify other water recycling opportunities throughout the 17 
Western states, and to conduct appraisal-level and feasibility-level 
studies to determine if those opportunities are worthy of 
implementation. Finally, Title XVI authorized the Secretary to conduct 
research and construct demonstration facilities. Despite the 
authorization to conduct appraisal investigations and feasibility 
studies, Title XVI project sponsors have sought project authorizations 
from Congress before completion of such studies. Title XVI projects 
have therefore been authorized in an ad hoc manner, without consistent 
criteria to determine whether they are technically and fiscally sound 
and would help fulfill the Administration's goals. The failure to apply 
these tests to Title XVI projects is inconsistent with the scrutiny and 
analysis that should apply to every water management infrastructure 
decision we make.
    In 1996, Congress enacted Public Law 104-266, the Reclamation 
Recycling and Water Conservation Act. This law amended Title XVI of 
Public Law 102-575 and authorized the Secretary to participate in the 
planning, design, and construction of 18 additional projects, including 
two desalination research and development projects. Since 1996, 
additional Title XVI amendments and other pieces of legislation have 
been enacted and now there are 32 projects authorized for construction 
in nine states.
    In addition to significantly increasing the number of authorized 
construction projects, the Reclamation Recycling and Water Conservation 
Act of 1996 also placed several important limitations on Reclamation's 
involvement in water recycling projects. First, the maximum Federal 
cost share for new projects or projects that have yet to receive 
funding was limited to the lesser of 25 percent of total project costs 
or $20 million. Four of the five projects that were authorized in 1992 
and that had already received Federal funding were limited to the 
amounts specified in Reclamation's Fiscal Year 1997 budget 
justifications, which in each case was substantially higher than $20 
million. Second, the legislation originally stipulated that no Federal 
funding may be appropriated on an authorized project for construction 
activities until the Secretary or the non-Federal project sponsor 
completes a feasibility study, the Secretary has determined that the 
non-Federal project sponsor is financially capable of funding the non-
Federal share of the project costs, and a cost-share agreement with the 
non-Federal project sponsor is in place.
    Despite these stipulations, since 1994 construction projects have 
generally been initiated by Congress. The principle exception to this 
occurred in FY 2000, when Reclamation evaluated and ranked unfunded 
authorized projects for the purpose of prioritizing available 
construction funding for four new starts. Reclamation has not used a 
competitive process to allocate funds since FY 2000. Instead the 
Administration has confined its funding requests to previously budgeted 
projects.
    Of the 32 specific projects authorized to date, 21 have received 
funding. Of these, nine have been included in the President's budget 
request. Including anticipated expenditures during FY 2006, 
approximately $325 million will have been expended by Reclamation on 
these authorized projects by the end of the current fiscal year. Three 
of the projects have been funded to the full extent of their 
authorization. Two more should be fully funded in 2006.
    The remaining projects are currently in various stages of planning 
or construction. Thirteen of the 21 projects are currently producing 
and delivering reclaimed water. According to the project sponsors, 
approximately 118,000 acre-feet of reclaimed water were put to 
beneficial use in FY 2005. The sponsors indicate that further 
construction this year should result in an increase of about 42,000 
acre-feet in the amount of reclaimed water delivered for a total annual 
yield of about 160,000 acre-feet in FY 2006.
    Based on current project plans, more than $340 million in post-FY 
2006 Federal funding could be required to complete the maximum Federal 
cost share for those projects that have already received financial 
assistance. More than half of this amount, or approximately $182 
million, would go to just three projects that were authorized prior to 
the 1996 Title XVI amendments limiting the Federal cost-share to $20 
million per project. By the end of FY 2006, collectively, these three 
projects alone will have received approximately $138.5 million.
    Neither detailed project specifics nor feasibility analysis are 
currently available for most of the 1 1 projects that have yet to 
receive Federal funding assistance. Some of those projects are no 
longer being pursued by the project sponsors at this time; however, 
each of the unfunded projects has a Federal cost-share ceiling of $20 
million or 25%, whichever is less.

                              PART REVIEW

    In 2004, Reclamation worked with the Office of Management and 
Budget (OMB) to evaluate the Title XVI program using OMB's Program 
Assessment Rating Tool (PART), which overall was found to be Moderately 
Effective. The PART highlighted many of the problems and challenges we 
are discussing today. While the program is effective at obligating 
funds, and has helped to make new supplies of water available, two main 
problems can be inferred from the assessment: 1) it is difficult to 
assess progress, because the program's goals and timelines are unclear, 
mostly due to the large extent of local control; and 2) there is 
insufficient Reclamation involvement and oversight early in the project 
development process, leading to a proliferation of projects, many of 
which may have planning deficiencies or be inconsistent with the 
program's goals. Finally, a recent review of this PART concluded that 
its goals of promoting water reuse and recycling are consistent with 
the Water 2025 program's goals of diversifying water supplies, with the 
aim of proactively addressing water-related crises in the Reclamation 
states.

                            PROPOSED REFORMS

    Mr. Chairman, as population growth and diverse demands for water 
stress already limited supplies, Reclamation stakeholders throughout 
the West want Reclamation to address shortages and help avert 
conflicts. Title XVI projects have demonstrated that water recycling 
can be a viable water supply alternative in water short urban areas of 
the West. However, Title XVI has outgrown its original purpose--
demonstrating new technology. Fundamental reform is needed to ensure 
that the program produces results for the current needs of the West.
    First, we believe that before projects are authorized for 
construction their appraisal and feasibility studies should be 
completed, reviewed, and approved by Reclamation and the Office of 
Management and Budget and submitted to Congress. As we have often said, 
this is not current practice. As a result, Congress is asked to 
authorize projects without the benefit of adequate analysis that a 
feasibility study can and should provide at early stages of project 
screening. This information is essential to making informed decisions 
and establishing funding priorities.
    Second, we believe that project sponsors should understand the 
explicit criteria by which they, Reclamation, and Congress can measure 
the merit of their proposals. Some of these criteria could determine 
threshold eligibility in the earliest stages of project planning. For 
example, does the project qualify for funding under some other Federal 
program? Does the project sponsor have a comprehensive water 
conservation program? Is the project located where it could help 
Reclamation carry out its core mission? Can the project proponent show 
that it can and will pay its share of study and, ultimately, 
construction and Operations and Maintenance costs?
    Beyond threshold eligibility criteria, we think that as projects 
progress through appraisal and, if warranted, feasibility study phases, 
they should be rated against several ranking criteria that would help 
Congress and the Administration prioritize projects. For example, would 
the project actually alleviate water conflict? Would it add or 
diversify water supply in one of the ``hot spot'' areas that are also 
the focus of the Water 2025 program? Can it be brought on-line within a 
reasonable timeframe?
    Solving the problem of how to justify select projects for 
construction authorization does not address what should be done with 
projects that have already been authorized for construction. These 
currently authorized projects fall into at least three categories: 
projects that have received Federal construction funds; projects that 
have not yet received funding but whose project sponsors remain 
interested in pursuing them, and projects that our best information 
indicates are no longer being pursued by project sponsors.
    We believe that eligibility criteria similar to what we suggest for 
use in pre-authorization studies and appraisals should also be 
legislated for projects that have not yet initiated construction. 
Additionally, we would like to explore with this Committee solutions to 
the problem of obsolete authorizations (authorizations to fund projects 
that the sponsors are no longer pursuing). The Administration is 
currently developing a legislative proposal to bring such reforms to 
Title XVI. The proposal aims to create a framework under which Title 
XVI projects will be screened to ensure they complement Reclamation's 
mission, rather than diminishing Reclamation's ongoing core programs.
    Reclamation's desire to make project funding more competitive is 
shared by both non-Federal entities and a growing number in Congress; 
introducing more competition to the process should ultimately result in 
more on-the-ground benefits where they are most needed, and in better 
use of taxpayer funds. To make this a reality, Reclamation is 
considering different models for a project evaluation process to form 
the heart of Title XVI reform; among the options we are considering is 
the process contained in S. 895, the Rural Water Supply Act reported by 
this Committee and approved by the U.S. Senate unanimously in 2005. We 
are committed to working with this Committee on this critical effort. 
If Title XVI is to have a future, it must be adapted so that Congress, 
the Administration, and the American people can screen and prioritize 
projects to ensure that they serve Reclamation's core mission, target 
resources where they can have the greatest impact, and meet the needs 
of all American taxpayers.
    That concludes my testimony. I am pleased to answer any questions.

    Senator Murkowski. Thank you, Commissioner Keys. I 
appreciate you kind of putting in perspective, in the 
historical context, where we have come from on Title XVI. You 
made the comment that, initially, that the program was designed 
to demonstrate certain technologies; do you think that the 
original intent, then, of Title XVI, which was to demonstrate 
the water recycling technology and their applicability, do you 
think that that original intent has been completed and that the 
purposes of what we started out with, with Title XVI, are no 
longer needed? You've indicated that you believe that Title XVI 
has a future, but did we do what we set out to do, and now we 
need to look to phase two of Title XVI?
    Mr. Keys. Madam Chairman, I think that's a great way to put 
it. If you look at the whole Title XVI process, we were 
actually authorized in doing feasibility studies looking at 
demonstration projects before the Title XVI legislation was 
passed. We were looking at different areas in California where 
it may apply. Title XVI came along, gave that some funding and 
authorized five projects for construction. The purpose of those 
that were authorized for construction was to demonstrate that 
the theories that we had put together would work. I would tell 
you that I think we can claim success in the original Title XVI 
purpose and process.
    Senator Murkowski. So, you feel that the first part of this 
was a success. We have demonstrated these technologies, but 
we're beyond that demonstration phase now. And how would you 
describe, then, this second phase of Title XVI?
    Mr. Keys. Madam Chairman, I think--I don't think the whole 
process is flawed.
    Senator Murkowski. Okay.
    Mr. Keys. I think the purpose of looking at wastewater 
reuse and recycled water as a component of a water resources 
project, a conservation program, is still valid. What we're 
saying is that rather than have the projects authorized on an 
ad hoc or a random basis, there should be some method to it. 
And the method would be that you, in the Congress, authorize 
feasibility studies, we do those studies and then see where the 
projects are feasible, where they fit with the regional needs, 
where they fit with the hot spot maps, in other words, where we 
have ongoing conflict and contention out there, and then direct 
those projects into those areas.
    Our Water 2025 program is a good example of where we are 
directing resources, challenge grants into areas that have 
existing needs and where we can get something on the ground in 
a fairly short time. So, the original purpose is still there. 
We think there's a better way to do it.
    Senator Murkowski. I'd like to recognize that Senator 
Feinstein has joined us. Thank you, Senator.
    So, is it fair to say that if you perceive any flaws to the 
Title XVI program at this point, it is in the lack of a 
criteria or eligibility requirement, and that's the direction 
that reform needs to go, in your opinion?
    Mr. Keys. That's a big part of it, yes.
    Senator Murkowski. Is it the No. 1 concern as far as you 
would state?
    Mr. Keys. I would say it's the number one, followed very 
closely by needing the ability to have competition there, 
competition wherein the projects are implemented and where the 
most competitive ones are put in, in other words, the ones that 
give you the most saved water for the dollar. I think that is a 
close second to having some control over the authorization 
process.
    Senator Murkowski. I'm kind of skipping around here looking 
at the notes that I made while you were testifying. You made 
reference to eliminating, I guess, the obsolete authorizations. 
Can you tell me how many of the projects that we're looking at 
of the 31-some-odd you would consider to be obsolete 
authorizations and why they're obsolete?
    Mr. Keys. Madam Chairman, there are a number of projects 
that we understand the--even the project proponents are not 
following through on them anymore.
    Senator Murkowski. In terms of their share?
    Mr. Keys. They have either found alternate funding for 
them, or they have decided to find their water supply somewhere 
else. I think our view on the thing is we would look--those 
that are already being funded, let's get them done.
    Senator Murkowski. Okay.
    Mr. Keys. Those that are on-line, that are authorized and 
want to continue and that we have started funding, we will keep 
funding them.
    Senator Murkowski. And those are the nine programs that 
you've identified, then?
    Mr. Keys. Yes.
    Senator Murkowski. Okay.
    Mr. Keys. There are some that we have not started funding 
that have maybe not even finished their planning. They should 
have another look at them to be sure that they're consistent 
with the criteria that we're applying to new projects. Those 
that we talk about not funding or de-authorizing are those 
who--there are several, there are people that had them 
authorized, and now they don't want to do them anymore. Those 
are the ones we're talking about. And we would certainly work 
with you and the project sponsors. We're not trying to just 
kick some of them out.
    Senator Murkowski. Sure.
    Mr. Keys. We would certainly work with them and you to 
decide which ones we're not interested in pursuing anymore.
    Senator Murkowski. Let me ask you a little bit about the 
eligibility criteria, recognizing that you might perhaps have a 
different set of eligibility criteria for preauthorization, as 
opposed to those that are currently booked now.
    Mr. Keys. Okay.
    Senator Murkowski. Am I correct in assuming that there 
would be some differences or not?
    Mr. Keys. I think that that's something you and--your 
committee and us in Reclamation, with our stakeholders' input 
into that, could decide. In other words, if a project had 
already been authorized, I think that the step of just 
completing the feasibility may be adequate to say yes, we 
should go ahead. For one that has not even been authorized, 
then we go through the feasibility, look at the authorization 
and consider where it might be located or where there may be 
some competition of two or three projects, and we would say 
yes, this one fits that criteria, and the others don't.
    Senator Murkowski. You have testified to the need for 
legislation. It's your belief then that what has to happen in 
order to adequately address the reforms must come through 
legislation as opposed to an administrative directive?
    Mr. Keys. Madam Chairman, there are a number of the 
activities that we've talked about that could be done 
administratively. In other words, we could do the studies, some 
of the feasibility studies, under current authorizations. 
Requiring that feasibility study before construction 
authorization is something we would need legislation for. Being 
able to have competition among the different projects that are 
being considered for construction is something that we would 
need legislation for. So, there is some of it we could do 
administratively. There's others that we think that there 
should be some legislation.
    Senator Murkowski. Now, you also mentioned reference to the 
Rural Water program, that specific legislation. Do you also 
believe that the Federal share of the cost of the Title XVI 
program should be modeled after the rural water program?
    Mr. Keys. That's something that we could discuss. The 
different cost-share levels are something that are always 
contentious. In the rural water program, I think we ended up at 
25 to 30 percent that should be Federally funded or locally 
funded. The Title XVI program, so far, we have been limited to 
25 percent, or $20 million. I think that's something for us to 
consider with you and your committee as we develop the new 
legislation and what the proper levels should be.
    Senator Murkowski. Okay. Now, you also mentioned the Water 
2025 program and a desire to kind of realign Reclamation's 
water reuse activities to come into alignment with the goals of 
Water 2025. Do you see any fundamental differences between the 
Title XVI program as it now exists and what we're trying to 
achieve in Water 2025?
    Mr. Keys. I think there are three fundamental differences 
that we would consider. The first one is that the challenge 
grant program under Water 2025, they're targeted into those hot 
spot areas, those areas in the Western United States where we 
have identified conflict and the need for water conservation 
programs that will ease some of the water resource 
requirements.
    The second one is our Water 2025 programs are relatively 
short-term. Our challenge grants are just for 2 years, and they 
typically have to be done, and the whole project then is 
producing water within a relatively short term. Some of our 
Water 2025 ones are long-term developments.
    And the third part is that our Water 2025 programs are 
relatively small. In other words, it's unusual for us to have a 
Water 2025 program above $5 million, and some of our Title XVI 
programs are over $100 million and in the multiple tens of 
millions of dollars. So, those are the three fundamental 
differences between those two.
    Senator Murkowski. When speaking to the aspect of the 
funding and the funding levels, if the funding levels had 
stayed at their peak that we saw in 1999, how long would it 
have taken to reach the Federal ceiling for those original five 
projects that were authorized in 1992?
    Mr. Keys. Two of them are done.
    Senator Murkowski. Right.
    Mr. Keys. If you looked at San Diego, and if we had 
maintained the $28 million that was funded in 1999 that you 
mentioned, it would still have taken about 11 years to finish 
that project.
    Senator Murkowski. To get that one project or all five of 
them?
    Mr. Keys. That one project.
    Senator Murkowski. That one project.
    Mr. Keys. Yes.
    Senator Murkowski. Senator Feinstein, I don't know if you 
would like to make an opening statement, but I would certainly 
offer that to you and give you an opportunity to ask the 
Commissioner some questions. And I may have a few more for you 
when we've concluded.
    Senator Feinstein. Well, Madam Chairman, let me just say 
thank you for having this hearing. I believe I requested that 
you hold this hearing, and I'm really very grateful to you. 
I've been trying to sort out what the problem is, but there 
clearly is a big problem for my State, California, in that 
there have been a number of projects submitted, 1999, 2000, and 
nothing seems to happen with them. So, the question comes that 
if, in fact, it's $200,000 a project for them to study them, is 
this the best way to do it, since it's now 2006, and none of 
these projects are able to move ahead, as I understand it?
    It would almost seem to me that if the Bureau gave the 
local jurisdictions a set of criteria that they would need for 
approval and then let the local jurisdictions say this project 
meets your criteria or not, things would be sped up. As I 
understand it, the bottom line is in California none of these 
projects are moving forward. So, my question to Mr. Keys would 
be why is that?
    Mr. Keys. Senator Feinstein, there are a number of them 
that are moving forward. We have nine of them in our program 
this year that are being funded. I would tell you that----
    Senator Feinstein. Could you indicate which projects those 
are?
    Mr. Keys. Yes, ma'am. In our 2007 request, the Calleguas 
Municipal Water District has been proposed for money, the Long 
Beach Area Water Reclamation has been recognized, North San 
Diego County, Orange County, San Diego Area--boy, San Diego's 
got two in there--San Gabriel, San Jose and then our Water 
Reuse Foundation money. So, one, two, three, four, five, six, 
seven, eight. I said nine, and it appears that one of them is 
in Arizona, so there--that would be eight in California.
    Senator Feinstein. And could you tell me how many 
California projects are pending?
    Mr. Keys. Yes, ma'am. It looks like we have about 20 or 21 
on the books.
    Senator Feinstein. Okay. Now, how long will it take before 
those 21--if I understand what you're saying, you're saying the 
2007 bill approves nine specific California projects; is that 
right?
    Mr. Keys. There are funds in our request for fiscal year 
2007 that are targeted for nine Title XVI projects.
    Senator Feinstein. Okay. Now, for the other 21, is it true 
that it takes about $200,000 per project for the study?
    Mr. Keys. Well, Senator Feinstein, they are at different 
levels. Some of them have completed feasibility studies. Some 
of them have not. And I could not tell you that it's $200,000 
each. I don't know that figure.
    Senator Feinstein. Well----
    Mr. Keys. But we could certainly supply that for you.
    Senator Feinstein. I think what I'm looking for is the most 
cost-effective way to move these projects forward. In my State, 
this is a very big deal, and we get constant importunings--
please, please move the project, it's caught up in bureaucracy, 
it's been there year after year after year.
    So, the question comes, what do you do to break this? And I 
wonder, would it make sense if you just submitted the criteria 
that a project would have to meet for Federal funding and then 
let the local jurisdiction certify that, in fact, that project 
would meet that criteria?
    Mr. Keys. Senator Feinstein, we put out guidelines for 
those proposals in 1998, and they've been out there for folks 
to follow all along. I would tell you that a good share of 
those that have been authorized, they have not completed the 
feasibility studies along those guidelines.
    Senator Feinstein. Then there's a problem, because my staff 
just said many of them have submitted the studies.
    Mr. Keys. Right, some of them have.
    Senator Feinstein. They can't get action.
    Mr. Keys. Well, Senator Feinstein, we live in a time of 
flat budgets, or even decreasing budgets, and we only have so 
much money to go around. What we're trying to do is concentrate 
the money that we have onto those that are already under 
construction. For us to start construction on some that have 
not received money already, I think would be irresponsible, 
because we would then be making promises that we couldn't keep. 
So, we're trying to concentrate on those that we already have 
under construction.
    Senator Feinstein. So, you're saying that no new projects 
are being considered? Is that correct?
    Mr. Keys. Senator, we never say never. The Appropriations 
Committee at times funds things that we don't propose.
    Senator Feinstein. Madam Chairman, this is the problem. 
What I hear is constant frustration, that people have submitted 
their information, and it doesn't get approved, and so they 
come to us year after year after year importuning something to 
happen, because for many, this recycling is a very big deal and 
very important.
    And I'm just wondering if there isn't any way we can't save 
money for the Federal Government if, in fact, each one of these 
nine projects has cost $200,000 to study before it gets 
granted, if it isn't possible to be able to do it another way.
    And if I understand, Mr. Keys, you're reluctant to admit 
there is a better way.
    Mr. Keys. Senator Feinstein, I think there is a better way. 
I think the better way is for us to be sure that we have those 
feasibility studies done, and then, after they're done, come 
back to Congress and let Congress authorize them for 
construction and be sure that they're directed into those areas 
that fit with where Reclamation belongs. In a lot of cases, a 
lot of those projects that are authorized are not even within 
Reclamation project boundaries or in some of our territory 
there.
    Senator Feinstein. Oh.
    Mr. Keys. So, we're reluctant to start some of those, but 
we--like I said, we do what Congress says.
    Senator Feinstein. So, what you're saying is even if a 
project is authorized, if it doesn't fit your parameters, you 
don't fund it?
    Mr. Keys. Currently, that is not the case, because we don't 
have the authority to do that. We're asking to work with this 
committee to develop criterion so that they can be directed 
into those areas where we're short, where there are potentials 
for conflicts between water users, and this would help solve 
part of their water resource problem.
    Senator Feinstein. Would it be asking too much to ask you 
to give us a list of these projects, the nine plus the 21, the 
30 in California, with exactly where each one is, and if there 
is a problem, what that problem is?
    Mr. Keys. Senator, we'd be glad to furnish that.
    Senator Feinstein. Thank you very much. Could I receive it 
soonest?
    Mr. Keys. Yes, ma'am.
    Senator Feinstein. I appreciate that very much.
    Mr. Keys. Will do.
    Senator Feinstein. Thank you. Thanks, Madam Chairman.
    Senator Murkowski. Thank you, Senator Feinstein. 
Commissioner, I've got a question now. I thought that I kind of 
had a sense, in terms of these nine projects, that you are 
proposing to move forward for funding, and in looking at some 
of the charts that we have, for instance, the--and I'm going to 
mispronounce it, the Calleguas----
    Mr. Keys. Calleguas.
    Senator Feinstein. Calleguas, you said?
    Senator Murkowski. I'll let you say it, Calleguas. The 
Calleguas water study is included in your recommendations as 
one of the projects. And as I understand, that has already 
received Title XVI funding, about 44 percent of the Federal 
share. So, these projects that we're talking about, the nine 
that you have identified, are not necessarily for a feasibility 
study because--is that correct?
    Mr. Keys. The nine that I mentioned are ones that have 
already been authorized.
    Senator Murkowski. Okay.
    Mr. Keys. We have started construction, and we have put 
money into them.
    Senator Murkowski. Right, so we're not going back and doing 
a feasibility study on these. We're moving forward with these 
Federal funds to get----
    Mr. Keys. They--for example----
    Senator Murkowski [continuing]. Completion.
    Mr. Keys. Yes, ma'am.
    Senator Murkowski. Go ahead.
    Mr. Keys. For example, the Calleguas one, the money that we 
had put in through 2006 was $8.85 million. That means that the 
money that would potentially be put into there later on is up 
to $11 million, under the $20 million dollar cap. So, it's one 
of the ones that we have included in the President's request 
for fiscal year 2007, so that we can get it done.
    Senator Murkowski. Right.
    Mr. Keys. And these nine that I mentioned, that's what 
those are, the ones that had been funded previously, and we 
think should go ahead and be completed.
    Senator Murkowski. With these nine, if in fact, they go 
forward at these levels that you have recommended, how many of 
these nine then will be 100 percent complete?
    Mr. Keys. At the end of 2006, which is the current fiscal 
year, two of them will be complete. There are none that we 
would finish up in 2007.
    Senator Murkowski. Okay. All right. But what you're saying, 
though, is that it gets these nine projects further down the 
road toward completion, we're not looking at feasibility study 
money for any of these nine.
    Mr. Keys. That's correct.
    Senator Murkowski. Okay.
    Mr. Keys. That's correct.
    Senator Murkowski. All right, that helps me in just kind of 
understanding what we're doing there then. I had a question 
just in terms of how Title XVI is rated. Do you evaluate Title 
XVI using the program assessment rating tool utilized by OMB? 
And if so, how does that work or how did it work?
    Mr. Keys. Well, Madam Chairman, the PART exercise was an 
effort by the Office of Management and Budget to rate our 
program in how it's functioning. It does not rate the 
individual elements, in other words, the different projects 
that are authorized for construction. It evaluates the process 
and the program that is there.
    It was rated moderately effective, and what that means is 
that it has a primary weakness, and the primary weakness is 
that Reclamation has little impact on the program 
accomplishments, on the construction, on the methodology, on 
finishing the projects. In other words, we just pass the money 
through. And we were rated moderately effective because of 
that.
    Senator Murkowski. So, OMB gives you that rating. Have you, 
then, done anything in response to that PART rating to address 
the concerns or the issues that were raised in that review?
    Mr. Keys. Madam Chairman, that's one of the reasons we're 
here.
    Senator Murkowski. Okay, all right. Well, whatever it takes 
to get the program to function. I believe you stated that Title 
XVI does have a future. It's quite clear, from those who are 
listening, that there is a keen interest in figuring out how we 
can provide for the funding for these projects. But probably 
more importantly is how we prioritize them, because in times 
where we recognize that we've got budgets that are tighter, 
prioritization is something that is key. And I guess I look at 
what I understand of the program, and there's very little to 
give you a sense as to what has been given a priority.
    We, here in the Congress, can move forward to authorize 
something, but from the Bureau's perspective, you then have 
these projects that you're looking to, but in terms of where 
you put the funding next is an issue. So, I guess I'm looking 
at this and saying if we can enhance the process by having 
criteria that I think, as Senator Feinstein points out, people 
know in advance, they know what it is that they've got to meet 
in terms of eligibility criteria, you can perhaps have a more 
successful program. Senator Feinstein, do you have any further 
questions that you would like to address to the commissioner?
    Senator Feinstein. No, I think that's it. I really 
appreciate what you're doing, Madam Chairman, because I think 
we do need clarity. Did you want to say something, Mr. Keys?
    Mr. Keys. Yes, ma'am. Let me just say that the goals of 
Title XVI need to be done. Wastewater is a valuable asset out 
there that we should take advantage of, and what we're saying 
is that the Title XVI program, as it was originally formed and 
enacted and so forth, we can claim success from that because we 
have demonstrated the methodologies, we've demonstrated that 
it's a valuable part of water resource management.
    We think it's time to move to the next stage in that and be 
sure that we are getting the best result for the dollars that 
we're putting into it. In other words, we are supporting good, 
feasible projects, and they're being directed into those areas 
that are most challenged for water supply now. I think that 
kind of summarizes what we're trying to say, and we're willing 
to work with this committee and the Congress to try to produce 
a bill that will make it easier to do that.
    Senator Feinstein. I think that's very good. From my State, 
for example, I'm an appropriator, and I'm on that Appropriation 
Subcommittee. It would be very useful to have some 
prioritization so that we knew that the best projects were the 
ones that were getting the money. Right now, that really isn't 
possible, and that's why this list would be very useful. And 
then if somebody has a problem, they can find out what that 
problem is.
    Mr. Keys. Right.
    Senator Feinstein. I appreciate that.
    Mr. Keys. We will certainly provide that for you.
    Senator Feinstein. Thank you.
    Senator Murkowski. Thank you, Commissioner. I appreciate 
you being here today. With that, we'll call up the second 
panel. Welcome to all of you. On our second panel, we have 
Betsy Cody, who is with the Congressional Research Service. We 
also have Mr. Richard Atwater, the chairman of the Legislative 
Committee of the WateReuse Association; Mr. Thomas Donnelly, 
executive vice president of National Water Resources 
Association; and Ms. Virginia Grebbien, General Manager for 
Orange County Water District. Welcome to you all. We'll just 
start here at the end with Ms. Cody and move on down the line.

  STATEMENT OF BETSY A. CODY, SPECIALIST IN NATURAL RESOURCES 
      POLICY, RESOURCES, SCIENCE, AND INDUSTRY DIVISION, 
      CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS

    Ms. Cody. Well, thank you, Madam Chairman for the 
opportunity to appear before the subcommittee today. My name 
again for the record is Betsy Cody. I am a specialist in 
Natural Resources Policy with the Congressional Research 
Service, Library of Congress, where I've worked on Western 
water and natural resource issues since 1989.
    I've been asked by the subcommittee to provide information 
on the status of Reclamation's Title XVI Water Reuse and 
Reclamation program, as well as to highlight issues in its 
implementation. My written testimony, begins with a brief 
discussion of the broader context in which the Title XVI 
program is being implemented, as well as conflicts that have 
arisen in implementation and fundamental issues facing the 
109th Congress regarding the program's future. As requested, my 
written testimony also provides background on the Title XVI 
program, its genesis and where it stands today. With your 
permission, I'd like to request that my written testimony be 
entered into the record.
    Senator Murkowski. It will be included, as will the written 
testimony of all the participants this afternoon. Thank you.
    Ms. Cody. Thank you. I'd like to start with the context of 
where we are today, and we've heard some of that from 
Reclamation. Today, growing populations and changing values 
have increased demands on water supply throughout the West, as 
you're all familiar with.
    Senator Feinstein. Is your microphone on? It's hard to 
hear.
    Senator Murkowski. Pull it closer.
    Ms. Cody. Okay, all right. Growing populations and changing 
values have increased demands on water supplies and river 
systems, resulting in water use management conflicts throughout 
the country, particularly in the West where population growth 
and climate variability make managing water supplies especially 
challenging. As you know, in many Western States, agricultural 
demands are often in direct conflict with urban demands and 
other resource demands.
    Two figures in appendix A of my written testimony 
illustrate these points. The first is a copy of the Department 
of the Interior's hot spots figure where the Department has 
identified areas of potential water supply crises or conflicts. 
It's important to note that these areas are identified by 
Reclamation as areas already experiencing tension between 
available water supplies and water demand.
    The second figure shows the rapid growth in Western States, 
particularly in the Colorado River Basin region and southern 
California. The figure also shows the ranking of each State in 
growth as compared to the rest of the country. Five of the 
country's fastest growing States are among the 17 Reclamation 
states, and eight of the top 12 are among the traditional 17 
Western Reclamation States. If it pleases the Chair, I'd also 
like to introduce a third figure for the record, and I've asked 
staff to pass this out to members, who should have it by now.
    Senator Murkowski. We do, and it will be included as part 
of the record.
    Ms. Cody. All right, thank you. This figure, produced by 
CRS/the Library of Congress, depicts the Title XVI projects 
that have been authorized in the 17 traditional Reclamation 
States. It depicts them as an overlay on the first 
illustration, Reclamation's identification of hot spots in the 
West. The numbers on the left indicate the total number of 
projects. Our numbers differ slightly from Reclamation's mainly 
due to the way we count projects. They count one that we don't 
count, and we count one that they count as three, but those are 
minor details. The point--the major point--remains the same, 
that there are more than 30 reuse projects authorized for 
construction in the eight traditional Reclamation States and in 
the State of Hawaii.
    In the CRS figure, the darkest blue triangles represent 
completed projects. The grayish-blue triangles represent the 
other projects that have received some Title XVI funding. That 
doesn't mean they're in this year's budget request necessarily. 
Together, these total approximately 21 projects that have 
received Title XVI funding. The light-blue triangles represent 
the authorized projects that have not received Title XVI 
funding or have been identified by Reclamation in the recent 
past as inactive. And that's a moving target, so don't get too 
settled on those numbers.
    The projects are largely ordered by their authorization, 
that is, the earliest ones, No. 1, would be the initial 1992 
authorization, and if you count down about--well, there were 18 
authorized in 1996 and so on--so, they're largely ordered by 
their authorization, and then they correspond roughly to their 
location on the illustration, except for the San Joaquin 
Recycling Project and the Hawaii Authorization. Those two are 
not depicted. One, Hawaii was not in the original Reclamation 
Act, and we've had information from the San Joaquin project 
sponsors that they may not be pursuing that project, so it's 
not shown on the illustration.
    As you can see, nearly half of these projects are located 
in southern California. This concentration largely reflects the 
direction of the original program authorization, which, many in 
this room will recall, was begun in the midst of a 6-year 
drought in California and the Southwest. I have more on this 
early history in my written testimony.
    A total capacity of 750,000 acre-feet is estimated to be 
available when construction is complete on the active projects. 
CRS estimates that another 30,000 to 50,000 would be available 
if authorized projects for which we would be able to obtain 
information were to be constructed as contemplated, today. CRS 
found that at least six of the unfunded projects are still 
contemplating future development. However, they're in various 
stages of planning. One or two have started construction. The 
others are still in pre-feasibility study phase, so they 
differ. We were not able to contact all of those unauthorized 
projects; however, we'll continue to try.
    I'd like to turn now to issues. There's more on project 
status in the table and in my testimony. As Commissioner Keys 
has explained, the program has been controversial in recent 
years, and as members of the committee have commented on as 
well. While demand for these projects appears to be increasing, 
and Congress has authorized several new Title XVI projects over 
the years, the administration has opposed most new projects and 
accordingly has requested funding only for projects it has 
previously budgeted. The administration has also stated that 
Title XVI projects are not part of its core mission, and at 
times, has stated the activities are a local responsibility. 
These latter two issues may relate--from a water resources 
professional standpoint--to the traditional role of water 
resource development agencies, primarily developing water 
supply for M&I purposes, municipal and industrial purposes, as 
they are connected to multipurpose projects like flood control, 
navigation, hydro power, and in the case of Reclamation, 
irrigation water supply. That's an issue, again, I touch on in 
the written testimony, that providing water specifically for 
M&I uses for Reclamation has not been a traditional role except 
in relation to these big projects.
    Other issues appear to be largely concentrated on, one, 
project evaluation, which I think we've heard a lot about 
today; two, authorization, the issues that have been brought up 
in the questions of Commissioner Keys; and three, the funding 
issues. These issues are addressed in greater detail in my 
written testimony. Also, CRS has identified several policy 
options that Congress may wish to consider as it contemplates 
the future of the Title XVI program. A report on these options 
and assessment of how Reclamation's proposal, what we heard 
about today, might fit with these options, and a brief analysis 
of options is forthcoming--will be in a CRS report available 
for Congress.
    In summary, it appears that the growing local demand for 
these projects combined with differences in congressional and 
administrative priorities in approving and in funding projects 
has resulted in a backlog of sparsely funded and unfunded 
projects and unmet demand. Ultimately, this has raised 
questions--a question of what is the future of the Title XVI 
program. Thank you, and this concludes my testimony.
    [The prepared statement of Ms. Cody follows:]

 Prepared Statement of Betsy A. Cody, Specialist in Natural Resources 
   Policy, Resources, Science, and Industry Division, Congressional 
                          Research Service \1\
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    \1\ Nicole T. Carter, Analyst in Environmental Policy, Resources, 
Science, and Industry Division, assisted in the preparation of this 
testimony.
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  THE BUREAU OF RECLAMATION'S TITLE XVI PROGRAM: IMPLEMENTATION ISSUES

    Thank you Madame Chairman for the opportunity to appear before the 
Subcommittee today. I have been asked to provide Members of the 
Subcommittee with background information on the Bureau of Reclamation's 
Title XVI water reuse and reclamation program, as well as to highlight 
issues in its implementation. My testimony begins with a brief 
discussion of the broader context in which this program is being 
implemented, conflicts that have arisen in implementation, and 
fundamental issues facing the 109th Congress regarding the program's 
future. As requested, my testimony also provides background on the 
Title XVI program, including its genesis, and where it stands today.

              CONTEXT OF TITLE XVI IMPLEMENTATION IN 2006

    Growing populations and changing values have increased demands on 
water supplies and river systems, resulting in water use and management 
conflicts throughout the country. These demands are particularly 
evident in the arid West, where population has increased dramatically 
since Title XVI was first authorized, and where climate variability 
makes managing water supplies especially challenging. In many western 
states, agricultural demands are often in direct conflict with urban 
demands, as well as with water demand for threatened and endangered 
species, recreation, and scenic enjoyment. Areas where these conflicts 
are especially prevalent are illustrated in a figure developed by the 
Department of the Interior to display potential areas of conflict over 
water resources, or ``Hot-Spots'' (see Appendix A).* Further 
highlighting the population issue is a U.S. Geological Survey 
illustration showing recent population growth in the western states 
(see Appendix A).
---------------------------------------------------------------------------
    * The appendix has been retained in subcommittee files.
---------------------------------------------------------------------------
    Debate over western water resources revolves around the issue of 
how best to plan for and manage the use of this renewable, yet 
sometimes scarce and increasingly sought after, resource. Some 
observers advocate enhancing water supplies, such as through building 
new storage or diversion projects, expanding old ones, and funding 
water reclamation and reuse facilities. Others emphasize managing 
existing supplies more efficiently--through conservation and revision 
of policies that are seen as encouraging inefficient water use, such as 
using market mechanisms or providing better price signals, which 
theoretically would result in more efficient water use. In practice, 
all of these tools are used by western water managers to varying 
degrees; and all have been addressed by Congress, again to varying 
degrees.
    To address some of the growing challenges in western water 
management in the early 1990s, Congress directed the Secretary of the 
Interior (Secretary) to establish a federal water reclamation, 
recycling and reuse program (Title XVI of P.L. 102-575; 43 U.S.C. 
390h). Under the Title XVI program, the Secretary is directed to 
``investigate and identify'' opportunities for water reclamation and 
reuse in the West, for design and construction of ``demonstration and 
permanent facilities to reclaim and reuse wastewater, and to conduct 
research, including desalting, for the reclamation of wastewater and 
naturally impaired ground and surface waters'' (43 U.S.C. 390h(a)).
    Today, the Title XVI program seems to be at a cross-road. The 
program has been controversial in recent years because of concerns over 
its implementation. As reuse\2\ and desalination have become more 
viable options for addressing a variety of water management issues, the 
number of legislative proposals for Title XVI project authorizations 
has increased. At the same time, Administration support for the program 
has encountered many changes--from full support prior to enactment of 
Title XVI in 1992--to the present, where the Administration has found 
it cannot support much of the proposed legislation to authorize new 
projects.\3\ Also during this time, congressional authorization of new 
projects has been significantly less than demand.\4\ This situation has 
created frustration and confusion over the existing program, its 
future, and to some degree, the future role of the Bureau of 
Reclamation in the rapidly growing West. Frustration is especially 
apparent among project sponsors whose authorized projects remain 
unfunded or receive limited funding, and sponsors of pending project 
proposals, resulting in increased pressure on Congress and the 
Administration to address program issues.
---------------------------------------------------------------------------
    \2\ For the purposes of this testimony, water reuse connotes the 
planned beneficial use (e.g., landscape watering, agricultural 
irrigation, and industrial cooling) of treated municipal wastewater. 
Water reclamation is the treatment of wastewater or other impaired 
surface or groundwaters (e.g., seawater, or groundwater with high 
levels of arsenic) to make it usable or reusable. Water recycling 
generally connotes the use of wastewater that is captured and 
redirected back into the same water scheme, such as the multiple reuse 
of water in a manufacturing facility.
    \3\ For example, the Administration, when asked, has testified 
against every Title XVI bill in the 108th Congress and most of the 
pending bills in the 109th Congress, mostly because of budgetary and 
project feasibility concerns (discussed below).
    \4\ Two of approximately 13 project authorization bills were 
enacted by the end of the 108th Congress, and 1 bill has been enacted 
thus far in the 109th, with 16 individual project proposals pending in 
legislation. A total of 6 new projects have been authorized since 1996.
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                           TITLE XVI OVERVIEW

    The Bureau of Reclamation's Title XVI program is the only active 
federal program providing localities with financial and technical 
assistance for the development and construction of facilities for the 
reuse of wastewater and reclamation (including desalination) of 
impaired surface and ground waters.\5\ Although both the U.S. Army 
Corps of Engineers and the EPA have limited authorities to provide 
assistance to local entities for recycling projects (e.g., specific 
provisions in 1992 and 1999 Water Resources Development Acts,\6\ a 
pilot program by EPA under the Alternative Water Sources Act,\7\ and 
general Clean Water Act water treatment and wastewater authorities\8\), 
neither has an established, regularly funded program dedicated to such 
activities. However, in its review of federal agency programs, CEQ 
found that ``a broad range of federal agency program activities employ 
water reuse, recycling, and reclamation technologies to achieve 
conservation and other program objectives.''
---------------------------------------------------------------------------
    \5\ U.S. Executive Office of the President, Council on 
Environmental Quality, Federal Agency Water Reuse Programs, A Report to 
Congress, white paper published October 3, 2005, p. 3. This report 
confirms earlier findings of the Office of Management and Budget (OMB). 
Hereafter referred to as the CEQ report. See also, U.S. Executive 
Office of the President, Office of Management and Budget, Performance 
and Management Assessments. Budget of the U.S. Government, Fiscal Year 
2004 (Washington, DC: U.S. Govt. Print. Off., Feb. 2003), p. 173. See 
also, PART worksheets for the Department of the Interior's Title XVI 
water reclamation and reuse program at:[http://www.whitehouse.gov/omb/
budget/fy2004/pma.htmll, p. 2.
    \6\ 217 of P.L. 102-580, and 502 of P.L. 106-53, respectively. 
Some of these activities received funding for FY2003 in Title I of the 
Energy and Water Development Appropriation Act for FY2003 (P.L. 108-7; 
Division D). The Corps also has authority for design and construction 
of Everglades wastewater reuse technology (P.L. 106-541). In all, it 
appears $110.5 million in assistance has been authorized for Corps 
water reuse activities, with approximately $22.6 million appropriated 
as of FY2003.
    \7\ Title VI of P.L. 106-457. (Clean Water Act Section 220; 33 
U.S.C.  1300.)
    \8\ According to CEQ (CEQ report, p. 8 and 9), water reuse, 
recycling, and reclamation activities fall within larger EPA program 
areas of water treatment, wastewater management, or water resources 
management (33 U.S.C. 1376). According to the CEQ report, funding for 
certain aspects of water reuse, recycling, and reclamation project may 
be available via Clean Water Act and Safe Drinking Water Act State 
Revolving Funds. Although funds are not specifically authorized by 
Congress or targeted by EPA for such purposes, Congress has 
periodically specified funding for individual reuse projects. For 
example, project-specific reuse funding in FY2005 totaled $6.4 million.
---------------------------------------------------------------------------
                           PROGRAM BEGINNINGS

    In 1992, Congress directed the Secretary to establish a program to 
investigate and identify opportunities for wastewater reuse and 
reclamation of naturally impaired ground and surface waters in the 17 
western states (Reclamation Wastewater and Groundwater Study and 
Facilities Act, Title XVI of P.L. 102-575; 43 U.S.C. 390h(a)).\9\ 
Responsibility for undertaking the new program--commonly referred to as 
the Title XVI program--was assigned to the Department of the Interior's 
Bureau of Reclamation (Reclamation). As part of the original 
authorizing statute, the Secretary is directed to undertake appraisal 
investigations to identify opportunities for water reclamation and 
reuse, and is authorized to participate with federal, state, regional, 
and local authorities in developing feasibility studies.
---------------------------------------------------------------------------
    \9\ Congress has since authorized Title XVI activities in Hawaii.
---------------------------------------------------------------------------
    The genesis for Reclamation's wastewater reclamation, recycling, 
and reuse program was a 6-year western drought of the late 1980s and 
early 1990s. The drought hit California and the Southwest particularly 
hard. In response, this subcommittee and its House counterpart, the 
House Resources Water and Power Subcommittee, spent much time debating 
federal water supply policies, including how to address conflicts 
between the need and desire for continued operation of federal 
reclamation projects and the application of state and federal 
environmental laws that could potentially limit water deliveries to 
protect certain species or to comply with water quality standards. The 
result of several years' effort in addressing this conflict was the 
Reclamation Projects Authorization and Adjustment Act of 1992 (P.L. 
102-575). While much attention has been paid to Title XXXIV of this Act 
(the Central Valley Project Improvement Act), Title XVI, the 
Reclamation Wastewater and Groundwater Studies and Facilities Act, 
authorized construction of five specific water reuse and reclamation 
projects in Arizona and California and established what is known as the 
Title XVI program. The Act also authorized a comprehensive reuse study 
for Southern California, including Colorado River hydrologic regions. 
The latter provides specific statutory authority for activities that 
were underway in 1991 in response to then-Secretary Manuel Lujan's 
announcement of a ``Comprehensive Water Reuse Initiative'' for Southern 
California and speaks to what was perceived to be an important federal 
interest in the management of the Colorado River.\10\
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    \10\ U.S. Department of the Interior, Interior Secretary Lujan 
Announces Comprehensive Water Reuse Initiative for Southern California, 
News Release, Office of the Secretary, August 5, 1991. According to 
materials provided to CRS on October 25, 1991, Reclamation undertook a 
number of activities that fall, including developing a detailed action 
plan for promoting the initiative. By October 23, 1991, Reclamation had 
held its first pre-planning committee meeting for the Southern 
California Water Reclamation and Reuse Study.

          In addition to increasing the water supplies available to the 
        area [southern California], this program would also decrease 
        the area's dependency on water imports from the Colorado River, 
        California, and Los Angeles Aqueducts, help restore and protect 
        the quality of existing ground-water reserves, and help meet 
        environmental water needs. Lujan said . . . ``Reclaimed water--
        one of the most dependable, abundant and underutilized water 
        supplies available--could provide as much as 2 million acre-
        feet of water each year for the area.'' \11\
---------------------------------------------------------------------------
    \11\ Ibid., p.1.

    The completion and submission of this study and whether or not it 
is a ``feasibility study'' has a long history and has remained a point 
of contention among southern California stakeholders and Reclamation to 
this day.\12\ In sum, this large undertaking (capable of producing 
450,000 acre-feet of water annually), which is directly linked to the 
Title XVI program's creation, became caught up in apparent shifts in 
Administration policy on, and congressional oversight of, the Title XVI 
program.\13\
---------------------------------------------------------------------------
    \12\ Reclamation undertook the ``Southern California Comprehensive 
Water Reclamation and Reuse Study'', along with eight state and local 
agencies. The effort was later broadened to include 70 water supply and 
wastewater treatment agencies in southern California. The study was 
largely completed by April 2001 and was published as a final report in 
July 2002 (2002 Report); however, the report was not officially 
submitted to Congress, as required under the Act (Section 1606(c), 
which requires submission of the study within six years of the first 
appropriations for the title (by FY2000)). According to an October 2003 
letter to relevant project managers, the Department of the Interior 
found the original report contained ``more detail than desired for a 
submittal [sic.] to Congress.'' The then-Assistant Secretary for Water 
and Science then asked Reclamation to prepare a ``. . . concise, to-
the-point version of that Report.'' The Southern California 
Comprehensive Water Reclamation and Reuse Study, Reclamation Compendium 
was submitted to Congress February 20, 2004. However, the word 
feasibility was stricken from the ``compendium,'' raising the question 
of whether the submission complies with the directives of Section 1606.
    \13\ An apparent policy shift occurred during preparation of the 
FY2004 Reclamation budget, a process that included an evaluation of the 
program's effectiveness by the Office of Management and Budget (OMB) 
through its Program Rating and Assessment Tool (PART), the results of 
which are discussed in the Title XVI Policy Issues section below. It 
appears that since that time, congressional project authorizations 
slowed, although many legislative proposals are pending. (Re: apparent 
policy shift, see: U.S. Department of the Interior, letter from the 
Secretary of the Interior, Gale A. Norton, and Deputy Secretary of the 
Interior, Steven Griles, to the Solicitor, Inspector General, Assistant 
Secretaries, and Heads of Bureaus and Offices, stamped Nov. 22, 2002. 
Subject: Conclusion of the Fiscal Year 2004 Budget Formulation Process. 
The letter thanks officials for their efforts in identifying activities 
that could be scaled back or eliminated and notes a Reclamation 
proposal to ``devolve significant responsibilities in the Water 
Reclamation and Reuse (Title XVI) program'' in order to conserve 
resources to ``implement innovative, new approaches to address long-
standing problems such as those relating to endangered species.'')
---------------------------------------------------------------------------
                            TITLE XVI TODAY

    Title XVI has been amended multiple times since 1992, resulting in 
a total of 31 currently authorized projects in 8 western states and 
Hawaii (see Table 1).\14\ To date, Reclamation has undertaken planning, 
design, and/or engineering activities for 21 projects. Although the 
program includes projects for both water reuse and desalination of 
saline water (both brackish groundwater and seawater), the majority of 
Title XVI projects have been authorized for reclamation of municipal 
wastewater.
---------------------------------------------------------------------------
    \14\ Total number of projects is subject to interpretation. 
Reclamation does not include the Port Hueneme Desalination project in 
its summation of total project authorizations or list of ``active'' 
projects, because it was authorized under general authority of the 1996 
amendments, and was not specifically authorized by Congress as have 
been the other projects. However, because Reclamation includes the 
project in its budget itemization, including totals on estimated 
project funding to date and water to be reclaimed, etc., CRS includes 
it in its total project count. CRS also has counted the Hawaii 
authorization as one project; whereas, Reclamation counts it as three 
projects.
---------------------------------------------------------------------------
    Nearly half of the projects are concentrated in southern 
California. This concentration reflects the direction of the program as 
first authorized. Most of the largest projects were authorized in 1992, 
before federal contributions were capped.
    Project Funding. The federal share of project costs under Title XVI 
is limited to 25% of total project costs. Amendments in 1996 (P.L. 104-
266) authorized numerous new projects, and added new program guidance. 
Specifically, the amendments retained the 25% / 75% federal/non-federal 
cost share, but limited the federal share of costs to no more than $20 
million per project.
    Reclamation has completed its funding obligations for three 
projects: 1) the Los Angeles (CA) area water reclamation and reuse 
project; 2) the Tooele (UT) wastewater treatment and reuse project; and 
3) the Port Hueneme (CA) Desalination project. Title XVI funding 
obligations are nearly complete (80% or more complete) for several 
other projects: San Gabriel Demonstration (CA); North San Diego County 
(CA); Orange County Regional (CA); Mission Basin Desalination (CA); 
Albuquerque Metropolitan (NM); and the City of El Paso (TX).\15\ 
Projects authorized prior to the 1996 amendments ranged in total costs 
from $152 million ($38 million for Reclamation's share), to $690 
million ($172 million for Reclamation's share). Post-1996 projects have 
been much less expensive, ranging from $10 million ($2 million for 
Reclamation's share) to $280 million ($20 million for Reclamation's 
share).
---------------------------------------------------------------------------
    \15\ U.S. Department of the Interior, Bureau of Reclamation, Title 
XVI Water Reclamation and Reuse Program Funding History, Reclaimed 
Water Deliveries and Project Status, January, 2006. Revised Chart 
provided to CRS via e-mail February 1, 2006. (Hereafter referred to as 
2006 Reclamation Reuse Chart.)
---------------------------------------------------------------------------
    Total Title XVI funding through 2006 is estimated by Reclamation to 
be $324.5 million.\16\ (See Table 1.) The remaining total federal 
contribution for all authorized projects is estimated to be at least 
$344 million. Non-federal Title XVI investment as of Sept. 30, 2004 is 
estimated to be $1.1 billion.\17\ Title XVI funding for FY2006 is $25.6 
million; the budget request for FY2007 is $10.1 million.\18\
---------------------------------------------------------------------------
    \16\ U.S. Department of the Interior, Bureau of Reclamation, Title 
XVI Water Reclamation and Reuse Program Funding History, Reclaimed 
Water Deliveries and Project Status, January, 2006. Revised Chart 
provided to CRS via e-mail February 1, 2006. (Hereafter referred to as 
2006 Reclamation Reuse Chart.) Note: this figure represents actual 
expenditures, and is slightly lower than summation of annual 
appropriations, which total approximately $350 million (not including 
rescissions).
    \17\ U.S. Department of the Interior, Bureau of Reclamation, Title 
XVI Project Costs and Investment as of Sept. 30, 2004, Chart provided 
to CRS via e-mail February, 2005.
    \18\ FY2006 figures reflect an Across-the-Board Rescission of 1% 
per P.L. 109-148. Prior to the rescission, the appropriation was $25.9 
million. (U.S. Department of the Interior, Bureau of Reclamation, 
Budget Justifications and Performance Information, Fiscal Year 2007, 
released February 6, 2006. Water and Related Resources--p. 8.)
---------------------------------------------------------------------------
    Active and Inactive Projects. Projects have been authorized for 
construction in 9 states: Arizona, California, Hawaii, Nevada, New 
Mexico, Oregon, Texas, Utah, and Washington. These states represent 
many of the states that are especially active in reuse, but not all; 
two very active states, Florida and Colorado, do not have Title XVI 
projects. Florida is not eligible for Title XVI support because it is 
not a designated as a ``reclamation state,'' as defined by the 
Reclamation Act of 1902, as amended (43 U.S.C. 391).
    More than two-thirds of the 31 Title XVI projects have received 
some Title XVI funding. The 10 authorized projects that have not yet 
received funding from Reclamation, or received minor amounts, have been 
deemed ``inactive'' largely for accounting purposes. Projects shown in 
italics in Table 1 have not yet received Title XVI funding (with the 
exception of the Oregon project). Of these 10 projects, CRS has 
determined that at least 6 are, in some manner, moving forward with 
local funding.
    A total capacity of nearly 800,000 acre-feet of water is slated to 
be reclaimed by the projects that have received Title XVI funding and 
for which CRS was able to acquire data (see Table 1).\19\ Reclamation 
estimates that the amount of water to be reclaimed (maximum design 
capacity) from its active projects is nearly 750,000 acre-feet.\20\ The 
50,000 acre-foot difference between these estimates represents the 
total reclaimed water potential of 6 inactive projects for which CRS 
gathered estimates from project sponsors or project websites. The 
potential of all inactive projects would necessarily be somewhat 
higher.
---------------------------------------------------------------------------
    \19\ Figures are based on facility design capacities provided to 
CRS in the 2006 Reclamation Chart, and interviews with several sponsors 
of projects that have not received Title XVI funding.
    \20\ 2006 Reclamation Reuse Chart.
---------------------------------------------------------------------------
                        TITLE XVI POLICY ISSUES

    Title XVI policy issues generally fall into two categories: broad 
policy issues, such as the federal role in water supply development 
(particularly for municipal and industrial (M&I) purposes); and more 
specific project evaluation and authorization issues.
Broad Policy Issues
    Historically, federal water resource agencies' involvement in water 
supply was limited to developing irrigation projects and multiple use 
projects. Unlike other areas of water resources management in which the 
federal role is more prominent (e.g., irrigation, flood damage 
reduction, and navigation; or providing funding for wastewater and 
drinking water treatment through federal revolving loan programs), the 
federal role in water supply development for M&I uses has been 
secondary to the primary role of state and local governments. Water 
supply development for M&I purposes largely has generally been 
incidental to the primary project purposes of large, multi-purpose 
irrigation, flood reduction, hydro power, and navigation projects, 
pursuant to congressional policy established in the Water Supply Act of 
1958.\21\
---------------------------------------------------------------------------
    \21\ ``It is hereby declared to be the policy of the Congress to 
recognize the primary responsibilities of the States and local 
interests in developing water supplies for domestic, municipal, 
industrial, and other purposes and that the Federal Government should 
participate and cooperate with States and local interests in developing 
such water supplies in connection with the construction, maintenance, 
and operation of Federal navigation, flood control, irrigation, or 
multiple purpose projects.'' (Water Supply Act of 1958, 72 Stat. 320; 
43 U.S.C. 390b, note.)
---------------------------------------------------------------------------
    While occasional congressional directives have deviated from this 
policy (including Title XVI), as a general matter, local, regional, or 
state agencies have been responsible for water supply development, and 
they have been wary of federal involvement in allocating water.
    In recent years, the Administration has maintained that some Title 
XVI activities (other than research) are not a ``core function'' for 
Reclamation and that the Title XVI program ``serves a function that is 
a local responsibility.''\22\ However, over the last two decades, 
Congress has increasingly, and incrementally, authorized the Department 
of the Interior to participate in construction of approximately 13 
water supply projects for small and rural communities, as well as 
recycling and reuse projects under Title XIV. Although Congress has 
increasingly passed bills for site specific projects and established 
the Title XVI program, it has not re-articulated congressional policy 
regarding the federal role in water supply development since the 1958 
Water Supply Act.
---------------------------------------------------------------------------
    \22\ Office of Management and Budget, Performance and Management 
Assessments. Budget of the U.S. Government, Fiscal Year 2004 
(Washington, DC: U.S. Govt. Print. Off., Feb. 2003), p. 173. See also, 
PART worksheets for the Department of the Interior's Title XVI water 
reclamation and reuse program at: [http://www.whitehouse.gov/omb/
budget/fy2004/pma/waterreuse.pdf] p. 2. See also Administration 
testimony on Title XVI bills in the 108th and 109th Congresses.
---------------------------------------------------------------------------
Project Evaluation, Authorization, and Funding Issues
    Recent questions and concerns about the implementation of 
Reclamation's Title XVI program appear to have increased in part 
because of the nature of project evaluation and authorization processes 
and the lack of a clear program funding process that is typical of 
other federal water programs. Other federal water assistance programs, 
such as state revolving loan funds for wastewater and drinking water 
administered by EPA, have set criteria and competitive processes for 
project and funding, as do rural water supply programs administered by 
the USDA. Congress appropriates money annually for these programs; 
however, project funding is not appropriated by line item, as is the 
case for Reclamation projects. Instead, depending on the program, 
states or federal agencies allocate program funding based on program 
and project eligibility criteria.

Program Criteria and Project Evaluation
    In contrast to several other federal water programs, there are no 
legislatively mandated or promulgated development criteria and no 
competitive grant processes for Title XVI projects. Sections 1603 and 
1604 of Title XVI (43 U.S.C. 390h-1 (a)-(c) and 43 U.S.C. 390h-2 (a)-
(c)) establish a project evaluation process, which directs the 
Secretary to undertake appraisal investigations before preparation of 
feasibility studies on potential reclamation and reuse measures and 
lists several ``considerations'' that must be addressed; however, the 
Act does not include clear program criteria, such as how to prioritize 
projects, or qualified eligibility criteria.
    To implement the program, Reclamation developed guidelines for the 
development of Title XVI projects.\23\ These guidelines provide more 
explicit evaluation and feasibility criteria than is provided in the 
statute. OMB in the past has noted Reclamation's Title XVI guidelines 
provide ``solid criteria . . . to evaluate potential projects prior to 
funding, and also to monitor and evaluate projects under 
construction.'' \24\ These guidelines have never been officially 
promulgated as official rules or regulations; nor do the guidelines 
criteria appear to be binding.
---------------------------------------------------------------------------
    \23\ U.S. Department of the Interior, Bureau of Reclamation, 
Guidelines forPreparing, Reviewing, and Processing Water Reclamation 
and Reuse Project Proposals Under Title XVI of Public Law 102-575, as 
Amended, (Washington DC: Bureau of Reclamation, 1998).
    \24\ U.S. Executive Office of the President, Office of Management 
and Budget, OMB Program Assessment Rating Tool (PART), Competitive 
Grant Programs. PART worksheet for the Department of the Interior's 
Title XVI water reuse and recycling program at [http:I/
www.whitehouse.gov/omb/budget/fy2004/pma.html], p. 6.
---------------------------------------------------------------------------
Project Authorization
    Another issue relates to the project authorization process. 
Reclamation has interpreted the Title XVI authorization as requiring 
congressional authorization for each project, as is the case for 
traditional Reclamation projects. Under the evaluation process 
established in P.L. 102-575, as amended, and implemented by 
Reclamation, projects are to go through an appraisal phase, a 
feasibility phase, and receive a feasibility recommendation. Positive 
recommendations would then be forwarded to Congress for construction 
approval via a specific project authorization. Authorized projects 
would then be funded (or not) via the annual Energy and Water 
Development appropriations bill. However, in practice, many projects 
authorizations, and pending legislative proposals, are for projects 
that have not gone through the project evaluation phase outlined in 
Title XVI. It has generally been Reclamation policy to not support 
projects that have not gone through the evaluation phase and received a 
positive feasibility recommendation. At the same time, some projects 
have undergone what sponsors believe to be extensive evaluation and 
what they believed was a feasibility-level process. This has resulted 
in project sponsors' frustration by the experience, and has resulted in 
them coming directly to Congress for authorization. Other projects 
appear to have been authorized by Congress without assessment or 
feasibility evaluation by Reclamation.

Project Funding Issues
    Funding for Title XVI projects has been controversial in recent 
years because of differences in congressional and administration 
priorities. For example, Reclamation has limited its budget request to 
projects that have received prior federal funding, while Congress has 
provided substantially more funding for projects via the annual 
appropriations process. The budget request for the last 3 years has 
been 40%-67% less than the enacted appropriation for each of the last 3 
years. The Administration's request of $10.1 million for Title XVI 
projects for FY2007 is 40% less than the FY2006 enacted appropriation 
of $25.6 million.\25\
---------------------------------------------------------------------------
    \25\ Reflects FY2006 Across-the-Board Rescission of 1% per P.L. 
109-148. Without the rescission, the appropriation is $25.9 million. 
(U.S. Department of the Interior, Bureau of Reclamation, Budget 
Justifications and Performance Information, Fiscal Year 2007, released 
February 6, 2006. Water and Related Resources--p. 8.)
---------------------------------------------------------------------------
    While there is approximately $1 million-to-$3 million devoted to 
program management each year, there is no overall program funding per 
se. Instead, each project is authorized by a separate line item in 
Reclamation's Water and Related Resources budget account. The Senate 
Committee on Appropriations noted, in report language accompanying 
FY1998 Energy and Water Development Appropriations, its concern about 
the potential costs of this program and noted that local sponsors who 
proceed on their own prior to a federal commitment to the project ``do 
so at their own risk'' (S.Rept. 105-44). The Committee also noted its 
support of Reclamation's efforts to develop criteria to prioritize the 
authorized projects currently awaiting funding.
    The above issues raise several questions. Is new or revised program 
guidance needed, via a formal rule-making process, congressional 
action, or both? Would new or revised guidance forestall the issue of 
projects being authorized by Congress prior to undergoing the Title XVI 
project evaluation process, or would it would help to alleviate funding 
issues and controversy over differing administrative and congressional 
budget priorities?

                        Where to go from Here? 
                    Questions for the 109th Congress

    Growing pressure on water supplies in the West make it likely that 
the demand for Title XVI projects and requests for federal assistance, 
and hence pressure on Congress to approve more projects, will increase. 
At the same time, the potential for future requests to escalate and 
create an entirely new class of water supply assistance appears to have 
increased congressional and administrative concern over the 
implementation and authorization of new Title XVI projects. Under the 
current process, the potential result is an ever-growing list of 
pending Title XVI legislative proposals, and for those gaining 
congressional approval, a growing list of projects competing for 
limited appropriations and administration support. Currently, almost a 
third of the 31 authorized projects are unfunded--a ``backlog'' the 
Administration has cited as reason to oppose new authorizations--and 16 
additional project authorizations are pending before the 109th 
Congress.\26\
---------------------------------------------------------------------------
    \26\ A total of 19 bills amending the Title XVI program have been 
introduced thus far in the 109th Congress. One bill was enacted (Hawaii 
authorization, P.L. 109-70), and it had a closely related bill; leaving 
17 bills actively pending. Of these, one pertains to an existing 
project, leaving 16 bills that would authorize new projects; however, 
many of these bills address the same project, or would authorize 
multiple projects. In all, it appears there are 16 new project 
proposals pending.
---------------------------------------------------------------------------
    Thus, the 109th Congress is faced with the question of what should 
be the future of the Title XVI program?
    Fundamental to deciding the future of the program are underlying 
questions related to the federal role in municipal water recycling 
specifically, and perhaps municipal water supply more generally. The 
broader policy issues raised in the implementation of Reclamation's 
Title XVI program (particularly whether wastewater reuse and 
reclamation are local responsibilities or important to Reclamation's 
core functions), touch on several policy issues not unique to the Title 
XVI program. First, they highlight the tension between congressional 
and Administration priorities. Second, they raise questions regarding 
the appropriate federal role in water supply development for M&I uses. 
For example, is Congress redefining the federal government's role in 
M&I water supply and treatment as it authorizes new site-specific 
projects? If not, can or should such changes be made explicit through 
the kind of debate on implementation that is currently occurring, or 
through legislation?
    To what degree should the federal government provide incentives for 
water supply development via new technologies, and what geographic, 
regional, or social factors should be considered if it does so? Lastly, 
is additional coordination or realignment of certain federal water 
activities needed to ensure efficient use of scarce federal resources? 
One or more of the options could be used to address many of the issues 
associated with these questions.
    If Congress decides to affirm a federal role for water reuse in the 
West, a different set of questions arises: How does promoting or 
facilitating reuse in the West facilitate other federal goals, 
objectives, and legal obligations? How could the Title XVI program mesh 
with other federal activities (e.g., Interior's Water 2025 challenge 
grant initiative or CALFED water reuse and storage activities)? Should 
the program be tied to alleviating demand or reducing existing 
diversions where endangered species or other fish and wildlife concerns 
are at issue? Should it be used to help communities drought-proof their 
supplies, or to slow pressure on agricultural water supplies by 
possibly slowing conversion of ``ag-to-urban'' water transfers? Will 
promotion of recycling and reclamation simply encourage more growth in 
already water scarce areas? These questions are just a few that have 
been raised by interested parties in the course of discussing the 
future of the Title XVI program.
    In conclusion, a wide range of options appears to be available for 
addressing the Title XVI implementation issues addressed above. 
Legislative options range from dismantling or phasing out the Title XVI 
program, to strengthening the program, and could include many less 
drastic adjustments, such as providing Reclamation with clearer 
direction on why it should carry out these activities. Administrative 
options could potentially be pursued as well, such as strengthening 
agency guidelines or developing formal rules or regulations. While 
there is no silver bullet option likely to be supported by all 
stakeholders, examining these questions may help clarify differing 
perspectives on the appropriate federal role in reuse, define goals of 
federal participation in reuse, and understand the extent of problems 
with the existing program.
    This concludes my testimony. I will be happy to answer questions 
from the Chairman and other Members of the Subcommittee. Thank you.
                                 ______
                                 

                                                       Table 1.--TITLE XVI PROJECTS BY STATE:\27\
                            Federal Authorization, Estimated Contributions, and Actual Funding, and Water to be Reclaimed\28\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Total                                   Water to be Reclaimed  (acre-
                                                                                 Estimated                                             feet)
                                                                 Estimated        Funding      Estimated     Estimated   -------------------------------
                                                                  Federal         (actual       Percent       Project
     Project Name and Authorization  (Public Law Number)       Contribution      funding)      Title XVI    Completion
                                                                   ($ in       FY1994-FY2006    Funding        Date           By 2006      Max. Project
                                                                thousands)         ($ in       Complete                                      Capacity
                                                                                thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona
Phoenix Metropolitan Water Reclamation and Reuse, AZ (P.L.            20,000           1,260     06.30%        2010-2015               0         100,000
 102-575; P.L. 106-53 repealed study cost-share limit)......
                                                             -------------------------------------------------------------------------------------------
    Subtotal Arizona........................................          20,000           1,260                                           0         100,000
                                                             -------------------------------------------------------------------------------------------
California
Calleguas Municipal Water District Recycling, CA (P.L. 104-           20,000           8,853     44.27%             2010           9,500          10,000
 266).......................................................
High Desert Wastewater Collection and Reuse (Yucca Valley,              \42\               0   \42\                 \42\               0     1,100-5,500
 CA) (P.L. 104-266).........................................
Irvine Basin Project, CA (P.L. 108-233)\29\.................          12,710               0   \42\                 \42\            \43\           4,000
Long Beach Area Water Reclamation, CA (P.L. 104-266)........          18,836           9,857     51.88%             2011          10,000          18,000
Long Beach Desalination Demo, CA (P.L. 104-266).............          20,000           4,599     23.00%             2014               0           8,960
Los Angeles Area Water Reclamation and Reuse, CA (P.L. 102-           69,970          69,970    100.00%             \44\          35,640         102,000
 575).......................................................
Mission Basin Brackish Groundwater Desalting Demo, CA (P.L.            3,112           2,543     81.72%             2006           3,360           3,360
 104-266)...................................................
North San Diego County Water Recycling, CA (P.L. 104-266)...          20,000          17,063     85.32%             2008           4,916          13,532
Orange County Regional Water Reclamation, CA (P.L. 104-266).          20,000          16,164     80.82%             2008           5,040          72,000
Pasadena Reclaimed Water, CA (P.L. 104-266).................           5,760             345     05.99%             \42\               0           2,015
Port Hueneme Brackish Water, CA (P.L. 104-266)..............           4,000           4,000    100.00%             \43\           3,970           4,370
San Diego Area Water Reclamation, CA (P.L. 102-575).........         172,590          80,437     46.61%             2012          23,050          80,880
San Gabriel Basin, CA (P.L. 102-575)........................          38,090          30,935     81.22              2010          41,135          75,580
San Joaquin Area Water Reuse and Recycling, City of Tracy,              \42\               0   \42\                 \42\               0               0
 CA (P.L. 104-266)\30\......................................
San Jose Area Water Reclamation & Reuse, CA (P.L. 102-575)..         109,959          27,080     24.63%             2011           7,537          36,000
Watsonville Area Water Recycling, CA (P.L. 104-266).........          17,975           2,870     15.97%             2008               0           4,000
                                                             -------------------------------------------------------------------------------------------
    Subtotal California.....................................         533,002         274,716                                     144,148         435,797
                                                             -------------------------------------------------------------------------------------------
Hawaii
Hawaii Water Resources Act Projects, HI (P.L. 109-70)\31\...            \42\               0   \42\                 \42\            \43\            \43\
                                                             -------------------------------------------------------------------------------------------
    Subtotal Hawaii.........................................            \42\               0   \42\                 \42\            \43\            \43\
                                                             -------------------------------------------------------------------------------------------
Nevada
Las Vegas Shallow Aquifer Desalination R&D, NV (P.L. 104-             20,000             540     02.70%             \42\               0          20,000
 266).......................................................
North Las Vegas Water Reuse, NV (P.L. 104-266; P.L. 108-7)..          20,000           4,105     20.52%             \42\               0          72,810
Southern Nevada Water Recycling, NV (P.L. 104-266)..........          20,000          20,000    100.00%             2006           9,391         113,000
Truckee Watershed Reclamation Project (P.L. 106-554)\32\....            \42\               0   \42\                 \42\               0            \43\
                                                             -------------------------------------------------------------------------------------------
    Subtotal Nevada.........................................          60,000          24,645                                       9,391         205,810
                                                             -------------------------------------------------------------------------------------------
New Mexico
Albuquerque Metropolitan WRRP, NM (P.L. 104-266; P.L. 105-            11,687          11,687    100.00%             2007           5,730           6,181
 62)........................................................
                                                             -------------------------------------------------------------------------------------------
    Subtotal New Mexico.....................................          11,687          11,687                                       5,730           6,181
                                                             -------------------------------------------------------------------------------------------
Oregon
Willow Lake/City of Salem Natural Treatment, OR (P.L. 105-           950\34\           0\35\   \42\             2006\45\             112       600-1,200
 321)\33\...................................................
                                                             -------------------------------------------------------------------------------------------
    Subtotal Oregon.........................................             950               0                                         112       600-1,200
                                                             -------------------------------------------------------------------------------------------
Texas
El Paso Water Reclamation and Reuse, TX (Northwest Area)               8,691           8,670     99.76%             \42\           2,474           2,514
 (P.L. 104-266).............................................
Williamson County Water Reclamation and Reuse, TX (P.L. 108-          20,000              95      0.48%             \42\            \43\           5,000
 361).......................................................
                                                             -------------------------------------------------------------------------------------------
    Subtotal Texas..........................................          28,691           8,765                                       2,474           7,514
                                                             -------------------------------------------------------------------------------------------
Utah
Central Valley Water Recycling, UT (P.L. 104-266)...........       7,750\36\               0   \42\                 \42\               0           9,000
St. George Area Water Recycling, UT (P.L. 104-266)..........       3,000\37\           0\38\   \42\                 \42\            \43\    3,900-11,700
Tooele Water Reclamation and Reuse, UT (P.L. 104-266).......           3,409           3,409    100.00%             \44\           1,500           2,537
West Jordan Water Reclamation and Reuse, UT (P.L. 104-266)..            \42\               0   \42\                 \42\               0            \43\
                                                             -------------------------------------------------------------------------------------------
    Subtotal Utah...........................................          14,159           3,409                                       1,500  15,437-123,237
                                                             -------------------------------------------------------------------------------------------
Washington
Lakehaven, WA (P.L. 107-344)................................       9,500\39\               0   \42\                 \42\               0    6,717-13,435
                                                             -------------------------------------------------------------------------------------------
    Subtotal Washington.....................................           9,500                                           0    6,717-13,435
                                                             -------------------------------------------------------------------------------------------
        Total...............................................         677,989     324,482\40\                                 163,355\41\        778,056-
                                                                                                                                                 797,574
                                                             ===========================================================================================
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Information supplied to CRS by Reclamation in January and February 2005, 2006 Reclamation Reuse Chart, and CRS interviews with Project
  sponsors, November 2005-January 2006.
\27\ Projects in italics are considered ``inactive'' by Reclamation for budgeting purposes. According to Reclamation, projects are generally considered
  inactive if they are incomplete and not currently receiving federal funding or have received only a minor amount of federal funding (e.g., Oregon
  project) in prior years (i.e., overall, projects have not made substantial progress as a result of federal funding assistance).
\28\ Subtotals and totals indicate minimum estimated federal costs as this information was not available for all projects. Water to be Reclaimed column
  represents maximum project design capacity (or range for multi-phase projects). Numbers are based on project design capacity upon completion; they may
  not correspond to eventual amounts reclaimed or sold, which will likely be slightly less. Subtotals and totals indicate a lower bound estimate of
  water to be reclaimed, as water quality information was not available for all projects.
\29\ The Irvine project was inadvertently listed as ``active'' in Reclamation's 2005 active/inactive table, so earlier accounting of inactive projects
  are underestimated by one project.
\30\ Sponsor has indicated the project is not currently being pursued.
\31\ The Act authorizes design, planning, and construction of one desalination project and two recycling projects on three different islands.
\32\ The Truckee Watershed Reclamation Project (P.L. 106-554, Div. B, Sec. 106 of H.R. 5666) was inadvertently listed as the Sparks Water Reclamation
  and Reuse Project, NV in earlier Reclamation and CRS documents.
\33\ This project is listed here as inactive because it is not listed as a financially active project in the 2006 Reclamation Chart. However, it may be
  counted by Reclamation in other lists of ``active'' projects, as it meets other ``active'' criteria.
\34\ Based on total construction cost of $3.8 million.
\35\ Actual funding for this project has been approximately $270,000; however, it is not reported by Reclamation in funding tables provided to CRS
  because the project does not meet other ``active'' project budget criteria. In order to keep this column consistent with Reclamation estimates, we do
  not include the $270,000 in actual funding totals.
\36\ Based on estimated construction cost of $36 million.
\37\ Based on estimated construction cost of $12.5 million.
\38\ The project has not received Title XVI funding via Reclamation; however, has received $5.5 million from the Bureau of Indian Affairs (Dept. of the
  Interior) for the Shivwits Band portion of the project (to provide 200 acre-feet annually to the Tribe), which is part of an Indian settlement
  agreement. Additionally, EPA has provided a grant of $0.2 million via the State of Utah.
\39\ Based on estimated construction cost of $38 million.
\40\ Total shown here is slightly more than sum of the column listings due to rounding.
\41\ Total reclaimed by end of FY2006 may be more than reported by Reclamation; this total includes estimates from interviews with project sponsors.
\42\ Undetermined.
\43\ t available.
\44\ Completed.
\45\ Demo phase.


    Senator Murkowski. Thank you, Ms. Cody.
    Mr. Atwater.

 STATEMENT OF RICHARD ATWATER, CHIEF EXECUTIVE OFFICER, INLAND 
  EMPIRE UTILITIES AGENCY, ON BEHALF OF WATEREUSE ASSOCIATION

    Mr. Atwater. Good afternoon, Madam Chairman, Senator 
Feinstein. My name is Richard Atwater. I'm currently the 
general manager at the Inland Empire Utilities Agency located 
in Chino, California, southern California. But more importantly 
today, I'm testifying on behalf of the WateReuse Association as 
chair of their Federal Legislative Committee, and that's a 
national association from the east coast to the west coast, 
with over 300 members, and we have been working with the Bureau 
of Reclamation on the Title XVI program since its inception.
    Let me just back up a little bit and give you my 
background. I've known Commissioner John Keys since about 1981-
82, when I was at the Bureau of Reclamation, working here in 
Washington, DC, on the Colorado River and water problems 
throughout the West. And I think what I would like to highlight 
through my experience in working with the Bureau of 
Reclamation, and then I was one of the witnesses here before 
this committee. It was this committee who enacted Title XVI. It 
didn't come from the House. It was the leadership of this 
committee in 1990 and 1991 and 1992. And then, of course, all 
of the new starts were initiated through Congress, and I'll 
talk a little bit about that.
    But first, let me just say again, going back to 1990, and 
I'd suggest for the record, the Department of the Interior 
initiated the southern California reuse study, and it was by 
Secretary Manuel Lujan and at that time, Commissioner Dennis 
Underwood. Dennis, of course, just recently passed away. He was 
the general manager of the Metropolitan Water District, but he 
recognized clearly what we all recognize, and that is 
throughout the West, throughout the United States, and frankly, 
throughout the world, water reuse, recycling, desalinization, 
using new cutting edge technology needs to be developed and 
applied if we're going to solve our water problems.
    It was initiated by the administration in 1990 and 1991. In 
1992, when this committee enacted and Congress approved the 
whole legislation, it clearly recognized, and I will submit for 
the record your committee report, that we are in a water crisis 
and that water reclamation and reuse is a critical part of 
solving our problems. It's certainly more true today than it 
was 15 years ago. One of the things that Commissioner Keys 
said, that I think is an important one to talk about since both 
members asked him questions about it, why doesn't the 
administration propose criteria, and why don't they propose 
projects to be funded.
    As long as I've worked--when I was here in Washington, DC, 
and I've worked throughout the Western States, neither the Army 
Corps, and frankly, the Bureau of Reclamation, never proposes a 
new start. I was the general manager at West Basin Municipal 
Water District in 1992 when it was enacted. In 1994, we were 
the first new start on Title XVI working with the city of Los 
Angeles and the Mono Lake Committee. Senator Feinstein may 
remember this because she sat here in this committee room with 
Senator Bennett Johnston, and we looked at the solution. We can 
provide a 20 percent cost share to fund this water recycling 
project, where L.A. discharges wastewater into an EPA-
designated estuary, Santa Monica Bay, and we had this water 
right dispute that was very litigated for 15 years with a whole 
host of issues, including endangered species, Clean Air Act 
non-attainment, et cetera, and L.A. argued at that time that 
they would either go to the Colorado River or northern 
California to replace the lost water supply. We came up with an 
innovative solution to replace that with recycled water.
    I bring that up because, although the administration at 
that time in 1994 was sympathetic, the long-standing policy of 
OMB is that they never propose any new starts.
    Senator Feinstein. They never----
    Mr. Atwater. They never propose new starts of new projects, 
whether it's Title XVI, Army Corps flight control projects, et 
cetera. In fact, I think you'll find that when we get into a 
discussion of CALFED and the levee issue, it's doubtful that 
the administration would propose it as a new start unless you 
were to advocate it.
    And so, I just would remind you that every project that 
Commissioner Keys listed, the nine that have been funded, they 
were enacted in 1996 and authorized by Congress. And second, 
Congress appropriated the money first, before they put it in 
the President's budget. They've never done it the other way in 
the history of the program. They've never initiated it and 
proposed any project. And third, from the WateReuse standpoint, 
for the last half a dozen years, we've had an outstanding 
relationship with the Bureau on Research and Development. Our 
foundation leverages 20 cents on the dollar of Federal 
investment with State agencies like Florida and California, 
local agencies, and academic universities to fund research 
because we all agree we need to promote the technology, and 
that's the kind of partnership that I think we ought to 
encourage.
    What I want to just allude to is--and when you look at that 
history, after Congress re-authorized the program in 1996, the 
association--Commissioner Keys pointed out his bluebook, the 
guidelines, that's a great example, where we did work for 2 
years with them to come up with their guidelines, and it was 
stakeholder consensus, and I think it's worked well over the 
years. But Senator Feinstein, you asked the right question. 
Starting in 1991, with Secretary Lujan's initiation of the 
southern California study, and Congress authorized it in the 
1992 bill, we've spent about $8 million in southern California, 
and another $5 million in the bay area doing comprehensive 
engineering feasibility and financial feasibility studies on 
reuse, so that's an appropriate question.
    In the 1996 to 1998 guidelines the Bureau did, we had 
suggested that we don't need to reinvent the wheel. The State 
of California, through their California State Water Resources 
Control Board, had existing criteria, and we already had to 
submit feasibility reports. Why wouldn't we--and that's a good 
question to ask here, whether it's Arizona or New Mexico or 
California, why couldn't we have identical criteria for both 
the State and the Bureau?
    Senator Feinstein. Yes, why not?
    Senator Murkowski. That's a good point.
    Mr. Atwater. We do that already in California with EPA. So, 
that's a key point. We don't need to reinvent the wheel. And 
frankly, after 15 years and spending $15 million of engineering 
feasibility studies, I don't think we need to do more. In 
California--and I should also say, through the very extensive 
process of the CALFED Bay-Delta review--water recycling was 
rated as the most cost-effective new supply in California, and 
it's been fully vetted. The State of California just adopted 
its new State water plan, and it recommends it.
    So, we have a lot of planning that's been done. And I think 
it's a good question, how do we coordinate and collaborate on 
that and not duplicate efforts? And I think that's one that I 
think the committee--I think the Department of the Interior and 
the Bureau would agree, but we need to probably nudge them 
along more, that we need to do that.
    As a footnote, in January, I take a look at what the 
Secretary of the Interior submitted to OMB. It sent for the 
first tim--Senator Feinstein requested this in her 
legislation--a cross-cut budget of all expenditures by the 
Federal Government on CALFED. Every one of these Title XVI 
projects is listed in the cross-cut budget. In fact, they take 
credit for the investments to reuse water in San Diego to 
reduce its demand in the delta for good reason. We all 
acknowledge that helped solve the problem, just like that also 
helped solve the problem on the Colorado River, but they aren't 
talking to each other. They have a report that accomplishes 
what you want.
    So, the last thing I'd bring up, and just in conclusion, is 
that I think, overall, the program has had a huge success. And 
as we go forward over the next few decades, it's not unique to 
California, it's not unique to the Colorado River Basin States, 
and it's true, whether you are in Las Vegas, Phoenix, Tucson, 
Albuquerque, Salt Lake, or Denver, all the major metropolitan 
areas in the Colorado River Basin are developing reuse 
projects. Clearly, the Federal Government, given how important 
the Federal role is in the Colorado River and a lot of these 
issues that we deal with, they ought to be encouraging and 
promoting. And in this case, in the case of Title XVI, we're 
talking about the least amount of cost sharing of any Federal 
water project. We're talking a maximum of $20 million and 25 
percent. It is the smallest cost share of any Federal water 
program. And in fact, we would encourage more competition and 
more leveraging so that you spread the available funding, which 
is a policy issue. How much can you fund for the program, but 
have more competition so that it can be applied on a more 
competitive basis, so more people can have available funds?
    And in fact, the association would also encourage--which is 
discussions we've had with the House for the last couple years, 
and you might want to consider it, it's probably a good idea 
too: why not make it a national program? There's actually more 
reuse in Florida. And you look at problems in Texas and in the 
Southeast, and it's something you might want to consider. Why 
not? In fact, one of your recent legislations was to do reuse 
in Hawaii. If they have a water problem, and if you're applying 
cutting-edge technology to solve a problem that has multiple 
water quality environmental supply issues, why should it be 
unique to the Western 17 States? And so, I would suggest that 
the committee might want to consider that.
    I realize, from my days at the Bureau of Reclamation, it's 
been a tradition for a long time to keep it restricted to the 
17 States. Every once in a while, the Bureau tries to help out 
Alaska, and every once in a while, it helps out Hawaii, but it 
hasn't reached out to the rest of the country. However, I would 
point out that the research and development program, we, in 
fact--the Bureau with the WateReuse Foundation--fund some 
really cutting-edge research projects in places like Florida, 
Georgia and Virginia. And that concludes my remarks.
    [The prepared statement of Mr. Atwater follows:]

Prepared Statement of Richard Atwater, Chief Executive Officer, Inland 
    Empire Utilities Agency, on behalf of the WateReuse Association

                              INTRODUCTION

    Madam Chairman and members of the Subcommittee, the WateReuse 
Association is pleased to have the opportunity to present this 
testimony on the importance and role of the Bureau of Reclamation's 
Reuse and Recycling Program (Title XVI) in ensuring an adequate water 
supply for the nation in the 21st century. I am Richard Atwater, 
Chairman of the WateReuse Association's National Legislative Committee, 
and I am representing the Association today.
    As a way of introduction, the WateReuse Association (WateReuse) is 
a non-profit organization whose mission is to advance the beneficial 
and efficient use of water resources through education, sound science, 
and technology using reclamation, recycling, reuse, and desalination 
for the benefit of our members, the public, and the environment. Across 
the United States and the world, communities are facing water supply 
challenges due to increasing demand, drought, and dependence on a 
single source of supply. WateReuse address these challenges by working 
with local agencies to implement water reuse and desalination projects 
that resolve water resource issues and create value for communities. 
The vision of WateReuse is to be the leading voice for reclamation, 
recycling, reuse, and desalination in the development and utilization 
of new sources of high quality water.
    I am also Chief Executive Officer of Inland Empire Utilities Agency 
(IEUA), located in Chino, California. By implementing aggressive 
conservation programs and using innovative recycling and desalting 
technologies to reuse our water supplies, we have reduced our potable 
water demand by 20% over the past five years. IEUA is a municipal water 
district that distributes imported water from the Metropolitan Water 
District of Southern California and provides municipal/industrial 
wastewater collection and treatment services to more than 800,000 
people within a 242 square mile area in the western portion of San 
Bernardino County. The Inland Empire region is the ``economic engine'' 
of California and among the top 10 job creating regions in the U.S.
    The IEUA service area population is expected to double during the 
next 20 years. About 7000 new homes each year are being built in the 
IEUA service area. Inland Empire is not depending on new imported 
supplies from the Colorado River or northern California through the 
CALFED Bay-Delta Program to meet our future water supply needs. 
Instead, we have developed an integrated water resources plan that will 
develop 95,000 acre-feet of new recycled water, desalinate over 50,000 
acre-feet of brackish groundwater supplies, and, with the Metropolitan 
Water District of Southern California, develop 150,000 acre-feet of 
conjunctive use in the Chino groundwater basin. These will be the 
primary new water supplies to meet the rapidly growing needs of the 
Inland Empire region of Southern California.
    A critical partner in making these new local water supplies 
available in our region is the Federal government. Pending in Congress 
are Title XVI bills that would authorize a $20 million grant to provide 
a 10% Federal cost-share for the IEUA regional water recycling project 
of 95,000 acre-feet (total cost is $200 million). Without a doubt this 
cost-sharing arrangement to develop a critical new supply for a rapidly 
growing region without asking for more supplies from the Colorado River 
or northern California (CALFED) is incredibly cost-effective when 
compared to the other supply options available in the CALFED Bay-Delta 
Program.
    On behalf of the Association's Board of Directors, I want to 
commend you, Madam Chairman, for convening this hearing. The hearing is 
especially timely, given the increasing number of challenges facing 
local agencies in their continuing quest to ensure adequate water 
supplies in the future. It is our understanding that you would like our 
thoughts on the United States Bureau of Reclamation's (USBR) Title XVI 
Program. WateReuse is pleased to provide its views on this important 
and valuable program. We would also like to expand our comments beyond 
Title XVI and recommend some specific actions that the Federal 
government could take to address the nation's future water supply 
needs. Clearly if the U.S. is to address its future water supply needs 
in an effective manner, the Federal government must play a leadership 
role.
   the bureau of reclamation's title xvi reuse and recycling program
    In your invitation letter, Madam Chairman, you requested that the 
Association address three specific topics: 1) our experiences with 
Title XVI; 2) the potential project benefits; and 3) suggestions for 
reshaping and improving the program. Let me address each of these 
topics.

Experiences with the Title XVI Program and Program Benefits
    My personal history with Title XVI can be traced all the way back 
to the enactment of the legislation. As the General Manager of the West 
and Central Basin Water Management Districts at the time of the passage 
of the Title XVI legislation in 1992, I was strongly supportive of the 
legislation. Once the legislation was enacted, West Basin was fortunate 
to be one of the first recipients of grant funding. This grant funding 
had numerous benefits for West Basin as well as the approximately 30 
other local agencies that have received grant funding over the past 13 
years, including the Orange County Water District (OCWD), represented 
here today by Virginia Grebbien, OCWD's General Manager.
    The Association and its members have a long-standing and productive 
working relationship with the USBR and its Title XVI program. The Title 
XVI program has benefited many communities in the West by providing 
grant funds that made these projects more affordable. The Federal cost 
share--although a relatively small portion of the overall project 
cost--often makes the difference in determining whether a project 
qualifies for financing. In addition, the Federal funding and the 
imprimatur of the United States government typically results in a 
reduced cost of capital.
    The Association believes that the Title XVI program is an 
unqualified success and represents a sound investment in the future of 
the West by the Federal government. Through FY 2004, the Federal 
investment of $272.5 million has been leveraged by a factor of 
approximately 5:1. According to a recently completed study by the 
Council on Environmental Quality (CEQ), the non-Federal investment to 
date during this same period amounted to $1.085 billion.
    In enumerating specific project benefits, we must not forget the 
intangible benefits that exist when this critical new water supply is 
brought on line in addition to the financial value of such projects. 
These include the following:

   Environmental benefits realized through the conversion of 
        treated wastewater into a valuable new water supply;
   Reduction of the quantity of treated wastewater discharged 
        to sensitive or impaired surface waters.
   Avoidance of construction impacts of new supply development 
        (e.g., new dams and other expensive importation aqueducts);
   Reduced dependence on the Colorado River and on the CALFED 
        Bay-Delta System, especially during drought years when 
        conflicts on both of these water systems are particularly 
        intense.
   Creation of a dependable and controllable local source of 
        supply for cities in arid and semi-arid climates such as El 
        Paso, Phoenix, and Las Vegas; and
   Reduced demand on existing potable supplies.
   Energy benefits, including reduced energy demand and 
        transmission line constraints during peak use periods, realized 
        by the replacement of more energy-intensive water supplies such 
        as pumped imported water with less energy-intensive water 
        sources like recycled water.

    A fundamental question is ``why would we want to use valuable, high 
quality water from the Bureau of Reclamation's Shasta Reservoir in 
northern California or Lake Powell in Utah and pump and transport it 
over 500 miles to irrigate a park or golf course in the Los Angeles or 
San Diego metropolitan areas?'' Also remember that the replacement of 
that imported water with local recycled water will save enough energy 
from reduced pumping equivalent to a 500 megawatt power plant! 
Obviously the energy and water policy issues facing the arid West 
clearly justify a ``strategically'' small grant program to use recycled 
water as a means to continue to support the economic vitality of the 
major metropolitan areas throughout the Colorado and Rio Grande River 
basins.
    In its FY 2004 review of the Bureau's Title XVI program, the Office 
of Management and Budget (OMB) rated the program ``moderately 
effective.'' OMB noted that ``these water reuse and recycling projects 
help expand water supplies in areas that routinely face severe water 
shortages, and are especially important in helping to shift California 
from its dependence on Colorado River water.'' OMB was also 
complimentary of Bureau staff, noting that staff ``generally work[s] 
very closely and effectively with local sponsors in project development 
and planning and are efficient in supplying grant funds and technical 
assistance.'' The Association concurs with OMB on both of these 
findings; our experience in working with the Bureau has been a very 
positive one. We would only add that, when compared to traditional 
Bureau of Reclamation multiple purpose water supply projects, Title XVI 
is very cost-effective and minimizes the need for future additional 
Federal obligations to solve interstate water problems.

Suqqestions for Improvement of the Title XVI Program
    The Association strongly supports the continuation of Title XVI 
funding. Unfortunately, communities in the East do not qualify for 
Title XVI funds. Hence, WateReuse supports the establishment of a 
national competitive grants program that would provide Federal grant 
funding for which communities in all 50 states would be eligible.
    Water reuse and recycling is now practiced all over the country, 
not just in the 17 western states. In addition to California, Texas, 
Arizona, and Florida, the states of New Mexico, Washington, Colorado, 
Nevada, Virginia, and New Jersey have growing water reuse programs. 
Water reuse is growing at a 15% compound annual growth rate as shown in 
Appendix A (Figure 1).* Current planned reuse is estimated at 3.6 
billion gallons per day and is projected to grow to 12 billion gallons 
per day by the year 2015. Substantial growth potential remains, 
however. According to EPA's most recent Needs Survey, 34.9 billion 
gallons per day of wastewater were generated in 2000. This means that 
only about 10% is being beneficially reclaimed and reused (see Figure 
2). Statistics on actual use in California, Florida, Texas, and 
Arizona--which account for approximately 90% of all water reuse in the 
U.S.--are shown in Appendix A (Figure 3).
---------------------------------------------------------------------------
    * Appendix A has been retained in subcommittee files.
---------------------------------------------------------------------------
    As the Subcommittee considers actions to make the Title XVI program 
stronger and more effective, we recommend that consideration be given 
to the following:

          1) Creation of a competitive grants program;
          2) Expansion of eligibility to include communities in all 50 
        states; and
          3) Provision of an annual authorization of funding of $200 
        million/year.

    A policy and Federal leadership commitment with this relatively 
modest level of federal investment would mean that the nation would 
begin to respond to the demands placed on current limited water 
supplies and would address municipal, industrial and commercial demands 
as well as natural resources needs as documented in the Department of 
the Interior's Water 2025 assessment in 2002.
    The current Title XVI program allows a Federal contribution of the 
lesser of $20 million or 25% of the total project costs. To allow more 
communities to participate in this valuable program, the Association 
would support a reduction in Federal cost sharing to the lesser of $20 
million or 20% of total project costs. We think that, when compared to 
all other Bureau of Reclamation authorized projects, the Title XVI 
``targeted low cost share grant program'' has the greatest benefits for 
solving regional water problems and at the lowest Federal investment 
cost.
    Finally, the Association recommends that the Congress appropriate 
funds to conduct a national survey of water reuse and recycling needs. 
A national survey would serve a number of purposes, including 1) 
documentation of national, regional, and local water reuse and 
recycling needs, 2) documentation of willingness of local agencies to 
expend funds on water reuse projects if they could obtain some level of 
Federal support, and 3) a quantification of benefits--both financial 
and social--of existing Title XVI projects and future planned projects.

            THE FEDERAL ROLE IN WATER REUSE AND DESALINATION

    In the opinion of our Association, the Federal government should 
take a leadership role in promoting water reclamation and reuse, 
desalination, groundwater recharge technology, and water use 
efficiency/conservation innovation. If the appropriate Federal role is 
identified now and appropriate actions are taken, our nation will be 
well positioned to meet the water supply challenges of the future.
    There are numerous ways in which the leadership role of the Federal 
government could manifest itself. Federal subsidies for local water 
reuse projects and targeted investment through demonstration grants 
could be used to promote reuse practices. The Federal government could 
promote increased use of recycled water at Federal facilities (e.g., 
military bases and new GSA buildings); these could be examples of good 
stewards of water efficiency and water reuse.
    We also believe it is critically important for the Federal 
government to provide adequate funding for research. If this country is 
to have the wherewithal to provide cost-effective water supply 
facilities, we must be able to reduce the costs of production and to 
increase greater public acceptance and reliance on alternative water 
supplies.
    One of the many issues faced by water researchers is to understand 
the meaning and potential health and ecological impacts of thousands of 
organic compounds that have been identified at trace levels in 
wastewater and other alternative supplies. The challenge is that 
analytical methods, which allow identification of emerging chemical 
contaminants for both drinking water and wastewater, are ahead of the 
science that allows us to understand what these emerging contaminants 
mean in terms of protection of public health and the environment, and 
ultimately what treatment technologies are needed to ensure safe and 
appropriate alternative supply development. The same challenge is true 
for microbial contaminants. This is not only a water reuse challenge, 
but also one that also applies to every municipality whose source of 
water supply is a major river or whose groundwater is impacted by 
impaired water sources. Only through conducting substantial research 
can local, state, and Federal governments provide proper assurance to 
the public that both drinking water and reclaimed water are safe.
    WateReuse is also strongly supportive of additional Federal funding 
for water reuse and desalination projects. Although the President's 
budget typically includes less than $20 million for USBR's Title XVI 
program (note: the FY 2007 budget includes only $10 million), we have 
consistently encouraged the Congress to support this worthwhile program 
with an appropriate level of funding (i.e., $100 million/year or more).

                            RECOMMENDATIONS

    In summary, we believe that alternative water supplies, including 
water reuse and desalination, will be a critical component of the 
nation's water supply in the 21st century. To ensure that this 
important resource is fully utilized and that appropriate actions are 
taken now in order to avoid a future water crisis, the Federal 
government needs to play a leadership role. Some of the specific 
actions that should be taken by the Subcommittee include the following:

   Support additional research, technology demonstrations and 
        technology transfer of water reuse that is essential to 
        developing answers to questions on environmental pollutants of 
        concerns, gaining public acceptance. and reducing the costs of 
        production;
   Support increased funding for the Title XVI program;
   Support the enactment of legislation that would establish a 
        competitive grants program for which local water agencies in 
        all 50 states would be eligible that would provide funding for 
        much needed water reuse and desalination projects. The 
        Subcommittee should advocate an authorization of $100 million/
        year for water reuse projects and $100 million for desalination 
        over at least a five year period.
   Increase Federal ``venture capital'' (i.e., seed capital 
        assistance through innovative financing tools and targeted 
        grants (e.g., Title XVI) to assist communities in developing 
        innovative and new demonstrations of reuse and desalination 
        technology.

                               CONCLUSION

    Once again, the WateReuse Association wants to thank you, Madam 
Chairman, for convening this hearing. We would be pleased to work with 
you in addressing critical issues related to water reuse and recycling, 
desalination, and water use efficiency. We are strongly supportive of 
the Subcommittee's efforts to ensure adequate and safe supplies of 
water in the future for the entire country.

    Senator Murkowski. Thank you, Mr. Atwater.
    Mr. Donnelly.

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

    Mr. Donnelly. Thank you, Madam Chairman and Senator 
Feinstein. Projects and programs that maximize the use and 
reuse of existing supplies are greatly needed in the Western 
United States. Title XVI of Public Law 102-575 was intended to 
be just such a program. Unfortunately, it appears to be 
currently dysfunctional and understandably out of favor with 
this administration. NWRA strongly supports a reconstituted 
Title XVI program which provides cost sharing, cost-shared 
funding for research demonstration programs and construction of 
projects that represent new and improved technologies for water 
recycling, reuse, desalinization and conservation in the arid 
and semi-arid West.
    The single biggest flaw in the current program is the 
manner in which projects are selected for authorization and 
funding. We would recommend that Title XVI be amended to 
establish a more formal application process that requires the 
Commissioner of Reclamation to present to Congress a written 
report recommending or rejecting the project application before 
Congress authorizes those projects or funds those projects. 
That's not unlike programs in the Corps of Engineers and other 
Federal agencies.
    It has been suggested that the program should be made a 
national program. We would strongly recommend that the program 
be made available only in those States whose communities are 
coping with long-range water supply programs. That's not to say 
simply Reclamation States. There are a few non-Reclamation 
States that are facing water supply challenges akin to the 
problems faced by water supply districts in the arid and semi-
arid West, most notably Florida, as Mr. Atwater has mentioned. 
Congress could choose to extend Reclamation's Title XVI 
authority individually to these States.
    The question of whether or not the Title XVI program should 
remain the responsibility of the Bureau of Reclamation depends 
largely upon Congress's vision of the future scope and 
direction of the program. If the objectives of Title XVI 
continue to be those stated in the authorized legislation, and 
it remains a program addressing the critical water supply needs 
in the arid and semi-arid States or additional States facing 
similar problems, we believe the program should remain under 
the purview of the Bureau of Reclamation.
    In amending this program, Congress should consider 
increasing the Federal cost share and the maximum amount 
provided per project for those projects that satisfy national 
goals and objectives. Madam Chairman, we stand ready to assist 
the committee in any way to reconstitute the Title XVI program. 
We want to see this program work. Thank you very much.
    [The prepared statement of Mr. Donnelly follows:]

  Prepared Statement of Thomas F. Donnelly, Executive Vice President, 
                  National Water Resources Association

                    TITLE XVI OF PUBLIC LAW 102-575

    The National Water Resources Association (NWRA) is a nonprofit 
federation of associations and individuals dedicated to the 
conservation, enhancement, and efficient management of our Nation's 
most precious natural resource--WATER. The NWRA is the oldest and most 
active national association concerned with water resources policy and 
development. Its strength is a reflection of the tremendous 
``grassroots'' participation it has generated on virtually every 
national issue affecting western water conservation, management, and 
development.
    In the West, water infrastructure is every bit as important as 
transportation infrastructure. It is essential to the continued 
economic growth and development of the nation. Water infrastructure 
needs continue to exist, particularly considering the West's rapid 
population growth [9 out of 10 of the fastest growing states are 
Reclamation States]. However, on the whole, today's infrastructure 
needs are different from those of the past. No one envisions a future 
infrastructure development program and financing arrangements like the 
Reclamation program, which facilitated the development and economic 
growth of the West during much of the last century. It is time to 
recognize and address a new generation of infrastructure development 
needs and financing realities. Future projects are more likely to 
include non-structural features, environmental enhancement, proven best 
management practices, innovative approaches to water quality/quantity 
concerns and greater levels of non-federal financing.
    Projects and programs that maximize the use and reuse of existing 
supplies are greatly needed in the West. Title XVI of Public Law 102-
575 was intended to be such a program. Conceptually, Title XVI is a 
sound and much-needed federal program; however, it is currently 
dysfunctional and out of favor with the Administration. NWRA strongly 
supports a reconstituted Title XVI program which provides cost shared 
funding for research, demonstration programs and construction of 
projects that represent new or improved technologies for water 
recycling, reuse, desalination and conservation in the arid and semi-
arid West.

     RECOMMENDATIONS FOR IMPROVING TITLE XVI OF PUBLIC LAW 102-575

Application and Award Process
    The single biggest flaw in the current program is the manner in 
which projects are selected for authorization and funding. In point of 
fact, the process has devolved into one that rewards those project 
sponsors employing the most connected and influential lobbyists rather 
than on the merits of the project or its technology and the needs of 
the communities applying for assistance.
    We would recommend that the law be amended to establish a formal 
application process that requires the Bureau of Reclamation to present 
to Congress a written report recommending or rejecting the project 
application based upon factors such as, but not limited to, benefit/
cost, ability to cost share at an increased level, promising new 
technology, and the prospect of impending water shortages in the 
project area.
    If such a process was incorporated into the law ,it would then be 
incumbent upon the authorizing and appropriating committee in Congress 
to reject projects for which a Commissioner's report had not been 
forwarded to the authorizing Committees.

Use and Use Restrictions
    It has been suggested that the program should be made a national 
program. I suspect that water supply districts or agencies throughout 
the country could make use of such a program, but we would strongly 
recommend that the program be made available only in those States whose 
communities are coping with long-range water supply problems. There are 
a few non-Reclamation states that are facing water supply challenges 
akin to the problems faced by water supply districts in the arid and 
semi-arid West, most notably, Florida. Congress could choose to extend 
Reclamation's Title XVI authority individually to States facing long-
term water supply problems as was done by Public Law 106-566 for the 
State of Hawaii.

Program Responsibility
    The question of whether or not the Title XVI program should remain 
the responsibility of the Bureau of Reclamation depends largely upon 
Congress' vision of the future scope and direction of the program. 
First, we would oppose transferring the Title XVI program to the U.S. 
Army Corps of Engineers. The Army Corps' primary civil works mission is 
navigation and flood control. The only justification expressed to date 
for such a transfer of authority is the hope that under the Corps of 
Engineers the program would be funded at a much higher level. If the 
objectives of Title XVI continue to be those stated in the authorizing 
legislation and it remains a program addressing the critical water 
supply needs in arid and semi-arid states or additional states facing 
similar problems, we believe that the program should remain under the 
purview of the Bureau of Reclamation. Should Congress choose to expand 
the scope of the program and make it national in scope, we could see 
distinct advantages in transferring it to the Environmental Protection 
Agency. However, as stated previously, we strongly believe that the 
Title XVI program should benefit only those States whose communities 
continue to struggle with meeting the water supply demands of a rapidly 
growing population--the Reclamation West.

Cost Sharing
    Each year the federal budget provides millions of dollars to States 
and communities to provide water for environmental purposes, Native 
American trust responsibilities and other purposes. The restoration of 
the Everglades and California's Bay-Delta, water for anadromous fish 
and Indian water rights settlements have and will continue to cost the 
American taxpayers billions of dollars. Finding and/or providing 
additional water is the principle element in all of these mitigation or 
settlement programs.
    The Title XVI program can be used effectively to explore and 
develop technologies that provide additional water to meet the future 
needs and competing demands of growing communities and environmental 
mitigation and enhancement.
    The program currently calls for a minimum non-federal cost share of 
75 percent on all projects and provides a maximum of $20 million per 
project. In comparison to most other federal/non-federal cost shared 
programs, Title XVI is a bargain for the federal government.
    In amending the program, Congress should consider increasing the 
federal cost share and the maximum provided per project for those 
projects that satisfy national goals and objectives such as the 
aforementioned projects and programs.

Summary

          1. NWRA strongly supports a reconstituted Title XVI program 
        under the U.S. Bureau of Reclamation
          2. NWRA recommends that the Title XVI of P.L. 102-575 be 
        amended to establish a formal application process that requires 
        the Bureau of Reclamation to present to Congress a written 
        report recommending or rejecting the project application before 
        Congressional authorization or funding.
          3. NWRA recommends that Title XVI remain principally a 
        program benefiting the arid and semi-arid States which could be 
        extended on an individual bases to States demonstrating a 
        critical need.
          4. NWRA recommends that the federal/non-federal cost sharing 
        be made more flexible for projects creating new supplies of 
        water that satisfy national goals and objectives.

    In conclusion, the National Water Resources Association greatly 
appreciates the opportunity to present our views to the Senate Energy 
and Natural Resources Committee and we stand committed to assist the 
committee in its efforts to improve upon this important program.

    Senator Murkowski. Thank you, Mr. Donnelly.
    Ms. Grebbien.

STATEMENT OF VIRGINIA GREBBIEN, GENERAL MANAGER, ORANGE COUNTY 
               WATER DISTRICT, ORANGE COUNTY, CA

    Ms. Grebbien. Thank you, Madam Chairwoman and Senator 
Feinstein. I'm here today, I guess, representing the local 
color, if you will. I'm the general manager of the Orange 
County Water District. I'm also a public water official who has 
a lot of experience with Title XVI projects. I've personally 
been involved in the planning, design and construction of two 
Title XVI projects that are successfully operating. And 
currently, right now, my agency is building the groundwater 
replenishment system, which is a large, indirect potable reuse 
project which will be on-line in the summer of 2007.
    In addition to that, I've helped numerous agencies with 
their Title XVI projects through their institutional issues and 
moving those projects forward to completion. I would tell you 
that I'm here with a bit of a different message than 
Commissioner Keys. My message is one of enthusiasm and hope for 
the Title XVI program, rather than one of concerns and issues. 
I would tell you that the Bureau of Reclamation has played a 
very important role in Title XVI in the past and should 
continue to do so in the future. And the most important reason 
is what we've discovered in southern California, which is that 
water recycling is our future in order to increase our water 
reliability and supplement our imported water supplies. Despite 
the fact that the Title XVI program enjoys tremendous support 
from the Western and Sunbelt States, I'm really quite frankly 
disappointed that we're here today again asking questions that 
I've testified on before previously: Does the Title XVI program 
work? Does it provide value? Does it create new water? Is there 
a legitimate Federal role? Should the Title XVI program be 
modified?
    I would strongly tell you that the Title XVI program very 
much works. It provides exceptional value. It creates new 
water. How many programs by the Federal Government actually 
create new water? The Title XVI program does. Given the 
economic vitality of the West and the Federal mandates that 
State and local communities must meet to assure a clean and 
safe water supply, a legitimate Federal role in water recycling 
in the Title XVI program does exist. Federal assistance that's 
provided through the Title XVI program delivers benefits by 
reducing borrowing costs, enhancing public acceptance of a 
project, providing a platform for speedy transfer of innovative 
technologies that can be used elsewhere in the Nation.
    Our project, the Groundwater Replenishment project, the one 
we're building right now--72,000 acre-feet, enough water for 
140,000 families a year--would not have been successful without 
Federal buy-in and support. It's a reality today because both 
the State of California and the Federal Government have chosen 
to financially participate in this project. The Federal role is 
critical because it provides a mechanism for local elected 
officials and decisionmakers to deal with the inherent risk 
when implementing a large-scale water recycling program. I was 
asked this rhetorical question: Would GWR be alive today, or 
what would have happened to it without Federal support? And the 
answer to that is we would not have as broad-based community 
support and political support for the project as we currently 
enjoy.
    As we engage in outreach about our project, we start with 
the top, if you will, the Federal Government. They provide 
money technology transfer. The State of California provides 
money in regulatory oversight. Local government provides the 
majority of the money and the local will to implement the 
project. All six of Orange County's congressional leaders 
support the GWR project. California's two United States 
Senators--thank you very much, Senator Feinstein--support the 
GWR project, and that support is backed up by a Federal 
commitment with Federal dollars, and that's the foundation upon 
which we build community, environmental and business support 
for our project.
    Federal involvement in Title XVI projects is warranted for 
several reasons. In California, we have a mandate to reduce our 
use of Colorado River water. In Arizona and Nevada, there's a 
similar mandate to appropriately use Colorado River supplies. 
In Texas, the Ogallala Aquifer and watershed supply shortages 
are creating the need for recycled water supply development. 
New Mexico water supplies are extremely limited from the Rio 
Grande and other local watersheds. The common theme here, and 
there is a common theme, is that regional water supplies with 
direct Federal involvement must be augmented and enhanced 
through local water supply development, such as water 
recycling.
    The Federal Government has established significant mandates 
for ecosystem maintenance and restoration, fisheries, in-stream 
flows, and habitat development. All that takes water, water 
that is typically diverted from ag and urban areas. At the same 
time, our water demands are not decreasing. The population is 
continuing to grow, and we have future water supplies we need 
to meet. And these new water supplies must be environmentally 
sustainable if they're going to be developed, as Mr. Atwater 
mentioned.
    The Federal Government is instrumental in establishing 
these ecosystem mandates. How can we question the need for 
programs, such as Title XVI, that provide the necessary funds 
to implement alternative water supply projects?
    Over the last decade, I've watched the Bureau of 
Reclamation struggle to define its role in the Title XVI 
program, and we heard some of that earlier today. Congress has 
continued to authorize projects while the administration has 
continued to decrease the overall funding, and this has created 
a backlog of unfunded projects. I find it amazing that people 
point to this issue and say that it's a problem, and it's proof 
that the Title XVI program is broken. Instead, I would tell you 
that this is proof that the Title XVI program works, and it's 
needed, and it has value, and it should be expanded.
    One of the important lessons that I've learned from my 
years of working with Title XVI is the fact that we're at a 
stage where we need to implement a comprehensive Federal 
program of assistance to local agencies. And so, I would agree 
with all the witnesses here today that we do need to modify and 
amend, as well as augment and enhance the Title XVI program, 
not restrict it and cut it back. One of the things that we 
could do is identify the overall need, as you mentioned, 
Senator Feinstein, and have an annual survey of where these 
projects are at and have that survey be done by the Bureau of 
Reclamation based on data developed from the States. 
Establishing a set of criteria that would qualify for a 
project, I agree with that.
    However, I'm very concerned, and you heard it in the 
previous testimony, that--as I believe Commissioner Keys said, 
I'm reading my notes--the primary weakness of the Title XVI 
program is that it's a pass-through program for the Bureau of 
Reclamation. In my area in my agency, we do a lot of work with 
the Corps of Engineers. We have multiple partnerships with the 
Corps of Engineers. It will take us 7, 8, 9 years and millions 
of dollars to get a feasibility study off the ground to 
implement a wetlands project, a natural treatment project to 
reduce nitrate and other chemicals in stream flows, urban 
runoff. Fantastic programs. There's no reason something that 
should take a $400,000 or $500,000 feasibility study should 
take $5 million and 7 years, and that's our experience, quite 
frankly, with the Corps of Engineers. I do not want that to be 
my experience with the Bureau of Reclamation.
    The Title XVI program is streamlined. These projects do 
have feasibility studies. They are looked at by regulatory 
agencies, by local agencies, by State-level agencies. The 
Bureau of Reclamation has issued guidelines back in 1998. I 
think we have sufficient guidelines and criteria. I would 
encourage us to work on mechanisms where we can assure that the 
Title XVI project program is fully funded.
    And again, I would point to the fact that the Title XVI 
program has produced water, actual new water, not stored water, 
not conserved water, not water moved around, actual new water, 
and that is money very well spent by the Federal Government.
    In closing, I'd like to reiterate that the program's not 
broken. It definitely is not broken. It's a very valuable 
program that has facilitated the development of, I believe the 
CRS study said, 600,000 acre-feet a year of recycled water 
capacity. That's quite an achievement and something that we 
should all be proud of. The Title XVI project, GWR, a $20 
million investment by the Federal Government, has leveraged 
$467 million of local and State revenue, primarily local 
revenue. Not only do Title XVI projects drought-proof areas by 
creating new water supply, but they reduce pressure on imported 
water supplies where there's a clear Federal mandate. It 
facilitates technology improvements. It enhances the science of 
groundwater monitoring and provides the opportunities for 
technology transfer and research. All of that is a lot of value 
for your buck, and I would say that it's been a great program. 
I look forward to working with the committee and the Bureau of 
Reclamation to continue the Title XVI program.
    [The prepared statement of Ms. Grebbien follows:]

Prepared Statement of Virginia Grebbien, General Manager, Orange County 
                   Water District, Orange County, CA

    Good afternoon, Chairwoman Murkowski and members of the 
subcommittee. Thank you for the opportunity to testify today on the 
Bureau of Reclamations' Title XVI Program. I am Virginia Grebbien and I 
appear before you as the General Manager of the Orange County Water 
District located in Orange County, California and on behalf of our 
Board of directors. I will summarize my remarks and would request that 
my formal testimony as well as background information on OCWD be 
included in the hearing record. OCWD was formed in 1933 and today is 
responsible for managing and protecting the vast groundwater basin 
under north and central Orange County. The groundwater basin provides 
about two-thirds of the water supply for 2.3 million people in our 
region which includes the cities of Anaheim, Buena Park, Costa Mesa, 
Cypress, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, 
Newport Beach, Irvine, La Palma, Los Alamitos, Orange, Placentia, Santa 
Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster, and Yorba 
Linda.
    I am pleased to appear before you today to review the development 
status of recycled water projects and the important role the U.S. 
Bureau of Reclamation Title XVI program has played and must continue to 
play in the future. In Southern California we realize that the future 
of water reliability lies in the ability to supplement our imported 
water supplies with local water supply development such as recycled 
water. It is important to note that this priority involves multiple 
uses such as irrigation, industrial and indirect potable reuse.
    I have a long history with the Title XVI Program. I first testified 
in support of Title XVI in 1992 when the Program was originally 
authorized. In 1996 Congress amended the law. The changes included a 
``cap'' of 25% on eligible project costs. I was part of the WateReuse 
Association Task Force that helped initiate this and other changes. As 
a public official, I have managed the planning, design and construction 
of three Title XVI projects. I have also been involved in the 
institutional development of numerous others. The Title XVI Program has 
successfully helped develop 30 recycled water projects. I would note 
that this subcommittee has been a major reason behind the program's 
success. I would also note that full committee Chairman, Senator Pete 
Domenici has been a key reason that we have enjoyed continued funding 
of Title XVI programs despite efforts by the past two Administrations 
to reduce the federal role. We deeply appreciate Senator Domenici's 
commitment to ensure that we have a solid federal partnership.
    Despite the fact that the Title XVI Program enjoys tremendous 
support from the Western and Sunbelt states and despite the fact that 
the Title XVI Program is over subscribed, we are being asked, again, 
some important and fundamental questions that I hope will guide us in 
developing an improved water recycling partnership with the federal 
government. These are:

   Does the Title XVI Program work?
   Does it provide value?
   Does it actually create new water?
   Is there a legitimate federal role?
   Should the Title XVI Program be modified?

    From my humble perspective as one of the pioneers of implementing 
the original law, and an ardent supporter of recycled water, let me 
assure the subcommittee that the Title XVI Program works. It provides 
value. And, it creates new water. Given the economic vitality of the 
West (California alone is the 5th largest economy in the world; makes 
up 13% of the nation's GDP; and generates $1.4 trillion in gross state 
product) and the federal mandates that state and local communities must 
meet to assure a clean and safe water supply, a legitimate federal role 
does exist. Let's be clear on one important point; the federal 
assistance that is provided through Title XVI delivers benefits by 
reducing borrowing costs, enhancing public acceptance of a project, and 
providing a platform for the speedy transfer of innovative technologies 
that can be used elsewhere in the nation.
    Orange County Water District is currently constructing the 
Groundwater Replenishment System. This visionary indirect potable reuse 
project will be operational in the summer of 2007 and will produce 
72,000 acre-feet per year (enough water to meet the annual needs of 
140,000 families) of new water for the 2.3 million residents of Orange 
County. The Project uses state-of-the-aft treatment, monitoring and 
groundwater replenishment technology. This technology is used to insure 
high quality water is produced from the project. All aspects of the 
project are monitored to insure quality objectives are met and 
maintained. The product water will be recharged into the Orange County 
Groundwater Basin increasing the sustainable yield from the basin. The 
Project not only provides direct benefits to the rate payers within our 
service area but it provides regional benefits as well. Recycled water 
is a drought proof supply that is available even in the driest years. 
Having recycled water available enables OCWD to make conserved and 
imported water available to other Southern California water agencies 
that are not as fortunate in their water supply portfolio during dry 
years. In addition, to the extent local water supply can be created 
than it relieves the pressure to import water from the Colorado River 
into the Southern California Region.
    The Groundwater Replenishment System would not have been successful 
without federal buy-in and support. GWR is a reality today because both 
the State of California and the federal government have chosen to 
financially participate in this project. The federal role is critical 
because it provides a mechanism for local elected officials and 
decision makers to deal with the inherent risks when implementing a 
large scale recycled water project.
    The total capital cost for the GWRS project is $487 million. The 
Title XVI grant of $20 million has leveraged $80 million in State funds 
and $387 million in local rate payer dollars. The federal cost share 
was critical as it provided a mechanism to solicit State grant funds 
and importantly provided a level of political acceptability and project 
legitimization that enabled our local decision makers to move forward 
with the project.
    What would have happened to the GWRS project without federal 
support? We would not have as broad based community and political 
support for the project as we currently enjoy. As we engage in outreach 
about the project we start with the projects supporters; the federal 
government--they provide money and technology transfer; the state of 
California--they provide money and regulatory oversight; local 
government--they provide the majority of the money and the local will 
to implement the project. All six of Orange County's congressional 
leaders support the GWRS project. California's two United States 
Senators support the GWRS project. That support is backed up by federal 
dollars. This is the foundation upon which we have built community, 
environmental and business support for the GWRS project. Unlike some 
recycled water projects which unfortunately were built and then not 
operated due to lack of community support. I have 100% confidence that 
the GWRS project will be successfully producing recycled water next 
summer and the cornerstone of that confidence starts with a small 
federal investment.
    Federal involvement in Title XVI projects is warranted for several 
reasons. In California we have a mandate to reduce our use of Colorado 
River water. In Arizona and Nevada there is a similar mandate to 
responsibly use Colorado River supplies. In Texas the Ogallala Aquifer 
and watershed supply shortages are creating the need for recycled water 
supply development. In Florida there is a critical groundwater supply 
shortage. In New Mexico water supplies are extremely limited from the 
Rio Grande River and other local watersheds. The common theme is that 
regional water supplies with direct federal involvement must be 
augmented and enhanced through local water supply development of 
recycled water.
    The federal government has established significant mandates for 
ecosystem maintenance and restoration. Fisheries, in stream flows, 
habitat development all take water. Water that is typically being 
redirected from urban uses. At the same time, our water demands are not 
decreasing and neither are our future water supply projections. New 
water supplies that are environmentally sustainable must be developed 
if we are to meet our ecosystem mandates. Recycled water is one such 
supply. If the federal government is instrumental in establishing these 
ecosystem mandates how can we question the need for programs such as 
Title XVI that provide necessary funds to implement alternative water 
supply development?
    It is important for the federal government to play a role in 
research and technology transfer. Large results can be gained at the 
local and regional levels with relatively small investments from the 
federal government. No single local water agency has the financial 
resources or expertise to research and investigate membrane processes, 
brine concentration technologies, the health risks of pharmaceuticals 
or alternative power technologies to name a few areas of interest. 
However, the federal government has the capability to bring disparate 
agencies together in cost sharing arrangements to jointly work on 
technology improvements that will make recycled water development even 
more cost effective and reliable. Again, a small federal investment 
leverages local dollars and technical talent for significant water 
resources gains.
    Over the last decade I have watched the Bureau of Reclamation's 
struggle to define its role in the Title XVI Program. Congress has 
continued to authorize projects while the Administration has continued 
to decrease the overall funding for Title XVI. This has created a 
``backlog'' of unfunded projects. Some point to this situation as proof 
that Title XVI is broken and needs fixing. I would instead say this is 
proof of the value of Title XVI and what is needed is an expansion of 
the program. A proposal has been floated that the federal government 
should offer loan guarantees rather than grant funding. In my view this 
is a tool that should be available along with other financing options. 
However, the suggestion that this tool could replace the existing grant 
program is an ineffective idea. As a local government agency, OCWD has 
access to a significant amount of tax free credit. We have an AA+ 
credit rating and our average cost of debt is 4%. A loan guarantee from 
the federal government will not provide political support or the 
political will to implement recycled water projects like the current 
Title XXVI program does. Similarly, a loan guarantee does not enhance a 
local government agencies' ability to raise capital.
    What is missing from the Title XVI program is a comprehensive 
federal program similar to the federal Drinking Water supply Program 
that sets standards for federal support. This is an important point 
that I cannot emphasize enough. Title XVI is an effective program. The 
federal partnership made it possible for projects like GWR to get off 
the drawing board. However, a number of lessons have been learned since 
its original passage in 1992. Water recycling as well as desalination 
are foundations for our future public health, environmental and 
economic well being. I would add that on the heels of last year's 
natural disasters, these projects also serve to safeguard against water 
supply disruptions.
    One of the important lessons that I take away from my years of 
working with Title XVI is the fact that we are at stage where we need 
to implement a comprehensive federal program of assistance to local 
agencies. This means that we need to amend Title XVI to address issues 
including:

   Identifying the overall need for assistance on a project by 
        project basis among the states based on a bi-annual survey of 
        need conducted by the U.S. Bureau of Reclamation based on State 
        generated data.
   Establishing a series of criteria that would qualify a 
        project for assistance such as ensuring a project provides 
        multiple benefits or will contribute to other ongoing water 
        conservation programs.
   Ensuring that any existing Title XVI project authorization 
        is fully funded.
   Expanding Title XVI to advance the commercialization of 
        promising technologies that can reduce the cost of water 
        production and/or increase the safety and acceptance of 
        recycled water by the public.
   Providing for a defined budget authorization to support a 
        comprehensive federal water recycling program that can create 
        stability and predictably to the management of this program 
        need.

    In closing I would like to reiterate that the Title XVI program is 
not broken. It is a very valuable program that has facilitated the 
development of 600,000 afy of recycled water supply capacity. Title XVI 
has produced projects such as GWRS. The federal government's investment 
of $20 million has leveraged $467 million in state and local dollars. 
GWRS, a Title XVI project, will not only help to drought proof Orange 
County by creating a new water supply, but it will also reduced 
pressure on Colorado River supplies, it will facilitate technology 
improvements, it enhances the science of groundwater monitoring and it 
provides opportunities for technology transfer and research.
    Again, it is an honor to appear before you today and review the 
important ways that Title XVI has assisted OCWD's efforts to ensure a 
safe and reliable water supply and how we as a country should proceed 
into the future. Thank you.

    Senator Murkowski. Thank you, Ms. Grebbien. Let's go to 
some questions. Ms. Cody, is it fair to say that you believe 
that Title XVI is a value-added program, but we need to 
restructure it in order to make it more effective, based on 
your review?
    Ms. Cody. Well, that's a difficult question for me to 
answer. First of all, CRS does not take positions, and we are 
not allowed to take positions on pending legislation or even in 
this case, pre-pending legislation, so I can't exactly answer 
that question.
    However, what I can say is that I think that question is 
for Congress to decide--you have folks that believe, as we just 
heard, the program is not broken and others that do. I think 
what my conclusion would be--I can offer conclusions--is that 
you have a program that is stuck. Yes, some people are 
benefiting from it, some are continuing to go forward, some 
have been lucky enough or feisty enough to get the 
authorizations through Congress when they couldn't get 
engagement with the Bureau, but for the Bureau, that has 
created a problem. So, you have all these different views, and 
I think this hearing is a place where people can air those 
views and see exactly if the program is broken, and if so, 
where and gather information on how to fix it.
    One thing I have observed about the program is it is, in a 
way, not really a program. It is very much like the traditional 
process of authorizing Corps and Bureau of Reclamation 
projects. Congress authorizes the projects, and then the 
appropriations are made by line item. What Mr. Keys has 
described is a proposal where it would be very similar to other 
existing infrastructure projects, where you have the appraisal 
phase, feasibility stage, a positive feasibility study comes 
before the Congress, and then it's authorized, and then you get 
appropriations.
    I think what we're hearing from some of the folks at the 
table is that that may not work for these types of projects. I 
think where the problem comes in--and if I could just read 
something real quickly from my testimony?
    Senator Murkowski. Go ahead.
    Ms. Cody. On page eight of my testimony, it also relates to 
questions, Senators Murkowski and Feinstein, you both asked, 
and it's that what we have here is kind of a disconnect between 
the way that Reclamation has traditionally operated and other 
Federal programs operate and the desire to meet local needs. If 
I could just read this. There's a clear lack of--or Reclamation 
has noted the clear lack of program funding process that's not 
typical of other Federal agencies. Other Federal water 
assistance programs, such as the State revolving loan funds for 
waste water and drinking water administered by EPA, have set 
criteria and competitive processes. That's what Reclamation is 
now asking for, we heard today. So do rural water supply 
programs administered by USDA, and I think the new Rural Water 
Supply legislation passed by this committee last year is also 
in that vein, but Congress appropriates money annually for 
those programs.
    However, project funding for projects under these other 
programs is not appropriated by line item as it is for the 
Title XVI projects. Instead, depending on the program, the 
States and the Federal agencies allocate the program funding 
under project eligibility criteria, and I think that's an 
important difference--that here you have--that Reclamation 
would have, if it were similar to other programs, a pot of 
money that would then be decided where that money goes based on 
set eligibility criteria that the program sponsors would know 
what that is, and it could be based on those criteria. I think 
that's what I'm hearing. It's kind of the combination of things 
thrown out here today, but I want to make it very clear CRS 
does not make recommendations to the Congress.
    Senator Murkowski. Well, then I won't be able to ask most 
of my questions to you on that.
    Ms. Cody. I can frame issues, however, or come to 
conclusions.
    Senator Murkowski. But what I understand you are saying is 
that, based on the review that you have conducted of the 
various programs and where they are, either in the stages of 
funding or their obsolete authorization, whatever the status 
might be, that it would be helpful for the success of the 
programs if there were some form of eligibility criteria.
    Ms. Cody. I think it would be helpful. There are 
eligibility criteria. I mean, I think that is important to 
note. I think Mr. Atwater noted it. There are feasibility--
they're not really criteria, they are considerations that 
Reclamation must look into in the original statute. The Bureau 
also has pretty extensive guidelines. The issue is those 
guidelines do not have the--I don't want to say force of law, 
that's not the right term, but they are not binding on 
Reclamation--they have not gone through a formal rulemaking 
process, and they are not binding.
    So, when people look at those, they may view them 
differently than they would if Congress were to legislate 
specific criteria that then--or if Reclamation on its own went 
through a rulemaking process on new criteria, I think that's 
one of the sticking points.
    Senator Murkowski. Okay. Well, we will look forward to this 
forthcoming report where you set forth the policy options 
there.
    Ms. Cody. Okay.
    Senator Murkowski. Mr. Atwater, you have suggested 
expansion of Title XVI to a national program. We've been 
talking about the fate of some of these programs, that the 
reason they're not moving ahead is not because they don't have 
value or merit within their region or locality, it's just the 
dollars associated with it. Just as it relates to a budget, do 
you think that a national $200 million a year program is 
realistic when the Bureau's budget is roughly a billion?
    Mr. Atwater. Well, when you look at the role of cost 
effectiveness and what we're accomplishing here, and if you 
look at the partnerships between those States, those local 
entities, and how you're developing a new water supply, what I 
would say is if you could use 10 or 20 percent of the Bureau of 
Reclamation's budget and then apply it as a competitive grant 
program, frankly, it would be probably the most effective way 
to solve the water problems in the United States, and it would 
clearly have a lot of benefits.
    The bigger challenge, which is your job, is to figure out 
what are those priorities. But from my perspective, when you 
look at the experience of what the needs are in the country, 
$100 to $200 million for the economic vitality of many 
metropolitan areas and avoiding--I'll use my area as an 
example--in California, I'm developing 100,000 acre-feet of 
recycled water worth a 10-percent, $20 million Federal grant, 
and it's the economic engine. It's creating more jobs. It's in 
the top ten in the United States. And when you look at the 
economic multiplier benefits there, that $20 million bounces a 
lot of different ways when you consider the economic, 
environmental and social benefits of that kind of a program.
    And going back to Ms. Grebbien's point, in Orange County, 
you look at that kind of economic benefit and the regional and 
statewide in the context of the Colorado River, how that helps 
a lot of other areas and avoids stresses and strains and 
conflicts, and we all know in the water world, we talk about, 
you know, conflict all the time.
    I would suggest that's probably the most cost-effective way 
to encourage an appropriate level of Federal role.
    Senator Murkowski. What about Mr. Donnelly's suggestion 
that you do it on a State-by-State, case-by-case basis as 
opposed to a national approach?
    Mr. Atwater. It's probably true that maybe in Maine and 
maybe in parts of--I'll pick on Minnesota and Michigan, maybe 
they don't have a serious water problem. But clearly, from an 
association standpoint, we see that reuse, reclamation, 
cleaning up contaminated groundwater, whether it's perchlorate 
or arsenic in New Mexico, those types of technologies and how 
we reuse that water, whether it's for drinking water purposes 
or irrigating a golf course or putting it in a power plant, 
clearly, there's a lot of application throughout the country 
and internationally.
    Senator Murkowski. You made the point about the identical 
criteria between the States and the Bureau. I think that that's 
something that we would like to think is so common sense that 
we should be able to make something like that work. Mr. 
Donnelly, you mentioned just a more limited expansion as 
opposed to the national approach that Mr. Atwater had 
suggested. Again, the benefits of such an expansion moving 
beyond the traditional concept of the 17 States, I'm assuming 
you're coming at it from the same perspective as both Ms. 
Grebbien and Mr. Atwater, that by doing this, you do get a lot 
of bang for your buck, so to speak, with the dollars invested, 
and that there are areas beyond the 17 States that should have 
the opportunity to avail themselves with Title XVI funds.
    Mr. Donnelly. Basically, we're still--hydrologically, we're 
two countries. We're a water-poor West and a water-rich East. I 
mean, that's very general, and given the money that's in this 
program, I would hate to see it spread out and diluted to 
States that really are not facing critical water supply 
challenges for the future. Now, Florida, I mentioned that as an 
example. Florida is. Florida mimics a lot of the problems that 
we have in the Western United States. Congress declared--for 
the purposes of this Act, I believe Congress declared in 1996 
Hawaii to be a Reclamation State for the purposes of that Act. 
They could do the same thing for Florida, or if in the future 
another State develops the same type of problems, that could be 
done. But given the amount of money that's involved in this 
program right now, I would urge the Congress not to make it a 
national program.
    Senator Murkowski. I appreciated your comment about what 
you perceived to be the biggest flaw in the program, not that 
the program is broken, but that there is a flaw, and that flaw 
is the manner in which the projects are selected for funding. 
You made reference in your written testimony that it shouldn't 
come down to who has the biggest and best lobbyist in 
Washington, DC; it should really be based on merit that those 
projects go forward. And I think that's something that, from my 
perspective, we're looking at, and we want to make sure that we 
are addressing those needs where the need is greatest, but we 
need some assistance in being able to make those priorities as 
well. So the criteria that Commissioner Keys has suggested does 
not concern you? You would, in fact, welcome that; is that 
correct?
    Mr. Donnelly. I was kind of surprised at the dollar figure 
that was thrown around here, $200,000 per project to evaluate 
it. I think that's ridiculous. I mean, it doesn't require that, 
and it doesn't have to be that laborious a process. It should 
be very simple for the Bureau staff to go through and say yes, 
this project meets the goals and objectives of the Title XVI 
program, this one doesn't. And that's all they have to do is 
send it forward to Congress, and then this committee and the 
Appropriation Committee decides how they're going to be funded.
    Senator Murkowski. Ms. Grebbien, you made the comment that 
you were frustrated, I guess, that we're here again talking 
about the status of this program. I think it is important to 
recognize--and I do appreciate CRS's review of this--it's a 
program that has been very successful for some, but very, very 
frustrating for so many. And we don't have anybody on the panel 
who has been on the other end of not being able to get those 
funds and not being able to speak to the good side of it, so it 
is high time that what we're doing with Title XVI is reviewed. 
I think Orange County is in an envious position of having that 
phase one just about complete. I understand you're about 80 
percent now.
    Ms. Grebbien. Yes.
    Senator Murkowski. This projected proposal going forward I 
think would probably get you complete, then you go onto a 
second phase. So you are one of the ones that is seeing the 
direct benefit.
    Ms. Grebbien. Correct.
    Senator Murkowski. And that is important to recognize. But 
we also recognize that we're in a situation where we've got 
some 21 programs that are sitting there on hold with no real 
certainty as to who goes next or if anybody goes next, and 
therein lies the frustration. Orange County is a relatively 
wealthy county; could you have done this without the Title XVI 
funds?
    Ms. Grebbien. You know, it's interesting because folks 
always say Orange County, relatively wealthy county. Actually, 
Orange County is very much a melting pot, if you will, of 
demographics. We have some very depressed areas in our county, 
and then also we have the Newport Beach coast, it's an 
extremely diverse county. It's a county where there is no 
majority. We have the second highest Latino population, the 
second highest Asian population in the State, in Orange County.
    And so, in my particular service area, as I mentioned, 
there's some cities who are very economically depressed and 
then others who are extremely wealthy. And of course, we always 
feel like poor stepchildren because Orange County is giving 
more money to the State and to the Federal Government than 
we're receiving back in return in property taxes and other 
issues. But we could have built the project financially, yes, 
without the Title XVI program. However, what the Title XVI 
program did, as I mentioned when I was speaking earlier, is it 
really is the foundation upon which we have built support for 
the program under a variety of different levels.
    So, for example, when we sold debt to--municipal debt to 
finance our portion, the local cost share of the program, one 
of the things that we told the rating agencies is we had a 
grant from the Federal Government and also that the State was 
participating. Because of that and a few other factors, our 
interest rate costs were 25 basis points cheaper than it would 
have been otherwise, and that was a direct comment from our 
rating agencies. So, there's lots of value added by 
participating in the Title XVI program.
    Senator Murkowski. Then given where you are now and just 
about nearing completion on phase one, will you need the Title 
XVI assistance for phase two, or you've kind of established the 
project, established what it is that you need, gotten that 
community support? Are you on your own for this next phase?
    Ms. Grebbien. Actually, for the next phase, we're going to 
need even more financial assistance. And we're working with--
you know, our State is looking at a couple of bond issues, in 
more infrastructure bonds, and we're working very closely with 
NAWQA and other agencies to make sure that water recycling is 
included in those bond offerings. And because of what we've 
done, what Orange County Water District has done in the last 4 
years, we've doubled our water rates--doubled our water rates 
at the local level to pay for this project. At the same time, 
our partner, Orange County Sanitation District, is under a 
mandate for full secondary treatment, and they're having 
significant sewer rate increases. And so, there's only so much 
that the local community can bear. And if we are diligent in 
getting Title XVI money and State grant funds, then we're doing 
our part to work really hard to bring the cost down so that 
there's the political will and the local community-level will 
to implement rate increases that are necessary to generate the 
local dollars.
    Senator Murkowski. Thank you. Thank you to all the 
panelists.
    Senator Feinstein, I have certainly not kept within any 
time limit, so----
    Senator Feinstein. Oh, thank you. I'll try and be brief. 
Thanks, Madam Chairman. I want to ask a yes or no question. Do 
the panelists agree that the traditional Bureau project model 
of having the Bureau do a feasibility study for each project, 
do you agree that that is not cost effective? Could we go right 
down, just yes or no?
    Ms. Grebbien. Yes.
    Mr. Donnelly. Yes.
    Mr. Atwater. Yes.
    Ms. Cody. Senator Feinstein, I'm not sure I can answer the 
question.
    Senator Feinstein. Okay, if you can----
    Mr. Donnelly. You mean in relationship to Title XVI?
    Senator Feinstein. That's right.
    Mr. Donnelly. Yes.
    Senator Feinstein. See, I think this is the heart of the 
matter, and this is what, Madam Chairman, we need to change, to 
spend vital Federal dollars with the Bureau doing a feasibility 
study of each project, to me, makes no sense. It seems to me 
there ought to be a set of Federal criteria that if you want to 
come in for a Federal grant, these are the criteria that you 
must meet. And then the decision is made, yea or nay, you 
either meet that criteria or not. Now, you're going to have a 
lot of criteria. One of them might be does the project have a 
regional impact. You know, one of them is size. It could be a 
whole host, environmental conflicts, whatever the criteria are. 
But I suspect we would save a lot of money, and we would get 
more projects funded, and the frustration that the local 
jurisdictions feel, that they've had projects pending for 6, 7, 
8 years, and they don't know.
    So, I'd like to just respectfully suggest that we take a 
look at the law and make that change. And now, let me ask this 
question. In terms of Federal criteria, if there were to be 
specific Federal criteria, I've laid out some of them, I'd like 
to ask the panel, what do you believe the Federal criteria for 
Federal funding for that 20 percent should be?
    Mr. Atwater. Well, if I may?
    Senator Feinstein. Mr. Atwater.
    Mr. Atwater. What I would suggest, Senator Feinstein and 
Chairman Murkowski, is in fact, the 1998 guidelines are a good 
start. But in California, it's one example, in each of the 
States, as I indicated earlier, they have their own existing 
criteria for using the Clean Water Act State revolving fund, 
both for the drinking water programs, as Betsy pointed out, and 
for the Clean Water Act. And in California, we have a detailed 
criteria, and frankly, a good little process.
    Senator Feinstein. My question is, what should the Federal 
criteria be?
    Mr. Atwater. Well, that one was approved by EPA. And what 
my point is, why couldn't we have that merged? In this case, 
the Bureau, why couldn't you use the same criteria? They don't 
need to reinvent the wheel.
    Senator Feinstein. Mr. Donnelly?
    Mr. Donnelly. I agree with that. I guess the only thing I 
would add is that each of these projects should significantly 
contribute to the additional water supply of the area, that it 
should support their future plans for providing water to their 
citizens.
    Senator Feinstein. In other words, a net addition of 
potable water.
    Mr. Donnelly. Correct.
    Ms. Grebbien. I would say, Senator, that I would agree with 
Mr. Atwater. In California, most recycled water projects 
already conform with criteria established by the State Water 
Resources Control Board or the Department of Water Resources to 
get either SRF funds, low-interest loans or State grant moneys. 
And those criteria are adopted by or were put in conjunction 
with EPA, and they're relatively common sense things--is there 
new water developed, does it meet a minimum financial return, 
have you performed CEQA and/or NEPA, is it institutionally 
viable, are you meeting the health department regulations and 
requirements, is the treatment technology you're using proven.
    So, they're relatively understandable and straightforward, 
and Mr. Donnelly's suggestion of kind of having a checklist, if 
you will, rather than a full-blown feasibility study, those 
existing criteria would lend themselves to that approach.
    Senator Feinstein. How about regional impact?
    Ms. Grebbien. I personally like that criteria. I think the 
wave of the future in California is integrated watershed 
management planning, and we're starting to see more and more 
agencies cross political lines and developing projects that are 
regional in nature and provide watershed benefits. And I think 
that's something that is easy to evaluate and should push water 
agencies toward more global planning, which is a good thing.
    Senator Feinstein. Everybody recognizes that this would 
take the Bureau out of the feasibility study business?
    Ms. Grebbien. Yes, we do.
    Senator Feinstein. And you all think that's appropriate?
    Ms. Grebbien. Yes.
    Mr. Atwater. Yes.
    Ms. Grebbien. I do.
    Ms. Cody. I do have a comment on options, although I cannot 
say where the program should go.
    Senator Feinstein. You have a comment on options, okay.
    Ms. Cody. I can at least look at options, and I think what 
we've done in our--partly in the testimony, and more so in the 
report, is look at options for Congress to articulate the 
Federal interest in these projects. And among those options are 
things like--I think you mentioned fish and wildlife, something 
that helps with fish and wildlife, whether it's in a stream 
that has endangered or threatened species that are covered 
under the ESA or some other fish and wildlife criteria, or 
water quality standards. You may also want to look at whether 
there is duplication among programs, can some of these projects 
be funded from existing clean water or safe drinking water 
SRF's. That might be another criterion to look at.
    Also, I think Reclamation mentioned today that it is part 
of its core mission, and I think what they mean by that is--
well, I shouldn't put words in their mouths, but I also heard 
Commissioner Keys say that it would be--ranking criteria would 
be alleviating conflict, so possibly some of the criteria that 
Congress might want to look at is what is--what are those types 
of things. I think the Bureau hot spots map identifies some of 
those areas, but there may also be areas that are not on that 
map that have some of these issues.
    Senator Feinstein. Okay. Madam Chairman, that completes my 
questions, but once again, let me just thank you for doing this 
and offer to work with you on some revisions that might be able 
to affect this. I would hope we would keep the drought-inclined 
States and not the water-rich states in this, because the first 
priority really has to be those that don't have other water 
resources and therefore have to do recycling and desalination.
    Senator Murkowski. Thank you, Senator Feinstein.
    I want to go back to your map, Ms. Cody. We don't do a very 
good job oftentimes in anticipating the need in advance. And 
just looking at your map and recognizing that yes, you've got 
the bright red spots that show the conflict potential as being 
highly likely, but the areas where we know we're going to have 
issues, we know we have unmet needs. We have conflict 
potential, and you know, interesting terminology. What exactly 
does that mean? You go to southern California, you know exactly 
what conflict potential is.
    Senator Feinstein. In more ways than one, Madam Chairman.
    Senator Murkowski. In more ways than one. You said that 
first.
    Senator Feinstein. Yes, right.
    Senator Murkowski. But our reality is we've got some very 
serious issues. I focus, primarily, in this Energy Committee, 
on oil and natural gas matters because that's what my State 
happens to be rich in, but the real crisis for the globe is not 
necessarily going to be oil, it's going to be water. And what 
Title XVI provides through the reuse, where we're working it 
now, is fine in certain areas. But the track record for 
completion, quite honestly, isn't as impressive as we would 
like it to be, recognizing the growing demands as our 
population increases, as we look at these water poor States 
that, quite honestly, are some of our fastest-growing States in 
population. So we've got to get ahead of the game here rather 
than just staying even. And I would suggest that maybe we're 
not even staying even, and that's one of the reasons that we're 
here today.
    As far as the criteria go, I was just shown a description 
of the selection criteria that Metropolitan Water District of 
California uses, and it's a pretty--I mean, it looks like a 
pretty good list of things. So, you look at that and you say, 
well, if Metropolitan Water has it, and all of the other 
districts have something similar, what are we doing in terms of 
getting the criteria in sync so that there can be some level of 
certainty or just knowing what you--to expect before you get 
too far into the game?
    We had some very good information here this afternoon from 
all of you. We appreciate the perspective, appreciate the 
guidance. I think I'm leaving this hearing with a clear 
understanding that Title XVI does have a future, and what we 
need to do is figure out how we make it work best for the 
maximum good. And we've got a task in front of us, but there's 
no shortage of good ideas. So, I appreciate those of you who 
presented them today, and the committee will be working as we 
move forward. Thank you. With that, we're adjourned.
    [Whereupon, at 4:26 p.m., the hearing was adjourned.]

    [The following letter was received for the record:]

                          Eastern Municipal Water District,
                                        Perris, CA, March 14, 2006.
Hon. Lisa Murkowski,
Chairman, Subcommittee on Water and Power, Committee on Energy and 
        Natural Resources, U.S. Senate, Washington, DC.
    Dear Chairman Murkowski: The Eastern Municipal Water District 
(EMWD) appreciates the opportunity to provide written testimony to the 
Committee as it reviews the important role of the U.S. Bureau of 
Reclamation in its mission to encourage water recycling and 
desalination technologies to solve water problems throughout the 
western United States.
    The attached document presents our thoughts on invigorating the 
Bureau of Reclamation's Title XVI program and the associated benefits 
of making the needed improvements. If you need additional information, 
please feel free to contact me at 951-928-6109.
            Sincerely,
                                           Anthony J. Pack,
                                                   General Manager.
[Enclosure.]

            Statement of Anthony J. Pack, General Manager, 
                    Eastern Municipal Water District

    Madam Chairman and Members of the Committee: my name is Anthony J. 
Pack and I am the General Manager of the Eastern Municipal Water 
District (EMWD). On behalf of EMWD and its Board of Directors, it is my 
privilege to present this testimony to emphasize the benefits of 
invigorating the Bureau of Reclamation's (Bureau) Title XVI program 
which enables the Bureau to lead and unite the local and regional 
agencies and provide the necessary seed moneys to leverage local and 
State funds needed to develop and implement much needed water recycling 
programs to enhance the limited water supply in Southern California. 
The development of new water sources, such as recycled water, will help 
us relieve the overwhelming demand on the existing local, State and 
Federal water projects.
    EMWD provides domestic water, irrigation water, and sanitation 
services for about 580,000 people in a service area of over 555 square 
miles in.Western Riverside County in Southern California, one of the 
fastest growing areas in the nation. EMWD relies on water supply from 
the State and Federal water projects such as the State Water Project 
and the Colorado River to meet 65% of its needs, and supplements the 
remainder with recycled water, groundwater, and desalted brackish 
groundwater generated primarily through the development of local 
projects. Recognizing the limited availability of water from the 
existing sources and the need to meet the ever increasing demand, EMWD 
has ventured into an aggressive expansion of its water reuse program 
and an extensive brackish groundwater desalination program coupled with 
an integrated groundwater management strategy. We strongly believe that 
the successful implementation of these programs will create new water 
sources that will relieve the demand on the existing water projects for 
other State and national critical needs. This would not be feasible 
without the leadership and the financial participation of the Federal 
and State agencies and the desire to diligently invest local funds by 
the Board of Directors on innovative water projects.
    EMWD is the fourth largest recycled water user in the State of 
California and currently utilizes about 60 percent of the available 
recycled water. If not for the Federal assistance provided by the 
Bureau through its Small Reclamation Loan Program in the early 1990s, 
EMWD would not have been able to build this recycled water 
infrastructure, which is core to our success. This recycled water 
system not only enabled us to deliver recycled water to the various 
users but also allowed us to interconnect our five regional reclamation 
plants and the various storage facilities to increase system 
reliability. The use of recycled water within our District extends 
beyond irrigating parks, golf courses and agriculture to environmental 
enhancement such as the San Jacinto Wildlife Sanctuary. In our 
estimate, our efforts to utilize 20,000 acre feet of recycled water per 
year has relieved enough water from the State and Federal water 
projects to sustain 4,000 acres of wetlands, 5,000 acres of agriculture 
or 40,000 homes elsewhere in the west.
    EMWD strongly believes that any further increase in recycled water 
use cannot be accomplished without expanding local and regional 
recycled water infrastructure and without developing and implementing 
appropriate technology solutions to overcome the water quality 
regulations and constraints. Recognizing this, EMWD, as a member agency 
of the Santa Ana Watershed Project Authority, participated with the 
Bureau in the Southern California Comprehensive Water Reclamation and 
Reuse Study. Most of the projects identified in this study are also 
included in the Santa Ana Integrated Watershed Program. In addition, 
the California Water Plan and the CALFED-Bay Delta Program has 
identified that recycling is the most cost effective and the largest 
source of new water supply state-wide. All of these efforts identify 
the blooming opportunities waiting to maximize water recycling, reuse, 
and desalination. Where we are today is because of the vision the 
Congress had in the 1990s. The Congress paved the way for the future by 
enacting Title XVI which directed the Secretary of the Interior to 
investigate and identify opportunities for water reclamation, 
recycling, and reuse to address the future water needs of the West. 
This legislation further directed the Secretary to design and construct 
demonstration and permanent facilities. It is just when most of the 
water communities are beginning to embrace the core intent of Title XVI 
that some are questioning the effectiveness and the future need of the 
only Federal program that provides the localities with financial and 
technical assistance needed for the successful implementation of the 
various project elements.
    The Title XVI program, even during the early stages of recognition 
of the role of water reuse by water communities, has been very 
effective. It provided value and created new water by helping to 
develop 30 recycled water projects. Orange County Water District's 
Groundwater Replenishment System is an excellent example. It creates 
72,000 acre feet of water; incorporates modem treatment, monitoring, 
and groundwater recharge technology; and relieves Colorado River water 
for other agencies in Southern California. In this project Federal 
participation has enhanced broad based community and political support. 
Most significantly, Federal financial participation, at a very nominal 
level, has helped the agency to leverage significant State funds and 
local ratepayer dollars.
    Now, EMWD, like many other Southern California water agencies, has 
plans to further increase its recycling efforts by building more 
transmission and storage facilities and by incorporating desalting 
technology for both brackish water and recycled water to maximize 
recycling, reuse, and salinity management. This is not the time to 
question the effectiveness of the Title XVI program but it is the time 
to invigorate the program to make it better. Title XVI program is not 
broken. It requires more fuel, lubrication, and an updated maintenance 
manual.

          1. The Title XVI program needs fuel in the form of annual 
        appropriation, not intermittent but ongoing. The Bureau should 
        be directed to determine the national demand for water 
        recycling, reuse, and desalination projects and recommend a 
        reasonable level of annual funding needed to the Congress for 
        appropriation.
          2. The Title XVI program requires political lubrication. The 
        program has to be extended to all 50 states to minimize 
        friction between reclamation and non-reclamation states. This 
        will make it palatable to the Congressional representatives of 
        the non--reclamation states and help the program gain political 
        support. In reality, there are other states that could 
        significantly benefit from the Title XVI program.
          3. The Title XVI program needs an updated maintenance manual. 
        This Federal program should be made comprehensive and it should 
        include standards for Federal support. The Bureau should be 
        directed to establish a series of criteria that would qualify 
        projects for assistance such as ensuring that projects provide 
        multiple benefits and/or will contribute to ongoing water 
        conservation programs.

    In conclusion, I would like to emphasize the need to invigorate and 
enhance the Title XVI program to specifically target implementation of 
water recycling, reuse, and desalination programs. These are the basic 
and the cheapest building blocks for the new sources of water that are 
much needed to quench the thirst of the rapidly growing West. This 
valuable program has facilitated the development of 600,000 acre feet 
per year of recycled water capacity and the Federal contribution of 
$278 million, to date, has leveraged at a ratio of 5:1 with local and 
State funds to produce over $1.3 billion in benefits. I thank you and 
your esteemed committee for allowing me, on behalf of my Board, to 
provide this testimony.

                                APPENDIX

                   Responses to Additional Questions

                              ----------                              


     Responses of Betsy A. Cody to Questions From Senator Murkowski

    Question 1. CRS counts 31 project authorizations, while the 
Administration believes there are 32 authorizations. This also 
impacts the number of ``inactive'' projects. Please explain the 
discrepancy.
    Answer. CRS and the Bureau of Reclamation have made 
decisions in counting authorized projects, or project 
authorizations, that have resulted in slightly different 
project totals. The discrepancy can be explained by the way CRS 
and Reclamation treated one project and one project 
authorization bill.
    In its count of authorized projects, Reclamation did not 
include the Port Hueneme (CA) desalination project, because it 
was authorized under the general authority of the 1996 
amendments, and was not specifically authorized by Congress, as 
were the other projects. However, Reclamation did include the 
project in its budget summary, which included statistics on 
estimated project funding to date, and water to be reclaimed. 
For this reason, CRS included the Port Hueneme project in the 
total project count.
    Additionally, CRS counted the Hawaii authorization as one 
project, whereas Reclamation counted it as three projects. 
While the Title XVI authorization for Hawaii is just one 
authorization, it does appear to authorize three separate 
projects. In the future, CRS will count this authorization as 
three projects, and thus will be consistent with Reclamation on 
this point.
    In conclusion, if one subtracts the Port Hueneme project 
from the CRS total and adds the two additional Hawaii projects 
(count the Hawaii authorization as 3 projects instead of 1, for 
a net difference of 2), one ends up with the 32 projects 
identified by Reclamation. However, counting the Port Hueneme 
project and the Hawaii authorization as three projects leads to 
a total of 33 projects authorized under the Title XVI program. 
Of these, 32 have been specifically authorized by the Congress 
(as Reclamation reports) and one (Port Hueneme) has been 
undertaken pursuant to general Title XVI authorities.
    CRS will continue to count the Port Hueneme project as an 
authorized and active Title XVI project because it is included 
in program financial and other data provided by Reclamation. 
CRS will also henceforth count the Hawaii authorization as 
three projects, as does Reclamation. Thus, with this change, 
the total number of projects authorized (regardless of how they 
were authorized) is 33.
    Question 2. How did the Title XVI program evolve from the 
original authorization to the current program?
    Answer. The number of Title XVI projects grew substantially 
with the 1996 amendments to the original authorization. The 
1996 amendments (P.L. 104-266) authorized 18 additional 
projects and limited project funding. It appears nine projects 
have been authorized since 1996, three of which were authorized 
in September 2005 (the Hawaii projects). Reclamation developed 
and published Title XVI guidelines for program implementation; 
however, no rules or regulations have been promulgated for the 
program.
    The program's recent evolution appears to be closely tied 
to the findings and conclusions of the Administration's PART 
review process. More information on this process and its 
effects are included on page 5 (footnote number 13) and pages 
7-9 of my written testimony. Please contact me if this 
information needs clarification, or does not satisfactorily 
respond to your question.
    Question 3a. Is there a readily definable ``federal 
interest'' in the Title XVI program?
    Answer. Congress articulated the federal interest in water 
reuse in 1992 when it enacted Title XVI of P.L. 102-575, the 
Reclamation Wastewater and Groundwater Study and Facilities 
Act. The program was conceived during the long-term drought of 
the late 1980s and early 1990s when then-Secretary Lujan (1988-
1992 Bush Administration) announced the establishment of a 
Comprehensive Water Reuse Initiative for southern 
California.\1\ The initiative envisioned that a comprehensive 
water reuse program would help to decrease the area's 
dependence on imported water supplies from the Colorado River. 
While the federal interest in developing the Title XVI program 
was declared via enactment of P.L. 102-575, the federal 
interest and policy position regarding water reuse more 
generally were not clearly articulated in the statute 
itself.\2\ Hence, more than a decade later, the question has 
arisen whether there is still a federal interest in financing 
or providing technical assistance for water reuse.
---------------------------------------------------------------------------
    \1\ U.S. Dept. of the Interior, Office of the Secretary, ``News 
Release,'' dated August 5, 1991. According to materials CRS received on 
October 25, 1991, the Bureau of Reclamation undertook a number of 
activities in the fall of 1991, including developing a detailed action 
plan for promoting the initiative. By October 23, 1991, the Bureau had 
held its first pre-planning meeting for the Southern California Water 
Reclamation and Reuse Study.
    \2\ There are no findings or policy declarations in Title XVI 
itself, however, a quick review of the Title's legislative history 
reveals a brief discussion of the program's potential to address long-
term water supply needs of water short areas (U.S. Senate, Reclamation 
Projects Authorization and Adjustment Act of 1992, Report of the 
Committee on Energy and Natural Resources (S. Rpt. 102-267), 102nd 
Congress, 2nd Session, March 31, 1992, p. 1392). Other discussions 
largely focused on site- or regional-specific rationales for the 
program (e.g., the Title's ability to ``afford unique opportunities to 
resolve long-standing water management disputes'' in southern 
California (U.S. House of Representatives, Reclamation Projects 
Authorization and Adjustment Act of 1992, Conference Report, (H. Rpt. 
102-1016), 102nd Congress, 2nd Session, Oct. 5, 1992, p. 183). In 
another instance, Senator Bradley in a hearing mentioned the purpose of 
bringing down treatment costs through the desalination and research 
provisions of the Title. Yet, overall, Title XVI generated relatively 
little policy discussion compared with other provisions of the Act; it 
was one of 40 titles in an omnibus bill that proved quite controversial 
for its early provisions on surplus crops (``double subsidies''), 
Bureau of Reclamation policy reform, and latter provisions resulting in 
the Central Valley Project Improvement Act (Title 34 of P.L. 102-575).
---------------------------------------------------------------------------
    The argument for a federal interest in water reuse is 
perhaps most easily made where there is an existing federal 
interest in water supply development or water resources 
management. For example, the federal government, through the 
Secretary of the Interior, plays a major role in Colorado River 
management, which affects water supplies in many western 
states. As noted above, this involvement appears to be the 
impetus for establishing the Title XVI program.
    Other areas where the federal government is already 
involved in water resources management include places where 
implementation of the Endangered Species Act (ESA) has affected 
water resources management and water supplies in particular--
or, looked at another way, when federal water works (dams, 
pumps, distribution facilities) have contributed to the decline 
of certain species, thereby necessitating the implementation of 
the ESA and potential impacts on water supplies. Where federal 
projects have diverted water and where federal project 
operations result in a lack of water of sufficient quantities 
and quality for fish and wildlife or other species, and have 
contributed to species decline, it is arguable that the federal 
government under established policies has an interest, or 
responsibility, in augmenting those water supplies. A similar 
argument could be made for water quality where existing 
supplies, particularly groundwater supplies, do not meet new or 
emerging federal water quality requirements. A federal interest 
could also be articulated where the federal government is 
providing drought funding, or where it is funding and 
investigating new water supply development that in part would 
directly or indirectly augment potable supplies, as is the case 
in several areas of California. According to EPA, ``perhaps the 
greatest benefit of urban reuse systems is their contribution 
to delaying or eliminating the need to expand potable water 
supply and treatment facilities.'' \3\ However, whether such 
benefit equates to or implies a specific federal interest, 
particularly given the relatively limited history of federal 
involvement in local municipal and water supply development, is 
subject to debate. For more information on this point, please 
see pages 7-8 (Broad Policy Issues) of my written testimony.
---------------------------------------------------------------------------
    \3\ U.S. Environmental Protection Agency and U.S. Agency for 
International Development, Guidelines for Water Reuse, EPA/625/R-04-108 
(Sept. 2004). p. 85.
---------------------------------------------------------------------------
    Question 3b. Do all of the authorized projects have a 
federal nexus or are some strictly local in scope?
    Answer. The five projects and six studies authorized in 
1992 arguably address the federal interest articulated in the 
original Title XVI statute (P.L. 101-575). Other projects in 
Colorado River Basin states and projects in southern California 
areas receiving Colorado River water, or those in a position to 
offset or augment Colorado River supplies, also would appear to 
address this federal interest. It is not clear how many of the 
projects might address other potential federal interests 
described above; however, at least two of the ``inactive'' 
projects are, or would be capable of, providing water of 
improved quality to streams which contain threatened or 
endangered species under the federal Endangered Species Act. To 
fully understand whether some of the authorized Title XVI 
projects are ``strictly local in scope'' would require further 
in-depth research. This may be something the Government 
Accountability Office (GAO) could pursue given its authority to 
conduct program evaluations and its field resources (offices in 
California and elsewhere).
    Question 4. Have any of the authorized Title XVI projects 
been abandoned by the local sponsors?
    Answer. In interviews CRS conducted with project sponsors 
of seven ``inactive'' Title XVI projects, CRS found that one 
project (San Joaquin Area City of Tracy, CA) has been put on 
hold indefinitely. Another project (West Jordan, UT) had not 
been pursued by prospective project managers, but new 
management indicated the project might now be pursued, perhaps 
in conjunction with another nearby project.

      Responses of Betsy A. Cody to Questions From Senator Johnson

    Question 1. Your testimony talks about the primary role 
played by state and local governments in developing M&I water 
projects. If you look at programs across the board, including 
Indian water rights settlements; EPA State & Tribal Assistance 
Grants; and new Corps of Engineers authorities; hasn't federal 
assistance for M&Iprojects greatly increased over the last 15 
years?
    Answer. It is important to distinguish the difference 
between assistance for M&I water supply development projects 
and assistance for M&I wastewater and drinking water treatment 
projects. In my testimony, I touch on the historical role of 
federal water resource agencies (e.g., the Corps and 
Reclamation) in developing M&I water supply projects. What was 
not said, is that also historically, there has been a fine line 
upon which the activities of several federal agencies were 
drawn. For example, the U.S. Environmental Protection Agency 
(EPA) has dealt primarily with programs concerning water 
quality issues, while the Corps and Reclamation more typically 
engaged in water resource development projects; that is, they 
construct or assist in constructing navigation, flood control, 
irrigation, and other facilities. The perceptions of the core 
missions of these agencies still reflect this division in 
responsibilities, although there appears to be increasing 
overlap.
    For example, Congress has more frequently authorized the 
traditional water resource agencies to undertake M&I activities 
that involve water quality aspects (e.g., Title XVI, and 219 
``environmental infrastructure'' provisions in various Water 
Resources Development Acts (WRDAs)), and has also more 
frequently authorized M&I water supply development projects in 
the past 15--20 years. These latter projects are often in 
conjunction with or via Indian water rights settlements, rural 
water supply authorizations, and isolated Corps authorizations. 
However, it appears the total amount of federal assistance 
(funding) for the water supply development projects would be 
small, compared to federal funding for traditional water 
resources development projects (irrigation water supply, flood 
damage reduction, navigation, hydro power, etc.). It may be 
true that, as a percentage of such funding, the proportion of 
funding assistance going to M&I water supply projects is 
growing. This may be a fairly likely scenario if looking at 
funding for irrigation water supply development versus M&I 
water supply development; however, it maybe an unlikely 
scenario if comparing M&I water supply development with other 
water resources development activities such as those 
traditionally carried out by the Corps (flood damage reduction, 
navigation improvements, etc.).
    In contrast, funding that Congress appropriates to EPA in 
that agency's State and Tribal Assistance Grants (STAG) account 
is not provided for water resource or supply development. That 
assistance is provided for constructing or upgrading of local 
projects to treat ambient water to levels needed for safe and 
healthy drinking water and projects to treat a community's 
wastewater prior to discharge back into streams and lakes.
    Question 2. Approximately 9 of 31 authorized projects are 
deemed to be ``inactive'' by the Bureau of Reclamation. Does 
your report indicate that only one is not being pursued? Are 
the other inactive projects stalled because they are still 
undergoing planning activity? Has Congress authorized a number 
of projects that have not undergone in-depth feasibility 
studies?
    Answer. CRS has completed interviews with project sponsors 
of eight of the nine inactive projects identified by 
Reclamation in February of 2005. Of the eight for which we have 
completed interviews, only one project sponsor indicated the 
project would not be pursued (San Joaquin Area--City of Tracy, 
CA). Four projects have completed feasibility studies; however, 
it is not clear whether these studies were completed prior to 
project authorization. The other three projects are in various 
stages of planning and funding efforts, but could generally be 
categorized as being in pre-feasibility stages.
    I hope this information meets you needs. If you have 
further questions, please contact me at 7-7229 or at 
[[email protected].].
                                ------                                

                              Orange County Water District,
                               Fountain Valley, CA, March 17, 2006.
Hon. Lisa Murkowski,
Chairman, Subcommittee on Water and Power, Committee on Energy and 
        Natural Resources, U.S. Senate, Washington, DC.
    Dear Chairman Murkowski: Enclosed please find responses to the 
questions submitted by yourself and Senator Johnson as a result of my 
testimony on the Subcommittee's oversight hearing on the Bureau of 
Reclamation's Reuse and Recycling Program (Title XVI of P.L. 102-575). 
If you need any additional information or assistance I will be happy to 
provide it.
    Thank you for the opportunity to be a part of the Title XVI 
dialogue.
            Sincerely,
                                         Virginia Grebbien,
                                                   General Manager.
[Enclosure.]
             Responses to Questions From Senator Murkowski
    Question 1. Is it fair to say that you believe Title XVI is a 
value-added program but that it needs to be restructured in order to 
make it more effective?
    Answer. As I stated in my testimony on February 28 I strongly 
believe that the Title XVI program adds value. I have personally 
constructed three
    Title XVI Projects, the West Basin Water Recycling Project at West 
Basin Municipal Water District, the Esteban Torres Recycled Water 
Project at Central Basin Municipal Water District and currently under 
construction the Groundwater Replenishment System (GWRS) at Orange 
County Water District (OCWD). Together the West and Central Basin 
projects currently deliver about 35,000 AFY of recycled water. The GWRS 
project will be operational in the summer of 2007 and will serve 72,000 
AFY of recycled water. Together these three projects next summer will 
be providing in excess of 100,000 AF of value every year!
    In addition, Title XVI projects significantly leverage federal 
dollars providing economic value. The total cost of the GWRS project is 
$487 million. The federal cost share of $20 million is just four 
percent--a significant value to the federal government. Modest 
improvements to the program may be warranted but quite frankly, I 
believe the Title XVI program works well as is. The only improvement I 
would suggest is to increase the funding to the program.
    Question 2. What is the most important action that Congress can 
take to reshape Title XVI?
    Answer. The most important action Congress can take with respect to 
the Title XVI program is to continue to support it. Congress should 
send a strong signal encouraging the expanded use of recycled water to 
assist in solving the critical water problems facing the arid western 
regions of the United States. The Title XVI program creates new water 
supplies that are critically needed. As Congress considers ways to 
improve Title XVI, I suggest it ensure that existing projects are 
incorporated into any formal rewrite of Title XVI by authorizing the 
projects with a sunset provision of ten years. This would establish a 
commitment to projects that are already proceeding through the 
legislative process today and establish a revised program for the 
future.
    Question 3. Over the past several years, the funding level for 
Title XVI has ranged from a low of a $10 million Administrative request 
to a high of $31 million in Congressional appropriations. What do you 
think is an adequate level of funding for this program?
    Answer. Ideally Congress should be funding this program at 
sufficient levels to encourage the maximum amount of recycled water 
development. I estimate this high level of funding would be in the $100 
to $200 million per year range. However, given the competing interests 
for federal dollars 1 would suggest the minimum annual funding for 
Title XVI should be $50 million.
    Question 4. Currently, there is a limit on the federal cost-share 
of $20 million or 25 percent of project costs. One idea that's been 
discussed is reducing the federal cost-share. What do you believe is 
the appropriate federal cost-share?
    Answer. It is my understanding that the federal cost share on Title 
XVI projects is the lowest of any water resources program of the Army 
Corps or the Bureau of Reclamation so I would argue that the cost share 
does not need to be lowered. I know the Corps of Engineers projects my 
agency participates in have a maximum federal cost share of 50 percent. 
Similarly, we just received FEMA funding for 2005 flood damage that had 
a federal cost share of 75 percent. In contrast, the Title XVI cost 
share of the GWRS project is four percent.
    Question 5. How should Congress address projects that have been 
authorized but haven't received any federal funding?
    Answer. I would suggest a sunset provision on authorizations going 
forward is reasonable.
    Question 6. Do you agree with the Administration's suggestion that 
such projects should meet any newly imposed eligibility requirements?
    Answer. This question concerns me as I am unclear as to what new 
eligibility criteria are being contemplated by the Administration or 
whether it is needed. As discussed at February's Oversight Hearing, the 
USBR in the late 1990's issued a planning guidance document that 
outlines feasibility criteria. It is my understanding that authorized 
Title XVI Projects are in conformance with the criteria outlined in the 
guidance document. Similarly, the State of California has criteria for 
recycled water projects to be eligible for low interest loans and state 
bond funds. If these criteria were used they would be acceptable as 
they are well established, beneficial, and most if not all recycled 
water projects meet them. If additional criteria were to be developed I 
would recommend that any such criteria be stakeholder supported. 
Criteria that would require an extended review and approval process by 
the USBR would not be beneficial and would only serve to delay the 
implementation of Title XVI projects.
    Question 7. The House has added 10-year sunsets to their Title XVI 
bills. Do you agree with this approach?
    Answer. Yes.
    Question 8. I understand that the average monthly water bill for 
Californians is about $30. I further understand that more than 90 
percent of California communities pay less than two percent of their 
median household income for their water and wastewater charges, which 
would fall in the range of ``highly affordable.'' How much could urban 
water rates increase before rising to a level that is generally 
considered affordable to invest in new water projects?''
    Answer. Orange County has a diverse population that is now over 50 
percent in minority status. Many Orange County families are on limited 
income and fixed budgets. Additionally, water rates can unfortunately 
be perceived as taxes, which many residents believe should not be 
increased. These conditions make increasing residential water rates a 
difficult and delicate issue. Local city councils have been threatened 
in the past with recall elections due to proposed water rate increases.
    OCWD has recognized the need to increase water rates to provide 
funding to invest in our water future and has more than doubled our 
water rates over the past six years. This increased cost of groundwater 
has forced local cities to increase their retail water rates to their 
residential customers.
    Similarly, the Orange County Sanitation District (OCSD) has a $2 
billion capital improvement program to meet existing and future 
wastewater treatment capacity demands. OCSD has increased its sewer 
rates 15 percent a year for the last four years. These combined water 
and sewer rate increases have resulted in the combined average monthly 
residential water and sewer bill to increase by 15 to 20 percent a year 
over the last five years.
    Public opinion polling generally reveals that the public will 
support increased water and sewer rates to support clean water and 
clean beaches. However, polling also shows that public support erodes 
when water and sewer rates increase too steeply, typically greater than 
$10 per month is not supported.

              Responses to Questions From Senator Johnson

    Question 1. I'd like to hear a little bit more about your 
Groundwater Replenishment System. Does the overall project work 
basically as a water bank?
    Answer. This is a very perceptive observation. Yes, the project 
does work a bit like a water bank. It also serves as a water 
purification process and a salt water intrusion barrier. In Orange 
County we are very fortunate to have a large underground aquifer. We 
are even more fortunate in that it is ``managed'' versus adjudicated. 
What this means is that each year OCWD's Board of Directors determines 
how much water can be produced or pumped from the basin which is then 
enforced through economic incentives and disincentives. The net result 
of the Orange County basin being managed is that in the last twenty-
five years we have doubled the sustainable yield of the basin from 
150,000 AFY to 320,000 AFY. In contrast, an adjudicated groundwater 
basins' sustainable yield will remain constant over time.
    GWR will operate as a water bank using the groundwater basin as a 
storage reservoir and the recycled water as the supply source. The 
recycled water produced by the GWR Advanced Water Purification Facility 
(i.e. the treatment plant) will be recharged and stored underground in 
the basin. Some of the water will be used to increase our sustainable 
annual yield from the basin from 320,000 AFY up to about 380,000 AFY. 
The rest will remain in storage for use during emergencies, to weather 
droughts on the Santa Ana River (our main source of surface water in 
Orange County) or to weather droughts and supply restrictions on 
Southern California's imported water delivery systems.
    Question 2. What used to happen to the water that is now being 
captured, cleaned, and recharged into the groundwater basin as a result 
of your project?
    Answer. It would be wasted to the ocean.
    Question 3. Are there environmental issues associated with 
capturing water that formerly was released as treated effluent?
    Answer. The GWRS project provides an environmental benefit and is 
strongly supported by the local environmental community including the 
Orange County Coast Keepers and the Surfrider Foundation. Orange County 
has been plagued with beach closure issues particularly in the City of 
Huntington Beach. For a while it was thought that OCSD's discharge of 
treated effluent (the source water for GWRS) was the cause of high 
bacteria levels that were closing the beaches. This has since been 
determined to NOT be the cause of the beach closures. However, the 
local environmental community were very active in working with the OCSD 
to implement a policy of providing full secondary treatment to all of 
their wastewater discharges and to reclaiming as much of their 
wastewater as possible so that it would not be discharged into the 
Pacific Ocean.
    Question 4. Your testimony mentions that some recycled water 
projects were built and then not operated due to the lack of community 
support. Were any of those projects Title XVI projects?
    Answer. No. Please let me clarify my testimony. One project was 
built and then not operated. Another project was planned and under 
design when it was terminated due to lack of community support.
    Question 5. If not, how might have Title XVI helped to avoid that 
result (i.e. not operated after construction)?
    Answer. It is difficult to say if Title XVI would have helped these 
two projects because fundamentally these were community outreach 
failures rather than technical or financial failures. If they had been 
Title XVI projects than one can assume that there would have had to 
been greater political and community stakeholder support because in 
order to become a Title XVI authorized project it takes the support of 
an area's congressional delegation. Further, in order to receive 
appropriations the level of support from the local community to 
galvanize the congressional delegation to make the project a funding 
priority must be even greater. In other words, to become a successful 
(as defined by actually receiving appropriations) Title XVI project an 
agency would have to engage in a significant outreach program. If the 
agencies involved in these two particular projects had engaged in a 
better outreach campaign they may have been able to adapt and modify 
their projects so that the community would have supported them and they 
then could have been effectively implemented.
                                 ______
                                 
    Responses of Richard Atwater to Questions From Senator Murkowski

    Question 1. Is it fair to say that you believe Title XVI is a 
value-added program but that it needs to be restructured in order to 
make it more effective?
    Answer. The WateReuse Association strongly believes that the Title 
XVI program has been very successful in leveraging federal investments 
with local and state funds to develop innovative technologies and 
important new water supplies throughout the western U.S. The 
Association believes that the Title XVI program can be improved through 
modest changes in the cost-sharing provisions: lowering the federal 
investment cap from 25% to 20% and streamlining the Bureau of 
Reclamation's review of local projects feasibility reports to be 
consistent with adopted State criteria (such as the California Water 
Resources Control Board) to avoid redundant NEPA and ESA reviews. What 
is the most important action that Congress can take to reshape Title 
XVI? The update of the 1996 authorization of the Title XVI legislation 
with new criteria (see attached) for eligibility would be the most 
significant action that could be taken by the Congress.
    Question 2. Over the past several years, the funding level for 
Title XVI has ranged from a low of a $10 million Administrative request 
to a high of $31 million in Congressional appropriations. What do you 
think is an adequate level of funding for this program?
    Answer. The WateReuse Association believes annual appropriations 
can be sustained at a minimum of $50 million per year with a targeted 
goal of $200 million annually. This level of funding, divided between 
recycled water projects and desalination (both brackish groundwater and 
seawater), should be authorized by Congress.
    Question 3. Currently, there is a limit on the federal cost-share 
of $20 million or 25% of project costs. One idea that's been discussed 
is reducing the federal cost-share.
    What do you believe is the appropriate federal cost-share?
    Answer. As indicated in the February 28, WateReuse Association 
testimony, we believe reducing the cap on percentage cost share to a 
maximum of 20% from the current 25% would be more cost-effective. The 
Association also recommends no change in the authorization cap amount 
of $20 million. Many projects being built today have an effective cost-
share of between 10 and 15%, illustrating the significant federal 
investment benefits to the nation when compared to any other comparable 
federal water investment program at the Bureau of Reclamation, Army 
Corps of Engineers, USEPA and the USDA NRCS water resources programs.
    Question 4a. How should Congress address projects that have been 
authorized but haven't received any federal funding?
    Answer. All existing authorizations and all future authorizations 
should have a 10:year ``sunset'' authorization provision, effective 
going forward from 2006.
    Question 4b. Do you agree with the Administration's suggestion that 
such projects should meet any newly imposed eligibility requirements?
    Answer. Without knowing the Administration's proposed eligibility 
requirements, it is difficult to evaluate whether they are appropriate 
or whether they should be applied retroactively on existing authorized 
projects.
    Question 5. The House has added 10-year sunsets to their Title 16 
bills. Do you agree with this approach?
    Answer. Yes, we believe that sunset provisions would resolve 
concerns raised about Title XVI projects which are authorized but not 
funded within a reasonable period of time.
    Question 6. You advocate the expansion of the Title XVI program--
which is now limited to the 17 Reclamation states--to a national 
program with an annual authorization of $200 million.
    Would you support the concept proffered by the NWRA--namely that 
Congress should evaluate non-Reclamation state participation on a 
state-by-state basis?
    Answer. Yes, based on the continuation of specific Congressional 
authorization for each Title XVI project.
    Question 7a. You note in your testimony that through FY 2004, the 
Federal investment of $272.5 million was leveraged by a factor of about 
5:1, for a non-Federal investment of about $1.09 billion.
    Please explain how federal participation helps to leverage non-
federal funds, particularly since the average annual federal 
appropriation for a Title XVI project is approximately $1 million.
    Answer. The financing by local governments of new water supplies is 
typically more expensive; the average cost of their existing water 
supplies (whether local groundwater or imported supplies) and the 
federal investment of typically 10-20% of the capital costs achieves 
two key incentives: 1) federal endorsement with grant funding allows 
local officials to garner broad public support for the non-federal 
capital investment of 80-90%; and the federal investment typically 
lowers the cost of the new recycled water supply so it does not make it 
prohibitively expensive when compared to the existing local groundwater 
or imported supplies.
    Question 7b. Given that these projects can cost in excess of tens 
of millions of dollars, how does the federal share provide any benefit 
to a project?
    Answer. As documented in the California Water Recycling Task Force 
Report (June 2003) recommendations, state and federal grant funding is 
a critical ingredient to encouraging more water recycling in California 
to achieve the adopted goals of developing over I million acre-feet of 
new recycled water supplies statewide (California State Water Plan, 
2006). The same is true in other states.
    Question 8a. You suggest in your testimony that the federal cost-
share component could be reduced from 25% to 20%.
    Why not 15% or even 10%?
    Answer. As indicated above, the reduction of the cost-sharing 
percentage cap from 25% to 20% is reasonable. Lowering the cap further 
at this time would limit unnecessarily the federal grant assistance to 
projects that need the extra financial incentives.
    Question 8b. If the federal cost-share is reduced, should the $20 
million cap also be lowered? If not, why not?
    Answer. The $20 million cap with a 20% cap on federal cost-sharing 
of capital costs would now fund a $100 million project. Limiting the 
federal investment cap to less than $20 million would reduce the size 
and scope of the water recycling projects that can be considered. From 
Watereuse Association surveys of projects being planned and currently 
developed, many projects exceed $100 million and the cap already will 
reduce the effective cost share to below 20%.

     Responses of Richard Atwater to Questions From Senator Johnson

    Question 1a. Have water reuse technologies become more cost-
effective over the last decade?
    Answer. Yes, in that membranes are becoming more common in treating 
wastewater and other poor quality water sources (e.g., groundwater) for 
reuse and recycling of the supply for beneficial water supply projects.
    Question 1b. Has Title XVI helped to bring about developing more 
cost-effective technologies?
    Answer. Yes, our publication of 10 case studies in 2004 documents 
some of the best examples of new technologies being developed to reuse 
and recycle previously wasted water into ``state of the art'' new 
supplies. Recycled water is being used for new and different uses every 
year (for example, fabric dyeing factory in Chino started using 
recycled water in 2005; at least 14 high rise buildings in Irvine have 
dual plumbing systems for urinal flushing; and the Gallo winery in 
Sonoma County irrigates its grapes exclusively with recycled water).
    Question 2. Should Title XVI be amended to ensure that a certain 
percentage of funding is allocated to demonstration projects that 
promote promising new technologies?
    Answer. Through the Congressional authorizations and the criteria 
for funding of projects, the Association believes that the Congress and 
the Bureau of Reclamation have policies already in place that encourage 
new technologies and demonstration projects. Additional authorization 
language highlighting the value and need for demonstration projects 
would be an effective policy tool to the private and public sectors to 
continue to expand the use of new technologies to increase the reuse 
and recycling of water throughout the United States.
    Question 3. Do you think that Title XVI funding should be limited 
to less affluent communities that may not be able to afford water reuse 
projects absent federal grants?
    Answer. Most of the Title XVI projects that have been authorized 
and currently being considered by Congress are of a regional nature and 
typically have poor and disadvantaged communities served by the 
recycled project service area. Additional federal incentives for 
disadvantaged communities (e.g., keeping the cost-sharing percentage 
cap at 25%) might be an effective tool to ensure the financial 
feasibility of water recycling projects in disadvantaged communities. 
Drought and other water supply impairments do not selectively find 
communities. While some communities may enjoy higher standards of 
living than others, it is also true that these communities serve as 
engines for economic activity benefiting all within and across regions. 
The Association rejects the notion that Title XVI benefits wealthy 
communities and believes that there is no scientific survey that 
substantiates this assumption.
                                 ______
                                 
    Suggested New Criteria for Water Reuse and Desalination Projects

    (a) Project Financing Assistance.--The Secretary shall establish a 
program of grant assistance to support the construction of water reuse 
and desalination projects consistent with eligibility criteria in 
paragraph (ii) of this subsection.

          i. Eligible Projects.--For purposes of this section, an 
        eligible project shall be a project that provides water 
        supplies to the general public through alternative water 
        supplies. Projects that demonstrate compliance with subsection 
        (a) (ii) shall receive priority for assistance.
          ii. Priority Criteria.--Eligible projects shall be 
        prioritized for financing assistance if they:

                  1. significantly improve water supply quality or 
                reliability;
                  2. significantly increase water supply yield; or
                  3. address multiple benefits.

          iii. Guidelines.--The Secretary shall develop appropriate 
        guidelines for purposes of implementing the provisions of this 
        section. Such guidelines shall be issued not later than 180 
        days after the date of enactment of this Act. In the event that 
        such guidelines are not published by such date, the Secretary 
        shall proceed with selecting projects for assistance provided 
        that at least five projects in each eligible state shall be 
        selected. Such selection shall ensure a balance within each 
        state between water reuse and desalination projects.
          iv. Cost Share.--Projects authorized to receive assistance 
        shall demonstrate an ability to provide up to 50% of a 
        project's costs from nonfederal sources. The Secretary may 
        waive this cost-share requirement if it is determined that the 
        project sponsor is deemed to be an economically disadvantaged 
        community.
          v. Authorization of Appropriations.--There is authorized to 
        be appropriated $250,000,000 for each of fiscal years 2006 
        through 2010. Such authorized amounts shall remain available 
        until expended.
                                 ______
                                 
  Responses of Thomas F. Donnelly to Questions From Senator Murkowski

    Question 1. Is it fair to say that you believe Title XVI is a 
value-added program but that it needs to be restructured in order to 
make it more effective? What is the most important action that Congress 
can take to reshape Title XVI?
    Answer. NWRA believes that Title XVI can be a very valuable program 
allowing districts facing long-term water supply challenges to develop 
``new'' water through recycling, reuse, desalination and conservation. 
With a limited amount of federal dollars available, it is important 
that the highest value projects are funded first. We would recommend 
that Title XVI be amended to require a report from the Commissioner to 
the Chairmen of the Senate Energy and Natural Resources Committee and 
the House Resources Committee recommending or not recommending 
authorization of the project proposal. We are not suggesting a detailed 
and costly assessment of the proposal, but simply a letter reporting on 
whether or not the proposed project meets the goals and objectives of 
the Act, adds water to systems that are facing critical water supply 
challenges. The report should also comment on, but not be limited to, 
the cost sharing arrangements, the technology and other pertinent 
aspects of the proposal.
    Question 2. Over the past several years, the funding level for 
Title XVI has ranged from a low of a $10 million Administrative request 
to a high of $31 million in Congressional appropriations.
    What do you think is an adequate level of funding for this program?
    Answer. If the aforementioned procedural changes are made to ensure 
that quality projects receive priority funding, an annual level of 
funding in the $30-50 million dollar level could make a big difference 
in the West. Creating ``new'' water can provide water for rapidly 
growing urban areas in the arid and semi-arid West and water to meet 
environmental needs.
    Question 3. Currently, there is a limit on the federal cost-share 
of $20 million or 25% of project costs. One idea that's been discussed 
is reducing the federal cost-share.
    What do you believe is the appropriate federal cost-share?
    Answer. The current federal/non-federal cost share is very 
favorable to the American taxpayer when compared to other federal 
programs. Urban districts have a rate-payer base that allows them to 
adequately fund the non-federal share in most cases. At this juncture, 
we would not urge Congress to change the cost sharing arrangements or 
the limit per project.
    Question 4. How should Congress address projects that have been 
authorized but haven't received any federal funding? Do you agree with 
the Administration's suggestion that such projects should meet any 
newly imposed eligibility requirements?
    Answer. Provided the Congress amends Title XVI as suggested in the 
response to question number 1, we would recommend that those projects 
that have not received federal funding should be returned to 
Reclamation for evaluation. In this respect, we do agree with the 
Administration.
    Question 5. The House has added 10-year sunsets to their Title 16 
bills. Do you agree with this approach?
    Answer. Sunset provisions require Congress to periodically reassess 
federal programs to determine whether or not they have successfully 
achieve their objectives, they should be continued or whether changes 
or amendments should be made to the original authorization. We do agree 
with this approach as long as it results in a review of the program 
rather than an automatic termination of the program.
    Question 6. In your opinion, could the Title XVI program be 
effective in creating ``new'' or ``saved'' agricultural water for other 
uses such as environmental enhancement or providing additional water 
for municipal use?
    Answer. There is no question that agricultural water uses provide 
numerous opportunities to save water through canal lining and other 
types of conservation improvements. Whether or not saved agricultural 
water can be used for either environmental enhancement or municipal use 
depends to a large extent on state water law. In a number of 
Reclamation States such as Idaho and Montana, appropriation law 
requires any saved water to go to the next junior appropriator. 
Conversely, some states have enacted laws that provide for two-party 
agreements to pay for conservation improvements in return for the use 
of the saved water. Title XVI should be amended to allow it to be used 
for projects that save agricultural water provided that the water is 
used for a purpose that meets the long-term water supply objectives of 
the state or region.
    Question 7. You've suggested increasing the federal cost-share 
component for projects that satisfy national goals and objectives.
    Please elaborate on the national goals and objectives.
    How much of an increase on the federal cost-share component do you 
think is reasonable?
    Answer. As an example, Congress has authorized multi-million dollar 
projects to restore and enhance the Everglades in Florida and 
California's Bay-Delta. Both of these projects require large quantities 
of water to be allocated for environmental enhancement. Title XVI 
projects which provide water to meet such national goals and objectives 
should be encouraged and given priority for funding. In such cases the 
current cost sharing arrangements may be inappropriate and prohibitive. 
It's difficult to simply pick a number for an appropriate federal/non-
federal cost share. Rather than doing so, we would recommend that for 
projects of this nature, cost sharing should be addressed by the 
authorizing committees on a case-by-case basis.
   Responses of Thomas F. Donnelly to Questions From Senator Johnson
    Question 1. Is here a sense by NWRA's members that the Title XVI 
program distracts Reclamation from carrying out its traditional mission 
and serving its traditional constituencies?
    Answer. The Bureau of Reclamation's core mission must be the 
maintenance of its water supply and power generation infrastructure. 
That is not to say that Reclamation should resist new missions 
authorized by Congress, such as those authorized under Title XVI of 
P.L. 102-575. We believe that programs such as Title XVI enhance rather 
than detract from Reclamation's mission.
    Question 2. Do you think Title XVI projects can and should be 
targeted in such a way as to help Reclamation carry out its core 
mission?
    Answer. There is no question that they should be. Whether they can 
be depends in large part on the details of the project application and 
the area that benefits from the project.
                                 ______
                                 
                        Department of the Interior,
           Office of Congressional and Legislative Affairs,
                                    Washington, DC, April 18, 2006.
Hon. Lisa Murkowski,
Chairman, Subcommittee on Water and Power, Committee on Energy and 
        Natural Resources, U.S. Senate, Washington, DC.
    Dear Madam Chairwoman: Enclosed are responses prepared by the 
Bureau of Reclamation to questions submitted following the February 28, 
2006, hearing regarding ``Title XVI of P.L. 102-575.''
    Thank you for the opportunity to provide this material to the 
Committee.
            Sincerely,
                                             Jane M. Lyder,
                                               Legislative Counsel.
[Enclosure.]

                            I. Oral Question
              Response to Question From Senator Feinstein

    Question 1. For pending California water recycling projects from 
SCCWRRS and BARWRP (those which have submitted feasibility studies but 
Reclamation has not completed review), why have the reviews not been 
completed and what will it take to complete them? Also, you can report 
on the status of projects that have been approved/authorized but have 
not received funding.
    Answer. Reclamation has completed its review of all reports and 
other documentation submitted by project proponents in response to our 
request for information for the report directed by P.L. 108-361. (The 
report is currently under administrative review, and we look forward to 
submitting it to Congress soon.) Of the submittals for projects that 
have not been authorized, fourteen (seven each associated with SCCWRRS 
and BARWRP) were nearly complete, but lacked elements such as NEPA 
compliance. While these projects have the potential to meet 
requirements included in Reclamation's 1998 Title XVI feasibility 
guidelines, we do not know how they would rank in priority if the Title 
XVI program were reformed as proposed in our testimony. The remainder 
lacked many required elements. All project proponents have been 
notified of Reclamation's findings.
    Progress on authorized Title XVI projects in California that have 
not yet received funding from Reclamation is as follows:

          1. San Joaquin Area Water Reuse--The sponsor has placed the 
        project on hold due to a change in demand for reclaimed water.
          2. Irvine Basin Groundwater and Surface Water Improvement--
        The sponsor has initiated planning and NEPA compliance is 
        underway. Reclamation has provided technical assistance on a 
        cost-reimbursable basis.
          3. Hi-Desert Wastewater Collection and Reuse--The sponsor has 
        indicated its interest in initiating the project in the near 
        future.

                 II. Questions Submitted for the Record
              Response to Question From Senator Murkowski

    Question 1. Local Title XVI project sponsors need help with the 
financing of the capital costs of constructing facilities, although 
they can also benefit from the receipt of subsidies for actual water 
delivered as in the case of the MWD program. Do you believe a reformed 
Title XVI program that rewards projects that have already been 
implemented with a unit cost subsidy would be more appropriate for 
Reclamation?
    Answer. Title XVI projects are constructed, operated, and 
maintained by non-Federal entities. Title XVI does not currently 
authorize Federal funding for operations and maintenance of these non-
Federal projects. We do not believe such funding to be an appropriate 
Federal role and do not believed it would be appropriate in a reformed 
Title XVI program.

              Responses to Questions From Senator Johnson

    Question 1. During her confirmation process, Deputy Secretary 
Scarlett was asked what role Interior should play in water recycling 
and reuse. She responded for the record that the Department ``questions 
the need for more Federal dollars through Reclamation to fund 
additional projects, given other potential funding sources throughout 
the West.''
    Do you know what other potential funding sources she may have been 
referring to? Do you think that there exists such a source of funds and 
that it reduces the need for Reclamation to have an active Title XVI 
program?
    Answer. The Title XVI projects are predominantly planned, designed 
and constructed by the local non-Federal project sponsors. These 
projects are also owned and operated by the local water agencies. As 
such, the primary responsibility for funding Title XVI projects resides 
with state and local government. Although there are no other Federal 
programs that provide funding for water recycling projects in the 
manner that the Title XVI does, there are sources of funding at the 
state level. One such program is the State Revolving Fund which 
receives Federal financial assistance in the form of block grants from 
the Environmental Protection Agency to help fund water and wastewater 
projects, including water recycling projects. In addition; numerous 
states have state-run financial assistance programs to provide grants 
and loans to local communities. In the case of California, a program 
funded from monies received from Proposition 50, passed by voters in 
2002, is available to help construct projects in that state. These 
funding sources are critical to the successful implementation of water 
recycling projects at the local level.
    Question 2a. Your testimony states that according to OMB, one of 
the 2 main problems with the Title XVI program is that there is 
insufficient Reclamation involvement early in the project development 
process, leading to projects with planning deficiencies. This might be 
a problem of Reclamation's own making. Last year, the Lakehaven Utility 
District in Washington state asked Reclamation to serve as the NEPA 
lead agency for the environmental review associated with Lakehaven's 
authorized water reuse project. Reclamation declined, stating that 
``the reuse portion of the program should be phased out and that no new 
planning starts should be initiated. In the future, the program's focus 
will be on desalination research.''
    By taking this position, isn't Reclamation removing itself from the 
planning process? How can OMB then complain that this is a major 
problem with the program?
    Answer. Reclamation believes that Title XVI has accomplished its 
authorized mission of demonstrating recycling technology. Reclamation 
made a conscious decision to redirect its discretionary funding in the 
Title XVI program to desalination research. Reclamation believes this 
commitment to focus Federal funding on research to bring down the cost 
of desalination and recycling will result in substantial future 
benefits to local communities. By advancing the science of water 
treatment technologies, we believe the cost of implementing water 
recycling and desalination projects can be reduced to a level that 
makes these types of new water supplies more affordable to a greater 
number of local communities. As Reclamation's testimony stated, we 
believe there is still a role forReclamation to assume in the planning 
of Title XVI projects and that desalination will become an even more 
important tool in meeting future water needs.
    Question 2b. What ideas do you have for ensuring sufficient 
Reclamation involvement in the project development phase?
    Answer. Reclamation has a number of ideas for insuring sufficient 
involvement in the planning phases of project development, but believes 
Congressional action is required to bring the program in line with the 
water supply needs of today. We are working on a legislative proposal. 
There are many changes to the way Title XVI is administered that could 
be accomplished under the existing statute. However, we believe it will 
take legislative action by Congress to place limitations on how and 
when future projects are authorized for construction. Reclamation does 
not have the ability to enforce these restrictions under Title XVI as 
it now exists.
    Question 3a. Your testimony suggests the Administration might be 
receptive to the authorization of new Title XVI projects if the 
existing authorization for the program is amended to establish explicit 
criteria ensuring project feasibility, as well as some formula for 
prioritizing funding.
    Is this an accurate assessment?
    Answer. Yes, this is an accurate assessment. We believe the Title 
XVI program has served a useful purpose, but is outdated and in need of 
reform. Clearly the authority to identify and investigate water reuse 
opportunities has helped many local water agencies with project 
planning. However, we believe the program has flaws relative to the 
specific authority to plan, design, and construct full-scale water 
reuse projects. Authorizing projects for construction prior to having 
completed comprehensive feasibility studies has resulted in Federal 
projects potentially costing billions of dollars that have not been 
determined to be feasible and worthy of Federal investment. This has 
placed a tremendous financial burden on Reclamation and further erodes 
our ability to manage our existing infrastructure. Reclamation would 
prefer to have projects authorized in stages where construction 
authorization only occurs after Reclamation has determined that the 
project would contribute to water supply goals and help meet our 
mission of delivering water and power in the most efficient and 
environmentally responsible manner.
    Question 3b. If changes along the line you suggest are made, is it 
realistic to expect that additional resources will be recommended to 
construct projects, or will the Administration still prefer for 
Reclamation to focus the program on something else like desalination 
research?
    Answer. Reclamation continues to fund ongoing Title XVI 
construction projects. We are confident that with Title XVI reform, 
there should be a greater role for Reclamation to play in decisions 
about implementation of future projects, within the broader context of 
addressing the many competing goals and funding needs, even just within 
Reclamation and the Interior Department. We expect that in the future, 
Reclamation's focus will be on processes and decisions relating to 
implementation of Title XVI water reuse programs, and on other efforts 
to fund research in advanced water treatment technologies, including 
desalination.
    Question 3c. Does Reclamation currently have explicit criteria by 
which it can measure the merit of Title XVI projects?
    Answer. Since 1994, authorized construction projects have generally 
been initiated as a result of Congressional action. The principle 
exception to this occurred in FY 2000, when Reclamation evaluated and 
ranked unfunded authorized projects for the purpose of prioritizing 
available construction funding for four new starts. As stipulated in 
``Guidelines for Preparing, Reviewing, and Processing Water Reclamation 
and Reuse Project Proposals Under Title XVI of Public Law 102-575, as 
Amended,'' Reclamation based its prioritization criteria on specific 
language in the Title XVI statute and the perceived needs of the local 
communities. Since FY 2000, Reclamation's funding requests have been 
limited to those projects that have been included in the President's 
budget request in prior years. Reclamation believes that the recent 
years of drought in the West and explosive population growth have 
changed the fundamental water supply situation, and that new criteria 
are needed to ensure Federal funding is directed to the greatest areas 
of need and in the most efficient manner possible.
    Question 4. Your testimony indicates that there are some authorized 
projects that may no longer be being pursued by the project sponsors.
    Can you identify these projects for the record?
    Answer. Based on currently available information, we believe the 
following projects are not being pursued by the project sponsors:

          San Joaquin Area Water Recycling and Reuse Project--The non-
        Federal project sponsor has placed the project on hold due to a 
        change in demand for reclaimed water.
          Central Valley Water Recycling Project, UT--The non-Federal 
        project sponsor has elected to place this project on hold 
        indefinitely.
          City of West Jordan, UT, Water Reuse Project--The non-Federal 
        project sponsor has elected to place this project on hold 
        indefinitely.
          Truckee Watershed Reclamation Project--This project has not 
        received Federal funding or involvement. The project sponsor 
        has never requested Reclamation's assistance in developing this 
        project and no progress has occurred to date.

    Question 5. What are some of the most significant technical or 
legal challenges facing water reuse projects? For example, do some 
projects have difficulty in securing state water use permits because of 
increased consumptive use?
    Answer. There have been instances when water recycling projects 
have been limited in the amount of water that project sponsors can 
reuse. For example, when a wastewater treatment plant has been 
discharging to a stream or river for many years, a portion of those 
flows may be required to continue due to the history of prior use by 
downstream communities. Other legal demands for wastewater discharges 
can often limit reuse, including inter-agency compacts and 
environmental demands, such as meeting the needs of endangered species. 
Technical challenges facing water reuse projects are varied and range 
from issues of water quality, health, safety and public acceptance, to 
issues of treatment technologies, brine-management and concentrate 
disposal. Though these challenges may be formidable in certain cases, 
it has been shown that a well thought-out planning process can 
significantly reduce the obstacles to project implementation and result 
in a successful water recycling project.

                                    
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