[Senate Hearing 109-460]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-460
 
                       MISCELLANEOUS WATER BILLS

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                           SECOND SESSIONQ08

                                   ON
                                     

                           S. 1577                               S. 1962

                           S. 2028                               S. 2035

                           S. 2054                               S. 2205

                           H.R. 3812



                                     

                               __________

                             MARCH 30, 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

                          Nate Gentry, Counsel
                    Mike Connor, Democratic Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Becker, Laurence R., State Geologist and Director, Vermont 
  Geological 
  Survey, Vermont Department of Environmental Conservation, 
  Vermont 
  Agency of Natural Resources....................................    28
Boyer, Jerry J., President, Spearfish Canyon Society.............    41
Craig, Hon. Larry E., U.S. Senator From Idaho....................     3
Hill, Catherine L., Northeast Regional Hydrologist, U.S. 
  Geological Survey, Department of the Interior..................    16
Jeffords, Hon. James M., U.S. Senator From Vermont...............    22
Johnson, Hon. Tim, U.S. Senator From South Dakota................     4
Keys, John, III, Commissioner, Bureau of Reclamation, Department 
  of the Interior................................................     7
Krambeck, Jerry, Mayor, City of Spearfish, SD....................    26
Lytle, C. Mel, Water Resource Coordinator, San Joaquin County, CA    29
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     1
Pollman Rogers, Darla, Riter, Rogers, Wattier & Brown, LLP, 
  Pierre, SD.....................................................    34
Robinson, J. Mark, Director, Office of Energy Projects, Federal 
  Energy 
  Regulatory Commission..........................................    13
Thune, Hon. John, U.S. Senator From South Dakota.................     1

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    47

                              Appendix II

Additional material submitted for the record.....................    65


                       MISCELLANEOUS WATER BILLS

                              ----------                              


                        THURSDAY, MARCH 30, 2006

                               U.S. Senate,
                   Subcommittee on Water and Power,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:37 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. Call to order the Subcommittee on Water 
and Power. It is my pleasure to welcome you all here this 
afternoon. We have seven bills before the committee this 
afternoon.
    We have S. 1577, which is sponsored by Senators Johnson and 
Thune, exempting a South Dakota hydropower project from FERC 
licensing requirements. We have S. 1962, sponsored by Senators 
Roberts, Brownback, Nelson, and Hagel. This authorizes an 
extension of Reclamation repayment contracts. S. 2028, 
sponsored by Senators Byrd and Rockefeller, reinstates a FERC 
hydropower license, extending the time for construction 
commencement. S. 2035, sponsored by Senators Craig and Crapo, 
reinstates a FERC hydropower license. S. 2054, sponsored by 
Senator Jeffords, authorizes a water resources study for the 
State of Vermont. S. 2205, sponsored by Senators Thune and 
Johnson, authorizes the reconveyance of Reclamation land in 
South Dakota. And H.R. 3812, coming from Congressman Pombo, 
authorizes a Mokelumne River feasibility study.
    Senator Thune, you have joined the subcommittee here this 
afternoon. We welcome your comments.
    I will note, for those that will be here this afternoon, 
we're scheduled to have a vote at 3 o'clock, from what I 
understand, so we're going to try to do this in an expedited 
manner.
    With that, Senator Thune, I will invite you to provide 
whatever comments you may have on your legislation, and then 
you, Senator Craig, for your comments, as well, before we go to 
the witnesses.
    Senator Thune, welcome.

          STATEMENT OF HON. JOHN THUNE, U.S. SENATOR 
                       FROM SOUTH DAKOTA

    Senator Thune. Thank you, Madam Chairman, Senator Craig, 
fellow subcommittee members. I appreciate very much the 
opportunity to appear before your committee to speak in support 
of a bill that I have advocated since my service in the House 
of Representatives.
    This noncontroversial legislation is something that Senator 
Johnson and I have supported for a number of years. The Senate 
Energy Committee reported out an identical bill last Congress, 
and the full Senate approved the legislation by unanimous 
consent. However, it ultimately died, because the House did not 
act before the end of the 108th Congress.
    I'm here today to ask for your assistance in seeing that 
this legislation is again reported out of your committee so it 
could be passed by the Senate and ultimately signed into law.
    For those who may not know, S. 2205, the Blunt Reservoir 
and Pierre Canal Land Conveyance Act of 2006, would provide a 
long-overdue remedy to a failed Federal irrigation project in 
my home State of South Dakota. The Flood Control Act of 1944, 
otherwise known as the Pick-Sloan Project, authorized the 
creation of the 750,000-acre Oahe Irrigation Project in central 
South Dakota. This project never became a reality. Therefore, 
the bill before the committee today seeks to de-authorize the 
Blunt Reservoir and Pierre Canal features. This would allow the 
original landowners the option of purchasing the land they lost 
to the Blunt Reservoir and Pierre Canal Project, thereby 
putting the land back onto the local tax rolls.
    This legislation also seeks to transfer to the State of 
South Dakota some parcels of land as partial mitigation for the 
536,875 acres of wildlife habitat that were permanently flooded 
in South Dakota. This flooding occurred to allow downstream 
States the benefits of flood-control navigation and municipal 
and industrial water supplies.
    Madam Chairman, as you can imagine, there are a number of 
original landowners who would like their land back. It's been 
roughly 30 years since landowners either sold their land to the 
Federal Government or had it taken, through condemnation. My 
bill addresses the roughly 20,000 acres of land that are 
currently owned by the Federal Government and managed by the 
Bureau of Reclamation.
    While this legislation is widely supported by landowners 
and the Governor of South Dakota, I do want to point out that a 
minor modification may need to be made to the purchase-option 
section of the bill. This is largely due to the fact that the 
State of South Dakota and landowners reached an initial 
agreement in 2001 regarding how the 20,000 acres currently 
owned by the Federal Government would be repurchased. As Darla 
Pollman Rogers will testify following my remarks, since 2001 
there's been a noticeable increase in land valuations in Sully 
and Hughes Counties in South Dakota. Nevertheless, even with 
this recent development, I am confident that this issue can be 
dealt with before S. 2205 goes before the full committee.
    Madam Chairman, I appreciate the opportunity to appear 
before your committee this afternoon. With your help, I'm 
hopeful that we can work together to expedite passage of this 
long-overdue bill.
    And I might just say, last and not least, I would also like 
to welcome Mayor Jerry Krambeck, of Spearfish, South Dakota. He 
will be testifying, on another bill that you referenced 
earlier, before your subcommittee this afternoon, and that's S. 
1577. This is a bill of which I am a cosponsor, along with 
Senator Johnson, that would transfer the Spearfish 
Hydroelectric Plant No. 1 to the city of Spearfish, South 
Dakota.
    I appreciate this committee's interest and commitment to 
this issue. And, again, I thank you, Madam Chairman, for the 
opportunity to testify before your committee this afternoon.
    Senator Murkowski. Thank you. I appreciate you being here 
with us, and thank you for your comments.
    With that, Senator Craig.
    And Senator Johnson, if you want to speak to any of the 
bills that are before us, you'll be invited after Senator 
Craig.

        STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR 
                           FROM IDAHO

    Senator Craig. Madam Chairman, thank you very much for 
holding this hearing and covering the issues that are before 
you in bill form.
    I'm here today to speak in support of S. 2035, the 
Arrowrock Hydro Project, and to help the committee understand 
the need for this legislation.
    The purpose of this legislation is to provide the 
irrigation districts of Arrowrock Dam with an extension of the 
original license in order to initiate construction. 
Respectfully, I feel that FERC is lost in a bureaucratic maze 
regarding the construction license of the Arrowrock Project.
    The Energy Policy Act of 2005 contained several provisions 
that encourage the development of projects which meet both the 
requirements of being a hydro project built at an existing dam 
and a hydro project that is a conduit.
    In Idaho, the Arrowrock Hydroelectric Project fits squarely 
within these frameworks. The irrigation districts have 
finalized a power sales agreement with the Clatskanie PUD to 
take all of the power of that plant. The irrigation districts 
have engaged in productive consultation with the U.S. Fish and 
Wildlife Service to evaluate and protect threatened species in 
the vicinity of the project, primarily bull trout. They have 
engaged an engineer of national reputation to design and build 
the contract. Last, they have financed--they have financing 
lined up to build the project. In short, the project is 
literally ready to go forward.
    This project was unable to meet the March 20, 2005, start-
of-construction deadline, because--guess what?--the U.S. Fish 
and Wildlife Service would not begin consultation on the 
project until after it completed consultation on all of the 
Reclamation projects in the Upper Snake River Basin. The Upper 
Snake River consultation was a direct outgrowth of the 
requirements of the Snake River Water Rights Act of 2004. So, 
it was simply a matter of lining up and timing.
    This project has been given an extension in the past, and 
another is needed to--because of the circumstances out of the 
control of the Arrowrock people. Without this amendment, the 
irrigation district would have to completely start the FERC 
licensing process over; thus, spending and wasting unnecessary 
resources of the agency and the irrigation district because of 
all the required collaboration and consultation needed that is, 
in part, already completed.
    So, I look forward to working with my colleagues to see if 
we can't move this legislation to keep this project on track. 
Thank you for its consideration, Madam Chairman.
    [The prepared statement of Senator Craig follows:]

   Prepared Statement of Hon. Larry E. Craig, U.S. Senator From Idaho

    Madam Chairman, thank you for holding this hearing today.
    I am here today to speak in support of S. 2035; the Arrowrock 
Hydroelectric Project and to help the Committee understand the need for 
this legislation. The purpose of this legislation is to provide the 
irrigation districts of Arrowrock Dam with an extension of the original 
license in order to initiate construction.
    Respectfully, I feel that FERC is lost in a bureaucratic maze 
regarding the construction license for the Arrowrock Project.
    The Energy Policy Act of 2005 contains several provisions that 
encourage the development of projects which meet both the requirements 
of being a hydropower project built at an existing dam and a hydropower 
project that is a conduit.
    In Idaho, the Arrowrock Hydroelectric Project fits squarely within 
this framework. The irrigation districts have finalized a power sales 
agreement with Clatskanie PUD to take all of the power from the plant.
    The irrigation districts have engaged in productive consultation 
with the Fish & Wildlife Service to evaluate and protect threatened 
species in the vicinity of the project, primarily bull trout. They have 
engaged an engineer of national reputation to design and build the 
contract. Last, they have financing lined up to build the project.
    In short, the project is ready to go forward.
    This project was unable to meet the March 20, 2005 start of 
construction because the Fish & Wildlife Service would not begin 
consultation on the project until after it completed consultation on 
all of the Reclamation projects in the Upper Snake River Basin. That 
Upper Snake consultation was a direct outgrowth of the requirements of 
the Snake River Water Rights Act of 2004.
    This project has been given an extension in the past and another is 
needed because of circumstances out of their control. Without this 
amendment, the irrigation districts would have to completely start the 
FERC licensing process over. Thus, spending and wasting unnecessary 
resources of agencies and the irrigation districts because all of the 
required collaboration and consultation is complete and the project is 
ready to move forward.
    I look forward to working with my colleagues to pass this 
legislation.

    Senator Murkowski. Thank you, Senator Craig.
    Senator Johnson.

          STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR 
                       FROM SOUTH DAKOTA

    Senator Johnson. Thank you, Senator Murkowski.
    I've just come from a Banking Committee markup, and I'm 
told to anticipate a vote on the floor at around 3:00, so this 
may turn out to be more disjointed than we would like, but I 
appreciate your chairing this and your working with us on these 
key issues.
    I want to thank my colleague, Senator Thune. I know he has 
an intensely busy schedule. So, if there reaches a point where 
you've got to get back to your office, we understand that, as 
well.
    I appreciate, Madam Chairman, your working with me, along 
with the committee staff, to include two bills in today's 
agenda that are important to South Dakota.
    Before I describe the bills, I want to recognize a few 
folks from back home in South Dakota. Obviously, my colleague 
Senator Thune, who is sponsoring both of these bills in today's 
agenda. Traveling from South Dakota today is the mayor of 
Spearfish, South Dakota, Jerry Krambeck, who will outline for 
the committee how the city is working to balance a basket of 
multiple uses in operating a century-old hydroelectric facility 
in the northern Black Hills. And, Mayor, I want to thank you 
for traveling a good deal of distance to present your testimony 
today.
    I'm also pleased that Darla Pollman Rogers could provide 
testimony in a powerful narrative on behalf of South Dakota 
landowners affected by the Blunt Reservoir and Pierre Canal 
Land Conveyance Act of 2006. Darla, welcome back to Washington, 
DC, as well.
    The historic Spearfish Hydro Plant Unit No. 1 in Spearfish, 
South Dakota, has operated continuously since 1912. In 2004, 
the city acquired the facility from the Barrick Mining Company, 
and intends to continue operation of the hydroelectric plant 
for the benefit of that community.
    Prior to the Federal Energy Regulatory Commission's order 
asserting jurisdiction to license the power plant, the project 
has been operating for more than 90 years under a 1909 right-
of-way permit allowing the project to occupy U.S. Forest 
Service land in the Black Hills National Forest. The 1909 
right-of-way permit was granted through a 1905 Act of Congress 
providing use for municipal or mining purposes.
    Over the past 90 years, the city of Spearfish has literally 
grown up around the hydroelectric plant, with the historic D.C. 
Booth Fish Hatchery drawing water through the facility's 
diversion pipe. With a vibrant tourism and recreation economy, 
along with traditional ranching and timber enterprises, the 
northern Black Hills is also working to capture the potential 
of the historic Homestake Mine through a world-class research 
laboratory. As the northern Black Hills economy diversifies and 
grows, clean sources of energy generation, such as the 
Spearfish Hydroelectric Plant, can meet these energy 
requirements.
    The city and the Spearfish Canyon homeowners have 
recognized the value, also, of protecting water resources in 
the Spearfish Creek. As the stream from which the city takes 
its name, it is incumbent on all residents to ensure the 
continued balance of uses and values of the creek. Accordingly, 
I have encouraged the city, the Spearfish Canyon homeowners, 
and other stakeholders to continue work over managing 
waterflows along Spearfish Creek. Solving the question of 
apportioning waterflows in the creek is as important as 
providing the community with certainty over operation of the 
hydroelectric facility. We need to make sure that those values 
are protected through balanced streamflows and a commitment to 
environmental protection. Spearfish Canyon is one of the 
natural wonders of our State--in fact, of our Nation--drawing 
visitors and binding lifelong residents to the stunning beauty 
of the northern Black Hills. Accordingly, we need to ensure 
regulatory continuity while also enhancing stream flows and 
recreational values.
    The second bill coming before the subcommittee, the Blunt 
Reservoir and Pierre Canal Land Conveyance Act of 2006, is 
emblematic of the historic circumstances challenging South 
Dakota since the construction of the large-scale Missouri River 
reservoirs in Montana and the Dakotas. Through the Flood 
Control Act of 1944, the Corps of Engineers executed a massive 
flood-control and water-resources plan commonly referred to as 
the Pick-Sloan Missouri Basin Program. Stretching from Missouri 
to Montana, the Corps of Engineers and the Bureau of 
Reclamation permanently altered the pace and direction of what 
had been one of the longest freeflowing rivers in the United 
States. In exchange for flooding hundreds of thousands of acres 
of valuable riverbottom lands and sacred tribal sites in 
Montana and the Dakotas, producers in rural communities would 
receive the benefits of irrigation and productive farmland.
    The Blunt Reservoir and Pierre Canal are two chapters in 
the Pick-Sloan master plan of reservoirs, levees, and canals. 
Envisioned in Hughes, Stanley, and Sully Counties was a 
190,000-acre irrigation project surrounding portions of Lake 
Oahe. As Darla will further explain, in the 1970's that vision 
did not become a reality, and the Bureau of Reclamation, the 
State, and local residents have grappled with a proper and fair 
solution ever since.
    The Blunt Reservoir and Pierre Canal Land Conveyance Act of 
2006 provides a mechanism for preferential leaseholders, the 
original landowners who leased their land from the Bureau of 
Reclamation, to purchase back their property. Many of these 
landowners and their direct descendants have paid tens of 
thousands of dollars in lease payments over the past 30 years 
to the Federal Government. Significantly, the South Dakota 
Department of Game, Fish, and Parks will acquire a second 
smaller set of lands through nonpreferential leaseholders. This 
provision is an important component to the bill, as South 
Dakota continues efforts required by Federal laws to mitigate 
for damage to fish and wildlife habitat from the Missouri River 
impoundments.
    In 2001, former Senator Tom Daschle and I introduced a 
similar version of the bill, and, in 2003, during the 108th 
Congress, the U.S. Senate passed the bill, only to have the 
clock run out in the House of Representatives.
    In the course of the past 5 years, farm-ground land values 
throughout South Dakota have increased markedly. Increased land 
valuations should be taken into account in judging whether 
preferential landowners can afford to acquire their lands. This 
is an issue that the subcommittee could resolve prior to full-
committee consideration of the bill, and an issue that I do not 
feel will impede timely action.
    In conclusion, I look forward to the testimony of all the 
assembled witnesses, and hope that the committee can make 
significant progress on these bills in a very timely manner.
    Thank you, Madam Chairman.
    Senator Murkowski. Thank you, Senator Johnson.
    Now let's go ahead and turn to our witnesses today. I'd 
like to welcome the administration witness, Mr. John Keys, the 
commissioner of Bureau of Reclamation; Ms. Catherine Hill, from 
the USGS; and Mr. Mark Robinson, from the Federal Energy 
Regulatory Commission.
    I want to also note that this subcommittee has received 
some written testimony on several of the bills that will come 
before the subcommittee today, and that will be made part of 
the official record.
    I also want to take just a quick moment to recognize you, 
Commissioner Keys. I understand it's been 34 years that you've 
been with the Bureau of Reclamation. And we're told that this 
is the last time that you will appear before this committee in 
your capacity as commissioner before you retire in, apparently, 
a couple of weeks. You have done a terrific job out there. It's 
tough work. We recognize that. Your performance as a 
commissioner during some pretty tough times is a testament, 
truly, to your talent and your dedication. We certainly 
appreciate it. I have certainly enjoyed the opportunity to work 
with you, and wish you the best of luck in the future.
    With that, go ahead with your testimony, your final swan 
song here before the committee.
    Mr. Keys. In other words, ``Do good your last time.''
    [Laughter.]
    Senator Murkowski. We have no doubt.
    Mr. Keys. It's been my pleasure to work with you. The 34 
years is what I had before. It's almost 40, now. So, it's time 
to go do something else.
    Senator Murkowski. Wow.

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

    Mr. Keys. Madam Chairman and members of the subcommittee, I 
am John Keys, commissioner of the Bureau of Reclamation. We 
appreciate the opportunity to appear here today and talk about 
these bills.
    I have submitted testimony that I would appreciate being 
made part of the permanent record.
    Senator Murkowski. It will be made part of the official 
record.
    Mr. Keys. Thank you.
    Madam Chairman, the administration supports S. 1962. Four 
water districts--the Kansas Bostwick Irrigation District No. 2 
and the Webster Irrigation District No. 4, both in Kansas, and 
the Bostwick Irrigation District and the Frenchman-Cambridge 
Irrigation District, both in Nebraska--are served by 
Reclamation projects of the Pick-Sloan Missouri Basin Program.
    Despite the recent prolonged drought in the West and a 
continually declining water supply, the district's contracts 
require that they continue to pay operation-and-maintenance 
costs and construction obligations to the United States. These 
districts have sought, and have been granted, annual deferments 
to their payments under Reclamation law.
    When an annual payment is deferred, it's rescheduled, to be 
repaid later. It's just spread out longer, at a higher level, 
during the accepted repayment period.
    The deferments have helped the districts to weather the 
drought in the short run, but have also caused the 
distribution-work payments to be substantially longer over the 
remaining terms of the contracts.
    The participating districts have done an exemplary job of 
communicating with Reclamation. They contacted us early in 2005 
to explore opportunities where--available to them under 
existing law to address their financial concerns. None existed.
    The legislation would spread the distribution-works 
repayment over a longer period, coinciding with the water-
supply works repayment term. In addition, slated increases in 
the reserve-fund payments under the existing contracts would be 
delayed for about 10 years.
    This legislation would provide needed financial relief to 
the districts, while not erasing their financial obligations to 
the United States. The districts' continued economic viability 
is important because of what they produce for the U.S. economy 
and to ensure that repayment will ultimately be possible. 
Therefore, the administration is pleased to support this 
legislation.
    S. 2205 directs the Secretary of the Interior to convey 
certain parcels of land acquired for the Blunt Reservoir and 
Pierre Canal to the State of South Dakota for the purpose of 
mitigating lost wildlife habitat or to preferential 
leaseholders, which are original landowners of the acquired 
land. The administration supports the intent of the bill, but 
we have some concerns with a few of its--pieces of its content.
    The basic concept of S. 2205, to allow original landowners 
to regain title to lands that Reclamation purchased in 
anticipation of a project that was never built, is 
straightforward and fair. Further, the sponsors of S. 2205 have 
addressed many of the technical issues that were raised in past 
related--in the past, related to liability, land descriptions, 
return of land-sale proceeds back to the Federal Treasury, and 
reimbursement of Federal implementation costs.
    However, the Department still finds the bill fails to 
adequately protect taxpayers' interest, for a number of reasons 
outlined in my testimony.
    There's also a constitutional issue. The bill would require 
South Dakota to agree to accept specified lands and act as an 
agent for the Secretary. Requiring States to take actions to 
administer Federal regulatory programs may not be 
constitutional. We suggest amending the bill to clarify that 
South Dakota may voluntarily choose to accept or reject the 
land conveyance and associated responsibilities.
    We appreciate the work done by the sponsors to address 
several technical issues that had been raised in the past, and 
we look forward to working with your committee and those 
sponsors and the local people to address those outstanding 
issues and make this happen.
    H.R. 3812 would authorize a feasibility study of the 
Mokelumne Regional Water Storage and Conjunctive Use Project, 
an initiative to provide additional water supply within the San 
Joaquin Valley. The focus would be on new water storage and 
conjunctive-use programs.
    In fiscal year 2005, Congress appropriated $300,000 for an 
appraisal investigation of the project. The appraisal report is 
in draft form at this time, and it is our hope to have it 
completed soon.
    It is unusual for a feasibility study to be authorized 
before the appraisal-level work is completed. The $3 million 
authorized for feasibility work would be matched, 50-50, by 
non-Federal cost sharing. In H.R. 3812, the time allowed for 
completing the work is 2 years. Typically, feasibility studies 
that include environmental-impact statements require about 3 
years to complete.
    Therefore, the administration recommends the bill be 
amended to extend the study period to a minimum of 3 years for 
completing the feasibility study.
    Notwithstanding this change, the administration cannot 
support H.R. 3812, because the bill authorizes the feasibility 
study prior to the appraisal process being complete, and the 
authorization would compete with already scarce budget 
resources.
    Madam Chairman, that completes my testimony, and I would 
certainly stand to any questions that you and the panel may 
have.
    [The prepared statement of Mr. Keys follows:]

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

                               ON S. 1962

    Madam Chairman and Members of the Subcommittee, I am John Keys, 
Commissioner of the Bureau of Reclamation. I am pleased to be here 
today to give the Administration's view on S. 1962, a bill to revise 
certain repayment contracts of four irrigation districts that are part 
of the Pick-Sloan Missouri Basin Program.
    The Irrigation Projects Reauthorization Council (IPRC) represents 
four member irrigation districts in support of this legislation. The 
districts--the Kansas Bostwick Irrigation District No. 2 and the 
Webster Irrigation District No. 4, both in Kansas, and the Bostwick 
Irrigation District in Nebraska and the Frenchman-Cambridge Irrigation 
District (also in Nebraska), are served by Reclamation projects built 
as part of the Pick-Sloan Missouri Basin Program. Webster Irrigation 
District No. 4 is located in the Solomon River basin; the others are in 
the Republican River basin, both tributaries to the Kansas River.
    The districts recently renewed their contracts with Reclamation. 
The contract renewal addressed repayment of a portion of the water 
supply works construction cost over a 40 year term. Webster Irrigation 
District No. 4 renewed its contract in 2002; the others renewed their 
contracts in 2000. However, each District's repayment of the 
distribution works construction cost obligation remained unchanged 
during contract renewal. Thus, the remaining term for repayment of the 
distribution works is, in each case, significantly less than that 
remaining for the water supply works. Under Reclamation law, the 
irrigation districts repay irrigation capital costs without interest 
charges.
    As discussed above, currently each of these districts' contracts 
has two different repayment periods: a water supply works repayment 
term which extends until 2040 or 2042 (40 years from when the 
respective district's contract was renewed) and a distribution works 
repayment period which extends 40 years from their first payment for 
the distribution works (to sometime between 2009 and 2015 depending on 
the particular district). This legislation would allow the repayment 
periods for the distribution works to be extended to match the 
repayment period for the water supply works, and allow for equal annual 
payments over that period. Additionally, reserve fund payments were 
slated to increase significantly in about 5 years, following scheduled 
completion of repayment of the distribution works construction costs 
obligation. Anticipating that this time horizon is too short for the 
districts to ensure financial recovery sufficient to make the increased 
reserve fund payments, this bill delays these increases for an 
additional 10 years.
    Drought conditions in southwest Nebraska and northwest Kansas have 
significantly impacted inflows to reservoirs providing a water supply 
to Kansas Bostwick Irrigation District, Bostwick Irrigation District in 
Nebraska, Frenchman-Cambridge Irrigation District and Webster 
Irrigation District. Annual inflow into reservoirs providing these 
districts' water supplies has reached new historical lows in the last 
three years. Four of the five canals in the Bostwick Irrigation 
District in Nebraska did not divert water the past two years. The 
Kansas Bostwick Irrigation District has not delivered a substantial 
amount of water to acres above Lovewell Reservoir the past two years. 
Three of the four canals in the Frenchman-Cambridge Irrigation District 
have not diverted any water the past three years. The Webster 
Irrigation District did not divert water into Osborne Canal this past 
year.
    Despite the declining water supply available to these Projects, the 
districts' contracts require that they pay a portion of annual 
operation and maintenance costs for the water supply works and repay 
construction cost obligations to the United States. This payment 
obligation to Reclamation is in addition to the districts' 
responsibility for 100 percent of the operation and maintenance costs 
of the distribution works and those water supply works that have been 
transferred to the districts. Even with no water or a diminished 
supply, the need for maintenance of these facilities continues.
    The districts assess their irrigators in order to pay the 
districts' annual expenses and repayment obligations. These irrigators 
have received a diminished or no supply in recent years. For the last 
couple of years most of these districts have sought and been granted 
annual deferments to their payments under Reclamation law (the Act of 
September 21, 1959, 73 Stat. 584). In order to grant a deferment, 
Reclamation requires a determination that payment of the installments 
will cause an undue burden on the water users and that there is no 
alternative source of funds available to pay the installments. When an 
annual payment is deferred, it is rescheduled to be repaid as quickly 
as possible within the remaining term of the contract. The deferments 
have helped the districts to weather the drought in the short run, but 
have also caused the annual distribution works payments to be 
substantially larger over their remaining repayment period, because 
deferments do not extend the total time period allowed for repayment.
    For example, Kansas-Bostwick Irrigation District #2 would, after 
execution of the annual deferment currently being processed, have 
annual distribution works payments of $421,353 due through 2015, with 
annual water supply works payments of $21,841 through 2015, increasing 
to $96,512 for 2016 and 2017, then decreasing to $85,591 from 2018 
through 2040. This results in an annual repayment total for this 
district of $443,194 through 2015 when the distribution works are 
scheduled to pay out in the absence of this legislation. If S. 1962 
becomes law, the district will have consistent annual payments of 
$188,387 from 2006 through 2040, thus providing relief to help the 
district through the current financial crisis.
    The total repayment obligation for the distribution works and water 
supply works for all four districts together is $12,442,447. This 
legislation does not change the dollar amount of this repayment 
obligation. However, because Reclamation law provides that irrigators 
do not pay interest on capital costs, this bill would reduce the 
present value of expected Treasury receipts. The difference between the 
present value of the payout stream of the contracts as they currently 
exist and as they would be amended by this bill is $1,620,637. This 
assumes that, in the absence of this legislation, the districts would 
pay the minimum payments due on time over the life of these contracts.
    The IPRC and the participating districts have done an exemplary job 
of communicating with Reclamation as they sought this legislation. They 
contacted us in early 2005 to explore what opportunities were available 
to them under existing law to address their financial concerns. Other 
than the deferments discussed above, none existed. Reclamation also 
very much appreciates the manner by which IPRC has kept us informed and 
worked with us to identify issues. They addressed the possible effect 
to power repayments through ``aid to irrigation'' early on by working 
closely with Midwest Electric Consumers Association and with 
Reclamation. It is our understanding that ``aid to irrigation'' is not 
affected by this legislation.
    The legislation would provide needed financial relief to the 
districts by rescheduling their financial obligations to the United 
States. Extension of the repayment period will not be a permanent 
solution to the water scarcity facing these districts. However, taking 
this action will provide needed relief for the districts and increase 
the likelihood that they will be able to attain long-term financial 
viability and fulfill their repayment obligation to the United States. 
Therefore, the Department supports this legislation.
    I am happy to respond to any questions.

                               ON S. 2205

    Madam Chairman and Members of the Subcommittee, I am John Keys, 
Commissioner of the Bureau of Reclamation. Thank you for the 
opportunity to testify on S. 2205.
    S. 2205 directs the Secretary of the Interior (Secretary) to convey 
certain parcels of land acquired for the Blunt Reservoir and Pierre 
Canal--features of the Oahe Irrigation Project in South Dakota--to the 
State of South Dakota for the purpose of mitigating lost wildlife 
habitat, or to the original land owners of the acquired lands or their 
descendants (preferential leaseholders). The bill directs that the 
proceeds of sales of preferential lease lands be deposited as 
miscellaneous funds in the treasury and that such funds shall be made 
available, subject to appropriations, to the State for the 
establishment of a trust fund to pay the county taxes on the lands 
received by the State Department of Game, Fish, and Parks under the 
bill. The Administration supports the intent of the bill but has some 
concern with its content, as I will discuss later.
    The basic concept of S. 2205--to allow original landowners to 
regain title to lands that Reclamation purchased in anticipation of a 
project that was never built--is straightforward and equitable. 
Further, the sponsors of S. 2205 have addressed, in whole or in part, a 
number of the technical issues that were raised in the past related to 
liability, land descriptions, return of land sale proceeds back to the 
Federal treasury, and reimbursement of Federal implementation costs. 
However, the Department still finds that the bill fails to adequately 
protect taxpayers' interests for four reasons. First, the bill directs 
Reclamation to sell the land to preferential leaseholders for less than 
fair market value. Second, it directs Reclamation to convey to the 
State the non-preferential lease parcels and the preferential lease 
parcels that current lessees choose not to purchase without 
compensation for the initial taxpayer investment in those lands. Third, 
after conveyance Reclamation would still be responsible for 
administrative costs associated with the acquisition of those lands, 
such as curation of project archeological collections. Finally, the 
bill provides that parcels may be swapped for other land elsewhere in 
the State, which may alter the potential environmental mitigation 
benefits of the land, potentially undermining one of the purposes of 
the Act.

Background
    As background, Reclamation purchased approximately 19,292 acres of 
land between 1972 and 1977 in preparation for building the Blunt 
Reservoir and the Pierre Canal. In many cases, Reclamation leased the 
land back to the seller. Currently, Reclamation is leasing some 13,000 
acres of Blunt Reservoir lands to 18 preferential leaseholders and 
about 1,100 acres of Pierre Canal lands to 11 preferential 
leaseholders. Although not reflected in title documents, the sellers 
expected they would be able to purchase their lands back if they were 
not needed for the project.
    Nearly three decades later, construction has not commenced for the 
Blunt Reservoir, although some earth-moving has been done for the 
Pierre Canal. Because it is unlikely this project will be built, 
Reclamation no longer needs to hold title to the acquired lands. Under 
S. 2205, the preferential leaseholders (the original landowners or 
their descendants) would be offered an option to purchase the land they 
currently lease within 5 years of enactment. Section 2(d) of the bill 
provides that the land could be sold to preferential leaseholders for 
10% less than fair market value for agricultural purposes of the land. 
Purchases would be from the South Dakota Commission of Schools and 
Public Lands, acting as an agent for the Secretary of the Interior. If 
a preferential leaseholder declines to purchase the land, the 
Commission is to convey the parcel to the South Dakota Department of 
Game, Fish, and Parks for wildlife habitat mitigation. Reclamation's 
interest in the 5,000 acres currently unleased or leased to parties who 
are not preferential leaseholders would be conveyed to the State of 
South Dakota Department of Game, Fish, and Parks to be used in 
mitigation of wildlife habitat lost as a result of Pick-Sloan 
development.

Valuation and Payment
    S. 2205 directs that proceeds of sales of land under the Act be 
deposited as miscellaneous funds in the Treasury and such funds shall 
be made available, subject to appropriations, to the State for the 
establishment of a trust fund to pay the county taxes on the lands 
received by the State Department of Game, Fish, and Parks under the 
bill. While this partially addresses the Administration's previous 
concerns (stated in testimony provided on S. 1028 in the 107th 
Congress) about recovering the taxpayer investment in these lands, the 
Administration remains opposed to the transfer of unleased or non-
preferential leased lands to the State without compensation to 
Treasury. Furthermore, the Administration believes that all lands 
conveyed under this bill should be sold for no less than fair market 
value. In this situation we agree that equitable considerations support 
offering preferential leaseholders the right of first refusal to 
purchase these lands, which their families have been using for many 
years, at appraised fair market value. We do not agree with the 
provisions of the bill effectively subsidizing this sale. Moreover, we 
note that the best practice for determining market value and ensuring 
that the lands are used for their highest and best use is to sell the 
parcels at an auction, and this would be our preferred way to dispose 
of Federal lands in situations that do not present the circumstances 
that exist here.

Constitutional Concern
    We have an additional concern about the constitutionality of the 
bill as currently written. The bill contains mandatory language stating 
that South Dakota ``shall agree to accept'' specified lands and ``act 
as an agent for the Secretary.'' Provisions of Federal law that require 
States to take actions to administer Federal regulatory programs are 
unconstitutional. This could be addressed by amending the bill to 
clarify that South Dakota may voluntarily choose to accept or reject 
the land conveyance and associated responsibilities.
Conclusion
    We appreciate work done by the sponsors to address several 
technical issues that have been raised in the past. We look forward to 
working with the sponsors and the Committee to address any outstanding 
issues that remain.
    I would be pleased to answer any questions.

                              ON H.R. 3812

    My name is John Keys, and I am Commissioner of the U.S. Bureau of 
Reclamation. I am pleased to provide the Administration's views on H.R. 
3812, a bill to authorize the Secretary of the Interior to prepare a 
feasibility study for the Mokelumne River Regional Water Storage and 
Conjunctive Use Project (known as the MORE WATER Project), San Joaquin 
County, California. The Administration cannot support this bill because 
it is premature, and given scarce Federal budgetary resources, an 
expansion of the Federal role in the Mokelumne River cannot be 
justified.
    Specifically, this bill would authorize the Secretary to study the 
feasibility of constructing a project to provide additional water 
supply and improve water management reliability through the development 
of new water storage and conjunctive use programs. The bill would 
authorize an appropriation of $3,300,000 for the Federal cost share of 
the study, with the proviso that the Federal share shall not exceed 50 
percent of the total cost of the study. Clearly there are many water 
supply issues in the San Joaquin Valley and in San Joaquin County in 
particular. I am proud of the work our people in the Mid-Pacific Region 
have done to understand the issues, the local interests and the role 
Reclamation might play in solving problems.
    I would like to provide some background relative to current 
investigations of Mokelumne River water supplies and planning 
investigation costs. In Fiscal Year 2005, Congress appropriated 
$300,000 for the initiation of an appraisal investigation of the 
Mokelumne River Regional Water Storage and Conjunctive Use Project. The 
Appraisal Report is in draft form at this time. It is our hope to have 
it completed soon.
    H.R. 3812 directs the Secretary, not later than 2 years from date 
of enactment, to complete a feasibility study and provide copies to the 
Committee on Resources of the House of Representatives and to the 
Committee on Energy and Natural Resources of the Senate. Feasibility 
studies, which integrate National Environmental Policy Act compliance 
documentation, and are completed in conformance with the Principles and 
Guidelines for such studies, require a minimum of 3 years to complete. 
The Administration recommends the bill be amended to extend the study 
period to a minimum of 3 years for completing the feasibility study and 
to providing the copies to the appropriate Congressional committees.
    The Mokelumne River is tributary to the Sacramento-San Joaquin 
Delta. There is no clear justification for expanding federal 
involvement into the Mokelumne River. Although this broad area is 
impacted by the Central Valley Project and CALFED, the Mokelumne River 
does not have a Bureau of Reclamation water project.
    It is premature to authorize a feasibility study before the 
appraisal study has been completed and reviewed. Moreover, this study 
would compete for funding with other currently authorized projects, 
including several authorized storage feasibility studies authorized 
under CALFED. I should also note that Reclamation did not seek funding 
for this project in the President's Fiscal Year 2006 or 2007 budgets.
    The Administration appreciates local efforts to address future 
water issues. However, in light of the concerns expressed above, we 
cannot support this bill authorizing Reclamation participation in a 
feasibility study. That concludes my prepared remarks. I would be 
pleased to answer any questions.

    Senator Murkowski. Thank you. I appreciate your comments, 
Commissioner Keys.
    With that, let's go to Mr. Robinson, with the Federal 
Energy Regulatory Commission.

   STATEMENT OF J. MARK ROBINSON, DIRECTOR, OFFICE OF ENERGY 
         PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION

    Mr. Robinson. Madam Chairman, Senator, I am Mark Robinson, 
and I appreciate the opportunity to speak today on S. 1577, 
which would exempt the Spearfish Project from the licensing 
requirements under the Federal Power Act that the Commission 
administers.
    Just as a matter of background, I'm the director of the 
Office of Energy Projects. We authorize the siting of liquified 
natural gas facilities, interstate natural gas pipelines, and, 
more significantly here today, the licensing, administration, 
compliance of, and dam safety of hydroelectric projects, some 
1,700 hydroelectric projects across the country.
    Our jurisdiction for hydroelectric projects derives from 
the Federal Power Act, and really falls into four areas. If a 
project exists on Federal lands, then it falls under the 
Commission's jurisdiction; or if it's on navigable waters, or 
if it's on waters that Congress exerts Commerce Clause 
jurisdiction over, or the fourth rationale is if they are at 
Federal dams. Any of those bring hydroelectric projects under 
the Federal Energy Regulatory Commission's jurisdiction, 
pursuant to the Federal Power Act.
    The standard we use, found in the Federal Power Act--and 
actually it was originally in the Federal Water Power Act of 
1920--that we use to license projects is that the project has 
to be found to be consistent with comprehensive development of 
the basin. We take into consideration all of the public-
interest issues associated with that project. More directly, we 
must give equal consideration, as required by Congress, to both 
the developmental and nondevelopmental values of the--of these 
projects. By ``developmental values,'' I mean power generation, 
irrigation, flood control, things of that sort. By 
``nondevelopmental values,'' they're mostly environmental 
issues--fish and wildlife issues, recreation, public safety, 
things of that sort.
    Specific to the Spearfish Project, our history on this 
project started in April 2000, when we received a complaint 
that the Spearfish 1 and 2 developments, which both had about 
5-mile bypass reaches on the Spearfish--Creek, I believe it's 
called--were not releasing water, and there were trout, fish 
kills associated with it. That's typically what prompts us to 
look into an operating, nonlicensed hydroelectric project; it's 
a complaint from someone else that the project is not being 
operated consistent with public-interest values.
    We did look into this project, and found that it--part of 
the project, at least, existed on Federal lands. And, for that 
reason, the Commission, in August 2001, concluded that the 
project was jurisdictional and ordered that it become--that 
they apply for a license.
    In March 2002, however, a new piece of information came to 
the Commission, and the Commission reversed itself, in that the 
project--that portion of the project that existed on Federal 
lands was actually permitted by a pre-1920 Federal 
authorization. So, the Commission concluded, at that point, 
that, as long as that Federal authorization was active, that it 
did not require to be licensed. Unfortunately, that 
authorization expired shortly thereafter, so in about 2 months, 
in June 2002, the Commission reestablished that the project 
needed to be licensed again.
    And then, in May 2002, the Commission, trying very hard to 
work with the operator of the project, granted a 3-year 
extension for the operator to defer starting the active 
licensing, which, in itself, was going to be a 3-year grant, to 
allow them to do the necessary work to bring it under license. 
But they granted a 3-year extension at that point. And then we 
find ourselves here today with S. 1577.
    In passing the Federal Power Act, Congress decided that the 
method of licensing projects prior to 1920, the--I'm sorry, the 
Federal Water Power Act, in 1920, did not give a consistent 
review for hydroelectric projects, and didn't ensure the 
protection of the public interest, and they vested that power 
in the Commission to ensure that, in fact, projects were 
licensed and authorized consistently across the country to 
protect all the public interest--not just power production or 
other aspects, but all public interests.
    I know of nothing about this project that would separate it 
from the other 1,700 projects that we have under license or 
exemption. And we have looked. It just doesn't seem to be 
there.
    Licensing a project does ensure that we give equal 
consideration to those developmental and nondevelopmental 
values--the fish and wildlife resources and power production. 
And, therefore, I would recommend that this project undergo 
that same scrutiny to ensure that it is operated to the full 
benefit of the public.
    Thank you very much.
    [The prepared statement of Mr. Robinson follows:]

  Prepared Statement of J. Mark Robinson, Director, Office of Energy 
             Projects, Federal Energy Regulatory Commission

    Madam Chairman and Members of the Subcommittee: I appreciate the 
opportunity to comment on S. 1577, a bill to exempt the Spearfish 
Project, located in South Dakota, from the otherwise applicable 
licensing requirements of the Federal Power Act (FPA). My name is J. 
Mark Robinson, and I am the director of the Office of Energy Projects 
at the Federal Energy Regulatory Commission. Our office is responsible 
for non-federal hydroelectric licensing, administration, and safety; 
certification of interstate natural gas pipelines and storage 
facilities; and, authorization and oversight over the construction, 
operation, and safety of Liquefied Natural Gas (LNG) terminals. I 
appear today as a Commission staff witness speaking with the approval 
of the Chairman of the Commission. The views I express are my own and 
not necessarily those of the Commission or of any individual 
Commissioner.
    Under Part 1 of the Federal Power Act, the Commission issues 
licenses to non-Federal interests authorizing the construction, 
operation and maintenance of water power projects on navigable waters 
of the United States, on federal lands and on streams over which the 
Congress has jurisdiction. Licenses are also required to utilize 
surplus water or waterpower from government dams.
    Licenses may be issued under the FPA only if, in the judgment of 
the Commission, the proposed project is best adapted to a comprehensive 
plan for the development and utilization of the water resources of the 
river basin involved for all public purposes. The licenses are issued 
for terms up to 50 years and contain terms and conditions that are 
designed to ensure that the comprehensive development standard is met. 
The terms and conditions reflect consideration of all environmental and 
developmental aspects of the project, including such factors as the 
effect of project construction and operation on fish and wildlife 
resources, irrigation, flood control, water supply, recreation, and the 
safety of the public.

                         LEGISLATIVE BACKGROUND

    Prior to passage on June 20, 1920, of the Federal Water Power Act, 
the responsibility for licensing and overseeing hydroelectric 
facilities was dispersed among several arms of government. The 
construction and operation of dams in navigable waters, in non-
navigable tributaries whose flows affected such waters, and on federal 
lands were regulated under four general statutes: Section 7 of the 
River and Harbor Act of 1890, as amended; sections 9 and 10 of the 
River and Harbor Act of March 3, 1899; the General Dam Act of 1906; 
and, the General Dam Act of 1910.
    If a hydroelectric project was located on a navigable water of the 
United States, it needed Congressional authorization. In addition, if 
the project was located on public lands of the United States, it 
required authorization from the Secretary of the Interior. If the 
project was located on federal forest reserves (i.e., National Forest 
lands), it required authorization from the Secretary of Agriculture.
    The passage of the Federal Water Power Act of 1920 (FWPA) 
superseded prior statutes. The FWPA created the Federal Power 
Commission and made it unlawful to operate a hydroelectric project in 
navigable waters or on federal lands without a license from the Federal 
Power Commission. The Federal Water Power Act established firmly the 
principle of federal regulation of water power projects and established 
a national policy in the use and development of water power projects on 
public lands and navigable streams.
    Section 23(b) of the FPA requires either a Commission license or a 
valid pre-1920 federal permit for a hydropower project covered by Part 
I of the statute. Such permits were issued before the FPA was passed. 
They were grandfathered by Section 23(b), under which the permittee 
could either operate under the permit until it expired or apply for a 
license under the FPA. Although most of these permits have expired or 
been converted into licenses, the problem of determining what 
constitutes a valid permit or right-of-way still arises (as in case of 
the Spearfish Project). In 1935, the FPA was amended to broaden the 
Commission's authority and jurisdiction over water power projects to 
include projects that are located on commerce clause waters and which 
would also affect the interests of interstate or foreign commerce.

                           SPEARFISH PROJECT

    S. 1577 would exempt the Spearfish Project, located in South 
Dakota, from the otherwise applicable licensing requirements of the 
FPA. As noted previously, under Part I of the FPA, hydropower projects 
are required to be licensed, if, among other things, they are located 
on the public lands or reservations of the United States.
    In September 2000, following receipt of an environmental complaint, 
the Commission began a review of the jurisdictional status of the 
Spearfish Project, operated by the Homestake Mining Company 
(Homestake). The complaint concerned the alleged dewatering of the 
Spearfish Creek downstream of the Spearfish Project, especially in the 
summer, to the detriment of resident trout. In August 2001, the 
Commission found that the project was required to be licensed, because 
it was located on federal lands, within the Black Hills National 
Forest.
    However, the Commission subsequently reversed this finding on March 
1, 2002 (Order Granting Rehearing and Denying Late Intervention) 
because Homestake had demonstrated that it held a valid right-of-way 
under a 1905 Act that permitted rights-of-way in National Forests for 
projects, such as Spearfish, that operated for mining purposes (at the 
time of the Commission order, the project's power was being used for 
mining operations). The Commission therefore concluded that the project 
need not be licensed.
    In April 2002, Homestake informed the Commission that it had ceased 
mining operations as of December 31, 2001, but that it interpreted the 
FPA as allowing it to continue generating for activities associated 
with mine reclamation. In an order issued June 17, 2002, the Commission 
ruled that the 1905 Act made no reference to reclamation, and that 
since mining operations had ceased, Homestake or any successor could 
not generate electricity at the project without a Commission license. 
Homestake did not seek judicial review of this order. To date, the 
Spearfish Project is still operating. It is my understanding that for 
several years the City of Spearfish has been exploring the possibility 
of acquiring and operating the project.
    In passing the FPA, Congress made the decision that, to protect 
public resources, projects located on federal lands and reservations 
must be licensed by the Commission. The Spearfish Project, being 
located in part on National Forest lands, meets this criterion. I am 
aware of no reason why this project should be treated differently than 
others that are similarly situated. Exempting the project from the 
requirements of the FPA would set a precedent for exempting individual 
projects from the otherwise applicable requirements of the FPA. 
Congress has charged the Commission with examining thoroughly all of 
the environmental and developmental aspects of projects such as the 
Spearfish Project, and of licensing those projects with appropriate 
conditions to ensure that they are best adapted to the comprehensive 
development of affected waterways. In the absence of the Commission's 
licensing jurisdiction, there is no guarantee that there will be any 
consideration of the resources that the Commission is charged with 
weighing and protecting.
    Exempting this project would also remove Commission oversight for 
dam safety. Therefore, Homestake would not need to comply with Part 12 
of the Commission's dam safety regulations. Currently, Homestake has an 
approved Emergency Action Plan and is inspected by the Commission every 
three years. Conformance with the Congressional intent expressed in the 
Federal Power Act requires that the Spearfish Project be licensed.
    As a result of these concerns, I do not support S. 1577.
    I appreciate the opportunity to present my views to the 
Subcommittee. Thank you.

    Senator Murkowski. Thank you, Mr. Robinson.
    And next, let's go to Ms. Catherine Hill, from the United 
States Geological Survey.

STATEMENT OF CATHERINE L. HILL, NORTHEAST REGIONAL HYDROLOGIST, 
       U.S. GEOLOGICAL SURVEY, DEPARTMENT OF THE INTERIOR

    Ms. Hill. Madam Chairman and Senator Johnson, I'm Catherine 
Hill, northeast regional hydrologist for the U.S. Geological 
Survey. Thank you for the opportunity to provide the views of 
the Department of the Interior on S. 2054, a bill to conduct a 
Vermont water resources study.
    The Department of the Interior agrees that the goals of the 
bill are commendable and the needs that could be addressed are 
real. However, we note that studies similar to this have been 
carried out by the USGS in other States, generally carried out 
within the USGS Cooperative Water Program. This is a 
longstanding cost-share program using Federal and State 
dollars. Given the existing authorities for our Cooperative 
Water Program, we feel congressional authorization of this 
study is not necessary.
    S. 2054 directs the Secretary of the Interior, acting 
through the director of the USGS and in coordination with the 
State of Vermont, to conduct a study on water resources in the 
State of Vermont. The role identified for the Department in 
this bill is consistent with USGS's leadership role in 
surveying and characterizing groundwater resources.
    The bill requires a survey of groundwater supplies and 
aquifers available for water supply by municipalities 
throughout the State as part of a study to determine whether 
these supplies provide water of potable quality.
    The USGS has a long history of conducting groundwater 
resources on both local and regional scales. In the 1950's and 
1960's, studies were conducted across the Nation to provide a 
basic understanding of geologic--geohydrologic conditions at a 
county-level scale. In the 1980's, 25 regional aquifer systems 
were studied in detail, including the aquifer systems in 
Vermont. However, these studies provided a regional and 
national context for--of groundwater that are often not 
detailed enough for State and municipalities.
    In Vermont, USGS has been actively working with the Vermont 
Geological Survey in the creation of a new bedrock geologic map 
that is scheduled to be completed soon. This new geologic map 
will provide a variety of information that can be used to help 
define groundwater availability and quality.
    In 2003, USGS provided information on possible approaches 
for groundwater assessment and aquifer mapping to the State of 
Vermont for a report to the State legislature on the status of 
groundwater and aquifer mapping. In this report, a plan for 
future statewide groundwater and aquifer assessments was 
presented. This document provides a foundation for how work 
proposed by this legislation could be performed.
    The USGS has extensive data bases that include geochemical 
characteristics of rocks, soils, stream sediments, and water, 
long-term groundwater levels and stream flows, and water use 
and well inventories. We also have a number of ongoing studies 
that relate to groundwater in Vermont. For example, USGS, in 
cooperation with the Vermont Geological Survey, is looking at 
radionuclide content of wells in the Barre West and Montpelier 
quadrangles. We are also analyzing the presence of arsenic in 
bedrock wells throughout New England as part of a project with 
the National Institutes of Health. This work will identify the 
probability of bedrock wells having detectable levels of 
arsenic. In addition, we are evaluating how radon and uranium 
vary from aquifer to aquifer in northern portions of the United 
States, including Vermont.
    In New Hampshire, USGS has already performed statewide 
surficial and bedrock aquifer mapping and characterization. 
This work, conducted through the USGS's Cooperative Water 
Program, now serves as the benchmark for groundwater 
characterization in the State, and is the basis for State and 
local planning and resource protection programs. We envision 
that a statewide aquifer mapping and groundwater 
characterization effort in Vermont would be similar in many 
respects to the New Hampshire effort.
    The proposed legislation also requires an assessment of how 
groundwater recharges and interacts with surface water. This is 
critical, because groundwater can be a major source of water 
for streams. Vermont's rivers and streams provide habitat for 
its trout and other fisheries, and supply flows to its many 
lakes and ponds. A better understanding of groundwater 
aquifers, the areas that contribute to both ground- and 
surface-water systems, and how current and future water demands 
could influence these systems will help decisionmakers ensure 
that sufficient supplies are present for the multiple uses of 
Vermont's water.
    USGS concurs with the goals of S. 2054. Such an effort will 
help ensure long-term water supplies for Vermont's citizens, 
businesses, industries, and natural features. However, we feel 
that such a proposed study would take 5 or more years to 
complete, rather than the 2-year timeframe. We recommend that 
studies of this type be conducted under USGS's Cooperative 
Water Program.
    We look forward to working with the State of Vermont, 
particularly the Vermont Geological Survey, in future 
groundwater resource and aquifer studies.
    Thank you, Madam Chairman, for the opportunity to present 
this testimony. I look forward to any questions.
    [The prepared statement of Ms. Hill follows:]

      Prepared Statement of Catherine L. Hill, Northeast Regional 
Hydrologist, U.S. Geological Survey, Department of the Interior, on S. 
                                  2054

    Madam Chairman and Members of the Subcommittee, I am Catherine L. 
Hill, Northeast Regional Hydrologist for Water for the U.S. Geological 
Survey (USGS). I thank you for the opportunity to provide the views of 
the Department of the Interior (Department) on S. 2054, a bill to 
conduct a Vermont water resources study.
    The Department agrees that the goals of the bill are commendable 
but has concerns with the bill. We note that studies similar to this 
have been done by USGS in other States, generally carried out within 
the USGS Cooperative Water Program, which is a long-standing cost-
sharing program using Federal and State funds. Given the existing 
authorities for our Cooperative Water Program, congressional 
authorization of this study is not necessary.

                 S. 2054, VERMONT WATER RESOURCES STUDY

    S. 2054 directs the Secretary of the Interior, acting through the 
Director of the USGS and in coordination with the State of Vermont, to 
conduct a study on water resources in the State of Vermont. The role 
identified for the Department in this bill is consistent with USGS's 
leadership role in surveying and characterizing ground-water resources.
    The bill requires a survey of ground-water supplies and aquifers 
available for water supply by municipalities throughout the State, as 
part of a study to determine whether these supplies provide water of 
potable (drinkable) quality.
    The USGS has a long history of conducting ground-water assessments 
on both local and regional scales. In the 1950s and 1960s, studies were 
conducted across the Nation to provide a basic understanding of 
geohydrologic conditions at a county-level scale. In the 1980s, 25 
regional aquifer systems were studied in detail, including the aquifer 
systems in Vermont. However, these studies provide a regional and 
national context of ground water that are often not detailed enough for 
State and municipal needs.
    As stated, the goals of the S. 2054 can be met through existing 
authorities, and many related activities are being implemented on the 
ground in Vermont. USGS has been actively working with the Vermont 
Geological Survey in the creation of a new bedrock geologic map that is 
scheduled to be completed in the next few years. This new geologic map 
will provide a variety of information that can be used to help define 
ground-water availability and quality. Map information will include 
bedrock types that may be correlated with high yield wells or bedrock 
types that may be associated with natural contaminants (for example 
arsenic or radon). In 2003, USGS provided information on possible 
approaches for ground-water assessment and aquifer mapping to the State 
of Vermont for a report to the State Legislature on the status of 
ground-water and aquifer mapping. In this report, a plan for future 
statewide ground-water and aquifer assessments was presented. This 
document provides a foundation for how work proposed by this 
legislation could be performed.
    The USGS has extensive databases that would provide useful 
information in evaluating potential ground-water resources in Vermont. 
These databases include the location and characteristics of most 
mineral occurrences throughout the United States; geochemical 
characteristics of rocks, soils, stream sediments, and water; long-term 
ground-water level and stream flows; and water-use and well 
inventories.
    The USGS also has a number of on-going studies that relate to 
ground water in Vermont. USGS, through the Mineral Resources Program 
and in cooperation with the U.S. Environmental Protection Agency, is 
determining the water quality effects of three abandoned mines on local 
streams and ground water. Another USGS study, in cooperation with the 
Vermont Geological Survey, is looking at the radionuclide content of 
wells in the Barre West and Montpelier quadrangles. USGS is also 
analyzing the presence of arsenic in bedrock wells throughout New 
England as part of a project with the National Institutes of Health. 
This work will identify the probability of bedrock wells having 
detectable levels of arsenic. In addition, through the USGS National 
Water-Quality Assessment Program, we are evaluating how radon and 
uranium vary from aquifer to aquifer in the northern portions of the 
United States, including Vermont.
    In New Hampshire, USGS has already performed statewide surficial 
and bedrock aquifer mapping and characterization. This work, conducted 
through the USGS Cooperative Water Program, occurred in the 1980s and 
90s and now serves as the benchmark for ground-water characterization 
in the State and is the basis for State and local planning and resource 
protection programs. We envision that a statewide aquifer mapping and 
ground-water characterization effort in Vermont would be similar in 
many respects to the New Hampshire effort.
    Ground water is the source of water for two-thirds of Vermont's 
residents. From 1950 to 2000, the amount of ground water used in the 
State is estimated to have increased by at least 60 percent. While 
Vermont is blessed with a major surface-water supply source in Lake 
Champlain to serve its largest cities, most communities, businesses, 
and homes away from the Lake rely on ground water for their water 
supply.
    The proposed legislation also requires an assessment of how ground 
water recharges and interacts with surface water. This is critical 
because ground water can be a major source of water for streams, 
especially in headwater areas. Vermont's rivers and streams are an 
important natural resource--providing habitat for its trout and other 
fisheries and supplying flows to its many lakes and ponds. As stated 
previously, USGS is currently working with the States to provide a 
better understanding of ground-water aquifers, the areas that 
contribute to both ground-and surface-water systems, and how current 
and future water demands could influence these systems, will help 
decision makers ensure that sufficient supplies are present for the 
multiple uses of Vermont's water resources.

                               CONCLUSION

    In conclusion, the USGS concurs with the goals of the bill to meet 
Vermont's need for a detailed ground-water assessment and aquifer 
mapping program, but notes that there are already ongoing efforts to 
address these goals. Such an effort would help ensure long-term water 
supplies for its citizens, businesses, industry, and natural features. 
However, we feel that such a proposed study would take 5 or more years 
to complete and that the 2-year time frame for completing the study 
would not yield comprehensive results. We recommend that studies of 
this type be conducted under the USGS Cooperative Water Program, 
through a cost-share arrangement. The USGS looks forward to working 
with the State of Vermont, particularly the Vermont Geological Survey, 
in future ground-water resource and aquifer studies.
    Thank you, Madam Chairman, for the opportunity to present this 
testimony. I will be pleased to respond to questions you and other 
Members of the Subcommittee may have.

    Senator Murkowski. Thank you, Ms. Hill.
    I haven't been told that we've got a vote yet, so we'll 
keep going for as long as we can here.
    Commissioner Keys, S. 2205, the Blunt Reservoir and the 
Pierre Canal Land Conveyance, you've indicated that the Bureau 
supports the intent of this legislation. Just in understanding 
some of the background, I have been led to believe that the 
preferential leaseholders here have paid rent on what was 
originally their land over these past 30 years. Does this 
warrant or suggest a reduced sales price because of these 
rental payments that have gone on prior to this point in time?
    Mr. Keys. Chairman Murkowski, no, it does not. All of our 
transactions there would be based on fair market value.
    Senator Murkowski. So, what has been paid, historically, in 
terms of rent, has nothing to do with fair market value at 
today's time and date?
    Mr. Keys. No, ma'am, it does not.
    Senator Murkowski. Okay. I also understand that some of the 
leaseholders claim that there was a commitment made by the 
Federal Government to sell back the land at the same price that 
it was purchased at 30 years ago. Is that your understanding? 
Or, again, do you still go back to, ``We've got to operate on--
based on what's fair market value today''?
    Mr. Keys. Madam Chairman, I have no knowledge that there 
were any promise made to sell it back at the price that it was 
paid before.
    Senator Murkowski. You still would have been commissioner 
back then.
    [Laughter.]
    Mr. Keys. Madam Chairman, I worked on the project before, 
when I was working for a living.
    [Laughter.]
    Mr. Keys. That didn't sound right, did it?
    [Laughter.]
    Senator Murkowski. We understand.
    Mr. Keys. When Reclamation purchased that land for the 
construction of the canal and the reservoir, we paid fair--at 
least fair market value for it in all cases. In some cases, 
where we had to condemn it and it went into court, we paid more 
than fair market value, within the limits allowed by the law.
    And what we're suggesting in the current legislation is the 
same thing apply now, that when we sell it back to them, it be 
at fair market value.
    Senator Murkowski. Okay. With S. 1962, to revise the 
repayment contracts, do you anticipate that the irrigation 
districts will be able to meet this proposed new repayment 
schedule if, in fact, this is enacted? You've cited the 
hardship faced in the districts by the drought; will they be 
able to make these repayments?
    Mr. Keys. Madam Chairman, we think so. In the discussions 
that we've had with all four of those districts, it appears 
that stretching it out would give them the opportunity to 
recover their reserve funds, and then keep up with their 
payment schedule. Of course, none of us can predict the 
drought. The drought in some of those areas has lasted 6 years, 
up to now, and, if it continues, that same hardship would be 
there. But everything that we see now is that, if it gets back 
to some normal precipitation situation, that they would be able 
to meet that schedule.
    Senator Murkowski. Okay. Then the last question for you--
and this is as it relates to the Mokelumne River feasibility 
study--at this point, is it your belief that this proposed 
project is the best alternative for alternate water--or 
additional water for the San Joaquin Valley?
    Mr. Keys. Madam----
    Senator Murkowski. I heard your concerns that you have 
expressed on the record, but is this the best project?
    Mr. Keys. Madam Chairman, in that portion of the San 
Joaquin Valley, it's a good project. Our preference is to 
finish the appraisal study that's underway. The funding is 
there. The plans are to have it done at the end of this fiscal 
year. And certainly we would like to finish that so that we 
know what to spend our feasibility-study money on. But it's a 
good project. And certainly we would look forward to working 
with you for additional legislation later, and working with the 
project sponsors.
    Senator Murkowski. Okay.
    Mr. Robinson, as it relates to the Spearfish Hydropower 
Project, if the city did go though this licensing process, can 
you estimate how long that might take, and how much it might 
cost the city? What are you looking at?
    Mr. Robinson. It's hard to put a precise estimate on it, 
but we typically allow about 3 years to develop a license 
application. That allows a couple of sample seasons, which is 
not unusual for developing information on fish and wildlife 
issues, and then about a year to prepare the application.
    Depending upon the issues that kind of drive the costs--
here I don't think there's any issue associated with fish 
passage facilities, which can be very expensive--there would 
be--I think the main focus would be on what flow regimes are 
necessary. There's a very long bypass reach between the dam 
itself and the powerhouse. It's 5 to 6 miles long. How much 
water you have to leave in that section of the stream to 
provide for fish and wildlife, versus putting it through the 
tunnel, the penstock, and the turbines, would probably occupy 
most of everyone's attention, and the costs associated with it. 
I just--I don't have a real estimate on that.
    Senator Murkowski. Does that extend the time period 
involved, as well?
    Mr. Robinson. No, I don't think that would extend the time 
period. I think that could easily be done within that 3 years. 
It's just the type of study that you do, typically. It's called 
an instream flow study, an IFIM, instream flow incremental 
methodology. Those studies can run a couple of hundred-thousand 
dollars to perform, to determine what type of habitat exists 
and what water levels are necessary to protect that habitat.
    Senator Murkowski. Does the U.S. Forest Service administer 
the right-of-way that we're talking about here?
    Mr. Robinson. Yes, for the transmission line.
    Senator Murkowski. And did--has the Forest Service 
determined, then, that the right-of-way is valid, and is 
transferable, then, to the city?
    Mr. Robinson. That, I can't answer, ma'am. I just don't 
know.
    Senator Murkowski. Okay. All right. That's something that 
we had wanted some clarification on.
    Just so that you're aware of these buzzers in the 
background, we are in the midst of a vote. Senator Johnson is 
going to do his duty. And when he returns, I will escape 
quickly and go cast my vote, as well.
    Ms. Hill, with regard to the Vermont groundwater study, I 
guess I'm trying to determine what it is that USGS is 
suggesting would help the people of Vermont in more fully 
understanding their water resources. You've indicated that you 
support the goals, that they're commendable, but you've 
indicated that this particular legislation, as it's drafted, 
you don't believe is needed. What kinds of studies--and you've 
mentioned the USGS Cooperative Program is the way to go; is 
there anything else that can be done, in terms of providing the 
assistance that the people of Vermont are looking for in 
understanding what the water resource is? Is there something 
legislatively that we can do more--I guess I'm trying to 
understand whether or not you believe that this legislation, or 
any aspect of it, should move forward.
    Ms. Hill. Let me--I'm not trying to be evasive, but we have 
done a similar study in New Hampshire. Typically it's a 
wonderful project, and I think it definitely is needed, but we 
like to put it in something such as the Water Co-op Program, so 
that you have a Federal share and a State share.
    Senator Murkowski. Does that dilute the--excuse the pun, 
but does that dilute an individual State's ability to get focus 
to their resource, when it is part of an entire cooperative 
program?
    Ms. Hill. No, I don't believe that it does, because you're 
in a partnership, and we have strong partnerships with the 
State. So, I don't think it would dilute it. It would be a 
joint partnership that you would develop the scope together, 
which has already been done, in fact.
    Senator Murkowski. And so, then, to push a little bit 
further as it relates to S. 2054, are there any aspects of the 
legislation that we should be working to advance?
    Ms. Hill. Well, Vermont would be in the forefront of any 
legislation that would help move forward a comprehensive study 
of groundwater resources. That just hasn't been done very 
often, nationwide.
    Senator Murkowski. Is there an appropriate non-Federal cost 
share for a study of this kind that's being proposed in this 
legislation?
    Ms. Hill. I don't think there's one being proposed. Well, I 
shouldn't say that. I guess I would have to get back to you on 
that. I'm not sure.
    Senator Murkowski. Okay. All right.
    Well, I'm going to--that is the extent of the questions 
that I have for the panel. If I can just ask that you stay a 
few more minutes, until Senator Johnson comes back, we will 
take a brief recess, and I'll let him assume the gavel, so that 
we don't miss a beat here. He'll have a chance to ask his 
questions of the panel, and then, when I return from the vote, 
we will take up the second panel.
    So, with that, we'll just stand in brief recess. Thank you.
    [Recess.]
    Senator Johnson [presiding]. The committee will be back in 
session while Chairman Murkowski takes care of her vote on the 
floor. And she'll be returning, I'm certain, but in order to 
move things along--and, obviously, this is all on the record--
we'll proceed here from this point.
    Again, Mr. Keys, I want to commend you, and thank you, for 
your years of great service to America through the Bureau of 
Reclamation. And I know that you've been of great service and 
cooperation to my office and my State on numerous water 
projects and other BOR initiatives in South Dakota. And we wish 
you the very best on your future plans.
    And I have a statement here from Senator Jeffords that I'll 
put in the record. This is an opening statement from Mr. 
Jeffords relative to S. 2054. And, without objection, it is 
accepted into the record.
    [The prepared statement of Senator Jeffords follows:]

  Prepared Statement of Hon. Jim Jeffords, U.S. Senator From Vermont, 
                               on S. 2054

    I want to thank the Energy and Natural Resources Committee for 
holding today's hearing on my legislation, S. 2054, which would direct 
the Secretary of Interior, through the U.S. Geological Survey, to 
conduct a study of Vermont's groundwater resources.
    This is a critical issue for Vermont. Vermont's population is 
relatively small--just over 600,000 people. But, about two-thirds of 
our population's drinking water comes from groundwater, both from 
public water systems and from private wells.
    We have our share of contamination and supply issues. Naturally--
occurring contaminants like uranium threaten the viability of local 
water supplies. Proposals for increased withdrawals raise the ire of 
locals who fear for the long-term impact on water supplies.
    A groundwater map is step one in the process of figuring out how to 
address these issues. Without the basic data that will be provided by 
the groundwater study, it is difficult to make informed decisions about 
Vermont's groundwater.
    Today you'll be hearing from Larry Becker, Vermont's State 
Geologist, who will be speaking more about the state's commitment to 
addressing its need for a groundwater map during the hearing. Mr. 
Becker has worked for the State of Vermont since 1981 serving as 
Technical Services Chief for the Vermont Geological Service, and as a 
hydrogeologist, groundwater planner, and geology consultant for the 
Vermont Department of Environmental Conservation. He is the Chair of 
the Association of American State Geologist's Earth Science Education 
Committee. His Master's Degree from the University of Vermont focused 
on shoreline dynamics and sediment transport in Lake Champlain's 
Appletree Bay in Vermont. He received his B.S. Geology degree from the 
State University of New York at Buffalo.
    S. 2054 would authorize the U.S. Geological Survey to create a 
groundwater map that could be used as a decision-making tool in the 
state of Vermont. With the state as a partner, USGS brings technical 
expertise and financial assistance to this project that Vermont could 
not duplicate on the state level alone. This effort is consistent with 
other similar projects completed by USGS in the northeast and other 
proposals moved through this committee and the full Senate in recent 
months. I look forward to working with you to move this bill through 
the full Senate, and I thank the Committee again for holding this 
hearing today.

    Senator Johnson. Commissioner Keys, how much does the 
Bureau of Reclamation spend to manage the lands acquired for 
the Pierre Canal and Blunt Reservoir?
    Mr. Keys. Mr. Johnson, currently we spend about $282,000--
I'm sorry, that's how much we get. We spend about $151,000 a 
year to manage those lands.
    Senator Johnson. Okay. In your testimony you stated that 
the Bureau will be still responsible for some administrative 
fees even if the Blunt Reservoir bill is enacted. Could you 
elaborate on the nature of those fees, and do you have an 
estimate of the total amount of those costs?
    Mr. Keys. Mr. Johnson, the one feature that we would still 
have to take care of with provisions of the bill is to take 
care of the historic--the cultural resources that are there. We 
would have to do those surveys, and then take care of the 
curation of whatever artifacts were found.
    I am thumbing my notes to see how much that would cost. I 
would certainly provide that figure for the record.
    Senator Johnson. Yes, if you could take a look at that and 
then provide that quickly, it would be very helpful.
    Mr. Keys. I'd be glad to.
    Senator Johnson. Could you tell the committee the 
difference between the BOR's cost to manage these lands today 
versus the cost if H.R. 4301 was enacted? Excuse me, S. 2205--
the cost between management of the lands today versus if we 
were to enact 2205?
    Mr. Keys. Mr. Johnson, I would assume that's the cost 
between 2001 and 2006. I would have to provide that for the 
record, also. I don't have those numbers at my fingertips.
    Senator Johnson. Well, I think what that would come down to 
is the difference between the $151,000 of management 
expenditures, less what you are investing in historic and 
cultural resources. So, again, that would depend on your 
getting back to us on that number, I suppose.
    When lands are taken out of Federal ownership, are they 
always disposed of at fair market value? And, if not, what 
exceptions are there to those rules?
    Mr. Keys. Mr. Johnson, certainly, any transfer like that is 
subject to whatever bill is passed to make it happen.
    Senator Johnson. Right.
    Mr. Keys. In most cases--and I know of no exceptions now--
when we dispose of land, it's done at fair market value.
    Senator Johnson. And so, it's really the discretion or the 
judgment of the Congress to determine whether there's any 
special circumstances that might justify a different rule; 
essentially, that is what you're saying?
    Mr. Keys. Senator, that's correct. I would take it back to 
the original purchase of the land. There, fair market value was 
offered to the people that we were purchasing the land from. If 
they didn't like that, they didn't take it, and we had to 
condemn it and go into court. And, in some cases, they got more 
for it, whatever the court allowed them.
    Senator Johnson. Right.
    Mr. Keys. And certainly the action of the Congress would 
prevail here.
    Senator Johnson. All right. Well, we look forward to 
working with you, and with the BOR, as we try to come to a 
satisfactory and equitable resolution of that particular aspect 
of the bill. And we look forward to working with you in good 
faith in that regard.
    Mr. Keys. Senator Johnson, I might just add, our goal is 
the same as yours and the same as the project sponsors here, 
and that's to get that land back onto tax rolls, back into the 
hands of those people that purchased it. I think it's--we will 
work with you on the details to get that done.
    Senator Johnson. Yes. And we'll also work with you relative 
to the constitutional issues you raised pertaining to the State 
of South Dakota's Game, Fish, and Parks Department on what we 
need to do to make sure that BOR is satisfied with the legal 
basis for that transfer, as well.
    Mr. Keys. Okay.
    Senator Johnson. And we'll be sharing language with you, 
and work with you closely on that.
    Relative to Mr. Robinson, first let me start out by stating 
that I do believe that the licensing and administrative of our 
Nation's public hydroelectric plants is an important regulatory 
tool to balance the often competing multiple uses of the 
Nation's water resources. Several Senators on the Energy 
Committee have devoted a good deal of time toward improving the 
Federal license process for non-Federal hydropower plants. That 
being the case, I believe that the set of circumstances 
surrounding this small--very small--hydroelectric plant in 
Spearfish are unique, and therefore provides for a re-
examination, in this instance, of the Federal license 
requirements.
    So, my first question, Mr. Robinson, is that it's my 
understanding that FERC is asserting jurisdiction to require a 
license on the basis that certain right-of-way grants and 
permits which were issued by the Federal Government prior to 
the enactment of the 1920 Federal Power Act had expired. Is 
that your argument, the basis for your jurisdictional claim?
    Mr. Robinson. Well, the basis is the existence of the 
transmission lines on Federal lands. Those particular lands 
were covered by a pre-1920 Federal authorization, which the 
Commission, in its last order, found had expired, and, 
therefore, no longer provided that exemption from the Federal 
Water Power--the Federal Power Act.
    Senator Johnson. Now, I've learned that these right-of-way 
grants and permits were not issued by the FERC, or that the 
rights-of-way are administered by the FERC. In fact, the 
rights-of-way permits are administered exclusively by the U.S. 
Forest Service, which recently found that they had not expired, 
and, in fact, were validly transferred from the Homestake 
Mining Company to the city of Spearfish. In light of these sets 
of circumstances, isn't it fair to believe that the FERC is 
overreaching in asserting jurisdiction, particularly in light 
of the long-held administration of the rights-of-way by the 
U.S. Forest Service?
    Mr. Robinson. I think the Commission would always be in a 
posture of reviewing any of their findings if new information 
was provided to them. What you just mentioned, about the Forest 
Service making a finding, is something that doesn't exist, I 
don't believe, in our record right now. The Commission, when 
they made their determination that the pre-1920 permits had 
expired, based that on the statute, itself, and its language, 
which went to power being produced for mining purposes. And the 
mining operation has ceased to function there. There's no 
argument on that. The Commission concluded from that that--
therefore, that those permits were no longer valid. But we 
would always be interested in seeing any new information that 
anyone had on it.
    Senator Johnson. All right. I want to ask you a question 
about the time and cost of licensing this project. I understand 
that the median amount of time for a hydro relicense applicant 
is about 64 months, from the beginning to the end, and that, 
under the traditional process, costs average about $2.3 
million. Who bears the costs for the license? And, in 
proportion to other hydro projects, what could the city of 
Spearfish expect, in terms of cost and time, to license this 
very small, century-old hydro plant?
    Mr. Robinson. To answer your first question, the proponent, 
or the applicant, bears the cost for that. Agencies and others 
bear their own costs for participating. NGO's--nongovernmental 
organizations--and private citizens all bear their own costs. 
As far as the timeframe for licensing, it's our objective--and 
we just modified our licensing process with the integrated 
licensing process--it's our objective to license all projects 
within 2 years after the application is filed. Not 64 months, 
but 2 years. I think some of those numbers that you're quoting 
go back to the 1990's, prior to two iterations of improvements 
in the licensing process, the 64 months.
    The $2.5 million, I have not heard that number before, but 
we certainly have projects that go well beyond that, in terms 
of their costs. We license projects up to the size of the 
1,800-megawatt Priest Rapids project in the mid-Columbia 
system. And it's very expensive to authorize--or to license 
large projects like that. And it tends to skew the average cost 
associated with it. But it doesn't mean that it's cheap to 
license even a small project like this. It would be a 
significant investment to go through licensing.
    Senator Johnson. Yes.
    Mr. Robinson. That's indisputable.
    Senator Johnson. And you could understand, from the 
community-of-Spearfish perspective, the electricity production 
here is a secondary and incidental issue, and that the real 
issue is the water flow and the water access into the community 
of Spearfish.
    Mr. Robinson. I've been involved with licensing projects 
for 28 years, and, during that 28 years, the shift from power 
being the significant factor that we looked at to nonpower 
values being the overwhelming aspect of licensing projects is 
across the country.
    Senator Johnson. Well, thank you, Mr. Keys, Mr. Robinson, 
Ms. Hill. And I would presume that, in the case of the South 
Dakota projects, that Mr. Keys and Mr. Robinson would be 
willing to accept any written questions that we may--that the 
committee may submit----
    Mr. Robinson. Absolutely.
    Senator Johnson [continuing]. After the conclusion of this 
hearing.
    Mr. Keys. Yes, we would.
    Senator Johnson. Well, thank you very much.
    And I'll turn it back over to Chairwoman Murkowski.
    Senator Murkowski [presiding]. Thank you for helping out 
with the tag team there. It makes it work a little bit better.
    I want to thank the witnesses for your time this afternoon, 
for coming in and helping out on these issues of importance 
within the region.
    With that, let's call up the second panel here. Welcome to 
the committee this afternoon. And I think what we will do is, 
we'll start with you, Mayor Krambeck, and just go down the line 
in the order that you are seated.
    So, with that, welcome. I appreciate the fact that several 
of you have come from a relative distance to be here this 
afternoon. We appreciate your willingness to appear and the 
time that you are giving to us on these respective issues. So, 
thank you, and welcome.
    Mayor Krambeck.

   STATEMENT OF JERRY KRAMBECK, MAYOR, CITY OF SPEARFISH, SD

    Mr. Krambeck. Thank you. My name is Jerry Krambeck. For the 
past 6 years, I've served as the mayor of Spearfish, South 
Dakota, a municipality of approximately 9,000 people located in 
the heart of South Dakota's Black Hills.
    I'm here today to testify in support of S. 1577. I would 
like to submit for the record letters from some elected 
officials, public agencies, and water user groups in South 
Dakota that support this legislation being championed by 
Senators Johnson and Thune.*
---------------------------------------------------------------------------
    * The letters have been retained in subcommittee files.
---------------------------------------------------------------------------
    When visiting our city, one cannot help but appreciate the 
scenic beauty of Spearfish Canyon. Frank Lloyd Wright said it 
best during his 1935 visit to Spearfish Canyon when he declared 
that it's the best, the most magnificent canyon in the West. 
We're proud of this heritage, and take seriously our 
responsibility to preserve it for the future generations to 
enjoy and appreciate.
    The city is located at the base of Spearfish Canyon, 
through which Spearfish Creek runs. Spearfish Creek is the 
lifeblood to the many farms and ranches that operate in our 
area. Farmers have been irrigating the fields for nearly 150 
years in Spearfish, with some water rights dating back to the 
mid-19th century. Our community also has a rich mining history. 
For years, many citizens in our community were employed by the 
Homestake Mine, in Lead, South Dakota.
    These values prompt our city, in 2004, to purchase the 
small 4,000 kilowatt Spearfish Hydroelectric Plant No. 1 from 
Homestake Mining Company. At that time, Homestake was closing 
its gold mine in Lead, and no longer needed the hydropower from 
this plant to supports its operations. The project had been in 
continuous operation since 1912, and had been meticulously 
maintained and preserved. The city saw an opportunity to 
preserve this historical landmark, which stands as a reminder 
of resilience, ingenuity that was required of those early 
settlers in the West.
    This project is important for more than its historical 
value. And for a very real way, it supports these deeply held 
values in--of our community. For example, the hydro facility 
bypasses a significant sinkhole in Spearfish Creek where 
surface waters are lost to the underlying aquifer. By diverting 
flows around the sinkhole, the project provides additional 
water for recreation, irrigation, fire protection, and the 
National Historic D.C. Booth Fish Hatchery. In addition, since 
acquiring the hydro facility, the city has worked to develop an 
agreement with the Spearfish Canyon Howeowners Association to 
provide for additional water to be left in Spearfish Creek for 
aesthetic and environmental benefit.
    The reason I'm here today is that the multiple benefits 
provided by this project are in danger of being forever lost. 
In the series of orders issued in 2001 and 2002, the Federal 
Energy Regulatory Commission ruled that this hydroelectric 
facility, which, at the time, had been operating for about 80 
years, falls under its mandatory licensing jurisdiction under 
the Federal Power Act. The statute was enacted about a decade 
after Homestake started generating electricity at the facility. 
FERC justified its claim of jurisdiction over the project by 
finding that certain right-of-way grants issued by the Federal 
Government for the project in the early 20th century had 
expired.
    These grants are currently administrated by the U.S. Forest 
Service. FERC issued its rulings without even consulting with 
the Forest Service. In fact, the Forest Service is on record 
that right-of-way grants continue to be valid, even after the 
hydro facility was conveyed from Homestake to the city of 
Spearfish. Despite the urging of the entire South Dakota 
congressional delegation, FERC refuses to change its 
jurisdictional rulings.
    The city does not oppose the goals of the Federal Power 
Act, making sure that our Nation's waterways are best managed 
for multiple public interests such as power development, energy 
conservation, the protection of fish and wildlife resources, 
recreation, and flood control. We believe that we have already 
accomplished this in Spearfish Creek.
    Our objection is that FERC's licensing of this facility 
would be an unnecessary exercise, at a tremendous cost. As this 
committee well knows, the FERC licensing process is an enormous 
undertaking. Studies conducted by FERC find that even small 
projects like this one can take over 6 years to license, at a 
cost that could approach millions of dollars.
    Costs of this magnitude alone would require that the city 
mothball the project and shut it down. The city does not 
believe that policies and goals of the Federal Power Act 
support this result, discriminating against a source of clean, 
renewable energy that is already operated in a manner that best 
balances public interest considerations, through the sheer 
imposition of overwhelming administrative costs.
    Thank you very much for letting me testify today.
    Senator Murkowski. Thank you.
    Mr. Becker.

STATEMENT OF LAURENCE R. BECKER, STATE GEOLOGIST AND DIRECTOR, 
VERMONT GEOLOGICAL SURVEY, VERMONT DEPARTMENT OF ENVIRONMENTAL 
       CONSERVATION, VERMONT AGENCY OF NATURAL RESOURCES

    Mr. Becker. Thank you, Madam Chairman and members of the 
subcommittee. I'm Laurence Becker, Vermont state geologist, and 
I direct the Vermont Geological Survey. That's part--a division 
of the Vermont Department of Environmental Conservation.
    Thanks for the opportunity to represent the State of 
Vermont in response to S. 2054, the Vermont Water Resources 
Study. And thanks to Senator Jeffords for recognizing the 
importance of groundwater through his sponsorship.
    The State of Vermont understands that groundwater is a 
fundamental resource. We strongly agree that characterizing the 
resource to support sound water supply and protection decisions 
is a necessary step to plan for the future. We strongly support 
this bill and urge this body to move this authorization 
forward.
    Coordination with Vermont in the proposed language is a 
necessary step to create a meaningful partnership between the 
State and the Federal Government. Local control is an important 
element of the Vermont ideal, and the State can work best with 
USGS to bring the operational considerations and results of the 
study to our towns and municipalities. It is recognized that 
such a study will take financial resources and personnel to 
complete.
    Sixty-six percent of Vermont's population depends on 
groundwater for their drinking-water supply, including 
municipalities, fire districts, agricultural, industrial, 
commercial users, and homeowners. Fisheries habitat is 
supported by groundwater discharge to surface waters.
    For future supplies, the State has little knowledge of the 
location of potential high-yield aquifers. Natural 
contamination in well water from uranium, radium, and arsenic 
that exceeds public health standards is an issue in a number of 
geologic settings in Vermont. Information on where these 
contaminants can be found is needed statewide.
    Vermont has seen well-interference problems in tight 
geologic formations, made worse by periods of drought. These 
areas need characterization. Resource vulnerability can vary, 
depending on the nature of the geology overlying groundwater 
resources, and this is little characterized in relation to 
aquifers.
    In Vermont, the primary aquifers are saturated sand and 
gravel, and water in fractured bedrock. The State's geology 
comprises the vessel that contains Vermont's groundwater. 
Surface water and groundwater are connected. Wells in saturated 
sand and gravel can meet larger municipal demands, 500 to 1,000 
gallons per minute in our State. Domestic users often obtain 
water from drilled wells in bedrock that can supply as little 
as 2 gallons per minute to meet family demand.
    In recent years, with some town partners, the Vermont 
Geological Survey has focused on characterizations of the 
surficial and bedrock geology to derive groundwater planning 
maps at a town scale. These town-by-town studies are 
progressing slowly, as limited resources are available to 
complete the work. The Vermont Geological Survey has completed 
some localized detailed research and mapping in radioactivity, 
arsenic, and radon, also in radioactivity in cooperation with 
USGS. Comprehensive investigations are needed to protect the 
public health. Nitrate in groundwater studies are underway next 
to a large farm to ultimately provide best--information for 
best nutrient management practices in relation to protecting 
groundwater. And, as you heard, the USGS and the Vermont 
Geological Survey are already cooperating to produce a new 
State bedrock geologic map which would apply to this issue.
    A 2003 report that the Vermont legislature identifies three 
levels of study to develop groundwater and aquifer maps of 
increasing accuracy. Each level builds upon the previous level, 
using sophisticated tools, technical expertise and scientific 
evaluation. The report concludes that the most obvious obstacle 
to completing aquifer mapping statewide is the lack of 
dedicated funding sources for employing people to analyze and 
compile the data, and to work with partners and purchase 
scientific equipment.
    In conclusion, the State's compelling interest is that this 
valuable and necessary groundwater resource be understood to 
protect existing uses, plan for growth, and ensure for the 
sustainability of the health and well-being of Vermonters. In 
the present information vacuum, towns in the State will be 
hard-pressed to balance economic needs against protection of 
the resource. This bill is that first necessary step to create 
the information template for future planning. Both the USGS and 
the State of Vermont bring necessary expertise to the effort. A 
strong partnership with USGS that takes the needs of Vermont 
into account is a beneficial and necessary step to meet the 
goals of S. 2054.
    Thank you, Senator Murkowski, for this opportunity. We're 
glad to help in any way as you deliberate in this regard.
    Senator Murkowski. Thank you, Mr. Becker. I appreciate it.
    Dr. Lytle, welcome.

  STATEMENT OF C. MEL LYTLE, WATER RESOURCE COORDINATOR, SAN 
                       JOAQUIN COUNTY, CA

    Dr. Lytle. Good afternoon, Madam Chairman and committee 
members.
    I'm Dr. Mel Lytle, the water resource coordinator for San 
Joaquin County, California. On behalf of the county and the 
Mokelumne River Water and Power Authority, I'm here today to 
testify in support of H.R. 3812, the bill sponsored by Chairman 
Richard Pombo.
    Historic shortfalls in surface water supply in San Joaquin 
County have led to an overreliance on their diminishing 
groundwater resources. As a result, the county, its cities, and 
water agencies are actively engaged in a stakeholder-supported 
effort to secure additional water resources to decrease 
groundwater overdraft, slow saline intrusion, and improve 
water-supply reliability and environmental protection in the 
region.
    Recognizing the need for a regional approach, this 
consensus-based effort has completed significant water 
management planning, including recently adopted countywide 
water management plans, groundwater basin management plans, and 
will complete an integrated regional plan by the end of 2006. 
From this effort, the Mokelumne River Regional Water Storage 
and Conjunctive Use Project, locally known as the ``MORE WATER 
Project,'' has been recognized as a major new element of the 
region's Integrated Conjunctive Use Program.
    H.R. 3812 will authorize the Department of the Interior to 
also participate in this effort on a cost-sharing basis to 
complete the necessary studies and environmental protection.
    MORE WATER centers on the development of new facilities to 
capture floodwaters from the Mokelumne River for beneficial 
use, including groundwater recharge in the eastern San Joaquin 
Basin. Through improved conjunctive management, the basin's 
underground storage potential of approximately 2 million acre-
feet could be realized. In addition, with water banking, MORE 
WATER could provide greater regional benefit and permit other 
agencies the ability to store and use excess water from the 
underlying basin.
    MORE WATER has gained considerable regional attention and 
was foundational in the formation of the Mokelumne River Forum, 
a California Department of Water Resources-sponsored 
collaborative effort comprised of nearly 20 stakeholder 
agencies that reach from the river's headwaters in the high 
Sierra Nevada Mountain range, through Alpine County, downstream 
to Amador, Calaveras, and San Joaquin Counties, and on out into 
the greater East Bay area.
    The stakeholders have elected to participate in this 
collaborative effort to develop mutually beneficial and 
regionally focused projects to--and programs to meet water 
supply and related needs from the Mokelumne River.
    Under the Department of the Interior's Water 2025 Program, 
MORE WATER could set the standard of success for the forward-
looking focus in the water-deficient areas of the Western 
United States. MORE WATER is consistent with the program's key 
tools, including removal of institutional barriers and 
interagency cooperation, conservation, efficiency in markets, 
and improved technology.
    We urge your support for the passage of H.R. 3812 in a 
timely manner. This effort will establish a significant working 
relationship between the county, the Bureau of Reclamation, and 
a wide range of regional stakeholders to ultimately provide new 
infrastructure to improve water resource management and 
sustainability for California's future.
    Thank you. That concludes my prepared remarks.
    [The prepared statement of Dr. Lytle follows:]

  Prepared Statement of Dr. C. Mel Lytle, Water Resource Coordinator, 
                  San Joaquin County, CA, on H.R. 3812

                LOCAL AND REGIONAL WATER RESOURCE ISSUES

    San Joaquin County is located in the heart of the vibrant 
agricultural communities of the Central Valley of California. It is 
uniquely situated at the confluence of the Sacramento and San Joaquin 
Rivers, the Bay-Delta, the source of water for two-thirds of 
California's population, and several eastside rivers flowing from the 
Sierra Nevada Mountains (Figure 1).* Grape production, dairy products 
and other crops are the major agricultural commodities that come from 
fields surrounding the burgeoning Cities of Stockton, Tracy, Lodi, 
Manteca, Lathrop, Mountain House and Escalon. In all, approximately 
700,000 residents call the County home. Of late, population trends are 
dramatically increasing and are expected to double by 2040 due 
principally to migration from the San Francisco Bay Area and other 
areas of the State.
---------------------------------------------------------------------------
    * All figures have been retained in subcommittee files.
---------------------------------------------------------------------------
    Currently, the necessary water supplies to sustain the County's 
diverse population, the $1.5 billion agricultural economy, other 
industry, and sensitive habitats in the Delta are not adequate. 
Opportunities to develop new water supplies are heavily constrained by 
current uses and availability including water that has been developed 
for use out of the Region by either the Central Valley or State Water 
Projects. The County is currently dependent on groundwater for 60% of 
its supply. This dependency has impacted the vital groundwater basin, 
which is seriously over drafted by 200,000 acre-feet per year. The 
California State Department of Water Resources has designated the 
Eastern San Joaquin Basin a critically over drafted basin (DWR Bulletin 
118). This has placed the groundwater basin and the City of Stockton's 
drinking water supply in jeopardy due to intrusion of saline 
groundwater underlying the San Joaquin River Delta. Within the Delta, 
water quantity and quality is often inadequate for agricultural and 
urban users, limiting the types of crops that can be grown and lowering 
crop yields of those that are grown. In addition to local threats to 
water supplies, the County has been adversely affected by changes in 
State and Federal policies, which continue to erode existing supplies 
and have upset longstanding plans to develop new supplies. As a result, 
new water supply is vital to help sustain social, economic and 
environmental viability in the County and surrounding Region.

                     REGIONAL WATER SUPPLY PLANNING

    Independently, county water districts and cities have found it 
difficult to wield the political and financial power necessary to 
implement large scale water supply projects to mitigate the conditions 
of groundwater basin overdraft. Recognizing the need for a regional 
approach to water supply planning and implementation and with the aide 
of local, State and Federal representatives and a well represented 
stakeholder group consisting of over 25 agencies, the County in 2002 
adopted the San Joaquin County Water Management Plan (WMP). The purpose 
of the WMP was to define the extent of. groundwater overdraft and 
identify possible solutions and strategies necessary to secure 
supplemental water supplies using a consensus-based collaborative 
process.
    In addition, the Northeastern San Joaquin County Groundwater 
Banking Authority (GBA) was organized to employ a consensus-based 
approach in solving this problem and with its goal to develop ``. . . 
locally supported groundwater banking and recharge projects that 
improve water supply reliability in San Joaquin County . . . .'' 
Collaboration amongst the GBA member agencies has strengthened the 
potential for broad public support for conjunctive management 
activities, allowed members to speak with one regional voice as well as 
increased their ability to obtain local, state, and federal funding. 
Table 1 lists the member agencies of the GBA.
    In 2004, the GBA adopted the East San Joaquin Basin Groundwater 
Management Plan (GWMP) to enhance and coordinate existing groundwater 
management policies and programs and to develop new policies and 
programs to ensure the long-term sustainability of groundwater 
resources in San Joaquin County. The GWMP establishes four basin 
management objectives (BMO) that relate to groundwater levels, 
groundwater quality, surface water quality and flow, and inelastic land 
subsidence. To meet the established BMO's, the GBA member agencies have 
defined the Eastern Basin Integrated Conjunctive Use Program including 
possible new supply from the Delta, Calaveras, Stanislaus, American and 
Mokelumne Rivers together with Stockton East Water District and the 
U.S. Army Corps of Engineers--Farmington Groundwater Recharge Program, 
in order to develop new and affordable surface water supplies for 
beneficial use and groundwater recharge of the underlying groundwater 
basin.
    Table 1.--MEMBER AGENCIES OF THE NORTHEASTERN SAN JOAQUIN COUNTY

   Groundwater Banking Authority
   City of Stockton
   City of Lodi
   Woodbridge Irrigation District
   North San Joaquin Water Conservation District
   Central San Joaquin Water Conservation District
   Stockton East Water District
   Central Delta Water Agency
   South Delta Water Agency
   San Joaquin County Flood Control and Water Conservation 
        District
   California Water Service Company
   San Joaquin Farm Bureau Federation

    The Mokelumne River Regional Water Storage and Conjunctive Use 
Project (MORE WATER) is a major new supply component of both the WMP 
and the GWMP development efforts. Fundamentally, conjunctive use and 
groundwater recharge is the major focus of the MORE WATER Project. 
Under a proposed project alternative, the Project could develop a new 
off-stream storage facility to capture flood waters from the Mokelumne 
River and regulate those flows to an integrated system of groundwater 
banking and recharge projects to help meet San Joaquin County water 
demands (Figure 2). In addition, there is a potential for MORE WATER to 
provide substantial regional benefits because of its strategic 
proximity to the Delta and East Bay Municipal Utility (EBMUD) 
facilities. This conjunctive use program could be utilized to provide 
critical year flows to enhance water supply reliability, fisheries and 
maintain water quality standards to help meet CALFED Bay-Delta Program 
objectives.

                     MORE WATER PROJECT BACKGROUND

    In 1990, San Joaquin County acting as the Mokelumne River Water and 
Power Authority (MRWPA) filed a water right application with the 
California State Water Resources Control Board (SWRCB) for 
unappropriated wet year flows (flood waters) on the Mokelumne River. 
The application cited three project concepts including a reservoir at 
Middle Bar, an off-stream reservoir at Duck Creek or direct diversions 
off the lower Mokelumne River between Camanche Reservoir and Interstate 
5. In addition, the MRWPA obtained a Federal Energy Regulatory 
Commission (FERC) Preliminary Permit for the proposed Duck Creek 
Reservoir, which allows the Authority to study the power generation 
potential at the proposed project site.
    Initial Studies--in 2003, the MRWPA conducted an initial review of 
historic project concepts together with several other project 
alternatives that included a wide array of ideas ranging from a new on-
stream reservoir, to desalinization, conservation and wastewater 
recycling. Additionally, the Authority began work to devise a 
regulatory strategy that would satisfy the requirements of the SWRCB, 
CEQA, NEPA, and all applicable permits to develop a preferred project 
alternative. By capturing flood flows, studies have shown that 
substantial supplies could be made available from the Mokelumne River.
    Thus far, efforts to complete the initial project investigations 
have been accomplished through local cost-sharing agreements between 
the Authority and the Cities of Stockton and Lodi. Other local and 
regional support for the MORE WATER Project has come from the GBA 
member agencies and others.
    Next Steps--at present, Interior's Bureau of Reclamation Mid-
Pacific Region (Bureau) is nearing completion of the initial MORE WATER 
Appraisal Study. The MRWPA welcomes the Bureau's involvement in the 
development of the preferred MORE WATER alternative that will help meet 
the needs of the Region while being sensitive to the rights of other 
water users and ensuring that the Mokelumne River will provide a source 
of pride and joy for years to come. The principal goal of feasibility 
analysis for MORE WATER will be to identify opportunities to capture 
flood flows from the Mokelumne River for groundwater storage and 
beneficial use consistent with objectives identified in the WMP, GWMP 
and the requirements developed for the Department of the Interior. On a 
parallel track to the feasibility analysis, the MRWPA in association 
with. the Groundwater Banking Authority will complete a programmatic 
environmental impact report (EIR) to support the East Basin Conjunctive 
Use Program. Subsequently, a project specific EIR and environmental 
impact statement (EIS) will be prepared for the MORE WATER preferred 
alternative. The approach is indicative of the MRWPA's commitment to 
satisfying the California Environmental Quality Act, the National 
Environmental Protection Act, and the Federal Clean Water Act.

                          REGIONAL COOPERATION

    MORE WATER has gained considerable regional attention and was 
foundational in the formation of the Mokelumne River Forum, a 
collaborative effort comprised of 16 stakeholder agencies that reach 
from the River's headwaters in Alpine County downstream to San Joaquin 
County and the greater East Bay Area. The stakeholders have elected to 
participate in this collaborative process to develop mutually 
beneficial and regionally focused projects to meet water supply and 
related needs from the Mokelumne River. Stakeholder input is genuinely 
welcomed in all phases of MORE WATER and is the backbone of regional 
planning efforts undertaken in San Joaquin County.

                          MORE WATER BENEFITS

    MORE WATER will provide water to decrease groundwater overdraft, 
prevent saline groundwater intrusion, and to improve water supply 
reliability and environmental protection for the Region. MORE WATER is 
an integral component to the Eastern Basin Integrated Conjunctive Use 
Program as a supply and groundwater recharge element.
    Consistency with CALFED and Department of the Interior's Water 2025 
Program Objectives--while not a component of the CALFED Program, MORE 
WATER is consistent with CALFED objectives and will provide information 
important to water resource and environmental protection efforts being 
conducted under the CALFED aegis. The CALFED Record of Decision 
outlines a myriad of program elements intended to implement the goals 
and objectives of the CALFED Program. MORE WATER is consistent with the 
following Program elements:

   Water Storage--Conjunctive use programs hinge on the ability 
        for entities to capture surface water when available for direct 
        use and groundwater recharge. Groundwater recharge is an 
        integral part of the success of MORE WATER.
   Ecosystem Restoration--The Mokelumne River system is a 
        source of pride for the San Joaquin County Community. 
        Stakeholder led efforts such as the Lower Mokelumne Restoration 
        Project to replace the aging Woodbridge Irrigation District 
        Diversion Dam with anadromous fish friendly fish screens and 
        ladders and the completion of a new fish hatchery at Camanche 
        Reservoir by EBMUD and the California Department of Fish and 
        Game are major successes for the Region. MORE WATER will be 
        developed to maximize enhance or create ecosystem restoration 
        benefits like these examples where feasible.
   Watershed Management--The Mokelumne River Watershed is 
        represented by water agencies, irrigation districts, grass 
        roots organizations, interest groups, and authorities such as 
        the Mokelumne River Forum and the Mokelumne River Authority. 
        The MRWPA will continue to promote MORE WATER to these groups 
        and will coordinate formal consultation with federal and State 
        fisheries and resources agencies and other non-governmental 
        organizations.
   Water Transfers--Groundwater banking in San Joaquin County 
        has the potential to provide regional and statewide agencies 
        the ability to store excess water in the underlying basin. San 
        Joaquin County's proximity to the Sacramento-San Joaquin Delta 
        would facilitate water transfers and exchanges of banked water 
        to areas served by the East Bay, State Water Project and the 
        Central Valley Project. Banked groundwater could also be used 
        for fisheries needs under the CALFED Environmental Water 
        Account. The underground storage potential of Eastern San 
        Joaquin County is estimated at approximately 1.5 to 2 million 
        acre-feet, enough to supply 12 million people for one year. 
        MORE WATER would provide the necessary infrastructure and 
        improvements necessary to utilize a portion of this resource.
   Flood Control--The capture of flood flows is a major 
        objective of MORE WATER. Through the use of a new off-stream 
        reservoir on Duck Creek, the effects of flooding locally and in 
        the Delta could be lessened during periods of high water.

    Under the Department of the Interior's Water 2025 Program, MORE 
WATER could be a new standard of success for the ``forward-looking 
focus'' in water deficient areas of the Western United States. MORE 
WATER is consistent with the following Program Key Tools:

   Removal of Institutional Barriers and Inter Agency 
        Cooperation--MORE WATER is a high priority project for the 
        Region. Extensive public outreach is a major component to the 
        success of MORE WATER. Thus far, MRWPA staff has met with 
        numerous State and Federal regulatory agencies and are also 
        participants in numerous stakeholder led watershed group 
        efforts like the Mokelumne River Forum to resolve differences 
        and find mutual benefit in the Mokelumne River watershed.
   Conservation, Efficiency, and Markets--MORE WATER is 
        currently being developed as part of a regional conjunctive use 
        project to enhance urban, agricultural, and environmental water 
        supplies. MORE WATER will use affordable approaches to capture, 
        use, and recharge water as part of the Eastern Basin Integrated 
        Conjunctive Use Program. MORE WATER infrastructure and 
        improvements will help the Region to secure more reliable water 
        supplies through the restoration of the underlying basin and 
        potentially the establishment of a regional groundwater bank 
        that is accessible to water markets throughout the State and in 
        particular The East Bay and South of Delta Water Users.
   Collaboration--MORE WATER and other regional planning 
        efforts undertaken by San Joaquin County employ a consensus-
        based approach to water supply planning and development. 
        Recently, successful collaborative efforts in the County 
        include the Water Management Plan and the Groundwater 
        Management Plan that involved over 40 local, State and Federal 
        agencies. Stakeholder input is welcome during all phases of the 
        MORE WATER process.
   Improved Technology--MORE WATER and other similar 
        conjunctive use projects will require extensive knowledge of 
        the underlying Basin. San Joaquin County is committed to 
        establishing a science program for Basin research and 
        monitoring. Groundwater Banking Authority stakeholders are 
        currently working together with the California Department of 
        Water Resources and the U.S. Geological Survey on a $2.5 
        million, 5-year joint study to determine the source and extent 
        of saline intrusion in the Basin.

    Should the Senate support the passage of H.R. 3812, the MRWPA would 
work with the Department of the Interior to complete feasibility 
studies together with the necessary environmental documentation and 
permitting support documents for the MORE WATER Project.

    Senator Murkowski. Thank you, Dr. Lytle.
    And now, let's go to Ms. Pollman Rogers.
    Ms. Pollman Rogers. Thank you.

  STATEMENT OF DARLA POLLMAN ROGERS, RITER, ROGERS, WATTIER & 
BROWN, LLP, PIERRE, SD, ACCOMPANIED BY JOHN COOPER, SECRETARY, 
        SOUTH DAKOTA DEPARTMENT OF GAME, FISH, AND PARKS

    Ms. Pollman Rogers. Madam Chair, Senator Johnson, good 
afternoon.
    My name is Darla Pollman Rogers. I am an attorney engaged 
in the private practice of law in Pierre, South Dakota. And I 
am here today to testify on behalf of preferential leaseholders 
who live in the Pierre Canal and Blunt Reservoir parts of South 
Dakota.
    I'm also privileged to introduce to you today the secretary 
of the South Dakota Game, Fish, and Parks, John Cooper. We have 
worked very hard together in negotiations to present you with 
the language in S. 2205, and we are both here to answer any 
questions and give any assistance we can to this committee to 
promote this cause.
    My job today, though, is to urge you to focus for a minute 
on the preferential leaseholders and to correct what I perceive 
to be an ongoing injustice that has occurred to these 
leaseholders as a result of the Government's actions, not only 
in acquiring private land, but also in their prolonged 
ownership of private land for a public project that is now 
dead, and actually has been for many years. And I am here to 
urge you to correct the injustices by passage of S. 2205, or 
something similar thereto.
    Before I describe these injustices to you a little--in a 
little more detail, I would like to point you to the map that I 
have on the easel here, because I think sometimes a picture is 
worth a thousand words. The picture on the--or the map on the 
easel now, the red portion, depicts the Pierre Canal. And, as 
you can see, it extends from the Oahe Dam--the water was to go 
down that red canal, traverse all that way, and then go over to 
the other map that's on the floor in front of you, which 
depicts the Sully County--or the Blunt Reservoir Project. And 
the Blunt Reservoir, then, is where the--at least part of where 
the land was to actually be--the reservoir was to be on that 
land, and then the land from--or the water from there would be 
pumped out for irrigation purposes.
    The Oahe Project was actually authorized by Congress in 
1968, and from 1973 to 1977 is when the Bureau of Reclamation 
acquired these lands from the Pierre Canal owners and also the 
Blunt Reservoir owners. In 1977, the funds were not renewed, so 
the project, at that point, was dead. The Bureau acquired 
approximately 19,000 acres along the canal and in the Blunt 
Reservoir area.
    The first injustice that I want to discuss briefly is the 
actual acquisition of the land. And I want to emphasize to you 
today that my clients, who owned most of that 19,000 acres of 
land, were not willing sellers. The land was acquired under 
threat of condemnation. And as part of the enticement to sell, 
these landowners were told, No. 1, that they could lease the 
land back at the same rate until the project went through, and, 
No. 2, that they could buy their land back for the same price 
if the project did not materialize. Neither one of those 
promises have been fulfilled.
    And that leads me to the continuing injustice. We are now 
30 years down the road. The preferential leaseholders have 
diligently tried to reacquire their land. And so, now you are 
faced with, How do you correct the injustice? How do you right 
these wrongs in this prolonged period of land ownership by a 
public entity?
    And I would suggest to you what we have tried to provide 
for you in S. 2205 is a possible solution. What the bill will 
do, bottom line, is, No. 1, it will give the preferential 
leaseholders an option to buy back the land. And that's 
approximately 14,000 acres of this land. It will give the rest 
of the land, the nonpreferential lease land, to the Department 
of Game, Fish, and Parks for purposes of wildlife mitigation.
    I would remind you, however, that the terms of S. 2205 were 
negotiated back in 2001, and land prices have doubled between 
2001 and 2006. The goal here is to give the preferential 
leaseholders a meaningful option to buy back the land, so it 
needs to be affordable so that they can do so.
    I would like to just quickly wrap up with a personal 
example. My father, who is 83 years old, sold his land--some of 
his land to the Bureau in 1973. And, even at his age, he's 
still very intricately involved in our farming operation. He is 
still waiting for an opportunity to buy back his land. Time is 
running out for him. It's running out for all of the 
preferential leaseholders. I would urge you to act now to 
correct this injustice.
    Thank you for allowing me to testify. I would ask that my 
written testimony and exhibits be made part of the record. And 
we would be happy to answer any questions. Thank you.
    [The prepared statement of Ms. Pollman Rogers follows:]

 Prepared Statement of Darla Pollman Rogers, Riter, Rogers, Wattier & 
  Brown, LLP, Representing Preferential Leaseholders within the Blunt 
                 Reservoir and Pierre Canal, on S. 2205

    Members of the Subcommittee, my name is Darla Pollman Rogers. I am 
an attorney in private practice in Pierre, South Dakota, and I 
represent preferential leaseholders in the Blunt Reservoir and Pierre 
Canal areas. Thank you for the opportunity to present testimony to you 
on behalf of the preferential leaseholders.
    The preferential leaseholders strongly support S. 2205. Since 
becoming aware of legislative proposals concerning the Pierre Canal and 
Blunt Reservoir lands, as a group, the preferential leaseholders have 
spent many hours negotiating for and providing input into S. 2205 and 
its predecessors. Please allow me to give you a brief background of the 
history surrounding the long struggle this small group of landowners 
has had in attempting to regain ownership of their land.
    The Blunt Reservoir land and the Pierre Canal land were originally 
part of the Oahe Unit, James Division, of the Oahe Irrigation Project 
(hereinafter called the ``Oahe Project''), which was authorized as a 
component of the Pick-Sloan Plan to provide multi-purpose use of the 
Missouri River water in South Dakota. The Oahe Project was authorized 
and funded by Congress nearly 30 years ago, but the project never 
materialized. The government did, however, acquire approximately 19,000 
acres of land in Hughes and Sully Counties for construction of the 
Pierre Canal and Blunt Reservoir. All of these acres have been removed 
from county property tax rolls since 1977, as the land has literally 
been in federal ``limbo.'' Of the 19,000 acres, approximately 13,700 
acres are preferential lease acres (approximately 25 original 
landowners or descendants who still operate the land as preferential 
leaseholders) and 5,300 are nonpreferential lease acres (original land-
owners subsequently relinquished their rights to lease the land, which 
is now operated by approximately 9 nonpreferential leaseholders).
    I used the word ``acquire'' deliberately, because the circumstances 
of the acquisitions were, at best, misleading. The landowners did not 
want to give up land that was an integral part of their operations. 
(See Exhibit 1,* one map of Pierre Canal; two maps of Blunt Reservoir 
area.) The original landowners were in fact ``enticed to sell their 
land.'' (See Exhibit 2, May 27, 2005, letter of Governor Rounds.) They 
were told that they could sell their land to the Government 
voluntarily, or it would be condemned. If they sold voluntarily, they 
could lease the land back from the Bureau of Reclamation (which 
administered and managed the land), at a lease rate that would not 
increase, until the project was completed (thus the term 
``preferential'' leaseholders). These landowners were also told that if 
for some reason the project was not completed, they would be able to 
purchase their land back at the same price they were paid for it.
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    * All exhibits have been retained in subcommittee files.
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    You may ask how I know what representations were made to the 
original landowners. I know because they have told me, and I know 
because I was personally involved. My father, Leonard Pollman, was an 
original landowner, and we are preferential leaseholders today. In 
fact, my father's case is a good example of the unfulfilled promises 
made to the original landowners at the time they gave up their land. My 
father did not want to go through costly condemnation litigation, so he 
reluctantly agreed to sell his land to the government, after he was 
told he could lease it back at the same lease rate until his land was 
needed for the project. (See Exhibit 3.) In the event the land was not 
used, he was told he could buy it back for the same price for which he 
sold it. He asked the representative from the Bureau to please put that 
assurance in writing. See Exhibit 4, which is a copy of the written 
``assurance'' of the Bureau representative, Arthur E. Mischke, that the 
lease rate would remain the same. The original lease, dated December 
19, 1973, was for $3,700.00. The ``maximum rate'' of $3,700.00 has 
steadily increased over the years, and today is nearly double that 
amount. (See Exhibits 5 and 6.)
    Similar representations were made to other landowners at the time 
of sale. See Exhibit 7, which is another ``assurance'' made by a Bureau 
representative to Duane and Barb Winkler, landowners in the Blunt 
Reservoir area. As in the case of Mr. Pollman, the annual leaseback 
rate has more than doubled over the years, yet their Land Purchase Con-
tract has not become null and void.
    It is important to know the sincere and honest intentions of these 
landowners. They did not wish to be uncooperative, but they wanted to 
protect their interests, for as long as possible, in the land they were 
in essence being forced to sell. (See Exhibit 8, letter of preferential 
leaseholder Aubrey R. Smith.)
    That is still the intent of these same landowners today. After all 
these years, they are still trying to reacquire their land. While most 
of them have leased the land since the government acquired it, the 
lease rates have not remained the same, but have increased dramatically 
over the years. And to date, these landowners have still not had the 
opportunity to buy back their land, as promised.
    As early as 1981, deauthorization of the Oahe Project was 
considered, and these same landowners testified at a hearing in front 
of the Subcommittee on Water and Power of the Committee on Energy and 
Natural Resources, United States Senate, as follows:

        Their (the original landowners') position is that they should 
        have the first chance to buy back their land . . . This 
        dispositional scheme must be written into the deauthorization 
        legislation itself.

    The landowners were supported in their position by the South Dakota 
Legislature, which passed a Concurrent Resolution in 1980 favoring 
disposing of the land acquired for the Oahe Project by first offering 
it to the original landowners. Unfortunately, the matter was not 
resolved in 1981.
    The issue of deauthorization of the Oahe Project resurfaced again 
in January of 1998, in the form of S. 1341. In that bill, all the land 
was to have been transferred to the State of South Dakota for wildlife 
habitat mitigation (See Exhibit 9). John Cooper, the Secretary of the 
South Dakota Department of Game, Fish and Parks, sent a letter to the 
preferential leaseholders (among others) concerning deauthorization of 
the Pierre Canal and Blunt Reservoir features of the Oahe Project and 
transferring those lands in Fee Title to the State of South Dakota for 
wildlife mitigation. (See Exhibits 10 and 11.) The landowners were 
invited to a public hearing in late January of 1998, and many 
landowners attended the meeting. They were told, in essence, that 
acquisition of the Pierre Canal and Blunt Reservoir by South Dakota 
Game, Fish and Parks was part of a much larger effort to re-store 
wildlife habitat that was destroyed by the construction of the Missouri 
River Dam. The ultimate effect of S. 1341 would have been that these 
preferential leaseholders would have lost their land, probably within a 
ten-year period. Preferential leaseholders ex-pressed their strong 
opposition to S. 1341, as did then Representative John Thune. (See 
Exhibits 12 through 16.)
    So the struggle began all over again. The preferential leaseholders 
had numerous meetings with each other, with Game, Fish and Parks, and 
with their South Dakota Congressional delegates. Senator Daschle 
understood the long struggle of these landowners and their unique 
situation and agreed to champion their cause. S. 1178 was the result of 
said meetings, and it was introduced to you in October of 1999. We 
supported S. 1178, but unfortunately, it did not survive the political 
process.
    Since the defeat of S. 1178, the meetings have continued among 
landowners, Game Fish and Parks, South Dakota Congressional delegates, 
the Commissioner of School and Public Lands, and the Bureau of 
Reclamation. With Secretary John Cooper acting as facilitator, we 
stayed in touch intermittently in 2000, and then held a series of 
working sessions in 2001. The result of these efforts was S. 1028. 
Under S. 1028, the Blunt Reservoir feature of the Oahe Project would 
have been deauthorized. The preferential lease land was to have been 
transferred to the South Dakota Commission of School and Public Lands, 
and the preferential leaseholders in the Blunt Reservoir and Pierre 
Canal areas would have had the opportunity to buy back the land that 
was acquired from them for a project that never materialized. Non-
preferential lease parcels, unleased parcels, and preferential lease 
parcels that were not repurchased by the original landowner (or his or 
her descendants) were to have been conveyed to Game, Fish and Parks for 
the purposes of wildlife habitat mitigation.
    S. 1028 was a better bill than its predecessors, because in this 
round of negotiations, the interested parties tried to resolve all 
concerns and questions that were articulated with the introduction of 
S. 1178. For example, the terms ``nonpreferential leaseholder'' and 
``preferential leaseholder'' were redefined to make sure there were no 
arguments or questions about who fit into the categories. The issue of 
liability was addressed in S. 1028, in response to concerns raised by 
the Bureau. The Bureau participated in the working sessions and 
submitted the liability language included in the bill. Revisions were 
made in response to concerns of county officials. Funding 
clarifications were made in response to concerns of the Commissioner of 
School and Public Lands. A perpetual easement along the Pierre Canal 
land for future water development was added to appease water 
development concerns.
    Unfortunately, S. 1028 did not pass. What you have before you 
today, however, is S. 2205, which is in essence identical to S. 1028. 
Preferential leaseholders have the option to buy back their land. Long-
term funding mechanisms are included in an attempt to make the buy-back 
a viable option for landowners. Non-preferential leaseholders also have 
a ``trade'' opportunity, if the land they currently lease is an 
integral part of their home or business.
    I would point out, however, that the preferential leaseholders have 
concerns about the valuation provisions of the bill. As currently 
drafted, Section 2(d)(4) of S. 2205 provides that the purchase price 
will be based upon a fair market value appraisal of the land for 
agricultural use. The preferential leaseholders agreed to that 
provision in 2001, when all the parties sat at the table and negotiated 
the terms of this bill's predecessor. From 2001 to the present, the 
value of farmground in Hughes and Sully Counties has nearly doubled. 
Farmground located in the Blunt Reservoir vicinity sold for $400.00 to 
$450.00 per acre in 2001; in 2005, similar property sold for $750.00 to 
$844.00 per acre. Because of the lapse in time in getting this issue 
resolved, use of 2001 valuations, or granting preferential leaseholders 
a discount on the fair market value, may be the only way to make the 
buy-back option meaningful for some of the preferential leaseholders 
who lost thousands of acres of land to ``public use.''
    Many injustices have occurred to the preferential leaseholders 
throughout this agonizing process. First, their land was taken from 
them based upon false promises and misrepresentations. The 
misrepresentations continued through the leasing process that 
transpired over the next 30 years. But perhaps an even greater 
injustice is the prolonged period of time for which government held 
this private land, even though the public project for which the land 
was originally acquired has been dead for years. And now, despite the 
fact that representatives from the Bureau participated in the 
negotiations of the language of this bill and agreed to the terms, the 
Bureau appears to oppose the return of the land to the preferential 
leaseholders.
    S. 2205 is a compromise. Game, Fish and Parks wanted all the land 
for wildlife mitigation; leaseholders wanted all the land returned to 
private ownership. This compromise is the end result of countless hours 
of drafting and redrafting, which has come about as the result of 
input, negotiations, and compromise of all parties directly affected by 
deauthorization of the Blunt Reservoir feature of the Oahe Project. A 
true consensus has been reached in this bill. My clients, this small 
group of preferential leaseholders who have struggled all these years 
to have the opportunity to repurchase their land, support S. 2205. It 
is an appropriate resolution of a long-standing situation.
    I will add this. My father is now 83 years old. He is still 
actively involved in our family farming operation. While he has had 
many promises made to him and broken, his dream is to reacquire his 
land during his lifetime.
    On behalf of my father and the other preferential leaseholders of 
the Blunt Reservoir and Pierre Canal, I urge your support and passage 
of S. 2205.
    Thank you for the opportunity to present this testimony. I am happy 
to try to answer any questions you may have.

    Senator Murkowski. Thank you. And, yes, all the exhibits 
you've mentioned, and your full testimony, will be included, as 
well as that of any of the rest of you.
    Just a few very quick questions for the members of this 
second panel here, starting with you, Mayor Krambeck. Both 
Senator Johnson and I brought up the question to Mr. Robinson, 
in terms of the anticipated cost to the city if you did have to 
go through a licensing process. You indicated in your comments 
that it could theoretically approach millions of dollars. Do 
you have anything more specific, in terms of what you 
anticipate that cost might be? Have you looked at that? Or are 
we just, kind of, estimating that it's going to be a 
considerable amount?
    Mr. Krambeck. From everything that I can gather from all 
the information that we have with the FERC licensing, it could 
most definitely get into the millions of dollars.
    Senator Murkowski. And for a community like yours, what 
does that mean to you?
    Mr. Krambeck. It would be very much a hardship for us, and, 
as the testimony stated, a possibility of having to mothball 
the project.
    Senator Murkowski. Thank you.
    Mr. Becker, you've indicated in your comments that there's 
a fair amount of cooperation working with the USGS on a 
groundwater study and analysis within the State. What would you 
intend to identify as a priority area of study in cooperation, 
or in conjunction, with USGS if you're able to move forward 
with this groundwater study?
    Mr. Becker. Well, I mentioned local control in my 
testimony, and I think that we would--if we did come up with a 
program for the State, driven by this bill, that we would need 
to check back with our citizens and set up a kind of a protocol 
or maybe a priority system by which we could go through that 
system, certainly near growth areas, issues like that, where we 
would see growth with potential conflict--looking for water, 
for growth in economic development, as well as protection. So, 
I think that would kind of--just in a general way, how I might 
think about it.
    Senator Murkowski. Thank you.
    And, Dr. Lytle, what progress have you made in acquiring 
the rights to the water the proposed project would provide? How 
far along are you in that?
    Dr. Lytle. What progress we've made? The actual feasibility 
study that we're proposing to work, in cooperation with the 
Bureau of Reclamation, is the feasibility that'll allow us to 
secure those water rights. But, as interest in--as far as the 
local and regional groups that are involved in this project, 
we've taken it upon ourselves to begin that process by 
completing the initial phase--Phase 1 reconnaissance study and 
a number of other additional water rights investigations. But 
we're looking to H.R. 3812 to provide that cost share that'll 
allow us to complete it and move it forward.
    Senator Murkowski. But, at this point, you're still in the 
preliminary phases?
    Dr. Lytle. That's correct.
    Senator Murkowski. And, finally, to you, Ms. Pollman Roger, 
you mentioned the preferential leaseholders. Do you know of any 
nonpreferential leaseholders who would somehow be disadvantaged 
by the conveyance to the State Game and Fish Department?
    Ms. Pollman Rogers. Yes, Madam Chair. We have tried--some 
of the preferential leaseholders are also nonpreferential 
leaseholders. And so, some of the land, the nonpreferential 
land, is also very much part of their operations today. We have 
included a provision in the bill to try to address that, and 
that gives nonpreferential leaseholders in that particular 
situation the opportunity to go somewhere else in the State of 
South Dakota to find land that could be used for wildlife 
mitigation, acquire that, and then trade the South Dakota Game, 
Fish, and Parks for that piece, so that they can keep their 
operations intact. And that would be pursuant to consent of 
both parties. But I am sure that the Department of Game, Fish, 
and Parks is willing to work with these people who have the 
land as part of their operations now.
    Senator Murkowski. Good. Thank you.
    Senator Johnson, questions?
    Senator Johnson. Well, I want to thank the entire panel for 
your observations on the various bills before the committee. 
It's all very helpful. I have just a few questions for my South 
Dakotans.
    Mayor Krambeck, the project at Spearfish has been in 
continuous operation since 1912. During these past almost 100 
years, the project has been a clean source of renewable energy 
and assured a stable water supply to the city of Spearfish, 
created recreational opportunities within the city, and 
supplied water to the D.C. Booth National Historic Fish 
Hatchery. Although these multiple uses clearly strike a balance 
in the public interest, in the event that S. 1577 becomes law, 
do you foresee any operational changes at the project?
    Mr. Krambeck. Yes, Senator Johnson. I feel--under public 
ownership, I think that there could be many positive changes. 
And one positive change is the agreement that I referred to in 
my testimony with the Spearfish Canyon Homeowners Association. 
This was one of the groups that I met with that basically are 
one of the stakeholders within the canyon, and we have a 
potential agreement basically signed with them to allow more 
water flow in some of the lower reaches of the canyon when the 
water flows are at certain levels. And so, this would be a 
positive thing. And I think under private ownership, when it 
was under Homestake, that they wouldn't allow this so the 
studies could be done. And our city council also, in 2004--I 
don't remember the resolution number, but we did a resolution 
basically saying that we agree that this aquifer recharge area 
should be studied, and we will agree to study it.
    In fact, I was on vacation last spring, and received a 
phone call from my public works director, and she said, 
``Jerry, we've got about 120 cubic feet per second in the 
creek, and USGS wants to do some studying this week.'' I said, 
``Go for it.'' I said, ``Turn the gates open and let some water 
down, and let the--let's do what we can do.''
    So, I feel, under public ownership, yes, that these things 
could be accomplished.
    Senator Johnson. Now that the city of Spearfish has assumed 
ownership of the hydroelectric facility, how has it made 
certain that the project is operated and maintained in a safe 
and efficient manner? And does the city have the expertise to 
run this facility?
    Mr. Krambeck. We were able to, fortunately, hire two of the 
operators that Homestake Mining Company had for years. One of 
them was about a 35-year employee, and he's retired now and 
working part time for us. And the other one was actually the 
foreman of the whole mine operation, their electrical foreman. 
So, we brought expertise in with us, and they are actually 
operating the power plant, the same folks.
    And as for any safety issues, or anything like that, that 
may come up with the dams and so forth, I would just like to 
say that we're very much aware of these types of issues, and if 
either one of the dams broke--one, we refer to as the Maurice 
Dam--that water would just go down Spearfish Creek, and that's 
not a flood situation; the other one is referred to as Forebay, 
and that water also, if that dam would breach, would actually 
end up back into Spearfish Canyon. So, there aren't any issues 
there with safety.
    Senator Johnson. Well, thank you, Mayor Krambeck.
    And, Madam Chairman, I have a statement from the Spearfish 
Canyon Society that I'd like to submit for the record to the 
committee.
    Senator Murkowski. Absolutely. It'll be included.
    [The statement of the Spearfish Canyon Society follows:]

                                  Spearfish Canyon Society,
                                     Spearfish, SD, March 26, 2006.
Hon. Tim Johnson,
U.S. Senate, Washington, DC.
    Dear Senator Johnson: On behalf of the board of trustees of the 
Spearfish Canyon Society, we thank you for the opportunity to submit 
our attached comments on Senate Bill 1577 contained within 
Miscellaneous Water and Power Bills to the Water and Power Subcommittee 
of the Senate Energy and Natural Resource Committee.
    If you have any questions, please feel free to contact us.
            The very best,
                                            Jerry J. Boyer,
                                               President & Trustee.
[Enclosures.]

  Written Statement to the Water and Power Subcommittee of the Senate 
                 Energy and Natural Resource Committee

                              INTRODUCTION

    My name is Jerry J. Boyer. I am president and trustee of the 
Spearfish Canyon Society. The Society is a not-for-profit public 
charity whose mission is to establish a legacy of Spearfish Canyon 
through conservation partnerships for preservation and enhancement of 
the canyon landscape, and its heritage. Through conservation of land, 
water, biological and cultural resources, sustainable programs and 
projects including public access, and charitable fundraising 
activities, the Society promotes effective and balanced solutions 
between ecology and economy.
    On behalf of the Society's board of trustees, we thank the 
Subcommittee for this opportunity to share its 6-page summary views and 
attachments by this written statement.

                               STATEMENT

    The Society received an invitation from Senator Johnson's office to 
review the purpose of S. 1577 and its impacts on the local community, 
and examine its national public policy ramifications.
    Although we do not support this bill, we applaud the efforts by 
Senator Johnson to achieve a streamflow balance in S. 1577 by inviting 
the city to meet with the Society and adopt the ``win-win'' streamflow 
plan. We regret the city declined the Senator's invitation.
    The Society advances a ``win-win'' streamflow-sharing plan that 
reflects national public policy . . . economic development enhanced by 
common sense natural resource management. The plan contains a ``shared 
pain-shared gain'' streamflow feature that acknowledges the dramatic 
hydrological cycles typically experience in Spearfish Canyon (see 
attached chart). The plan allows 50cfs through the hydro diversion and 
15cfs to flow downstream to increase and enhance the canyon's 
aesthetics and natural resource values. The 15cfs downstream flow is 
then collected at an existing pipeline 3-miles downstream at the old 
Spearfish Intake (the pipe will have to be enlarged) and diverted 
around the aquifer recharge zone before merging with the hydro 
diversion flow at the City Park. Contrary to the City's position, the 
Society's plan also only affects the streamflow for the hydro 
operation, and does not affect any flow through the city or to 
downstream irrigators. (See Map illustration.*)
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    * All illustrations have been retained in subcommittee files.
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    The Society views S. 1577 as regressive from established national 
procedure that engages all public interests. The City understood the 
requirements and associated costs when it acquired the hydroelectric 
facility. Further, the City may be encumbering significant other costs 
by circumventing an open public process that alienated other interested 
parties, and are now seeking relief through S. 1577. The City, without 
consideration for other cumulative public economic and environmental 
benefits, chose not to share the stream flow, but to seek all stream 
flow for its local revenue needs. While the Society supports the City's 
acquisition and use of the hydroelectric facility, the Society believes 
it is inappropriate for the Congress to reward the municipality for its 
self-serving and economically stifling choice in demanding all 
streamflow for hydro generation.
    S. 1577 will eliminate the possibility for the competing parties to 
develop a better public resolution involving the Spearfish Canyon 
streamflow. The FERC permit review process provides an opportunity to 
objectively catalog the competing values, and facilitate a public 
policy choice that provides a balance between ecology and economy. The 
City position manifests a very local revenue benefit based on an 
unenlightened understanding of the Canyon streamflow. The Society, in 
contrast, supports a streamflow plan that increases the total public 
economic and environmental values involving tourism, 3-miles of new 
fisheries, and wildlife habitat including the American Dipper, to name 
a few. The Society's ``win-win'' sharing of the streamflow provides a 
balance between ecology and economy. FERC's jurisdictional decision in 
2001, re-affirmed on appeal in 2002, provides a public process 
opportunity to resolve the conflict between competing parties. This 
conflict exemplifies the exact congressional purpose for FERC's 
existence.
    The Society maintains that S. 1577 is not reflective of 
contemporary national values. An enlightened public trust doctrine, 
supported by nearly a century of technical research, has demonstrated a 
much greater aggregate economic value for our nation's stream resources 
rather than those narrowly focused and often destructively consumptive 
uses of streams in the past, like Spearfish Creek. This contemporary 
value applied locally demonstrates that a hydro constructed in 1914 to 
create jobs in the mining industry to foster western Frontier 
development in the early 20th Century is not the same national 
necessity as a hydro to be operated for mere municipal revenue in the 
21st Century.
    The Society maintains that S. 1577 is not even reflective of local 
values. The City leadership has chosen an extreme position that is not 
reflective of the citizens of the city, the state's population centers, 
or the one million annual visitors to the canyon. No local public 
meetings regarding the contentious streamflow issue were conducted. 
Local values manifest an admiration of both the community and the 
picturesque canyon, and a desire that all entities benefit from the 
streamflow. Spearfish Canyon is a national and state scenic byway. The 
public's affection and high value placed on the canyon landscape is 
best illustrated by the words of Frank Lloyd Wright in his visit of 
1935: ``I may be branded as a heretic, but how is it that I've heard so 
little of this miracle and we, toward the Atlantic, have heard so much 
of the Grand Canyon when this is even more miraculous. All the better 
eventually . . . that the Dakota are not on the through line to the 
Coast . . . My hat is off to South Dakota treasures.''
    Finally, S. 1577 establishes a harmful policy precedent that will 
further erode FERC's jurisdictional authority as other U.S. 
congressional representatives seek similar resolve for their 
appropriate states.
    We urge the Congress to resist S. 1577, and allow the people, 
through established public policy and process, the opportunity to 
increase the aggregate public benefits by first cataloging the 
competing values, and then, develop a science-based stream management 
plan that better meets the public needs.

    Senator Johnson. Okay.
    And to Ms. Pollman Rogers, under our bill, if a 
preferential leaseholder decides to exercise their right to 
repurchase the land, what price would they pay?
    Ms. Pollman Rogers. Section 2(d) of the bill, as it's 
currently drafted, really contains the terms of the purchase 
option. And what happens under that section, again, as 
currently written, is, the value of the land would be 
determined by an appraiser, who would appraise it at fair 
market value for agricultural purposes. Then the manner of the 
purchase or buyback would be at the option of the landowner, as 
long as that value was over $10,000. If it's over $10,000, the 
preferential leaseholder can either exercise the option to 
purchase that land for cash, in which case that preferential 
leaseholder would get a 10-percent discount, because you don't 
have the carrying costs of a contract. If the preferential 
leaseholder chose to purchase it under a contract or the 
installment plan, he or she would have 30 years in which to 
purchase it. They'd have to pay 10 percent down, 30 years to 
purchase it, at 3 percent interest.
    Now, I would say, however, I think you've really placed 
your finger on the real issue and the concern that some of the 
preferential leaseholders have at this point, and that is, 
again, when we negotiated the terms of this bill, land prices 
were much, much less than they are now. And the whole point is 
to make this purchase--repurchase option meaningful. Some of 
these people have lost thousands of acres, and they--in order 
to give them a meaningful opportunity to buy it back, it has to 
be at a price where they can, in fact, exercise their option 
and reacquire it. Land prices in Hughes and Sully Counties have 
escalated dramatically since 2001.
    Senator Johnson. What are some of the specific benefits 
from the wildlife mitigation plan that will accompany the lands 
conveyed to the State?
    Ms. Pollman Rogers. With all due respect, Senator Johnson, 
I would like to defer that question to Secretary Cooper, if you 
would--
    Senator Johnson. Well, if I may, Madam Chairwoman, because 
we do have the South Dakota secretary of Game, Fish, and Parks 
here, if I may call the secretary to the table to respond to 
just a couple of questions I have.
    Senator Murkowski. I absolutely have no objection to that. 
I do have another commitment at 4 o'clock, but I am happy to 
let you continue your line of questioning, Senator Johnson. And 
if you want to just wrap up the panel at that time.
    Senator Johnson. I'd be honored to do that. And we only 
have just a few minutes more, I think, really.
    Senator Murkowski. Well, with that, I will thank each and 
every one of the panel members again for coming the distance 
and providing your testimony. Know that the committee will be 
working on these matters with the bill sponsors. But I do 
appreciate the level of background that you've been able to 
provide us. And thank you.
    And, with that, Senator Johnson, I'll pass the gavel back 
to you and you can wrap it up.
    Senator Johnson. Thank you.
    Senator Murkowski. Thank you.
    Senator Johnson [presiding]. Secretary Cooper, I think you 
heard the question. Would you care to respond to it? What is in 
this for the wildlife circumstances in the State of South 
Dakota?
    Mr. Cooper. Yes, sir. Thank you, Senator Johnson.
    As you mentioned in your opening testimony, the Pick-Sloan 
Plan provided for the construction of mainstem dams on the 
Missouri River, four of which we have in South Dakota. Two of 
those dams--the Big Bend Dam backs up Lake Sharpe, and that's 
down by the Lower Brule Reservation, the Crow Creek 
Reservation; and the Oahe Dam backs up Oahe Reservoir. When we 
lost, though, the floodplain and the cottonwood bottoms, we 
lost a significant amount of wildlife habitat in the State of 
South Dakota. And the 1958 Wildlife Coordination Act required 
the Federal Government to mitigate that loss of acres on a one-
to-one basis. Part of the whole Pick-Sloan--or the Oahe 
Diversion Project was also involved with not only supplying 
water and benefits as a result of the Pierre Canal and the 
Blunt Reservoir, but also to do wildlife mitigation projects.
    We have never received any wildlife mitigation projects as 
a result of the Pick-Sloan Program in the State of South 
Dakota. In order to solve that, or at least try to address it, 
we recognized we were going to have to compromise somewhat and 
try to come up with something that worked with our various 
Indian tribes and the State to go back in and try to mitigate 
terrestrial habitat. We did receive benefits as a result of the 
construction of those reservoirs for fisheries, but the 
terrestrial issues have never been solved.
    Your support for title VI of the Water Resources 
Development Act in 1999 was an attempt to compromise and to 
work with South Dakota's need for that mitigation. As a part of 
that title VI legislation, we worked with our various Indian 
tribes to put together a compromise solution that required the 
Federal Government to put forth a trust fund, a $108 million 
trust fund, for the State of South Dakota, and various amounts 
of trust funds for the Lower Brule Sioux Tribe and the Cheyenne 
River Sioux Tribe.
    As a part of this turnover, if we could compromise on this 
with--which Darla Pollman Rogers talked to you about, is a 
compromise. We would have the opportunity in this defunct 
project, which no longer is needed by the Federal Government, 
to provide the opportunity to return those preferential 
leaselands to the landowners who rightfully should have them 
back. And there is a sum of 4,000 acres--a little over 4,000 
acres, that would be able to come to the Department of Game, 
Fish, and Parks and utilized as a game production area in 
accordance with our mitigation plan under title VI. That title 
VI mitigation plan requires us to look for 27,000 acres that 
are already in State or Federal control, so that we don't have 
to go out and purchase productive ag lands, and be able to do 
what we could to mitigate those losses on terrestrial habitat. 
You're not going to ever mitigate the losses for the flooding 
of those two reservoirs, to the tune of 385,000 acres, but it's 
an opportunity for us to move forward. And that 4,000 acres 
would go toward the 27,000-acre bank that we have been able to 
construct under title VI.
    We have plans for those, for those acres. And they 
basically are involved with going back in with grass plantings 
and small shrubbery plantings, and the opportunity to have 
local farmers become our tenant to work with us on the 
development of those lands into wildlife habitat.
    Senator Johnson. Mr. Secretary, you may have heard 
Commissioner Keys make some observation about a constitutional 
concern he had about imposing this land on the State of South 
Dakota, and the need to make those a voluntary provision for 
South Dakota. I'm fine with that. But my assumption is that the 
State of South Dakota is very much inclined to take possession 
of these 4,000 acres.
    Mr. Cooper. Absolutely. And we're more than willing to work 
with the Bureau of Reclamation on trying to construct language 
that would help them.
    And I might also point out that Commissioner Keys talked 
about the Bureau's responsibility, continuing responsibility, 
on cultural resource issues in Section 106 of the Historic 
Preservation Act. Right now, in our programmatic agreement with 
all of the tribes in South Dakota on the Missouri River 
corridor, the responsibilities under title VI for the State is 
to assume responsibility with the Corps of Engineers, and any 
other Federal agency, for the protection of all those cultural-
resource sites. We do it every day in the course of our work on 
the Missouri River.
    So, from the standpoint of the Bureau of Reclamation being 
able to transfer some of its concerns on their cultural 
resource, and/or whatever else they need to have done, we do 
have a process right now for being able to help them do that. 
They would not need anyone specifically from the BOR to be able 
to do that.
    Senator Johnson. Ms. Pollman Rogers, how many landowners 
are we talking about? How many people are involved that would 
have preferential----
    Ms. Pollman Rogers. There are approximately 25 preferential 
leaseholders.
    Senator Johnson. Okay.
    Well, I want to thank all of you.
    Relative to the Blunt Reservoir issue, it seems to me that 
this is a win-win solution we're trying to lay out. The 
Government gets out from underneath the obligations for its 
annual maintenance costs, which is in the hundreds of thousands 
of dollars. The landowners are belatedly, but somewhat made 
whole. We also wind up with some extraordinarily valuable 
wildlife property being managed for those purposes, as at least 
partial mitigation. And so, I think the Government saves money, 
we serve the public better, and we also serve the private 
sector better. So, again, I appreciate your contributions to 
this hearing.
    Thank you, Mayor Krambeck, for your patience and your 
tenacity of the community to work through these issues.
    And, again, Mr. Becker and Dr. Lytle, thank you for your 
testimony here. It's going to be very valuable to the 
committee, as a whole.
    So, with that, this hearing is adjourned.
    [Whereupon, at 4:12 p.m., the hearing was adjourned.]

                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

                        Department of the Interior,
           Office of Congressional and Legislative Affairs,
                                      Washington, DC, May 25, 2006.
Hon. Lisa Murkowski,
Chairwoman, 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 March 30, 
2006, hearing regarding the following bills: S. 1962, S. 2205, and H.R. 
3812.
    Thank you for the opportunity to provide this material to the 
Subcommittee.
            Sincerely,
                                             Jane M. Lyder,
                                               Legislative Counsel.
[Enclosures.]

             Responses to Questions From Senator Murkowski

    Question 1. S. 1962/H.R. 4000--Do you feel that the loss of 
revenues to the Treasury if this bill were authorized is justified 
considering the recent hardship faced by the irrigation districts as a 
result of the drought?
    Answer. The Districts are unable to fulfill their repayment 
obligations as currently established. If the Districts are unable to 
meet their repayment obligations, repayment will shift to Pick-Sloan 
Missouri Basin Program (PSMBP) power customers. These customers do not 
benefit as directly from the facilities in question. The loss to the 
Treasury if this bill is enacted will be in the present value of the 
repayment obligation; the loss to the Treasury in the case that the 
Districts are unable to make their payments will depend on the way that 
the PSMBP allocates the additional financial obligation imposed by the 
failure of the Districts. Given that the Districts are being 
financially squeezed by a drought over which they have no control, 
extending their repayment period is a justified response that increases 
the chances that the Districts will regain financial viability and that 
costs will not be shifted to power customers unnecessarily.
    Question 2. H.R. 3812--How is the proposed project's appraisal-
level study progressing and when do you anticipate it will be complete?
    Answer. The appraisal study is in the final draft stage. We 
anticipate the study being completed by July, 2006.

              Responses to Questions From Senator Bingaman

    Question 1a. S. 1962/H.R. 4000--Your testimony establishes that 
Reclamation has the authority to grant deferments with respect to the 
repayment schedules established by contract, but that those deferments 
do not extend the total time period for repayment.
    What are the types of situations where Reclamation has historically 
granted deferments?
    Answer. Deferment of annual repayment obligations has occurred due 
to conditions such as (1) severe or adverse weather conditions that 
cause a partial or total loss of crops, such as hailstorms, floods, 
severe windstorms, and drought; and (2) damage to project facilities 
where the repair cost to the District exceeds the District's available 
reserve funds.
    Question 1b. Should the deferment authority be amended so that 
Reclamation has the authority to extend the total time period for 
repayment?
    Answer. Reclamation recently completed a review of its deferment 
policy. This policy review resulted in the issuance of new Directives 
and Standards in 2006 for ``Deferment Contracts--Delegation of 
Authority,'' and ``Deferment Contracts.'' The existing authority has 
provided Reclamation the necessary authority to deal with the vast 
majority of hardship cases experienced by our Districts or contractors. 
Additional authority to extend the total time period for repayment is 
not necessary at this time.
    Question 2a. S. 1962/H.R. 4000--Over the past 20 years, how often 
has legislation similar to S. 1962 been enacted which provides relief 
to water users from an existing repayment contract?
    Answer. It is our understanding that legislation similar to S. 1962 
has been enacted only once in the last 20 years. Public Law 108-231, 
enacted on May 28, 2004, authorized the Secretary of the Interior to 
revise the repayment contract with an irrigation district in Texas by 
extending the period authorized for repayment of reimbursable 
construction costs from 40 to 50 years.
    Question 2b. Will this bill create a unique precedent, likely to be 
followed by many similar requests?
    Answer. P.L. 108-231 already created a precedent that S. 1962 is 
following. S. 1962 could encourage others to follow suit.
    Question 3a. H.R. 3812--Your testimony indicates that a feasibility 
study requires the completion of NEPA compliance documents.
    Does Reclamation have a new policy requiring NEPA compliance to be 
an integral part of its feasibility studies?
    Answer. Reclamation's policy on integrated feasibility studies has 
been in place since the early 1980s. The most current version--
Directives and Standards CMP 05-02--(5/01/00) states, ``Feasibility 
studies will normally be integrated with compliance under the National 
Environmental Policy Act (NEPA), Fish and Wildlife Coordination Act, 
Endangered Species Act, National Historical Preservation Act (NHPA), 
and other related environmental, and cultural resource laws. These 
activities will proceed concurrent with the feasibility study and 
culminate in an integrated planning report/NEPA compliance document 
(PR/NEPA Document).'' The analysis generated from the NEPA process 
provides significant worthwhile information to inform the decision 
process as to whether a project should go forward, and advantages and 
disadvantages to different project configurations.
    Question 3b. If so, is it an efficient use of limited resources to 
require a full environmental review while still assessing the technical 
and financial feasibility of a project?
    Answer. Integrated feasibility studies are normally considered the 
most efficient planning approach from a time and resource perspective. 
Information developed during an environmental review process could have 
a direct influence and bearing on technical and financial feasibility. 
Current Reclamation policy does provide some flexibility in the 
preparation of feasibility studies. The feasibility study processes 
established through the Principles and Guidelines and the NEPA 
processes described in Reclamation's NEPA Handbook have similar 
preparation and documentation requirements.
    Question 4. H.R. 3812--According to testimony, the San Joaquin 
County area is not within the CALFED project area.
    Is it possible, however, that some of the regional water supply 
projects being reviewed by the CALFED program could address the water 
supply issues in San Joaquin County?
    Answer. The testimony commented only on the lack of a Federal role 
along the Mokelumne River. San Joaquin County is included within the 
CALFED project area; CALFED, through the State's Proposition 13 grant 
program, has funded several groundwater projects within the County. 
Stockton East Water District received a $1,341,000 grant for a 
groundwater storage pilot project in FY01, and $3,700,630 for a 
pipeline construction project related to its groundwater storage 
project in FY02. In addition, through the State's Proposition 50 grant 
program, San Joaquin County is preparing an integrated regional water 
management plan.

              Responses to Questions From Senator Johnson

    Question 1. S. 2205--How much does the Bureau of Reclamation spend 
to manage the lands acquired for the Pierre Canal and Blunt Reservoir?
    Answer. Management and O&M costs specific to the Pierre Canal lands 
are currently approximately $10,000 per year. Management and O&M costs 
for Blunt Reservoir lands are currently approximately $60,000 per year 
for land resource management activities related primarily to weed 
control, lease administration, fencing, and erosion control. 
Additionally, Reclamation spends approximately $130 per year in 
curation costs at the South Dakota State Archaeological Research Center 
(SARC) in Rapid City, South Dakota, for the storage of artifacts 
collected during cultural resource surveys in the mid 1970s.
    Question 2. S. 2205--In your testimony, you state that the Bureau 
will be still responsible for some administrative fees even if the 
Blunt Reservoir Bill is enacted. Could you elaborate on the nature of 
these fees? Do you have an estimate on the total amount of these fees?
    Answer. The Blunt Reservoir archeological collections include 
artifacts collected from Federal and private lands, both prior to and 
after the definition of boundaries of the proposed Blunt Reservoir, 
under the authority of the National Historic Preservation Act. The 
collections are currently curated at the South Dakota State 
Archaeological Research Center (SARC) in Rapid City.
    The fees referenced in the testimony are, in part, those related to 
curation of the archeological collections. The volume of artifacts 
collected from surveys and excavations associated with Blunt Reservoir 
Project activities is approximately 6.5 cubic feet, out of 
approximately 100 cubic feet of Reclamation collections from South 
Dakota. A Fiscal Year 2004 cooperative agreement with SARC funds 
curatorial services, including the collection of accession and catalog 
data, temporary storage costs, and a percentage of the new compact 
storage shelf units. Approximately $5,300 has been spent to date on 
these activities. Future annual expenditures for collection curation 
and storage are estimated to be $20 per cubic foot or approximately 
$130 per year in perpetuity, not accounting for inflation. If 
authorized by law, SARC would potentially accept a donation of 
archeological collections made from Federal lands, given a rigorous 
process of evaluation and approval by both Reclamation and the State of 
South Dakota. Such a congressional authorization could release the 
Federal government from its ongoing curation obligation.
    In addition to curation, Reclamation may face additional costs 
associated with protection and preservation of cultural properties 
located on lands that would be conveyed back to preferential lease 
holders. Transfer of historic property out of Federal ownership without 
adequate and legally enforceable restrictions or conditions to ensure 
long-term preservation of the property's historical significance, 
regardless of the mechanism used to do so (title transfer, quit claim 
deed, donation, etc.), is defined in 36 CFR 800 as an adverse effect on 
the historic property and therefore subject to consultation with the 
State Historic Preservation Office (SHPO), Advisory Council on Historic 
Preservation (ACHP) and other interested parties. Protection of sites 
that leave Federal ownership is usually achieved through preservation 
easements or covenants. The ACHP and SHPO expect that a responsible 
entity will hold the easements or enforce the terms of the covenants. 
If Reclamation retains this responsibility, costs may be incurred if 
land use changes are made and/or resources of historic/cultural value 
are discovered on the land. The amount of these costs would be 
situationally dependent.
    Question 3. S. 2205--Can you tell me the difference between the 
BOR's cost to manage these lands today versus the cost if H.R. 4301 is 
enacted?
    Answer. Aside from the cultural resource work necessary for 
transfer of the lands, Reclamation's costs of an estimated $70,000 per 
year would be eliminated if H.R. 4301 were enacted. Unless Reclamation 
is relieved of the post-conveyance obligation to enforce preservation 
easements and covenants (by statute, these obligations could be 
transferred to Tribes, universities, tribal colleges, or the State of 
South Dakota), Reclamation would incur annual costs of $130 per year, 
adjusted for inflation, for curation and storage, as well as 
undeterminable intermittent costs related to the continued historical 
significance of the transferred lands. (From 1997 to 1999, Reclamation 
paid the University of North Dakota $40,000 for a cultural resources 
survey of 4,106 acres and for relocation and re-documentation of 84 
previously recorded cultural resource sites. This may be indicative of 
possible future costs.)
    The other cost savings to the United States Treasury would be 
elimination of the annual payment in lieu of taxes (PILT), currently 
estimated at $27,600, to Sully and Hughes Counties in South Dakota. The 
bill proposes establishment of a trust fund for the use of the State to 
pay county taxes on the lands received by the State Department of Game, 
Fish, and Parks under the bill. However, the bill also indicates that 
the use of sales proceeds for the establishment of this Trust Fund 
would be subject to authorization of appropriations for this purpose. 
If funds are appropriated in accordance with this provision, some 
potential PILT savings would effectively be lost to the Federal 
government and transferred to the State.
    Question 4. S. 2205--When lands are taken out of Federal ownership, 
are they always disposed of at fair market value? If not, what are the 
exceptions?
    Answer. The General Services Administration Surplus Real Property 
Disposal Regulations contained in 41 CFR 102-75.350 allow disposal 
agencies to make surplus real property available to local governments 
and certain non-profit institutions or organizations at up to a 100 
percent discount. Discounts in the fair market value of the lands are 
available only for public benefit purposes such as education, health, 
parks and recreation, public airports, highways, correctional 
facilities, etc.
    Additionally, 41 CFR 102-75.990 allows a Federal agency to donate 
to public bodies any Government-owned real property (land and/or 
improvements and related personal property), or interests therein in 
cases where the estimated cost of the property's continued care and 
handling exceeds the estimated proceeds from its sale.
    Outside of these exceptions, Reclamation is not aware of any 
regulations or laws that allow Reclamation to dispose of lands at less 
than fair market value.
                                 ______
                                 
              Federal Energy Regulatory Commission,
                                 Office of Energy Projects,
                                    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 Chairman Murkowski: Thank you for your letter of April 3 
enclosing questions from Senator Tim Johnson for the record of your 
Subcommittee's March 30, 2006 hearing on S. 1577, a bill to facilitate 
the transfer of Spearfish Hydroelectric Plant Number 1 to the city of 
Spearfish, South Dakota, and for other purposes.
    Enclosed are my responses to Senator Johnson's questions. If you 
have further questions or need additional information, please let me 
know.
            Sincerely,
                                          J. Mark Robinson,
                                                          Director.
[Enclosure.]

              Responses to Questions From Senator Johnson

    Question 1. First, let me start out by stating that I do believe 
the licensing and administration of our nation's public hydro-electric 
plants is an important regulatory tool to balance the often competing 
multiple uses of the nation's water resources. Several Senators on the 
Energy Committee have devoted a good deal of time toward improving the 
federal license process for nonfederal hydropower plants. That being 
the case, I believe that the set of circumstances surrounding the small 
hydroelectric plant in Spearfish are unique and, therefore, provide for 
a re-examination in this instance of the federal license requirements.
    It is my understanding that FERC is asserting jurisdiction to 
require a license on the basis that certain rights-of-way grants and 
permits, which were issued by the federal government prior to the 
enactment of the 1920 Federal Power Act, had expired. Is this your 
argument?
    Answer. Yes, the FERC is asserting jurisdiction over the Spearfish 
Project based on the fact that certain pre-1920 rights-of-way and 
permits had expired. When a pre-1920 permit expires, the authorization 
once provided by the permit must be obtained from the Commission. [See 
Scenic Hudson Preservation Conference v. Callaway, 370 F. Supp. 162, 
166 (S.D.N.Y. 1973), affd, Scenic Hudson Preservation Conference v. 
Callaway, 499 F.2d 127 (4th Cir. 1974)); Wisconsin Power and Light 
Company, 55 FERC  61,169 (1991).
    Question 2. Now, I've learned that these rights-of-way grants and 
permits were not issued by the FERC or that the rights-of-way are 
administrated by the FERC. In fact, the rights-of-way permits are 
administrated exclusively by the U.S. Forest Service, which recently 
found that they had not expired, and in fact, were validly transferred 
from the Homestake Mining Company to the City of Spearfish. In light of 
these sets of circumstances, don't you believe that FERC is 
overreaching in asserting jurisdiction, particularly in light of the 
long-held administration of the rights-of-way by the U.S. Forest 
Service?
    Answer. Pursuant to section 23(b)(1) of the Federal Power Act 
(FPA), 16 U.S.C.  817, a non-federal hydroelectric project must, 
unless it has a still-valid pre-1920 federal permit, be licensed if it 
occupies lands of the United States. The Spearfish project occupies 
federal land, so the inquiry turns to whether it has a still valid pre-
1920 federal permit. If not, the FPA requires that the project be 
licensed.
    By way of further background, Section 4 of the Transfer Act of 
February 1, 1905 (1905 Act) [Ch. 288, 33 Stat. 628] states:

          Rights-of-way for the construction and maintenance of dams, 
        reservoirs, water plants, ditches, flumes, pipes, tunnels, and 
        canals, within and across the national forests of the United 
        States, are granted to citizens and corporations of the United 
        States for municipal or mining purposes, and for the purposes 
        of the milling and reduction of ores, during the period of 
        their beneficial use, under such rules and regulations as may 
        be prescribed by the Secretary of the Interior, and subject to 
        the laws of the State or Territory in which said forests are 
        respectively situated.
        [Emphasis added.]

    The 1905 Act also transferred from the Secretary of the Interior to 
the Secretary of Agriculture authority over the forest reserves, 
together with authority over hydroelectric facilities on those reserves 
[Homestake Mining Company, 97 FERC at p. 61,832 n. 18]. It is this Act 
that allowed the project to be operated, for mining purposes, without a 
license from the Commission.
    By Commission order issued November 9, 2001 [Homestake Mining 
Company, 97 FERC  61,180], as amended by our order of March 1, 2002 
[Homestake Mining Company, 98 FERC  61,236], the Commission found that 
the Spearfish No. 1 Project had a valid right of way pursuant to the 
1905 Act for those parts of the project's water transmission conduits 
and pipelines that occupy National Forest lands. The right of way was 
still valid in 2001 because, in compliance with the 1905 Act, the 
Spearfish project was built and was still operated for mining and ore-
milling purposes, in that all the power it generated was being 
transmitted to and used by Homestake's mining operations in the town of 
Lead, South Dakota.
    On April 15, 2002, Homestake confirmed that it ceased mining 
operations as of December 31, 2001, but argued that the pre-1920 permit 
was still in effect, because it permitted ``all requisite mine 
reclamation operations.'' However, section 4 of the 1905 Act makes no 
reference to mine reclamation, which in 1905 was presumably of less 
regulatory concern than it is today. Nor has a search for references to 
the 1905 Act in the administrative decisions of the Departments of 
Agriculture or the Interior uncovered any suggestion that mine 
reclamation should be considered an element of ``mining purposes'' 
under the 1905 Act. In these circumstances, the Commission concluded 
that, since Homestake had ceased mining operations, its pre-1920 permit 
did not authorize continues project operation and Homestake or its 
successor must, if the projects is to continue generating, apply for a 
license pursuant to Part I of the FPA.
    The pre-1920 permit issued under the 1905 Act for the project's 
water pipes and conduits is distinct from the Forest Service right-of-
way for the project's transmission line facilities. The latter permit 
was not issued under the 1905 Act but rather under the Act of February 
15, 1901, or the Act of March 4, 1911. While that permit may have been 
a valid pre-1920 permit, it ceased to be so when the Forest Service 
replaced it in 1969 with a new permit.
    Since the Spearfish project no longer has valid pre-1920 permits, a 
license from the Commission is required for the project's continued 
operation.
    Question 3. Mr. Robinson: I want to ask you a question about the 
time and cost of licensing this project. I understand that the median 
amount of time for a hydro re-license applicant is about 64 months from 
the beginning to the end, and that under the Traditional Process costs 
average $2.3 million. Who bears the costs for the license? And, in 
proportion to other hydro projects, what could the City expect in terms 
of cost and time to license this small, century-old hydro plant?
    Answer. According to the Commission's ``Report on Hydroelectric 
Licensing Policies, Procedures, and Regulations Comprehensive Review 
and Recommendations Pursuant to Section 603 of the Energy Act of 
2000,'' completed in May of 2001, the range for the amount of time for 
a hydro relicense applicant to prepare a license application is 32 to 
40 months and from application filing to Commission action is 18 to 43. 
The report also found the average application preparation cost to be 
about $2.3 million. This average cost includes some license 
applications for very large projects that incurred very large costs. 
The application preparation costs are borne by the license applicant.
    Since 2001, the Commission has issued and implemented the 
Integrated Licensing Process (ILP). The ILP was designed to reduce the 
time and cost of licensing by providing a predictable and efficient 
licensing process. The benefits of the ILP come from early issue 
identification and study plan development, better coordination with 
other stakeholder processes, established time frames, and early Federal 
Energy Regulatory Commission staff assistance. Commission staff 
estimates that licensing will be completed in no more than 18 months 
after an application is filed and costs will be reduced 30 percent. No 
projects using the ILP have been filed yet, so staff has not yet been 
able to verify these projections. Results so far from the 14 projects 
using the ILP look promising. All projects have met all deadlines.
    For the Spearfish No. 1 Project, Commission staff estimates that 
the total time from the beginning of pre-filing consultation to 
application filing is 36 months and from application filing to 
Commission action would be about 18 months. Based upon data contained 
in several recently filed license applications for small projects of 
similar scope, staff would estimate an application preparation cost of 
about $84.2 per kilowatt (kW) of installed capacity or about $338,000 
for the 4,000-kW Spearfish No. 1 Project. These values of cost and time 
are estimates and they will vary due to the facts of the specific case.
                                 ______
                                 
                                     City of Spearfish, SD,
                                      Speafish, SD, April 14, 2006.
Hon. Lisa Murkowski,
Chairwoman, Subcommittee on Water and Power, Committee on Energy and 
        Natural Resources, U.S. Senate, Washington, DC.
    Dear Chairwoman Murkowski: It was my pleasure to appear before the 
Senate Subcommittee on Water and Power of the Committee on Energy and 
Natural Resources on Thursday, March 30, 2006, to give testimony on S. 
1577, to facilitate the transfer of Spearfish Hydroelectric Plant 
Number 1 to the City of Spearfish, South Dakota, and for other 
purposes. The City of Spearfish and its citizens appreciated the 
opportunity to convene a hearing on S. 1577, which continues to be a 
matter of primary importance to our community. We look forward to 
working with the Subcommittee, Senator Tim Johnson, and Senator John 
Thune, as this bill progresses through the legislative process.
    In your letter dated April 3, 2006, you provided a set of questions 
that has been submitted and requested the City's response. As 
requested, the City has prepared its response, which is attached to 
this letter.
    Should you have any further questions regarding this matter, please 
do not hesitate to contact me. We again thank you and the Subcommittee 
for this opportunity to fully vet all views and interests associated 
with S. 1577 and believe that the bill strikes the appropriate balance 
between developmental and conservational interests, while preserving 
the historic Spearfish Hydroelectric Plant Number 1.
            Sincerely,
                                         Jerry A. Krambeck,
                                                             Mayor.
[Enclosure.]

             Responses to Questions From Senator Murkowski

    Question 1. S. 1577 expresses the sense of Congress that the City 
should: (I) uphold a 2004 MOA with the Spearfish Canyon Landowners 
Association and (2) ensure the release of an additional 5-10 cubic feet 
per second between the Intake Dam and the Spearfish Division. Please 
explain the significance of this sense of Congress.
    Answer. The City believes that the significance of this sense of 
Congress is the acknowledgement that the operation and maintenance of 
the Spearfish Hydroelectric Plant Number 1 concerns not only the 
generation of emissions-free, renewable energy, but also the public's 
interests in aesthetic flows, fisheries protection, irrigation, water 
supply, and recreation. As Mayor Krambeck testified during the March 30 
hearing, the City understands its role to appropriately balance these 
interests--which, at times, may be competing--as illustrated by his 
recounting of a recent event where the City, in response to a request 
by the United States Geological Survey, authorized the release of 
additional flows into the bypassed reach of Spearfish Creek for the 
purposes of studying the geomorphology and geology of Spearfish Canyon.
    In reaching the 2004 Memorandum of Agreement, the City and 
Spearfish Canyon Landowners Association worked tirelessly to 
investigate historical flow data of Spearfish Canyon, as well as 
downstream water uses, in order to strike a scientifically-supported 
compromise that would allow for additional flows in the bypassed reach, 
while protecting downstream senior water rights and other public uses 
of Spearfish Creek. Should S. 1577 preclude Federal Energy Regulatory 
Commission involvement in this matter, the City fully intends to 
execute and uphold the 2004 MOA, which would satisfy the sense of 
Congress expressed in the bill.
    Question 2. You testified that the U.S. Forest Service has 
determined that the right of way in question remains valid and is fully 
transferable to the City. Do you have the Forest Services assessment in 
writing so we could make that part of the hearing record?
    Answer. While the City was in the process of acquiring Spearfish 
Hydroelectric Plant Number 1 from Homestake Mining Company, it sent an 
inquiry to the United States Forest Service (USFS) regarding the then-
current status of right-of-way grant, as well as whether the right-of 
way grant would be affected by the conveyance to the City. The City's 
inquiry cited orders of the Federal Energy Regulatory Commission 
holding that the right-of-way grant at issue would expire upon the 
cessation of extraction activities at the Homestake Mine in Lead, South 
Dakota.
    The USFS's response, which is attached, confirmed that ``the 1905 
easement transfers automatically upon sale of the pipeline facilities'' 
and that ``the right-of-way is unaffected by the conveyance unless 
there is a change of use of the easement.''
                                 ______
                                 
                               U.S. Forest Service,
                            Northern Hills Ranger District,
                                      Spearfish, SD, July 30, 2004.
E. James Hood,
City Attorney, City of Spearfish, SD.
    Dear Jim: Thank you for your draft letter of July 14, 2004 
concerning the status of acquisition of Spearfish Hydro Plant No. 1 and 
the transfer of right-of-way grant 08861. I appreciate you keeping me 
informed as to the City's efforts in acquiring the Hydro Plant.
    In your letter, you ask that the USFS confirm that the right-of-way 
remains in effect and will be unaffected by the conveyance. I note that 
under your footnote #4 on page two of your letter, you state that the 
Federal Energy Regulatory Commission (FERC) believes that the right-of-
way expired once Homestake ceased its extraction activities in Lead. 
Our position is that the 1905 easement transfers automatically upon 
sale of the pipeline facilities. We asked that we be notified upon sale 
and transfer of ownership, which you have done. It is also our position 
that the right-of-way is unaffected by the conveyance unless there is a 
change of use of the easement. In that case, an environmental analysis 
and Special Use Permit may become necessary.
    The position of the Forest Service in our ability to regulate the 
1905 easement is that we may administer projects as long as that 
administration does not diminish or reduce any vested right granted by 
the 1905 right-of-way. Because of the subsurface nature of the use of 
National Forest land, the impact on the National Forest is minimized. 
We have the authority under the Organic Act for general resource 
protection; and therefore, the Forest Service has authority under 36 
CFR 251 to require information from the holder, stop resource damage, 
require that the project be maintained in good repair and require 
rehabilitation of the project area upon abandonment of the projects.
    I have obtained copies of recorded Assignment between Homestake and 
the City of Spearfish. If there is other information that I need I will 
let you know.
    Again, thank you for keeping me informed of your progress with the 
acquisition of Hydro Plant No. 1. If you need other information from 
me, please let me know.
            Sincerely,
                                           Pamela E. Brown,
                                                   District Ranger.
                                 ______
                                 
              Responses to Questions From Senator Johnson

    Question 1. Mayor Krambeck, this project has been in continuous 
operation since 1912. During these past nearly 100 years, the project 
has been a clean source of renewable energy, ensured a stable water 
supply to the City, created recreational opportunities within the City 
of Spearfish, and supplied water to the D.C. Booth National Historic 
Fish Hatchery. Although these multiple uses clearly strike a balance in 
the public interest, in the event that S. 1577 becomes law, do you 
foresee any operational changes at the project?
    Answer. While the City would continue to operate Spearfish 
Hydroelectric Plant Number 1 for generational purposes, certainly some 
changes could occur at the project in the event of enactment of S. 
1577. First, the 2004 MOA between the City and the Spearfish Canyon 
Landowners Association calls for additional instream flows through the 
reach of Spearfish Creek that is bypassed for the operation of the 
project. Second, the City's interest in acquiring and operating the 
project is not to simply maximize power generation. To the contrary, 
the City understands its responsibilities to balance between 
developmental and conservational interests, such as aesthetics, 
fisheries protection, irrigation, water supply, and recreation. While 
the City cannot encroach upon perfected senior water rights, it would 
work with its constituencies to best balance among these important 
public interests.
    Question 2. Mayor Krambeck, now that the City has assumed ownership 
of this hydroelectric facility, how has it made certain that the 
project is operated and maintained in a safe and efficient manner? Does 
the City have the expertise to run this facility?
    Answer. The City has implemented appropriate safeguards to ensure 
that the hydroelectric facility is operated in a safe and efficient 
manner. Most importantly, the City hired former Homestake employees who 
operated and maintained the facility for many years. This approach 
allowed the City to retain years of institutional knowledge regarding 
the facility. At the same time, the City is investigating the 
feasibility of upgrading certain communications and control equipment 
at the facility, which would allow for a more precise and efficient 
operation of the facility. Finally, Federal Energy Regulatory 
Commission staff recently inspected the facility and found it to be in 
good working condition and classified it as having a low hazard 
potential.
                                 ______
                                 
     Responses of C. Mel Lytle to Questions From Senator Murkowski

    Question 1. In your testimony, you mention State and Federal 
policies that ``erode existing supplies'' and have ``upset new 
supplies''. To which policies are you referring?
    Answer. Historically, as the Department of the Interior's Central 
Valley Project was constructed in California, San Joaquin County was 
directed to look to the American River through the Auburn-Folsom South 
Unit as a major source of the water it needed to meet its critical 
deficiencies and has been consistently denied a water supply from this 
source. At the same time, because of the planned availability of 
American River water for San Joaquin County, the County was denied 
other sources of surface water supply, principally from the San 
Joaquin, Stanislaus and Mokelumne Rivers.
    In significant part, the County's reliance on American River water 
stems from numerous state and federal actions which have foreclosed 
other alternatives while always directing us to the American River; 
however, the Folsom South Canal extension into San Joaquin County has 
never been constructed and San Joaquin County has never received this 
contemplated water supply from the American River. In this regard, we 
cite the following:

          A. Bulletin No. 11 of the State Water Rights Board entitled, 
        ``San Joaquin County Investigation,'' dated June 1955, includes 
        a description of the Folsom South Canal extending southward to 
        provide a water supply of approximately 303,000 acre feet 
        annually to San Joaquin County. Bulletin No. 11 indicates that 
        this water and canal is the ``probable ultimate supplemental 
        water requirement for the San Joaquin Area.''
          B. In Decision 858, issued on July 3, 1956, the State 
        Engineer found that the North San Joaquin Water Conservation 
        District could receive water from the American River through 
        the Folsom South Canal and that this course would be cheaper 
        and more dependable then Mokelumne River water which flows 
        through the District. As a result of these findings, the North 
        San Joaquin District was granted only a temporary permit to use 
        water from the Mokelumne River and denied a requested permanent 
        right.
          C. Four entities within San Joaquin County, consisting of the 
        North San Joaquin Water Conservation District, Stockton and 
        East San Joaquin Water Conservation District (now Stockton East 
        Water District), City of Stockton, and the California Water 
        Service Company, all filed to appropriate water from the 
        American River. In Decision 893, adopted on March 18, 1958, the 
        then State Water Rights Board at the request of the Bureau of 
        Reclamation denied those permits. The Board, in granting the 
        permits to the Bureau of Reclamation for the Folsom Project, 
        conditioned the permit to allow time for parties desiring water 
        within Placer, Sacramento, and San Joaquin Counties to 
        negotiate a water supply contract. San Joaquin County interests 
        did diligently negotiate for contracts, approved those 
        contracts, and signed them, but they were not approved at the 
        Washington level by the Bureau of Reclamation, as is noted 
        below.
          D. The Bureau of Reclamation report entitled ``Folsom South 
        Unit'' dated January 1960 clearly identified the needs for 
        supplemental water within San Joaquin County and service to the 
        County through the Folsom South Canal. Again, this gave San 
        Joaquin County reason to rely on a water supply from the 
        American River.
          E. In 1967 and 1971, the Bureau of Reclamation furnished 
        draft contracts to San Joaquin County and districts within the 
        County to deliver, in part, American River water through the 
        proposed Folsom South Canal to San Joaquin County. Negotiations 
        regarding these contracts resulted in the Stockton East Water 
        District, the Central San Joaquin Water Conservation District 
        and the North San Joaquin Water Conservation District approving 
        contracts for execution. The contracts were approved by the 
        regional office of the Bureau of Reclamation. Although the 
        contracts were sent to Washington for approval, none were 
        executed by the United States. The contracts were not executed, 
        due to a combination of circumstances and changing policies. 
        Disapproval was not because San Joaquin County did not need the 
        water.
          F. Following Decision 1400 issued by the State Water 
        Resources Control Board in April 1972 modifying permits to the 
        Bureau of Reclamation for American River water from the 
        proposed Auburn Dam for delivery of water, in part, to San 
        Joaquin County, San Joaquin County's agencies continued to work 
        with the Bureau of Reclamation regarding various studies 
        concerning the Auburn-Folsom South Unit.
          G. In Board hearings on Applications 14858, 14859, 19303 and 
        1904, for Stanislaus River water, which led to Decision 1422 in 
        1973, the Bureau of Reclamation testified that the portion of 
        San Joaquin County north of the Calaveras River would be served 
        by the Folsom South Canal. Furthermore, at the time of adopting 
        the New Melones Basin Allocation in 1981, the Secretary of 
        Interior noted that the provision of only a small amount of 
        water to San Joaquin County from New Melones was acceptable 
        since water would be provided to Eastern San Joaquin County 
        from the American River through the Folsom South Canal.

    Contrary to these many reports, studies, policies and decisions of 
both the State and the Federal Bureau of Reclamation, San Joaquin 
County has not received water from the American River through the 
contemplated extension of the Folsom South Canal.
    For years, the County has sought to obtain additional surface water 
supplies to supplement available water supplies, including efforts to 
obtain water from a source other than the contemplated American River. 
This includes expending substantial efforts and resources (in excess of 
65 million dollars for infrastructure alone) to secure a reliable 
source of Stanislaus River water. Again, due to changes in State and 
Federal decisions and policies this supplemental water supply to San 
Joaquin County is not secure. In this regard, we cite the following:

          A. As a result of State Water Resources Control Board 
        Decision 1422 issued in 1973, the Bureau of Reclamation 
        received conditional permits for Stanislaus River water to be 
        diverted at New Melones Dam and Reservoir. In order to receive 
        State permission to appropriate the water from these permits 
        was to demonstrate ``firm commitments'' within the permitted 
        four county service area, which included San Joaquin County. In 
        part, to demonstrate such commitment, the Bureau of Reclamation 
        entered into contracts with both Stockton East Water District 
        and Central San Joaquin Water Conservation District in 1983 for 
        a 155,000 acre-foot annual Stanislaus River water supply.
          B. These County districts spent over 65 million dollars on 
        delivery infrastructure. Despite the completion of these 
        delivery facilities in 1993, the Bureau did not deliver water 
        to the districts, but a significant amount of New Melones water 
        was released in 1993 and 1994 for fish purposes to meet the 
        needs of the recently adopted Federal CVPIA. Since 1993 the 
        County districts have only received a small portion of their 
        contracted Stanislaus River water. Instead, the Bureau of 
        Reclamation makes discretionary releases from New Melones to 
        meet Delta flow and salinity standards and for fish purposes 
        that directly take water away from these County districts.
          C. The Bureau of Reclamation's discretionary decision to meet 
        Delta flow and salinity standards with this Stanislaus River 
        water occurs despite the State Water Resources Control Board's 
        Decision 1641 issued in 2000 indicating that these standards 
        could be meet from other sources including: releases from other 
        CVP reservoirs such as Friant; recirculation of water through 
        the Delta Mendota Canal, the Newman Wasteway and the San 
        Joaquin River; construction of a valley drain; and purchases of 
        water from willing sellers to release to meet these standards.
          D. The Bureau of Reclamation's discretionary decision to 
        release water from New Melones Reservoir for fish purposes to 
        satisfy provisions of the CVPIA also deprives these County 
        districts of their contracts Stanislaus River water. Nothing 
        within the CVPIA mandates that these releases must be made from 
        New Melones. The releases of Stanislaus River water is 
        completely within the Bureau of Reclamation's discretion.

    These federal and state decisions are continuing to deprive County 
interests of water supplies. As a result, even though it is more 
costly, the County recognizes that surface water supplies obtained in 
the future for the most part will need to be on a conjunctive use 
basis. Any conjunctive use plan will use surface water in times of high 
flows and use stored groundwater in dry years. This is the basis of the 
MORE WATER Project where flood flows from the Mokelumne River will be 
captured with the construction of new infrastructure to be conveyed to 
groundwater recharge projects in the San Joaquin County. H.R. 3812 will 
authorize $3.3 million in federal appropriations for the Bureau of 
Reclamation to participate on a cost-sharing basis in the development 
of feasibility studies and environmental documentation required to 
complete this project.
    Question 2. In your testimony, you state that groundwater recharge 
is the primary focus of the project. Do you plan to re-inject project 
water, offset groundwater depletions with project water, or both?
    Answer. San Joaquin County is faced with numerous water supply 
challenges including critical groundwater overdraft, declining 
groundwater levels, diminishing surface water supplies, and impending 
threat of saline groundwater intrusion. The Eastern Basin Conjunctive 
Use Program is intended to help solve many of these challenges by 
creating the infrastructure necessary to facilitate both increased 
surface water use (in-lieu recharge) and direct groundwater recharge 
projects. The MORE WATER Project is an integral component to this 
Program. The success of the this Program could also allow regional and 
statewide interests to participate in groundwater banking and exchange 
programs due to the storage potential of the Basin estimated at 2 
million acre feet or the equivalent of either Folsom or New Melones 
Reservoirs.

      Responses of C. Mel Lytle to Questions From Senator Bingaman

    Question 1. Your testimony notes that San Joaquin County has been 
adversely affected by changes in State and Federal policies which have 
upset longstanding plans to develop new water supplies. Some additional 
background would be helpful.
    What changes in policies have occurred and how has that impacted 
the water supply in San Joaquin County?
    Answer. Historically, as the Department of the Interior's Central 
Valley Project was constructed in California, San Joaquin County was 
directed to look to the American River through the Auburn-Folsom South 
Unit as a major source of the water it needed to meet its critical 
deficiencies and has been consistently denied a water supply from this 
source. At the same time, because of the planned availability of 
American River water for San Joaquin County, the County was denied 
other sources of surface water supply, principally from the San 
Joaquin, Stanislaus and Mokelumne Rivers.
    In significant part, the County's reliance on American River water 
stems from numerous state and federal actions which have foreclosed 
other alternatives while always directing us to the American River; 
however, the Folsom South Canal extension into San Joaquin County has 
never been constructed and San Joaquin County has never received this 
contemplated water supply from the American River. In this regard, we 
cite the following:

          A. Bulletin No. 11 of the State Water Rights Board entitled, 
        ``San Joaquin County Investigation,'' dated June 1955, includes 
        a description of the Folsom South Canal extending southward to 
        provide a water supply of approximately 303,000 acre feet 
        annually to San Joaquin County. Bulletin No. 11 indicates that 
        this water and canal is the ``probable ultimate supplemental 
        water requirement for the San Joaquin Area.''
          B. In Decision 858, issued on July 3, 1956, the State 
        Engineer found that the North San Joaquin Water Conservation 
        District could receive water from the American River through 
        the Folsom South Canal and that this course would be cheaper 
        and more dependable then Mokelumne River water which flows 
        through the District. As a result of these findings, the North 
        San Joaquin District was granted only a temporary permit to use 
        water from the Mokelumne River and denied a requested permanent 
        right.
          C. Four entities within San Joaquin County, consisting of the 
        North San Joaquin Water Conservation District, Stockton and 
        East San Joaquin Water Conservation District (now Stockton East 
        Water District), City of Stockton, and the California Water 
        Service Company, all filed to appropriate water from the 
        American River. In Decision 893, adopted on March 18, 1958, the 
        then State Water Rights Board at the request of the Bureau of 
        Reclamation denied those permits. The Board, in granting the 
        permits to the Bureau of Reclamation for the Folsom Project, 
        conditioned the permit to allow time for parties desiring water 
        within Placer, Sacramento, and San Joaquin Counties to 
        negotiate a water supply contract. San Joaquin County interests 
        did diligently negotiate for contracts, approved those 
        contracts, and signed them, but they were not approved at the 
        Washington level by the Bureau of Reclamation, as is noted 
        below.
          D. The Bureau of Reclamation report entitled ``Folsom South 
        Unit'' dated January 1960 clearly identified the needs for 
        supplemental water within San Joaquin County and service to the 
        County through the Folsom South Canal. Again, this gave San 
        Joaquin County reason to rely on a water supply from the 
        American River.
          E. In 1967 and 1971, the Bureau of Reclamation furnished 
        draft contracts to San Joaquin County and districts within the 
        County to deliver, in part, American River water through the 
        proposed Folsom South Canal to San Joaquin County. Negotiations 
        regarding these contracts resulted in the Stockton East Water 
        District, the Central San Joaquin Water Conservation District 
        and the North San Joaquin Water Conservation District approving 
        contracts for execution. The contracts were approved by the 
        regional office of the Bureau of Reclamation. Although the 
        contracts were sent to Washington for approval, none were 
        executed by the United States. The contracts were not executed, 
        due to a combination of circumstances and changing policies. 
        Disapproval was not because San Joaquin County did not need the 
        water.
          F. Following Decision 1400 issued by the State Water 
        Resources Control Board in April 1972 modifying permits to the 
        Bureau of Reclamation for American River water from the 
        proposed Auburn Dam for delivery of water, in part, to San 
        Joaquin County, San Joaquin County's agencies continued to work 
        with the Bureau of Reclamation regarding various studies 
        concerning the Auburn-Folsom South Unit.
          G. In Board hearings on Applications 14858, 14859, 19303 and 
        1904, for Stanislaus River water, which led to Decision 1422 in 
        1973, the Bureau of Reclamation testified that the portion of 
        San Joaquin County north of the Calaveras River would be served 
        by the Folsom South Canal. Furthermore, at the time of adopting 
        the New Melones Basin Allocation in 1981, the Secretary of 
        Interior noted that the provision of only a small amount of 
        water to San Joaquin County from New Melones was acceptable 
        since water would be provided to Eastern San Joaquin County 
        from the American River through the Folsom South Canal.

    Contrary to these many reports, studies, policies and decisions of 
both the State and the Federal Bureau of Reclamation, San Joaquin 
County has not received water from the American River through the 
contemplated extension of the Folsom South Canal.
    For years, the County has sought to obtain additional surface water 
supplies to supplement available water supplies, including efforts to 
obtain water from a source other than the contemplated American River. 
This includes expending substantial efforts and resources (in excess of 
65 million dollars for infrastructure alone) to secure a reliable 
source of Stanislaus River water. Again, due to changes in State and 
Federal decisions and policies this supplemental water supply to San 
Joaquin County is not secure. In this regard, we cite the following:

          A. As a result of State Water Resources Control Board 
        Decision 1422 issued in 1973, the Bureau of Reclamation 
        received conditional permits for Stanislaus River water to be 
        diverted at New Melones Dam and Reservoir. In order to receive 
        State permission to appropriate the water from these permits 
        was to demonstrate ``firm commitments'' within the permitted 
        four county service area, which included San Joaquin County. In 
        part, to demonstrate such commitment, the Bureau of Reclamation 
        entered into contracts with both Stockton East Water District 
        and Central San Joaquin Water Conservation District in 1983 for 
        a 155,000 acre-foot annual Stanislaus River water supply.
          B. These County districts spent over 65 million dollars on 
        delivery infrastructure. Despite the completion of these 
        delivery facilities in 1993, the Bureau did not deliver water 
        to the districts, but a significant amount of New Melones water 
        was released in 1993 and 1994 for fish purposes to meet the 
        needs of the recently adopted Federal CVPIA. Since 1993 the 
        County districts have only received a small portion of their 
        contracted Stanislaus River water. Instead, the Bureau of 
        Reclamation makes discretionary releases from New Melones to 
        meet Delta flow and salinity standards and for fish purposes 
        that directly take water away from these County districts.
          C. The Bureau of Reclamation's discretionary decision to meet 
        Delta flow and salinity standards with this Stanislaus River 
        water occurs despite the State Water Resources Control Board's 
        Decision 1641 issued in 2000 indicating that these standards 
        could be meet from other sources including: releases from other 
        CVP reservoirs such as Friant; recirculation of water through 
        the Delta Mendota Canal, the Newman Wasteway and the San 
        Joaquin River; construction of a valley drain; and purchases of 
        water from willing sellers to release to meet these standards.
          D. The Bureau of Reclamation's discretionary decision to 
        release water from New Melones Reservoir for fish purposes to 
        satisfy provisions of the CVPIA also deprives these County 
        districts of their contracts Stanislaus River water. Nothing 
        within the CVPIA mandates that these releases must be made from 
        New Melones. The releases of Stanislaus River water is 
        completely within the Bureau of Reclamation's discretion.

    These federal and state decisions are continuing to deprive County 
interests of water supplies. As a result, even though it is more 
costly, the County recognizes that its last chance for surface water 
supplies obtained in the future for the most part will need to be on a 
conjunctive use basis. Any conjunctive use plan will use surface water 
in times of high flows and use stored groundwater in dry years. This is 
the basis of the MORE WATER Project where flood flows from the 
Mokelumne River will be captured with the construction of new 
infrastructure to be conveyed to groundwater recharge projects in the 
San Joaquin County. H.R. 3812 will authorize $3.3 million in federal 
appropriations for the Bureau of Reclamation to participate on a cost-
sharing basis in the development of feasibility studies and 
environmental documentation required to complete this project.
    Question 2. You note that the water project contemplated in H.R. 
3812 is not part of the CALFED program.
    Do any of the water supply projects being reviewed as part of the 
CALFED program have a connection to San Joaquin County, and might they 
help to address some of the issues described in your testimony?
    Answer. Much of the water supply development interests of San 
Joaquin County were not originally included in the CALFED development 
process. Since that time, the MORE WATER Project has developed, 
primarily through grass-roots efforts, into a significant conjunctive 
use program to correct groundwater basin overdraft with available flood 
waters from the Mokelumne River. Currently, it is focused primarily on 
the development of local supplies, whereas the focus of CALFED 
predominately is to improve water supply reliability for South of Delta 
Exporters, water quality and ecosystem restoration in the Delta as it 
is impacted by the State and Federal Projects. However, MORE WATER is 
consistent with the goals of CALFED, but has not been included as a 
major component in the CALFED solution to date.
    While not a component of the CALFED Program, MORE WATER will 
provide information important to water resource and environmental 
protection efforts being conducted under the CALFED aegis. MORE WATER 
is consistent with the following Program elements:

   Water Storage--Conjunctive use programs hinge on the ability 
        for entities to capture surface water when available for direct 
        use and groundwater recharge. Groundwater recharge is an 
        integral part of the success of MORE WATER.
   Ecosystem Restoration--The Mokelumne River and the Delta are 
        a source of pride for the San Joaquin County Community. MORE 
        WATER will be developed to maximize enhance or create ecosystem 
        restoration benefits when feasible.
   Watershed Management--The Mokelumne River Watershed is 
        represented by numerous organizations, interest groups, water 
        right holders and authorities. The County will continue to 
        promote MORE WATER to these groups like the Mokelumne River 
        Forum and coordinate formal consultation with these agencies.
   Water Transfers--The underground storage potential of 
        Eastern San Joaquin County is estimated at approximately 2 
        million acre-feet, enough to supply 12 million people for one 
        year. Groundwater banking in San Joaquin County has the 
        potential to provide regional and statewide agencies the 
        ability to store excess water in the underlying basin. San 
        Joaquin County's proximity to the Delta could facilitate water 
        transfers and exchanges to areas served by the State Water 
        Project, Central Valley Project and the CALFED Environmental 
        Water Account.
                                 ______
                                 
  Responses of Darla Pollman Rogers to Questions From Senator Johnson

    Question 1. If a preferential leaseholder decides to exercise their 
right to repurchase the land, what price will they pay?
    Answer. Paragraph (2), Page 6, of S. 2205 sets forth the terms of 
repurchase if a preferential leaseholder exercises his/her option to 
buy back the land.

          A. The value of a preferential lease parcel is its fair 
        market value for agricultural purposes, as determined by an 
        independent appraisal.
          B. If the appraised value of the land is in excess of 
        $10,000.00, the preferential leaseholder has the option to pay 
        cash for the land, or to buy it on an installment contract 
        basis:
                  (1) If the preferential leaseholder pays cash, the 
                purchase price is the appraised value, less a 10% 
                discount.
                  (2) If the preferential leaseholder repurchases the 
                land on an installment basis, the purchase price is the 
                appraised value of the land.
          C. If the appraised value of the land is less than 
        $10,000.00, the preferential leaseholder must pay cash, and the 
        purchase price is the appraised value, less a 10% discount.

    Question 2. What are some of the specific benefits from the 
wildlife mitigation plan that will accompany the lands conveyed to the 
state?
    Answer. The federal lands conveyed through S. 2205 to the State of 
South Dakota (for the use and benefit of the Department of Game, Fish & 
Parks) will provide the critical and essential land base on which the 
state can move forward with satisfying its Habitat Mitigation Plan as 
authorized by Section 602 of title VI of Public Law 105-277 of October 
21, 1998. By providing the much needed land base for fully implementing 
the state's Habitat Mitigation Plan, the state can finally begin to 
adequately address the 30-year-old obligation to South Dakota by the 
federal government for wildlife habitat forever lost through inundation 
associated with construction of dams through the Pick-Sloan Act. It is 
necessary to have an accessible and productive land base on which to 
implement wildlife habitat mitigation plan practices such as woody 
cover developments, wildlife food plot and upland nesting cover 
establishments. Specifically, the citizens of South Dakota and its 
visitors will have a place to enjoy and encounter myriad wildlife 
species that are the direct result of habitat developments and 
improvements made possible by the availability of lands obtained 
through S. 2205 and applied to that land through an approved Habitat 
Mitigation Plan.

 Responses of Darla Pollman Rogers to Questions From Senator Murkowski

    Question 1. Do you believe that, if this bill is enacted, a sales 
price ten percent below fair market value will compensate the 
leaseholders for increase in sales price and lease fees over the last 
30 years?
    Answer. No, a sales price ten percent below fair market value will 
not compensate preferential leaseholders for the increase in the value 
of land and lease fees over the last 30 years, for the following 
reasons:

          1. Under S. 2205 as currently drafted, the 10% discount 
        applies only if (a) the total purchase price is less than 
        $10,000.00; or (b) if the preferential leaseholder pays cash to 
        buy back his/her land. For many of the preferential 
        leaseholders, especially in the Blunt Reservoir area where the 
        tracts of lease land are larger, an installment purchase is the 
        only way they will be able to exercise their option to buy back 
        their land. Preferential leaseholders who repurchase their land 
        via installment do not receive a discount from the appraised 
        value.
          2. The value of the land, and especially the larger tracts, 
        has increased dramatically over the years. Farmground in Hughes 
        and Sully County is currently worth from $750.00 to $850.00 per 
        acre. Values in the late seventies were much, much less. In 
        addition, preferential leaseholders have paid close to fair 
        market value for lease rates over the years, so their lease 
        payments have also increased considerably over the 30-year 
        timeframe.

                                 ______
                                 
    [Responses to the following questions were not received at 
the time the hearing went to press.]

         Committee on Energy and Natural Resources,
                           Subcommittee on Water and Power,
                                     Washington, DC, April 3, 2006.
Laurence Becker,
State Geologist, Vermont Department of Environmental Conservation, 
        Geology and Mineral Resources Division, Waterbury, VT.
    Dear Mr. Becker: I would like to take this opportunity to thank you 
for appearing before the Senate Subcommittee on Water and Power of the 
Committee on Energy and Natural Resources on Thursday, March 30, 2006, 
to give testimony on S. 2054, to direct the Secretary of the Interior 
to conduct a study of water resources in the State of Vermont.
    Enclosed herewith please find a list of questions which have been 
submitted for the record. If possible, I would like to have your 
response to these questions by Monday, April 17, 2006.
    Thank you in advance for your prompt consideration.
            Sincerely,
                                            Lisa Murkowski,
                                                          Chairman.
[Enclosure.]

                    Questions From Senator Murkowski

    Question 1. If enacted, how would the information provided by this 
study help address your groundwater contamination problems?
    Question 2. Do you feel that you have an adequate level of 
understanding about your surface water resources?
    Question 3. In coordination with the USGS, what will you identify 
as priority areas of study?

                    Questions From Senator Bingaman

    Question 1. Your testimony indicates that the State of Vermont is 
in the process of developing an aggressive program to understand its 
groundwater resource to benefit future planning efforts.

   Are there areas within the State that are beginning to 
        experience significant draw down in any of the aquifer systems? 
        Is water supply growing as an issue or is most of the concern 
        in the State related to water quality issues?
   Is the State able to provide sufficient funding and other 
        resources to partner with the USGS in a joint study program?
   Does the State currently have a permit system in place to 
        regulate access to, and pumping of groundwater?
                                 ______
                                 
         Committee on Energy and Natural Resources,
                           Subcommittee on Water and Power,
                                     Washington, DC, April 3, 2006.
Hon. John Keys,
Commissioner, Bureau of Reclamation, Department of the Interior, 
        Washington, DC.
    Dear Commissioner Keys: I would like to take this opportunity to 
thank you for appearing before the Senate Subcommittee on Water and 
Power of the Committee on Energy and Natural Resources on Thursday, 
March 30, 2006 to give testimony on S. 1962, S. 2205, and H.R. 3812.
    Enclosed herewith please find a list of questions which have been 
submitted for the record. If possible, I would like to have your 
response to these questions by Monday, April 17, 2006.
    Thank you in advance for your prompt consideration.
            Sincerely,
                                            Lisa Murkowski,
                                                          Chairman.
[Enclosure.]

                    Questions From Senator Murkowski

    Question 1. S. 1962/H.R. 4000--Do you feel that the loss of 
revenues to the Treasury if this bill were authorized is justified 
considering the recent hardship faced by the irrigation districts as a 
result of the drought?
    Question 2. H.R. 3812--How is the proposed project's appraisal-
level study progressing and when do you anticipate it will be complete?

                    Questions From Senator Bingaman

    Question 1. S. 1962/H.R. 4000--Your testimony establishes that 
Reclamation has the authority to deferments with respect to the 
repayment schedules established by contract, but that grant those 
deferments do not extend the total time period for repayment.

   What are the types of situations where Reclamation has 
        historically granted deferments?
   Should the deferment authority be amended so that 
        Reclamation has the authority to extend the total time period 
        for repayment?

    Question 2. S. 1962/H.R. 4000--Over the past 20 years, how often 
has legislation similar to S. 1962 been enacted which provides relief 
to water users from an existing repayment contract?

   Will this bill create a unique precedent, likely to be 
        followed by many similar requests?

    Question 3. H.R. 3812--Your testimony indicates that a feasibility 
study requires the completion of NEPA compliance documents.

   Does Reclamation have a new policy requiring NEPA compliance 
        to be an integral part of its feasibility studies?
   If so, is it an efficient use of limited resources to 
        require a full environmental review while still assessing the 
        technical and financial feasibility of a project?

    Question 4. H.R. 3812--According to testimony, the San Joaquin 
County area is not within the CALFED project area.

   Is it possible, however, that some of the regional water 
        supply projects being reviewed by the CALFED program could 
        address the water supply issues in San Joaquin County?

                     Questions From Senator Johnson

    Question 1. S. 2205--How much does the Bureau of Reclamation spend 
to manage the lands acquired for the Pierre Canal and Blunt Reservoir?
    Question 2. S. 2205--In your testimony, you state that the Bureau 
will be still responsible for some administrative fees even if the 
Blunt Reservoir Bill is enacted. Could you elaborate on the nature of 
these fees? Do you have an estimate on the total amount of these fees?
    Question 3. S. 2205--Can you tell me the difference between the 
BOR's cost to manage these lands today versus the cost if H.R. 4301 is 
enacted?
    Question 4. S. 2205--When lands are taken out of Federal ownership, 
are they always disposed of at fair market value? If not, what are the 
exceptions?
                                 ______
                                 
         Committee on Energy and Natural Resources,
                           Subcommittee on Water and Power,
                                     Washington, DC, April 3, 2006.
Hon. Jerry Krambeck,
Mayor, The City of Spearfish, SD.
    Dear Mayor Krambeck: I would like to take this opportunity to thank 
you for appearing before the Senate Subcommittee on Water and Power of 
the Committee on Energy and Natural Resources on Thursday, March 30, 
2006, to give testimony on S. 1577, to facilitate the transfer of 
Spearfish Hydroelectric Plant Number 1 to the city of Spearfish, South 
Dakota, and for other purposes.
    Enclosed herewith please find a list of questions which have been 
submitted for the record. If possible, I would like to have your 
response to these questions by Monday, April 17, 2006.
    Thank you in advance for your prompt consideration.
            Sincerely,
                                            Lisa Murkowski,
                                                          Chairman.
[Enclosure.]

                    Questions From Senator Murkowski

    Question 1. S. 1577 expresses the sense of Congress that the City 
should: (1) uphold a 2004 MOA with the Spearfish Canyon Landowners 
Association and (2) ensure the release of an additional 5--10 cubic 
feet per second between the Intake Dam and the Spearfish Division.
    Please explain the significance of this sense of Congress.
    Question 2. You testified that the U.S. Forest Service has 
determined that the right of way in question remains valid and is fully 
transferable to the City. Do you have the Forest Service's assessment 
in writing so we could make that part of the hearing record?

                     Questions From Senator Johnson

    Question 1. Mayor Krambeck, this project has been in continuous 
operation since 1912. During these past nearly 100 years, the project 
has been a clean source of renewable energy, ensured a stable water 
supply to the City, created recreational opportunities within the City 
of Spearfish, and supplied water to the D.C. Booth National Historic 
Fish Hatchery. Although these multiple uses clearly strike a balance in 
the public interest, in the event that S. 1577 becomes law, do you 
foresee any operational changes at the project?
    Question 2. Mayor Krambeck, now that the City has assumed ownership 
of this hydroelectric facility, how has it made certain that the 
project is operated and maintained in a safe and efficient manner? Does 
the City have the expertise to run this facility?
                                 ______
                                 
         Committee on Energy and Natural Resources,
                           Subcommittee on Water and Power,
                                     Washington, DC, April 3, 2006.
Hon. P. Patrick Leahy,
Acting Director, U.S. Geological Survey, Reston, VA.
    Dear Mr. Leahy: I would like to take this opportunity to thank you 
for sending Ms. Catherine Hill to appear before the Senate Subcommittee 
on Water and Power of the Committee on Energy and Natural Resources on 
Thursday, March 30, 2006, to give testimony on S. 2054, to direct the 
Secretary of the Interior to conduct a study of water resources in the 
State of Vermont.
    Enclosed herewith please find a list of questions which have been 
submitted for the record. If possible, I would like to have your 
response to these questions by Monday, April 17, 2006.
    Thank you in advance for your prompt consideration.
            Sincerely,
                                            Lisa Murkowski,
                                                          Chairman.
[Enclosure.]

                    Question From Senator Murkowski

    Question 1. What do you believe would be an appropriate non-Federal 
cost share for a study of this kind?

                     Question From Senator Bingaman

    Question 1. Your testimony indicates that authorization of the 
study contemplated in S. 2054 is unnecessary given the existing 
authorization of the Cooperative Water Program. The President's 2007 
budget, however, would cut almost $700,000 in funding for the 
Cooperative Water Program.

   Without this bill and any specific appropriations that may 
        be provided by Congress, is there any hope of getting 
        significant resources from the USGS to partner with the State 
        of Vermont on this study?
   Has the USGS allocated any of its Cooperative Water Program 
        money to Vermont over the last several years?

    Question 2. If S. 2054, as introduced, were enacted into law, would 
the USGS require a state/local cost-share? How does the USGS interpret 
the language in S. 1338 (a similar bill for Alaska) with respect to 
cost-share?
                                 ______
                                 
         Committee on Energy and Natural Resources,
                           Subcommittee on Water and Power,
                                     Washington, DC, April 3, 2006.
Dr. Mel Lytle,
Water Resources Coordinator, San Joaquin County, Stockton, CA.
    Dear Dr. Lytle: I would like to take this opportunity to thank you 
for sending Ms. Catherine Hill to appear before the Senate Subcommittee 
on Water and Power of the Committee on Energy and Natural Resources on 
Thursday, March 30, 2006, to give testimony on H.R. 3812, to authorize 
the Secretary of the Interior to prepare a feasibility study with 
respect to the Mokelumne River, and for other purposes.
    Enclosed herewith please find a list of questions which have been 
submitted for the record. If possible, I would like to have your 
response to these questions by Monday, April 17, 2006.
    Thank you in advance for your prompt consideration.
            Sincerely,
                                            Lisa Murkowski,
                                                          Chairman.
[Enclosure.]

                    Questions From Senator Murkowski

    Question 1. In your testimony, you mention State and Federal 
policies that ``erode existing supplies'' and have ``upset new 
supplies''. To which policies are you referring?
    Question 2. In your testimony, you state that groundwater recharge 
is the primary focus of the project. Do you plan to re-inject project 
water, offset groundwater depletions with project water, or both?

                    Questions From Senator Bingaman

    Question 1. Your testimony notes that San Joaquin County has been 
adversely affected by changes in State and Federal policies which have 
upset longstanding plans to develop new water supplies. Some additional 
background would be helpful.

   What changes in policies have occurred and how has that 
        impacted the water supply in San Joaquin County?
    Question 2. You note that the water project contemplated in H.R. 
3812 is not part of the CALFED program.
   Do any of the water supply projects being reviewed as part 
        of the CALFED program have a connection to San Joaquin County, 
        and might they help to address some of the issues described in 
        your testimony?
                                 ______
                                 
         Committee on Energy and Natural Resources,
                           Subcommittee on Water and Power,
                                     Washington, DC, April 3, 2006.
J. Mark Robinson,
Director of the Office of Energy Projects, Federal Energy Regulatory 
        Commission, Washington, DC.
    Dear Mr. Robinson: I would like to take this opportunity to thank 
you for sending Ms. Catherine Hill to appear before the Senate 
Subcommittee on Water and Power of the Committee on Energy and Natural 
Resources on Thursday, March 30, 2006, to give testimony on S. 1577, to 
facilitate the transfer of Spearfish Hydroelectric Plant Number 1 to 
the city of Spearfish, South Dakota, and for other purposes.
    Enclosed herewith please find a list of questions which have been 
submitted for the record. If possible, I would like to have your 
response to these questions by Monday, April 17, 2006.
    Thank you in advance for your prompt consideration.
            Sincerely,
                                            Lisa Murkowski,
                                                          Chairman.
[Enclosure.]

                     Questions From Senator Johnson

    First, let me start out by stating that I do believe the licensing 
and administration of our nation's public hydro-electric plants is an 
important regulatory tool to balance the often competing multiple uses 
of the nation's water resources. Several Senators on the Energy 
Committee have devoted a good deal of time toward improving the federal 
license process for nonfederal hydropower plants. That being the case, 
I believe that the set of circumstances surrounding the small 
hydroelectric plant in Spearfish are unique and, therefore, provide for 
a re-examination in this instance of the federal license requirements.
    Question 1. It is my understanding that FERC is asserting 
jurisdiction to require a license on the basis that certain rights-of-
way grants and permits, which were issued by the federal government 
prior to the enactment of the 1920 Federal Power Act, had expired. Is 
this your argument?
    Question 2. Now, I've learned that these fights-of-way grants and 
permits were not issued by the FERC or that the rights-of-way are 
administrated by the FERC. In fact, the rights-of way permits are 
administrated exclusively by the U.S. Forest Service, which recently 
found that they had not expired, and in fact, were validly transferred 
from the Homestake Mining Company to the City of Spearfish. In light of 
these sets of circumstances, don't you believe that FERC is 
overreaching in asserting jurisdiction, particularly in light of the 
long-held administration of the rights-of-way by the U.S. Forest 
Service?
    Question 3. Mr. Robinson: I want to ask you a question about the 
time and cost of licensing this project. I understand that the median 
amount of time for a hydro re-license applicant is about 64 months from 
the beginning to the end, and that under the Traditional Process costs 
average $2.3 million. Who bears the costs for the license? And, in 
proportion to other hydro projects, what could the City expect in terms 
of cost and time to license this small, century-old hydro plant?

                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

    Statement of G. Thomas Bartlett III, Mayor, City of Grafton, WV

    Chairman Murkowski, Ranking Member Johnson, and distinguished 
members of the Committee: I am pleased to have this opportunity to 
submit testimony in support of S. 2028, a bill to reinstatement of a 
license for Federal Energy Regulatory Commission (FERC) project No. 
7307. Reinstatement provides the City of Grafton with a renewed 
opportunity to move ahead on a hydroelectric power plant project at the 
Tygart Dam just upstream of Grafton on the Tygart Valley River. Our 
region is in critical need of the economic impact of this project.
    I am encouraged and excited to see the critical factors, which 
would influence the progress of this idea, are joining together in 
mutual support. I feel much more confident about the prospects of 
success as compared with the circumstances of this same opportunity 
when it presented itself several years ago. National Renewable 
Resources Conemaugh L.P. (NRRC) is currently supported by a management 
team which encourages involvement in this type of project. The current 
successful operation by NRRC of a hydroelectric plant in nearby 
Pennsylvania is a positive influence. The prospect of finding a 
customer for the electric power produced by this project is more likely 
now than ever before.
    I understand that flow of water during winter pool levels have been 
considered and NRRC engineering has considered it to be more than 
adequate for the sustained power levels. Therefore, no changes to the 
Corps of Engineers current operational procedures are needed. Current 
generation technology and design will provide for a 20 Megawatt output 
at minimum flows. This much energy would provide sufficient electricity 
for 10,000 homes. This project would intrude to a minimum extent on the 
present dam structure since it would be making use of provisions for 
hydroelectric power which were built into the dam 70 years ago.
    The City will receive regular income from the operation of this 
project. We look forward to the prospect of supporting community 
projects with these discretionary funds. Planning responsible and 
innovative ways of improving our community would be a delightful 
challenge that I would happily undertake.
    Revenues provided to the City from this project could be used to 
enhance local services to children and the elderly, including the 
expansion of our local senior citizen center. This senior center 
provides daily meals to Grafton's elderly but is having a difficult 
time extending this service to home-bound seniors. Additional funding 
would help them to support and expand our local meals of wheels 
program. Further, funds would be used to build a memorial to the Sago 
mine tragedy--some of the miners lived in our community. In addition, 
the City has a laundry list of projects that could move ahead with 
revenues from this project, including: preserving and promoting our 
International Mother's Day Shrine, preserving the B&O Railroad Station, 
enhancing our Taylor County Museum, maintaining the local National 
Cemeteries, and preserving our stately one hundred year old U.S. Post 
Office. With the discretionary funds that would be received by the City 
from this project, all these historical treasures could receive the 
attention that they deserve. People from everywhere would come to see 
and enjoy these historical treasures in restored splendor. Without this 
project the City's discretionary budget is minimal and many of these 
initiatives will go unfunded.
    Therefore, I encourage you to support S. 2028 which will reinstate 
Grafton's FERC license; thus, providing a critical first step toward 
harnessing a renewable resource for the benefit of all in the region.
    As I read the testimony of Jeffery Kossack, President of NRRC, I am 
pleased to say that I support and concur with his representation of the 
situation.
    We invite you, one and all, to come and join us in the celebration 
of our 150th birthday during Memorial Day weekend 2006.
                                 ______
                                 
 Statement of Jeffery Kossack, President, National Renewable Resources 
                        Conemaugh LP, on S. 2028

    Chairman Murkowski, Ranking Member Johnson, distinguished members 
of the Committee: I respectfully submit to you this testimony in 
support of S. 2028, a bill to provide for the reinstatement of a 
license for Federal Energy Regulatory Commission (FERC) project number 
7307. This bill would allow the City of Grafton, West Virginia, to 
obtain an extension to their license for constructing a hydroelectric 
facility at the Tygart dam.
    As you are no doubt aware, the City of Grafton held a FERC license 
to develop a plan to make use of this power tunnel for a period of 
time; unfortunately this license has lapsed. During the time when the 
City of Grafton's FERC license was valid, the project economics were 
very tight and it was impossible to secure utility cooperation to make 
the project work. Long-term interest rates are now lower and the demand 
for clean fuel sources is now much more robust; both of which now make 
the project viable. My firm is actively engaged in securing a buyer for 
electricity produced by the proposed facility, we are confident that 
such a buyer will be found.
    My company, NRR Conemaugh LP, has established an agreement with the 
City of Grafton to build the hydroelectric facility in question. This 
project would open and utilize a power tunnel that was built into the 
Tygart Dam nearly seventy years ago. Unfortunately, the envisioned 
power resource has remained unused for the entire life of the dam. The 
dam is in fine working order and water is continually running through 
the facility. Unsealing the power tunnel would not disrupt the dam's 
ability to maintain water levels and would not compromise dam 
integrity. Opening the power tunnel for hydroelectric production and 
thereby harnessing this resource would provide a clean, safe and 
efficient energy resource.
    The proposed 20 megawatt hydroelectric project would be located 
immediately below Tygart Dam. The facility would have an annual energy 
production of 85 gigawatts, on average, which is enough energy fuel a 
city the size of Grafton. This $45 million project would be completely 
funded by NRR Conemaugh, which has demonstrated success in 
hydroelectric production in Pennsylvania.
    Our current plan is to finance the Tygart project with 
approximately 50 percent of our own capital and approximately 50 
percent with long-term bank debt. We have already bid out the equipment 
package and have completed a number of the civil drawings. Project 
construction could begin within 12 months of FERC license 
reinstatement. Our company would commit itself to fast tracking this 
work in order to get the project under way as soon as possible.
    My company will take on the entire financial cost of the project 
and will not request any financial assistance from the City of Grafton, 
the State of West Virginia or the federal government. In fact, each of 
these governmental entities would gain significant revenues as a direct 
result of this project moving forward.
    The City of Grafton would receive an annual licensing fee of 
approximately $300,000 per year for the life of the facility. These 
funds could be used at the City's discretion. It is my understanding 
that this revenue source would be the sole source of discretionary 
spending for the City. Consequently, many City initiatives that are 
currently unfunded could be undertaken.
    Not only would this project have local and regional benefits, but 
the federal government would receive an annual licensing fee of 
$200,000 from this project. This fee is not significant in terms of 
federal spending; but it is not often that Congress is confronted with 
projects looking to give dollars back to the Treasury.
    Passage of this bill would result in approximately 200 construction 
jobs with a payroll of over $1 million per month during construction. 
This will prove to be a true economic boom for this region of West 
Virginia. Our company is committed to utilizing local workforce, 
contractors and suppliers when able. Further, this project would create 
a few well-paying permanent jobs at the facility in addition to 
providing an ongoing regional economic impact of approximately $200,000 
per year for the life of the project, which is estimated at 45 years.
    This project fits very well into the national energy plan that has 
been advanced by Congress and has substantial regional support, 
including that of both of West Virginia's U.S. Senators.
    Further, Rep. Alan Mollohan of West Virginia has introduced 
companion legislation, H.R. 4417, in the House.
    With your help in reinstating the City of Grafton's license, I 
believe that we can make this project a reality. The passage of S. 2028 
is a critical first step to making this important project a success. I 
assure you that if the needed legislation is enacted, our company is 
totally committed to making this project work.
    In conclusion, I respectfully urge the Committee to approve S. 
2028. This project is one that will cost the federal government nothing 
but will have a significant positive economic impact on Grafton and 
will enhance West Virginia's clean fuel production capabilities.
                                 ______
                                 
   Statement of Jon Groveman, Director and General Counsel, Vermont 
          Natural Resources Council Water Program, on S. 2054

    My name is Jon Groveman. I am the Water Program Director and the 
General Counsel for the Vermont Natural Resources Council (VNRC). 
Founded in 1963 by farmers and foresters, VNRC has over 4,500 dues 
paying members and 1,500 activists in the state of Vermont, who are 
dedicated to VNRC's mission of protecting Vermont's environment and our 
working landscape through research, education and advocacy. Thank you 
for this opportunity to submit written testimony on 5.2054.
    VNRC strongly supports S. 2054. Groundwater protection is currently 
a critical environmental issue facing the state of Vermont. In a small, 
rural state like Vermont, most people get their drinking water from 
individual wells, rather than large public water supplies. For example, 
the most recent statistics available from the Vermont Agency of Natural 
Resources indicate that more than 66% of Vermonters are supplied 
drinking worker directly through groundwater, as opposed to surface 
water.
    Despite the number of Vermonters that rely on groundwater as their 
primary source of drinking water, Vermonters know very little about the 
quality and quantity of their groundwater. Unlike our neighboring 
states of New Hampshire and Maine, Vermont has not undertaken a program 
to map our groundwater resources. New Hampshire and Maine have received 
significant assistance from he United States Geological Survey (USGS) 
to map its geologic and groundwater resources, including financial 
assistance. There is an intrinsic relationship between geology and 
groundwater resources. In New England, groundwater is trapped between 
the spaces of rocks beneath the surface. The quantity and quality of 
groundwater is directly linked to these geologic formations. 
Accordingly, federal agencies like the USGS play a key role in helping 
states understand and protect their groundwater resources.
    As a result of their work with the USGS, New Hampshire and Maine 
have a much better understanding on where its groundwater is located 
and what the threats to its groundwater resources are than Vermont. S. 
2054 would place Vermont on equal footing with its neighboring states 
by ensuring that the federal government will assist Vermont to 
inventory and map its groundwater resources. Accordingly, VNRC urges 
the Committee to pass S. 2054.
                                 ______
                                 
                Statement of Earl Briggs, Rapid City, SD

    My name is Earl Briggs, a retired farmer from Hughes Co. near 
Pierre, S. Dak. I am writing testimony in reference to the Pierre Canal 
and Blunt Reservoir Conveyance Act (HR-4301) (S-2205) sponsored by 
(Stephanie Herseth) (Sen. John Thune).
    In the mid 1970's the Bureau of Reclamation acquired a strip of 
land (63 acres) across our farm in Section 26-111-78 (640 acres) for 
the defunct Oahe Irrigation Project. This was taken against our will by 
condemnation. The opposition in the irrigation district grew until 
funding on a 3 year contract (21 miles) after one year was cancelled. I 
have leased this land from the Bureau since the project was abandoned. 
All they done on ours is put in two fences and a $350,000.00 culvert 
across Dry Run Creek.
    The Bureau in their negotiations promised us we could irrigate from 
the canal or they would sell it back to us at purchase price if the 
project was abandoned, which proved to be a ploy to get possession of 
the land. We. discovered there was no provisions the Master Contract 
for canalside irrigation,
    In our case we have a strip of land in a S shape, approximately one 
mile long, (320 rods) and 30 rods wide going through \1/3\ pasture and 
\2/3\ farm ground. If this remnant is appraised at its actual value, I 
believe I could live with that and repurchase as the bill is written.
    I do have a problem with the portion of the bill that turns over 
non-preferential, and preferential lands not purchased to the S. Dak. 
Game Fish and Parks. For 30 years we have made up the difference in 
property taxes on nearly 20,000 acres of land. In fact the BOR paid 
$1.39 per acre in taxes while we paid $6.16 per acre last year.
    These lands were all taken by threat of condemnation in the first 
place, so rightfully they should be put back in private hands and tax 
roll by auction of non-preferential land, not yet another government 
entity, The S. Dak. Game Fish and Parks. They keep referring to the 
mitigation act of 1958 for lands taken by the reservoirs. I don't think 
Hughes and Sully counties should take the brunt of this ill conceived 
idea, as this was a whole state issue a half century ago. We raise more 
wildlife by accident than they do on purpose.
    Being 78 years old and renting it to my neighbor for 14 years who 
is 100%, and rightfully the successor, I very much want to get this 
resolved before leaving. this earth. This would put this money back 
into the Gov't coffers from which it came from in the first place.
    Hopefully we can get this bill tweaked and passed making me one 
happy farmer along with my neighbors.
    Thank you.
                                 ______
                                 
 Statement of The Boise-Kuna Irrigation District, Big Bend Irrigation 
  District, Nampa & Meridian Irrigation District, New York Irrigation 
          District, and Wilder Irrigation District, on S. 2035

                SHORT STATEMENT OF NEED FOR LEGISLATION

    In the last eighteen months, the Irrigation Districts have twice 
been poised to begin construction on the Arrowrock Hydroelectric 
Project. Twice, they have been stymied by the inaction and refusal to 
act by federal agencies. This legislation is needed so the Districts 
can salvage the hundreds of thousands of dollars and countless hours of 
time and energy invested in the Project. Without the legislation, the 
Project will be lost, along with the opportunity to supply clean, 
renewable energy from an existing dam, and the opportunity help offset 
water delivery costs to the farmers of the Boise River Valley. In 2005, 
Congress passed a landmark Energy Bill designed to encourage 
development of these clean, renewable power sources. Congress should 
not permit the agencies' bureaucratic process to thwart this benign 
Project. The Districts can and will deliver a final Project that meets 
the highest environmental standards and that coexists with all existing 
uses of the Boise River reservoir system, including fish and wildlife. 
They just need the time extension this legislation offers. The 
Districts are not seeking any federal appropriations for the Project. 
The Project is supported by a broad range of Idaho and Oregon 
interests, including an Oregon public power entity which has contracted 
to purchase the output from this plant. The time is now for this 
Project.

                       THE INTERAGENCY CONFLICTS

    Five Idaho and Oregon Irrigation Districts hold the FERC license to 
develop a hydroelectric powerplant at Arrowrock Dam. FERC License No. 
4656. In the last eighteen months, their efforts to build this Project 
have been stymied, not by any lack of diligence or effort on their 
part, but because of the interactions of two federal agencies--the Fish 
& Wildlife Service and the Federal Energy Regulatory Commission. The 
Districts first received. word in January of 2004 that the licensed 
start of construction deadline for this Project would be March of 2005. 
They immediately went to work and selected a contractor to design and 
build the Project. A plan was developed over the course of summer of 
2004 to reduce the size of-the Project and presented to FERC staff in 
submissions and in a meeting in FERC's offices in August of 2004. Based 
on this consultation with FERC staff, the Districts planned to meet the 
start of construction date by beginning manufacture of the component 
parts as permitted by Commission precedent and regulations. There was 
sufficient time in the schedule to meet the deadline.
    The Fish & Wildlife Service had been insisting for some time that 
FERC consult with the Service on this Project under Section 7 of the 
Endangered Species Act because of the presence of bull trout in 
Arrowrock Reservoir.\1\ FERC had taken the position that there was no 
new discretionary federal action that required consultation.\2\ In 
2004, the Service again requested that FERC engage in consultation.\3\
---------------------------------------------------------------------------
    \1\ FWS Letter April 27, 2001
    \2\ FERC Letter August 16, 2001
    \3\ FWS Letter February 25, 2004
---------------------------------------------------------------------------
    After the Districts' meeting with FERC staff in August of 2004 to 
discuss the scope of the Project, FERC responded to the Service's 
request for consultation with a letter requesting the Service's 
concurrence that the Licensees' proposed modification will not affect 
or is not likely to adversely affect bull trout or any listed 
species.\4\ The Commission concluded that using of the existing intake 
structure and existing operations of the dam, the fact that no 
reservoir draw-down was required and that the Districts' proposed 
elimination of some transmission lines were all positive benefits and 
unlikely to affect any listed species. The Commission also noted that 
Arrowrock Reservoir was no longer under consideration as critical 
habitat for bull trout. Finally, FERC requested that the Service engage 
in informal discussions with the Districts to resolve any issues the 
Service might have.
---------------------------------------------------------------------------
    \4\ FERC Letter September 29, 2004
---------------------------------------------------------------------------
    With the understandings reached with the staff concerning 
development of the Project to meet the March 2005 start of construction 
date, the Districts worked diligently with their contractor and had a 
feasibility study completed by December of 2004, which contemplated the 
start of construction by fabrication of component parts in March of 
2005.\5\ The Districts' representative previously met with the Service 
and provided them with all the information provided to FERC. However, 
the Service did not act on the FERC's letter until three months had 
passed. At the end of December 2004, the Fish & Wildlife Service 
advised FERC and Licensees that it disagreed with the Commission's 
determination of no affect or not-likely to adversely affect bull 
trout, and insisted on formal consultation, but stated that it would 
not be in a position to begin consultation on the Project until the end 
of March 2005, after the deadline for start of construction.\6\ The 
Service was engaged in a comprehensive consultation which covered 
multiple species at all Reclamation projects on the Upper Snake River 
Basin, including Arrowrock Reservoir and wanted to complete that 
consultation before engaging on this smaller consultation.
---------------------------------------------------------------------------
    \5\ SSW Feasibility Study December 2004 (excerpts)
    \6\ FWS Letter December 21, 2004
---------------------------------------------------------------------------
    Faced with the inability to start construction to meet the deadline 
because of the Service's stance, the Districts filed a request with 
FERC to stay the license deadline. The Commission has authority to stay 
deadlines where the delay is caused by action or inaction of another 
federal agency. In response to the request for stay, the Service wrote 
to FERC supporting the stay.\7\ The Service advised FERC that the Upper 
Snake River Basin consultation had recently been completed and that 
Reclamation's operations would not jeopardize any threatened or 
endangered species. The Service advised FERC that they had been engaged 
in informal consultation with the Districts, were cooperating in 
developing the necessary information, and requested that FERC request 
formal consultation by June 15, 2005. They anticipated completing 
formal consultation in sixty (60) days. The Districts continued to 
consult with the Service, the contractor, and--Reclamation to provide 
the necessary information for a Biological Opinion.
---------------------------------------------------------------------------
    \7\ FWS Letter April 29, 2005
---------------------------------------------------------------------------
    Despite's the Service's willingness to resolve the ESA issues, the 
Commission denied the request for stay. 111 FERC  61,271 (May 27, 
2005). In denying the request for stay, the Commission took the 
position that the changes proposed by the Districts required a 
preconstruction amendment to the license. The Commission also expressed 
its skepticism that the Fish & Wildlife Service could complete the 
consultation in the timeframe it suggested. These conclusions came as a 
complete surprise to the Districts. They had been operating under the 
working assumption that, as a result of the meetings with the staff, no 
preconstruction license amendment was necessary. They were also quite 
surprised that the Commission had directed the Districts to work with 
the Service to satisfy the needs to the Service and then the Commission 
would reject the stay request because it did not believe that the 
Service would engage in a timely consultation with the Districts as the 
Service indicated.
    Accordingly, the Districts filed a timely motion for rehearing, 
supplying the Commission with additional evidence of the work that the 
Service, the contractor, and the Districts had done in moving the 
Project forward. The Districts also provided significant information 
about the status of the power sales agreement for the output of this 
Project. In July of 2005, the Districts filed a supplemental memorandum 
in support of its petition for rehearing and reconsideration. Later, in 
July, the Districts advised FERC staff that the informal consultation 
was completed and that the Service was requesting again that FERC 
engage in formal consultation. The response of the staff was that they 
could not even discuss the matter with the Districts because of the 
motion for rehearing.\8\
---------------------------------------------------------------------------
    \8\ FERC Email July 29, 2005
---------------------------------------------------------------------------
    The Commission, on September 1, 2005, entered an order denying the 
motion for rehearing. 112 FERC  61, 240 (Sept. 1, 2005). The 
Commission made a number of factual errors in doing so. First, the 
Commission contended that the staff ``clearly informed'' the Districts 
that a preconstruction license amendment was essential for this 
Project. This is not correct. After meeting with the staff, the 
Districts\9\ and Licensees\10\ both understood that no preconstruction 
amendment was necessary. Indeed, the Commission issued its. no affect 
letter to the Service which would have allowed construction to begin in 
2005 (if the Service had concurred) and provided information to the 
Districts and their contractor about how to meet the existing deadline 
by construction of major component parts. The Districts followed up the 
August 25, 2004 meeting with a memo to staff in which the Districts 
stated their understanding that no license amendments would be 
necessary.\11\ The Commission's Order, however, claimed that the 
Districts were not entitled to rely upon either their meeting with the 
staff or the previous experience with the Commission in determining 
whether a license amendment was necessary. See 56 FERC  62, 061 
(October 24, 1991) (Districts' Lucky Peak Power Plant Project did not 
require preconstruction amendments). The Commission's Order contended 
that the Districts had made no progress towards a power sales 
agreement. In reaching this conclusion, the Commission ignored 
information supplied to the Commission that, at the time the Commission 
made its final ruling, the power sales agreement had been finalized. 
Yet, the Commission's Order claimed that no progress had been made and 
that all the Districts had was a draft of a letter of intent. Finally, 
the Commission contended that the Fish & Wildlife Service was not able 
to carry out its agreement to consult with the agency and Districts. 
The Commission's Order ignored the extensive informal consultation 
between the Licensees and the Service since April 2005 and ignored the 
fact that the agency was prepared to complete this consultation 
expeditiously, as soon as the Commission requested formal consultation. 
The Service even wrote to the Commission on September 1, 2005 again 
requesting formal consultation and advising that they had everything 
they needed to complete consultation.\12\ In other words, everything 
was ready, but the Commission chose to believe that the Districts and 
the Service were not committed-to-the consultation.
---------------------------------------------------------------------------
    \9\ Kukla Testimony
    \10\ SSW Letter March 21, 2005
    \11\ Email to FERC staff September 1, 2004
    \12\ FWS Letter September 1, 2005
---------------------------------------------------------------------------
    These egregious bureaucratic errors will deprive the Districts of 
the opportunity to build this Project. If allowed to stand, it will 
deprive the Districts of hundreds of thousands of dollars in 
investments over the years and will deprive them of the opportunity to 
provide services to the landowners in the Irrigation Districts. It will 
deprive Clatskanie PUD of an independent source of power. The Districts 
urge Congress to pass this legislation. The construction of the Project 
will provide significant benefits to the nation's energy supply, to the 
local economy, to the Irrigation Districts and thousands of their 
patrons, and to a small, publicly owned Oregon Public Utility District, 
who will utilize the power to supply its customers.

                    BRIEF DESCRIPTION OF THE PROJECT

    The Arrowrock Hydroelectric Project is proposed as a 15 megawatt 
powerplant built at an existing Bureau of Reclamation dam. The dam is 
located just east of Boise, Idaho, on the Boise River. The dam was 
completed in 1918, and the Districts are the major spaceholders for the 
irrigation water stored behind the dam. No new impoundments will be 
built. No reservoir draw-downs are required. Existing transmission 
routes will be utilized. Detailed construction and operation summaries 
were developed for consultation-with and provided to the Service and 
other agencies.\13\
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    \13\ Reservoir Operations & Construction Approach
---------------------------------------------------------------------------
    The Districts are experienced in building and operating 
hydroelectric facilities, as they also own, and under contract with the 
Seattle City Light, operate the Lucky Peak Power Plant Project (FERC 
Project 2832) immediately downstream of the Arrowrock Hydroelectric 
Project.

                           GENERAL BACKGROUND

    The Boise-Kuna, Big Bend, Nampa & Meridian, New York and Wilder 
Irrigation Districts are all public entities formed under the laws of 
the State of Idaho, and, Big Bend Irrigation District, is formed under 
the laws of State of Oregon. These Districts hold storage rights to the 
water held behind the reservoirs on the Boise River, including the 
Arrowrock Reservoir. The Districts serve 167,000 acres of irrigated 
farm land in the Boise Valley. Most of the land in these Irrigation 
Districts is in small farms, with an average size of less than of 100 
acres.
    The Districts have been diligently trying to develop the 
hydroelectric resource at Arrowrock Dam for many years. They are the 
logical entities to develop that resource, since, as the spaceholders 
of the irrigation water, they control the vast majority of the water 
stored behind Arrowrock Dam. The Districts pay the Bureau of 
Reclamation a significant portion of the Bureau's cost of operation and 
maintenance of that Dam. Development of the Project over the years has 
been difficult and beset with problems from the very beginning. Shortly 
after the license was originally issued in 1989, a severe drought hit 
the Northwest, including Boise River, making any hydroelectric 
development of major concern. In the mid-1990s, a listing of anadorous 
fish downstream in the Columbia and Snake Rivers caused greater 
uncertainty about the uses to which water would be put in the 
tributaries above, including on the Boise. Even though there are no 
anadorous fish in the vicinity of the Arrowrock Dam, or even in the 
Boise River, the uncertainty about the uses of stored water cause 
greater uncertainties in the viability of any hydroelectric facility, 
even one not within the habitat of the listed anadorous species. In 
2001, the energy crisis and accompanying volatility of energy prices 
made a long-term power purchase agreement. difficult or impossible to 
obtain for a hydroelectric facility with its inherent variability in 
output. Operational issues concerning the location of the Lucky Peak 
Reservoir and the Arrowrock Dam, as the Bureau of Reclamation operates 
the Arrowrock Reservoir and the Lucky Peak Reservoir so as to cause 
difficulty in maintaining sufficient head between the two reservoirs to 
insure adequate generation.
    In dealing with these various obstacles, the Districts have 
examined a number of variations on this Project. The Project was 
originally licensed as a 60 megawatt facility, which would be supplied 
by drilling large tunnels through the Arrowrock Dam, a concrete 
structure almost 100 years old. Later, the Districts evaluated a 30 
megawatt project. They had a power purchaser willing to purchase the 
output of a 30 megawatt project but ran into problems when the former 
developer was not able to deliver the Project for the price that was 
quoted. Since the spring of 2004, the Districts have been working with 
Shaw/Stone & Webster, an engineering and construction firm of national 
prominence in the hydroelectric industry, to develop a project of 15 
megawatts. Recent modifications to the Arrowrock outlet works 
downstream of the dam by the Bureau of Reclamation have created the 
configuration where the Districts will be able to tie the powerplant 
into the modified outlet works and use the water that is otherwise 
being released through the dam by the Bureau of Reclamation without 
having to drill additional tunnels through the dam. Shaw/Stone & 
Webster has consulted with Reclamation\14\ and completed a feasibility 
study\6\ and updated the study in September 2005\15\ The Project is 
constructible, financeable, and will generate sufficient revenues in 
power sales to pay for itself over the remaining course of the FERC 
license. The Districts have entered into a power purchase and sales 
agreement with an Oregon public power entity, the Clatskanie Peoples-
Utilities District, to develop the Project, and for Clatskanie to 
purchase all of the output of the facility.\16\
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    \14\ SSW email to Reclamation August 26, 2005
    \15\ SSW Amended Feasibility Study September 2005
    \16\ Power Purchase & Sale Agreement (executed)
---------------------------------------------------------------------------
    Clatskanie PUD sells 1.2 million megawatt hours of electricity 
yearly to retail customers in northern Columbia County and eastern 
Clatsop County and to industrial facilities in Bellingham, Washington, 
and Halsey, Oregon. The output of a 15 megawatt project is, in the view 
of Clatskanie PUD, a perfect fit for their system, which is otherwise 
heavily dependent on the Bonneville Power Administration. Clatskanie 
PUD is a strong supporter of this Project and this 
legislation.17,18
---------------------------------------------------------------------------
    \17\ Clatskanie PUD Brochure
    \18\ Clatskanie PUD Press Release
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                         POWER SALES AGREEMENT

    The Districts and Clatskanie People's Utility District have 
executed a Power Purchase and Sale Agreement for all of the output of 
this Project.\15\ In 2005, the Districts negotiated a memorandum of 
understanding with Clatskanie PUD for the development of the 
Project.\19\ By July, the Irrigation Districts and Clatskanie PUD had 
completed extensive negotiations on a power purchase agreement. The 
power purchase and sale agreement was put in final form and approved by 
the Boards of each of the Irrigation Districts for a vote of the 
electors of the Irrigation District. The final form was also approved 
by Clatskanie. In an election held in August of 2005, the voters of the 
Irrigation Districts overwhelmingly approved the power sales contract 
with Clatskanie PuD.\20\ A two-thirds majority vote was required, and 
the lowest approval rate of any of the Irrigation Districts was in 
excess of 75%. One District's (New York) electors unanimously approved 
the agreement. The Irrigation Districts and Clatskanie were prepared to 
execute the final agreement in September of 2005, when FERC untimely 
denied the petition for rehearing. Even though FERC has refused to 
permit construction to begin, the Irrigation Districts and Clatskanie 
PUD believe in this Project so strongly that they recently executed the 
final agreement approved in the summer of 2005 by the Irrigation 
Districts' voters and by Clatskanie.\16\ A formal signing ceremony of 
this agreement was held at Arrowrock Dam March 10, 2006 by the 
parties.18,21 Clatskanie PUD and the Irrigation Districts 
have held their first Steering Committee Meeting and will continue to 
hold regular Steering Committee meetings through the course of the 
development and construction of the Project.
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    \19\ Clatskanie--Districts MOU
    \20\ Canvassing Resolutions
    \21\ Photographs (separate file)
---------------------------------------------------------------------------
                              EXPENDITURES

    The Districts and Clatskanie have agreed to share in the future 
development cost of the Project on a 50/50 basis. Over the years, the 
Districts have expended in excess of $900,000.00 on this Project.\22\ 
The only way the Districts will recover these expenditures is for the 
Project to be constructed and begin generating electricity.
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    \22\ Arrowrock Expenditures
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                               FINANCING

    The Districts have been working with Lehman Brothers as a bond 
underwriter for several years in trying to bring this Project online. 
Lehman Brothers has carefully scrutinized the power sales agreement and 
determined that the agreement is financeable with Clatskanie as a power 
purchaser.\23\ The Districts have the ability as public entities to 
issue bonds for the development of this Project. The Districts have the 
authority under Idaho Code  43-2301 to sell bonds for the development 
of a hydroelectric Project as long as the bonds are approved by the 
voters. Overwhelming voter approval of the bond issuances was obtained 
in the August 2005.
---------------------------------------------------------------------------
    \23\ Lehman Bros. Letter March 16, 2006
---------------------------------------------------------------------------
    EPC Contractor
    In 2004, the Districts issued requests for proposals for design and 
construction of the Arrowrock Project. As a result of a rigorous 
selection process, Shaw/Stone & Webster was determined to offer the 
best proposal. Shaw/Stone & Webster has prepared two feasibility 
studies--one in December of 2004,\6\ and an amended feasibility study 
in September 2005.\15\ The feasibility studies demonstrate that the 
Project will generate sufficient electricity to pay the cost of the 
Project on a project financing basis. Shaw/Stone & Webster remains 
solidly committed to this Project.\10\

                          OTHER CONSULTATIONS

    Idaho Power conducted an updated system interconnection study of 
the reduced project generation capacity to 15 megawatts in 2004. This 
alternative will minimize impact from the Project by significantly 
reducing power line construction from that authorized by the License. 
The License authorizes 15 miles of transmission lines. This current 
plan approved by Idaho Power will allow a tie-in to existing lines at a 
location only 5 miles from Project No. 4656. Idaho Power confirmed the 
tie-in and described the interconnection facilities on October 28, 
2004.\24\ In addition, the transmission line route will upgrade an 
existing Reclamation line to Arrowrock Dam at no additional cost to 
Reclamation, so no new power line routes will be required. Line 
specifications and easement information have been provided to SSW and 
the Bureau of Reclamation, and are incorporated in the Project plans 
developed by SSW. In addition to the interconnection studies, 
Clatskanie has conducted negotiations with Idaho Power on wheeling the 
output across Idaho Power's transmission system. Idaho Power has also 
determined there is system capacity for the wheeling to meet 
Clatskanie's needs.
---------------------------------------------------------------------------
    \24\ IPCo Interconnection Approval
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    The Districts also have a valid water license from the Idaho 
Department of Water Resources for use and generation of 
electricity.\25\ Representatives of the Districts have engaged in 
consultations with various other agencies, including the Corps of 
Engineers--the operator of Lucky Peak Reservoir just downstream of the 
Arrowrock Dam where the powerhouse will be located. The Corps has 
advised the Districts that no additional consultation will be necessary 
for placement of the powerhouse, other than a 404 permit.\26\ The 
Districts have engaged in extensive consultation with all of the other 
agencies and are prepared to complete that consultation as required by 
the terms of the existing FERC license.
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    \25\ IDWR Permit
    \26\ COE Email
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    Finally, it should be noted that this Project enjoys extensive 
support. Of course, the Districts' landowners overwhelmingly approved 
the contract with Clatskanie PUD.\19\ Clatskanie is a strong supporter. 
The Bureau of Reclamation worked with the Districts and the contractor 
and is committed to finalizing an agreement with the Districts to 
review and approve the Districts' construction activities as required 
by the FERC license. The Project is supported by the Idaho Water Users 
Association, a statewide organization.\27\ In addition, the Boise Metro 
Chamber of Commerce has expressed its support of the Project, and the 
Chamber's Board unanimously voted to support the Project because of the 
energy and economic development benefits that the Project will 
bring.\28\
---------------------------------------------------------------------------
    \27\ IWUA Letter March 6, 2006
    \28\ Boise Metro Chamber of Commerce Letter March 15, 2006
---------------------------------------------------------------------------
    The Districts have put forth an extensive effort to develop this 
Project. They have the ability to bring the Project online, with all of 
the support from the regulatory agencies, the contractor, the power 
purchaser, and the community at large. The Districts urge Congress to 
pass this legislation and to allow this clean, renewable hydro project 
to come online.
                                 ______
                                 
  Statement of Mike D. Kukla, Member, Board of Directors of the Boise-
                        Kuna Irrigation District

    I am a director of the Boise-Kuna Irrigation District. I was first 
elected to the Board of Directors of the Boise-Kuna Irrigation District 
in 1998. I have served continuously since that time. I have fanned 
ground in the Boise-Kuna Irrigation District for most of my adult life.
    Shortly after my election to the Board of Directors of Boise-Kuna 
Irrigation District, I was appointed to the Steering Committee for the 
Lucky Peak Power Plant Project and for the Power Committee which 
oversees the Arrowrock Hydroelectric Project. The revenues from the 
Lucky Peak Hydroelectric Project are critical to our District's ability 
to deliver water to the District's landowners, as the revenues are used 
to help offset the costs of delivery. The goal of the Irrigation 
Districts with the Arrowrock Hydroelectric Project would be to provide 
a similar source of income to help pay costs of the operation of the 
irrigation delivery system. The Boise-Kuna Irrigation District is a 
non-profit, governmental entity. All revenues are used for operation 
and maintenance of the. system.
    Boise-Kura Irrigation System is one of five Irrigation District 
that make up the Boise Project Board of Control. Collectively, these 
Districts irrigate 167,000 acres of land in the Boise Valley. As fuel 
costs grow and commodity prices drop, farming is a very difficult 
business with small margins. Using the power revenues to help keep the 
costs of delivery of water under control is critical to many of the 
farmers in our Irrigation District and throughout the Boise Project
    As part of my responsibilities with the Power Committee, I have 
attended all the Power Committee meetings. The Districts have been 
working very hard over the last several years to build a project at 
Arrowrock Dam. Many of the difficulties we have experienced have been 
due to bureaucratic delays in various governmental agencies, 
particularly with the Fish & Wildlife Service and with the Federal 
Energy Regulatory Commission.
    In March of 2003, we submitted to FERC an application for an 
extension of time to start construction of the project. FERC did not 
rule on that request for extension of time until January of 2004, at 
which time we had a little more than one year left to actually get the 
project-under construction. The Power Committee met several times a 
month during 2004 to issue requests for proposals, evaluate and select 
a new contractor for the project, and to reconfigure the project so 
that it was economically viable. We also met on a regular basis with 
potential power purchasers. Of course, those power purchasers needed to 
be assured that the project could be built and that the regulatory 
agencies had approved the project.
    The Districts selected Shaw Stone & Webster to help them redesign 
the project to meet the needs of the power purchasers. We worked 
closely with Shaw Stone & Webster over the course of the summer of 2004 
and came up with a project that would significantly reduce the impact 
of the powerplant by eliminating tunnels through the Arrowrock Darn and 
to connect into the newly refurbished outlet works on the downstream 
face of the Dam. Realizing that FERC approval of what we were trying to 
accomplish was critical and that the deadline for start of construction 
of March of 2005 was quickly approaching, we scheduled a meeting with 
the staff of FERC. That meeting took place on August 25, 2004, with 
approximately six members of the FERC staff. I was present at this 
meeting, along with our attorney and representatives from Shaw Stone & 
Webster. We explained the proposal for the project, and had drawings 
available for review of the new configuration. The new configuration 
involved placing the powerhouse in the exact same location as the 
powerhouse for the licensed project. The only significant differences 
were a reduction in the generation capacity and elimination of a 
penetration through the Dam. The powerline would follow the licensed 
route using the existing Bureau of Reclamation powerline right of way, 
but would not require extension to a substation in Boise because of the 
reduction output from the smaller facility.
    At this meeting, the initial reaction to the proposal from members 
of the staff was that these changes would require a license amendment, 
and that a license amendment would require a significant processing 
time. We discussed at length the schedule for building the project. It 
did not appear that we could meet the start of construction date for 
the proposal if a license application would have to have been processed 
as originally suggested by FERC staff. Accordingly, we began discussing 
alternatives. From my perspective, I thought we had reached consensus 
by the time we left the meeting that a license amendment would not he 
required and that we could meet the start of construction date by start 
of manufacturing of component parts or ``bending of metal.'' In fact, 
when we left, the staff agreed to provide the contractor, Shaw Stone & 
Webster, with information on ``bending of metal'' as meeting the 
deadline for start of construction.
    The other significant issue related to a potential license 
amendment was the question of bull trout. Between the time the license 
was originally issued and the time of the meeting with FER.0 in August 
2004, the Fish & Wildlife Service had listed bull trout as a threatened 
species. The Fish & Wildlife Service had advised us and FERC that the 
Service insisted on consultation over the operations of the Arrowrock 
hydroelectric facility. With the modifications to the project 
eliminating the tunnels through the Dam, it was clear to us at this 
meeting that the potential for impact to the bull trout in Arrowrock 
Reservoir from the hydroplant was limited or nonexistent. This was so 
because the Arrowrock powerplant can only use water that is released 
for irrigation purposes and has no independent authority to demand 
water releases. No longer would the releases all go through the 
powerplant and a separate tunnel, but would go through the existing 
outlet works. The decision was reached at that meeting by FERC staff 
that FERC would send a letter to the Fish & Wildlife Service advising 
the Service that, with the revised configuration of the facility, there 
would be no effect on the species. A determination that the 
hydroelectric plant would not affect the species would allow the 
project to start construction by the March 2005 start of construction 
date. Therefore, no amendment to the license would be necessary to 
trigger a Section 7 consultation with the Fish & Wildlife Service 
because the Service should concur in the no effect determination.
    Ultimately, the Fish & Wildlife Service did not agree with the no 
effect determination, although it took three months for the Service to 
make that decision. At that time, the Service advised us that it would 
not even begin consultation on the project until after the deadline for 
start of construction because of other consultation the Service was 
conducting. Without approval of the project from the Fish & Wildlife 
Service, there was no way that the Districts would have been able to 
issue bonds to fund the project, and the start of construction date was 
doomed.
    The Districts then asked FERC for a stay of the license conditions 
just to give us sufficient time to complete the consultation with Fish 
& Wildlife Service, because Fish & Wildlife Service was willing to 
initiate consultation after March of 2005. FERC turned us down on the 
stay request asserting that the staff had told us that we were required 
to amend the license, and, because we had not sought a license 
amendment, we could not even hope to start construction. This 
conclusion in the FERC order was a shock to me because it directly 
contradicted what 1 understood the direction of FERC staff to have been 
when we left the meeting in August of 2004. We then sought rehearing, 
and FERC again turned us down. This time, they also asserted we had no 
hopes of getting Fish & Wildlife Service approval, and that we did not 
have a real power sales contract in place. Both of these assertions are 
false. We worked with Fish & Wildlife Service over the course the 
spring and summer of 2005, and the Fish & Wildlife Service was prepared 
to, and in fact advised us that they could have issued a biological 
opinion within as little as thirty days once formal consultation began 
because of the consultations that we had been engaged with them in 
advance and because of the previous work that Fish & Wildlife Service 
had done on Arrowrock Reservoir operations. In addition, FERC totally 
ignored the fact that we finalized a power sales contract with 
Clatskanie People's Utility District, and that the Irrigation 
Districts' voters overwhelmingly approved this contract in elections 
held in August of 2005. Under our state law, the voters are required to 
approve any power sales agreements and borrowing money for financing of 
hydroelectric facilities. A two-thirds majority is required, and each 
of the Districts approved that by far more than two-thirds majority. In 
fact, in Boise-Kuna, the voters approved the contract by an excess of 
90% approval.
    This vote shows that the Arrowrock Hydroelectric Project is very 
important to the farmers and landowners of the District. It will 
provide a tremendous benefit to the landowners at no cost to the 
federal government. We will provide significant employment in building 
the project, and we will do our small part in helping to reduce this 
country's reliance on foreign oil and natural gas and other fossil 
fuels. On behalf of the people of the Boise-Kuna Irrigation District 
and all of the farmers and landowners throughout the Boise Project, I 
strongly urge Congress to pass this legislation.
                                 ______
                                 
         Statement of The Clatskanie People's Utility District

    The Clatskanie People's Utility District and five Idaho and Oregon 
Irrigation Districts recently signed an agreement to jointly develop 
the 15 megawatt Arrowrock Hydro-Electric Project on the Boise River 
northeast of Boise, Idaho. Pending extension of the Federal license by 
Congress, construction could proceed by November of this year, and be 
completed by 2008.
    The Arrowrock Dam, owned by the U.S. Bureau of Reclamation, was 
built in 1915 and is 353 feet high. When built, it was the highest dam 
in the world. Water is currently released from Arrowrock Dam with a 
series of outlet-valves and a spillway.
    The project, to be financed by the Boise-Kuna, Nampa & Meridian, 
New York, Wilder, and Big Bend Irrigation Districts is expected to cost 
$41 million and produce an average of 81,000 megawatt-hours of 
electricity per year, which will be purchased by Clatskanie PUD. The 
project will consist of placing 2--7.5 MW turbines on two existing dam 
outlets, and reconstructing a 5.5 mile power line to a nearby 
substation.
    ``This clean renewable energy project would produce enough 
electricity to power 5,400 average homes, or about 8% of Clatskanie 
PUD's current energy needs,'' according to Greg Booth, General Manager 
at the PUD. The project has-no anadromous fishery impact and will have 
very little impact on the environment. ``This project will be a long 
term, low-cost resource for the PUD and, with minimal environmental 
impact, is as green as it gets,'' according to Booth.
    Clatskanie PUD is a joint owner of the 36 megawatt Wauna 
Cogeneration Power-Plant and owns the 11 megawatt Alden-Bailey Natural 
Gas Power Plant.
    Clatskanie PUD sells 1.2 million megawatt hours of electricity 
yearly to retail customers in northern Columbia County and eastern 
Clatsop County and to industrial facilities in Bellingham, Washington, 
and Halsey, Oregon. It has annual revenues of approximately $45 million 
and has the third lowest residential rate in the country.
    The Irrigation Districts are also public entities. They own the 
storage rights to the water behind Arrowrock Dam. The Irrigation 
Districts supply water to irrigate 167,000 acres in the Boise River 
Valley and most of the land is farmed in small parcels of less than 160 
acres. The Irrigation Districts currently own and operate the 101 
megawatt Lucky Peak Hydro-Electric Power Plant located on the Boise 
River just a few miles downstream from the Arrowrock Dam. The Lucky 
Peak powerhouse has been operating since 1988.
    The voters of the Irrigation Districts overwhelmingly approved the 
agreement with Clatskanie PUD. ``This vote shows that the Arrowrock 
Hydroelectric Project is very important to the farmers and landowners 
of the District'', according to Mike Kukla, a Director of the Boise-
Kuna District and member of the Irrigation Districts' Power Committee. 
``It will provide a tremendous benefit to the landowners at no cost to 
the federal government.''

