[Senate Hearing 109-764]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-764
 
     ST. MARY DIVERSION AND CONVEYANCE WORKS AND MILK RIVER PROJECT

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                   on

                                S. 3563

   TO AUTHORIZE THE SECRETARY OF THE INTERIOR TO CONDUCT STUDIES TO 
 DETERMINE THE FEASIBILITY AND ENVIRONMENTAL IMPACT OF REHABILITATING 
THE ST. MARY DIVERSION AND CONVEYANCE WORKS AND THE MILK RIVER PROJECT, 
    TO AUTHORIZE THE REHABILITATION AND IMPROVEMENT OF THE ST. MARY 
 DIVERSION AND CONVEYANCE WORKS, TO DEVELOP AN EMERGENCY RESPONSE PLAN 
 FOR USE IN THE CASE OF CATASTROPHIC FAILURE OF THE ST. MARY DIVERSION 
              AND CONVEYANCE WORKS, AND FOR OTHER PURPOSES

                               __________

                      HAVRE, MT, SEPTEMBER 1, 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 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
                  Frank J. Macchiarola, Staff Director
                   Judith K. Pensabene, Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                          Nate Gentry, Counsel
                    Mike Connor, Democratic Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Baucus, Hon. Max, U.S. Senator from Montana......................     2
Bohlinger, Hon. John, Lt. Governor, State of Montana.............     7
Burns, Hon. Conrad, U.S. Senator from Montana....................     4
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     1
Doney, Julia, President, Fort Belknap Community Council..........    21
Old Person, Chief Earl, Chairman of the Blackfeet Tribe..........    16
Reed, Randy, Co-Chair, St. Mary Rehabilitation Working Group.....    13
Rehberg, Hon. Denny, U.S. Representative from Montana............     5
Rice, Robert E., Mayor, City of Havre, State of Montana..........    25
Ryan, Mike, Regional Director, Bureau of Reclamation, Department 
  of the Interior................................................    38

                                APPENDIX

Additional material submitted for the record.....................    51


     ST. MARY DIVERSION AND CONVEYANCE WORKS AND MILK RIVER PROJECT

                              ----------                              


                       FRIDAY, SEPTEMBER 1, 2006

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                         Havre, MT.
    The committee met, pursuant to notice, at 1 p.m., at the 
Student Union Ballroom, Student Union Building, Montana State 
University, 1 SUB Drive, Havre, Montana, Hon. Pete V. Domenici, 
chairman, presiding.

 OPENING STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM 
                           NEW MEXICO

    The Chairman. Could we have order, please? Thank you very 
much. Good morning everyone. It's nice to be with you. I'm 
Senator Pete Domenici of the State of New Mexico. I'm chairman 
of the committee, the standing committee of the U.S. Senate 
called Energy and Natural Resources. We are having an official 
hearing of that committee here in your city and we will proceed 
shortly with opening statements and observations and then 
proceed to ask the representative from this area, the U.S. 
Representative, to speak. Before that, I would ask if Senator 
Burns would have a word. I have an opening statement but I 
would just like to ask you if you want to have a word of 
welcome first.
    Senator Burns. Well, thank you, Mr. Chairman, for that 
opportunity. You never want to precede the chairman of a 
committee, I learned that a long time ago in the Senate and I 
was reminded, I think, on this committee whenever we first 
joined the U.S. Senate. So I would wait and make my statement 
after your opening statement but I would want to welcome 
Senator Domenici, the chairman of the Energy and Natural 
Resource Committee, to Montana. This is not his first trip to 
the State. He is familiar with the State of Montana and he is 
not unfamiliar with the challenges that we face in the West and 
that is water and our natural resources and how we maintain a 
conservation mode to make good use of our natural resources and 
to make sure that our economies flourish because our economy is 
based on natural resources here in our great State. So, Mr. 
Chairman, thank you for coming and welcome to Montana.
    The Chairman. Thank you, Senator Burns. All right, the 
meeting is called to order. Thank you for attending. The 
realization of our Nation's Manifest Destiny was made possible 
by the construction of water supply projects by the Bureau of 
Reclamation. Many families migrated to the West under the 
promise that this water would be provided. Reclamation water 
projects currently supply water to 31 million people and 
provide irrigation water for roughly 10 million acres of 
farmland. With the growth of the West, the demands on the water 
that these projects supply have grown significantly. These 
projects are the lifeblood of the West. Any disruption to the 
water supplies that is supplied by these facilities would be 
devastating to the interests that depend upon them. However, in 
many instances, these projects are growing old and without 
repair. It threatens the existence of many of our communities 
in the West. Nowhere is this more true than the Hi-Line of 
Montana. After 90 years of use, the St. Mary's facility is 
deteriorating and is in need of major rehabilitation. Of that, 
I do not have to come here to draw that conclusion. I'm made 
aware of that and it is a matter of fact.
    The failure of the facility threatens the well being and 
prosperity of the Hi-Line farmers and ranchers, local towns and 
industry and fish, wildlife, and recreation are all dependent 
on water from the St. Mary facility. Senator Burns has 
advocated the importance of addressing this situation and I 
very much appreciate his leadership in confronting the problem 
that aging infrastructure puts upon and poses for both Montana 
and the Nation.
    I look forward to working with him to address this problem. 
At Senator Burns' request, I included $5 million in the energy 
and water appropriations bill, which I also happened to chair, 
for engineering and environmental studies required to 
rehabilitate the facility. It is my sincere hope that this 
hearing will begin the process of evaluating the best way to 
repair these aging facilities throughout the West. I would like 
to welcome our witnesses for today's hearing and I will name 
panel number one shortly but before I do that, I believe I will 
yield to Senator Burns for comments. Then I will introduce 
panel number one and then ask Congressman Rehberg to make an 
opening statement preceding the first panel. With that, Senator 
Burns, I yield to you.
    [The prepared statement of Senator Baucus follows:]
    Prepared Statement of Hon. Max Baucus, U.S. Senator From Montana
    Mr. Chairman, the Hi-Line is about more than wide-open spaces and 
spectacular views of Montana. The plows and the combines of the Hi-Line 
are fundamental to our way of life. The Hi-Line is vital to Montana. 
And the Hi-Line is important to the nation's bottom line.
    Our predecessors recognized this. They had foresight. They saw that 
irrigated agriculture in the Milk River Basin would foster regional 
prosperity.
    A century ago, Ethan Allen Hitchcock was Secretary of the Interior. 
He served under Presidents William McKinley and Theodore Roosevelt. In 
1905, Secretary Hitchcock authorized the construction of the St. Mary 
Diversion Facility to provide water to irrigators and communities along 
the Hi-Line.
    And the St. Mary Diversion Works was one of the first five 
irrigation projects authorized by the newly-formed Bureau of 
Reclamation in the early 1890s. That history underscores the importance 
of the St. Mary System to the state, the region, and the nation. The 
St. Mary System's value has not diminished. And neither should our 
resolve to maintain it.
    I would like to thank all the area producers and the members of the 
St. Mary Working Group. especially thank Lt. Governor John Bohlinger, 
Chief and Chairman Earl Old Person, Chairwoman Julia Doney, Larry 
Mires, Randy Reed, and John Tubbs. They have tirelessly championed the 
rehabilitation of the St. Mary System. They understand that investing 
in our Country's infrastructure is critical to our producers' economic 
competitiveness today. And they understand that it is part of our duty 
to leave a better country to our children tomorrow.
    That is why I am proud of my work to help rehabilitate the St. Mary 
System. In 2005, I got the rehabilitation started by including $8 
million dollars in the highway bill to build a new bridge across the 
St. Mary River and address bank stabilization along Swiftcurrent and 
Boulder Creeks. I also worked with my friend Senate Minority Leader 
Harry Reid to include $5 million in the 2007 Energy and Water 
Appropriations bill. We are off to a good start. And I'm committed to 
getting the job done.
    The Milk River Basin is home to just 7 percent of the state's 
population. But the Milk River Basin supports more than 1 out of every 
4 farm jobs in the state. And every producer in the Milk River Basin 
generates agricultural retail and service jobs, as well. Producers in 
the Milk River Basin generate 38 percent of Montana's farm and ranch 
earnings.
    Maintaining Montana's economic competitiveness depends on irrigated 
agriculture in the Milk River Basin. And irrigated agriculture depends 
on rehabilitation of the St. Mary System. It's the life line of the Hi-
Line.
    The St. Mary System diverts 160,000 acre-feet of water into the 
Milk River every year. Without that diversion, the Milk River would dry 
up in 6 out of every 10 years. Without that diversion, our agricultural 
communities along the Hi-Line would dry up.
    The St. Mary System provides drinking water to more than 18,000 
residents in Glacier, Hill, Blaine, Phillips, and Valley counties. Our 
communities depend on a reliable source of clean drinking water. It's 
critical to the health of our children. Without the St. Mary System 
diversion, municipal water systems across the Hi-Line would be 
devastated.
    The St. Mary Diversion and Conveyance Works Act includes an 
important provision providing for a feasibility study to determine the 
possibility of developing a safe and reliable municipal and industrial 
water source for the Fort Belknap Reservation. We should not risk the 
health of our communities on 100-year-old water infrastructure.
    Inaction and delay are not options. After 100 years, the St. Mary 
Diversion works are just one accident away from catastrophe. The St. 
Mary System consists of 29 miles of crumbling earthen canals, leaky 
siphons, and cracking concrete hydraulic drops.
    The system was originally designed to divert 820 cubic feet a 
second. But now the system can handle just 670 cubic feet a second.
    In 2002, one of the hydraulic drop structures failed. The canal had 
to be turned off for 2 months. Again in 2004 and 2005, the system had 
to be shut down because of leaks in the siphons. Each of these capacity 
reductions and shutdowns acts like a tax on local producers. Each 
shutdown cost them millions in lost revenue.
    We must act now. I will not stand by while the life line of the Hi-
Line rusts, cracks, and crumbles.
    Rehabilitating the St. Mary Diversion works is critical to Montana 
tribes. For nearly a century, the Blackfeet Tribe has hosted the St. 
Mary Diversion Works on their land. But this has significantly impaired 
the tribe's natural resources.
    The system has caused flooding and erosion below the confluence of 
Swiftcurrent and Boulder Creeks. The St. Mary diversion dam bars fish 
from moving upstream. That hurts native fisheries and the recreation 
economy.
    Sherburne Dam is incapable of passing water during low winter 
flows. As a result, Swiftcurrent Creek often dries up in the winter, 
hurting fish habitat.
    One of the biggest concerns is that a catastrophic failure of the 
St. Mary Diversion works could severely damage Blackfeet Tribal lands. 
That could cause flooding and resource damage. And that could put lives 
at risk.
    That is why the St. Mary Diversion and Conveyance Works Act of 2006 
includes a provision creating an emergency response plan and an 
emergency response fund. We must not leave the Blackfeet Tribe in 
harm's way. We must not leave them at the mercy of a rusting, 100-year-
old irrigation system. This legislation makes sure that we take steps 
to protect the Tribe.
    The St. Mary rehabilitation legislation also includes several other 
provisions critical to the Blackfeet Tribe. It includes protection of 
Tribal water rights. And it includes feasibility studies to determine 
the possibility of rehabilitating the Blackfeet Tribe's irrigation 
system.
    The costs of inaction are great. And so are the benefits of 
rehabilitation. Rehabilitating the St. Mary system will ensure that the 
region's farmers and ranchers stay competitive. Rehabilitating the St. 
Mary System would increase agricultural production by up to $13 million 
dollars a year. And rehabilitating the System would pump another $4 
million dollars in secondary effects into area retail, service, and 
supply businesses.
    The Milk River Basin is also home to more than 7,300 acres of 
wetlands and the Bowdoin National Wildlife Refuge. These natural 
resources depend on a stable supply of water in the Milk River. These 
wetlands support hundreds of thousands of waterfowl each year.
    We take our kids hunting and fishing here. These wetlands are part 
of our recreational heritage as Montanans. They are important to the 
local economy. Rehabilitation of the St. Mary System will improve this 
hunting and fishing habitat. Rehabilitation of the St. Mary System 
would bring another $12 million dollars a year in recreation dollars to 
the local economy.
    All told, rehabilitating the St. Mary System could bring in an 
additional $41 million dollars a year to the local economy. Creating 
good paying jobs at home is my top priority. These are jobs that 
preserve our agricultural way of life. These are jobs that promote our 
recreational heritage of hunting and fishing. These are good jobs that 
keep our Hi-Line families and communities strong.
    Let us work to keep our agricultural economy competitive. Let us 
work to keep clean drinking water flowing to more than 18,000 
Montanans. Let us work to correct resource damage on Blackfeet lands. 
And Let us work to preserve the wetlands and wildlife.
    For all these reasons, we must work to rehabilitate the St. Mary 
System. Let us keep the Hi-Line's life line in good shape, for the next 
generation of farmers and ranchers on the big open spaces of Montana.

         STATEMENT OF HON. CONRAD BURNS, U.S. SENATOR 
                          FROM MONTANA

    Senator Burns. Thank you, Mr. Chairman. I appreciate that 
and again, thank you for coming. The $5 million is appreciated 
in that bill and of course, it will be put to good use. The 
funding will complete the feasibility study for the same area 
of diversion facilities and will develop an emergency response 
plan in the event of a catastrophic failure of those 
facilities.
    It has been my great honor to work on this project. We've 
traveled it from one end to the other. We visited with people 
all the way from St. Mary's clear down to Wolf Pointe, Montana 
and I made the decision that this project must move forward. 
I'd also like to thank our witnesses for traveling and taking 
time out of their busy summer schedules to participate today. 
The St. Mary Rehabilitation Group, the Blackfeet Tribe, and the 
Fort Belknap Tribe have been integral to the development of 
this legislation. I am also pleased to see Representative 
Rehberg here today and the Bureau of Reclamation, Great Falls 
Regional Director, Mike Ryan, could join us up here today also.
    In 1903, Secretary of the Interior Hitchcock authorized the 
construction of the Milk River Project as one of the first five 
reclamation projects under the new Reclamation service. Two 
years ago we authorized the construction of the St. Mary 
Diversion Facilities and two years later, those facilities were 
authorized and have been in operation for nearly 100 years with 
minimum repairs or improvements.
    I would tell you it is a wonder how they work, given the 
time and our knowledge of engineering and of moving water. At 
that, it looks like to me, Mr. Babb really knew what he was 
doing. It is the backbone of this region's agriculture economy. 
It provides irrigation for 110,000 acres and approximately 660 
farms. But now, the facilities and the Milk River Projects are 
facing catastrophic failure. Landslides along the canal are in 
a deteriorated condition. The structure makes the project 
unreliable.
    As authorized in 1903, the Milk River Project is operated 
as a single-use irrigation project. Since completion, nearly 
100 percent of the cost to operate and maintain the diversion 
and infrastructure has been borne by the irrigators. In 
addition, the irrigators are responsible for reimbursing the 
Reclamation, to initiate the initial construction cost of the 
diversion facilities. Maintenance costs have increased with 
accelerated deterioration of those facilities.
    That is the history on it and when we look on how important 
this is to our area, this project has to move forward and we 
cannot lose sight of the critical role that our Blackfeet and 
Belknap Tribes must play in this discussion. Both tribes have 
water compacts that must be addressed in addition to the St. 
Mary's Project. My staff has been working closely with Fort 
Belknap on its draft settlement language and I look forward to 
working with the Blackfeet as soon as its Compact has been 
ratified by the State.
    I know that the tribes are deeply concerned about their 
water rights being lost in the shuffle but I will not allow 
that to happen. It is important to me that the tribes' rights 
are protected in the St. Mary's legislation and their 
individual settlement packages are given due consideration by 
Congress.
    They are all pieces of a comprehensive water solution along 
the Hi-Line and I am committed to securing the enactment of all 
three components. Overall, the bill will provide a feasible and 
comprehensive approach to rehabilitating an aging and 
deteriorating infrastructure while still meeting the needs of 
the folks in Montana.
    I would tell you that the cornerstone of any economic 
development that we face on the Hi-Line today is hinged with 
the development of this project. That's how important it is to 
this area. That's how important it is to the State of Montana 
and to me. Thank you, Mr. Chairman. I look forward to the 
testimony.
    The Chairman. Thank you, Senator.
    Now I'm going to introduce the first panel and see if you 
are all here. Please show me by standing up and then we will 
note your presence. Lieutenant Governor John Bohlinger; Randy 
Reed; Earl Old Person; Julia Doney; and Bob Rice. You will 
testify immediately following the Congressman and will speak in 
the order that I just introduced you. With that, I am very 
pleased to have you present. It is wonderful to have you open 
these hearings with your observations and we yield now to you.

   STATEMENT OF HON. DENNY REHBERG, U.S. REPRESENTATIVE FROM 
                            MONTANA

    Mr. Rehberg. Thank you, Senator Domenici, Senator Burns. We 
thank you for calling this oversight hearing to discuss the 
important rehabilitation that needs to be done at the St. Mary 
Diversion and Conveyance Works and the Milk River Project. By 
being here today you will hopefully gain an even better 
understanding of the critical nature of this project. I would 
additionally like to thank the audience for being here as well 
because it proves to you the importance and this is the number 
one issue within the State of Montana as far as Governor 
Switzer is concerned, Senator Burns, Senator Baucus, myself and 
the Montana Legislature and the municipalities and the 
counties.
    As you know, I have introduced legislation, H.R. 5705, that 
is identical to Senator Burns's bill, in an effort to make this 
issue and this project a reality.
    A hundred years ago, the U.S. Government recognized the 
benefit of agriculture production in this region and 
subsequently, the Bureau of Reclamation made significant 
investments in infrastructure along the St. Mary and Milk River 
Basins. Due to the flow pattern of the Milk River, an agreement 
was also entered into in 1921 that allocated water to both the 
United States and Canada. This agreement is just one example of 
the importance, not only nationally but internationally, of 
this stretch of water.
    However, 100 years have certainly taken a toll on these 
facilities. The St. Mary's Diversion is worn out and in serious 
need of modernization and rehabilitation. This legislation 
would not only authorize the rehabilitation and improvement of 
the St. Mary Diversion and Conveyance Works in the best manner 
possible but would also ensure that we develop an emergency 
response plan in case the facilities should ever fail.
    The Milk River is a lifeline to northern Montana. Our 
agriculture, wildlife and small communities are dependent upon 
the fair and reliable delivery of water. This project is one of 
the most complex the Bureau of Reclamation has ever undertaken 
in this country. With so many entities involved, it is vital 
that we take the necessary steps to ensure these facilities 
continue to work.
    I look forward to hearing the rest of our witnesses and I 
hope that this hearing will enable us to push this critical 
legislation through both the House and Senate.
    I might point out that it is unusual to have this many 
members of the Energy and Water Appropriations Committee 
sitting together because I also serve on the Energy and Water 
Appropriations in the House.
    Senator Domenici, I look forward to working in the 
Conference Committee with both of you on Senator Burns's and 
your insertion of the language and the continuation of our 
working relationship so that we can see that the money is 
available for this rehabilitation. It seems like we are a long 
ways from the headwaters of the St. Mary's Diversion sitting in 
Havre, Montana. That will just tell you how important this 
project is. It virtually covers the entire northern part of the 
State of Montana. So much of our population, having traveled to 
New Mexico with both your own Congressman, Steven Pierce, and 
your Congresswoman, Heather Wilson. I know that you represent 
exactly the same kind of issues in New Mexico. We don't need to 
explain to you the problem, just point out to you how important 
we feel it is. We feel very fortunate that Senator Burns is on 
the committees that matter most to us and look forward to 
working with you in the future. Thanks for giving me this 
opportunity. Thank you for coming to Montana and thank you for 
giving us the opportunity to be heard on this very important 
issue.
    The Chairman. Thank you very much.
    Senator Burns, did you have anything to ask of the 
congressman?
    Senator Burns. I have none.
    The Chairman. I have just one question. Congressman, first 
thank you for being here and for your testimony and for your 
help. We will, so the people will understand, the money that 
we're talking about, the $5 million, is already in the bill. In 
other words, if you were to pick up the appropriation bill for 
energy and water, which I chair in the Senate, you will find in 
it the $5 million and it says what it is for. The problem is, 
we haven't gotten around to passing the appropriations bills 
yet this year and I can't look out at you and promise you as to 
when it will happen. But it would appear to me that we will 
either do it in the next 3 or 4 weeks--we will pass some of 
them in the Senate and House and see if we can get them wrapped 
up. But if not, then we will do it after the election and I'm 
sure we will get them all done, regardless of who is--what the 
outcome of the elections happen to be, we'll get them done and 
you will be a big help because you're on the subcommittee that 
we will meet with. Ours is in for sure. We hope yours is--your 
chairman did not put it in. It's not in yours. I will see to it 
in conference, it's there but you will be of great help.
    Mr. Rehberg. Thank you.
    The Chairman. Is that satisfactory?
    Mr. Rehberg. Absolutely. You hit it right on the nose and I 
need to tell the audience and yourself as well, no it is not in 
the House version. That's why what you both did and you, Mr. 
Chairman in particular, in the Senate is so critical to the 
success of this project. I will provide the support that you 
need in that conference and make sure that my chairman 
understands how important that is.
    The Chairman. You got it. You can count on that. Thank you, 
sir.
    Mr. Rehberg. You bet.
    The Chairman. Now, would the witnesses now come to the 
table and begin in the way that I introduced you? Lieutenant 
Governor, at this end of the table and you go first.
    Mr. Bohlinger. Yes, sir.
    The Chairman. How much time do they each have? All right, 
now in the interests of conducting the hearing in such a way 
that it is orderly, we're going to follow what we normally do 
in the Senate and give each of you 5 minutes. We'll go right 
down the line, 5 minutes each and then we'll come to questions 
and perhaps a second round of observations on your part. I'm 
going to start with you, Lieutenant Governor. It's good to have 
you and we're glad to get you on record on what you have to say 
about this project. Please proceed.

   STATEMENT OF HON. JOHN BOHLINGER, LT. GOVERNOR, STATE OF 
                            MONTANA

    Lt. Gov. Bohlinger. Good afternoon. Thank you, Senator 
Domenici, Senator Burns. I'd like to express my gratitude for 
your being here. My name is John Bohlinger. I am Montana's 
Lieutenant Governor and for the past 2 years, I have had the 
privilege of serving with Mr. Randy Reed, the co-chair of the 
St. Mary Rehabilitation Working Group.
    As Montana's Lieutenant Governor, I welcome you to our 
State. I thank you for this opportunity to discuss the 
critically needed rehabilitation of the St. Mary Diversion 
Works and to address associated concerns the Blackfeet Tribe, 
the Fort Belknap Indian Community and the Milk River Basin. I 
would also like to express my thanks to Senator Baucus, Senator 
Burns and Congressman Rehberg for making this issue a priority 
in the Halls of Congress.
    I am here today as Governor Switzer's representative, and 
as the spokesperson for the State of Montana. I'd like to take 
just a moment to express some of my feelings and concerns. The 
opportunity to have a Senate field hearing in the State of 
Montana is critical. It gives we, as Montanans, a chance to 
meet before Congress and to address our concerns.
    On the 15th of August, I wrote Senator Domenici a letter, 
asking him to invite Governor Switzer to this table to express 
himself. That invitation didn't come but I want to tell you 
about a little of Governor Switzer's background. He is a 
farmer, a rancher, and a man with an advanced degree in soil 
science. He understands agriculture as an irrigated farmer. I 
think he could have added a lot to today's conversations.
    I also would like to discuss briefly the critical issue of 
funding for this St. Mary's Project and place that in context 
with projects that have been funded in this region. As these 
charts would illustrate, in 2002 and 2000, the U.S. Congress 
took under consideration the inadequate water infrastructure of 
our State and authorized the funding for and the advancement of 
what is called the Rocky Boy Reservation Water Project and the 
Fort Peck Dry Prairie Project. It would have cost about $500 
million to bring these projects to fruition. That has not moved 
through Congress. The appropriations have not been placed on 
the President's budget but our congressional delegation have 
been able to bring forward about $45 million towards this need. 
The charts would have illustrated that this amount pales in 
comparison to the sort of monies that have been made available 
to our neighbors in North Dakota, who received $133 million or 
three times the amount that we Montanans have received. Our 
neighbors, South Dakota, received $268 million or six times 
more than we received. Colorado, our neighbors to the south, 
received $207 million or four and a half times more than we 
Montanans received and your State, the Land of Enchantment, 
received $144 million dollars or three times more than we 
Montanans received and it is not that we begrudge the placement 
of those monies in these other States because we know how vital 
they are to the economies and to the welfare of those people. 
We're just hoping that Montana will have its fair share of this 
next budget and appropriation period as we move forward with 
the St. Mary's Project.
    The Chairman. Let me see, Lieutenant Governor.
    Lt. Gov. Bohlinger. Yes, sir.
    The Chairman. It is a privilege to have you here, as I said 
but I've just heard you talk about comparisons and that's fine.
    Lt. Gov. Bohlinger. Yes sir.
    The Chairman. But would you get on with talking about this 
project?
    Lt. Gov. Bohlinger. Yes, sir. I certainly will. Let me 
speak directly.
    The Chairman. I think that's why we came here.
    Lt. Gov. Bohlinger. Yes, sir.
    The Chairman. Now, there is a nice theoretical discussion--
--
    Lt. Gov. Bohlinger. Thank you, sir.
    The Chairman. Which would have been a good thing to do at a 
political rally, perhaps, but let's get on with this. What do 
you want to tell us as Lieutenant Governor?
    Lt. Gov. Bohlinger. I'd like to speak directly to S. 3563.
    The Chairman. That would be good.
    Lt. Gov. Bohlinger. Thank you. I'd like to acknowledge the 
role of the St. Mary's Working Group and its work in crafting 
this piece of legislation. Sixteen members of the Working Group 
represent a broad partnership of stakeholders and they include 
the Milk River Irrigation Districts, the Blackfeet Tribe, the 
Fort Belknap Indian Community, municipalities, county 
governments, business interests and recreational and fishery 
interests in the Milk River Basin.
    The catalyst for bringing the Working Group together has 
been the simple understanding of their shared fate. The 
negative impacts of failure will be borne by all, just as the 
benefits of success will be shared by all, as S. 3563 is the 
culmination of 3 years of hard work by the St. Mary's Working 
Group and the State of Montana.
    We also recognize that the entirety of the St. Mary 
Division Works is located within the boundaries of the 
Blackfeet Indian Reservation. As such, the sovereignty of 
tribes must be recognized and respected as a solution is 
crafted.
    The St. Mary Diversion Works are as old as the Bureau of 
Reclamation itself. Energy to construct the 30-mile canal was 
provided by steam, horse, and manual labor. Now, after almost 
100 years of service, the St. Mary system has reached the end 
of its useful life. The steel siphons are plagued with slope 
instability and are leaking. The five concrete drop structures 
have deteriorated to a point of rubble. Slides and slope 
failure is widespread along the canal route. It is not a 
question of if but when the system will fail.
    Mr. Chairman, loss of this infrastructure would have a 
devastating economic effect on the Milk River Basin and people 
of the State of Montana. The St. Mary Diversion Works support 
over 10 percent of Montana's irrigated agricultural economy.
    Without water from the St. Mary River, this Milk River 
would run dry in 6 out of every 10 years and the impact would 
extend beyond agriculture. Multiple Hi-Line communities depend 
upon St. Mary Diversion Works for their municipal water. The 
Bowdoin National Wildlife Refuge also depends upon water from 
the St. Mary River. A sudden failure of the system would result 
in environmental damage to the St. Mary's watershed and the 
Blackfeet Reservation. This is a culturally sensitive area that 
contains critical habitat for the threatened cutthroat and bull 
trout.
    Also at stake is the United States' water right for the St. 
Mary River under the 1909 Boundary Water Treaty. A failure of 
the St. Mary Diversion Works would preclude the United States 
from exercising its entitlement to a share of the St. Mary 
River.
    The State of Montana has taken a leadership role in 
contributing over $1.9 million towards the preliminary 
engineering, economic studies, and administrative and technical 
support to the Working Group. At the request of the Schweitzer 
Administration, the State Legislature authorized $10 million in 
non-Federal share for reconstruction of the St. Mary Diversion 
Works.
    One of the most important provisions of S. 3563 is the 
establishment of an affordable cost share agreement for water 
users who hold repayment contracts with the Bureau of 
Reclamation. The 1905 authorization of the St. Mary Diversion 
Works is for the single purpose of irrigation. As a result, 
nearly 100 percent of the cost to operate and maintain the 
diversion facilities has been borne by irrigators.
    A recent study demonstrates that 32 percent of the annual 
economic benefit derived from the St. Mary system accrues to 
irrigated agriculture. The remaining 68 percent accrues to the 
public in the form of municipal water, recreation and fish and 
wildlife benefits.
    In 1905, the Secretary of the Interior authorized 
construction of the St. Mary Diversion Works in order to 
provide a stable source of water for irrigation to the lower 
Milk River Valley. As a result of this early 20th century 
project, settlers moved into the valley and a vibrant regional 
economy based on agriculture grew out of a dry prairie 
landscape.
    The Chairman. Governor, can you look at the clock up here 
and see what's cooking?
    Lt. Gov. Bohlinger. I see a red light blinking, sir.
    The Chairman. That's been blinking for a long time.
    Lt. Gov. Bohlinger. Well, let me just summarize by offering 
my thanks for this opportunity to speak with your committee, 
sir. We appreciate your being here. We appreciate you, Senator 
Burns, for arranging this opportunity and we look forward to 
further collaborating with you. Thank you for this opportunity 
to speak.
    [The prepared statement of Lt. Gov. Bohlinger follows:]
   Prepared Statement of Hon. John Bohlinger, Lt. Governor, State of 
                                Montana
    Chairman Domenici, Ranking Member Bingaman, and distinguished 
members of the Energy and Natural Resources Committee, thank you for 
the opportunity to provide further testimony in support of S. 3563, 
``St. Mary Diversion Works and Milk River Project Act of 2006.'' The 
State of Montana appreciates the Committee holding a field hearing in 
our fair State and the time and effort of everyone involved in 
traveling such a great distance. We respectfully move this Committee to 
pass S. 3563 as herein described.
    As was evident at the field hearing in Havre, Montana, the St. Mary 
Diversion and Conveyance Works (``DCW'') is unique. The United States 
Bureau of Reclamation (``BOR'') expressed concern at the hearing that 
S. 3563 may set a precedent for other aging infrastructure across the 
West. However, this is not the case. Although other BOR projects may be 
facing similar aging issues, the DCW is like no other and cannot be 
directly compared to any other. The DCW was authorized in 1905, as part 
of the Milk River Project, one of the original five Reclamation Service 
projects authorized in 1902. It is an engineering marvel of the early 
twentieth century. It is entirely gravity-fed, with steel riveted 
siphons of the Titanic era, delivering water approximately 30 miles 
from the St. Mary River in a trans-basin diversion to the North Fork of 
the Milk River. The DCW lies entirely within the boundaries of the 
Blackfeet Indian Reservation, whose people helped construct the DCW 
and, yet, have never benefited from its existence. The DCW allows the 
United States to take its share of water from the St. Mary River under 
the 1909 Boundary Waters Treaty with Canada (1909 Treaty). Without the 
DCW our share of the St. Mary River would flow to Canada. The Water 
Rights Compact between the State of Montana and the Ft. Belknap Indian 
Community of the of the Ft. Belknap Indian Reservation (``Ft. Belknap 
Indian Community'') is predicated upon the continued existence of the 
DCW. The DCW also provide critical water to the Bowdoin National 
Wildlife Refuge which is struggling with severe salinity issues. 
Failure of the DCW could also impact the threatened Bull Trout. No 
other BOR project faces such a complex intertwining of Tribal, 
international, fish and wildlife, and domestic sustainability issues.
    At the outset, I would like to address a question raised by Senator 
Domenici in the field hearing. The question was whether the 1909 Treaty 
would need to be renegotiated if the DCW were to be rehabilitated with 
a 1000 cubic feet per second (CFS) canal. The short answer is no. 
Rehabilitation of the DCW would not require renegotiation and would not 
be affected by actions of the International Joint Commission, the 
international body responsible for implementing the 1909 Treaty. 
Rehabilitating the canal to a 1000 CFS capacity would simply allow the 
United States to take that amount of water to which it is already 
entitled under the 1909 Treaty. The original design capacity of the DCW 
was 850 cfs. Due to deterioration and safety concerns, the DCW has for 
a long time operated at approximately 670 cfs. A larger capacity DCW, 
such as 1000 cfs, would simply allow the United States to take more of 
its existing entitlement. As recognized by BOR Regional Director Dan 
Jewell, before the International Joint Commission, the United States 
currently does not have enough infrastructure to take full advantage of 
its entitlement under the 1909 Treaty.
    The United States currently runs approximately 150,000 acre-feet 
per year of St. Mary River water through the DCW to the Milk River and 
the Milk River Basin. Without the DCW, none of this water would be 
available to users in the Milk River Basin. According to BOR, virtually 
all the Milk River irrigators in Montana receive on average only about 
one-half of a full-service water supply with the DCW. The mainstem of 
the Milk River has essentially been closed to new appropriations for 
over twenty years. In dry years, about 90% of the flow in the Milk 
River is water diverted from the St. Mary River through the DCW for 
irrigation, municipal, fish and wildlife, and recreation purposes.
    Without the DCW, the United States could not take virtually any of 
its share of the St. Mary River water to which it is entitled under the 
1909 Treaty. All of this water would flow to the benefit of our 
neighbors in Canada. As a further complicating factor, Canada currently 
irrigates 7000 acres in Alberta with water flowing through the Milk 
River as it runs into Canada and before it flows back into the United 
States into the Milk River Basin. Some of this water is Canada's share 
of the Milk River, some is its share of the St. Mary River through the 
DCW, and some is the United States' share of the St. Mary River through 
the DCW. Should the DCW fail, Canada would almost assuredly continue to 
meet its irrigation demand from the flows in the Milk River in Canada, 
regardless of whether the DCW is rehabilitated. This leaves the people 
in the Milk River Basin in even more dire straights, if that were to be 
possible. This includes the Ft. Belknap Indian Community which is 
entitled to essentially all of the natural flow of the Milk River (up 
to 645 cfs) under their Water Rights Compact with the State of Montana; 
this is the reason that the Compact is predicated on the existence of 
the DCW to bring St. Mary River water to the Milk River and the people 
of the Milk River Basin.
    The State of Montana appreciates the concerns and shares 
frustrations of the Blackfeet Tribe and the Ft. Belknap Indian 
Community regarding settlement of their claims, and in particular their 
water rights. However, the deterioration of the DCW doesn't stop simply 
because Tribal negotiations are on-going and S. 3563 must be passed 
now. The State has been in negotiation with the Blackfeet Tribe 
concerning their water rights for over twenty years with little or no 
effective federal presence at the table. While the State and the Ft. 
Belknap Indian Community reached a settlement ratified by the Montana 
Legislature in 2001, the Federal Government has yet to bring to the 
table resources to effectuate a federal ratification of that 
settlement. The State has already secured $9.5 million in bonding 
authority to commit to any final, federal settlement with the Ft. 
Belknap Indian Community. The State is committed and stands ready to 
negotiate these settlements. Without any type of deadline to force the 
necessary federal resources to the table, there is little doubt that 
these settlement issues would continue to limp along without federal 
finality for years to come. BOR believes that these claims should be 
settled prior to any authorization on the DCW. However, this statement 
is somewhat disingenuous given that BOR knows that Washington has not 
committed the federal resources to negotiate and settle these claims. 
The luxury of time that the BOR seeks by requiring final, federal 
settlement of these claims and rights prior to authorization of 
rehabilitation, knowing that there is a void of resources dedicated to 
settlement, is not one that the Tribes of people of the Milk River 
Basin can afford. Time is of the essence.
    To this end, the State proposes the following to address the 
concerns of the Tribes, provide for the continued viability of the Milk 
River Basin, and provide for the implementation of the 1909 Treaty. The 
DCW will fail, and it is just a question of when. Postponing 
rehabilitation does not make the impending failure disappear. It takes 
time to properly prepare for planned rehabilitation. The Blackfeet 
Tribe and the Ft. Belknap Indian Community testified that they support 
S. 3563, as long as their claims and issues are settled prior to 
construction of any rehabilitation of the DCW. The State proposes that 
S. 3563 be passed substantially as written with new language providing 
that construction of the rehabilitation may not commence until Federal 
FY 2009, October 1, 2008, or until such time as the claims of the 
Tribes are federally settled, whichever comes first. The new language 
provides an additional two years for resolution of Tribal claims and 
issues and provides an incentive for the Federal Government to bring 
the necessary resources to the table to effectuate settlement. During 
the interim, the BOR can complete all actions necessary for 
construction, including compliance with the National Environmental 
Policy Act and engineering. As further set forth in the testimony of 
Mary Sexton, Director of the Montana Department of Natural Resources 
and Conservation, the State believes that a majority of BOR's concerns 
regarding additional work have already been addressed and the timeframe 
suggested by the State allows for completion of the rest. S. 3563 with 
the new language addresses all of the parties remaining concerns by 
providing a timeline for Tribal settlement, time to complete all 
actions necessary for construction, and providing for the planned 
rehabilitation of the lifeline upon which the Milk River Basin, the 
Water Rights Compact between the State and the Ft. Belknap Indian 
Community, and the 1909 Treaty depend.
    Finally, as brought out in the field hearing, the DCW is vital 
feature of the Montana Hi-Line. Over ten percent of Montana's irrigated 
agricultural economy is dependent upon supplemental water provided by 
the DCW. Without the water imported from the St. Mary River, the Milk 
River would run dry on average 6 out of every 10 years. Over 17,000 
people in communities along the Hi-line depend on the DCW for their 
municipal drinking water. Bowdoin National Wildlife Refuge is also 
dependent on St. Mary River water to provide critical food and habitat 
for an estimated 100,000 waterfowl each spring and fall. A sudden 
failure of the system would likely result in severe environmental 
damage on the Blackfeet Reservation, particularly to the threatened 
Bull Trout.
    The cost-share set forth in S. 3563 is critical to the survival of 
these interests, and especially the cap on cost-share of $25 million. 
The State's understanding of how this cost-share would work is set 
forth in Exhibit A to this Testimony. The average per capita income for 
residents of the Hi-Line is $14,585. As originally and currently 
authorized, irrigators bear almost 100% of the operation and 
maintenance (including rehabilitation) costs for the DCW. A preliminary 
economic study commissioned by the State and conducted in consultation 
with BOR indicates that 32% of the annual economic benefit derived from 
the DCW accrues to irrigated agriculture. The remaining 68% accrues to 
the public in the form of municipal water, recreation, and fish and 
wildlife benefits. For this reason alone, the DCW must be reauthorized 
to recognize these other benefits. In addition to and not a part of 
that calculation are the considerations that the Blackfeet Tribe should 
benefit from a rehabilitated DCW, and the Water Rights Compact between 
the State and the Ft. Belknap Indian Community is predicated on the 
continued existence of the now deteriorated DCW. If the DCW fails, the 
Water Rights Compact must be reopened for negotiation because non-
Tribal water use in the Milk River is dependent upon St. Mary River 
water. Moreover, the United States forfeits virtually its entire share 
of the St. Mary River to Canada under the 1909 Treaty if the DCW fails. 
Thus, the DCW is unique, and any cost-share set by S. 3563 cannot set a 
precedent for any other project for no other BOR project shares these 
same interests.
    In conclusion, for the past two and one-half years, I have had the 
privilege of Co-Chairing the St. Mary Rehabilitation Working Group 
(``Group'') with Mr. Randy Reed, an irrigator from Chinook, Montana. 
This Group formed at the impetus of local people like Mr. Reed who are 
frightened by a future without the imperiled DCW and recognize that the 
local BOR cannot provide for a planned rehabilitation. The Group is an 
unprecedented representation of Tribal, irrigation, fish and wildlife, 
county, municipal, economic development, and recreation interests along 
the Hi-Line of Montana. The representatives on the Group and their 
forebears settled the Hi-Line with the promise from the Federal 
Government of a stable water supply. That promise hangs precariously in 
the balance as the DCW rapidly approaches failure after almost one 
hundred years of service. It is on-behalf of these interests and the 
hard-working people of the Hi-Line that State moves this Committee for 
passage of the S. 3563 as modified by the new language herein 
discussed.

               Exhibit A--COST SHARE ANALYSIS OF PROPOSED ST. MARY REHABILITATION PROJECT S. 3563
----------------------------------------------------------------------------------------------------------------
                                                                                           Reimbursable costs
                                                                 Non                   -------------------------
             Rehabilitation costs                           reimbursable  Reimbursable    Federal    Non-Federal
                                                                                         cost share   cost share
----------------------------------------------------------------------------------------------------------------
                                                 (2006 $s)           55%           45%          75%          25%
Feasibility Study............................   15,000,000     8,250,000     6,750,000    5,062,500    1,687,500
St. Mary Rehabilitation......................  135,000,000    74,250,000    60,750,000   45,562,500   15,187,500
Emergency Fund...............................   15,000,000     8,250,000     6,750,000    5,062,500    1,687,500
Milk River Project...........................   10,000,000     5,500,000     4,500,000    3,375,000    1,125,000
 
                                                                    100%
Emergency Fund Plan..........................    2,000,000     2,000,000
Blackfeet Economic Projects..................    1,000,000     1,000,000
Blackfeet Irrigation Projects................    5,000,000     5,000,000
Fort Belknap Regional Water..................    1,000,000     1,000,000
                                              ------------------------------------------------------------------
                                                                                   75%          75%          75%
  Total......................................  184,000,000   105,250,000    78,750,000   59,062,500   19,687,500
----------------------------------------------------------------------------------------------------------------
a Subject to $25 million cap.

    The Chairman. Do you support S. 3563?
    Lt. Gov. Bohlinger. Wholeheartedly.
    The Chairman. Right. Thank you very much.
    Lt. Gov. Bohlinger. Yes, sir. Thank you.
    The Chairman. Mr. Reed.

  STATEMENT OF RANDY REED, CO-CHAIR, ST. MARY REHABILITATION 
                         WORKING GROUP

    Mr. Reed. Chairman Domenici, Senator Burns, welcome to 
Montana. Senator Domenici, thank you for coming.
    The Chairman. Thank you.
    Mr. Reed. My name is Randy Reed. I am the co-chair of the 
St. Mary Working Group with Montana Lieutenant Governor John 
Bohlinger.
    I would like to express my thanks and sincere appreciation 
to Senator Burns, Senator Baucus and Representative Rehberg. As 
soon as Montana's congressional delegation became aware of the 
seriousness of the problems, they took the issue as a top 
priority.
    My great grandfather homesteaded in the Milk River Valley 
and was among the founding fathers supporting the construction 
of the Milk River Project at the turn of the 20th century. 
Irrigation allowed my grandfather to settle in northern Montana 
and endure. I began farming and ranching in 1984, after 
graduating from Montana State University with an Agricultural 
Business Degree.
    Today, my family produces irrigated seed potatoes, alfalfa 
hay and malt barley and pinto beans. We also rely on the 
project for our drinking water and also enjoy many of the 
recreational opportunities supported by the St. Mary Diversion 
Works. S. 3563 recognizes the critical need to rehabilitate the 
St. Mary Diversion and Conveyance Works. A system-wide 
investigation showed critical shortcomings in the system's 
infrastructure and operation impacts to the environment. The 
steel siphons are plagued with slope instability problems, 
leaks and the concrete in the hydraulic drop structures is 
severely deteriorating. Landslides along the canal and the 
deteriorated condition of the structures make the canal 
unreliable today as a water source.
    The proposed legislation addresses the core issue: cost 
share. The ability of irrigators to pay for capital investment 
represents a financial crisis associated with the project. As 
originally authorized, the St. Mary Diversion Works are 
operated for the single purpose of irrigation. As such, over 
the last 90 years, nearly 100 percent of the operating and 
maintenance cost for the diversion infrastructure has been 
borne by irrigators.
    Reclamation's 2005 Current Use Benefit Analysis showed 
large public benefits accrue from the existence of the St. Mary 
Diversion Works. A recent preliminary economic study authored 
by John Duffield shows that approximately 32 percent of the 
annual economic benefit associated with the St. Mary Diversion 
Works accrue to irrigated agriculture. The remaining 68 percent 
accrues to the public in the form of municipal water, 
recreation, fish and wildlife, and extensive riparian areas. 
However, the 1905 authorization does not reflect this new 
reality. As a result, irrigators within the Milk River Project 
are being asked to subsidize the Nation for benefits the public 
enjoys.
    Mr. Chairman, the residents of the Milk River Basin are 
hardworking people, who, over generations of families, have 
carved out a living and built communities in this landscape.
    With an average per capita income of $14,585, the residents 
of the Hi-Line are not rich. Yet counties, communities and 
individuals have donated over $275,000 in support of the St. 
Mary's efforts. Now we need active cooperation and 
participation from the Bureau of Reclamation.
    We have tried to constructively engage Reclamation in this 
project and have been repeatedly told there is nothing the 
agency can do under the current authorization. Passage of S. 
3563 will allow Reclamation to work with us collectively for an 
amicable solution. My family's future, my communities' future 
and the future of the Milk River Basin are dependent on the 
passage of S. 3563. Does the Unites States close the book on 
100 years of history and investment or do we reinvest in our 
country's future? Our grandfathers had the vision to establish 
this project to build Montana communities. The legacy is ours 
now. Passage of S. 3563 is not just about the fate of the 
farmers and ranchers but rather, Montana's Milk River Basin.
    Rehabilitation is a legacy that we will pass to our 
children and our grandchildren and many generations beyond. 
Once again, I thank you, Senator Domenici and Senator Burns, 
for coming to Montana. This is so critical to us, our water 
supply and we're just so appreciative of this hearing. Thank 
you, sir.
    [The prepared statement of Mr. Reed follows:]
  Prepared Statement of Randy Reed, Co-Chair, St. Mary Rehabilitation 
                             Working Group
    Chairman Domenici and distinguished members of the Senate Energy 
and Natural Resources Committee.
    Welcome to Montana and thank you for holding this field hearing in 
Havre, Montana to discuss the critical need to rehabilitate the St. 
Mary Diversion Works of the Milk River Project and, address associated 
concerns of the Blackfeet Tribe, Ft. Belknap Indian Community, and the 
Milk River Basin.
    My name is Randy Reed. I am the Co-Chair of the St. Mary 
Rehabilitation Working Group with Montana Lt. Governor John Bohlinger.
    I would like to express my thanks and sincere appreciations to 
Senator Burns, Senator Baucus and Representative Rehberg. As soon as 
Montana's Congressional Delegation became aware of the seriousness of 
the problems they took on the issue as a top priority.
    My great grandfather homesteaded in the Milk River Valley and was 
among the founders supporting the construction of the Milk River 
Project at the turn of the 20th century. Irrigation allowed my great 
grandfather to settle in Northern Montana and endure. I began farming 
and ranching in 1984 after graduating from Montana State University 
with an Agricultural Business Degree. Today, my family benefits from 
these same water resource facilities and we are able to raise irrigated 
certified seed potatoes, alfalfa hay and malt barley. We also rely on 
the project for our drinking water and enjoy the many recreational 
opportunities supported by the St. Mary Diversion Works.
    Senate Bill 3563 recognizes the critical need to rehabilitate the 
St. Mary Diversion and Conveyance Works. A system wide investigation 
showed critical shortcomings in the system infrastructure and operation 
impacts to the environment. The steel siphons are plagued with slope 
stability problems and leaks, and the concrete in the hydraulic drop 
structures is severely deteriorating. Landslides along the canal and 
the deteriorated condition of the structures make the canal unreliable 
today as a water source.
    The State of Montana has spent over half a million dollars to 
prepare preliminary engineering and economic studies. S. 3563 addresses 
the immediate need to begin the final planning and environmental 
analysis required to reconstruct the facilities. The bill also allows 
Reclamation to develop a ``strategic plan'' and reimbursable funding 
mechanism that provides critical support should a catastrophic failure 
occur prior to rehabilitation. It is time for us to be ``pro-active'' 
on these issues rather then ``reactive''.
    The proposed legislation addresses a core issue--cost-share. The 
ability of irrigators to pay for capital investment represents the crux 
of the financial crisis associated with this project. As originally 
authorized, the St. Mary Diversion Works are operated for the single 
purpose of irrigation. As such, over the last 90 years, nearly 100% of 
the cost to operate and maintain the diversion infrastructure has been 
borne by irrigators within the eight irrigation districts of the Milk 
River Project.
    Reclamation's 2005 Current Use Benefits Analysis showed large 
public benefits accrue from the existence of the St. Mary Diversion 
Works. A recent preliminary economic study authored by Dr. John 
Duffield shows that approximately 32% of the annual economic benefit 
associated with the by the St. Mary Diversion Works accrue to irrigated 
agriculture. The remaining 68% accrues to the public in the form of 
municipal water, recreation, fish and wildlife, and extensive riparian 
areas. However, the 1905 authorization does not reflect this new 
reality. As a result, irrigators within the Milk River Project are 
being asked to subsidize the Nation for benefits the public enjoys.
    Although rehabilitation of the St. Mary Diversion Works is at the 
heart of Senate Bill 3563, the proposed legislation addresses other 
water related needs in the St. Mary and Milk River Basin. S. 3563 
contains provisions to address project related concerns on the 
Blackfeet Reservation and provides funding for the Ft. Belknap Indian 
Community to study the feasibility of building a rural water system on 
their reservation. Senate Bill 3563 also authorizes Reclamation to 
prepare a feasibility study on the need to rehabilitate water diversion 
and delivery structures within the Milk River Project.
    Mr. Chairman, the people of the Milk River Basin and the State of 
Montana are not looking for a handout through Senate Bill 3563. 
Residents of the Milk River Basin have worked extremely hard to bring 
attention to this critical issue. The St. Mary Rehabilitation Working 
Group represents a broad coalition of basin interests including the 
Milk River Irrigation Districts, the Blackfeet Tribe, the Fort Belknap 
Indian Community, municipalities, business interests, and recreational 
and fishery interests in the Milk River Basin. The residents of the 
Milk River Basin are hard working people who over generations of 
families have carved out a living and built communities in this 
beautiful landscape. With an average per capita income of $14,585, 
residents of the Hi-line are not rich. Yet counties, communities and 
individuals have donated over $275,657 in support of this project.
    Now we need the active cooperation and participation of the Bureau 
of Reclamation. We have tried to constructively engage Reclamation in 
this project and have been repeatedly told that there is nothing the 
agency can do under current Reclamation law. Passage of Senate Bill 
3563 will allow Reclamation to work with us collectively for an 
amicable solution.
    My family's future, my communities' future, and the future of the 
Milk River basin is dependent on passage of Senate Bill 3563. Does the 
Unites States close the book on 100 years of history and investment or 
do we reinvest in our country's future? Our grandfathers had the vision 
to establish this project to build Montana communities. This legacy is 
ours now. Passage of S. 3563 is not just about the fate of the farmers 
and ranchers but rather Montana's Milk River Basin. Rehabilitation is a 
legacy that we will pass on to our children and our grandchildren and 
the many generations beyond
    Again, I appreciate this opportunity to testify.

    The Chairman. Thank you very much, Mr. Reed.
    Chief Earl Old Person, would you please proceed? Thank you, 
sir, for coming.

         STATEMENT OF CHIEF EARL OLD PERSON, CHAIRMAN 
                     OF THE BLACKFEET TRIBE

    Chief Old Person. Honorable Senator Domenici and Senator 
Burns, I am Earl Old Person, chairman of the Blackfeet Tribe. I 
appear here on behalf of the Blackfeet Tribe and its members. I 
would like to express my appreciation to the chairman of the 
Senate Energy and Natural Resources Committee, Pete Domenici, 
for the invitation to provide testimony to the committee.
    I would like to also express my appreciation to Senator 
Burns, whose landmark efforts to bring about the rehabilitation 
of the St. Mary facility and for his efforts on behalf of the 
Blackfeet Tribe in that process. Also to Senator Baucus and 
Congressman Rehberg, for their concern and input.
    We are cautiously supportive of the present legislation to 
rehabilitate the St. Mary's facilities. We are relieved to see 
an unsafe project, that could potentially fail and seriously 
impact our reservation lands and the people, will be finally 
fixed. We are also optimistic that the amount of damages on the 
reservation that has been caused by the project will be 
remedied. This has been a long-standing concern of the 
Blackfeet Tribe. We are glad to see that something will finally 
be done about it. However, we are cautious because once again, 
plans are being made that directly impact our land and waters. 
While in the past, we have been consistently ignored and left 
out of the process, this time we are demanding to be a full 
party to the process with an equal place at the table with the 
Federal and the State government and with equal signatory 
authority in all aspects of the project, including final 
approval of the project.
    Because our land and waters are directly impacted by the 
project, we have the greatest interest and greatest stake in 
this rehabilitation effort. As long as we can remember, our 
Blackfeet people have occupied the area of St. Mary's and Milk 
River, however, our original territory was much larger but 
gradually, our land was taken until we were pushed as far as 
possible up against the rocks, the Rocky Mountains and this is 
our reservation today.
    When our reservation was established by Treaty in 1855, our 
people understood that the waters of the reservation, including 
St. Mary's and Milk River, were also set aside for our people. 
This is our water. The rivers and streams on reservation are 
sacred to the Blackfeet people and they are a critical part of 
our oral history, creation of stories and traditions and 
ceremonies. They are the lifeblood of every aspect of our 
lives, our economy and our way of life and our spirituality.
    However, when the United States entered into the Boundary 
Waters Treaty in 1909, no one came to us and said, ``We are 
dividing up your water. You should be part of our 
negotiations.'' In fact, no one came to us at all and our water 
rights were never even considered in the Treaty. When the Milk 
River Project was constructed by the Federal Government almost 
100 years ago, no one came to us and asked our permission to 
use our water. No one came to us and asked our consent to build 
this project that diverts our water far off the reservation to 
be used by others.
    When you talk about rehabilitation of the St. Mary's 
facility, as far as we are concerned, you are talking about 
fixing a project that will continue to divert Blackfeet water. 
This is why we are now saying, ``No more.'' We will not let the 
Federal and State governments make plans for our water and 
ignore the water rights and land rights of the tribe. That is 
why we are saying that our land and water issues must be 
addressed in order for the rehabilitation to go forward and 
that is why we are saying that we must be an equal party at the 
table with the Federal and State governments in the process.
    The Blackfeet Tribe has long viewed the massive conversion 
of St. Mary's water from the Blackfeet Reservation for the Milk 
River Project as well as the 1909 Boundary Waters Treaty as a 
violation of the rights of the Blackfeet people because the 
water rights of the Blackfeet tribe was never considered or 
addressed. As far as the Blackfeet Tribe is concerned, it is 
our water that has been diverted for use by others almost 100 
years ago. Unless the water rights of the tribe are determined, 
we do not see how the diversion can legitimately continue 
through the rehabilitation system. We are also adamant that our 
damage claims relating to the project are addressed and 
resolved and that we finally receive some benefit from this 
project that has used our lands and water for all these years.
    Although the Federal Government promised us that we would 
benefit from the project in return for the use of our land and 
waters, to this day, we have never received one benefit from 
the project.
    It is also critical that our Blackfeet irrigation projects 
be rehabilitated as an older BIA Irrigation Project. It suffers 
from substantial disrepair and historical neglect and suffers 
similar conditions and problems as the Milk River Project. If 
monies can be appropriated for the Milk River Project to use 
reservation waters far downstream by non-Indian project users, 
then funds should also be appropriated to repair the Blackfeet 
irrigation project so that reservation waters can be used for 
our people. We are especially glad to see that the Blackfeet 
provision of the present bill recognizes these issues.
    We appreciate the efforts of Senator Burns for including 
these provisions on our behalf but we must also ensure that 
these provisions are acted upon by the Federal Government.
    The only way to ensure that land and water rights of the 
Blackfeet Tribe are protected is to make sure that they are 
determined and resolved before the rehabilitation goes forward. 
We expect the Federal Government to move forward quickly in 
this regard. It is also our expectation that Congress and our 
Montana delegation will assist in and be supportive of the 
Blackfeet Tribe in achieving a comprehensive settlement of the 
water rights and damage claims.
    We appreciate the committee's understanding of these issues 
and look forward to both a resolution of the Blackfeet Tribe's 
long-standing land and water issues and to the rehabilitation 
of St. Mary Diversion and Conveyance facilities. We also look 
forward to a clear recognition of the Blackfeet Tribe's 
critical role in the process and on equal sovereign-to-
sovereign basis with both the Federal and the State government.
    I want to thank you for allowing me this time. This is 
important to our Blackfeet people. I may have taken a little 
more time but it is very critical at this time, that we address 
these issues. Thank you.
    [The prepared statement of Chief Old Person follows:]
Prepared Statement of Chief Earl Old Person, Chairman of the Blackfeet 
                                 Tribe
    Good afternoon. I am Earl Old Person, Chairman of the Blackfeet 
Tribe. I appear here today on behalf of the Blackfeet Tribe and its 
members.
    I would like to express my appreciation to the Chairman of the 
Senate Energy and Natural Resources Committee, Pete Domenici, for the 
invitation to provide testimony to the Committee. I would also like to 
express my appreciation to Senator Burns whose landmark efforts to 
bring about the rehabilitation of the St. Mary facilities is the 
subject of the hearing today.
    At the outset, I would like to state that the Blackfeet Tribe 
supports the rehabilitation of the St. Mary diversion facilities and 
conveyance works. The Tribe understands and is concerned that the 
diversion facilities and conveyance works may fail, and the physical 
and environmental impacts of such failure will be felt most directly by 
the Blackfeet people. There are also some very significant 
environmental impacts to Reservation lands and waters which have been 
caused by the Project that are a source of major concern by the 
Blackfeet. We understand the these environmental issues will be 
addressed and fixed as part of the rehabilitation effort. These include 
the siltation of St. Mary's Lake, an environmental tragedy that is 
worsening over time, the dewatering of Swiftcurrent Creek which has a 
substantial impact on the fishery, including the threatened bull trout, 
the flooding at the confluence of Boulder Creek and Swiftcurrent Creek 
that occurs on an almost annual basis, and, of course, the leakage of 
the canal that has impacted tribal lands, resources and wildlife. The 
Blackfeet Tribe has long sought to have these environmental damages 
resolved and fixed, and we will push to make sure they are addressed as 
part of the rehabilitation process. In addition, the water system of 
the community of Babb has been affected by the operation of the 
project, and it is our expectation that this issue will be addressed as 
well.
    At the same time, we do not believe the diversion and conveyance 
facilities can be rehabilitated unless the water rights of the 
Blackfeet Tribe and other claims relating to the Project are resolved. 
The water rights of the Tribe were never addressed when the Milk River 
Project was constructed. Neither were the Tribe's water rights 
addressed when the United States entered into the 1909 Boundary Water 
Treaty with Great Britain, which allocated St. Mary's and Milk River 
water between the United States and Canada, and which serves as the 
primary justification for the Milk River Project diversions. As far as 
the Blackfeet Tribe is concerned, it is our water that has been 
diverted for use by others for almost a hundred years, and we do not 
believe that anyone can establish otherwise unless a water rights 
compact is entered into or an adjudication occurs. Unless the water 
rights of the Blackfeet Tribe are determined, it is impossible to say 
that the historical capacity of the St. Mary Canal is available for 
diversion off the Reservation. And, if a greater capacity canal is 
constructed--and we understand that this is an option being 
considered--then it is even more critical that the Tribe's water rights 
be determined.
    Finally, despite promises by the federal government that the 
Blackfeet Tribe would benefit from any project that utilized St. Mary 
and Milk River waters, the Blackfeet Tribe has never received one 
benefit from the Milk River Project. We have suffered the environmental 
consequences of the Project, and we must live with the potential 
failure of the project on a daily basis. We see water being diverted 
from the Reservation year after year after year, but incredibly the 
Blackfeet Tribe receives absolutely no benefit from the project. It is 
high time that this situation changes, and we intend to insure that as 
part of any rehabilitation effort, the Blackfeet Tribe receives the 
benefits from the Project to which it is entitled, including an 
appropriate allocation of water from the Project, other project 
benefits and compensation for damages and use of Blackfeet water.
    For these reasons, the Blackfeet Tribe expects to be a full partner 
in the rehabilitation process with the Federal government and the State 
government. It is our expectation that the Tribe will have an equal 
role in any decision-making process relating to the rehabilitation, and 
in approving all aspects of the rehabilitation effort, including 
preliminary studies, planning, design and construction. The Tribe also 
expects that it will be a full signatory to any final approvals of the 
final project. I will address these issues in more detail in my 
remaining remarks.
    The Blackfeet Tribe is a sovereign Indian Nation residing on the 
Blackfeet Indian Reservation and exercising jurisdiction and regulatory 
control within the Reservation. The present Blackfeet Reservation is 
only a small part of the historical aboriginal territory of the 
Blackfeet Tribe, and our people have occupied these lands since time 
immemorial. The Aboriginal Territory of the Blackfeet Tribe encompasses 
much of the present State of Montana, and a large area north into 
Canada, including the St. Mary's and Milk Rivers. The Rocky Mountains, 
and the streams and rivers that flow from the mountains, have long been 
one of the most culturally and religiously significant areas to the 
Blackfeet People, and they are a critical part of the oral history, 
creation stories and ceremonies. The present Blackfeet Reservation was 
established by Treaty with the United States on October 17, 1855 (11 
Stat. 657).
    The St. Mary's and the Milk Rivers originate on and near the 
present day Blackfeet Reservation, and the Tribe has aboriginal rights 
to the waters of the two rivers that predate the formation of this 
country, and treaty rights that date at least from the 1855 Treaty. The 
Tribe's water rights are currently the subject of negotiations among 
the Blackfeet Tribe, the Montana Reserved Water Rights Compact 
Commission and a Federal Negotiation Team. The adjudication of the 
Tribe's water rights has been stayed by the Montana Water Court on a 
year to year basis in order to allow the negotiations to proceed.
    The St. Mary facilities that are the subject of the proposed 
legislation are located on the Blackfeet Reservation. Since the 
construction of the facilities almost one hundred years ago, the Tribe 
has had, and continues to have, fundamental issues relating to water 
rights, land rights, environmental issues and damages claims that are 
directly related to the St. Mary facilities and the diversion of St. 
Mary River water for the Milk River Project. It therefore goes without 
saying that the Blackfeet Tribe is the primary stakeholder in any 
effort to rehabilitate the St. Mary diversion and conveyance works of 
the Milk River Project.
    The Blackfeet Tribe has long viewed the massive diversion of St. 
Mary's water from the Blackfeet Reservation for purposes of the Milk 
River Project, as well as the 1909 Boundary Waters Treaty which was 
used to justify the diversion, as violations of the rights of the 
Blackfeet people because the water rights of the Blackfeet Tribe were 
never considered or addressed in the Boundary Waters Treaty or in the 
diversions of water for the Milk River Project. This state of affairs 
is completely incomprehensible to the Blackfeet Tribe. Only the year 
before the Boundary Waters Treaty was concluded in 1909, the U.S. 
Supreme Court decided the most significant Indian water rights case in 
the United States, Winters v. United States, 207 U.S. 564 (1908). This 
case established and defined the fundamental doctrine of Indian 
reserved water rights that governs Indian water rights in the western 
United States for almost one hundred years. As this Committee knows, 
under the Winters doctrine, when an Indian reservation is established 
by the United States government, sufficient water is reserved to 
fulfill the purposes of the Reservation, both existing and future, with 
a priority date of the date of establishment. The Winters case, which 
arose on the Fort Belknap Reservation and involved the very same Milk 
River that is involved here today, remains the fundamental basis for 
Indian water rights in the United States. However, notwithstanding the 
contemporaneous Winters decision, there is absolutely no acknowledgment 
or consideration of the water rights of the Blackfeet Tribe in the 
diversion of water from the Blackfeet Reservation for the Milk River 
Project or in the Boundary Waters Treaty. The failure to recognize and 
take into account the Blackfeet reserved water rights puts the very 
validity of the St. Mary diversion and the Boundary Waters Treaty into 
question.
    The complete disregard of the water rights of the Blackfeet Tribe 
is all the more incomprehensible because several alternatives for uses 
of the United States' share of St. Mary's and Milk River water were 
identified and analyzed, two of which would have benefitted the 
Blackfeet Tribe. One of the alternatives identified by the Bureau of 
Reclamation was a Blackfeet only project. The Bureau of Reclamation 
determined that 60,000 acres on the Blackfeet Reservation could be 
irrigated feasibly with St. Mary's water. A second alternative was an 
all-American Canal route that would have routed the canal through the 
Reservation and provided benefits to the Tribe on its way downstream to 
other project users. The third alternative is the present Milk River 
Project. Ironically, the two alternatives that would have provided 
benefits to the Blackfeet Tribe were rejected in favor of providing 
benefits only to non-Indian irrigators downstream on the Milk River.
    From the studies of these alternatives, the United States knew when 
entering into the Boundary Waters Treaty and in constructing the Milk 
River Project, that the Blackfeet Tribe had a reserved right to St. 
Mary's water in an amount of at least that water necessary to irrigate 
60,000 acres on the Reservation, or approximately 150,000 acre-feet. 
Nevertheless, these rights were never discussed or considered in the 
Boundary Waters Treaty, nor was the impact on the Tribes rights 
discussed or considered in the final Bureau of Reclamation project 
selected for construction.
    At the time of Boundary Waters Treaty and when the Milk River 
Project was constructed, the Reservation had been in existence for more 
than fifty years, and it would have been impossible to ignore the fact 
that Blackfeet land and waters were involved. It also would have been 
impossible not to recognize that the Milk River Project, constructed to 
allow the United States to fully develop its St. Mary's--Milk water 
supply, involved a major dam and reservoir and canal system located on 
the Blackfeet Reservation. It is therefore incredible that the United 
States did not involve the Blackfeet Tribe in the negotiations of the 
Boundary Waters Treaty or provide benefits to the Tribe as part of the 
Milk River Project.
    If Blackfeet rights had been acknowledged and considered in the 
Boundary Waters Treaty, we do not believe that the Milk River Project 
would have ever been built. The project utilizes a substantial portion 
of the United States' share of St. Mary's water, diverting it off the 
Blackfeet Reservation in a trans-basin diversion for use by non-Indian 
users far downstream from the Reservation. To this day, the Tribe 
receives no benefit whatsoever from the Project. At the same time, the 
Tribe has suffered greatly from environmental problems and damages that 
have been caused by the diversion facilities on the Reservation.Among 
other things, these environmental problems and damages include the 
following:

   The current outlet structure at Sherburne Dam is unable to 
        pass low flows during the winter months and as a result, 
        Swiftcurrent Creek is completely dewatered and fishery habitat 
        is lost, including habitat for the threatened bull trout.
   The banks of Swiftcurrent Creek have been eroding under the 
        current release regime, and flooding occurs on nearly an annual 
        basis at its confluence with Boulder Creek. Fishery habitat and 
        private property is continually at risk as a result of the 
        erosion and flooding.
   The Swiftcurrent Creek Dike, which was constructed by the 
        Bureau of Reclamation in 1915, diverts all flows from 
        Swiftcurrent Creek and Boulder Creek into Lower St. Mary Lake. 
        These streams previously flowed across a large alluvial fan in 
        the Babb area. As a result of the dike, sediment is 
        continuously deposited into St. Mary Lake. The resulting delta 
        has increased in size by 16 acres between 1958 and 1990. St. 
        Mary's Lake is a stunningly beautiful alpine lake and is a 
        significant recreational area on the Reservation and source of 
        economic revenue to the Tribe.
   The St. Mary Diversion Dam is a barrier to fish moving 
        upstream, and fish are sometimes caught in the headgates at 
        that location. These impacts may affect the threatened bull 
        trout in addition to other fish species.
   The canal and siphons are in a significantly deteriorated 
        condition and leakages from the canal present environmental 
        problems, and the potential of additional environmental 
        problems if they fail.

    A separate problem is the impact the operation of the St. Mary 
diversion facilities causes to the Babb Community water system. There 
is a known surface and groundwater interaction between water levels at 
Babb and surface water runoff carried in adjacent streams and water 
transported in the St. Mary's Canal. This interaction affects the 
community water system and needs to be studied and addressed.
    In addition to the water rights and environmental issues, the 
construction of the Milk River Project is directly contrary to, and in 
complete derogation of, the promises made to the Tribe that it would 
benefit from the development of St. Mary's and Milk River water. These 
promises were made in return for the Blackfeet Tribe agreeing to allow 
a right of way for the Milk River Project facilities in an 1895 
Agreement, ratified by Congress, and in the development of the two 
alternatives that would provide irrigation benefits to the Blackfeet 
Tribe, including the irrigation of 60,000 acres of land within the 
Blackfeet Reservation. Although that project was determined to be 
feasible, it was never built. Instead, the rights and interests of the 
Blackfeet Tribe were sacrificed in favor of downstream development far 
off the Reservation.
    Further, the United States allowed non-Indians on the Blackfeet 
Reservation to file state water rights claims for essentially all the 
direct flow water rights on the North and South Forks of the Milk River 
during this same period. As a result there is no readily available 
water left for Tribal development in either watershed. The United 
States was obligated to discuss these circumstances with the Blackfeet 
Tribe and to take these circumstances into account. However, once 
again, the United States failed in its obligation to protect the rights 
of the Blackfeet Tribe.
    There are also serious questions about the existence of valid 
rights of way for the project. Clearly, there can be no construction or 
reconstruction of the project without valid rights of way, and this 
issue must be addressed before the rehabilitation can go forward. 
Although the Bureau of Reclamation has been reviewing this issue for 
several years, there has been no final report on the rights of way and 
no discussion with the Tribe concerning this critical matter.
    As this history shows, the Blackfeet Tribe has been systematically 
excluded from the process used to allocate the waters of the St. Mary's 
and Milk Rivers, and the Tribe's rights have been systematically 
ignored in the subsequent utilization of St. Mary's water by the Milk 
River Project. Astonishingly, this disregard of the Blackfeet Tribe and 
the rights of the Tribe has continued up to the present time. There is 
still no serious discussion of the Tribe's water rights, land rights 
and damages claims in the context of the rehabilitation of the project, 
and no clear benefits for the Blackfeet Tribe as part of the 
authorization for the project.
    In order for the rehabilitation to go forward, the following must 
be done:

          1. The water rights of the Tribe must be determined.
          2. The land issues relating to the project must be determined 
        and resolved, in particular the right of way issues.
          3. The Tribe's damages claims against the federal government 
        must be resolved. This includes damages relating to use of 
        Tribal water, use of Tribal land, damages to Tribal land, and 
        environmental damages caused by the Project.
          4. The Tribe must receive clear benefits from the project as 
        part of the authorization.
          5. The Tribe must be a full partner in the rehabilitation 
        effort, including the preliminary studies, the planning, design 
        and construction.

    The Chairman. Thank you very much, Chief. Your statement 
will be made a part of the record in the event you did not give 
it all.
    Now, Ms. Doney, you were next.

  STATEMENT OF JULIA DONEY, PRESIDENT, FORT BELKNAP COMMUNITY 
                            COUNCIL

    Ms. Doney. Yes. Good afternoon, Mr. Chairman, members of 
the committee, and interested individuals. Thank you for this 
opportunity to provide the position of the Tribes of the Fort 
Belknap Reservation and the Fort Belknap Community Council to 
the committee on this important legislation. I am Julia Doney, 
the duly elected president of the Fort Belknap Community 
Council, the governing body of the Gros Ventre and Assiniboine 
Tribes of the Fort Belknap Reservation.
    First, a few words about the Fort Belknap Reservation. 
Pursuant to treaties of the United States signed in 1851 and 
1855, and the Act of Congress of 1888, the Fort Belknap 
Reservation is home to the Gros Ventre and Assiniboine Tribes. 
Pursuant to the constitution and bylaws of the tribes, the Fort 
Belknap Community Council is the governing body of the tribes 
and tribal members. The council consists of ten elected 
representatives, including the president.
    The Fort Belknap Reservation, in north-central Montana, 
lies approximately 50 miles east of Havre and is bounded by the 
Milk River on the north and the Little Rocky Mountains on the 
south. The reservation consists of 697,617.18 thousand acres of 
trust lands, both allotted and tribal, fee lands, and Montana 
State school lands. The vast majority of the land ownership is 
by the United States in trust for the tribes and for individual 
Native Americans. Approximately 3,150 enrolled tribal members 
reside on the reservation and 3,179 tribal members reside off 
the reservation.
    Unemployment is extremely high on the reservation, with the 
principle employers being the Tribal government and the United 
States. Agriculture is the principle industry, with irrigation 
occurring on about 7,500 acres of the more than 13,880 acre 
Fort Belknap Irrigation Project in the north part of the 
reservation and grazing and dryland farming and minor amounts 
of irrigation occurring in the southern portion of the 
reservation. Precipitation ranges from about 20 inches a year 
in the southern mountains, up to 12 inches per year in the 
northern part of the reservation.
    Fort Belknap is home to the famous Winters decision, 207 
U.S. 564, 1908, which is the seminal case in the Reserved Water 
Rights Doctrine. The U.S. Supreme Court affirmed a lower court 
decision which determined that the Fort Belknap Tribes had a 
water right of 500 miners inches--125 cubic feet per second--to 
irrigate about 7,500 acres of the more than 13,800 acres of the 
Fort Belknap Indian Irrigation Project. Although no water 
rights had been filed with the State of Montana under State 
law, the Court determined that the tribes' reserved water right 
had an 1888 priority date, earlier than upstream, non-Indian 
water diversions and the Court upheld an injunction against the 
junior diverters.
    In 1979, pursuant to amendments to the Montana Water Use 
Act, the State of Montana filed a general stream adjudication, 
In the Matter of the Adjudication of All Rights to the Use of 
Water, Both Surface and Underground, within the State of 
Montana, Montana Water Court. As an alternative to litigating 
reserved water rights in the Montana Water Court, the 
amendments authorized the Montana Reserved Water Rights Compact 
Commission to negotiate reserved water rights with Montana 
Indian Tribes and Federal agencies.
    In 2001, the State and the Fort Belknap Indian Community 
ratified a Compact. A copy attached as Exhibit 1,* which 
settled the reserved water rights of the Tribes of the Fort 
Belknap Reservation between the state and the community. The 
compact quantified the water rights, provided for 
administration and dispute resolution, provided protections to 
allottees and non-Indian water users in the Milk River Basin, 
established the Milk River Coordinating Committee to assure 
coordination and communication among all Milk River water 
users, provided for water right protection and enforcement 
through the appointment of the water commissioner for the Milk 
River Basin and provided for further negotiations among the 
United States, the tribes, and the State on Federal issues, 
such as Federal financial contribution, an allocation of water 
from Tiber Reservoir, State/Federal cost share, construction of 
mitigation features to protect the Milk River Project water 
users. Such three party negotiations have thus far not been 
successful and the tribes and the State have decided to seek 
introduction of Federal legislation ratifying the compact and 
authorizing such actions as are necessary to implement the 
compact.
---------------------------------------------------------------------------
    * All attachments have been retained in committee files.
---------------------------------------------------------------------------
    The draft bill authorizes development of the tribal water 
right that is consistent with the Tribal Water Development Plan 
that has been approved by the Fort Belknap Indian Community 
Council. The plan, as developed, would allow the Fort Belknap 
Indian Community to irrigate sufficient water to meet the 
tribal needs for the next 30 to 50 years. The level of 
development is necessary to meet the needs of the Fort Belknap 
Indian Community and will allow the Community to be a real 
player in the irrigated agricultural economy of the Milk River 
Basin.
    The Fort Belknap Indian Community has been closely involved 
in the deliberations of the St. Mary Working Group. We 
understand the history, background, and need for action to 
protect the St. Mary Water supply for the non-Indian water 
users of the Milk River Project. In the spirit of community and 
being a good neighbor, the Community would like to be able to 
support S. 3563.
    However, on March 17, 2006, I, as president of the Fort 
Belknap Indian Community, provided written comments on a draft 
of S. 3563 and a copy of the letter is attached. In my 
comments, I specifically requested that the Fort Belknap 
Reservation be treated similarly to the Blackfeet Reservation 
in the legislation and that provisions parallel to those for 
Blackfeet be included in the legislation for Fort Belknap 
Indian Community. To date, I have received no response to my 
comments and request nor was the legislation modified to 
include the provisions, which I requested.
    In a March 28, 2006 meeting between the State and Fort 
Belknap Indian Community, representatives and State entities 
committed to moving forward with water settlement legislation.
    The Chairman. Could you summarize your statement now, 
ma'am?
    Ms. Doney. I will. Since then, it was stated that we would 
move forward. The water settlement legislation would move 
forward parallel with the St. Mary legislation. Let's see. 
While the State and the community have completed a Reserved 
Water Rights Compact for the Fort Belknap Reservation, much 
work still needs be done to obtain congressional ratification 
of the compact and authorization of the implementation and 
funding for the compact. The State and community have moved a 
long way toward agreeing.
    In short, the Fort Belknap Indian Community believes that 
consideration of S. 3563 is premature and should be delayed 
until completion of water rights negotiations of the Milk River 
Basin. It is simply unfair to the tribes of the Fort Belknap to 
provide yet another benefit to the non-Indian water users while 
deferring action on the reserved water rights of the Fort 
Belknap.
    The Fort Belknap Indian Community would support the 
enactment of S. 3563 if the bill is amended to include 
legislation ratifying, authorizing, and providing for funding 
at level necessary to implement the Fort Belknap Indian 
Community/Montana Compact. It simply makes sense to solve the 
Fort Belknap Indian Community water rights issues at the same 
time.
    Again, thank you for the opportunity to provide this 
testimony and I ask that this statement be substituted for the 
original statement that was provided. Thank you.
    [The prepared statement of Ms. Doney follows:]
      Prepared Statement of Julia Doney, President, Fort Belknap 
                           Community Council
    Good afternoon Mr. Chairman, members of the Committee, and 
interested individuals. Thank you for this opportunity to provide the 
position of the Tribes of the Fort Belknap Reservation and the Fort 
Belknap Community Council to the Committee on this important 
legislation. I am Julia Doney, the duly elected president of the Fort 
Belknap Community Council, the governing body of the Gros Ventre and 
Assiniboine Tribes of the Fort Belknap Reservation.
                      the fort belknap reservation
    First, a few words about the Fort Belknap Reservation. Pursuant to 
Treaties of the United States signed in 1851 and 1855, and the Act of 
Congress of 1888, the Fort Belknap Reservation is home to the Gros 
Ventre and Assiniboine Tribes. Pursuant to the Constitution and Bylaws 
of the Tribes, the Fort Belknap Community Council is the governing body 
of the Tribes and tribal members. The Council consists of ten elected 
representative, including the president.
    The Fort Belknap Reservation, in north-central Montana, lies 
approximately 50 miles east of Havre and is bounded by the Milk River 
on the North and the Little Rocky Mountains on the South. The 
Reservation consists of 697,617.18 thousand acres of trust lands (both 
allotted and tribal), fee lands, and Montana state school lands. The 
vast majority of the land ownership is by the United States in trust 
for the Tribes and for individual Native Americans. Approximately 3,150 
enrolled tribal members reside on the Reservation and 3,179 tribal 
members reside off the Reservation.
    Unemployment is extremely high on the Reservation, with the 
principle employers being the Tribal government and the United States. 
Agriculture is the principle industry, with irrigation occurring on 
about 7,500 acres of the more than 10,000 acre Fort Belknap Irrigation 
Project in the North part of the Reservation and grazing, dry land 
farming, and minor amounts of irrigation occurring in the southern 
portion of the Reservation. Precipitation ranges from about 20 inches 
per year in the southern mountains to 12 inches per year in the 
northern portion of the Reservation.
    Fort Belknap is home to the famous Winters decision, 207 U.S. 564, 
1908, which is the seminal case in the ``reserved water rights 
doctrine.'' The United States Supreme Court affirmed a lower court 
decision which determined that the Fort Belknap Tribes had a water 
right of 500 miners inches (125 cubic feet per second) to irrigate 
about 7,500 acres of the more than 13,000 acres of the Fort Belknap 
Indian Irrigation Project. Although no water rights had been filed with 
the State of Montana under state law, the Court determined that the 
Tribes' reserved water right had an 1888 priority date, earlier than 
upstream, non-Indian water diversions and the Court upheld an 
injunction against the junior diverters.
     the fort belknap/montana water rights compact (mont. code ann 
                            sec. 85-20-1001)
    In 1979, pursuant to amendments to the Montana Water Use Act, the 
State of Montana filed a general stream adjudication, In the Matter of 
the Adjudication of All Rights to the Use of Water, Both Surface and 
Underground, within the State of Montana, Montana Water Court. As an 
alternative to litigating reserved water rights in the Montana Water 
Court, the amendments authorized the Montana Reserved Water Rights 
Compact Commission to negotiate reserved water rights with Montana 
Indian Tribes and federal agencies.
    In 2001, the state and the Fort Belknap Indian Community ratified a 
Compact (Copy attached as Exhibit 1)* which settled the reserved water 
rights of the Tribes of the Fort Belknap Reservation between the State 
and the Community. The Compact quantified the water rights, provided 
for administration and dispute resolution, provided protections to 
allottees and non-Indian water users in the Milk River Basin, 
established the Milk River Coordinating Committee to assure 
coordination and communication among all Milk River water users, 
provided for water right protection and enforcement through the 
appointment of a water commissioner for the Milk River Basin, and 
provided for further negotiations among the United States, the Tribes, 
and the State on federal issues, such as federal financial 
contribution, an allocation of water from Tiber Reservoir, state/
federal cost share, construction of mitigation features to protect Milk 
River Project. Such three party negotiations have thus far not been 
successful and the Tribes and the State have decided to seek 
introduction of federal legislation ratifying the Compact and 
authorizing such actions as are necessary to implement the Compact. A 
copy of the most recent draft of the legislation is attached as Exhibit 
2.
---------------------------------------------------------------------------
    * The exhibits have been retained in committee files.
---------------------------------------------------------------------------
    The draft bill authorizes development of the tribal water right 
that is consistent with the tribal water development plan that has been 
approved by the Fort Belknap Indian Community's counsel. The Plan as 
developed would allow the Fort Belknap Indian Community to irrigate 
sufficient water to meet the tribal needs for the next 30 to 50 years. 
The level of development is necessary to meet the needs of the Fort 
Belknap Indian Community and will allow the community to be a real 
player in the irrigated agricultural economy of the Milk River Basin.
                                s. 3563
    The Fort Belknap Indian Community has been closely involved in the 
deliberations of the St. Mary Working Group. We understand the history, 
background, and need for action to protect the St. Mary Water supply 
for the non-Indian water users of the Milk River Project. In the spirit 
of community and being a good neighbor, the Community would like to be 
able to support S. 3563.
    However, on March 17, 2006, I, as President of the Fort Belknap 
Indian Community, provided written comments on a draft of S. 3563. In 
my comments, I specifically requested that the Fort Belknap Reservation 
be treated similarly to the Blackfeet Reservation in the legislation 
and that provisions parallel to those for Blackfeet be included in the 
legislation for Fort Belknap. To date I have received no response to my 
comments and request nor was the legislation modified to include the 
provisions which I requested.
    In addition, while the State and the Community have completed a 
Reserved Water Rights Compact for the Fort Belknap Reservation, much 
work still must be done to obtain Congressional ratification of the 
Compact and authorization of the implementation and funding for the 
Compact. The State and Community have moved a long way toward agreeing 
on legislation, please see Exhibit 2. However agreement is not yet 
complete nor has legislation been introduced. It is anticipated that 
the Settlement Bill will be introduced at the next Session of Congress. 
The Fort Belknap Indian Community would request that the Settlement 
Bill and S. 3563 be considered together in the next Session of 
Congress.
    In short, the Fort Belknap Indian Community believes that 
consideration of S. 3563 is premature and should be delayed until 
completion of reserved water rights negotiations in the Milk River 
basin. It is simply unfair to the Tribes of the Fort Belknap Indian 
Community to provide yet another benefit to the non-Indian water users 
while deferring action on the reserved water rights of the Fort Belknap 
Indian Community.
    For the above reasons, the Fort Belknap Indian Community must 
oppose the enactment of S. 3563 unless and until legislation ratifying 
and authorizing the Fort Belknap/Montana Compact is moved forward at 
the same time as S. 3563 or joined with S. 3563. It simply makes sense 
to solve all the basin's water rights issues at the same time.
    Again, thank you for the opportunity to provide this testimony. If 
you have any questions, please feel free to proceed.
    Respectfully submitted, this first day of September, 2006.

    The Chairman. That will be done and your time has expired.
    Ms. Doney. I'm sorry.
    The Chairman. It was a pleasure to have you here. Please 
proceed.

  STATEMENT OF ROBERT E. RICE, MAYOR, CITY OF HAVRE, STATE OF 
                            MONTANA

    Mr. Rice. Chairman Domenici and Senator Burns, thank you 
for your willingness to schedule this hearing. We appreciate 
you coming to Havre. The advantage of going last is most of the 
information that you should receive has already been said. In 
fact, your opening statements indicated to me that you know the 
impact of the problem but I'm going to read a prepared 
statement for the record.
    My name is Robert Rice. I have had the opportunity to serve 
as mayor of this fine community for the past 5 years. On behalf 
of not only the city of Havre, but the communities of Chinook, 
Harlem--and the Mayor of Harlem asked me to say Harlem twice, 
Dodson and Malta, Kremlin, Gilford, Hingham, Rudyard and 
Inverness, who all receive their drinking water from the Milk 
River, which is fed by the St. Mary Diversion and Conveyance 
Works, we sincerely appreciate the special effort you are 
taking today to more fully understand and appreciate the 
importance of this century-old Federal facility to the health, 
welfare and economic well-being of a large section of northern 
Montana.
    When you think of this aging piece of infrastructure, I'd 
like you to think of it in a very personal way. In a drought 
year like the one we're currently experiencing, the source of 
our water for municipal, industrial and economic development 
purposes comes almost entirely from that which is transferred 
to the Milk River Basin from the St. Mary River Basin through 
the engineering marvel that is the St. Mary Diversion and 
Conveyance Works. From the water you may drink today to the 
water used to maintain the lawn outside this building to the 
water used for every other single purpose in this and other 
communities in our area, it is all available to us only because 
Federal policymakers 100 years ago had the vision to invest 
wisely in this vitally important infrastructure we continue to 
rely on today. It is now our turn to do what we can to assure 
that this water delivery system remains structurally sound and 
will continue to deliver quality drinking water to future 
generations of Montanans.
    The St. Mary Diversion facility is known by many as the 
``lifeline of the Hi-Line,'' the geographic area of northern 
Montana that encompasses that area of our State from the Rocky 
Mountain Front to the North Dakota border. The rehabilitation 
of this facility is estimated to provide a net economic benefit 
on an annual basis of up to $41.3 million for our State and 
this country. Many of the economic benefits that can be 
attributed to St. Mary water come from municipal, industrial 
and recreational uses, all of which were not part of the 
congressionally authorized project when it was created in 1905. 
These economic benefits will continue to grow as the 
communities on the Hi-Line continue to grow. The long-term 
economic value of this project is projected to be as high as 
$700 million, for a cost-benefit ratio of 4 to 1, given the 
projected cost of this project of $120 million. It is clear 
that the Federal Government investment being requested to 
rehabilitate the St. Mary system will continue to add to the 
economy of northern Montana and the United States for decades 
to come.
    The part of Montana served by the St. Mary Diversion and 
Conveyance Works has traditionally not enjoyed the economic 
prosperity that other areas have. However, we contribute 
significantly to the overall economy of Montana and this 
Nation, in large measure, due to the continued operation of the 
St. Mary Diversion Works. The Milk River Basin alone produces 
$67 million in annual farm earnings, which is fully 38 percent 
of Montana's total.
    This critical piece of infrastructure for the city of Havre 
and for the other communities who rely heavily on it for their 
everyday water needs, serves a rural population of over 17,000 
people. I implore you to work earnestly toward an investment by 
the Federal Government that will keep this ailing but 
critically important facility not only operational, but a 
vibrant part of the fabric of our regional economy.
    Thank you for this opportunity to speak. I'd also like to 
thank Mr. Rehberg for being here. Senator, it is an honor to 
have you in our wonderful city.
    The Chairman. Well, mayor, let me say that I very much 
appreciate being here and I thoroughly enjoy it.
    Mr. Rice. Thank you, sir.
    The Chairman. It is beautiful country. I just want to tell 
all of you, if you haven't been to New Mexico now, as compared 
with New Mexico 2 months ago, it is completely different. We 
have had a monsoon hit New Mexico. Monsoon! And we had so much 
rain that it is a green pasture everywhere where it was brown.
    Mr. Rice. We envy you, sir. We need that.
    The Chairman. It was just terrific. I mean, I never saw 
anything--I wasn't there during a lot of that rain, I just came 
and found it. I just couldn't believe it! In 74 years--I was 
born there on the outskirts of Albuquerque. I never heard of 
anything quite like this. If this is some kind of weather 
change that is bad, I'm all for it.
    [Laughter.]
    The Chairman. I don't know what that is, but I'm----
    Mr. Rice. Yes, sir.
    The Chairman. I'll take it!
    Mr. Rice. We'll take some of that, too, sir.
    The Chairman. I'm sure it won't be there next year. You'll 
be back with the same dry drought with everybody complaining 
and crying. Right now, actually, they are asking me to stop the 
rain. You know, they always--before, they wanted me to bring 
rain and now they want me to stop it. I tell them they are 
really nuts. Let's take it all. Whatever comes, let's take it.
    First, let me thank all four of you. Now, you didn't get by 
this easy. We're going to ask some questions, if you don't 
mind.
    Mr. Rice. Sure.
    The Chairman. And I'm going to do it the way I normally do 
but in no way holding you to this. I'd like to start by letting 
you ask questions but if you want me to, I will, whichever you 
prefer. I usually let some Senator start but I'll do it, 
whichever way you prefer, Senator Burns.
    Senator Burns. You are being pretty liberal with the rules 
of the Senate here.
    The Chairman. Yes, I am.
    Senator Burns. I've never seen you in this mode before.
    The Chairman. I am so generous today you wouldn't believe 
it.
    Senator Burns. There you go. I've just got a couple of 
questions with regard to Ms. Doney. Your water compact has not 
been completed yet, has it?
    Ms. Doney. No, it hasn't.
    Senator Burns. How many acres have you, on the reservation, 
do you have under irrigation now, today? Do you know, by any 
chance? On the reservation and you might----
    Unidentified Male. The current?
    Senator Burns. Yes.
    Unidentified Male. The current irrigation project is 
13,800. We currently irrigate 7,500 and we have additional 
historical--[fades to inaudible].
    Senator Burns. Okay. But your water compact has not been 
completed as of yet?
    Ms. Doney. No.
    Unidentified Male. The water compact has been completed 
with the State; the tribe has a signed agreement with the State 
of Montana.
    Senator Burns. Okay, but we haven't got it down to the 
Federal level yet?
    Unidentified Male. We need to get it to the Federal level.
    Senator Burns. Okay. I just wanted to clear that up for the 
record. Also, Mayor Rice, you were talking about the impact, 
not only that agriculture has on the city of Havre but also, 
what is the impact of this water as far as the city is 
concerned?
    Mr. Rice. For the city of Havre, sir?
    Senator Burns. You bet.
    Mr. Rice. This is instrumental in any economic development 
that we want to proceed with. It is our source of drinking 
water currently. If we were to lose it, we would have to rely 
on our wells, which are capable but it would be very 
detrimental to our community to have to do that. That's why we 
also have entered into the Tyber Project. We feel good water is 
vital to this economy in Havre itself so if we were to lose 
this, we'd be in the dire straits, to be quite honest with you.
    Senator Burns. Mr. Reed was the one who contacted me a 
couple of years ago and said, we've got to do something up here 
and immediately went to work and we started on working on this 
project, Mr. Chairman and they have prepared a guidebook for us 
and I just want to make that part of the record for the 
information of the rest of the committee, as we move this thing 
forward.
    I feel like those water compacts are very, very important, 
too and of course, there are a lot of moving parts to this 
project and we can't allow anything that would hinder our 
collaboration and our cooperation in order to get it done. 
There is just too much at stake to be any other way.
    Mr. Chairman, that is all the questions I have. I think 
that you want to satisfy some of the questions that you have 
because you're the chairman and you've got to ask the tough 
questions and we hope that we will be able to answer them for 
you.
    The Chairman. Lieutenant Governor, we'll start with you, 
please.
    Lt. Gov. Bohlinger. Yes, sir.
    The Chairman. You mentioned in your testimony the possible 
effects of the failure of the St. Mary's facility would have on 
the 1909 Boundary Water Treaty between Canada and the United 
States.
    Lt. Gov. Bohlinger. Yes, sir.
    The Chairman. My first question is, what effect, if any, 
has the reduction in the facility's capacity over the years, 
had on the treaty with Canada?
    Lt. Gov. Bohlinger. Well, the treaty with Canada was first 
established in 1909 and was revised in 1921. The effects of a 
failure of this canal would cause all of that water to flow 
into the Milk River and then eventually into the Hudson Bay--
that is, flow into the St. Mary's River, which flows into the 
Hudson Bay. The Milk River would not receive water. It would, 
in my opinion, be disastrous for the Hi-Line. We'd find about 
140,000 acres of irrigated farmland no longer able to receive 
irrigation water. We'd find about 17,000 to 18,000 people who 
live along the river and look upon that as a source of water 
for life, unable to sustain life as they know it. It would be a 
disastrous occurrence, sir.
    The Chairman. If the capacity of the facility is increased 
to 1,000 CFS, will a re-negotiation of the treaty be required? 
And if so, what would you--what have you done to prepare for 
that eventuality?
    Lt. Gov. Bohlinger. Mr. Chairman, I have not been a party 
to those studies but I will find those people that have been 
working on that issue and include in our final report, comments 
from them with respect to that question.
    The Chairman. All right. Let me continue on.
    Lt. Gov. Bohlinger. Yes, sir.
    The Chairman. Both the Blackfeet Indian Tribe and the Fort 
Belknap Indian Tribe expressed concerns about the resolution of 
their reserved water right claims. My first question is, when 
do you anticipate a compact, resolving the Blackfeet Indian 
Tribe's water rights claims will be agreed to by the State of 
Montana and the Blackfeet Indian Tribe?
    Lt. Gov. Bohlinger. Mr. Chairman, the Blackfeet Nation and 
the State of Montana are vigorously working towards an 
agreement at this time. I can't say specifically when that 
agreement will be crafted but it is being worked on.
    The Chairman. It is imminent?
    Lt. Gov. Bohlinger. Mr. Chairman, again, I will have to get 
those people that are negotiating to provide an answer to that 
question and I will include that in my final report to you.
    The Chairman. Can anybody at the table answer that 
question?
    Chief Old Person. I would like to call on my legal counsel.
    The Chairman. Let's get her up here and let's ask. Are you 
the legal counsel?
    Ms. Geyn. Yes. My name is Geyn, Mr. Chairman. As the 
Lieutenant Governor has indicated, we are working toward a 
final settlement. At this time, our goal is to try to have 
something to present to the 2007 Montana Legislature. We hope 
to meet that goal. It's unclear that we will be able to but 
that certainly is our hope at this time.
    The Chairman. All right, thank you very much. You can be 
seated. Lieutenant Governor, you mentioned in your testimony 
that a re-allocation of project purposes for St. Mary system is 
one of the most important features of S. 3563. Do you remember 
that?
    Lt. Gov. Bohlinger. Yes sir.
    The Chairman. You also mentioned that a recent study found 
that only 32 percent of the annual economic benefit derived 
from the facility accrues through the irrigated agriculture.
    Lt. Gov. Bohlinger. Yes sir.
    The Chairman. While the remaining 68 percent goes to other 
purposes, is that correct?
    Lt. Gov. Bohlinger. Yes sir. That's correct. The 68 percent 
beneficiaries would include the municipalities, would include a 
very lively sportsman industry that has been developed. 
Fisheries and hunting contribute greatly to this economy. It's 
our wish that when a new funding formula is developed, that it 
would include more than just the irrigators as those who 
contribute to the cost of maintaining the facility. We feel 
that the cost should be shared proportionately in terms of 
benefit received.
    The Chairman. Was the Reclamation involved in producing the 
assessment of the economic benefits?
    Lt. Gov. Bohlinger. This study was done by a Dr. Duffield, 
I believe his name is. I believe he is an independent 
researcher that was employed by the State of Montana for that 
study.
    The Chairman. Okay. Thank you.
    Lt. Gov. Bohlinger. Yes, sir.
    The Chairman. Mr. Reed?
    Mr. Reed. Yes sir.
    The Chairman. I was provided a January 2006 cost estimate 
for the rehabilitation of the St. Mary's facility undertaken by 
Thomas, Dean and Hoskins. They estimated that depending upon 
the canal capacity, the rehabilitation will cost from $120 
million to $140 million. As has been the case with many 
construction projects, past estimates have recently 
skyrocketed. I think you all know that. Is the private firm's 
estimate still accurate or has the cost increased since the 
January 2006 estimate, in your opinion?
    Mr. Reed. In my opinion, the figures have been brought up 
to current costs. The cost analysis is based on the increased 
costs and it was also adjusted for inflation.
    The Chairman. Well, tell me that another way. Does that 
mean it's pretty accurate?
    Mr. Reed. I believe our engineer is here, if you would like 
it directly from him. I believe it to be accurate but our 
engineer, I think, is in the background.
    The Chairman. Where is the engineer? Do you mind standing 
up here and--just come up a little closer. Would you state your 
name for the record, please, sir?
    Mr. Jewel. My name is Irling Jewel. I'm with Thomas, Dean 
and Hoskins and the cost estimate was done in the report that 
you refer to was the corrected one. The final one was just 
completed last month. We did some minor tweaking. There are 
some unknowns but we feel that the dollar amount that is in the 
current appropriations----
    The Chairman. Are pretty close.
    Mr. Jewel. Is pretty close, in the ballpark for the 
magnitude it stretches.
    The Chairman. Now, just stand there for a minute. Does 
Reclamation concur in the estimate and what has just been said? 
Just state your name for the record.
    Mr. Ryan. Mr. Chairman, my name is Mike Ryan. I'm the 
Regional Director of the Bureau of Reclamation in the Great 
Plains. Reclamation has reviewed the engineering report and 
yes, we agreed with the caveats that Irling stated, that it is 
a reasonable estimate and range of costs.
    The Chairman. All right, very good. Thanks to both of you. 
My next question to you, sir--Mr. Reed, you might have to call 
on somebody but it is my understanding that the deterioration 
of the facility has resulted in the reduction, the capacity of 
it from 850 CFS to between 650 and 725. What is the primary 
cause of this reduced capacity?
    Mr. Reed. The canal was constructed as a single vane 
construction at the turn of the century and due to--there isn't 
a lot of freeboard on the canal and so several things have 
happened over the years. The thing hasn't been re-prismed since 
the early fifties, where you take an excavator and go the whole 
length of the canal. Also, where it is a one-bank canal, so 
when you come to a coolie, the canal goes straight and there is 
a one-bank and then it backs up in the coolie so it's not as we 
traditionally think of it as a canal. It's--you know, in those 
days when they had construction with mules and frescos, it was 
an amazing engineering feat, what they did with horses. I mean, 
I'm not sure--you know, I would hope a new project like that 
could be constructed today but it was amazing!
    The Chairman. Let's just get down to summarizing for me. 
What is the primary cause of the reduced capacity?
    Mr. Reed. It has to do with canal capacity as well as there 
is a certain amount of seepage between the first 9 miles of the 
canal and then after that, it mainly has to do without a new 
prism in the canal. Then also, there are waste ways that don't 
function anymore and the people that operate that facility, 
they have to watch the Weather Channel. So if there is a 
predicted thunderstorm, they have to cut the canal back because 
it will overtop somewhere and wash out.
    The Chairman. Okay, let me follow on. How does this 
reduction that we just are assuming is a fact, how does this 
reduction affect the local interests that rely on the water?
    Mr. Reed. Well, it's a timing issue. We can let it loose 
out of Fresno at about 1,600 CFS at peak demand and when you 
can only bring water across at 650 CFS, you run Fresno out 
before you get water here. The other issue, going back to the 
1909 Boundary Water Treaty, the 21 order is set on 2-week 
intervals. So when 2 weeks go by and the St. Mary River is 
flowing 5,000 CFS, we lose our water to Canada. It becomes free 
Canadian water. It's not even part of the settlement and 
because of the under-capacity of the canal, we lose water to 
Canada, due to an administrative rule in the 1909 Boundary 
Water Treaty.
    The Chairman. So which interests have taken the brunt of 
the reduced capacity?
    Mr. Reed. Irrigation.
    The Chairman. In your testimony, you stated that in the 
past, local parties that paid for a portion of the engineering 
studies required for the rehabilitation of St. Mary's facility. 
S. 3563 provides that 88.75 percent of these costs be borne by 
the Federal Government. One, do you believe that the non-
Federal parties are able to contribute more than 11.25 percent 
for the St. Mary facility and Milk River Project Feasibility 
Study?
    Mr. Reed. I believe, sir, that when we got into this, we 
were wishing that the thing could be authorized under Picks 
Law. It's just a political critter I don't think we can carry 
and to make the thing affordable and to make the thing work and 
the financing package and so that we can all budget it and go 
on with our lives, this is the cost share we need to make it 
work.
    The Chairman. So what you are saying is that your best 
impression of the community at large, that is about as fair as 
we can get it and about as much as you can bear. Is that 
correct?
    Mr. Reed. Yes sir.
    The Chairman. All right. You also stated in your testimony 
that you irrigate with water provided by the facility, is that 
correct?
    Mr. Reed. Yes sir.
    The Chairman. Have you and other farmers who irrigate with 
this water, found it difficult to make the annual operation and 
maintenance payments?
    Mr. Reed. Well, the problem with the Milk River is the 
consistency. St. Mary's is our consistent water. St. Mary's 
flows 150 acre feet like clockwork. The Milk River bounces up 
and down, given the year and so it makes it--when you don't 
have a reliable, managed water supply, it makes it difficult to 
make everything work. An example this year, we have a lot of 
water. It is a hot, dry year. The price of hay is up. I mean, 
it is finally one of those years where you can get a little 
heel but it's not always the case. There are a lot of hot, dry 
years that we're short on water and because we have an under-
capacity system with storage that is diminished, it hurts. It 
hurts the bottom line. It hurts to be able to pay the bills, it 
hurts to pay the banker. In the year 2001, one of the most 
severe years, I had to purchase a brand new pivot. I was making 
a payment on a pivot with 6 inches of water. It was nearly 
impossible but I got through it. That's just kind of how we 
are. But the whole system and the reliability of the St. Mary's 
water will increase the economic value of water here. It will 
also make it so that we can afford to invest on infrastructure.
    The Chairman. Well, what time is it?
    Unidentified Male. I don't know.
    The Chairman. I don't have a watch here.
    Senator Burns. How about 2:12?
    The Chairman. 2:12?
    Senator Burns. Yes.
    The Chairman. Okay. I wonder if we might do this. We aren't 
nearly finished. I have a number of questions for each of you 
and then we have another witness. But I think we should recess 
for about 10 minutes.
    Senator Burns. Okay, that would be fine.
    The Chairman. All right, we stand in recess for 10 minutes 
and please return.
    [Recess.]
    The Chairman. In Washington, we'd lose half the audience. I 
see that--keep the audience or do what we had to do, right?
    Senator Burns. That's right.
    The Chairman. I thought probably a number of people agreed 
with me that it was time for a recess so I did that, in all our 
mutual benefits, those who found themselves in the restroom and 
we all had the same problem. Having said that, we're ready now 
to proceed.
    Our witness that is before us is Earl Old Person. Will you 
get your mic up close to you, please sir? That's fine. Now, Mr. 
Old Person, in your testimony, you state that the Blackfeet 
Tribe must be involved in decisions surrounding the 
rehabilitation of the St. Mary's facility. I included a 
provision in fiscal year 2006 budget, Energy and Water that 
authorized Reclamation to enter into cooperative agreements 
with Blackfeet Indian Tribe and the State of Montana for the 
collection of technical data for the rehabilitation of St. 
Mary's facility. First question. Specifically, what benefits 
would you like to see the Blackfeet Tribe receive from the 
rehabilitation of the facility and how would you characterize 
the Reclamation's willingness to participate in these studies?
    Chief Old Person. Well, I think first of all, I don't like 
reading testimonies. I like to come off the cuff but one of the 
reasons that we say that we want to be part of what is taking 
place today. I have a photograph of old-timers that I 
translated for, back in the sixties. There is another group in 
the eighties and that was the last group. These were the people 
that the know anything about this treaty that was made between 
the U.S. Government and the Canadian government.
    The Chairman. Yes, sir.
    Chief Old Person. All they had in mind was this was our 
water. This is where the water begins its flow. That's what 
they had in mind and they were proud of it because it was their 
way of life. It's their way that they referred to the water as 
something that we need, not only we the Indians, all people 
need water and we, as the Indian people, it's sacred to them. 
That is the reason that being ignorant to this canal deal that 
took place, that is the reason I say that from here on, we want 
to be part of whatever takes place, however it can benefit us, 
we want to be involved. And I'm sure that people can 
understand, all lands need help today and we're part of them. 
All irrigation projects need help today and we want to 
understand what exactly is taking place.
    I want to give you a little history. There was a Comedicine 
Canal that took place years ago. Our people did not agree with 
it but they were told it was for your benefit. You can irrigate 
with this canal that is going to take place. Instead, when that 
canal took place, our people that did not own, did not 
irrigate, did not farm--if they had land in that area, they 
were charged for it and they wondered why is my lease money 
being held? They were told it was O&M charges. They were being 
charged for nothing they were using. These are some of the 
things why we want our involvement today. I think we have some 
people today within our reservation that are just as 
knowledgeable, capable, that can do things for us and with us 
so that we can better understand whatever takes place.
    The Chairman. All right, now Chief Old Person, I understand 
that and I am just trying to get from you--I'm not trying to 
make things difficult. I hope you don't think that.
    Chief Old Person. Oh no, I know.
    The Chairman. But I put language in a bill that has already 
passed that said--let me read it here. It said that the U.S. 
Bureau of Reclamation was authorized to enter into cooperative 
agreements with you and the State of Montana for the collection 
of technical data for the rehabilitation of St. Mary's 
facility.
    Chief Old Person. Um hmm.
    The Chairman. Has there been this discussion with you and 
your people that I've just described, regarding the technical 
data or not?
    Chief Old Person. I would like to refer to my legal counsel 
and we have our water resource person here with us.
    The Chairman. Okay. Is the question fair? I don't mean to--
--
    Chief Old Person. It's fine.
    The Chairman. All right. Yes ma'am?
    Ms. Geyn. Yes, Senator Domenici, there was language in the 
bill that you mentioned authorizing cooperative agreements 
between the Bureau of Reclamation and the tribe.
    The Chairman. That's right.
    Ms. Geyn. In relation to that funding that was included in 
that particular bill, if that language was intended to carry 
over to other funding, we certainly would benefit from that and 
would agree with that. We do have a cooperative agreement right 
now with the Bureau of Reclamation for approximately $190,000 
to undertake certain studies for the benefit of the Blackfeet 
Tribe. So we do have that cooperative agreement and we would 
hope that those kinds of arrangements continue for any 
additional funding that is appropriated by Congress.
    The Chairman. I'm reading your answer to say that it must 
have been pretty good because you'd like it to continue on. So 
I guess that is your answer.
    Ms. Geyn. Yes, Senator. That is an example of what we would 
like to see continue in this project as things go forward. The 
tribe certainly would like to have a meaningful role in any 
study that takes place or any investigations or data collection 
that occurs on the reservation and if that can be done through 
a cooperative agreement, we certainly would support that.
    The Chairman. We'll go on to something else in a similar 
vein but a different subject. Are you aware that in S. 3563--
and you can have legal counsel on this too--that we would 
direct the Secretary of the Interior to resolve any land, 
water, environmental or other claims that the Blackfeet Indian 
Tribe has against the United States? Are you aware that that is 
in the proposed bill?
    Ms. Geyn. Yes, Senator. We are aware that we are in there 
and I think the chairman alluded to the fact that we are 
appreciative that that language was in there. It is language 
that we sought. When you ask about our compact and the status 
of it, I said that we were trying to reach the 2007 legislature 
that will be an agreement between the tribe and the State only. 
One of the most difficult parts is reaching agreement with the 
Federal Government as part of that comprehensive settlement and 
that language, we are hoping, will spur the Federal Government 
on to make sure that we reach an agreement with them as well on 
an appropriate Federal contribution of settlement so we are 
definitely supportive of that language and actually sought to 
have that language included in the bill.
    The Chairman. All right. I had some additional questions, 
for you, Chief Earl Old Person but I think I'll give them to 
your counsel to answer in writing. Is that all right? Now, I'm 
going to ask you a couple, ma'am. Are you aware that in S. 
3563, that authorizes the Secretary of the Interior to 
undertake a feasibility study to develop a rural municipal 
industrial water supply project for the Fort Belknap Indian 
Reservation?
    Ms. Geyn. Fort Belknap?
    Tom.
    Mr. Bruckards. Yes, my name is Tom Bruckards. I am the 
water attorney for the Fort Belknap Indian Community and we are 
aware of that language in the bill.
    The Chairman. Will somebody describe the need for this 
project, briefly for us, for the record?
    Mr. Bruckards. Let me say that part of our problem in the 
southern part of the reservation, we had a coal mine up in the 
mountains, in the Little Rocky Mountains and we're concerned 
about the water contamination and we're hoping to have a water 
project, a potable water project for the whole reservation so 
that the communities can have safe water. That's the primary 
purpose of it. Water is always a problem in this part of the 
country if you don't have it from a main water source. There is 
a lot of salt in the water. It is water that has to be treated 
a lot, in the groundwater--it's not real good groundwater. So 
any fresh water from the rivers is better than the well water, 
at least that is what we've been finding in the hole. You're 
familiar with the North Dakota/South Dakota water projects and 
they all seem to be using water from the rivers and we're no 
different on Fort Belknap. We need that kind of a water supply, 
a water distribution system so that we can utilize our water 
from the Milk River for that purpose, for municipal and 
industrial purposes.
    The Chairman. I have just one quick follow-up and it might 
be you, sir. Does the current water infrastructure on the Fort 
Belknap Indian Reservation allow the tribe to take full 
advantage of their adjudicated water rights of 125 CFS?
    Mr. Bruckards. We have a project, the Fort Belknap Indian 
Irrigation Project but that project has not been kept up. As we 
stated, the initial project was for 13,800 acres. We are 
currently irrigating about 7,500 acres and the project, as it 
was designed, was very difficult for the 125 CFS to carry the 
whole length of the project. It's not really the fault--it's 
really nature's fault because it is a very level valley--
there's not a lot of slope from the west end to the east end so 
the 125 CFS was difficult to irrigate the whole 13,800 acres. 
They did a good job of designing it but like we mentioned 
before, engineering has come a long way since then.
    The Chairman. Thank you. Back to you, ma'am. You stated in 
your testimony that the passage of S. 3563, the big Senate 
bill, should be delayed until Fort Belknap Water Rights Compact 
is authorized. My home State also has many unresolved Indian 
water rights claims. Unfortunately, the Department of the 
Interior has not been as involved in the resolution of these 
claims as I believe they should, speaking of my State. Our 
committee has repeatedly urged the Department of the Interior 
to become more involved in the resolution of these claims. So 
the question for you, aside from the Federal legislation 
authorizing the compact, is what provisions would you like 
included in S. 3563 and how would you describe the Department's 
involvement in negotiating the Fort Belknap Water Rights 
Compact? Who wants to do that?
    Mr. Bruckards. Senator, the Fort Belknap Indian Community's 
Water Compact was done in accordance with the Water Rights 
Settlement Office of Interior. They appointed a regional water 
compact negotiating team that participated fully, but at the 
regional level and the Federal Government, the U.S. Department 
of Justice, the Interior Department, the Department of 
Agriculture--all the departments that have interests have been 
represented in the Working Group and the Working Group has 
assessed our water compact and has sent it to Washington to the 
Working Group in Washington at Interior. That was in 1992, I 
believe and it has been sitting there since then, without 
action. So, the State and the Fort Belknap Indian Community 
decided we had better go to Congress, just like many of the 
Indian settlements of the past, Congress has taken up the 
legislation and the administration has worked out their 
differences with Congress. We're hoping that this will take 
place with our bill that we're drafting and hope to have 
introduced in the next session of Congress.
    The Chairman. Well, we wish you luck.
    [Laughter.]
    The Chairman. Mr. Mayor, in your testimony, you state that 
17,000 people in the Hi-Line of Montana receive their water 
from the St. Mary facility.
    Mr. Rice. Yes, sir.
    The Chairman. Is there an alternative source of supply for 
your city if the water were no longer available from the St. 
Mary facility?
    Mr. Rice. Yes, sir. We have three active wells within the 
community that we could rely on if we needed to. But in each 
case, it would take some finance to get those active and 
online.
    The Chairman. So you could prevent a serious negative 
impact on the economy if given some time, in the event it was 
just impossible to renew these facilities?
    Mr. Rice. Yes, sir. In an emergency situation, we would be 
able to provide drinking water and health and welfare for our 
community.
    The Chairman. Under the current authorization, what amount 
of the project purpose is assigned for municipal use and does 
your city currently have to pay for the water it receives from 
the facility?
    Mr. Rice. Sir, we do pay for water that we receive. I can't 
give you the exact figure right off the top of my head. I can 
refer to my C-Lawyer, Dave Peterson.
    Mr. Peterson. Yes, Senator, the city has a contract with 
the Bureau of Reclamation for 1,000 give or take, with 
additionally 800 in purchase and they purchase out for about--I 
believe $15,000 a year. In the wells, sir that he is talking 
about, it would only be able to supply water. During the 
summertime, it wouldn't be able to meet any demands for any 
type of irrigation or anything like that. It would be strictly 
emergency purposes only. We would have to put small treatment 
facilities on those wells in order to get them up to the 
plants.
    The Chairman. I hate to do this one but I will. Do you 
believe your city is capable of assuming a portion of the cost 
associated with operation, maintenance and rehabilitation of 
the St. Mary facility?
    Mr. Rice. Senator, in all honesty with you, we would have 
to do whatever it takes to get the job done. If I had to come 
up with some money today, I probably couldn't but if it meant 
getting the project done, then we would have to find some means 
to make that happen. But I would find it very difficult.
    The Chairman. Yes. Is the price you're paying pretty cheap?
    Mr. Rice. For water? Currently, yes sir. It's reasonable.
    The Chairman. The price he described is pretty reasonable?
    Mr. Rice. Yes, sir. That's reasonable. Yes sir, very 
reasonable. We are able to make a living on it.
    The Chairman. Very good. Now, Senator Burns, do you have 
any wrap-up question or observation?
    Senator Burns. I've got a lot of observations and I've got 
a lot of notes here. I have no further questions. I think the 
line of questioning is very good. I think it indicates that we 
still have some work to do and I think we've got a good group 
in place to do it and I thank you for asking those questions 
and being here today to hear the answers.
    The Chairman. Well, I think it is important that I've 
finally--just in the final wrap-up here, before we take our 
last witness, the Regional Director of the Great Plains Region, 
U.S. Bureau of Reclamation. That's going to be our last 
witness. But I want to ask again, of our two Indian leaders. 
Chief Earl Old Person, are you suggesting that unless and until 
your water rights claims be adjudicated and settled, that we 
not proceed to rehabilitate this project?
    Chief Old Person. The construction.
    The Chairman. Yes. the construction?
    Chief Old Person. Right.
    The Chairman. Okay, so you say you might proceed with the 
feasibility and the like but it's your position we should not 
proceed with construction until your claims are resolved, is 
that right?
    Chief Old Person. Right.
    The Chairman. How about you, ma'am?
    Ms. Doney. I say the same.
    The Chairman. All right. Now we have that clear on the 
record. It does not mean, I believe, that we've concluded that 
we agree with that or don't agree but let's make sure that 
everybody knows that is the position. We nonetheless are 
proceeding with the feasibility money and another $5 million 
that Senator Burns asked of my subcommittee, not this one but 
the appropriation one, for putting that money in and moving 
ahead, one step at a time. Thanks for your time. It's been a 
privilege to be in your community. You are excused.
    Mr. Ryan, thank you very much for coming. More importantly, 
thank you for working for the Federal Government and heading up 
the group here. You have done an excellent job and we are 
delighted to have you here and we'd like you to testify and 
submit your statement. So summarize it and we'll ask a few 
questions. Please proceed.

     STATEMENT OF MIKE RYAN, REGIONAL DIRECTOR, BUREAU OF 
            RECLAMATION, DEPARTMENT OF THE INTERIOR

    Mr. Ryan. Thank you, Chairman Domenici and Senator Burns. 
My name is Mike Ryan and I am the Regional Director of the 
Great Plains Region for the Bureau of Reclamation. I appreciate 
the opportunity to provide the Department of the Interior's 
views on S. 3563. I will summarize my written remarks and would 
ask that my full statement be included in the record?
    The Chairman. That will be done.
    Mr. Ryan. Reclamation has worked extensively with the St. 
Mary's Rehabilitation Working Group since its inception. We 
share their concerns with the condition of these facilities and 
also recognize the adverse consequences that would come with a 
failure of the system. However, given the potential magnitude 
and costs of the challenges before us, we feel it essential 
that we proceed with caution in a step-wise and informed 
manner. The Department recognizes the importance of this 
Federal project in serving the people of Montana. Recognizing 
these needs, the Department supports the parts of the bill that 
would provide authorization to carry out appropriate 
feasibility studies. The Department also supports the general 
concept of an emergency plan and fund to be used in the event 
of a catastrophic failure of the St. Mary Diversion and 
Conveyance Works prior to rehabilitation. The Department is 
concerned however, with the legislation's provision of 
investment authority for the emergency response plan. There are 
concerns that investing appropriations provides additional 
monies to finance a governmental purpose outside of the normal 
appropriations process. However, the Department does not 
support authorization for construction of the rehabilitation 
and improvement of the St. Mary Diversion and Conveyance Works 
or other features of the Milk River Project prior to completion 
of a feasibility report. The information generated from this 
analysis is essential to making informed decisions about the 
future of these facilities.
    In addition, outstanding water rights claims of the United 
States as Trustee for the Blackfeet Tribe and the Fort Belknap 
Indian Community are significant to the future of water 
management in the watersheds dealt with in this bill. The 
Department believes that pending the resolution of these 
claims, authorization of a rehabilitation plan for the Milk 
River Project as called for in this act is premature. Federal 
negotiating teams are currently working with both tribes and 
the Montana Reserved Water Rights Commission toward settlement 
of their water rights claims.
    The Department of the Interior remains committed to these 
ongoing settlement negotiations. In addition to defining the 
extent of tribal water rights, negotiations allow settlement 
parties to develop creative solutions to water use problems. 
The Department is concerned that passage of this legislation 
would negatively impact efforts to resolve water rights claims 
for the tribes of the Blackfeet and Fort Belknap Reservations. 
Although this bill requires the Secretary to consult with the 
appropriate parties, there is a risk of creating parallel and 
potentially conflicting tracks for negotiating rehabilitation 
and water management strategies.
    In negotiating Indian water rights settlements, the Federal 
Government seeks settlements that resolve all outstanding water 
claims and achieve finality. The requirement in the bill would 
effectively separate out some of the Blackfeet Tribe's water-
related claims against the United States for separate 
resolution from the tribe's other claims. This provision 
exacerbates the risk that this bill, rather than facilitating 
the resolution of existing Indian water rights claims, would 
complicate and slow the process of negotiating a comprehensive 
settlement.
    The Department also objects to language imposing a 
legislative timeline on the Secretary of the Interior with 
respect to settling Indian water rights and other claims. A 
mandate to the effect that the ``Secretary shall resolve any 
claims'' also suggests that the availability of Federal funds 
and resources is unlimited.
    While the Department cannot support authorizing the 
rehabilitation of this project at this time, as I stated, the 
Department supports studying rehabilitation of the St. Mary 
Diversion and Conveyance Works. The feasibility study would 
develop and analyze alternative means for the rehabilitation of 
St. Mary storage and conveyance facilities, endangered species 
issues, tribal water issues and interests, fish and wildlife 
resource issues, municipal water supply concerns and 
international considerations related to the apportionment of 
the St. Mary and Milk Rivers. Until this is accomplished, we 
believe that an informed determination of a project plan is not 
possible, therefore construction authorization at this time is 
premature.
    The Department supports engaging the tribes of the 
Blackfeet and Fort Belknap Indian Reservations in studies to 
identify implementable solutions to their water needs. These 
studies must be done in consultation with the tribes and in 
coordination with ongoing efforts to negotiate comprehensive 
water rights settlements. We would also note that the project 
repayment terms identified in the bill depart from the accepted 
project repayment practice to a degree that creates a dangerous 
precedent for the extensive aging infrastructure needs 
throughout the West. The legislation should require the use of 
current Reclamation procedures for determining non-Federal 
cost-share that have been applied across the Western States.
    Given the extensive infrastructure needs throughout the 
West, the Department believes this bill would significantly 
impact Reclamation's ability to address aging infrastructure. 
This legislation could cost the Federal Government over $160 
million, while authorizing multiple feasibility studies that 
could, if implemented, cost the Treasury hundreds of millions 
more. In addition the potential Federal contribution to pending 
Indian water rights settlements has not been addressed.
    At the same time, we recognize the importance of the Milk 
River Project and are committed to the most efficient use of 
Federal resources to assure its viability.
    Thank you for the opportunity to comment and I'd be happy 
to respond to questions.
    [The prepared statement of Mr. Ryan follows:]
     Prepared Statement of Mike Ryan, Regional Director, Bureau of 
                Reclamation, Department of the Interior
    Mr. Chairman and members of the committee, my name is Mike Ryan, 
and I am the Regional Director of the Great Plains Region for the 
Bureau of Reclamation. I appreciate the opportunity to provide the 
Department of the Interior's views on S. 3563, the St. Mary Diversion 
and Conveyance Works and Milk River Project Act of 2006.
    Let me say at the outset that Reclamation has worked extensively 
with the St. Mary's Rehabilitation Working Group since its inception. 
We understand and share their concerns with the state of these 
facilities and also recognize the adverse consequences that would come 
with a failure of the system. Given the potential magnitude and costs 
of the challenges before us, we feel it essential that we proceed with 
caution in a step-wise and informed manner.
    This legislation has a number of components. First, it would 
authorize the Secretary of the Interior to study the feasibility and 
environmental impact of rehabilitating the St. Mary Diversion and 
Conveyance Works and other features of Reclamation's Milk River Project 
in North Central Montana. Second, the legislation would authorize the 
rehabilitation and improvement of the St. Mary Diversion and Conveyance 
Works. Third, the legislation would authorize the creation of an 
emergency response plan and fund to use for emergency repairs should 
there be a catastrophic failure of the facilities prior to 
implementation of rehabilitation. Fourth, the legislation would require 
the Secretary to resolve all claims of the Blackfeet Tribe against the 
United States relating to the portions of the Milk River Project 
located within the exterior boundaries of the Blackfeet Reservation. 
Fifth, the legislation would authorize the Secretary to study the 
feasibility of implementing projects to improve the economic conditions 
of the Blackfeet Indian Reservation and also to determine the 
feasibility of rehabilitating the Blackfeet Irrigation Project. 
Finally, the legislation would authorize study of developing a 
Municipal, Rural and Industrial (MR&I) water supply project for the 
residents of the Fort Belknap Reservation and surrounding communities.
                               background
    The St. Mary Storage Unit of the Milk River Project, often referred 
to as ``the lifeline of the Highline,'' was authorized by the Secretary 
of the Interior on March 25, 1905 and constructed between 1905 and 
1921. It was authorized as a single-purpose irrigation project, thus 
irrigators are responsible for the operation, maintenance, and 
replacement costs of the facilities. The St. Mary River provides about 
50% of the Milk River Project's water supply for 110,000 acres of 
irrigated land during normal years, but this percentage increases to 
approximately 90% during 1 drought years. Three municipalities, two 
rural water systems, and the Bowdoin National Wildlife Refuge also rely 
on the Milk River Project for some or all of their water supplies.
    The St. Mary Diversion and Conveyance Works have a long history of 
service. In fact, these facilities have generally outlived their design 
life, as they have served the people of North Central Montana for 
almost one hundred years under severe climatic and geologic conditions.
                            federal concerns
    The Department recognizes the importance of this Federal project in 
serving the people of Montana. In addition to the role the St. Mary 
Diversion and Conveyance Works plays in providing water for agriculture 
and municipal needs for the people of Montana, these facilities are 
also relevant to efforts to resolve the water rights claims of the 
tribes of the Blackfeet and Fort Belknap reservations, to conserve 
threatened and endangered species, to maintain and improve water 
quality, to promote power development and recreation, and to ensure 
implementation of the Boundary Waters Treaty of 1909.
    Recognizing these needs, the Department supports the parts of this 
bill that would provide authorization to carry out appropriate 
feasibility studies: for rehabilitation of the St. Mary Diversion and 
Conveyance Works; rehabilitation of prioritized Milk River Project 
facilities; for appropriate projects with the Blackfeet Reservation; 
and for a MR&I water supply system on the Fort Belknap Indian 
Reservation. The purpose of these studies would be to provide the 
Congress with a complete and comprehensive package of information upon 
which to build solutions for the water needs of North Central Montana. 
Typically, a 50-50 cost share among the federal government (50 percent) 
and local project beneficiaries is provided by legislation authorizing 
feasibility studies.
    The Department also supports the general concept of an emergency 
plan and fund to be used in the event of a catastrophic failure of the 
St. Mary Diversion and Conveyance Works prior to rehabilitation. The 
Department is concerned, however, with the legislation's provision of 
investment authority for the Emergency Response Plan. Investing 
appropriations provides additional monies to finance a governmental 
purpose outside of the normal appropriations process. The Department 
has other concerns regarding the specific language contained in the 
legislation and we would appreciate the opportunity to work with the 
committee to address these concerns.
    The Department does not support authorization for construction of 
the rehabilitation and improvement of the St. Mary Diversion and 
Conveyance Works or other features of the Milk River Project. It would 
be premature for Congress to authorize this major project prior to 
completion of a feasibility report. It is of critical importance to 
decision makers that extensive analysis be done in compliance with 
Reclamation policy, practice and Executive orders, and also in 
compliance with other Federal laws and policies, including for example 
the Clean Water Act, the National Environmental Policy Act (NEPA), and 
the National Historic Preservation Act. The information generated from 
this analysis is essential to making informed decisions about the 
future of these facilities.
    In addition, outstanding water rights claims of the United States 
as trustee for the Blackfeet Tribe and Fort Belknap Indian Community 
are significant to the future of water management in the watersheds 
dealt with in this bill. The Department believes that pending the 
resolution of these claims, authorization of a rehabilitation plan for 
the Milk River Project as called for in this Act is premature. Parts of 
the Milk River Project facilities are located within the boundaries of 
the Blackfeet Reservation, and more importantly, the Blackfeet Tribe 
has asserted Federal reserved water rights to the water currently being 
delivered through the Milk River Project facilities. The Fort Belknap 
Indian Community also has asserted significant claims in these 
watersheds. Federal negotiating teams are currently working with both 
tribes and the Montana Reserved Water Rights Commission toward 
settlement of their water rights claims.
    The Department of the Interior remains committed to these ongoing 
settlement negotiations. For over 30 years, Tribes, States, local 
parties, and the Federal government have recognized that, when 
possible, negotiated Indian water rights settlements are preferable to 
protracted litigation over Indian water rights claims. In addition to 
defining the extent of tribal water rights, negotiations allow 
settlement parties to develop creative solutions to water use problems. 
The Department is concerned that passage of S. 3563 would negatively 
impact efforts to resolve water rights claims for the Tribes of the 
Blackfeet and Fort Belknap reservations. Although this bill requires 
the Secretary to consult with the State, the Blackfeet Tribe, and the 
Board for the Milk River Project regarding the selection of an 
alternative for rehabilitating the project, the bill does not ensure 
coordination between efforts to settle tribal water claims and the 
rehabilitation project. There is a risk of creating parallel and 
potentially conflicting tracks for negotiating rehabilitation and water 
management strategies.
    In negotiating Indian water rights settlements, the Federal 
government seeks settlements that resolve all outstanding water claims 
and achieve finality. The requirement in S. 3563 that the Secretary 
``shall resolve any land, water, environmental, and other claims of the 
Blackfeet Tribe against the United States relating to the portions of 
the Milk River Project located within the exterior boundaries of the 
Blackfeet Reservation'' would effectively separate out some of the 
Blackfeet Tribe's water-related claims against the United States for 
separate resolution from the Tribe's other claims. This provision 
exacerbates the risk that this bill, rather than facilitating the 
resolution of existing Indian water rights claims, will complicate and 
slow the process of negotiating a comprehensive settlement.
    The Department also objects to language in S. 3563 imposing a 
legislative timeline on the Secretary of the Interior with respect to 
settling Indian water rights and other claims. The Secretary should 
have discretion to determine the scope and merit of the claims to be 
settled, as well as be given latitude to determine the sorts of 
solutions that fit within the abilities of the Department. A mandate to 
the effect that the ``Secretary shall resolve any . . . claims'' also 
suggests that the availability of federal funds and resources is 
unlimited.
                need for studies prior to authorization
    While the Department cannot support authorizing the rehabilitation 
of this project at this time, the Department supports studying 
rehabilitation of the St. Mary Diversion and Conveyance Works. The 
feasibility study would develop and analyze alternative means (starting 
with a screening of alternatives at an appraisal level of detail) for 
the rehabilitation of St. Mary storage and conveyance facilities; 
endangered species issues; Tribal water issues and interests; fish and 
wildlife resource issues; municipal water supply concerns; and 
international considerations related to the apportionment of the St. 
Mary and Milk Rivers. Reclamation believes that a feasibility report 
can be completed in 3 years, a timeline that allows for the necessary 
aspects of the planning process (engineering, hydrology, economic, 
environmental, cultural, Tribal and international considerations) to be 
incorporated. Until this is accomplished we believe that an informed 
determination of a project plan, project features and project costs is 
not possible, and therefore construction authorization at this time is 
premature.
    In the search for a comprehensive solution to the water and related 
issues in North Central Montana, the Department supports engaging the 
Tribes of the Blackfeet and Fort Belknap Indian Reservations in studies 
to identify implementable solutions to their water needs. These studies 
must be done in consultation with the Tribes and in coordination with 
ongoing efforts to negotiate comprehensive water rights settlements. We 
would like to work with the committee on setting some parameters on the 
appropriate scope and number of the projects to be studied.
    The Department agrees that the extent of infrastructure needs of 
the Milk River Project and the costs of rehabilitation must be made 
clear to the Congress, along with the extent and costs of other 
projects that could be of benefit to the Blackfeet and Belknap Tribes. 
The Department is concerned with some of the language contained in the 
legislation regarding these issues and we would again appreciate the 
opportunity to work with the committee and the Tribes toward mutually 
acceptable legislation.
               federal reimbursability/repayment concerns
    The project repayment terms identified in Section 3(b)(4) of S. 
3563 depart from the accepted project repayment practice to a degree 
that creates a dangerous precedent for the extensive aging 
infrastructure needs throughout the West. This legislation requires the 
Federal government to cover the full cost of the ``public benefits'' of 
the project, and also pay for the vast majority of the traditionally 
reimbursable side of the ledger. The legislation identifies that 55 
percent of the project costs will be Federal and 45 percent will be 
reimbursable. The legislation then assigns 75% of this reimbursable 
cost to the Federal Government. The Federal share therefore is at least 
88.75%, not the 55% stated in subsection (4)(A)(ii). The legislation 
also caps non-reimbursable obligations at $25 million. The legislation 
should require the use of current Reclamation procedures for 
determining non-Federal cost-share that have been applied across the 
western states.
    Given the extensive infrastructure needs throughout the West, the 
Department believes S. 3563 would significantly impact Reclamation's 
ability to address aging infrastructure and would appreciate the 
opportunity to work with the committee to refine these costs. We would 
further emphasize that the Department has a longstanding policy making 
local beneficiaries responsible for ensuring that project operation, 
maintenance, and replacement costs for facilities are met. This 
legislation could cost the Federal government over $160 million, while 
authorizing multiple feasibility studies that could, if implemented, 
cost the Treasury hundreds of millions more. In addition the potential 
Federal contribution to pending Indian Water Rights Settlements has not 
been addressed.
    At the same time, we recognize the importance of this project, and 
are committed to the most efficient use of Federal resources to assure 
its continued viability.
    Thank you for the opportunity to comment on S. 3563.

    The Chairman. Thank you for that gloomy testimony.
    [Laughter.]
    Senator Burns, would you like to comment?
    Senator Burns. Thank you, Mr. Chairman. You know, you 
objected to setting the timeline in order to make these 
settlements. Mr. Ryan, if we don't set some timelines, how are 
we going to get it done?
    Mr. Ryan. I share your concerns, Senator Burns. But in my 
experience in negotiating water contracts, I have not 
experienced negotiating water rights settlements but in 
negotiating water contracts, sometimes the deadlines can have a 
negative effect on trying to reach cooperation in wrestling 
through some tough water issues.
    Senator Burns. Right now, nothing moves and I don't know if 
that benefits the folks that have the water or does that 
benefit the Federal Government or does that benefit the Federal 
Treasury? I just think it does not hurt us to set some 
timelines on negotiating these settlements because they are 
important. They are important to our State. They are important 
to the tribes and sometimes, we get the feeling that the 
bureaucracy just stonewalls us and the only way we have to 
break through that wall is insertion of a timeline. Now, we can 
also take a timeline out. But I think there has to be some 
impetus put to move it forward. I really do and we'll be happy 
to work with you on that.
    Mr. Ryan. Thank you.
    Senator Burns. Happy to work with you but basically, I just 
think we have to have some timelines in order to get it done. I 
know it has to be part of what we're trying to do here. Time is 
money and then if we delay, delay, delay, delay, delay, then 
all at once, the figures that the Senator or the chairman was 
worried, are the figures on the Reclamation. Do these figures 
still hold today as they did a couple of years ago when they 
were put together, they say yes. Well, pretty soon those 
figures start to go up, too. So the cost to the taxpayer and 
the cost to the tribes and the water users continue to go up 
and it just serves no purpose to dillydally around with it. 
That's my comment. That's my story and I'm sticking to it!
    Mr. Ryan. I understand, sir.
    The Chairman. Thank you, Senator. Let me say, Mr. Ryan, I 
understand that the problem that you're confronted with is much 
bigger than you and----
    [Laugher.]
    Mr. Ryan. Thank you, sir.
    Senator Burns. It is.
    The Chairman. And you know that.
    Mr. Ryan. Yes, sir.
    Senator Burns. And I do, too.
    Mr. Ryan. Thank you, sir.
    The Chairman. I just nonetheless must lay before you at a 
public hearing on a project like this, which is a rather 
symbolic project in terms of the country. I must lay before you 
the realities of what we're confronted with. The average 
reclamation facility is over 50 years old.
    Mr. Ryan. Yes sir.
    The Chairman. Some of the reclamation facilities are over 
90 years old.
    Mr. Ryan. Yes sir.
    The Chairman. We're talking about one of those today, 
right?
    Mr. Ryan. Yes sir.
    The Chairman. In many areas of the West, such as the Hi-
Line here are dependent upon reclamation projects, the 
Reclamation estimates that estimates that approximately $250 
billion has been invested in reclamation projects. Is that 
correct?
    Mr. Ryan. Yes sir, that is my understanding.
    The Chairman. However, as these facilities age, many 
communities can no longer afford the cost of operation, 
maintenance and rehabilitation. We have one of those before us 
today.
    Mr. Ryan. It appears that way, sir.
    The Chairman. How does the administration plan to protect 
this Federal investment and the people who rely on these 
facilities when the stakeholders are unable to afford the 
rehabilitation of the reclamation facilities and when, as a 
matter of fact, many of the uses of the reclamation projects 
are different that they were when the projects were originated? 
How does the administration plan to protect that investment and 
that set of facts?
    Mr. Ryan. Well, sir, I think that some of the testimony 
that came out earlier and also in some of your observations 
pointed to that fact that for the reclamation projects that are 
old projects that have, in many instances, single purposes for 
their authorization, when those purposes are irrigation and in 
today's world, with the agricultural economy, it is very 
difficult for those to stay financially viable. My experience 
on other reclamation projects has indicated that one means to 
help sustain their viability is to reach out to other purposes 
that the project can be benefited from and I think that we 
heard some of that today----
    The Chairman. You're right.
    Mr. Ryan. And then to see, sir, if those purposes could 
bring something to the table financially to help maintain the 
viability of the core.
    The Chairman. And even that has not been established as a 
policy for the country. We are not telling our Bureau of 
Reclamation people to rely upon that as a policy in order to 
rehabilitate and/or alter, amend or maintain facilities. We 
have not said the American policy is--when they are old, 
etcetera, go out and find out if you are benefiting other uses 
that should be paying and see if they make things more--things 
less fragile if they contribute. That's not a policy yet, is 
it?
    Mr. Ryan. My understanding is the same as yours, sir.
    The Chairman. Well, that's a policy we better look at, 
Senator Burns. It clearly applies to yours but it applies to 
the country.
    Mr. Ryan. Yes sir.
    The Chairman. It might be too small an impact on the 
remnants of the $250 billion that has been invested and that 
investment is in all various levels of decay, right?
    Mr. Ryan. Yes sir.
    The Chairman. Some of it is okay even though it is old.
    Mr. Ryan. Yes sir.
    The Chairman. Some is no good at all and some has just 
changed itself out there and is now a municipal water source.
    Mr. Ryan. Yes sir.
    The Chairman. It goes all over the map.
    Mr. Ryan. There is great variability.
    The Chairman. And we haven't set about to see what in the 
world is out there, either. We have, in this committee. You 
know that we have at least set about to reorganize the Bureau 
of Reclamations? You know that?
    Mr. Ryan. Yes sir. And I am on the--along those lines, sir, 
I believe what you are referring to is what Reclamation has 
called the ``Managing for Excellence'' aspects and I am 
directly involved with one component of that effort and that 
component is major repair challenges.
    The Chairman. Is what?
    Mr. Ryan. Major repair challenges.
    The Chairman. Okay.
    Mr. Ryan. And I asked to be assigned that task. I'm hopeful 
that it would help me with working with the local folks, 
yourself and others, to resolve situations here on the Milk.
    Senator Burns. Mr. Chairman, can I make an observation 
here?
    The Chairman. Senator Burns.
    Senator Burns. When we talk about protecting that $250 
billion in investment we've made in irrigation systems that 
have been built since day one, why is it so difficult for some 
of those irrigation districts that the users want to own it and 
have paid for it? In other words, they have paid back the loans 
on it? And yet, we have a terrible, terrible, difficult time in 
getting the Bureau of Reclamation to release that district to 
those users. Why is that so difficult?
    Mr. Ryan. Well Senator, I have had some direct experience 
with transferring title from Federal ownership to irrigation 
district ownership and even though it was a bit complicated, we 
stepped through that process and I believe those districts 
right now are happy with the agreement that we reached and 
title now does rest with them. There are occasions, though, 
when the issues that surround the title of the facility make it 
such that in my direct experience, the receiving entity is not 
willing to bear, for instance, issues working through other 
Federal legislation, such as the Endangered Species Act and 
operating the project or issues associated with the liability. 
One of the benefits--in my opinion, one of the benefits to 
local water users is that since title is still in the hands of 
the U.S. Government, the U.S. government shares at least some, 
if not all, the liability for those facilities and upon 
transfer of title, that goes with it.
    Senator Burns. I like your answer but I don't accept it.
    Mr. Ryan. Thank you, sir.
    The Chairman. Let's leave the macro for a minute, other 
than to just suggest that somebody is involved and as bright as 
you are, you must understand that we have a pending fiasco.
    Mr. Ryan. Yes sir.
    The Chairman. We've got to find out what we're doing about 
it.
    Mr. Ryan. Yes sir.
    The Chairman. The strange thing is, that some of these 
districts, these projects are probably pretty valuable.
    Mr. Ryan. Yes sir.
    The Chairman. They are probably not so valuable in their 
current state of disrepair, if you leave them as purposed 
originally.
    Mr. Ryan. Yes sir.
    The Chairman. But if you put them into another kind of mold 
and try to package it up, they might contribute to a renovation 
that might be cheaper than we think.
    Mr. Ryan. Yes sir.
    The Chairman. But we've got to turn loose the innovation 
and the innovative thought on how you package these in a better 
way. Some municipalities can pay much more than they are 
currently paying and would, if in fact we changed our approach 
and said something different before them, at the different 
table, for them to participate in.
    Mr. Ryan. Yes sir.
    The Chairman. Let me go back to this one here. Both Senator 
Burns and I requested half a million dollars in the energy and 
water appropriation bill last year, $5 million in this year's 
bill, which has not yet reached fruition but it was for the 
collection of data and the feasibility studies for the 
rehabilitation of this facility.
    Mr. Ryan. Yes sir.
    The Chairman. How are the studies that were authorized last 
year progressing and when carrying out these studies, are you 
taking into account the environmental effects that the 
operation of the St. Mary's facility has on the Blackfeet Tribe 
and if so, how do you plan to remedy these negative effects, if 
there are some?
    Mr. Ryan. Senator, as the Blackfeet tribal representatives 
mentioned earlier, we do have some agreements between the 
Blackfeet Tribe and the Bureau of Reclamation. The Bureau of 
Indian Affairs is involved also and we've also done some good 
work with the State of Montana to get out those questions. I 
was briefed by my staff that that work continues and that they 
are optimistic about its outcome. I also understand and it was 
underscored for me again just a short while ago with the 
testimony of the stakeholders that there is a lot at stake for 
them. Their interests are sincere and this is important work 
and that we need to be careful. But I'm optimistic we'll get 
through it.
    The Chairman. You are?
    Mr. Ryan. Yes sir.
    The Chairman. All right, very good. I hope the Indian 
leaders understand that it is a two-way street. You've got to 
be cooperative also in trying to get to this end. I think they 
indicate--I believe that's the case.
    Mr. Ryan. Yes sir, so do I.
    The Chairman. We'll see it in a few months. If it isn't, 
we'll see. We'll have another hearing, maybe bring them back to 
Washington and see what's cooking.
    Mr. Ryan. Yes sir.
    The Chairman. Because you've got to get these negotiations 
going. It can't just languish around. Would you describe more 
fully the Government's involvement in the resolution of the 
Blackfeet Tribe and the Fort Belknap's Indian Tribe's water 
rights claims?
    Mr. Ryan. Senator, those are topics that I've been briefed 
upon but since much of the work happened prior to my assuming 
this position, I don't feel comfortable with my level of 
knowledge to be responsive. But if you'd permit, I could take 
that question back and provide the answer to the committee.
    The Chairman. You'd better. Does somebody there know? Do 
you have somebody that knows the answer to that question?
    Mr. Ryan. Yes sir.
    The Chairman. And they're just not here?
    Mr. Ryan. Yes sir, that's correct.
    The Chairman. They are back in your office or what?
    Mr. Ryan. They're back in the Department.
    The Chairman. In the Department?
    Mr. Ryan. Yes sir.
    The Chairman. Okay. Would you do that for us?
    Mr. Ryan. Yes sir.
    The Chairman. Okay, I'll make the question very succinct 
and staff will give it to you.
    Mr. Ryan. Thank you.
    The Chairman. You stated in your testimony that the 
administration supports the general concept of an emergency 
response plan and a fund to go with it.
    Mr. Ryan. Yes sir.
    The Chairman. Right. You go on to say that you are 
concerned with the investment authority associated with the 
emergency response plan.
    Mr. Ryan. Yes sir.
    The Chairman. What do you suggest the administration should 
do in the event of a catastrophic failure? How would the 
emergency repairs be funded, in the event of a catastrophic 
failure?
    Mr. Ryan. If the emergency response funding were there, 
sir?
    The Chairman. Yes.
    Mr. Ryan. Yes, well if I remember correctly, the language 
talks about working with the tribal governments and working 
with the communities and the water users to come up with a 
contingency plan, analyzing the risk of the different features, 
taking a look at the failure scenario as the likelihood and 
impact of different failure modes. In other work that I've 
done--I'm an engineer, sir. In other work that I've done, we 
would identify critical spares and have those on hand. We would 
try to negotiate agreements up front for access, potentially 
also for acquisition of additional repair materials and 
mobilize and get in and get the work done, get the repair done. 
That's the type of effort that as I read the Senate bill that I 
envisioned the author, Senator Burns, would want us to take and 
I think that is appropriate.
    The Chairman. All right. Mr. Ryan, you stated in your 
testimony that feasibility studies can be completed in three 
years.
    Mr. Ryan. Yes sir, we believe so.
    The Chairman. Federal funds have already been appropriated 
to undertake the studies for the rehab of the St. Mary's 
facility. Additionally, the St. Mary Rehabilitation Working 
Group has invested significant time, money and resources in 
developing these studies.
    Mr. Ryan. Yes sir.
    The Chairman. How do you plan to incorporate the work that 
has already been completed by the St. Mary's Rehabilitation 
Working Group and the Reclamation when completing the 
feasibility study on the St. Mary facility?
    Mr. Ryan. Senator, we believe that it would be foolish to 
through out all the hard that has been done to date and start 
at ground zero.
    The Chairman. I would hope so.
    Mr. Ryan. And wasteful of money previously spent and 
relationships previously developed. So we would envision using 
every bit of available information that is applicable, that is 
on the books right now, so we're not reinventing the wheel and 
use that. We have to make sure that the concerns and I think 
that we heard from the first panel, sir, that there still are 
some concerns with where we're at and where we're going, so we 
have to dovetail those in and complete not only the feasibility 
report but we also have to be working on making sure we satisfy 
the National and Environmental policy Act and the National 
Historic Preservation Act, etcetera. But I'd like to be able to 
use all the information that good people have worked hard to 
generate so far.
    The Chairman. So do you believe that the feasibility study 
for the rehabilitation of the facility can be completed in less 
than 3 years?
    Mr. Ryan. Senator, if I can do it in less than 3 years, I 
will. But right now, with my understanding of what's been done 
and what remains, 3 years is the appropriate timeframe.
    The Chairman. Okay. In the written testimony, Chief Old 
Person stated that Reclamation is investigating the rights of 
way of the Blackfeet Reservation.
    Mr. Ryan. Yes sir.
    The Chairman. Will you please tell the committee, will you 
update us on these activities?
    Mr. Ryan. Yes sir. There are differences of opinion between 
the Blackfeet Tribe and the U.S. Government on just what the 
status--you know, the interest in the lands is, ownership or 
easements, rights of way, etcetera and so working with the 
Blackfeet Tribe and working with the Bureau of Indian Affairs, 
that's some of the cooperative work that was referred to 
earlier on sitting down, looking through the existing data and 
trying to work together, in a professional and in a way 
collaborative way, to resolve those concerns. Many of the 
records are very old and trying to come to grips with just 
what--where does a section corner lie and----
    The Chairman. What are rights of way for?
    Mr. Ryan. For the canal system, for the carriage and----
    The Chairman. Will you talk about water?
    Mr. Ryan. Yes sir.
    The Chairman. Okay.
    Mr. Ryan. Yes sir. For the features of the St. Mary's----
    The Chairman. So you're trying to arrive at some kind of 
market value or what is this exercise you're going through?
    Mr. Ryan. We're trying to resolve some longstanding 
differences of opinion about just who--did the United States 
acquire all of the use interests that it needed to, nearly 100 
years ago and if not, then what do we do about it?
    The Chairman. So the point is, if we have it, the Indian 
position is, is that they are entitled perhaps, to some money. 
Is that right?
    Mr. Ryan. Well Senator, I don't presume to speak for the 
Blackfeet Tribe but that is my understanding of what they think 
would be fair.
    The Chairman. All right. I understand. I have no further 
questions of you. I thank you so much for what you've been 
doing.
    Mr. Ryan. Thank you, sir.
    The Chairman. I'm sure it is hard work, especially on this 
old project but it is important that we keep it up until we 
find out how we're going to do it, right?
    Mr. Ryan. Yes sir. I am fortunate enough to be a fourth 
generation Montanan. This State and its people are important to 
me.
    The Chairman. Okay, that's good. I'm not a Montanan and 
it's already important to me.
    [Laughter.]
    Mr. Ryan. Thank you.
    The Chairman. Okay. Senator Burns, do you have anything 
further to say?
    Senator Burns. I do not. I just want to thank you for 
coming to Montana and holding this hearing and also, your very 
sharp questions and to highlight the challenges that we have in 
front of us. That's the real worth of this hearing, here where 
people get to hear the question and they get to hear the 
answers. So thank you very much for coming.
    The Chairman. Senator Burns, it's a pleasure to be in your 
State. Thank you for inviting me. On behalf of the Energy and 
Natural Resources Committee, I want to thank all of you for 
participating, those that did. For you who are present and for 
letting us conduct this hearing in your presence, we thank you. 
We think we have a wonderful committee. They are not all here 
but we have had a reputation since I became chairman, of 
getting things done. And the way we've done it is, believe or 
not, is to shake aside the idea of partisanship and do two 
major bills on a bipartisan basis, totally without regard to 
our party affiliation. We decided to do an energy bill. We 
haven't had one in 15 years. We did one. There are people who 
wanted a lot of other things in it but it is a magnificent 
piece of work. It is going to bring onboard during the next 7 
or 8 years, literally millions and millions of gallons of 
ethanol that will be followed on by a further biodegraded 
production of ethanol from cellulose in a big, monster way.
    We have done some terrific things in terms of bringing on 
alternative vehicles. We've done some powerful things in terms 
of nuclear power. Whether you like it or not, the American 
people have finally come of age and 85 percent think it is time 
we used nuclear power and what a great accomplishment that is. 
About the same time, we did a bill that puts that out there and 
believe it or not, with the incentives we provided, there are 
27 new applicants for powerplants that would be fed by nuclear 
power that are already applications pending for the Nuclear 
Regulatory Commission. I don't believe you knew that, Governor. 
We had zero for a period of 30 years. Now we have 27, thousand 
megawatts each, pending. And guess what? They're going to build 
them right next door to the existing one. What a smart idea! 
And in each case, the people in the neighborhood want them 
back. So all this idea of where will you locate them have been 
resolved. Pretty smart idea. I could go on beyond that with the 
kinds of things this bill has brought into fruition. Your 
senator sat right there and we did it, didn't we?
    Senator Burns. We did it.
    The Chairman. First bill in 15 years! Now if we could do a 
few more, moving toward independence and if we weren't too 
frightened, frightened of our own spirit and do some offshore 
drilling, which we have just about got started with recently, 
producing from our own reservoirs underground, the deep water. 
Do that next and then a couple of other big things. We will 
have been very proud and you would have been proud of us. 
That's important these days, that you get a feel that we're 
trying to do our job. We are. Some of us do work very hard, 
contrary to what you are fed over the airwaves, we are pretty 
hardworking and some of us are even halfway smart.
    [Laughter.]
    The Chairman. Thank the Lord, not to us. Some of us just 
inherited it, right? My kids are pretty smart. They get it all 
from my wife, everybody says. That's true. In any event, thank 
you. We won't be back soon but in the meantime, let's see what 
we can do about this project.
    Senator Burns. Thank you.
    [Applause.]
    [Whereupon, at 4:30 p.m., the hearing was adjourned.]
                                APPENDIX

              Additional Material Submitted for the Record

                              ----------                              

Statement of Dolores Plumage, Blaine County Commissioner and Member of 
                  St. Mary's Working Group on S. 3563
    Chairman Domenici, Ranking Member Bingaman, members of the Energy 
and Natural Resources Committee:
    It is an honor to submit testimony on behalf of Blaine County and 
my fellow Commissioners Art Kleinjan and Don Swenson. I am presenting a 
county perspective on SB 3563. To the credit of the St. Mary's Working 
Group (SMWG) members, there has been consistent participation and 
attendance during all four seasons in challenging weather conditions, 
high transportation costs, long distances, economic hardships 
especially in Eastern Montana, and last, but not least, a diversified 
representation of interests that could have easily shattered the 
group's unity. However, the Working Group has maintained a focused 
purpose and dedication to the efforts of authorizing the rehabilitation 
of the St. Mary Diversion System and addressing associated issues of 
the Blackfeet and Ft. Belknap Tribes, and the Milk River Basin.
    Glacier, Hill, Phillips, Valley and Blaine Counties collectively 
contain a total population of 66,860, a 7.2% of total Montana 
population. The total farm earnings of the Basin is 38% of all Montana 
farm earnings; and the Basin represents 27% of all Montana farm 
employment; and the irrigated crops of the Basin are barley--32% of 
Montana's total barley crop, Basin spring wheat--3.4%, and alfalfa--
8.2% of all irrigated alfalfa produced in Montana; and Basin livestock 
which is 15.5% of all Montana cattle; and 11% of all Montana sheep 
(source: Mont. Dept. of Commerce--Census and Economic Info. Center).
    Blaine County has a population of 6,629, per capita income $12,101, 
and a county size in square miles 4,275. Following are the Blaine 
County communities' municipal, residential and industrial water use 
data: Chinook--population served 1,386; Harlem--848; and Ft. Belknap 
Agency--1,262 (source: St. Mary Diversion & Milk River Project 
Preliminary Econ. Analysis by Dr. J. Duffield, 12/30/05; 2005 census). 
Agricultural production is a major source of revenue. The Ft. Belknap 
Reservation and its government have pending projects such as an ethanol 
plant and a water treatment plant. Both Ft. Belknap and communities in 
the county have goals of attracting more commerce, a more improved 
highway for the hi-line connecting the five counties, extensive oil and 
gas activity and increased tourism. According to University of Montana 
Paul Polzin, ``It is not unusual for population growth to lag behind 
economic growth'', (Great Falls Tribune, Aug. 24, 06).
    In a normal irrigation season (May through September), supplemental 
water provided by the St. Mary Diversion Facilities provides 
approximately 70-90% of irrigation water used by contract holders on 
the Milk River Basin. During the drought of 2001, 95% of available 
water in the Milk River originated in the St. Mary River Basin. St. 
Mary system provides municipal drinking water to over 17,000 people in 
thirteen Montana communities. Bowdoin National Wildlife Refuge 
contracts with Reclamation for approximately 3,500 acre-feet per year 
of supplemental water from the St. Mary River. This 15,500-acre refuge 
provides food and habitat for an estimated 100,000 waterfowl each 
spring and fall. The St. Mary system benefits wetlands, numerous 
endangered and threatened species, and reservoirs for storage and 
recreational benefits.
    The St. Mary Diversion Facilities are approaching 100 years old and 
are still dependent on the same basic infrastructure built by the 
Reclamation Service in the early 1900's. Operation of the St. Mary 
Diversion Facilities has had a series of negative environmental impacts 
on the Blackfeet Reservation.
    There are many issues being addressed by the Working Group. It is 
obvious that the tribes are facing crucial decisions regarding their 
water rights. Ft. Belknap Reservation is within the boundaries of 
Phillips and Blaine Counties. Considering the testimonies of President 
Julia Doney of the Ft. Belknap Community Council and Chairman Earl Old 
Person of the Blackfeet Tribal Council, it is evident that they do not 
want this legislation to overshadow their water issues which have 
existed for many years. It is the Working Group's task to sincerely 
address issues that are within their scope of limited jurisdiction. The 
Working Group desires to work collaboratively with Bureau of 
Reclamation to develop language to address a mutual agreement of 
determining federal reimbursability/repayment concerns and to address 
multiple users of the Milk River.
    The irrigators have had to bear the financial burden of maintaining 
the St. Mary's infrastructure. Considering all of their rising costs of 
agricultural expenses, it is overwhelming for the irrigators. Bureau of 
Reclamation is a key component; however, it is depressing and 
frustrating to observe their reluctance to assist due to their own 
bureaucracy. Hence the Working Group has no choice but to bypass 
Reclamation and go to Congress. The expression of great appreciation by 
St. Mary's Executive Director Larry Mires is also echoed by the Working 
Group to Senator Baucus for securing federal funds to address Blackfeet 
environmental issues and the St. Mary Siphon Bridge in 2005; and to 
Senator Burns and the Congressman Rehberg for crafting the new 
legislative language to provide a permanent fix to the St. Mary and 
Milk River Projects in 2006. Counties, communities, and citizens have 
donated $275,657.88 to support the efforts of the St. Mary 
Rehabilitation Working Group (as of 8.21.06). The St. Mary's Working 
Group was formed in 2004 and have provided over $126,102 in-kind 
contributions to attend meetings and to promote the project.
    The State of Montana has contributed over $947,142 to support the 
goals of the Working Group (as of 7.31.06). The State of Montana also 
has contributed staff time and resources providing administrative and 
technical support. Lt. Governor Bohlinger and the supporting staff from 
Department of Natural Resources have been invaluable to the Working 
Group's progress. The dedication to the urgency of this water system 
and its importance to Eastern Montana has been a wonderful ``work in 
progress''.
    Montanans are a very self-reliant and proud people. Today we are 
extremely happy to see that our concerns have reached the hearts and 
minds of our legislators. Sometimes, it appears that we are forgotten. 
With a deep-rooted love for the Milk River Basin and the simplicity of 
life that we represent, Blaine County thanks you for your time, 
attendance and dedication to this matter.
                                 ______
                                 
                         Page Whitham Land and Cattle, LLP,
                                      Glasgow, MT, August 28, 2006.
Chairman Domenici,
Ranking Member Bingaman,
Energy and Natural Resources Committee.
    Mr. Chairman and Members: Thank you for the opportunity to submit 
testimony regarding the need for rehabilitation of the Milk River 
Project and the St. Mary's Diversion Works.
    I am a cattle rancher, irrigator, and member of the St. Mary 
Rehabilitation Working Group. My son and his children represent the 
fourth and fifth generations to operate one of the larger family 
ranches in northern Montana. We irrigate Milk River Valley land, 
producing winter feed for a significant number of cattle and calves 
that are pastured on private, BLM, and State of Montana lands during 
the grazing season. Our ranch employs twelve to fifteen men and women, 
circulates substantial income through the state's economy, and 
contributes considerable revenue to county, state, and federal 
government.
    Prior to construction of the Ft. Peck Dam, the many thousands of 
acres of fertile bottom land along a 130 mile stretch of the Missouri 
River served as winter feed base for a large number of northern Montana 
ranches, including ours. Following the flooding of these highly 
productive ``Missouri River Hay lands'', the Milk River Project has 
served as a substitute source of production since the early 1940s and 
now provides winter feed base for most range-livestock operations in 
the region.
    Since World War II, area farmers and ranchers have invested 
significantly in the purchase and development of lands for irrigation 
and have incurred financial obligations based on the production 
potential of irrigated land. The development of these lands for 
irrigation was encouraged through government programs and accomplished 
with the understanding that a dependable supply of water at an 
affordable cost would always be available.
    Milk River Project irrigated lands produce the majority of the 
winter feed for more than 250,000 head of cattle, and is essential to 
the $110,000,000 range livestock industry in four northern counties of 
Montana. Most years, Montana is a winter feed deficit state and Milk 
River Valley irrigated hay production is irreplaceable.
    Montana ranches without a dependable source of winter feed have 
never survived, and I am unable to envision the future of our ranch 
without an irrigated feed base.
    There is little doubt; the loss of this water supply would 
financially ruin hundreds of farms and ranches, adversely affect fish 
and wildlife, and jeopardize the municipal water supply for a number of 
communities including the Ft. Belknap Reservation.
    The Milk River Project and St. Mary Diversion are in critical need 
of rehabilitation, and failure to appropriately reauthorize and fund 
this project will result in a socio/economic disruption of 
unpredictable magnitude within the State of Montana. This is an 
antiquated Federal Project operating under outdated Federal Law, and a 
congressional solution is crucial.
            Respectfully,
                                                    Steven K. Page.
                                 ______
                                 
                                                 September 1, 2006.
Chairman Domenici,
Ranking Member Bingaman,
Energy and Natural Resources Committee.
Re: Benefits of St. Mary Diversion Facilities and Milk River Project

    Thank you for giving me the opportunity to write the Energy and 
Natural Resources Committee. My name is Mike Barthel and I've resided 
along the Milk River for the past 20 years. Prior to making my home 
near the Milk, I resided in Glendive, Montana and grew up on a farm 
near the Yellowstone River. I know the importance of water both from an 
agriculture standpoint and from my current position on the St. Mary 
Working Group (SMWG) where I represent all forms of recreation along 
the Milk River Valley. I've served as State President for Montana 
Walleyes Unlimited and a two-year term as a local president for the 
Fresno Chapter of Walleyes Unlimited. My current occupation is Police 
Chief for the City of Havre, a town that wouldn't exist if the City of 
Havre didn't have an adequate and reliable water supply.
    I met Co-Chair of the SMWG (Randy Reed) a number of years ago when 
we discovered we had the same interest. The federally built and 
maintained water system that supplies the reservoirs of Fresno and 
Nelson and the Milk River was failing and on the verge of a of 
catastrophic failure. Mr. Reed's interest primarily lye with the family 
farm. My interests . . . No minimum pool standards set on Fresno and 
Nelson and I was receiving increasing pressure from members of the 
walleye club asking me to do something about it. Don't let Mr. Reed 
fool you with his oral testimony and written comments, which tends to 
lean towards irrigation. We have shared some great fishing days 
together on the water! From those early meetings, a group was formed. 
Today it is called the SMWG and although we have different interest at 
the table, the goal is common. Rehabilitate the system so that an 
adequate water supply will supply life to the Hi Line for years to 
come.
    My experiences as a leader of an organization have given me the 
opportunity to work with some great people who specialize in the 
management of water. One such organization is the Montana Fish, 
Wildlife and Parks. FWP has presented to the public many times on lake 
elevations and why it will do more harm then good to plant fish when 
water levels are too low. The local chapter works in conjunction with 
FWP and has planted trees and vegetation to ensure adequate cover for 
newly planted fingerlings and fry fish. Too many times the lake 
elevations are too low for the cover to do any good and the fry and 
fingerlings become a food source. Too many times the elevation of the 
lake is so low the fish decided to exit and are flushed downstream. Too 
many times the lake elevations are so low that one can't even put a 
boat into the water. The local biologist has said for years that a 
stable water supply on the lakes in needed for fish survival. Future 
fisheries studies are needed. Species of concern, like the Sauger 
inhabits these waters. Further west, the endangered Bull Trout is 
allowed to pass by an inadequate fish net and into the Milk River 
system. The Piping Plover an endangered bird can be found on Nelson 
Reservoir. Again, a minimum pool standard would ensure adequate water 
for fish, wildlife and municipal water use.
    The local Fresno Chapter of Walleyes Unlimited recently invested 
over $60,000 in a campground on water front property for all of the 
public to enjoy. Today, it is a long walk down the beach to water. 
Because of receding water, the beach turns to knee-deep mud and then 
silk. Boat slips and docks are moved daily because of the constant 
receding water. With the current price of fuel, campers and boaters 
must stay close to home a problem when there isn't enough water. The 
main problem: Roughly 1150CFS leaving Fresno, 450CFS entering. Other 
groups have worked hard on establishing habitat for wildlife along the 
Milk River Valley. Ducks Unlimited, Pheasants Forever, Turkeys Forever, 
and Northerns Forever all have dedicated time and money to improve the 
Milk River and reservoirs for the betterment of their species. The 
Bureau of Reclamation has spent a lot of federal dollars installing 
restrooms, camping areas and fire pits, but many times because of low 
water the locations are too far from water to be utilized.
    The continued releases from the first dam on the Milk River ensure 
some good. In addition to supplying drinking water to roughly 17,000 
people living near the Milk River, it is estimated that the net 
economic benefit of recreation in the basin attributable to the Milk 
River Project and St. Mary water is $10.5-$12 million annually. 
Additionally imported water from the St. Mary River supports over 7,340 
acres of wetlands in the Milk River Basin with of a total value of $5-
$7 million annually. Benefits of St. Mary Diversion Facilities and Milk 
River Project far exceed those originally envisioned when the project 
was built in 1906.
    The SMWG is asking for your help on behalf of all the Americans 
living and visiting this great part of Montana! We cannot afford this 
federal project by ourselves.
            God Bless,
                                                      Mike Barthel.
                                 ______
                                 
                          Bear Paw Development Corporation,
                                      Havre, MT, September 4, 2006.
Hon. Pete Domenici,
Chairman, Committee on Energy and Natural Resources, Dirksen Senate 
        Office Building, U.S. Senate, Washington, DC.
Hon. Jeff Bingaman,
Ranking Member, Committee on Energy and Natural Resources, Dirksen 
        Senate Office Building, U.S. Senate, Washington, DC.
    Dear Chairman Domenici, Ranking Member Bingaman and Members of the 
Committee on Energy and Natural Resources: I am writing with specific 
regard to S. 3563, which, among other things, will work to rehabilitate 
the St. Mary Diversion and Conveyance Works and the Milk River Project 
(St. Mary Diversion). This legislation, perhaps more than any other 
action currently before Congress, will determine the continued 
viability of northern Montana as a place to live, work, recreate and 
engage in entrepreneurial activities. Thank you for this unique 
opportunity to provide you with information about the St. Mary 
Diversion as you consider much-needed funding for this century-old 
federal project.
    I currently serve as the Executive Director of Bear Paw Development 
Corporation, a federally-recognized Economic Development District that 
includes five counties and two Indian reservations in northern Montana. 
The economy of this area and the well-being of its people are 
intimately linked to the continued functionality of the St. Mary 
Diversion and its accompanying infrastructure. While the Congress 
smartly authorized this project 100 years ago, it has unfortunately 
fallen into a dreadful state of disrepair that literally challenges its 
continued ability to perform its intended function, which is the 
efficient delivery of water from the St. Mary River Basin to the Milk 
River Basin.
    Although the original purpose of this engineering marvel was to 
assure that the agricultural producers of northern Montana received the 
water necessary to properly grow crops for a growing nation and a young 
state, the water delivered by the St. Mary Diversion has had a much 
deeper, more significant impact on this area, known as the Hi-Line, 
than anyone would have speculated in the early 1900's. Nearly 50,000 
people live in the rural counties directly impacted by this project, 
with countless more reaping the indirect benefits of a water delivery 
system funded, designed and constructed by individuals possessing a 
vision for northern Montana that continues to allow our area to 
contribute significantly toward the economic well-being of Montana and 
the United States.
    As you can imagine, it is difficult enough to engage in meaningful, 
job-creating economic development activities in places like rural 
northern Montana. This task becomes nearly impossible without the 
proper publicly-financed infrastructure that allows the private sector 
to expand, create jobs and contribute to our overall economy. According 
to the December, 2005 St. Mary Diversion & Milk River Project 
Preliminary Economic Analysis, the rehabilitation of the St. Mary 
Diversion is responsible for as much as $41.3 million annually in net 
economic benefit to Montana and the U.S. This same study indicates that 
the long-term economic value of this project is estimated at $410-$700 
million. When compared to the expected project cost of approximately 
$120 million, a favorable cost-benefit ratio of 4:1 is anticipated.
    Production agriculture is, by any measure, the backbone to the 
economy of northern Montana. Fully 38 percent of Montana's total farm 
earnings are derived from agricultural production in the Milk River 
Basin. This $67 million annually comes from over 8,600 farm workers. 
Annual agricultural cash receipts from the Milk River Basin are $495 
million. None of this agriculture-related economic activity would be 
possible without the continued functionality of the St. Mary Diversion 
and Conveyance Works. In a very real and significant way, this 
infrastructure fuels the economy of our area and adds tremendously to 
the overall viability and sustainability of Montana's economic base.
    In addition to the St. Mary Diversion's role as a contributor to 
the regional and national economy, it also provides life-sustaining 
drinking water for the communities of Havre, Chinook, Harlem, Fort 
Belknap Agency and rural areas in Hill County. More than 15,700 
residents of these communities rely on the St. Mary Diversion Works to 
deliver water to their homes on a daily basis. This municipal use 
sustains these communities and makes them attractive as locations to 
live, raise a family and conduct business. Without the water that is 
delivered to these communities, it would be impossible for the 
residents of this area to survive. Indeed, the St. Mary Diversion 
allows our quality of life, and life itself, to exist on the high 
plains of northern Montana.
    Although the pioneering engineers and federal policymakers of the 
early 1900's were truly visionary with respect to this piece of 
infrastructure, it has not received the attention it deserves from the 
federal government over the course of the past several decades. At a 
personal level, we all understand it is folly to spend good money on a 
house for our family only to ignore its ongoing upkeep and maintenance. 
The same is true with public infrastructure. The St. Mary Diversion 
Works is in serious need of rehabilitation and faces the real potential 
of immediate collapse, which would have significant and very negative 
impacts on all of Montana's Hi-Line. The federal government, through S. 
3563, has a real opportunity to protect the investment they have 
already made in this project and assure that this important 
infrastructural enhancement to this area can continue to serve the 
various water needs of our communities for decades to come.
    Another factor which points to the importance of federal investment 
in this project is the relative poverty of the residents of the area 
when compared to their fellow citizens on a statewide or national 
basis. Using figures from Hill, Glacier and Blaine Counties, the 
following statistics indicate the dramatic gap that exists with per 
capita income and poverty for this region and individuals that reside 
elsewhere:

------------------------------------------------------------------------
                                                           Persons below
                                            Per capita     poverty level
                                            income 1999        2003
------------------------------------------------------------------------
United States...........................     $21,587            12.5%
Montana.................................     $17,151            14.2%
Hill County.............................     $14,935            18.1%
Glacier County..........................     $11,597            25.6%
Blaine County...........................     $12,101            22.2%
------------------------------------------------------------------------

    These stark numbers are indicative of the general economic 
conditions that exist in the area impacted by this project and point to 
the necessity of securing federal funds to continue to assure that the 
communities of Montana's Hi-Line receive the water that is necessary to 
fuel their economy and provide quality drinking water to its residents. 
These numbers reflect the reality that the residents of this region are 
simply unable to bear the brunt of paying to properly rehabilitate this 
federally-owned facility. A significant federal investment is a must.
    The proposed rehabilitation of the St. Mary Diversion Works has 
developed through a unique and truly grassroots effort of citizens, 
local and tribal government officials, conservation organizations, 
agricultural producers and economic development interests. This diverse 
group of concerned Hi-Line residents wants to find a sensible, long-
term solution to the deteriorating nature of this important water 
delivery system for our area. Toward this end, Milk River residents, 
organizations and units of local and tribal government have contributed 
over $401,000 in both monetary and in-kind donations that will advance 
this project, a substantial financial and personal commitment for a 
region of our state and nation that has experienced out-migration, 
business closures, commodity price uncertainty and multiple years of 
drought.
    Your assistance in directing appropriate federal funding to this 
project through S. 3563 will go a long way toward assuring that the 
investment made by the Congress 100 years ago in the St. Mary Diversion 
and Conveyance Works was money well spent and that this water delivery 
system will be able to continue to serve the people and communities of 
northern Montana for the next 100 years.
    Thank you for allowing me the opportunity to present these 
comments. My contact information is as follows:
                                                 Paul Tuss,
                                                Executive Director.
                                 ______
                                 
                                             City of Havre,
                                      Havre, MT, September 5, 2006.
Hon. Pete Domenici,
Chairman, Committee on Energy and Natural Resources, Dirksen Senate 
        Office Building, U.S. Senate, Washington, DC.
Hon. Jeff Bingaman,
Ranking Member, Committee on Energy and Natural Resources, Dirksen 
        Senate Office Building, U.S. Senate, Washington, DC.
    Dear Chairman Domenici, Ranking Member Bingaman and Members of the 
Committee on Energy and Natural Resources: I am writing with specific 
regard to S. 3563, which contains legislation to rehabilitate the St. 
Mary Diversion and Conveyance Works and the Milk River Project (St. 
Mary Diversion). On behalf of the rural population of over 17,000 
people of Havre, Chinook, Harlem, Dodson, Malta, Kremlin, Gilford, 
Hingham Rudyard and Inverness who all receive their drinking water from 
the St. Mary Diversion we appreciate the efforts being made to help 
rehabilitate this 100 year old infrastructure.
    When the newly created Bureau of Reclamation decided to construct, 
what some call an engineering marvel, the St. Mary Diversion, its sole 
intended use was for irrigation. Since the inception of the first 
waters that flowed through the gates, the use of the project has 
changed dramatically. In the last 100 years the project has grown from 
a single use project to an economically viable multi-use project that 
serves agriculture, municipal, industrial and recreation uses after its 
first 100 years of use.
    The City of Havre constructed a water treatment facility in the 
early 1950's as the ``City Fathers'' also had a vision and looked for 
the community to continue to grow. The city entered into a contract 
with the Bureau of Reclamation and was allocated 2800 acre/feet of 
water from the Milk River each year for the treatment and distribution 
to its residents. Before the construction of the water plant the city 
relied on wells to supply water to the residents and businesses in 
Havre. As the city expanded and the population continued to grow, the 
quality of the wells started to deteriorate. Havre became more 
dependent on the use of surface water to supply its customers and used 
more of its 2800 acre/feet allocation.
    In 1997 after a study completed by the city's engineer Carollo 
Engineering it was determined that the ground water deteriorated to a 
point that it could only be used as a backup water supply during 
emergency situations. The city began the process of expanding the water 
plant to meet the needs of the growing community. In 2000 the city 
allocated more that $9 million dollars for the expansion and 
construction of the current water treatment facility which can produce 
6 MGD. Today the City of Havre relies solely on the waters from the 
Milk River and in most years' water from St. Mary's Diversion to 
provide its drinking water. This is the case for all of the communities 
which receive water from the Milk River.
    As Mayor Bob Rice of Havre stated in his oral testimony at the 
September 1, 2006 Field Hearing in Havre, in a drought year like the 
one we're currently are experiencing, the source of our water for 
municipal, industrial and economic development purposes comes almost 
entirely from that which is transferred to the Milk River Basin from 
the St. Mary River Basin. The Milk River without the water from the St. 
Mary's diversion would run dry 7 out of every 10 years.
    Agriculture on the Milk River Basin produces 38% of Montana's total 
farm earnings. This is a large percentage considering the size of 
Montana. But without the communities along the basin this production 
would not be possible and without the agricultural economics the 
communities would dry up and blow away along with the water that the 
Milk River alone provides. These to groups go hand in hand and could 
not survive without the other.
    Along with the agricultural benefits there are many other economic 
benefits that were derived from this single use system built in 1905. 
The industrial, municipal and recreational uses make up 59% of the 
$41.3 million in economic benefits that are seen at the local, state, 
regional and national levels. The long-term economic value of this 
project is projected to be as high as $700 million, for a cost-benefit 
ratio of four-to-one, given the projected cost of this project of $120 
million.
    Federal policy makers 100 years ago had seen a vision for this land 
and created the St. Mary's Diversion and Conveyance Works. It has gone 
from a single use project in its infancy to a multi-use project that 
has created communities and an economic livelihood along the Milk River 
Basin. These communities and their economic benefits make this State, 
Region and Nation what they are today.
    The ability of the irrigators to maintain this century old 
infrastructure is no longer economically feasible. The St. Mary 
Diversion and Conveyance Works is known as the ``Lifeline of the Hi-
Line,'' and is in need of help from the visionaries (Federal 
Government) who invested in the future of this land 100 years ago. With 
this help we will continue to preserve the communities and this land 
served by the St. Mary's Diversion and Conveyance Works.
    I ask you to work toward making an honest investment by directing 
appropriate federal funding to this project through S. 3563 that will 
keep this conveyance system operational for the next 100 years and 
allow future generations to work and live in the ``Lifeline of the Hi-
Line''.
    Thank you for this opportunity for allowing me the opportunity to 
present these comments. My contact information is as follows:
                                            David Peterson,
                                             Public Works Director.
                                 ______
                                 
                                    Glasgow, MT, September 5, 2006.
Hon. Conrad Burns,
Senate Energy and Natural Resources Committee.
    Dear Senator Burns: My wife (Kim) and I irrigate about 425 acres in 
the Glasgow Irrigation District, of which I serve as a Commissioner. 
The purpose of this correspondence is two-fold. First, all of the 
assistance and leadership that you and your staff have invested into 
the St. Mary Diversion and Conveyance Works and Milk River Project Act 
of 2006 (Senate Bill 3563) are appreciated. Secondly, the following 
information and suggestions are provided for your use in negotiating SB 
3563 through the Senate hearings.
    Several questions regarding the economics of irrigating on the Milk 
River were raised during the recent Senate Energy and Natural Resources 
Field Hearing in Havre. Some of your Congressional colleagues may not 
realize higher costs are incurred when irrigating at the lower-end of a 
ditch or irrigation system (in comparison to being at the headwaters). 
In contrast, the amount of water available for irrigating is generally 
less at the lower end of a ditch. Since the Glasgow Irrigation District 
is located at the bottom end of the Milk River Basin, we have the 
highest costs among the eight irrigation districts in the Milk River 
System. Our annual irrigation taxes average about $19.50/per acre. In 
addition we pay $4.75 per acre foot of water. It is critical to 
remember that the Glasgow Irrigation District borrowed $2 million for a 
Rehabilitation and Betterment (R&B) project in the early 1990's. At 
that time, the Bureau of Reclamation did an economic analysis and 
concluded that we (the irrigators) did not have the capability to repay 
the loan. Our membership had to vote and agree to take on added debt to 
qualify for the loan (which we approved, and are now repaying). In 
other words, irrigators in the Glasgow Irrigation District are 
continually confronted with the difficulty of generating enough revenue 
to match the production costs and provide adequate funds for family 
living expenses. Some members of our District will be unable to survive 
the high construction costs that are likely to be associated with the 
rehabilitation of the St. Mary works.
    Kim and I bought most of our irrigated acreage in 1994. I believe 
that our aspirations were similar to other families that have bought 
land along the Milk River during the last century. Because we knew that 
the Bureau of Reclamation had acquired most of the ``early'' water 
rights along the river, we expected our water rights to be a viable 
long-term investment. This premise of ``available irrigation water'' 
has been the basis for developing infrastructure throughout the Basin. 
We pay about $11,000 annually for irrigation (425 acres x $19.50/acre 
plus about 425 ac-ft of water at $4.75/ac-ft. About $2,500 of our 
annual irrigation costs ($6/ac) goes to pay O&M of the St. Mary works. 
Therefore, it has been most disheartening to learn that our irrigation 
system is in shambles, and that the two most likely scenarios for the 
future will be: 1) higher irrigation costs, and 2) less water. Although 
I do not believe the current dilemma is the fault of any one Government 
Agency, or the activities of any special interest group, it would seem 
that the Federal Government should be more aggressive and zealous in 
its efforts to protect physical, social, and biological investments 
throughout the Basin.
    In my opinion, the creation and evolution of the St. Mary Working 
Group has been one of the most positive events to occur in the Milk 
River Basin. Most of the special interest groups in the Basin are 
represented on the Group, and they have become a catalyst for positive 
change throughout the Basin. As a member of the Working Group, I 
believe that ``consensus'' was the foundation for the draft language 
that we forwarded to your office for consideration in the drafting of 
SB 3563. Therefore, I was surprised and disappointed during the Field 
Hearing to learn that some members of our Working Group apparently 
recommended delaying construction activities on the St. Mary Project, 
until the Tribal Water Compacts were settled. As an irrigator, 
Commissioner of the Irrigation District, and member of the Working 
Group--I strongly disagree with their position. I feel like the entire 
Milk River Basin is being held hostage.
    We simply cannot afford to delay passage of SB 3563, and subsequent 
construction activities. The failure or collapse of the Irrigation 
System would adversely impact every tax-paying resident and sportsman 
in the Milk River Valley. More importantly, I believe that language in 
the draft Senate Bill clearly stated, that the activities of this 
legislation ``would not affect the Tribal water rights or the 
negotiations of water compacts''. Perhaps the language needs to be 
strengthened? Hopefully, it can be stated and demonstrated to everyone 
that the draft language protects, rather than threatens Tribal 
interests. This is not the time for bureaucratic inertia. Therefore, 
for the interests of all, I strongly recommend that you and your staff 
continue your important efforts to pass SB 3563.
    Please do not hesitate to contact me if additional information is 
needed. Likewise, I would appreciate updates from your staff on the 
status of the Bill as it progresses through the Hearings. Once again, 
many thanks for the good work.
            Sincerely,
                                                        John Lacey.
                                 ______
                                 
                                  Montana State University,
                                      Malta, MT, September 6, 2006.
Hon. Pete V. Domenici,
Chairman, Senate Energy and Natural Resource Committee.
Hon. Jeff Bingaman,
Ranking Member, Senate Energy and Natural Resource Committee.
    Dear Chairman Domenici, Ranking Member Bingaman, and Members of the 
Energy Committee: I would like to thank you for taking the time to 
travel to Montana and hosting a field hearing for the St. Mary 
Diversion and Conveyance Works and Milk River Project Act of 2006. I 
would also like to extend my appreciation of Senator Burns for 
introducing this legislation and the support it has received from 
Senator Max Baucus and Representative Denny Rehberg.
    It has been well documented that the 90 year old St. Mary Diversion 
and Conveyance and Milk River Project is in great need of 
rehabilitation. Current estimates for this rehabilitation are about 
$135 million. The passage of this act is necessary to amend the old 
authorization, which recognizes this project as a single purpose 
irrigation project. Since the development of this project, irrigators 
have repaid the original construction cost and all of the annual 
maintenance costs. At the same time, other uses and values have grown 
to include wildlife, recreation, and municipal water supply, while 
maintaining irrigation as the primary use. Since the project has the 
additional uses of municipal water to 17,000 individuals in 13 
communities and supports wildlife, including Bowdoin National Wildlife 
Refuge, it is only appropriate that federal cost share also be used to 
rehabilitate the system. The format for the proposed cost share in S. 
3563 was developed from the Bureau of Reclamation Safety and Dams Act 
of 2004.
    The diversion of water from St. Mary River into the Milk River has 
been noted as the ``Life Line of the Hi-Line'' and has continued since 
its inception in 1906 to be of great economic importance to this region 
of Montana. Increased agricultural production and recreation represent 
32% and 29% of the economic benefit that the St. Mary Conveyance Works 
and Milk River Project provide to this region, respectively. Economic 
development in this region is challenging, but without a doubt, we 
cannot afford to lose one of our major economic inputs. Loss of the 
added St. Mary water into the Milk River would drastically change our 
community and region.
    As this legislative process began in 2002, the State of Montana and 
local stakeholders have worked hard to include all of the affected 
interests, as demonstrated by your diverse witness list. Despite 
testimony by both the Blackfeet and Fort Belknap Tribes in opposition 
to this legislation, both parties have been involved with the writing 
of S. 3563 and the Working Group process since its inception. The 
Working Group, State, and Tribal interests have contributed over 
$275,000 dollars of local monies, in addition to the $2,547,142 that 
the State of Montana has contributed. Additionally, the State of 
Montana has authorized $10 million in bonds to be matched with federal 
dollars for the rehabilitation of this federal facility. I doubt that 
there are many states or communities that are willing to commit funds 
at this level, prior to federal authorization and appropriation for the 
rehabilitation of a US Bureau of Reclamation facility.
    Without the added water from the St. Mary River into the Milk 
River, water shortages would occur 6 out of every 10 years. The 90-
year-old conveyance system is in desperate need of rehabilitation. 
Delayed rehabilitation could likely result in catastrophic failure of 
some portion of the conveyance system. Failure would result in large-
scale environmental damage to the Blackfeet Reservation, costing many 
more thousands of dollars to repair. US Bureau of Reclamation has 
documented the vulnerable structural integrity of the system and 
diminished capacity of the conveyance system. A rehabilitated system 
would address long-standing issues of degradation to the Blackfeet 
Reservation due to the operation of the system, and address winter 
habitat for the threatened bull trout.
    Passage of the St. Mary Diversion and Conveyance Works and Milk 
River Project Act of 2006 is an important first step in a lengthy 
process in making positive improvements to an old federal facility. It 
is important to begin this rehabilitation process with passage of S. 
3563 to protect the previous investment in this federal facility. These 
efforts will provide a road map for future rehabilitation projects, 
paving the way for local/federal partnerships to rehabilitate other 
federal systems and provide a new age for the Bureau of Reclamation.
    I would like to thank the entire Senate Energy and Natural Resource 
Committee for their time and dedication to this important project and 
look forward to passage of S. 3563 legislation.
            Sincerely,
                                           Marko Manoukian,
                                   Phillips County Extension Agent.
                                 ______
                                 
                        St. Mary Rehabilitation Work Group,
                                    Glasgow, MT, September 6, 2006.
Hon. Pete Domenici,
Chairman, Committee on Energy and Natural Resources, Dirksen Senate 
        Office Building, U.S. Senate, Washington, DC.
Hon. Jeff Bingaman,
Ranking Member, Committee on Energy and Natural Resources, Dirksen 
        Senate Office Building, U.S. Senate, Washington, DC.
    Dear Chairman Domenici, Ranking Member Bingaman and Members of the 
Committee on Energy and Natural Resources: I am Larry Mires and I 
currently serve as the Executive Director of Two Rivers Economic Growth 
Corporation, a local Economic Development organization that serves the 
city of Glasgow and Valley County Montana. The economy of this area and 
the well-being of its people are intimately linked to the continued 
functionality of the Milk River Project and its accompanying 
infrastructure, the St. Mary Diversion and Conveyance Works being the 
main one. I also have the honor and privilege of serving as the 
Executive Director for the St. Mary Rehabilitation Working Group; The 
sixteen members of the Working Group represent a broad coalition of 
stakeholders including the Milk River Irrigation Districts, the 
Blackfeet Tribe, the Ft. Belknap Indian Community, municipalities, 
county government, business interests, and recreational and fishery 
interests in the Milk River Basin. The Working Group was created to 
craft a ``Workable Solution'' for rehabilitating the St. Mary Diversion 
Facilities before the system suffers a catastrophic failure. With this 
goal in mind, the Working Group has been working with the State of 
Montana and the Montana delegation to draft authorizing legislation to 
resolve this issue.
    I am writing with specific regard to S. 3563, which, among other 
things, will work to rehabilitate the St. Mary Diversion and Conveyance 
Works of the Milk River Project (St. Mary Diversion) and Milk River 
Project. This legislation, perhaps more than any other action currently 
before Congress, will determine the continued viability of northern 
Montana as a place to live, work, recreate and engage in 
entrepreneurial activities. Thank you for this unique opportunity to 
provide you with information about the St. Mary Diversion as you 
consider much-needed funding for this century-old federal project.
    It should be noted that S. 3563, the St. Mary Diversion and 
Conveyance Works and Milk River Project Act of 2006 as submitted to the 
congress on June 23, 2006 by Senator Conrad Burns and co-sponsored by 
Senator Max Baucus was done so with consensus of the full Working 
Group. By operating policy all decisions and agreements by the Working 
Group must be by consensus--with no exceptions.
    While the Congress authorized this project 101 years ago, it has 
unfortunately fallen into a dreadful state of disrepair that literally 
challenges its continued ability to perform its intended function, 
which is the efficient delivery of water from the St. Mary River Basin 
to the Milk River Basin.
    Although the original purpose was to assure that the agricultural 
producers of northern Montana received the water necessary to properly 
grow crops for a growing nation and a young state, the water delivered 
by the St. Mary Diversion has had a much deeper and more significant 
impact on this area, known as the Hi-Line, than anyone would have 
speculated in the early 1900's. Nearly 50,000 people live in the rural 
counties directly impacted by this project, with countless more reaping 
the indirect benefits of a water delivery system funded, designed and 
constructed by individuals possessing a vision for northern Montana 
that continues to allow our area to contribute significantly toward the 
economic well-being of Montana and the United States.
    It is difficult enough to engage in meaningful, job-creating 
economic development activities in places like rural Montana and even 
more challenging on the Hi-Line. This task becomes nearly impossible 
without the proper publicly-financed infrastructure that allows the 
private sector to expand, create jobs and contribute to our overall 
economy. According to the December, 2005 St. Mary Diversion & Milk 
River Project Preliminary Economic Analysis, authored by Dr. John 
Duffield, University of Montana and member of the advisory committee 
that provided the guidance for the U.S. Water Resources Council (1983), 
Economic and Environmental Principles and Guidelines for Water and 
Related Land Resources Implementation Studies, commonly referred to as 
the ``principles and guidelines'', the rehabilitation of the St. Mary 
Diversion is responsible for as much as $41.3 million annually in net 
economic benefit to Montana and the U.S. This same study indicates that 
the long-term economic value of this project is estimated at $410-$700 
million. When compared to the expected project cost of approximately 
$135 million, a favorable cost-benefit ratio of 4:1 is anticipated.
    Most specifically, I would like to address some comments and 
concerns made during the Field Hearing held in Havre, Montana on 
September 1, 2006.
    1. Both tribal councils, while supporting the legislation, were 
opposed to its passage at this time until their reserved water right 
claims are resolved. No one in the basin disagrees with the need to 
resolve tribal water right claims--there is the reality however that 
these negotiations have been ongoing, in some cases for over half a 
century or more, and are still not resolved. The Milk River Project, 
the Montana Hi-Line, the State of Montana, and the country simply CAN 
NOT continue to wait or be held hostage for these agreements to be 
reached by the Tribes, the State, and the Congress. The Bureau of 
Reclamation testified that they were opposed to any and all 
``deadlines'' in the legislation, as ``it impairs their ability to 
negotiate effectively''. It is obvious from Reclamations past 
performances, that if tight regiments are not enacted the agency is 
more then capable of blowing off the directives of Congress and the 
people of this great country.
    2. Bureau of Reclamation testified against the legislation in whole 
but supported yet another 3 year ``feasibility study''. In 1999 
congress passed the Chippewa Cree Tribe of the Rocky Boy's Reservation 
Indian Reserved water Rights Settlement and Water Supply Enhancement 
Act of 1999 (P.L. 106-103) specifically directed Reclamation to conduct 
a regional feasibility ``study'' of north central Montana. Reclamation, 
again proving its ability to side step congress, down graded the 
``Regional Feasibility Study'' to a ``Regional Feasibility Report'' 
sighting lack of sufficient funding for sufficient information to make 
a full ``Feasibility Study''. This report, which was finally released 
in 2004, has already determined that ``St. Mary Canal System 
Enhancements is the only alternative that would significantly address 
the water supply and related issues of north Central Montana and that 
would produce positive economic benefits'' (U.S.BR, October 2004, Page 
iii).
    3. Reclamation testified in favor of a Strategic Plan in case of a 
catastrophic failure of the St. Mary Diversion and Conveyance Works yet 
opposed the establishment of a trust fund to cover the expense incurred 
should an event take place. This position by Reclamation leaves only 
one option--the original current single purpose authorization of 1902 
and makes the irrigators of the basin fiscally liable for 98% of the 
cost. This will bankrupt the Hi-Line agricultural community of Montana 
and is totally unacceptable by any standards! Unless authorized as a 
multi purpose project, problems of the past and today will simply 
continue to escalate and we will be no further ahead then we are now. 
What has been taking place in the past does not seem to be working or 
we wouldn't be having these discussions today. The Working Group would 
welcome the opportunity to work closely with the committee to find a 
meaningful solution.
    Production agriculture is, by any measure, the backbone to the 
economy of northern Montana. Fully 38 percent of Montana's total farm 
earnings are derived from agricultural production in the Milk River 
Basin. This $67 million annually comes from over 8,600 farm workers. 
Annual agricultural cash receipts from the Milk River Basin are $495 
million. None of this agriculture-related economic activity would be 
possible without the continued functionality of the St. Mary Diversion 
and Conveyance Works. In a very real and significant way, this 
infrastructure fuels the economy of our area and adds tremendously to 
the overall viability and sustainability of Montana's economic base.
    4. Reclamation rejected all the other aspects of the legislation. 
One of the greatest concerns to all is that of cost repayment. The 
proposed legislation uses formulas similar to those passed by Congress 
in the 2004 Reclamation Safety of Dams Act, in that 15% of reimbursable 
funds are paid by project beneficiaries. It is my understanding that 
Reclamation through administrative procedure attempted to make that 15% 
of each projects total cost--and not of qualified reimbursable funds. 
We would welcome to opportunity to work with the committee in seeking 
an equitable formula for ``cost repayment'' for this aging 
infrastructure.
    5. S. 3563 also contains a $25 million cap which Reclamation does 
not endorse nor support. This is in fact a ``cost containment'' 
provision to maximize each and every dollar spent on the project. The 
basin can no longer afford extravagant and unnecessary duplications of 
expenditures that exist in government, i.e. studies upon studies that 
result in the same conclusions but fail to allow an actual solution.
    6. Reclamation was not in favor of additional basin wide studies at 
this time. With out these studies being authorized, how is it ever 
going to be possible to develop a long range plans for the current 
infrastructures? Authorizing studies of the Milk River Project simply 
speeds up the process that Reclamation would drag out for another 100 
years.
    In addition to the St. Mary Diversion's role as a contributor to 
the regional and national economy, it also provides life-sustaining 
drinking water for the communities of Havre, Chinook, Harlem, Fort 
Belknap Agency and rural areas in Hill County. More than 15,700 
residents of these communities rely on the St. Mary Diversion Works to 
deliver water to their homes on a daily basis. This municipal use 
sustains these communities and makes them attractive as locations to 
live, raise a family and conduct business. Without the water that is 
delivered to these communities, it would be impossible for the 
residents of this area to survive. Indeed, the St. Mary Diversion 
allows our quality of life, and life itself, to exist on the high 
plains of northern Montana.
    Although the pioneering engineers and federal policymakers of the 
early 1900's were truly visionary with respect to this piece of 
infrastructure, it has not received the attention it deserves from the 
federal government over the course of the past several decades. The St. 
Mary Diversion Works is in serious need of rehabilitation and faces the 
real potential of immediate collapse, which would have significant and 
very negative impacts on all of Montana's Hi-Line. The federal 
government, through S. 3563, has a real opportunity to protect the 
investment they have already made in this project and assure that this 
important infrastructural enhancement to this area can continue to 
serve the various water needs of our communities for decades to come.
    The proposed rehabilitation of the St. Mary Diversion Works has 
developed through a unique and truly grassroots effort of citizens, 
local and tribal government officials, conservation organizations, 
agricultural producers and economic development interests. This diverse 
group of concerned Hi-Line residents wants to find a sensible, long-
term solution to the deteriorating nature of this important water 
delivery system for our area. Toward this end, Milk River residents, 
organizations and units of local and tribal government have contributed 
over $401,000 in both monetary and in-kind donations that will advance 
this project, a substantial financial and personal commitment for a 
region of our state and nation that has experienced out-migration, 
business closures, commodity price uncertainty and multiple years of 
drought.
    Your assistance in directing appropriate federal authorization and 
funding to this project through S. 3563 will go a long way toward 
assuring that the investment made by the Congress 100 years ago in the 
Milk River Project and St. Mary Diversion and Conveyance Works was 
money well spent and that this water delivery system will continue to 
serve the people and communities of northern Montana and our country 
for the next 100 years and beyond.
    Thank you for allowing me the opportunity to present these 
comments.
            Respectfully submitted;
                                               Larry Mires,
                                                Executive Director.
                                 ______
                                 
                                    Chinook, MT, September 6, 2006.

    Chairman Domenici, Ranking Member Bingaman, Members of the Energy 
and Natural Resources Committee: I am writing concerning the need to 
rehabilitate the St. Mary Diversion Facilities. My husband and I live 
in the small rural farming community of Chinook along Montana's hi-
line. The City of Chinook has a population of approximately 1,200 
people.
    My husband, Ed Obie, is a 3rd generation inhabitant of Chinook. 
Sixty years ago his father returned from World War II and began ``Obie 
Flying Service''. When my husband finished college, he joined his 
father in the flying service business and is operating it on his own 
today. Ed does aerial charters and crop spraying. The number of 
charters decreased sharply after the government began subsidizing Big 
Sky Airlines. In fact, a number of fixed base operators (FBO's) in 
north central Montana have ceased to offer charters, including those in 
Havre, Malta and Great Falls. As a result of the decline in charters, 
the aerial spraying has become our main source of income. If we have no 
water, we have no crop spraying.
    We also operate a small, dryland farm south of Chinook. As we are 
in a drought more often than not in this area, our crop yields aren't 
always the best--may I run some figures by you:

This year's projected farm income: 16,500 bu.    $66,000.00
 wheat @ $4/bu................................
This year's farm expenses:
Health insurance @ $500/mo....................  ...........   $ 6,000.00
  Utilities...................................  ...........       700.00
  Fuel and repairs (approx.)..................  ...........    16,000.00
  Property taxes..............................  ...........     3,300.00
  Crop insurance..............................  ...........    8, 000.00
  Farm & vehicle insurance....................  ...........     7,000.00
  Fertilizer..................................  ...........    13,000.00
  Custom seed & harvest.......................  ...........    18,000.00
  Crop spraying...............................  ...........     7,000.00
                                                            ------------
Total expenses................................  ...........   $79,000.00
                                                            ============
LOSS on farm operation........................   $13,000.00
------------------------------------------------------------------------

    The point here is, there would be many years we could not exist 
without the income from the crop spraying.
    Aside from the obvious reasons for needing water, we, and many 
others like us along the hi-line, will be unable to make a living in 
this area. The hi-line could become nothing but a string of ghost 
towns.
    I understand our neighbors at Fort Belnap are opposing the project 
until such time as they get some water right issues handled. By that 
time it could be too late for the rest of us--and also for them.
    Please show your support of the St. Mary Diversion project.
    Thank you for your consideration.

                                                         Gail Obie.
                                 ______
                                 
                                        The City of Harlem,
                                     Harlem, MT, September 6, 2006.
Senator Conrad Burns,
321 1st Avenue North, Great Falls, MT.
Re: St. Mary Diversion and Conveyance Works and Milk River Project Act 
of 2006

    Dear Senator Burns: As Mayor of the City of Harlem, a community 
located on the Hi-line which draws its water from the Milk River, I am 
writing to you to support your effort to make the above named 
legislation a true reality for thousands of Montanans.
    Harlem, like many communities along the Milk River, depends on the 
river as our sole source of reliable, potable water for our citizens. 
Without the water which the Milk River supplies to us, the City of 
Harlem would be faced with a crisis of enormous proportions! Harlem 
would either have to have water brought in by truck (a costly and 
unreliable option) or search for water underground by drilling deep 
wells miles from the city limits (a cost prohibitive option with only a 
marginal chance of success according to a civil engineer hired by the 
City). If Harlem is not able to take water from the Milk River, the 
City itself will likely die.
    I cannot urge you in strong enough terms to promote and fight for 
the St. Mary Diversion project! Harlem, as a member of the St. Mary 
Working Group, supports fully the effort to rehabilitate the aging 
facilities which are in immediate need of repair and reconstruction.
    Senator Burns, as you have said, St. Mary's is ``the backbone of 
the region's agricultural economy.'' May I respectfully add that for 
Harlem the Milk River is ``the lifeblood of the city.'' Please feel 
free to use me as a reference in this matter. I will be glad to speak 
with anyone about the importance of the St. Mary's Diversion project to 
our community!
            Respectfully yours,
                                           Jason L. Gibson,
                                                             Mayor.
                                 ______
                                 
                             Philips Conservation District,
                                      Malta, MT, September 6, 2006.
Re: S. 3563, Rehabilitation of the St. Mary Diversion Facility
    Dear Chairman Domenici, Ranking Member Bingaman, and Members of the 
Energy and Natural Resources Committee: Thank you for the opportunity 
to submit testimony on Senate Bill 3563 authorizing the Secretary of 
the Interior to conduct studies to determine the feasibility and 
environmental impact of rehabilitating the St. Mary Diversion and 
Conveyance Works and the Milk River Project, to authorize the 
rehabilitation, and to develop an emergency response plan for use in 
the case of catastrophic failure of the project.
    It is the opinion of the Phillips Conservation District (PCD) Board 
that the St. Mary Diversion Facility is of immeasurable value to the 
producers, sportsmen, municipalities, and the general public in 
Phillips County, the Hi-Line, and the State of Montana. The PCD Board 
of Supervisors are locally elected volunteers whose role is to oversee 
and positively affect natural resource management, and to be a voice 
for private lands for the benefit of the environment and the local 
economy.
    The water supplied through the Milk River Irrigation Project allows 
local irrigators to produce a great deal of the hay needed in Phillips 
County. Approximately 50,000 tons of hay is raised annually on 
irrigated acres in Phillips County; providing roughly 1/3 of the hay 
necessary to maintain the County's nearly 50,000 head of cattle.
    Without the dependable water source provided by the Milk River 
Irrigation Project, this would not be possible in a county where the 
average rain fall is 10-12 inches annually. For example, the annual 
water year (September to August) precipitation amounts for the past few 
years in Phillips County were as follows (does not include the Zortman 
area):

    2001-02--11 in.
    2002-03--10.2 in.
    2003-04--14.1 in.
2004-05--10.5 in.
2005-06--9.4 in.*
    *(does not include Aug.)

    Additional difficulties producers often contend with in Phillips 
County are temperature extremes, wind, and timeliness of precipitation.
    In addition, the Conservation District feels it would be 
economically unfeasible to expect irrigators to assume the entire cost 
for the rehabilitation, operation and maintenance of the facilities. It 
is obvious that the benefits extend well beyond providing irrigating 
waters, and costs should be shared accordingly.
    In Phillips County, Nelson Reservoir is a popular location for 
recreation providing fishing, boating, water skiing, and other 
activities for persons locally and statewide. The Milk River enhances 
wildlife habitat for numerous fish, reptiles, and animal species in the 
area. Considering the prediction that the Milk River would go dry six 
of every ten years without the St. Mary Diversion, these benefits could 
be lost.
    In conclusion, it would be disastrous to abandon this valuable 
facility which has truly proven to be ``the lifeline of the Hi-Line'' 
for nearly 100 years. Your support for this essential project is 
greatly appreciated.
            Sincerely,
                                           Robert Breipohl,
                                                          Chairman.
                                 ______
                                 
                                   Rector Law Office, P.C.,
                                    Glasgow, MT, September 7, 2006.
Hon. Pete Domenici,
Chairman, Committee on Energy and Natural Resources, Dirksen Senate 
        Office Building, U.S. Senate, Washington, DC.
Hon. Jeff Bingaman,
Ranking Member, Committee on Energy and Natural Resources, Dirksen 
        Senate Office Building, U.S. Senate, Washington, DC.
Re: Senate Bill 3563

    Dear Chairman Domenici, Ranking Member Bingaman and Members of the 
Committee on Energy and Natural Resources: I write in support of Senate 
Bill 3563 and urge your committee to adopt the same. I did attend the 
Senate Field Hearing in Havre and would like to make the following 
comments.
    Authorization of this project is essential. The authorization will 
give the Bureau of Reclamation the authority to proceed with the 
studies that are preliminary and necessary for the ultimate 
rehabilitation of the St. Mary Diversion. Nothing can happen until the 
authorization has been passed.
    Even though the Blackfeet and the Fort Belknap Tribes have given 
their tentative support to the Senate Bill, it is imperative that the 
authorization go forward today. The concerns of both the Tribes can be 
worked through after the authorization has been allowed to proceed. 
Tribal Water Compacts, while they are certainly related, are not an 
intrical part of the rehabilitation process itself.
    There were several questions concerning the cost share formula. The 
significant thing about that cost share formula is that 62% of the 
benefits from the Diversion itself inure to non-agricultural purposes. 
I practice law in Glasgow and am serving on the St. Mary Working Group 
as a representative of the Two Rivers Growth Economic Development 
Council. While we understand that agriculture is our basic industry and 
failure of that industry would have a ripple effect that would wreck 
havoc on the whole economy. Yet there are those other benefits that are 
real and substantial; values of river front property have appreciated 
significantly in the last few years, primarily because of the 
recreational aspects and the wildlife that are associated with the 
river. There are literally thousands of acres of wetlands that would be 
destroyed if the Diversion was allowed to fail. It would therefore, 
have an extreme negative impact on the wildlife utilizing those 
wetlands.
    The cost share formula proposed in the Bill, I believe, is fair 
because there are so many non-agricultural benefits and further, 
because the agricultural segment of our economy simply cannot afford to 
pay the cost to rehabilitate the project. The cost per acre would be 
staggering and would undoubtedly cause several financial failures in 
the agriculture community.
    At the hearing, no one addressed the other portions of the Milk 
River Project. There are several other project features that need to be 
reviewed and studied, most notably, Vandalia Dam. This authorization 
Bill would authorize the feasibility study to determine the condition 
of the facility and the repairs needed.
    I therefore urge the committee to pass and approve Senate Bill 
3562.
            Sincerely,
                                                   James D. Rector.
                                 ______
                                 
                                    Chinook, MT, September 7, 2006.
Senator Conrad Burns,
U.S. Senate.
    Senator Burns: As a life long resident of Blaine County, a former 
irrigator and a present day water user in the city of Chinook, I must 
give my support for your Bill to rehabilitate the Saint Mary Diversion. 
Failure of the Diversion would be devastating to the people that are 
served by the water from the Milk River in Montana. Water from the Milk 
River is used not only for irrigation, but for drinking and for 
wildlife habitat. Money must come from the federal government to do 
this rehabilitation.

                                                     Richard Cronk.
                                 ______
                                 
                                      Havre, MT, September 8, 2006.
Re: S. 3563 St. Mary Canal Rehabilitation Project
    Chairman Domenici, Ranking Member Bingaman, Members of the Energy 
and Natural Resources Committee: Thank you for the opportunity to 
comment on this potentially great adventure. It is long over due in my 
opinion.
    A little about myself, I am a retired Fisheries Biologist and 
Fisheries Scientist (American Fisheries Society certification), having 
worked for the State of Montana's Fish, Wildlife and Parks 
Department(FWP) for over 30 years. For 28 of those years I worked with 
the fisheries in the Milk River Drainage and as the Regional Biologist 
for the middle and upper Milk. I have had many opportunities to work 
with state and federal agencies concerning projects on the Milk River 
and associated reservoirs but the St. Mary rehab is by far the most 
important project to come along in my lifetime. I would like to address 
some of the fisheries benefits of this project.
    I conducted a considerable amount of research on the effects of 
water availability on fisheries in Fresno and Nelson Reservoirs during 
my tenure. One of the more important studies determined the effects of 
drawdown on fish emigration and flushing from Fresno Reservoir. It was 
determined that when the reservoir is drawn down to elevation 2551, 
massive numbers of forage fish and game fish are discharged into the 
river below. This is most likely due to density dependent factors 
(overcrowding). When water is drawn below this elevation, long term 
damage occurs to the fishery. The walleye/pike/perch fishery must 
rebuild from the remnant populations in subsequent years. Many times in 
the last three decades the reservoir has been drawn below this critical 
point. In fact, this severe draining occurs every 2.6 years on average. 
As it takes about four years to grow a walleye to catchable size, 
managing this fishery has been an uphill battle. Despite an excellent 
water year in 2005 and good runoff this Spring, we are again within 
days of surpassing this critical point. As the reservoir recedes, 
turbidity and increased temperature negatively affect the fishery. If 
levels remain low over winter, which is common, predation and 
cannibalism further reduce game and forage fish populations. Water 
level management recommendations to benefit the fishery have been 
submitted to the U.S. Bureau of Reclamation (BOR) numerous times. These 
recommendations are also contained in FWP progress reports and are in 
the files. These recommendations include a draw-down regime and a 
minimum pool recommendation. I believe the BOR would like to meet these 
criteria but water availability has not allowed this to occur. It is 
important to note that these water level recommendations are not 
completely in direct conflict with primary irrigation demands as 
moderate draw-downs in late Spring and Summer are beneficial to the 
fishery in that they allow for re-vegetation of shorelines for forage 
fish production the following year. A more consistent and increased 
diversion of water could allow for both needs to be met. The success of 
all fisheries management efforts are contingent on water availability 
at this time.
    Similar flushing effects were noted at Nelson Reservoir and water 
level recommendations have also been submitted to the BOR for inclusion 
into their water management operations.
    It should also be noted that endangered and sensitive species such 
as pallid sturgeon and paddlefish would also use the lower Milk River 
below Vandalia Dam if more water entered and exited the system in a 
timely manner.
    Local sportsmen groups, the state and the BOR have continued to 
extend boat ramps into these dewatered reservoirs at considerable 
expense. Despite their efforts, only one ramp is currently usable at 
Fresno Reservoir at this time.
    In conclusion, it is obvious from a fisheries standpoint that if 
the rehabilitation of the St. Mary's canal and associated structures is 
able to improve delivery and therefore increase the quantity of water 
to the Milk River System, the stage would be set to see great long-term 
improvement to the entire Milk River fishery as long as minimum pools 
could be established.
            Sincerely,
                                                        Kent Gilge.
                                 ______
                                 
                                   Montana Association of Counties.
Hon. Pete Domenici,
Chairman, Committee on Energy and Natural Resources, Dirksen Senate 
        Office Building, U.S. Senate, Washington, DC.
Hon. Jeff Bingaman,
Ranking Member, Committee on Energy and Natural Resources, Dirksen 
        Senate Office Building, U.S. Senate, Washington, DC.
    Dear Chairman Domenici, Ranking Member Bingaman and Members of the 
Committee on Energy and Natural Resources: I am writing on behalf of 
Montana Association of Counties (MACo) in regard to S. 3563, which will 
work to rehabilitate the St. Mary Diversion and Conveyance Works and 
the Milk River Project. This legislation, perhaps more than any other 
action currently before Congress, will determine the continued 
viability of northern Montana as a place to live, work, recreate and 
engage in entrepreneurial activities. The St. Mary Diversion Facility 
is known by many as the ``Lifeline of the Hi-Line,'' the geographic 
area of northern Montana that encompasses that area of our state from 
the Rocky Mountain Front to the North Dakota border. When such a large 
part of Montana is affected by a basic infrastructure failure it 
affects all parts of the State.
    These reasons are why MACO encourages your efforts to appropriate 
the necessary federal funding for this project. With this funding the 
St. Mary's system will be able to continue to serve the people of the 
Hi-Line and our State economy for years to come.
    Thank you for allowing me the opportunity to present these 
comments.
            Sincerely,
                                       Douglas A. Kaercher,
                                                   President, MACo.
                                 ______
                                 
     Statement of Kraig Hansen, Fire Chief, Chinook Volunteer Fire 
                        Department, Chinook, MT
    I would like to thank you for letting me submit a testimony on the 
need to rehabilitate the St. Mary Diversion Facilities. I'm the fire 
chief for the community of Chinook Mt. and the St. Mary Project has a 
huge impact on the community and the fire department. The City of 
Chinook has a population of 1300 people and we receive all of our water 
from the Milk River and that water is provided by the St. Mary 
Diversion Facilities. The fire department currently has an ISO rating 
of an 8 but will be testing Sept. 12, 2006 to try to lower the rating. 
I fully intend on getting the ISO rating to a 7, possibly a 6, which 
will help the residents living in Chinook obtain a lower Fire Insurance 
premium. The City of Chinook relies a 100 percent on the Milk River for 
water and also for the fire hydrants, but if Senate Bill S. 3563 fails 
and the St. Mary's Diversion fails, our ISO rating will jump to a 10 
which is like having no fire department at all. The Fire Insurance 
premium would go up tremendously on every building in town. No one in 
town could afford fire insurance so the towns along the Hi-Line would 
dry up and become ghost towns. The people and the groups that are 
opposing this, need to set aside their political gains and their greed 
to see that this Senate Bill S. 3563 passes because there's just not 
another alternative.
                                 ______
                                 
    Statement of Carol C. Juneau, Representative HD 16, Browning, MT
    I would like to support the testimony provided to the Committee on 
September 1, 2006, in Havre, Mt. of Earl Old Person, Chairman of the 
Blackfeet Tribal Business Council, in regards to the St. Mary Canal. 
Some of the issues addressed by Mr. Old Person that I would like to 
reiterate include:

          A. The St. Mary diversion facilities cannot be rehabilitated 
        without the water rights and other claims of the Blackfeet 
        Tribe are resolved.
          B. Environmental impacts to the Blackfeet Reservation caused 
        by the Project need to be addressed and fixed.
          C. That the rehabilitation effort includes an appropriate 
        allocation of water from the project, other project benefits 
        and compensation for damages and use of Blackfeet water.

    I represent the Blackfeet Reservation in my House District 16, 
Montana State Legislature. Also, thank you for bringing this hearing to 
Montana.
                                 ______
                                 
   Statement of Mary Sexton, Director, Montana Department of Natural 
                 Resources and Conservation, Helena, MT
    Chairman Domenici and distinguished members of the Senate Energy 
and Natural Resources Committee, I thank you for the opportunity to 
provide written testimony on Senate Bill 3563. My name is Mary Sexton, 
and I am the Director of the Montana Department of Natural Resources 
and Conservation.
    The Montana Department of Natural Resources and Conservation (DNRC) 
fully supports passage of S. 3563, the ``St. Mary Diversion Works and 
Milk River Project Act of 2006.'' As the agency of State government 
responsible for coordinating local, state, and federal water resources 
development and utilization plans and projects, DNRC is committed to 
working with local, Tribal and federal partners on the successful 
implementation of all provisions contained in S. 3563.
    DNRC agrees with the statement made by the Bureau of Reclamation 
(Reclamation) at the 1 September 2006 Senate Energy and Natural 
Resources Committee field hearing in Havre, Montana, that the 
facilities of the St. Mary Diversion and Conveyance Works have outlived 
their design life after serving the people of North Central Montana for 
almost one hundred years under severe climatic and geologic conditions. 
The Department also agrees with Reclamation on the adverse consequences 
that would come with a failure of the system. We also agree with 
Reclamation on the need to take a comprehensive look at the water needs 
of the Milk River Basin and to proceed in a stepped and informed 
manner.
    S. 3563 lays the groundwork for developing a comprehensive solution 
by authorizing investigations on facilities throughout the Milk River 
Basin in addition to addressing concerns of the Blackfeet Tribe and Ft. 
Belknap Indian Community. As Committee members know from oral testimony 
given at the 1 September field hearing, the St. Mary Diversion and 
Conveyance Works are in critical need of repair or replacement. Failure 
of the St. Mary Diversion system would be catastrophic to the Hi-Line 
economy of north central Montana. The stable supply of irrigation water 
provided by the system secures the ``backbone'' of the region's 
agricultural economy. In authorizing construction of the rehabilitation 
and improvement of these facilities, S. 3563 simply recognizes that the 
infrastructure needs of the system have to be addressed now. It is not 
a question of if, but when, the system will fail. With a catastrophic 
lose of the St. Mary Diversion and Conveyance Works there will be no 
need to address the other challenges before us.
    DNRC also agrees with Reclamation on the need to develop an 
emergency plan and funding mechanism should the St. Mary Diversion and 
Conveyance Works suffer a catastrophic failure before rehabilitation is 
substantially complete. However, we believe that the best emergency 
response plan is to pass S. 3563 as soon as possible and more forward 
to construction before the system fails.
    DNRC must respectfully disagree with Reclamation's testimony that 
Reclamation ``has worked extensively with the St. Mary's Rehabilitation 
Working Group since its inception.'' Though Reclamation attends all 
Working Group meetings, the agency has chosen to take a role limited to 
monitoring the discussion and providing technical information. This 
limited role is confusing to basin residents who do not understand why 
the agency that owns and operates the facilities is not at the front 
leading the discussion. It is out of this void of Reclamation 
leadership and planning that the Working Group grew. For this reason, 
the State of Montana has been forced to take a leadership role to move 
this project forward. Not only is it confusing for the owner/operator 
not to be fully engaged in the process, it is detrimental to the 
overall effort.
    DNRC's strongest area of disagreement is with Reclamation's 
statement that a 3-year feasibility study (FS) must be done before 
Congress can make an informed decision about the future of these 
facilities. Reclamation's 3-year study is the approach typically 
followed for a brand new project, not rehabilitation of a project that 
has been in place for almost 100 years. We believe that through the 
combined efforts of Reclamation and the State of Montana, the majority 
of required engineering, hydrologic, and economic studies have already 
been completed.
    In October 2004, Reclamation released its North Central Montana 
Regional Feasibility Report authorized under the 1999 Chippewa Cree 
Reserved Water Rights Settlement (P.L. No.106-163) and funding with 
three million dollars. The study found that ``St. Mary Canal System 
Enhancements is the only alternative that would significantly address 
the water supply and related issues of north Central Montana and that 
would produce positive economic benefits'' (U.S.BR, October 2004, Page 
iii). This report assessed various rehabilitated canal capacities, but 
did not provide a preferred alternative or recommended capacity.
    On 31 May 2006, in a meeting with DNRC staff, Reclamation staff 
stated that cost estimates contained in the North Central Montana 
Feasibility Report were considered to be of feasibility grade for the 
St. Mary Diversion and Conveyance Works. Given that Reclamation 
considers feasibility grade cost estimates to be more accurate than 
appraisal level estimates, Reclamation staff comments appear to 
contradict those made by Reclamation in their oral testimony that one 
component of the FS would be the screening of alternatives at an 
appraisal level of detail for the rehabilitation of the facilities. If 
the North Central Regional Feasibility Report is not at least the 
appraisal level study sought by Reclamation, what then was the purpose 
of the three million-dollar expenditure?
    In 2004, DNRC hired the engineering consulting firm of Thomas Dean 
& Hoskins (TD&H) of Great Falls, Montana, to provide professional 
engineering services to the State and Working Group. In February 2005, 
TD&H released the Phase 1 report titled St. Mary Diversion Facilities 
Data Review, Preliminary Cost Estimate and Proposed Rehabilitation 
Plan. A copy of the Executive Summary from this report is attached as 
Exhibit A.* is report achieved the following goals.
---------------------------------------------------------------------------
    * The exhibits have been retained in committee files.

          1. Review of all engineering, geotechnical, and environmental 
        information collected and/or prepared by or on behalf of the US 
        Department of Interior related to the St. Mary Diversion and 
        Conveyance Works,
          2. Completion of an on-site field investigation to identify 
        deficiencies and potential rehabilitation and/or replacement 
        design concepts that will ensure the most efficient and cost-
        effective continued operation of the St. Mary Diversion and 
        Conveyance Works, and
          3. Identification of additional studies necessary to evaluate 
        alternatives, identification of environmental compliance and 
        cultural resource requirements, preparation of preliminary cost 
        estimates, development of a preliminary implementation schedule 
        for rehabilitation that addressed preliminary engineering 
        requirements, environmental and cultural resource assessments, 
        funding procurement, phasing, design, and construction.

    In 2006, TD&H began Phase 2 preliminary engineering design work for 
rehabilitating the St. Mary Diversion and Conveyance Works. The results 
of this effort are documented in the report St. Mary Diversion 
Facilities Feasibility and Preliminary Engineering Report for Facility 
Rehabilitation (TD&H, August, 2006). A copy of the Executive Summary 
from this report is attached as Exhibit B. As part of the Phase 2 
preliminary engineering design work, TD&H examined several alternative 
designs for rehabilitating system infrastructure and developed 
feasibility level cost estimates for each. All cost estimates were 
prepared in general accordance with procedures described in 
Reclamation's Cost Estimating Handbook (USBR, 1989). In addition, TD&H 
developed appraisal level cost estimates on two additional diversion 
and conveyance alternatives that have been proposed since Reclamation's 
2004 North Central Feasibility Report. In response to a question from 
Senator Domenici on Reclamation's confidence with TD&H's cost estimates 
Reclamation replied that they were generally satisfied with the 
accuracy of the estimates.
    Phase 2 preliminary design work also included a preliminary 
economic analysis of the proposed rehabilitation project undertaken by 
Dr. John Duffield with the firm Bioeconomics in Missoula, Montana. Dr. 
Duffield served on the review team for the development of the U.S. 
Water Resources Council (1983), Economic and Environmental Principles 
and Guidelines for Water and Related Land Resources Implementation 
Studies, commonly referred to as the ``principles and guidelines `` 
used by Reclamation. The methods Dr. Duffield applied in his analysis 
are generally consistent with the guidance provided in the principles 
and guidelines. In addition, Dr. Duffield consulted with Reclamation's 
economist Mr. George St. George in preparation of the preliminary 
economic analysis. The main findings of Dr. Duffield's report are that 
an assumed $120 million investment in the St. Mary Diversion and 
Conveyance Works will produce an estimated economic benefit of $24 to 
$39 million annually, compared to the amortized annual project cost of 
about $6.6 million. In other words, project benefits far exceed project 
costs by about a four to one ratio. These project benefits are shared 
over a number of sectors including irrigated agriculture, municipal and 
rural water uses, recreation, fish and wildlife, and ecosystem services 
including the provision of wetlands. The net present value of project 
benefits over the 100-year design life of a rehabilitated project is 
estimated to be between $410 and $660 million. This very significant 
impact relative to cost reflects the fact that substantial private 
sector infrastructure is already in place. Results of the full 
preliminary economic analysis are found in the report St. Mary 
Diversion & Milk River Project Preliminary Economic Analysis Impacts 
and Benefit-Cost Analysis (Bioeconomics, August 30, 2006) A copy of the 
Executive Summary from this report is attached as Exhibit C.
    Montana DNRC also believes that the majority of needed hydrologic 
studies were completed as part of Phase 2 preliminary engineering 
studies. These results can be found in the report St. Mary Diversion 
Facilities Hydrologic and Hydraulic Design Considerations for Overall 
Canal Rehabilitation (TD&H, July 28, 2006). A copy of the Executive 
Summary from this report is attached as Exhibit D.
    It is important for the Committee to understand that DNRC and its 
contractors made every effort to ensure that all Phase 2 preliminary 
engineering studies were done in accordance with Reclamation policy and 
procedures. Representatives from DNRC, TD&H and Bioeconomics held 
periodic update meetings with Reclamation staff to brief them on 
progress and receive comments for improvements. All draft reports were 
submitted to Reclamation for review and comment. Representatives from 
DNRC and their contractors also met with Reclamation staff to review 
and discuss every comment Reclamation provided.
    We would also like Committee members to know that several other 
issues Reclamation believes must be further studied are being addressed 
through other venues. In particular, the Montana Reserved Water Rights 
Compact Commission is actively negotiating with the Blackfeet Tribe to 
settle water right claims, and the International Joint Commission's 
Administrative Measures Task Force is working on issues related to 
apportionment waters in the St. Mary and Milk Rivers. The outcome of 
any decision by the International Joint Commission will not affect 
whether or not the St. Mary Diversion and Conveyance Works need to be 
rehabilitated or even the manner is which it could be rehabilitated. As 
recognized by Montana Area Office Manager Mr. Dan Jewell in testimony 
before the International Joint Commission, the United States lacks the 
infrastructure to take the water to which it is already entitled under 
the 1909 Boundary Waters treaty.
    It is the opinion of Montana DNRC that the largest remaining data 
gap is an environmental review to satisfy requirements of the National 
Environmental Policy Act (NEPA). We agree with Reclamation that this 
step needs to be taken and look forward to working with them on its 
completion. Given that the federal action being contemplated is the 
rehabilitation of a 100 year old project, rather than a brand new 
start, we feel a 3-year timeframe to complete an environmental review 
is excessive. We feel Reclamation should be able to complete this step 
within two years.
    Montana DNRC also disagrees with Reclamation's testimony that is it 
unreasonable to apply a $25 million cap on reimbursable obligations. We 
believe such a cap will provide a powerful incentive for Reclamation to 
control costs. Reclamation has a history of cost overruns, such as 
Animas La Plata, and passing the additional costs on to contract 
holders who have no recourse but to pay. With a cap on reimbursable 
obligations Reclamation will be forced shoulder the burden of any cost 
overruns.
    One of the most important provisions in S. 3563 is establishment of 
reasonable cost-share arrangements for those who would hold repayment 
contracts with Reclamation. The St. Mary Diversion and Conveyance Works 
must also be reauthorized to recognize the multiple benefits it now 
supports. As originally authorized in 1905, the St. Mary Diversion and 
Conveyance Works are operated for the single purpose of irrigation. As 
such, over the last 90 years, nearly 100% of the cost to operate and 
maintain the diversion infrastructure has been borne by irrigators 
within the eight irrigation districts of the Milk River Project. 
Reclamation's 2005 Current Use Benefits Analysis showed large public 
benefits accrue from the existence of the St. Mary Diversion system. 
Dr. Duffield's preliminary economic analysis shows that 32% of the 
annual economic benefit associated with the supplemental water supplied 
by the system accrues to irrigated agriculture. The remaining 68% 
accrues to the public in the form of municipal water, recreation, fish 
and wildlife, and extensive riparian areas. However, the 1905 
authorization does not reflect this new reality. As a result, contract 
holders in the Milk River Basin are being asked to subsidize the Nation 
for benefits the public enjoys. This inequity must be addressed now.
    The State of Montana and St. Mary Rehabilitation Working Group have 
put in a tremendous effort to raise non-federal funds to initiate the 
rehabilitation project. To date, State and local funds committed to the 
rehabilitation of the St. Mary Diversion and Conveyance Works exceed 
$13 million (Exhibit E). However, rehabilitation can only succeed if 
there is a third partner, the Federal Government.
    The State and Working Group are eager and willing to work with 
Reclamation and Congress to find acceptable solutions for federal 
support to the project. We understand that National priorities make it 
extremely difficult to find federal funds for the rehabilitation of the 
St. Mary Diversion and Conveyance Works. However, the rehabilitation of 
the St. Mary Diversion and Conveyance Works cannot wait. Should the 
system fail not only will there be a serious effect on the Montana 
economy, environmental damage to the St. Mary's watershed on the 
Blackfeet Reservation--in a culturally sensitive area that contains 
critical habitat for the threatened cutthroat and bull trout, and 
potential international conflict, the cost of rehabilitation will be 
more expensive and difficult as emergency construction. There is not 
time to simply wait for the federal funding environment to change.
    The State and Working Group wish to work with Congress to pass S. 
3563 as soon as possible. Finally, the State and Working Group will 
continue to raise non-federal funds and work with all of the 
stakeholders so that we are prepared to pursue the rehabilitation 
project as soon as federal funds are provided.
    I once again thank you for the opportunity to present this 
testimony to the Committee.
                                 ______
                                 
   Statement of Jay Eslick, Superintendent, Chinook Public Schools, 
                              Chinook, MT
    Dear Chairman Domenici and Members of the Energy and Natural 
Resources Committee,
    Thank you for this opportunity to submit testimony regarding the 
need to rehabilitate the St. Mary Diversion Facilities.
    My name is Jay Eslick. I am Superintendent of Schools in Chinook, 
Montana. I represent a School District with a student population of 
approximately 425 students and a community of over 2000 people.
    The town of Chinook is located in the ``Heart of the Hi-Line'' 
along the northern border with Canada. Our major industry is farming 
and ranching. In recent years we have also experienced substantial 
economic growth due to the exploration, extraction, and production of 
natural gas within our region.
    I am writing today to impress upon you the importance of the Milk 
River to our community and region. Our community solely depends on the 
Milk River as our source of water. Without the Milk River we will not 
be able to live in this area. Farmers would not be able to farm. 
Ranchers would not be able to ranch. Gas Companies would not be able to 
explore, extract or produce.
    The St. Mary Water project was built with the intention of 
providing water to the Montana Hi-Line. The people of the Hi-Line have 
built their livelihood around the St. Mary Water Project. Some of the 
data I have seen reveals the Milk River would run dry, on average, six 
(6) out of every ten (10) years without the St. Mary Water Project. 
With the recent drought conditions that have strangled our region, I 
would venture to guess this average would be a conservative estimate.
    The failure to rehabilitate the St. Mary Water Project system would 
undoubtedly displace thousands of people from the Hi-Line and create 
economic chaos for the banking and lending institutions within our 
region.
    I encourage you to support the passage of legislation to 
rehabilitate the St. Mary Water Project System.
    Thank you for your consideration.
                                 ______
                                 
      Statement of Freda Bryson, Chinook City Counsel, Chinook, MT
    I am writing in reference to the need for a new canal system near 
Browning Montana to be built at the St. Mary's Lake at the head of the 
Milk River which supplies water to the Milk River System. This Milk 
River starts at the East side of Glacier Park.
    There has been studies lots of money spent for many different 
reports ,now is the time to get started on the construction for this 
very important project.
    My name is Freda Bryson and I'm a City Counsel person for the City 
of Chinook Montana. We solely depend on the Milk River for water, due 
to the draught we have endured for the past several years. Our Farmers 
and Ranches have had to relay on our City water system to haul water 
for their livestock as well as household needs.
    We have had to increase the cost of our water system that is having 
a financial impact On the Citizen's of my Community.
    With this Letter I hope you will consider getting this construction 
going soon.
                                 ______
                                 
                  Statement of Max Maddox, Chinook, MT
    For the record, my name is Max Maddox and my address is 3490 
Stockyard Rd., Chinook, MT 59523. In order for you to more fully 
understand the importance that Senate Bill 3563 has to me and my 
family, I would like to share some thoughts and personal information 
with you.
    Since the late 1970's I have attended meetings in an effort to find 
an affordable way to repair the deteriorating facilities of the St. 
Marys Diversion works. Fore years I represented the five irrigation 
districts in the Chinook Division Irrigation Association during 
discussions about the Fort Belknap Tribes' Water Rights Compact. This 
proposed Compact is now before the U.S. Government and is contingent on 
a viable St. Marys Diversion.
    Since the 1970's a member of my family (my father, my brother or 
myself) has served on the local ditch board. I have been a board member 
of the Montana Water Resources Association for over 20 years and I now 
serve as its chairman. I have also been a member of the St. Marys 
Working Group since its inception. So far this year alone I have 
dedicated 27 days to these organizations, all in an effort to try to 
help ensure the enactment of the new introduced SB3563.
    Why would anyone donate so much time and put so much effort to this 
cause? I do it for my family's future and our way of life in the Milk 
River Valley. My grandfather's great-great grandchildren are now 
growing up on the family farm that he established. Will they, and 
others like them in our valley, be able to continue on the family 
farms? Under the present circumstances they won't if the St. Marys 
Diversion fails and is not repaired. If a catastrophic failure should 
occur and be repaired under the present rules of repayment, they won't 
be able to continue because they would be unable to pay the bill--so, 
either way they go broke. We have to have water, but it also has to be 
affordable. SB3563, as drafted by Senator Burns, will let us survive a 
major break in the system and upon its enactment it will ensure this 
project for our future generations.
    Beyond our family farm, in our valley we have an internationally 
important bird area The Bowdoin Wildlife Refuge that is dependent on 
the St. Marys water. Wetlands are becoming national treasures. We have 
over 7,300 acres of wetlands incidental to this project (with an 
estimated replacement cost of between $80.73 and $117.4 million) that 
are in serious jeopardy should the system fail. While I was attending a 
National Water Resources conference in Park City, Utah recently, I 
turned on the TV late one evening and there was a program (on national 
TV) about the Whitetail deer of the Milk River Valley. This is another 
nationally recognized treasure that is dependent on water in the Milk 
River.
    My response to testimony at your recent hearing in Havre, Montana: 
the language in SB3563 was agreed to by ALL parties in the St. Marys 
Working Group in previous meetings. It has always been understood that 
the SMWG would not get involved in Tribal water rights or their 
negotiation. Nothing was said that the two issues couldn't proceed 
parallel to one another. However, they are two separate issues both in 
discussion and in legislation. The St. Marys Diversion is in too 
critical of a condition to wait for a protracted Water Rights Compact 
process. Comments by the Chair and SB3563 author were deemed proper, in 
my view, confirming the urgency in proceeding with this legislation.
    I was disappointed, upset and embarrassed that testimony was not 
adhered to as submitted, and that not all of it was given in the 
predetermined time allowed. I guess I've sacrificed so much in time and 
effort for this endeavor that I was very excited to have a U.S. Senate 
Hearing in our valley, and I feel strongly that committee protocol 
should have been followed and positions shouldn't have changed from 
prior agreements.
    Also, as to the Bureau of Reclamation's request that legislation be 
halted and the BOR be given three years to conduct yet another 
feasibility study, I disagree. It is my recollection that the BOR was 
given money and a mandate to do this back around 1999, and all we got 
from it was a feasibility report. Things on the St. Marys Diversion are 
too tenuous to wait three more years for something that was supposed to 
have been done already. We need the protection provided in SB3563 to 
get us through a catastrophic failure as soon as possible. As Senator 
Burns said, ``Time is money.''
    Your consideration of my remarks is most appreciated and I look 
forward to the progression of this legislation.
    Mr. Chairman and Committee Members, I thank you.
                                 ______
                                 
Statement of Gary W. Anderson, Member, St. Mary Rehabilitation Working 
              Group, Representing the City of Chinook, MT
    I thank you for the opportunity to discuss the critical need for 
the rehabilitation of the St. Mary Diversion and Conveyance Works and 
my support for Senate Bill 3563.
                  municipal and residential water uses
    The communities of Havre, Chinook, Harlem and two rural systems 
supplied from Fresno Reservoir are dependent on supplemental water from 
the St. Mary River for a stable water supply. Without the diversion, 
these agricultural communities and rural water system would dry up.
    Remember more than 15,790 people living in those communities are 
dependent on this system for clean drinking and household waters along 
with water to support their businesses and industries. Ground waters in 
the communities of Chinook and Harlem are contaminated in varying 
degrees with natural gas by-products and in varying amounts with 
sulfur, iron and nitrates making a lot of the ground water of no use 
for drinking and household use. These surrounding areas are therefore 
dependent on the treatment plants in Chinook and Harlem for their water 
supply.
    At the U.S. Senate Field Hearing held September 1, 2006 in Havre, 
Montana, Chairman Domenici asked Bob Rice, the Mayor of Havre, what 
Havre would due in the event that the project failed to bring water to 
his city. Mayor Rice responded that the City of Havre has three 
emergency wells that could be put into used. These wells are meant for 
emergency use only and would require major expense to the city to place 
them on line as needed for permanent use. Small treatment plants would 
probably have to be built at each location. The wells would provide 
emergency drinking and household water use only. Chairman's Domenici 
question did not include the communities of Chinook and Harlem. These 
communities are not as fortunate. This would require locating good 
water, drilling, transporting and maybe treatment of the water at the 
well sites. An expense they can not handle.
    Failure of the system would be devastating to these communities, 
agriculture, and recreational economic development along the hi-line of 
Montana.
    Why? Because we are talking about the ``Lifeline of the Hi-Line''--
St Mary Water.
                       milk river basin economics
   The irrigated lands contribute about 15 to 17 million 
        dollars each year in alfalfa production. (Bureau of Reclamation 
        (BOR), 2003)
   These crops, in turn, provide much of the winter feed for 
        livestock in the Milk River Basin--approximately 258,500 head 
        valued at $237 million dollars. (Montana Statistical Reporting 
        Service date)
   Milk River Basin is an important contributor to Montana's 
        Economy.

                --38% of all Montana Farm Earnings.
                --27% of all Montana Farm Employment
                --Irrigated Crops; Barley: 32%, Spring Wheat: 3.4%
                --Agriculture Cash Receipts: $495 million
                --Livestock: 15.5% of all Montana Cattle, 11% of all 
                Montana Sheep
                  (Montana Department of Commerce-Census & Economic 
                Information Center)
                           other information
    St. Mary water in the Milk River is significant to the health of 
the Missouri River Basin and contributes to ground water recharge. 
(Communities of Dodson, Malta, Saco & Hinsdale--2,816 people)
    Flow of water into the Milk River from St. Mary River improves 
water supply, water quality, fish and wildlife habitat, and may provide 
hydropower opportunities. (BOR, 2003)
    According to a 2001 study, (Majerus 2001), recreational 
opportunities throughout the basin depend on imported water from the 
St. Mary River. In 2002, Nelson & Fresno reservoirs alone served 88,165 
visitors (BOR, 2003) and provided about $15 million/yr. in recreational 
benefits.
    The U.S. Bureau of Reclamation ``Milk River Project'' is a 
significant component of Montana's industrial infrastructure and is 
vital to the economic and societal sustainability of the Milk River 
Valley. This irrigation system has served its purpose for many years; 
however due to deterioration associated with age, is in urgent need of 
rehabilitation
                         st. mary canal system
    The System is composed of a diversion dam, 29 miles of canals, two 
(2) Steel siphon tubes--one section with a 90-inch dia. and another 
with a 78-inch dia.--each barrel is approximately 4,605 feet in total 
length. This total includes both the Hall's Coulee Siphon and St. Mary 
Siphon sections. There are also five concrete drops.
    Senate Bill 3563 recognizes the critical need to rehabilitate the 
St. Mary Diversion and Conveyance Works. The steel siphons are plagued 
with slope instability and are leaking badly. The leaking support 
collars are responsible for soaking the ground under the concrete 
saddle support causing them to move or slip down hill. Some of the 
concrete saddles that support the siphons have deteriorated 
significantly and in the area of the Hall's Coulee Siphons, some of the 
them are completely gone. 6" x 6" timbers laid in Lincoln log 
configuration or criss-crossed, are all that support the siphons. 
Ground slides and slope failure is widespread along the canal route. 
Originally designed to deliver 850 cubic feet per second (cfs) the 
system is now stressed to delivery of 670 cfs.
    If allowed because of structural deterioration and collapses, 670 
cubic feet/second of water travelling at 60 mph down any one of the 
drops or out of the siphons would do a tremendous amount of 
environmental damage to the St. Mary watershed on the Blackfeet 
Reservation.
      st. mary rehabilitation working group-contributing partners
    As I mention earlier, the St. Mary Working Group was formed in 
2003. The Working Group is composed of 18 members. These members 
represent the 8 Milk River Irrigation Districts, the Blackfeet tribe, 
the Fort Belknap Indian Community, 9 Municipalities/Communities, 5 
County governments, 2 rural water systems including the communities of 
Kremlin, Gildford, Hingham, Rudyard, and Inverness, Bear Paw 
Development Corp., Two Rivers Economic Growth, the State of Montana, 
business interest, along with recreational and fishery interests in the 
Milk River Basin. All decisions made in this effort are made by 
consensus of all contributing partners without exception.
    The St. Mary Working Group has determined that there are three 
``focus of efforts'' for the Milk River Basin Water Project. They are 
as follows:

          1) Find a ``Workable'' solution for rehabilitating the St. 
        Mary Facilities before the system suffers catastrophic failure.
          2) Work with the Blackfeet tribe to address environmental 
        impacts associated with the operation of the St. Mary 
        Facilities and provide workable enhancements and mutual 
        benefits from a rehabilitated St. Mary Canal.
          3) Explore option for restoring Fresno Reservoir to its 
        original capacity and rehabilitate the Basin infrastructure.
                        local and state funding
    The St. Mary Working Group has local funding support--$150,000 in 
local Milk River Basin funds annually. As of August 21, 2006 the total 
local funding support was $275,657.88. Over a ten-year period this 
could reach $1,500,000.
    Not include is In--kind contribution by members of the St. Mary 
Working Group--$126,102, which equates to approximately $3,600/month 
(As of 5/23/2006)
    The 2005 Legislature for the State of Montana also supports the 
rehabilitation of the St. Mary Diversion Works by contributing over 1.9 
million towards preliminary engineering, economic studies, and 
administrative and technology support to the Working Group. They also 
designated $10 million bonding authority for non-federal cost share for 
replacement and rehabilitation of the St. Mary Diversion Facilities 
infrastructure.
                              to summarize
    The Milk River Irrigation Project was authorized in 1903 by the 
Secretary of Interior and was one of the first five irrigation projects 
initiated in the United States under the 1902 Reclamation Act. 
Excavation of the St. Mary Canal began in 1907. The major components of 
the Milk River Irrigation Project were in place between 1907 and 1939. 
Most parts of the project were in place by 1924, though Fresno Dam and 
Reservoir were not completed until 1939. This irrigation project made 
possible reclamation of approximately 125,000 acres of agricultural 
land possible in the lower Milk River Valley. This system diverts 
approximately 160,000 acre-feet of water into the Milk River every year 
where it supports irrigated agriculture, communities and businesses, a 
National Wildlife Refuge, fish and wildlife, and recreational 
opportunities in north-central Montana's Hi-line region. Without this 
diversion, the Milk River would dry up 6 out of 10 years.
    Again thank you for the opportunity to provide written testimony 
for Senate Bill 3563.
                                 ______
                                 
    Statement of Randy Middlebrook, Critical Infrastructure Program 
                   Manager, Montana Homeland Security
    Greetings, allow me to introduce myself. My name is Randy 
Middlebrook and I am the Critical Infrastructure Program Manager for 
Montana Homeland Security. I have taken a special interest in the 
efforts of the Saint Mary Rehabilitation Working Group and their 
ongoing interaction with you committee. My interest is that the Saint 
Mary Diversion / Milk River Project has been identified as State Level 
Critical Infrastructure by my office and its impending demise will have 
a rippling effect throughout the Montana High Line Region.
    Effects will be felt not only from a public safety standpoint but 
also through interdependencies that this valuable water system provides 
to other sectors of critical infrastructure within the state, namely 
the Public Health sector. The Northern Montana Hospital in Havre serves 
one of the largest populated regions in the state. Approximately 40,000 
people along the high line rely on expedient and convenient emergency 
and everyday medical services from the Northern Montana Hospital. 
Obviously, without water, these services that the residents of northern 
Montana rely on and take for granted on a daily basis could be severely 
diminished or even cease to exist.
    The National Infrastructure Protection Plan directs each state to 
identify, assess risk and threat, prioritize based on criticality and 
formulate a plan to protect critical infrastructure within its 
boundaries at any level. The vulnerability of any infrastructure is not 
based solely on the terrorist threat. Other factors such as natural 
disasters, reliability and domestic issues make our infrastructure 
systems just as vulnerable and at risk as a high valued target within 
the state and the nation. One of the charges and primary objective of 
my office is to ensure that the critical infrastructure in Montana is 
protected from any and all risks and hazards; failure to keep a 
critical system such as the Saint Mary Diversion Project functioning is 
a failed protection from a homeland security viewpoint.
    Although there may not be anything I, or my staff, can do in the 
way of funding, we can certainly increase awareness and ensure that all 
of the state agencies that need to address this issue are somehow 
involved in the efforts of the working group. Funding for the Bureau of 
Reclamation to rehabilitate this very critical system needs to be top 
priority and I will act as an advocate for the people of Montana to 
help find a way to secure funding to protect one of our most valuable 
resources . . . . . water!
                                 ______
                                 
           Statement of County Commissioners, Hill County, MT
    We are writing regarding S. 3563, the bill to rehabilitate the St. 
Mary Diversion and Conveyance Works and the Milk River Project.
    As County Commissioners in Hill County, Montana, we are acutely 
aware of the circumstances that would result if this bill is not passed 
and funded. We are proud of our county and work diligently to provide 
the residents with a quality life style, including jobs, infrastructure 
and areas to recreate. In order to maintain this life style, 
improvements must be made to aging infrastructure, including the St. 
Mary Diversion. The entire Hi-Line of Montana survives largely in part 
because of the water provided by this aging federal project. The 
rehabilitation of this project would assure the economic viability of 
communities along the Milk River Basin.
    The original purpose for construction of this project was 
agricultural irrigation needs but towns and cities along the basin also 
depend on a stable water flow in the Milk River to provide their 
citizens water for drinking as well as household use. In Hill County 
alone, Inverness, Rudyard, Hingham, Gildford, Kremlin and Havre utilize 
water from the Milk River, either through water districts or water 
contracts with the Bureau of Reclamation. The economic feasibility of 
these communities depends upon a reliable water delivery system, which 
would be accomplished with funding of this bill.
    Thank you for allowing us to speak for the 17,000 plus residents of 
Hill County regarding this very important project.

                                    

      
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