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



 
 ENERGY AND WATER, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              


                        TUESDAY, MARCH 28, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:01 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Pete V. Domenici (chairman) 
presiding.
    Present: Senators Domenici, Craig, Allard, Johnson, and 
Inouye.

                       DEPARTMENT OF THE INTERIOR

                         Bureau of Reclamation

STATEMENTS OF:
        MARK LIMBAUGH, ASSISTANT SECRETARY FOR WATER AND SCIENCE, 
            DEPARTMENT OF THE INTERIOR
        JOHN W. KEYS III, COMMISSIONER, BUREAU OF RECLAMATION

                 STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. Good morning. Today the subcommittee is 
going to take testimony on the fiscal year 2007 budget request 
for the Bureau. Our panel will consist of the witnesses from 
the Department of the Interior and the Bureau of Reclamation. 
Testifying for them will be Mark Limbaugh, Assistant Secretary 
for Water and Science; and John W. Keys, III, Commissioner of 
Reclamation. Commissioner, it is great to have you before us. 
We understand that after this series of hearings over time that 
this may be your last. You will be missed. It has been a good 
stay. We hope you have enjoyed it. Things have been tough at 
the Bureau, but we are in transition.
    Thank you for appearing. I understand that the Bureau is 
considering that your effective retirement time would be next 
month. Is that correct?
    Mr. Keys. Mr. Domenici, that is correct.
    Senator Domenici. So certainly this is your last appearance 
here. Again, thank you for your many years of service to the 
Federal Government. Second, I want to wish you a very long and 
happy retirement.
    Now to the business at hand. The fiscal year 2007 budget 
request for the Bureau totals $971.6 million, a decrease of 
nearly $50 million from 2006, at least the enacted level of 
2006, which was $1.0208 billion, a 9.5 percent decrease. That 
is a pretty steep decrease. This is partially offset by 
discretionary receipts of $33.8 million from the Central Valley 
Project Restoration Fund and an $88 million rescission of 
unobligated balances for At Risk Desert Terminal Lakes.
    Highlights for the budget include, as we see it: $14.5 
million for Water 2025, a $9 million increase for fiscal year 
2006 level increase in that project. This initiative seeks to 
make water more available in reclamation States through 
enhanced conservation. Clearly, the money does not match up 
with the size of the problem, but in this tight budget year I 
do not know where it does.
    Fifty-seven million dollars, another item, is a $2 million 
increase from 2006 for the Animas-LaPlata. Funding will be 
primarily provided for the continued construction of the Ridges 
Basin Dam and Durango pumping plant. If I am wrong on any of 
these, I would hope you would take note and note it in your 
comments to us. However, it is my understanding that an 
additional $12 million is needed to maintain that schedule and 
we will work on that with you.
    Thirty-eight-point-six million dollars for CALFED. That is 
a $2 million increase from 2006. The funds will be used for 
environmental water account, storage feasibility studies, 
conveyance studies, and some other items.
    One hundred twenty million dollars for operating, managing, 
and improving California Central Valley Project. This is a $9 
million increase over 2006.
    And $69 million for 2007--that is a $7.6 million, 11 
percent, increase--for ensuring the safety of reclamation dams.
    Eight-point-five million for 2007, $7.5 million decrease 
from the 2006 program level, for science and technology 
programs.
    And $39 million for 2007, the same amount as the enacted 
level, for site security. The 2007 budget includes funding for 
guards and surveillance of facilities, anti-terrorism upgrades, 
law enforcement functions.
    Ten million dollars for water recycling and reuse projects. 
This is a $15 million decrease from 2006.
    I anticipate that this tight budget will cause us some real 
problems and I appreciate the fact that you have put together a 
budget that is reasonably balanced as you see it, and we will 
have our views to see whether we agree with that as we complete 
our work.
    Senator Reid is not here, but I understand if he has a 
statement we will introduce it in the record, and it is with 
his concurrence that we proceed without a minority member 
today.
    Senator Craig, very active in this committee, I yield to 
you for whatever time you would like.

                    STATEMENT OF SENATOR LARRY CRAIG

    Senator Craig. Well, thank you very much, Mr. Chairman.
    I am sure that the Secretary and the Commissioner come 
before us with the Bureau of Reclamation budget facing a 3.5 
percent decrease from 2006 levels in what I would suggest, 
although it may not be articulated by them, to be a frustrating 
budget. I think all of us recognize, and certainly this 
committee does and you do, Mr. Chairman, the aging 
infrastructure that we are dealing with and the need to 
obviously, to deliver water and its importance, and in the West 
now more so than ever.
    Before I go on, let me also recognize, as you have, that 
Commissioner Keys is leaving us. John, I must tell you how 
proud I have been of the service you have provided to us, to 
our Government, to the West for a good number of years. John 
and I go back a long ways. When he was serving in Idaho we 
worked very closely together, and that relationship continued. 
The Commissioner has been instrumental in developing the needed 
Water 2025 program. He is returning to the West and he will 
find a West just in the short time that he has been here that 
is growing dramatically, a West that is populating at an 
unprecedented rate, a West that is populating in the most arid 
parts of our country.
    The three fastest growing States in the West right now are 
Arizona, Nevada, and my State of Idaho, Mark's State of Idaho. 
We live in the high desert great basin region of the country. 
For us to not be focusing with the intensity of resource that I 
think we need for water and water development is going to catch 
up with us. We are going to have to start running faster than 
we are running today to resolve some of those problems that are 
needed.
    Right now, a classical thing is happening in Idaho. The 
Idaho legislature is battling it out over how to re-look at old 
first in line, first in time water rights, and should they be 
used in slightly different ways, for enhanced storage, enhanced 
water into the system. That is an interesting battle that is 
going on at the legislative level right now. But I think, Mr. 
Chairman, it is prelude to the reality of some of our problems 
that we are facing in a country; in a region of the country 
that obviously does not get all the water it needs. That battle 
will continue.
    The Bureau is going to play a role in it. They must play a 
role in it. Your bill, the Rural Water Supply Act, Mr. 
Chairman, I hope we can see that through the House this year. I 
think it is going to begin to focus us in ways that we need to 
focus with some resource that is going to be awfully important.
    Lastly, Mr. Chairman, I have to say this because, thanks to 
the Secretary and the Commissioner, I did something over the 
recess that I have been wanting to do for years. I spent a day 
at Hoover Dam and went top to bottom, in a structure that still 
is operating as effectively, if not more so, than it was 
designed to do in the 1930's when it was built. I could go on 
and on, but the one thing behind it that was interesting is 
that the impoundment, the lake, the reservoir, was just a 
little over 50 percent full.
    There is a very real reality to the water system there and 
the supply of the river that is so important to that portion of 
the West and the absence of water at this moment. I thought it 
was fairly dramatic. The reality is that Colorado just ain't 
producing water. You have got to get busy.
    Senator Allard. Yes, we are trying to.
    Senator Craig. All right, okay. And probably keep more of 
it.
    Anyway, thank you very much, Mr. Chairman. We are glad to 
have you before us, both Mr. Secretary and Commissioner. Again, 
John, we hope you the very best in your retirement.
    Mr. Keys. Thank you very much.
    Senator Domenici. Colorado had some late snow.
    Senator Craig. Yes, they did.
    Senator Allard. And down around the New Mexico border.
    Senator Craig. And they are getting it again.
    Senator Domenici. Is it in the right place? Is it coming 
down some more?
    Senator Allard. Yes.
    Senator Domenici. It is too late, but that is good.
    Senator, do you have anything you would like to offer?

                    STATEMENT OF SENATOR TIM JOHNSON

    Senator Johnson. Just very briefly.
    Mr. Secretary, I want to welcome Secretary Limbaugh here as 
well as Mr. Keys. Commissioner Keys, I too want to join in 
thanking you for your extraordinary service over these many 
years. We have worked very closely with you on our BOR water 
projects in particular in South Dakota and I wish you well and 
the people of South Dakota wish you well in whatever next may 
come your way in terms of your next endeavors.
    I do want to express my concern that once again the BOR 
budget for the Great Plains Region is simply inadequate, given 
the ongoing projects that we have out there. It is my 
understanding that the recommendation is $168 million for Water 
and Related Resources. That is a $14.4 million decrease from 
2006. It is my understanding that about $68.7 million is 
budgeted for ongoing rural water projects. That includes the 
municipal, rural, and industrial, MRI account. That includes 
the Mni Wiconi and the Lewis and Clark Rural Water Systems in 
South Dakota.
    Very frankly, the Mni Wiconi and Lewis and Clark Water 
Systems in South Dakota alone could consume the entire budget 
for ongoing water projects. Each of them could use well over 
$30 million in the coming fiscal year for construction. What I 
fear happening is that these projects are being stretched out 
to such a great degree that not only does it delay getting 
water in the case of the Mni Wiconi to some of the poorest of 
the poor, three Indian tribes, but the overall cost of these 
projects is becoming immense, which may make it almost 
unworkable for some of the component rural water systems.
    Like buying anything else, the more we can pay up front the 
less it will cost down the road. So I am very worried that we 
continue to come in with budget recommendations that are 
excessively low and are going to make these water projects as 
well as others around the country far more costly to the 
taxpayers than would otherwise be the case.
    Now, I appreciate that the President campaigned on lower 
taxes and smaller government, so no one should be surprised 
that there is an inadequate budget for public works projects 
such as these. Nonetheless, these projects are key 
infrastructure improvements that will result in economic growth 
and prosperity and public health throughout large regions of 
the country, and I think that it is a classic case of being 
penny-wise and pound-foolish to nickel-and-dime and underfund 
these key water projects.
    The BOR has done a great job of managing these projects, of 
building these projects. So my criticism is not with the BOR. 
The criticism is with the overall level of funding that OMB has 
allocated in the recommendations and, frankly, our budget 
resolution does not do as well as I would like either, despite 
great efforts on the part of our chairman and others to make 
sure that we try to get a reasonable allocation.
    So I want to share those concerns with you, but most of 
all, Commissioner Keys, to thank you for working very closely 
with my staff and with South Dakotans over the years. We have 
some of the most extraordinary and largest scale drinking 
projects in the world in that State, and your willingness to 
work with us on those projects is a big reason why we have come 
as far as we have. Thank you.
    Senator Domenici. Thank you very much, Senator.
    Senator Allard.

                   STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. Well, Mr. Chairman, I would just like to 
make my full statement a part of the record and join you and 
the other members of the committee in expressing to 
Commissioner Keys our appreciation for his service. I 
understand that you have not decided what you are going to be 
doing next, but I wish you well in whatever endeavors you may 
decide to do, even if you are just going to retire and take 
life easy, which I cannot imagine somebody like you is going to 
end up doing. But I do wish you well with the other members of 
the committee.
    Also, I just want to highlight a problem that I see 
emerging and that is maintenance of our facilities we already 
have out there. I know that other members have similar problems 
in their States that we do, that concern about certain projects 
that have some maintenance requirements that we think we really 
need to deal with and we need to rehabilitate many of those 
projects.
    Colorado has 18 Bureau projects there. We have utilized the 
Department a lot historically, and these projects I think have 
become especially prominent in the last several years in 
Colorado, in fact the entire West, because of the terrible 
drought that you have out here on your chart. It has been 
shifting around both in the northern and southern parts of the 
West.

                           PREPARED STATEMENT

    Many federally owned Bureau of Reclamation projects are 
currently at or past their life expectancy and in severe need 
of rehabilitation. The Bureau has maintained that 
rehabilitation is the same as operations and maintenance, which 
in many cases was turned over to local operating agencies. So I 
just say that it seems to me that we need to be looking at 
these things more seriously. So I will have some questions for 
you in that regard, and I do not understand why you do not take 
a greater interest in rehabilitation of these projects, because 
we are not going to be building new ones and we need to make 
sure that the ones that we have out there are up to par with 
changing standards and up there to operate at maximum 
efficiency, because I do not see us getting a lot of new 
projects out there.
    Thank you, Mr. Chairman.
    [The statement follows:]

               Prepared Statement of Senator Wayne Allard

    Mr. Chairman, thank you for holding this hearing. Those of us in 
the West are well aware of the important work that the Bureau of 
Reclamation has done over the years. In Colorado there are 18 Bureau 
projects. These projects are vital in supplying water to many people in 
rural areas of the State. The value of these projects has been 
especially prominent during the last 4 to 5 years, as Colorado--and the 
entire West--has experienced terrible drought.
    I would like to mention a growing problem with Bureau projects 
throughout the West, which I will follow-up on during the question 
portion of this hearing. Many federally-owned Bureau of Reclamation 
projects are currently at, or past, their life expectancy and in severe 
need of rehabilitation. While the cost of rehabilitation is generally 
one-half to one-third of the cost of replacing a project this is more 
than many communities can afford. The Bureau has maintained that 
rehabilitation is the same as operations and maintenance, which in many 
cases was turned over to local operating agencies long ago.
    It seems to me, however, that these two things are not the same. No 
matter how many oil changes or tune-ups you give a car, it will 
eventually no longer be serviceable. The same can be said of these 
projects. Local entities have worked diligently over the years to care 
for, and make repairs to, these projects. But eventually they reach the 
end of their operational life, and more extensive help is needed. I 
cannot understand why the Bureau continues to maintain that they have 
no responsibility to assist local communities in the rehabilitation of 
federally-built, federally-owned projects.
    Before I close I would like to thank Commissioner Keyes for his 
service. Mr. Keyes, I understand that you have announced your 
resignation, and will be leaving the Bureau April 15. We wish you all 
the best in whatever you choose to do next.

    Senator Domenici. Before we proceed, I think we should let 
this record, hearing record, reflect that we commence these 
hearings at a rather historic time, because under the Energy 
Policy Act we have totally modernized the licensing process for 
water projects in the United States and diversions, thanks to 
the extraordinary leadership of Larry Craig, and we have 
something that is workable. It is going to be a difficult, 
long, arduous implementation process, without any question. 
Perhaps we will have an oversight hearing when you think it is 
right.
    Senator Craig. I think we should do that.
    Senator Domenici. Sorry I did not have that on, but I think 
you understood most of what I said.
    Incidentally, speaking to my staffer out there, I would 
prefer if you would come up here and sit by me.
    Now, having said that, we are going to proceed, 
Commissioner, with you and then with Mark in that order. Or do 
you want to go in the reverse order? Mr. Secretary, do you want 
to go first?
    Mr. Limbaugh. Yes, please, Mr. Chairman.
    Senator Domenici. Let us do that. You are on.

                       STATEMENT OF MARK LIMBAUGH

    Mr. Limbaugh. Thank you, Mr. Chairman and members of the 
committee. Good morning. I am pleased to be here today to 
introduce the 2007 budget for the Bureau of Reclamation and the 
Central Utah Project. I would ask that my entire statement be 
made part of the record.
    Senator Domenici. It will be.
    Mr. Limbaugh. Thank you, Mr. Chairman.
    Joining me today is Reclamation Commissioner John Keys and 
CUPCA Program Director Reed Murray. Also with us is John 
Trezise, Budget Director for the Department of the Interior; 
and Bob Wolf, Reclamation Budget Director.

  HIGHLIGHTS OF THE FISCAL YEAR 2007 BUDGET REQUEST FOR THE BUREAU OF 
                              RECLAMATION

    Before turning to the Commissioner, I would like to 
highlight a few details of the Reclamation request for the 
subcommittee. Recently, the National Academy of Sciences 
completed a study on the Bureau of Reclamation's construction 
and infrastructure programs. This study looked into the future 
of the agency and provided some insight on how Reclamation can 
improve its construction and infrastructure management 
functions, as well as address some contemporary problems in 
dealing with water supply and infrastructure challenges in the 
future.
    I want to assure this subcommittee, Mr. Chairman, that I am 
personally committed to ensuring that Reclamation addresses the 
findings and recommendations of this study in order to improve 
the effectiveness and efficiency of the management of 
infrastructure and construction processes. I brought copies of 
``Managing for Excellence,'' Reclamation's action plan in 
addressing the study's findings, for the subcommittee to 
review, and I look forward to working with all of you in this 
effort.

                    WATER SUPPLY CRISES IN THE WEST

    Chronic water supply problems in the western States served 
by the Bureau of Reclamation will continue to be a challenge. 
Demand for water in many basins of the West, as many of you 
have noted this morning, exceeds available supply even in 
normal years. Recurrent droughts compound this problem. For 
example, the Southwest is in the sixth year of a severe 
drought. Projections for this year suggest very low water 
supplies that could negatively impact farmers, urban residents, 
Native Americans, and fish and wildlife alike.
    When combined with the fact that the West is home to some 
of the fastest growing communities in the Nation, these 
realities guarantee that water supply crises will become more 
frequent if we do not act now. Our Water 2025 program has 
sparked a movement to change the way we think about and value 
water supplies in the West. The challenge grants under Water 
2025 have provided the means for many western water managers to 
implement innovative measures for conserving and managing water 
more effectively to meet unmet needs. Through the challenge 
grant component of Water 2025, Reclamation has awarded 68 
challenge grants in 16 western States, collectively, 
representing $60 million in water management improvements, $44 
million of which came from private sources. In other words, 
non-Federal interests have invested approximately $3 for every 
$1 the Federal Government has invested.
    Also, looking for the next generation of desalination 
technologies through targeted research and development will be 
key to finding new cost-effective water supplies in many areas 
of the West in the future.
    Continuing the Water 2025 program into the future will 
encourage solutions to prevent conflict and crises over water, 
the real barriers to progress in the West. Speaking of 
problems, our water supply crises that we have seen recently in 
the Middle Rio Grande and the Klamath River Basins are the sort 
of crises we hope to avoid through Water 2025.
    In the 2007 budget, the Bureau of Reclamation continues to 
address the Klamath Basin with continued emphasis on working 
across the landscape cooperatively to address water needs of 
stakeholders and endangered species. In the Middle Rio Grande 
Project, the Reclamation request now totals almost $24 million 
for fiscal year 2007. Of this amount, almost $11 million is to 
address the status of endangered species, including the Rio 
Grande silvery minnow and the Southwest willow flycatcher, 
through the collaborative program.
    In addition to Reclamation funding, Interior is working 
closely with other Federal agencies and non-Federal partners to 
improve the status of endangered species while also protecting 
existing and future uses of water in the basin. In fact, on 
April 11 and 12, Reclamation will host the first annual 
collaborative program symposium in Albuquerque to more 
effectively coordinate efforts to address endangered species 
needs in the basins.
    Finally, the Middle Rio Grande Water Conservancy District 
is just one of the many entities Reclamation has worked with 
through the Water 2025 program to help stretch water supplies 
in a very dry area of the West.

                           PREPARED STATEMENT

    In conclusion, I would now like to turn to Commissioner 
John Keys to provide more details on the Reclamation budget. 
After his statement, he and I would be pleased to answer 
questions, and Reed Murray from the Central Utah Project Office 
is also available for questions as well.
    Mr. Chairman, thank you.
    [The statement follows:]

                  Prepared Statement of Mark Limbaugh

    Good morning. I am pleased to be here today on behalf of the 
Secretary to discuss the fiscal year 2007 budget for the Department of 
the Interior. I appreciate the opportunity to highlight our priorities 
and key goals.
    The Department's broad, multi-faceted mission and geographically 
dispersed services and programs uniquely contribute to the fabric of 
America by maintaining and improving the Nation's natural and cultural 
resources, economic vitality, and community well being. Interior's 
70,000 employees and 200,000 volunteers live and work in the 
communities, large and small, that they serve. They deliver programs 
through partnerships and cooperative relationships that engage and 
invite citizens, groups, and businesses to participate.
    The challenges of our diverse responsibilities are many, but they 
are made more manageable through an integrated approach that defines 
common mission goals for all bureaus and offices. The Department's 
integrated strategic plan is key to this approach. The plan defines 
four mission categories, which include resource protection, resource 
use, recreation, and serving communities. Capabilities in partnerships, 
management, and science are at the foundation of the plan and weave 
throughout the four mission goals.
    Although the details of the respective missions of Interior's 
bureaus and offices differ, the central focus is the same. A focus on 
excellent performance requires mission clarity, good metrics, and 
management excellence. Management excellence requires a focused 
approach to maintain and enhance program results, making wise 
management choices, routinely examining the effectiveness and 
efficiency of programs, finding effective means to coordinate and 
leverage resources, and the continuous introduction and evaluation of 
process and technology improvements.
    The 2007 budget reflects the Department's commitment to these 
management strategies and management excellence.

                            BUDGET OVERVIEW

    The 2007 budget request for current appropriations is $10.5 
billion. Permanent funding that becomes available as a result of 
existing legislation without further action by the Congress will 
provide an additional $5.6 billion, for a total 2007 Interior budget of 
$16.1 billion.
    The 2007 current appropriations request is a decrease of $392.2 
million or 3.6 percent below the 2006 funding level. If emergency 
hurricane supplemental funding is not counted, the 2007 request is a 
decrease of $321.9 million or 2.9 percent below the 2006 level.
    The request for the Bureau of Reclamation and the Central Utah 
Project, funded in the Energy and Water Development Appropriations Act, 
is $923.7 million. This request includes a net programmatic reduction 
of $43.1 million, or 4.1 percent, from the 2006 funding level. It also 
includes the proposed cancellation of $88.0 million in prior year 
balances of appropriations for the Desert Terminal Lakes program.
    The 2007 Central Utah Project budget is $40.2 million, an increase 
of $6.1 million above the 2006 enacted level. The increase will 
maintain progress towards timely completion of the project. This 
funding level, if maintained in the out years, will allow the project 
to be completed by 2021.

                            2005 HURRICANES

    In addition to the funds requested in the budget, on February 16, 
2006, the President sent the Congress a supplemental funding request 
for hurricane recovery. The supplemental includes $216 million for 
Interior agencies. Funding will be used to conduct clean-up and debris 
removal and repairs and reconstruction of facilities at park units, 
refuges, and USGS science facilities. These actions will allow us to 
open roads and trails to the public, repair visitor centers and 
exhibits, and reconstruct water control structures to host migratory 
bird populations and other wildlife. The supplemental also includes 
funding for MMS to complete restoration of its operations in New 
Orleans.

                  DEPARTMENTAL PROGRAMMATIC HIGHLIGHTS

    The 2007 budget maintains and improves performance across the 
Department's strategic goals to achieve healthy lands and water, 
thriving communities and dynamic economies throughout the Nation. Key 
goals for 2007 include:
  --Enhancing America's energy supplies through responsible energy 
        development and continued implementation of the Energy Policy 
        Act;
  --Building on successful partnerships across the country and 
        expanding opportunities for conservation that leverage Federal 
        investments;
  --Continuing to advance trust reform;
  --Coordinating existing efforts under a unified program that focuses 
        on high-priority historic and cultural protection under the 
        Preserve America umbrella;
  --Preventing crises and conflicts over water in the West through 
        Water 2025;
  --Continuing to reduce risks to communities and the environment from 
        wildland fires; and
  --Providing scientific information to advance knowledge of our 
        surroundings.
    Before turning this over to Commissioner John Keyes for a detailed 
discussion of our water programs in the Bureau of Reclamation, I want 
to highlight several aspects of the Interior Department budget.

                               EVERGLADES

    I want to commend the subcommittee for its continued support of 
Everglades restoration efforts. The Department is both a steward, with 
specific mandates from Congress, and a partner, working with other 
agencies to restore and protect the South Florida ecosystem. The 
Department's highest priority in this effort is the completion of the 
Modified Water Deliveries project. Completion of this project is 
critical for the preservation and restoration of the resources at 
Everglades National Park. Furthermore, improved flows of water to the 
park will lay a strong foundation for future environmental benefits to 
be realized for the Everglades under the Comprehensive Everglades 
Restoration Plan.
    The funding for the Modified Water project provided in 2006 with 
the strong support of the subcommittee will complete the 8.5 Square 
Mile Area component of the project. Funding requested for 2007 in the 
budget of the National Park Service and the Corps of Engineers will 
begin work on modification of the Tamiami Trail. As the subcommittee is 
aware, the recently approved Revised General Reevaluation Report for 
the Tamiami Trail calls for a 2-mile bridge to the west and 1-mile 
bridge to the east. This approach will provide the necessary conveyance 
of water south from the Water Conservation Area 3B into the Northwest 
Shark River Slough section of the Everglades National Park.

              WATER 2025--PREVENTING CRISES AND CONFLICTS

    The 2007 budget includes an increase of $9.5 million for Water 
2025, for a total funding level of $14.5 million. I am pleased to 
report that the administration has submitted legislation for the 
authorization necessary to accomplish the goals of this program.
    The overarching goal of Water 2025 is to meet the challenge of 
preventing crises and conflicts over water in the West. Water 2025 will 
achieve this by increasing the certainty and flexibility of water 
supplies, diversifying water supplies, and preventing crises through 
added environmental benefits in many watersheds, rivers, and streams.
    Competitive 50/50 Challenge Grant Program.--The Challenge Grant 
program will remain an integral part of Water 2025 in 2007. In fiscal 
year 2004 and again in fiscal year 2005, the response to the program 
was overwhelming, with Reclamation receiving over 100 proposals for 
Challenge Grants each year. To date, Reclamation has awarded funding 
for 68 Challenge Grants in 16 States, including 62 projects by 
irrigation and water districts and 6 more by western States. The funded 
projects involve innovative approaches to improving water management 
through water marketing, water conservation, and modernizing water 
delivery systems. Collectively, these projects represent almost $60 
million in improvements in the West, including a non-Federal 
contribution of $44 million and the Federal Government contribution of 
$15 million. In other words, for every $1 the Federal Government has 
invested, there has been about $2.90 non-Federal investment.
    The projects selected for award through the Challenge Grant program 
in fiscal year 2004 and fiscal year 2005 include:
  --23 projects that, collectively, will convert 74 miles of dirt 
        canals to pipeline;
  --44 projects to install water measurement devices, SCADA systems and 
        automate water delivery systems; and
  --11 projects that include water marketing plans.
    Based on estimates in the project proposals, the 68 funded projects 
could save up to 285,000 acre-feet per year, collectively, once fully 
implemented. An acre-foot of water is enough to supply a family of four 
for up to a year.
    The overwhelming response to the Challenge Grant Program 
underscores the significance of Water 2025 to Western water users and 
proves the success of the Challenge Grant concept. The response to the 
Challenge Grant Program also demonstrates a widespread eagerness to 
improve the way water is managed across the West and to address local 
needs.
    Examples of some of the funded Challenge Grant projects include:
    Arizona.--The Gila Gravity Main Canal Board, in partnership with 
the City of Yuma and NAD Bank, will make canal system improvements to 
conserve water, restore canal capacity and improve operation 
efficiency. Resulting water savings are estimated at up to 45,000 acre-
feet (af) of water per year. The conserved water will be available for 
other Colorado River users. The total project cost is $2,207,775 with a 
Water 2025 contribution of $284,000.
    California.--The Calleguas Municipal Water District in Thousand 
Oaks will install automated monitoring devices to 23 water distributors 
to allow implementation of new rate structures encouraging more 
efficient water use, conservation of water, and better management of 
local groundwater supplies. This project will reduce demand on the 
Metropolitan Water District and the Colorado River and will save an 
estimated 5,500 acre-feet per year. The total project cost is 
$3,095,000, with a Water 2025 contribution of $300,000.
    Idaho.--The Preston Whitney Reservoir Company will replace 23,333 
feet of open canal with PVC pipe and modify the works structure at 
Lamont Reservoir. The project is estimated to save 1,800 acre-feet of 
water per year. The total project cost is $877,153, including the Water 
2025 contribution of $300,000.
    Montana.--The Paradise Valley Irrigation District will replace 
9,000 feet of leaky canal with a pressure pipeline system that will 
conserve 1,000 acre-feet of water per year. It will be one of the first 
pressurized systems in the area and a significant improvement over the 
old system. This project will conserve water for the District by 
eliminating seepage in the canal and improve operation and control in 
the main canal. Efficiency levels will reach nearly 100 percent with 
the new pipeline system, compared to the current efficiency rate of 40 
to 45 percent. Irrigation seasons will be extended during drought years 
by making more use of the water that is available. The total project 
cost is $524,215, with a Water 2025 contribution of $262,107.
    New Mexico.--The State of New Mexico will rehabilitate a USGS 
streamflow gage on the Pecos River to provide more accurate high 
streamflow measurements. The gage will help better measure water under 
high flow conditions. Accurate measurement of water delivered to Texas 
under the Pecos River Compact is critical to the State. The total 
project will cost $146,660 with a Water 2025 contribution of $59,480.
    Oregon.--The Central Oregon Irrigation District in Bend Oregon will 
collaborate with numerous partners--seven irrigation districts, six 
cities, three tribes, and the Deschutes Resource Conservancy--to 
address long-term basin water needs by establishing a pilot water bank. 
This project has a long-term potential savings of up to 326,522 acre-
feet a year. The project demonstrates collective partnering of basin 
interests and addresses many institutional constraints. The total cost 
of the project is $588,750, with a Water 2025 contribution of $233,750.
    Texas.--The District will purchase and install 225 on-farm delivery 
site meters for more precise water measurement and efficient water 
delivery. The saved water--3,464 acre-feet per year--will enable 
continued farming during droughts and increase the length of the 
irrigation season. On-farm metering will help the District achieve its 
goal of 100 percent volumetric pricing of water delivered to its users. 
The total cost of the project is $602,500, with a Water 2025 
contribution of $300,000.
    Utah.--The Sevier River Water Users Association in Utah will expand 
and enhance their real-time monitoring and control system to better 
manage water deliveries. The project is estimated to save up to 22,500 
acre-feet of water.
    Water System Optimization Reviews.--The fiscal, legal, and 
political hurdles to the development of significant new supplies make 
it imperative that existing water supply infrastructure be fully 
utilized within the framework of existing treaties, interstate 
compacts, water rights, and contracts. Reclamation will work with 
willing States, irrigation and water districts, and other local 
entities to assess the potential for water management improvements in a 
given basin or district. Potential actions identified in these reviews 
may form the basis for future Water 2025 cooperative grant proposals.
    Improved Water Purification Technology.--We can make better use of 
existing water supplies that may have limited use due to high salt or 
mineral contents, or which may be otherwise unsuitable for consumptive 
use. Lowering the cost of desalination is one of the key tools to 
managing scarce water resources because of the potential it offers to 
expand usable water supplies. A portion of the funding requested will 
be used to award competitive, cost-shared research and development 
cooperative agreements that focus on inland brackish ground waters, 
energy efficiencies, and management of concentrates.
    A majority of the funding requested for this component will support 
operations and research and development conducted at the Tularosa Basin 
National Desalination Research Facility, which is proposed to be re-
named the Brackish Groundwater National Desalination Research Facility 
and scheduled to be operational in 2007. The budget request includes 
funds for start-up operations, including hiring an external 
organization to operate the facility under Reclamation direction and 
starting initial research and development.

                          KLAMATH RIVER BASIN

    The Klamath River Basin demonstrates our ability to work across the 
landscape cooperatively to accomplish our goals. The 2007 budget 
includes $63.4 million for Klamath Basin restoration activities. This 
is an increase of $7.8 million and, with funds available in 2006, will 
be used to restore streams and wetlands in the upstream and downstream 
reaches of the Klamath River and its tributaries.
    The Reclamation budget request of $32.2 million provides funding 
for studies and initiatives related to improving water supplies to meet 
the competing demands of agricultural, tribal, wildlife refuge, and 
environmental needs in the Klamath River Basin.
  --The request includes an increase of $2.4 million for investigations 
        to increase water storage/conserve water, an increase of 132 
        percent from 2006, for a total funding level of $4.2 million.
  --The request includes an increase of $982,000, for total funding of 
        $8.7 million to address ESA requirements including fish 
        screens, passage, and ladders.
  --The balance of the funding increase is spread across various 
        components of the Klamath Project, primarily water quality 
        studies and operations and maintenance.
    In 2007, through its Partners for Fish and Wildlife program, FWS 
will begin a new $2.0 million Lower Klamath Basin initiative. Funding 
will be used to provide fish passage on tributaries; fencing for 
riparian areas along streams; assessment and monitoring of disease, 
particularly in juvenile fish; and restoration of stream channels from 
former mining excavations. The 2007 budget also includes $3.5 million 
to acquire and restore agricultural lands adjacent to Upper Klamath 
Lake to provide quality habitat for larval and juvenile suckers and a 
host of native waterbirds, improve water quality for the lake and 
downstream anadromous fish, and increase water storage in the lake.

                 ADDRESSING OTHER DEPARTMENTAL CHANGES

    For the record, I would like to call the attention of the 
subcommittee to proposals requested in the President's Budget for 
programs funding in the Interior, Environment and Related Agencies 
Appropriations Act. The budget continues to emphasize our operating 
programs, including those for the National Park Service, leveraging of 
Federal resources through cooperative conservation; continued progress 
on Indian Trust reform; and increasing access to renewable and non-
renewable energy sources, while enhancing environmental monitoring and 
protection. Some details of our energy proposals follow.

                           ENERGY DEVELOPMENT

    The Department's energy programs play a critical role in providing 
access to domestic oil, gas, and other energy resources. To enhance 
domestic production, the 2007 budget proposes a $43.2 million 
initiative to implement the Energy Policy Act of 2005 and continue 
progress on the President's National Energy Policy. In total, the 
budget includes $467.5 million for the Department's energy programs.
    APD Processing.--In 2003, the Department released an Energy Policy 
and Conservation Act mandated report identifying five basins in 
Montana, Wyoming, Utah, Colorado, and New Mexico as containing the 
largest onshore reserves of natural gas in the country and the second 
largest resource base after the Outer Continental Shelf. These onshore 
basins contain an estimated 139 trillion cubic feet of natural gas, 
enough to heat 55 million homes for almost 30 years. These resources 
offer the best opportunity to augment domestic energy supplies in the 
short-term.
    Before any leasing for oil and gas production can occur on the 
public lands in these areas, BLM must have a land-use plan in place. 
Beginning in 2001, with the support of Congress, BLM initiated the 
largest effort in its history to revise or amend all of 162 resource 
management plans. Within areas designated in plans as appropriate for 
mineral development, BLM has made a concerted effort to help bring 
additional oil and gas supplies to market. In 2002, 2.1 Tcf were 
produced from Federal, non-Indian lands. In 2003 and 2004, 2.2 Tcf and 
3.1 Tcf, respectively, were produced from these lands.
    The BLM is experiencing a steady increase in the demand for 
drilling permits. In 2000, BLM received 3,977 applications for permits 
to drill. In 2005, BLM received 8,351 APDs. The bureau estimates that 
the number it will receive in 2006 will exceed 9,000, more than double 
the number processed 5 years ago. To address this demand, BLM has taken 
steps to ensure that drilling permit applications are processed 
promptly, while at the same time ensuring that environmental 
protections are fully addressed. These measures, along with increased 
funding, have allowed BLM to make significant progress in acting on 
permit applications. In 2005, BLM processed 7,736 applications, nearly 
4,000 more than it was able to process in 2000.
    Section 365 of the Energy Policy Act established a pilot program at 
seven BLM field offices that currently handle 70 percent of the 
drilling permit application workload. The pilot program is testing new 
management strategies designed to further improve the efficiency of 
processing permit applications. The Energy Policy Act provides enhanced 
funding for the pilot offices from oil and gas rental receipts. With 
more efficient processes and authorities and funding provided through 
Section 365, BLM currently anticipates processing 10,160 permits in 
2006.
    The efforts of BLM have achieved significant results. Almost 4,700 
new onshore wells were started in 2005. This level of activity is 56 
percent higher than in 2002.
    For 2007, the budget proposes an increase of $9.2 million to focus 
on the oil and gas workload in BLM's non-pilot offices, which are also 
experiencing a sharp and sustained demand for APDs. This increase will 
provide $4.3 million for drilling permit processing and $2.8 million 
for inspection and enforcement activities. It will also provide $2.1 
million for energy monitoring activities. The budget also includes 
$471,000 for FWS to increase consultation work with the non-pilot 
offices.
    The budget assumes continuation through 2007 of the enhanced 
funding for pilot offices from oil and gas receipts to facilitate a 
smooth transition to funding from drilling permit processing fees, 
effective September 30, 2007. Legislation to be proposed by the 
administration will allow a rulemaking to phase in full-cost recovery 
for APDs, beginning with a fee amount that will generate an estimated 
$20 million in 2008, fully replacing the amount provided by the Energy 
Policy Act.
    Alaska North Slope.--The most promising area for significant long-
term oil discoveries and dramatic gains in domestic production in the 
United States is the Alaska North Slope. The U.S. Geological Survey 
estimates a 95 percent probability that at least 5.7 billion barrels of 
technically recoverable undiscovered oil are in the ANWR coastal plain 
and 5 percent probability of at least 16 billion barrels. They estimate 
the mean or expected value is 10.36 billion barrels of technically 
recoverable undiscovered oil. At $55 a barrel, more than 90 percent of 
the assessed technically recoverable resource estimate is thought to be 
economically viable. At peak production, ANWR could produce about 1 
billion barrels of oil a day, about 20 percent of our domestic daily 
production and more oil than any other State, including Texas and 
Louisiana.
    The 2007 budget assumes the Congress will enact legislation in 2006 
to open ANWR to energy exploration and development with a first lease 
sale held in 2008 and a second in 2010. The budget estimates that these 
two lease sales will generate a combined $8.0 billion bonus revenues, 
including $7.0 billion from the 2008 lease sale.
    The 2007 budget includes an increase of $12.4 million for BLM 
energy management activities on the Alaska North Slope. The additional 
funds will support the required environmental analyses and other 
preparatory work in advance of a first ANWR lease sale in 2008. The 
requested increase will also support BLM's leasing, inspection, and 
monitoring program in the National Petroleum Reserve-Alaska and BLM's 
participation in the North Slope Science Initiative authorized by the 
Energy Policy Act. In addition, a significant share of the $12.4 
million increase will be used by BLM to respond to the environmental 
threat posed by abandoned legacy wells and related infrastructure on 
the North Slope.
    Outer Continental Shelf Development.--Deepwater areas of the Gulf 
of Mexico currently account for 17 percent of domestic oil and 6 
percent of domestic gas production. However, over the next decade, oil 
production in the Gulf is expected to increase by 43 percent and 
natural gas by 13 percent. The increase will come from deepwater and 
greater depths below the ocean floor. The 2007 budget includes an 
increase of $2.1 million for OCS development, to allow MMS to keep pace 
with the surge in exploration and development in the deepwater areas of 
the Gulf and $1.5 million for OCS environmental impact statements on 
future lease sales.
    New Innovations in Energy Development.--The 2007 budget includes an 
increase of $6.5 million for MMS's new responsibilities under the 
Energy Policy Act for offshore renewable energy development. MMS will 
establish a comprehensive program for regulatory oversight of new and 
innovative renewable energy projects on the OCS, including four 
alternative energy projects for which permit applications were 
previously under review by the U.S. Army Corps of Engineers.
    Oil shale resources represent an abundant energy source that could 
contribute significantly to the Nation's domestic energy supply. Oil 
shale underlying a total area of 16,000 square miles in Colorado, Utah, 
and Wyoming represents the largest known concentration of oil shale in 
the world. This area may contain in place the equivalent of 1.2 to 2 
trillion barrels of oil. The budget proposes a $3.3 million increase, 
for a total program of $4.3 million, to enable BLM to accelerate 
implementation of an oil shale development program leading to a 
commercial leasing program by the end of 2008, in compliance with 
section 369 of the Energy Policy Act. This request is accompanied by 
$500,000 budgeted for USGS to determine the size, quality, and quantity 
of oil shale deposits in the United States.
    Gas hydrates, found in some of the world's most remote regions such 
as the Arctic and deepwater oceans, could dramatically alter the global 
balance of world energy supply. The estimated volume of natural gas 
occurring in hydrate form is immense, possibly exceeding the combined 
value of all other fossil fuels.
    The 2007 budget includes a $1.9 million package of increases for 
gas hydrate research and development by MMS, BLM, and USGS. This will 
fund a coordinated effort in the Gulf of Mexico and the North Slope of 
Alaska to accelerate research, resource modeling, assessment, and 
characterization of hydrates as a commercially viable source of energy.

                               CONCLUSION

    The budget plays a key role in advancing our vision of healthy 
lands, thriving communities, and dynamic economies. Behind these 
numbers lie people, places, and partnerships. Our goals become reality 
through the energy and creativity efforts of our employees, volunteers, 
and partners. They provide the foundation for achieving the goals 
highlighted in our 2007 budget. This concludes my overview of the 2007 
budget proposal for the Department of the Interior and my written 
statement. I will be happy to answer any questions that you may have.

    Senator Domenici. We thank you. Who was it you wanted me to 
call on next?
    Mr. Limbaugh. Commissioner Keys.
    Senator Domenici. Mr. Commissioner, you have the floor.

                 SUMMARY STATEMENT OF JOHN W. KEYS III

    Mr. Keys. Thank you, Mr. Chairman and members of the 
committee. It is my absolute pleasure to be here with you today 
to talk about our budget request for fiscal year 2007. As he 
said, with me is Bob Wolf, our Director of Program and Budget, 
who helps me keep up with the numbers.
    Let me say, before I go ahead, that it is a pleasure to 
work with you and your committee staff. They have been good 
friends over the years and your staff people have been just 
outstanding to work with, and we do appreciate that very much.
    I have submitted a full statement and I would appreciate it 
being made part of the record.
    Senator Domenici. It will be.
    Mr. Keys. Mr. Chairman, before I get into----
    Senator Domenici. Does that mean our staff has not given 
you enough static?
    Mr. Keys. No, sir, Mr. Chairman, that is not what it means. 
It means that we work together very well.
    Senator Domenici. I see, okay. Static notwithstanding?
    Mr. Keys. That is correct.
    Senator Domenici. Okay.

                   NATIONAL ACADEMY OF SCIENCES STUDY

    Mr. Keys. Mr. Chairman, before I get into the 2007 budget 
request, let me expand on some of the material that Mark talked 
about with the National Academy of Sciences study. In 2005, the 
Academy conducted a study to help Reclamation determine the 
appropriate organizational, management, and resource 
configurations needed to meet its construction and 
infrastructure management responsibilities associated with 
fulfilling our mission. This is the report that they produced 
from that effort.
    We have produced an action plan to address the 
recommendations of this report, and we are pleased to share it 
with Congress and our stakeholders. We have provided you with 
copies so that you can see what we are trying to do. As we 
formulate actions to respond to the recommendations of the 
Academy, we will keep you informed to solicit your input and 
input from our customers and stakeholders. We have teams 
working on all of these issues. They will receive all of the 
time and attention that they need from my office on down. We 
appreciate the critical thinking that the Academies have given 
us and the information in the report. We fully intend to use it 
to improve Reclamation and the way we do business in the 21st 
century.

     FISCAL YEAR 2007 BUDGET REQUEST FOR THE BUREAU OF RECLAMATION

    Mr. Chairman, the overall 2007 budget request for 
Reclamation is $971.6 million in current authority. The numbers 
that you used in your opening remarks are correct. Our 2007 
budget request continues the President's commitment to a more 
citizen-centered government and supports Reclamation's mission 
of delivering water and generating power. Some highlights from 
that proposal:

           HIGHLIGHTS OF THE FISCAL YEAR 2007 BUDGET REQUEST

    The Water 2025 program asks for $14.5 million, and I have 
provided an update on the Water 2025 program. Mark provided 
some statistics from the program. We think it is an excellent 
program that has a lot of potential to help us address problems 
in the near and mid-term future.
    We have submitted a bill to Congress for permanent 
authorization of that program. This past year, we worked with 
our customers and stakeholders to put that bill together, and 
it has been submitted to Congress.
    On the Klamath project, we are asking for $24.8 million. 
The 2007 funding request would continue the on-the-ground 
initiatives to meet multiple obligations, including providing 
water for irrigation and wildlife refuges, avoiding jeopardy to 
endangered and threatened species, and meeting tribal trust 
obligations.
    Mr. Chairman, I might add that there was a court ruling on 
the Klamath project that directed Reclamation to attain the 
phase 3 flows on the Klamath River. I am happy to tell you that 
we have enough water in the Klamath Basin to meet those phase 3 
flows in the river and to deliver irrigation water this year. 
We would have a problem if we get into a back-to-back bad water 
year situation. The court ruling was made, and we think we can 
meet the obligations on the Klamath River.
    Senator Domenici. So that is good news for the Senators 
involved there.
    Mr. Keys. Yes, sir, it is.
    I would add that the good water year helps because in some 
places, we have in excess of 200 percent of normal 
precipitation in the area.
    On the Middle Rio Grande, we are asking for $23.7 million. 
That request would continue funding in support of the 
endangered species collaborative program and for acquiring 
supplemental water, doing the channel maintenance, and pursuing 
government-to-government consultations with Pueblos and tribes 
in the basin. The funding would also continue efforts to 
support the protection of and contribute to the recovery of the 
Rio Grande silvery minnow and the Southwest willow flycatcher.
    On the Animas-La Plata Project, we are asking for $57.4 
million. The 2007 request would continue funding construction 
of the project's major features, Ridges Basin Dam and the 
Durango pumping plant. It would also allow us to begin 
construction of the Ridges Basin Inlet Conduit and keep the 
project on schedule.
    On site security, we are requesting $39.6 million. The 2007 
request would ensure the safety and security of the public, 
Reclamation's employees, and the key facilities on Reclamation 
projects. The fiscal year 2007 request assumes annual costs 
associated with guard and patrol activities would be treated as 
project costs subject to reimbursability. Costs of program 
management, studies, and hardening of facilities would remain 
non-reimburseable.
    For the Safety of Dams program, we are asking for $69 
million. The 2007 request would provide for risk management 
activities throughout Reclamation's inventory of 361 dams and 
dikes. The request would also provide pre-construction and 
construction activities for up to 21 dams identified through 
the program.
    Our Rural Water program asks for $68.7 million. This 
request would support completion of ongoing rural projects and 
includes funding for municipal, rural and industrial systems 
for the Garrison Diversion Unit, the Mni Wiconi Project, Fort 
Peck-Dry Prairie Project, and the Lewis and Clark Project.
    For the CALFED-Bay Delta program, we are asking for $38.6 
million. Funds are requested to continue implementation of 
priority activities included in the CALFED-Bay Delta 
Authorization Act. Specifically, funds would be used for the 
environmental water account, storage feasibility studies, 
conveyance feasibility studies, science, implementation of 
projects to improve Delta water quality, ecosystem restoration, 
and planning and management activities.

                           PREPARED STATEMENT

    Mr. Chairman, the 2007 budget request demonstrates 
Reclamation's commitment to meeting the water and power needs 
of the West in a fiscally responsible manner. Reclamation is 
committed to working with its customers, States, tribes, and 
other stakeholders to find ways to balance and provide for the 
mix of water resource needs in 2007 and beyond.
    Thank you again for the continued support from the 
committee, and we would be happy to answer what questions you 
might have.
    [The statement follows:]

                 Prepared Statement of John W. Keys III

    Thank you, Mr. Chairman, and members of the subcommittee for the 
opportunity to appear in support of the President's fiscal year 2007 
budget request for the Bureau of Reclamation. With me today is Bob 
Wolf, Director of Program and Budget.
    Our fiscal year 2007 request has been designed to support 
Reclamation's efforts to deliver water and generate hydropower, 
consistent with applicable State and Federal law, in an environmentally 
responsible and cost-efficient manner.
    The funding proposed is for key projects that are important to the 
Department and in line with administration objectives. The budget 
request also supports Reclamation's participation in efforts to meet 
emerging water supply needs, to address water shortage issues in the 
West, to promote water conservation and improved water management, and 
to take actions to mitigate adverse environmental impacts of projects.
    The fiscal year 2007 request for Reclamation totals $971.6 million 
in gross budget authority and is partially offset by discretionary 
receipts in the Central Valley Project Restoration Fund ($33.8 million) 
and rescission of unobligated balances for At Risk Desert Terminal 
Lakes ($88 million). The total program, after offsets to current 
authority and the inclusion of permanent authority is $849.8 million.

                      WATER AND RELATED RESOURCES

    The fiscal year 2007 request for Water and Related Resources is 
$883.4 million. More specifically, the request for Water and Related 
Resources includes a total of $456.5 million for water and energy, 
land, and fish and wildlife resource management activities (which 
provides for construction, management of Reclamation lands, and actions 
to address the impacts of Reclamation projects on fish and wildlife), 
and $376.9 million for facility operations, maintenance, and 
rehabilitation activities.
    Providing adequate funding for facility operations, maintenance, 
and rehabilitation continues to be one of Reclamation's highest 
priorities. Reclamation continues to work closely with water users and 
other stakeholders to ensure that available funds are used effectively. 
These funds are used to allow the timely and effective delivery of 
project benefits; ensure the reliability and operational readiness of 
Reclamation's dams, reservoirs, power plants, and distribution systems; 
and identify, plan, and implement dam safety corrective actions and 
site security improvements.
    Highlights of the fiscal year 2007 request for water and related 
resources include:
    Water 2025 ($14.5 million).--Water 2025 is a high priority for the 
Secretary of the Interior and will focus Reclamation's financial and 
technical resources on areas in the West where conflict over water 
either currently exists or is likely to occur in the coming years.
    The overarching goal of Water 2025 is to meet the challenge of 
preventing crises and conflict over water in the West. Water 2025 will 
attain this goal by increasing certainty and flexibility in water 
supplies, diversifying water supplies, and reducing conflict through 
the use of market-based approaches and enhancing environmental benefits 
in many watershed, rivers and streams consistent with State and Federal 
laws.
    With $14.5 million, Water 2025 will continue to be a multifaceted 
program with projects that embody the overarching goal of preventing 
crises and conflict over water in the West. Leveraging limited Federal 
dollars through the Challenge Grant Program will continue to be a major 
component of Water 2025. The Challenge Grant Program will focus on 
projects that improve water management through conservation, 
efficiency, and water markets, as well as collaborative solutions to 
meet the needs of the future. Beginning in fiscal year 2007, a system 
optimization review component has been added to ensure existing water 
management systems are operated to maximize water deliveries. 
Modernization of existing systems will occur within the framework of 
existing treaties, interstate compacts, water rights, and contracts. 
Water 2025 will also continue to fund research for water purification, 
including research on desalination.
    The Department transmitted the administration's proposed permanent 
authorizing language to Congress on March 7, 2006.
    I would like to share with the committee several highlights of the 
Reclamation budget:
    Klamath Project in Oregon and California ($24.8 million).--The 
fiscal year 2007 request will continue and increase funding for studies 
and initiatives related to improving water supplies to meet the 
competing demands of agricultural, tribal, wildlife refuge, and 
environmental needs in the Klamath River basin. Key areas of focus 
include increasing surface and groundwater supplies, continuing a water 
bank, making improvements in fish passage and habitat, taking actions 
to improve water quality, and continuing coordination of Reclamation's 
conservation implementation program.
    Lower Colorado River Operations Program ($17.0 million).--The 
fiscal year 2007 request will provide funds for the work necessary to 
carry out the Secretary's responsibilities as water master of the lower 
Colorado River. The fiscal year 2007 request funds measures under the 
multi-species conservation program to provide long term Endangered 
Species Act compliance for lower Colorado River operations for both 
Federal and non-Federal purposes.
    Middle Rio Grande ($23.7 million).--The fiscal year 2007 request 
will continue to address endangered species issues and support of the 
Endangered Species Collaborative Program. In addition, the request will 
continue funding for acquiring supplemental water, channel maintenance, 
and pursuing government-to-government consultations with Pueblos and 
Tribes. Finally, the funding will continue efforts that support the 
protection and contribute to the recovery of the Rio Grande silvery 
minnow and southwestern willow flycatcher.
    Animas-La Plata in Colorado and New Mexico ($57.4 million).--The 
fiscal year 2007 request includes $57.4 million to continue 
construction of the project's major features, Ridges Basin Dam and 
Durango Pumping Plant. While work on these two features began in fiscal 
year 2003, maintaining funding at the level we have identified is 
necessary to complete construction of these features in a timely 
fashion. This level of funding will also permit the start of 
construction on the Ridges Basin Inlet Conduit, which is necessary to 
avoid substantial Project delays. Funding will be primarily directed to 
these three features while other key features are held for future 
implementation.
    Columbia/Snake River Salmon Recovery in Idaho, Oregon, Montana, and 
Washington ($17.3 million).--The fiscal year 2007 request will address 
the requirements in the biological opinions issued in December 2000 by 
the Fish & Wildlife Service and in November 2004 by the National Marine 
Fisheries Service. The 2004 biological opinion has been remanded to 
NOAA Fisheries and a new biological opinion is due in October 2006. 
During the remand, the 2004 biological opinion remains in place as 
Reclamation continues to implement actions identified in the 2004 
updated proposed action. These requirements include significantly 
increased regional coordination efforts; actions to modify the daily, 
weekly, and seasonal operation of Reclamation dams; acquisition of 
water for flow augmentation; tributary habitat activities in selected 
subbasins to offset hydrosystem impacts; and significantly increased 
research, monitoring, and evaluation.
    Site Security ($39.6 million).--An appropriation in the amount of 
$39.6 million is requested for site security to ensure the safety and 
security of the public, Reclamation's employees and key facilities. 
This funding includes $15.4 million for physical security upgrades and 
$24.2 million to continue all aspects of Reclamation-wide security 
efforts, including law enforcement, risk and threat analysis, 
implementing security measures, undertaking security-related studies, 
and maintaining guards and patrols on the ground.
    The fiscal year 2007 budget request assumes annual costs associated 
with guard and patrol activities will be treated as project O&M costs 
subject to reimbursability based on project cost allocations. These 
costs in fiscal year 2007 are estimated at $20.9 million of which $18.9 
million will be reimbursed; the actual amount may differ from this 
estimate based on actual operations costs. Of the funding to be 
reimbursed, $11.6 million will be in direct up-front funding from power 
customers, while $7.3 million in appropriated funds will be reimbursed 
by irrigation users, M&I water users, and other customers in the year 
in which they were incurred through Reclamation's O&M allocation 
process. Reclamation will continue to treat facility fortification, 
studies, and anti-terrorism management-related expenditures as non-
reimbursable.
    Safety of Dams ($69.0 million).--Assuring the safety and 
reliability of Reclamation dams is one of the Bureau's highest 
priorities. The Dam Safety Program is critical to effectively manage 
risks to the downstream public, property, project, and natural 
resources. The fiscal year 2007 request will provide for risk 
management activities throughout Reclamation's inventory of 361 dams 
and dikes, which would likely cause loss of life if they were to fail. 
The request includes preconstruction activities for modifications 
planned for the future. In fiscal year 2007, there will be two large-
scale ongoing corrective action projects plus four new awards.
    Rural Water ($68.7 million).--This request supports the completion 
of ongoing rural water projects. This includes funding for Municipal, 
Rural, and Industrial (MR&I) systems for the Pick Sloan-Missouri Basin 
Program--Garrison Diversion Unit (North Dakota), the Mni Wiconi Project 
(South Dakota), the Fort Peck Reservation/Dry Prairie Project 
(Montana), and the Lewis and Clark Project (South Dakota, Iowa, and 
Minnesota). The ``Rural Water Act of 2005'' (S. 895) was passed by the 
Senate in November 2005, and should address many of the problems 
identified by the Program Assessment Rating Tool (PART) evaluation of 
this program. The legislation directs the Secretary of the Interior to 
carry out a rural water supply program in reclamation States to: (1) 
investigate and identify opportunities to ensure safe and adequate 
rural water supply projects for municipal and industrial use in small 
communities and rural areas; and (2) plan the design and construction, 
through the conduct of appraisal investigations and feasibility 
studies, of such projects. This measure will bring more uniformity, 
direction, and prioritization for rural water projects. The legislation 
is awaiting action by the House.
    Science and Technology (S&T) ($8.5 million).--The fiscal year 2007 
request includes funding for the development of new solutions and 
technologies which respond to Reclamation's mission-related needs. We 
feel our S&T work is important and will contribute to the innovative 
management, development, and protection of water and related resources. 
Of the amount requested, about $1 million is planned for internal 
desalination Research & Development (R&D) conducted by Reclamation. 
Additionally, water purification funds requested through the Water 2025 
program will be managed by the S&T program.

                       POLICY AND ADMINISTRATION

    The $58.1 million request is an increase of approximately $800,000 
from the fiscal year 2006 enacted level of $57.3 million. The 
additional funding in the fiscal year 2007 request includes funding for 
labor cost increases due to cost of living raises and inflationary 
costs for non-pay activities. Funding requested will be used to: (1) 
develop, evaluate, and direct implementation of Reclamation-wide 
policy, rules, and regulations, including actions under the Government 
Performance and Results Act, and implement the President's Management 
Agenda; and (2) manage and perform functions that are not properly 
chargeable to specific projects or program activities covered by 
separate funding authority.

                CENTRAL VALLEY PROJECT RESTORATION FUND

    This fund was established by the Central Valley Project Improvement 
Act, Title XXXIV of Public Law 102-575, October 30, 1992. The request 
of $41.5 million is expected to be offset by discretionary receipts 
totaling $33.8 million, which is the maximum amount that can be 
collected from project beneficiaries under provisions of Section 
3407(d) of the Act. The discretionary receipts are adjusted on an 
annual basis to maintain payments totaling $30.0 million (October 1992 
price levels) on a 3-year rolling average basis. The net amount 
requested for fiscal year 2007, after the offset, is the same as fiscal 
year 2006. These funds will be used for habitat restoration, 
improvement and acquisition, and other fish and wildlife restoration 
activities in the Central Valley Project area of California.

                     CALIFORNIA BAY-DELTA (CALFED)

    Title I of Public Law 108-361, titled the Calfed Bay-Delta 
Authorization Act, was signed by the President on October 25, 2004. The 
Act authorized $389 million in Federal appropriations over the period 
of fiscal year 2005 through fiscal year 2010. For fiscal year 2007, 
$38.6 million is requested to enable Reclamation to advance its 
commitments under the CALFED Record of Decision and with a focus 
towards implementation of priority activities included in the Calfed 
Bay-Delta Authorization Act that will contribute to resolving water 
resource conflicts in the CALFED solution area. Funds will specifically 
be used for the environmental water account, feasibility studies of 
projects to increase surface storage and improve water conveyance in 
the Delta, conduct critical science activities, implementation of 
projects to improve Delta water quality, ecosystem enhancements, and 
program planning and management activities.

                     PRESIDENT'S MANAGEMENT AGENDA

    Reclamation continues to make progress in all areas of the 
President's Management Agenda. Efforts toward advancing management 
excellence in the fiscal year 2007 budget include: (1) improvements in 
performance based budgeting, (2) program evaluations utilizing the 
Program Assessment Rating Tool (PART), and (3) management studies to 
improve organizational, management, and resource configurations.
    Performance Based Budgeting.--Reclamation's budget is supported by 
a performance-oriented framework that aligns to its mission and key 
outcome goals to: (1) Deliver Water Consistent with Applicable State 
and Federal Law, in an Environmentally Responsible and Cost-Efficient 
Manner, and (2) Deliver Power Consistent with Applicable State and 
Federal Law, in an Environmentally Responsible and Cost-Efficient 
Manner. Reclamation's work in Resource Protection and Recreation are 
also reflected in its outcome goals. The framework includes both long-
term and annual performance goals that link to the Department of the 
Interior (DOI) Strategic Plan.
    As part of Reclamation's budget process, funding requests for all 
projects and bureauwide programs are linked to the DOI Strategic Plan, 
further demonstrating their budget and performance ties. Activity Based 
Cost Management (ABCM) output data is also refined and analyzed to 
support Reclamation's efforts to produce cost information that, along 
with performance data, is used to enhance budget decision-making. ABCM 
data analysis will play an even greater role in formulating the fiscal 
year 2008 budget.
    Program Assessment Rating Tool (PART).--Reclamation's performance 
budget also includes performance goals used in the assessment of 
program performance. For the fiscal year 2007 budget, Reclamation's 
Safety of Dams, Site Security and Water Management/Supply--Operations 
and Maintenance programs were evaluated using the PART process. The 
safety of dams program was rated effective. For this program, the 
administration has identified the need to establish performance data 
and track performance. The program has a strong track record, and 
refined performance measures will help us better track how well we are 
addressing dam safety issues. The site security program was rated 
moderately effective, with improvements needed in budget and 
performance integration. The program has been dramatically re-designed 
since 9/11/2001, and is making progress towards meeting our short-term 
and long-term goals of improving security at Reclamation facilities. 
The PART also rated the water management/supply operations and 
maintenance as adequate. Improvement plans for this program include 
developing a comprehensive strategy to operate and maintain Reclamation 
facilities.
    Management Studies.--The National Academies of Science, National 
Research Council has completed its study to assist Reclamation in 
determining the appropriate organizational, management, and resource 
configurations to meet its construction and related infrastructure 
management responsibilities associated with fulfilling Reclamation's 
core mission of delivering water and power for the 21st century. An 
action plan that addresses the findings and recommendations in the 
study has been approved by the Secretary of the Interior. The action 
plan has been published on Reclamation's website and provided to the 
committee.

                   BUDGET AND PERFORMANCE INTEGRATION

    In line with the Department's initiative, Reclamation continues to 
advance its efforts for improving budget and performance integration. 
To do so, Reclamation's senior leadership participates in quarterly 
reviews to focus on projections of whether or not our published annual 
performance targets will be met by the end of the fiscal year. When it 
is determined that accomplishment of a performance target may be in 
question, Reclamation identifies corrective actions to be taken.
    Both Reclamation's budget and performance documents incorporate 
references to its outcome-oriented goals and measures as identified in 
the PART and the information that is used in the quarterly reviews with 
senior leadership. Reclamation completion of baseline data for several 
new measures will enable it, over time, to develop and analyze 
historical trends that may be used to better support its budget 
requests and the goals included in its operating plan.

                  FISCAL YEAR 2007 PLANNED ACTIVITIES

    Reclamation's fiscal year 2007 priority goals are directly related 
to continually fulfilling our progress in water and power contracts 
while balancing a range of competing water demands. Reclamation will 
continue to deliver water consistent with applicable State and Federal 
law, in an environmentally responsible and cost-efficient manner. 
Reclamation will strive to deliver 28.4 million acre-feet of water to 
meet contractual obligations while addressing other resource needs (for 
example, recreation, fish and wildlife habitat, environmental 
enhancement, and Native American trust responsibilities). Reclamation 
will work to maintain our dams and associated facilities in fair to 
good condition to ensure the reliable delivery of water. Reclamation 
will strive to meet or beat the industry forced outage average to 
ensure reliable delivery of power. Reclamation will reduce salinity by 
preventing an additional 21,000 tons of salt from entering the water 
ways.
    Moreover, the fiscal year 2007 budget request demonstrates 
Reclamation's commitment in meeting the water and power needs of the 
West in a fiscally responsible manner. This budget continues 
Reclamation's emphasis on delivering and managing those valuable public 
resources. Reclamation is committed to working with its customers, 
States, Tribes, and other stakeholders to find ways to balance and 
provide for the mix of water resource needs in 2007 and beyond.

                               CONCLUSION

    Mr. Chairman, please allow me to express my sincere appreciation 
for the continued support that this committee has provided Reclamation. 
This completes my statement. I would be happy to answer any questions 
that you may have at this time.

    Senator Domenici. Thank you very much.
    I note that Senator Inouye arrived. Every other Senator had 
an opportunity to make a comment, Senator. If you would like to 
make one, you are welcome.
    Senator Inouye. Mr. Chairman, I thank you very much. I came 
by to thank the Commissioner for his service to our country and 
to our people. Thank you very much.
    Mr. Keys. Thank you.
    Senator Inouye. I wish the very best, sir.
    Senator Domenici. Thank you very much, Senator Inouye.
    Is any Senator on an urgent time frame, any more urgent 
than I?
    Okay, I will ask a few questions and then--did you want 
further testimony or are we finished with the executive branch?
    All right. Commissioner and Secretary, obviously you must 
know that I am very concerned about the drought in the West, in 
particular in New Mexico and the Southwest. The information 
that I have seen shows that the current snow pack is less than 
anything ever seen by current measurement system that was 
installed in 1980 in the Sangre de Cristo Mountains. It is 
possible that there will be no runoff from the Sangre de 
Cristo, which feeds the Santa Fe, the Pecos, the Canadian 
Rivers.
    The most recent information that I have seen shows Pecos 
runoff estimated at 4 percent, Rio Grande 26, Zuni will get 1 
percent of the normal runoff of Blue Water Lake. These are 
absolutely grim statistics. It is not like I am putting these 
to you expecting that you have solutions or that you are the 
cause. Neither. It is just a terrible statement of reality.
    What is your assessment of the drought situation in the 
West and where do you anticipate the greatest impacts this 
year? Is there any assistance that the Bureau might offer to 
mitigate these impacts? What would drought contingency planning 
entail, and what triggers Reclamation to pay for water hauling 
versus drilling emergency wells? I put that all in one package, 
but I think that you understand what I am talking about. Could 
you start, please, and answer them?
    Mr. Keys. Mr. Chairman, the weather situation in the West 
is reversed from what it was last year. Last year, we had a wet 
Southwest and a dry northern tier. This year, we have a good 
wet northern tier and the conditions in the Southwest, the 
southern plains and the southern Rockies, are extremely poor.
    Your characterization of the Middle Rio Grande and the 
Pecos is what the forecasts are showing. Certainly, we are 
trying to see how much water we have in storage. In the Rio 
Grande Basin, we are about 30 percent full in the storage 
space, and we are trying to see how long that water will last.
    We are also purchasing water to be sure that we have enough 
for the silvery minnow in the Middle Rio Grande, and we have 
the water for the prior and paramount rights for the Pueblos 
set aside.
    So with that said, what can we do to help? Title I of 
Public Law 102-250 expired last year. The Title I program 
allowed us, with proper appropriations, to do some temporary 
work on the ground. The only permanent facilities that could be 
done was the construction of wells, but it helped folks get 
through. A good example would be hauling water to some of the 
reservations.
    Title I ran out, and we would certainly welcome the 
opportunity to work with you and your committee to get that 
renewed.
    The Title II program gives us the ability to plan with the 
States and other entities to deal with the drought and to put 
plans together to find other water. We would certainly look 
forward to working with you on reauthorization of the Title I, 
and then, if we get the requests from States, to help them put 
drought contingency plans together.
    Senator Domenici. We are working with you now on trying to 
put that in the supplemental appropriation.
    Mr. Keys. Great. Thank you very much.
    Senator Domenici. Do you know anything about that, Mr. 
Secretary?
    Mr. Limbaugh. Mr. Chairman, no. I do know a little bit 
about the drought and, being a former watermaster and manager 
of a river in Idaho, it always pays to get ahead of these 
things before they happen. The work that we have done with the 
Middle Rio Grande Conservancy District to enhance their ability 
to manage water more effectively and efficiently will help them 
in managing this horrible drought that they are about to 
experience. So we do believe, Senator, that having both 
proactive and reactive parts of this are extremely important.
    Senator Domenici. Well, I have two more and I will be as 
quick as I can.
    Last week, I was made aware of a serious water situation in 
the Ruidoso and Ruidoso Downs, New Mexico, area. The city 
council recently voted to initiate phase 4 water restrictions, 
the most severe they have ever had. The Downs has been under 
water rationing since 2002. Its Reclamation is aware of the 
water situation. We are wondering if there is any immediate 
help that Reclamation can offer these two communities? Do you 
know about them and is there any?
    Mr. Keys. Mr. Chairman, we were made aware of this 
situation about the same time you were last week. We do not 
have any projects in the area now, but our folks are working 
with your staff and the local folks to see if there is some 
help that we could make available to them.
    Senator Domenici. It is my understanding that some of the 
provisions of the Reclamation State Emergency Relief Act have 
expired, and you indicated that. Assuming that we address this 
legislative issue, do you have any idea how much funding you 
would anticipate that Reclamation could utilize based on known 
and anticipated drought problems? We need that soon and I 
assume we are working on it together. Is that a fair 
assessment?
    Mr. Keys. Mr. Chairman, it is. Title I is the one that we 
need to be reauthorized. Should it be reauthorized, we could 
use around $4 million to help address problems out there. In 
our proposal--Title II is still authorized, and we have about 
$476,000 in our proposal for Title II, planning for the future 
drought.
    Senator Domenici. I am going to hold on a question on 
advanced water treatment technologies, desalinization, and just 
see how we are doing in your opinion. You have got an 
initiative. We just wonder whether it is of the kind and 
stature and structure that we should count on for the future.
    With that, I yield now to--Senator, are you ready on your 
side?
    Senator Allard. My side is ready. I have no questions.
    Senator Domenici. Senator Craig, then Senator Allard.
    Senator Craig. Thank you very much, Mr. Chairman. Mr. 
Chairman, when Commissioner Keys was nominated I asked him that 
on his watch a Klamath Basin situation should never occur again 
and he assured me that to the best of his ability that would 
not happen, and it has not happened. But most importantly, I 
think 2025 has come out of some of those realities as to how we 
manage an overallocated resource in light of the demands being 
put on it, whether it is for endangered species or just simply 
expanded use, and how we get there.
    I guess, Commissioner, my question of you and the Secretary 
both would be: When we look at a report of this character and 
the idea of officially authorizing an approach like this, how 
do you see it laying out over a period of a decade and the 
kinds of resources that would be required of the budget, if you 
will, to accomplish what is outlined in this kind of effort?
    Have you looked at it from a decade overview as to where it 
takes us and what we gain from it and how much it will cost?
    Mr. Limbaugh. Mr. Chairman and Senator Craig, we have been 
amazed at the interest in the challenge grant program, with 
each year bringing over $100 million in projects requesting 
Federal matching funds. We cannot begin to get to all of them. 
So the needs are out there.
    The other thing we see that is progressive about this Water 
2025 approach, is that it targets areas of the West where we 
can predict conflict and crises. We can predict problems, and 
try to get ahead of them before they become the next Klamath 
Basin, where we would have a problem with converging demands 
causing a huge disruption in water supplies to someone.
    A decade of Water 2025 at any level of funding would be 
extremely helpful in these areas. We cannot say how much, once 
we get to the point of having the program up and running, how 
much more, how many more projects would be flushed out, how 
many solutions would be found that would need the seed money 
that 2025 and the challenge grant program provides. But we 
believe that getting ahead of these problems will produce even 
more solutions in other areas of the West that currently may 
not realize that they have problems.
    Having that program in place, having a proactive look, 
managing for the future and providing the seed money, 
especially in tight budget times where we have limited funding, 
we believe is a very dynamic way to deal with the problems that 
maybe we cannot even predict at this point. But we can predict 
some problems now that we can effectively deal with.
    Mr. Keys. Mr. Craig, I think there are two things to add to 
what Mark said. One is that the Water 2025 program gives us the 
ability to work with water user groups to provide water through 
conservation to the new needs created by exploding populations, 
new industry, new endangered species needs, and at the same 
time, protect the basic water right of the irrigation folks who 
have the water right to start with.
    The Water 2025 program gives them the mechanism to make 
that water available. It also lets us work with conservation 
and gives us time to see where there may have to be another 
infrastructure built. In other words, whether it is a dam, 
reservoir, desalination plant, or a recycling facility, there 
is a need for more infrastructure. Water 2025 gives us the time 
to take care of the immediate needs and plan for those future 
requirements.
    Senator Craig. Well, I think the challenge grant and the 
approach you are using is an exciting one and it fits in a way 
that I think some of us who look at the traditional funding 
approaches of the Bureau of Reclamation may not have 
understood, and that we are dealing with a highly developed 
region of the country today, not one that needs to be 
developed, not one that needs the water before it can develop. 
The world is significantly different in the Bureau regions 
where you have always been and been active. And there is money 
out there now and the opportunity to cost-share and/or to grant 
and/or to guarantee, all of those kinds of tools allow private 
sector money to be employed at a much higher level, I think.
    I think your overview of that is valid, because what I am 
hearing out there--it is just like I think we got a chunk of 
money for recharge into the aquifer and yet the irrigation 
districts and all of that are very willing to pony up and 
participate when we have those kinds of grants.
    So I think when we look at our budget challenges here we 
can leverage a public resource from this level in a much more 
expanded way through that kind of an approach. I thank you for 
that. It makes a lot of sense.

                  DAM SAFETY AND AGING INFRASTRUCTURES

    I am concerned about, obviously, dam safety and 
infrastructure aging. I mentioned that in my opening comments. 
I also understand the reality of budgets this year. Mr. 
Chairman, the good news in my region of the country versus 
yours is we are probably having almost one of the wettest 
winters on record. The flip-flop that the Commissioner and the 
Secretary have talked about has occurred. It has flipped out of 
Idaho and the Inter-Mountain West and landed in the Southwest. 
We are in a weather pattern out there right now, though, that 
seems to be taking moisture across the whole region at a fairly 
heavy rate. It is certainly going to enhance what we already 
have and it may help you some.
    But in all of our basins that are overallocated, and I 
suspect every one is now, excess water--it is interesting. 
Idaho is going through an interesting situation at this moment. 
We are dumping water. We are spilling at a rate that, a lot of 
Idahoans are stepping back and looking at that and saying: You 
know, we ought not be doing that; we ought to be spilling that 
throughout the season, if you will, for enhanced water quality 
and downstream water quality, than seeing it all go out, if you 
will, at this moment--which speaks to something you mentioned 
in passing as a combination of a lot of ideas, Commissioner, 
and that is increased storage. The West is going to have to 
deal with that at some time in the future, at our continued 
rate of growth. We can conserve, yes. We can spread, yes. We 
can use less, yes. But in reality you cannot populate at the 
rate that we are populating out there without trying to figure 
out how to expand a resource and add to it.
    Thank you all very much.
    Senator Domenici. We look forward to your first proposal at 
that time.
    Senator Craig. It will come.
    Senator Domenici. All right.
    The Senator from Colorado.
    Senator Allard. Mr. Chairman, thank you.
    I want to follow up a little bit on my opening comments. I 
just want to pose this question to the Bureau. Why does the 
agency not believe that they should play a role in the 
rehabilitation of federally built and federally owned projects?
    Mr. Keys. Mr. Chairman, Mr. Allard, we work very closely 
with the irrigation districts. We work with them on annual 
reviews of their maintenance and their operation. We actually 
work with them on any deficiencies that are there. I would tell 
you that there are no critical deficiencies that are left 
untreated. In other words, there is no backlog of critical 
maintenance.
    There are some things that should be taken care of, and we 
work with districts to help them manage their reserve funds to 
take care of those. Original contracts that all of those 
districts signed called for operation, maintenance, and 
replacement, and we work with the districts.
    It is true that we do not have some of the old programs 
that we used to have such as the rehabilitation and betterment 
program, the small loan program, or the drainage and minor 
construction program. They were good programs, but they are not 
available any more. Certainly, we work to minimize the need for 
large expenditures, but sometimes it takes that. We try to find 
the money.
    The bill that Mr. Craig talked about, the Rural Water bill, 
had a loan guarantee provision. Mark and I are working with the 
administration to have an administration bill that would 
accommodate that. Certainly, it is a way to help some of those 
districts address some of those problems.
    Senator Allard. Now, based on just what you said, 
apparently you had a different approach than today, when you 
said you had a rehabilitation program. I suppose when you had 
that rehabilitation program you did not consider rehabilitation 
as being the same thing as operation and maintenance, and now 
my understanding is that within the Department you consider 
rehabilitation as the operation and maintenance.
    Why did that change happen? Maybe could you elaborate on 
that a little further for me, please?
    Mr. Keys. Mr. Allard, in the old days when we had the 
rehabilitation and betterment program, the districts were still 
responsible for rehabilitation. When there was a need, they 
went to Congress to get a bill passed to provide the money for 
rehabilitation and betterment. However, they were still 
responsible, so they entered into repayment contracts.
    Senator Allard. I see.
    Now, if a project is willing and able to do rehabilitation 
work, but simply needs funding, does the Bureau object to being 
a pass-through agency for that funding?
    Mr. Keys. Mr. Allard, I am not sure what you mean by 
``pass-through.'' The loan guarantee program that we have 
proposed would let us co-sign the loan and use the facility 
that is owned by the Federal Government as collateral. They 
would benefit from a low-interest loan that could be made 
available through the Department of Agriculture, so we would 
back it up with the district.
    Senator Allard. I am going to change over now to a problem 
area that I have in the State of Colorado, Leadville. It was 
the source of a lot of silver mining there and there is a lot 
of just natural lead in the soil, and as a consequence of that 
the drainage there from that particular part of our State has 
been classified as a Superfund site. I have a letter here from 
the State of Colorado trying to get the Environmental 
Protection Agency and the Bureau of Reclamation to work 
together, as well as the Colorado Department of Public Health. 
According to this letter, basically you agree with the effort 
to try and work together as a group. The only thing is that you 
need to obtain some authorizing language in order for you to 
carry on your functions.
    I would hope that maybe your office can work with us and 
see if we can come up with some authorizing language that would 
allow for that to move forward and get that whole thing off 
dead center right now.
    Mr. Keys. Mr. Allard, we would be more than happy to do 
that. We have been working closely with the State and EPA on 
the Leadville Mine drainage problem, and certainly, we would 
work with you to develop the right legislation.
    Senator Allard. Our constituents in Colorado expressed a 
great deal of concern regarding the threat to Colorado's 
municipal water supplies, particularly the western slope 
reservoirs, due to a huge amount of fire danger from bark 
beetle-killed trees nearby. We have got some parts of the bark 
beetle where it just literally is wiping out entire forests. 
The Colorado River drainage, a lot of it comes out of those 
areas, some of it out of the North Platte.
    My question to you is does the Bureau have a position on 
the threat to municipal water in Colorado? And more 
importantly, do you see the need for protective or other 
measures to reduce such threats?
    Mr. Keys. Mr. Allard, we work very hard to protect the 
watersheds above our reservoirs from development. When there is 
fire damage, we work with the Forest Service or BLM to do 
rehabilitation work, so we do not get the big influx of 
sediment that takes up the storage space.
    We and the National Academy have just launched a review of 
some forest management practices, and that could be part of the 
study. Otherwise, we take it on a case-by-case basis and work 
with the local Forest Service and BLM.
    Senator Allard. That bark beetle problem in our State, it 
has really been--I have been up to Alaska and seen whole 
watersheds wiped out. We are facing the same thing. It is not 
as obvious because the trees have not turned rust yet, rust-
colored, but it is coming, and it is all over the West. 
Whatever you can do to help us address those issues and get 
these things moving and giving some thought about the impact of 
the bark beetle I think would be much appreciated. I know that 
Senator Craig has some of those issues also in Idaho, and 
probably in New Mexico.
    Senator Craig. If the Senator would yield, when you go 
through these severe drought cycles and you stress trees in the 
way they have been stressed in the West, what follows is a 
beetle epidemic, and we are now into that cycle. We may be back 
into a wet cycle on the Rocky Mountain front and even in Idaho, 
but that does not mean the beetles will stop.
    So we have these huge watersheds that are now dead and we 
are trying to get in them to clean them, revitalize them, by 
thinning. And of course we are being--we are head on head, if 
you will, with many of our environmental community groups. But 
what then follows a dead forest is a fire, and you are going to 
get total watershed wipeout, and then you have got major water 
quality problems of the kind you are talking about.
    Senator Allard. Soil erosion, the whole works comes with 
that, silt problems.
    Mr. Keys. Mr. Allard, Mr. Craig, our Department has been 
one of the champions for the Healthy Forests Initiative, and 
certainly, the bark beetle is a big part of that focus. We have 
worked very closely with the Forest Service and with the Bureau 
of Land Management. Yes, we have several million acres that we 
manage also. Certainly, the Healthy Forests Initiative is 
trying to deal with the bark beetle problem.
    Senator Allard. I have just one more question, Mr. 
Chairman, if I might.
    A little over a year ago, the Bureau did a cost look-back 
study on the Arkansas Valley Conduit. That is a pipeline that 
runs out of the Pueblo Reservoir and goes down towards Kansas. 
However, to date the study has not been released. Can you tell 
me what the holdup is and when we can expect to see that study?
    Mr. Keys. Mr. Chairman, Mr. Allard, we are still working on 
the cost estimate for that study. As you know, cost estimates 
these days are almost a pariah in our construction programs, 
and that is not just unique to Reclamation. We anticipate 
having that done this summer.
    Senator Allard. Thank you very much.
    Thank you, Mr. Chairman.

             DESALINATION AND WATER TREATMENT TECHNOLOGIES

    Senator Domenici. Thank you, Senator.
    Well, I am going to close on a little bit of a downer note 
for you, on the desalinization and advanced water treatment 
technologies. I think you know that because of my position as 
subcommittee chairman of the Energy and Water Appropriations 
Subcommittee I have tried very hard to pursue with vigor 
desalinization and also arsenic cleanup. But the Bureau manages 
a diverse water treatment research program funded through five 
budget items, including Reclamation research and development 
budget, Water 2025, the Yuma Desalting Plant, and by the end of 
2006 the Tularosa Basin facility will be complete.
    These programs have the potential to expand the Nation's 
water supplies and contribute to solving numerous current 
Reclamation challenges, including providing water for rural 
communities, reducing the concentration of salt and selenium in 
irrigation return flows, and improving endangered species 
habitat, and providing increased supplies for all water users, 
as we see it in terms of the potential application of the 
technologies that are being developed.
    This huge benefit is dramatically undermined by what I see 
as a lack of coherent strategy, with clear goals for Interior-
sponsored activities, integration of the multiple programs with 
Reclamation, and cooperation with other agencies, including the 
USGS, Department of Energy, and the Office of Naval Research--
kind of a freak to the mix, but it turns out it has a lot of 
assets and it has a genuine and sustained interest in the basin 
that we are working on by coincidence. We have pushed them 
there and they are working at it with a lot of money.
    Over 8 months ago, I asked the Bureau to develop and 
present a coherent strategy for water treatment research and 
development. I have not yet received that strategy. Does a 
strategy for the desalinization and related research exist and 
what is it?
    Mr. Limbaugh. Mr. Chairman, I will take a whack at that. 
Currently, we are working on several fronts to provide you a 
coherent strategy. First of all, we are working with OMB to 
refine the strategy that we have proposed, that would help 
coordinate those efforts and set priorities. We do have the 
multifaceted approach and basically the highlight would be the 
research and development grants through the 2025 program 
looking at the next generation of technologies.
    But also, the Tularosa facility, which will be complete in 
2007, the first part of 2007, in the fiscal year 2006 budget 
year, is----
    Senator Domenici. When will it be complete?
    Mr. Limbaugh. January 2007.
    Senator Domenici. January 2007?
    Mr. Limbaugh. Yes, with the funds that we have in the 2006 
budget.
    Senator Domenici. Turnkey, ready to go, open?
    Mr. Limbaugh. Yes, sir.
    We also have in the 2007 request the operations and 
maintenance for that facility. So we are looking at finding a 
partner for that facility and working on a business plan that 
will be a sustainable use of that facility within the research 
and development component.
    We also have worked with the National Academy of Sciences 
and have initiated a study, a follow-on to the road map that 
will look at Reclamation's programs and also others to find the 
coordinated strategy that will be blessed by the National 
Academy, that will hopefully be the long-term look at how 
desalination can work, what the role of the Federal Government 
will be in most efficiently managing and looking towards the 
future with that technology.
    We do believe that the new technology, the new generation 
of desalination, is important to the West and it is very 
important to many regions of the West, and specifically in 
using not only ocean desalination but brackish ground water, on 
a more cost effective basis than what it is now.
    John, do you have anything?

                 TULAROSA AND HURRICANE RELIEF EFFORTS

    Mr. Keys. Mr. Domenici, let me give you a real success 
story on Tularosa. Last August 29, when Katrina was bearing 
down on Louisiana----
    Senator Domenici. I understand.
    Mr. Keys. We got the call from the Corps of Engineers 
saying: ``How can you help us?'' The hurricane hit on Monday. 
Monday afternoon, we got the request from the Corps to help out 
with water supply in the area. Wednesday afternoon, we had a 
lowboy from Las Cruces arrive at Tularosa. They put two of the 
desal units that we were testing at the facility on the truck. 
Friday afternoon, they hit the ground in Biloxi. Saturday 
morning they were producing 200,000 gallons a day of water. 
That is enough to serve about 50,000 people.
    They also did that at the regional medical center there. 
When Rita came through, they took it down to the air base. 
After Rita passed through, they came back, set it up again, and 
it operated for about 2 months, 24/7, and produced water for 
about 50,000 people. When it was done, they put it on the truck 
and took it back to Tularosa.
    Right after that happened, we had requests from the 
National Rural Water Association on how they may purchase four 
of those units, station them around the United States, so that 
the next time we have an emergency like that they are ready to 
go. This is a real success story from some of the work at 
Tularosa.
    Senator Domenici. That is a very good example of carrying 
out this project. But that is not the whole story. The question 
is do we have in place what experts would tell us is a center 
that can pursue vigorously all phases or multiple phases and 
aspects of the problems still remaining with desalinization? 
Maybe we are not on the right track. Maybe it is too little of 
a facility. Maybe it is--who is going to tell us?
    Is the Academy going to tell us, in your opinion? Are the 
national laboratories going to tell us? I do not believe you 
have the expertise to tell us that. You are managers, in a 
sense; is that correct?
    Mr. Limbaugh. Mr. Chairman, that is correct, and that is 
why we have tried to go with the Academy study and we are 
trying to include the partners that we have worked with in 
looking for a managing entity for the Tularosa facility in New 
Mexico. We think that the strategy of having the National 
Academy of Sciences review the Federal and private sector roles 
for the future, would give us the needed impetus to implement 
the road map and look to the future in a much more sound, 
sustainable manner.
    Senator Domenici. I might say to my friend, the word 
``Tularosa'' keeps coming up and one might wonder what is that 
all about. Well, actually there is a rather large underground 
sea of salty water and that basin is called the Tularosa Basin.
    Senator Allard. I see, because I was thinking----
    Senator Domenici. There is a little town called Tularosa, 
but it is just a small little village.
    Senator Allard. Mr. Chairman, I was also thinking that if 
this is surface water desalinization, I think certainly--and 
this will not fit in, I guess, now that I know where you are 
going. But one concern is that we have dynamics happening on 
the surface that adds to salinated water supply. We have 
plants, for example the tamarisk, which is salt cedar, which 
adds--not only do they drink a lot of water, but they cause the 
river to become more saline, and as a result of that I think it 
contributes a lot to salination. This probably would not be 
covered by that study, but certainly I think--I was going to 
bring that up after your discussion in regard to this question. 
But now that I more thoroughly understand where you are 
driving, Mr. Chairman, we will bring that up at another time.
    Senator Domenici. So now we are going to have to get from 
you this solid and final recommendation as to what that 
facility--how much did we invest in the facility that we keep 
alluding to?
    Mr. Keys. Mr. Chairman, about $16 million.
    Senator Domenici. One-six?
    Mr. Keys. Yes.
    Senator Domenici. It is supposed to be a place where you 
can come and do your research, is that not correct?
    Mr. Keys. Yes, it is.
    Senator Domenici. As I recall, a permanent facility. You 
make arrangements, bring your best technology, and test it out 
there?
    Mr. Keys. Exactly.
    Senator Domenici. So the whole question is how important is 
that to the pursuing of a program.
    Mr. Keys. We think that it is very important. We are 
working with other agencies that want to test there. This 
summer, there will be a request for proposals for a contract to 
manage a plant, do a business plan, and attract folks.
    Senator Domenici. I think one of the most important long-
term things you are doing is to determine whether you are going 
to be an active, vibrant player in desalinization. We will be 
having hearings concerning reorganizing the Bureau. Does 
desalinization fit with Reclamation's mission? Or is that 
something that should be elsewhere?
    I do not know. We did what we could do. It is obvious we 
have truncated it on there because of our interest, and a very 
good interest, I think, without any question.
    I also want to close by just complimenting you and many on 
what has happened with the minnow in the Rio Grande. We start a 
year with a much different situation than we have ever had 
before, in that the play now between the stakeholders is no 
longer what it was before. The effort now is to create a 
completely different kind of habitat for bringing the fish 
through the water, in a sense, rather than letting the water 
flow, flow, flow, flow, and get lost as it is taken downstream 
to the fish.
    You would have been amazed, Commissioner. The latest effort 
was the Interstate Streams Commission, a very powerful entity, 
made a commitment to this. They came up with a very large piece 
of equipment that they put in this very dry river, and what 
they did is they, with full environmental approval in advance, 
they moved it slowly upstream and provided pits, if you could 
imagine, deep pits, so that as they moved up 4 or 5 miles they 
made water holes, so as to speak, for the minnow. An 
experiment, a test run.
    They then put minnows that we have raised, which nobody has 
complained about, planted them. That has been their 
contribution to what others have done by creating inlets, where 
you just actually create an inlet on the side of the place, of 
the river, and you plant these fish there and they live in 
these inlets. They cannot get out too easily and so they stay 
and propagate and have water where there is water, instead of 
going 70 miles down to Soccoro, where you have been to see that 
little dry hole.
    So all that together, you know, shows how difficult and how 
much hard work people will do. We have really tried. We hope 
this drought does not make all that for naught. We have alluded 
to it. It could.

                     ADDITIONAL COMMITTEE QUESTIONS

    All right. I have remaining questions on CALFED, Title XVI, 
and Animas-La Plata. They will be submitted. Answer them in due 
course and we will see.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                  Questions Submitted to Mark Limbaugh
            Questions Submitted by Senator Pete V. Domenici

                                DROUGHT

    Question. Secretary Limbaugh, Commissioner Keys, I am extremely 
concerned about drought in the west and particularly in New Mexico and 
the southwest.
    The information that I have seen shows that the current snowpack is 
less than anything ever seen by the current measurement system that was 
installed in 1980 in the Jemez and Sangre De Cristo Mountains.
    It is possible that there will be no runoff from the Sangre De 
Cristo which feeds the Santa Fe, Pecos, and Canadian Rivers. The most 
recent information that I have seen shows the Pecos runoff estimated at 
4 percent, Rio Grande 26 percent, and the Zuni will get 1 percent of 
normal runoff in Bluewater Lake.
    These are grim statistics. Unless we get unusual rainfall, the 
situation will be more critical next year. What is your assessment of 
the drought situation in the West?
    Answer. We share your concerns. The hydrologic conditions of the 
major basins of the Western United States can be characterized by 
contrast. The northern basins--such as those in the Pacific Northwest, 
northern Rockies, northern Great Plains, northern California, northern 
Nevada and northern Colorado are projecting snowpack and spring runoff 
levels at well above normal. Furthermore, due to significant storms 
over the past several weeks, Nebraska and Kansas have seen significant 
improvements in their hydrologic conditions.
    In contrast, despite significant rain and snow over the past week 
in New Mexico, southern Colorado, Oklahoma and Texas, the Southwest, 
Southern Plains and Southern Rockies have had below-normal levels of 
precipitation this winter and all these areas potentially face serious 
drought conditions this spring and summer.
    Question. Where do you anticipate the greatest drought impacts for 
this year?
    Answer. We expect the most significant impacts in New Mexico, 
Texas, Oklahoma, and Arizona.
    Question. What assistance can the Bureau offer to mitigate drought 
impacts?
    Answer. If reauthorized, Title I of Public Law 102-250, the 
Reclamation States Emergency Drought Relief Act of 1991, as amended, 
could provide authority for construction, management, and conservation 
measures to alleviate the adverse impacts of drought, including the 
mitigation of fish and wildlife impacts. Additionally, Title I could 
provide for emergency response and allow Reclamation the flexibility to 
operate its project facilities in a manner that would allow the most 
efficient use of limited water supplies.
    Question. What would drought contingency planning entail?
    Answer. Drought contingency planning is a plan for the future that 
details what activities an entity would engage in for the prevention or 
mitigation of drought impacts. The plan would identify opportunities to 
conserve, augment and make more efficient use of water supplies.
    Question. What triggers Reclamation to pay for water hauling versus 
drilling emergency wells?
    Answer. Section 101 of Title I of Public Law 102-250, the 
Reclamation States Emergency Drought Relief Act of 1991, as amended, 
provides that the only permanent facilities for drought mitigation are 
the drilling of wells. All other actions must be temporary in nature. 
Water hauling would be considered a temporary action allowable under 
Title I. One action is not preferred over the other. Decisions on which 
cause of action to take are based on local water conditions, costs, and 
timeliness among other factors. Should Title I of Public Law 102-250, 
the Reclamation States Emergency Drought Relief Act of 1991, as 
amended, be reauthorized, both activities could be carried out.
    Question. Last week, I was made aware of the serious water 
situation in Ruidoso and Ruidoso Downs, NM. The Ruidoso City Council 
has recently voted to initiate Phase IV water restrictions (the most 
severe). Ruidoso Downs has been under water rationing since 2002. Is 
Reclamation aware of the water situation and is there any immediate 
help that Reclamation can offer these two communities?
    Answer. Our understanding from discussion with the State of New 
Mexico is that the Village of Ruidoso could benefit from either repair 
of certain existing non-operational wells or drilling of additional 
wells. Should Title I of Public Law 102-250, the Reclamation States 
Emergency Drought Relief Act of 1991, as amended, be reauthorized, 
Reclamation would be capable of working with the Village of Ruidoso and 
the State of New Mexico to assist in either effort.
    Question. Does your budget request contain any funding for drought 
assistance in fiscal year 2007?
    Answer. The fiscal year 2007 budget request includes $475,000 for 
drought activities.
    Question. It is my understanding that some of the provisions of the 
Reclamation States Emergency Relief Act have expired. Assuming that we 
address the legislative issues, how much funding would you anticipate 
that Reclamation could utilize based on known and anticipated drought 
conditions for the remainder of fiscal year 2006 and what would be the 
needs for fiscal year 2007?
    Answer. We could effectively use approximately $7.5 million in 
fiscal year 2006. The funds requested for fiscal year 2007 in the 
amount of $475,000 would be sufficient, under present drought 
circumstances.
    Question. How will the drought affect in-stream flow requirements 
for endangered species?
    Answer. The drought will not modify the in-stream flow 
requirements, in that there is no exception for extreme drought 
conditions in meeting endangered species requirements. We will need to 
meet the flow requirements specified for a dry year. Because of drought 
conditions, more water will need to be released from storage to meet 
those requirements.
    Question. What will Reclamation's role be in these issues?
    Answer. Only Title I of Public Law 102-250, the Reclamation States 
Emergency Drought Relief Act of 1991, as amended, which expired on 
September 30, 2005, contains provisions to acquire water on a 
nonreimbursable basis as well as the drilling of new wells or 
rehabilitating existing wells. Reclamation must undertake the 
activities or contract for services.
                                 ______
                                 
             Questions Submitted by Senator Byron L. Dorgan

                               WATER 2025

    Question. The President's budget proposes $14.5 million for the 
Water 2025 initiative, an increase of $9.6 million over fiscal year 
2006 enacted. The administration developed Water 2025 to meet the 
challenge of preventing crises and conflicts over water in the West by 
increasing the certainty and flexibility of water supplies, 
diversifying water supplies and preventing crisis among users. The 
funding supports a competitive 50-50 challenge grants and the water 
system optimization reviews.
    While I support the general concept of the initiative--preventing 
crises and conflicts over water--I feel the best way to prevent future 
problems is to adequately fund projects, like Garrison Diversion, that 
are aimed at addressing emerging water needs of our country.
    In some ways, I think that the Water 2025 initiative is simply a 
way for the administration to fund its pet projects versus providing 
adequate funding for projects that have been vetted and approved by 
Congress and passed into law. In an August 2005 press release, the 
Department of Interior announced $1 million in Water 2025 grants for 
projects in Idaho, Kansas, Texas, Arizona, Montana and New Mexico. I 
could recommend several North Dakota projects that could have used that 
funding.
    Did any of the $9.6 million increase for the Water 2025 initiative 
come from funds that were previously used to fund projects in North 
Dakota?
    Answer. No, funding for water projects in North Dakota has not been 
decreased as a result of funding requests for the Water 2025 Program.
    The development of rural water projects and the Water 2025 Program 
are both important. While completion of the Garrison Diversion will 
serve an important local need, the Water 2025 Program allows 
Reclamation to focus resources on geographical problem areas throughout 
the 17 Western States. With a tightening Federal budget, Water 2025 has 
proven that leveraging Federal dollars with our partners can provide 
on-the-ground improvements in water management infrastructure that can 
help prevent water crises where it is most likely to occur.
    To date, Reclamation has awarded funding for 68 Challenge Grants in 
16 States, including 62 projects by irrigation and water districts and 
6 more by Western States. Collectively, the 68 projects represent 
almost $60 million in improvements, including a non-Federal 
contribution of $44 million and the Federal Government contribution of 
$15 million. In other words, for every dollar the Federal Government 
has invested, there has been about a $2.90 non-Federal investment.
    Estimates in the project proposals indicate that the 68 projects 
could save up to 285,000 acre feet of water per year, collectively, 
once fully implemented. An acre foot of water is enough to supply a 
family of four for up to a year.
    It is important to clarify that Water 2025 does not provide an 
opportunity for the administration to fund projects that it favors over 
projects that have been approved by the Congress. On the contrary, all 
Water 2025 Challenge Grant funding is allocated through a highly 
competitive and impartial process. Proposals are ranked by a panel of 
technical experts based on an established set of criteria that 
prioritizes projects resulting in real on-the-ground benefits, in terms 
of water conserved, better managed, or marketed, within 24 months from 
the date of award. Under this approach, only the very best projects are 
selected for funding, based on their technical merits.
    The $1 million awarded to six States in August 2005 was part of the 
Water 2025 Challenge Grant Program for Western States. Any State agency 
with water management authority, located in the 17 Western States--
including North Dakota--is eligible to compete for the $1 million. None 
of the $1 million was awarded to North Dakota because nobody from North 
Dakota submitted any proposals for consideration in the Challenge Grant 
Program. We look forward to working with the delegation to increase 
awareness of this program among North Dakota water interests, so that 
they can avail themselves of this competitive program.
    Question. Isn't the first approach to resolving future conflicts 
and water problems to provide the funding in the first place for 
projects, like Garrison Diversion, that are aimed at doing exactly 
that?
    Answer. Rural water projects such as those associated with the 
Garrison project account for much of the new project construction 
within Reclamation. The development of rural water supplies and the 
implementation of the Water 2025 Program are both tools that are 
necessary to prevent crises and conflict over water in the West--and 
both are Departmental priorities. The Department has worked closely 
with the Senate Energy and Natural Resources Committee, on a bi-
partisan basis, to develop legislation to establish a formal rural 
water supply program in the Bureau of Reclamation (S. 895). This will 
enable Reclamation, in cooperation with States and rural communities, 
to better plan for and prioritize rural water supply projects. In 
recent years, we have worked closely with the State of North Dakota to 
implement the Dakota Water Resources Act. Despite the tight budget 
climate that we face, Reclamation has dedicated a significant amount of 
funding to this and other rural water supply projects indicating that 
completion of projects to meet the water supply needs of rural 
communities continues to be a priority.
    Reclamation is responsible for delivering water and power 
throughout the 17 Western States, with a limited amount of Federal 
funding. Therefore, geographically broad-based efforts that leverage 
limited Federal dollars--such as the Water 2025 Program--are also 
essential to preventing conflicts and crises over water throughout the 
West.
    Through the Water 2025 Challenge Grant Program, Federal funding is 
leveraged through cost-shared grants that are awarded on a competitive 
basis to eligible applicants in any of the 17 Western States--including 
North Dakota. Those eligible include irrigation and water districts, 
Western States, tribal water authorities, and other local entities with 
water delivery authority. The grants support projects that improve 
water conservation and efficiency through the modernization of existing 
water delivery facilities, and projects that involve water marketing. 
These types of projects are essential to meet competing demands for 
water, even in areas where new storage projects have been approved.
                                 ______
                                 
                Questions Submitted to John W. Keys III
            Questions Submitted by Senator Pete V. Domenici

    Question. Are there other appropriate means for Reclamation to 
address drought conditions?
    Answer. Public Law 102-250, the Reclamation States Emergency 
Drought Relief Act of 1991, as amended, is not the only program 
Reclamation uses in addressing drought issues. Title I of the Act, used 
for responding to emergency needs, expired on September 30, 2005. The 
Water Conservation Field Service Program and the Water 2025 Initiative 
are examples of programs that are designed to prevent crisis and 
conflict over water in the West through advanced preparation and water 
management improvements. The Drought Act is a complimentary program to 
Water 2025. Proactive tools like this are critical because water 
shortages based on an imbalance between supply and demand, even in non-
drought years, should catch nobody by surprise--they are inevitable. 
Even though we don't know when and where water supply disruptions will 
hit, we know they will happen. Short-term response actions are highly 
visible and important, but allocating our resources to longer-term, 
proactive, preventive efforts, such as through creating local drought 
management plans or the type of targeted actions envisioned by the 
Water 2025 program, will ultimately have more of an impact to 
alleviating the effects of droughts than short-term, last-minute fixes.

         DESALINATION AND ADVANCED WATER TREATMENT TECHNOLOGIES

    Question. The U.S. Bureau of Reclamation manages a diverse water 
treatment research program funded through 5 budget items including 
Reclamation's Research and Development Budget, Water 2025 and the Yuma 
Desalting Plant.
    By the end of fiscal year 2006, the Tularosa Desalination Facility 
will be complete. These programs have the potential to expand the 
Nation's water supplies and contribute to solving numerous current 
Reclamation challenges including providing water for rural communities, 
reducing concentration of salt and selenium in irrigation return flows, 
improving endangered species habitat and providing increased supplies 
for all water uses in the United States.
    This huge potential benefit is dramatically undermined by the 
seeming lack of a coherent strategy with clear goals for the Interior 
sponsored activities, integration of the multiple programs within 
Reclamation and cooperation with other agencies including the United 
States Geological Survey, the Department of Energy, the Office of Naval 
Research, etc.
    Answer. We are developing a strategy which we feel addresses the 
concerns you have raised. It is undergoing the administration's review 
and upon completion, we will share the strategy with the Congress.
    Question. Does a strategy for desalination and related research 
exist?
    Answer. Yes, Reclamation has a draft strategy for advanced water 
treatment technologies.
    Question. What is the strategy?
    Answer. We are working within the administration to finalize 
development of our proposed strategy and would be glad to fully brief 
your office on it when it is complete.
    Question. Can/will Reclamation participate in multi-agency 
activities to coordinate research funded through Federal, State and 
private investment?
    Answer. Yes, we are currently coordinating our research efforts 
with the Interagency Consortium, Water Reuse Association and 
Desalination Task Force, among others. We have asked the National 
Academies to become engaged with us and provide further definition on 
roles of the Federal, State, and private sector research investments. 
Furthermore, Reclamation's Science and Technology program, which 
coordinates all of Reclamation's research and development activities, 
has a strong track record of coordinating with other research bodies to 
ensure prioritization of research, and to avoid redundancy.
    Our participation with the Office of Naval Research in the 
development of the Emergency Unit for Water Purification (EUWP) and 
testing at the Tularosa facility allowed us to successfully deploy the 
EUWP after hurricane Katrina to the Biloxi Regional Medical Center. We 
provided highly purified water to the hospital and later treated water 
from the city's municipal system until the city's system was certified 
safe by the State.
    Question. Can you assure me that the Tularosa facility will be 
completed this fiscal year within the budget provided by Congress for 
fiscal year 2006?
    Answer. Yes, the Tularosa facility is scheduled to be completed in 
January of 2007 utilizing the fiscal year 2006 appropriations in 
accordance with the administration's fiscal year 2007 budget request.
    Question. It has always been my intention that the Tularosa 
Desalination Test Facility be operated by a university in the southern 
New Mexico region and be positioned as the Nation's premier location 
for inland desalination and concentrate disposal research and 
development. The Bureau of Reclamation promised me a detailed strategy 
document by February of this year in which this role would be well 
articulated. I have yet to receive that document and feel that the 
Bureau is remiss in fulfilling their promise. Does this strategy 
document now exist and does it anticipate this appropriate role for 
Tularosa by the end of calendar year 2006?
    Answer. The mission of the Tularosa Desalination Test Facility is 
to be the intellectual powerhouse that attracts outstanding researchers 
to work on developing cost effective, efficient desalination 
technologies that can be applied to brackish and impaired ground 
waters--resulting in new supplies of usable water for municipal, 
agricultural, industrial, and environmental purposes.
    We have developed a Business Plan for the Tularosa facility and are 
working to finalize it. We plan to meet with your office when it is 
complete.
    Question. Additionally, the administration's budget appears to be 
inadequate to provide funding to operate and underwrite research at the 
facility in fiscal year 2007. How do you intend to undertake the 
research program outlined to my office with the current inadequate 
resources?
    Answer. We believe that adequate budget for start-up, operation, 
maintenance, and research has been requested in the fiscal year 2007 
President's budget within the Water 2025 program. The request will 
cover operation, maintenance, and will provide funding for research at 
the facility and elsewhere.
    Question. It appears that USBR does not intend to undertake its 
role as the Nation's central research organization in desalination and 
reuse research given the current budget proposal. Has the Department of 
Interior decided to abandon this core competency?
    Answer. The Department is committed to maintaining Reclamation's 
advanced water treatment research efforts with emphasis in resolving 
inland advanced water treatment issues and cost reduction through 
applied research, while ensuring that our research efforts are 
undertaken strategically, in the context of overall research and 
development needs in the water area.
    Our fiscal year 2007 budget requests of $5,235,000 for advanced 
water treatment research, is to continue the pursuance of expanding 
useable water supplies. The request is divided among the internal and 
external Research and Development programs as follows: Desalination and 
Water Purification Research program (external), $25,000; Title XVI 
(external), $750,000; Water 2025 (external), $2,700,000; Colorado River 
Basin Salinity Control program, Title I (internal), $760,000; and the 
Science and Technology program (internal), $1,000,000.
    Question. When will Reclamation be prepared to issue the call for 
proposals for the management contract for the Tularosa Desalination 
Facility?
    Answer. We expect to be in a position to issue the Request for 
Proposals for the management contract of the facility by late summer 
2006. Reclamation will have a managing entity on board in ample time 
for the opening of the facility.

                 TITLE XVI WATER RECLAMATION AND REUSE

    Question. The budget request seeks $10.1 million for Title XVI 
projects. In light of the current backlog of needs, how was this 
request determined to be adequate and appropriate?
    Answer. The President's request of $10.1 million for fiscal year 
2007 is about $100,000 less than the amount requested for fiscal year 
2006 for Title XVI. As in fiscal year 2006, the fiscal year 2007 budget 
request includes those eight construction projects that were included 
in the President's request in prior years. We continue to be aware that 
the desire for Title XVI funding is significant. However, Reclamation 
has many demands placed upon it, and we must balance all of our 
priorities within the funding limits we are working with.
    Question. The Bureau was directed to review and report on those 
recycling projects deemed to be feasible under CALFED. To date, there 
has been no report provided to Congress. What is the status of this 
review and why has it not been forwarded to Congress?
    Answer. Reclamation has completed its review of all reports and 
other documentation submitted by project proponents in response to our 
request for information for the report directed by Public Law 108-361; 
we transmitted the report to Congress on April 28, 2006. Of the 
submittals for projects that have not been authorized, 14 (7 each 
associated with SCCWRRS and BARWRP) were nearly complete, but lacked 
elements such as NEPA compliance. While these projects have the 
potential to meet requirements included in Reclamation's 1998 Title XVI 
Guidelines, we do not know how they would rank in priority if the Title 
XVI program were reformed as proposed in our February 28, 2006, 
testimony to the Senate Subcommittee on Water and Power. The remainder 
lacked many required elements. All project proponents have been 
notified of Reclamation's findings.
    Question. What was the Bureau's request for Title XVI program 
funding that was transmitted to OMB as part of the budget formulation 
process?
    Answer. The administration's budget request for Title XVI funding 
in fiscal year 2007 was $10.2 million.
    Question. How were projects selected for funding?
    Answer. For continuity purposes, Reclamation elected to request 
funds for the same projects that were included in the President's 
budget request in fiscal year 2006.
    Question. Were the funding levels for each project determined to be 
adequate?
    Answer. The funding level for each project was determined based on 
the amounts requested in prior years and the construction schedule of 
the project sponsors. We feel these levels are adequate given the many 
competing demands which are worthy of funding by Reclamation.
    Question. The Title XVI program was established as a way to 
increase water supplies in the West by recovery of water that otherwise 
would have been wasted. Reclamation has never been a big proponent of 
this program. Yet it seems to be a natural fit with Reclamation's role 
of providing water and power to the West. How does Reclamation believe 
this program could be modified so that OMB and Reclamation would be 
willing to significantly increase budget resources for this program?
    Answer. Reclamation discussed potential modifications to the Title 
XVI program before the Senate Subcommittee on Water and Power on 
February 28, 2006. Reclamation provided a drafting service to Congress 
that would accomplish many of these issues, and the administration is 
developing its own legislation for Title XVI reform that will be 
transmitted to Congress soon. Reclamation believes these proposed 
changes will make the program more competitive, better define project 
eligibility, and more effectively help reduce future conflicts and 
crises over water supplies in the West. Ultimately, our intent is to 
administer this program in conjunction with the Water 2025 program, to 
target resources to the areas of most critical need to proactively 
avert water conflicts by diversifying water supplies.

                            ANIMAS-LA PLATA

    Question. Costs on the Animas-La Plata project increased rather 
dramatically after it was authorized. Will we be able to construct this 
project within the cost ceiling that we provided?
    Answer. Current legislation authorizes the appropriation of such 
funds as are necessary to complete construction of the project 
facilities through 2012. Even though there is no legislated cost 
ceiling, we do have a construction cost estimate. The current base 
construction cost estimate of $500 million, indexed to October 2006 
price levels, is $552 million. With the understanding that features not 
yet awarded will continue to be indexed, Reclamation believes the 
indexed base estimate is adequate to complete the Project, provided it 
is funded at sufficient levels to match construction capability and no 
unforeseen conditions are encountered.
    Question. In the fiscal year 2006 Energy and Water Act we extended 
the timeframe for completion of this project to 2012. Does the funding 
request for this project allow you to meet this schedule?
    Answer. Yes. The fiscal year 2007 budget request is $57.4 million. 
This request will continue construction of two of the Project's major 
features, Ridges Basin Dam and the Durango Pumping Plant and begin 
construction of a third major feature, Ridges Basin Inlet Conduit. The 
Project schedule was recently revised to reflect the funding level for 
fiscal year 2006 and the President's request for fiscal year 2007. 
Assuming funding levels in the out years at the fiscal year 2007 
request level, construction of the Project could be completed by 2012, 
with Project closeout in fiscal year 2013.
                                 ______
                                 
              Questions Submitted by Senator Wayne Allard

                          REPAYMENT CONTRACTS

    Question. Historically, the Reclamation Program does not flow from 
a single organic Federal statute. There have been various acts since 
the 1902 Reclamation Act which have shaped the program. Since 1939, 
every project has been individually authorized with its own terms and 
conditions. Given geographical and geological uniqueness, and varied 
construction dates, we find it difficult to believe all, or any, Bureau 
of Reclamation projects are identical. Therefore we ask: Are all 
repayment contracts identical?
    Answer. No. All repayment contracts are not identical. Contracts 
are a mix of standardized and nonstandardized articles.
    Reclamation has contracting authority under general Reclamation 
law, project-specific authorizations, and even contract- or contractor-
specific authorizations. Variations among these authorities lead to 
variations among repayment contracts. For example, the Reclamation 
Project Act of 1939 allows a maximum repayment period of 40 years 
(Public Law 76-260) (general Reclamation law); the Colorado River 
Storage Project Act allows a 50-year repayment period (Public Law 84-
485); the Central Valley Project Improvement Act specifies a 25-year 
repayment period for irrigation repayment contracts (Public Law 102-
575, Title XXXIV, section 3404(c)) without affecting repayment periods 
for municipal and industrial contracts (project-specific 
authorization); and the Congress specified a 60-year repayment period 
for the Yuma Mesa Irrigation and Drainage District (Public Law 84-394) 
(contractor-specific authorization).
    Numerous other provisions can vary among repayment contracts, 
including the permissible uses of project water, water delivery 
schedules, where water can be used, and who is responsible for 
operating and maintaining facilities. Even among contracts made 
pursuant to the same authority, circumstances may lead to some 
variation, within whatever range the applicable law allows.
    In the early 1960's, Reclamation recognized that there are some 
provisions standard to all contracts. These ``standard contract 
articles'' generally result from requirements of executive orders, 
rulemaking processes, or other laws mandating they appear in contracts.
    Question. Are all projects under the same authorization?
    Answer. All projects are not under the same authorization. While 
many prior to 1939 were under the general authorization provided in the 
Reclamation Act of June 17, 1902, Congress did, in some instances (for 
example the Boulder Canyon Project Act of 1928 (Public Law 70-642) and 
the Central Valley Project, California, and Colorado River Project, 
Texas (1937) (Public Law 75-392)) provide specific project 
authorization. Since 1939, Congress has provided more individual 
project authorizations to construct projects. However, pursuant to the 
Flood Control Act of 1944 (Public Law 78-534), Congress directed that 
project authorizations be approved by an act of Congress.
    Question. Is it the opinion of the Bureau of Reclamation that all 
repayment contracts include ``replacement'' even when it is not stated 
in the contracts?
    Answer. Reclamation contractors are required to pay for their 
appropriate share of operation and maintenance costs (O&M) (Public Law 
63-170, Public Law 69-284, Public Law 76-280, Public Law 97-293). O&M 
costs are generally the costs necessary to operate a constructed 
project and make repairs and replacements necessary to maintain the 
project in sound operating condition during the life of the project. 
One of the standard articles for all contracts is the ``emergency 
reserve fund'' article. This article resulted from the demonstration 
that nearly every district, on occasion, requires funds to meet major 
unforeseen costs of operation and maintenance and repairs and 
replacement of the project works. While the article may be standard, 
the requirements for the fund amount are not. Guidance for the 
establishment of the amount of the reserve fund is found in Reclamation 
policy, which recognizes that not all projects are the same and, 
therefore, the amount of the reserve fund is established accordingly.

                             SAFETY OF DAMS

    Question. The Safety of Dams program provides guidelines and 
financing for dam inspections. Therefore, are pertinent structures 
other than the dam itself given the same importance as the dam? If not, 
why not?
    Answer. The Safety of Dams Program identifies (inspects) and 
evaluates issues and implements modifications to dams, if warranted, to 
reduce risks to the public. Dam inspections are part of a comprehensive 
risk management approach to limiting life safety risks downstream of 
dams owned by Reclamation.
    Many other structures that are part of the Reclamation water 
resource infrastructure do not pose the same life safety risks, even 
though they may be critical features for assuring the delivery of 
project benefits. These structures are evaluated as part of 
Reclamation's Review of Operation and Maintenance (RO&M) Program. The 
RO&M program provides an excellent program for assuring the continued 
operation of Reclamation facilities. The Safety of Dam program 
addressing the potential life safety consequences associated with the 
failure of high- and significant-hazard dams requires a higher standard 
of risk management to assure the safety of persons living downstream of 
those facilities.

                        JACKSON GULCH RESERVOIR

    Question. Jackson Gulch Reservoir, an off-river reservoir, depends 
on a canal system as relevant to the reservoir as the dam. Without the 
canal, the dam would be useless and unnecessary. The Animas-La Plata 
project will also be dependent on a water carriage delivery system. 
What do we need to do to make Bureau of Reclamation realize the 
importance; and/or how can we begin a ``Safety of Connecting 
Structures'' program in order to preserve these systems?
    Answer. Reclamation understands the importance of the canal systems 
and other features that are associated with its dams. These facilities 
are inspected by Reclamation professionals on a regular frequency under 
the Review of Operation and Maintenance Program which was established 
in Reclamation in 1948. Observed structural or operational deficiencies 
are noted and recommendations are categorized based on significance and 
tracked until accomplished. Reclamation retains ownership of these 
facilities, yet the operation, maintenance and replacement of many 
facilities have been transferred to water user entities.
    In the case of Jackson Gulch Reservoir, a feature of the Mancos 
Project, the Mancos Water Conservancy District is responsible for 
operation and maintenance, including repair, of all project facilities, 
as specified in their contract. Repair or replacement of the canal 
system is the responsibility of the District. The long-term viability 
of all Reclamation facilities, especially for transferred works, is 
critically dependant on the local project sponsors meeting their 
obligations to perform required Operations and Maintenance activities.

                       OPERATIONS AND MAINTENANCE

    Question. What is the Bureau of Reclamation's official definition 
of (a) ``operations and maintenance'' and (b) ``operations, maintenance 
and replacement''?
    Answer. Within the context of managing Reclamation's water and 
power infrastructure, the operation and maintenance of project works 
involves a wide range of activities. These operations and maintenance 
activities encompass those actions necessary to achieve continued 
integrity and operational reliability in delivering authorized project 
benefits.
    Additionally, as stated in Reclamation's ``Report to the Congress, 
Annual Costs of Bureau of Reclamation Project Operation and Maintenance 
for Fiscal Years 1993-97'', dated September, 1998, ``the most visible 
maintenance tasks are the major repairs and rehabilitations, equipment 
and facility replacements, and facilities additions that are 
accomplished at every project over time.'' As such, the ``maintenance'' 
term includes ``replacements'' and, therefore, the definitions for both 
(a) and (b) as stated in your question are considered to be synonymous. 
Similarly, for contract administration purposes within Reclamation, 
replacements have always been included as part of maintenance 
responsibilities and costs.

                    BUREAU OF RECLAMATION'S MISSION

    Question. What does the Bureau of Reclamation believe is their (a) 
current mission or purpose, and (b) their future mission or purpose?
    Answer. The current and future mission of the Bureau of Reclamation 
is to manage, develop, and protect water and related resources in an 
environmentally and economically sound manner in the interest of the 
American public. The role of Reclamation is vitally important at this 
critical time, and in the future in the West. As the West experiences 
rapid double digit growth in many areas, the role of Reclamation in 
managing the critical infrastructure in a manner that balances the 
needs of agriculture, municipal and industrial, power users, 
recreation, fish and wildlife and endangered species is essential. In 
the Lower Colorado River Basin for example, the Secretary of the 
Interior is the water master. In that capacity, the Secretary is 
required to balance the needs of the Seven Basin States while 
maintaining the river. This includes river operations, facility O&M, 
water service contracting and repayment, decree accounting, and 
oversight of hydropower activities. Additionally, in Idaho, in the 
Columbia Basin, we are trying to meet the objectives of our projects 
and at the same time recognize the water rights and to enforce or 
actually coordinate and work with the compacts that have been done in 
the basin.

                             REHABILITATION

    Question. Bill language gives evidence to the fact that as recently 
as the 1990's, Reclamation did support rehabilitation. (a) When did 
that change and why? (b) Does the Bureau of Reclamation see 
rehabilitation as currently outside of or futuristically not a part of 
their mission?
    Answer. We believe you may be referring to funding of the 
Rehabilitation and Betterment Program, which was authorized in a 1949 
Act, and amended/supplemented in 1950, 1971, and 1975. Under the 
program, Reclamation water users were able to obtain no-interest loans 
to rehabilitate and improve the Reclamation-owned irrigation facilities 
they operated and maintained. Although still authorized, loan funding 
of that program was discontinued in the mid-1990's (driven by limited 
appropriations at that time) and water users were expected to use their 
own resources or to seek private financing. Private lenders are often 
unwilling to lend to the water users, however, because project 
facilities can not be used as collateral; the United States holds title 
to the facilities.
    As Reclamation's infrastructure continues to age, there will likely 
be a need for increased maintenance and major rehabilitations. 
Reclamation recognizes the importance of a preventive maintenance 
philosophy and the need for ongoing condition assessments of our 
facilities to identify and remediate deficiencies at an early stage. 
Through these efforts and applying effective technology and research in 
these maintenance activities, the service lives of these facilities can 
be lengthened and the need for major rehabilitation efforts delayed 
and/or reduced. Reclamation will continue to work cooperatively with 
water users in addressing these rehabilitation issues. Ultimately, 
local water users are responsible for the operation and maintenance of 
certain facilities (i.e., facilities transferred for operation and 
maintenance responsibility).
    Question. Are the benefits derived from large projects perceived as 
more important than those of small projects and therefore worth 
funding?
    Answer. No. Each project, large or small, has its own merits and 
issues.
    Question. There is potential that projects will be forced to return 
O&M to Reclamation when they cannot fund replacement due to failure. 
What does Reclamation intend to do when projects begin to fail? And 
when this potential situation becomes reality?
    Answer. Return of O&M to Reclamation is a possibility. At this 
point in time, we cannot predict what will occur other than Reclamation 
would examine the causes of failure, the potential consequences to the 
project sponsors and other factors such as the environment, and the 
economic merits of reinvesting in the project. We believe that the loan 
guarantee program as discussed above will reduce the likelihood of O&M 
being returned to Reclamation.

                          REPAYMENT CONTRACTS

    Question. Our repayment contract states that we, the project 
operating entity, are entrusted to and expected to protect the Federal 
interest, i.e. the Mancos Project. Why are we trying to convince the 
Bureau of Reclamation to support our efforts?
    Answer. Reclamation supports the efforts of managing entities to 
protect the Federal investment. In the case of the Mancos Project, the 
existing O&M contract specifies that the Mancos District is responsible 
for the operations and maintenance, including repair, of all project 
facilities.
    Question. Why does Reclamation fear we are trying to ``take away'' 
from their budget? We should both be working toward the same goal.
    Answer. Reclamation consistently supports and is committed to its 
projects as authorized by public law in accordance with legal 
contracts. For example, on the Mancos Project in Colorado, the contract 
between Reclamation and the Mancos Water Conservancy District states 
that the District will be responsible for operation, maintenance and 
rehabilitation of the project facilities rather than Reclamation.
    Question. Very recently it was announced that Reclamation had saved 
several million dollars on a project and were able to lower their 
budget. Was it possible for them to re-route the savings and begin to 
address the rehabilitation problems surfacing? If so, why didn't they?
    Answer. Unless the specific project in the question is named it 
would difficult to comment on how any project savings may have been 
used elsewhere or when the savings would have been realized. 
Reclamation is constrained in how it spends appropriated funds by 
public law and legal agreements. Transferring or reprogramming funds 
between projects is also subject to Congressional guidelines.
                                 ______
                                 
             Questions Submitted by Senator Byron L. Dorgan

                          OVERALL BOR FUNDING

    Question. The administration has written that ``water is the 
lifeblood of the American West and the foundation of its economy.'' Yet 
when the President released his budget earlier this year, he proposed a 
nearly $140 million budget cut for the arm of the government 
responsible for the supply and management of much of that water in the 
West, the Bureau of Reclamation. How will the Bureau of Reclamation 
address the growing water needs of the Western part of this country 
with even less resources than the previous year?
    Answer. We believe the funding level is sufficient to address 
Reclamation's responsibilities related to the growing and changing 
water needs of the West. Through collaboration and partnerships, we 
believe we can stretch limited Federal dollars further. For example, 
part of the funding in fiscal year 2007, is for the Water 2025 program 
that continues to focus on preventing crises and conflicts in the West, 
particularly in the problem areas identified on the Potential Water 
Supply Crises by 2025 illustration, May 5, 2003. The $14.5 million 
request will fund three program components: Challenge grants, water 
system optimization reviews, and research to improve water purification 
technology.
    The $14.5 million includes a request of $9.7 million to continue 
the success of the Water 2025 Challenge Grant Program. The requested 
amount will help bring the funding more in line with the demand and 
with the critical need for projects that will stretch water resources.
    In just 2 years since the inception of the Challenge Grant Program, 
Reclamation has funded 68 Challenge Grants to irrigation and water 
districts and western States, to address western water conflicts before 
a crisis occurs. Grants have been awarded in 16 out of 17 western 
States, potentially saving up to 285,000 acre-feet of water, once the 
projects are fully implemented. An acre-foot of water is enough to 
supply a family of four for a year.
    The $14.5 million requested also includes $2.1 million for water 
system optimization reviews, a new component of Water 2025 to be 
introduced in fiscal year 2007. Funding for system optimization reviews 
will be awarded through a competitive process, much like the Challenge 
Grants. Through water system optimization reviews, Reclamation will 
work with willing irrigation and water districts and western States to 
identify options for maximizing efficiency and improving water 
management.
    Finally, $2.7 million of the Water 2025 funding will be used to 
continue to fund research to improve and decrease the cost of water 
purification technology, including desalination. Water 2025 funding 
will be applied to competitive cost-shared grants for pilot, 
demonstration, and research projects to improve and test water 
purification technology.
    Water 2025 represents one example where Reclamation is leveraging 
its budget to resolve water issues in the West through collaboration 
and partnerships during a time of limited Federal dollars.

                              RURAL WATER

    Question. As you know, my top priority within the Bureau of 
Reclamation's budget is adequate funding for the Garrison project. A 
total of 155,000 acres of Ft. Berthold Indian Reservation land was 
taken for building the second-largest earth filled dam in America, the 
Garrison Dam. The water divided the Reservation down the middle. The 
Federal Government owes this tribe and others in North Dakota for its 
sacrifice for the Nation.
    But this administration's budget once again fails to live up to 
that promise by recommending only $24.21 million for Garrison 
Diversion, a $3.1 million cut over the fiscal year 2006 level of 
$27.311 million. The President's request does not provide the necessary 
funding for the municipal, rural and industrial (MR&I) projects in the 
State. The Dakota Water Resource Act of 2000 authorized $200 million 
for the State MR&I program and $200 million for the Indian MR&I 
program. The President's fiscal year 2007 budget only provides $6 
million for MR&I projects: $3 million for State MR&I and $3 million for 
Indian MR&I. The North Dakota Water Commission has identified a need of 
$36 million for MR&I projects in fiscal year 2007.
    The President's budget proposal woefully funds Garrison Diversion. 
Why is the Federal Government turning its back on its commitments to 
the residents of my State?
    Answer. The administration is not turning its back on the residents 
of North Dakota. The fiscal year 2007 President's budget request 
continues progress on the Garrison Diversion Unit while maintaining 
existing infrastructure and other on-going construction projects 
throughout the agency, during a time of limited Federal dollars.
    Question. As you know, the BOR released its Draft Environmental 
Impact Statement for the Red River Water Supply Project on December 30, 
2005. This draft listed 8 potential alternatives and the BOR had a 60-
day comment period, which was extended until the end of March.
    I want to thank the BOR for holding all the meetings around North 
Dakota to discuss the different alternatives contained within the draft 
plan. The State of North Dakota has identified their preferred 
alternative and it seems like the most feasible and cost effective plan 
put forward.
    This plan would use a combination of the Red River, other ND in-
basin sources, and Missouri River water. The principal feature of this 
option would be a pipeline from the McClusky Canal to Lake Ashtabula 
that would release treated MO River water into the Sheyeene River. The 
pipe would be sized so peak day demands could be met by Lake Ashtabula 
releases. The option would include a biota treatment plant at the 
McClusky Canal and a pipeline to serve industrial water demands in 
southeastern ND. The biota treatment process would use various 
disinfection technologies.
    Unlike the other alternatives, this plan would ``only'' cost $500 
million. I say ``only'' because the other alternatives range from $600 
million to $2.5 billion.
    What, if anything, did the Bureau learn from all the meetings 
around North Dakota regarding this plan?
    Answer. The proposed alternatives would use water sources in North 
Dakota and Minnesota. Public hearings were held in North Dakota and 
Minnesota to gather input on all eight (No Action and seven action) 
alternatives evaluated in the draft EIS.
    The formal input received at these hearings can be categorized as 
follows: (1) support for the project; (2) support for the State's 
preferred alternative; (3) opposition to the project; (4) opposition to 
the State's preferred alternative; (5) opposition to interbasin water 
transfer; (6) concerns with transfer of non-native biota from 
interbasin water transfers; (7) concern that the identified need for 
water is too large; (8) concern that the Red River Valley residents 
live within their means (more water conservation, more drought 
contingency, more use of in-basin water sources); (9) concern expressed 
by Three Affiliated Tribes and Standing Rock Sioux Tribes that other 
features of GDU, specifically Indian MR&I, be completed before funding 
construction of any Red River Valley Water Supply feature(s); (10) 
concern expressed by tribes that diversion would negatively impact 
their water rights.
    Question. Are you finished taking comments on this? If not, how 
long has the comment period been extended?
    Answer. No, the comment period has been extended. The additional 
time will permit Reclamation and the State of North Dakota the 
opportunity to work cooperatively with the Environmental Protection 
Agency (EPA) to address and resolve issues raised by EPA.
    Question. Is it still your intention to publish the final EIS in 
December of this year?
    Answer. Yes. Reclamation plans to distribute the final EIS by 
December 31, 2006.
    Question. From a preliminary standpoint, is the Bureau looking at 
any one alternative in particular?
    Answer. No. We are going to evaluate all comments and data before 
identifying a preferred alternative.
    Question. Is the State's alternative the most likely at this point 
and if so is the administration already engaging the Canadian 
government on potential concerns regarding the Boundary Waters Treaty 
Act? I know it may be premature, but I do not want the project held up 
based on unsubstantiated allegations regarding biota transfers.
    Answer. Until all comments have been received and evaluated it is 
premature to assess any one of the alternatives as ``most likely.'' 
Canada has participated in technical discussions on the Red River 
Valley Water Supply project but has not been engaged formally at this 
time. Reclamation has briefed the State Department on the issues 
associated with treaty compliance.
    Question. And to that point, has the Canadian Government submitted 
any comments on the proposals? More specifically, has the Canadian 
Government indicated any alternative to what the BOR has proposed?
    Answer. Although Canada was invited to participate on the Red River 
Valley Water Supply Needs and Options studies they declined to be a 
formal member of the team. Manitoba and Environment Canada participated 
as observers but did provide technical comments during the study 
process and on the draft Needs and Options report. Both Manitoba and 
Environment Canada are expected to comment on the draft EIS. At this 
time, Canada has not proposed any new alternatives. Their comments to 
date have made it clear that they oppose any interbasin water transfer, 
are concerned about potential transfer of non-native biota associated 
with a transfer of Missouri River water, and would like a reference to 
the International Joint Commission.
                                 ______
                                 
            Questions Submitted by Senator Dianne Feinstein

                  FUNDING FOR FRIANT--NRDC SETTLEMENT

    Question. The Department of the Interior is a party to the 
negotiations to settle the long standing litigation over the San 
Joaquin River. I'm aware that settlement discussions are confidential 
and have not been completed, but I understand that the Justice 
Department has told the Court that the Department expects negotiations 
to be substantially completed by mid-April.
    If the Justice Department is correct in its assessment and the 
parties' settlement is approved by the Court, can we assume that you 
will begin your San Joaquin River restoration activities as soon as 
possible, including in fiscal year 2007, and if so, how would the 
Bureau fund such activities? A Settlement wasn't anticipated when the 
Bureau drafted its fiscal year 2007 budget request, so the request 
doesn't include funding for fiscal year 2007 restoration actions.
    Answer. As you know, settlement discussions are continuing. If a 
settlement is eventually reached and if it is approved by the Court, 
Reclamation could be able to begin initial activities associated with 
the restoration activities outlined in the settlement using a portion 
of the Central Valley Project Improvement Act (CVPIA) Restoration Fund 
which has been identified in the 2007 budget request for use on San 
Joaquin River activities.
    Question. What source of existing revenues (i.e. the Judgment Fund, 
CVPIA Restoration Funds, the Friant Surcharge, Cal Fed, or other Energy 
and Water appropriations) can be applied to this effort in fiscal year 
2007?
    Answer. There are a number of possible sources of funding. This is 
a matter under consideration in the confidential settlement 
discussions.
    Question. As you know, Congressman Radanovich, Governor 
Schwarzenegger and I have all urged the Bureau to reach a settlement of 
this case. Now that the parties appear close to reaching an agreement, 
will implementation of a San Joaquin River settlement be a future 
funding priority for the Bureau?
    Answer. The Department appreciates the effort that all of the 
parties to the litigation have committed to the settlement 
negotiations, and we remain hopeful that a settlement will ultimately 
be reached. Establishing funding priorities in any given year will, of 
course, require discussions with the Office of Management and Budget, 
as well as subsequent acts of Congress.

                         CALFED STORAGE STUDIES

    Question. I strongly believe that with a growing population, global 
warming, and other challenges, California greatly needs new water 
supply. I understand that your current schedule is to finish the last 
of the four CALFED storage feasibility studies, for the Upper San 
Joaquin storage project, in July 2009.
    Is there anything that I can do to get this study finished faster? 
If there is any potential delay in getting the approval of other State 
or Federal agencies, will you let me know right away so I can try to 
get the process moving?
    Answer. We have been reviewing our schedules and believe that there 
may be opportunities to expedite the investigation such that all four 
studies including the Upper San Joaquin storage investigation could be 
completed by the end of 2008. These opportunities are dependent on the 
results of on-going technical studies as well as the level of 
cooperation we receive from our State partners and other State and 
Federal CALFED agencies and stakeholders. Based on our current schedule 
of tasks to complete the investigations, additional funding above the 
budget request is not required at this time to support expediting the 
schedule. We hasten to add that completion of these studies does not 
mean that the projects will be ready to begin construction; these are 
merely documents that will aid the Federal Government in determining 
whether these proposed projects are feasible and how they fit into 
broader nationwide priorities for investment.

                      ENVIRONMENTAL WATER ACCOUNT

    Question. The administration asked for $10 million for the 
environmental water account in its fiscal year 2007 CALFED funding 
request. How critical is this environmental water account funding for 
avoiding or minimizing harm to the Delta smelt and other pelagic fish 
while delivering water to farmers and cities to the South?
    Answer. The Environmental Water Account (EWA), authorized in the 
2004 CALFED Bay-Delta Authorization Act, is a pilot water management 
program, and is integral to making balanced progress in implementing 
the CALFED program. It is designed to help protect and increase 
survival, and aid in the recovery of at-risk native fish species of the 
Bay-Delta, including the Delta Smelt, by strategically implementing 
pumping curtailments at the Central Valley Project's Tracy Pumping 
Plant and the State Water Project's Banks Pumping Plant. Whether the 
actions of the EWA do contribute to the recovery of at-risk native fish 
populations is a question that remains unanswered.
    Given the current situation regarding the decline of pelagic fish 
populations and ongoing investigations into the reasons for this 
decline, the EWA agencies, as well as many other concerned entities, 
have made this matter a high priority. A multi-year science effort was 
initiated in 2005 by the agencies involved in the Interagency 
Ecological Program to determine the causes of the Pelagic Organism 
Decline (POD) in the Delta. Part of this effort includes identifying 
the role, if any, that water project operations in the Delta might have 
had in the POD.
    Additionally, the CALFED Science Program has already initiated the 
development of fish population models for the Delta that will increase 
our understanding of how certain actions in the Delta affect fish 
populations. The results of these efforts will likely increase our 
understanding of how effective the EWA program has been in helping 
Delta fish populations. Because of the current situation in the Delta, 
it is critical to have adequate fiscal year 2007 funding for the pilot 
phase of the EWA to help ensure sufficient water assets are acquired 
for fish protection and water supply reliability purposes.

            LOWER TUSCAN AQUIFER WATER SUPPLY INVESTIGATION

    Question. I have a strong interest in the Bureau of Reclamation 
supporting locally-led efforts to investigate the Lower Tuscan 
groundwater formation, which Congress funded with $2 million in the 
fiscal year 2006 Energy and Water Development Appropriations bill. 
Preliminary study results suggest the Lower Tuscan may hold as much as 
30 million acre-feet of water.
    While the potential water supply benefits of the Lower Tuscan 
formation appear to be substantial--with early California Department of 
Water Resources estimates forecasting as much as several hundred 
thousand acre-feet in new water available for agricultural, 
environmental, and municipal uses--additional technical work must be 
completed to determine how this resource can best meet regional and 
statewide water supply needs.
    Commissioner Keys, I want to thank you for your support for this 
critically important initiative. I understand that the Bureau is 
working on a cooperative agreement with Glenn-Colusa Irrigation 
District to move forward on this project.
    Can you update the committee on the Bureau's progress in moving 
forward on the Lower Tuscan work?
    Answer. Reclamation is currently working with Sacramento Valley 
water interests, in particular with Glenn-Colusa Irrigation District 
(GCID), to develop a cooperative agreement that will include studies 
and investigations of the possibility of integrating the Lower Tuscan 
Formation into Sacramento Valley surface water supplies. This agreement 
will be a counterpart to the agreement between GCID and the Department 
of Water Resources for Proposition 50 funding for these same 
activities.
    I would also point out that new groundwater supplies, while 
potentially representing a short-term expansion of water supply, and 
offering potential for conjunctive use (groundwater storage of surface 
waters), must be carefully managed to avoid groundwater mining. New 
groundwater supplies need to be part of a long-term, sustainable 
strategy for water use, and should not be used as a one-time windfall.
    Question. When do you anticipate finalizing the cooperative 
agreement?
    Answer. We expect to receive a completed proposal from GCID no 
later than June 14, 2006, and to enter into a Cooperative Agreement 
with GCID prior to the end of fiscal year 2006.

                  CALFED WATER USE EFFICIENCY PROJECTS

    Question. I understand that the Bureau is now accepting grant 
applications from agricultural and urban water districts for $2.4 
million from Congress's fiscal year 2006 appropriation for CALFED water 
use efficiency projects. Can you tell me about the types of projects 
you expect to fund, and how much water they could save to be used for 
other purposes?
    Answer. Funding is available for agriculture and urban projects. 
Applicants for the CALFED Water Use Efficiency Grants Program must be 
local public agencies involved with water management (cities, counties, 
joint power authorities, or other political subdivisions of California) 
or incorporated mutual water companies.
    To be eligible for financial assistance, a proposed activity must 
have a defined relationship to CALFED objectives. These objectives 
include: improving and increasing habitats, improving ecological 
functions for ecosystem quality, providing good water quality, and 
reducing the mismatch between the Bay-Delta water supply and its 
current and projected uses.
    Proposals that will be considered for funding are agricultural 
projects including canal lining, spill and tailwater recovery systems, 
automated canal structures, and evaluation of improved water 
efficiency, and urban projects that satisfy the implementation of the 
urban Best Management Practices, such as, residential plumbing 
retrofits, Commercial Industrial and Institutional water conservation 
efforts (water used primarily by hotels, restaurants, commercial/office 
buildings, manufacturers, and public service facilities), large 
landscape conservation, metering, and system audits.

                 WATER RECYCLING PROJECTS AND TITLE XVI

    Question. In 1999, California water districts submitted the San 
Francisco Bay Area Regional Water Recycling Program feasibility study 
to the Bureau of Reclamation. This regional plan consisted of 19 
projects that if constructed would produce 125,000 acre feet of 
recycled water by 2010. In 2001, California water districts submitted 
the Southern California Comprehensive Water Reclamation and Reuse 
feasibility study to the Bureau. If constructed, the 34 projects in 
this regional plan would generate 451,000 acre feet of recycled water. 
The Bureau has been reviewing these studies for the past 7 and 5 years, 
respectively. Is this the typical time it takes to review Title XVI 
feasibility studies?
    Answer. The Bay Area Regional Water Recycling Program (BARWRP) 
study was submitted to Reclamation in 1999 by the local water agencies. 
The Southern California Comprehensive Water Reclamation and Reuse Study 
(SCCWRRS) was completed by Reclamation, in cooperation with local water 
agencies, in 2001. The reports documenting these studies were submitted 
to Congress, which completed Reclamation's responsibility under 
Sections 1610 and 1606 (respectively) of Title XVI, Public Law 102-575. 
These studies were regional and programmatic in nature and were not 
intended to determine the feasibility of individual projects; 
therefore, Reclamation has not been reviewing these studies or specific 
projects identified in either of these reports to determine their 
feasibility during the past 7 and 5 years, respectively.
    However, Public Law 108-361 required Reclamation to determine 
whether subsequent reports and other documentation submitted by 
individual project proponents met the requirements of the 1998 Title 
XVI Guidelines for determining project feasibility, and this review has 
now been completed and provided to Congress.
    Question. Is it true the Bureau has not yet completed its review 
process?
    Answer. Reclamation has completed its review of the reports and 
other documentation submitted by project proponents in response to our 
request for information for the report directed by Public Law 108-361. 
The report was transmitted April 28, 2006.
    Question. When can both Congress and the projects sponsors expect 
to receive the Bureau's completed review?
    Answer. The report was transmitted April 28, 2006.

                          SUBCOMMITTEE RECESS

    Senator Domenici. Anyway, with that sad tale, we are in 
recess.
    [Whereupon, at 11:10 a.m., Tuesday, March 28, the subcom- 
mittee was recessed, to reconvene subject to the call of the 
Chair.]
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