[Senate Hearing 110-571]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-571
 
                       MISCELLANEOUS WATER BILLS

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                   ON
                                     

                           S. 2842                               S. 3189

                           S. 2974                               H.R. 3323



                                     

                               __________

                              JULY 8, 2008


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


                     U.S. GOVERNMENT PRINTING OFFICE
45-191 PDF                 WASHINGTON DC:  2008
---------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001

               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana          JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           BOB CORKER, Tennessee
KEN SALAZAR, Colorado                JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
             Judith K. Pensabene, Republican Chief Counsel
                                 ------                                

                    Subcommittee on Water and Power

                  TIM JOHNSON, South Dakota, Chairman

BYRON L. DORGAN, North Dakota        BOB CORKER, Tennessee
RON WYDEN, Oregon                    LARRY E. CRAIG, Idaho
MARIA CANTWELL, Washington           JIM DeMINT, South Carolina
KEN SALAZAR, Colorado                JOHN BARRASSO, Wyoming
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
JON TESTER, Montana                  JIM BUNNING, Kentucky

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



                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Allard, Hon. Wayne, U.S. Senator From Colorado...................     4
Barrasso, Hon. John, U.S. Senator From Wyoming...................     2
Gimbel, Jennifer, Director, Colorado Water Conservation Board, 
  Denver, CO.....................................................    30
Johnson, Hon. Tim, U.S. Senator From South Dakota................     1
Johnson, Robert W., Commissioner, Bureau of Reclamation, 
  Department of the Interior.....................................     7
Keppen, Dan, Executive Director, Family Farm Alliance, Klamath 
  Falls, OR......................................................    20
Long, Bill, President, Southeastern Colorado Water Conservancy 
  District, Las Animas, CO.......................................    27
Salazar, Hon. Ken, U.S. Senator From Colorado....................     2
Tester, Hon. Jon, U.S. Senator From Montana......................     1

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    39

                              Appendix II

Additional material submitted for the record.....................    53


                       MISCELLANEOUS WATER BILLS

                              ----------                              


                         TUESDAY, JULY 8, 2008

                               U.S. Senate,
                   Subcommittee on Water and Power,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:35 p.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Tim Johnson 
presiding.

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

    Senator Johnson. I call to order this hearing before the 
Water and Power Subcommittee. It is my pleasure to welcome 
everyone here this afternoon. Today's hearing involves four 
separate bills that are pending before the subcommittee.
    These bills cover very different subjects in the area of 
water resources management.
    S. 2842, introduced by Senator Reid, addresses aging 
infrastructure issues within the Bureau of Reclamation.
    S. 2974, introduced by Senators Allard and Salazar, would 
authorize a municipal water supply project in Colorado known as 
the Arkansas Valley Conduit.
    S. 3189, introduced by Senator Bingaman and Ranking Member 
Domenici would amend existing legislation authorizing the Upper 
Colorado and San Juan River ESA recovery programs.
    H.R. 3323 would authorize a title transfer for facilities 
associated with a Reclamation Project in Southern California.
    These bills all represent matters which are of extreme 
importance to different areas of the country. While time is 
beginning to run short in this Congress, the subcommittee will 
look closely at these bills and work with the sponsoring 
members to try and make progress toward enactment.
    Senator Corker, the subcommittee's ranking member, could 
not be with us this afternoon. So let me turn to the other 
Senators on the subcommittee and ask for their opening 
comments.
    Senator Tester.

          STATEMENT OF HON. JON TESTER, U.S. SENATOR 
                          FROM MONTANA

    Senator Tester. Thank you, Mr. Chairman. I appreciate your 
holding this hearing. I want to welcome Commissioner Johnson 
back to the Senate.
    Water is incredibly important. It's incredibly important 
for everybody. So to say it's more important in the West than 
anywhere else would probably be a bit biased, but what the 
heck. It's very important in the West.
    I can tell you that there are literally hundreds of water 
projects, some that the Bureau of Rec has oversight over, some 
they don't. But there's just a ton of projects out there that 
have been built for going on almost 100 years that are wore 
out. You know, our forefathers did a good job of developing our 
infrastructure. Develop things like irrigation projects and 
water for towns and dams for flood safety and the list goes on 
and on and on.
    But now it is long past time, in my opinion, that we take a 
very proactive stand on infrastructure, particularly water 
infrastructure in this country, and make an investment that I 
think we are in dire need of. We have several projects in the 
State of Montana that are going to have devastating impacts on 
the people of the State and quite honestly on some of our food 
supply if they are not dealt with sooner rather than later.
    So with that, I look forward to the testimony of 
Commissioner Johnson, in particular and I look forward to 
asking a few questions.
    Senator Johnson. Senator Barrasso.

         STATEMENT OF HON. JOHN BARRASSO, U.S. SENATOR 
                          FROM WYOMING

    Senator Barrasso. Thank you very much, Mr. Chairman. I just 
want to say that the bill introduced by Chairman Bingaman and 
Ranking Member Domenici, S. 3189, is very important to the 
people of the State of Wyoming. The Upper Colorado River 
Recovery Implementation Program has been very successful in 
providing workable solutions to provide water resources to 
Wyoming residents while at the same time providing protection 
for endangered fish.
    Funding for this Fish Recovery Program has built fish 
streams, fish passages, hatcheries, flooded bottom lands and 
reservoirs to help these endangered fish in the Upper Colorado 
River. Providing additional authority to repair and to maintain 
these facilities is necessary to keep Wyoming in compliance 
with the Endangered Species Act and to keep water flowing to 
our constituents. So the passage of this bill is important to 
the ability of Wyoming to continue to develop our compact of 
portioned water resources.
    I do want to make sure that all affected parties, including 
the rate payers, have their concerns addressed. So I urge the 
committee to address those concerns that may be outstanding 
within the bill. Thank you, Mr. Chairman.
    Senator Johnson. Senator Salazar.

          STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR 
                         FROM COLORADO

    Senator Salazar. Thank you very much, Chairman Johnson. 
It's always an honor to see you at the helm of this committee 
and for your great work on behalf of the people of South Dakota 
and this country. I want to thank you for holding this hearing.
    I wanted to, in particular welcome my colleague from 
Colorado, Senator Wayne Allard, to testify on behalf of a bill 
that he's been championing for a very long time. It's a bill 
whose time has come. I am very hopeful that notwithstanding 
Commissioner Johnson's testimony which will probably be in 
opposition to the bill, that this committee in a bipartisan 
basis in this U.S. Senate and this U.S. Congress will roll the 
Bureau of Reclamation and that ultimately we are going to get a 
conduit bill out to the small communities downstream of Pueblo, 
Colorado.
    The Arkansas Valley Conduit was originally authorized in 
1962 under the Frying Pan Arkansas Project. This proposed a 130 
mile conduit from Pueblo Dam to the city of Lamar will deliver 
water to numerous municipal water providers to serve an 
estimated 50,000 individuals in 22 towns throughout rural 
Southeastern Colorado. A part of what I have called in the past 
here, Chairman Johnson, for the U.S. Senate, part of that 
forgotten America that really needs to have an injection of new 
opportunities on this clean water supply will help this part of 
Colorado.
    The reason that the conduit has never been built is simple. 
The original authorization called for local communities to bear 
100 percent of the construction costs, an arrangement that has 
never proven feasible for this rural, economically depressed 
area of my State. Today construction of the conduit is 
estimated to cost $300 million and taking until 2021 to 
complete.
    While this is a substantial price tag, the project will 
without question yield significant long term benefits to the 
residents of Southeastern Colorado. As I have said many times 
before water is the life blood of the communities in our arid 
West. Water capacity is an essential prerequisite to our 
community. I've put the rest of my statement in the record.
    [The prepared statement of Senator Salazar follows:]

   Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado

    Chairman Johnson and Ranking Member Corker, thank you for holding 
this legislative hearing today. I am looking forward to discussing the 
bill that Sen. Allard and I have been working on with the Southeastern 
Colorado Water Conservancy District to make the Arkansas Valley Conduit 
a reality in southern Colorado.
    The Arkansas Valley Conduit (AVC) was originally authorized in 1962 
under the Fryingpan-Arkansas or ``Fry-Ark'' Project. This proposed 130 
mile conduit from Pueblo Dam to the city of Lamar will deliver water to 
numerous municipal water providers to serve an estimated 50,000 
individuals in 42 towns throughout rural southeastern Colorado.
    The reason that the conduit has never been built is simple: the 
original authorization called for local communities to bear 100 percent 
of the construction costs--an arrangement that has never proven 
feasible for this rural, economically depressed area of my state. 
Today, construction of the AVC is estimated to cost $300 million and 
take until 2021 to complete. While this is a substantial price tag, the 
project will without question yield significant long-term benefits to 
the residents of southeastern Colorado. As I have said many times 
before, water is the lifeblood of communities in the arid West. Water 
capacity is an essential prerequisite to economic development. The 
conduit will provide up to 25,000 acre-feet of high-quality water that 
will require minimal treatment to reach drinking standards. This new 
source of potable water will allow these communities to reduce existing 
water treatment costs and better conserve and manage their existing 
ground-water resources and infrastructure. This regional, large-scale 
approach to water delivery is a proven cost-savings practice that will 
benefit these communities for many decades to come.
    Over the past several years community leaders from southeastern 
Colorado have worked closely with the Colorado congressional delegation 
and the Bureau of Reclamation to explore potential cost-share 
arrangements to make the financial burdens incurred by the AVC bearable 
to these local communities. The bill under consideration today, S. 
2974, is the product of some creative thinking and a great deal of hard 
work, and represents a novel approach to funding a large-scale water 
project. The Fry-Ark is unique among Reclamation water projects in that 
it is currently generating significant revenue from so-called ``excess 
capacity'' contracts for storage of non-Fry-Ark water in Fry-Ark 
facilities. The original Fry-Ark authorization permits the use of 
revenues from the project for construction of authorized project 
features. This bill would direct these excess-capacity revenues be used 
to fund the lion's share of the local contribution from a 65-35 
federal-local cost share for the project.
    I am proud of this legislation and the hard work by many 
stakeholders to bring it before our committee today. I am also proud of 
the leadership and adept management of the Fry-Ark project by the 
Southeastern Water Conservancy District, which has positioned the 
project for this long-awaited expansion. I am hopeful that this bill 
will become a model for future endeavors. The conduit will make a real 
difference in the lives of those who call the Arkansas River Valley 
their home and I look forward to discussing this bill with our 
panelists.
    Thank you, Mr. Chairman.

    Senator Salazar. But I want to make just one other quick 
comment and that is there have been a number of partners, 
Chairman Johnson, who've been working on this legislation for a 
very, very long time. It is sometimes unheard of that a local 
community that is as poor as the communities downstream of 
Pueblo would go and ask an agency of the State of Colorado, the 
Colorado Water Conservation Board, for a loan of some $80 
million in order to be able to move forward with this project 
and to be able to provide a local share as a contribution to 
making this conduit a reality.
    Senator Allard and I held meetings and hearings on this 
subject over the last several years. It's something which he 
and I are 100 percent behind. I'm very hopeful that this 
committee will be supportive of our efforts and ultimately that 
we will get this through the U.S. Senate today.
    Senator Johnson. Welcome Senator Allard. Please proceed.

         STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR 
                         FROM COLORADO

    Senator Allard. Mr. Chairman, thank you for the welcome. I 
trust you had a good Fourth of July. I relish the opportunity 
of being able to work with you both as a member in the House on 
the AG Committee and then over here on issues that are 
important to the West. I consider South Dakota part of that.
    So I also want to welcome the other members that are here 
and your support and diligence in dealing with those issues 
that are important to many of us as it involves water. I'm 
sorry to see that the Ranking Member Corker didn't make it 
here, but understand why. I appreciate your recognizing that in 
the comment.
    I just want to thank you, Mr. Chairman and Ranking Member 
Corker for holding this important hearing and for allowing me 
the opportunity to appear before you today. I'm here to testify 
in support of S. 2974, that's the Arkansas Valley Conduit Act 
of 2008.
    As members of this subcommittee know water is one of our 
most precious resources. This is especially true in the West 
where some areas continue to struggle through a multi-year 
drought. The backbone of Colorado, like South Dakota and 
Tennessee, is found in our small and rural communities.
    Unfortunately for our rural communities things that folks 
in the metropolitan area take for granted can be difficult to 
come by. This should not include safe, clean drinking water. 
That's why I have long worked to enact legislation that would 
help the Arkansas Valley Conduit become a reality.
    I should note that the Arkansas Valley Conduit was 
originally authorized in Congress in 1962. My esteemed 
colleague from Colorado had mentioned that. So it's been in the 
works for a long time.
    Something that's been very important to that part of the 
State become much, much more important recently because of the 
tougher laws that have been passed for clean water and while we 
recognize the quality of water that we have to meet public 
health standards for those communities. So we've been working 
on it for over forty years as a part of the Frying Pan Arkansas 
Project. The original Fry-Ark Project authorizing legislated 
granted the Secretary of the Interior the authority to 
construct the Arkansas Valley Conduit.
    This legislation simply reauthorizes that authority and 
adds a workable cost share provision. Due to the authorizing 
statues lack of cost share provision and Southeastern 
Colorado's depressed economic status, the conduit was never 
built. Until recently there was no urgent need for it. The 
region was fortunate to enjoy an economical and safe 
alternative to the pipeline transportation of Project Water and 
that was the Arkansas River itself.
    Unfortunately it is no longer the case. While the Federal 
Government has continued to strengthen its unfunded water 
quality standards these communities have fallen further and 
further behind in obtaining those standards. As far back as 
1950 the Bureau of Reclamation determined that the quality of 
local drinking water supplies were unacceptable. Clear back to 
1950.
    In response to a number of water providers falling out of 
compliance with existing EPA water quality standards, the local 
communities formed a committee to evaluate alternative 
approaches to solving this problem. The Arkansas Valley Conduit 
was found to be the most viable solution. However, local 
communities are unable to fund the conduit under existing 
circumstances.
    This legislation is essential if we are to bring local 
water providers into compliance with Federal water quality 
standards. It will finally provide a long term solution to the 
region's water quality concerns. The Arkansas Valley Conduit 
will deliver fresh, clean water to 16 cities and 25 water 
agencies in Bent, Crowley, Kiowa, Prowers, Pueblo and Otero 
counties when completed. That's an area slightly larger than 
the entire State of New Hampshire. The largest city served by 
the conduit is La Jara, Colorado with a population of 
approximately 12,000 people.
    The local sponsors of the project have completed an 
independently funded feasibility study of the conduit and have 
developed a coalition of support from water users in 
Southeastern Colorado. I'm also pleased that the State of 
Colorado has contributed a great deal of funding for the study 
through the Colorado Water Conservation Board. This legislation 
enjoys strong, bipartisan support both locally and here in 
Washington.
    I'm pleased that I've been able to work with Senator 
Salazar on this measure. His work as a member of this 
subcommittee is appreciated and these are one the things that 
we have been able to work and both feel highly committed is 
very important to the general welfare to the State of Colorado. 
You know, we, I think, both agree that, you know, the weakest 
link of your economy can affect your whole State. This area 
needs to have clean water so it continues their economic growth 
and even sustain what they have now.
    I thank you Mr. Chairman. I appreciate the committee's time 
and consideration of this important matter and hope that we 
will be able to move this legislation forward. Thank you for 
your time.
    Senator Johnson. Thank you, Senator Allard.
    We'll now turn to the first panel of witnesses for today's 
hearing. Representing the Administration is Bob Johnson, the 
Commissioner of Reclamation, who will speak to all the bills on 
today's agenda. Welcome to you Commissioner Johnson and thank 
you for making yourself available.
    Before starting, I'd like to note that the subcommittee has 
received additional written testimony on several of the bills 
before us today. That testimony, as well as the written 
submission of all of today's witnesses, will be made part of 
the official hearing record.
    [The prepared statement of Senator Allard follows:]
  Prepared Statement of Hon. Wayne Allard, U.S. Senator From Colorado
    Thank you M--Chairman and Ranking Member Corker, for holding this 
important hearing and for allowing me the opportunity to appear before 
you today.
    I am here to testify in support of S.2974 the Arkansas Valley 
Conduit Act of 2008. As members of this Subcommittee know water is one 
of our most precious resources. This is especially true in the West 
where some areas continue to struggle through a multiyear drought.
    The backbone of Colorado, like South Dakota and Tennessee, is found 
in our numerous small and rural communities. Unfortunately for rural 
communities things that folks in metropolitan areas take for granted 
can be difficult to come by. This should not include safe, clean 
drinking water. That is why I have long worked to enact legislation 
that would help the Arkansas Valley Conduit become a reality.
    I should note that the Arkansas Valley Conduit was originally 
authorized by Congress in 1962, over forty years ago, as a part of the 
Fryingpan-Arkansas Project. The original ``Fry-Ark'' Project 
authorizing legislation granted the Secretary of the Interior the 
authority to construct the Arkansas Valley Conduit. This legislation 
simply reauthorizes that authority and adds a workable cost-share 
provision.
    Due to the authorizing statute's lack of a cost share provision, 
and Southeastern Colorado's depressed economic status, the Conduit was 
never built. And, until recently, there was no urgent need for it--the 
region was fortunate to enjoy an economical and safe alternative to 
pipeline-transportation of project water: the Arkansas River. 
Unfortunately, this is no longer the case. While the federal government 
has continued to strengthen its unfunded water quality standards, these 
communities have fallen further and further behind in attaining them. 
As far back as 1950, the Bureau of Reclamation determined that the 
quality of local drinking water supplies were ``unacceptable.''
    In response to a number of water providers falling out of 
compliance with existing EPA water quality standards, the local 
communities formed a committee to evaluate alternative approaches to 
solving this problem. The Arkansas Valley conduit was found to be the 
most viable solution. However local communities are unable to fund the 
Conduit under existing circumstances.
    This legislation is essential if we are to bring local water 
providers into compliance with federal water quality standards and it 
will finally provide a long term solution to the region's water quality 
concerns.

    Senator Johnson. Mr. Johnson, please go ahead and summarize 
your written testimony. Following that, we'll have a brief 
question and answer period for you.

    STATEMENT OF ROBERT W. JOHNSON, COMMISSIONER, BUREAU OF 
            RECLAMATION, DEPARTMENT OF THE INTERIOR

    Mr. Johnson. Thank you, Chairman Johnson and members of the 
committee. I'm pleased to be here and present the 
Administration's views on these bills.
    S. 2842 would direct the Secretary to devise and carry out 
new annual inspection processes for canals, levees, tunnels, 
dikes, pumping plants, dams and reservoirs. The bill seeks to 
assure the integrity of our infrastructure and protect the 
public safety, two of Reclamation's highest priorities. 
Reclamation owns 8,000 miles of canals, 24,000 miles of 
laterals, 13,000 miles of drains, 450 dams and many other 
pieces of infrastructure.
    Two-thirds of these facilities have been transferred to 
local parties to operate and maintain. Reclamation uses 
established inspection processes under contracts entered into 
with our operating partners to ensure proper operation and 
maintenance. We also have policies and procedures in place to 
regularly review the condition and operation of facilities 
reserved for operation maintenance by the Bureau of 
Reclamation.
    The recent failure of the Truckee Canal in Nevada has 
caused us to take a fresh look at our approach to maintaining 
our canals that run through urban areas. We are conducting 
expedited inspection of such facilities and developing, in 
conjunction with our operating partners, new standards for 
management of our urban canals.
    Certain provisions of S. 2842 would pose significant 
implementation challenges for Reclamation, specifically 
sections three and four. My written statement speaks to the 
difficulties in detail. We would be glad to work with the 
committee to further explore how we can address our shared goal 
of infrastructure safety.
    S. 2974 deals with a proposal that Reclamation has 
testified on before, most recently in March 2008 before the 
House committee and in September 2006 before this committee. 
While the Arkansas Valley Conduit Proposal in Colorado has not 
changed since those hearings, the financing mechanism in this 
current bill is new. We are encouraged that the level of cost 
sharing in this bill is better than the one offered in the 
House Bill.
    However, Reclamation cannot say with certainty that the 
financing regime referenced in section two of this bill will 
provide adequate funding for a pipeline that is estimated to 
cost between $265 and $345 million. Today, Reclamation has 
entered into three such long term excess capacity contracts 
which generate annual revenue of only about $1 million per 
year. They are ``if-and-when'' contracts, and depend on 
hydrology and water supply considerations that are outside of 
Reclamation's control.
    Having said that, we recognize the importance of the 
conduit proposal to Southeastern Colorado and remain committed 
to work with the Southeastern Colorado Water Conservancy 
District to further define and clarify provisions within this 
bill. We stand ready to lend staff expertise to deepen 
discussions on alternative financing for the canal with the 
districts, with Senator Allard, Senator Salazar and with this 
committee.
    The Department supports S. 3189, the Upper Colorado River 
and San Juan River Fish Recovery Programs which were initiated 
in 1988 and 1992, respectively. The program goals are to 
recover populations of endangered fish while providing for the 
continued development of water resources in compliance with the 
Endangered Species Act. Program actions provide Endangered 
Species Act compliance for more than 1,600 Federal, Native 
American and non-Federal water projects depleting more than 
three million acre feet of water per year from the San Juan and 
Colorado Rivers and their tributaries.
    Failure to address these programs' funding needs would 
require re-initiation of ESA consultation on all Federal 
projects that rely on the programs for ESA compliance. There's 
strong, broad based stakeholder support for this legislation 
and with the changes identified in my written statement the 
Department supports passage.
    The Department also supports H.R. 3323. This bill would 
authorize the conveyance of a federally owned distribution 
system associated with the Cachuma Project to the Goleta Water 
District. All of the facilities that would be transferred are 
or were in the district's boundaries and includes 59 miles of 
pipelines, laterals, pump stations and associated structures.
    The district completed its repayment obligation in 2002 and 
has operated and maintained this distribution system since 
1952. This title transfer is beneficial to the district and 
Reclamation. Again, the Administration supports this bill.
    Mr. Chairman, this concludes my verbal remarks. I'd be 
pleased to answer any questions.
    [The prepared statements of Mr. Johnson follow:]

   Prepared Statement of Robert W. Johnson, Commissioner, Bureau of 
                Reclamation, Department of the Interior

                                S. 2842

    Mr. Chairman and members of the subcommittee, I am Robert W. 
Johnson, Commissioner of the Bureau of Reclamation. I am pleased to 
provide the Department of the Interior's views on S. 2842, the Aging 
Water Infrastructure and Maintenance Act. While we share the sponsors' 
goals of reliable and safe facility operations, the Department does not 
support S. 2842.
    Reclamation testified before this Subcommittee at an oversight 
hearing on aging infrastructure on April 17, 2008 and, at that time, I 
expressed Reclamation's commitment to working with our partners to 
assure the integrity and reliability of our Federal water and power 
assets. Aging infrastructure continues to be an important topic for any 
number of Federal agencies, but Reclamation's April 17, 2008 testimony 
emphasized the fact that a facility's age, by itself, is not the sole 
determinant of its reliability--rather, facility condition is a central 
factor in predicting the long-term functionality and maintenance need 
of Reclamation assets. Inspections and preventive maintenance play a 
critical role in assuring this functionality.
    Since the April hearing, Reclamation has experienced a second canal 
failure on the Newlands Project in Nevada, this one on the V-Line 
Canal, near a wasteway leading back to the Carson River. While this 
incident did not result in residential flooding, it highlighted the 
limits of facility maintenance and inspections in preventing 
infrastructure failures to Reclamation and its customers. While public 
safety is Reclamation's highest priority, even the most thorough 
inspections, on tens of thousands miles of canals and laterals, will 
never be able to detect every possible defect.
    The bill provides that DOI conduct annual inspections of canals, 
levees, tunnels, and other infrastructure that are under DOI's 
jurisdiction. While the Department supports the intent of the bill, it 
potentially imposes new costs upon DOI. The Bureau of Reclamation 
already conducts inspections of its assets. Furthermore, the Bureau of 
Reclamation's five-year Capital Improvement plan helps prioritizes 
assets based on their condition. The Bureau's Capital Improvement plan 
includes a composite score of the asset that takes into account a 
number of variables. In addition, the bill presents feasibility 
concerns because the Department's assets do not fit into ``one size 
fits all'' standards that are prescribed in the legislation. 
Specifically, the bill's requirement in Section 3(c) to develop a 
National Priority List concerns Reclamation. First, development of 
objective criteria to rank facilities in terms of risk would be a 
significant undertaking, as would the annual review of facilities to 
reprioritize the list. Second, Reclamation already promotes preventive 
maintenance through regular facility reviews to identify operations and 
maintenance (O&M) deficiencies at an early stage. While these processes 
are thorough, they will never detect every deficiency, and with about 
8,116 miles of canals in the Reclamation inventory, it is not realistic 
or cost-effective to provide sufficient information on each project 
facility as described in the bill. Through facility reviews, 
Reclamation makes recommendations for noted deficiencies on project 
facilities; cost estimates and recommended timeframes for related 
repairs or replacements are discussed and documented in these 
recommendations, and mutually agreed upon with the operating entities 
at the time of the review.
    Section 4 calls for development and publication of Reclamation-wide 
standards, guidelines and regulations on O&M. The Department believes 
this provision would impose new costs and duplicate processes and 
practices that already exist or are currently underway at Reclamation. 
Reclamation maintains O&M-related directives and standards in its 
Reclamation Manual, as well as Reclamation-wide inspection requirements 
and procedures that are posted on Reclamation's Web site and available 
to our customers. Additionally, American Society of Civil Engineers 
(ASCE) Manuals and Reports on Engineering Practice No. 57, Management, 
Operation, and Maintenance of Irrigation and Drainage Systems, jointly 
developed by Reclamation and ASCE, provides additional information and 
standards related to the O&M of related facilities and systems. We 
develop and circulate regular Water Operations and Maintenance 
Bulletins, conduct an annual Water Management Workshop with our 
operating partners, and Reclamation produces and regularly updates the 
Facilities, Instructions, Standards and Techniques (FIST) manuals, 
which provide the most current guidance on the operation of 
hydroelectric and some water facility equipment.
    Section 4 also presents a challenge to implement because the 
breadth of Reclamation's facilities, their geographic locations, and 
specific environments, do not lend themselves to ``one-size-fits-all'' 
standards and guidelines as described in the legislation. This would 
also present difficulties in differentiating between ``structural 
deficiencies'' caused by non-compliance with regulations and those 
resulting from normal deterioration due to the age of the facility that 
is beyond one's control.
    It is worthwhile noting that the Department has developed an Asset 
Management Plan (AMP) and called on each Bureau to prepare bureau-
specific AMPs summarizing their current asset inventory and 
articulating a strategy and plan of action for improving the management 
and condition of relevant inventory. These AMPs provide DOI and the 
bureaus with the necessary tools to make wise investments and manage 
assets in a cost effective manner.
    Reclamation's Dam Safety Program prioritizes and ranks facilities 
using a risk management approach. The President's budget request for FY 
2009 is over $90 million, up about $15 million from FY 2008 for 
evaluations and corrective (construction) actions. This program focuses 
on 375 distinct dam and dike structures, where safety conditions are 
more critical and where staff resources can be deployed for extended 
periods of time. In contrast, the language of Section 4(c)(1) would 
oblige Reclamation to study every distinct facility, regardless of 
risk, which would include canals, levees, laterals, pipelines, tunnels, 
drains, and other asset types far beyond the current resources of 
Reclamation's inspection and review teams.
    Additionally, it is not clear whether the authorization in S. 2842 
would extend beyond Reclamation to other Interior bureaus and agencies, 
such as Bureau of Indian Affairs irrigation and power systems, Bureau 
of Land Management earthen livestock impoundments, and Fish and 
Wildlife Service fishery and refuge facilities.
    In addition, S. 2842 also authorizes $11 million for FY 2009 
through FY 2013 for these annual inspections and related activities. 
The Bureau focuses its resources on the programs and projects that will 
best help it accomplish its primary missions of delivering water and 
power. Creating additional obligations may limit the Bureau's 
effectiveness in other key areas.
    In light of these concerns, the Department cannot support S. 2842. 
At the same time, it is useful to note that the Reclamation already has 
a number of comprehensive programs for assessing the status and 
condition of our infrastructure.
    Approximately two-thirds of Reclamation's facilities are 
transferred works; they are owned by the United States but operated and 
maintained by others pursuant to contracts. Under the terms of the 
transfer of operation and maintenance contracts and agreements, the 
operating entities are often required to perform O&M of the facilities 
at their own expense. Reclamation emphasizes the importance to our 
partners of maintaining adequate emergency and replacement reserve 
funds, typically required under contracts or agreements, to be able to 
address operation, maintenance and replacement of project facilities.
    Other existing programs where Reclamation already is working to 
address aging infrastructure include the Review of Operation and 
Maintenance Program, the Safety Evaluation of Existing Dams Program, 
and monitoring Replacements, Additions, and Extraordinary Maintenance 
activities.
    Additionally, in response to the canal breach in Fernley, Nevada, 
Reclamation has increased its attention to assessing canals located in 
areas experiencing urban growth. This incident emphasized the need for 
Reclamation to address the challenges that growth of urbanized areas in 
proximity to long-existing canals poses within our project lands. 
Vegetation and property encroachments are very real issues for the 
operation and maintenance of Reclamation canals and other facilities. 
These growth patterns have exposed residential areas to flood risks, 
and indirectly created a public safety burden on Reclamation and our 
partners like Truckee-Carson Irrigation District. In light of these new 
challenges, Reclamation held a Canal/Asset Management meeting in May 
with our stakeholders in Denver to discuss canal inspection procedures, 
impacts of urbanization on Reclamation canals and on ways we can help 
our operating partners address related infrastructure issues. Next for 
Reclamation is to utilize the input from the discussions at this 
meeting, in coordination with operating entities West-wide, to 
systematically inspect the remainder of the identified canals or 
reaches through urbanized areas.
    We believe that these new tools, combined with the cooperation of 
Reclamation's local partners, will assure the continued safe operation 
of Reclamation's facilities. While canal breaches or delivery 
interruptions will never be completely eliminated, we are committed to 
reducing the probability and consequences of these failures West-wide.
    We appreciate the committee's interest in these issues and look 
forward to working with the Congress to continue developing solutions 
that provide for the biggest net benefits to the Federal taxpayer.
    This concludes my written statement. I would be pleased to answer 
any questions.

                                S. 2974

    Mr. Chairman and Members of the Subcommittee, I am Robert W. 
Johnson, Commissioner of the Bureau of Reclamation. I am pleased to be 
here today to present the Department of the Interior's views on S. 
2974, legislation authorizing appropriations and the Arkansas Valley 
Conduit in the State of Colorado. For the reasons described below, the 
Department has significant concerns with S. 2974 and cannot support 
this legislation.
    The Arkansas Valley Conduit is an authorized feature of the 1962 
Fryingpan-Arkansas Project (Fry-Ark Project), but never constructed due 
to financing considerations. Today, increased water treatment costs due 
to local groundwater quality and changing requirements of the Safe 
Drinking Water Act, have renewed local interest in alternative means of 
obtaining safe and clean water supplies for the Lower Arkansas Valley.
    The Conduit would transport water about 110 miles from Pueblo Dam 
(part of the Fry-Ark Project) to communities along the Arkansas River 
to a point near Lamar, Colorado. The Lower Arkansas River Basin is 
comprised of rural communities, with the largest town, Lamar, having a 
population of approximately 8,600. The population anticipated to be 
served by the Conduit is approximately 50,000. Total project costs were 
roughly estimated in 2005 to be between $265 million and $345 million, 
depending on the project features chosen for construction.
    This legislation intends to utilize existing infrastructure as one 
component in addressing a water need, proposes a different mechanism 
for repaying the outstanding debt for the construction of current 
features of the Fry-Ark Project (including nearly $38 million in 
outstanding and uncontracted debt for the construction of Ruedi 
Reservoir), and proposes one way to provide water for Lower Arkansas 
basin communities.
    Reclamation has testified previously on several versions of 
legislation to fund construction of the Arkansas Valley Conduit (AVC). 
The Department testified on H.R. 317 on March 13, 2008 before the House 
Water & Power Subcommittee, and in September 2006 before this 
Subcommittee on S. 1106. In both of those testimonies, Reclamation 
cited those prior bills' cost share arrangement as inconsistent with 
the existing AVC authorization in PL 87-590, which requires 100% 
repayment of project features within 50 years. While this bill improves 
upon past versions for cost-sharing requirements, S. 2974 also 
continues to be inconsistent with the original Fry-Ark authorization by 
providing that the Federal government bear 65 percent of the cost of 
the project. In addition, several outstanding issues remain regarding 
the funding source for the local cost share.
    The legislation before the Subcommittee today, S. 2974, is a new 
proposal that proposes a different financing arrangement involving 
contracts that would provide a still-undetermined revenue stream for 
repaying the Conduit. We have been happy to work with the Southeastern 
Colorado Water Conservancy District on identifying and further refining 
the complex financing concepts outlined in S. 2974.
    Although the Department is appreciative of the work that has been 
done, the Administration still has some significant outstanding 
concerns with this legislation.
    In particular, Reclamation does not believe the excess capacity 
contracts referenced in Section 2(b) of this bill will provide adequate 
funding for a pipeline that, in 2005, was priced between $265 million 
and $345 million. Section 2(b) provides that any revenue derived from 
contracts for the use of Fryingpan-Arkansas project excess capacity or 
exchange contracts using Fryingpan-Arkansas project facilities shall be 
credited to the actual cost of Ruedi Dam and Reservoir, the Fountain 
Valley Pipeline, and the South Outlet Works at Pueblo Dam and Reservoir 
until the date on which the payments to the Arkansas Valley Conduit 
begin. After that, the revenue would be used for the Conduit.
    To date, Reclamation has entered into three such long-term excess 
capacity contracts, which generate annual revenue of only about $1 
million per year. They are ``if and when'' contracts, which depend 
heavily on hydrology and water supply considerations outside of 
Reclamation's control. In addition, any new contracts take years to 
negotiate and finalize. We do not believe that these revenues will be 
sufficient to pay for the Conduit. Relying on these new contracts could 
leave the Federal government responsible for the primary funding of 
this project. Also, the revenues from these excess capacity contracts 
would normally be deposited into the general Treasury after being 
credited to project repayment. Therefore, using them in this manner 
creates a troubling precedent. We cannot say what the potential loss to 
the Treasury would be and would need to study this issue further if 
this type of financing were to proceed.
    Reclamation also has concerns regarding the overall Federal and 
Non-federal cost share described in S. 2974. This type of credit toward 
future projects may not comport with the Administration's fiscal 
management policies and could potentially leave the Federal government 
responsible for being the primary source of funding for all of these 
types of projects in the future. Also, this type of applied cost 
sharing appears to deviate from standard cost-sharing practices, 
potentially creating a precedent that needs more careful consideration.
    Finally, while incentivizing local sponsors to manage their water 
resources responsibly can be a positive, we are concerned that this 
type financing may allow project beneficiaries to not have to repay 
their pre-existing obligations, which, in turn, may necessitate even 
more Federal funding being dedicated toward this project. The loss to 
the Treasury under our current contracting policies would be about $1 
million annually, but could increase as these contracts increased.
    We recognize the importance of the Conduit proposal to southeastern 
Colorado, and remain committed to working with Congress and the 
Southeastern Colorado Water Conservancy District to further define and 
clarify provisions within this bill. However, for the aforementioned 
concerns noted above, we cannot support S. 2974.
    This concludes my statement, and I would be pleased to answer any 
questions.

                               H.R. 3323

    Mr. Chairman and Members of the Subcommittee, I am Robert Johnson, 
Commissioner of the Bureau of Reclamation. I am pleased to be here 
today to provide the Department's views on H.R. 3323, the Goleta 
Distribution System Conveyance Act of 2007, to authorize the Secretary 
of the Interior to convey a certain federally-owned water distribution 
system of the Cachuma Project in California to the Goleta Water 
District. The Administration supports H.R. 3323.
    H.R. 3323 would transfer title of the federally owned distribution 
system associated with the Cachuma project that is within the 
boundaries of the Goleta Water District in Goleta, California. The 
features that would be transferred to the Goleta Water District include 
59 miles of pipelines and laterals, two pump stations and regulating 
features, associated structures, and lands and rights of way. The 
proposed transfer would apply only to land and facilities and would not 
affect the District's existing water service contract with Santa 
Barbara County Water Agency or the Federal Government's receipts from 
water deliveries under that contract.
    The Goleta Water District has operated and maintained this 
distribution system since 1952 and fully met its repayment obligation 
in 2002. This title transfer will enable the District to gain greater 
local control of the distribution facilities that were constructed for 
their use. It will also eliminate the need for some administrative 
obligations that exist for the District. For example, once title is 
transferred, the District will no longer be required to seek approval 
from Reclamation for easements, crossing permits, or work on the 
facilities.
    In addition, this title transfer protects the financial interest of 
the United States. Transferring title to these facilities will reduce a 
number of administrative burdens on Reclamation including periodic 
facility reviews that are currently required because it is a 
Reclamation owned facility and the processing of paperwork that 
currently consumes significant staff time. It will also ensure that 
long-term responsibility for the operation, maintenance, management, 
and regulation, as well as liability, for the transferred lands and 
facilities, will rest with the District.
    The process and cooperative approach used to negotiate and develop 
this transfer should be a model for future title transfers throughout 
the West. Reclamation and the District have worked effectively and 
cooperatively throughout this process to address the elements required 
for title transfer. We thank the District's representatives for their 
work on this transfer and look forward to continuing to work with them 
as the process draws to a close.
    Mr. Chairman, thank you for your consideration of this bill. That 
concludes my testimony, and I would be pleased to answer any questions.

                                S. 3189

    Mr. Chairman and members of the Subcommittee, I am Robert W. 
Johnson, Commissioner of the Bureau of Reclamation. I am pleased to 
provide the Department of the Interior's views on S. 3189, a bill to 
extend funding and authorization for ongoing endangered fish recovery 
programs in the Upper Colorado and San Juan River Basins. The 
Department supports passage of this bill, but recommends that some 
changes be included as described below.
    Public Law106-392 authorizes the Bureau of Reclamation to provide 
cost sharing for construction of capital projects and annual base 
funding for the operations of the Upper Colorado and San Juan Recovery 
Implementation Programs (Programs). The current authorities provided by 
P.L. 106-392 expire at the end of FY 2010. The proposed legislation 
would amend P.L. 106-392 to incorporate several goals.
    To date, the two Programs have expended a total of $77.8 million in 
federal funds since inception (1988), with a solid record of 
performance. Activities completed to date have included fish passage 
improvements at Price-Stubb Dam (2008), and fish ladders and screens on 
the Grand Valley Diversion Dam on the Colorado River. Along with 
protections for the four listed fish species, water reliability has 
also been protected, and no lawsuits have been filed on Endangered 
Species Act compliance for any of the covered water projects on the 
Colorado and San Juan Rivers since the two recovery programs were 
constituted. The programs' efforts have resulted in fewer threats to 
the survival of Colorado pikeminnow and razorback suckers, and the 
highest larval counts ever recorded on the Green River for suckers in 
2007.
    I would like to describe the Department's views on the legislation 
in detail. First, S. 3189 authorizes an additional $12 million in 
federal expenditures for capital projects under the San Juan Program 
for the purposes of: protecting endangered fish critical habitat and 
infrastructure from rock slides in a reach of the San Juan River near 
Farmington, New Mexico, which the Fish and Wildlife Service has 
determined to be necessary for recovery; and repairing and replacing 
capital facilities including fish passages, fish screens, aquatic 
habitat enhancements, hatcheries and fish rearing facilities as needed 
through 2023. While previous authorizations for this program were for 
shorter time periods, this longer time window is concurrent with the 
recovery goals for these species, with the objective of downlisting or 
de-listing in 2023. Although a longer-term authorization may be 
warranted, we also believe that it is prudent to reassess the program 
and its goals so that adaptive management practice can be applied to 
ensure the best outcomes for this program.
    Next, this bill authorizes an additional $15 million in federal 
expenditures for capital projects for the Upper Colorado Program for 
the purposes of: constructing a fish screen at the Tusher Wash 
Diversion Dam on the Green River in light of significantly increased 
construction material costs; and for repairing and replacing 
constructed capital facilities fish screens, fish passages, habitat 
enhancements, hatcheries and fish rearing facilities as needed through 
2023. In addition, we recommend that the bill be revised to raise the 
authorization in Section 3(c)(1) of Public Law 106-392 for non-federal 
contributions to capital projects, to ensure that the federal cost-
share of program implementation is not escalated further.
    Third, this bill attributes additional non-federal cost sharing of 
$56 million which relates to power replacement costs borne by power 
consumers due to reoperation of Flaming Gorge Dam to benefit the 
endangered fish (years 2010 through 2023). This is consistent with the 
original definition of cost sharing provided in Public Law 106-392.
    Fourth, this bill allows for continuation of base funding derived 
from power revenues through 2023 for all activities necessary to 
achieve recovery as currently authorized. While these funds are termed 
non-federal cost shares consistent with the original cost allocation 
reflected in Public Law 106-392, they are drawn from revenues otherwise 
subject to repayment obligations and the Administration does not as a 
general matter endorse the treatment of such revenues as a non-federal 
contribution to cost-sharing for restoration projects.
    Fifth, section 2(b)(4) of this bill allows the Western Area Power 
Administration to borrow from the Colorado Water Conservation Board 
Construction Fund (Construction Fund) if sufficient base funds are not 
available in the Upper Colorado River Basin Fund (Basin Fund) to meet 
base funding needs for the Programs. The borrowing authority in S. 3189 
is intended to compensate for declining revenues that occur during 
periods of drought. The proposal to grant WAPA borrowing authority 
would replace a provision in existing law which requires that WAPA and 
the Bureau of Reclamation request appropriations in the event that base 
funds are insufficient.
    The Administration generally opposes providing new borrowing 
authority for operations and maintenance purposes. . This bill provides 
authority for WAPA to borrow from a non-Federal entity to cover 
operating, maintenance and rehabilitation costs, as well as the absence 
of restrictions specifying the amount of allowed outstanding 
obligations and sufficient limits on the timing of repayment. Further, 
it is Administration policy that, where we do support borrowing 
authority, it should be from the Treasury. It is generally not prudent 
financial policy to use borrowing to cover operating costs. Further, it 
has been longstanding Treasury policy that, if borrowing authority is 
justified, Federal agencies should be authorized to borrow exclusively 
from the Treasury. Also, any borrowing authority should be subject to a 
specific statutory limit, to be determined taking into consideration 
the expected needs of the program.
    The Upper Colorado and San Juan Programs were initiated in 1988 and 
1992 respectively, under the terms of cooperative agreements with 
departments and agencies of the United States. The Programs' goals are 
to recover populations of endangered fish while providing for the 
continued development of water resources in compliance with the 
Endangered Species Act. Program partners include the States of 
Colorado, New Mexico, Utah, and Wyoming; Reclamation; Western Area 
Power Administration; U.S. Fish and Wildlife Service; Bureau of Land 
Management; National Park Service; Bureau of Indian Affairs; Native 
American Tribes including the Jicarilla Apache Nation, Navajo Nation, 
Southern Ute Indian Tribe and Ute Mountain Ute Tribe; environmental 
organizations; water users; and power customers. Program actions 
provide Endangered Species Act compliance for more than 1,600 Federal, 
Native American, and non-Federal water projects depleting more than 3 
million acre-feet of water per year in the Colorado and San Juan rivers 
and their tributaries.
    The Programs are nationally recognized collaborative efforts which 
have served as models to address other Endangered Species Act issues 
throughout the country. The Programs have developed comprehensive plans 
for recovery of the fish species. Aggressive efforts are being 
implemented to construct fish passages, fish screens, and propagation 
facilities; restore and enhance aquatic habitat; acquire water; enlarge 
and coordinate the operations of existing water storage reservoirs; 
improve water use efficiency; stock native fish and control competing 
non-native fish species, all activities leading to restoration of 
ecosystems and recovery of the four listed Colorado River fish species. 
Both Programs have a demonstrated history of success.
    Failure to address these Programs' funding needs would require re-
initiation of Section 7 consultation on all Federal projects that rely 
on the Programs for Endangered Species Act (ESA) compliance. There is 
strong broad based stakeholder support for this legislation and a 
critical need exists for the additional authority provided by the 
proposed amendment. The Department supports passage of S. 3189 with the 
aforementioned changes.
    This concludes my testimony. I am happy to answer any questions.

    Senator Johnson. Commissioner Johnson, is it Reclamation's 
expectation that the contractors in S. 2842, who operate the 
transferred works will be able to pay for the estimated $800 
million of repair and rehabilitation work?
    Mr. Johnson. I think the $800 million that you're 
mentioning there is the estimate that we provided for 
transferred works and the needs for rehabilitation and 
betterment associated with those transferred works. I believe 
that some of that rehabilitation and betterment can be repaid 
by the project operators. It can be funded and paid by the 
project operators. But I don't believe all of it probably can, 
some of it may very well be beyond their ability to pay.
    I don't have a break down of the specifics of those 
numbers. That's just a general characterization. Some can and 
some can't.
    Senator Johnson. Is there a plan to pay for the permanent 
fix that is needed for the Truckee Canal?
    Mr. Johnson. At this time there is not. That's being worked 
on. We're still working on the cost estimate of what's 
required.
    It's likely to be a very expensive fix. There's 11 miles of 
canal with urban areas that lie below it. It's probably in the 
tens of millions of dollars.
    I'm sure there will be issues regarding the district's 
ability to pay those costs. We'll have to work hard to find 
mechanisms to fund and pay those costs over time.
    Senator Johnson. Your testimony on S. 3189 recommends 
Public Law 106-392 which first authorized the Upper Colorado 
and San Juan River Recovery Programs to increase the non-
Federal contribution for capital projects. Currently the 
required contribution is set at $17 million. What is the 
specific non-Federal contribution that the Administration 
recommends?
    Mr. Johnson. Senator, that's a fair question that I'm not 
in a position to answer today. What I'd like to do is provide 
an answer for the record on that. We still need to do some work 
internally related to that. But we will answer that in a timely 
way.
    Senator Johnson. PL 106-392 requires Interior to prepare a 
report by the end of Fiscal Year 2008 on the use of power 
revenues beyond 2011 for base funding for the ESA programs. It 
is my understanding that the completion of that report is just 
about final. Is the release of that report imminent and is S. 
3189 consistent with its recommendations?
    Mr. Johnson. The report is still undergoing review within 
the Administration. I think in general it's consistent with the 
legislation. But because it's still under review there could be 
revisions. I wouldn't, you know, I think it's possible that 
there may be some areas that are not consistent.
    But we've got to wait until that review is complete and 
when that is over we will provide the report to the committee 
and to Congress.
    Senator Johnson. When do you estimate that report is due?
    Mr. Johnson. Let me respond for the record. I wouldn't want 
to give a date and then not be able to meet it. Let me respond 
for the record on that, if I can.
    Senator Johnson. Ok. Back to S. 2842. What are the risk 
factors that should be analyzed so that an inspection and 
corrective action program can be properly prioritized?
    Mr. Johnson. I think there's three primary risk factors and 
there may be more. But certainly the risk of loss of life from 
the failure of a facility ought to be an important 
consideration, if not the most important consideration. Also 
the risk of property damage, you know, what kind of property we 
have downstream that could be affected by a failure.
    Then certainly also is the risk associated with the loss of 
water service. If you have a facility fail and you're no longer 
able to provide water service, the impacts that that has needs 
to be taken into consideration. So those would be three factors 
that I would identify. There may be more.
    I think that's something that we're working on within 
Reclamation in this new concept that I talked about as a result 
of the failure of the Truckee Canal. We're taking a fresh look 
at our canals and our procedures for doing inspections and what 
kind of criteria we ought to be using for those inspections.
    Senator Johnson. Senator Tester.
    Senator Tester. Thank you, Chairman Johnson. Thank you, 
Commissioner Johnson for being here. My questioning is going to 
revolve around S. 2842, the Aging Water Infrastructure and 
Maintenance Act. I appreciated your responses on the risk 
factors.
    You had stated that the BOR share the goals that are 
contained in 2842, but you won't be supporting this specific 
bill. I'd be interested to hear, No. 1, and I think you do 
agree because I think you've testified to the fact that we're 
in dire need of some improvements in infrastructure, how would 
the Bureau want to see us proceed if we didn't use this bill?
    Mr. Johnson. I think particularly on the bill that's under 
consideration, it has, it applies to all Reclamation 
facilities, dams, canals, laterals, drainage facilities and 
requires some fairly short turn around timeframes for doing 
inspections. Given the number of facilities that we have, we 
think it would be probably impossible to meet the timeframes 
that are included in there. So that's certainly one thing.
    I think that something that focused more on urban canals 
would be helpful. We have a Safety of Dams Program. We have 
legislation that defines the Safety of Dams Program.
    We have a very active Safety of Dams Program. Our 2009 
budget request for that program was $90 million. I think that 
we're doing a very good job, an adequate job of maintaining our 
dams and maintaining their safety. So I'm not sure we need more 
legislation that deals with dams.
    I think one of the other big issues that we will have that 
we'll have to talk about is the cost sharing and how the costs 
are shared. What percentage is Federal and what percentage is 
not Federal?
    Senator Tester. Can I ask, this bill states 65 percent 
Federal cost share. Is that in the ball park you guys are 
thinking about?
    Mr. Johnson. I'm not in a position to give a specific 
number today. My guess is that that's probably too high of a 
Federal share.
    Senator Tester. Ok. I don't know. I'd be interested to know 
what the Bureau thinks. I don't know, if you could give that 
information or if it's a shot in the dark or if they want to do 
it at all would be fine. If you could, can you give me an idea 
of where you guys want to go with it because I think that's 
important to know?
    Timeframes, you talked about the urban canals in the 
previous answer. Montana is a pretty rural State. Does that 
mean we're left out of the equation if you guys go by your 
parameters?
    Mr. Johnson. No, it's not.
    Senator Tester. Ok.
    Mr. Johnson. In fact, we're developing these new criteria 
in conjunction with all of our operating partners. In fact we 
had an initial meeting with them. I think we have a really good 
partnership on how we move forward to address safety issues on 
urban canals. I think there's two parts to the process that 
we're trying to address.
    The point is we're trying to get new standards for urban 
canals.
    Senator Tester. Right.
    Mr. Johnson. Maintenance standards for an urban canal needs 
to be different than the maintenance for a canal that runs 
through a rural area.
    Senator Tester. Yes. I get that. You talked about the 
enormity of all these assessments that would have to be done. 
Do you have assessments done now on at least a part of it that 
would help you preempt a part of what we're asking for here?
    Mr. Johnson. Yes. There's 108 reaches of canals that run 
through urban areas. I couldn't tell you how many miles that 
is. There's quite a number of miles.
    We've asked each of our offices in the field to give us, 
one, we've already asked them to do a windshield survey. But 
we've asked them to give us a schedule and a prioritization of 
those urban canals and a schedule for doing detailed 
inspections on each one to get a handle on it.
    Senator Tester. Could you give me, I mean is it possible 
that you can give me the top ten urban canals, dams, siphons 
that are at risk and where you would plug the money if you had 
the money? Do you have that ability right now?
    Mr. Johnson. I don't know that we have a top ten. I can 
certainly go back and see if there's some information that we 
can provide on the ones that we think are most critical based 
on the preliminary survey that we've done.
    Senator Tester. When I signed on to this bill I'll tell you 
exactly what I told my staff. This bill isn't needed they're 
already doing it. They said no. It's not being done completely.
    I'm not being critical. I'm just being honest. I don't know 
how it's possible to have our infrastructure be brought up 
unless there's assessments done all the time. I mean, just all 
the time on these projects so that we know which are in the 
most imminent need.
    I know that depends upon the risk factors. I know that's 
going to have some impact. But that would be a great help and 
then we wouldn't have to do this. Then all we have to do is 
fight about cost share.
    Mr. Johnson. Yes.
    Senator Tester. Thank you. Thank you, Mr. Chairman.
    Senator Johnson. Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman. I 
share your concerns in the question about the non-Federal 
contributions to S. 3189. So I'm looking forward to getting 
that same answer that you are, Mr. Chairman.
    I did have two questions, Commissioner Johnson on S. 3189, 
if I may. Kind of explain to all of us why it's in the interest 
of the American taxpayer to continue to fund the Upper Colorado 
Fish Recovery Program?
    Mr. Johnson. It provides water supply for a lot of--well 
the bill doesn't provide it. It provides ESA coverage. It 
protects endangered species. It ensures that we comply with the 
Endangered Species Act. It ensures that we will be able to 
deliver water supplies to water users in four states in the 
Upper Colorado River Basin.
    It's absolutely a critical program. We could not provide 
the benefits of all those projects that deliver those water 
supplies without the Upper Colorado River Recovery Program.
    Senator Barrasso. Then could you please just describe the 
current status of the Upper Colorado River Basin, the fund, 
what it's used for, current revenue level, balance, if the 
money is going to be there in terms of sufficient revenues in 
the future to continue to assist in addressing these needs?
    Mr. Johnson. I'd be glad to do that. I don't have all of 
those numbers off the top of my head. But we'd be glad to 
provide a written response on that.
    Senator Barrasso. Thank you, Mr. Chairman.
    Senator Johnson. Senator Salazar.
    Senator Salazar. Thank you very much, Chairman Johnson.
    Let me first of all acknowledge that in the audience today 
there are a number of people that are here to testify not only 
on the Lower Arkansas Conduit bill, but also on the Endangered 
Fish Recovery Program of 2008. They include the Director of the 
Colorado Water Conservation Board, Jennifer Gimbel, who I've 
known for a very long time and Bill Long the President of 
Southeast Water Conservancy District, Jim Broderick, who is the 
Executive Director of the Southeast Colorado Water Conservancy 
District, former Congressman Ray Kogovsek, out of that same 
area, Pueblo native and hero and Christine Arbogast, who does a 
lot of work on the water issues of the State of Colorado. So I 
welcome them formally to the hearing.
    Let me also at the outset say, Mr. Chairman, most of my 
questions here are going to be directed at S. 2974. But I want 
to just comment on two other pieces of legislation that are 
before us. First S. 2842, the Aging Water Infrastructure and 
Maintenance Act. I'm proud to be a co-sponsor of that 
legislation with Senator Reid and Senator Bingaman, Senator 
Tester and I do hope that we're able to get that legislation 
through.
    Second S. 3189, the Endangered Fish Recovery Programs Act 
of 2008. Without that legislation moving forward it would be 
very difficult to maintain our efforts on what has been a 
national model for how we deal with the protection of water 
rights, compact entitlements in our State on the one hand. At 
the same time, on the other hand, deal with balancing the 
requirements and demands of the Endangered Species Act. So I'm 
proud to be a sponsor and supporter of that legislation as 
well.
    Now with respect to the Frying Pan-Arkansas River Conduit I 
have a couple of questions for you, Commissioner Johnson. You 
will remember you and I went through this drill a couple of 
years ago where we talked about cost share. My own view is when 
we have a set of rural communities that essentially have pulled 
themselves up from their bootstraps.
    They've come up with what essentially is a 65/35 cost 
share. They've done a lot more than many other Bureau of 
Reclamation projects which have in fact been authorized and 
which have been implemented by the Bureau of Reclamation. Now 
isn't it true that there are projects out there which in fact 
have as much as a 90 percent, 10 percent cost share with 90 
percent being on the Federal Government?
    Mr. Johnson. There are certainly, I mean I wouldn't want to 
necessarily say 90 percent. But certainly there are a number of 
projects----
    Senator Salazar. Are you aware of one, two, three, several 
projects have been funded as Bureau of Reclamation projects 
where the Federal cost share has been 100 percent?
    Mr. Johnson. Where they're all non reimbursable activities? 
Yes, that would be the case. I can't think of any off the top 
of my head, but I imagine there's probably some that are 
totally non reimbursable.
    There's a lot of them that are 75 percent. Certainly most 
of the rural water projects that are already authorized, I 
think, provide for 75 percent Federal funding, 25 percent 
local. So certainly, yes.
    Senator Salazar. You know I have the utmost respect for 
you, Commissioner Johnson. You and I have worked together on a 
number of issues including Leadville Mine Drainage Tunnel 
recently and other things as well as my respect for Secretary 
Kempthorne. But I will tell you that I find the position of the 
Bureau of Reclamation here offensive.
    I find it offensive because of the fact that we have worked 
so hard and long with the local communities affected for them 
to come up with a different kind of cost sharing formula than 
what we had in the past. I remember on a number of different 
occasions co-hosting meetings with Senator Allard on the 
Pueblo, downstream of Pueblo to talk with the community about 
how they needed to be forthcoming and step up to the plate and 
assume a share of the responsibility for the payback. It was at 
my urging in fact that I believe the Southeast Water 
Conservancy District and others went to the State legislature 
and said let us borrow the $60 million so we can have our local 
cost share.
    Yet it seems that throughout this time period as the 
Southeast was putting together its program, it ended up in this 
legislation which is bipartisan legislation sponsored by 
Senator Allard and by me that the Bureau of Reclamation at the 
local level was nowhere to be seen. We come forward now with 
what we think is a great compromise that essentially would 
implement the vision which is now some, if I have my numbers 
right, 46 years old. It's a conduit long time in coming and the 
result of a lot of work over the last several years.
    So I find it offensive, Commissioner Johnson, that the 
Bureau of Reclamation would come here in front of this 
committee today and say, well, it's still not good enough. We 
need something else. Why is it that the Bureau of Reclamation 
was not there working hand in hand with the Southeast Water 
Conservancy District and all of its local partners to come up 
with a package that in fact would be acceptable to everyone?
    Mr. Johnson. We certainly didn't intend to be offensive. 
I'm not aware of a lot of interaction that has occurred between 
us and Southeastern. I think that that interaction needs to 
occur. I think that Reclamation is certainly willing to sit 
down and spend time with the district and with others taking a 
hard look at the financing proposal.
    Certainly this is an improvement over what we've seen in 
other bills that were introduced previously. It's certainly a 
movement in the right direction. I'm not in a position to 
endorse, you know, what's in the bill today. But we're 
certainly willing to take a hard look at it.
    You know I was talking with Jim Broderick before the 
meeting today. I'm not sure that we understand the details of 
what's included in there because Jim was telling me that the 
intent is to repay the 65 percent. So the 35 percent would be 
funded locally and that repayment would occur on the 65 
percent. I'm not sure that we understood that when we developed 
our analysis.
    Now I'm not saying that that's acceptable. But I'm just 
saying I'm not sure that we understood, completely, the 
proposal as envisioned in the legislation. I would just say 
that we are more than willing to sit down with the district and 
understand the details and see if there's anything that we can 
all be comfortable with.
    Senator Salazar. Mr. Chairman, I know my time has expired, 
but I have several more questions of the witness, but I'll wait 
my turn if it's ok with you or I can continue as you wish.
    Senator Johnson. You may proceed.
    Senator Salazar. Thank you, Mr. Chairman. Let me then just 
respond, Commissioner Johnson. It would be my, let's say hope. 
That's too soft. Wish, too soft. It would be my request, too 
soft. It would be my direction to you and to Secretary 
Kempthorne that you work with the Southeast Water Conservancy 
District so we can get this legislation moved forward.
    It would seem to me that for you as a Commissioner of 
Reclamation for the remainder of this year through January of 
next year that this should be one of the crown jewel 
achievements of Reclamation that after 40 years of waiting we 
finally are making the possibility of the conduit becoming a 
reality. Let me ask you this question. If we do not move 
forward with this legislation how does the Bureau of 
Reclamation have any sense of how these rural communities 
ultimately are going to be able to access a clean water supply? 
What are their alternatives?
    Mr. Johnson. I know they've been relying on ground water. I 
know that ground water has got problems associated with it. I 
know the quality is not what we'd like to see. I don't know to 
what extent that is an alternative.
    I'm really not in a position, Senator, to know enough about 
the project to be able to offer a response on that. We could 
respond in more detail in writing, if you'd like.
    Senator Salazar. Let me tell you where I would like you to 
put your efforts and that is working with the Southeast Water 
Conservancy District, State of Colorado and the local partners 
to fully understand this legislation. This is very important 
legislation that I'm certain is going to have tremendous 
bipartisan support in the U.S. Senate.
    I want to not only have this legislation pass, but I also 
want to make the conduit a reality. So I would appreciate it if 
you would just have your office and the local staff for the 
Bureau of Reclamation working with the Southeast to fully 
understand the parameters of what we're trying to do here. It's 
very difficult, Commissioner Johnson.
    You must understand for us to go to the President of 
Southeast, Bill Long and some of his predecessors and say you 
need to come up with the local cost share for them to go to 
Denver and testify first in front of the Colorado Water 
Conservation Board and then to have a bill shepherded through a 
State general assembly to get over $60 million committed to 
this project, I think is a Herculean undertaking for a local 
community. I think that effort has to be recognized.
    Thank you very much, Mr. Chairman.
    Senator Johnson. Commissioner Johnson, you may be excused. 
Please have a seat and listen to the panelists.
    Mr. Johnson. Yes, glad to.
    Senator Johnson. Since there are no more questions let's 
have our second set of witnesses take a seat.
    On our second panel we have first, Dan Keppen, Executive 
Director of the Family Farm Alliance to testify on S. 2842.
    Second, Bill Long, Chairman of the Arkansas Valley Conduit 
Committee in Colorado to testify on S. 2974.
    Third, Jennifer Gimbel, Director of the Colorado Water 
Conservation Board to testify on S. 3189.
    Welcome to each of you and thank you for traveling back 
here to provide your testimony to the subcommittee. Mr. Keppen, 
please start by summarizing your testimony. We'll then proceed 
with the other witnesses. After all of you have completed your 
statements, we will proceed with questions.

 STATEMENT OF DAN KEPPEN, FAMILY FARM ALLIANCE, KLAMATH FALLS, 
                               OR

    Mr. Keppen. Thank you, Chairman Johnson, members of the 
subcommittee. I appreciate this opportunity to testify on 
behalf of the Family Farm Alliance. My name is Dan Keppen.
    I serve as the Executive Director for the Alliance. We 
advocate for family farmers, ranchers, irrigation districts and 
allied industries in 17 Western states. We're focused on one 
mission and that's to ensure the availability of reliable, 
affordable, irrigation water supplies to Western farmers and 
ranchers throughout the West. Our members relative to this bill 
include irrigation districts and water agencies that are 
responsible for the operation and maintenance of some of the 
Reclamation's largest and most complex facilities.
    The Bureau of Reclamation built and manages the largest 
part of a critical water supply infrastructure that is the 
foundation of the economic vitality of our membership's fate. 
Much of this federally owned infrastructure is now 50 to 100 
years old, approaching the end of its design life. It needs to 
be rebuilt and rehabilitated for the next century.
    In the American West Federal water supply systems are 
essential components of communities, farms, and the 
environment. These facilities are part and parcel of the 
Nation's food production system. Their operation helps ensure 
our ability to provide reliable and secure food for our own 
citizens and the rest of the world.
    Aging public infrastructure across the Nation is a growing 
critical problem as we have seen in media accounts in the last 
few months. Throughout the Bureau of Reclamation's history 
canals have been constructed in the West to deliver project 
benefits. When these canals were constructed they were located 
generally in very rural areas, Fernley, Nevada for example, 
where the major impact of canal failure was the loss of project 
benefits associated with agriculture.
    However with increased urbanization occurring on lands 
below many canals, loss of life or significant property and 
economic damage can now result from failure. Such a failure 
occurred in Fernley, Nevada this past January. Thankfully no 
lives were lost, but hundreds of homes were damaged and 
millions of dollars of damage were imparted to the local 
community.
    The Family Farm Alliance commends Senator Reid for 
introducing the Aging Water Infrastructure and Maintenance Act, 
S. 2842. This bill is timely and it helps shed light on a 
critical problem that our members are becoming increasingly 
concerned with in recent years. Senator Reid has said that the 
purpose of the bill is to provide Reclamation with resources 
and direction to inspect and maintain aging water facilities so 
that disasters like the Fernley flood can be avoided.
    We agree with Senator Reid that there clearly is a need for 
Congress to address the deterioration of the aging Reclamation 
facilities and preventing failures like the one in Fernley 
should be an immediate priority. However we have reviewed S. 
2842 in detail and we do have a number of concerns about how 
this legislation would actually be implemented on the ground. 
We have been working with Senator Reid's staff on some changes 
that we think will alleviate our concerns.
    In general we believe that the bill's approach as written 
is a bit too broad. It mandates additional inspections and new 
maintenance standards for all Reclamation facilities when the 
focus instead should be on those facilities that pose an actual 
risk to urbanized areas. Although S. 2842 would authorize 
financial assistance to non-Federal entities responsible for 
the maintenance of federally owned facilities, it is not clear 
how that assistance would be realized.
    With that said, we believe S. 2842 is intended to address 
an important problem and can achieve its desired effect by 
incorporating changes that reflect the input of water managers 
imminently familiar with canal safety matters. We have vetted 
this issue, you know, very extensively with water managers 
throughout the West that comprise our membership.
    First, we believe that a different level of scrutiny is 
appropriate for canal regions that are cutting through 
urbanizing areas. Focusing inspections and setting standards on 
aging canals that pose significant threats to life and property 
would be far more cost effective than the Reclamation wide 
inspections and new regulatory structure mandated by the bill. 
As specific standards are developed in such cases Reclamation 
after consultation with water users should identify near term 
inspections.
    The bill should recognize Reclamation's and water user's 
ongoing review of operations and maintenance programs. It 
should not create a new Federal standard that would go beyond 
what might be required by existing contract and/or State law 
which would be the case in Idaho.
    Second, this bill provides an opportunity to further push 
an important financing program already passed by Congress 
through this very committee that stymied in its implementation 
by the Office of Management and Budget. S. 2842 should 
specifically direct funding implementation of the loan 
guarantee program authorized by the Rural Water Supply Act of 
2006. The 109th Congress sought to address the financing 
difficulties global agencies face by creating an innovative 
loan guarantee program to help them meet the financial 
obligations for the repair and rehabilitation of Federal water 
supply facilities.
    That Act authorized a loan guarantee program within 
Reclamation that would leverage a small amount of appropriated 
dollars into a large amount of private lender financing 
available to qualified Reclamation contractor water districts 
with good credit. These loan guarantees, a long awaited 
critical financing tool for water users across the West are now 
being held up because of incorrect interpretations of clear 
Congressional direction by OMB. The Family Farm Alliance, 
earlier this year, prepared a very detailed white paper that we 
believe rebuts OMB's assertions and conclusions that explains 
why this program should be implemented post haste.
    That paper was transmitted to Chairman Bingaman and 
committee staff about 2 months ago with the larger Energy 
committee. I would be happy to provide interested members on 
this subcommittee with that document if requested. It really is 
unfortunate that further legislation is required on this matter 
since we do not believe that's what Congress intended when they 
passed the Act 2 years ago.
    The Family Farm Alliance is interested in this particular 
bill introduced by Senator Reid because it helps to underscore 
what is becoming a growing concern in the Western United 
States. It is imperative that we find creative ways to provide 
for the operation and maintenance and modernization of existing 
water supply infrastructure. With some clarifying changes and 
direction to prioritize and implement a financing program 
already signed into law, Senator Reid's bill could provide an 
important first step toward solving our aging water 
infrastructure problems.
    We thank him for his leadership on this issue. Again we 
believe a current bill should be revised so that Reclamation 
guidelines for analyzing projects could be updated to include 
consideration for urbanization and other effects that were not 
in play when these facilities were originally designed many 
decades ago. However one size does not fit all and blanket 
inspections for all Reclamation facilities are not appropriate 
or cost effective.
    Further many local districts may not have the financial 
capability to conduct required repairs to their facilities 
immediately. A loan guarantee program could assist them.
    We believe these recommendations will further improve S. 
2842. Our revisions are intended to help create a revised bill 
that our family farmers and ranchers and our membership can 
embrace. We look forward to continuing to work with the bill's 
sponsors on developing language toward that end.
    Thank you for this opportunity to present our views today.
    [The prepared statement of Mr. Keppen follows:]

   Prepared Statement of Dan Keppen, Executive Director, Family Farm 
                      Alliance, Klamath Falls, OR

    Chairman Johnson and Members of the Subcommittee: Thank you for 
this opportunity to submit testimony on behalf of the Family Farm 
Alliance (Alliance). My name is Dan Keppen, and I serve as the 
executive director for the Alliance, which advocates for family 
farmers, ranchers, irrigation districts, and allied industries in 
seventeen Western states. The Alliance is focused on one mission--To 
ensure the availability of reliable, affordable irrigation water 
supplies to Western farmers and ranchers. Our members include 
irrigation districts and water agencies that are responsible for the 
operation and maintenance of some of the Bureau of Reclamation's 
largest and most complex facilities.
    I have over nineteen years experience in Western water resources 
engineering and policy work, including three years as manager of the 
Tehama County Flood Control and Water Conservation District in 
California. During that time, I was directly involved with management 
and repair work associated with three federally-declared flood 
disasters along the Sacramento River and its tributaries.
    The following has been prepared to present our perspective on the 
``Aging Water Infrastructure and Maintenance Act'' (S. 2842) and to 
offer recommendations to improve it further.

                 THE WEST'S AGING WATER INFRASTRUCTURE

    The Bureau of Reclamation (Reclamation) built and manages the 
largest part of the critical water supply infrastructure that is the 
foundation of the economic vitality of the 17 Western States. Much of 
this federally-owned infrastructure is now 50-100 years old, 
approaching the end of its design life, and needs to be rebuilt and 
rehabilitated for the next century. The Congressional Research Service 
has calculated the original development cost of this infrastructure to 
be over $20 billion, and Reclamation estimates the current replacement 
value of its water supply and delivery infrastructure at well over $100 
billion.
    In the American West, Federal water supply systems are essential 
components of communities, farms, and the environment. These facilities 
are part and parcel of the nation's food-production system and their 
operation helps ensure our ability to provide reliable and secure food 
for our own citizens and the rest of the world. Reclamation estimates 
that $3 billion will be needed from project users in the near-term to 
provide for essential repairs and rehabilitation of Reclamation 
facilities.
    Aging public infrastructure across the Nation is a growing critical 
problem. Throughout Reclamation's history, canals have been constructed 
in the West to deliver project benefits. When these canals were 
constructed, they were located generally in rural areas, where the 
major impact of canal failure was the loss of project benefits. 
However, with increased urbanization occurring on lands below many 
canals, loss of life or significant property/economic damage can now 
result from failure.
    On April 10, 2008 Senator Harry Reid introduced the Aging Water 
Infrastructure and Maintenance Act (S. 2842), which provides an 
initial, timely approach to address these changing conditions.

                               BACKGROUND

    Senator Reid has described S. 2842 as a response to January 5, 2008 
failure of the Truckee Canal, which resulted in the flooding of 585 
homes and businesses in Fernley, Nevada, causing an estimated $50 
million in property damage. At nearly 100 years old, the Truckee Canal 
is one of Reclamation's oldest facilities, and it has experienced 
several failures, with the most recent of which is believed to have 
been caused by burrowing rodents, a common problem throughout the West. 
Senator Reid has said that the purpose of the bill is to provide 
Reclamation with resources and the direction to inspect and maintain 
aging water facilities so that disasters like the Fernley flood can be 
avoided.
    S. 2842 would require Reclamation to inspect all of its facilities 
within two years and to review those inspections every three years 
thereafter. Reclamation would be required to use information gathered 
during the inspections to develop detailed maintenance schedules for 
facilities that Reclamation operates (``reserved facilities'') and 
facilities, such as the Truckee Canal, that are operated by non-federal 
authorities (``transferred facilities''). S. 2842 also requires 
Reclamation to develop a ``National Priority List'' of reserved and 
transferred facilities that need the ``most urgent maintenance,'' and 
to review the projects on the list annually.
    In addition, S. 2842 would direct Reclamation to develop, within 
six months of enactment, regulations to establish standards for the 
condition and maintenance of all project facilities. The standards are 
to require that the project operates in a manner that ensures the 
safety of populations and property located ``in close proximity'' to 
the project. Within one year of enactment, Reclamation would have to 
develop guidelines to ensure compliance with the new regulations.
    The bill authorizes Reclamation to carry out (or have a non-federal 
entity carry out) any repair or modification to a project facility 
necessary to preserve its structural safety. If the structural 
deficiency to be repaired is on a transferred facility, and the problem 
does not result from a failure to comply with the new standards and 
guidelines, Reclamation may reimburse the non-federal operating entity 
for up to 65 percent of the cost of the repair/modification. If the 
structural deficiency on a transferred facility is the result of 
noncompliance with new standards and guidelines, Reclamation can make 
repairs or modifications to minimize the risk of ``imminent harm'' to 
lives and property and then seek reimbursement of costs from the non-
federal operating entity.
    S. 2842 authorizes $5 million in FY 2009 and $1.5 million annually 
in 2010 and 2013 to carry out the facility inspections, and it 
authorizes ``such sums as are necessary'' for project modifications.

                 ISSUES OF CONCERN AND RECOMMENDATIONS

    There clearly is a need for Congress to address the deterioration 
of aging Reclamation facilities, and preventing failures like the one 
in Fernley should be an immediate priority. However, we have reviewed 
S. 2842 in detail and have a number of concerns about the legislation. 
In general, we believe that the bill's approach is too broad. It 
mandates additional inspections and new maintenance standards for all 
Reclamation facilities when the focus instead should be on those 
facilities that pose an actual risk to urbanized areas. The 
Reclamation-wide inspection program and new project condition and 
maintenance standards required by the bill would in many cases 
duplicate or undermine existing operation and maintenance (O&M) 
standards and inspection procedures built into contracts for 
transferred facilities. This would increase costs--federal and non-
federal--without a corresponding increase in public safety. Finally, 
although S. 2842 would authorize financial assistance to non-federal 
entities responsible for the maintenance of federally-owned facilities, 
it is not clear how that assistance would be realized.
    We note three primary areas of uncertainty in the bill that we 
think can be addressed via our associated recommendations.

          1. Where detailed inspection programs already exist, it 
        appears that the legislation would create new or redundant 
        programs.

    We are concerned about how the remedies proposed by S. 2842 would 
mesh with ongoing inspection, operations and maintenance (O&M) 
activities undertaken by local interests and Reclamation.
    For transferred facilities, there is generally a contract between 
Reclamation and the non-federal operating authority that mandates 
standards for inspections and project conditions and performance. 
Reclamation performs regular inspections on these facilities and 
essentially dictates to the local authority which repairs or 
modifications are necessary and the appropriate level of maintenance.
    For example, the major pumping and conveyance facilities of the 
Central Valley Project (CVP) in California are operated and maintained 
by non-federal authorities under transfer agreements with Reclamation. 
These authorities include the San Luis Delta-Mendota Water Authority 
(SLDMWA), Tehama-Colusa Canal Authority (TCCA) and the Friant Water 
Authority (FWA). The transfer agreements for the CVP facilities 
specifically address inspections. In the case of the Friant-Kern and 
Delta-Mendota Canals, Reclamation, in conjunction with the respective 
FWA SLDMWA and TCCA water managers perform a detailed inspection of the 
facilities every three years and identify for Reclamation items 
requiring repair or rehabilitation. Reclamation may require additional 
inspections annually.
    Maintenance of the CVP facilities has improved since the local 
authorities took them over from Reclamation. Since the transfer of O&M 
responsibilities to these California authorities, significant progress 
has been made on repair and rehabilitation projects that were 
repeatedly deferred by Reclamation when it was responsible for 
operating the facilities.
    Reclamation also has an ongoing program to review the operations 
and maintenance on all Reclamation project reserved works. Reports from 
those inspections indicate any deficiencies, their relative priority 
for correction and other aspects of project function. These reviews and 
inspections have been conducted for many decades.
    In Fernley, Reclamation had apparently conducted an inspection on 
the failed canal at some point preceding the failure. Their inspection 
showed nothing to be alarmed about, and it is not clear whether the 
rodent burrows were missed in the inspection or whether the burrowing 
occurred after the inspection took place.
Recommendation: Revise Inspection Requirements for Critical Areas
    We believe that a different level of scrutiny is appropriate for 
canal reaches that are cutting through urbanizing areas. Focusing 
inspections and setting standards on aging canals that pose significant 
threats to life and property would be far more cost-effective than the 
Reclamation-wide inspections and new regulatory structure mandated by 
the bill. As specific standards are developed in such cases, 
Reclamation, after consultation with water users, should identify near-
term inspections, even though there may have been a recent inspection.
    The legislation could require Reclamation to revise its inspection 
procedures to give a higher priority to identifying structural problems 
in facilities where failures could directly impact urbanized areas. 
Improved inspections could bring the most critical aging problems to 
the forefront and, if done correctly, will allow prioritization from 
the most imminent possibility of failure to the least (natural 
occurrences notwithstanding).
    The bill should recognize Reclamation's and water users' ongoing 
review of operations and maintenance programs. Maintenance schedules 
already exist and have been complied with for years. Depending on how 
S. 2842 bill would be interpreted by local Reclamation staff, there is 
the potential that current appropriate maintenance practices of non-
Federal agencies could be turned upside down. It may be more effective 
for local Reclamation staff to sit down with the canal managers on a 
regular basis (e.g., monthly or quarterly) to review concerns that have 
ALREADY been identified by the canal managers and which need attention; 
thereby creating a regular, cooperative approach rather than more, 
questionable, and sometimes confrontational, ``surprise'' inspections.
    The proposed bill should not create a new federal standard that 
would go beyond what might be required by existing contract and/or 
State law. For example, Idaho statutes already require that canals be 
maintained in good repair and prepared to deliver water each year.

          2. It is unclear how the ``federal vs. non-federal'' 
        obligation will be defined for facilities transferred to non-
        federal entities, particularly when some facilities did not 
        meet modern federal standards at the time of transfer.

    S. 2842 seems to assume that all transferred facilities were in 
compliance with engineering design standards at the time Reclamation 
transferred the facilities to local authorities. Unfortunately, that 
was not always the case.
    A very real problem that Western water managers are facing in some 
areas relates directly to the Fernley experience. Many Reclamation 
canal facilities were designed at a time when urban development wasn't 
even a consideration. Often, these facilities were located in rural, 
isolated settings. In the decades that followed initial construction of 
these facilities, issues arose that were not serious problems in rural 
areas.
    For example, water seeping from earth-lined canals has created 
wetlands adjacent to some canal reaches, attracting all manner of 
wildlife. Reaches of the Madera Canal in California near these 
``wetlands'' have become home to huge populations of ground squirrels, 
who have burrowed into canal banks, further threatening the integrity 
of these structures and leading to increased seepage.\1\
---------------------------------------------------------------------------
    \1\ In Western Colorado, prairie dogs pose a similar threat. 
Districts in that area fear that if the prairie dog is included on the 
ESA list as currently proposed, there will be nothing they can to 
control their canal banks from being riddled with burrows.
---------------------------------------------------------------------------
    As new housing developments encroach further and further into the 
once rural areas bisected by these original canals, the current level 
of repair will not be tolerated by the new residents. In fact, in 
Madera, concrete-lined canals -designed with no knowledge of the 
burgeoning growth that would occur many decades later--have failed, 
resulting in litigation leveled at local districts from new residents 
that have moved into the area.
    In addition, the bill's definition of ``project facility'' could be 
read to include local distribution works built and/or operated and 
maintained by non-federal agencies that are fully paid out but title 
transfer has not yet occurred.
Recommendation: Clarify the Local Responsibility for Transferred Works
    The bill should be modified to clearly define the federal 
obligation vs. non-federal obligation for facilities transferred to a 
non-federal entity that didn't meet ``federal standards'' at the time 
of transfer.
    Water users should have a partnership role with Reclamation in this 
process because they have a direct interest in seeing that Reclamation 
facilities are operated and maintained properly. Any kind of canal 
failure could result in non-delivery of water and have adverse effects 
on irrigators (and municipalities) and their corresponding communities.
    The definition of ``project facility'' should be clarified.

          3. Reimbursement timing and reliability are unclear.

    S. 2942's treatment of how and when reimbursements for facility 
repairs and modifications will be provided is not clear. It appears the 
bill treats Reclamation-operated facilities and transferred facilities 
differently. Congress should understand that water users currently 
cover Reclamation costs for inspections under both situations, and in 
most cases, are responsible for funding their own O&M budgets each 
year. In some areas, such as Friant, all of the facilities are 
federally owned. If the locals undertake the work proposed in S. 2842, 
which in many cases would be in addition to their regular O&M budget, 
they must first clearly understand when reimbursement money will become 
available, how to handle full or partial funding in the absence of 
collateral, the manner in which line item earmarks will be considered, 
etc.
    Under the current service agreements between Reclamation and local 
authorities, funding for major repair projects can be challenging. 
Local authorities are also concerned about Reclamation's discretion to 
define which types of project costs are capital and which costs are 
O&M. In the water users' view, more and more of these determinations 
are shifting costs to O&M, and therefore, the water users are 
challenged with significant repairs payable in a single year rather 
than amortized over a longer capital repayment period.
    Water users will face a challenge to make timely repairs if they 
are to rely on funding from this proposed program. By the time funding 
for a project would be reflected in Reclamation's budget, and that 
project is actually implemented, a decade may have elapsed, based on 
current practices.
Recommendation: Clarify Reimbursement Terms for Local Agencies
    The bill should be revised so that adequate funding, realistic 
timing and a reliable means of reimbursement are provided by the 
federal government to non-federal operating entities. The non-federal 
operating entities do not hold title to Reclamation facilities and thus 
have limited collateral for financing purposes.
Recommendation: Specifically Direct Funding and Implementation of Loan 
        Guarantees Program
    Direct loans provide one useful mechanism for local agencies to 
make infrastructure repairs. In the past, Reclamation offered its water 
users loans, which allowed users to finance over many years their 
contractual share of repair and rehabilitation costs. Currently, 
Reclamation does not have an active program that provides either loans 
or a budget line for the water user share of these rapidly increasing 
costs, even under hardship conditions.
    S. 2842 should specifically direct funding and implementation of 
the loan guarantee program authorized by The Rural Water Supply Act of 
2006 (PL 109-451). The 109th Congress sought to address the financing 
difficulties local agencies face by creating an innovative loan 
guarantee program to help them meet their financial obligations for the 
repair and rehabilitation of Federal water supply facilities. The Act 
authorized a loan guarantee program within Reclamation that would 
leverage a small amount of appropriated dollars into a large amount of 
private lender financing available to qualified Reclamation-contractor 
water districts with good credit. In other words, the Congress gave the 
authority to Reclamation to co-sign a loan to help their water 
contractors meet their contract-required, mandatory share of 
extraordinary maintenance, facility rebuilding and replacement costs of 
federally-owned facilities.
    Given this scenario, it is incredible that Reclamation loan 
guarantees, a long-awaited critical financing tool for water users 
across the West, are now being held up because of incorrect 
interpretations of clear Congressional direction by the Office of 
Management and Budget (OMB). This is not what Congress intended.

                         SUMMARY AND CONCLUSION

    Reclamation guidelines for analyzing projects should be updated to 
include considerations for urbanization and other effects that were not 
in play when these facilities were originally designed, many decades 
ago. However, one-size still does not fit all, and blanket inspections 
for all Reclamation facilities are not appropriate or cost-effective. 
Further, many local districts may not have the financial capability to 
conduct required repairs to their facilities immediately. A loan 
guarantee program can assist them. We believe these recommendations 
will further improve S. 2842.
    We hope that you will see our comments in the constructive light in 
which they are offered. Senator Reid's bill, if enacted, will impact 
the family farmers and ranchers who make up our membership, and our 
suggested revisions are intended to help create a revised bill that 
they can embrace. We look forward to working with bill sponsors on 
developing bill language towards that end.
    Thank you for this opportunity to present our views today.

    Senator Johnson. Thank you, Mr. Keppen.
    Mr. Long.

STATEMENT OF BILL LONG, PRESIDENT, SOUTHEASTERN COLORADO WATER 
              CONSERVANCY DISTRICT, LAS ANIMAS, CO

    Mr. Long. Good afternoon Chairman Johnson and committee 
members. I am Bill Long, President of the Southeastern Colorado 
Water Conservancy District. I would like to thank the committee 
for the opportunity to present testimony in support of S. 2974. 
Also, I would like to thank Senators Allard and Salazar for 
their unending efforts to complete the Frying Pan Arkansas 
Project with the construction of the proposed Arkansas Valley 
Conduit.
    Frying Pan Arkansas legislation originally enacted in 1962 
created a multi purpose project that includes a water 
collection system on the West slope of Colorado that collects 
and delivers clean water to the municipal and agriculture users 
in the Arkansas River Basin of Southeast Colorado. Among the 
storage and delivery facilities authorized in the Arkansas 
River Basin was the Arkansas Valley Conduit. Frying Pan 
Arkansas Project Act requires that municipal water supply works 
either be constructed by communities themselves or if 
infeasible by the Secretary with repayment of actual costs and 
interest within 50 years.
    During development of the original project Reclamation 
found the conduit to be economically feasible but the 
beneficiaries lack the bonding capability to construct the 
works themselves. The beneficiaries of the conduit found that 
it is also was financially unfeasible to repay Reclamation 
within 50 years if Reclamation were to construct the conduit. 
Indeed they still cannot afford this project. federally 
mandated water quality regulations are increasing and are most 
difficult to comply with utilizing our current water supply 
source. Protecting public health is of utmost importance to our 
water providers. Without the Arkansas Valley Conduit individual 
local water providers will be forced to provide expensive 
temporary fixes. They will turn to Federal grant programs to 
pay for them.
    In the meantime they will face fines and penalties which 
only exacerbate their financial constraints. The Conduit 
Project and legislation are needed today to assist the 
communities of the Lower Arkansas River Basin to resolve its 
water quality and supply issues through a cost effective 
regional approach. Recently we have been discussing with the 
Bureau of Reclamation, our Congressional delegation and other 
governmental partners an approach that would apply current and 
future miscellaneous revenues generated by Fry-Ark to repay the 
debt on the Fry-Ark components in a different manner than is 
currently provided for in the repayment contract between 
Southeastern and the United States.
    Unique among Federal Reclamation projects, the Frying Pan 
Arkansas Project is beginning to generate significant 
miscellaneous revenues from the storage of non project water in 
Fry-Ark facilities to excess capacity or if and when contracts. 
We propose using this miscellaneous project revenue generated 
by the project itself to count toward the 100 percent payment 
of actual construction costs. The estimated cost of the 
Arkansas Valley Conduit is 300 million and will take until 2021 
to design, permit, acquire right of ways and construct.
    The participants have secured a guaranteed loan for $60.6 
million from the State of Colorado to help in the repayment of 
their obligation. The proposed repayment schedule is based on a 
65 percent Federal share and 35 percent local share. The local 
share would be paid back with interest. The Federal share would 
be repaid with Fry-Ark generated miscellaneous revenue.
    The Arkansas Valley Conduit participants would make 
payments from the proceeds of the State loan and revenues 
generated by local water fees toward construction costs. 
Miscellaneous contract revenues would be used to make payments 
on remaining construction costs. Repayment would be complete in 
2072, within the 50 year requirement of the Fry-Ark authorizing 
legislation.
    The goal of S. 2974 is to make this project a reality. We 
ask you to help provide the means necessary to address the 
water quality concerns of the Lower Arkansas Valley. 
Southeastern and other project proponents are prepared for the 
hard work ahead and ask for your help.
    Mr. Chair, Southeast, the project sponsor and the Bureau of 
Reclamation partner, our partner, is somewhat disappointed with 
the Bureau of Reclamation testimony today. We have had 
continuing dialog with the Bureau concerning this concept over 
the past year. Their testimony today is the first time they 
have expressed concerns about our proposal. It is not timely 
and does not meet the standards set in their motto, ``Managing 
for Excellence.''
    In closing I once again thank the committee for the 
opportunity to testify today and would be happy to answer the 
committee's questions. Also I have two documents I would like 
to submit for the record, a list of our participants and a 
letter from the State of Colorado endorsing the project and 
providing the $60 million loan.* Thank you.
---------------------------------------------------------------------------
    * See Appendix II.
---------------------------------------------------------------------------
    [The prepared statement of Mr. Long follows:]

Prepared Statement of Bill Long, President, Southeastern Colorado Water 
                  Conservancy District, Las Animas, CO

    [Mr. Chair] My name is Bill Long, president of the Southeastern 
Colorado Water Conservancy District (``Southeastern''), and I am 
testifying today in support of S. 2974: a bill to authorize the 
construction of the Arkansas Valley Conduit in the State of Colorado, 
and for other purposes (Arkansas Valley Conduit Act). I thank the 
Subcommittee for the opportunity to testify today. I also thank 
Senators Allard and Salazar for their leadership in introducing this 
legislation and the Subcommittee for holding this hearing today.
    As background for my testimony, Southeastern is a statutory water 
conservancy district (see C.R.S. Sec.  37-45-101, et seq.), which was 
formed on April 29, 1958, by the District Court for Pueblo County, 
Colorado. Southeastern's district boundaries extend along the Arkansas 
River from Buena Vista to Lamar, and along Fountain Creek from Colorado 
Springs to Pueblo, Colorado. Southeastern administers, holds all water 
rights for, and repays reimbursable costs for the Fry-Ark Project, a 
$550 million multi-purpose reclamation project authorized by Congress 
and built by the U.S. Bureau of Reclamation (``Reclamation''). The 
Project diverts water underneath the Continental Divide, from the 
Fryingpan and Roaring Fork River drainages, into the Arkansas River 
drainage, where Project water is stored in Pueblo Reservoir and other 
reservoirs. Southeastern provides Project water and return flows to 
supplement the decreed water rights of water users within 
Southeastern's boundaries. Southeastern repays a large part of the 
Project's construction costs (estimated at $127 million over a minimum 
40-year period), as well as annual operation and maintenance costs, in 
accordance with its repayment contract with the United States. Payments 
are made from property tax revenues available to Southeastern, 
supplemented by revenue from Project water sales.
    On August 16, 1962, John F. Kennedy flew to Pueblo, Colorado to 
officially and proudly proclaim the authorization of the Project, and 
the start of construction. Both the 1962 Act, and the1978 Amendment 
contemplated the construction of the Arkansas Valley Conduit, which has 
yet to be developed, primarily because the constituents do not have the 
funding to develop it.
    As early as 1953, the Secretary of the Interior acknowledged that 
additional quantity and better quality of domestic and municipal water 
was critically needed for the Arkansas Valley, and in particular for 
those towns and cities east of Pueblo. House Document 187, 83d 
Congress, 1st Session, and the Fryingpan-Arkansas Final Environmental 
Statement dated April 16, 1975, both of which have been incorporated by 
reference into the Authorizing Act, recognized that the Arkansas Valley 
Conduit would be an effective way to address this need. The local water 
available from the Arkansas River alluvium has historically been high 
in Total Dissolved Solids (TDS), sulfates, and calcium, and has 
objectionable concentrations of iron and manganese.
    Representatives of local and county governments, water districts 
and other interested citizens of the Lower Arkansas River Basin formed 
a committee in 2000 to consider a feasibility study of the Arkansas 
Valley Conduit. These interested parties formed the WaterWorks! 
Committee and, along with Southeastern, began to review the feasibility 
of developing the Arkansas Valley Conduit. Some of the relevant 
conclusions reached are as follows:

   The cost of the Arkansas Valley Conduit compares favorably 
        with any ``no action alternative,'' which would still require 
        the communities involved to make substantial financial 
        investments to address current water quality and safe drinking 
        standards.
   The financial capabilities of the participating agencies are 
        estimated to be inadequate to fund the construction of the 
        proposed Arkansas Valley Conduit, under a 100 percent funding 
        requirement, but Arkansas Valley Conduit participants could 
        afford to pay 20 percent cost-share.
   There is an adequate water supply to make the Arkansas 
        Valley Conduit feasible.

    As mentioned above, the Arkansas Valley Conduit was included in the 
original Fry-Ark reports integrated into the Fry-Ark Authorization Act. 
The Arkansas Valley Conduit was not built because communities in the 
Lower Arkansas River Basin could not fully fund the Arkansas Valley 
Conduit project. A study of the Arkansas Valley Conduit was prepared 
for Southeastern, the Four Corners Regional Commission and the Bureau 
of Reclamation in 1972. The report's recommendations for construction 
of a water treatment plant, pumping station and conduit to serve 16 
communities and 25 water associations east of Pueblo were not 
implemented at that time due to the lack of federal funding. 
Evaluations on the quantity of water needed to satisfy long-range 
objectives for water users in the Southeastern district area were 
prepared in 1998. Additionally, an update of the estimated construction 
costs presented in the 1972 report was prepared in 1998.
    The question of how to fund the construction of the Arkansas Valley 
Conduit has dominated Southeastern's and its partners' efforts over the 
past five years. Recently, we have been discussing with the Bureau of 
Reclamation, our Congressional delegation and other governmental 
partners an approach that would apply current and future miscellaneous 
revenues generated by Fry-Ark to repay the debt on certain Fry-Ark 
components in a different manner than is currently provided for in the 
repayment contract between Southeastern and the United States, 
including construction of the Arkansas Valley Conduit.
    Unique among Federal Reclamation projects, the Fryingpan-Arkansas 
Project (Fry-Ark) is beginning to generate significant miscellaneous 
revenues from storage of non-project water in Fry-Ark facilities 
through ``excess capacity'' or ``if-and-when'' contracts. We propose 
using this miscellaneous project revenue, generated by the Fry-Ark 
itself, to count towards the 100 percent payment of actual costs 
requirement.
    The estimated cost of the Arkansas Valley Conduit is $300 million 
and will take until 2021 to design, permit, acquire rights-of-way, and 
construct. The participants have secured a guaranteed loan for $60.6 
million from the State of Colorado to help in their repayment 
obligation.
    The proposed repayment schedule is based on 65% Federal share and 
35% local share. The local reimbursable portion would be $105 million 
and would be paid back with interest. The Federal non-reimbursable 
portion of the Arkansas Valley Conduit would be $195 million, and would 
be paid without interest.
    It is estimated that construction of the Arkansas Valley Conduit 
would be complete in 2020 and would begin delivering water in 2021, at 
which time payment on the reimbursable portion of the Fry-Ark costs 
would begin with 3.046% interest.
    The Arkansas Valley Conduit participants would make a $40 million 
payment toward the $105 million reimbursable construction costs. 
Contract Revenue would be used to make payments on the remaining 
reimbursable balance of the Arkansas Valley Conduit.
    Once the reimbursable portion repayment is complete, Contract 
Revenue would be used to pay for the non-reimbursable $195 million 
(without interest.) This non-reimbursable portion repayment would be 
complete in 2072, within the 50 year requirement of the Fry-Ark 
authorizing legislation.
    To implement this approach, the Fry-Ark authorizing act will need 
to be amended to limit Arkansas Valley Conduit beneficiaries' repayment 
obligation to not more than 35 percent. The combined Fry-Ark Contract 
Revenue and Arkansas Valley Conduit beneficiary payments will pay 100 
percent of the Arkansas Valley Conduit construction costs, with 
interest being applied only on the 35 percent reimbursable Arkansas 
Valley Conduit beneficiary obligation.
    The citizens and communities of the Lower Arkansas River Basin have 
waited 30 to 50 years for this project that will improve their water 
quality and supply. The need for the Arkansas Valley Conduit has been 
well established for more than 50 years. The Lower Arkansas River Basin 
communities continue to seek federal assistance in moving this much-
needed project forward. We ask this subcommittee's prompt action in 
support of S. 2974. We look forward to working with our Congressional 
delegation and this Subcommittee to bring this much-needed project to 
fulfillment.

    Senator Johnson. Thank you, Mr. Long.
    Ms. Gimbel.

    STATEMENT OF JENNIFER GIMBEL, DIRECTOR, COLORADO WATER 
                 CONSERVATION BOARD, DENVER, CO

    Ms. Gimbel. Chairman Johnson, thank you very much for the 
invite. Good afternoon, Senator Salazar. My name is Jennifer 
Gimbel and I serve as the Director of the Colorado Water 
Conservation Board within the Colorado Department of Natural 
Resources.
    I am here on behalf of the non-Federal parties to the 
recovery program of San Juan and Upper Colorado River in 
support of S. 3189. I have provided detailed written testimony 
that you have received. S. 3189 provides needed amendments to 
Public Law 106-392, the authorizing legislation for the Upper 
Colorado and San Juan Endangered Fish Recovery Programs.
    I don't think I can do any better at the job explaining the 
need for those programs than Senator Barrasso did and Senator 
Salazar have already done except to add maybe a couple of 
figures to that. That is that the program has provided 
compliance, ESA compliance, for more than 1,600 water projects. 
We're talking about over three million acre feet of depletion.
    This includes ESA compliance for the Bureau of Reclamation 
Projects in the Upper Basin which by the way are very important 
in the scheme of the Colorado River Compact. The programs have 
enjoyed bipartisan support that have been hailed by 
Administration from both parties. By 2010 these programs will 
have constructed approximately $100 million in facilities: fish 
passages, fish screens, flooded bottom lands, habitat, 
hatcheries and a reservoir that augments flows for endangered 
fish.
    These large complex facilities on and/or near the Upper 
Colorado River and San Juan River Basins will require 
rehabilitation, repair or replacement. Authorization for the 
Secretary to conduct capital construction expires September 30, 
2010. Existing funding authority will have been expended.
    S. 3189 will authorize an additional $12 million for 
capital projects for the San Juan Program, including $7 million 
for protecting critical habitat of endangered fish species from 
rock slides in the area west of Farmington, New Mexico, and $5 
million for repair, rehabilitation and replacement of 
constructed capital facilities as needed until the year 2023. 
It will also authorize an additional $15 million in Federal 
expenditures for capital projects for the Upper Colorado River 
Program to construct a fish screen in critical habitat on the 
Green River in Wyoming and again, also for repairs, 
rehabilitation and replacement of constructed capital 
facilities through 2023.
    S. 3189 also recognizes the additional non-Federal cost 
share of $56 million through 2030. The authorization for 
Federal appropriations would only increase $27 million over 13 
years. The remaining $56 million is provided by additional non-
Federal contributions as allowed in Public Law 106-392.
    The non-Federal cost share of capital cost increases from 
52 percent to 58 percent. Chairman Johnson you had mentioned 
the cost share of 17 million. Actually the non-Federal cost 
share has been about $65 million and will go up to $121 million 
with this bill.
    The bill also authorizes annual base funds for power 
revenues which have contributed significantly to the success 
and implementation of the Recovery Programs. That is set to 
expire in 2011. At that point annual base funding will be 
reduced by 39 percent.
    Annual base funding supports actions other than operation 
and maintenance of capital projects and monitoring. It includes 
non-native fish management, research, public information and 
involvement and program management. If this funding is 
eliminated from both programs this could delay and 
significantly impede the Recovery Program achievements in 
restoring the populations. As a result, I believe as either 
Senator Salazar or Senator Barrasso mentioned, more than 1,600 
water projects, as well as future projects, would be in 
jeopardy.
    Also, S. 3189 provides authority for the Western Area Power 
Administration to obtain loans from the Colorado Water 
Conservation Board should power revenues be insufficient in any 
specific year. This authority is already provided for capital 
projects. This bill would then allow that authority to happen 
for the rehabilitation and the rehab and replacement and 
repairs.
    I appreciate the opportunity to provide this testimony to 
the Water and Power Subcommittee. I would note that many, many 
water user groups have supported this. We have letters from the 
Wyoming Water Association, Colorado Water Congress, Nature 
Conservancy, Western Resource Advocates, Navajo Nation, San 
Juan Water Commission, the list goes on.
    With that, I would be happy to answer any questions, Mr. 
Chairman. Thank you for this opportunity.
    [The prepared statement of Ms. Gimbel follows:]

    Prepared Statement of Jennifer Gimbel, Director, Colorado Water 
                     Conservation Board, Denver, CO

    My name is Jennifer Gimbel. I serve as Director, Colorado Water 
Conservation Board, within the Colorado Department of Natural 
Resources. I am here to testify in support of S. 3189.
    The Colorado Water Conservation Board (CWCB) has been involved in 
the Upper Colorado River Endangered Fish Recovery Program and the San 
Juan River Basin Recovery Implementation Program (programs) since the 
inception of these programs in 1988 and 1992, respectively. The 
Colorado Water Conservation Board and the Colorado Division of Wildlife 
actively participate in the programs on behalf of the State of 
Colorado. The State Engineer's Office participates in administration of 
water for delivery to endangered fish habitat within the state of 
Colorado. We not only participate in the governance and the technical 
committees of the programs, but the CWCB has also provided loans to the 
programs to cover capital projects in accordance with Public Law 106-
392.
    I believe you will be receiving or have received letters of support 
for S. 3189 from several participants in the programs, including the 
States of Colorado, New Mexico, Utah, and Wyoming, American Indian 
tribes, water users, power customers and environmental organizations.

       UPPER COLORADO AND SAN JUAN RIVER BASIN RECOVERY PROGRAMS

    The programs have the goals of recovering four federally listed 
endangered fish species in the Upper Colorado River basin while water 
development and management activities proceed in compliance with state 
laws, interstate compacts, and the federal Endangered Species Act. 
Activities of the programs provide Endangered Species Act compliance 
for more than 1,600 water projects depleting approximately three 
million acre-feet per year in the Upper Colorado River basin, including 
every Bureau of Reclamation project in the Upper Basin upstream of Lake 
Powell. No lawsuits have been filed as a result of ESA compliance. The 
programs have substantial grassroots support among participants, 
including the four Upper Basin states (Colorado, New Mexico, Utah, 
Wyoming), American Indian tribes (Navajo Nation, Jicarilla Apache 
Nation, Southern Ute Tribe, Ute Mountain Tribe), water users, power 
customers and environmental organizations. Four federal agencies (U.S. 
Fish and Wildlife Service, U.S. Bureau of Reclamation, National Park 
Service, and Western Area Power Administration) participate in the 
programs. Since the inception of these programs, they have enjoyed 
strong support in Congress, as indicated the substantial bi-partisan 
support in both the Senate and the House of Representatives for annual 
appropriations.
    The programs have been hailed by administrations of both parties 
for their successes. In 2000, Secretary of the Interior, Bruce Babbit 
referred to the Upper Basin recovery programs as ``an ongoing success 
story'' (Colorado River Water Users Association, 2000). Secretary of 
the Interior Gale Norton referred to the programs as a national model 
of how the Endangered Species Act should be implemented (Colorado Water 
Congress, 2006). In 2008, Secretary Dirk Kempthorne awarded the Upper 
Basin and San Juan programs the Department of the Interior's 
Cooperative Conservation Award for the successful history of 
stakeholder collaboration resolving ``seemingly intractable water use 
conflicts...'' (see attached Exhibits A and B).*
---------------------------------------------------------------------------
    * Exhibits A-C have been retained in subcommittee files.
---------------------------------------------------------------------------
    P.L. 106-392: P.L.106-392 was signed into law on October 30, 2000. 
The law authorizes the Bureau of Reclamation to provide cost sharing of 
capital construction and annual operations for the endangered fish 
recovery programs for the Upper Colorado and San Juan River basins. The 
law recognizes significant and specific cost sharing contributions to 
the programs by the States of Colorado, Wyoming, Utah, and New Mexico, 
power customers, and water users for these purposes.
    P.L. 106-392 has been amended twice. P.L.107-375 extended the 
period for capital construction to 2008 for both programs. P.L.109-183 
extended the period for construction of capital projects for both 
programs through FY 2010, authorized an additional $15 million in 
capital expenditures for the Upper Colorado River Recovery Program, and 
recognized an additional $11 million in non-federal cost share 
contributions.
    S. 3189 provides for additional needed authorization for capital 
construction of projects, recognizes additional non-Federal cost 
sharing, and continues annual funding of the programs at current 
levels, as discussed in detail below.

 S. 3189 AMENDMENTS REGARDING ADDITIONAL AUTHORIZATION OF CONSTRUCTION 
      OF CAPITAL PROJECTS AND ADDITIONAL NON-FEDERAL COST SHARING

    NEED FOR 2008 AMENDMENTS RE: CAPITAL PROJECTS: By 2010, these two 
programs will have constructed approximately $100 million in facilities 
(fish passages, fish screens, flooded bottomlands habitat, hatcheries, 
and a reservoir that augments flows for endangered fish) (Exhibit C). 
These large, complex facilities are on, or adjacent to, major rivers in 
the Upper Colorado and San Juan River basins and will require 
rehabilitation, repair or replacement. Many of the facilities are 
susceptible to damage by floods and debris associated with the major 
rivers on which they are located, i.e. Green, Colorado, Gunnison and 
San Juan.
    Additional authority is needed to complete the Tusher Wash fish 
screen on the Green River. Additional time is needed to complete 
capital projects in the San Juan basin.
    Authorization for the Secretary of the Interior to conduct capital 
construction expires on September 30, 2010. Existing funding authority 
for the Upper Colorado Program will have been expended.
    The proposed amendments will authorize funding to protect critical 
habitat. Unstable rock formations adjacent to designated critical 
habitat for the endangered razorback sucker and Colorado pikeminnow in 
the San Juan River caused a major landslide near Farmington, New 
Mexico. A second slide occurred in August, 2007 in the same area. U.S. 
Fish and Wildlife Service determined that the unstable cliffs are a 
threat to critical habitat in the San Juan River. The estimated cost of 
stabilizing the rock formation is $7 million. Presently, authority for 
this type of activity does not exist in P.L. 106-392. It would be 
prudent to have such authority to ensure recovery of the species and 
continued ESA compliance for the water projects that rely on the 
programs.
    Specifically, S. 3189 would achieve the following:

   Authorize an additional $12 million in federal expenditures 
        for capital projects for the San Juan Program for the purposes 
        of a) protecting critical habitat of endangered fish species 
        from rock slides in the area west of Farmington ($7 million), 
        and b) repair, rehabilitation and replacement of constructed 
        capital facilities (fish passages, fish screens, habitat, 
        hatcheries) as needed through 2023 ($5 million).
   Authorize an additional $15 million in federal expenditures 
        for capital projects for the Upper Colorado Program for the 
        purposes of a) constructing a fish screen on Tusher Wash in 
        critical habitat on the Green River, Utah in light of 
        significantly increased construction material costs, and b) for 
        repairs, rehabilitation and replacement of constructed capital 
        facilities (fish screens, fish passages, habitat, hatcheries) 
        as needed through 2023.
   Recognize additional non-federal cost sharing of $56 million 
        through 2023.

    Appropriations will only be requested as needed and any requests 
would be subject to Congressional scrutiny.
    IMPACT ON COST SHARING: S. 3189 would increase the total capital 
projects authorizations from $126 million to $209 million. However, 
authorization for federal appropriations only would increase from $61 
million to $88 million through 2023, an increase of $27 million over 
the 13 fiscal year period. The remaining $56 million is provided by 
additional non-federal contributions of the same kind as recognized by 
and included in the authorizations for the programs set forth by 
Congress in P.L. 106-392. This additional non-federal contribution is 
from power replacement costs due to reoperation of Flaming Gorge Dam to 
benefit the endangered fish. It is conservatively estimated at $56 
million over the current estimate of $22.1 million (Flaming Gorge EIS, 
U.S. Bureau of Reclamation, 2007). With the recognition and inclusion 
of these additional, out-of-pocket power replacement costs, the non-
federal share of capital costs increases from 52% to 58%. Non-federal 
cost sharing also includes $8.9 million from water users previously 
recognized by Congress.
    A comparison of cost sharing under the proposed 2008 amendments 
with the present law is provided below.


  s. 3189 amendments regarding authorization of continued annual base 
                      funding from power revenues
    ANNUAL BASE FUNDING: Annual base funds from power revenues 
contribute significantly to the successful implementation of recovery 
actions by both recovery programs, including instream flow 
identification, evaluation, and protection; habitat restoration and 
maintenance; management of nonnative fish impacts; endangered fish 
propagation and stocking; research, monitoring, and data management; 
public information and involvement; and program management. Subsequent 
to passage of P.L. 106-392, $27,139,900 in power revenue base funds 
have been expended or obligated by the Upper Colorado Recovery Program, 
and $12,969,300 by the San Juan Recovery Program (2001--2007). The U.S. 
Fish and Wildlife Service, the four participating states, American 
Indian Tribes, and water users also provide additional annual funding 
and in-kind contributions for these activities.
    NEED FOR 2008 AMENDMENTS: P.L. 106-392 requires the Secretary of 
the Interior to submit a report to the appropriate Committees of the 
United States Senate and House of Representatives by the end of fiscal 
year 2008 on the utilization of power revenues for annual base funding 
of the recovery programs, and to make a recommendation regarding the 
need for continued annual base funding from power revenues beyond 
fiscal year 2011 that may be required to achieve the goals of these 
recovery programs. The report has been under revision in the Department 
of the Interior since January, 2008. It is expected to be delivered to 
Congress soon. Regardless of when the delivery of this report occurs, 
we urge Congress to enact the amendments to continue annual funding of 
the recovery programs at current levels.
    Unless reauthorized by Congress, the utilization of power revenues 
for annual base funding of recovery program actions, other than for 
operation and maintenance of capital projects and monitoring, will 
cease after fiscal year 2011.
    The approximate fiscal impact of reductions in annual base funding 
(estimates in fiscal year 2008 dollars) after fiscal year 2011 without 
reauthorization is summarized as follows:


    Without reauthorization, annual base funding from power revenues 
for nonnative fish management, research, public information and 
involvement, and program management would be eliminated from both 
recovery programs. This would delay and significantly impede the 
recovery programs' achievements in restoring populations of the 
endangered fishes. As a result, ESA compliance provided by recovery 
program actions for more than 1,600 water projects, as well as future 
projects, would not likely continue. ESA compliance depends not only on 
implementing recovery actions, but is ultimately and directly linked to 
long-term improvement in the status of fish populations and achievement 
of recovery.
    The non-federal participants in the programs recommend that 
Congress also pass amendments to insure continued base funding at 
current levels. S. 3189 accomplishes this. The report by the Secretary 
is under review in the Department of the Interior. It is expected to be 
delivered to Congress soon, and is expected to include recommendations 
consistent with the recommendations of the non-federal participants 
listed below, which are embodied in S. 3189.
    RECOMMENDATIONS REGARDING BASE FUNDING: The non-federal 
participants in the programs offered the following recommendations to 
the Secretary regarding continued authorization of base funding to be 
incorporated into P.L. 106-392:

          1. P.L.106-392 should be amended to allow continued use of 
        power revenues through 2023 for annual base funding of all 
        activities as originally authorized and which are necessary to 
        achieve recovery. The expected date of recovery of the 
        razorback sucker and bonytail is 2023. In 2020, the Secretary 
        should be required to submit a report to Congress on the need 
        for continued funding beyond 2023 and the recommended sources 
        of funding.
          2. To assure that annual base funds are available in the 
        event that the balance in the Upper Colorado River Basin Fund 
        cannot meet annual base funding needs for the recovery 
        programs, Congress should:

                  a) Add authority to enable Western Area Power 
                Administration to borrow from the Colorado Water 
                Conservation Board Construction Fund the annual base 
                funds that would otherwise be derived from the Upper 
                Colorado River Basin Fund (Basin Fund) and to repay 
                those borrowed funds from the Basin Fund, as is 
                currently authorized for capital construction projects 
                funded with the Basin Fund; and,
                  b) Add specific authority for congressional 
                appropriations for annual base funding if annual 
                funding of the recovery programs cannot be provided 
                from the Basin Fund or the Colorado Water Conservation 
                Board loans in a given year or years, and direct 
                Reclamation, in consultation with Western Area Power 
                Administration, to inform Congress if such a situation 
                is reasonably foreseeable as far in advance as 
                possible.

          3. The language in the existing legislation that states that 
        base funding and depletion charges previously agreed upon 
        should be retained: ``Nothing in this Act shall otherwise 
        modify or amend existing agreements among participants 
        regarding base funding and depletion charges for the Recovery 
        Implementation Programs.'' This provides that annual and in-
        kind cost sharing by the U.S. Fish and Wildlife Service, the 
        Bureau of Reclamation, the four participating States, American 
        Indian Tribes, and water users identified in the original 
        agreements will continue.
          4. The authorizing legislation should be amended to state 
        that provision of base funding through 2023 should be 
        contingent upon the recovery programs modifying the respective 
        Cooperative Agreements extending the terms of the recovery 
        programs through 2023, and that any needed modifications take 
        place at least one year prior to expiration of the current 
        agreements.

    S. 3189 implements these recommendations.
    Letters supporting these recommendations have been submitted to the 
Secretary of the Interior by the following non-federal recovery 
programs' participants for the Secretary of the Interior:

          State of Colorado; State of Utah; State of New Mexico; State 
        of Wyoming; Jicarilla Apache Nation; Navajo Nation; Southern 
        Ute Indian Tribe; Ute Mountain Ute Tribe; Colorado Water 
        Congress; Utah Water Users Association; Wyoming Water 
        Association; San Juan Basin Water Users;Colorado River Energy; 
        Distributors Association (CREDA).

    I appreciate the opportunity to provide this testimony to the Water 
and Power Subcommittee.

    Senator Johnson. Thank you. Mr. Keppen, your testimony 
recommends that S. 2842 take into account the ongoing 
inspection and maintenance programs paired up by BOR and water 
users. Could these programs provide the basis for a national 
priorities list of infrastructure maintenance to water users? 
Prioritize maintenance actions based on the risk posed to 
populated areas?
    Mr. Keppen. I would say, Mr. Chairman, the answer to your 
first question is yes. I think we've advocated kind of a 
cooperative approach to doing that between the water users and 
the Bureau of Reclamation. Maybe one of those forums is 
actually what Commissioner Johnson mentioned earlier, this 
canal workshop series that has been set up, but something 
similar to that where the water users, the local entities and 
the Bureau are sitting down together to come up with that list.
    The second question, I guess, was regarding whether water 
users prioritize maintenance actions based on the risk posed to 
population areas. It's going to depend, I think, where you're 
at. I ran a flood control district in Sacramento Valley for 3 
years about 10 or 15 years ago. I would say, definitely yes, in 
that case. I think that it is the case probably for most 
districts.
    Maintenance actions are contingent on a lot of things. 
Population is probably one of the most important, also the 
location of important infrastructure, pumping plants, things 
like that. But I would say, you know, without going out and 
canvassing my membership based on my experience and based on 
what I've seen out there, I would say, yes. Maintenance actions 
are probably, very definitely, are based in large part on the 
areas they protect.
    Senator Johnson. Mr. Long, BOR questions whether the 
revenue available from the excess capacity contracts will be 
sufficient to repay the cost of the conduit. How does your 
analysis differ from BOR's?
    Mr. Long. Chairman Johnson, our analysis differs in that we 
have used contracts that have not been executed but we fully 
expect to be executed. In the West we are continuing our 
drought this year. As a very good example we have had adequate 
snowfall in the mountains but this spring has brought little or 
no rain.
    So storage is absolutely critical for us folks in the West. 
The larger communities, Colorado Springs, those entities at 
this time are pursuing these contracts that we fully expect to 
be executed.
    Senator Johnson. If BOR is correct and the excess capacity 
contract for revenues are not sufficient to meet the repayment 
obligation would the water users make up the difference?
    Mr. Long. Mr. Chairman, the water users, our participants 
would make every effort to make up the difference. Again, we 
think the Bureau is incorrect. Storage space in the West is 
more valuable than gold or oil.
    It will be utilized. There will be contracts that generate 
revenue. Whether they be short term, if and when annual 
contracts were long term. We fully expect the revenue to be 
there.
    Senator Johnson. Ms. Gimbel, the Administration's testimony 
suggests that S. 3189 be amended to increase the non-Federal 
contribution for capital projects. It also opposes the 
provisions authorizing WAPA from seeking loans from the 
Colorado Conservation River Board. How would the 
Administration's proposed changes to the bill affect the 
support that the participants in the Recovery Programs?
    Ms. Gimbel. Mr. Chairman, first of all I'm rather amazed 
that a 58 percent cost share that this bill will rise up to for 
non-Federal is not sufficient for the Administration to 
consider continued support of this program. With respect to the 
WAPA, Western Power Administration, we have already done loans 
with them on capital projects. My Board has given them two 
loans.
    This is just allowing the same to happen, if necessary, to 
keep the program continuous for rehabilitation and repair 
projects, replacement projects.
    Senator Johnson. Senator Salazar.
    Senator Salazar. Thank you very much, Chairman Johnson. 
Director Gimbel, let me ask you a question just concerning the 
Recovery Programs of the Upper Colorado and San Juan. How many 
states benefit from the implementation of those recovery 
programs?
    Ms. Gimbel. Four states and probably more because the water 
goes downstream to the lower basin to other states. But not 
only is it just the states, as I've said, it's three million 
acre feet worth of depletions as well as the water users, the 
Federal Government. Everybody benefits.
    Senator Salazar. Would it be fair to say the states of 
Wyoming, Colorado, Utah and New Mexico would have their water 
right systems essentially torn asunder if it weren't for the 
fact that we have the Endangered Fish Recovery Programs that 
had been agreed upon by those states and the Federal 
Government?
    Ms. Gimbel. That is a very fair statement, sir.
    Senator Salazar. Thank you very much. Since I recognized 
other Colorado people in the audience, a friend that has been 
working long and hard on the Recovery Programs for Colorado, 
Tom Pitts, I also see out in the audience. Welcome to the 
hearing today as well.
    Mr. Long, take a minute and just through your eyes, 
describe those communities downstream of Pueblo that would 
benefit from the Lower Arkansas River Conduit. What are they 
like?
    Mr. Long. Each and every community is a small agriculture 
community, well below the average household income of the State 
of Colorado, probably half. It is an area though that has 
struggled, but fought hard to survive and I think successfully. 
We continue to be a very productive agriculture area, even 
though we're now in probably our seventh year of drought.
    But it's an area with a great deal of heart, a great deal 
of patriotism and we believe it is important to continue the 
agriculture heritage and production of food for American 
citizens.
    Senator Salazar. If this Arkansas River Conduit becomes a 
reality will it help in the economic diversification of those 
communities downstream of Pueblo as they look at regaining 
their foothold economically?
    Mr. Long. I believe so, absolutely. It is difficult to 
attract new industry with our current water supply. Some 
communities, we have 12, at least 12 communities right now who 
are under enforcement orders for the State of Colorado to 
improve water quality. The balance are also struggling with 
being in compliance.
    Two communities such as mine, we have built reverse osmosis 
plants utilizing Federal funds. Those communities and that has 
ended up being a band aid. Those communities are now going back 
to State and Federal programs requesting assistance in meeting 
the discharge demand. Reverse osmosis plants create a discharge 
which is considered to be a hazardous material.
    So, all of these factors make it very difficult to promote 
economic development. We have lost our tomato canning factory, 
our pickle factory. We have replaced those with other 
industries. But yes, we need good, clean water to be 
successful.
    Senator Salazar. Mr. Long, can you also explain to the 
committee the effort that it took for you and for others to go 
before the State, Colorado Water Conservation Board and their 
loan program and then the State General Assembly to secure the 
loan you have obtained?
    Mr. Long. Yes, and fortunately we had a great deal of help 
from some of the Board members from the Colorado Water 
Conservation Board. But it was a project that took nearly 2 
years. We spent several hundred thousand dollars in refining 
our project coming up with what we believe is the best 
proposal, the most cost effective, the most long term solution.
    We took this proposal to the Colorado Water Conservation 
Board. They approved it unanimously upon first presentation and 
then passed it to the State legislature for approval who also 
approved it a little over a year ago.
    Senator Salazar. I want to thank you, Mr. Long and Ms. 
Gimbel and all the witnesses that are here from Colorado. Mr. 
Chairman, Senator Johnson, thank you for your inspiration and 
your leadership of this committee.
    Senator Johnson. I have no additional questions. Thank you 
all to the witnesses for your participation today.
    For the information of Senators and their staff, questions 
for the record are due by the close of business tomorrow. With 
that, this hearing is adjourned.
    [Whereupon, at 3:50 p.m. the hearing was adjourned.]


                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

     Responses of Jennifer Gimbel to Questions From Senator Johnson
    The Administration's testimony suggests that S. 3189 be amended to 
increase the non-Federal contribution for capital projects. It also 
opposes the provisions authorizing WAPA from seeking loans from the 
Colorado River Water Conservation Board.
    Question 1. How would the Administration's proposed changes to the 
bill affect the support of the participants in the recovery programs?
    Answer. I would like to address your question in the two parts as 
posed.
    A. The Administration's testimony suggests that S. 3189 be amended 
to increase the non-Federal contribution for capital projects.
    P.L. 106-392 recognizes contributions to capital projects by the 
four Upper Basin states (Colorado, New Mexico, Utah, and Wyoming) of 
$17 million dollars and a $17 million dollar contribution by power 
customers.
    Commissioner Johnson states in his testimony: ``Third, this bill 
attributes additional non-federal cost sharing of $56 million dollars 
which relates to power replacement costs borne by power consumers due 
to the operation of Flaming George Dam to benefit the endangered fish 
(years 2010 through 2023). This is consistent with the original 
definition of cost sharing provided in Public Law 106-392.''
    These power replacement costs, a result of reoperating Flaming 
Gorge Dam to benefit the endangered fish, are real, ``out-of-pocket'' 
expenses borne by local, rural electrical utilities, communities and 
Native American tribes who hold contracts for federal electrical power.
    In addition to the increased non-federal cost sharing of $56 
million, the proposed amendments (S. 3189) request Congress to 
authorize an additional $27 million dollars in federal cost sharing, 
which is approximately one-half the additional non-federal cost sharing 
recognized in the bill. The additional $56 million dollars of non-
federal cost share raises the non-federal cost share for capital 
projects from 52 percent under current law to 58 percent under the 
proposed amendments, even with the additional $27 million dollars in 
federal cost share.
    Given that the non-federal cost share with the proposal amendments 
in S. 3189 will be 58 percent of capital projects construction costs, 
it is not considered reasonable to ask for additional cost sharing from 
states and power customers.
    Requests for additional cost sharing to raise the non-federal share 
above 58 percent would likely meet strong opposition from states 
legislatures and power customers, and erode support for these 
nationally recognized models of implementation of the Endangered 
Species Act.
    B. The Administration also opposes provisions authorizing WAPA from 
seeking loans from the Colorado River Water Conservation Board.
    Annual funding from the Upper Colorado River Basin Fund 
(hereinafter referred to as the Basin Fund) was authorized in P.L. 106-
392 at $4 million dollars/year for the Upper Colorado Recovery Program 
and $2 million dollars/year for the San Juan Recovery Program, adjusted 
annually for inflation. These funds are used to operate and maintain 
constructed capital projects (fish screens, fish passages, bottom lands 
habitat, hatcheries), monitor native and non-native fish populations, 
conduct extensive non-native species management and control activities, 
and meet program management, and administration services needs and 
support other activities necessary to recover endangered fish species.
    S. 3189 is designed to ensure the availability of those funds. As 
Commissioner Johnson points out:

          The proposal to grant WAPA borrowing authority would replace 
        a provision of existing law which requires that WAPA and the 
        Bureau of Reclamation request appropriations in the event that 
        base funds are insufficient.

    During a critical stage of the recent prolonged drought in the 
western United States, despite Western Area Power Administration's 
attempts to raise electrical power rates, reduce contractual 
obligations and take other actions in response to the drought, Western 
forecasted that the Basin Fund balance would be insufficient to fund 
the environmental programs, including the two recovery programs base 
funding needs. Western and Reclamation undertook temporary actions in 
order to continue to fund these programs, however, no request for 
appropriations was made to Congress.
    The amendment ensures continuation of annual funding for the 
recovery programs. This funding is for essential activities to recover 
the fish species--and is necessary to maintain ESA compliance for some 
1,600 water projects, including every Reclamation project on the 
mainstem and tributaries within the Upper Colorado River Basin upstream 
of Glen Canyon Dam.
    The loan provision provides that base funding, in the event of a 
drought, be provided from the Basin Fund as originally intended by 
Congress, if a loan agreement can be worked among Reclamation, WAPA, 
and the Colorado Water Conservation Board.
    I would point out that the balance of monies in the Basin Fund are 
a function of varying hydrological conditions in the Colorado River 
Basin and the price of supplemental electrical power on a very volatile 
market. The current drought began in water-year 2000 and has been 
severe and long-lasting. A Basin Fund with an adequate balance to 
``tie-over'' O&M replacement and emergency expenses in one drought year 
may become depleted in successive drought years or because of high 
prices for supplemental electrical power. Without the loan provision, 
Recovery Program participants would be requesting appropriated funds in 
Reclamation's budget on very short notice. This would be disruptive to 
the normal Reclamation budgeting and appropriations process and could 
disrupt other Reclamation activities included in long term budget 
planning. Such requests would place our Congressional delegations in a 
difficult position.
    The Administration also states ``further, it has been long standing 
Treasury policy that, if borrowing authority is justified, federal 
agencies should be authorized to borrow exclusively from the 
treasury.'' While this may be general policy, Congress, in P.L. 106-
392, provided borrowing authority for recovery program capital funds 
from the Colorado Water Conservation Board, if needed, in the event the 
Basin Fund could not provide those funds. Western Area Power 
Administration has used this loan provision and borrowed from Colorado 
Water Conservation Board in two successive years during the current 
drought. The additional provision for borrowing of annual funds from 
the Colorado Water Conservation Board is consistent with established 
Congressional policy for the recovery programs.
    The non-federal participants in the programs support the additional 
borrowing authority for annual base funds as a means of ensuring that 
base funds are available for essential recovery program functions when 
severe drought conditions in the Upper Colorado River Basin impact the 
Basin Fund. This provision is consistent with Congressional intent of 
having the Basin Fund provide annual funding to the recovery programs, 
and provides the means for repayment from the Basin Fund of any such 
loan. Borrowing is not intended to be routine or occur over a period of 
years. It is likely that any shortfalls will be temporary. We 
anticipate this borrowing provision would be used infrequently by 
Western Area Power Administration and Reclamation.
    Question 2. Your testimony indicates that the S. 3189 would 
authorize additional federal appropriations for the repair, 
rehabilitation, and replacement of constructed facilities that are key 
to the ESA recovery programs.
    Will this be an ongoing Federal responsibility after 2023, the 
projected recovery timeframe for the endangered species at issue, or 
will the States and other program participants take over some 
responsibility for maintaining these facilities?
    Answer. Currently, P.L. 106-392 states that ``utilization of power 
revenues for annual base funding shall cease after fiscal year 2011, 
unless reauthorized by Congress; except that power revenues may be 
continued to be utilized to fund the operation and maintenance of 
capital projects and monitoring.''
    S. 3189 provides for annual base funding to cease after 2023, 
unless reauthorized by Congress except that power revenues may continue 
to be utilized only to fund the operation and maintenance of capital 
projects and monitoring. S. 3189 also requires the Secretary submit a 
report by the end of fiscal year 2020 regarding continued use of base 
funding to Congress after 2023 that may be required to fulfill the 
goals of the recovery implementation programs.
    Congress will have the opportunity prior to 2023 to assess the 
needs of the recovery programs at that time and determine the need for 
continuing annual funding for operation and maintenance of these 
facilities. We anticipate that the Congress will confer with the states 
and other program participants regarding these needs and make an 
appropriate decision regarding ongoing federal responsibilities.
    Question 3. One of the tables attached to your testimony indicates 
that overall base funding would be reduced by 39% ($2.8 million) after 
2011, if the use of power revenues were not reauthorized as set forth 
in S. 3189.
    What are the other sources of base funding that make up the 
remaining 61% ($4.25 million)?
    Answer. All the base funding referred to in the testimony and table 
($7.017 million dollars in FY08) is from power revenues. Without the 
amendments proposed in S. 3189, this source of funding would be reduced 
by 39 percent ($2.766 million) to $4.256 million. Therefore, the 
remaining 61 percent referred to in the testimony is also from power 
revenues.
    I would like to point out that base funding is also provided by the 
states. Furthermore, the states are mandated under P.L. 106-392 to 
continue that funding under Section 3(d) (2) of P.L. 106-392 which 
states as follows: ``Nothing in this act shall otherwise modify or 
amend existing agreements among participants regarding base funding and 
depletion charges for the recovery implementation programs.'' The 
intent of this clause, which remains unmodified by S. 3189, is to 
ensure that original agreements to provide base funding by the states 
and water users are maintained. For example, in 2008, the states of 
Colorado, Utah, and Wyoming contributed $425,000 dollars in annual 
funding to the program through in-kind contributions, in addition to 
the costs of participation in the programs through various committees 
and subcommittees. Water users also have contributed approximately $2 
million through depletion fees on new water projects since the 
inception of the programs.
    Question 4. S. 3189 would continue to use revenues in the Upper 
Colorado Basin Fund to help pay for the ESA Recovery Programs.
    What is your understanding on whether there will be sufficient 
revenues available from the Fund to continue to assist in addressing 
environmental needs in the Upper Colorado River Basin (i.e. the ESA 
recovery programs and the Glen Canyon Adaptive Management Program)?
    Answer. Western Area Power Administration cannot predict with 
certainty that monies in the Basin Fund will be available to meet the 
needs of these environmental programs under all hydrological and market 
conditions. Moreover, monies collected in the Basin Fund are required 
to repay to the Treasury principle, interest on CRSP facilities and 
OM&R and emergency expenses. This is precisely the purpose of extending 
the loan authority to include base funding for the two recovery 
programs. Over the long term, there may be periodic shortages caused by 
drought and adverse market conditions that would result in use of the 
provisions of S. 3189 to obtain a loan from the Colorado Water 
Conservation Board or, if such a loan could not be negotiated, program 
participants requesting funds to be appropriated by Congress to cover 
annual program costs. We anticipate that in the long term the Basin 
Fund will be able to provide the funds, and in the event of a loan, the 
Basin Fund will be able to repay the loan prior to the prescribed 
repayment date of 2057 in S. 3189.
                                 ______
                                 
        Responses of Bill Long to Questions From Senator Johnson

    Your testimony indicates that if the Conduit were not built, the 
participating communities would still need to make substantial 
investments to meet water quality standards.
    Question 1. What options do the communities have with respect to 
long-term water supplies, and how would they pay for the investments 
needed to make that water available? Is the Conduit the most cost-
efficient way to address long-term water needs?
    Answer. The need for the Arkansas Valley Conduit is driven by 
projected population growth, the economically-disadvantaged nature of 
the lower Arkansas River valley, and increasingly costly water 
treatment requirements being experienced by certain water providers in 
the basin. The increasing cost of water treatment is a result of the 
poor quality of locally available groundwater and increasingly 
stringent requirements of the Safe Drinking Water Act. The local 
groundwater available from the Arkansas River alluvium has historically 
been high in total dissolved solids (TDS), sulfates, and calcium, and 
has objectionable concentrations of iron and manganese. The Colorado 
Department of Public Health and Environment (CDPHE), in their February 
2002 report on the status of water quality in Colorado, states:

          The Lower Arkansas River in Colorado is the most saline 
        stream of its size in the U.S. The average salinity levels 
        increase from 300 parts per million (ppm) TDS east of Pueblo to 
        over 4,000 ppm near the Kansas state line. The shallow alluvial 
        groundwater along the River has similar salinity.

    The results of CDPHE-sponsored sampling of the Lower Arkansas River 
alluvial aquifer showed that a significant number of domestic water 
supply wells contained nitrate levels above 10 mg/l (EPA's drinking 
water standard). Additionally, various water suppliers have recently 
reported measurable concentrations of radionuclides in their water. 
This extremely poor groundwater quality, combined with increasingly 
stringent quality regulations of the Safe Drinking Water Act, has 
caused several local water suppliers to invest in expensive water 
treatment facilities to assure a reliable water supply for their 
customers. Due to poor groundwater quality, some local water providers 
are already out of compliance with the increasingly stringent water 
quality regulations of the Safe Drinking Water Act. Others are 
increasingly at risk of being designated out of compliance. Facing 
federal sanctions, several water suppliers have investigated expensive 
water treatment facilities to achieve compliance with the federal 
regulations and to assure a reliable water supply for their customers. 
The risk posed to the economically depressed region's ratepayers by 
requirements for as many as 10 new treatment facilities with uncertain 
costs are considered unacceptable.
    Generally, all drinking water systems in the Lower Arkansas River 
Basin, from St. Charles Mesa in eastern Pueblo County to Lamar in 
Prowers County, are concerned with the poor water quality in this 
region. Many of the more than 40 water providers in the Lower Arkansas 
River Basin could benefit from the Arkansas Valley Conduit water 
providers do not satisfy, or only marginally satisfy, current drinking 
water standards. All communities must meet the state and federal 
primary drinking water standards through treatment or source 
replacement. Less documented, however, is the potential burden placed 
upon communities by high raw water concentrations of various 
unregulated water quality constituents such as iron, manganese and 
hardness. These constituents can cause accelerated infrastructure decay 
and loss of tax base and economic impacts associated with factories and 
businesses locating elsewhere.
    In 2003, consultants for WaterWorks! organization , a group of 
Arkansas Valley water providers, evaluated what they called the ``No-
Action'' alternative. The No-Action alternative considered the actions 
likely to be necessary for the larger municipalities and water 
suppliers in the Conduit project area, should the Conduit not be built. 
A copy of these pages from the 2003 report is attached.* Among the 
major alternatives to the Conduit to address the significant water 
quality issues is Reverse Osmosis and groundwater injection. The 
Financial Feasibility Study published in October 2004 shows a no-action 
alternative cost of $252.7 million. The study notes that this estimate 
is on the low side because of ``Unknowns regarding future water quality 
regulations'', ``Continued degradation of water quality requiring 
additional treatment'', and ``Stringent regulation pending regarding 
disposal of waste streams from the water treatment processes''. The 
factors are expected to drive up the cost of the no-action alternative 
that would require each water provider to upgrade their current 
treatment facilities.
---------------------------------------------------------------------------
    * Report has been retained in subcommittee files.
---------------------------------------------------------------------------
    The Conduit is the most cost-efficient way to address long-term 
water needs. Rather than continuously spending funds for upgraded water 
treatment facilities and increased operation and maintenance costs, it 
has been proposed that a pipeline from Pueblo Reservoir could be used 
to provide higher quality water to users in the Lower Basin. The water 
available from Pueblo Reservoir readily satisfies the requirements of 
the Safe Drinking Water Act and is not expected to change significantly 
in the future. The benefits of the proposed pipeline are that the well-
defined costs of constructing and operating a pipeline could replace 
the continuously increasing and unconstrained costs of water treatment. 
Additionally, the improved quality of potable water will result in a 
better quality of life for water users in the basin.
    The conduit will reduce the drinking water treatment costs in two 
ways. First, a single Valley filtration plant will, through economics 
of scale reduce overall treatment costs. For example, to run a single 
filtration plant of 24 million gallons per day (mgd) is 60 percent less 
expensive than operating 20 smaller plants. The annual savings could be 
approximately $2 million. Secondly, for those communities operating 
Reverse Osmosis (RO) plants, now or in the future, the costs of 
treatment can be reduced through the blending of conduit and local 
water. It may be possible to deliver Conduit water RO plants and 
pressures which either eliminate or significantly reduce the need for 
pumping, and the electricity required for it.
    Many communities are limited in the amount of ground water they can 
use for drinking water because of its quality. Mixing the newly 
available conduit water with already developed ground water systems 
will maximize use of existing ground water supplies. Depending on the 
varying water quality of the ground water, the conduit water could 
allow municipalities or other water providers to fully utilize their 
existing sources and minimize testing or treatment costs. Additionally, 
existing supplies could be utilized as drought protection in the event 
a prolonged drought period is experienced.
    Question 2a. BOR questions whether the revenue available from the 
excess capacity contracts will be sufficient to repay the costs of the 
Conduit.
    How does your analysis differ from BOR's? What current repayment 
obligations exist for the Fry-Ark Project?
    Answer. Our revenue availability analysis makes a conservative 
forecast of future contracts and income, using present contracts and 
BOR policies to anticipate terms and rates of these contracts. We have 
studied the availability of excess capacity in Project facilities as 
part of a District led effort called the Preferred Storage Options 
Plan. Because of our work with the Project beneficiaries, and current 
contract requests already before BOR, we have a good idea of the scope 
of contracts that will be executed in the future and have staged the 
revenue based on a conservative anticipation of when those contracts 
are likely to be in place. We have only accounted for a portion of the 
likely future revenue in our calculation.
    BOR on the other hand, only counts those contracts already executed 
and does not anticipate execution of any future contracts in their 
analysis.
    With regard to current repayment obligations, Southeastern signed a 
50 year repayment contract with Reclamation in 1982 for the portions of 
the project that it is responsible for repaying. The original cost for 
the Project was $585,103,000, with Southeastern's liability being 
$132,237,478. Southeastern's initial repayment was split with 
Irrigation uses owing $74,348,993, and M&I owing $57,888,485. The M&I 
portion incurs an annual interest obligation at the rate of 3.046 
percent. Southeastern is currently paying down the M&I portion of the 
balance, then the remaining Irrigation portion will be repaid.
    Southeastern's contract with Reclamation requires it pay the 
Operations & Maintenance (O&M) costs for the upcoming year first, and 
then any remaining collections will be applied against the current debt 
balance. The O&M expected payment for 2008 is $2,565,500.
    As of December 31, 2007, Southeastern owed $76,123,882 on the 
original debt. Southeastern's ad-valorem tax collections to be applied 
to payment for this year are expected to total $4,304,083. In addition, 
all water sales and winter water storage collections will be applied 
against the balance owed. After paying the O&M, it is expected that 
Southeastern will be able to pay approximately $4 million towards to 
balance owed.
    Southeastern's current M&I balance owed is $6,182,811and expects to 
have the M&I balance paid off in 2011. The Irrigation component's 
remaining balance is $69,941,071 and is projected to be paid off well 
before the deadline of 2032.
    In addition, Southeastern has a current debt obligation of $842,000 
to Reclamation for the Safety of Dams repairs performed in 1999-2001. 
There is no interest obligation on this debt because the remaining 
balance represents Irrigation's portion of the debt. The District is 
currently making annual payments of $60,000 towards this obligation. 
The funds for the repayment are generated by a surcharge on water sales 
and storage contracts, which are sufficient to cover the annual 
obligation.
    Question 2b. If BOR is correct and the excess capacity contract 
revenues are not sufficient to meet the repayment obligation, would the 
water users make up the difference? Would you be agreeable to language 
being inserted into the bill that would make clear that the project 
participants are fully responsible for 35% of the construction costs in 
the event that the excess capacity contract revenues are insufficient?
    Answer. We would be agreeable to inclusion of language similar to 
that in the Water Supply Act of 1958 (43 U.S.C. Sec.  390b) to the 
effect that State or local interests be required to give reasonable 
assurances that repayment of the project costs will be made within the 
life of the project.
                                 ______
                                 
       Responses of Dan Keppen to Questions From Senator Johnson

    Your testimony recommends that S. 2842 take into account the 
ongoing inspection and maintenance programs carried out by BOR and the 
water users.
    Question 1a. Could these programs provide the basis for a National 
Priorities List of infrastructure needing urgent maintenance?
    Answer. Yes, within the scope envisioned by S. 2842, which focuses 
on those facilities maintained and operated by the Bureau of 
Reclamation and its water customers. Outside of this scope, there are 
also many other water delivery and flood control facilities owned, 
operated and/or maintained by other federal agencies (e.g. U.S. Army 
Corps of Engineers), state government (e.g. California Department of 
Water Resources) and local entities (e.g. county flood control 
districts).
    Development of a National Priorities List for the facilities 
considered by S. 2842 would best be accomplished in a collaborative 
manner between the Bureau of Reclamation and its water customer 
partners.
    Question 1b. Do the water users prioritize maintenance actions 
based on the risk posed to populated areas?
    Answer. Depending on the characteristics of the area being served, 
different water users will have different priorities. With that said, 
it can safely be concluded that local maintenance actions are 
prioritized according to the risk posed to populated areas, key 
adjacent infrastructure, budget constraints, and contractual 
requirements between local entities and the federal government.
    Question 2. You mentioned that the Administration has held up 
implementing the loan guarantee program authorized in the 2006 Rural 
Water Supply Act, and that S.2842 should be amended to address this 
situation.
    Can you tell us what specific problem exists with the 
Administration's implementation of the program, and how you think that 
Congress can remedy the situation?
    Answer. Implementation of the 2006 Rural Water Supply Act (P.L. 
109-451) is now being held up because of incorrect interpretations of 
clear Congressional direction by the Office of Management and Budget 
(OMB). An April 3, 2008 memo prepared by OMB (attached)* concluded that 
the Bureau can carry out the loan program only if it is willing to 
siphon large amounts of funding away from other programs and needs 
within its budget. We believe that OMB's conclusions are wrong and that 
they are driven by a desire to prevent implementation of the program. 
We have prepared a White Paper (also attached) that rebuts OMB's flawed 
arguments and representations.
---------------------------------------------------------------------------
    * Document has been retained in subcommittee files.
---------------------------------------------------------------------------
    A key flaw is OMB's argument that the Government must carry 100% of 
the total loan amount as contingent liability in the Federal budget. 
The term ``subsidy'' (per the Federal Credit Reform Act of 1990) is 
defined as the annual budget authority needed to cover the portion of 
credit assistance estimated to be un-recovered because of defaults, 
expressed as a percentage of the amount of each loan approved for 
guarantee. OMB suggests in their memo that this ``subsidy'' should be 
100% of the total loan amount that is guaranteed by the government. 
This logic defies the entire financing system used daily by both 
private and public sectors alike, as further detailed in the attached 
White Paper. Using more appropriate logic, the government would only be 
contingently liable for a fraction of the total guaranteed loan 
amount--in most cases calculated to be 1%-3% of the total loan amount 
guaranteed. In fact, the Congressional Budget Office assumed a loan 
guarantee subsidy rate of 1%-2% when it provided Congress with a cost 
estimate for the Rural Water Supply Act legislation (S. 895).
    Congress can help remedy this situation through new legislative 
language. Specifically, S. 2842 could be amended to include a new title 
that would establish a loan guarantee finance demonstration program. 
Such a program could identify specific demonstration projects, provide 
timelines to develop memoranda of agreement between the Interior 
Department and local project proponents, and provide authority for the 
Secretary of the Interior to make available to lenders federal loan 
guarantees for projects identified. This new title would also specify 
that the ``subsidy'' shall be the greater of 2% or the subsidy 
determined by the Secretary of Agriculture for covering the federal 
cost of guaranteeing loans to lenders financing water projects under 
existing and very successful U.S. Department of Agriculture Rural 
Development authorities.
    As stated in our testimony, we would be pleased to work with 
Senator Reid to develop this language and revise S. 2842 to make it a 
bill our members will embrace.

                        Attachment.--White Paper

     RESPONSE TO OFFICE OF MANAGEMENT AND BUDGET MEMORANDUM ``LOAN 
             GUARANTEES TO IMPROVE FEDERALLY OWNED ASSETS''
                          FAMILY FARM ALLIANCE

May 2, 2008.

    On April 3, 2008, Richard A. Mertens, Deputy Associate Director of 
the Energy, Science, and Water Branch, Office of Management and Budget 
(OMB), sent a memorandum to Timothy R. Petty, Deputy Assistant 
Secretary, Water and Science, Department of the Interior. This memo 
addresses the accounting treatment of certain loan guarantees that have 
been contemplated by the Bureau of Reclamation (Bureau) to assist water 
districts contracting for water from federally owned facilities in 
meeting their fiscal responsibilities to pay their share of the 
operation, maintenance, and rehabilitation of these facilities. This 
paper highlights the errors and misinterpretations in the OMB memo in 
mischaracterizing the loan guarantee program available to the Bureau 
and clarifies the Congressional intent of the P.L. 109-451 in 
authorizing such activities.

  THE LOAN GUARANTEE FUNCTION ESTABLISHED UNDER TITLE II OF THE RURAL 
 WATER SUPPLY ACT OF 2006 (P.L. 109-451) WAS SPECIFICALLY INTENDED TO 
               FILL A CRITICAL GAP IN FEDERAL CAPABILITY

    In general, the costs of operating, maintaining and repairing 
Bureau of Reclamation water storage and conveyance projects are paid by 
the beneficiaries of those facilities. Beneficiaries can be 
individuals, but mostly they are irrigation and water districts 
organized by landowners. The local districts receive water from Bureau 
facilities under contracts that require them to pay that portion of the 
facilities' operations and maintenance (O&M) costs attributable to its 
water supply function.
    In some cases, the Bureau has transferred to local water agencies 
the responsibility for operating and maintaining federally owned 
facilities, and the local agencies bill their landowners directly for 
costs. In other cases, the Bureau performs the O&M of a project and 
collects the costs from districts or individuals. When the Bureau 
operates a project, it generally pays the federal share of O&M costs 
with appropriated funds and receives the estimated non-federal share 
from the local districts in advance for the year. At the end of the 
year, the actual non-federal share of O&M costs is compared to the 
estimated advances from the local districts and either a credit or an 
invoice is provided for the difference.
    Beyond the costs of day-to-day operations and normal maintenance, 
beneficiaries also are responsible for the costs of ``extraordinary 
maintenance''--major repairs and replacement of equipment. Frequently, 
extraordinary maintenance and rehabilitation project costs range from 
the millions to the tens of millions of dollars.
    The Bureau of Reclamation estimates that the replacement value of 
it dams, canals and power facilities west wide is $ 100 billion. 
Protecting the value of this huge federal asset, assuring its safety 
and operational integrity, is dependent on the ability of mostly small 
local agencies to fund operation, maintenance and repair costs that 
continue to increase sharply as the Reclamation system ages. According 
to the Bureau, the system currently requires $3 billion in repairs and 
extraordinary maintenance, the cost of which is the responsibility of 
both the Federal government and the landowners and local water 
districts dependent on these systems.
    Because Federal Reclamation Law and policy requires that project 
beneficiaries pay the costs of major rehabilitation and repair projects 
in advance of expenditure, local agencies must turn to the private 
market to secure financing, which can be difficult because they don't 
own the asset they are borrowing money to repair.
    In the past, the Bureau's Rehabilitation and Betterment (R&B) 
Program helped local districts meet these financial obligations by 
providing a means for spreading repayment of extraordinary maintenance 
and repair costs over several years. However, the R&B Program and other 
similar Bureau direct loan programs were abandoned by previous 
administrations because they were regarded as inefficient.
    In 2006, Congress recognized the need to help non-federal water 
agencies raise non-federal dollars to pay for their share of the 
rehabilitation and repair of aging federal water facilities. Title II 
of the Rural Water Supply Act of 2006 authorized the Bureau of 
Reclamation to provide federal loan guarantees to Reclamation project 
beneficiaries to make it easier (and cheaper) for them to secure 
financing in the private market.
    Specifically, the Act provides the Secretary of the Interior the 
authority to guarantee a private-sector or lender financed loan 
(maximum 40-year term) for up to 90 percent of the cost of an eligible 
project. The new Bureau program was modeled on a long-standing and 
highly successful loan guarantee program in the U.S. Department of 
Agriculture's Rural Utilities Service.
    The intent of the Act was to avoid direct federal funding of the 
Bureau's infrastructure repair and rehabilitation needs by making it 
easier for project beneficiaries to fund them with private lender 
financing. With a small commitment of appropriations, the program could 
make large amounts of non-federal financing available to fund the non-
federal portion of extraordinary maintenance and repairs.
    The Rural Water Supply Act and its loan guarantee program were 
developed and enacted with the strong support of the Bureau of 
Reclamation. The Act instructed the Bureau to develop eligibility 
criteria to implement the program. However, sixteen months after 
passage of the Act, the program is still not in place, mainly because 
its implementation is being resisted by the Office of Management and 
Budget.
    OMB's April 3 memo does not explicitly instruct the Bureau not 
carry out the loan guarantee program. Instead, the letter informs the 
Bureau that OMB will apply a ``budgetary treatment'' to the program 
that, for all practical purposes, makes its implementation impossible. 
Specifically, OMB tells the Bureau that it can issue loan guarantees 
for major improvements and repairs, but the guarantees must be backed 
by an upfront appropriation equal to 100 percent, or more, of their 
face value. In other words, the Bureau can carry out the program, but 
only if it's willing to devote large portions of it's already strained 
budget to do so.
    OMB's assertion that the Federal cost of the Bureau loan guarantees 
should be 100 percent of the guaranteed amount contrasts sharply with 
the Congressional Budget Office estimate (attached) that program's 
cost--subsidy rate--would be only 1 to 2 percent of the amount 
guaranteed.
    In its memo of April 3, OMB supports its argument for the 100 
percent subsidy rate by misrepresenting the Bureau program as ``third-
party financing'' and by grossly exaggerating the financial risks to 
the federal government while dismissing the ``economic stake'' that 
farmers and their water agencies have in the Reclamation projects upon 
which their livelihoods depend.

     OMB MISINTERPRETS THE CBO ISSUE BRIEF ON THIRD PARTY FINANCING

    In is April 3 memo to Reclamation, OMB asserts that the loan 
guarantees established in the Rural Water Supply Act are ``third party 
financing'' as defined by the Congressional Budget Office (CBO). The 
OMB memo relies upon a CBO issue brief, Third-Party Financing of 
Federal Projects (2005), which defines third-party financing as someone 
other than the U.S. Treasury using private capital markets to raise 
money on behalf of (emphasis added) a federal program to be repaid on 
the basis of some kind of long-term federal commitment. The loan 
guarantee program authorized by P.L. 109-451 provides for federal loan 
guarantees to Reclamation's water contractors to help finance their 
non-federal share of the costs of major repairs, replacements, and 
project rehabilitation--not the government's share. The federal 
government, while technically the holder of title to most of these 
water projects has either operating or repayment contracts with the 
local entities that have the responsibility under such contracts to pay 
for their share of such maintenance and construction efforts. The OMB 
position letter does not account for this contractual relationship, 
leading to its erroneous accounting treatment and 100% budget scoring 
conclusions.
    The CBO issue brief further states that ``in the case of third-
party financing, the government typically couples a transfer of federal 
property with directives on how the property may be developed.'' This 
is not the case with P.L. 109-451 loan guarantees. There are no 
transfers of federally owned property nor are there government 
contributions or conveyances in exchange for future compensation in the 
Bureau's case.
    The CBO issue brief also states that the source of capital for 
third-party financed projects is the income generated by their 
operation, which is usually from federal spending. The CBO issue brief 
goes on to state that ``for most of the third-party projects carried 
out so far, credit assessments make it clear that the government is the 
only or dominant user identified in the agreements--and hence, the only 
or dominate source of capital.'' None of these conditions apply to the 
Reclamation projects or activities contemplated under P.L. 109-451.

  THE GOVERNMENT DOES NOT HAVE TO CARRY 100% OF TOTAL LOAN AMOUNT AS 
               CONTINGENT LIABILITY IN THE FEDERAL BUDGET

    While the government contingent liability for these loans exists, 
the question becomes what is the actual contingent liability the 
government should carry in the budget. OMB suggests in their memo that 
it should be 100% of the total loan amount that is guaranteed by the 
government. This logic defies the entire financing system used daily by 
both private and public sectors alike. The government's contingent 
liability should be calculated as the percentage of possible guaranteed 
loans that would be likely to default, taking into account the 
following factors:

          1. The amount of collateral pledged;
          2. The repayment contracts for the cost of operation and 
        maintenance of federally-owned water supply infrastructure;
          3. The leverage the Federal government holds in recovering 
        any possible default interest and principal, and;
          4. The credit-worthiness of the non-federal entity obtaining 
        the loan.

    Using this more appropriate logic, the government would only be 
contingently liable for a fraction of the total guaranteed loan 
amount--in most cases calculated to be 1%-3% of the total loan amount 
guaranteed. In fact, the CBO scored S. 895 (now P.L. 109-451) loan 
guarantees at 1% to 2% for future appropriation purposes.
omb grossly mischaracterizes the ``comparable economic stake'' of local 

          WATER DISTRICTS ATTEMPTING TO SECURE LOAN GUARANTEES

    The OMB memo states that the government bears the full risk of a 
loan guarantee because it owns the asset and benefits from the 
improvements made to the asset. It goes on to state that the water 
district (non-federal borrowing entity) relies solely on receipts 
generated by that asset to repay the loan, and that the water district 
lacks any ownership interest and does not have a ``comparable economic 
stake'' in the overall success of the project, as do water districts 
that own the assets. The water districts referred to in the OMB memo 
are either an instrumentality of the states they are located in, or are 
canal companies recognized as tax-exempt public-purpose organizations 
that share the same status as the districts. These are ``public'' state 
agencies with an enormous responsibility to operate, maintain, and 
replace the infrastructure that delivers water to millions acres of 
irrigated farms and ranches, thousands of cities, and generates 
countless kilowatts of electrical power used by their communities. 
While ownership of an asset is one means of measuring economic stake in 
such projects, merely holding title does not represent the vast 
economic and socially integrated public purposes these assets 
represent.
    The Federal government is not the primary beneficiary of these 
projects. True, federal taxpayers have benefited for years from the 
settling of the Western U.S., for the most part accomplished through 
the initial construction of these projects. However, the true project 
beneficiaries are the non-federal public entities (and the landowner 
public who they serve) who have contracted with the government to repay 
the cost of construction, and to pay for their portion of the 
operation, maintenance, and replacement of these facilities. The 
private investment (farm and ranch development, cities and suburbs, 
electricity distribution facilities, etc.) that has been made over the 
last century that is dependent on the successful annual operation of 
these water projects is tremendous. One study several years ago 
estimated the total domestic economic product developed annually from 
federal irrigation projects is over $60 billion per year (1998 
dollars). Without the water and power delivered from these facilities 
every year to these countless beneficiaries, this vast economic engine 
would crumble, land values would deteriorate and many communities would 
cease to exist as the desert would again overtake these now-fertile 
areas of the arid West.
    What if these facilities cease to operate due to the inability of 
these public non-federal agencies to obtain timely financing to cover 
their share of such improvements? Then, the water rights issued by the 
state that allow the facilities to operate would also cease, and the 
federal ``asset'' would essentially be rendered worthless--probably 
casting the facility into the ``liability'' column of the federal 
balance sheet. The federal ``economic stake'' is dwarfed by the true 
economic stake of the many project beneficiaries who repay or have 
repaid the construction and operation costs of these facilities. This 
fact, however, does not diminish in any way the many public benefits 
derived from these facilities: the Federal government does have the 
responsibility to pay the public's share of these major rehabilitation 
costs. The flood control, fish and wildlife, and recreational benefits 
derived from these federal water projects have been recognized by 
Congress for years. On the other hand, the OMB memo diminishes the 
economic stake of the non-federal project beneficiaries. This is a huge 
error in logic when weighing the risk to the government from the 
guaranteed loans proposed by the Rural Water Supply Act
   federal loan guarantees are designed to function in precisely the 
  opposite direction that the office of management and budget suggests
    The OMB memo suggests that federal loan guarantees in this instance 
are equivalent to borrowing of private capital by a federal agency to 
finance such improvements. It suggests that use of public funds derived 
from the U.S. Treasury is less expensive for the taxpayer because the 
rates on Treasury bonds are lower than rates from the private sector. 
This position is likely supported by OMB's erroneous assumption that 
assigns 100% risk to the federal agency guaranteeing a loan.
    Federal Loan Guarantees are designed to function in precisely the 
opposite direction. Federal Loan Guarantees bring private capital and 
private sector risk to the equation---which actually decreases or 
limits federal exposure. The risks to the federal government are 
arguably and substantially less than 100%, due to the following 
factors:

          1. The non-federal borrower's dependence on the facility;
          2. The ``creditworthiness'' analysis required by P.L. 109-
        451;
          3. The economic stake of the non-federal borrower and their 
        customers in a reliable facility (as previously outlined);
          4. The contractual arrangement with the U.S. for water supply 
        at stake; and
          5. Subsequent leverage to collect any possible defaults that 
        may arise.

    The OMB analysis also ignored the fact that other authorities 
allowing Reclamation to provide ``direct loans'' require that they be 
``interest-free'' to the borrower.

       THE FEDERAL TAXPAYER WOULD BENEFIT IMMENSELY UNDER A LOAN 
                           GUARANTEE PROGRAM

    Finally, federally authorized tax-free municipal bonds are 
typically used to finance public infrastructure improvements. However, 
given the current mortgage crisis, they are currently priced well above 
Treasury rates. Credit instruments guaranteed by the full faith and 
credit of the federal government, however, would price very close to 
Treasury rates. In analyzing what the most cost-effective public 
financing alternative to the ``taxpayer'', as OMB describes, the 
federal taxpayer would benefit immensely under a loan guarantee 
program, since federal tax dollars would be leveraged to obtain private 
financing. Further, the interest would actually be paid for by the non-
federal borrower. With direct loans, given Reclamation's current 
authorities, the taxpayer would pay the interest (the R&B Program loans 
were ``interest-free'' to qualified borrowers).
    Furthermore, the federal ``subsidy'' for guaranteed loans--if 
accounted for properly--would be significantly lower than the subsidy 
provided through tax-free municipal bond financing.
                                 ______
                                 
    Responses of Robert W. Johnson to Questions From Senator Johnson

                                S. 2842

    Question 1a. With respect to S. 2842, BOR appears to be taking the 
position that its current inspection program and standards for 
maintaining infrastructure are sufficient to protect the public. 
However, in your testimony at the April 17th aging infrastructure 
hearing, you stated that based on an in-depth inspection of the Truckee 
Canal after it failed last December, BOR was limiting the use of the 
Truckee Canal to only 45% of maximum flow until a permanent fix was 
made to Canal. BOR appears to be implementing a new construction 
standard for the Canal based on the post-failure inspection.
    Doesn't Reclamation's response to the Truckee Canal failure reflect 
the need for more in-depth inspections of major water delivery 
facilities so that appropriate corrective actions can be implemented?
    Answer. As a result of the Truckee Canal failure, Reclamation 
believes increased attention to the review and inspection of canal 
reaches located in urbanized areas is needed and has the following 
activities underway:

   Integration of special reviews and examinations under our 
        Review of Operation & Maintenance (RO&M) Program of these 
        urbanized canal reaches
   Development and use of new review/maintenance criteria to 
        apply to the review of these canal reaches
   Development and offering of canal operator training to 
        improve surveillance and inspection capability related to these 
        canal reaches as part of their duties

    The extent and timing of the implementation of these activities 
will be subject to budget priorities and the involvement of applicable 
operating entities.
    Question 1b. What are the risk factors that should be analyzed so 
that an inspection and corrective action program can be properly 
prioritized?
    Answer. Some of the primary risk factors that Reclamation believes 
should be analyzed and incorporated into any such prioritization 
include:

   Extent of estimated downstream population which
   Extent of estimated property damage that could result
   Consequences and cost of loss or interruption of service
   Age and related state-of-the-art design and construction 
        practices
   Operation and maintenance history and practices, including 
        prior facility incidents
   Population density

    Question 1c. Do you believe that your current inspection program, 
coupled with input from the water user community (as suggested in the 
Family Farm Alliance testimony), could be used to create the National 
Priorities List called for in S. 2842?
    Answer. Yes. Although the cited National Priorities List would be 
an extremely challenging activity to undertake given the wide range of 
facilities and risk factors involved, Reclamation believes that our 
current Associated Facility Review of Operation and Maintenance 
Program, in collaboration with operating entities, would be essential 
to creating such a list. Since the reported version no longer features 
this requirement, Reclamation no long has these concerns.
    Question 2a. Assuming that BOR has an inspection program that 
properly identifies the repairs that are needed on its canals, the key 
for protecting the public is the successful implementation of the 
necessary rehabilitation work. Your April 17th testimony estimated that 
the necessary rehabilitation of transferred works could total at least 
$800 million.
    Is it Reclamation's expectation that the contractors who operate 
transferred works will be able to pay for the estimated $800 million of 
repair and rehabilitation work? If not, is it appropriate to create a 
new program, or modify existing programs, to provide some financial 
assistance to ensure the continued safe use of transferred works?
    Answer. Existing law requires that repair and rehabilitation costs 
be considered to be operation, maintenance, and replacement. In 
accordance with Reclamation law and contracts with the operating 
entities, the portion of these costs allocated to the reimbursable 
project purposes are the responsibility of the project contractor(s). 
To date, no attempt has been made by Reclamation to determine the 
applicable project contractors' ability to pay for the estimated $800 
million of repair and rehabilitation work.
    Question 2b. Can you provide a rough cost estimate for the 
permanent fix needed on the Truckee Canal? Is there a plan to pay for 
such a permanent fix?
    Answer. No formal cost estimates have yet been completed for 
options associated with permanent repairs to the full length of the 
Truckee Canal. Preliminary studies show that a permanent repair to the 
portion of the canal alignment near the 2008 failure site could cost 
$25 million or more. But before any definitive numbers can be used for 
funding purposes, alternative evaluations need to be completed and cost 
estimates refined. While the canal is operational again, there are no 
evaluations completed at this time that determine payment options or 
mechanisms for permanently repairing the Truckee Canal. In accordance 
with Reclamation law, the operating entity would be required to pay its 
allocated share of the cost in advance.
    Question 3. During the hearing, you mentioned that there exists 108 
reaches of Reclamation canals that go through urban areas.
    Can you provide some more specific information concerning the 
location and respective length of these reaches?
    Answer. To clarify, over the past eight years, Reclamation has 
begun inventorying its canals and canal reaches located in urbanized 
areas. The preliminary estimate is that there are over 1,000 such canal 
reaches. Following the Truckee Canal failure earlier this year, 
Reclamation quickly reviewed this existing inventory in an attempt to 
determine which of these canal reaches were of the most concern, based 
on potential impacts in the event of their failure, as well as their 
current condition. Our preliminary review indicates that 108 canal 
reaches may need increased attention as part of Reclamation's ongoing 
facility review process. That increased attention is already being 
given through the conducting of special reviews on some of these canal 
reaches. Due to recent changes in the extent of urbanization adjacent 
to many of these canals, Reclamation is currently reviewing and 
updating the inventory, with input from the responsible operating 
entities.

                                S. 2974

    Question 4a. With respect to S. 2974, it would be helpful to better 
understand the current use of the revenues available from excess 
capacity contracts.
    Does existing law provide that these revenues be credited against 
the repayment due for existing Fry-Ark Project features?
    Answer. Yes, the Fryingpan-Arkansas Act of 1962 Section 2 (b) and 
(c) provide for these revenues to be credited against repayment.
    Question 4b. If so, isn't repayment for those features less than 
100% by the original Project beneficiaries?
    Answer. Section 1(c) of the Fry-Ark Act contemplates single purpose 
works for Municipal and Industrial features to be 100% reimbursable and 
to be paid within fifty years. This requirement is stipulated in 
separate contracts. Other features of the project are multipurpose 
features and the revenues from excess capacity contracts are applied as 
a tail-end credit to the project.
    Question 4c. What are the existing Fry-Ark Project features?
    Answer. The existing Fry-Ark features include Ruedi Dam and 
Reservoir, the north and south side collection systems that include 17 
diversion structures and numerous related conduits, Boustead Tunnel, 
Sugarloaf Dam and Turquoise Reservoir, the Mt. Elbert Conduit, the Mt. 
Elbert Dam and Forebay, the Mt. Elbert pumped storage penstocks, the 
Mt. Elbert Powerplant, Twin Lakes Dam and Reservoir, Pueblo Dam and 
Reservoir, South Outlet Works and Manifold, and the Fountain Valley 
Conduit.
    Question 4d. What is their current outstanding repayment balance 
and at what time are those existing features due to be fully repaid?
    Answer. The reimbursable portion of the Fry-Ark Project to be paid 
by Southeastern Colorado Water Conservancy District is approximately 
$80 million, and is due to be repaid by 2032.
    Ruedi Dam and Reservoir has approximately, $38 million in debt that 
is due by 2019.
    The Fountain Valley Conduit has a separate payout schedule, which 
is the responsibility of the District. The current outstanding balance 
to date is $66 million. The District receives revenues to repay this 
obligation from the Fountain Valley Authority, and is scheduled to 
payout by 2025.
    Pueblo Reservoir's South Outlet Works construction costs are also 
part of the District's original repayment obligation. The current 
outstanding balance to date is $2.3 million and has a payout date of 
2032. Currently certain municipal and industrial entities have 
contracted for a portion of the costs of the South Outlet Works.
    Question 4e. Is Reclamation currently negotiating additional excess 
capacity contracts that may increase revenues above the current level 
of $1 million per year identified in your testimony?
    Answer. Different variables occur every year which changes the 
number of contracts requested. The current level of $1 million a year 
identified in our testimony is an average amount of annual revenue 
based on the past several years. Because of the myriad variables in 
water scheduling and planning, past year revenues are not necessarily 
an accurate predictor of future year revenues.
    We currently have two requests for long-term, `if-and-when' excess 
capacity contracts, that have not been negotiated, which, if executed, 
could increase revenues above the current $1 million level. One current 
excess capacity contract we have entered is being challenged legally.
    Question 4f. Do you disagree with the analysis by the Southeastern 
Colorado Water Conservancy District indicating that excess capacity 
contracts will yield in excess of $3.0 million/yr by 2020?
    Answer. The District's projection of $3 million in annual revenues 
from excess capacity contracts includes several assumptions that may 
not be realized. Reclamation is discussing this with the District now. 
Reclamation has only recently entered into two long-term excess 
capacity contracts, and in no case in the history of the Fry-Ark 
Project have temporary excess capacity contracts yielded this amount of 
revenue. There are several uncertainties in trying to project revenues 
from future `if-and-when' excess capacity contracts. As stated in our 
testimony, while incentivizing local sponsors to manage their water 
resources responsibly can be a positive, we are concerned that this 
type financing may allow project beneficiaries to not have to repay 
their pre-existing obligations, which, in turn, may necessitate even 
more Federal funding being dedicated toward this project. The loss to 
the Treasury under our current contracting policies would be about $1 
million annually, but could increase as these contracts increased.
    Question 5. Your testimony states that S. 2974 is inconsistent with 
the original Fry-Ark authorization by proposing a 65% federal cost-
share for the Arkansas Valley Conduit.
    Doesn't the Arkansas Valley Conduit fit the definition of a rural 
water project under the 2006 Rural Water Supply Act, and if so, isn't 
the 65% federal cost-share consistent with the cost-share proposed by 
the Bush Administration for rural water projects?
    Answer. The proposal in S. 2974 is inconsistent with both the 
existing Fryingpan-Arkansas authorization, as well as the Rural Water 
Program in Public Law 109-451. The existing Fryingpan-Arkansas 
authorization calls for 100 percent repayment with interest of project 
facilities by project beneficiaries. S. 2974 would also provide 100 
percent repayment of the AVC, but only contemplates that interest will 
be paid on 35% of the costs. The remaining 65% of the costs would be 
repaid without interest. The cost of the Conduit would be funded by a 
split of upfront costs and the remaining costs would require federal 
government appropriations that would be repaid by miscellaneous 
revenues from the Project. Also, the original Fry-Ark authorization 
does not contemplate the construction of project features using 
revenues from previously existing project contracts as described in S. 
2974.
    The Arkansas Valley Conduit project could be a candidate for 
consideration under the Rural Water Program, once the Program is in 
effect. However, there are some differences in the requirements of the 
Act and what the District is proposing.

   The Rural Water Act (Public Law 109-451) authorizes and 
        requires appraisal and feasibility studies which are then 
        prioritized and ranked against one another. The final 
        feasibility report includes a recommendation to the Secretary 
        on whether the rural water supply project should be authorized 
        for construction, and identifies the appropriate non-Federal 
        share of construction costs.
   In contrast, the District's proposal is asking to modify the 
        existing authorization.

                                S. 3189

    Question 6. Your testimony on S. 3189 recommends that Public Law 
106-392, which first authorized the Upper Colorado and San Juan River 
recovery programs, be amended to increase the non-Federal contribution 
for capital projects. Currently, the required contribution is set at 
$17 million.
    What is the specific non-Federal contribution the Administration 
recommends?
    Answer. As a general policy the Administration recommends that the 
non-Federal cost share for programs of this nature be at least 50 
percent of the total costs associated with capital projects.
    Question 7. P.L. 106-392 requires Interior to prepare a report by 
the end of FY 2008 on the use of power revenues beyond 2011 for base 
funding for the ESA programs. It's my understanding that completion of 
that report is just about final.
    Is release of that report imminent, and is S. 3189 consistent with 
its recommendations?
    Answer. The report is currently undergoing review within the 
Administration.
    Question 8. Your testimony states that the continuation of base 
funding from power revenues is problematic because the funds ``are 
drawn from revenues otherwise subject to repayment obligations''.
    What do you mean by this statement? How are these revenues 
otherwise subject to repayment obligations?
    Answer. Under the provisions of Public Laws 106-392 and 109-183, 
and as proposed in S. 3189, Colorado River Storage Project (CRSP) 
hydropower revenues utilized for base funding are ``. . . treated as 
non-reimbursable and as having been repaid and returned to the Treasury 
as costs assigned to power for repayment under section 5 of the 
Colorado River Storage Project Act.'' However, based upon the terms of 
S. 3189, the repayment that would ordinarily be paid to the Treasury 
would be credited from an accounting perspective, but would not 
actually be repaid. The cost share established for power customers is 
not a contribution of funds for projects and no non-Federal monies from 
power customers are returned to the United States Treasury. The 
Administration does not, as a general matter, endorse the 
nonreimbursable treatment of such power revenues as a non-federal 
contribution to cost-sharing for recovery programs.
    Question 9. S. 3189 would continue the use of revenues from the 
Upper Colorado River Basin Fund.
    What is the current status of the Fund-e.g. what is it used for, 
current revenue levels and balance, and will future revenues be 
sufficient to continue addressing environmental needs (i.e. the ESA 
recovery programs and the Glen Canyon Adaptive Management Program)?
    Answer. The Colorado Basin Fund currently has a balance of 
approximately $83 million (July, 2008). It is projected to have a 
fiscal year end 2008 balance of around $80 million.
    The Upper Colorado River Basin funds are used for the operation and 
maintenance costs of all facilities of the Colorado River storage 
project as provided in the CRSP Act. This includes operational costs, 
along with maintenance and replacement of facility assets (OM&R). A 
large portion of the OM&R costs relates to purchased power costs, which 
is required to meet contractual obligations to deliver power. Purchased 
power is especially crucial and expensive in times of drought. The 
Basin Fund also provides funding for the costs of irrigation features 
of CRSP. A portion of power revenues collected in the Basin Fund is 
dedicated to repayment of the federal investment cost plus interest.
    The Basin Fund is also used for: (1) cost sharing for the Colorado 
River Basin Salinity Control Program (authorized by the Colorado River 
Salinity Control Act P.L. 93-320 June 24, 1974 and P.L. 104-127, April 
4, 1996); (2) the Glen Canyon Dam Adaptive Management Program 
(authorized by the Grand Canyon Protection Act, Title XVIII of P.L. 
102-575, October 30, 1992) which is approximately $9.5 million per 
year; and (3) cost sharing for the endangered Fish Recovery 
Implementation Program for the Upper Colorado and San Juan River Basin 
(authorized by P.L. 106-392, October 30, 2000) which is approximately 
$7 million annually. In addition, the Basin Fund is used for Colorado 
River water quality studies authorized by P.L. 87-590, Fryingpan-
Arkansas Project Act, August 16, 1962 and consumptive use studies 
authorized by P.L. 90-537, The Colorado River Basin Project Act, 
September 30, 1968. Funding for the programs mentioned above are 
authorized as non-reimbursable costs and will be treated as having been 
repaid and returned to the general fund of the Treasury as costs 
assigned to power for repayment under section 5 of the Act of April 11, 
1956 (70 Stat. 170).
    The annual projected revenues for FY2008 for the Basin Fund are 
$208.6 million and expenses (Projected for 2008) for the Basin Fund are 
$189.7 million.
    If revenue, expenses and repayment amounts remain reasonably 
consistent into the foreseeable future, future cash flows should be 
sufficient to continue addressing non-reimbursable environmental costs 
at or near current levels. However, if environmental costs were to 
unexpectedly rise over planned cash flow amounts, there may not be 
enough available cash to fund increased environmental costs and provide 
adequate cash flow at the same time to meet basic Basin Fund 
obligations.

     Response of Robert W. Johnson to Question From Senator Salazar

    In March 2008, Reclamation's witness testified before a House 
subcommittee on a previous version of the Arkansas Valley Conduit bill, 
H.R. 317, that the legislation was inconsistent with the 35 percent 
local cost share set forth in the Administration's proposed rural water 
legislation, implying that 35 percent local cost share is an 
appropriate local cost share percentage.
    Question 1. Why is this legislation, containing a 35 percent cost 
share and authorizing the use of project-generated revenues to help pay 
for the capital construction costs of that pipeline unacceptable, when 
the Administration's proposed rural water legislation contains a 35 
percent local cost share?
    Answer. The Rural Water Act requires a capability to pay study, the 
results of which are used to determine the appropriate non-Federal cost 
share for projects. Under the Act, the amount of the local cost share 
could be more than 35%. At this time we do not have enough information 
to make a determination as to the appropriate local cost share for the 
AVC if it were authorized under the Rural Water program, but it could 
conceivably be greater than the 35% called for in S. 2974.

                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

  Statement of the Central Arizona Water Conservation District, on S. 
                                  2842

    The Central Arizona Project was authorized by Congress under the 
1968 Colorado River Basin Projects Act. The Central Arizona Project or 
``CAP'' was constructed by the U.S. Bureau of Reclamation and is 
operated and maintained by the Central Arizona Water Conservation 
District. Responsibility for the care, operation and maintenance of 
CAP's water supply system was transferred to the Central Arizona Water 
Conservation District or ``CAWCD'' in 1993. Therefore, under Section 2 
of the proposed Act, CAP is a ``transferred project facility.''
    In general, CAWCD agrees with the comments pertaining to S. 2842 
submitted by Mr. Robert W. Johnson, Commissioner, U.S. Bureau of 
Reclamation and Mr. Dan Keppen, Executive Director, Family Farm 
Alliance. In addition to and in support of these comments, CAWCD also 
submits the following regarding the provisions of S. 2842.

   The concern that many Federal Reclamation projects, both 
        ``reserved'' and ``transferred'' are aging and in need of 
        rehabilitation is very legitimate. With the dramatic increase 
        in urbanization in the west, many of these projects no longer 
        reside in isolated rural areas. Combine that fact with aging 
        equipment and infrastructure and a growing inability by many 
        smaller irrigation districts to keep pace with rising 
        maintenance costs, the situation has become increasingly 
        critical. Failures of canal systems and other associated 
        equipment now pose serious risks to many downstream 
        communities.
   The concern that the U.S. Bureau of Reclamation lacks the 
        necessary resources to provide assistance to these irrigation 
        districts is also legitimate. While Reclamation has the 
        necessary authority to rehabilitate older projects and bring 
        equipment and other infrastructure to current standards, it 
        lacks the funds to do so. Reclamation's technical ability in 
        these areas may have also diminished.
   In lieu of the proposed Act, it would be far more effective 
        and appropriate for the Congress to fund existing Reclamation 
        programs such as the Rehabilitation and Betterment Act and the 
        Small Reclamation Project Act. These existing programs were 
        authorized by the Congress and are no longer funded or used. 
        These programs, in combination with Reclamation's Review of 
        Operation and Maintenance Program, could provide the same 
        result as the proposed Act, if properly funded. CAWCD believes 
        that the Congress should provide both direction and funding to 
        Reclamation to make much needed investments in its operating 
        projects to bring them to current standards.
   The proposed Act authorizes funding but funds would need 
        further appropriation. Reclamation has been unable to secure 
        any new funding for quite some time. Therefore, it would appear 
        the proposed Act creates another Reclamation program that it 
        will be unable to comply with or utilize to benefit its 
        operating partners. As stated above, CAWCD believes the 
        Congress should seriously consider funding existing Reclamation 
        programs and provide appropriate direction to Reclamation as to 
        their use.

    As to the specific provisions of the proposed Act, CAWCD submits 
the following additional comments.

   As written, the proposed Act is both redundant and 
        unnecessary. Regarding Reclamation inspections of Federal 
        projects provided for in Section 3, Reclamation's contracts 
        with its operating partners and its existing Review of 
        Operation and Maintenance Program already provide for regular 
        periodic inspections of Reclamation project facilities, both 
        ``reserved'' and ``transferred.''
   Existing Reclamation contracts and other agreements also 
        contain provisions regarding reimbursement of Federal costs 
        related to such inspections. The provisions of Reclamation's 
        contracts vary widely. Some require reimbursement to 
        Reclamation and some don't. CAWCD's contracts with Reclamation 
        require CAWCD to pay Reclamation's costs for oversight and 
        inspection; the proposed Act would appear to waive some of 
        these costs.
   The proposed Act would appear to apply the same criteria to 
        all projects. In the case of CAP, CAWCD is fully capable, both 
        financially and technically, of properly and effectively 
        operating and maintaining project infrastructure and does not 
        need or necessarily want additional Reclamation intervention. 
        However, there are many older Reclamation projects operated and 
        maintained by smaller organizations that lack the necessary 
        resources. Many of these projects could benefit greatly from 
        Reclamation assistance.
   The proposed Act imposes requirements and mandates on 
        Reclamation that it probably cannot meet. For instance, it is 
        unlikely that Reclamation would be able to develop standards 
        and guidelines within 180 days.
   The proposed Act may provide Federal funds for 65 percent of 
        modification costs; however, it will only do so for facilities 
        that are in compliance with regulations proposed in Section 4. 
        It is not known what these regulations will require and it may 
        mean that many facilities, including CAP, may be non-compliant.

    CAWCD appreciates the committee's interest in these issues. We also 
appreciate the opportunity to provide comments regarding S.2842. Our 
comments are intended to be constructive and we hope the committee will 
find them useful.
                                 ______
                                 
                                              Denver Water,
                                          Denver, CO, July 8, 2008.
Hon. Tim Johnson, Chairman,
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Building, 
        Washington, DC.
Subject: Support for S.3189

    Dear Chairman Johnson and Senator Corker, I am writing to support 
S.3189, a bill to amend Public Law 106-392. Passage of this bill will 
ensure the adequacy of funds to complete the important missions of both 
the Upper Colorado River Endangered Fish Recovery Program and the San 
Juan River Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs 
continue to benefit many water users. The status of endangered fish 
continues to improve under these programs. In the two basins, more than 
1,600 water projects are provided with ESA compliance in accordance 
with these two programs. No lawsuits have been filed in ESA compliance 
under these programs. The programs have long enjoyed bi-partisan 
support in Congress.
    We request that the Subcommittee support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
            Sincerely,
                                                  HJ Barry,
                                                           Manager.
                                 ______
                                 
              Grand Valley Water Users Association,
                            Grand Valley Project, Colorado,
                                  Grand Junction, CO, July 7, 2008.
Hon. Tim Johnson,
Chairman,
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Building, 
        Washington, DC.
Subject: Support for S.3189

    Dear Chairman Johnson and Senator Corker, I am writing to support 
S.3189, a bill to amend Public Law 106-392. Passage of this bill will 
ensure the adequacy of funds to complete the important missions of both 
the Upper Colorado River Endangered Fish Recovery Program and the San 
Juan River Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The programs have long enjoyed bi-
partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
            Sincerely,
                                        Richard L. Proctor,
                                                           Manager.
                                 ______
                                 
               The Southwestern Water Conservation District
                                         Durango, CO, July 1, 2008.
Hon.  Tim Johnson,
Chairman,
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Building, 
        Washington, DC.
Subject: Support for S.3189

    Dear Chairman Johnson and Senator Corker, The Southwestern Water 
Conservation District (SWCD) was established by the Colorado 
legislature to conserve and protect the waters of the San Juan and 
Dolores Rivers and their tributaries. The San Juan River Basin Recovery 
Implementation Program (SJRBRIP) is an invaluable and successful 
program in our District.
    With the SJRBRIP and the Upper Colorado River Endangered Fish 
Recovery Program, the status of endangered fish is improving. The two 
programs have the dual goals of achieving recovery of endangered fish 
species and ensuring ESA compliance for water project depletions. In 
the two basins, more than 1,600 water projects are provided with ESA 
compliance in accordance with these two programs. The programs have 
long enjoyed bi-partisan support in Congress.
    S.3189 assures authority for capital funding to both programs to 
provide for major rehabilitation and repair of more than $100 million 
in facilities constructed by the two programs, assures protection of 
critical habitat in the San Juan River, and extends current funding 
levels for annual operation and maintenance provided by RSP power 
revenues.
    I am writing to ask that you and the Sub-Committee support the 
amendments (S.3189) to Public Law 106-392. Passage of this bill will 
ensure that adequate funds are available to complete the important 
missions of both the Upper Colorado and San Juan Basin programs.
            Respectfully submitted,
                                               John Porter,
                                                         President.
                                        Bruce T. Whitehead,
                                                Executive Director.
                                 ______
                                 
Statement of Harris Sherman, Executive Director, Department of Natural 
          Resources, State of Colorado, Denver, CO, on S. 2974
    In 2007 the Colorado General Assembly authorized the Colorado Water 
Conservation Board to loan nearly $61 million to the Southeastern Water 
Conservancy District to allow the District to share the cost of 
constructing the Arkansas Valley Conduit. To comply with the terms of 
its loan, the District must secure the passage of the federal 
authorizing legislation because the project was originally a component 
of the Frying-Pan Arkansas Project. If federal authorizing legislation 
is not passed, the state loan authorization will expire.
    The passage of S. 2974 provides the most immediate opportunity to 
allow the District to comply with the terms of its loan and allow it to 
build a project to provide reliable water to rural communities south of 
Pueblo, Colorado to Lamar. These communities have faced significant 
challenges to meet water quality standards and some are under 
compliance orders from our Colorado Department of Public Health and 
Environment. On their own, each provider does not have the economic 
means to address these issues.
    A regional approach like the Arkansas Valley Conduit offers the 
most efficient and effective way to provide clean water to this corner 
of Colorado and it is why the CWCB is proving a significant source of 
the funds to build the project.
                                 ______
                                 
            Southeastern Colorado Water Conservancy District
                        arkansas valley conduit
                              participants
June 1, 2008 



                                 State of Colorado,
                           Department of Natural Resources,
                                          Denver, CO, July 2, 2008.
Hon. Tim Johnson,
Chairman,
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Building, 
        Washington, DC.
Subject: Support for 5.3189

    Dear Chairman Johnson and Senator Corker, I am writing to support 
S.3189, a bill to amend Public Law 106-392, entitled ``the Endangered 
Fish Recovery Program Improvement Act of 2008.'' Passage of this 
legislation is imperative to assure that the Upper Colorado River 
Endangered Fish Recovery Program and the San Juan River Basin Recovery 
Implementation Program (collectively ``programs'') continue to be able 
to meet the goals for which these programs were established.
    S.3189 assures that: 1) the programs will have the authority 
necessary for capital funding, as needed, to provide for 
rehabilitations and repairs of the facilities constructed by the 
programs; 2) the protection of critical habitat in the San Juan River 
basin extends current funding levels for annual operation and 
maintenance provided by CRSP power revenues; 3) the Colorado Water 
Conservation Board (``CWCB'') can provide loans to the programs, if 
necessary, to overcome temporary shortfalls in funding; 4) and these 
programs can continue to have authorization until 2023.
    The CWCB is an agency within the Department of Natural Resources 
and it was established in 1937 to preserve and develop Colorado's water 
resources for existing and future generations. The provisions related 
to loans from the CWCB will allow the programs to be more nimble while 
achieving the goals of the programs.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin and providing 
ESA compliance for water project depletions in the Upper Basin 
consistent with interstate compacts and state water law. These 
successful programs are model programs and their success has been 
applied in other basins including the recently federally authorized 
Platte River Recovery Implementation Program. In the two basins, more 
than 1,600 water projects are provided with ESA compliance in 
accordance with the programs.
    No lawsuits have been filed in ESA compliance under these programs 
and these programs have long enjoyed bi-partisan support in Congress.
    On behalf of the State of Colorado, I request the Subcommittee to 
support the amendments to the authorizing legislation for the Upper 
Basin and San Juan Recovery programs in S.3189.
            Sincerely,
                                            Harris Sherman.
                                 ______
                                 
                                    City of Aurora,
                           Water Department Administration,
                                         Aurora, CO, June 27, 2008.
Hon. Tim Johnson,
Chairman.
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Building, 
        Washington, DC.
Subject: Support for S.3189

    Dear Chairman Johnson and Senator Corker, I am writing to support 
S.3189, a bill to amend Public Law 106-392. Passage of this bill will 
ensure the adequacy of funds to complete the important missions of both 
the Upper Colorado River Endangered Fish Recovery Program and the San 
Juan River Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The programs have long enjoyed bi-
partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
            Sincerely,
                                                Dana Ehlen,
                                                  Interim Director.
                                 ______
                                 
                                    City of Aurora,
                                          Water Department,
                                           Water Resources,
                                          Aurora, CO, July 3, 2008.
U.S. Senate, Committee on Energy and Natural Resources, 304 Dirksen 
        Senate Building, Washington, DC.
Re: 5.2974 Arkansas Valley Conduit

    To the Chairman and Members of the Committee on Energy and Natural 
Resources: The City of Aurora supports S. 2974 and the development of 
the Arkansas Valley conduit (AVC) to ensure that the citizens of the 
lower Arkansas River Valley within Colorado have a secure, safe and 
affordable drinking water supply. The AVC has long been contemplated, 
with funding being the primary obstacle.
    On March 13, 2008, the Southeastern Colorado Water Conservancy 
District offered testimony at the House of Representative Subcommittee 
on Power and Water hearing regarding H.R. 317. The testimony outlined 
an alternative funding mechanism for the AVC construction which would 
ensure that the entire estimated project costs of $300 million would be 
paid over a 50 year period using revenues from Fryingpan-Arkansas 
Project excess capacity contracts. We believe this same funding 
mechanism is contemplated under S.2974. This mechanism is an innovative 
and sensible repayment plan, but the funding depends for its success 
upon revenues realized from the execution of long-term ``if and when'' 
excess capacity storage and exchange contracts, such as the one 
recently executed between the Bureau of Reclamation and the City of 
Aurora. Such contracts maximize the use of existing infrastructure 
while minimizing environmental impacts.
    The Bureau of Reclamation's authority to contract with Aurora has 
been questioned several times and is currently being litigated by the 
Lower Arkansas Valley Water Conservancy District. Aurora's payment for 
use of excess capacity storage and exchange is estimated to be $40 
million over the next 40 years and 580 million over the next 65 years. 
Aurora's contracts thus account for over a quarter of the estimated 
total revenues from excess capacity contracts. Hence, it is appropriate 
to ensure that any existing controversies over the validity of such 
contracts also be resolved. This will promote a mutually beneficial 
arrangement which brings clean water to a deserving population.
    Thank you for your consideration of these comments.
            Sincerely,
                                               Mark Pifher,
                                                   Deputy Director.
                                 ______
                                 
                   Central Utah Water Conservancy District,
                                           Orem, UT, June 30, 2008.
Hon. Tim Johnson,
Chairman,
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Building, 
        Washington, DC.
Subject: Support for S.3189

    Dear Chairman Johnson and Senator Corker, I am writing to support 
S.3189, a bill to amend Public Law 106-392. Passage of this bill will 
ensure the adequacy of funds to complete the important missions of both 
the Upper Colorado River Endangered Fish Recovery Program and the San 
Juan River Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The programs have long enjoyed bi-
partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
            Sincerely,
                                       Don A. Christiansen,
                                                   General Manager.
                                 ______
                                 
    Statement of Douglas Kemper, Executive Director, Colorado Water 
                    Congress, Denver, CO, on S. 3189
    I am writing to support S.3189, a bill to amend Public Law 106-392. 
Passage of this bill will ensure the adequacy of funds to complete the 
important missions of both the Upper Colorado River Endangered Fish 
Recovery Program and the San Juan River Basin Recovery Implementation 
Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The programs have long enjoyed bi-
partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
                                 ______
                                 
   Statement of Kevin Walsh, General Manager, Goleta Water District, 
                        Goleta, CA, on H.R. 3323

    On behalf of the Board of Directors and customers of the Goleta 
Water District, I am pleased to submit this testimony in support of 
H.R. 3323, legislation to authorize the Secretary of the Interior to 
convey a water distribution system to the Goleta Water District. This 
legislation passed the House of Representatives on May 21, 2008.
    We strongly support this legislation and thank the committee for 
considering it today.

                         GOLETA WATER DISTRICT

    The Goleta Water District is located in Santa Barbara County, 
California. The District serves irrigation water to about 8,000 acres 
of farmland, and municipal water to about 80,000 people. Most of that 
water, about two-thirds, comes from the federal Cachuma Project.
    In 1956, the US Bureau of Reclamation completed the congressionally 
authorized Cachuma Project, a dam and reservoir storage project in 
Santa Barbara County. The project serves the City of Santa Barbara and 
four water Districts, including the Goleta Water District, with 
irrigation and municipal water. The costs for this project are being 
repaid to the federal government.
    While the dam and reservoir were under construction, the Bureau 
also gave loans for construction of water distribution systems. Goleta 
Water District revived one of those loans to construct a water pipeline 
distribution system and obtain rights-of-way for the pipelines. This 
forty year loan was completely repaid to the federal government, in 
full, in 2002. Since the completion of construction of the 
distributions system, and in accordance with the terms of the loan, the 
Goleta Water District has assumed complete responsibility for the water 
distribution system and the easements, including paying all operation 
and maintenance costs, in addition to repaying the loan in full.
    Since the loan is paid off, the District would now like to obtain 
title of the facilities for which it paid. It is not unlike paying off 
a mortgage, only in this case federal law provides that an act of 
Congress is necessary to convey ownership and make the title transfer.

 H.R. 3323, THE GOLETA WATER DISTRIBUTION SYSTEM CONVEYANCE ACT OF 2007

    H.R. 3323 would authorize the Secretary of Interior to convey title 
of the federally owned water distribution system, along with its 1,113 
associated easements, to the Goleta Water District.

                         TITLE TRANSFER PROCESS

    It has been a continuing desire of the District to obtain title to 
the Distribution System plus its associated easements outlined in the 
legislation, which have been owned by the United States for many years. 
Since 2004 when the District sent a Letter of Intent to Transfer Title, 
the Bureau and the District have worked cooperatively and successfully 
to address all of the elements necessary to bring this legislation 
forward, including repayment of the Bureau of Reclamation loan, public 
meetings, and the completion of an Environmental Assessment Report 
resulting in a Finding of No Significant Impact.
    Most recently we have worked with Congresswoman Capps to introduce 
the legislation to achieve title transfer.

                    BENEFITS OF THIS TITLE TRANSFER

    The title transfer will give the District more local control of the 
Distribution System which was constructed for our use. There will be 
one less administrative layer caused by United States ownership when 
changes or improvements to the facilities are needed. Private citizens 
whose property is encumbered with the easements will no longer have to 
deal with the federal government, but only their local water District 
when making use changes to their properties. The Bureau of Reclamation 
will no longer need to complete periodic reviews of these transferred 
facilities. As a result, they will hopefully be able to direct 
personnel and resources to more important activities. Also, the Bureau 
of Reclamation will divest itself of liability for the distribution 
system.

                               CONCLUSION

    In conclusion, I would like to thank some of the people who have 
made this transfer possible. I would like to thank Bureau of 
Reclamation staff Sheryl Carter of the South Central California Area 
Office in Fresno and James Hess here in Washington who have helped us 
in preparing for the title transfer.
    We'd like to acknowledge our debt of gratitude to Congresswoman 
Lois Capps for her support and assistance with this legislation.
    In summary, H.R. 3323 is a good bill, a good title transfer and 
shows a cooperative process of benefit to both Reclamation and the 
District. I urge the Committee to move this legislation forward.
                                 ______
                                 
                              The State of Wyoming,
                                    Office of the Governor,
                                       Cheyenne, WY, July 10, 2008.
Hon. Tim Johnson,
Chairman,
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Committee on Energy 
        and Natural Resources, U.S. Senate, 304 Dirksen Senate 
        Building, Washington, DC.
Subject: Submittal of Testimony Supporting the Enactment of S.3189

    Dear Chairman Johnson and Senator Corker: I am writing to express 
my strong support. on behalf of the State of Wyoming, for enactment 
into law of S. 3189, the Endangered Fish Recovery Programs Improvement 
Act of 2008. Passage of this bill will ensure authority for capital 
funding for the Upper Colorado River Endangered Fish Recovery Program 
and the San Juan River Basin Recovery Implementation Program, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities previously constructed by the two programs.
    This bill proposes to add $15 Million to the authorization for 
capital expenditures for the Upper Colorado River Basin Program, adds 
$12 Million to the authorization for the San Juan River Basin Recovery 
Implementation Program's capital expenditures, extends the period of 
capital construction to 2028 and amends the current authorization to 
allow continued annual funding at current levels from power revenues. 
The proposed 2008 amendments address current and foreseeable capital 
construction needs for the two programs not presently authorized. 
Current authority for construction has been largely expended and ceases 
after FY 2010.
    The additional authority provided by enactment of this measure will 
allow Reclamation to repair and rehabilitate, as needed, approximately 
$100 million in capital facilities (fish passages, fish screens, 
flooded bottomlands habitat and hatcheries, and a reservoir) 
constructed by the recovery programs. In addition, these facilities, 
located on or adjacent to major rivers in the Upper Colorado River 
basin, are subject to damage from flooding and debris. Additional 
authority is also needed to complete the Tusher Wash fish screen on the 
Green River and additional time is needed to complete construction 
projects in the San Juan basin. In addition to these needs, unstable 
rock formations adjacent to designated critical habitat for the 
endangered fish caused two major landslides near Farmington, New 
Mexico. The U.S. Fish and Wildlife Service determined that the unstable 
cliffs are a threat to critical habitat in the San Juan River. 
Authority is needed to eliminate this threat.
    The goal of these two successful programs is to recover the four 
Colorado River endangered fish species in a manner that is consistent 
with state and tribal laws, interstate compacts, the Endangered Species 
Act, other federal laws, and Indian trust responsibilities.
    We are most appreciative of the Senate Committee on Energy and 
Natural Resource's past support of legislation and necessary amendments 
authorizing the capital construction activities of the two recovery 
programs. This legislative measure will further the abilities of the 
two recovery programs to accomplish their important objectives.
    I have included with this letter testimony that I am submitting in 
support of this important legislation. Thank you for your consideration 
of my testimony and for its inclusion in the hearing record.
            Best regards,
                                          Dave Freudenthal,
                                                          Governor.
                                 ______
                                 
    Statement of the Honorable Dave Freudenthal, Governor, State of 
                          Wyoming, on S. 3189

    Mr. Chairman and Members of the Water and Power Subcommittee of the 
United States Senate Committee on Energy and Natural Resources, I am 
pleased to submit this statement urging your Committee to favorably 
consider, and report without amendments, S. 3189. This bill is 
essential to the successful continuation of the Upper Colorado River 
and San Juan River Basin Recovery Implementation Programs, as 
authorized by Public Law 106-392 (and subsequently amended by Public 
Law 107-395 and 109-183). Enactment of this legislation is critical to 
the recovery of the Colorado River Basin endangered fish species and 
hence is important to the interests of the State of Wyoming. Since 
their initiation in 1988 and 1992, respectively, the highly successful 
Upper Colorado and San Juan recovery programs have provided a 
cooperative, workable and effective mechanism for continued compliance 
with the Federal Endangered Species Act for more than 1,600 federal and 
non-federal water projects in the Upper Colorado River basin and the 
San Juan River basin, including projects that provide water to meet 
tribal needs and that fulfill the federal government's trust 
responsibility to tribes in compliance with the Endangered Species Act. 
Accordingly, continuation of the implementation of these recovery 
programs, including the requested authority to rehabilitate, repair or 
replace the programs' capital construction projects now in place and 
which are directly benefiting the endangered fish species is imperative 
to our States' ability to continue to develop our compact-apportioned 
water resources.
    The two programs have constructed approximately $100 million in 
facilities (fish passages, fish screens, flooded bottomlands habitat, 
hatcheries, and a reservoir that augments flows for endangered fish). 
The operation of these facilities is a critical component of the 
recovery programs are providing the reasonable and prudent alternative 
These facilities are on, or adjacent to, major rivers in the Upper 
Colorado and San Juan River basins. Many of the facilities are 
susceptible to damage by floods and debris associated with the major 
rivers on which they are located (Green, Colorado, Gunnison, and San 
Juan).With the passage of time these complex facilities will require 
some degree of rehabilitation or repair. Further, additional authority 
is needed to complete the Tusher Wash fish screen on the Green River, 
and additional time is needed to complete capital projects in the San 
Juan basin.
    Authorization for the Secretary of the Interior to conduct these 
recovery programs' capital construction expires on September 30, 2010. 
Accordingly, there is no authority for Reclamation to repair or 
rehabilitate these facilities after that date or to complete the Tusher 
Wash fish screen and San Juan basin projects. Existing funding 
authority will have been expended. The proposed amendments would 
provide an additional $20 million in authorization repairs and 
rehabilitation of these facilities through 2023. Importantly, 
appropriations for repair and rehabilitation will only be requested as 
needed.
    One such unanticipated need for capital expenditures occurred in 
2007. Unstable rock formations adjacent to designated critical habitat 
for the endangered razorback sucker and Colorado pikeminnow in the San 
Juan River caused a major landslide near Farmington, New Mexico. A 
second slide occurred in August, 2007 in the same area. The U.S. Fish 
and Wildlife Service determined that the unstable cliffs are a threat 
to critical habitat in the San Juan River. The estimated cost of 
stabilizing the rock formation is $7 million. Presently. authority for 
this type of activity was not provided within P.L. 106-391 as amended. 
The proposed amendments would add authorized funding to protect 
critical habitat.
    Specifically, enactment into law of the proposed 2008 amendments 
will accomplish the following:

   Authorize an additional $12 million in federal expenditures 
        for capital projects under the San Juan Program for the 
        purposes of a) protecting critical habitat of endangered fish 
        species and related infrastructure trout rock slides in the 
        area west of Farmington ($7 million), and b) repair and 
        replacement of constructed capital facilities (fish passages, 
        fish screens, habitat, hatcheries) as needed through 2023 ($5 
        million).
   Authorize an additional $15 million in federal expenditures 
        for capital projects for the Upper Colorado Program for the 
        purposes of a) constructing a fish screen on Tusher Wash in 
        critical habitat on the Green River, Utah in light of 
        significantly increased construction material costs, and b) for 
        repairs and replacement of constructed capital facilities (fish 
        screens, fish passages, habitat, hatcheries) as needed through 
        2023.
   Recognize additional non-federal cost sharing of $56 
        million.
   Amend the current authorization to allow continued funding 
        for annual operation and maintenance funding at current levels 
        provided by CRSP power revenues. This authority will expire at 
        the end of fiscal year 2011 under the existing law.

    The recovery programs are serving as national models for how 
willing partners can use effective, collaborative partnerships to meet 
important needs. Application of the ESA in Wyoming's portion of the 
Upper Colorado River Basin has not impeded our ability to develop our 
water resources since the Upper Colorado Recovery Progam's initiation 
in 1988. This is, in my view, a critical and key measure of the 
Program's success in meeting its commitment to allowing needed water 
development to proceed in compliance with the ESA. Further, these 
programs are making substantial progress towards recovery of the four 
endangered fish species.
    These two recovery programs' dual objectives of recovery while 
accommodating additional water resources development in the Basin 
represent the best approach yet devised to resolving the conflict 
between the federal Endangered Species Act (ESA) and water development 
needs. No lawsuits have been filed concerning the ESA compliance 
provided by these programs. State and federal agencies, Indian tribes 
and private organizations are cooperating through these two recovery 
programs to achieve recovery of endangered fish while meeting 
continuing demands for water in the arid West.
    Thank you for the opportunity to submit this testimony. I request, 
in addition to your consideration of its contents, that this testimony 
he included in the formal hearing record concerning this important 
legislation needed for the Upper Colorado River Endangered Fish 
Recovery Program and San Juan River Basin Endangered Fish Recovery 
Implementation Program.
                                 ______
                                 
                               State of New Mexico,
                                    Office of the Governor,
                                        Santa Fe, NM, July 8, 2008.
Hon. Tim Johnson,
Chairman,
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Building, 
        Washington, DC.
Subject: Support for S.3189

    Dear Chairman Johnson and Senator Corker: I am writing to support 
S.3189, a bill to amend Public Law 106-392. Passage of this bill will 
ensure the adequacy of funds to complete the important missions of both 
the Upper Colorado River Endangered Fish Recovery Program and the San 
Juan River Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving and this progress 
critically needs to be sustained. In the two basins, more than 1,600 
water projects are provided with ESA compliance in accordance with 
these two programs. No lawsuits have been filed in ESA compliance under 
these programs. The programs have long enjoyed bi-partisan support in 
Congress.
    I request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189. On behalf of the citizens of New Mexico, I 
sincerely thank the Subcommittee for your assistance to ensure adequate 
funding authorization and extension of the authorized period for 
capital construction for these critically important recovery programs.
            Sincerely,
                                           Bill Richardson,
                                                          Governor.
                                 ______
                                 
    Statement of Brad Luckey, Manager, General Services-Government 
   Relations, Imperial Irrigation District, Imperial, CA, on S. 2842

    I am writing on behalf of the Imperial Irrigation District (IID) in 
Southern California. The purpose of my letter is to address S. 2842, 
the Aging Water Infrastructure and Maintenance Act.''
    As you may be aware, IID is one of the largest irrigation districts 
in the United States. In terms of volume of water delivered, IID is the 
largest irrigation district in the United States, serving about 500,000 
acres of land in the southeastern portion of California. IID's growers 
grow a large variety of crops year-round, and in the winter months IID 
is one of the main suppliers of vegetables for the entire nation.
    I am writing to you about S. 2842 because IID operates and 
maintains, under a contract with the Secretary of the Interior, a very 
large canal system known as the All American Canal (AAC). The AAC 
carries water from the Colorado River near Yuma, Arizona over to the 
Imperial Valley--a distance of about 50-60 miles. A portion of the AAC 
goes through urbanized areas in the vicinity of the City of Calexico, 
California. IID therefore has an interest in S. 2842 and the wording of 
this important legislation.
    I first want to thank you for your work, along with Senator Reid 
and others, to give attention to aging infrastructure related to the 
function of the U.S. Bureau of Reclamation. The AAC was built in the 
1930's and therefore IID is keenly aware of the need to appropriately 
maintain this kind of system, both for its longterm usefulness and to 
ensure the safety of people that may live in the vicinity of the canal.
    In order to keep this letter brief, I want to say that IID supports 
the content of the Testimony offered to your Subcommittee by the Family 
Farm Alliance on July 8, 2008. IID believes that the helpful comments 
and suggestions offered by the Family Farm Alliance are in line with 
HD's views regarding this legislation. It is also our understanding 
that this week the Family Farm Alliance will be submitting revised 
legislation for review by the Subcommittee. IID has had an opportunity 
to provide comments to the Family Farm Alliance on the proposed revised 
legislation, and therefore I want to express support for the revised 
version that will be submitted to your Subcommittee.
    While IID appreciates the overall intent behind S. 2842, I do want 
to emphasize two important points. First, that this legislation should 
be narrowed to focus only on areas where Bureau of Reclamation 
facilities are in urbanized areas. This should be the narrow area of 
concern for this legislation, as opposed to the wide scope of 
Reclamation facilities that are spread throughout the West. And second, 
we think it is important to emphasize that respect should be given to 
the fact that in many circumstances, like that faced by IID, the 
operation and maintenance of facilities such as the AAC have been in 
the hands of irrigation districts like IID for many years.
    IID operates and maintains the AAC and the Imperial Diversion Dam 
and Desilting Works located on the Colorado River between Arizona and 
California. Accordingly, decisions on a day-to-day and annual basis as 
to operation, maintenance and repair are made by IID and are paid for 
by IID. We therefore suggest that while Reclamation certainly has a 
role in this process, as the link between the district and the owner of 
the facilities--the United States government--it is nevertheless very 
important to recognize that IID is really ``in the drivers seat'' when 
it comes to routine decisions regarding the maintenance of the AAC. As 
we see it, the legislation should be crafted to reflect this important 
role the district plays in this process.
    In closing, let me offer our cooperation in working with your 
Subcommittee to craft an infrastructure maintenance bill that is 
workable for the government and for entities like IID.
                                 ______
                                 
 Statement of Levi Pesata, President, Jicarilla Apache Nation, Dulce, 
                             NM, on S. 3189

    On behalf of the Jicarilla Apache Nation, I am writing to support 
S.3189, a bill to amend Public Law 106-392. Passage of this bill will 
ensure the adequacy of funds to complete the important missions of both 
the Upper Colorado River Endangered Fish Recovery Program and the San 
Juan River Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and federal, state and Tribal water laws. These 
successful programs are working. The status of endangered fish is 
improving. In the two basins, more than 1,600 water projects are 
provided with ESA compliance in accordance with these two programs. No 
lawsuits have been filed in ESA compliance under these programs. The 
programs have long enjoyed bipartisan support in Congress.
    The Nation requests the Subcommittee to support the amendments to 
the authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189. Thank you for your support.
                                 ______
                                 
            The Nature Conservancy,
                                Western Resource Advocates,
                                                      July 7, 2008.
Hon. Tim Johnson,
Chairman
Hon. Bob Corker,
Ranking Member, Subcommittee on Water and Power, Senate Energy and 
        Natural Resources Committee, 304 Dirksen Senate Office 
        Building, Washington, DC.
Subject: Support for S. 3189

    Dear Chairman Johnson and Senator Corker, As conservation 
representatives to the Upper Colorado River Endangered Fish Recovery 
Program and San Juan River Basin Recovery Implementation Program, we 
are writing to support S.3189, a bill to amend Public Law 106-392. 
Passage of this bill will ensure funding to complete the important 
missions of these two widely-hailed recovery programs. We support 
passage of the bill as long as it is modified in a small but important 
respect, noted below.
    Most important to the conservation community, S. 3189 extends 
current funding levels for non-reimbursable annual operation and 
maintenance costs using power revenues from the Colorado River Storage 
Project. Annual base funding for recovery activities, like population 
monitoring, non-native fish control, and adaptive management of 
recovery strategies, is absolutely essential to the success of these 
Programs, especially as we transition from a capital construction phase 
to an active management phase in the recovery process.
    In addition, S.3189 assures authority for capital funding to both 
programs, as needed, to provide for major rehabilitation and repair of 
more than $100 million in facilities constructed by the two programs.
    Our full support of the bill is contingent one minor technical 
correction to Section 2(a)2 of the legislation, to remove the phrase 
``through stabilization of adjacent stream banks and adjacent impacted 
infrastructure'' from the definition of `facilities.' We believe the 
narrower definition of facilities to protect critical habitat is 
adequate to allow the stabilization of the rock slide on the San Juan 
River,\1\ without opening the Program to a wide-range of questionable 
or unrelated claims for repair of private infrastructure.
---------------------------------------------------------------------------
    \1\ According to the USFWS, this repair will prevent future rock 
slides and will eliminate the regular need for heavy equipment in 
critical habitat, thus directly benefitting the species recovery effort 
in the San Juan. In addition, the San Juan Recovery Implementation 
Program agreed with the USFWS assessment and supports the effort to 
stabilize the rock slide.
---------------------------------------------------------------------------
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin and providing 
ESA compliance for water project depletions in the Upper Basin 
consistent with interstate compacts and state water law. These 
successful programs are working and have long enjoyed bi-partisan 
support in Congress.
    We urge the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs by favorably reporting S.3189. Thank you for your efforts on 
behalf of these important and successful programs.
            Sincerely,
                                Bart Miller and Dan Luecke,
            Western Resource Advocates and Upper Colorado Recovery 
                                            Implementation Program.
                           Tom Iseman and Robert Wigington,
 The Nature Conservancy and Upper Colorado Recovery Implementation 
                                                           Program.
                                            Adrian Oglesby,
       The Nature Conservancy and San Juan Recovery Implementation 
                                                           Program.
                                 ______
                                 
  Statement of Joe Shirley, Jr., President, The Navajo Nation, Window 
                          Rock, AZ, on S. 3189

    I am writing to express the Navajo Nation's support for 5.3189, a 
bill to amend Public Law 106392. Passage of this bill will ensure the 
adequacy of funds to complete the important missions of both the Upper 
Colorado River Endangered Fish Recovery Program and the San Juan River 
Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The Navajo Nation has been an active 
participant in the San Juan program, and these programs have long 
enjoyed bi-partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
                                 ______
                                 
  Statement of Eric W. Wilkinson, General Manager, Northern Colorado 
          Water Conservancy District, Berthoud, CO, on S. 3189

    On behalf of the Board of Directors and staff of the Northern 
Colorado Water Conservancy District, (Northern Water) I am writing to 
support S. 3189, a bill to amend Public Law 106-392. Passage of this 
bill will ensure that adequate funds are available to complete the 
important missions of both the Upper Colorado River Endangered Fish 
Recovery Program and the San Juan River Basin Recovery Implementation 
Program.
    S. 3189 assures authority for capital funding to both recovery 
programs, as needed, to provide for major rehabilitation and repair of 
more than $100 million in facilities constructed by the two programs; 
assures protection of critical habitat in the San Juan River; and 
extends current funding levels for annual operation and maintenance 
provided by Colorado River Storage Project power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin--the highest 
standard under the Endangered Species Act (ESA)--and providing ESA 
compliance for water project depletions in the Upper Basin consistent 
with interstate compacts and state water law. These programs are 
successfully accomplishing these goals. The status of endangered fish 
is improving, while these two programs are providing ESA compliance for 
more than 1,600 water projects within the respective river basins. It 
is important to note that these programs have long enjoyed bi-partisan 
support in Congress.
    Northern Water respectfully requests the Subcommittee support the 
amendments to the authorizing legislation for the Upper Basin and San 
Juan Recovery programs in S. 3189.
                                 ______
                                 
 Statement of Jim Ferland, Senior Vice President, Utility Operations, 
               PNM Resources, Albuquerque, NM, on S. 3189

    I am writing to support S.3189, a bill to amend Public Law 106-392. 
Passage of this bill will ensure the adequacy of funds to complete the 
important missions of both the Upper Colorado River Endangered Fish 
Recovery Program and the San Juan River Basin Recovery Implementation 
Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The programs have long enjoyed bi-
partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
                                 ______
                                 
    Statement of the Honorable Lois Capps, U.S. Representative From 
                        California, on H.R. 3323

    Mr. Chairman and members of the Subcommittee, thank you for holding 
this hearing today. And thank you for the opportunity to speak in favor 
of H.R. 3323, the Goleta Water Distribution System Conveyance Act of 
2007, legislation I introduced last year. On May 21, 2008, the House 
passed my legislation by voice vote.
    H.R. 3323 would authorize the title transfer of a federally owned 
water distribution system in my congressional district from the Bureau 
of Reclamation to the Goleta Water District. The purpose of the 
legislation is to simplify the operation and maintenance of the 
District's water distribution system and eliminate unnecessary 
paperwork and consultation between the District and the Bureau.
    The Goleta Water District has operated and maintained the 
facilities proposed for transfer since the 1950's. They have worked 
through all requirements of the Bureau's title transfer process, 
including: public meetings, fulfillment of their repayment obligations, 
completion of an environmental assessment, and compliance with all 
other applicable laws.
    The only step remaining to complete the process is an act of 
Congress enabling the Secretary of the Interior to transfer title.
    It is important to note that the proposed transfer would apply only 
to lands and facilities associated with the District and would not 
affect the District's existing water service contract with the Santa 
Barbara County Water Agency nor the Federal government receipts from 
water deliveries under the contract. In addition, the proposed transfer 
does not envision any new physical modification or expansion of the 
service infrastructure.
    I'm pleased the Administration is supporting my legislation, which 
will allow the Bureau to focus its limited resources where they are 
needed most. In my view, this is an example of local problem-solving at 
its best. I commend the staff of the water district and the Bureau for 
their efforts to reach this agreement. They have been working on this 
for several years now.
    Today's hearing is another important step in this process. And I 
hope the Subcommittee will approve this legislation very soon, which 
means a lot to my constituents.
    Again, I want to thank the Chairwoman of the Subcommittee, as well 
as the members of the Subcommittee for your interest in the bill.
    Thank you.
                                 ______
                                 
    Statement of Mark Duncan, Chairman, San Juan Water Commission, 
                       Farmington, NM, on S. 3189

    I am writing to support S.3189, a bill to amend Public Law 106-392. 
Passage of this bill will ensure the adequacy of funds to complete the 
important missions of both the Upper Colorado River Endangered Fish 
Recovery Program and the San Juan River Basin Recovery Implementation 
Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The programs have long enjoyed bi-
partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
                                 ______
                                 
  Statement of Clement J. Frost, Chairman, Southern Ute Indian Tribe, 
                        Ignacio, CO, on S. 3189

    On behalf of the Southern Ute Indian Tribe (``Tribe''), I am 
writing to support S.3189, a bill to amend Public Law 106-392. Passage 
of this bill will ensure the adequacy of funds to complete the 
important missions of both the Upper Colorado River Endangered Fish 
Recovery Program and the San Juan River Basin Recovery Implementation 
Program (``Upper Basin and San Juan Recovery Programs'').
    S.3189 assures authority for capital funding to both the Upper 
Basin and San Juan Recovery Programs, as needed, to provide for major 
rehabilitation and repair of more than $100 million in facilities 
constructed by the two programs, assures protection of critical habitat 
in the San Juan River, and extends current funding levels for annual 
operation and maintenance provided by CRSP power revenues.
    The Upper Basin and San Juan Recovery Programs have the dual goals 
of achieving recovery of endangered fish species in the Upper Colorado 
River Basin and the San Juan River Basin, the highest standard under 
the Endangered Species Act (``ESA''), and providing ESA compliance for 
water project depletions in the Upper Basin and the San Juan Basin 
consistent with interstate compacts and state water law. These 
successful programs are working. The status of endangered fish is 
improving. In the two basins, more than 1,600 water projects are 
provided with ESA compliance in accordance with the Upper Basin and San 
Juan Recovery Programs. No lawsuits have been filed on ESA compliance 
under these two programs. The Upper Basin and San Juan Recovery 
Programs have long enjoyed bipartisan support in Congress.
    The Tribe requests the Subcommittee to support the amendments to 
the authorizing legislation for the Upper Basin and San Juan Recovery 
Programs in S.3189.
                                 ______
                                 
  Statement of Carly B. Burton, Executive Director, Utah Water Users 
                        Association, on S. 3189

    On behalf of the Utah Water Users Association, I am writing to 
support S.3189, a bill to amend Public Law 106-392. Passage of this 
bill will ensure the adequacy of funds to complete the important 
missions of both the Upper Colorado River Endangered Fish Recovery 
Program and the San Juan River Basin Recovery Implementation Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    The two programs have the dual goals of achieving recovery of 
endangered fish species in the Upper Colorado River Basin, the highest 
standard under the Endangered Species Act, and providing ESA compliance 
for water project depletions in the Upper Basin consistent with 
interstate compacts and state water law. These successful programs are 
working. The status of endangered fish is improving. In the two basins, 
more than 1,600 water projects are provided with ESA compliance in 
accordance with these two programs. No lawsuits have been filed in ESA 
compliance under these programs. The programs have long enjoyed bi-
partisan support in Congress.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
                                 ______
                                 
 Statement of Ernest House, Sr., Chairman, The Ute Mountain Ute Tribe, 
                         Towaoc, CO, on S. 3189

    I am writing to support S.3189, a bill to amend Public Law 106-392. 
Passage of this bill will ensure the adequacy of funds to complete the 
important missions of both the Upper Colorado River Endangered Fish 
Recovery Program and the San Juan River Basin Recovery Implementation 
Program.
    S.3189 assures authority for capital funding to both programs, as 
needed, to provide for major rehabilitation and repair of more than 
$100 million in facilities constructed by the two programs, assures 
protection of critical habitat in the San Juan River, and extends 
current funding levels for annual operation and maintenance provided by 
CRSP power revenues.
    These successful programs are working. The status of endangered 
fish is improving. In the two basins, more than 1,600 water projects 
are provided with ESA compliance in accordance with these two programs.
    We request the Subcommittee to support the amendments to the 
authorizing legislation for the Upper Basin and San Juan Recovery 
programs in S.3189.
                                 ______
                                 
  Statement of Ron Cunningham, President, Wyoming Water Association, 
                               on S. 3189

    The Wyoming Water Association supports the passage of S.3189, a 
bill that will, when enacted, amend the current authorizations in 
federal law for the Upper Colorado and San Juan River Endangered Fish 
Recovery Implementation Programs. Founded in 1933, the objectives of 
the state-wide Wyoming Water Association are to promote the 
development, conservation, and utilization of the water resources of 
Wyoming For the benefit of Wyoming people. The Wyoming Water 
Association annually adopts resolutions supporting the ongoing conduct 
of the Upper Colorado Recovery Program. The Wyoming Water Association 
has been a participating entity within the Upper Colorado Recovery 
Program since the Upper Colorado Recovery Program was initiated in 
January 1988. We are directly represented on the Upper Colorado 
Recovery Program's Biology, Management and Implementation Committees by 
Mr. Tom Pius, of Water Consult, Inc. of Loveland, Colorado.
    We join our Program partners, including the States of Colorado, New 
Mexico, Utah, and Wyoming: and hydroelectric power and environmental 
community interests in requesting that your Subcommittee favorably mark 
and approve S. 3189 expeditiously after the upcoming July 8th hearing 
on this legislation.
    The Upper Colorado and San Juan recovery programs are recovering 
endangered fish species in a manner that is compatible with state 
wildlife and water law. The programs provide. ESA compliance for more 
than 1,600 water projects, including federal Reclamation projects and 
tribal projects in the Upper Colorado River and San Juan River basins. 
The Programs' have constructed approximately 5100 million in facilities 
(fish passages, fish screens, flooded bottomlands habitat, hatcheries. 
and a reservoir that augments flows) that are directly benefitting the 
endangered fish and their habitat. These large, complex facilities are 
susceptible to damage by floods and debris associated with the major 
rivers on which they are located and will require in the future, either 
due to damage or wearing out, investment to be made in rehabilitation, 
repair or replacement of the moving systems and facilities' components. 
Additional authority is needed to complete the Tusher Wash fish screen 
on the Green River. Additional time is needed to complete capital 
projects in the San Juan Basin.
    Currently, authorization for the Secretary of the Interior to 
conduct capital construction expires on September 30, 2010 and the 
existing appropriations authority for the Upper Colorado Program will 
have been expended. In addition, S. 3189 authorizes funding to protect 
critical habitat. Unstable rock formations adjacent to designated 
critical habitat in the San Juan River have caused several landslide 
near Farmington, New Mexico, which the U.S. Fish and Wildlife Service 
characterize as constituting adverse modification to critical habitat 
in the San Juan River. The estimated $7 million cost of stabilizing 
these cliff-side rock formations is not authorized in the existing 
Public Law 106-392. S. 3189 will provide additional authorities to 
ensure recovery of the species and continued ESA compliance for the 
water projects that rely on the two recovery programs. Appropriations 
will only be requested as needed and any requests will be subject to 
Congressional scrutiny. Specifically, S. 3189 would achieve the 
following:

   Authorize an additional $12 million in federal expenditures 
        for capital projects for the San Juan Program for the purposes 
        of a) protecting critical habitat of endangered fish species 
        from rock slides in the area west of Farmington ($7 million), 
        and b) repair, rehabilitation and replacement of constructed 
        capital facilities as needed through 2023 ($5 million).
   Authorize an additional $15 million in federal expenditures 
        for capital projects for the Upper Colorado Program for the 
        purposes of a) constructing a fish screen on Tusher Wash in 
        critical habitat on the Green River in Utah, and b) for 
        repairs, rehabilitation and replacement of constructed capital 
        facilities as needed through 2023.
   Recognize additional non-federal cost sharing of $56 million 
        through 2023.
   Allow continued use of power revenues through 2023 for 
        annual operation and maintenance expenses associated with the 
        two recovery programs.

    The members of the Wyoming Water Association again request and will 
greatly appreciate your continued support of these two vital programs 
through approval of S.3189.

                                    

      
