- H.R. 489, H.R. 818, AND H.R. 470

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

H.R. 489, H.R. 818, AND H.R. 470

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

LEGISLATIVE HEARING

before the

SUBCOMMITTEE ON WATER AND POWER

of the

COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

Thursday, May 12, 2011

__________

Serial No. 112-29

__________

Printed for the use of the Committee on Natural Resources

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COMMITTEE ON NATURAL RESOURCES

DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC John P. Sarbanes, MD
Scott R. Tipton, CO Betty Sutton, OH
Paul A. Gosar, AZ Niki Tsongas, MA
Raul R. Labrador, ID Pedro R. Pierluisi, PR
Kristi L. Noem, SD John Garamendi, CA
Steve Southerland II, FL Colleen W. Hanabusa, HI
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann,
TN
Jon Runyan, NJ
Bill Johnson, OH

Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democrat Staff Director
David Watkins, Democrat Chief Counsel
------

SUBCOMMITTEE ON WATER AND POWER

TOM McCLINTOCK, CA, Chairman
GRACE F. NAPOLITANO, CA, Ranking Democrat Member

Louie Gohmert, TX Raul M. Grijalva, AZ
Jeff Denham, CA Jim Costa, CA
Scott R. Tipton, CO Ben Ray Lujan, NM
Paul A. Gosar, AZ John Garamendi, CA
Raul R. Labrador, ID Edward J. Markey, MA, ex officio
Kristi L. Noem, SD
Doc Hastings, WA, ex officio

------
CONTENTS

----------
Page

Hearing held on Thursday, May 12, 2011........................... 1

Statement of Members:
Gosar, Hon. Paul A., a Representative in Congress from the
State of Arizona........................................... 5
Prepared statement of.................................... 7
McClintock, Hon. Tom, a Representative in Congress from the
State of California........................................ 1
Prepared statement of.................................... 3
Napolitano, Hon. Grace F., a Representative in Congress from
the State of California.................................... 4
Prepared statement of.................................... 5

Statement of Witnesses:
Currie, Phyllis E., General Manager, Pasadena Water and
Power, Pasadena, California................................ 25
Prepared statement on H.R. 470........................... 26
Evans, Hon. Kenny, Mayor, Town of Payson, Arizona............ 11
Prepared statement on H.R. 489........................... 13
Heck, Hon. Joseph J., a Representative in Congress from the
State of Nevada............................................ 10
Prepared statement of.................................... 11
Matheson, Hon. Jim, a Representative in Congress from the
State of Utah.............................................. 8
Prepared statement of.................................... 9
Moe, Darrick, Regional Manager, Desert Southwest Region,
Western Area Power Administration, U.S. Department of
Energy, Phoenix, Arizona................................... 21
Prepared statement on H.R. 470........................... 22
Murillo, David, Deputy Commissioner for Operations, Bureau of
Reclamation, U.S. Department of the Interior, Washington,
D.C........................................................ 17
Prepared statement on H.R. 489........................... 19
Prepared statement on H.R. 818........................... 19
Pongracz, Ann C., Senior Deputy Attorney General, Colorado
River Commission of Nevada, Las Vegas, Nevada.............. 30
Prepared statement on H.R. 470........................... 31
Snow, Gawain, General Manager, Uintah Water Conservancy
District, Vernal, Utah..................................... 15
Prepared statement on H.R. 818........................... 16
Sullivan, John F., Associate General Manager, Salt River
Project, Phoenix, Arizona.................................. 28
Prepared statement on H.R. 470........................... 29

Additional materials supplied:
Mohave Electric Cooperative, Navopache Electric Cooperative,
Sulphur Springs Valley Electric Cooperative, Trico Electric
Cooperative, and Arizona Electric Power Cooperative,
Statement submitted for the record on H.R. 470............. 44

LEGISLATIVE HEARING ON H.R. 489, TO CLARIFY THE JURISDICTION OF THE
SECRETARY OF THE INTERIOR WITH RESPECT TO THE C.C. CRAGIN DAM AND
RESERVOIR, AND FOR OTHER PURPOSES; H.R. 818, TO DIRECT THE SECRETARY OF
THE INTERIOR TO ALLOW FOR PREPAYMENT OF REPAYMENT CONTRACTS BETWEEN THE
UNITED STATES AND THE UINTAH WATER CONSERVANCY DISTRICT; AND H.R. 470,
TO FURTHER ALLOCATE AND EXPAND THE AVAILABILITY OF HYDROELECTRIC POWER
GENERATED AT HOOVER DAM, AND FOR OTHER PURPOSES.

----------

Thursday, May 12, 2011

U.S. House of Representatives

Subcommittee on Water and Power

Committee on Natural Resources

Washington, D.C.

----------

The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1334, Longworth House Office Building, Hon. Tom
McClintock, Chairman of the Subcommittee, presiding.
Present: Representatives McClintock, Gosar, Napolitano,
Grijalva, and Garamendi.
Also Present: Representatives Heck and Matheson.

STATEMENT OF HON. TOM McCLINTOCK, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF CALIFORNIA

Mr. McClintock. The hour of 10:00 has arrived. The quorum
of the Committee is present. All of our witnesses are here. And
so, the meeting of the Subcommittee on Water and Power will
come to order.
This Committee meets today to hear testimony on H.R. 489,
sponsored by Congressman Gosar; H.R. 818, sponsored by
Congressman Matheson; and H.R. 470, sponsored by Congressman
Heck and Congresswoman Napolitano. I would ask unanimous
consent of the Committee that the gentleman from Nevada, Mr.
Heck, and the gentleman from Utah, Mr. Matheson, be allowed to
sit with the Subcommittee and participate in the hearing. If
there is no objection, so ordered.
We will begin with five-minute opening statements by myself
and the Ranking Member, followed by members of the Committee on
the order of their arrival. So, we will start the clock and I
will yield myself five minutes.
The bills before us today make minor adjustments to current
water projects, but they also open up larger issues that I hope
to address during the coming session. We have, again, before us
the Hoover Power Allocation Act, H.R. 470, authored by Dr. Heck
of Nevada and Mrs. Napolitano of California. The Hoover Dam is
an ideal model to which we must return. It produced a
cornucopia of water storage, hydroelectricity, recreational
resources, and flood control, financed not by general
taxpayers, but by the users of these benefits. The Federal
Government helped front the money for the construction. The
project participants paid back that money with interest from
the proceeds of their water and electricity sales. The original
project was paid off long ago and continues to store up to 28
million acre-feet of water and to generate 2,000 megawatts of
electricity, while providing one of the great recreational gems
of the West and shielding the Colorado River Basin from the
devastating cycle of floods and droughts which once ravaged it.
We have drifted far, far from this model of abundance in
previous Congresses and we need to get back to it. In the
meantime, the question arises of how to allocate these power
benefits when current contracts expire in 2017. One approach is
before us today. It allocates power at cost rates for the
project participants with a five percent set-aside for
latecomers to the vineyard. With the exception of this set-
aside, it follows existing precedent.
A second approach was rejected by Congress in the 1980s, to
put the power out for bid at market rates. This would reap a
windfall for the Treasury, but at enormous expense to 29
million existing ratepayers. This approach would also
discourage future partnerships by denying participants the full
fruit of their investments.
A third approach is to default this decision to the Western
Area Power Administration that is pursuing an administrative
process. This has the advantage of engaging in far more
detailed discussions and negotiations than can be addressed by
Congress, but with the drawback of unaccountability to
taxpayers and ratepayers, not to mention potential lawsuits and
the reigniting of conflicts between the affected States.
Our next bill, H.R. 498, authored by Congressman Paul Gosar
of northern Arizona, addressees a growing problem that we are
having with the U.S. Forest Service. This bill arises from the
bureaucratic intransigence, megalomania, and abuse that has
become the new hallmark of this rogue agency. In this case,
there is a small water system called the Cragin Project,
serving several small rural communities in Arizona that was
transferred from private ownership, ultimately to the Bureau of
Reclamation. The water system is nearly 50 years old and it
needs repairs. Simple enough, you just go and fix it. Except in
this case, the Forest Service bureaucrats have claimed
jurisdiction and have actively impeded, obstructed, delayed,
and disrupted efforts to repair this vital water system. Having
watched the Forest Service's abusive behavior in my own
district, I have no doubt that it is deliberately attempting to
create conditions that would ultimately expel these long-
established communities from the national forests. This is a
pattern of abuse that we are watching across the western United
States and is particularly ironic considering that the original
mission of the Forest Service was to open the forests for the
benefit of the people.
This bill restates and reenforces existing law, that the
Bureau of Reclamation alone has jurisdiction over the
maintenance and operation of the Cragin Project and it tells
the King's foresters to go pound sand. And the only thing I can
add to this bill is Amen.
The Subcommittee will also review H.R. 818, a bill
sponsored by Congressman Jim Matheson of Utah. This legislation
allows a local water district to prepay its loan obligations to
the Federal Treasury in the same way a family has the option to
prepay its home loan to save compounded interest costs. This is
a principle that we should replicate uniformly, and I hope that
this Committee will produce a more comprehensive bill during
this session.
With that, I yield back my time and yield to the Ranking
Member, Congresswoman Napolitano, for five minutes.
[The prepared statement of Mr. McClintock follows:]

Statement of The Honorable Tom McClintock, Chairman,
Subcommittee on Water and Power, on H.R. 470, H.R. 489, and H.R. 818

The Water and Power Subcommittee meets today to review three bills
that make minor adjustments to current water projects, but that open
larger issues I hope to address in coming months.
We have again before us the Hoover Power Allocation Act, H.R. 470
authored by Dr. Heck of Nevada and Mrs. Napolitano of California.
The Hoover Dam is an ideal model to which we must return. It
produces a cornucopia of water storage, hydroelectricity, recreational
resources and flood control--financed not by general taxpayers but by
the users of these benefits. The federal government helped front the
money for construction, the project participants paid back that money
with interest from the proceeds of their water and electricity sales.
The original project was paid off long ago and continues to store up to
28 million acre-feet of water and generate 2,000 megawatts of
electricity, while providing one of the great recreational gems of the
West and shielding the Colorado River Basin from the devastating cycle
of floods and droughts which once ravaged it.
We have drifted far from this model of abundance in previous
congresses and we need to get back to it.
In the meantime, the question arises of how to allocate these power
benefits when current contracts expire in 2017.
One approach is before us today. It allocates power at at-cost
rates for the project participants, with a five percent set-aside for
latecomers to the vineyard. With the exception of this set-aside, it
follows existing precedent.
A second approach was rejected by Congress in the 1980's: to put
the power out for bid at market rates. This would reap a windfall for
the Treasury, but at enormous expense to 29 million existing
ratepayers. This approach would also discourage future partnerships by
denying participants the fruit of their investments.
A third approach is to default this decision to the Western Area
Power Administration that is pursuing an administrative process. This
has the advantage of engaging in far more detailed discussions and
negotiations than can be addressed by Congress, but with the drawback
of unaccountability to taxpayers and ratepayers, potential lawsuits and
re-igniting conflicts between the affected states.
The Subcommittee will also review H.R. 818, a bill sponsored by
Congressman Jim Matheson of Utah. This legislation allows a local water
district to pre-pay its loan obligations to the Federal Treasury, in
the same way a family has the option to pre-pay its home loan to save
compounded interest costs. This is a principle that should be
replicated uniformly, and I hope that this committee will produce a
more comprehensive bill during this session.
______

STATEMENT OF HON. GRACE F. NAPOLITANO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Mrs. Napolitano. Thank you, Mr. Chair. As you stated,
today's legislative hearing focuses on these three pieces of
legislation that were already considered in the 111th Congress.
And I will not go into them, other than that I am glad that we
are finally getting to the Hoover bill. We expected it to get
passed last year and, unfortunately, it did not.
To all of our witnesses, thank you for making the journey
to be here with us and to share your information with us. My
focus will be on the H.R. 470 legislation, to allocate the
power for 50 years from Hoover Dam to power customers in the
local and other river basin states--Arizona, Nevada, and my
home state of California.
Power from Hoover was first allocated in 1928, as part of
the Boulder Canyon Project Act. It is the only hydropower in
Western's service territory that has always been allocated by
Congress. The legislation would also create a new pool of
Schedule-D power, over 100 megawatts of power given up by the
existing customers that will make available to WAPA, to
reallocate to, thankfully, the tribes and other entities who
also want to benefit from the resource.
I am also pleased to see that Western is here today Mr.
Moe. I want to ensure that Western is committed to implementing
a full and transparent process in the allocation of this
resource. We also expect that the state regulatory agencies of
Arizona and Nevada will follow the same process, procedures,
and commitment to an impartial and unbiased allocation
determination for all parties, and I speak especially to the
tribes that have been left out for eons and also the
municipalities who might be able to qualify.
Mr. Chair, I would like to introduce into the record three
letters, dated in 2009 from the tribal leadership. It is the
Gila River Indian Authority, Indian Community Utility
Authority, dated December 8; Ak-Chin Indian Community, December
9; and the Intertribal Council of Arizona. They were unable to
get something real quickly when I called and asked if they
wanted to put their two cents into this hearing. It is
important for us to understand that they also are going to be
needing assistance. This is the copy for you and this is for
the record.
Mr. McClintock. And without objection, it will be entered
into the record.
Mrs. Napolitano. Also, I have since the legislation has 33
bipartisan cosponsors from the lower basin, I would like to
submit for the record 101 letters of support the Committee has
received from a wide array of interested parties, and there you
are, sir, from a wide variety of groups----
Mr. McClintock. Letter by letter or we will just----
Mrs. Napolitano. I could. I have the list.
Mr. McClintock. ----accept them all at once.
Mrs. Napolitano. Accept them all at once, if you would,
please.
Mr. McClintock. Without objection.
[NOTE: The letters submitted for the record have been
retained in the Committee's official files.]
Mrs. Napolitano. Thank you, sir. And I do look forward to
working with my cosponsor, Rick Heck--he has done a good job on
getting this through--and the members of this Committee for
enacting this really critical piece of legislation for the
western states of which I happen to represent one of them. And
with that, I yield back my time.
[The prepared statement of Mrs. Napolitano follows:]

Statement of The Honorable Grace F. Napolitano, Ranking Member,
Subcommittee on Water and Power, on H.R. 470

Today's legislative hearing focuses on three pieces of legislation
that were also considered by the Committee in the 111th Congress:
H.R. 470, The Hoover Dam Power Allocation Act of 2011,
introduced by my colleague Representative Heck;
H.R. 489, a bill that would clarify the jurisdiction of
the Secretary of the Interior with respect to the C.C. Cragin Dam and
Reservoir, introduced by Congressman Gosar, and
H.R. 818, legislation that would direct the Secretary of
the Interior to allow for prepayment of repayment contracts between the
United States and the Uintah Water Conservancy District, introduced by
Congressman Matheson.
Thank you to our witnesses for making the journey to be with us
today.
I would like to focus on H.R. 470--legislation that would allocate
power for 50-years from the Hoover Dam to power customers in the Lower
Colorado River Basin States of Arizona, Nevada, and my home state of
California.
Power from Hoover Dam was first allocated in 1928 as part of the
Boulder Canyon Project Act. It is the only hydropower in Western's
service territory that always has been allocated by Congress.
The legislation would also create a new pool of Schedule-D Power,
over 100 megawatts of power given up by existing customers that will
made available to WAPA to reallocate to tribes and other entities who
also want to benefit for this resource.
I am also pleased to see that the Western is here today--Welcome
Mr. Moe. Mr. Moe we want to ensure that Western is committed to
implementing a full and transparent process in the allocation of this
resource.
We also expect that the State regulatory agencies of Arizona and
Nevada will follow the same procedures and commitment to an impartial
and unbiased allocation determination for all parties, including tribes
and municipalities.
The legislation has 33 bipartisan cosponsors from the Lower Basin
states. I would like to submit into the Record the 101 letters of
support the Committee has received from a wide variety of groups.
I look forward to working with Representative Heck and members of
this Committee in enacting this important legislation.
______

Mr. McClintock. Mr. Gosar.

STATEMENT OF HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF ARIZONA, ON H.R. 489

Dr. Gosar. Thank you. First, I would like to take this
opportunity to thank Chairman McClintock and Ranking Member
Napolitano for holding a legislative hearing on H.R. 489, a
bill aiming to clarify the jurisdiction of the Secretary of the
Interior with respect to the C.C. Cragin Dam and Reservoir. It
is not often Congress gets the opportunity to focus on details
of infrastructure, but it is dams like this which provide power
and water that form the backbone of our communities. This
legislation is a commonsense solution to the bureaucratic
wrangling that has occurred between the Departments of the
Interior and Agriculture that has compromised the routine
maintenance of this critical water infrastructure in my
district.
The C.C. Cragin Project, formerly known as the Blue Ridge,
consists of a number of facilities, including a dam and
reservoir, diversion tunnel and pump shaft, pumping plant,
priming reservoir, pipeline, electrical transmission line, and
a generating plant. The majority of the project is located on
Federal lands on both the Coconino and Tonto National Forests.
This critical water infrastructure project is an important
aspect of the Salt River Reclamation Project. It is integral to
providing a water supply for Phoenix, the fifth largest city in
the country, and is instrumental in making 3,500 acre-feet of
water available to Gila County. The Town of Payson and the
neighboring communities in the county rely on this pipeline to
supply municipal drinking water to their residents, my
constituents.
In 2004, at the request of SRP and with the support of
Reclamation and the former owner of the project, the Arizona
Water Settlement Act authorized a title transfer of the C.C.
Cragin Project from SRP to the Bureau of Reclamation. Under
this language, the Federal Government would own the project,
but SRP would still operate and maintain it. Once that
legislation was implemented, it became clear there was a
disagreement between the U.S. Forest Service and the Bureau of
Reclamation over who had the responsibility for approving
requested operation, maintenance, and the responsibility for
repairs related to the C.C. Cragin Project. Specifically, the
Bureau of Reclamation argued that it should approve SRP's work
plans, environmental compliance, and other regulatory
permitting requirements associated with the project. The U.S.
Forest Service asserted that Reclamation was required to obtain
a special use permit to operate, maintain, and repair the water
project. This simply isn't a tenable situation for the short-
term or long-term management of the C.C. Cragin Project. The
bureaucratic wrangling that delayed much-needed repairs to the
Cragin facilities increased repair costs and placed the
development project of the Town of Payson at risk.
On January 26 of this year, I introduced H.R. 489 to settle
this jurisdictional issue once and for all. I appreciate the
Committee moving forward with this important legislation in an
expeditious manner. This is not the first time this Congress
and this Committee has been forced to address this type of
bureaucratic dispute and I hope that future situations can be
resolved in a more timely and efficient manner.
The language in this legislation reflects a compromise
reached by the relevant parties in thorough negotiations, and
grants the Department of the Interior exclusive jurisdiction to
manage the Cragin Dam Project and grants the Department of
Agriculture administrative jurisdiction over land management
activities that do not conflict or adversely affect the
operational maintenance or replacement repair of the project.
The bill meets the needs of SRP and Reclamation, to ensure the
infrastructure can be maintained, while accommodating the
Forest Service, ensuring they continue to manage the lands
underlying the utility corridor with respect to recreation,
wildfire, law enforcement, and other activities consistent with
its authorities, responsibilities, and expertise.
It is important to note, this legislation does not relieve
the Bureau of Reclamation or SRP from compliance with all
requirements under Federal law, including the National
Environmental Policy Act or NEPA. In addition, the
implementation of this legislation has no cost to the taxpayer.
I look forward to hearing today's testimonies and
ultimately moving this bill forward through the legislative
process. It is critical to my community that a solution is met
that ensures the future management of the C.C. Cragin Project.
And I yield back the balance of my time.
[The prepared statement of Dr. Gosar follows:]

Statement of The Honorable Paul A. Gosar, a Representative
in Congress from the State of Arizona, on H.R. 489

Good morning:
First, I would like to take this opportunity to thank Chairman
McClintock and Ranking Member Napolitano for holding a legislative
hearing on H.R. 489, a bill aimed clarifying the jurisdiction of the
Secretary of the Interior with respect to the C.C. Cragin Dam and
Reservoir. It is not often Congress gets the opportunity to focus on
the details of infrastructure, but it is dams like this, which provide
power and water, that form the backbone of our communities. This
legislation is a common-sense solution to the bureaucratic wrangling
that has occurred between the Department of Interior and Agriculture
that compromises routine maintenance of critical water infrastructure
in my district.
The C.C. Cragin project, formerly known as Blue Ridge, consists of
a number of facilities, including a dam and reservoir, diversion tunnel
and pump shaft, pumping plant, priming reservoir, pipeline, electrical
transmission line, and a generating plant. The majority of the project
is located on federal lands in the Coconino and Tonto National Forests.
This critical water infrastructure project is an important aspect
of Salt River Project Federal Reclamation Project. It is integral to
providing a water supply for Phoenix, the fifth largest city in the
country, and is instrumental in making 3,500 acre-feet of water a year
available to the Gila County. The Town of Payson and the neighboring
communities in the county rely on the pipeline to supply municipal
drinking water to their residents, my constituents.
In 2004, at the request of the SRP and with the support of
Reclamation and the former owner of the project, the Arizona Water
Settlements Act authorized the title transfer of the C.C. Cragin
Project from SRP to the Bureau of Reclamation. Under this language, the
federal government would own the Project, but SRP would still operate
and maintain it.
Once that legislation was implemented, it became clear that there
was a disagreement between the U.S. Forest Service and the Bureau of
Reclamation over who had the responsibility for approving requested
operation, maintenance and repairs related to the C.C. Cragin Project.
Specifically, the Bureau of Reclamation argued that it should approve
SRP's work plans, environmental compliance, and other regulatory
permitting requirements associated with the project. The U.S. Forest
Service asserted that Reclamation was required to obtain a special use
permit to operate, maintain, and repair the water project.
This simply isn't a tenable situation for short-term or long-term
management of the C.C. Cragin project. The bureaucratic wrangling has
delayed much-needed repairs to the Cragin facilities, increased repair
costs, and placed the economic development project of the Town of
Payson at-risk.
On January 26th of this year, I introduced H.R. 489 to settle this
jurisdiction issue once and for all. I appreciate the committee moving
this important legislation forward in an expeditious manner. This is
not the first time this Congress, and this Committee, has been forced
to address this type of bureaucratic dispute and I hope that future
situations can be resolves in a more timely and efficient manner.
The language in this legislation reflects a compromise reached by
the relevant parties in thorough negotiations. It grants the Department
of Interior exclusive jurisdiction to manage the Cragin Dam Project and
grants the Department of Agriculture administrative jurisdiction over
land management activities that do not conflict or adversely affect the
operation, maintenance, or replacement/repair of the project.
The bill meets the needs of SRP and Reclamation to ensure the
infrastructure can be maintained, while accommodating the Forest
Service, ensuring they continue to manage the lands underlying the
utility corridor with respect to recreation, wildfire, law enforcement,
and other activities consistent with its authorities, responsibilities,
and expertise.
It is important to note, this legislation does not relieve the
Bureau of Reclamation or SRP from compliance with all requirements
under federal law including the National Environmental Policy Act
(NEPA). In addition, the implementation of this legislation has no cost
to the taxpayer.
I look forward to hearing today's testimonies, and ultimately
moving this bill forward through the legislative process. It is
critical to my community that a solution is met that ensures the future
management of the C.C. Cragin project.
______

Mr. McClintock. Mr. Matheson.

STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF UTAH, ON H.R. 818

Mr. Matheson. Well, thank you, Mr. Chairman for giving me
the opportunity to participate. I am not a member of this
committee, but I have to say, coming here and seeing everyone
seated before 10:00 and you started the hearing right at 10:00
makes me interested, maybe this is a good committee because I
am very impressed. That is not standard operating procedure in
Congress, I must say. So, I compliment you on that. And I do
want to thank the Chairman and Ranking Member Napolitano for
holding this hearing on the bill I have introduced, H.R. 818.
It is a bill that directs the Secretary of the Interior to
allow for prepayment of repayment contracts between the United
States and Uintah Water Conservancy District I would also like
to thank my constituent, Mr. Snow, who is the General Manager
of the Uintah Water Conservancy District for his testimony and
participation today. And I also thank the Bureau of Reclamation
for its support of this legislation.
A lot of times we use this phrase around here, but this is
a commonsense bill. It is a bipartisan bill. It encourages and
promotes fiscal responsibility at all levels of government and
it passed the House of Representatives in the 111th Congress
unanimously and it has been reintroduce by my Senate
counterparts in the Utah delegation, Senators Hatch and Lee,
during this Congress.
Allowing the Water Conservancy District to pay their debt
obligations back early and in a timely manner is a win-win. It
is financially beneficial to both local government and the
Federal Government alike. It provides local government the
ability to responsibly self-govern, giving them the flexibility
to pay off their loan early and save hundreds of thousands of
dollars in future interest payments. The savings will result in
lower cost to the water users, which is very important as we
continue to grow out of the current economic recession and look
for additional ways to support much-needed economic development
in rural communities. And likewise, allowing for the prepayment
results in a significant payment to the Federal Treasury. It is
estimated roughly between $4- and $5 million. How often do we
have legislation come forward that actually provides a little
help in reducing the deficit. If Congress continues to look for
ways to trim the Federal budget and encourage best practices
and good government policies, allowing for prepayment is a good
model to follow. In addition, I believe this legislation
provides a good opportunity to help rural communities
prioritize and implement best practices to utilize scarce
resources, in an effort to meet fewer water demands in a cost-
effective and fiscally responsible manner.
Last, I want to point out that there is a precedence for
allowing prepayment of these repayment contracts. H.R. 818 is
similar to legislation used by the Central Utah Water
Conservancy District, which allows for prepayment of the
repayment contracts for the Bonneville Unit. This effort saved
hundreds of thousands of dollars in taxpayer dollars and
allowed for project managers to consider and implement cost
savings through a balanced approach to managing an important
resource in my State.
I support the testimony of Mr. Snow and the proposed
technical amendment he will discuss. Essentially, this
amendment would provide greater flexibility to the District
should future amendments to the prepayment contracts occur.
Under similar prepayment legislation for the Central Utah Water
Conservancy District, Congress had authorized prepayment on
several different occasions. This technical amendment seeks to
avoid a similar circumstance for Uintah by allowing all future
amendments to the contract with the Bureau of Reclamation to be
considered eligible for prepayment.
So, Mr. Chairman, again, I really appreciate the
opportunity to speak before the Committee on H.R. 818. I want
to thank the Committee for once again holding a hearing on this
important topic. I certainly look forward to working with you
to advance this bill once again. And I yield back the balance
of my time.
[The prepared statement of Mr. Matheson follows:]

Statement of The Honorable Jim Matheson, a Representative
in Congress from the State of Utah, on H.R. 818

Thank you, Chairman McClintock and Ranking Member Napolitano for
holding a hearing on my bill, H.R. 818, to direct the Secretary of the
Interior to allow for prepayment of repayment contracts between the
United States and the Uintah Water Conservancy District. I'd also like
to thank my constituent, Mr. Gawain Snow, General Manager of the Uintah
Water Conservancy District for his testimony today. I also thank the
Bureau of Reclamation for its support.
This is a common sense, bipartisan bill that encourages and
promotes fiscal responsibility at all levels of government. It passed
the House unanimously in the 111th Congress and has also been
reintroduced by my Senate counterparts in the Utah delegation Sens.
Hatch and Lee. Allowing the Uintah Water Conservancy District to pay
their debt obligations back early and in a timely manner is a win-win:
it's financially beneficial to local and Federal government alike. It
provides local government the ability to responsibly self-govern,
giving them the flexibility to pay off their loan early and save
hundreds of thousands of dollars in future interest payments. This
savings will result in lower costs to the water users--very important
as we continue to grow out of the current economic recession and look
for additional ways to support much-needed economic development in
rural communities. Likewise, allowing for prepayment results in a
significant payment to the Federal Treasury, from $4-5 million.
As Congress continues to look for ways to trim the federal budget
and encourage best practices and good government policies, allowing for
prepayment is a good model to follow. In addition, I believe this
legislation provides a good opportunity to help rural communities
prioritize and implement best practices to utilize scarce resources in
an effort to meet rural water demands in a cost effective and fiscally
responsible manner. Lastly, I want to point out that there is
precedence for allowing for prepayment of repayment contracts. H.R. 818
is similar to legislation used by the Central Utah Water Conservancy
District, which allowed for prepayment of the repayment contracts for
the Bonneville Unit. This effort saved hundreds of thousands in tax
payer dollars, allowed for project managers to consider time and cost
savings through a balanced approach to managing an important resource
in my state.
I support the testimony of Mr. Snow and the proposed technical
amendment he will discuss. Essentially this amendment would provide
greater flexibility to the District should future amendments to the
prepayment contracts occur. Under similar prepayment legislation for
the Central Utah Water Conservancy District, Congress had to authorize
prepayment on several different occasions. This technical amendment
seeks to avoid a similar circumstance for Uintah by allowing all future
amendments to the contract with the Bureau of Reclamation to be
considered eligible for prepayment.
Mr. Chairman, I appreciate the opportunity to speak before the
Committee on H.R. 818 and thank the Committee once again for holding a
hearing on this important topic. I look forward to working with you to
advance this bill once again. I yield back the balance of my time.
______

Mr. McClintock. Dr. Heck.

STATEMENT OF HON. JOSEPH J. HECK, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEVADA, ON H.R. 470

Dr. Heck. Thank you, Chairman McClintock, Ranking Member
Napolitano. I thank you for allowing me to sit with the Water
and Power Subcommittee today to discuss H.R. 470, the Hoover
Power Allocation Act. As you know, this issue is very important
to my home state of Nevada and to more than 29 million
residents across Nevada, Arizona, and California that benefit
from Hoover power. Hoover Dam is located in my district and
Hoover power is critical to southern Nevada's economy,
businesses, and consumers. The power is clean and affordable
and today, we are taking an important step toward making it
stable.
The Hoover power contracts are due to expire in 2017. H.R.
470 would authorize the distribution of electricity from Hoover
Dam over the next 50 years and create a new resource pool to
make Hoover power available to Indian tribes and other
customers who could not access this power in the past.
Extending Nevada's access to low-cost, clean hydroelectric
power through the enactment of H.R. 470 is key to Nevada's
economic recovery because it will create certainty over future
electricity prices. This is exactly what our economy needs
right now in order to get people back to work.
H.R. 470 was developed as a consensus bipartisan plan to
ensure the continued availability and reliability of Hoover
power to the citizens of Nevada, California, and Arizona.
Hoover contractors, who participated in developing this plan,
have invested more than $1.3 billion to construct, operate, and
maintain Hoover Dam in the past. They agreed to contribute five
percent of their post-2017 allocation to form a 100 megawatt
resource pool that would be made available to customers, such
as tribes, irrigation districts, and rural cooperatives that
were not eligible to apply for allocations under prior laws.
H.R. 470 provides that this resource pool be allocated by a
Federal-state partnership involving the Western Area Power
Administration and the States of Nevada, California, and
Arizona. Again, this legislation is essential to the millions
of consumers who have invested in this renewable source of
energy over the past 75 years, because it will continue to
provide them with Hoover power for the next 50 years, as well
as allows new customers to benefit from the clean, low-cost
energy.
Again, Mr. Chairman, I thank you for the opportunity to sit
here with you today. I thank the Ranking Member for all of the
hard work she has put into this bill and I urge the
Subcommittee's favorable recommendation. And I yield back the
balance of my time.
[The prepared statement of Mr. Heck follows:]

Statement of The Honorable Joseph J. Heck, a Representative
in Congress from the State of Nevada, on H.R. 470

Chairman McClintock and Ranking Member Napolitano: thank you for
allowing me to sit with the Water and Power Subcommittee today to
discuss H.R. 470, the Hoover Power Allocation Act. As you know, this
issue is very important to my home state of Nevada and the more than 29
million residents across Nevada, Arizona, and California that benefit
from Hoover power.
Hoover Dam is located in my district, and Hoover power has been
critical to Southern Nevada's economy, businesses, and consumers. The
power is clean and affordable, but today we are taking an important
step toward making it stable. That is why the Hoover Power Allocation
Act, H.R. 470, is the first piece of legislation I introduced when I
came to Congress in January, 2011.
The Hoover power contracts are due to expire in 2017. H.R. 470
would authorize the distribution of electricity from Hoover Dam for the
next 50 years, and create a new resource pool to make Hoover power
available to Indian tribes and other customers who could not access
this power in the past.
Extending Nevada's access to low-cost, clean hydropower though the
enactment of H.R. 470 is key to Nevada's economic recovery, because it
will help create certainty over future electricity prices. This is
exactly what our economy needs right now in order to get people back to
work.
H.R. 470 was developed as a consensus bi-partisan plan to ensure
the continued availability of and reliability of Hoover power to the
citizens of Nevada, California and Arizona.
Hoover contractors who participated in developing this plan have
invested more than $1.3 billion to construct, operate and maintain
Hoover Dam in the past. They agreed to contribute five percent of their
post-2017 Hoover power allocations to form a 100 megawatt resource pool
that will be made available to customers such as tribes, irrigation
districts and rural cooperatives that were not eligible to apply for
allocations under prior laws.
H.R. 470 provides that this resource pool will be allocated by a
federal-state partnership involving the Western Area Power
Administration, and the States of Nevada, California and Arizona.
Additionally, it requires the current and new Hoover contractors to pay
Hoover Dam's future costs.
Again, this legislation is essential to the millions of consumers
who have invested in this renewable source of energy over the past 75
years because it will continue to provide them with Hoover power for
the next 50 years, as well as allows new customers to benefit from this
clean, low-cost energy.
______

Mr. McClintock. Thank you, very much. We will now hear from
our panel of witnesses. Each witness' written testimony will
appear in full in the hearing record. So, I would ask that each
of you keep your oral statements to five minutes, as outlined
in your invitation letter and under Committee Rule 4[a].
I also want to explain how our timing lights work. When you
began to speak, the clerk will start the timer, and a green
light will appear. After four minutes, a yellow light will
appear. And at that time, you should begin to conclude your
statement. At five minutes, a red light will come on and that
means that you need to stop talking and be quiet. And if there
is any consolation, we hold our Members to the same standard.
Our first witness is The Honorable Kenny Evans, Mayor of
Payson, Arizona.

STATEMENT OF HON. KENNY EVANS, MAYOR,
PAYSON, ARIZONA

Mr. Evans. Thank you, Mr. Chairman, Chairman McClintock,
Ranking Member Napolitano. It is a privilege to be able to come
back here and to be able to address this group today concerning
Representative Gosar's House bill, H.R. 489. My name is Kenny
Evans, as you mentioned, and I am just an old farm boy, cowboy,
who has had the privilege of growing up in the shadow of those
Rocky Mountains--southern Rockies in central Arizona.
Interestingly enough, I am now currently the Mayor. I find
myself as the Mayor of a beautiful small mountain town called
Payson. I have served as the President of the Northern Arizona
Municipal Water Users Association, as well. It represents the
nine major communities in northern Arizona. I am also the
immediate past president of the Arizona Farm Bureau, where I
served as either the President or Vice President for 27 years
and the current President, who succeeded me, is in the room
today, Kevin Rogers.
Over the last 40 years, I have had the privilege of riding
horseback and sleeping under the stars, under those Ponderosa
trees that are part of the magical, mystical mountains that we
call Rim Country of Arizona. And additionally, I have had the
privilege of dragging three generations, as a grandpa, a
father, and a son, as Boy Scouts up to camp to enjoy the
wonders of Blue Ridge Reservoir. So, I come to you today and
you have my written testimony before you. I appreciate
Representative Gosar's statement and your statement at the
beginning, Chairman McClintock. You have said much of what
needs to be said about this bill; but I think from a very
personal standpoint, as somebody who has lived there and who
understands how critical water is in the Southwest, I would
plead with this Committee to use whatever influence you have to
expedite action on this issue.
Payson is an island in the middle of the national forest.
From my deck, I have the privilege of being able to look out
and see parts of four different national forests, two national
wilderness areas, two national monuments. That is how encircled
we are. And so, I speak from experience when I say we have
learned, as a community, we have had to learn how to deal with
bureaucrats from multiple agencies. We cannot survive without
doing that.
As you mentioned, the challenge that we face today is that
we have been trying to put it into perspective, so the members
of the Committee can understand it, those who are not from
Arizona, the Mogollon Rim is an escarpment that runs from the
northwest part of the State of Arizona to the southeast,
bisecting the State for almost 200 miles. It is a 2,500 foot
cliff, so to speak, that runs that entire distance, with the
higher elevation to the north and east, the lower elevations to
the south and west. To give you a relative visualization of
what we are doing, it would be like having the Blue Ridge
Reservoir on the north rim of the Grand Canyon and be trying to
bring the water form that north rim down to the bottom of the
canyon. That is what we are attempting to do.
And the Blue Ridge Reservoir, the C.C. Cragin Project, is
not a new project. It was built in 1963, so it is almost 60
years old now. The pipeline that brought the water about a
third of the way to our community is part of that old
established project that was done by a private mining company
called Phelps Dodge in 1963. About a decade ago, they found
that they no longer needed that water and pursuant to the
agreement that allowed them to build that facility, they
transferred ownership to SRP. And in 2004, as part of the
Indian Settlement Act, as part of the Arizona Indian Settlement
Act, SRP transferred ownership to the Bureau of Reclamation.
Enter the little Town of Payson. We are a small town. We
have a population of just over 15,000 people. But, we were able
to negotiate with the consent of all the participants--and in
Arizona getting everybody to agree to anything is a major,
major coup, but we were able to get them to agree to transfer
about a third of the water that comes out of Cragin or about
3,500 acre-feet a year to the Town of Payson. We have gone
through all the regulatory issues. We have gotten it done so
that we can have that water transferred to us. It is solely the
Forest Service that has held this up and it has held us up to
date to the tune of about six or seven months.
I would take any questions and, again, thank you, Mr.
Chairman, Ranking Member Napolitano.
[The prepared statement of The Honorable Kenny Evans
follows:]

Statement of The Honorable Kenny J. Evans, Mayor,
Town of Payson, Arizona, on H.R. 489

Chairman McClintock, Ranking Member Napolitano and Members of the
Subcommittee, thank you for the opportunity to submit testimony in
support of H.R. 489, a bill to clarify the jurisdiction of the
Secretary of the Interior with respect to the C.C. Cragin Dam and
Reservoir.
My name is Kenny J. Evans; I'm an old farm boy who has had the
wonderful privilege of growing up in the shadow of the Rocky Mountains.
I am currently the Mayor of the beautiful mountain community of Payson,
Arizona. I also serve as President of the Northern Arizona Municipal
Water Users Association and on the Executive Committee of the Arizona
League of Cities and Towns. I am the immediate past President of the
Arizona Farm Bureau where I served as state President or Vice-President
for over 27 years.
Over the past 40 plus years I have been privileged to bring three
generations of Boy Scouts to camp and fish at Blue Ridge Reservoir (now
CC Cragin). I have a great love for Blue Ridge and am intimately aware
of its history and management. I am also keenly aware of the damage
that the current bureaucratic turf battle is causing. What H.R. 489
does not do is relieve either the Bureau or SRP from compliance with
all requirements of federal law.
Payson is an island in the middle of National Forests and National
Monuments. From the deck of my home I can see four National Forests,
two National Monuments and two National Wilderness Areas. The Town of
Payson truly understands the complexity of working with Federal
Agencies on a daily basis. After much study, we fully support H.R. 489
which will clarify that since the Project is now being operated as a
component of the Salt River Federal Reclamation Project (SRP), the
Bureau of Reclamation (Bureau) is responsible for approval of all
operation, maintenance and repair activities just like more than a
dozen other reservoirs and dams and other federal reclamation projects
in Arizona, including the other Salt River Project facilities located
on lands within the boundaries of the other National Forests.
H.R. 489 only applies to the C.C. Cragin Project, which is located
within the Coconino and Tonto National Forests in northern Arizona
approximately 25 miles north of my community. The C.C. Cragin Project
consists of a number of facilities including a 147-foot high dam,
15,000 acre-foot reservoir, diversion tunnel and pump shaft, pumping
plant, priming reservoir, a 10 mile long pipeline, electrical
transmission line, and small generating plant which supplies power to
the Project's pumping plant. Originally known as the Blue Ridge
Project, the dam, reservoir, and associated facilities were constructed
by Phelps Dodge in the 1960's as part of a water exchange with SRP. In
the last ten years, Phelps Dodge found that it no longer needed the
Blue Ridge Project for water exchange and pursuant to the terms of
their agreement, Phelps Dodge transferred ownership of all of the Blue
Ridge Project facilities to SRP.
Enter the small rural mountain Town of Payson. Payson sits at the
base of the Mogollon Rim, a 200 mile long escarpment that bisects
Arizona west to east and is home to the largest Ponderosa Forest in the
country. Currently, all domestic water for the Town and surrounding
communities comes from groundwater. Through the years Payson has become
the most water conserving community in the State using less than 80
gallons of water per capita per day. However, severe drought and slow
but steady growth have stressed future assured water supplies that were
based on groundwater alone.
In 2004, with support from all participants, including the U.S.
Bureau of Reclamation, language was included as part of the Gila River
Indian Community Water Rights settlement in Section 213(i) of the
Arizona Water Settlements Act, Public Law 108-451, 118 Stat. 3478,
3532, authorizing title transfer of the Blue Ridge Project from SRP to
the Bureau and renaming it C.C. Cragin. Up to 3,500 acre-feet per year
were to be made available to Payson and surrounding communities with
the facilities operated and managed by SRP pursuant to its September 6,
1917 contract with the Bureau of Reclamation. Subsequently, SRP
officially transferred title to the C.C. Cragin Dam and Reservoir
together with all of its associated facilities, including 77 acres of
fee land to the Bureau and concluded the surface water right title
transfer and agreement with the Town of Payson. In accordance with the
1917 contract with the Bureau and as directed by Section 213 (i)(5) of
the Arizona Water Settlement Act, SRP began operating and maintaining
the C.C. Cragin Project.
As part of its maintenance efforts, SRP identified numerous serious
leaks present in the existing pipeline needing immediate repair. Not
only is the pipeline's integrity important to the general operation of
C.C. Cragin Project and SRP's water supply for the Phoenix metropolitan
area, but it also has special significance to the Town of Payson and
neighboring communities in Northern Gila County who will rely heavily
on the Project to supply municipal drinking water in the future. As a
part of this effort, the Town of Payson received an allocation of $10.6
million from the American Recovery and Reinvestment Act (ARRA) stimulus
money to assist in paying for the repairs to the pipeline and extending
the pipeline and other municipal water-related improvements needed to
make the water available to residents.
Once SRP began working with the Bureau on repairs of the C.C.
Cragin Project, it became evident that the Bureau (U.S. Department of
Interior [Bureau of Reclamation)]) and the Forest Service (U.S.
Department of Agriculture [USDA--FS]) disagreed as to who had
responsibility for approving the requested operation, maintenance and
repair functions associated with this Reclamation Project. Please note
that this had nothing to do with compliance with State and Federal
rules, laws and regulations. It had everything to do with who gave the
approval to proceed (Bureau or USDA-FS). The Forest Service asserted
that the Bureau needed to obtain a special use permit from them prior
to Project operation by SRP and that all maintenance and repairs needed
prior approval by them. The Bureau and SRP maintain that under the
terms of the Arizona Water Settlements Act, the C.C. Cragin Project is
just like all of the other Salt River Federal Reclamation Project
facilities located on Forest Service land. On those facilities,
jurisdiction over approvals of work plans, maintenance, repairs,
environmental compliance, and other permitting associated with Project
operation and maintenance belongs to the Bureau, while jurisdiction
over recreation, fire suppression, etc. lies with the Forest Service.
This approach is consistent with Reclamation Projects across the
western United States pursuant to a 1987 Memorandum of Understanding
between the Departments of Agriculture and Interior.
For the past five years SRP and the Bureau have unsuccessfully
attempted to resolve this jurisdictional dispute with the Forest
Service. The Forest Service has insisted on having ultimate approval
authority for the Project even though these facilities are components
of the Salt River Federal Reclamation Project. Meanwhile, the resulting
bureaucratic wrangling over approval requirements between the two
Departments has delayed and created uncertainty in planning much-needed
repairs to the Cragin facilities, increased repair costs, and has
placed a portion of the Town of Payson's $10.6 million stimulus grant
at risk. The bill before you, H.R. 489, clarifies the jurisdiction over
the C.C. Cragin Project. It is consistent: (1) with the 1987 Memorandum
of Understanding between the Departments of Agriculture and Interior;
(2) with Section 213(i) of the Arizona Water Settlements Act, Public
Law 108-451, 118 Stat. 3478, 3532; (3) with the September 6, 1917
contract with the Bureau of Reclamation pursuant to the 1902
Reclamation Act; and, (4) with the process used with other Reclamation
projects located on Forest Service lands within the State of Arizona
and throughout the west.
The bill before you, H.R. 489, would resolve this jurisdiction
conflict by withdrawing the approximately 512 acres that comprise the
Cragin Project for Bureau of Reclamation purposes. Under this
arrangement, the underlying lands would remain part of the National
Forest, while clarifying that the Secretary of Interior has exclusive
jurisdiction to manage the Cragin Project on these lands in accordance
with the terms of section 213(i) of the Arizona Water Settlements Act.
This change will make the administrative structure of the Cragin
Project consistent with the six additional dams and reservoirs owned by
the Bureau and operated by SRP within the Tonto National Forest.
In managing the Cragin Project, the Secretary of Interior and SRP
are required to ensure the compliance of their activities with all
applicable federal laws, including regulations. The Secretary of
Interior is authorized to enter into a contract with the Secretary of
Agriculture to undertake the management of recreation, wild land fire
activities, public conduct and law enforcement, cultural and other
resources, and any other appropriate management activity. The Forest
Service requested several changes to the original language on this
issue to further clarifying their management activities, as well as
several other technical changes to other portions of the bill language.
These changes are incorporated into H.R. 489 and fully supported by the
Town of Payson.
The Town of Payson's ARRA grant will be at risk if there are
continuing delays. I sincerely ask that you approve H.R. 489 so that
this much-needed project can proceed under the Bureau of Reclamation's
oversight and in compliance with all applicable laws, rules and
regulations.
Chairman McClintock, Ranking Member Napolitano and Members of the
Subcommittee,, thank you once again for the opportunity to testify
before you today. I would be willing to answer any questions you might
have.
______

Mr. McClintock. Thank you, very much, for your testimony.
Our next witness is Mr. Gawain Snow, General Manager of the
Uintah Water Conservancy District in Vernal, Utah. Thank you
for joining us.

STATEMENT OF GAWAIN SNOW, GENERAL MANAGER,
UINTAH WATER CONSERVANCY DISTRICT, VERNAL, UTAH

Mr. Snow. Thank you, Mr. Chairman, Congresswoman
Napolitano, and members of the Subcommittee. I appreciate being
here today to testify in support of H.R. 818. I also wanted to
thank Representative Jim Matheson for introducing this bill on
behalf of Uintah Water Conservancy District, which was formed
in 1956, as part of the Colorado River Storage Act. The
District encompasses almost all of Uintah County, Utah, and
Uintah County is adjacent to Colorado and Wyoming.
At the time when the Jensen Unit was constructed, there was
18,000 acre-feet of municipal and industrial (M&I) water that
was to be developed along with that project. That amount of
water was developed in anticipation of and predicated upon
Project Independence, a 1974 Federal initiative to aid the
United States in becoming independent of foreign nations in the
production of energy, particularly that of oil and gas and oil
shale development. The project, however, failed to materialize.
The need for all of that water was not then necessary at that
time. Due to that, we entered into a mandatory contract with
the Bureau of Reclamation, which allowed us to take 2,000 acre-
feet of that for the M&I water, which we are under contract.
And looking to the future, we anticipate that we will use some
other blocks of water, as becomes necessary.
In that mandatory contract, there was not a prepayment
clause included. And so at this time, H.R. 818 would direct the
Secretary of the Interior to allow for prepayment of the
specified repayment contracts between the United States and the
Uintah Water Conservancy District under the terms and
conditions similar to those used in implementing the provisions
of the Central Utah Completion Act. It would provide for
prepayment and maybe provide it in several installments, to
provide a substantial completion of the delivery facilities
being prepaid, would adjust to confirm to a final cost
allocation, and may not be adjusted on a basis of the type of
prepayment financing utilized by the District. What this would
allow us to do then was to go out and find some money that
would be of less interest than what we are presently paying,
returning to the U.S. Government $4- to $5 million. And
finally, we would ask the Subcommittee to entertain a technical
amendment to the bill, which would expand the references of our
contracts with the Reclamation to include all subsequent
amendments made under subsection 9[c] of the Reclamation Act of
1939.
Again, we feel that this is a good bill. It allows us some
flexibility. Our working relationship with the Bureau of
Reclamation has been excellent in the past and we desire to
continue to do that. I would like to thank you for the
opportunity to testify here today and be happy to respond to
any questions that the Committee might have. Thank you.
[The prepared statement of Gawain Snow follows:]

Statement of Gawain Snow, General Manager,
Uintah Water Conservancy District, in Support of H.R. 818

Chairman McClintock, Congresswoman Napolitano and members of the
Subcommittee, I am grateful to be able to appear here today and testify
in support of H.R. 818. I want to also thank Rep. Jim Matheson for
introducing this bill on behalf of the Uintah Water Conservancy
District (District). The District was formed in 1956 for the purpose of
``conserving, developing and stabilizing supplies of water for
domestic, irrigation, power, manufacturing, municipal and other
beneficial uses, and for the purpose of constructing drainage works.''
The District operates and maintains the Vernal and Jensen Units of the
Central Utah Project, which was authorized by Congress as part of the
Colorado River Storage Project Act of 1956. The District encompasses
almost all of Uintah County, Utah in eastern Utah adjacent to the
border of Colorado.
At the time of its construction (1984-1987), the Jensen Unit was to
provide 18,000 Acre-Feet (AF) of municipal and industrial (M&I) water
to the residents of Uintah County. This amount of water was based on an
anticipated accelerated population growth within the District's service
area predicated on Project Independence, a 1974 Federal initiative to
aid the United States in becoming independent of foreign nations in the
production of energy, particularly the production of oil and gas,
including oil shale development. Project Independence failed to
materialize, however, resulting in the curtailment of energy
development and a corresponding decrease in population, rather than the
anticipated population growth. Of the total 18,000 AF of M&I water to
be developed, 6,000 AF were to be developed with the construction of
Red Fleet dam (which was built) and another 12,000 AF were to be
developed at a later date with the construction of the Burns Bench Pump
station on the Green River in Jensen, Utah. Due to the economic bust
described above, the demand for water that had been foreseen was no
longer there. As a result, an amendatory contract was signed in 1989
with the Bureau of Reclamation (Reclamation) reducing the amount of
water subscribed to by water providers to 2,000 AF and reserving to the
United States the remaining 4,000 AF of developed M&I water and the
12,000 AF of undeveloped M&I water for marketing by the United States,
provided among other things, that the water would not be marketed
within the District's boundary and that the District would have the
right of first refusal to acquire such M&I water. The amendatory
contract also provided for the delay in construction of the Burns Bench
Pump station until such time as the demand develops for the additional
12,000 AF of water.
Reclamation desires to do a final cost allocation on the Jensen
Unit. Such action would be premature without developing the remaining
12,000 AF on the Green River, because the cost per acre-foot would be
approximately 2.5 times as much as if the 12,000 AF were developed.
Also, at this time, not all of the remaining 4,000 AF of water in Red
Fleet Reservoir has been subscribed. Reclamation took 700 AF of the
4,000 AF to increase the conservation pool in the reservoir leaving
3,300 AF of available water in Red Fleet Reservoir. The Burns Bench
pump station will not be constructed until all of the M&I water
available in Red Fleet is subscribed. In the past year, the District
has received several inquiries for the remaining M&I water in Red Fleet
but no contracts have been signed. The price of the water is set by the
amendatory contract. The amount per acre-foot is based on the cost of
the Jensen Unit (including an estimated cost of the pump station)
divided by 18,000 AF. The resulting cost is $5,555.21 per acre-foot and
is payable by dividing that amount by the number of years remaining
until 2037 with the last payment being made in 2037. Based on this
formula, water purchased in 2006 would be paid for at a rate of $179.07
per acre-foot per year for 31 years. The District approached
Reclamation about the possibility of discounting those payments at the
rate set by the Office of Management and Budget for such prepayments.
However, according to Reclamation, the amendatory contract does not
allow for prepayment. The District then determined that it would seek
legislation similar to a bill that was used by the Central Utah Water
Conservancy District, which allowed for prepayment of the repayment
contracts for the Bonneville Unit. Prepayment of our contract with
Reclamation, as proposed in H.R. 818, would substantially reduce the
cost of water to the District and result in a substantial payment to
the federal treasury, estimated to be between $4-5 million.
H.R. 818 directs the Secretary of the Interior to allow for
prepayment of the specified repayment contracts between the United
States and the Uintah Water Conservancy District under terms and
conditions similar to those used in implementing provisions of the
Central Utah Project Completion Act. It also provides that the
prepayment: (1) may be provided in several installments to reflect
substantial completion of the delivery facilities being prepaid; (2)
shall be adjusted to conform to a final cost allocation; and (3) may
not be adjusted on the basis of the type of prepayment financing
utilized by the District.
Finally, we ask the Subcommittee to entertain a technical amendment
to the bill which expands the references to our contracts with
Reclamation to include all subsequent amendments made under Section
9(c) of the Reclamation Act of 1939. This is needed to cover a letter
agreement signed by the District and Reclamation in 2005 and a Board
Resolution which affected the terms of the previous agreements and
provide flexibility for further contract amendments. Again I want to
thank you for the opportunity to testify today and will be happy to
respond to any questions.
______

Mr. McClintock. Thank you for your testimony and your
brevity. Our next witness is Mr. David Murillo. He is the
Deputy Commissioner for Operations, Bureau of Reclamation, here
in Washington, D.C.

STATEMENT OF DAVID MURILLO, DEPUTY COMMISSIONER FOR OPERATIONS,
U.S. BUREAU OF RECLAMATION, WASHINGTON, D.C.

Mr. Murillo. Thank you. Thank you, Chairman McClintock,
Ranking Member Napolitano, and members of the Subcommittee. I
am David Murillo, Deputy Commissioner for Operations at the
Bureau of Reclamation. I am pleased to provide the views of the
Department of the Interior on H.R. 498 and H.R. 818. With me
today is Robert Cunningham, Assistant Director of Lands of the
U.S. Forest Service, who is prepared to respond to any
technical questions the Subcommittee may have on H.R. 489. My
written statement has been submitted for the record.
H.R. 489 seeks to clarify Federal jurisdiction with respect
to the C.C. Cragin Project, which includes a dam, reservoir,
and 11.5-mile utility corridor containing the transmission line
and high-pressure pipeline. The project is located nearly
entirely within the Coconino National Forest in north central
Arizona. Language included in the Arizona Water Settlement Act
created questions about the respective jurisdictions of the
Forest Service and the Bureau of Reclamation related to the
C.C. Cragin Project. We have come to an agreement that we think
can resolve this issue and this legislation is consistent with
that arrangement.
Reclamation and the Forest Service work closely with the
Salt River Project Agriculture Improvement and Power District,
the entity that operates and maintains the C.C. Cragin Project
and reached agreement in mid-2010 on the terms of managing the
project and associated legislation to clarify jurisdiction of
the Federal agencies. This legislation accommodates the needs
of Reclamation and SRP by ceding exclusive administrative
jurisdiction over that land underlying the dam and reservoir to
Reclamation and by expressly acknowledging SRP's responsibility
for operating and maintaining the dam, reservoir, and utility
corridor, pursuant to the Settlement Act of the 1917 agreement
between the Department of the Interior and SRP. In addition,
this approach accommodates the Forest Service by allowing the
agency to manage the land underlying the utility corridor for
recreation, wildfire, law enforcement, and other activities.
The Administration believes that this legislation provides
a sound approach for future management of the project. Both
Departments are committed to working diligently with SRP to
ensure needed work for the project can be accomplished
expeditiously. Reclamation's longstanding experience with SRP
over nearly a century has been very productive. SRP has proven
to be a responsible and reliable operator and caretaker of U.S.
interests and resources. It is our hope that combining that
history with the Forest Service land management authority and
expertise would result in even more effective stewardship.
H.R. 818, as introduced on February 18, 2011, allows for
prepayment of the current and future repayment contract
obligation to the Uintah Water Conservancy District of the cost
allocated to their municipal and industrial water supply on the
Jensen Unit of the Central Utah Project and provides that the
prepayment must result in the United States recovering the net
present value of all repayment streams that would have been
payable to the United States if H.R. 818 were not enacted. The
Department supports H.R. 818. The District entered into a
repayment contract, dated June 3, 1976, in which they agreed to
repay all reimbursable costs associated with the Jensen Unit of
the CUP. The Jensen Unit's total water supply was envisioned at
that time to be roughly 18,000 acre-feet because plans
envisioned completion of another pumping plant at a location on
a green river known as Burns Bench. However, for a variety of
reasons, the Burns Bench feature was never built and this is
described in my written statement.
Under Reclamation law, water districts are not authorized
to prepay their M&I repayment obligation based upon a
discounted value of the remaining annual payments. However,
this legislation would authorize early repayment by the Uintah
Water Conservancy District to the Federal Government because
there is an interest component to the M&I repayment streams to
be repaid early. Early repayment without an adjustment for
interest would result in lower overall repayment to the United
States. To keep the United States whole, the Bureau of
Reclamation would elect that the net present value of the whole
amount that would be due without early repayment.
The language in H.R. 818 has been amended from the language
contained in an earlier version of this legislation. The
amendment language clarifies that this legislation requires
that the Federal Government be paid what it is owed by the
Conservancy District because the United States supports the
goal of providing for early repayment under this contract and
H.R. 818 clearly establishes that the Department supports this
legislation. Thank you, again, for this opportunity to testify
and I would happy to answer any questions the Subcommittee may
have.
[The prepared statement of David Murillo follows:]

Statement of David Murillo, Deputy Commissioner, Operations,
Bureau of Reclamation, U.S. Department of the Interior, on H.R. 489

Chairman McClintock and Members of the Subcommittee, I am David
Murillo, Deputy Commissioner of Operations of the Bureau of Reclamation
(Reclamation). Thank you for the opportunity to provide the views of
the U.S. Department of the Interior (Department) on H.R. 489,
legislation specific to lands underlying the C.C. Cragin Dam, Reservoir
and utility corridor (C.C. Cragin project) in Arizona. The legislation
seeks to clarify federal jurisdiction with respect to the C.C. Cragin
project, which includes a dam, reservoir, and 11.5-mile utility
corridor containing a transmission line and high-pressure pipeline. The
project is located nearly entirely within the Coconino National Forest
in north-central Arizona.
Language included in the Arizona Water Settlements Act (AWSA,
Public Law 108-451) created questions about the respective jurisdiction
of the U.S. Forest Service (Forest Service) and Reclamation related to
the C.C. Cragin project. We have come to an agreement that we think can
resolve this issue. This legislation is consistent with that
arrangement. We look forward to continue working with the Committee on
reaching a resolution.
Reclamation and the Forest Service worked closely with the Salt
River Project Agricultural Improvement and Power District (SRP), the
entity that operates and maintains the C.C. Cragin project under the
AWSA, and reached agreement in mid-2010 on legislation to clarify
jurisdiction of the Federal agencies. The legislation, S. 1080, was
considered during the 2nd session of the 111th Congress. The bill was
not enacted during the last Congress, but both H.R. 489 and its
companion bill, S. 201, contain the same provisions as S. 1080, as
reported.
This legislation accommodates the needs of Reclamation and SRP by
ceding exclusive administrative jurisdiction over the lands underlying
the C.C. Cragin project to Reclamation and by expressly acknowledging
SRP's responsibility for operating and maintaining the C.C. Cragin
project pursuant to the AWSA and the 1917 agreement between the
Department and SRP. This is a unique situation due to the AWSA. In
addition, this approach accommodates the Forest Service by allowing the
agency to manage the lands underlying the utility corridor with respect
to recreation, wildfire, law enforcement, and other activities
consistent with the Forest Service's authorities, responsibilities, and
expertise; the AWSA; the 1917 agreement; and the existing right-of-way
over the utility corridor held by another party. This approach would
allow for integrated management of tens of thousands of acres of
ecosystems across National Forest System lands underlying and adjacent
to the C.C. Cragin project, including watershed, wildlife habitat,
range, and vegetation management. H.R. 489 allows for a workable
agreement for both day-to-day activities and other activities that will
improve the management and safety of the covered land. The
Administration believes that this legislation provides a sound approach
for future management of the C.C. Cragin project. Both Reclamation and
the Forest Service are committed to working diligently with SRP to
ensure needed work for the C.C. Cragin project can be accomplished
expeditiously, including any necessary emergency and non-emergency
repairs and replacement of improvements, in full compliance with
applicable law, including the National Environmental Policy Act and the
Endangered Species Act, as provided in the AWSA.
Reclamation's long-standing experience working with SRP over nearly
a century has been very productive. SRP has proven to be a responsible
and reliable operator and caretaker of U.S. interests and resources.
Reclamation and SRP have nearly a century of responsible stewardship in
regard to both the technical operation of dams and reservoirs and
protection of natural resources. It is our hope that combining that
history with the Forest Service's land management authorities and
expertise would result in even more effective stewardship.
This concludes my testimony. I will be pleased to answer any
questions.
______

Statement of David Murillo, Deputy Commissioner, Operations,
Bureau of Reclamation, U.S. Department of the Interior, on H.R. 818

Chairman McClintock and Members of the Subcommittee, I am David
Murillo, Deputy Commissioner of Operations of the Bureau of Reclamation
(Reclamation). Thank you for the opportunity to provide the views of
the Department of the Interior (Department) on H.R. 818, as introduced
on February 18, 2011. This legislation allows for prepayment of the
current and future repayment contract obligations of the Uintah Water
Conservancy District (District) of the costs allocated to their
municipal and industrial water (M&I) supply on the Jensen Unit of the
Central Utah Project (CUP) and provides that the prepayment must result
in the United States recovering the net present value of all repayment
streams that would have been payable to the United States if H.R. 818
were not enacted. H.R. 818 would amend current law to change the date
of repayment to 2022 from 2037. The legislation would also allow
repayment to be provided in several installments and requires that the
repayment be adjusted to conform to a final cost allocation. The
Department supports H.R. 818.
The District entered into a repayment contract dated June 3, 1976,
in which they agreed to repay all reimbursable costs associated with
the Jensen Unit of the CUP. The Jensen Unit's total water supply was
envisioned at this time to be roughly 18,000 acre-feet because plans
anticipated completion of another pumping plant at a location on the
Green River known as Burns Bench.
However, for a variety of reasons, the Burns Bench feature was
never built. And with the enactment of language in Section 203(g) of
the Central Utah Project Completion Act of 1992 (P.L. 102-575), the
District's contract was amended in 1992 to reduce the project M&I
supply subject to repayment to 2,000 acre-feet annually, and
temporarily fix repayment for this supply based upon a reduced interim
cost allocation developed for the still-uncompleted project. The
amended 1992 contract required the District to repay about $5.545
million through the year 2037 at the project interest rate of 3.222%
with annual payments of $226,585. The current balance due, without
discounting, is $3,949,058 as of 2011.
It is important to note that this $3,949,058 figure reflects a
repayment amount that is statutorily lowered by the 1992 legislation,
and does not reflect the true repayment costs of the Jensen Unit. The
costs allocated to the 2,000 acre-feet of contracted M&I supply, and
the M&I supply available through additional incomplete project
features, may be significantly revised upward in the future upon
project completion or enactment of this bill, both of which would
require a Final Cost Allocation. An additional currently unallocated
cost of $7,419,513 is expected to be allocated to the contracted 2,000
acre-feet in order to achieve a full and final project repayment.\1\
These are the costs that paragraph 3 of H.R. 818 requires to be
included in the prepayment. .The 2011 balance on the 1992 M&I repayment
contract is $3,949,058 and the adjustment amount when factoring in the
total project cost including interest on that debt is $7,419,513.
Therefore, in total non-discounted dollars, the Conservancy District
owes the Federal government $11,368,571.
---------------------------------------------------------------------------
\1\ This allocation will be subject to revision should there be
additions to the project.
---------------------------------------------------------------------------
Under Reclamation law, water districts are not authorized to prepay
their M&I repayment obligation based upon a discounted value of their
remaining annual payments.
This legislation would authorize early repayment by the Uintah
Conservancy District to the Federal government. Because there is an
interest component to the M&I repayment streams to be repaid early,
early repayment without an adjustment for interest would result in
lower overall repayment to the United States. To keep the United States
whole, the Bureau of Reclamation would collect the present value of the
whole amount that would be due without early repayment.
The language in H.R. 818 has been amended from the language
contained in an earlier version of this legislation, H.R. 2950. The
amended language clarifies that this legislation requires that the
Federal government be paid what it is owed by the Conservancy District.
Because the United States supports the goals of providing for early
repayment under this contract so long as the United States is kept
whole, and H.R. 818 clearly establishes that early repayment under this
legislation must be of an amount equal to the net present value of the
foregone revenue stream, the Department supports this legislation.
This concludes my testimony. I will be pleased to answer any
questions.
______

Mr. McClintock. Thank you, very much, for your testimony.
Our next witness is Mr. Darrick Moe. He is the Desert Southwest
Regional Manager for the Western Area Power Administration in
Phoenix, Arizona, and sitting behind Mr. Moe is an accompanying
witness from the U.S. Forest Service. Mr. Moe for five minutes.

STATEMENT OF DARRICK MOE, DESERT SOUTHWEST REGIONAL MANAGER,
WESTERN AREA POWER ADMINISTRATION, PHOENIX, ARIZONA

Mr. Moe. Chairman McClintock, Ranking Member Napolitano,
members of the Subcommittee, I appreciate having the chance to
be here today to discuss Hoover Power Plant allocations. My
name is Darrick Moe. I am the Regional Manager for Western Area
Power Administration in the Desert Southwest Region. Western's
mission is to market and deliver reliable, cost-based Federal
hydropower from facilities such as Hoover Dam, which is within
the geographic area of Western's Desert Southwest Region. As
you have already stated, Chairman McClintock, Ranking Member
Napolitano, Congressman Heck, Hoover Power Plant is a very
important and vital resource to the Desert Southwest Region.
With the maximum capacity of over 2,000 megawatts, Hoover
supplies clean power to millions of homes in Arizona,
California, and Nevada.
In accordance with existing policy and Federal law,
Western's post-2017 power allocation effort is composed of a
series of proposals introduced to the public through Federal
Register notices and public forums. Western makes policy
decisions only after all interested parties have had an
opportunity to provide input, as you mentioned in your opening
statement, Mr. Chairman. We consider that input and develop new
Hoover Dam allocations in the public's interest.
Western initiated the public process to allocate Hoover Dam
electricity in November of 2009. This Federal notice proposed
the extension of 95 percent of the energy and capacity
available to market from Hoover to the existing Hoover
contractors, while making five percent available to new
customers. It proposed 30-year contract terms and invited
comments on other items. Based on the comments received,
Western extended the comment period under this notice through
the end of last September. After considering comments from that
notice, Western issued its latest Federal Register notice for
this effort on April 27, 2011.
Western therein decided it is appropriate to apply the
Power Marketing Initiative, or PMI, to the Hoover allocation
process. The PMI has been applied to all of Western's
remarketing effort since it was announced as a final rule in
1995, following a four-year public process. Through the
application of PMI, Western balances the public interest of
maintaining resource stability for existing customers and the
regional power grid against the public interest of providing
for widespread use of Federal hydropower resources by new
customers, such as tribal governments and other eligible
customers. Western also decided with that Federal Register
notice on a 30-year term to achieve a balance between resource
certainty and providing for an allocation opportunity for
future customers at an appropriate time. Finally, Western made
numerous proposals, included the amount of energy and capacity
to market the size of the resource pool for new customers and
provisions for marketing excess energy. The current comment
period is open through June 16, 2011.
There are numerous steps ahead yet in the administrative
process. We currently project that we should have this process
completed and be able to issue new contracts for Hoover power
by the summer of 2014, based on the current schedule. It is
important that the process be finalized, of course, well ahead
of 2017, to provide customers time to balance their energy
portfolios, to make transmission arrangements, and allow
related state agencies time to carry out their own allocation
process.
Western has reviewed H.R. 470. We appreciate the work this
Subcommittee has done over the last year to address concerns
that Western had with the prior version of this bill, such as
allowing for 36 months for Western to complete its
administrative process under H.R. 470. Western's written
testimony notes areas of departure between current
administrative process and H.R. 470 and provides additional
background. However, the broad outlines of H.R. 470 are similar
in many respects to the proposal Western recently has made in
our process. Both would result in a resource pool for new
customers. Western's current proposal would result in a similar
size resource pool being allocated to existing contractors and
new customers, as compared to H.R. 470.
It is Western's mission to market Federal hydropower. We
are using due diligence in moving this process forward, to
allocate the vitally important Hoover resource in the public's
interest and in a timely manner. We also stand ready to
implement H.R. 470 and will apply ourselves accordingly should
Congress decide to enact. I would be pleased to answer any
questions.
[The prepared statement of Darrick Moe follows:]

Statement of Darrick Moe, Regional Manager of the Desert Southwest
Region, Western Area Power Administration, U.S. Department of Energy,
on H.R. 470

Mr. Chairman and members of the Subcommittee, I am Darrick Moe,
Regional Manager of the Desert Southwest Region, speaking on behalf of
Timothy J. Meeks, the Administrator of the United States Department of
Energy's Western Area Power Administration (Western). I am pleased to
be here today to discuss H.R. 470, the Hoover Power Allocation Act of
2011. This legislation seeks to amend the Hoover Power Plant Act of
1984. The legislation proposes revised allocations of the generation
capacity and energy from the Hoover Dam power plant, a feature of the
Boulder Canyon Project (BCP), after the existing contracts expire on
September 30, 2017.
Western's mission is to market and deliver reliable, renewable,
cost-based hydroelectric power from facilities such as Hoover Dam.
Hoover Dam was authorized and constructed in accordance with the
Boulder Canyon Project Act of 1928. Pursuant to this Act, the Secretary
of the Interior was authorized to contract for the sale of generation
based upon general regulations as he may prescribe. Subsequent power
sales contracts were executed that committed Hoover power through May
31, 1987. With the passage of the Hoover Power Plant Act of 1984,
Congress authorized the Secretary of the Interior to implement an
uprating program, which increased the generation capacity of the Hoover
Dam facilities, to make additional facility modifications, and to
resolve issues over the disposition of Hoover power, post-1987. Western
proceeded to market Hoover Dam power and entered into 30-year term
contracts with the current Hoover contractors in accordance with the
Hoover Power Plant Act of 1984, and Western's Conformed General
Consolidated Power Marketing Criteria. This process resulted in the
allocation of 1,951 megawatts of contingent capacity with an associated
4,527,001 megawatt-hours of firm energy. (Contingent capacity is
capacity that is available on an as-available basis, while the firm
energy entails Western's assurance to deliver.)
The Hoover power plant is a significant hydroelectric power
resource in the desert Southwest with a maximum rated capacity of 2,074
megawatts. Under existing Federal law and policy, Western markets
Hoover power at cost. Hoover power is hydropower and is considered
``clean energy'' with a minimal carbon footprint. The Hoover Dam power
plant is able to ramp up and down rapidly and is used by contractors
for various power-related ancillary services. For these reasons, Hoover
power is an extremely valuable resource for power contractors in the
southwestern United States.
The existing power sales contracts between Western and the
contractors will expire on September 30, 2017. As this expiration date
becomes more prominent on the planning horizon, efforts have progressed
among both Federal and non-Federal sectors to determine the allocation
of Hoover Dam power after 2017.
In accordance with policy and existing Federal law, Western's post-
2017 power allocation effort comprises a series of proposals introduced
to the public through public information forums and public comment
forums. Western makes policy decisions only after all interested
parties have been provided ample opportunity to be engaged in the
process and public input has been carefully considered to develop new
Hoover Dam allocations that are in the public's best interest and
provide widespread use of this Federal resource.
Western's public process to allocate Hoover Dam electricity was
initiated on November 20, 2009, in a Federal Register notice that
proposed several key aspects of the allocating effort. Among other
things, this Federal Register notice proposed the application of
Western's Power Marketing Initiative (PMI) developed under the Energy
Planning and Management Program (EPAMP), the extension of a major
percentage of the marketable resource to existing contractors,
reservation of an approximate 5% resource pool to be allocated to
eligible contractors, and provision of 30-year contract terms. Western
conducted three public information forums from December 1-3, 2009.
These public information forums were well attended by current customers
and interested parties and engaged the attendees through question and
answer sessions. Public comment forums were held from January 19-21,
2010. Interested parties were provided an opportunity to submit
comments related to Western's proposals contained in the November 20,
2009 Federal Register notice. In an April 16, 2010 Federal Register
notice, Western extended the comment period from January 29, 2010, to
September 30, 2010. This extension provided interested parties
additional time to submit comments and allowed Western to consult with
Tribes to inform them of the remarketing process.
After considering comments received, Western announced in an April
27, 2011 Federal Register notice its decision to apply its EPAMP PMI to
the Boulder Canyon Project remarketing effort. The PMI has been applied
to all of Western's remarketing efforts since it was announced as a
final rule in 1995 following a four-year public process. Application of
the PMI to the Boulder Canyon Project expressly protects and reserves a
major portion of the existing customers' allocations while also
providing potential customers, such as Tribal governments and other
eligible customers, an opportunity to acquire an allocation. The PMI
has historically provided a balancing of the needs of the existing
customers with those of prospective customers. Western also decided on
a 30-year contract term to achieve a balance between resource certainty
and providing for an allocation opportunity for future customers at an
appropriate time. Finally, Western also made additional proposals and
is seeking further comments on the amount of marketable contingent
capacity and firm energy, the size of the resource pool to be created
for new customers, and excess energy provisions. As described in the
Federal Register notice, a public information and comment forum has
been established for all interested parties to provide written and oral
comments on these proposals. The comment period for these proposals
closes June 16, 2011.
There are numerous steps ahead in the Administrative process.
Western currently projects that this process will be completed with
finalized contracts in the summer of 2014. It is important that the
process be finalized well in advance of 2017 to provide customers the
time to balance their energy portfolios and make required transmission
arrangements, and to allow related state Agencies time to carry out
their allocations process.
Western has reviewed H.R. 470. There are several similarities
between the draft legislation and Western's initial proposals brought
forward in the November 20, 2009 Federal Register notice, and there are
some departures. To provide background that may be useful to the
Subcommittee members as this bill is considered, I'll address some of
these differences in my comments.
All of Western's allocation efforts are open to public
participation and conducted in accordance with the Administrative
Procedures Act. At each stage of the process, Western proposes actions
and/or policy to be considered and is open for public comment and
input. Western believes soliciting and integrating public input into
policy decisions allows Western to develop results that are in the
public's best interest and lead to the most widespread use of this
resource.
Western has 15 current contractors who receive an allocation of
Hoover power. Two of those existing contractors are the Colorado River
Commission (CRC) and the Arizona Power Authority (APA). CRC and APA
sub-allocate their Hoover power to customers under prescribed
guidelines and regulations. Both H.R. 470 and Western's administrative
effort propose an amount of resource to be allocated to new customers.
H.R. 470 proposes certain quantities to be allocated to APA and CRC for
their disposition to new customers. While it is anticipated that new
customers to APA and CRC could result from this effort, Western's
process affords the opportunity to fully seek public input and assures
all interested parties are considered in the power's disposition.
Western has received numerous written comments and statements from
Native American Tribes expressing concern that their interests have not
yet been fully vetted and considered. In recent history, Tribes have
been active in Western's remarketing efforts, and one goal of Western's
Strategic Plan is to seek partnerships with Tribes on numerous
initiatives. I believe that soliciting input from Tribes and other
entities that do not already have an allocation of Hoover power is in
the public interest.
H.R. 470 would direct that Hoover's full maximum rating of 2,074
megawatts of capacity be allocated to Hoover customers in a multi-
faceted approach. As described in Western's November 20, 2009 Federal
Register notice, we propose to market 2,044 megawatts of contingent
capacity; 30 megawatts below the maximum rating. The retention of 30
megawatts of contingent Hoover Dam capacity for use by Western for
project integration purposes should provide the tools we need to meet
our mission and statutory requirement of delivering reliable Federal
hydro-generation. Western manages multiple federally owned generation
and transmission projects in the Desert Southwest on a minute-by-minute
basis. While these projects are financially segregated, they are
operated as an integrated system. This 30-megawatt capacity to be held
by the Federal Government would provide significant benefit to the
operation of the integrated projects and the Western Area Lower
Colorado balancing authority that Western operates. Retaining 30
megawatts would also likely allow our Hoover Dam power customers to
experience cost-neutral conditions. Should Western be unable to retain
approximately 30 megawatts, we would expect to procure replacement
power from the market at a higher cost, if it is available. These
higher costs would in turn need to be passed through to Western
customers in the form of higher rates.
H.R. 470 expressly requires that each contract offered to a new
allottee for Hoover Dam power should require the new allottee to
execute the Boulder Canyon Project Implementation Agreement. Western
finds significant value in the provisions and results of the
Implementation Agreement. However, this agreement was jointly
constructed between Western and our customers for unique circumstances
that existed in 1994. Should this requirement be retained, the current
Implementation Agreement would need to be evaluated and potentially
revised to accommodate current conditions. We support the universal
benefits achieved by the Implementation Agreement and will work with
our customers to determine the appropriate documentation to meet all of
our customers' needs; both current and future.
H.R. 470 expressly requires that each contract offered to a new
allottee for Hoover Dam power includes a provision requiring the new
allottee to pay a proportional share of its State's funding
contribution for the Lower Colorado River Multi-Species Conservation
Program, known as the LCR MSCP. The LCR MSCP is a 50-year, multi-
stakeholder, Federal and non-Federal partnership, responding to the
need to balance the use of lower Colorado River water resources and the
conservation of native species and their habitats in compliance with
the Endangered Species Act (ESA). The LCR MSCP is a comprehensive
approach to species protection developed after nearly a decade of work.
This program is funded on a cost-share basis comprised of 50-percent
Federal and 50-percent non-Federal. The States of Arizona, California
and Nevada have worked internally with water and power customers to
fund each State's respective share. H.R. 470 recognizes these funding
requirements and obligates new power customers to contribute to this
funding in a proportional manner. Supporters of H.R. 470 note that the
50-year obligation of the LCR MSCP is, in part, reason to proceed with
50-year Hoover power supply contracts. Western continues to review the
LCR MSCP requirements in our administrative process. However, Western's
position is that the 50-year LCR MSCP term need not coincide with the
Hoover Dam power sales contracts' term. The adoption of a 50-year
contract term, as opposed to Western's decision to apply 30-year
contract terms, could potentially exclude evolving classes of customers
in decades to come. The modern day electrical industry is dynamic in
its regulations, technologies, operations and participants. The
landscape of potential customers in decades to come has the capability
to yield new Hoover customers, as we strive to meet the needs of all
our customers; existing and future.
As drafted, H.R. 470 states that Subdivision E of the General
Consolidated Power Marketing Criteria or Regulations for Boulder City
Area Projects published in the Federal Register on December 28, 1984,
(Criteria) shall be deemed to have been modified to conform to this
legislation. Western would like to refine this statement as Western's
December 28, 1984, Federal Register notice is more precisely titled
Conformed General Consolidated Power Marketing Criteria or Regulations
for Boulder City Area Projects (Conformed Criteria). Western published
the Criteria on May 9, 1983, which was in need of conformance per the
Hoover Power Plant Act of 1984. Pursuant to the Hoover Power Plant Act
of 1984, Western conformed the 1983 Criteria in its December 28, 1984,
Federal Register notice. In doing so, the pertinent section is now
Subdivision C of the Conformed Criteria. If H.R. 470 is to move
forward, edits would be needed to refer to Subdivision C Western's
Conformed Criteria and not Subdivision E of the Criteria.
Western respectfully recognizes that our administrative process is
not the exclusive means of allocating Hoover power. I would welcome the
opportunity to work with this Subcommittee to address the technical
concerns I have raised and to ensure the widespread use of this
valuable resource as work continues on this legislation. In the absence
of congressional action, Western will uphold our authority and
responsibility to market Hoover power consistent with historical
statutes and in concert with the rules and regulations as the Secretary
of Energy prescribes.
This concludes my prepared remarks and I would be pleased to answer
any questions you or members of the Subcommittee might have.
______

Mr. McClintock. Thank you for your testimony. Our next
witness is Ms. Phyllis Currie. She is the General Manager,
Pasadena Water and Power Department, Pasadena, California.
Welcome to Washington.

STATEMENT OF PHYLLIS E. CURRIE, GENERAL MANAGER, PASADENA WATER
AND POWER DEPARTMENT, PASADENA, CALIFORNIA

Ms. Currie. Thank you. Chairman, McClintock and Ranking
Member Napolitano, I am pleased to testify today on behalf of
the Southern California Public Power Authority and the City of
Pasadena, as well as the other member agencies of the Southern
California Public Power Authority. As a joint power authority
consisting of 11 municipal utilities and 1 irrigation district,
SCPPA members deliver electricity to approximately 4.8 million
consumers over an area of 7,000 square miles. The SCPPA members
that are Hoover participants include the municipal utilities of
the Cities of Anaheim, Azusa, Banning, Burbank, Colton,
Glendale, Los Angeles, Pasadena, Riverside, and Vernon.
The City of Pasadena was one of the original contractors
for power from Hoover Dam. In 1931, Pasadena, along with the
Cities of Glendale, Burbank, and Los Angeles, the Metropolitan
Water District of Southern California, Southern California
Edison, and the States of Arizona and Nevada, all agreed to pay
rates sufficient to guarantee the Federal Government that
construction costs of the Hoover Dam would be repaid in 50
years. Hoover Dam and the Power Plant were paid for entirely by
the original power users, not by the Federal taxpayers. All the
benefits of this dam, which have been spoken by other speakers
this morning, were made possible by the financial commitment of
these original power users. Millions of citizens in Arizona,
California, and Nevada have enjoyed these benefits since the
dam's inception.
Pasadena was also one of the parties that agreed in 1984 to
advance fund the cost of up-rating the turbines at Hoover,
which resulted in another 500 megawatts of generation. Pasadena
joined the SCPPA Cities of Glendale, Anaheim, Riverside, Azusa,
Banning, Colton, Vernon, and the States of Arizona and Nevada
in that up-rating effort, which, again, used no taxpayer money.
Power from Hoover Dam has always been allocated by act of
Congress, rather than through an administrative proceeding,
through the Boulder Canyon Project Act of 1928, which
authorized the original construction, and the Hoover Power
Plant Act of 1984, which authorized the up-rating. The
contractors have guaranteed that funds required would be paid
by the participants.
In anticipation of the expiration of the current contracts
in 2017, the power users in Arizona, California, and Nevada got
together more than three years ago to begin the negotiations
that have led to the legislation before you today. This
legislation authorizes the Secretary of Energy to enter into
50-year contracts with the existing contractors for 95 percent
of the capacity and energy they now receive. It gives power
users a contract term that matches the financial commitment
that has been made by those contractors in the 2009 Lower
Colorado River Multi Species Conservation Plan legislation. The
funds under that bill will be used for 50 years of
environmental mitigation on the lower Colorado River.
H.R. 470 also creates a set-aside pool for new entrants,
including Indian tribes, municipalities, rural electric
cooperatives, irrigation districts that do not now receive
Hoover power. From Pasadena's point of view, passage of this
legislation will enable us to plan effectively for long-term
power supplies to meet customer demand. It will also offset the
higher cost of renewable resources that we will have to acquire
to meet a 40 percent by 2020 renewable target that Pasadena has
adopted. All of the other SCPPA Hoover contractors have adopted
targets in a similar range. Additionally, the State of
California has enacted legislation that would require all
utilities, including SCPPA members, to meet a 33 percent
renewable standard and a 30 percent reduction in greenhouse
gases by 2020.
Pasadena is proud to have been one of the original Hoover
participants and an original participant in the up-rating
project. This unique facility has provided many benefits, but
has not been paid for by the Federal Government. We are proud
that the legislation we are discussing today was unanimously
agreed to by Hoover contractors in the three states and we are
especially gratified for the support, bipartisan support that
we have, as represented by the Chairman and the Ranking Member.
Thank you for the opportunity to present this statement and I
would be happy to answer any questions you may have.
[The prepared statement of Phyllis E. Currie follows:]

Statement of Phyllis Currie, General Manager,
Pasadena Water and Power, on H.R. 470

Chairman McClintock and Ranking Member Napolitano, thank you for
inviting me to participate in today's hearing on H.R. 470 the Hoover
Power Allocation Act of 2011.
I am Phyllis Currie, the General Manager of the Pasadena Water and
Power. I am testifying today on behalf of the City of Pasadena and the
other nine Hoover contractors who are members of SCPPA, the Southern
California Public Power Authority.
The SCPPA is a joint powers authority consisting of 11 municipal
utilities and one irrigation district. Our members deliver electricity
to approximately 2 million customers over an area of 7,000 square
miles, with a total population of 4.8 million consumers. SCPPA members
that are Hoover participants include the municipal utilities of the
Cities of Anaheim, Azusa, Banning, Burbank, Colton, Glendale, Los
Angeles, Pasadena, Riverside and Vernon.
Pasadena was one of the original contractors for power from Hoover
Dam. In 1931, Pasadena, along with Glendale, Burbank, Los Angeles,
Metropolitan Water District of Southern California, Southern California
Edison and the States of Arizona and Nevada agreed to pay rates
sufficient to guarantee the federal government that construction costs
of the multi-purpose, almost 1,500 megawatt dam would be repaid in 50
years.
Hoover Dam and power plant were entirely paid for by the original
power users--not by the federal taxpayers. All the benefits of this
multi-purpose dam, including flood control, municipal and industrial
water supply, irrigation and recreation were made possible by the
commitment of these original power users to pay for the dam. Since its
inception, Hoover Dam has provided these multiple benefits to millions
of citizens in Arizona, California and Nevada.
Pasadena was also one of the parties that agreed, in 1984, to
advance fund the costs of uprating the turbines at Hoover, which
resulted in another 500 MW of generation from the dam. Pasadena joined
SCPPA cities Glendale, Anaheim, Riverside, Azusa, Banning, Colton,
Vernon and the States of Arizona and Nevada in that uprating effort
which, again, used no taxpayer money.
Power from Hoover Dam has always been allocated by Act of Congress,
rather than through an administrative proceeding. The Boulder Canyon
Project Act of 1928 authorized construction of the dam and related
facilities and allocated power to the original contractors, including
Pasadena. The Hoover Power Plant Act of 1984 authorized the Hoover
uprating project, re-allocated power to the original contractors and
allocated the new capacity and energy to the uprating participants.
In anticipation of the expiration of current contracts for Hoover,
in 2017, power users in Arizona, California and Nevada got together
more than three years ago to begin negotiations that led to the H.R.
4349. These negotiations led to the legislation before you today.
The key features of this legislation are as follows:
Authorizes the Secretary of Energy to enter into 50-
year contracts with existing contractors for 95% of the
capacity and energy they now receive;
Gives power users a contract term that matches the
financial commitment made by water and power contractors in the
Lower Colorado River Multi-Species Conservation Plan
legislation signed into law in 2009. The MSCP funds will be
used for 50 years of environmental mitigation on the Lower
Colorado River;
Creates a 5% ``set aside'' of capacity and energy for
new entrants, including Indian tribes, municipalities, rural
electric cooperatives and irrigation districts that do not now
receive Hoover power;
From Pasadena's point of view, passage of this legislation will
enable us to plan effectively for long-term power supplies to meet
customer demand. It will also offset the higher cost of renewable
resources we will acquire to meet the 40 by 2020 target Pasadena has
adopted. All of the other SCPPA Hoover contractors have adopted
similar, or higher, renewable energy targets. Additionally, California
has enacted state legislation that would require all utilities,
including SCPPA members, to meet a 33% renewable energy standard and
30% reduction in greenhouse gas reduction by 2020.
And, passage of this bill will match the commitment water and power
users made to fund the MSCP with contracts that ensure the benefits of
the power generated at Hoover.
Pasadena is proud that it was one of the original Hoover
participants and that we were participants in the uprating authorized
in 1984. This unique facility, paid for by power users, not by the
federal government, provides immeasurable benefits to citizens Southern
California, Arizona and Nevada.
We are also proud that the legislation we are discussing today was
agreed-to unanimously by Hoover contractors in the three states. And,
we are gratified to have strong bi-partisan support for the bill from
the Chairwoman and many other Members of Congress from Arizona,
California and Nevada. Thank you for the opportunity to present this
statement and I would be happy to answer any questions you may have.
______

Mr. McClintock. Thank you for your testimony. Our next
witness is Mr. John Sullivan, Associate General Manager of the
Salt River Project in Phoenix, Arizona.

STATEMENT OF JOHN F. SULLIVAN, ASSOCIATE GENERAL MANAGER, THE
SALT RIVER PROJECT, PHOENIX, ARIZONA

Mr. Sullivan. Chairman McClintock, Ranking Member
Napolitano, and members of the Subcommittee, thank you for the
opportunity to testify in support of House Bill 470. I would
like to begin by thanking Representative Heck and Ranking
Member Napolitano for introducing this bill and to
Representatives Flake, Franks, Gosar, a fellow Tucsonan,
Grijalva, Quayle, and Schweikhart for recognizing the
importance of this legislation to Arizona and signing on as
cosponsors. My name is John Sullivan. I am the Associate
General Manager of the Water Group of the Salt River Project in
Phoenix.
Arizona currently receives 377 megawatts of Hoover power
through a contract between the United States and the Arizona
Power Authority, the APA, as authorized by Federal law. The APA
has subsequently allocated Hoover power to 30 eligible
entities, including SRP, within the State under provisions of
Arizona law. Hoover power allocations allow those cost-based
entities, including municipal utilities, irrigation districts,
and electrical districts, to supply power to their customers at
rates that help support Arizona agriculture and local
economies. Hoover power also plays a critical role in supplying
Colorado River water to central and southern Arizona through an
APA contract with the Central Arizona Water Conservation
District. Passage of H.R. 470 is necessary to secure power
allocations for those entities that have invested in and rely
on Hoover power, but is also important so that Indian tribes,
electric cooperatives, and other eligible entities not
currently benefitting from Hoover power can receive
allocations. The bill sets aside five percent of the total
capacity specifically for those new entrants. SRP is committed
publicly and privately to work with APA and entities seeking
new allocations in the state allocation process.
In addition, we recognize the importance of certainty for
existing contractors and new entrants alike and that is why SRP
has offered to sell a backstop product with the same
operational and price characteristics as Hoover to certain
entities within the State of Arizona, in the event they do not
receive an allocation through the state process. We feel the
five percent set aside in the legislation for new entrants and
our written offer is a fair solution that provides certainty to
all parties in Arizona. However, securing Arizona's allocation
through the passage of this bill, as introduced, is a critical
first step, and I urge support and passage of H.R. 470.
I would also like to take a moment to express SRP's support
for H.R. 489, which Mayor Evans testified on just a little bit
earlier. SRP operates and maintains the C.C. Cragin Project
under a contract with the Bureau of Reclamation. As you have
heard, this bill would simply clarify that Reclamation is
responsible for approval of operation, maintenance, and repair
activities at the project, as is the case for all other Federal
Reclamation projects located on national forest lands in the
State of Arizona. It would not relieve either the Bureau of SRP
from full compliance with environmental laws. I have submitted
a written statement for the record on that bill and appreciate
the opportunity to address that briefly.
Chairman McClintock, members of the Subcommittee, thank you
again for the opportunity to testify before you today. I would
be happy to answer any questions.
[The prepared statement of John Sullivan follows:]

Statement of John F. Sullivan, Associate General Manager,
Salt River Project, on H.R. 470

Chairman McClintock, Ranking Member Napolitano and Members of the
Subcommittee, thank you for the opportunity to submit testimony in
support of H.R. 470, a bill to allocate Hoover Dam power to existing
customers and also to establish allocations to new customers. My name
is John F. Sullivan. I am the Associate General Manager of the Water
Group at the Salt River Project (``SRP''), a large multi-purpose
federal reclamation project providing water and power service in the
Phoenix, Arizona metropolitan area.
SRP fully supports H.R. 470, which will both allocate and expand
the availability of hydroelectric power generated at Hoover Dam.
Hydropower from Hoover Dam is an important, emission-free, renewable
resource to SRP and to the State of Arizona, as well as the States of
California and Nevada. H.R. 470 will ensure that this clean, affordable
and reliable source of electricity will continue to be available to our
region, and will set aside a portion of the available electricity to
benefit Indian Tribes and other eligible entities which do not
currently receive Hoover power.
Hoover power allocations were initially authorized for 50 years
under the Boulder Canyon Project Act of 1928. The Hoover Power Plant
Act of 1984 extended those allocations and authorized customer funding
to upgrade the turbines at Hoover, creating an additional 500 MW of
capacity. Hoover Dam power has been critical to the development of the
region and continues to be a vital source of low-cost, renewable power
for 29 million people in Arizona, California and Nevada, helping to
keep our energy costs to consumers as low as possible. Substantial
investments have been made by the Hoover contractors to improve and
utilize the Hoover resource, including a commitment to fund a portion
of the Lower Colorado River Multi-Species Conservation Program for 50
years.
Arizona currently receives 377 MW of Hoover power through a
contract between the United States and the Arizona Power Authority
(``APA'') as authorized by federal law. The APA has subsequently
allocated Hoover power to 30 eligible entities, including SRP, within
the State under provisions of Arizona law. Hoover power allocations
help these cost-based entities, including municipal utilities,
irrigation districts and electrical districts, supply power to their
customers at rates that help support Arizona agriculture and local
economies. Hoover power also plays a critical role in supplying
Colorado River water to central and southern Arizona through an APA
contract with the Central Arizona Water Conservation District, the
operator of the Central Arizona Project.
Passage of H.R. 470 is necessary to secure power allocations for
those entities that have invested in and rely on Hoover power, but is
also important so that Indian Tribes, electric cooperatives and other
eligible entities not currently benefiting from Hoover power can
receive allocations. SRP looks forward to working with the APA and
these new entrants in the State allocation process. In an effort to
promote certainty, SRP has offered to sell a ``backstop'' product with
the same operational and price characteristics as Hoover to certain
entities within Arizona, in the event they do not receive an allocation
through the State process.
H.R. 470 is supported by existing customers in all three states,
who worked for two years to negotiate and come to agreement on the
legislation. In the 111th Congress, an identical bill (H.R. 4349)
passed the House of Representatives as well as the Senate Energy and
Natural Resources Committee with strong bipartisan support and without
opposition. The current contracts for Hoover power expire in 2017; and,
given the need for certainty and the time required to develop alternate
power supply plans if necessary, along with the time required to
develop federal power contracts and administer the State allocation and
contract process, early passage of this bill is essential.
The clean, renewable energy generated at Hoover Dam is vital to SRP
and the other customers in the region and passage of H.R. 470 is
necessary to secure continued access to the power and to provide the
opportunity for access by new customers. We urge your support and
prompt passage of this important bill.
Chairman McClintock and Members of the subcommittee, thank you
again for the opportunity to testify before you today. I would be happy
to answer any questions.
______

Mr. McClintock. Thank you, Mr. Sullivan, for your
testimony. Our final witness is Ms. Ann Pongracz, Senior Deputy
Attorney General of Colorado River Commission of Nevada,
stationed in Los Vegas, Nevada. Welcome.

STATEMENT OF ANN C. PONGRACZ, SENIOR DEPUTY ATTORNEY GENERAL,
COLORADO RIVER COMMISSION OF NEVADA, LAS VEGAS, NEVADA

Ms. Pongracz. Thank you, very much, Mr. Chairman, Ranking
Member Napolitano, members of the Committee, for this
opportunity to testify today in favor of H.R. 470. We would
like to begin by expressing our thanks to Congressman Heck,
Congresswoman Berkeley, our Nevada senators, and Congresswoman
Napolitano, and other cosponsors of the legislation.
Hoover power, as Congressman Heck pointed out earlier
today, is a critically important resource for the Nevada
economy and for our citizens and prior to coming to Washington,
we had prepared written comments in favor of H.R. 470, in order
to support the bill. I have submitted these written comments
for the record and will focus my limited amount of time
available on issues presented by the testimony of the Western
Area Power Administration.
The Colorado River Commission of Nevada and other Hoover
contractors are quite concerned about certain aspects of the
testimony Western has presented today--and particularly aspects
of the testimony that relate to Western's plans for remarketing
post-2017 Hoover power that are set forth in its April 27th
Federal Register notice. While the Hoover contractors certainly
recognize that Western has a very important role to play in
allocating Hoover power, we object to several aspects of the
approach taken in the April 27th Federal Register notice.
Western makes major decisions in that notice, which it proposes
to become effective upon May 27th of this year, barely two
weeks from the date of today's hearing. And on these points,
Western is proposing to take an approach that varies
dramatically from the approach advocated in H.R. 470, in terms
of Western has decided to apply its PMI to Hoover power, which
has not been done in the past; Western is proposing that the
resource pool would be marketed only by Western, in contrast to
the Federal-state sharing of allocation authority that is
included in H.R. 470; and Western proposes a contract term of
30 years, as opposed to the 50-year contract term that is set
forth in H.R. 470.
Application of the PMI to Hoover power would ignore the
substantial historic differences between Hoover Dam and other
Federal hydropower projects in Western's region. Congress has
in the past recognized that it is appropriate to market Hoover
hydropower differently. This distinction is rooted in the
historical fact that Ms. Currie referred to, that contractors
have funded the construction and ongoing operation of Hoover
Dam, whereas other projects have had billions of dollars of
funding by the U.S. Treasury. Western is attempting to erase
this distinction without demonstrating that such change is
necessary.
The Hoover contractors further object to Western's decision
to reduce the relationship between the funding mechanism for
the Lower Colorado River Multi Species Conservation Program or
MSCP and Hoover contracts. There is a very close relationship
created in H.R. 470 between MSCP funding and receipt of the
Hoover power and H.R. 470 makes a provision that all future
Hoover power allottees will have to, in their contracts for
Hoover power, make the same commitment to funding the MSCP
program, that existing Hoover contractors have made. We think
that maintaining that strong relationship through the 50-year
contracts is crucial to the future success of the MSCP.
Now, Hoover contractors believe that Western does not,
absent H.R. 470, have the legal authority to allocate Hoover
power to tribes. We support the inclusion of tribes in the
allocation process for the resource pool, but note that there
is a problem with doing so without the enactment of H.R. 470.
Hoover contractors also believe that Western lacks the legal
authority to apply its PMI to Western. Both of these issues
will lead to litigation if Western continues down this road.
This would upset the delicate balance of responsibility that
has worked so well in the past between the Federal and state
government and between Western and the various parties, the
existing Hoover contractors who have worked together with
Western and with each other so well in the past.
Now there is a potential solution here that we would like
to bring to the attention of the Committee, which would be, if
Western would issue a notice in the Federal Register
clarifying, perhaps clarifying that they did not intend to
actually make these decisions effective May 27th and that those
decisions would be included as proposals, as would all the
other issues that are set forth in the Federal Register notice
and go through the comment process that Western lays out in the
notice that would go a long way to addressing the problem that
has been created by the phrasing of the notice that was
published.
We urge Congress to send Western a strong signal regarding
the proper approach for allocating Hoover power and enact H.R.
470 as soon as possible. Thank you, very much. I stand ready to
respond to questions.
[The prepared statement of Ann C. Pongracz follows:]

Statement of Ann C. Pongracz, Senior Deputy Attorney General, Counsel
to the Colorado River Commission of Nevada, on H.R. 470, H.R. 489 and
H.R. 818, in Support of H.R. 470

Good morning Chairman McClintock, Congresswoman Napolitano and
Members of the Subcommittee. My name is Ann C. Pongracz, Senior Deputy
Attorney General, and I serve as Counsel to the Colorado River
Commission of Nevada. I appreciate your invitation to speak to you
today regarding H.R. 470, and I want to especially thank Congressman
Heck and Congresswoman Napolitano for your efforts and leadership on
this bill. I speak today on behalf of the State of Nevada, one of the
three lower basin states directly affected by the Hoover power
contracts. The Colorado River Commission of Nevada strongly supports
H.R. 470. I also submit for the record support letters from the Nevada
customers who benefit from Hoover power including the Southern Nevada
Water Authority and NV Energy.
The Colorado River Commission is the state agency charged with,
among other duties, receiving and allocating federal hydropower from
the Colorado River that is provided to the State of Nevada. This
legislation is crucial to my state. On behalf of the State in its
sovereign capacity and also as principal on its own behalf, the
Colorado River Commission receives electric power generated by Hoover
Dam through delivery contracts with the Western Area Power
Administration of the U.S. Department of Energy. The Commission, in
turn, contracts to deliver Hoover power to retail and wholesale
customers in Southern Nevada. We also operate a power delivery system
to deliver this critical resource to our customers.
The Colorado River Commission of Nevada has worked for three years
with representatives of Arizona and California to develop this
consensus approach to ensuring that the benefits of Hoover power will
continue to be delivered to the citizens of our three states after
current contracts expire in 2017.
H.R. 470 extends current Hoover power contracts for fifty years to
2067. It re-directs five percent of Hoover capacity and associated
energy from current contractors to a resource pool that will be made
available to new allottees in Nevada, Arizona and California who do not
receive any Hoover power today. This bill will allow federally-
recognized Indian tribes to apply to access the dam's power for the
first time, as well as entities eligible under section 5 of the Boulder
Canyon Project Act such as states, municipal corporations and political
subdivisions.
H.R. 470 provides coordinated federal/state management of the new
allottees' resource pool. The Western Area Power Administration will
allocate two-thirds of the pool, and the remaining one-third of the
pool will be distributed in equal shares through the Arizona Power
Authority (for new allottees in Arizona), the Colorado River Commission
of Nevada (for new allottees in Nevada), and Western (for new allottees
in California). H.R. 470 requires new allottees to pay a proportionate
share of the costs borne today by current contractors for operational
and environmental purposes.
We urge the Congress to approve H.R. 470. We believe that Congress
should allocate post-2017 Hoover power as it has done since Hoover Dam
was constructed in 1935. Congressional approval is needed to ensure the
continued availability and reliability of Hoover power to the citizens
of Nevada, Arizona and California. The State of Nevada supports H.R.
470 in its entirety and urges the Committee to approve the bill. Thank
you again for the opportunity to speak with you today. I'd be happy to
answer any questions you may have.
______

Mr. McClintock. Great. Thank you all, very much, for your
testimony today and for many of you who have traveled so far to
be here. At this point, we will begin questions by the Members.
To allow all of our Members to participate and to ensure that
we can hear from all of our witnesses today, we will be
limiting questioning to five minutes. After the Ranking Member
and I pose our questions, I will then recognize Members on
alternating sides of the aisle, in order of their arrival and
seniority. And I will begin with my five minutes.
Mr. Murillo, regarding H.R. 818, that allows local water
utility to repay its loan balance to the Federal Government. I
have supported the concept of prepayment. I just want to
clarify why this bill is necessary. Does the Bureau of
Reclamation have the ability to allow for loan prepayment
without specific congressional authorization?
Mr. Murillo. Without this legislation, we do not have that
ability to have them prepay.
Mr. McClintock. Are you aware of how many similar loans in
the western United States need congressional approval for
prepayment?
Mr. Murillo. No, I am not.
Mr. McClintock. Could you provide that number to the
Subcommittee? As I said----
Mr. Murillo. I can provide that information for the record.
Mr. McClintock. I think this is a matter that we, at some
point, need to discharge with a uniform policy on the subject.
I think it is sound public policy and ought to apply in all
cases.
Mr. Murillo. Yes, I can provide that information for the
record.
Mr. McClintock. Great. Thank you. Also, to correct the
record, the representative from the Forest Service is here
backstopping your testimony, not Mr. Moe's. But on that
subject, to your knowledge, has the Forest Service attempted to
interfere or obstruct the maintenance of any other water
systems?
Mr. Murillo. I am not aware where they have tried to
interfere with the maintenance or operations of other
facilities. This is a unique situation and I think that is why
we are in the situation we are with this one, with Cragin.
Mr. McClintock. The situation may be unique as to their
interference with the maintenance of this vital water project,
but it is not unique with respect to their behavior in a wide
range of areas involving the management of the national forest.
As I said, I believe this evinces an overall design ultimately
to expel the people from the people's forests. And I certainly
appreciate the Bureau of Reclamation looking into that and
getting back to this Committee, if there are other examples of
this kind of behavior throughout the areas where the Forest
Service claims jurisdiction over Bureau of Reclamation
projects.
Mr. Murillo. Yes, we will look into that and provide that
information for the record.
Mr. McClintock. Thank you. Next, regarding the Hoover power
issue, and I will ask any of the Hoover power witnesses to
respond. In the event that Congress does not follow legislative
precedent by passing this Hoover power bill and the Western
Area Power Administration then steps in to allocate the
hydropower that is generated at Hoover Dam--obviously, the
agencies started that process. I have heard a lot of rumblings
from Hoover power customers that the effort will be subject to
controversy and potential litigation. I wonder if any of the
witnesses can elaborate on those concerns.
Ms. Pongracz. Yes, Mr. Chairman. Ann Pongracz for the
record. We do believe that it is quite likely that litigation
would ensue in the event that this legislation is not enacted.
While we are quite willing to participate in a Western
remarketing processing, we have participated in the process
thus far. We intend to continue to participate in the process
as it goes forward. However, Western's decision to make certain
decisions effective May 27th virtually guarantees that certain
parties will feel a need to sue as soon as later this month, in
order to prevent these provisions from going into effect. This
is because of the application of the Administrative Procedures
Act and under the terms of the Federal Administrative
Procedures Act, some of our Hoover contractor participants are
extremely concerned that once those decisions go into effect,
the courts would be required to apply a very different standard
of review to Western's proposed approach than they would if the
procedures were not yet in effect.
Mr. McClintock. Thank you. Perhaps I could direct this
question to Ms. Currie, as one of the project participants. The
Federal Government fronts much of the money for these projects
and then it is paid back by the users of the water. What
benefits does the Federal Government derive once the project is
paid for?
Ms. Currie. Well, the Federal Government continues to have
the price stability that this project represents and the fact
that the consumers have price stability leads to overall
economic benefit that the Federal Government certainly shares
in. So, we believe that the success of this project has been
demonstrated in terms of the leveling of energy costs that it
has brought to our region.
Mr. McClintock. Mr. Moe, why should parties that have had
no part in the financing of these facilities be given a five
percent slice of the project, I am sorry, in three seconds or
less. I will save that for the second round of questions. My
time is up. I recognize the Ranking Member, Ms. Napolitano.
Mrs. Napolitano. Thank you, Mr. Chair. And to Mr. Moe, why
is Western proposing something so different in the
administrative allocation process that was negotiated by the
three states, the contract, 30 years versus the 50, and the 30
megawatt set aside for WAPA and what would it be used for if
this bill does not pass?
Mr. Moe. A couple of areas where our current proposals are
different are the 30 year versus 50 year. For example, we asked
for comments for that and had a comment period open for about a
year and believe, based on reviewing those comments, that 30
years is a proper balance between providing long-term costs and
economic certainty and allowing for new customers. For example,
30 years ago, prior to the 1984 allocation, the Western's
regulatory process did not make it very easy for tribes to
become customers. In the meantime, we have 87 tribes as
customers. So----
Mrs. Napolitano. OK.
Mr. Moe. So, it allows us to look for widespread use and
balance that against economic----
Mrs. Napolitano. My time is running, so let me cut it short
because of the comment you made about tribes and I noticed that
you first outreached to the tribes in January--well, actually,
you started a process in January of 2010 and then you start
reaching out to the tribes in September. Why the time lapse and
have you reached out to them before? And have you negotiated
with them before and for how long?
Mr. Moe. Yes. We initiated our process on November 2009 and
sent it, you know, to all interested parties.
Mrs. Napolitano. Including tribes?
Mr. Moe. They would have been included. One of the reasons
we extended it----
Mrs. Napolitano. Would have been included, sir? Were they
included?
Mr. Moe. Yes. One of the reasons we extended the process is
to send particular notice to all 59 tribes in the marketing
area, to make sure individually that they all got notice of the
process and so that is one of the reasons we extended the
process until the end of September of last year.
Mrs. Napolitano. Thank you. And your Federal notice
proposing to allocate less for new entrants than the bill
would, 93 megawatts versus 103 megawatts, this means the
entities would have less opportunity under the Federal Register
notice. Can you justify that?
Mr. Moe. Yes. The 30 megawatts is another difference that
you mentioned. We believe the 30 megawatts is important to
integration of the project and operating the balancing
authority reliably. It is a proposal at this time. We have not
made a decision on it, so it is something we are still seeking
comments on before we make a final decision.
Mrs. Napolitano. OK. How many tribes are in the Desert
Southwest marketing area and how many of those are eligible to
apply for the 103 megawatt Schedule D?
Mr. Moe. There are 59 tribes in the Boulder Canyon
marketing area and the Hoover marketing area. And we haven't
moved the process to asking for allocations yet. That is one of
the future steps in our process. But, those tribes have all
been notified that the process is going on.
Mrs. Napolitano. OK. If these tribes are successful in
being able to get allocations, Federally recognized tribes,
what are you going to do to be able to help them be successful
in being able to get into the allocation properly?
Mr. Moe. One of the things that we have done with the
issuance of the Power Marketing Initiative and in that same
time frame is change the regulations on how tribes could
participate in our allocation pools. A major example is they do
not need to be utility status in order to participate. And,
again, in the last 20 to 30 years, we have had 87 new tribal
customers because of that. Again, in the Hoover process, we are
not that far along yet for me to speak to any decisions that
have been made in the process. But, that is an example of
something we have done in recent history to----
Mrs. Napolitano. Would you be asking some of the tribes
that are currently receiving how to outreach to the tribes that
you have not, would be new entrants, possibly new entrants?
Mr. Moe. Well, two entities, in addition to tribal,
directly sending notice to the tribes. We work with the Arizona
Tribal Energy Association and the ITCA, the Intertribal Council
of Arizona, to try to help us in our outreach efforts and we
would intend to continue those kinds of activities.
Mrs. Napolitano. Thank you. Mr. Snow, in your testimony,
you mentioned a need for a technical amendment to H.R. 818, as
introduced is identical to language that passed last Congress.
What does it do and why is the language necessary?
Mr. Snow. I have been told what the technical amendment
would do.
Mrs. Napolitano. I cannot hear you, sir.
Mr. Snow. I have been told what the technical amendment
would to. I have not seen the technical amendment. But, I
understand that it might extend to other forum, water service
contract, possibly repayment on water service contract.
Mrs. Napolitano. Would you submit it for the record,
please, sir?
Mr. Snow. Submit the technical----
Mrs. Napolitano. Any information you may have.
Mr. Snow. OK. Thank you.
Mrs. Napolitano. Thank you. Thank you, Mr. Chair.
Mr. McClintock. Mr. Gosar.
Dr. Gosar. Well, first of all, Mr. Murillo, thank you for
your testimony on H.R. 489. As you mentioned, it is consistent
with what we have put in the bill, your background and your
support. And on behalf of the Administration in support of
this, maybe we can look at it as a good approach to the future
of future projects. But my first question is for you, Mr.
Sullivan. Tell me why Congress needs to step into a
jurisdictional dispute between the agencies?
Mr. Sullivan. Chairman McClintock, Representative Gosar, I
have been involved personally in negotiations now between the
Bureau of Reclamation and the U.S. Forest Service over the
dispute between those two agencies over who would actually have
control. It is tough enough dealing with one master; but
dealing with two masters, two bureaucracies is unbelievably
complicated. We had a number of instances of delays just to
make sure that paperwork was in a form satisfactory to the U.S.
Forest Service. These are environmental issues where we
addressed it. We got the approval of the Bureau of Reclamation.
So, it went through their process. And then the Forest Service
said, no, we have to put in a form that is acceptable to us.
And it is strictly a form issue. It is not an issue of
substance.
So, we tried for a good four-and-a-half years to deal with
this administratively. We really got no traction. In fact, we
got to a point in the last Congress where we decided we just
were not going to be able to move forward. That is when we
asked that a bill be introduced. It was introduced in both the
House and Senate. Unfortunately, it did not pass in the last
Congress, so we are back again. But, we believe that at this
point, Congress needs to send a signal to the agencies that one
should be sufficient, not two.
Dr. Gosar. And can you tell me the estimate cost? Because,
these are basic services. These aren't extravagant aspects.
This is water delivery to the constituents within the area.
Tell me what kind of cost was actually passed along to you?
Mr. Sullivan. Chairman McClintock, Representative Gosar, I
cannot give you specific costs, although I can provide those to
the Subcommittee at a later date. But, I can tell you that, you
know, 60-day, 90-day delays when you have a schedule and when
you are operating in an area where there are some endangered
species and so the period of time within which you can do
maintenance is limited, caused delays in having contractors
come in and not be able to do that work or not being able to
schedule contractors in during the period where we can do the
maintenance because spotted owl nesting issues.
Also, probably on a much larger scale is the Town of Payson
and the impacts of not having a reliable water supply to Mayor
Evans' 15,000 constituents. I am not sure we can put a price
tag on that. The Town of Payson's other water supply is a very
limited groundwater supply. And they have already experienced
several periods in this last decade where they have had to
limit groundwater supply to the citizens of Payson because of
drought. Cragin provides another reliable supply and they can
co-manage groundwater and surface water, to be able to supply
water to their citizens. If that water is not available, they
face a future of increasing curtailments in water supply to
their citizens.
Dr. Gosar. And, Kenny, thank you, very much, Mayor, for
coming over here. It is great to see you. You know, you have
had a very progressive town and trying to take care of itself
getting economics and one of those facilities to provide
economics is to have sound water basis. Tell me what kind of
implications that was for Payson for the City Council and for
your directives in trying to keep Payson sound?
Mr. Evans. Interestingly enough, we are the most water
conserving community in the State of Arizona, probably in the
West. Our conservation measures have kept water usage below 80
gallons per person per day versus the 360 gallons per person in
southern California. So, we really do and are concerned about
water. One of the huge challenges we face is the cost of
bringing this project down and the fact that we are in an era
when interest rates are going up for projects dramatically. We
are about to lose a significant part of our era grant because
we cannot get this job because of the Forest Service's
intervention.
Dr. Gosar. Thank you.
Mr. McClintock. Thank you. Mr. Grijalva.
Mr. Grijalva. Thank you, Mr. Chairman. And Mr. Murillo and
also I think it is Mr. Cunningham from the Forest Service, just
a quick response, and the Cragin Dam bill, 489, that Mr. Gosar
has introduced, its previous form that came through the House
and we went through those hearings, there were some questions
that came up, and let me just bring those back up again because
I think this version is more reflective of the Senate version
than it was the House version that came out of here. The
precedent, and maybe you can address the precedent question,
both agencies, since most of the discussions were between you
and the conflict that we hear about is that there is a
precedent being set, because that was one of the concerns that
came up about usurping Forest Service ability to manage its
land by making the transfer to the Bureau?
Mr. Murillo. Thank you, very much, for the question. I
think this is more or less a unique situation. What we have
here is we have part of the project features that are on
Reclamation fee title and then you have other part of the
features that are on Forest Service lands. If you look at the
other projects that are in place, those projects are entirely
on withdrawn lands through Reclamation.
Mr. Grijalva. Right.
Mr. Murillo. So, it is more unique. So, I think what we are
looking at here is just trying to provide the legislation so we
get that consistent with the structure that was with the other
projects.
Mr. Grijalva. The other units, the other SRP units that
they have the management that are on public land, they carry
the same unique characteristics as the one we are talking about
now?
Mr. Murillo. No. Those are on withdrawn lands through
Reclamation, those feature are.
Mr. Grijalva. OK. Mr. Cunningham? I think specifically, Mr.
Cunningham, the concern was on the land management side, some
of the issues that Mr. Sullivan brought up in his testimony,
issues dealing whether with Endangered Species Act, other kinds
of environmental issues that are particular to Forest Service
jurisdiction, how does that manage in the transfer?
Mr. Cunningham. I think this bill takes care of a lot of
those points. It does a very good job of it.
Mr. Grijalva. I appreciate it, sir. Thank you. Mr.
Sullivan, if I may, one of the points in the last discussion we
had on this and, again, I am assuming it is a point again, is
the arrangements with the electric coops in relationship to Mr.
Heck's legislation. The coop situation, they are on Schedule D.
They were guaranteed allocation. Can you describe the
arrangement that is in the present legislation, why you feel
that it is a comfortable one to go forward with?
Mr. Sullivan. Representative Grijalva, Chairman McClintock,
the arrangement for coops, and currently coops are all
categorized, as you mentioned, in the last category for Hoover
power, is that this set aside, the portion that goes to the
State of Arizona would then be part of the process that the
Arizona Power Authority will go through under state law for
allocation.
Mr. Grijalva. That request, I think, is specific to a
special preference under Schedule that is not part of the
arrangement, as I understand it, and maybe you can respond
specifically to that.
Mr. Sullivan. I believe you are correct. I was not in any
of the meetings with the coops. But, I believe you are correct,
they are asking for a special preference and that, what I
believe, would bring up a conflict within the State of Arizona
between state law and Federal law. Frankly, this issue is, once
the power is allocated to the State of Arizona, which is the
state agency, the Arizona Power Authority, then Arizona state
law covers how that power would be allocated. And the Arizona
Power Authority would allocate the additional power, that five
percent set aside, the coops would be in that pool of eligible
entities, along with the tribes.
Mr. Grijalva. The delicate balance is preeminent right
here. That has already been arrived at, right?
Mr. Sullivan. Right.
Mr. Grijalva. And let me just in closing, Mr. Chairman, all
the stakeholders and the people that went through this probably
wonderful negotiations that went on for ever, the inclusion of
native lands and tribes, I think, is a very, very important
addition to it and I want to commend you for making sure that
occurred. Thank you.
Mr. McClintock. Thank you. Mr. Heck.
Dr. Heck. Thank you, Mr. Chairman, again. I appreciate the
opportunity to participate today as a guest of the Committee.
Mr. Moe, a question first is on the 35 megawatt set aside for
project integration. Has there been a set aside in the previous
years for you to use in project integration?
Mr. Moe. Well, the current proposal that Western has would
actually increase the marketed capacity from what it has been
in previous years, but that increase is still 30 megawatts
different than what the legislation proposes. The legislation
would be 30 megawatts higher. And, again, the reason that we
are currently proposing the 30 megawatts is to allow us to
reliable integrate the----
Dr. Heck. That is not answering the question. The question
was, did you have the set aside or the ability to utilize the
power previously for your project integration?
Mr. Moe. It hasn't been as critical in the past because the
marketed capacity has been lower in the past.
Dr. Heck. This is a yes or no question.
Mr. Moe. So, no, as set aside was not required.
Dr. Heck. OK. But have you used power from the Hoover Dam
in your project integration in the past?
Mr. Moe. Hoover Dam is currently part of the BA and we make
sure that the right people are paying the right cost.
Dr. Heck. Can you explain to me what the benefit would be
of having your agency be the sole marketing source of power?
Mr. Moe. We do not have a position either way in terms of a
benefit. I mean, I think, you know, we are moving forward, our
process, because it is our responsibility to make sure it is
marketed. If the legislation is passed, you know, we appreciate
the chance we have had to work on technical issues with that
and believe we can also accommodate that.
Dr. Heck. And that brings me to my last question. This bill
was dropped on January 26th. Three months later, your agency
published the Federal Register notice on April 27th with the
intent to move forward with certain changes in how the system
operates. I would ask why, as the sponsor of this bill, no one
took the time to come and discuss what was going to be put
forth, with either myself or the Ranking Member, who had this
bill previously and who is the cosponsor?
Mr. Moe. Well, certainly, it was not our intention to not
have discussion. We had been in a public process since November
of 2009 on the issue predominantly of the Power Marketing
Initiative, as well as term and some other issues we proposed.
Because of comments from current contractors, as well as tribes
and others, we extended that comment period all the way until
September of last year and spent quite a lot of time reviewing
comments from that period. And we had been telling, you know,
interested parties that we actually hope to move another step
forward earlier than we were able to. So, it was not a strategy
to time when we finally got the point of being able to issue
our next Federal Register notice with respect to the
legislation at all. And, certainly, we would be pleased to
continue dialogue, if that is----
Dr. Heck. I am not trying to suggest there was some
subversive attempt here, but I would think with three months
from the time a bill was dropped that has significant impact on
your agency, you would be able to find a time to come and talk
to the primary sponsors of that bill about where you thought
the agency would be heading. And I think this leads to the
greater issue that we are addressing in this Congress is the
systematic overreach of executive agencies without legislative
direction. With that, Mr. Chairman, I thank you and yield back
my time.
Mr. McClintock. That concludes our first round of
questioning. We will now move to our lightening round. I just
have a few questions left. I wanted to pick up on my point, Mr.
Moe, of why should parties that had no part in financing this
project initially given a five percent slice of the project
now?
Mr. Moe. Well, as many people have said, Hoover power is
very valuable for those that have it and valuable for those
that would like to be able to use it in the future. Again, as I
just discussed with Congressman Heck, we had a comment period
of over a year for whether we should open a new resource pool.
We had----
Mr. McClintock. But, again, this is a project that was
financed by the participation and by the resources of various
entities. As I see it, they own it. They paid for it; they own
it. Why should we now be parceling out additional slices to
those who had no participation in the project?
Mr. Moe. Whoever the contractors are would pay the rates,
in the past they have, to repay the project in the----
Mr. McClintock. Ms. Currie, you are a contractor. What are
you thoughts on the subject?
Ms. Currie. My thoughts are we have been paying the freight
on this project since its inception and we should be able to
continue to have the benefits. All of our customers
collectively in the three states----
Mr. McClintock. Why the five percent slice off then?
Ms. Currie. The five percent does recognize that people who
have not been able to benefit need an opportunity. And so this
was part of the give and take
Mr. McClintock. Oh, I see.
Ms. Currie.--that the existing contractors came up with.
Mr. McClintock. Why are we locking in these contracts for
50 years? One thing that is being done at the administrator
level, which I think makes a little more sense, is to keep it
to 20 or 30 years. Fifty years was initially required to pay
off the capital cost of construction. Beyond that, aren't we
hamstringing future generation to respond to changing
conditions or policies?
Ms. Currie. Well, we are telling the existing contractors
that the commitment they have made in 2009 to fund
environmental mitigation over 50 years will be matched by the
term going forward on this.
Mr. McClintock. But those policies may change a lot sooner
than 50 years. Why would we want to hamstring the next
generation to keep them from responding to those changes in
policy, in science, in necessity?
Ms. Currie. Well, the obligation to pay, as set forth in
that 2009 environmental mitigation legislation, that is not
going to change. That 50 years is a contract between the
participants in Hoover and the Federal Government to pay for
mitigation. And so, we believe that that should be honored by
the 50-year commitment that is in H.R. 470.
Mr. McClintock. One thing I would like to hear from all of
the witnesses here that are on the Hoover issue, and you do not
have to answer it right now, but just if you could offer
thoughts, if you have them, in writing while the hearing record
is open, I am interested in how we can provide a uniform
standard for all future power contract extensions, so that it
is not done a piecemeal basis. It may be to be. There may be
unique circumstances with each of these issues that need
specific attention. But, to the extent that we can provide a
uniform standard that everybody knows, everybody can rely upon,
it seems to me to be a better way to approach the issue and any
thoughts you have on that subject for future legislation would
be much appreciated. And with that, I will yield back the
balance of my time and recognize the Ranking Member.
Mrs. Napolitano. Thank you, Mr. Chair, and to Mr. Sullivan,
I have read your testimony with quite a bit of interest because
you apparently have learned to conserve water in your Payson
area, am I correct?
Mr. Sullivan. Actually, you need to direct that to the
Mayor.
Mrs. Napolitano. To the Mayor, I am sorry; the Mayor, I am
sorry, yes.
Mr. Sullivan. He is the conserver.
Mrs. Napolitano. He is the conserver, good. Are you using
any of the solar to be able to reduce some of the electricity
that does require it?
Mr. Evans. Yes, and I have wish I had time to explain to
you some of the forward-looking things we are doing.
Mrs. Napolitano. Send me a note, please.
Mr. Evans. Yes. We have currently the largest solar field
in the State on educational facilities. We have 2.8 megawatts
that are being generated, which make them nearly energy
neutral. Additionally, we are in the process of constructing
another 10 megawatts to provide the energy for a new four-year
college. UAS campus is coming to our town.
Mrs. Napolitano. Well, thank you, so much. I am impressed.
And just as a matter of a comment to any of you who might want
to respond real quickly, because my time will go through, in
local level, and I am sure you understand we, sometimes, have
to retrain employees. Would there be any comment about having
the agencies retrained or be able to work with each other and
to work with you? Any comment? You are laughing now.
Mr. Evans. I have to continue to work with the Forest
Service people back home on a daily basis, so I think you
noticed I have tempered my thoughts considerably compared to
some of you, who are in the position above it.
Mrs. Napolitano. Understood and acknowledged. Anybody else?
Mr. Evans. I would think that training and cross training
would be very valuable. One of the real tough challenges we
face at the doing level. I mean, the old adage about the rubber
meets the road, we are the ones who are facing the citizens who
expect, you know, the quality of life to improve and----
Mrs. Napolitano. Thank you. I am running out of time.
Mr. Evans. Yeah, when that gets held up by a bureaucrat,
who simply wants the form filled out on his piece of paper,
that is tragic.
Mrs. Napolitano. Thank you. Anybody else? OK, your lips are
sealed. Ms. Currie, what role does the Multi Species Habitat
Plan play in allowing for the water and power deliveries?
Ms. Currie. Fifty percent of the cost of that program is
paid for by water and power contractors. So, that is an
essential part of this issue of 50 years versus 30 years. When
the up-rating was done in 1984 with the 30-year time frame, we
did not have this environmental cleanup obligation as part of
it. So that is a key difference that we are facing now and we
believe that that 50-year term is fair and appropriate.
Mrs. Napolitano. Thank you. Mr. Chair, I yield back.
Mr. McClintock. Thank you. Mr. Gosar?
Dr. Gosar. Well, first of all, I want to thank my
colleague, Congressman Grijalva, for clarifying the Forest
Service and Reclamations from the past House bill, so that we
had better clarity on that aspect. So, thank you, so very, very
much. Mayor Evans, I know there are lots of this going on and
particularly being an island out there in the Federal land
area. This is not the only aspect that has caused problems with
you, has it?
Mr. Evans. It has not. As I mentioned, we have to deal with
five or six agencies, Federal agencies and the challenge we
face is the bureaucratic wrangling between those agencies. We
get along better with them than they get along with one another
oftentimes.
Dr. Gosar. And then that really does have an impact,
particularly to the economics.
Mr. Evans. In my little town, and it is a small town, but
it is measured--I believe someone asked that to be quantified.
In our terms, it is measured in millions. We have a project
that the delays have cost us or will cost future generations in
our community $200 million, as a result of delays associated
with somebody saying I don't have the information I need on the
form that I have and so I can't understand it. It wasn't that
it was violating some rule, regulation, law; it was simply a
delay associated with their inability to make a decision.
Dr. Gosar. And I know that you have been very innovative in
regard to trying--I mean, you are surrounded by forests and in
Arizona, we have been in drought. We have dry spells. We have
high volumes of lightening strikes and stuff. So, we are at
risk for a lot of fires. And so, I know that you have been on
the aspect of trying to be on the forward aspect of prevention.
This would just be another place that we could definitely ask
the agencies to get along, to help us out, and start working
with us.
Mr. Evans. Absolutely. We have located bladders in the
forest, so that we have water close to those ignition sources
that may--you know, they are out disbursed in areas over which
we have no control. But, we have used our own local resources
to get money and to put bladders out there, so water is
disbursed into the forest, so we can protect those forest
resources.
Dr. Gosar. And I know we have seen the Forest Service
really start to come to the table, to start really looking at
this cooperatively with us.
Mr. Evans. Exactly. And as I said, and it sounded funny,
but we do work well with the Forest Service. Our challenge is
trying to get them to be able to work with other sister
agencies, U.S. Fish and Wildlife, Department of Ag, other
agencies within the Department of Ag, other agencies within the
Department of the Interior, the Army Corps, et cetera.
Dr. Gosar. Thank you. Mr. Moe, the Hoover Dam depends on a
lot of its water from water release from upstream and the Glen
Canyon Dam and I know there are a number of people that have
wanted to take out and to remove the Glen Canyon Dam. Can you
give me some ideas in regards to what kind of allocation or
problems that may facilitate or be problematic with?
Mr. Moe. Well, the removal of Glen Canyon Dam would
definitely be a major change in the way water is operated on
the Colorado River. It is a centerpiece for balancing
allocations between the upper and lower basins on the Colorado
River, for example. It would also impact hydropower. So, there
would be major impacts. But, you know, it is not something that
Western Area Power Administration has been doing any work on
for sure and I do not know how to give you any more specifics
than that.
Dr. Gosar. Well, along with the Hoover project, we also
have the Parker-Davis Project, as well, that you have
allocations. So, the rural coops get electricity from both,
right?
Mr. Moe. Arizona Electric Power Cooperative does have a
Parker-Davis power allocation. I believe they also have a
Colorado River Storage Project allocation.
Dr. Gosar. And Native Americans do get some of that power,
I mean, from the Navajo Nation to the White Mount Apaches and
the San Carlos Apaches. We get that and they can still apply
through that process, can they not?
Mr. Moe. Those two projects I mentioned, both also have
Native American customers, yes.
Dr. Gosar. Thank you, very much.
Mr. McClintock. Thank you. Mr. Grijalva?
Mr. Grijalva. Thank you, Mr. Chairman, again. For Ms.
Currie and Ms. Pongracz, and Mr. Sullivan, probably the same
question, the Chairman brought up the timing issue in terms of
the Multi Species Act and the restoration commitment and
environmental commitment that is made with that Act, which I
think is very significant to put the long-term water
availability and the restoration obligation that is being made
there and the legislation that we are talking about today. Talk
about not only the timing issue and why the 50 year is critical
for both the function and also why they are not only from a
policy perspective, but from a water usage perspective tied
together, if you would?
Mr. Sullivan. I will take a shot, since I am the water guy
sitting on this panel. From a water supply perspective and from
a power supply perspective, directly addressing the issue of
the multiple different species that are impacted by the
operation of the Colorado River and doing it for a long period
of time assures that the power supply and the water supply
provided by Hoover to the lower Colorado region is there. And
so having made the commitment to protect endangered species on
the lower Colorado, we also protect the ability to deliver
water to the three states and to the country of Mexico under
the Treaty. We also then----
Mr. Grijalva. That is a certainty issue, right? There is a
certainty issue.
Mr. Sullivan. There is a certainty issue.
Mr. Grijalva. Yeah.
Mr. Sullivan. And there is certainty to the Federal
Government that the three states will continue in their
commitment for 50 years to help fund that.
Mr. Grijalva. Any response?
Ms. Currie. I would just echo those comments in terms of he
is a water guy; I came out of the finance area. When you are
making investments over long terms, you put money forward with
the expectation that you will have certain outcomes. And
matching these terms with the legislation before you, with the
2009 environmental cleanup legislation just makes it that much
better for long-term planning.
Mr. Grijalva. Thank you.
Ms. Pongracz. I agree with the comments of the prior two
speakers, Congressman Grijalva, and have nothing to add.
Mr. Grijalva. Thank you. And, Mayor, it just reminds me,
there is--it will remain nameless--a community that is located
inside of a reservation, tribal lands, and like you said, I
have to be careful where--and I explained to them, you know,
you are renting here. You have to be really careful how you
deal with the tribe that is in control of the land. And I
understand that. I think that the legislation that we are
dealing with today provides also some certainty to your
community, which I think is a good step forward. And I yield
back, Mr. Chairman.
Mr. McClintock. Well, thank you, very much, folks. Thank
you for joining us today and for your valuable testimony. I
know members of the Subcommittee may have additional questions
for witnesses. We will ask that you respond to those in
writing. The hearing record will be kept open for 10 days to
receive responses. And if there is no further business and
without objection, the Subcommittee stands adjourned.
[Whereupon, at 11:34 a.m., the Subcommittee was adjourned.]

[Additional material submitted for the record follows:]

[A statement submitted for the record by the Mohave
Electric Cooperative, Navopache Electric Cooperative, Sulphur
Springs Valley Electric Cooperative, Trico Electric
Cooperative, and Arizona Electric Power Cooperative on H.R. 470
follows:]

STATEMENT OF MOHAVE ELECTRIC COOPERATIVE, NAVOPACHE ELECTRIC
COOPERATIVE, SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE, TRICO
ELECTRIC COOPERATIVE AND THE ARIZONA ELECTRIC POWER COOPERATIVE ON H.R.
470 THE HOOVER POWER ALLOCATION ACT

MAY 12, 2011

``And one should bear In mind that there is nothing more difficult
to execute, nor more dubious of success, nor more dangerous to
administer than to introduce a new order to things; for he who
introduces it has all those who profit from the old order as his
enemies; and he has only lukewarm allies in all those who might profit
from the new. This lukewarmness partly stems from fear of their
adversaries, who have the law on their side, and partly from the
skepticism of men, who do not truly believe In new things unless they
have personal experience in them.''--Niccolo Machiavelli

Over the past two years, several rural electric cooperatives in
Arizona have banded together in an effort to secure an allocation of
power from Hoover Dam. This endeavor has not been easy, and as Niccolo
Machiavelli noted in his preceding comment, bringing about a new order
of things is hampered by many impediments. Nevertheless, we continue
the pursuit of this valuable National resource (Hoover Power), not only
for those we serve, but for the countless future residents that the
State of Arizona will undoubtedly attract.
The provisions incorporated into H.R. 470 are expected to provide
guidance to the Federal Government and the States of California,
Nevada, and Arizona until the year 2067. However, these guidelines--for
the most part--consist of the perpetuation of the status quo. In other
words, the vast majority of those that currently receive power from
Hoover Dam will continue to do so--in fact, many entities will see an
increase in their allocations. Although changes have been proposed to
existing policy--and rightly so--to allow Native American tribes and
the ``have-nots'' (the Schedule D pool) the opportunity to acquire
Hoover power, it has always been our contention that, in Arizona, the
Schedule D pool is insufficient to address the needs of all those who
will seek to obtain it.
We, collectively known as the Arizona Cooperatives, have no quarrel
with the manner in which the States of California and Nevada will
govern and remarket their respective allocations of power from Hoover.
Our concerns lie in the 70-year old exclusionary practices that prevent
Arizona's Electric Cooperatives from receiving an apportionment of
Arizona's allocation of Hoover power.
Federal statutes and Congressional intent are replete with
references as to the legitimacy of electric cooperatives entitlement to
clean, efficient, inexpensive hydropower ``...[to] encourage the
development of rural areas...'' In fact, the Reclamation Act of 1906
provided the Federal Government's entry into the electric power field,
and the Federal Power Act of 1920 codified preference to a
``...particular class of users, such as public bodies and
cooperatives.'' According to a 2001 Government and Accounting Office
(GAO) report on FEDERAL POWER requested by then Chairman of the
Committee on Resources--The Honorable James V. Hansen -
``one primary benefit that the Congress sought in giving
priority to public utilities and cooperatives, which distribute
directly to customers without a profit incentive, was to obtain
lower electricity rates for consumers''
The report went on to further reiterate 95 years of Congressional
intent by indicating that
``the notion of providing public bodies and cooperatives with
preference for federal hydropower rests on the general
philosophy that public resources belong to the nation and their
benefits should be distributed directly to the public whenever
possible. In many cases, the preference provisions of federal
statutes give the electric cooperatives... priority in seeking
to purchase federally produced and federally marketed power.''
We make note of the statements contained in the report because we
believe--and as the report points out--that electric cooperatives are
entitled to fair and equitable consideration in the marketing of our
Nation's hydropower. It is this ``preference'' that we want this
Congress to acknowledge and reiterate, and provide safeguards to its
compliance.
We believe Congress can ensure the protection of this noteworthy
policy by adopting a simple amendment to H.R. 470. Fairness in the
application of Federal preference laws is needed. In Arizona, existing
discriminatory practices which cloud and often repudiate Congressional
intent must be addressed. To clarify any misconceptions, we believe
H.R. 470 should be amended to include a provision that states
unequivocally that any remarketing of Arizona's allocation of Hoover
power should be contingent upon extending a fair and equitable
consideration to cooperatives within the state.
Fair and equitable access to Federal resources is a law of the
Land. We, the Arizona-based Electric Cooperatives, believe its
application can be accomplished without any violation of the State of
Arizona's rights or laws.
Many of our opponents have promoted the perception that the
amendment we seek usurps Arizona state law. But we do not believe that
Congress's assurance of fair and equitable consideration is an
infringement upon the State of Arizona's discretion in the remarketing
of their allocation of Hoover power. In fact, we view it as one more
policy to consider in fairly redistributing Hoover power,
The discretion to distribute Arizona's allocation of Hoover power
would still be allowed to proceed under State Statute. Nothing in the
proposed amendment would prevent the State of Arizona, or its agent the
Arizona Power Authority, from utilizing Arizona's Statutes to
significantly advantage the District class of customer--as is currently
the case. It is our contention that our amendment would only require
that there be some fair and equitable consideration of the other
classes of customers as well. The discretion of implementing the ``fair
and equitable'' aspects is up to the State and the APA.
Another myth we'd like to dispel is that the Cooperatives do not
have Hoover power because we have not submitted the necessary data. We
have not provided the APA with data because it is our understanding
that the APA's actual post-2017 Hoover marketing process Isn't
presently active, and In fact, is not expected to commence until 2016-
17. We have been given examples of the type of data that are expected
and will gladly submit this information, along with the other entities
in Arizona that are currently receiving Hoover power or seeking Hoover
power, when the time is appropriate and the APA is actively remarketing
Hoover.
We would also like to clarify a misconception that has been allowed
to flourish regarding the Arizona Power Authority's ``costs'' for
Hoover power. Many of our opponents have indicated to congressional
staff that they ``paid'' for Hoover and it's upgrades and that the
Arizona Cooperatives ``can have Hoover power'' if they ``buy In''. We
assume this statement infers that those that currently receive Hoover
power are equity partners in Hoover Dam. We view these comments as
inaccurate and the ``buy in'' statement as ludicrous. Hoover Dam is a
national public resource owned by the people of the United States, not
any single or collective entity that may be the recipient of the power
generated at the Dam.
Factually, the Hoover facility and its uprates and the costs
associated with the facility are all paid by the allottees through the
cost of the power remarketed, and in Arizona, the cost of Hoover to the
Arizona Power Authority is recovered through its rates to its
customers. Beginning in 2017, as it is today, the Arizona Power
Authority will recover any Hoover related costs through the rates that
it charges its customers for the Hoover power and energy resold to
them,
There is also some rendition of history that the cooperatives did
have an allocation of Hoover power in the early 1960's. That particular
portion of history provides the example of why an amendment is needed.
Prior to 1963, the State of Arizona--through the Arizona Power
Authority (APA)--did market a blended product of Hoover power, Parker-
Davis Project power, and purchased steam power as Colorado River Power.
The APA had excess surplus of this blended power and some of the
cooperatives in Arizona did purchase this power along with entities
such as investor-owned utilities. Those of us that purchased this
excess power from the APA did not have allocations.
It is important to note that the Parker-Davis Project power was
required by law to be marketed in accordance with federal preference
rules. In 1963, the federal government decided that Arizona's ``super
preference'' laws were not consistent with the Federal Preference laws
and took the Parker-Davis Project power away from the State and
marketed it directly to preference entities in accordance with
preference power provisions. It was then that the cooperatives received
Parker-Davis power in 1963. Since 1963, the cooperatives have not
received an allocation of Hoover power, and the power they received
prior to 1963 was actually a blend of Parker-Davis Project power,
Hoover power, and purchased steam power and, again, not an allocation.
In closing, we want to thank the Members of this Committee, and
staff for providing us with the opportunity to share our concerns and
to propose a solution to our dilemma. We firmly believe our amendment
can correct the 70 years of discrimination and exclusion the Arizona
Cooperatives have experienced in their quest to obtain Hoover power. We
wish to reiterate that our amendment does not impact the States of
California or Nevada or the manner in which they allocate their
apportionment of Hoover power.
We are grateful to the Salt River Project for working with us and
for proposing to provide Mohave Electric Cooperative, Navopache
Electric Cooperative, and the Sulphur Springs Valley Electric
Cooperative with up to three [3] mw (collectively) of Hoover power.
This offer isn't effective until 2017 (at the earliest) and is
contingent upon the APA's refusal to provide the Arizona Cooperatives
with Hoover power once the new contracts are executed in 2017.
Nevertheless, we view this gesture by SRP as honorable, and in the
spirit of fairness and cooperation.
We also want to express our sincerest gratitude to Congressman Ed
Pastor. His willingness to listen to our concerns, and advocate that
the Arizona Cooperatives be given an equal opportunity to obtain Hoover
power, has been invaluable. We are deeply appreciative of Congressman
Pastor's efforts and for pursuing what he believes is in Arizona's best
interests.
Lastly, over the last two and one-half years we have had the
courage to speak the truth, and fight for our customers and rural
Arizona. It is our hope that this Congress will not allow the
perpetuation of the outdated practices of the past, at the expense of
the needs of millions of rural Arizonans. Eighty-three year old
policies must be reviewed and amended to ensure their relevancy for
future generations. The enactment of H.R. 470 will codify in public law
provisions which will govern the allocation of Hoover power until 2067.
In its current form,
H.R. 470 allows for the continuation of a policy that is
detrimental to Arizona's Electric Cooperatives. We ask that you not
allow this injustice to continue for the sake of political expediency.
We ask that you adopt the amendment we have proposed, or work with us
in arriving at a mutually beneficial solution.