[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


H.R. 4366, ``SAN LUIS UNIT DRAINAGE RESOLUTION ACT''; H.R. 5217, ``SAN 
  LUIS UNIT DRAINAGE RESOLUTION ACT''; AND DISCUSSION DRAFT OF H.R. 
        ____, ``BLACKFEET WATER RIGHTS SETTLEMENT ACT OF 2016''

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

                          LEGISLATIVE HEARING

                               BEFORE THE

                SUBCOMMITTEE ON WATER, POWER AND OCEANS

                                 OF THE

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                         Tuesday, May 24, 2016

                               __________

                           Serial No. 114-44

                               __________

       Printed for the use of the Committee on Natural Resources
       
            
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                     COMMITTEE ON NATURAL RESOURCES

                        ROB BISHOP, UT, Chairman
            RAUL M. GRIJALVA, AZ, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
Louie Gohmert, TX                    Madeleine Z. Bordallo, GU
Doug Lamborn, CO                     Jim Costa, CA
Robert J. Wittman, VA                Gregorio Kilili Camacho Sablan, 
John Fleming, LA                         CNMI
Tom McClintock, CA                   Niki Tsongas, MA
Glenn Thompson, PA                   Pedro R. Pierluisi, PR
Cynthia M. Lummis, WY                Jared Huffman, CA
Dan Benishek, MI                     Raul Ruiz, CA
Jeff Duncan, SC                      Alan S. Lowenthal, CA
Paul A. Gosar, AZ                    Matt Cartwright, PA
Raul R. Labrador, ID                 Donald S. Beyer, Jr., VA
Doug LaMalfa, CA                     Norma J. Torres, CA
Jeff Denham, CA                      Debbie Dingell, MI
Paul Cook, CA                        Ruben Gallego, AZ
Bruce Westerman, AR                  Lois Capps, CA
Garret Graves, LA                    Jared Polis, CO
Dan Newhouse, WA                     Wm. Lacy Clay, MO
Ryan K. Zinke, MT
Jody B. Hice, GA
Aumua Amata Coleman Radewagen, AS
Thomas MacArthur, NJ
Alexander X. Mooney, WV
Cresent Hardy, NV
Darin LaHood, IL

                       Jason Knox, Chief of Staff
                      Lisa Pittman, Chief Counsel
                David Watkins, Democratic Staff Director
                  Sarah Lim, Democratic Chief Counsel
                                 ------                                

                SUBCOMMITTEE ON WATER, POWER AND OCEANS

                       JOHN FLEMING, LA, Chairman
              JARED HUFFMAN, CA, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
Robert J. Wittman, VA                Jim Costa, CA
Tom McClintock, CA                   Ruben Gallego, AZ
Cynthia M. Lummis, WY                Madeleine Z. Bordallo, GU
Jeff Duncan, SC                      Gregorio Kilili Camacho Sablan, 
Paul A. Gosar, AZ                        CNMI
Doug LaMalfa, CA                     Raul Ruiz, CA
Jeff Denham, CA                      Alan S. Lowenthal, CA
Garret Graves, LA                    Norma J. Torres, CA
Dan Newhouse, WA                     Debbie Dingell, MI
Thomas MacArthur, NJ                 Raul M. Grijalva, AZ, ex officio
Rob Bishop, UT, ex officio

                                ---------                                
                                CONTENTS

                                ----------                              
                                                                   Page

Hearing held on Tuesday, May 24, 2016............................     1

Statement of Members:
    Costa, Hon. Jim, a Representative in Congress from the State 
      of California..............................................    13
    Fleming, Hon. John, a Representative in Congress from the 
      State of Louisiana.........................................     1
        Prepared statement of....................................     5
    Gosar, Hon. Paul A., a Representative in Congress from the 
      State of Arizona...........................................     9
        Prepared statement of....................................    10
    Huffman, Hon. Jared, a Representative in Congress from the 
      State of California........................................     6
        Prepared statement of....................................     7
    Napolitano, Hon. Grace F., a Representative in Congress from 
      the State of California....................................    11
    Valadao, Hon. David G., a Representative in Congress from the 
      State of California........................................    12
    Zinke, Hon. Ryan K., a Representative in Congress from the 
      State of Montana...........................................    20

Statement of Witnesses:
    Barnes, Hon. Harry, Chairman, Blackfeet Nation, Browning, 
      Montana....................................................    22
        Prepared statement of....................................    24
    Bezdek, John, Counselor to the Deputy Secretary, U.S. 
      Department of the Interior, Washington, DC.................    29
        Prepared statement of....................................    31
        Questions submitted for the record.......................    38
    Birmingham, Tom, General Manager/General Counsel, Westlands 
      Water District, Fresno, California.........................    48
        Prepared statement of....................................    49
        Questions submitted for the record.......................    53
    Brown, Jerry, General Manager, Contra Costa Water District, 
      Concord, California........................................    44
        Prepared statement of....................................    46
    Ellis, Steve, Vice President, Taxpayers for Common Sense, 
      Washington, DC.............................................    39
        Prepared statement of....................................    41

Additional Materials Submitted for the Record:
    Bishop, Rob, February 26, 2015 Letter to Departments of 
      Justice and Interior.......................................     2
    Connor, Michael L., Deputy Secretary of the Interior, April 
      21, 2016 Letter to Representative David Valadao............    14
                                     
 
   LEGISLATIVE HEARING ON H.R. 4366, TO AFFIRM AN AGREEMENT 
 BETWEEN THE UNITED STATES AND WESTLANDS WATER DISTRICT DATED 
  SEPTEMBER 15, 2015, AND FOR OTHER PURPOSES, ``SAN LUIS UNIT 
DRAINAGE RESOLUTION ACT''; H.R. 5217, TO AFFIRM ``THE AGREEMENT 
BETWEEN THE UNITED STATES AND WESTLANDS WATER DISTRICT'' DATED 
SEPTEMBER 15, 2015, ``THE AGREEMENT BETWEEN THE UNITED STATES, 
  SAN LUIS WATER DISTRICT, PANOCHE WATER DISTRICT AND PACHECO 
   WATER DISTRICT'', AND FOR OTHER PURPOSES, ``SAN LUIS UNIT 
 DRAINAGE RESOLUTION ACT''; AND DISCUSSION DRAFT OF H.R. ____, 
 TO AUTHORIZE AND IMPLEMENT THE WATER RIGHTS COMPACT AMONG THE 
BLACKFEET TRIBE OF THE BLACKFEET INDIAN RESERVATION, THE STATE 
  OF MONTANA, AND THE UNITED STATES, AND FOR OTHER PURPOSES, 
       ``BLACKFEET WATER RIGHTS SETTLEMENT ACT OF 2016''

                              ----------                              


                         Tuesday, May 24, 2016

                     U.S. House of Representatives

                Subcommittee on Water, Power and Oceans

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              


    The subcommittee met, pursuant to notice, at 10:35 a.m., in 
room 1334, Longworth House Office Building, Hon. John Fleming 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Fleming, McClintock, Gosar, 
LaMalfa, Denham, Bishop, Huffman, Napolitano, Costa, and 
Torres.
    Dr. Fleming. The Subcommittee on Water, Power and Oceans 
will come to order. The subcommittee meets today to hear 
testimony on H.R. 4366, sponsored by Mr. Valadao; H.R. 5217, 
sponsored by Mr. Costa; and the discussion draft on the 
``Blackfeet Water Rights Settlement Act of 2016.''
    Before we begin, I ask unanimous consent that our non-
subcommittee colleagues, Mr. Valadao and Mr. Zinke, be allowed 
to join us on the dais and participate at the appropriate time 
in the hearing if time permits.

    [No response.]

    Dr. Fleming. Hearing no objection, so ordered.
    I will now yield myself 5 minutes to make my opening 
statement.

 STATEMENT OF HON. JOHN FLEMING, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF LOUISIANA

    Dr. Fleming. Today's hearing involves an examination of 
water-related settlements between the Federal Government and 
non-Federal parties.
    These complex and bipartisan settlements are the results of 
decades of litigation, claims, and negotiations, and are 
intended to provide certainty for all the parties involved. 
But, they also involve Federal dollars. Louisianans and other 
American taxpayers are being asked to pay for some parts of 
these settlements, so there are legitimate questions about the 
Federal costs and the benefits of these bills.
    One of the most important questions involving a settlement, 
especially when American taxpayer dollars will be used, is 
whether resolving the litigation will be advantageous to the 
Federal Government compared to its liability under current law.
    For many years, these questions were either ignored or not 
adequately answered on a bipartisan basis. Congress was simply 
viewed at times as a final rubber stamp for approving costly 
settlements, or forced to be an arbitrator on fiscal 
expenditures even though it did not have the key information 
needed to make a decision.
    Times have changed. With an over $19 trillion debt, we need 
to figure out whether these and other settlements are in the 
best interests of the American taxpayer. It is not responsible 
to make these assessments in a vacuum. And that's why the 
Chairman of this Committee, Rob Bishop, asked the current 
Interior Secretary and the former Attorney General last year to 
provide more information on future Indian water rights 
settlements in order to ensure that they are fiscally 
responsible and justified. I ask unanimous consent to enter 
that letter into the Record.

    [No response.]

    Dr. Fleming. Hearing no objection, so ordered.

    [The information follows:]
                   U.S. House of Representatives,  
                    Committee on Natural Resources,
                                             Washington, DC

                                                  February 26, 2015

Hon. Eric Holder, Attorney General
Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530

Hon. Sally Jewell, Secretary
Department of the Interior
1849 C Street, NW
Washington, DC 20240

    Dear Mr. Attorney General and Madame Secretary:

    The House Natural Resources Committee (Committee) has primary 
authorizing jurisdiction over the legislative resolution of Indian 
water rights claims within the House of Representatives. Additionally, 
given the longstanding policy of the United States that disputes 
regarding Indian water rights should be resolved through negotiated 
settlement rather than through litigation, both of your Departments 
play key roles in negotiating and developing settlements regarding 
these claims before they are ever considered by Congress.
    The Committee recognizes that settlements to these matters are 
generally preferable to protracted litigation, which does little to 
provide water supply and financial certainty for settling and other 
parties. Importantly, settlements, if crafted correctly, can also 
provide relief to the United States from burdensome legal obligations 
and benefit all American taxpayers. The Committee recognizes that the 
Executive branch is charged with implementing existing Indian water 
rights settlement criteria and procedures designed to meet these 
goals.\1\
---------------------------------------------------------------------------
    \1\ Department of the Interior Working Group on Indian Water 
Settlements for the Participation of the Federal Government in 
Negotiations for the Settlement of Indian Water Rights Claims, Federal 
Register, Vol. 55, No. 48, March 12, 1990.
---------------------------------------------------------------------------
    Due to the direct linkage between your efforts in negotiating the 
proposed resolution of these claims and our responsibility in enacting 
such proposals both for the benefit of the United States interests and 
to help Tribal and non-tribal parties, it is important that we work 
together to facilitate Congressional consideration when you have 
reached resolution.
    Due to growing federal debt and increased budgetary pressures from 
existing Indian water rights settlements, it is important that the 
proposed settlements, their proposed legislation and the federal costs 
associated with them be fiscally responsible and justified in order to 
protect the American taxpayer and future Tribal needs.
    As Chairman of the Committee, I write this letter to inform you of 
the process that the Committee intends to follow when considering 
future Indian water rights settlements during this Congress and to 
inform you of the assistance the Committee will need from you and your 
designees in order to proceed forward.
    Given the role your Departments have in negotiating each proposed 
settlement, to help expedite the Committee's consideration of proposed 
legislation enacting such settlement that is fiscally responsible, your 
departments--in concurrence with the Office of Management and Budget--
must also play a significant and initial role in certifying and 
explaining the Administration's support of the financial aspects of 
legislation codifying such settlement to the Committee. Put simply, 
your Departments must convey support for and forward the settlements 
and the proposed authorizing legislation, specifically including 
federal spending levels, before any Committee consideration takes 
place.

    To that end:

  1.  I anticipate each of you will provide a statement to the 
            Committee affirming that each proposed settlement 
            resolution transmitted by your Department adheres to the 
            current criteria and procedures.

  2.  I ask that your Departments specifically affirm to the Committee 
            that a settlement meets Criteria 4 \2\ and 5(a) and (b) \3\ 
            to ensure that the American taxpayer is deriving benefits 
            from any such settlement prior to Committee consideration. 
            Related to such determination, both Departments will be 
            expected to affirm that a particular settlement represents 
            a net benefit to the American taxpayer as compared to the 
            consequences and costs of not settling litigation, and 
            specifically support the federal financial authorization 
            included in the proposed legislative text.
---------------------------------------------------------------------------
    \2\ Criteria 4, as included in Federal Register, Vol. 55. No. 48, 
March 12, 1990 states: ``The total cost of a settlement to all parties 
should not exceed the value of the existing claims as calculated by the 
Federal Government.''
    \3\ Criteria 5(a) and (b), as included in Federal Register, Vol. 
55. No. 48, March 12, 1990 state: ``Federal contributions to a 
settlement should not exceed the sum of the following two elements: a. 
First, calculable legal exposure--litigation costs and judgment 
obligations if the case is lost; Federal and non-Federal exposure 
should be calculated on a present value basis taking into account the 
size of the claim, value of the water, timing of the award, likelihood 
of loss. b) Second, additional costs related to Federal trust or 
programmatic responsibilities (assuming the U.S. obligation as trustee 
can be compared to existing precedence.)--Federal contributions 
relating to programmatic responsibilities should be justified as to why 
such contributions cannot be funded through the normal budget 
process.''

  3.  For settlement legislation to be considered, the Attorney General 
            or his/her designee must have conveyed to a court and all 
            settling parties have agreed, in writing, to the settlement 
            pending a legislative resolution before it is forwarded to 
---------------------------------------------------------------------------
            the Committee for it to be considered.

  4.  Both Departments and the settling parties must have approved, in 
            writing, the legislative text needed to codify the 
            settlement before it is transmitted to the Committee and 
            have provided that proposed text to the relevant court.

  5.  Based on precedent,\4\ the Committee requests that the Department 
            of Justice consent to being available to testify if any 
            legislative text is considered by the Committee related to 
            such proposals.
---------------------------------------------------------------------------
    \4\ Testimony of Mr. Peter Steenland, Appellate Section Chief, 
Department of Justice, before the Joint Hearing on S. 2259 before the 
Subcommittee on Water and Power of the Senate Committee on Energy and 
Natural Resources and the Senate Committee on Indian Affairs, S. Hrg. 
103-943, Aug. 4, 1994.

  6.  Both Departments must list the legal claims being settled in any 
---------------------------------------------------------------------------
            document transmitting legislative text; and

  7.  Such settlements and proposed legislation shall not include 
            financial authorizations for claims already settled by 
            Congress or claims that have no legal basis.

    The actions of your Departments, as outlined above, will play a 
very critical role in expediting the Committee's consideration of these 
important settlement efforts. If your Departments follow this process--
starting with settlement legislation being proposed and supported by 
the Administration--it is my intent to then introduce the settlement 
legislation at the Administration's request and consider such 
legislation in the Committee at the appropriate time. In conclusion, it 
is my intent that your actions prior to Committee consideration will 
determine whether negotiated settlements proceed in the legislative 
process.
    I look forward to working with you to help achieve fiscally 
responsible settlements that help federally recognized tribes, other 
settling parties and the American taxpayer.

            Sincerely,

                                                Rob Bishop,
                                                          Chairman.

                                 ______
                                 

    Dr. Fleming. He asked the Administration to send 
documentation on seven requests before Congress would consider 
these settlements. This Administration, to its credit, 
responded favorably and our staff have worked together on this 
new protocol over the last 15 months.
    As a result, we have a recent Administration letter on the 
Blackfeet Settlement before us today that answers many of these 
questions. A letter was also sent on the proposed Pechanga 
Settlement, but it did not make the deadline necessary to add 
it to today's agenda. At some point soon, we may consider that 
settlement.
    The letters on both these settlements responded to many of 
Chairman Bishop's requests. But one of the key ones was not 
definitively answered. Specifically, the Bishop letter requests 
that the Administration affirm that a settlement meets long-
standing Federal criteria in place to determine that the 
``total cost of a settlement to all parties should not exceed 
the value of the existing claims as calculated by the Federal 
Government.''
    [Slide]
    Dr. Fleming. As the television screen indicates, both the 
Blackfeet and Pechanga letters stated that ``the Office of 
Management and Budget advises that it is still assessing and 
evaluating the information necessary for it to definitely 
conclude whether the proposed settlement meets all of the 
criteria and procedures.''
    While Congress has more information than ever before, we 
simply don't have all of it yet, especially as it relates to 
the net benefits of these two water rights settlements. On the 
other hand, the Administration was very specific in providing 
the net benefits and costs on the drainage settlement before us 
today, as evidenced by the chart on the television screen.
    These are well-intended settlements and I commend those of 
you who have worked so hard on getting these bills to this 
important juncture. But, as I pointed out, more information is 
necessary from the Administration. We also need to work with 
the Congressional Budget Office to determine, prior to further 
consideration, what these bills would cost, or perhaps reduce 
the costs of, the Federal Government.
    The American people have asked for and deserve transparency 
and accountability so their taxpayer dollars are spent wisely. 
This hearing will help examine these settlements in that 
context. I look forward to today's testimony.
    [The prepared statement of Dr. Fleming follows:]
Prepared Statement of the Hon. John Fleming, Chairman, Subcommittee on 
                        Water, Power and Oceans
    Today's hearing involves an examination of water-related 
settlements between the Federal Government and non-Federal parties.
    These complex and bipartisan settlements are the results of decades 
of litigation, claims and negotiations and are intended to provide 
certainty for all parties involved. But, they also involve Federal 
dollars. Louisianans and other American taxpayers are being asked to 
pay for some parts of these settlements, so there are legitimate 
questions about the Federal costs and benefits of these bills.
    One of the most important questions involving a settlement--
especially when American taxpayer dollars will be used--is whether 
resolving the litigation will be advantageous to the Federal Government 
compared to its liability under current law. For many years, these 
questions were either ignored or not adequately answered on a 
bipartisan basis. Congress was simply viewed at times as a final rubber 
stamp for approving costly settlements or forced to be an arbitrator on 
fiscal expenditures even though it did not have the key information 
needed to make a decision.
    Times have changed. With an over $19 trillion dollar debt, we need 
to figure out whether these and other settlements are in the best 
interests of the American taxpayer. It is not responsible to make these 
assessments in a vacuum. And that's why the Chairman of this Committee, 
Rob Bishop, asked the current Interior Secretary and the former 
Attorney General last year to provide more information on future Indian 
water rights settlements in order to ensure that they are fiscally 
responsible and justified.
    I ask unanimous consent to enter that letter into the Record--
hearing no objection, so ordered.
    He asked the Administration to send documentation on seven requests 
before Congress would consider these settlements. This Administration, 
to its credit, responded favorably and our staff have worked together 
on this new protocol over the last 15 months. As a result, we have a 
recent Administration letter on the Blackfeet Settlement before us 
today that answers many of these questions. A letter was also sent on 
the proposed Pechanga Settlement but it did not make the deadline 
necessary to add it to today's agenda. At some point soon, we may 
consider that settlement.
    The letters on both these settlements responded to many of Chairman 
Bishop's requests. But, one of the key ones was not definitively 
answered. Specifically, the Bishop letter requests that the 
Administration affirm that a settlement meets long-standing Federal 
criteria in place to determine that the ``total cost of a settlement to 
all parties should not exceed the value of the existing claims as 
calculated by the Federal Government.''
    As the television screen indicates, both the Blackfeet and Pechanga 
letters stated that ``the Office of Management and Budget advises that 
it is still assessing and evaluating the information necessary for it 
to definitively conclude whether the proposed settlement meets all of 
the Criteria and Procedures.''
    While Congress has more information than ever before, we simply 
don't have all of it yet--especially as it relates to the net benefits 
of these two water rights settlements. On the other hand, the 
Administration was very specific in providing the net benefits and 
costs on the drainage settlement before us today, as evidenced by the 
chart on the television screen.
    These are well-intended settlements and I commend those of you who 
have worked so hard on getting these bills to this important juncture. 
But, as I pointed out, more information is necessary from the 
Administration. We also need to work with the Congressional Budget 
Office to determine, prior to further consideration, what these bills 
would cost--or perhaps reduce the costs of--the Federal Government.
    The American people have asked for and deserve transparency and 
accountability so their taxpayer dollars are spent wisely. This hearing 
will help examine these settlements in that context. I look forward to 
today's testimony.

                                 ______
                                 

    Dr. Fleming. The Chair now recognizes the Ranking Member, 
Mr. Huffman, for his statement.

 STATEMENT OF HON. JARED HUFFMAN, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Huffman. Thank you, Mr. Chairman; and welcome to the 
witnesses. I am glad to be here today to examine three bills 
that do deserve our attention. On today's agenda we have the 
Blackfeet Water Rights Settlement Act, to approve a much-needed 
Indian water rights settlement for the Blackfeet Tribe in 
Montana. This, I believe, is good public policy and ought to 
move quickly through the committee.
    However, the two other bills on today's agenda would 
approve a legal settlement agreement recently reached between 
the Federal Government and the Westlands Water District, which 
is missing significant environmental and budgetary safeguards, 
and should give every member of this committee serious pause.
    The settlement agreement would relieve the Federal 
Government of an obligation under a 56-year-old law to build an 
interceptor drain for the Westlands Water District. In 
exchange, the settlement agreement calls for nearly $400 
million in a taxpayer bailout for the Westlands Water District. 
The drainage legislation would also approve a not-yet-finalized 
drainage agreement with the so-called Northerly Area Water 
Districts.
    I want to be very clear that both of the two bills we are 
considering in this regard specifically direct Department of 
the Interior to implement the ``Northerly Area'' agreement. 
Members of this committee have never seen that agreement. The 
public has never seen that agreement. The water utilities that 
would benefit from that agreement did not show up today to 
testify in favor of it; and we just learned late last night 
that the Department of the Interior now says that they cannot 
even testify in favor of that agreement, despite ostensibly 
supporting at least one of these bills, due to an ongoing 
Inspector General investigation that we did not even know was 
pending until we learned about it last night.
    Mr. Chairman, there are red flags and smoking guns all over 
this subject matter, and it begs the question of why the House 
is considering supporting an agreement sight unseen, and why we 
are even holding the hearing on these two implementing bills 
today. But since we are here, it is appropriate to start with 
some history.
    Fifty-six years ago, Congress passed the San Luis Act of 
1960, which authorized construction projects to provide 
irrigation water for certain agricultural lands in Merced, 
Fresno, and Kings County. Recognizing that much of that land 
was very saline and poorly drained soil, the San Luis Act 
required the state of California or the Federal Government to 
agree to build an interceptor drain.
    The Bureau of Reclamation eventually agreed to build the 
drain after the legislation passed, and in 1968 they began 
construction of a 200-mile drain to transport the drainage 
wastewater from the San Luis Unit, and discharge it into the 
Delta. After significant public concern about dumping drainage 
wastewater into the Delta, which happens to be California's 
most important drinking water source, the Federal Government 
stopped construction of the drain at a place called the 
Kesterson Reservoir.
    [Slide]
    Mr. Huffman. The picture that you are looking at right now 
is why in the 1980s the Kesterson Reservoir became infamous 
across the Nation, because it was revealed that this toxic 
drainage wastewater from Westlands and the San Luis Unit 
contained a highly toxic element called selenium, which is 
common in the soils of that area, but deadly in high 
concentrations to both humans and wildlife.
    The effects of this drainage wastewater on wildlife shocked 
the country. What we saw was severe mortality and deformities 
among waterfowl in Kesterson. And, again, this photo is an 
example of what shocked the Nation at that time.
    So, in 1986 the Bureau of Reclamation closed the drain 
serving the San Luis Unit because of these selenium concerns. 
Folks within the San Luis Unit sued the Federal Government, and 
court rulings subsequently found that unless that old law is 
amended, that the Department of the Interior still has an 
obligation to provide drainage service to Westlands and the San 
Luis contractors.
    So, here we are today, with legislation that would amend 
the San Luis Act of 1960, but with a big catch. In exchange for 
amending that law, which I think almost everyone now agrees 
should not have contained this taxpayer obligation in the first 
place to finance a boondoggle drain for these lands, the 
settlement agreement requires taxpayers to provide a $400 
million bailout for Westlands and the San Luis water 
contractors on top of the millions they receive already in 
taxpayer subsidies.
    Now, the Westlands Water District has some of the largest 
and wealthiest corporate farms in the world. They boast $1 
billion in crop sales every single year. Yet, in this 
agreement, they are demanding nearly $400 million in a bailout 
to simply agree to go along with a common-sense change in 
Federal law to acknowledge that this interceptor drain, that 
cannot be built because there is nowhere to put this toxic 
drain water, should not have to be built.
    Some have claimed that this deal actually saves taxpayers 
money, because if Westlands forces taxpayers to finance a 
drain, it would cost much more than the bailout we are giving 
in this agreement. We are going to hear from a witness today 
that that is actually not the case.
    And while my time is out, Mr. Chairman, we could spend this 
entire day talking about the examples in which the interests of 
the Westlands Water District are being elevated above the 
interests of taxpayers, the interests of the environment, and 
the interests of other water users as well, which we will hear 
about in a little while. I look forward to the discussion.
    [The prepared statement of Mr. Huffman follows:]
     Prepared Statement of the Hon. Jared Huffman, Ranking Member, 
                Subcommittee on Water, Power and Oceans
    Thank you, Mr. Chairman, and welcome to the witnesses.

    I'm glad to be here today to examine three bills that do deserve 
our attention. On today's agenda we have the Blackfeet Water Rights 
Settlement Act, to approve a much needed Indian water rights settlement 
for the Blackfeet Tribe in Montana. This, I believe, is good public 
policy and ought to move quickly through the Committee. However, the 
other two bills on today's agenda would approve a legal settlement 
agreement recently reached between the Federal Government and the 
Westlands Water District, which is missing significant environmental 
and budgetary safeguards, and should give every member of this 
committee serious pause.
    The settlement agreement would relieve the Federal Government of an 
obligation under a 56-year-old law to build an interceptor drain for 
the Westlands Water District. And in exchange, the settlement agreement 
calls for nearly $400 million in a taxpayer bailout for the Westlands 
Water District. The drainage legislation would also approve a not-yet-
finalized drainage agreement with the so-called Northerly Area water 
districts.
    I want to be very clear that both of the two bills we're 
considering in this regard specifically direct the Department of the 
Interior to implement the ``Northerly Area'' agreement. Members of this 
committee have never seen that agreement; the public has never seen 
that agreement. The water utilities that would benefit from that 
agreement did not show up today to testify in favor of it, and we just 
learned late last night that the Department of the Interior now says 
that they can't even testify in favor of that agreement despite 
ostensibly supporting at least one of these bills due to an ongoing 
Inspector General investigation that we didn't even know was pending 
until we learned about it last night.
    Mr. Chairman, there are red flags and smoking guns all over this 
subject matter and it begs the question of why the House is considering 
supporting an agreement sight unseen and why we are even holding the 
hearing on these two implementing bills today.
    But since we are here, it is appropriate to start with some 
history. Fifty-six years ago, Congress passed the San Luis Act of 1960, 
which authorized construction projects to provide irrigation water for 
certain agricultural lands in Merced, Fresno, and Kings County and 
recognizing that much of the land was very saline and poor soil, the 
San Luis Act required the state of California or the Federal Government 
to agree to build an interceptor drain.
    The Bureau of Reclamation eventually agreed to build a drain after 
the legislation passed, and in 1968 they began construction of a 200-
mile drain to transport the drainage wastewater from the San Luis Unit 
and discharge it into the Delta. After significant public concern about 
dumping drainage wastewater into the Delta, which happens to be 
California's most important drinking water source, the Federal 
Government stopped construction of the drain at a place called the 
Kesterson Reservoir.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


    .epsThe picture that you're looking at right now is why the 
Kesterson Reservoir in the 1980s became infamous across the Nation, 
because it was revealed that this toxic drainage wastewater from 
Westlands and the San Luis Unit contained a highly toxic element called 
selenium, which is common in the soils of that area, but deadly in high 
concentrations to humans and wildlife. The effects of this drainage 
wastewater on wildlife shocked the country. What we saw was severe 
mortality and deformities among waterfowl in Kesterson, and again this 
photo is an example of what shocked the Nation at that time.
    And so in 1986, the Bureau of Reclamation closed the drain serving 
the San Luis Unit because of these selenium concerns, folks within the 
San Luis Unit sued the Federal Government, and court rulings 
subsequently found that unless that old law is amended, that the 
Department of the Interior still has an obligation to provide drainage 
service to the Westlands and the San Luis contractors.
    So, here we are today, with legislation that would amend the San 
Luis Act of 1960. But, with a big catch.
    In exchange for amending that law--which I think almost everyone 
now agrees should not have contained this taxpayer obligation in the 
first place to finance a boondoggle drain for these lands--the 
settlement agreement requires taxpayers to provide a $400 million 
bailout for Westlands and the San Luis water contractors on top of the 
millions they receive already in taxpayers subsidies. Now the Westlands 
Water District has some of the largest and wealthiest corporate farms 
in the world. They boast a billion dollars in crop sales every single 
year. And yet in this agreement they're demanding nearly $400 million 
in a bailout to simply agree to go along with a common-sense change in 
Federal law to acknowledge that this interceptor drain that can't be 
built because there's nowhere to put this toxic drain water shouldn't 
have to be built.
    Now some have claimed that this deal actually saves taxpayers 
money, because if Westlands forced taxpayers to finance a drain, it 
would cost much more than the bailout we're giving them in this 
agreement. We're going to hear from a witness today that that is 
actually not the case.
    While my time is out, Mr. Chairman, we could spend this entire day 
talking about the examples in which the interests of the Westlands 
Water District are being elevated above the interests of taxpayers, the 
interests of the environment, and the interests of the other water 
users, which we'll hear about in a little while as well, and I look 
forward to the discussion.

                                 ______
                                 

    Dr. Fleming. I thank the gentleman.
    The Chair now recognizes Dr. Gosar.

 STATEMENT OF HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ARIZONA

    Dr. Gosar. Thank you, Chairman, for holding this hearing.
    Arizona is home to 22 federally recognized American Indian 
tribes, has the second largest American Indian population, and 
reservation land covers over a quarter of the state, making 
Indian water rights settlements one of the most important 
issues facing Arizonans.
    [Slide]
    Dr. Gosar. Tribal and non-tribal communities, water and 
power users, the state, and the Federal Government have a long 
history of working together on complex Indian water rights 
settlements. Ten such settlements in Arizona, or portions of 
them, as listed here on the TV screen, have been enacted by 
Congress, and there are more on the horizon, depending on 
negotiations.
    These settlements can be a significant benefit to tribal 
communities who have decades of water claims. They can remove 
clouds of litigation uncertainty for water and power ratepayers 
and industries. They can reduce Federal liability to benefit 
the American taxpayer. They can also protect and promote jobs, 
like the 4,000 mining jobs affiliated with the no-Federal-cost 
Bill Williams River Water Rights Settlement Act that Senator 
Jeff Flake and I sponsored in the last Congress. When done 
properly, they can be a win-win for everyone involved.
    Although recent ones have not cost taxpayers a dime, some, 
like the Blackfeet legislation before us will cost Federal 
money, due in part to the Federal-tribal trust responsibility.
    Since there is a Federal funding backlog on existing Indian 
water rights settlements, we have a growing national debt, and 
many of our non-Western colleagues are not familiar with the 
Winters Doctrine and tribal water, it is important that 
Congress is educated and making informed decisions on future 
settlements.
    That is why Chairman Bishop's February 2015 letter and the 
Administration's complete answers to it can help pave the way 
for consideration of these important matters. It is my hope 
that the Administration, which has been acting in good faith so 
far, will provide all the answers necessary to move forward on 
the Blackfeet, Pechanga, and additional settlements. No one, 
except for a few so-called environmental groups, prefers 
endless litigation, and with these settlements, with more 
information, we can help provide a blueprint for water 
certainty and taxpayer relief.
    The San Luis drainage bills before us today aim to achieve 
that, as well. This Administration concluded that it is 
responsible under Federal law for building a multi-billion 
dollar irrigation drain, and instead negotiated with local 
irrigation districts to go another route that could potentially 
save billions of dollars. Meanwhile, the irrigation district 
that has helped pay for a drain that was never built will get 
some of its money back. But it is also indemnifying the United 
States from liability for the damages associated with failing 
to provide the drainage.
    Nothing is ever perfect in a negotiated water-related 
settlement, but I want to applaud these parties here today who 
have worked together to achieve a better future for their 
communities. I also want to commend Mr. Zinke, Mr. Valadao, and 
Mr. Costa for their leadership on these bills. I look forward 
to getting more answers today and into the future for these 
well-intentioned efforts.
    Thank you, sir.
    [The prepared statement of Dr. Gosar follows:]
   Prepared Statement of the Hon. Paul A. Gosar, a Representative in 
                   Congress from the State of Arizona
    Thank you for holding this hearing.
    Arizona is home to 22 federally recognized American Indian tribes, 
has the second largest American Indian population and reservation land 
covers over a quarter of the state, making Indian water rights 
settlements one of the most important issues facing Arizonans.
    Tribal and non-tribal communities, water and power users, the state 
and the Federal Government have a long history of working together on 
complex Indian water rights settlements. Ten such settlements in 
Arizona--or portions of them--as listed here on the TV screen have been 
enacted by Congress and there are more on the horizon depending on 
negotiations.
    These settlements can be a significant benefit to tribal 
communities who have decades of water claims; they can remove clouds of 
litigation uncertainty for water and power ratepayers and industries 
and they can reduce Federal liability to benefit the American taxpayer. 
They can also protect and promote jobs--like the 4,000 mining jobs 
affiliated with the no-Federal cost Bill Williams River Water Rights 
Settlement law that Senator Jeff Flake and I sponsored in the last 
Congress. When done properly, they can be a win-win for everyone 
involved.
    Although recent ones have not cost taxpayers a dime, some like the 
Blackfeet legislation before us will cost Federal money due, in part, 
to the Federal tribal trust responsibility. Since there's a Federal 
funding backlog on existing Indian water rights settlements, we have a 
growing national debt and many of our non-western colleagues are not 
familiar with the Winters Doctrine and tribal water, it's important 
that Congress is educated and making informed decisions on future 
settlements.
    That's why Chairman Bishop's February 2015 letter and the 
Administration's complete answers to it can help pave the way for 
consideration of these important matters. It's my hope that the 
Administration, which has been acting in good faith so far, will 
provide all the answers necessary to move forward on the Blackfeet, 
Pechanga and additional settlements. No one, except for a few so-called 
environmental groups, prefers endless litigation, and these 
settlements, with more information, can help provide a blueprint for 
water certainty and taxpayer relief.
    The San Luis Unit drainage bills before us today aim to achieve 
that as well. This Administration concluded that it's responsible under 
Federal law for building a multi-billion dollar irrigation drain and 
instead negotiated with local irrigation districts to go another route 
that could potentially save billions of dollars. Meanwhile, the 
irrigation district that has helped pay for a drain that was never 
built will get some of its money back but it is also indemnifying the 
United States from liability for the damages associated with failing to 
provide drainage.
    Nothing is ever perfect in a negotiated water-related settlement, 
but I want to applaud these parties here today who have worked together 
to achieve a better future for their communities. I also want to 
commend Mr. Zinke, Mr. Valadao and Mr. Costa for their leadership on 
these bills. I look forward to getting more answers today and into the 
future on these well-intentioned efforts.

                                 ______
                                 

    Dr. Fleming. I thank the gentleman.
    The Chair now recognizes Mrs. Napolitano for her remarks.

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

    Mrs. Napolitano. Thank you very much. I do have some 
comments, but I think I will reserve most of them until the 
witnesses are here.
    I do have grave concerns over this. First of all, I do not 
see any provision that if the agreement is to go through, 
whether--in the future--that land is sold for a profit to some 
other entity. I just want to say I look forward to it, and I 
would yield to Mr. Huffman.
    Mr. Huffman. I thank the gentlelady. I was just going to 
point out that the argument that this is somehow saving the 
taxpayers money is at odds with the fact that if the Federal 
Government were required to somehow build this drain under 
existing law, the Westlands Water District would have to pay 
for that. They would have to fully repay the taxpayers of the 
United States. Yet, under this agreement, there is no such 
protection for the taxpayers.
    Also, environmental and water quality safeguards are 
completely missing from this deal. These are important. Going 
all the way back to folks who looked at this in prior 
administrations, the Bush administration, and at the state 
level, the Schwarzenegger administration, the importance of 
environmental and water quality safeguards in any drainage deal 
for this area has always been stressed. Yet, there are 
absolutely none in this agreement.
    Finally, it is important to note the need for robust 
enforcement and performance standards in any agreement like 
this, especially in light of recent charges against Westlands 
by the Securities and Exchange Commission. Just 2 months ago, 
the SEC charged Westlands for misleading investors--and I 
quote--``misleading investors about its financial condition as 
it issued a $77 million bond offering.'' And they noted that 
Westlands' General Manager, Mr. Birmingham, who we will be 
hearing from today, described their extraordinary accounting 
transactions as ``a little Enron accounting.''
    Anyone who compares their business tactics to a company 
whose collapse exposed one of the largest accounting frauds in 
corporate history should not be trusted so lightly with a 
waiver of nearly $400 million owed to the U.S. Treasury, much 
less a permanent water contract or carte blanche to manage the 
toxic discharge problem that could drain into the most 
important drinking water source in California.
    After all of these considerations and revelations that we 
have on this subject matter, it is mind-boggling that we would 
simply take Westlands' word under this agreement. It is equally 
mind-boggling that we are seriously here today to consider 
these bills that are not even close to being right.
    Mr. Chairman, these bills represent a bad deal for 
taxpayers, the environment, and public health. They should be 
rejected by Congress unless and until they are very 
significantly improved. And with that, I yield the balance of 
my time.
    Dr. Fleming. And the gentlelady yields.
    Our first panel today will include a panel of our 
colleagues who have direct interest in this legislation. First 
we will hear testimony from Mr. Valadao of California on his 
bill, H.R. 4366. We will then hear from Mr. Costa, who is also 
from California, on H.R. 5217. Then we will hear from Mr. Zinke 
of Montana, for his statement on the discussion draft of the 
``Blackfeet Water Rights Settlement Act of 2016.''
    Each of you will be recognized for up to 5 minutes, and I 
now recognize Mr. Valadao for 5 minutes.

    STATEMENT OF HON. DAVID G. VALADAO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Valadao. Good morning, Chairman Fleming, Ranking Member 
Huffman, and members of the committee. I appreciate the 
invitation to testify before you today on my legislation, H.R. 
4366, the San Luis Drainage Resolution Act, which I introduced 
in the House of Representatives earlier this year.
    The district that I represent in California's Central 
Valley has the most productive agricultural land in the entire 
world. Producing over 400 different commodities, it is safe to 
say that my district plays a vital role in feeding the Nation 
and the world.
    Many outside of agriculture do not understand the complex 
and delicate systems involved in putting food on the table of 
American families. The San Luis Drainage Resolution Act that we 
will be hearing today helps ensure the land in Westlands Water 
District can continue to remain productive, while protecting 
the environment, and letting the Federal Government off the 
hook for potentially billions of dollars.
    I would like to provide a brief background on the ongoing 
problem that the settlement contained and which my bill aims to 
correct.
    In 1960, Congress passed the San Luis Act, which authorized 
the construction and operation of the San Luis as a part of the 
Central Valley Project (CVP). The principal purpose of the San 
Luis Unit was to furnish water for irrigation of land in 
Merced, Fresno, and Kings Counties in California.
    Any water project that brings fresh water to an 
agricultural area must take the water remaining after the crops 
have been irrigated away from the root zone. Too-shallow 
groundwater results in salt buildup in soils and reduces the 
productivity of farmland. For this reason, the San Luis Act 
expressly conditioned the construction of the San Luis Unit on 
the provision of drainage facilities.
    The courts have held that the Secretary of the Interior was 
and is responsible for providing the drainage to the San Luis 
Unit of the CVP. According to the Bureau of Reclamation, this 
is at the cost to the Federal Government of over $3.5 billion, 
indexed for inflation. Following litigation in the 1970s, 
Interior stopped providing the drainage required for the San 
Luis Unit. This caused the destruction of thousands of acres of 
farm land.
    After decades of litigation, appeals, and negotiations 
concerning the Federal Government's obligation to construct an 
agriculture drainage unit to remove excess water from the 
western side of the San Joaquin Valley, the U.S. Federal 
Government and Westland's Water District have reached an 
agreement to resolve this dispute.
    The crux of the agreement is the requirement that 
Westland's Water District assumes full responsibility for 
managing drainage within the District. In return, the Federal 
Government will relieve Westlands Water District of its 
existing repayment obligation for construction of the Central 
Valley Project.
    While both the Federal Government and Westlands Water 
District have approved the terms of this agreement, Congress 
must affirm the recent settlement in order to achieve a final 
resolution. I cannot stress enough the importance of this 
legislation so that we may finally end this decades-old 
dispute. In doing so, we are able to protect the economic 
stability of the most productive agriculture region in the 
world by preserving agriculture production and, as a result, 
safeguarding thousands of desperately needed jobs in the 
region.
    Furthermore, passage of this legislation will shield 
American taxpayers from potentially billions of dollars in 
future drainage and litigation costs by relieving the United 
States of its multi-billion dollar statutory and court-ordered 
drainage obligation. The U.S. Government has already spent over 
$100 million in previous settlements related to the failure to 
meet this drainage obligation.
    In conclusion, this common-sense agreement reached by the 
Federal Government and Westlands Water District, and backed by 
both Democrats and Republicans in the House of Representatives, 
is absolutely imperative. Implementation of the San Luis Unit 
Drainage Resolution would settle this long-standing dispute, 
proving beneficial for all those involved.
    Thank you for your time, and I yield back.
    Dr. Fleming. Thank you, Mr. Valadao.
    Mr. Costa, you are recognized.

STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF CALIFORNIA

    Mr. Costa. Thank you very much, Chairman Fleming, Ranking 
Member Huffman, and members of the subcommittee. I appreciate 
the invitation to testify before you today on my legislation, 
H.R. 5217, the San Luis Drainage Resolution Act, which I 
introduced to the House of Representatives earlier this year. 
This bipartisan piece of legislation that is reflected in both 
my legislation and Congressman Valadao's reflects years of work 
by this Administration and the Department of the Interior.
    I would like unanimous consent to submit a letter from 
Secretary Mike Connor indicating the resolution that the 
Administration gave in supporting this bipartisan legislation.
    [No response.]
    Dr. Fleming. Without objection, so ordered.

    [The information follows:]

              The Deputy Secretary of the Interior,
                                             Washington, DC

                                                     April 21, 2016

The Honorable David Valadao
House of Representatives
Washington, DC 20515

    Dear Representative Valadao:

    Thank you for your letter dated November 24, 2015, regarding the 
Drainage Settlement between Westlands Water District (Westlands) and 
the United States (Settlement). In your letter, you requested 
confirmation of our mutual understanding of the Settlement in a number 
of areas. Your interest in the Settlement is appreciated and our 
responses to the specific areas you raised are below.
Litigation and Legal Claims That Would Be Resolved Under the Settlement
    Litigation over the United States' obligation to provide drainage 
service to the San Luis Unit of the Bureau of Reclamation's 
(Reclamation) Central Valley Project (CVP) has a long and complicated 
history spanning the last two and a half decades. The summary in your 
November 24, 2015, letter accurately describes the litigation that the 
Settlement resolves. Litigation commenced shortly after the United 
States halted use of the San Luis interceptor drain and plugged all 
Federal facilities, following the discovery of embryonic deformities of 
aquatic birds at Kesterson Reservoir. This Settlement resolves 
Westlands Water District v. United States, the remaining breach of 
contract case relating to the United States' drainage obligation, as 
well as provides for the vacatur of the 2000 Order Modifying Partial 
Judgment in Firebaugh Canal Water District v. United States, whereby 
the district court expressly retained jurisdiction and actively 
exercises a monitoring function over Reclamation's implementation of 
drainage service in the San Luis Unit. The Settlement also provides a 
framework for resolving Michael Etchegoinberry, et. al. v. United 
States, which is a Fifth Amendment takings case brought by individual 
landowners within Westlands. These cases are described in more detail 
below.
    Firebaugh was filed in 1988 by two water districts located outside 
and ``downslope'' of the San Luis Unit. The action was partially 
consolidated with Sumner Peck Ranch, Inc. v. United States, a similar 
action brought in 1991 by approximately 100 landowners located within 
the San Luis Unit. In 1995, following a trial, the district court 
entered a partial judgment that the Secretary of the Interior's 
(Secretary) obligation under the San Luis Act to provide drainage was 
not excused or rendered impossible. In 2000, the Ninth Circuit largely 
affirmed the partial judgment, and on remand the district court entered 
an injunction (2000 Order Modifying Partial Judgment) against the 
Secretary requiring Reclamation to ``promptly'' provide drainage 
service to the San Luis Unit. In 2002, the United States settled the 
Sumner Peck plaintiffs' claims.
    In compliance with the 2000 Order Modifying Partial Judgment, the 
Department developed a Plan of Action outlining the steps it would 
follow to implement a drainage solution for the San Luis Unit. 
Following completion of an environmental impact statement, Reclamation 
issued a Record of Decision (ROD) in March 2007 to meet the drainage 
service requirements of the court's injunction. The Department also 
prepared and submitted to Congress a feasibility report, concluding 
that the cost of implementing the selected alternative would be 
approximately $2.7 billion (now $3.8 billion in April 2015 dollars). 
That amount far exceeds the remaining appropriations ceiling authorized 
for construction of the San Luis Unit. As a result, the alternative 
selected in the ROD cannot be fully implemented under existing law. As 
part of the on-going litigation, the Department advised the court in 
November 2009 that, while it could not implement the entire ROD, 
sufficient appropriation ceiling remained to allow it to construct one 
subunit of drainage facilities within Westlands. Beyond that subunit, 
however, the Department remains unable to continue implementation of 
the ROD without additional Congressional authorization.
    During the same time Reclamation was formulating its plan of action 
for the implementation of drainage service, the Firebaugh plaintiffs 
continued to seek their own injunction requiring Reclamation to provide 
drainage service to lands adjacent to the San Luis Unit. On September 
30, 2011, the district court held that the San Luis Act imposed no duty 
on the Secretary to provide drainage service that would protect or 
remediate conditions on plaintiffs' lands, and the plaintiffs' had 
failed to demonstrate unreasonable delay by Reclamation in implementing 
a drainage plan within the San Luis Unit. The district court 
subsequently entered final judgment on all of the Firebaugh plaintiffs' 
claims and the Firebaugh plaintiffs appealed to the Ninth Circuit. On 
April 3, 2013, the Ninth Circuit affirmed the district court, Firebaugh 
Canal Water Dist. v. United States, 712 F.3d 1296 (9th Cir. 2013); a 
petition for rehearing en banc was subsequently denied and the United 
States Supreme Court denied cert.
    Under the 2000 Order Modifying Partial Judgment, the district court 
continues to monitor Reclamation's activities to provide drainage 
service for a subunit of the San Luis Unit within Westlands pursuant to 
a ``Control Schedule.'' The United States submits biannual reports to 
the district court, which report on progress in implementing the 
Control Schedule. The filing of these status reports, supported by a 
declaration from Reclamation's Mid-Pacific Regional Director presently 
continues. On October 26, 2015, Judge O'Neill granted a Joint Motion 
for a Partial Stay by Westlands and the United States and partially 
stayed implementation of the current Control Schedule through January 
15, 2017 while parties continue to work on obtaining legislation 
required to implement the Settlement, however, the Court did not 
relieve parties of filing bi-annual status reports with the court.
    On September 2, 2011, a group of individual landowners within 
Westlands filed suit in the Court of Federal Claims alleging that the 
failure by the United States to provide drainage service to their lands 
resulted in a physical taking of their property without just 
compensation in violation of the Fifth Amendment. Plaintiffs brought 
their suit as a class action on behalf of all landowners located within 
Westlands ``whose farmlands have not received the necessary drainage 
service the United States is required to provide under the San Luis Act 
. . ..'' A plaintiff class has yet to be certified. A motion by the 
United States seeking dismissal of the takings claim was denied on 
September 20, 2013. Etchegoinberry, et. al. v. United States, 114 Fed. 
Cl. 437 (2013). The Opinion contains language sharply critical of the 
United States' delay in providing drainage to Westlands. Westlands 
itself is not a party to this litigation, but pursuant to the 
Settlement would intervene for purposes of settling the case. The Court 
of Federal Claims has stayed this litigation to allow settlement 
negotiations to proceed, but is requiring the submission of regular 
status reports on the progress of the discussions.
    On January 6, 2012, Westlands filed its own suit against the United 
States also in the Court of Federal Claims, alleging that the 
government's failure to provide drainage service to the Westlands' 
service area constituted a breach of Westlands' 1963 Water Service and 
1965 Repayment contracts (including the interim renewal of those 
contracts). The United States moved to dismiss Westlands' claims. On 
January 15, 2013, the Court of Federal Claims granted the United 
States' motion to dismiss, ruling that none of the contracts contained 
an enforceable promise to provide drainage to Westlands. Westlands 
Water Dist. v. United States, 109 Fed. Cl. 177 (2013). Westlands has 
appealed to the Federal Circuit, and briefing on the appeal is 
complete. On December 2, 2015, the Federal Circuit granted a stay 
through January 20, 2017.

    Benefits to the U.S. of the Westlands Settlement:

     The Settlement, if authorized by Congress, would relieve 
            the Department of all drainage obligations imposed by the 
            San Luis Act, including implementation of the 2007 ROD, 
            within Westlands. The 2015 costs of implementing the entire 
            ROD are roughly $3.8 billion.

     Westlands agrees to seek dismissal of the Westlands breach 
            of contract litigation and would join the United States in 
            petitioning for vacatur of the 2000 Order Modifying Partial 
            Judgment in the Firebaugh case directing implementation of 
            drainage service and control schedules.

     The Settlement establishes a framework for resolving all 
            individual landowner claims in the Etchegoinberry takings 
            case. Specifically, Westlands would intervene in this case 
            for settlement purposes and would provide compensation to 
            its landowners. Potential exposure to Federal taxpayers 
            from an adverse judgment could be as high as $2 billion.
     Westlands agrees to provide for the release, waiver, and 
            abandonment of all past, present, and future claims, 
            including from individual landowners, and further agrees to 
            indemnify the United States for any and all claims relating 
            to the provision of drainage service or lack thereof within 
            its' service area.

     Westlands has also agreed to permanently retire a total of 
            not less than 100,000 acres of lands within its boundaries 
            utilizing those lands only for the following purposes:

                a. Management of drain water, including irrigation of 
                reuse areas;

                b. Renewable energy projects;

                c. Upland habitat restoration projects; or

                d. Other uses subject to the consent of the United 
                States.

     The Settlement transfers the legal obligation to manage 
            drainage to lands within the Westlands service area from 
            the United States to Westlands.

     Westlands agrees to cap its CVP water deliveries at 75 
            percent of its contract quantity. Any water savings above 
            this 75 percent cap would become available to the United 
            States for other CVP authorized purposes.

     As part of the overall Settlement, the United States 
            anticipates it will enter into a water service contract 
            with Lemoore Naval Air Station to provide a guaranteed 
            quantity of CVP water to meet the irrigation needs of the 
            Naval Air Station associated with air operations, and 
            Westlands would agree to wheel all CVP water made available 
            to Lemoore.

    The Settlement provides the following benefits to Westlands:

     Westlands will be relieved of current, unpaid capitalized 
            construction costs for the CVP, the net present value of 
            which is currently estimated to be $295 million. Westlands 
            will still be responsible for operation and maintenance, 
            will pay restoration fund charges pursuant to the Central 
            Valley Project Improvement Act and will be responsible for 
            future CVP construction charges associated with new 
            construction for the project.

     The Secretary will convert Westlands' current 9(e) water 
            service contract to a 9(d) repayment contract consistent 
            with existing key terms and conditions. As a ``paid out'' 
            project, the benefit of this conversion gives the district 
            a contract with no expiration term, consistent with other 
            paid out Reclamation projects. However, the contract will 
            contain terms and conditions that are nearly identical to 
            those in the current 9(e) contract.

     Westlands will be relieved of Reclamation Reform Act (96 
            Stat. 1269) provisions relating to acreage limitations and 
            full cost pricing. The Reclamation Reform Act grants this 
            relief on its face to projects that are considered ``paid-
            out.'' Additionally, the tiered pricing provisions are 
            triggered when a district receives 80 percent of its 
            contract quantity, and as part of the Settlement, Westlands 
            water deliveries will be capped at 75 percent of its 
            contract quantity.

     Westlands will also take title to certain facilities 
            including the portion of the San Luis Drain that lies 
            within Westlands' service area.

    The Settlement envisions relief from statutory obligations, debt 
relief, title transfer, and authority to enter into a new CVP water 
service contract with Lemoore Naval Air Station, all activities 
requiring Congressional authorization.
Net Benefit for the San Luis Unit Drainage Resolution Act:
    There were several aspects regarding the obligation to provide 
drainage service that were evaluated in determining the overall net 
benefit to the United States. Included in this consideration were 
avoided drainage construction costs, repayment to the United States of 
reimbursable costs, relief from Reclamation Reform Act fees, and unpaid 
CVP capital obligations. Specific to Westlands, further consideration 
was given to the indemnification of current legal claims, namely the 
Etchegoinberry v. United States litigation, of which just financial 
compensation estimates could be as high as $2 billion.
    The result of the Department's net benefit analysis was a savings 
to the United States of at least $968.9 million in regards to 
Westlands. This amount does not include the avoided financial liability 
in the Etchegoinberry claim. The different aspects of the net benefit 
analysis are summarized below.

     Avoided Construction Costs to the United States--Based on 
            current conditions and recognition of completed drainage 
            projects valued at roughly $700 million in 2015 dollars, 
            particularly in the Northerly Area of the San Luis Unit, 
            the total remaining cost of providing drainage service has 
            been calculated to $3.1 billion. Approximately $2.5 billion 
            is associated with the cost to provide drainage service 
            specifically to Westlands while the remaining $558 million 
            is the total cost that would be needed to address drainage 
            concerns of the Northerly Area of the San Luis Unit.

     Repayment of Reimbursable Drainage Construction Costs--
            Following the completion of drainage construction projects 
            and implementation of drainage service, Westlands would be 
            responsible for reimbursable costs incurred by the United 
            States. Assuming repayment would occur over a 40 year 
            period with zero interest as required by current applicable 
            law, the calculated repayment value in 2015 dollars is 
            approximately $1.2 billion for Westlands.

     CVP Capital Obligation Relief--Your November 24, 2015 
            letter accurately describes the amount of debt that would 
            be repaid to the United States by the year 2030 associated 
            with continued repayment of Westlands' CVP obligations as 
            $375 million. For purposes of evaluating a potential 
            settlement, however, we believe the value of repayment in 
            today's dollars is a more accurate representation of the 
            costs of settlement. Consequently, we believe $295 million, 
            which represents the costs of repayment forgiveness in 
            today's dollars, is the figure that should be used when 
            evaluating the settlement.

     San Luis Drain Feature Re-Evaluation (SLDFRE)--Reclamation 
            has undertaken some drainage actions as part of the SLDFRE. 
            The net present value of the debt relief of these 
            construction costs to Westlands is $13.6 million.

     Grasslands Bypass Project--The estimated operations and 
            maintenance obligations that would be forgiven for the 
            Grasslands Bypass Project for Westlands is $2.6 million. 
            Historically, these costs were previously designated as 
            capitalized construction costs and were not recovered on an 
            annual basis when the expenditures occurred.

     Reclamation Reform Act Relief--As part of the Settlement, 
            Westlands would receive relief from the Reclamation Reform 
            Act costs associated with water delivered to full cost 
            lands. The estimated amount of this relief is approximately 
            $20 million.

    The costs to implement drainage actions in Westlands in this 
analysis are based on the costs in the 2007 ROD, indexed to April 2015 
dollars. We recognize that Westlands can realize efficiencies, such as 
using local or in-house labor, reduced travel, and different purchasing 
requirements than Reclamation, that reduce their cost to implement 
drainage as compared to the costs if Reclamation were to implement the 
2007 ROD. In addition, it is widely recognized that the drainage issue 
may have lessened over the last few years due to drought and irrigation 
efficiencies, but we are of the view that long term, there will be a 
need for substantial financial investment to alleviate drainage 
concerns in the San Joaquin Valley. While California has experienced a 
series of dry years recently, the historic hydrologic record indicates 
that wet cycles will return and drainage will again become a 
substantial challenge in the San Luis Unit.
    In addition, with Westlands responsible for drainage within its 
boundaries, there is more incentive to increase irrigation efficiencies 
as new technology is developed in the future, which is a component of 
managing drainage that is largely outside of Reclamation's control. It 
should also be noted that Westlands will be responsible for 
implementing drainage in perpetuity. The costs in this analysis have 
only been indexed to April 2015 dollars. These costs will rise as 
drainage actions are implemented many years and potentially, decades 
into the future.
    Based on these and other terms of the Settlement, it is our belief 
that the Settlement results in significant savings to American 
taxpayers when compared to the unavoidable costs that would occur 
without the terms agreed to in the Settlement. Moreover, we are also of 
the view that failure to settle on-going litigation will place the 
Department's ability to address the effects of the on-going drought in 
both the short and long term at risk due to the potential of 
significant amounts of appropriations being expended on providing 
drainage service. As a practical matter, should our efforts to settle 
litigation with Westlands fail, funding for programs throughout the 
Mid-Pacific Region are likely to be reduced in order for Reclamation to 
adequately fund the Control Schedule. Please find the attached ``Costs 
and Benefits to the Federal Government'' table for Westlands that 
succinctly capture the information presented in this letter.
    We want to again express our appreciation for your attention to 
this matter. Please contact us if you have any further questions.

            Sincerely,

                                         Michael L. Connor.

                               ATTACHMENT

            U.S. Bureau of Reclamation's Assessment of Costs

  and Benefits to Federal Government of Westlands' Drainage Settlement

                (Presented in Present (2015) Net Worth)
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 

APRIL 20, 2016

                                 ______
                                 

    Mr. Costa. It is important to note that this results in a 
decision made by this Administration after the court made a 
decision in 2000. As a matter of fact, the language of the 
Westlands Settlement Agreement has been in since last fall, and 
committees and staff have been briefed. Member staff have been 
briefed over the recent months. This is not something new that 
they have just looked at.
    The district that I represent in Central California's 
Valley is home to some of the most productive agricultural land 
in the world. The San Joaquin Valley, which I and Congressman 
Valadao call our home, and other representatives, are proud of 
the crops that we produce that ultimately feed the Nation. This 
is what we are talking about--food.
    This settlement agreement is much larger than the issues 
that we will be discussing here today because it is food on 
America's dinner table. It is a national security item. Half 
the Nation's fresh fruits and vegetables come from California. 
We are number one in the dairy industry, number one in the 
citrus industry, and number one in nut production. This is food 
that goes on all of our constituents' dinner tables, period; 
and that needs to be understood.
    The San Luis Drainage Act that we will hear today helps 
ensure the land in the San Luis Unit of the Central Valley 
Project has the opportunity to continue the long-standing 
history of productivity while saving the Federal Government 
literally $3.8 billion in liability.
    Secretary Connor, I think, said it best, ``After the court 
made the decision in 2000, they had three choices. The three 
choices were, (1) to change the law, which they chose not to 
do; (2) was to reach a settlement agreement, which this 
legislation reflects; or (3) to be found in contempt of court, 
neither of which Mr. Connor nor Secretary Salazar wanted to 
do.''
    As a matter of fact, this legislation strongly parallels 
the settlement agreement that was reached that the NRDC 
negotiated as part of the San Joaquin River Settlement 
Agreement. And yes, you can shake your head, but I would like 
to enter this as a record to show the parallels of the actions 
that have taken place on the San Joaquin River Settlement 
Agreement compared to these agreements that we have here, Mr. 
Chairman.
    [No response.]
    Dr. Fleming. Without objection, so ordered.
    Mr. Costa. Congressman Valadao laid out the case for the 
necessity for the drainage settlement for Westlands Water 
District in his testimony. I have similar thoughts as it 
relates to the settlement agreement that I am carrying. My 
legislation authorizes an agreement between three Northerly 
Water Districts and the San Luis Unit, commonly known as the 
Northern Districts. That is Panoche, Pacheco, and the San Luis 
Unit.
    The passage of H.R. 5217 would result in a resolution to 
all of the drainage obligations for the United States, and 
would move the responsibilities of those drainage obligations--
and that is where the nexus is, that is where the checks and 
balances are--to the control of the local jurisdictions. And 
guess what? If they don't abide by those, they don't get the 
water. That is the bottom line.
    These agreements reached by the Obama administration and 
the water districts within the San Luis Unit need to be 
authorized to move forward. That is what this hearing is all 
about. The benefits of the United States are significant. There 
is no lessening of environmental protections requirements under 
state or Federal law by these agreements. That needs to be 
underlined, as well.
    But let me just close on this note. Some of my colleagues 
here and elsewhere have said, ``Look, if Westlands Water 
District is for something, we are against it, automatically, 
period.'' This has been a political football that has been out 
in California for years. As a matter of fact, some have 
suggested that the San Luis and farming on the west side ought 
to dry up and blow away. Dry up and blow away, because that is 
how much they think of the production of food and fiber.
    Yes, and let me tell you something. That 100,000 acres that 
you are concerned about that may be sold? Let me explain 
something to you. If that 100,000 acres doesn't have water, 
which it doesn't; and if it doesn't have drainage, which it 
doesn't--listen to me, if it doesn't have water and it doesn't 
have drainage, guess what? It has no value, period.
    So, let me close with this thought. Doing nothing, which is 
something we do very well around here, only heightens the 
concern of your issues about drainage in the Delta. That is 
what we do well around here is nothing. So advocate doing 
nothing, and we will continue to deal with the challenges, the 
Federal Government will continue to be exposed to $3.5 billion 
of liability as a result of the court decision.
    Thank you very much, Mr. Chairman, for the time. I will 
look forward to the hearing testimony.
    Dr. Fleming. I thank the gentleman.
    Mr. Zinke is now recognized for 5 minutes.

 STATEMENT OF HON. RYAN K. ZINKE, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF MONTANA

    Mr. Zinke. I am both excited and proud to welcome Chairman 
Harry Barnes of the great Blackfeet Nation of Montana to 
Washington, DC. Mr. Barnes was elected Chairman of the 
Blackfeet Tribal Business Council on July 10, 2014, and has 
worked diligently over the past few years to rebuild and 
bolster the tribe's government and community.
    Mr. Chairman, I know you have waited a long time for this 
day to come, and I am glad we have finally passed this one 
major hurdle. It is a historic day for Montana. Today marks the 
first time in the Blackfeet Compact history that has received a 
hearing on the House side. Shortly after the hearing, I will be 
proud to formally introduce the bill to the House itself. This 
accomplishment has been made possible because of the hard work 
of many people. The collaborative efforts of both sides of the 
aisle between the tribe, the state, and the congressional 
delegation clearly show what a priority this is to the state of 
Montana.
    We all jointly support this compact and will continue to 
fight to see its passage through Congress. The compact has also 
reached significant milestones within the Administration. The 
letter provided to this committee is the first of its kind, and 
I am glad to help push the efforts between the OMB, Department 
of the Interior, and the Department of Justice forward. I 
cannot stress how critical this water compact is to the state 
of Montana, the tribe, and America, which is why it is so 
widely supported across the state.
    This is not a contentious issue. Not only is it critical to 
address the tribe's water issues, but many in our state also 
rely on these projects and the completion of this water compact 
settlement. The Blackfeet Nation are warriors. They have fought 
for over 100 years to protect their culture and their 
traditions. And water is a critical part of their way of life, 
which is why this compact is so important. Whether it is for 
economic purposes or religious ceremonies, water is, as 
Chairman Barnes so eloquently states, the creation of the 
Blackfeet people.
    I appreciate the opportunity to be here today and speak 
about the importance of this compact, and thank the committee 
for holding a hearing on this issue.
    On a personal note, I grew up over the mountains of the 
great Blackfeet Nation. I have a map in my office. The map 
shows what the state looked like in 1889, when the great state 
of Montana became a state. And I can tell you the Blackfeet 
Nation has given a lot to this country. They have given this 
country a lot of reservation land. They have fought in every 
battle this Nation has ever fought. My respect to the tribe is 
undaunted. I ask you for support, and I look forward to your 
questions. I yield back.
    Dr. Fleming. I thank the gentleman. We have no formal 
question round, but certainly gentlemen and other Members who 
have testified are welcome to join us on the dais.
    We are now ready for our second panel. If you will go ahead 
and come forward, second panel.
    Let's see, we need to put new signs out. If you would, it 
would help me out if you sit behind the sign that identifies 
you so I don't make too many mistakes.
    [Laughter.]
    Dr. Fleming. First of all, we have the Chairman of the 
Blackfeet Nation, the Honorable Harry Barnes, who is based out 
of Browning, Montana. Chairman Barnes will testify on the 
discussion draft of the Blackfeet Water Rights Settlement Act 
of 2016.
    Next is Mr. John C. Bezdek, Counselor to the Deputy 
Secretary at the Department of the Interior in Washington, DC. 
He will be testifying on all three bills today.
    Seated behind Mr. Bezdek, as accompanying witnesses, will 
be Ms. Letty Belin, a Senior Counselor to the Deputy Interior 
Secretary, and Mr. Craig Alexander, Chief of the Indian 
Resources Section, Environment and Natural Resources Division 
at the Department of Justice.
    Next is Mr. Steve Ellis, Vice President of the Taxpayers 
for Common Sense located in Washington, DC. Mr. Ellis will be 
testifying on H.R. 4366 and H.R. 5217.
    Next is Mr. Jerry Brown, General Manager of the Contra 
Costa Water District, which is based out of Concord, 
California. I guess there will be two Jerry Browns in 
California, as a result. Mr. Brown will be testifying on both 
H.R. 4366 and H.R. 5217.
    And then, finally, Mr. Thomas Birmingham, General Manager 
for the Westlands Water District, which is based out of Fresno, 
California. Mr. Birmingham will testify on H.R. 4366 and H.R. 
5217.
    Each witness' written testimony will appear in full in the 
hearing record. I ask that you keep your oral statements to 5 
minutes only.
    The way the lights work is you will be under a green light 
for the first 4 minutes. Then you will be under a yellow light, 
caution light, for the last minute. If it turns red before you 
complete your testimony, please quickly come to an end so that 
we can move on and keep the hearing going and get everyone's 
input and questions asked.
    I now recognize Mr. Zinke for introduction of our first 
witness.
    Mr. Zinke. Thank you, Mr. Chairman.
    Let me introduce Chairman Barnes. The Chairman is now the 
Chairman of the Blackfeet Nation. He was elected, as earlier 
remarked, a former veteran.
    With that, Mr. Chairman, I will have you say your opening 
remarks. I yield back.
    Dr. Fleming. Chairman Barnes, you are now recognized for 5 
minutes.

  STATEMENT OF HON. HARRY BARNES, CHAIRMAN, BLACKFEET NATION, 
                       BROWNING, MONTANA

    Mr. Barnes. Thank you very much, Chairman Fleming, Ranking 
Member Huffman, and members of the committee. My name is, in 
fact, Harry Barnes, and I serve as Chairman of the Blackfeet 
Tribal Business Council of the Blackfeet Indian Nation of 
Montana. I am honored to be here on behalf of the Blackfeet 
Nation in support of the Blackfeet Water Rights Settlement Act. 
I want to thank the committee for holding this hearing on this 
bill that is critical to the future of the Blackfeet people. I 
also want to thank Congressman Zinke and his staff for their 
leadership and strong support of this legislation and 
settlement.
    The Blackfeet Water Rights Settlement is the culmination of 
over two decades of work by the tribe. It represents a 
historical break-through in the tribe's over century-long 
battle to secure and protect its water rights. Iterations of 
the bill have been introduced in previous Congresses. In 2015, 
Senators Tester and Daines introduced the Blackfeet Water 
Rights Settlement Act, Senate Bill 1125. Earlier this year, the 
Senate Indian Affairs Committee marked up and favorably 
reported the bill out of committee.
    The discussion draft being heard today, which is 
substantially similar to the marked-up version of Senate Bill 
1125, ratifies the Blackfeet Montana Water Rights Compact; 
resolves significant water-related claims against the Federal 
Government; and, most importantly, provides the critical 
resources needed for the development of the self-sustaining 
economy on the Blackfeet Reservation, and a permanent homeland 
for the Blackfeet people.
    The Blackfeet Tribe resides on the Blackfeet Indian 
Reservation in North Central Montana. The reservation is 
located along the Eastern Rocky Mountains and borders the 
Glacier National Park, Lewis and Clark National Forest, and the 
U.S.-Canadian border.
    The reservation was established by treaty with the United 
States in 1855. The present reservation is approximately 1.5 
million acres, and there are currently over 17,000 enrolled 
members, about half of whom reside on the reservation.
    Six different drainages are encompassed within the 
Blackfeet Reservation: the St. Mary, the Milk, Cut Bank Creek, 
Two Medicine River, Badger Creek, and Birch Creek. The 
reservation is located at the headwaters of these streams, two 
of which--the St. Mary River and the Milk River--are allocated 
between the United States and Canada by the 1909 Boundary 
Waters Treaty. As a result, any tribal claim against the system 
creates a great deal of uncertainty among Montana water users.
    In December 2007, after nearly two decades of negotiation 
to resolve the Blackfeet Tribe's water rights, the tribe 
completed a water rights compact with the Montana Reserved 
Water Rights Compact Commission. The compact was overwhelmingly 
approved by the Montana legislature in April 2009.
    In general, the compact confirms the tribe's water rights 
to all streams on the reservation. It brings certainty to the 
tribe's water rights and protects the tribe's use of water for 
the tribe's growing population.
    The Blackfeet Water Rights Settlement Act would, (1) ratify 
the tribe's water compact with the state of Montana; (2) 
resolve the Blackfeet Tribe's water-related claims against the 
United States; and (3) provide the necessary resources needed 
for the tribe to put its water to use and to develop a self-
sustaining economy on the Blackfeet Reservation.
    In consideration for the tribe waiving its claims against 
the United States, the legislation authorizes Federal funding 
for vital drinking water projects, water storage projects, and 
irrigation improvements and development on the reservation. It 
also provides for water-related economic development projects, 
and provides funds to address environmental and fishery issues. 
It is important to note that the tribe has water-related 
claims, as described in more detail in my written statement, 
against the Federal Government in excess of the funds 
authorized in the legislation.
    The settlement also includes funding for unfunded Federal 
programmatic responsibilities, including deferred maintenance 
and rehabilitation on the BIA's Blackfeet irrigation project. 
Although these are obligations that the Federal Government was 
required to undertake outside the context of this settlement, 
the tribe has agreed to these items being included as 
consideration for the settlement.
    Notably, with respect to cost, since 2012, the tribe has 
agreed to reduce the amount of funding authorized in the 
legislation by more than $190 million to address concerns 
raised by the Department of the Interior. Moreover, the state 
is contributing $49 million toward the Blackfeet Settlement, 
the largest contribution the state has made to any Montana 
water settlement.
    Dr. Fleming. I am sorry, Mr. Chairman, you are 38 seconds 
past your deadline. Again, I promise you, every word of it will 
be in the official record.
    Mr. Barnes. I appreciate that, Chairman.
    Dr. Fleming. Yes, sir.
    Mr. Barnes. I apologize for the oversight.

    [The prepared statement of Mr. Barnes follows:]
     Prepared Statement of Chairman Harry Barnes, Blackfeet Nation
                   on Discussion Draft of H.R. ____,
           ``Blackfeet Water Rights Settlement Act of 2016''
    Chairman John Fleming, Ranking Member Jared Huffman, and members of 
the committee, my name is Harry Barnes, and I serve as Chairman of the 
Blackfeet Tribal Business Council of the Blackfeet Indian Nation of 
Montana. I am honored to be here on behalf of the Blackfeet Nation in 
support of the Blackfeet Water Rights Settlement Act. I want to thank 
the committee for holding this hearing on this bill that is critical to 
the future of the Blackfeet People. I also want to thank Congressman 
Zinke and his staff for their leadership and strong support of this 
legislation and the settlement.
    The Blackfeet Water Rights Settlement is the culmination of over 
two decades of work by the Tribe. It represents a historical 
breakthrough in the Tribe's over century long battle to secure and 
protect its water rights. Settlement legislation ratifies the 
Blackfeet-Montana Water Rights Compact, resolves significant water 
related claims against the Federal Government, and most importantly 
provides the critical resources needed for the development of a self-
sustaining economy on the Blackfeet Reservation and a permanent 
homeland for the Blackfeet People.
           the blackfeet reservation and the blackfeet people
    The Blackfeet Reservation was established by treaty in 1855. The 
Reservation is located along the Rocky Mountains in north central 
Montana, adjacent to Glacier National Park, Lewis and Clark National 
Forest and the border with Canada. Our Reservation is renowned for its 
spectacular mountains, majestic plains and abundant natural resources. 
The Blackfeet People have occupied this area since time immemorial. As 
we say: ``We know who we are and where we come from. We come from right 
here. We know, and have always said, that we have forever lived next to 
the Rocky Mountains.''
    Our treaty, known as Lame Bull's Treaty, was signed in 1855. 
Executive Orders and statutes followed, each taking large areas of our 
traditional land. We ended up with the land that was most sacred to us: 
our present day reservation. In 1896, the Northern Rockies were taken 
from us because speculators believed there were rich minerals to be 
had. When mineral riches did not materialize, this most sacred part of 
our homeland became part of Lewis and Clark National Forest and a 
portion later became part of Glacier National Park in 1910. To this 
day, we question the legitimacy of the 1896 transaction. While the 
Tribe retained hunting, fishing and timbering rights in the area taken, 
we hope that one day our claims to this area will be resolved.
    The present Blackfeet Reservation is about 1.5 million acres. 
Although the United States had promised our Reservation would never be 
allotted in the 1896 Agreement by which the Northern Rockies were lost, 
the Federal Government went back on its word and allotted lands within 
the Reservation to individual tribal members under Allotment Acts in 
1907 and 1919.
    The Tribe now has over 17,000 members, about half of whom live on 
the Reservation. Our people have worked hard to survive in the 
sometimes harsh climate of the Rocky Mountains, and to live in the 
modern world while maintaining the cultural and spiritual ties to the 
land and its resources.
                    the critical importance of water
    Water is critical to the Blackfeet People. It is central to our 
culture and our traditions. It is an essential element of our way of 
life, and is crucial to our continuing survival culturally, 
traditionally and economically. Six different drainages are encompassed 
within the Reservation: the St. Mary, the Milk, Cut Bank Creek, Two 
Medicine River, Badger Creek and Birch Creek. These are the veins and 
arteries of the Reservation and provide life to the Blackfeet People 
and bind us together as a People. Water is the source of creation to 
the Blackfeet People. We believe that rivers and lakes hold special 
power through habitation of Underwater People called the Suyitapis. The 
Suyitapis are the power source for medicine bundles, painted lodge 
covers, and other sacred items. Contact with supernatural powers from 
the sky, water and land is made through visions and dreams and 
manifests itself in animals or particular objects. The beaver ceremony 
is one of the oldest and most important religious ceremonies, and 
beaver bundles have particular significance. The ceremonial importance 
of water is especially present in the use of sweat lodges as a place to 
pray, make offerings, cleanse and heal. The sweat lodge remains a part 
of the religious and spiritual lives of many tribal members.
    Water is truly the lifeblood that sustains the Blackfeet People and 
our way of life. The water resources of the Blackfeet Reservation are 
essential to make the Reservation a productive and sustainable homeland 
for the Blackfeet People and for our communities to thrive and prosper. 
Safe and clean drinking water supplies are vital for the growing 
population on the Reservation, and water is critical to our economy 
which is heavily dependent on stock raising and agriculture. The 
Blackfeet Reservation's location along the eastern Rocky Mountain Front 
makes it the home of abundant fish and wildlife, which depend directly 
on the water resources of the Reservation to support them and allow 
them to thrive. Large game animals, including moose, elk, and deer 
abound. The Reservation provides significant habitat for grizzly bears 
and other bears, and for other animals such as lynx, pine marten, 
fisher, mink, wolverine, weasel, beaver, otter, grey wolf, swift fox 
and others. Numerous bird species are also found on the Reservation 
including bald eagle, golden eagle, osprey, ferruginous hawk, northern 
goshhawk, harlequin duck, piping plover, whooping crane, and all 
migratory and shoreline birds, as well as game birds such as the 
sharptail grouse, ringnecked pheasant, mountain dove, Hungarian 
partridge and two other species of grouse. The fishery on the 
Reservation is renowned, and includes the west slope cutthroat trout, 
northern pike, lake trout, rainbow trout, mountain white fish, lake 
white fish, brook trout, brown trout, Yellowstone cutthroat trout, 
walleye, and many others. The threatened bull trout is also be found on 
the Reservation. The habitats of these wildlife and fish species depend 
directly on the water resources of the Reservation to support them and 
allow them to thrive.
    The Reservation also possesses significant timber, oil and gas 
resources and other natural resources. Oil and gas production has 
occurred on the Reservation since the 1930s, and the Tribe has recently 
experienced a significantly increased interest in new development on 
the Reservation. The Tribe has also been working hard to develop wind 
energy and the hydroelectric potential on the Reservation. All of these 
activities are dependent on adequate supplies of water.
    Fortunately, we are blessed with an abundant supply of water. Over 
518 miles of stream and 180 water bodies, including 8 large lakes, are 
located on the Reservation. More than 1.5 million acre-feet of water 
arise on, or flow through, the Blackfeet Reservation on an annual 
basis--the St. Mary River alone contributing over one-third of the 
total supply. Despite the significant water supply, or maybe because of 
it, historically, others have sought to appropriate it for themselves, 
and water has become a precious resource in more modern times.
                       historical water conflicts
    In 1909, just a year after the historic Winters decision involving 
the Milk River, the United States entered into the Boundary Water 
Treaty with Canada, which, among other things, divided the Milk River 
and St. Mary River between the two countries. However, not a word in 
the Treaty, or the negotiations leading to it, mention the Blackfeet, 
that these streams arise on or near the Blackfeet Reservation, or that 
the Blackfeet have rights to water in these streams. Not long after the 
Boundary Waters Treaty, the United States withdrew significant lands on 
the Blackfeet Reservation under the 1902 Reclamation Act, and began 
construction of the St. Mary facilities to divert most of the United 
States' share of the St. Mary River off the Reservation for use by the 
Bureau of Reclamation Milk River Project over a hundred miles away. The 
United States pursued this course notwithstanding that there was an 
equally feasible project on the Blackfeet Reservation where the water 
could have been brought. The diversion is accomplished through 
facilities on the Reservation, including Sherburne Dam, and a 29 mile 
canal through the Reservation that eventually empties into the Milk 
River. The Milk River flows north into Canada and then back into the 
United States near Havre, Montana, where it is heavily utilized by the 
Milk River Project and by the Fort Belknap Reservation.
    There are few historical acts, other than loss of land, that have 
engendered more passion and outrage than this wholesale transfer of 
Reservation water to serve non-Indians far downstream, without a word 
about, or any consideration of, the Blackfeet Tribe's water rights or 
the Blackfeet water needs. The Tribe is left not only with no access to 
and no benefit from its own water, but a tangled web of confusing and 
non-existent rights of way and easements for the St. Mary Diversion 
facilities on the Reservation. Plans to rehabilitate the 100-year-old 
St. Mary Diversion facilities so that the diversion of water off the 
Reservation can continue and perhaps increase, have further raised 
water right concerns, and have emphasized the need for a final 
resolution of the Tribe's water rights.
    At the same time that the St. Mary diversion was taking place, non-
Indian water users south of the Reservation built a dam on Birch Creek, 
the southern boundary of the Reservation, which was intended to 
appropriate Birch Creek water for use by the non-Indian water users off 
the Reservation. In Conrad Investment Company v. United States, decided 
by the Ninth Circuit in 1908, the same year as the Winters case, the 
court upheld the Tribe's prior and paramount right to the water. But 
the court did not award the full amount of water necessary to irrigate 
all of the Tribe's irrigable lands, leaving it open for the Tribe to 
claim additional water in the future. United States v. Conrad 
Investment Company, 156 Fed. 123 (D. Mont. 1907), aff'd Conrad 
Investment Co. v. United States, 161 Fed. 829 (9th Cir. 1908). In the 
meantime, Birch Creek has been fully appropriated through non-Indian 
development of 80,000 acres of irrigation immediately off and adjacent 
to the Reservation.
    Allotment brought the third serious conflict between the Tribe and 
non-Indian water users. In an attempt to control the water through the 
land, the Conrad Investment case served as the springboard to the first 
Blackfeet Allotment Act in 1907. Over a span of two Congresses, the 
Blackfeet Allotment Act moved forward with various water rights 
provisions intended to make Blackfeet water rights subject to state 
law, to enjoin the United States from prosecuting any further suits 
against water users, and to give preference to settlers on surplus 
lands to appropriate water on the Reservation. See, John Shurts, Indian 
Reserved Water Rights: The Winters Doctrine in its Social and Legal 
Context, 1880s-1930s (University of Oklahoma Press, 2000), Chapter 6. 
These efforts largely failed, thanks in part to a veto from President 
Theodore Roosevelt, but the 1907 Allotment nevertheless became law 
notwithstanding the promise that the Reservation would never be 
allotted. See Agreement of September 26, 1895, ratified June 10, 1896, 
29 Stat. 321, 353, Art. V. With allotment, many of the prime irrigation 
lands on the Reservation quickly went out of trust, and the Tribe's 
water rights have gone unprotected from the use of water by non-Indian 
development on the former allotments. Numerous disputes have arisen 
over the years of varying severity, and the need to resolve the Tribe's 
water rights has increasingly become critical.
    The 1907 Allotment Act also authorized the Blackfeet Irrigation 
Project. However, from the outset, the BIA built the Blackfeet 
Irrigation Project with undersized and inadequate delivery systems and 
storage facilities, thereby ensuring that the economic promise of the 
Project would be unfulfilled for the Tribe and tribal members. Project 
lands continue to have problems in receiving a full supply of water 
because of the early BIA decisions to undersize the project. 
Traditionally, the Tribe has taken the approach of sharing the resource 
cooperatively, but increased shortages during the late irrigation 
season, and the dilapidated condition of the Blackfeet Irrigation 
Project, have become serious impediments to water use within the 
Reservation.
    Finally, the cession of western reservation lands in 1895 has 
historically been a disputed issue to the Blackfeet People. While the 
Tribe reserved the right to hunt, fish and cut timber on the ceded 
lands which now form a portion of Lewis and Clark National Forest and 
Glacier National Park, the area has traditionally held particular 
significance for religious and cultural reasons. The water rights 
associated with these activities are resolved in the settlement.
                          water rights compact
    Given the historical water rights issues on the Reservation, the 
Blackfeet Water Rights Compact is truly a milestone achievement after 
nearly two decades of negotiations among the Tribe, the Montana 
Reserved Water Rights Compact Commission and the Federal Government. 
The Compact was completed in December 2007. The Montana Legislature 
approved it in April 2009 (85-20-1501 MCA), and it is now before 
Congress for ratification in the Blackfeet Water Rights Settlement Act. 
It will further require approval of the Tribe through a vote of the 
tribal membership.
    In general, the Compact confirms the Tribe's water rights to all 
streams on the Reservation. It brings certainty to the Tribe's water 
rights and protects the Tribe's use of the water for the Tribe's 
growing population and need to make the Reservation a productive and 
sustainable homeland. The Compact:

     Establishes the Tribe's water right as all surface and 
            groundwater less the amount necessary to fulfill state 
            water rights in all drainages except for the St. Mary River 
            and Birch Creek;

     Establishes a St. Mary water right of 50,000 acre-feet;

     Establishes a Birch Creek water right of 100 cfs, plus 25 
            cfs for in stream flow during the summer and 15 cfs during 
            the winter;

     Protects state water right non-irrigation use and some 
            irrigation uses through ``no-call'' provisions;

     Provides for water leasing off the Reservation;

     Closes on-reservation streams to new water appropriations 
            under state law;

     Provides for tribal administration of the tribal water and 
            state administration of state law water rights and creates 
            a Compact Board to resolve disputes between tribal and 
            state water rights;

     Provides for an allocation of water stored in Tiber 
            Reservoir; and

     Mitigates the impacts of the Tribe's water rights on Birch 
            Creek water users through a separate Birch Creek Agreement 
            by which the Tribe defers new development on Birch Creek 
            for 15 years over and above the current Conrad Investment 
            decree, and provides 15,000 acre-feet of water per year to 
            Birch Creek water users from Four Horns Reservoir, the 
            total agreement not to exceed 25 years.

                 state approval and state contribution
    As part of the state approval of the Compact, the state committed 
to contribute $20 million to the Compact. These funds were fully 
authorized and are available when the Compact becomes final. In 2007, 
the Montana Legislature also appropriated $15 million for Birch Creek 
mitigation. Of these funds, $14.5 million has been placed in an escrow 
fund for the Tribe as part of the Birch Creek Agreement, and $500,000 
was used for engineering studies for the Four Horns enlargement. In the 
recent 2013 Legislature, the state also committed an additional $14 
million to the Blackfeet Settlement, bringing the total state 
contribution to $49 million. This is a very major contribution on the 
part of the state, and the largest for an Indian water rights 
settlement in Montana.
                 blackfeet water rights settlement act
    The Blackfeet Water Rights Settlement Act will: (1) ratify the 
Tribe's water compact with the state of Montana; (2) resolve the 
Blackfeet Tribe's water-related claims against the United States; and 
(3) provide the necessary resources needed for the Tribe to put its 
water to use and to develop a self-sustaining economy on the Blackfeet 
Reservation.

    Specifically, the bill:

     Ratifies the Compact and authorizes the Secretary to sign 
            it;

     Requires the Secretary to enter into contracts with the 
            Tribe for the delivery of (1) 5,000 acre-feet per year of 
            St. Mary River water through the Milk River Project 
            facilities to the Tribe and (2) provides for additional 
            contracts depending on available water;

     Compensates the Tribe for delay in providing additional 
            St. Mary River water;

     Expressly provides for the Milk River Project purposes;

     Requires the Secretary to implement the Swift Current Bank 
            Stabilization Project to correct environmental problems 
            associated with Milk River Project facilities;

     Provides the Tribe with the exclusive right to develop and 
            market hydroelectric power from the St. Mary Storage Unit 
            of the Milk River Project;

     Directs the Secretary to allocate to the Tribe 45,000 
            acre-feet per year of water stored in Lake Elwell and 
            authorizes the Tribe to enter into leases or other 
            agreements for the use of that water for any beneficial 
            purpose subject to certain conditions;

     Requires the Secretary, acting through the Commissioner of 
            Reclamation, to:

          --  carry out deferred maintenance on the Blackfeet 
        Irrigation Project;

          --  undertake rehabilitation and improvements on Four Horns 
        Dam, including dam safety improvements and other improvements 
        for the benefit of the Blackfeet Irrigation Project and in 
        order to provide Four Horns Reservoir water to state water 
        rights users on Birch Creek;

          --  plan, design, and construct the Municipal Rural and 
        Industrial water system (involving water intake, treatment, 
        pumping, storage, and pipeline facilities); and

          --  construct the Blackfeet Water, Storage, and Development 
        Projects, including new irrigation and storage, on-farm 
        improvements and other water related projects.

     Authorizes Federal funding for the water-related projects 
            authorized in the legislation;

     Confirms the Tribe's instream water rights in the Lewis 
            and Clark National Forest and Glacier National Park;

     Requires the Blackfeet Tribe to work with the Fort Belknap 
            Indian Community on resolving any conflict between their 
            respective Milk River water rights, and directs the 
            Secretary of the Interior to resolve such conflict if the 
            Tribe and Community are unable to do so provided certain 
            conditions are met;

     Provides for the waiver and release by the Tribe of water 
            rights claims against Montana and the United States in 
            return for recognition of the tribal water rights and other 
            benefits provided under the Compact and this Act.

                            waivers/funding
    The Tribe has water-related claims against the Federal Government 
in excess of the funds authorized in the legislation for, among other 
things: (1) the diversion of St. Mary water off the Blackfeet 
Reservation to the Milk River Project for approximately 100 years; (2) 
the environmental and resource damage caused by the St. Mary diversion 
facilities; (3) claims relating to the 1909 Boundary Waters Treaty; (4) 
the United States' unfulfilled promise to construct a new storage 
facility on Two Medicine River after a catastrophic flood in the 1960s; 
and (5) the failure of the United States to protect the Tribe's water 
rights from development by others, particularly on Birch Creek, Cut 
Bank Creek and the Milk River.
    In consideration for the Tribe waiving its claims against the 
United States, the legislation authorizes Federal funding for vital 
drinking water projects, water storage projects, and irrigation 
improvements and development on the Reservation. It also provides for 
water related economic development projects and provides funds to 
address environmental and fishery issues. The settlement also includes 
funding for unfunded Federal programmatic responsibilities, including 
deferred maintenance and rehabilitation on the BIA's Blackfeet 
Irrigation Project. Although these are obligations that the Federal 
Government was required to undertake outside the context of this 
settlement, the Tribe has agreed to these items being included as 
consideration for the settlement.
    Importantly, since 2012, the Tribe has agreed to reduce the amount 
of the funding authorized in the legislation by more than $190 million 
to address concerns raised by the Department of the Interior. Moreover, 
the state is contributing $49 million toward the Blackfeet Settlement, 
the largest contribution the state has made to any Montana water 
settlement to date.
          critical tribal need for water supply infrastructure
    The water projects authorized in the legislation include a regional 
water system to provide a long-term municipal water supply to all 
Reservation communities, funding for the United States' deferred 
maintenance obligations and safety of dams obligations associated with 
the Bureau of Indian Affairs' Blackfeet Irrigation Project, putting new 
lands outside the Project into production through new irrigation 
facilities and small water storage projects, stock water and domestic 
water developments, lake and fishery improvements and enhancements, and 
energy development projects. Settlement funds would also fund the 
implementation of the Compact and the administration of the tribal 
water right through the Tribal Water Code.
    In particular, it is critical to establish a long-term supply of 
water to Reservation communities. The Tribe has continually had to 
address community water supply problems by cobbling together short-term 
fixes. At the same time, the Reservation population has significantly 
increased, and projections are that such increases will continue. A 
long-term supply will provide the necessary stability that will allow 
for long-term community growth.
    At the time the Reservation was established, it was acknowledged 
that ``[t]here is an abundant supply of water arising on or near the 
Blackfeet Reservation,'' but much of that water is now diverted off the 
Reservation. Along with the lack of storage capacity for on-Reservation 
use and a dilapidated BIA irrigation project, numerous barriers are 
created for the Tribe in its efforts to protect and put to use its 
valuable water resources. These challenges in part account for the high 
unemployment and devastating poverty rate that has plagued the 
Reservation for generations. Unemployment runs as high as 70 percent 
and more than half of the employed are below the poverty level. 
Securing control of and actively managing Reservation water resources 
would be an important step toward improving economic conditions on the 
Reservation and creating the homeland envisioned in the numerous 
treaties and agreements that serve as the foundation of the United 
States and Blackfeet Tribe's relationship.
 litigation will continue if settlement legislation does not become law
    In 1979, the United States filed suit in Federal court seeking to 
quantify the Blackfeet Tribe's water rights. In 1983, the Federal 
district court litigation was stayed pending the outcome of the Montana 
State court water adjudication proceedings. The adjudication of the 
Blackfeet tribal water rights in the state court proceedings have been 
stayed pending finalization of the Compact and the Blackfeet Settlement 
legislation. Should the negotiated settlement of the Blackfeet Tribe's 
water right claims fail to be ratified by Congress, then the claims of 
the Blackfeet Tribe will be litigated before the Montana Water Court. 
The Montana Water Court has already put the Tribe on notice that is not 
willing to delay litigation of the Tribe's water rights if a settlement 
is not completed by the end of January 2017. Moreover, if the 
settlement fails, the Tribe will pursue its monetary claims described 
above against the United States, resulting in years of litigation and 
potentially a judgment against the United States that exceeds the 
funding authorized in the legislation.
                               conclusion
    The Blackfeet Water Rights Settlement has critical importance to 
the future of the Blackfeet People and represents decades of hard work 
by many people. The legislation will secure the water rights of the 
Tribe through ratification of the Tribe's water rights compact, and 
will also provide the necessary funding for the Tribe to develop its 
water rights for the benefit of the Tribe and its members. The 
settlement will significantly contribute to the development of a strong 
Reservation economy, jobs for tribal members, and a better life for the 
Blackfeet People.
    Finally, although the Department of the Interior was involved in 
our negotiations every step of the way in the decades long process, and 
was intimately involved in the drafting of the Compact, the 
Administration raised a number of issues relating to settlement 
legislation. The Tribe has worked with the Interior over the last 3 
years to come to agreement on the legislation. We are happy to report 
that the Tribe and Interior are in full agreement on the terms of the 
legislation.
    We thank the committee and committee staff and look forward to 
responding to any questions you may have.

                                 ______
                                 

    Dr. Fleming. Thank you. Next, Mr. Bezdek, you are 
recognized for 5 minutes.

 STATEMENT OF JOHN BEZDEK, COUNSELOR TO THE DEPUTY SECRETARY, 
        U.S. DEPARTMENT OF THE INTERIOR, WASHINGTON, DC

    Mr. Bezdek. Chairman Fleming, Ranking Member Huffman, and 
members of the subcommittee, thank you for the opportunity to 
appear here today regarding the settlement bills before the 
subcommittee.
    I am accompanied today by Letty Belin, my colleague in the 
Deputy Secretary's office, who is also the Chair of the 
Secretary's Working Group on Indian Water Rights. Also with me 
today is Mr. Craig Alexander of the Department of Justice, who 
is appearing as a technical witness to help me respond to 
questions the committee might have on the Blackfeet Water 
Rights Settlement.
    As you know, the Department has submitted detailed written 
testimony on congressional correspondence regarding H.R. 4366 
and the Blackfeet legislation. I will briefly summarize my 
written testimony in the interest of time.
    In terms of H.R. 4366 and H.R. 5217, the drainage bills 
before the subcommittee today will help resolve over 25-plus 
years of litigation associated with the Central Valley 
Project's San Luis Unit. The unit's congressionally authorized 
features include a drain to remove sub-surface water after 
irrigation in this part of the Central Valley. For reasons 
described in my testimony, the drain was never completed.
    The settlement resolves three separate cases currently in 
litigation. It provides for the vacatur of the 2000 Order 
Modifying a Partial Judgment in the Firebaugh Canal Water 
District v. United States case. This will allow the United 
States to avoid the cost of implementing a court-ordered 
drainage solution currently estimated to be $3.8 billion. By 
doing so, it will free up significant resources to address 
other pressing water needs in California, which are severely 
needed during this drought, and place the obligation of 
providing drainage with the District, who is in a much better 
position than Reclamation to determine the most appropriate and 
cost-effective manner of meeting these legal requirements.
    It also addresses and provides a path forward for 
resolution of two additional pieces of litigation: a breach of 
contract claim by Westlands, and a Fifth Amendment takings case 
filed by individual landowners within Westlands. In the takings 
case alone, the exposure to the American taxpayer could be in 
excess of $2 billion.
    We understand there are differing views in this matter, but 
the settlement before us today reflects the reality that this 
Department has operated in: exposure to ongoing litigation; 
meeting court-ordered requirements; and trying to protect 
existing budget priorities.
    Quite simply, in the months and years leading up to today, 
the potential substantial financial impact of compliance with 
the judgment has come to pose serious challenges for meeting 
priority programs in California and throughout the West. The 
need for action by Congress, new legal challenges, and 
financial concerns all played a significant role in the 
Department's decision to enter into settlement negotiations 
with Westlands, and ultimately to the terms of the settlement 
itself. For these reasons, the Department supports H.R. 4366.
    With regard to the Blackfeet Water Rights Settlement Act, I 
would like to congratulate Chairman Barnes, the Blackfeet 
Tribe, and the state of Montana for their hard work on this 
settlement. This took decades to achieve, and required 
significant compromise by all of the parties. This is an 
incredible achievement, and it is a testament to the 
perseverance and vision of Blackfeet leaders who have waited 
over 100 years for this moment to arrive.
    Disputes over Indian water rights are expensive, divisive, 
and create financial, economic, and societal barriers. 
Settlements to these disputes, however, help break down these 
barriers and improve water resources management by encouraging 
collaboration among neighboring communities, while also 
stabilizing their economies. This model has proven time and 
time again throughout the West, and it is why the United States 
has pursued a policy of settling Indian water rights claims for 
over 30 years.
    For the Blackfeet Tribe, this settlement is a crucial and 
long-awaited step toward self-determination. It will provide 
badly needed tools for achieving a viable homeland, while 
overcoming high unemployment, extreme poverty, and a lack of 
employment opportunities.
    The Blackfeet water rights settlement resolves all 
outstanding Blackfeet water claims, quantifies a tribal right 
to more than 750,000 acre-feet of surface water and nearly all 
groundwater on the reservation, and funds the construction and 
rehabilitation of water-related infrastructure on the 
reservation for the benefit of the tribal community.
    Federal settlement funding will provide lasting benefit for 
the tribe and its members by protecting public health and 
creating substantial numbers of temporary and permanent 
employment opportunities on the reservation, including 
construction, water management, renewable energy, agriculture, 
recreation, and tourism. The settlement will also remove the 
cloud of uncertainty hanging over the water rights for the Milk 
River project. Moreover, the settlement provides protections to 
state-based water users and the regional economy, which rely on 
such use.
    While we believe that each settlement should be evaluated 
on its own merits and that the full range of benefits in any 
settlement is not easily quantified, the cost of this 
settlement, when compared to the Federal benefits received, 
reflect a settlement that is in the best interest of the tribe, 
the state, and the American taxpayer.
    As expressed in our recent correspondence to this 
committee, this settlement makes good business sense, good 
economic sense, and good legal sense. In short, this settlement 
is good government, and we support it. Thank you.
    [The prepared statement of Mr. Bezdek follows:]
 Prepared Statement of John Bezdek, Counselor to the Deputy Secretary, 
                    U.S. Department of the Interior
Statement on H.R. 4366 and H.R. 5217, San Luis Unit Drainage Resolution 
                                  Acts
    Chairman Fleming, Ranking Member Huffman, I am John Bezdek, 
Counselor to the Deputy Secretary at the Department of the Interior. I 
am pleased to provide the views of the Department of the Interior 
(Department) on H.R. 4366, the San Luis Unit Drainage Resolution Act. 
The Department supports the goal of providing a long term drainage 
solution in the San Luis Unit. The Department notes that H.R. 4366 
would authorize the implementation of a settlement of litigation with 
the Westlands Water District (Westlands) and provide a long term 
drainage solution and therefore supports the bill. The Department is 
also aware of the subcommittee's interest in H.R. 5217, which 
authorizes the Westlands Settlement, but additionally authorizes a 
related agreement (Northerly District Agreement) with three water 
districts in the northern reaches of the San Luis Unit service area. I 
will address H.R. 4366 first.
    For over 28 years, there has been litigation surrounding drainage 
for lands served by the San Luis Unit (SLU) of the Central Valley 
Project (CVP). Currently, the Bureau of Reclamation is under a court 
order to provide drainage services to these impaired lands and the only 
drainage alternative that has undergone environmental and feasibility 
review will cost approximately $3.8 billion in 2015 dollars. If 
settlement is not authorized, significant amounts of funding will be 
directed toward providing drainage services. In order to meet this 
court-ordered mandate, the Department may have to significantly reduce 
or potentially eliminate other programs.
    The San Luis Unit (SLU) is part of the Bureau of Reclamation's 
(Reclamation) Central Valley Project (CVP) in California. Congress 
authorized the SLU on June 3, 1960, under Public Law No. 86-488. As 
originally authorized, the Act contemplated facilities to remove 
drainage water from irrigated lands to achieve a long-term, salt and 
water balance necessary to maintain sustainable agriculture in the SLU. 
Initial plans for drainage facilities included the San Luis Interceptor 
Drain (Drain), which would have collected drainage water and conveyed 
it for discharge into the Bay-Delta. By 1975, an 82-mile segment of the 
Drain (terminating at Kesterson Reservoir) had been constructed, which 
provided drainage to a portion of Westlands. Litigation over the United 
States' drainage obligation commenced shortly after the United States 
halted use of the San Luis interceptor drain and plugged all Federal 
drainage facilities in the SLU following the discovery of embryonic 
deformities of aquatic birds at Kesterson Reservoir. Kesterson 
Reservoir was emptied and, since that time, the United States has not 
resumed drainage service to Westlands. These details are a matter of 
public record, and my statement will summarize only the facts relevant 
to the legislation before the subcommittee today.
    Following the closure of Kesterson Reservoir and the plugging of 
the Drain, two lawsuits were filed regarding the provision of drainage. 
Firebaugh Canal Water District v. United States was filed in 1988 by 
two water districts located outside and ``downslope'' of the SLU. The 
action was partially consolidated with Sumner Peck Ranch, Inc. v. 
United States, a similar action brought in 1991 by approximately 100 
landowners located within the SLU. In 1995, following a trial, the 
district court entered a partial judgment that the Secretary of the 
Interior's (Secretary) obligation under the San Luis Act to provide 
drainage was not excused or rendered impossible. In 2000, the Ninth 
Circuit largely affirmed the partial judgment, and on remand the 
district court entered an injunction (2000 Order Modifying Partial 
Judgment) against the Secretary requiring Reclamation to provide 
drainage service ``without delay'' to the SLU. In 2002, the United 
States settled the Sumner Peck plaintiff's claims.
    In compliance with the 2000 Order Modifying Partial Judgment, the 
Department developed a Plan of Action outlining the steps it would 
follow to implement a drainage solution for the SLU. Following 
completion of an environmental impact statement, Reclamation issued a 
Record of Decision (ROD) in March 2007, in which Reclamation selected a 
drainage alternative that met the drainage service requirements of the 
district court's injunction. The Department also prepared and submitted 
to Congress a feasibility report, concluding that the cost of 
implementing the selected alternative would be approximately $2.7 
billion (now $3.8 billion in April 2015 dollars). That amount exceeds 
the remaining appropriations ceiling originally authorized for 
construction of the SLU. As a result, the alternative selected in the 
ROD cannot be fully implemented under existing law. As part of the 
ongoing litigation, the Department advised the district court in 
November 2009 that, while it could not implement the entire ROD, 
sufficient appropriation ceiling remained to allow it to construct one 
subunit of drainage facilities within a portion of Westlands. 
Reclamation began implementing the selected drainage plan in a subunit 
of Westlands in 2010 and in the Northerly Area of the SLU with 
construction of the Demonstration Treatment Plant in 2012, pursuant to 
a court ordered control schedule. Beyond that subunit, however, the 
Department remains unable to continue implementation of the ROD without 
additional congressional authorization. In 2012, the district court 
entered final judgment against the Firebaugh plaintiffs dismissing 
their remaining claims while maintaining jurisdiction to supervise 
compliance with the 2000 injunction requiring Reclamation to provide 
drainage service to drainage-impaired lands in the San Luis Unit.
    On September 2, 2011, individual landowners within Westlands Water 
District filed suit in the Court of Federal Claims alleging that the 
failure by the United States to provide drainage service to their lands 
resulted in a physical taking of their property without just 
compensation in violation of the Fifth Amendment. Plaintiffs brought 
their suit as a class action on behalf of all landowners located within 
Westlands ``whose farmlands have not received the necessary drainage 
service the United States is required to provide under the San Luis Act 
. . ..'' A plaintiff class has not yet been certified. A motion by the 
United States seeking dismissal of the takings claim was denied on 
September 20, 2013.\1\ The Opinion contains language sharply critical 
of the United States' delay in providing drainage to Westlands. The 
Court of Federal Claims has stayed this litigation to allow settlement 
negotiations to proceed, but is requiring the submission of regular 
status reports on the progress of the discussions. While the complaint 
does not specify a dollar amount for damages, estimates suggest that 
Federal liability for just compensation could range from zero to over 
$2 billion.
---------------------------------------------------------------------------
    \1\ Etchegoinberry, et. al. v. United States, 114 Fed. Cl. 437 
(2013).
---------------------------------------------------------------------------
    On January 6, 2012, Westlands filed its own suit against the United 
States also in the Court of Federal Claims, alleging that the 
government's failure to provide drainage service to the Westlands 
service area constituted a breach of Westlands' 1963 Water Service and 
1965 Repayment contracts (including the interim renewal of those 
contracts) with the United States. The United States moved to dismiss 
Westlands' claims. On January 15, 2013, the Court of Federal Claims 
granted the United States' motion to dismiss, ruling that none of the 
contracts contained an enforceable promise to provide drainage to 
Westlands.\2\ Westlands has appealed to the Federal Circuit, and 
briefing on the appeal is complete. On December 2, 2015, the Federal 
Circuit granted a stay through January 20, 2017.
---------------------------------------------------------------------------
    \2\ Westlands Water Dist. v. United States, 109 Fed. Cl. 177 
(2013).
---------------------------------------------------------------------------
    The Westlands Settlement resolves Westlands Water District v. 
United States, the remaining breach of contract case relating to the 
United States' drainage obligation. The Settlement also provides for 
the vacatur of the 2000 Order Modifying Partial Judgment in Firebaugh 
Canal Water District v. United States, allowing the United States to 
avoid the costs of meeting its statutory and court-ordered drainage 
obligation, currently estimated to be $3.8 billion. The Settlement 
further provides a framework for resolving Michael Etchegoinberry, et. 
al. v. United States, the Fifth Amendment takings case brought by 
individual landowners within Westlands.
    Interested parties have commented on the 2010 letter from the then-
Commissioner of the Bureau of Reclamation to Senator Feinstein focusing 
on how the key legislative elements outlined in that letter differ from 
the Settlement ultimately negotiated by the parties. While the letter 
outlined key elements of a long-term drainage strategy that the 
Administration would support if Congress were to consider authorizing a 
resolution of the drainage issues in the SLU, the letter was not an 
Administration proposal for legislation. The Department's belief was 
that a legislative response was needed and the letter was an effort to 
facilitate Congress moving forward with a resolution. However, Congress 
took no action on the legislative elements the Department indicated it 
could support. Therefore, the Administration explored a negotiated 
resolution of the drainage problem with Westlands as a response to the 
projected costs of construction of drainage service facilities in 
Westlands under control schedules which had been submitted to the 
district court under the partial judgment and injunction. Moreover, 
Reclamation has grown increasingly concerned about the potential 
financial impact of compliance with the judgment on its ability to meet 
other priority programs. Lack of legislation by Congress, new legal 
challenges and financial concerns all played a significant role in the 
Department's decision to enter into settlement negotiations with 
Westlands and ultimately into the terms of the Settlement itself.
Benefits of the Westlands Settlement to the United States

     If enacted into law, the proposed legislation would amend 
            the San Luis Act to relieve the Department from all 
            drainage obligations imposed by that statute, including 
            implementation of the 2007 ROD, the present cost of which 
            is estimated to be $3.8 billion.

     Westlands agrees to dismiss Westlands v. United States, 
            the breach of contract litigation, and would join the 
            United States in petitioning for vacatur of the 2000 Order 
            Modifying Partial Judgment in the Firebaugh case, which 
            presently requires Reclamation to implement drainage 
            service.

     The Settlement establishes a framework for resolving all 
            individual landowner claims in the Etchegoinberry takings 
            case. Specifically, Westlands would participate in this 
            case for settlement purposes and would provide compensation 
            to affected landowners. Otherwise, potential exposure to 
            Federal taxpayers from an adverse judgment could be as high 
            as $2 billion.

     Westlands agrees to release, waive and abandon all past, 
            present and future claims related to drainage, and agrees 
            to indemnify the United States for any and all claims from 
            individual landowners relating to the provision of drainage 
            service or lack thereof within its service area.

     Westlands agrees to permanently retire at least a minimum 
            of 100,000 acres of lands within its boundaries utilizing 
            those lands only for the following purposes:

           a.  management of drain water, including irrigation of reuse 
        areas;

           b.  renewable energy projects;

           c.  upland habitat restoration projects; or

           d.  other uses subject to the consent of the United States.

     The Settlement transfers the legal obligation to manage 
            drainage for lands within Westlands service area from the 
            United States to Westlands. The United States will retain 
            the ability to enforce this obligation through a contract 
            term conditioning the U.S. obligation to make water 
            available to Westlands upon its compliance with State and 
            Federal law.

     Westlands agrees to cap its CVP water deliveries at 75 
            percent of its contract quantity. Any CVP water which 
            Westlands would otherwise receive above this 75 percent cap 
            would become available to the United States for other CVP 
            authorized purposes.

     Westlands agrees that all drainage water will be disposed 
            of within Westlands' district boundaries and that no 
            drainage water will be discharged outside of Westlands' 
            boundaries.

     As part of the Settlement, the United States would enter 
            into a water service contract with Lemoore Naval Air 
            Station to provide a quantity of CVP water to meet the 
            irrigation needs of the Naval Air Station associated with 
            air operations, and Westlands agrees to wheel CVP water 
            made available to Lemoore.

Benefits of the Westlands Settlement to Westlands

     Westlands will be relieved of current, unpaid capitalized 
            construction costs for the CVP, the present value of which 
            is currently estimated to be $295 million. Westlands will 
            still be responsible for operation and maintenance costs, 
            will pay restoration fund charges pursuant to the Central 
            Valley Project Improvement Act and will be responsible for 
            future CVP construction charges associated with new 
            construction of the project (e.g. Folsom Reservoir Safety 
            of Dams modifications).

     The Secretary will convert Westlands' current 9(e) water 
            service contract to a 9(d) repayment contract consistent 
            with existing terms and conditions and all terms of the 
            Settlement. As a ``paid out'' project, the benefit of this 
            conversion gives the district a contract with no expiration 
            term, consistent with other paid out Reclamation projects. 
            However, the contract will contain terms and conditions 
            that are nearly identical to those in the current 9(e) 
            contract, including the shortage provision.

     Westlands will be relieved of Reclamation Reform Act (RRA) 
            (96 Stat. 1269) provisions relating to acreage limitations 
            and full cost pricing. The RRA grants this relief on its 
            face to projects that are considered ``paid-out.'' 
            Additionally, the tiered pricing provisions are triggered 
            when a district receives 80 percent of its contract 
            quantity, and as part of this settlement, Westlands water 
            deliveries will be capped at 75 percent of its contract 
            quantity.

     Westlands will also take title to certain facilities 
            within its service area that it currently operates.

    Several aspects regarding the obligation to provide drainage 
service were evaluated in determining the overall net benefit to the 
United States. Included in this consideration were avoided drainage 
construction costs, repayment to the United States of reimbursable 
costs, relief from Reclamation Reform Act fees, and unpaid CVP capital 
obligations. The United States would also benefit from avoided 
financial liability in the Etchegoinberry takings litigation, which 
could be as high as $2 billion.
    The Department recognizes that Westlands can realize efficiencies, 
such as local or in-house labor, reduced travel, and different 
purchasing requirements than Reclamation, that reduce its cost to 
implement drainage as compared to the costs that Reclamation would 
incur if Reclamation implemented the 2007 ROD. Nevertheless, while the 
scope of the drainage problem may have lessened in recent years due to 
drought and irrigation efficiencies, the Department is of the view that 
there will continue to be a need for substantial financial investment 
to alleviate drainage concerns in the San Joaquin Valley in the long 
term. While California has experienced a series of dry years recently, 
the historic hydrologic record indicates that wet cycles will return 
and the drainage challenge in the San Luis Unit will increase. With 
Westlands responsible for drainage within its boundaries, there is more 
incentive to increase irrigation efficiencies should new technology be 
developed in the future, which is a component of managing drainage that 
is largely outside of Reclamation's control. It should also be noted 
that Westlands will be responsible for implementing drainage in 
perpetuity. Costs will rise as drainage actions are implemented many 
years and potentially, decades into the future.
    It is the Department's belief that the Settlement results in a 
savings to the American taxpayers when compared to the costs that would 
occur without the terms agreed to in the Settlement. Moreover, we are 
also of the view that failure to settle ongoing litigation will place 
the Department's ability to address the effects of the ongoing drought 
in both the short term and long term at risk due to the potential of 
significant amounts of appropriations being expended on providing 
drainage service. As a practical matter, should our efforts to settle 
litigation with Westlands fail, funding for programs throughout 
Reclamation are likely to be reduced in order for Reclamation to 
adequately fund the Control Schedule.
    Were the Settlement not to be approved by Congress, Reclamation 
would still be obligated to implement drainage service to all drainage-
impaired lands in the SLU as required under that Act and the 
injunction. To fully carry out that obligation, Congress would need to 
increase the appropriations ceiling imposed by the San Luis Act and 
appropriate adequate funds to complete the work. Some members of the 
public and this subcommittee have expressed concerns with many aspects 
of the Settlement, and the Department appreciates those concerns and 
would note that this settlement is a unique situation stemming, in 
part, from a specific set of judicially imposed, legal requirements and 
should not be seen as precedential for future settlements. But it is 
the Department's view that in this specific case, the years of 
negotiation that have led to the Settlement and the introduction of 
H.R. 4366 have produced the best possible outcome for the people of 
California, the environment, and the American taxpayer. With the 
enactment of H.R. 4366, nearly three decades of litigation, enormous 
potential liabilities for the United States, and a longstanding 
environmental problem will be comprehensively resolved.
    As stated above, the Department is also aware of the provisions of 
H.R. 5217 which would authorize the Northerly District Agreement. The 
Department believes that agreement is consistent with, and 
complementary to, the Westlands Settlement. However, the Office of 
Inspector General at the Department of the Interior is currently 
involved in an investigation, pending which, the Department is 
withholding a decision on the Northerly District Agreement and has no 
position on H.R. 5217 at this time.
    Statement on Discussion Draft H.R. ____, Blackfeet Water Rights 
                         Settlement Act of 2016
    Chairman Fleming, Ranking Member Huffman and members of the 
subcommittee, I am John Bezdek, Counselor to the Deputy Secretary at 
the Department of the Interior (Department). I am here today to provide 
the Department's views on the discussion draft H.R. ____, the Blackfeet 
Water Rights Settlement Act of 2016, which would provide approval for, 
and authorizations to carry out, a settlement of the water rights 
claims of the Blackfeet Tribe of the Blackfeet Indian Reservation of 
Montana. The Department is supportive of the discussion draft H.R. 
____, the Blackfeet Water Settlement Act of 2016, and looks forward to 
working with the committee to consider this legislation.
    The Department supports resolving Indian water rights claims 
through negotiated settlement. Our general policy of support for 
negotiations is premised on a set of general principles including that 
the United States participate in water settlements consistent with its 
responsibilities as trustee to Indians; that Indian tribes receive 
equivalent benefits for rights which they, and the United States as 
trustee, may release as part of a settlement; that Indian tribes should 
realize value from confirmed water rights resulting from a settlement; 
and that settlements are to contain appropriate cost-sharing 
proportionate to the benefits received by all parties benefiting from 
the settlement.
    Disputes over Indian water rights are expensive and divisive. In 
many instances, Indian water rights disputes, which can last for 
decades, are a tangible barrier to progress for tribes, and 
significantly, hinder the rational and beneficial management of water 
resources. Settlements of Indian water rights disputes break down these 
barriers and help create conditions that improve water resources 
management by providing certainty as to the rights of all water users 
who are parties to the dispute. That certainty provides opportunities 
for economic development, improves relationships, and encourages 
collaboration among neighboring communities. This has been proven time 
and again throughout the West as the United States has pursued a policy 
of settling Indian water rights disputes whenever possible. Indian 
water rights settlements are also consistent with the Federal trust 
responsibility to American Indians and with Federal policy promoting 
Indian self-determination and economic self-sufficiency.
    Today, implementing existing settlements and reaching new 
agreements is more important than ever given the need for water on many 
Indian reservations and throughout the West and the uncertainty 
regarding its availability due to drought, climate change, and 
increasing demands for this scarce resource.
    The Treaty with the Blackfeet in 1855 encompassed some 27,500 
square miles of Blackfeet tribal lands in what was to become Montana. 
The discovery of gold in the early 1860s brought the first wave of non-
Indians into the territory, along with increasing pressure to open the 
Reservation to non-Indian settlement. A series of Executive Orders 
reduced and reconfigured the Reservation and then in 1888, it was 
divided into three separate and smaller reservations: the Fort Belknap 
Reservation, the Fort Peck Reservation, and the Blackfeet Reservation. 
The Blackfeet Reservation was further diminished in 1895 (Agreement of 
September 19, 1895, ratified on June 10, 1896, 29 Stat. 321, chapter 
398, hereafter ``1895 Agreement''), when the United States purchased 
from the Tribe 800,000 acres of land along the western boundary of the 
Reservation.
    In the 1895 Agreement, the United States promised that the 
Reservation would not be allotted without `the consent of the adult men 
of the Tribe' (Article V), and that if the government were to build a 
canal to control the abundant supply of water available seasonally in 
the St. Mary River, the canal would be constructed to provide 
irrigation water for the Reservation (Article III and Meeting Minutes). 
Within just a few years, the Reservation was opened to allotment; 
construction of a canal to capture the supply of the St. Mary River had 
begun but the canal was designed and constructed to divert St. Mary 
water off of the Reservation for the benefit of the Milk River Project, 
located some 200 miles away, and not for the benefit of the Tribe. In 
1909, the United States entered into a treaty with Canada apportioning 
the waters of the St. Mary and Milk Rivers. This Treaty did not 
specifically address the water rights of the Blackfeet Nation and other 
tribes, even though it was concluded just after the United States 
Supreme Court handed down its 1908 decision in Winters v. United 
States--a case involving the Milk River, which established the doctrine 
of Federal Indian reserved water rights.
    The Tribe's water rights have been fought over for more than 100 
years, as reflected in approximately 14 court cases and congressional 
proceedings addressing directly or indirectly the use and control of 
the Reservation's water resources. Modern efforts to quantify the 
Tribe's reserved water rights began in 1979 when the state of Montana 
(State) filed suit in State court as part of the statewide water rights 
adjudication proceeding. At the same time, the United States filed a 
case in Federal court in Montana to adjudicate the Tribe's reserved 
water rights claims. The question of jurisdiction that arose as a 
result of the two lawsuits was decided in 1983 by the United States 
Supreme Court, which held that state court was the appropriate forum to 
adjudicate tribal reserved water rights pursuant to the McCarran 
Amendment, 43 U.S.C. Sec. 666.\3\
---------------------------------------------------------------------------
    \3\ Arizona v. San Carlos Apache Tribe, 463 U.S. 545 (1983). The 
Federal Court action has been stayed since 1983 pending the outcome of 
the State adjudication.
---------------------------------------------------------------------------
    In 1989, the Tribe initiated negotiations with the Montana Compact 
Commission and in 1990 the Department appointed a Federal Negotiation 
Team to assist in achieving a negotiated settlement of the Tribe's 
reserved water rights claims. The State and the Tribe reached an 
agreement in 2007, in the form of a Compact, which the Montana 
Legislature approved in 2009. Federal legislation to authorize the 
Compact was first introduced in 2010. Since then the Administration has 
been negotiating with the Tribe and the State to resolve important 
Federal concerns relating to cost, cost sharing, Federal interests, and 
Federal responsibilities. Those negotiations lowered the Federal cost 
of the settlement by approximately $230 million.
    The Blackfeet Water Rights Settlement will provide many benefits, 
as it resolves all outstanding Blackfeet water claims, quantifies a 
tribal water right to more than 750,000 acre-feet of surface water and 
nearly all groundwater on the Reservation, and funds the construction 
and rehabilitation of water related infrastructure on the Reservation 
for the benefit of the tribal community. Federal settlement funding 
will provide lasting benefits for the Tribe and its members, by 
protecting public health and creating substantial numbers of temporary 
and permanent employment opportunities on the Reservation, including 
opportunities in the construction, water management, renewable energy, 
agricultural, recreation, and tourism industries. The Settlement also 
includes a process that will enable the Blackfeet Tribe and the Fort 
Belknap Indian Community to resolve a conflict that exists between them 
over relative rights to use the Milk River. The settlement process 
provides funding to support the Tribes' efforts to reach a resolution, 
and authorizes the Secretary to establish criteria to provide for such 
an arrangement if the tribes do not reach a successful sharing 
arrangement. This settlement is a crucial and long-awaited step toward 
achieving the permanent tribal homeland promised to the Blackfeet Tribe 
in the treaties and agreements ratified by Congress between 1855 and 
1896 that serve as the foundation of the relationship between the Tribe 
and the United States.\4\
---------------------------------------------------------------------------
    \4\ Treaty with the Blackfeet, 1855, Oct. 17, 1855, 11 Stat., 657, 
Ratified Apr. 15, 1856, Proclaimed Apr. 25, 1856, Act of April 15, 1874 
(18 Stat. 28, chapter 96), Agreement of 1888, ratified by the Act 
approved May 1, 1888 (25 Stat. 113), Agreement of 1895, dated September 
26, 1895, ratified by the Act approved June 10, 1896 (29 Stat. 321, 
353), Criteria and Procedures, No. 10.
---------------------------------------------------------------------------
    Settlement funding focuses primarily on Federal programmatic 
responsibilities, including funding for dam safety repairs and deferred 
maintenance for Bureau of Indian Affairs facilities on the Reservation; 
\5\ increasing water storage capacity for irrigation and other economic 
activities on the Reservation; \6\ construction, rehabilitation, and 
expansion of the Blackfeet Regional Water System to provide safe, clean 
drinking water to all of the Reservation's major population centers; 
\7\ improving tribal irrigation projects with on-farm improvements for 
tribal trust lands; \8\ and establishing the Blackfeet Tribal Water and 
Energy Office to support self-determination and enhance the Tribe's 
capacity to manage its trust resources.
---------------------------------------------------------------------------
    \5\ Indian Dam Safety Act of 1994, 25 U.S.C. Sec. 3801 et seq.
    \6\ 25 U.S.C. Sec. 13, ``the Secretary of the Interior . . . shall 
expend such moneys as Congress may from time to time appropriate, for 
the benefit, care, and assistance of the Indians . . . for development 
of water supplies.'' (Emphasis supplied).
    \7\ It is ``the policy of the United States that all Indian 
communities and Indian homes, new and existing be provided with safe 
and adequate water supply systems . . . as soon as possible.'' 25 
U.S.C. Sec. 1632(a)(5).
    \8\ 1907 Blackfeet Allotment Act.
---------------------------------------------------------------------------
    The Blackfeet Reservation is set up against the Rocky Mountains and 
possesses some of the most spectacular scenery in the United States. It 
provides significant habitat for countless wildlife and fish species, 
including many protected species. Reservation fisheries are world 
renowned. Yet, the Reservation struggles with high unemployment, 
extreme poverty, and a lack of employment opportunities. The 
Reservation ranks as the 5th poorest reservation in the United States. 
The American Community Survey of 2014 calculates the poverty rate on 
the Reservation at nearly 40 percent, with unemployment at more than 20 
percent, and the share of the population that did not work in the 
previous 12 months even higher, at 39.1 percent. In addition to these 
bleak statistics, at least 30 percent of Reservation households live in 
housing that lacks complete plumbing or kitchen facilities and more 
than 80 percent of school age children are eligible for free or reduced 
school lunches.
    The improvements to irrigation infrastructure on the Reservation 
should have a major beneficial impact on the tribal economy, which is a 
rural economy dependent on farming and ranching and associated hay and 
alfalfa farming operations. Settlement funding will also provide vital 
improvements for the Tribe's farming and ranching activities, including 
the significant bison herds maintained by the Tribe. Such activities 
are an important source of tribal revenues and an important source of 
jobs for tribal members. Settlement funds will also support 
improvements to tribal lakes and fisheries, providing important habitat 
improvements as well as recreational and economic development 
opportunities that take advantage of the natural environment. Such 
activities will contribute to increased tribal revenues and allow the 
Tribe to provide better and more comprehensive services to tribal 
members.
    The Blackfeet Water Settlement funding may add significant 
temporary and permanent job opportunities for tribal members on the 
Reservation. These benefits will derive from Federal spending on 
important water related infrastructure projects and improvements.
    The Settlement will also provide water supplies and increased water 
storage capacity which will help the Tribe establish better economic 
conditions to support a viable homeland for its members. The funding to 
construct, rehabilitate, and expand the Tribe's municipal water system 
will ensure all major population centers on the Reservation have 
reliable and safe drinking water supply for 50 years into the future. 
Currently, the Tribe experiences school closures and business 
disruptions because of the unreliability of municipal water systems, 
and has had to operate under a ``boil order'' for more than a decade in 
a major population center until the Tribe was able to cobble together 
grants, loans, and its own funds to update part of its system.
    The Blackfeet Water Settlement also provides important benefits to 
American taxpayers and the state of Montana. The final quantification 
of the Tribe's reserved water rights will bring stability for all water 
users within the State and will provide the certainty and reliability 
necessary to sustain the economy of the State without disruption. As 
originally proposed to this Administration, the Blackfeet Water 
Settlement included Federal funding of more than $650 million. The 
Department scrutinized every Federal dollar in the original proposal, 
and worked closely with the Tribe and the State to reduce the overall 
cost of the settlement by well over $200 million and increase State 
cost share. The State's direct contribution to the Blackfeet Water 
Settlement is now $49 million, a substantial and appropriate direct 
state cost share. While the current Blackfeet Water Settlement 
authorizes substantial Federal funding requirements through Fiscal Year 
2025, we have confirmed that this level of funding is necessary in 
order for the Tribe to develop its capacity to manage and develop its 
water resources.
    Important Federal proprietary interests in Glacier National Park 
(Park), the Lewis and Clark National Forest (Forest), the Bowdoin 
National Wildlife Refuge, and the Milk River Project will be protected 
by the settlement. The Park and Forest will enjoy protection of 
important instream flows with early priority dates. Federal funding 
also will address important obligations of the Bureau of Reclamation on 
the Reservation and provide compensation to the Tribe for deferring 
water use
    Notably, the Settlement will resolve or provide a process for 
resolving disputes and any Federal liability regarding the Milk River 
Project. Reclamation's use and occupancy of Reservation lands for the 
St. Mary Canal and other features of the Milk River Project has been 
disputed by the Tribe for more than 100 years. Under the process 
described in section 7 of the Settlement Act, the dispute will be 
resolved, and the parties' legitimate interests will be protected going 
forward on a permanent basis. Additionally, the Tribe has filed 
objections to the Milk River Project water rights claims that are 
pending in the Montana general stream adjudication. The Tribe will 
withdraw its objections in certain basins at the request of the United 
States. The United States will realize tremendous value from the 
resolution of these two disputes in addition to the consideration from 
the Tribe's waivers of legal claims for damages relating to its water 
rights and water resources. Avoidance of these potential money damage 
awards against the United States represents additional and very 
significant benefits for the Federal Government and the American 
taxpayer.
    That concludes my written statements. I would be pleased to answer 
questions at the appropriate time.

                                 ______
                                 

Questions Submitted for the Record by Rep. Huffman to Mr. John Bezdek, 
   Counselor to the Deputy Secretary, U.S. Department of the Interior

Mr. Bezdek did not submit responses to the Committee by the appropriate 
deadline for inclusion in the printed record.

    Question 1. Please provide an estimate of the total financial 
benefit that would be provided to San Luis Unit contractors if H.R. 
4366 and H.R. 5217 are enacted. Please include financial benefits 
associated with waiving Central Valley Project (CVP) repayment 
obligations, Reclamation Reform Act waivers, title transfers of 
property owned by the Federal Government and other direct and indirect 
financial benefits contained in both bills.

    Question 2. Under the settlement agreements, does the waiver of CVP 
repayment obligations include the capital obligation for the Trinity 
River Division facilities including the Trinity River hatchery?

    Question 3. If the settlement agreements are enacted, how much 
Trinity River Division water will be allocated under the new 9(d) 
contracts provided for in the settlements?

    Question 4. As Trustee for the Hoopa Valley Tribe, how can the 
Administration agree to a settlement based on a CVP water supply to 
which the trust beneficiary tribe has first priority under Reclamation 
law without ensuring that any pending dispute the San Luis Unit 
contractors have about that priority is fully and finally resolved in 
the beneficiary's favor?

    Question 5. Section 3404(c)(2) of the Central Valley Project 
Improvement Act (CVPIA) requires the Secretary of Interior to 
incorporate in any contract for CVP water the provisions of the CVPIA 
and other law. Will you agree to fulfill that requirement in the 
agreements that would be authorized by the settlement, including: (1) 
the CVPIA requirement for contractors to pay for the costs of the 
Trinity River Restoration program for as long as water is diverted by 
the Trinity River Division; (2) acceptance of the separate priorities 
provided for in section 2 of the 1955 Act authorizing the Trinity 
Division and senior to diversions to the Central Valley? If not, why 
not?

    Question 6. Why does the Administration believe that this drainage 
settlement should proceed when fundamental issues regarding entitlement 
to water for delivery to the San Luis Unit remain unresolved? If San 
Luis Unit contractors are not entitled to the water being sought in 
this settlement, wouldn't a consequent reduction in water deliveries to 
the San Luis Unit potentially resolve a portion of the drainage problem 
by reductions in CVP water deliveries to the San Luis Unit?
    Question 7. On December 23, 2014, the Solicitor of the Department 
of Interior issued Opinion M-37030 regarding Trinity River Division 
Authorization's 50,000 Acre-Foot Proviso and the 1959 Contract between 
the Bureau of Reclamation and Humboldt County. In the 18 months since 
then, have the Department's water managers accounted for that opinion's 
conclusion in CVP operations models and estimates of water supply? If 
yes, what has the Department done. If not, why not?

    Question 8. In an April 21, 2016 letter to Representative David 
Valadao, Deputy Interior Secretary Michael Connor states that ``it is 
widely recognized that the drainage issue may have lessened over the 
last few years due to drought and irrigation efficiencies.'' Has the 
Department of Interior developed any updated calculations since the 
2007 Record of Decision to estimate the current cost of providing 
drainage to the San Luis Unit? If no updated estimates have been 
developed, does the Department of Interior believe--based on increased 
irrigation efficiencies and other developments since the 2007 Record of 
Decision--that a current estimate of drainage costs would be less than 
the costs identified in 2007?

    Question 9. The Termsheet on the proposed Northerly District 
Agreement is vague about the future status of the San Luis Drain and 
the future management and cleanup of sediments in the Drain. Under some 
scenarios the future management of the Drain and its sediments could 
have an adverse impact on national wildlife refuges and other wetlands 
that Interior Department agencies are supposed to protect under 
numerous laws. For example, Section 3406(d) of the Central Valley 
Project Improvement Act requires the Secretary of Interior to maintain 
and improve wetland habitat areas in California, including by providing 
water supplies and supporting the objectives of the Central Valley 
Habitat Joint Venture. In accordance with the Department of Interior's 
wetlands-related responsibilities, what is the Department's plan for 
the future management of the San Luis Drain in and around the 
Grasslands complex of state, Federal and privately managed wetlands? 
How will the Department of Interior ensure that all potential impacts 
from the Drain and its future management and cleanup will not adversely 
impact these wetlands and the numerous species they support before the 
Department of Interior and the Bureau of Reclamation relinquish Federal 
control of the Drain?

                                 ______
                                 

    Dr. Fleming. Thank you, Mr. Bezdek.
    Mr. Ellis, you are now recognized.

STATEMENT OF STEVE ELLIS, VICE PRESIDENT, TAXPAYERS FOR COMMON 
                     SENSE, WASHINGTON, DC

    Mr. Ellis. Thank you. Good morning, Chairman Fleming, 
Ranking Member Huffman, and members of the subcommittee. Thank 
you for the opportunity to testify on H.R. 4366 and H.R. 5217. 
I am Steve Ellis, Vice President of Taxpayers for Common Sense, 
a national, non-partisan budget watchdog.
    In essence, the two agreements that would be implemented by 
these bills absolve the United States from providing drainage 
to several California water districts in exchange for numerous 
new benefits to the districts. At this time, Taxpayers for 
Common Sense (TCS) opposes this legislation. It is not that we 
do not want to see a resolution to this fight; we absolutely 
do. We just don't think this is the best or even a good deal 
for taxpayers.
    This deal would end the court-mandated requirement that the 
United States provide drainage, and shift that responsibility 
to the districts. But considering Reclamation estimated the 
effort would cost billions of dollars, it is not clear how the 
districts would pay for it. The legislation contains no 
practical enforcement measures to ensure adequate drainage, or 
even provisions for monitoring and testing.
    Westlands Water District has estimated that drainage will 
cost ``hundreds of millions of dollars, not billions.'' It may 
not initially seem relevant, but Westlands recently paid a 
penalty to settle an SEC enforcement action over misleading 
investors regarding their finances during a bond offering in 
2012. How? Westlands used self-described ``Enron accounting'' 
to manipulate their books to avoid raising water rates for 
their customers. Similar accounting practices might explain how 
Westlands anticipates lower costs, but that does not ensure 
taxpayers that Westlands can meet its drainage obligation.
    Under this agreement, Westlands landowners could continue 
to grow crops on their land until they can't any more, and then 
start reselling the promised water. Or they could use the 
affected lands for solar energy development and sell the water. 
Or they could retire more acres and grow more profitable crops 
on a smaller subset of lands. TCS would not oppose any of these 
options, but it would mean that the value of the drainage 
obligation that the United States is shedding is a pittance 
compared to what Westlands is getting.
    Land retirement is a primary strategy for reducing drainage 
impacts. But the Northerly Districts' agreement requires no 
land retirement at all, and the Westlands agreement only 
retires 100,000 acres. It has been widely reported that much of 
this land has already been retired. Both Westlands and 
Reclamation have previously suggested multiple times that 
200,000 acres should be retired. So, including only half as 
much in this agreement is surprising. Since drainage impact and 
costs will likely push Westlands to retire at least 200,000 
acres, in my opinion, this deal is really about the water.
    In a 2010 letter to Senator Feinstein, then-Commissioner 
Connor stipulated that contract amount of water for Westlands 
should be reduced by a proportion equivalent to the amount of 
land retired. Less land to irrigate, less water needed. The 
agreement abandons this common-sense proposition, and does not 
reduce the contract amount. Instead, it keeps the total 
contract amount, then stipulates that Westland should get 75 
percent of that, or 895,000 acre-feet.
    By promising that future allocations will be based on the 
full 100 percent contract total, rather than a reduced amount, 
it ensures that Westlands will always get a larger share, 
relative to other CVP junior contractors. In addition, under 
the agreement, Westlands would be considered to be paid out, 
and their water contract would convert from a 9(e) water 
service contract to a permanent 9(d) contract. If Westlands 
retires more land in the future, the excess water not used on 
that land would be money in the bank. The excess water 
delivered at artificially low rates would become highly 
valuable in the market.
    The right choices for water distribution in California vary 
over time, based on a myriad of factors. At a minimum, giving 
Westlands permanent water rights to water should have been 
analyzed for its impact on other future Federal and taxpayer 
obligations. Reclamation has presented a calculation that was 
shown earlier of the purported financial savings to the United 
States from this deal. Economic analysis is only as good as the 
assumptions that accompany it, and that is where this analysis 
fails.
    Deputy Secretary Connor stipulates that the analysis relies 
on ``current applicable law.'' This fails to recognize these 
bills are, in fact, making law and could improve financial 
terms for the taxpayer. Under current applicable law, which 
dates back to 1902, the districts would have 40 years to repay 
billions of dollars at no interest. The last dollar would be 
paid in 2070. I reject the savings analysis because of this 
fundamental assumption.
    Though current law allows for such repayment terms, current 
law also provides only $513 million in remaining construction 
authority for the San Luis Unit. Additional legislation 
providing billions of dollars in budget authority and 
appropriations would be necessary before drainage construction 
could start. New law, new terms.
    Taxpayers for Common Sense has long been on the record that 
there should be significant reforms to water project financing 
and to price water to reflect market realities. A 
reauthorization of the San Luis Unit would provide an ideal 
opportunity to change these decade-old policies. I want to 
reiterate that TCS wants this issue to be resolved. But these 
agreements and this legislation do not resolve the issue in a 
way that is fair to taxpayers.
    Thank you for the opportunity to testify and I will be 
happy to take any questions you might have.
    [The prepared statement of Mr. Ellis follows:]
Prepared Statement of Steve Ellis, Vice President, Taxpayers for Common 
                    Sense on H.R. 4366 and H.R. 5217
    Good morning Chairman Fleming, Ranking Member Huffman, and members 
of the subcommittee. Thank you for inviting me to testify. I will be 
focusing on H.R. 4366 and H.R. 5217, both of which would formalize 
agreements between the United States and Westlands Water District \1\ 
and the Northerly Districts.\2\ I am Steve Ellis, Vice President of 
Taxpayers for Common Sense, a national non-partisan budget watchdog.
---------------------------------------------------------------------------
    \1\ Available at http://www.usbr.gov/mp/docs/Notice-of-Filing-
Settlement-Agreement-AS-FILED-with-attachment-091615.pdf.
    \2\ Commentary based on Summary of Termsheet for a Proposed 
Settlement Between the United States and the Northerly San Luis Unit 
Districts Regarding Drainage from October 29, 2015.
---------------------------------------------------------------------------
    In essence, the two agreements absolve the United States from 
providing drainage for irrigation water sent to the districts in 
exchange for numerous new benefits to the districts:

     Drainage would become the responsibility of the districts.

     In return the districts would be deemed to have paid off 
            all capitalized construction costs for the Central Valley 
            Project (currently estimated at over $400 million in 
            total). Thus the districts would be given permanent 
            contracts for their water at a far cheaper price, along 
            with other benefits such as transfer of various Federal 
            facilities, waiver of Federal farm size limits, and a new 
            Federal commitment to permanent water deliveries from the 
            Central Valley Project (CVP) (because of delayed 
            environmental reviews and controversies the four districts 
            currently only have been only able to obtain 2-year 
            extension contracts for such deliveries for several cycles. 
            Without these bills, under the CVP Improvement Act (CVPIA) 
            these would be 25-year contracts).

     The Westlands agreement also would help resolve several 
            different ongoing rounds of litigation and Westlands would 
            permanently retire 100,000 acres of its 600,000-acre 
            district (we understand most of these lands have already 
            been retired under various prior programs or agreements).

     The Northerly Districts (San Luis, Panoche, and Pacheco 
            Water Districts) would also receive a new Federal payment 
            of $70 million.

    There are other factors in the agreements, but these are the main 
ones I will be discussing. Also, the full Northerly District agreement 
has not been finalized, so my commentary will be mostly Westlands-
focused, but would still generally apply to what I have seen about the 
other proposed agreement.
    At this time, Taxpayers for Common Sense is opposed to the 
legislation. It is not that we don't want to see a resolution to this 
fight. We absolutely do. We just don't think this is the best or even a 
good deal for taxpayers.
                                drainage
    It is true that this deal would end the court-mandated requirement 
that the United States provide drainage for these districts. The 
districts would take on the responsibility for ensuring adequate 
drainage. But considering that the cost of providing drainage for these 
districts is estimated in the billions of dollars, it is also not clear 
how the districts would be able to do this.
    There have been suggestions that drainage supplied by the districts 
would entail small-scale treatment, growing salt-tolerant crops, more 
efficient irrigation, and I would imagine further land retirement. 
Westlands has estimated that this will cost ``hundreds of millions of 
dollars.'' \3\ Not billions. But there is no guarantee that this will 
actually happen.
---------------------------------------------------------------------------
    \3\ Bettina Boxall Los Angeles Times ``Westlands Water District 
Agreement a Retreat From Previous U.S. Plan,'' September 22, 2015. 
Available at: http://www.latimes.com/science/la-me-westlands-20150922-
story.html. Quote from Tom Birmingham, General Manager Westlands Water 
District.
---------------------------------------------------------------------------
    This disparity in cost estimates is even harder to credit 
considering that Westlands recently paid a penalty to settle a 
Securities Exchange Commission (SEC) enforcement action over misleading 
investors regarding a $77 million bond offering in 2012. The SEC found 
an order-of-magnitude disparity in the promised debt service coverage 
ratio and the actual coverage ratio. Why? Because Westlands used self-
described ``Enron accounting'' in an effort to not raise water rates 
for Westlands customers.\4\ Similar accounting practices might explain 
how Westlands anticipates costs an order of magnitude lower than the 
Reclamation estimated costs, but they don't provide sufficient 
assurances to the taxpayers that Westlands can meet its drainage 
obligation.
---------------------------------------------------------------------------
    \4\ SEC Press Release ``California Water District to Pay Penalty 
for Misleading Investors,'' March 9, 2016. Available at https://
www.sec.gov/news/pressrelease/2016-43.html.
---------------------------------------------------------------------------
    The agreements and certainly the legislation contain no practical 
enforcement measures to ensure that the districts will provide adequate 
drainage, or even provisions for monitoring and testing. The only 
apparent ``enforcement'' tool is that if the United States somehow 
learns that any of the districts has somehow violated applicable law, 
the United States could (but is not required to) impose the ultimate 
sanction of stopping all water deliveries to the district--a rarely 
used Federal power around the West.
    Thus, under this agreement, Westlands landowners could continue to 
grow crops on their land until they can't anymore and then start 
reselling the promised water (either within the district or to cities 
or farms outside the district). Or they could use the affected lands 
for solar energy development and sell the water. Or they could retire 
more acres and grow more profitable crops on a smaller subset of lands. 
TCS wouldn't oppose any of these options, but it would mean that the 
value of the drainage obligation government is shedding is a pittance 
compared to what Westlands is getting, and TCS would prefer that the 
government make a better deal in exchange.
                            land retirement
    The Northerly Districts' agreement requires no land retirement at 
all, and the Westlands agreement includes a provision for Westlands to 
retire 100,000 acres from the 600,000-acre district. It has been widely 
reported that much of this land has already been retired. Furthermore 
it is a paltry amount considering what had been discussed in the past. 
In 2002, the top Westlands official wrote in the Bakersfield 
Californian that they were considering removing 200,000 acres from 
production--proudly stating it was one-third of the district--as part 
of an earlier proposed drainage settlement.\5\ The government's 2007 
Record of Decision on the drainage issue recommended that nearly 
200,000 (194,000) acres be retired.\6\ And in a 2010 letter to Sen. 
Feinstein (D-CA), then-Commissioner of Reclamation Michael Connor 
(current Deputy Secretary of Interior) wrote that Westlands should be 
``required to permanently retire a minimum of 200,000 acres of the most 
drainage impaired lands'' as part of a settlement.\7\
---------------------------------------------------------------------------
    \5\ Bakersfield Californian ``Another View/Tom Birmingham: 
Westlands Seeks to Help All Farmers,'' May 1, 2002.
    \6\ San Luis Drain Feature Re-evaluation Record of Decision March 
2007. Available at http://www.usbr.gov/mp/mp150/envdocs/
San_Luis_Drainage_Feature_Re-evaluation_ROD.pdf.
    \7\ Letter from Michael L. Connor, Commissioner, U.S. Department of 
Interior to Senator Dianne Feinstein. September 1, 2010
---------------------------------------------------------------------------
    Considering the consensus on 200,000 acres from so many parties--
including both Westlands and Reclamation--only including 100,000 acres 
in the agreement is surprising at best. It's very likely that between 
lands too salt-impacted/drainage-impaired for cultivation and an effort 
to reduce drainage costs, Westlands will retire at least 200,000 acres 
if not more. In my opinion this deal is really about water.
                                 water
    How is land retirement tied to water? In the 2010 letter to Sen. 
Feinstein, then-Commissioner Connor stipulates that the current 
contract amount of water for Westlands (1.193 million acre-feet) should 
be reduced by a proportion equivalent to the amount of district land 
retired. This was estimated to result in a new contract total of 
806,000 acre-feet (still an enormous amount of water and a generous 70 
percent of the old contract amount). It only makes sense. Less land to 
irrigate, less water needed. The agreement abandons this common-sense 
proposition and doesn't reduce the contract amount. Instead it 
stipulates in effect that Westlands should get 75 percent of the 
contracted amount or 895,000 acre-feet. In wet years, water in excess 
of that would be available to Reclamation for their use or to resell to 
others, including Westlands, in Reclamation's sole discretion.
    First, the higher total contract amount means tiered water pricing 
(water price increases for amounts delivered in excess 80 percent of 
total contract amount) would never come into effect. Instead of having 
to pay higher-tiered prices at 80 percent of the water potentially 
delivered to its smaller land area, Westlands would at maximum receive 
75 percent of the higher contract amount. The 75 percent level would in 
effect become 100 percent of what Westlands is entitled to under the 
law if H.R. 4366 or H.R. 5217 is enacted, and the higher-tiered pricing 
would never go into effect.
    Also, if a higher land retirement figure were used--like say, 
200,000 acres, twice what is in the agreement--it would be hard to 
justify (under both state and Federal legal principles) contracting for 
that much water to be delivered and not change the total contract 
amount. And by promising that future annual allocations will be based 
on the full 100 percent contract total, rather than a reduced amount 
(whether 70 or 75 percent), it ensures that Westlands will always get a 
larger share relative to other CVP junior contractors who have 
allocation percentages based on their actual contract amounts.
    In addition, under the agreement Westlands would be considered to 
be ``paid out'' and their water contract would convert from a 9(e) 
water service contract to 9(d) repayment contract. This would be a 
permanent contract as opposed to the normal contract renewals that 
should occur every 25 years under the CVPIA. In his letter to Sen. 
Feinstein, then-Commissioner Connor supported the idea of a longer-term 
contract than 25 years, but not a permanent contract. Promising a 
permanent contract with total amounts that are set in binding 
agreements and/or Federal statute regardless of potential future 
impacts population growth, other business users, climate change, or 
other factors disregards the long history of water strife and 
challenges faced in the arid West. At a minimum, such a proposal should 
have been analyzed for its impact on other Federal and taxpayer 
obligations before the Administration signed a Settlement Agreement 
committing the United States to such a new policy for Westlands.
    If, as we suspect will happen, Westlands goes ahead and retires 
more land, that excess water would be money in the bank. The excess 
water they received at artificially low rates would then, obviously, 
become much more valuable in the market.
                               true value
    Speaking of money, in an April 21, 2016 letter to Congressman David 
Valadao (R-CA, and author of H.R. 4366) regarding the Westlands 
agreement, Deputy Secretary of Interior Michael Connor attaches a table 
entitled ``U.S. Bureau of Reclamation's Assessment of Costs and 
Benefits to Federal Government of Westlands' Drainage Settlement 
(Presented in Present (2015) Net Worth).'' \8\ This net present value 
analysis discounts future costs and savings to account for the time 
value of money and bring everything into 2015 values. This analysis 
estimates the agreement would save the government a little less than $1 
billion--$968.9 million. This is absolutely the economically 
appropriate way to analyze the deal. Money coming in two decades or 
more from now is less valuable than money today. But economic analysis 
is only as good as the assumptions that accompany it. That is where 
this analysis fails.
---------------------------------------------------------------------------
    \8\ Letter from Michael L. Connor, Commissioner, U.S. Department of 
Interior to Representative David Valadao, April 21, 2016.
---------------------------------------------------------------------------
    Deputy Secretary Connor stipulates that the analysis used ``current 
applicable law.'' Such an analysis fails to consider that these bills 
are in the process of making law, and could instead alter expectations 
to improve financial arrangements for the taxpayer. The ``current 
applicable law'' goes back to the Reclamation Act of 1902. That means 
the beneficiaries of the drain would not have to start repaying for the 
project until it is complete. And under ``current applicable law'' the 
beneficiaries would have 40 years to repay at no interest. Zero, zilch, 
nada.
    Reclamation's analysis anticipates the Congress would appropriate 
and the United States would spend $2.5 billion on drainage to complete 
the project by 2030. In 2070, when the last of the $2.5 billion loan is 
repaid, the net present value of that total repayment in 2015 would be 
only $1.2 billion. These long-term, no-interest loans arguably made 
sense at the beginning of the last century as small farmers got started 
and Reclamation was encouraging settlement of the West. Providing a 40-
year no-interest loan in 2016 to Westlands--a wealthy, powerful water 
district that brags that its growers produce more than $1 billion worth 
of food and fiber every year--makes no sense.\9\ I reject the savings 
analysis because of its fundamental assumptions.
---------------------------------------------------------------------------
    \9\ http://wwd.ca.gov/about-westlands/.
---------------------------------------------------------------------------
                               authority
    Even if it is true that the law of the land still allows for such 
repayment terms, it is also true that under the law providing for the 
construction of the San Luis Unit there was only $513 million in 
remaining available authority as of 2015.\10\ So to even construct the 
drain and an equivalent new drainage system, additional legislation 
providing billions of dollars in budget authority and appropriations 
would be necessary before construction could be initiated. New law, new 
terms. Taxpayers for Common Sense has long been on the record that 
there should be significant reforms to water project financing and to 
price water to reflect market realities. A reauthorization of the San 
Luis Unit would provide an ideal opportunity to change these decades-
old policies. The facts of the Westlands situation are a perfect recipe 
for such fiscal and pricing reforms to reflect the new realities that 
have developed since the 1902 Act and the 1960 San Luis Act.
---------------------------------------------------------------------------
    \10\ Bureau of Reclamation U.S. v. Westlands Settlement Agreement 
Fact Sheet, Oct. 2015. Available at http: / / wwd.ca.gov / wp-content / 
uploads /2015 /10 /westlands-vs-united-states-settlement.pdf.
---------------------------------------------------------------------------
                               conclusion
    I want to reiterate that TCS wants this issue to be resolved. But 
we don't think that these agreements and this legislation resolve the 
issue in a way that is fair to taxpayers.
    Thank you for the opportunity to testify and I will be happy to 
take any questions you might have.

                                 ______
                                 

    Dr. Fleming. Thank you, Mr. Ellis.
    Mr. Brown, you are recognized for 5 minutes.

 STATEMENT OF JERRY BROWN, GENERAL MANAGER, CONTRA COSTA WATER 
                 DISTRICT, CONCORD, CALIFORNIA

    Mr. Brown. Thank you, Chairman Fleming, Ranking Member 
Huffman, and members of the subcommittee. Contra Costa Water 
District (CCWD) is the oldest and largest M&I contractor within 
the Central Valley Project, and we rely on the Delta to divert 
and deliver high-quality drinking water through CVP and our own 
facilities to our 500,000 residents and many large industrial 
customers. Anything discharged upstream in the San Joaquin 
Valley ends up downstream in the Delta. Any mistakes in these 
San Luis drainage agreements will compromise the Delta water 
quality we drink and use every day.
    CCWD has spent over $1 billion over the past 20 years to 
build infrastructure to protect and improve our drinking water 
quality. Unfortunately, the pressure on our assets to perform 
this critical function grows greater every day, as Delta water 
quality continues to decline. For the past 30 years, Contra 
Costa has worked with other Delta stakeholders, including Delta 
communities and environmental groups to prevent the export of 
toxic drainage from the San Luis Unit to the Delta. This 
includes opposing the building of the San Luis drain to the 
Delta, as well as opposition to drainage discharges within the 
San Joaquin River and, thus, ultimately reaching the Delta.
    CCWD supports an in-valley drainage solution in keeping 
with the 2007 Bureau of Reclamation Record of Decision on the 
San Luis drainage feature re-evaluation. It is essential that 
drainage is not exported to the Delta. However, as they say, 
the devil is in the details, and the details of how drainage 
will be managed are lacking in the Westlands settlement 
agreement and the Northerly Area agreement.
    To ensure that the many beneficial uses of the Delta are 
not impacted, the proposed legislation enacting these 
agreements needs to be amended in three key areas.
    First, the agreements both lack drainage management plans. 
This is despite the Obama administration letter to Diane 
Feinstein dated September 1, 2010 that identified as key 
elements to any drainage settlement measurable environmental 
objectives, including water quality and specific enforceable 
performance measures. While the Westlands settlement states 
that Westlands must manage its drainage as a condition for 
receiving CVP water, the enacting legislation and agreements 
lack any definition of detailed drainage management plans that 
are required for monitoring, reporting, and enforcement 
measures.
    Second, the agreements call for inadequate amounts of land 
retirement. Land retirement has been acknowledged to be the 
best way to prevent drainage impacts. The 2007 Record of 
Decision selected a final alternative with 194,000 acres of 
land retirement, which in itself was already less than the 
308,000 acres of land retirement identified in the lowest net 
cost alternative recommended by the USGS and U.S. Fish and 
Wildlife Service. However, the Westlands settlement only 
requires 100,000 acres of land retirement, and the Northerly 
agreement has no land retirement.
    Furthermore, the total contracted amount specified for the 
San Luis Unit CVP contract should be reduced proportional to 
the amount of land retired. Instead of reaffirming the San Luis 
contractor's full contract supply and converting these existing 
contract to permanent contracts, the agreement should promote 
water conservation and irrigation efficiency by retiring the 
water rights linked to the irrigation of retired lands.
    Third, the agreements have the potential to harm other CVP 
contractors. CCWD and other CVP contractors are already 
concerned about the decreasing reliability of the CVP water 
supply in general. Replacing the San Luis Unit contractor's 
renewable contracts with permanent contracts without legally 
binding and enforceable provisions added to the contracts will 
harm the rest of the CVP. Congress never intended San Luis 
users to be given a priority over other CVP contractors, but 
priority is implied by granting the San Luis Unit users 
guaranteed permanent contracts.
    The March 18, 2016 memo from the Congressional Research 
Service to Congressman Jared Huffman regarding the Westlands 
drainage settlement describes several ways that CVP contractors 
would be harmed by the settlement. In order to avoid adverse 
impacts to water supply of other contractors, the San Luis Unit 
contract amounts need to be subject to review at regular 
intervals, particularly in the face of changing hydrology in 
California due to climate change or completion of the 
California water fix, or other actions.
    Also, forgiving the San Luis Unit contractors' capital 
repayment debt must not hurt other CVP contractors by shifting 
recovery of cost to us. The legislation must specifically 
address how the $420 million cost will be recovered in the 
Federal budget without shifting costs to other CVP contractors.
    Thank you for this opportunity to testify on this topic of 
vital importance to CCWD and the Delta.
    [The prepared statement of Mr. Brown follows:]
Prepared Statement of Jerry Brown, General Manager, Contra Costa Water 
                  District on H.R. 4366 and H.R. 5217
    My name is Jerry Brown, and I am the General Manager of Contra 
Costa Water District (CCWD). Contra Costa Water District is an urban 
water agency located in the eastern end of the Bay Area in Northern 
California, on the western edge of the Sacramento-San Joaquin Delta. 
CCWD is the oldest and largest M&I contractor within the Central Valley 
Project, we are in the Delta, and we rely on the Delta to deliver high 
quality drinking water to our 500,000 residents and many large 
industrial customers. We own facilities and divert water from the Delta 
under our own permits and approvals. We also operate and maintain CVP 
facilities for the Bureau of Reclamation. Unlike other urban areas 
which also rely on the Delta and have other sources of supply, almost 
all of our water comes out of the Delta. Anything discharged upstream 
in the San Joaquin Valley ends up downstream in the Delta, and any 
mistakes in these San Luis Drainage agreements will compromise the 
Delta water quality we drink and use every day.
    CCWD has a unique standing in the Delta. We are known for having a 
strong technical acumen on Delta issues and for being constructive 
participants in the Delta conversation. CCWD has spent over $1B over 
the past 20 years to build infrastructure to protect and improve our 
drinking water quality. Unfortunately the pressure on our assets to 
perform this critical function grows greater every day as Delta water 
quality continues to decline. CCWD frequently engages with a wide range 
of stakeholders in collaborative efforts to protect the Delta by 
participating in projects that protect Delta levees, enhance Delta 
ecosystem protection, improve Delta water supply operations, advance 
Delta science, and maintain Delta water quality.
    For the past 30 years, Contra Costa Water District has worked with 
Delta counties and environmental groups, to prevent the export of toxic 
drainage from the San Luis Unit to the Delta. This includes opposition 
to building the San Luis Drain to the Delta as well as opposition to 
drainage discharges to the San Joaquin River and thus ultimately to the 
Delta. CCWD understands the need for drainage services for the San Luis 
Unit and fully supports sound in-valley drainage solutions, but we also 
seek to ensure that the actions of others will not harm us or our Delta 
neighbors. For instance, CCWD participated in the productive Grassland 
Bypass Use Agreements process in order to promote effective drainage 
management in the Northerly Area.
    CCWD acknowledges the stated commitment of Westlands and the 
Northerly Area contractors to manage their toxic agricultural drainage 
within their own boundaries. An in-valley drainage solution would be in 
keeping with the 2007 Bureau of Reclamation Record of Decision on the 
San Luis Drainage Feature Re-Evaluation, and it is essential that 
drainage is not exported to the Delta. However, as they say, ``the 
devil is in the details,'' and the details of the Westlands Settlement 
Agreement and the Northerly Area Agreement are lacking. To ensure that 
the many beneficial uses of the Delta are not impacted, most important 
to CCWD being drinking water as a beneficial use, CCWD's Board of 
Directors have taken an Oppose Unless Amended position on the proposed 
legislation enacting these agreements with amendments required in three 
key areas.
    First, the agreements both lack drainage management plans. This is 
despite the Obama administration letter to Senator Dianne Feinstein 
dated September 1, 2010, that identified as ``key elements'' to any 
drainage settlement ``measurable environmental objectives, including 
water quality'' and ``specific enforceable performance measures.'' The 
Westlands Settlement states that Westlands must manage its drainage as 
a condition for receiving CVP water, but the Settlement does not 
identify how proper management will be determined. The enacting 
legislation, and the implementing agreements, need detailed drainage 
management plans specifying monitoring, reporting, and enforcement 
measures. The monitoring and reporting that already occurs under the 
Grassland Bypass Use Agreements can serve as a model for these 
requirements. And at a minimum the terms of the current Use Agreement, 
including the requirement to achieve zero discharge to the San Luis 
Drain by the end of 2019, need to be incorporated into the Northerly 
Area Agreement. The Department of Interior, Bureau of Reclamation has a 
responsibility in perpetuity under anti-degradation policies of the 
state to ensure that these agreements do not create significant impacts 
on the beneficial uses of the Delta. Drainage management plans need to 
be finalized and approved by the appropriate state and Federal agencies 
before the San Luis Unit contractors receive the benefits of these 
agreements. These plans should be overseen by the Environmental 
Protection Agency if Reclamation is unable to ensure that these 
agreements do not adversely impact other water users such as CCWD or 
the Delta ecosystem.
    Second, the agreements call for inadequate amounts of land 
retirement. Land retirement has been acknowledged to be the best way to 
prevent drainage impacts but the settlement fails to secure a 
sufficient amount of acres to ensure Westland's fulfills its drainage 
control responsibilities. The 2007 ROD selected a final alternative 
with 194,000 acres of land retirement, which in itself was already less 
than the 308,000 acres of land retirement identified in the lowest net 
cost alternative recommended by the U.S. Geological Survey and the U.S. 
Fish and Wildlife Service. However, the Westlands Settlement only 
requires 100,000 acres of land retirement, and the Northerly Area 
Agreement has no land retirement requirement. Furthermore, the total 
contract amount of water given to San Luis Unit contractors through 
Central Valley Project contracts should be reduced proportional to the 
amount of land retired. Retiring drainage-impaired land not only 
reduces the amount of toxic drainage generated from the region but also 
reduces the irrigation demand of the region. Decreasing the demand for 
Delta exports reduces the burden on the overstressed Delta system, 
leading to a healthier ecosystem and a more reliable water supply for 
all beneficial uses of the Delta. The Westlands Settlement currently 
awards Westlands a permanent contract for their existing 1,193,000 
acre-feet of water per contract year, which does not take into account 
land already retired or land that will be retired; this inflated total 
contract amount gives Westlands an unfair, disproportionately large 
base amount from which shortage allocations are calculated. Instead of 
reaffirming the San Luis Unit contractors' full contract supply and 
converting their existing contracts to permanent contracts, the 
agreements should promote water conservation and irrigation efficiency 
by retiring the water rights linked to the irrigation of retired lands.
    Third, the agreements have potential to harm other CVP contractors. 
For 80 years, CCWD has relied on Central Valley Project water to meet 
most of our customer needs. CCWD signed a long-term 40-year municipal 
and industrial contract with the Central Valley Project in 2005. CCWD 
and other CVP contractors are already concerned over the decreasing 
reliability of CVP water supply in general. Replacing the San Luis Unit 
contractors' renewable contracts with permanent contracts as 
contemplated in the settlement without legally binding and enforceable 
provisions added to the contracts could harm the rest of the CVP's 
contractors by giving Westlands higher priority to limited water 
available to the entire CVP. The new rights awarded in the settlement 
to Westlands also violate the past practice of the Bureau of 
Reclamation recognizing ``first in time, first in rights'' priority, 
which means older CVP contractors like CCWD are potentially impacted in 
the form of lesser deliveries and/or contract quantities. Also 
concerning is the fact that legislative history contains references to 
San Luis Unit water as ``surplus'' water. Congress never intended San 
Luis users to be given priority over other CVP contractors, but 
priority is implied by granting the San Luis Unit users guaranteed 
permanent contracts. The basis for moving forward with San Luis Unit in 
the first place was that their needs would only be met after existing 
needs were met, which include the needs of CCWD and other Delta 
beneficial uses. The March 18, 2016 memorandum from the Congressional 
Research Service to Congressman Jared Huffman regarding the Westlands 
Drainage Settlement describes several ways that CVP contractors would 
be harmed by the settlement. Specifically, in order to avoid adverse 
impacts to the water supply of other CVP contractors, the San Luis Unit 
contract totals need to be subject to review at regular intervals, 
particularly in the face of changes in hydrological conditions in 
California due to climate change and sea level rise or completion of 
the California WaterFix or other actions. Similarly, the settlement 
agreements' forgiveness of the San Luis Unit contractors' capital 
repayment debt must not hurt other CVP contractors by shifting recovery 
of CVP costs to us. The legislation must specifically address how the 
$420M cost will be recovered in the Federal budget without shifting 
costs to other CVP contractors.
    Thank you for this opportunity to testify on this topic of vital 
importance to CCWD.

                                 ______
                                 

    Dr. Fleming. Thank you, Mr. Brown.
    Mr. Birmingham, you are recognized.

 STATEMENT OF TOM BIRMINGHAM, GENERAL MANAGER/GENERAL COUNSEL, 
          WESTLANDS WATER DISTRICT, FRESNO, CALIFORNIA

    Mr. Birmingham. Thank you, Mr. Chairman, members of the 
committee. In my written testimony, and in the written 
testimony submitted by the Department of the Interior, there is 
a detailed description of the history of the litigation that 
has brought us to this point. I will not recount that 
litigation, but I would like to observe that this is a real 
problem, as made very evident by the photograph that was 
depicted during the opening statement by the Ranking Member.
    This is a real problem that existed in the San Joaquin 
Valley and an environmental problem that has existed for more 
than 35 years. And it is a problem that will be resolved 
through this settlement and the legislation to authorize the 
settlement.
    I understand that there are many who, at the mere mention 
of Westlands Water District, have their blood pressure raised. 
I have heard Members of Congress say, ``If this legislation 
benefits Westlands,''--not H.R. 4366, but any legislation that 
benefits Westlands--``I am going to oppose it.'' But when the 
benefits to the United States derived from this legislation are 
objectively analyzed, I believe that a reasonable person would 
conclude that this is in the best interest of the Federal 
Government, it is in the best interest of the taxpayer, and it 
is in the interest of the people of the state of California.
    Under this settlement, Westlands will assume responsibility 
for managing drain water within its boundaries. There are 
concerns about the potential that this water will be discharged 
to waters of the United States or into the Delta. The 
settlement does not permit that. The settlement is very clear. 
Water must be managed within our boundaries. And if we do not 
perform, the Federal Government has the ultimate hammer. Our 
water supply will be shut off.
    I understand that this may not be the settlement that 
individual Members of Congress have negotiated, but it is the 
settlement that the Obama administration negotiated on behalf 
of the United States. And under the terms of the settlement, 
the Federal Government will be relieved of an obligation to 
spend in excess of $3.5 billion under a court-mandatory 
injunction. They will be indemnified against any liability as 
it relates to their failure to provide drainage. The Federal 
Government will be indemnified against liability in existing 
takings litigation. Westlands will become a party to that 
litigation, and will compensate the landowners who have filed 
litigation against the government. Westlands will dismiss its 
contractual litigation.
    This is pretty simple. We have been paying for drainage 
service for in excess of 35 years. We have not received the 
drainage service. Our breach of contract litigation will go 
away. But from Westlands perspective, perhaps the greatest 
benefit is that there will finally be a meaningful solution to 
the drainage problem. And that is critical if we are going to 
sustain irrigated agriculture on the west side of the San 
Joaquin Valley.
    With that, Mr. Chairman, I would be delighted to answer 
your questions or questions of the members of the subcommittee.
    [The prepared statement of Mr. Birmingham follows:]
   Prepared Statement of Thomas Birmingham, General Manager/General 
      Counsel, Westlands Water District on H.R. 4366 and H.R. 5217
    Mr. Chairman and members of the subcommittee, my name is Thomas 
Birmingham, and I am General Manager/General Counsel of the Westlands 
Water District. I appreciate the opportunity to testify today in 
support of H.R. 4366, the ``San Luis Unit Drainage Resolution Act,'' 
which authorizes the implementation of the settlement agreement between 
the United States and Westlands Water District for the purpose of 
resolving litigation related to the Secretary of the Interior's 
obligation to provide drainage service to the San Luis Unit of the 
Central Valley Project.
                        westlands water district
    Westlands Water District (Westlands) is a public agency of the 
state of California, which was formed by an act of the State 
Legislature for the purpose of supplying irrigation water to land on 
the west side of the San Joaquin Valley. The District's principal 
office is in Fresno, California, and it consists of more than 600,000 
acres of land in Fresno and Kings counties. The lands within Westlands 
are among the most productive agricultural lands in the world. Fruits 
and vegetables produced in Westlands grace dining tables across the 
United States. That tremendous productivity occurs though a combination 
of the area's climate and soil, the skill and diligence of area 
farmers, and water. Westlands provides most of the water used to 
irrigate these lands, water it receives under a contract with the 
Federal Bureau of Reclamation (Reclamation). Because of its role in 
providing essential irrigation water, Reclamation rightly deserves 
credit for helping to create what is now a highly valuable agricultural 
resource. In this respect, Federal reclamation policy has been a 
notable success.
    For some lands within Westlands, as with lands elsewhere in the San 
Joaquin Valley, and across the United States, something more is 
required to keep the lands productive over the long term. Some lands 
require drainage. In the United States alone, 11 million of 44 million 
irrigated acres require drainage to remain productive. But disposing of 
drainage water can create its own set of concerns and issues, such as 
impacts to water quality. As a result of such concerns today there is 
no drainage of lands in Westlands, with the result that some lands in 
Westlands can no longer support irrigated crops. Without a solution, 
still more lands will be rendered infertile. With respect to drainage 
for these lands, Federal reclamation policy has been a notable failure.
history of litigation concerning drainage service for the san luis unit
    An understanding of the importance of H.R. 4366 requires an 
understanding of the events that have brought us to this point. I am 
confident that the Members of Congress who approved the construction of 
the San Luis Unit of the Central Valley Project in 1960 would have been 
very surprised to learn that this subcommittee is considering 
legislation, 56 years later, to resolve litigation concerning the 
Secretary's duty to provide drainage to the San Luis Unit, as the 1960 
legislation was intended to have resolved that issue.
    In 1960, it was understood that the delivery of irrigation water to 
areas within the San Luis Unit would also require drainage. Studies of 
the proposed San Luis Unit confirmed the need for drainage. Lands in 
areas adjacent to the proposed San Luis Unit were experiencing drainage 
problems, and landowners in those adjacent areas expressed concerns 
that providing irrigation water to the San Luis Unit lands without 
drainage could exacerbate their drainage problem. Indeed, California's 
earliest water plans recognized that if water were exported from the 
Sacramento-San Joaquin Rivers Delta and used in the Central Valley a 
master drain would be needed. Accordingly, in section 1(a) on the San 
Luis Act, Congress required the Secretary to provide for a drain to the 
Delta in the event that the state of California did not provide a 
drainage system. (Act of June 3, 1960, Public Law 86-488, 74 Stat. 
156.) In 1961, California informed the Secretary that it would not 
provide a master drain, and on January 9, 1962, the Secretary advised 
the Congress that he would make provision for the drain called for by 
the San Luis Act. Later, Reclamation entered contracts with Westlands 
(and other San Luis Unit Contractors) under which drainage service for 
lands within Westlands was contemplated.
    There is a long trail of litigation over the Secretary's 
performance of these statutory and contractual duties.
    That trail begins in 1963, when a group of districts now known as 
the San Joaquin River Exchange Contractors, which serve irrigation 
water to lands adjacent to the San Luis Unit, filed suit to compel the 
Secretary to provide for the drain before commencing construction of 
the San Luis Unit. The District Court denied an injunction, and 
dismissed the action, based on assurances by the United States that it 
would provide drainage to the San Luis Unit.
    Construction of the San Luis Drain began in 1968, but in 1975 the 
Secretary halted construction with only 40 percent of the Drain 
completed, based on concerns expressed by various groups about effects 
of the discharge of drain water into the Delta. Without a terminus in 
the Delta, drainage water generated from the limited area then being 
drained was stored on an interim basis at Kesterson Reservoir. The 
drainage water contained selenium, a naturally occurring mineral that 
was leached from soils in Westlands served by the Drain. Selenium is an 
essential part of the human and animal diet, but at sufficiently high 
concentrations can cause adverse effects to human health, animal life 
and crops. Selenium was identified as the cause of deformities and 
mortality in waterfowl embryos at Kesterson Reservoir, and in 1985 the 
Secretary announced that Kesterson and the Drain would be closed. The 
Secretary failed to provide any alternative plan for providing 
drainage.
    In 1988 and 1991, various landowners and water districts, including 
the Exchange Contactors, brought multiple actions against the Secretary 
to compel the Secretary to provide the drainage service required by the 
San Luis Act. (See Sumner Peck Ranch, Inc. v. Bureau of Reclamation, 
823 F.Supp. 715 (E.D. Cal. 1993).) After the District Court ruled that 
the San Luis Act imposed a mandatory duty to provide drainage, the 
government argued that changes in law since the adoption of the San 
Luis Act made compliance impossible. After a 3-week trial, the District 
Court rejected the government's contentions. The government then 
appealed to the Ninth Circuit of Appeals. In the meantime, nothing was 
being done to provide Federal drainage service to Westlands.
    In 2000, 40 years after passage of the San Luis Act, and 15 years 
after the Secretary essentially quit on drainage, the Ninth Circuit 
weighed in on the drainage issue. (Firebaugh Canal Co. v. United 
States, 203 F.3d 568 (9th Cir. 2000).) The Ninth Circuit held that the 
Secretary has a mandatory duty to provide drainage service to the lands 
of the San Luis Unit, although the Secretary has discretion whether to 
provide drainage service by a drain to the Delta or by some other 
means. The Ninth Circuit said:

        We agree with the district court that the Department of 
        Interior must act to provide drainage service. The Bureau of 
        Reclamation has studied the problem for over two decades. In 
        the interim, lands within Westlands are subject to irreparable 
        injury caused by agency action unlawfully withheld. Now the 
        time has come for the Department of Interior and the Bureau of 
        Reclamation to bring the past two decades of studies, and the 
        50 million dollars expended pursuing an ``in valley'' drainage 
        solution, to bear in meeting its duty to provide drainage under 
        the San Luis Act.

203 F.3d at 578.
    In response to the mandatory injunction issued after the Court of 
Appeals decision, Reclamation began evaluating alternative means of 
providing drainage service to the San Luis Unit, culminating in the San 
Luis Unit Drainage Feature Re-evaluation Environmental Impact 
Statement. Thereafter, in 2007, Reclamation signed a Record of Decision 
selecting a drainage plan and finding that the cost of providing 
drainage for lands served by the San Luis Unit would be approximately 
$2.7 billion. Reclamation now estimates that those costs are 
approximately $3.8 billion using 2015 cost indices. Reclamation began 
implementing the selected drainage plan in a portion of Westlands in 
2010 on a court-ordered schedule.
    In addition, the United States settled litigation brought by 
individual landowners regarding some 37,000 acres within Westlands 
damaged by a lack of drainage. Under that settlement, the United States 
paid approximately $110 million in damages. However, the claims of 
other landowners and Westlands with respect to other lands damaged by 
the lack of drainage remain unresolved. In 2011, those other landowners 
in Westlands filed a takings claim against the United States, alleging 
that failure to provide drainage service has caused a physical taking 
of their lands without just compensation, in violation of the Fifth 
Amendment. The Court of Federal Claims denied the United States' motion 
to dismiss the complaint, and while the complaint does not specify a 
dollar amount for damages, the government estimates that Federal 
liability for just compensation could be over $2 billion.
    In January 2012, Westlands filed a breach of contract claim against 
the United States, alleging that the Secretary's failure to provide 
drainage service to Westlands constituted a breach of Westlands' 1963 
Water Service and 1965 Repayment contracts (including the interim 
renewal of those contracts). That case is currently pending.
    In the context of this history, it should be evident to any 
objective person as to why the settlement authorized by H.R. 4366 is in 
the best interests of the United States, Westlands, and Federal 
taxpayers. Under the settlement: (1) the Secretary will be relieved of 
an obligation, the cost of which, is in excess of $3.5 billion; (2) the 
United States will be indemnified against liability that the government 
has estimated could be in excess of $2 billion; and, (3) Westlands will 
manage drain water within its boundaries, addressing a vexing 
environmental problem.
                        terms of the settlement
    Under the settlement authorized by H.R. 4366, the Secretary would 
be relieved from all drainage obligations imposed by the San Luis Act, 
including implementation of the 2007 Record of Decision, which 
Reclamation estimates will cost approximately $3.8 billion. Westlands 
will dismiss, with prejudice, the pending breach of contract litigation 
and will join the United States in a petition to vacate the District 
Court judgment imposing a mandatory injunction ordering implementation 
of drainage service. Westlands will provide for the release, waiver and 
abandonment of all past, present and future claims arising from the 
government's failure to provide drainage service under the San Luis 
Act, including those by individual landowners within Westlands' service 
area, and would further indemnify the United States for any and all 
claims relating to the provision of drainage service or lack thereof 
within the Westlands service area. Westlands will also seek to 
intervene in the pending landowner litigation for purposes of settling 
the case and will pay compensation to individual landowners.
    The settlement also provides that Westlands will become legally 
responsible for the management of drainage water within its boundaries, 
in accordance with Federal and California law. How Westlands will 
manage drainage water depends on the varying needs within the drainage-
impaired areas, and will evolve as conditions change. It will also 
depend upon ongoing monitoring and regulation of groundwater under the 
Long Term Irrigated Lands Regulatory Program being administered by the 
California Central Valley Regional Water Quality Control Board under 
the Porter-Cologne Water Quality Control Act. California Water Code 
sections 13000, et seq. Measures that will be used by Westlands include 
elements identified in Reclamation's drainage plan, such as land 
retirement, source control through more efficient irrigation practices, 
and collection and reuse of shallow groundwater.
    In exchange for agreeing to undertake responsibility to manage 
drain water within its boundaries, agreeing to dismiss its pending 
breach of contract claim against the United States, agreeing to 
compensate landowners in the pending Federal Claims Court litigation, 
and agreeing to indemnify the United States against future claims 
arising out of the Secretary's failure to provide drainage service, 
Westlands will be relieved of the obligation to pay its current, unpaid 
capitalized construction costs for the Central Valley Project. 
Reclamation currently estimates that the present value of these unpaid 
costs is approximately $300 million. However, under the settlement, 
Westlands will still be responsible for the payment of operations and 
maintenance costs of the Project and the payment of restoration fund 
charges pursuant to the Central Valley Project Improvement Act. 
Moreover, Westlands will still be responsible for future Project 
construction charges. The Secretary will convert Westlands' current 
9(e) water service contract to a 9(d) repayment contract consistent 
with existing terms and conditions. As a ``paid out'' contractor, the 
benefit of this conversion is permanent right to a stated share of 
Central Valley Project water. However, the terms and conditions of the 
contract, including the ``shortage provision'' that immunizes the 
United States from liability if shortages are caused by restrictions on 
operations of the Project imposed by Federal and applicable state law, 
will otherwise be the same as in the current 9(e) contract. Moreover, a 
new condition will be imposed in the 9(d) repayment contract: under the 
settlement, the United States' obligation to provide water to Westlands 
will be conditioned on Westlands' fulfillment of its obligations to 
manage drainage water within its service area. In other words, if 
Westlands does not fulfill its obligation to manage drainage water in a 
manner consistent with state and Federal law, its Central Valley 
Project water supply will be cut off.
    Another significant term of the settlement related to the 9(d) 
repayment contract is that it will cap deliveries to Westlands at 75 
percent of its existing contract quantity, 1.193 million acre-feet. Any 
water allocated in excess of this 75 percent cap, that otherwise would 
have been delivered to Westlands, will instead be available to the 
United States for other authorized Project purposes. In a year like 
2011, when the allocation to south-of-Delta agricultural contractors 
was 80 percent, 59,650 acre-feet of water would have been available for 
other purposes, such as level 4 refuge supplies. Assuming a modest cost 
of $200 per acre-foot, if the Secretary were to purchase this quantity 
of water in the transfer market, the water would have a value of $11.9 
million.
    The settlement also obligates Westlands to permanently retire from 
irrigated agricultural production not less than 100,000 acres of lands 
within its boundaries. This total includes lands previously retired by 
Westlands, approximately 36,500 acres, and lands previously acquired by 
Westlands and fallowed temporarily, approximately 53,500 acres. After 
retirement, these lands may be utilized only for: (1) management of 
drain water, including irrigation of reuse areas; (2) renewable energy 
projects; (3) upland habitat restoration projects; or (4) other uses 
subject to the consent of the United States.
              similarities to san joaquin river settlement
    There exists recent precedent for the settlement between the United 
States and Westlands authorized by H.R. 4366. In 2009, Congress enacted 
the San Joaquin River Restoration Settlement Act, Title X of Public Law 
111-11, which authorized the implementation of a settlement to resolve 
decades-long litigation concerning the Secretary's obligation to make 
releases from the Millerton Reservoir, a facility of the Central Valley 
Project, to comply with the requirements of California law.
    Like the settlement between the United States and Westlands 
intended to resolve decades-long litigation involving the Secretary's 
failure to comply with the law mandating drainage service to the San 
Luis Unit, the litigation related to the San Joaquin River involved 
environmental impacts resulting from the Secretary's failure to comply 
with the law. Both settlements provide for the conversion of Central 
Valley Project 9(e) water service contracts to 9(d) repayment 
contracts. Both settlements provide for the use of the contractors' 
capital repayment obligations as a source of funds to implement the 
settlements. The only meaningful difference between the terms of the 
two settlements is that under the San Joaquin River Settlement, the 
Federal Government remains responsible for compliance with the law and 
funding those measures required to implement the settlement. Under the 
drainage settlement, the Federal Government is relieved from 
responsibility for compliance with the law, and Westlands, at its own 
cost, will undertake that responsibility.
    I am aware that the mere mention of Westlands Water District raises 
the blood pressure of many environmentalists and some Members of 
Congress. Therefore, the reaction by some people that the settlement is 
a ``sweetheart deal'' for Westlands is not surprising, but is far from 
the truth. When the settlement is analyzed objectively, the benefits to 
the Federal Government and Federal taxpayers become readily apparent. 
The Secretary will not be faced with a mandatory injunction, compliance 
with which will cost an estimated $3.8 billion. Westlands will become 
responsible for drainage, and if Westlands does not perform, its 
Central Valley Project water supply will be terminated. Westlands will 
retire permanently 100,000 acres, and its maximum Central Valley 
Project water supply will be reduced by 25 percent. Westlands will 
compensate individual landowners who have sued the Federal Government, 
a Federal liability that the government estimates could exceed $2 
billion if the litigation were not settled.
    Without question, Westlands will also benefit from the settlement. 
Westlands will be relieved of its existing capital repayment 
obligation, which the government estimates to have a present value of 
approximately $300 million. But money that Westlands otherwise would 
have paid the United States absent the settlement, will be used to 
manage drainage water pursuant to the settlement. This cost will 
greatly exceed $300 million. Westlands will receive a permanent water 
supply contract, but this is not an anomaly under Federal Reclamation 
law. Across the West, when a contractor is ``paid out,'' the contractor 
receives a permanent right to a stated share of a project's water. 
Moreover, the conversion of Westlands contract to a 9(d) repayment 
contract will provide certainty that is critical to Westlands' ability 
to expend the hundreds-of-millions of dollars required to implement the 
settlement. But among the most significant benefits farmers in 
Westlands will receive is that, after more than five decades, there 
will finally be a meaningful solution to the drainage problem.
    I would be happy to answer any questions the Members have.

                                 ______
                                 

     Questions Submitted for the Record by Rep. Huffman to Mr. Tom 
         Birmingham, General Manager, Westlands Water District

Mr. Birmingham did not submit responses to the Committee by the 
appropriate deadline for inclusion in the printed record.

    Question 1. If Congress approves the drainage settlement agreement 
with the Westlands Water District (Westlands), how specifically will 
Westlands provide drainage? Please provide any preliminary drainage 
management plans already developed by Westlands, including any cost 
estimates associated with such plans. If Westlands has not yet 
developed a specific drainage management plan, by when will Westlands 
complete a drainage management plan?

    Question 2. Does the Westlands Water District anticipate any future 
financial commitments--including potential financial commitments 
associated with the proposed California WaterFix--that would undermine 
Westlands' ability to finance drainage services?

                                 ______
                                 

    Dr. Fleming. Thank you, Mr. Birmingham. And indeed, I am 
sure we do have a lot of questions today. As a result, I now 
recognize myself for 5 minutes for questions. My first question 
is for Mr. Bezdek.
    In an October 2015 document prepared by the Bureau of 
Reclamation regarding the drainage settlement, it states that 
there is ``the risk that Reclamation could be ordered by the 
court to provide this drainage service, notwithstanding the 
congressionally authorized construction ceiling under the San 
Luis Act of 1960.''
    My question for you, sir, is do you agree with Reclamation 
that such a court order is a possible risk?
    Mr. Bezdek. Mr. Chairman, we do believe that there is risk 
associated with this court order, having already ordered that 
we have an absolute obligation to provide drainage, that it 
could continue to order us to provide drainage, even once the 
authorized ceiling has been reached. We believe that that is a 
significant risk, and it is something that was one of the 
drivers for this settlement.
    Dr. Fleming. OK, thank you. If a court would issue such an 
order, wouldn't that be disruptive to Reclamation's operations 
and other budget priorities?
    Mr. Bezdek. Let me answer that by giving you an example, 
sir. In 2014, we had budgeted for $29 million to be allocated 
toward providing drainage. We had forwarded a reprogramming 
letter to Congress outlining that, because of the settlement 
and because of the stay issued by the court in light of the 
settlement, that we were able to take that $29 million and 
spend it on a host of other things, activities to improve water 
supply, Endangered Species Act compliance, or other types of 
environmental restoration activities.
    So, just in a very short period of time we have already 
seen the benefits of the settlement. Our concern is that, given 
the control schedule issued by the court, and the amounts that 
the court is expecting us to expend if we were back in front of 
it, that it would definitely jeopardize our ability to meet a 
lot of other priorities in California.
    Dr. Fleming. OK, thank you. Now, this question is to both 
of you, Mr. Bezdek and Mr. Birmingham.
    Mr. Ellis stated in his testimony that his organization is 
opposed to the drainage settlement because ``we just don't 
think this is the best or even a good deal for taxpayers.'' Do 
you agree with that?
    Mr. Bezdek. We believe that this is a very good deal for 
taxpayers. Quite simply, first and foremost, there is the 2000 
Order from the Ninth Circuit directing us to provide drainage 
service. It is absolute.
    Second, since 2010, there have been other intervening 
events that have occurred. Westlands has filed a litigation 
against us for breach of contract. In addition, individual 
landowners within the Westlands District have filed for takings 
in the court of claims. We believe that there is potential 
exposure of up to 2 billion. From that standpoint alone, we 
believe that this is very good. In addition to resolving those 
cases, Westlands is also agreeing to step in and indemnify us 
for any future damages, as it regards drainage.
    So, from our perspective, having this obligation, having 
the court direct us to implement drainage, we believe that this 
is a very good deal for the United States, and it will free up 
our budget to accomplish a lot of other very important things.
    Dr. Fleming. OK. How about Mr. Birmingham? What do you 
think?
    Mr. Birmingham. Mr. Chairman, it is Westlands' view that 
this is a very good deal for the United States.
    This settlement agreement has been referred to as a 
bailout. The real question is who is bailing out whom. In this 
context, Westlands is bailing out the United States. Even if 
the law were to be changed, and the obligation to deliver 
drainage to the San Luis Unit were to go away, there is still 
liability, which the Department of Justice has estimated could 
be in excess of $2 billion under a takings claim. That does not 
go away with the change in the law. And Westlands is agreeing 
to settle the litigation with those parties; that is a 
significant savings.
    Even if the government were to implement drainage, as has 
been suggested, we would repay that obligation over a 50-year 
period, interest free. That has a present value, according to 
the Department of the Interior, of approximately $1.2 billion 
that the Federal Government will save, just based in terms of 
the present value of money. And there are other benefits that 
the United States will receive. We are reducing our water 
supply by 25 percent. That has value to the United States.
    So, in response to your question, I disagree with the 
observation that this is not a good deal, the best deal for the 
United States. There may be better deals, but this is a very 
good deal for the United States.
    Dr. Fleming. OK. Thank you, gentlemen.
    Mr. Huffman is recognized for 5 minutes.
    Mr. Huffman. Thank you, Mr. Chairman. I do have some 
questions. Before I get to them I just want to say we continue 
to hear, I believe, too many red herrings and straw men on this 
subject. I think if people are going to come in here and say 
they have heard Members of Congress say certain things, that if 
something helps Westlands than they are opposed, they had 
better be ready to name names, because I have never said that, 
and I have never heard a Member of Congress say that, and I 
think we are entitled to know who the heck you are talking 
about, or whether it is a complete fiction, which is my 
supposition.
    Similarly, when folks say that Members of Congress want to 
see the west side of the valley blow away and dry up and stop 
providing food, that is nonsense. I don't know anyone who 
subscribes to that view. So, let's come back to the subject 
matter at hand.
    And Mr. Bezdek, I think you have drawn the short straw from 
the Department of the Interior to come here and defend these 
particular settlements, one of which nobody has even seen. For 
the first time last night in your written testimony, we learned 
that there is apparently a brand new pending Inspector 
General's investigation underway. That was the first I had 
heard of it. To my knowledge, the first anyone has heard of it. 
And now we learn at the last minute that the witness that we 
had expected to have here from these Northerly Districts is not 
showing up.
    Can you just confirm for the record that there is a pending 
investigation?
    Mr. Bezdek. Yes, sir. There is a pending investigation by 
the Department of the Interior's Office of the Inspector 
General.
    Mr. Huffman. Mr. Bezdek, going back over 8 years, the 
Interior Department has always outlined the importance of 
retiring between 194,000 and 305,000 acres of land as part of a 
solution to the drainage problem on the west side. Yet, in this 
agreement, you provide for a mere 100,000 acres of land 
retirement, and almost all of that land has already been 
retired. So, you are basically proposing to re-retire it, or to 
take credit for what has already happened on the ground.
    Does Interior now believe that those other hundreds of 
thousands of acres are suddenly OK to irrigate with imported 
water? And what is Interior's plan to make sure this does not 
cause a new Kesterson-type disaster? Who is going to make sure 
that does not happen?
    Mr. Bezdek. The initial answer to your question, 
Congressman, is that our view is that the settlement was 
designed to provide great flexibility for Westlands to 
determine how best to implement drainage. Our number-one policy 
goal was for the Department to get out of the drainage 
business. So, the 100,000 acre-foot is a floor, it is not a 
ceiling. The settlement was set up precisely to allow for great 
flexibility.
    It is my anticipation that it will go well above 100,000, 
but that is up to Westlands to determine how to implement it. 
But one of the cruxes of this settlement was to provide for 
flexibility in achieving the ultimate requirements to meet the 
drainage obligation.
    Mr. Huffman. I think I hear you say that the Westlands 
Water District is going to be responsible for making sure that 
another Kesterson-like incident does not happen. Is that fair 
to say?
    Mr. Bezdek. They are going to take on the obligation to 
provide drainage. That is correct. And----
    Mr. Huffman. So, you are telling Congress and the people of 
California that we should entrust the Enron accounting team 
with taking care of that particular environmental scenario.
    I want to ask you now about liability. We heard about 
indemnification. However, what was not mentioned and what I 
want to specifically ask you about is that indemnification 
provision in the agreement, to my knowledge, applies only from 
claims coming from within the San Luis Unit. Isn't that 
correct?
    Mr. Bezdek. Yes, sir. That is correct.
    Mr. Huffman. All right. So just outside the San Luis Unit 
you have the San Joaquin River exchange contractors who have 
maintained in the past that they are impacted by drainage from 
the west side. Does this agreement protect the Department of 
the Interior and the taxpayers of the United States against 
claims from the San Joaquin River exchange contractors and 
others who may be impacted by the drainage problem outside of 
the San Luis Unit?
    Mr. Bezdek. My understanding, Congressman, is there is a 
Ninth Circuit precedent that acknowledges that the obligation 
to provide drainage flows only to the land served by the San 
Luis Unit, and that there is no obligation to provide drainage 
to those individuals with lands that are not served by the San 
Joaquin----
    Mr. Huffman. Does the agreement protect the taxpayers in 
the Department from claims outside the San Luis Unit?
    Mr. Bezdek. Does the agreement expressly state that? No, 
sir. Do we believe that there is no legal obligation to provide 
drainage? We believe there is no legal obligation to provide 
drainage to those lands outside of the unit.
    Mr. Huffman. All right. Do you intend to do any NEPA 
analysis of these proposed agreements that have such profound 
potential impacts on other water users and the environment?
    Mr. Bezdek. We do agree that NEPA should be done on the 
implementation of both agreements. I believe the legislation 
acknowledges that the implementation will be subject to NEPA 
and other environmental laws.
    Mr. Huffman. Well, Mr. Costa's legislation says that they 
will be implemented notwithstanding any other law. Doesn't that 
include NEPA, ``any other law'' ? Wouldn't that appear to waive 
NEPA?
    Mr. Bezdek. Our position, sir, is that these agreements 
will be implemented, and they will be subject to NEPA.
    Mr. Huffman. Far more questions than we have time for. I 
yield back.
    Dr. Fleming. The gentleman yields. Chairman Bishop is 
recognized.
    The Chairman. Thank you, Mr. Fleming. I noticed all the 
Californians are here. And if Californians are all here, we 
must be talking about water. Right?
    [Laughter.]
    The Chairman. Back in February of 2015, I sent a letter to 
the Attorney General, as well as the Secretary of the Interior, 
which outlined a process. And we recognized in that letter that 
settlements are basically preferable to litigation, and that it 
usually helps the taxpayer because it takes away burdensome 
liabilities.
    So, the bills that are here before us attempt to do just 
that. So Valadao and Costa, you relieve the Federal Government 
of building, what, a $4 billion drain, even though the law and 
the courts say they have to? But you can change that and have a 
net savings to the American taxpayer.
    Similarly, the Blackfeet legislation would save, what, 
around $200 million to the taxpayer if it were implemented, 
even though it is not a cost benefit assessment that has been 
done by OMB?
    I appreciate the work of the sponsors, and those in the 
community that are working on both these pieces of legislation. 
I think we have created a process that is moving forward. But--
here comes the but--there is still work that needs to be done 
because, until OMB actually responds to the letter that we sent 
back in 2015 and gives their definitive statement, you are 
still asking us to be an arbitrator on the funding of this 
bill.
    I realize OMB signed off on the testimony that you gave, 
but their testimony is sending us mixed signals because the 
other week they said they are still assessing the cost of the 
bills that are using this criteria. That has to be part of the 
process. That was part of the February 2015 letter, and it has 
not yet arrived.
    So, Mr. Bezdek, let me ask you--and Ms. Belin, if you would 
like to--when can we get a definitive written answer from OMB 
so we can continue on with this timeline? And let me ask you 
specifically. Can we get that within 2 weeks?
    Mr. Bezdek. Mr. Chairman, I am unable to give you an exact 
date by which OMB will respond. What I can tell you is that the 
Department believes the criteria and procedures have been met. 
This is a new process in terms of following the protocols laid 
out in your letter. We are working with OMB to get the net 
information, but I am unable to sit here and give you a precise 
date by which they will respond.
    The Chairman. Well, that gives us problems, since we are 
planning on moving forward with these bills. I appreciate the 
position of the Department, but they are wrong. Until OMB 
fulfills that portion of the letter, those criteria have not 
been met. It has to be there.
    So, I am going to give you another chance. When can we 
expect OMB to fulfill the Administration's responsibilities 
here?
    Mr. Bezdek. Mr. Chairman, all I can tell you is that we are 
working with them. I was on the phone with them last evening. 
We are exchanging information. It is difficult for me to sit 
here and give you a date. All I can tell you is we are working 
very hard to provide that information.
    The Chairman. That does not help. I appreciate the 
situation you find yourself in, but it simply does not help. 
That is part of the criteria. That has to be there. And these 
pieces of legislation are being hung up because OMB still is 
giving mixed signals. I mean, they may have signed off on this 
document, but they have to give a written cost benefit 
assessment. That has to be part of the process. And we are not 
going to be able to move forward until OMB actually does their 
job.
    So, if you would be kind enough to go back there and tell 
them, ``Damn it, do it, we cannot move forward with these bills 
until that has taken place, do it.'' And I hope to do that.
    I have 1 minute left. Let me ask you, because one of these 
does deal with a drainage settlement that supposedly helps the 
Navy. Can you tell me how the Navy is involved with that 
settlement?
    Mr. Bezdek. Yes, sir. There is a naval air station that is 
within this area that has issues with birds striking aircraft. 
So they need to have irrigation water to keep the weeds down, 
to keep the rodents down, to keep the birds out. This deal will 
solidify an agreement whereby water will be provided to them 
from the CVP, and it will be wheeled by Westlands. So, this is 
a benefit to the Navy.
    The Chairman. Well, good. I hope that works out. Otherwise, 
we have an NDAA amendment coming up one more time.
    Once again, OMB needs to do their job. We have to have that 
assessment. That is essential. It is not done, and we cannot 
move forward until it happens. If you would communicate that, I 
would be greatly appreciative.
    Mr. Bezdek. Yes, sir.
    The Chairman. Thank you. I yield back.
    Dr. Fleming. The Chairman yields back. Mrs. Napolitano is 
recognized.
    Mrs. Napolitano. Thank you, Mr. Chairman. I agree with my 
colleague, Mr. Huffman, on many of the points that he has made.
    But Mr. Bezdek, does the Department of the Interior have 
any concerns over whether Westlands will be able to carry out 
the financial obligations on this settlement to construct the 
drainage that properly protects the drinking water and quality 
and environment without misleading the Federal Government and 
local residents? This is the people's house, we are supposed to 
be protecting them.
    Mr. Bezdek. Yes, ma'am. We do believe that Westlands has 
the capability and ability to do this. We also have worded the 
settlement agreement to provide that if drainage is not 
provided, that we maintain the right to have the ultimate 
drainage solution, and that is to cut off water deliveries.
    Mrs. Napolitano. Well, if there is no water?
    Mr. Bezdek. Excuse me, ma'am?
    Mrs. Napolitano. Well, what if there is no water to be able 
to--I am sorry, I am thinking about another area.
    Wasn't there an effort to begin cleanup of that 
contamination at one end?
    Mr. Bezdek. Yes. There has been work that has been 
undertaken by the Northerly Districts to implement a portion of 
the west side regional drainage plan. In addition to that, 
there has been work on----
    Mrs. Napolitano. And what results have there been from that 
cleanup?
    Mr. Bezdek. Those plans are not finished. They are due to 
be finished in 2020. So, the results are not complete yet.
    Mrs. Napolitano. Are there any measurements in the 
settlement that ensure that Westlands would carry out the 
financial obligations?
    Mr. Bezdek. In terms of a metric as to carrying out--no, 
ma'am. The agreement just basically says if Westlands does not 
provide drainage, we maintain the right to withhold deliveries. 
We structured the agreement specifically to provide Westlands 
flexibility. I know there is a lot of concern about whether 
drainage will be done. Our position is whether it was 
Reclamation or Westlands, both of which are going to be 
accountable to the State Water Resources Control Board for 
implementing a drainage solution.
    So, we feel comfortable that Westlands has the capability, 
and will carry this out.
    Mrs. Napolitano. I also have concerns over the entities 
receiving Federal land and the facilities. And then possibly 
selling at a later date at a profit at the expense of the U.S. 
taxpayers.
    I yield to Mr. Huffman. He had additional questions.
    Mr. Huffman. I thank the gentlelady. I want to ask Mr. 
Ellis from Taxpayers for Common Sense about a point you made. 
You took issue with the Department's economic analysis when it 
was justifying this settlement as a good deal for taxpayers, 
because I think I heard you say they are selectively invoking 
current law.
    On the one hand, they look at the Reclamation Act's very 
forgiving 40 year, 0 interest repayment terms, and they say, 
``Look how much that would cost the taxpayers if we advanced 
money for a drainage solution.'' On the other hand, they ignore 
the fact that the Federal liability for a drainage solution 
under current law is capped at $513 million.
    So, really, if we are looking fairly at current law, all of 
these projections about multi-billion dollar liabilities are 
completely contravening current law. Isn't that correct?
    Mr. Ellis. Yes, sir, Congressman Huffman. They did a net 
present value analysis, which is the appropriate analysis to 
do, discounting future dollars, bringing it all into 2015. But 
they did assume all of the current law provisions, which means 
that the last dollar that would be repaid would be in 2070, 
which--I think on the face of it, and especially in this day 
and age where you have a water district that claims that it 
produces $1 billion in food and fiber every year, that they 
would get a no-interest loan from taxpayers for 4 years does 
not make a lot of sense.
    And then also, yes, this legislation is making law, and 
this is an area that we have had concern for years about, the 
pricing of water, and how this is structured, and we are basing 
it all on a 1902 Reclamation Act.
    Mr. Huffman. All right. Then, Mr. Brown, you talked about 
the issue of Westlands, which is the most junior contractor in 
the system, being elevated in priority by virtue of this new 
permanent water contract they would be getting. Explain what 
that means to a senior water rights holder like Contra Costa 
County, which needs that water for municipal purposes.
    Mr. Brown. Certainly. When it comes to allocating the 
limited supplies that the Bureau has, there is a review of the 
different priorities. And this has kind of been a long-standing 
issue. In fact, Mr. Birmingham was an attorney against the 
Bureau back in the early 1990s, when Judge Wainger made the 
call that there are priorities, even within the CVP. It is 
within that basis that the San Luis Unit is essentially 
developed for surplus water, and that is water that is only 
available after all the other needs of the environment and the 
other water users have been met.
    So, the concern we have is that if somehow this agreement 
puts in place a new priority in the system, that somehow we 
have now gone down in rank, and that concerns us greatly.
    Dr. Fleming. OK. Mr. McClintock is recognized.
    Mr. McClintock. Thank you, Mr. Chairman.
    Mr. Birmingham, if the settlement is not approved, what is 
the next legal step for Westlands?
    Mr. Birmingham. If the settlement is not approved, and the 
Department of the Interior or the Secretary fails to comply 
with the court-ordered mandate, the next legal step would be to 
ask the court to hold the Secretary in contempt.
    Mr. McClintock. And the cost of judgments, I see here on a 
balance sheet provided by the Bureau of Reclamation, runs from 
a minimum of $1.3 billion to as much as $3.3 billion. Mr. 
Bezdek, is that correct?
    Mr. Bezdek. Sir, the only approved drainage plan comes out 
of a 2006 EIS with a cost of roughly $3.8 billion escalated to 
today's dollars.
    Mr. McClintock. So, the liability to the taxpayers would be 
$3.8 billion?
    Mr. Bezdek. That is correct, sir.
    Mr. McClintock. And the cost to taxpayers of this 
settlement is estimated at what?
    Mr. Bezdek. The cost to the taxpayers is the debt 
forgiveness on Westlands' capital obligations, which has been 
presently valued at roughly $295 million.
    Mr. McClintock. And I see a total cost here on your 
assessment of $331 million. So we are in the ballpark, then, 
roughly $330 million.
    Mr. Bezdek. Yes, sir.
    Mr. McClintock. So, for $330 million of cost we are 
relieving ourselves of $3.8 billion of costs?
    Mr. Bezdek. That is how we see it.
    Mr. McClintock. I am not entirely clear why that would be 
such a bad deal for taxpayers, Mr. Ellis. I realize you are 
dealing in a realm of absolutes, but we have these judgments 
against us. This settlement bill would not be here if the 
Federal Government actually thought it would prevail. Why would 
you throw out $3.8 billion of savings for $300 million of cost?
    Mr. Ellis. I wouldn't, if I thought that those were 
actually accurate numbers. And again, it is--Congressman 
McClintock, you know, we have worked together on a lot of 
different things, Taxpayers for Common Sense and you, on 
various amendments on the Floor, and in this case----
    Mr. McClintock. I know we have, but unfortunately you deal 
in absolutes, and we have to deal in realities. And the reality 
is we are looking at $3.8 billion in cost to be judged against 
the taxpayers that we can relieve ourselves of right now for 
about $330 million.
    Mr. Ellis. Yes, sir. But the thing is that they are 
assuming that all of the current law--which means that they are 
assuming that basically, even though Westlands has to repay all 
of the costs for building the drain, that that is discounted 
over a 40-year period that does not start until 2030 on a no-
interest loan.
    So, the reason why the return is so much lower is because 
we are moving it all into 2015 dollars. My question then again, 
Congressman, is why is the law setting up the 40-year no-
interest loan?
    Mr. McClintock. Because, with all due respect, we are 
looking at a more than 10-to-1 savings to cost on this.
    Mr. Birmingham, I understand why this is a good deal for 
the government. I am not entirely clear why it is a good deal 
for you.
    Mr. Birmingham. Well, I appreciate that, Mr. McClintock, 
and there are many people who have asked the same questions. 
Why would Westlands agree to this? But I would like to address, 
if I may just take a moment of your time, a number of the 
issues that have been raised.
    The new priority that Westlands is going to get with this 
settlement is very specific. Westlands doesn't get a new 
priority. We get a 9(d) contract, but that is just like the 
9(d) contract that the Friant contractors have. Last year, 
Westlands had a zero allocation, the 9(d) contractors in Friant 
had a zero allocation. The year before that Westlands had zero, 
Friant had zero. These contracts--and the agreement is very 
specific--do not give Westlands any priority.
    But going back to the question of why would Westlands do 
this, we need to solve this problem. It has been a problem that 
has festered for more than 35 years. And we see this as a way 
to ultimately solve the problem. We will have to comply with 
state law. As Mr. Bezdek said, we are going to have to comply 
with the requirements of the California Regional Water Quality 
Control Board that is now beginning to implement a long-term 
irrigated lands program that will require monitoring and will 
ensure that water quality is not degraded.
    And there are benefits to Westlands as a result of this, 
just like any compromise. We----
    Mr. McClintock. Just so that I am clear on this, we are at 
the end of the litigation process. You are now in the process 
of enforcing the court's decision, correct?
    Mr. Birmingham. We were approached by the Obama 
administration approximately 3 years ago, and asked, ``Would 
you consider trying to negotiate a settlement,'' because they 
did not see a means forward of complying with the mandatory 
injunction.
    Mr. McClintock. Right.
    Mr. Birmingham. So, we sat down with the Obama 
administration to try to settle this litigation, and I think 
that we have come to a settlement that is fair to the 
government and it is fair to Westlands. So, we have not been in 
enforcement over the course of the term we have been trying to 
settle this case.
    Dr. Fleming. OK. Mr. Costa is recognized for 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman.
    Mr. Bezdek, there has been an issue raised that I think 
needs to clearly be resolved by the Inspector General's 
investigation. To your knowledge, does this have anything to do 
with the Westlands settlement agreement?
    Mr. Bezdek. No, sir, it does not.
    Mr. Costa. All right, good. My understanding is the cost of 
providing drainage service, under your testimony, would be 
significant if we do not implement this proposal. Some estimate 
$80 million a year. Do you agree with that number?
    Mr. Bezdek. Yes, sir. The court-ordered control schedule 
actually has $80 million as a figure in one of the out-years.
    Mr. Costa. So, to our friends with the Taxpayers, if we do 
nothing, this is an $80 million obligation that the Department 
of the Interior has.
    Now, your budget for the Bureau of Reclamation is, what, 
approximately $200 million annually?
    Mr. Bezdek. The region, probably a little bit more than 
that. But that is in the ballpark.
    Mr. Costa. So, $80 million would have to be absorbed out of 
that $200 million, would it not?
    Mr. Bezdek. Yes, sir.
    Mr. Costa. That would be significant. That would impact a 
whole host of issues, as you noted in your testimony, from 
protection of endangered species law, to a host of other issues 
that you are dealing with in the region. And it would also, I 
suspect, impact priorities for the San Joaquin River 
restoration, in terms of its schedule to be maintained. Is that 
correct?
    Mr. Bezdek. Yes, sir, it would. It would be a major drain 
on our budget, period.
    Mr. Costa. Mr. Brown, I appreciate your testimony. You 
indicated about the concerns that Contra Costa Water District 
has, and I appreciate that. Is it true that you have a 
discharge permit?
    Mr. Brown. We are not a discharger, no.
    Mr. Costa. You don't discharge into the water?
    Mr. Brown. No.
    Mr. Costa. The Delta?
    Mr. Brown. No, sir.
    Mr. Costa. OK. But you are concerned about discharges, 
right?
    Mr. Brown. Absolutely.
    Mr. Costa. And this settlement, if enacted, eliminates 
discharges. Would you not agree that is the purpose, in part, 
of this settlement agreement?
    Mr. Brown. We are not confident that that will occur.
    Mr. Costa. Even though, in face of the issue that if they 
don't comply they don't get water? You don't think that is 
enough of a motivational factor?
    Mr. Brown. No, I don't.
    Mr. Costa. Why?
    Mr. Brown. Because there is no specificity to what 
compliance means. There are no requirements for reporting----
    Mr. Costa. No, no, no.
    Mr. Brown [continuing]. There are no requirements for 
monitoring----
    Mr. Costa. Hold on a second, Mr. Brown. Let me tell you----
    Mr. Brown [continuing]. And there is no enforcement action 
by anybody.
    Mr. Costa [continuing]. Something about what is happening 
in the Northern Districts. In the Northern Districts, where we 
have implemented a regional plan, they are subject to both 
state and Federal environmental law. Do you not agree?
    Mr. Brown. I agree, and I have the actual drainage 
requirements that they have here that are specifying all the 
monitoring, measuring, and reporting.
    Mr. Costa. I think it is important for people to note here, 
Mr. Brown, that 80 percent of the salts and 90 percent of the 
selenium have been reduced in the Northern Districts. Do you 
agree with that number, Mr. Brown?
    Mr. Brown. I don't know if those numbers are correct, but I 
agree that there has been a significant reduction in the salts 
and toxics, yes.
    Mr. Costa. And the selenium.
    Mr. Brown. And there is a goal to get to a zero discharge 
by 2019.
    Mr. Costa. And this is an effort that has been going on--
for the other Members--with the University of California Los 
Angeles that has a facility there, there is a reverse osmosis 
facility that is going there. There has been a great deal of 
effort that has taken place between the Northern Districts, 
Westlands, to perfect the agreement, because they know that 
they have to eliminate discharges. The reality is this has been 
an issue, as has been stated by Mr. Birmingham, for 35 years 
that they have had to contend with.
    I was in Los Banos when Mr. Halson raised the issue that 
there would no longer be drainage provided at the San Luis Unit 
that was a part of the original Act. That changed the whole 
world; and so, as a result of that decision, we are now dealing 
with the issues that have come before us.
    Is this solution going to be satisfactory to everyone in 
this committee? Of course not. Was the solution for the San 
Joaquin River Settlement Agreement satisfactory to everyone in 
this committee? Of course not. Are there still challenges with 
implementation of the San Joaquin River Settlement Agreement 
that involved climate change, involved land subsidence, and 
involved costs? Absolutely.
    But if we are to do nothing, that does not provide any 
assurance to the folks in Contra Costa or to the Delta who are 
discharging, and some who do have permits to discharge into the 
Delta. Would you not agree, Mr. Brown, that a solution 
ultimately needs to occur?
    Mr. Brown. An in-valley drainage solution with drainage 
management specifics of monitoring----
    Mr. Costa. Right. Where you and I disagree----
    Mr. Brown [continuing]. Reporting, and enforcement is an 
important----
    Mr. Costa [continuing]. Is I believe this is contained in 
the settlement agreement and you do not believe it is contained 
in the settlement agreement.
    We can agree to disagree, but I believe the facts speak for 
themselves. I believe you would not have this bipartisan 
agreement before us that the Obama administration has 
negotiated if that were not the case.
    Thank you. My time has expired.
    Dr. Fleming. Mr. LaMalfa is recognized.
    Mr. LaMalfa. Thank you, Mr. Chairman.
    Mr. Birmingham, do you wish to follow up on what was a 
contention made with the short amount of time on shifting of 
priority as regards to your district versus--Contra Costa was 
brought up. Do you wish to elaborate on that?
    Mr. Birmingham. Yes, Mr. LaMalfa, thank you. Throughout the 
negotiations, the concern that other contractors may fear that 
this would give Westlands some kind of priority that would 
reduce their water supply was paramount in the minds of all of 
the parties negotiating.
    The settlement agreement is very specific. The legislation 
that would authorize the settlement agreement is very specific. 
And, in fact, the legislation was amended at the request of 
several water agencies to ensure that this agreement cannot be 
implemented in a way that would reduce their water supply, 
affect their water supply, or increase their costs.
    As a consequence, we have other districts, like the Tehama-
Colusa Canal Authority and the Friant water contractors, who 
have expressed support for this legislation to authorize the 
implementation of the settlement because both are clear. We 
cannot implement this in a way that would affect their water 
supply or impose costs on them.
    Mr. LaMalfa. Certainly. OK. What is your level of 
confidence in the ability of your district being able to 
fulfill the obligations of the settlement versus if the Federal 
Government was to still be in charge of getting this drainage 
done. I mean yours versus theirs. Timely or cost-wise.
    Mr. Birmingham. I have a lot more confidence in the ability 
of Westlands Water District to do this, as opposed to the 
Department of the Interior. And that is not a criticism of the 
Department of the Interior, necessarily. But, as we have talked 
about, it requires appropriations, it requires authorizations, 
and even if we are talking about only the ceiling, $570 
million, we are still going to be fighting every year to get 
that money appropriated, or we are going to be in court, 
fighting for the judge to order the Department of the Interior 
to spend up to that ceiling.
    We have an expectation of what we will do to manage 
drainage service. It will vary from place to place, depending 
upon the circumstances. We have the ability to pay for it. And 
we are confident that we will be able to do it more quickly, 
more effectively, more efficiently than the Department of the 
Interior. We have a 50-year history with the Department of the 
Interior; it has not happened.
    Mr. LaMalfa. OK. Quickly, if nothing is done, what do you 
see as the longer-term impact on agricultural production in 
your area?
    Mr. Birmingham. The purpose of providing drainage is to 
protect the arability of the land. To say the solution is to 
retire 200,000 acres, that is inconsistent with the purposes of 
providing drainage service.
    If drainage service is not provided, if we do not find a 
solution, more and more land will become sterile. We will not 
be able to irrigate it. There are areas all over the world--the 
fertile crescent is no longer fertile because of drainage 
problems.
    Mr. LaMalfa. Thank you. Mr. Bezdek, if this settlement is 
not affirmed by Congress and the government is exposed to the 
full cost--well, first, let's settle the number. We heard a 
number $513 million as some kind of cap number, but you still 
contend that the full exposure would be $3.8 billion. Which 
number are we dealing with here?
    Mr. Bezdek. The San Luis authorization has an authorized 
ceiling, and we believe that that is $500 million and change to 
reach the authorized ceiling. Our view, however, is that, given 
the order of the court, that we have an absolute obligation to 
provide drainage, that we believe there are significant risks, 
that the court will not stop at that authorized ceiling, and it 
will continue to order us to provide drainage. If that is the 
case, then we are talking $3.8 billion.
    Mr. LaMalfa. If Reclamation is required to meet this 
responsibility, how long would it take for Reclamation to get a 
project done?
    Mr. Bezdek. Of this scope and magnitude, it would depend 
entirely upon appropriations, and how often they would come in 
and what amounts, it would take a number of years, sir, a 
number of years.
    Mr. LaMalfa. Longer than the partnership would be with 
Westlands doing so, is that right?
    Mr. Bezdek. I would say that is a safe assumption. Yes, 
sir.
    Mr. LaMalfa. Yes, OK. Mr. Chairman, I will yield back.
    Dr. Fleming. Mrs. Torres is recognized.
    Mrs. Torres. Thank you, Mr. Chairman. Indeed, California is 
in the house whenever we talk about water. However, I am from 
Southern California, where we have to deal with a lot of the 
same issues, salinity and the water. I represent a district 
that had a lot of farming and dairies. Most of that is gone 
now.
    Mr. Brown, when you talked about reducing water by 25 
percent, over what period of time and is that reduction solely 
by residential customers, or who is responsible for this 25 
percent reduction?
    Mr. Brown. I am a little at a loss here as to what you are 
talking about, exactly--are you talking about amounts that have 
been conserved within my service area?
    Mrs. Torres. Yes, that was your testimony, correct?
    Mr. Brown. No. I think the testimony that I was giving was 
relative to the 25 percent reduction in the total supply that 
Westlands would be allowed to take out of the CVP.
    Mrs. Torres. Oh, OK.
    Mr. Brown. Sorry if there is any confusion.
    Mrs. Torres. Thanks for that clarification.
    Mr. Bezdek, the Inspector General investigation, can you 
explain what that is, what that entails?
    Mr. Bezdek. I am sorry, ma'am, other than the information 
that we put in our testimony, I really have nothing else to add 
to it.
    Mrs. Torres. Is that classified information that you are 
not able to share in the committee?
    Mr. Bezdek. It is just information they have chosen not to 
share with me.
    Mrs. Torres. They have chosen--OK.
    [Laughter.]
    Mrs. Torres. I apologize if I put you in a bad position 
here.
    Back to Mr. Brown. You have no drainage ability right now, 
is that right?
    Mr. Brown. We are a water supplier to municipal industrial 
customers. We have wastewater agencies that treat and discharge 
into the river in our area. But we are not responsible for 
those discharges.
    Mrs. Torres. OK. I am going to yield the rest of my time to 
Mr. Costa.
    Mr. Costa. Thank you very much, my fellow colleague.
    Mr. Bezdek, what happens if this agreement is not ratified, 
in terms of the implications for the endangered species 
recovery?
    Mr. Bezdek. If this agreement is not ratified, as we have 
discussed already, Congressman, there will be just a tremendous 
drain on the Bureau of Reclamation's budget, and our ability to 
do good things in the environment will be potentially severely 
hampered. In terms of habitat, in terms of in-stream flow, in 
terms of species management, we have concerns that there will 
be impacts on our ability to do good things for the 
environment.
    Mr. Costa. Thank you.
    Mr. Brown, I have a lot of respect for the work you do on 
behalf of the Contra Costa Water District, and your desire to 
enlarge the Contra Costa Reservoir. Los Vaqueros is to be 
applauded. We all need to try to address all the water tools in 
our water toolbox to fix our broken water system. I hope you 
are supportive of other efforts to use other water tools, 
including increasing storage capacity, whether it be at Shasta 
Lake or Sites or looking at Temperance Flat, because we want 
you to have a reliable water supply in the Contra Costa Water 
District. Do you support those other efforts?
    Mr. Brown. We support storage projects in California, yes.
    Mr. Costa. Good, I am glad to hear that. You talked about 
land that ought to be taken out of production. I made the case 
that food and fiber is a national security item. I don't know 
what your expertise is, but how much land do you think we 
should take out of production in California?
    Mr. Brown. I don't have a particular opinion about that----
    Mr. Costa. Well, no, you do have an opinion. You said 
100,000 acres was not enough. So is it 300,000? Or should it be 
all of Westlands?
    Mr. Brown. I have an opinion that the 100,000 acres is 
inadequate, yes. I think----
    Mr. Costa. Eight hundred thousand?
    Mr. Brown. No, I said 100,000.
    Mr. Costa. OK. So, what is the magic number, two? Three? 
Four hundred thousand?
    Mr. Brown. The Bureau of Reclamation has already identified 
that it should be at least 194,000, and the USGS said it could 
be 308,000----
    Mr. Costa. But the Bureau of Reclamation settled on 100,000 
acres after a negotiated agreement. You have been in negotiated 
agreements, right?
    Mr. Brown. Yes, I have.
    Mr. Costa. OK. So, they start at one number, 300, and they 
negotiate to 100,000. That is a negotiated agreement.
    Mr. Brown. I applaud Mr. Birmingham. He is an excellent 
negotiator. But I am not so sure the Bureau has protected our 
interests, though.
    Mr. Costa. Well, I applaud all--because these are hard.
    Mr. Brown. Yes, they are.
    Mr. Costa. They were hard in the San Joaquin River 
Settlement Agreement, they are hard here. And they are always 
difficult. And it is a compromise.
    My time is expired, Mr. Chairman, but I thank you. And I 
thank the gentlewoman.
    Dr. Fleming. I thank the gentleman. The gentlewoman has 
yielded. Mr. Denham is recognized.
    Mr. Denham. Thank you, Mr. Chairman. First, just a comment. 
I find it interesting that while I did not support the San 
Joaquin Restoration Settlement, the chief negotiator, this is 
very, very similar. There seems to be a little bit of hypocrisy 
here in dealing with our current situation on drainage.
    Mr. Birmingham, can you talk about the Kesterson Reservoir 
tragedy--what happened there, who was in charge?
    Mr. Birmingham. The simple answer to your question is it 
was the Department of the Interior. The Kesterson Reservoir had 
originally been designed as a set of regulating reservoirs in 
anticipation of completing construction of the master drain to 
the Delta.
    When the construction of the drain stopped, Kesterson 
became the terminus of the reservoir. But the U.S. Fish and 
Wildlife Service said, ``Since we are going to have these 
reservoirs, let's turn the area into a wildlife refuge.'' And, 
as a consequence, the bio-accumulation of selenium, which no 
one is going to dispute was a very serious problem, resulted in 
the types of deformities and the death that the Ranking Member 
was referring to. But it was the Department of the Interior 
that was responsible for the decisions made related to 
Kesterson Reservoir.
    Mr. Denham. Thank you. Obviously, this is an ongoing 
frustration. We ought to be addressing more water storage. But 
it has certainly been frustrating that, yes, these settlements 
come up, the Federal Government does not do its job, whether it 
is providing the infrastructure for drainage, or fish ladders, 
or you name it. On a number of these settlements, we end up not 
only with a huge challenge, but our water gets shut off, as 
well.
    Now, some people in our state, some people around the 
country, tend to overlook that. But in our area, when you see 
people unemployed, when you see farmers that have been 
generational that are now losing their farms, it is a real 
issue. It is something that hits home.
    Mr. Bezdek, to your knowledge did the U.S. Department of 
Justice and the Department of the Interior negotiate that one 
of the key safeguards of the Westlands agreement is that if 
Westlands fails to manage drainage in their boundary they could 
lose their water contract?
    Mr. Bezdek. Yes, sir. That was negotiated by our team, 
which included representatives from the Department of Justice, 
as well as the Office of the Solicitor and the Department of 
the Interior.
    Mr. Denham. Thank you. I yield back.
    Dr. Fleming. The gentleman yields back. Mr. Zinke is 
recognized.
    Mr. Zinke. Thank you, Mr. Chairman.
    Chairman Barnes, as you know, this compact is critically 
important to Montana and all concerned. We also noticed concern 
as expressed by Chairman Bishop in Congress about the OMB 
assessment. There are some cost concerns. But as you pointed 
out in your written testimony, that litigation, if it 
continues, then the settlement does not become law. Could you 
expand further on the importance of moving forward on this 
settlement and settling these claims rather than allowing this 
litigation to continue?
    Mr. Barnes. Thank you, Representative Zinke. Yes, as you 
noted in your opening statement, and very generously and 
eloquently, that we are warriors, it is in our DNA, as 
witnessed by the recent Elouise Cobell Settlement case. There 
are a lot of other Elouise Cobells on the Blackfeet 
Reservation.
    I personally know that no good ever comes out of 
litigation. It becomes a settlement that neither party 
appreciates, neither party generally has a whole lot to do with 
the ultimate settlement.
    We, of course, would press our case. I was trained as an 
electrician, and I worked as a journeyman electrician, and 
ultimately as a contractor. I negotiated contracts. With no 
disrespect to the law trade, we realize that the highest paid 
nonproductive journeyman on the job was an attorney.
    [Laughter.]
    Mr. Barnes. As I said, I say that with no disrespect. But 
it becomes money spent that does not go to the benefit of 
either party. But we would press our case, understanding, of 
course, that $260 million in this settlement is unfunded 
Federal programmatic responsibility.
    So, we would first press our case on that trust 
responsibility of the Federal Government's lack of carrying out 
those changes, and regular routine maintenance things that have 
been deferred because of budget constraints. So, that is our 
first, and that is over half of the settlement, just in things 
that were not done, but that we rolled into this in the 
interest of settlement. Then we would go back on the other 
issues of claims.
    For the Boundary Treaty of 1907, the Blackfeet were not at 
the table, nor were we invited. That settlement between Canada 
and the United States did not take in concerns or the Blackfeet 
interests, and that certainly is probably the largest issue in 
here.
    And, we as Blackfeet today, have come to realize that if we 
are not at the table, we are on the menu. We refuse to be on 
the menu. Going forth we want to be at the table at our 
rightful place on a government-to-government basis. So, we are 
not demanding trust responsibility, we are demanding input upon 
our future.
    We have the Milk River project which really is for the 
downstream users. That whole irrigation project and diversion 
was not to the benefit of the Blackfeet, it was to the benefit 
of our downstream Montana users. I do not begrudge them their 
need for irrigation for their croplands and ranchlands, but 
again we were not at the table on that.
    A lot of the settlement has to do with that. We have more 
clearly defined all of the claims in our written testimony. 
There are a lot of right-of-way issues there. We would rather 
not fight those. We are prepared to if we need to. As you well 
know, a warrior's main responsibly is to always be prepared, 
and we are. We would rather go with the negotiated settlement, 
and negotiations were very tough. I do not necessarily agree 
with everything that the Department has put in front of us, but 
we did for the betterment of the entire settlement, which not 
only affects the Blackfeet Tribe and the Blackfeet people, but 
all of those downstream users, as was pointed out.
    We are the headwaters, you know? We are the source water of 
that, and we aim to find justice in this settlement. We 
understand the wording that we were not appreciative of. It 
seems counter-statements in the same sentence that we agree in 
support, but--that famous ``but''--now that has caused a 
tremendous amount of consternation.
    I want the Department to fully agree and support this. Now, 
if they need to go back to OMB, I would encourage them to go 
down there this afternoon and get this thing resolved because, 
quite honestly, we gave as much as we can, Representative 
Zinke.
    Mr. Zinke. Thank you. And, Mr. Chairman, the headwaters 
also go down to Louisiana.
    [Laughter.]
    Dr. Fleming. Yes. Frankly, being from Louisiana, we would 
love to give you at least half, maybe two-thirds, of our water 
any time.
    [Laughter.]
    Dr. Fleming. If we can get it to you, we would. Trust me on 
that.
    Well, I thank all the witnesses. It was a very interesting 
debate--a lot of, I think, well-intentioned ideas and certainly 
serious questions, and a lot of great work, and we appreciate 
that.
    I want to thank the staff for the great job they do in 
subcommittee, as well.
    We may have further questions in writing, so we will hold 
the record open for 10 days. In case we do deliver more 
questions to you, we ask that you would respond in writing, as 
well.
    So, therefore, there being no other business, and without 
objection, we are adjourned.

    [Whereupon, at 12:26 p.m., the subcommittee was adjourned.]

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