[Senate Hearing 115-483]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-483

                 INCREASING WATER SECURITY AND DROUGHT
                  PREPAREDNESS THROUGH INFRASTRUCTURE,
                       MANAGEMENT AND INNOVATION

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON 
                            WATER AND POWER

                                 OF THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             AUGUST 2, 2017

                               __________


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               Committee on Energy and Natural Resources
               
               
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
CORY GARDNER, Colorado               JOE MANCHIN III, West Virginia
LAMAR ALEXANDER, Tennessee           MARTIN HEINRICH, New Mexico
JOHN HOEVEN, North Dakota            MAZIE K. HIRONO, Hawaii
BILL CASSIDY, Louisiana              ANGUS S. KING, JR., Maine
ROB PORTMAN, Ohio                    TAMMY DUCKWORTH, Illinois
LUTHER STRANGE, Alabama              CATHERINE CORTEZ MASTO, Nevada
                                
                                ------                                

                    Subcommittee on Water and Power

                          JEFF FLAKE, Chairman

JOHN BARRASSO                        ANGUS S. KING, JR.
JAMES E. RISCH                       RON WYDEN
MIKE LEE                             BERNARD SANDERS
BILL CASSIDY                         AL FRANKEN
ROB PORTMAN                          JOE MANCHIN III
LUTHER STRANGE                       TAMMY DUCKWORTH

                      Colin Hayes, Staff Director
                Patrick J. McCormick III, Chief Counsel
                Lane Dickson, Professional Staff Member
           Angela Becker-Dippmann, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
        Melanie Stansbury, Democratic Professional Staff Member
                           
                           
                           
                           C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Flake, Hon. Jeff, Subcommittee Chairman and a U.S. Senator from 
  Arizona........................................................     1
King, Jr., Hon. Angus S., Subcommittee Ranking Member and a U.S. 
  Senator from Maine.............................................     2

                               WITNESSES

Buschatzke, Thomas, Director, Arizona Department of Water 
  Resources......................................................     3
Zane, Shirlee, Chairwoman, Board of Supervisors, Sonoma County, 
  California, and Chairwoman, Board of Directors, Sonoma County 
  Water 
  Agency.........................................................    21
Sheils, Martha, Director, New England Environmental Finance 
  Center, University of Southern Maine...........................    38
Markhoff, Heiner, President and Chief Executive Officer, GE Power 
  - Water and Process Technologies...............................    46
Riva, Carlos A., President and CEO, Poseidon Water, LLC..........    56

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

American Rivers et al.:
    Letter for the Record........................................   107
Buschatzke, Thomas:
    Opening Statement............................................     3
    Written Testimony............................................     6
Family Farm Alliance:
    Statement for the Record.....................................   108
Flake, Hon. Jeff :
    Opening Statement............................................     1
Glenn-Colusa Irrigation District:
    Statement for the Record.....................................   120
King, Jr., Hon. Angus S.:
    Opening Statement............................................     2
Markhoff, Heiner:
    Opening Statement............................................    46
    Written Testimony............................................    48
    Responses to Questions for the Record........................    99
(The) Metropolitan Water District of Southern California and 
  Sanitation Districts of Los Angeles County:
    Letter for the Record........................................   124
Northern California Water Association:
    Statement for the Record.....................................   126
Riva, Carlos A.:
    Opening Statement............................................    56
    Written Testimony............................................    58
    Responses to Questions for the Record........................   102
Sheils, Martha:
    Opening Statement............................................    38
    Written Testimony............................................    40
    Responses to Questions for the Record........................    82
Tehama-Colusa Canal Authority:
    Statement for the Record.....................................   129
Zane, Shirlee:
    Opening Statement............................................    21
    Written Testimony............................................    23
    Responses to Questions for the Record........................    80

 
                     INCREASING WATER SECURITY AND
                      DROUGHT PREPAREDNESS THROUGH
                       INFRASTRUCTURE, MANAGEMENT
                             AND INNOVATION

                              ----------                              


                       WEDNESDAY, AUGUST 2, 2017

                               U.S. Senate,
                   Subcommittee on Water and Power,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:06 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Jeff Flake, 
Chairman of the Subcommittee, presiding.

             OPENING STATEMENT OF HON. JEFF FLAKE, 
                   U.S. SENATOR FROM ARIZONA

    Senator Flake [presiding]. This hearing of the Senate 
Energy and Natural Resources Subcommittee on Water and Power 
will come to order.
    The purpose of today's hearing is to receive testimony on 
water supply and drought issues. We will hear testimony on a 
range of water-related topics including, infrastructure and 
supply, certainty in planning and innovative management 
practices that are critical to maintaining secure water 
supplies. This includes items that are crucial to Arizona such 
as the Colorado River.
    Drought planning, watershed restoration, better use of 
existing reservoirs, a reliable water supply and drought 
protection cannot be achieved without storage infrastructure 
and forward-thinking management and planning. Oftentimes 
discussions on water policy at the federal level are dictated 
by cost; however, it is important that Congress also consider 
the barriers local communities face as they plan and pursue new 
water projects.
    I look forward to today's hearing to hear how state and 
local policies encourage judicious water use and how permit 
streamlining and regulatory predictability can ensure all 
solutions are on the table.
    We will also hear about innovations in water treatment 
technology and project financing that can help with water 
infrastructure and supply challenges.
    Now we live in an age, as we know, that you expect when you 
turn on the tap that there is water there, that the water will 
always be there, which means that supply certainty is critical 
for managers.
    Protecting the sanctity of state water rights, resolving 
conflicts and collaborative planning, as we will see today, 
help ensure water certainty. As we have seen in Arizona, 
providing this certainty can also unleash private investment 
and innovative partnerships that improve water management.
    Finally, changes to operation and management of existing 
infrastructure can be a cost-effective water strategy as well.
    I am glad that the Committee will hear from several 
witnesses today who can speak to the importance of using the 
most up-to-date hydrology and forecast in operating existing 
reservoirs. I think that we can learn from this testimony and 
build on last year's drought legislation to try to address 
critical water needs for Arizona and the nation.
    Water managers on the ground have great ideas about how to 
increase water supply and drought resistance. I look forward to 
working with them on these efforts.
    In addition to the experts we will hear from today, we have 
received a number of written statements for the hearing record 
and I will be considering that input as we move forward as 
well.
    As Senator Franken and I were talking just a bit ago, this 
is an important issue for Arizona and I noted that through all 
of my life, whenever it rains, no matter where I was living, 
when I would see rain I would have the instinct to call my dad 
because as an old rancher that was when he was in a good mood.
    [Laughter.]
    And our favorite time as a family was to hop in the truck 
after a good rain and to see which draws were running to see 
which stock tanks would fill. That was our version of 
excitement in Snowflake, Arizona.
    [Laughter.]
    Anyway, I am glad we are having this hearing. I am glad to 
have Ranking Member Angus King from Maine and turn to him for 
his opening statement.

             STATEMENT OF HON. ANGUS S. KING, JR., 
                    U.S. SENATOR FROM MAINE

    Senator King. Thank you, Mr. Chairman. Thank you to our 
expert witnesses who are joining us this morning, especially my 
constituent from Maine. Welcome to Washington at this time of 
year--like me you would probably rather be in Maine on a day in 
August.
    As the Chairman mentioned, we will hear from a range of 
points of view this morning on different approaches to 
maintaining the crucial, healthy water supply. Even in Maine we 
are not immune to the impacts of a fragile water supply due to 
drought conditions.
    We recently had our first drought in 14 years which 
impacted 70 percent of our state, and a very significant 
percentage of our state's residents--I think it is almost 
half--depend upon wells for their water. That drought finally 
ended this past April, but it was a very serious matter for us.
    I understand my colleagues in the West probably are not 
very sympathetic to hearing about droughts in New England, but 
they do occur and all regions of the country have these serious 
issues. So I am looking forward to hearing about the different 
approaches that have been developed in other parts of the 
country.
    The critical nature of water management across the country 
has stimulated a variety of approaches to planning and 
financing. For example, we will hear from Martha Sheils, from 
the New England Environmental Finance Center, in regard to the 
importance of green infrastructure improvements on the water 
supply. I am also looking forward to hearing how we can promote 
public-private partnerships in water infrastructure projects 
and use the lessons in other areas where infrastructure 
improvements are, in fact, desperately needed. We will also 
hear about the value of planning and flexibility that we can 
provide in water management and how innovations in water use 
technology can make water management more effective.
    While we have different specific water concerns around the 
country and needs depending upon where we are, we can certainly 
take lessons from these folks who have joined us this morning 
to think differently and use more creative approaches to water 
management, public-private partnerships, innovative 
infrastructure and technology solutions.
    So, Mr. Chairman, thank you for calling this hearing. I 
look forward to hearing from our witnesses with their 
testimony.
    Senator Flake. Well, thank you.
    We will turn to the witnesses. Thank you for joining us 
today.
    We will begin the panel with Mr. Tom Buschatzke, Director 
of the Arizona Department of Water Resources. Tom, I greatly 
appreciate the close working relationship that we have had over 
the years and all that you have done for the State of Arizona 
on critical water issues. You have been an important water 
leader for the state, and we always look forward to having you 
testify here before the Senate.
    Next, we will have Shirlee Zane, Chairman of the Board of 
the Sonoma County Water Agency.
    Then, Martha Sheils, as mentioned, the Project Director for 
the New England Environmental Finance Center. I must say that 
these hearings are typically Western-focused so it is nice to 
have a witness here who will talk about things going on in 
Maine.
    Then we will hear from Heiner Markhoff, President and CEO 
of GE Water and Process Technology.
    Finally, we will hear from Mr. Carlos Riva, CEO of Poseidon 
Water.
    Thank you all for the testimony you will provide. We would 
like you to limit your remarks, if you can, to five minutes to 
have time for questions. Your full statements will be submitted 
for the record.
    With that, we will recognize Mr. Buschatzke.

           STATEMENT OF THOMAS BUSCHATZKE, DIRECTOR, 
             ARIZONA DEPARTMENT OF WATER RESOURCES

    Mr. Buschatzke. Thank you and good morning, Chairman Flake, 
Ranking Member King and members of the Subcommittee.
    I'm Tom Buschatzke, Director of the Arizona Department of 
Water Resources. Thank you for providing me an opportunity to 
testify on behalf of the State of Arizona. I have submitted 
written testimony for the record, and my comments today will 
highlight key issues in that testimony.
    Arizona continuously develops and improves the legal 
framework, policy prescriptions, institutions and 
infrastructure needed to secure its water resources, create 
certainty and prepare for drought. The state prioritizes 
internal actions but collaborates regionally and with the 
Federal Government. Aggressive water management actions have 
resulted in a reduction in Arizona's water use while its 
population and economic output have increased, all while 
decreasing mined groundwater usage.
    For the past 20 years, drought has been a constant in 
Arizona. When shortage on the Colorado River is declared, about 
84 percent of the total falls to Arizona. This knowledge drives 
robust drought mitigation programs in the state.
    Now I want to share some examples of innovative water 
management actions in Arizona.
    First, the Palo Verde Nuclear Generating Station contracted 
for reclaimed water for cooling purposes in 1973, long before 
reuse became a common practice.
    In 1986 and again in 1984, the landmarked Groundwater 
Management Act was amended to incentivize underground storage 
of surface water and effluent. That program promotes the use of 
existing infrastructure to help reduce costs and the water can 
be used for drought management or for growth.
    The Arizona Water Banking Authority was created in 1996 to 
backfill Colorado River shortages. It has stored over four 
million acre-feet for Arizona, but it has also stored 600,000 
acre-feet for Nevada. Our underground storage credits can be 
marketed to others.
    Tribes lease water to others facilitated by federally 
authorized tribal water right settlements. One we're using, the 
state's policy is to settle rather than litigate tribal water 
rights claims. There are 11 tribes in Arizona with pending 
claims, so much work still needs to be done.
    Turning to Arizona's efforts to deal with drought impacts 
to the Colorado River, major activities are ongoing. Over the 
past decade, the risk that Lake Mead might fall to unhealthy 
levels, even with the existing shortage criteria, has risen to 
unacceptable levels. In response, Arizona, Nevada, California 
and the Bureau of Reclamation negotiated a draft Drought 
Contingency Plan, or DCP, as it is commonly referred to. The 
DCP further incentivizes the conservation and storage of 
Colorado River water in Lake Mead and creates greater 
flexibility to recover some of that water. Under the DCP, 
Arizona and Nevada would take additional reductions at higher 
Lake Mead elevations and for the first time, California would 
take reductions to help protect critical Lake Mead elevations.
    A draft minute to the water treaty with Mexico, Minute 323, 
would have Mexico take actions equivalent to the DCP when both 
agreements are finalized. Arizona believes that Congressional 
authorization, likely through this Subcommittee, directing the 
Secretary of the Interior to execute the DCP will be pursued 
when the DCP is finalized. That authorization will create 
certainty for all the parties.
    As demonstrated by the ground-breaking measures I have 
outlined, collaboration in an all-hands-on-deck approach is the 
future of the Colorado River.
    Within the state, we will do more with our existing 
infrastructure.
    The Bureau of Reclamation and the operators of the Central 
Arizona Project (CAP) completed a system use agreement earlier 
this year, something that Chairman Flake has been prodding the 
Department of the Interior to complete. It allows for wheeling 
of non-project water. The agreement creates a clear pathway for 
the recovery of water stored underground and the transport of 
that water in the CAP canal to entities that will be shorted by 
Colorado River reductions. Wheeling also allows for exchanges 
between water users which lowers their costs and creates 
flexibility.
    Another opportunity is the use of the dedicated flood 
control space at modified Roosevelt Dam to increase its yield 
by an average of 70,000 acre-feet per year. To date, 
environmental compliance considerations and Corps of Engineer 
process issues forced interested parties to set aside their 
efforts. Streamlining the process, similar to the amendment 
Senators Flake and Risch inserted into the Energy bill last 
year, could help make that a reality.
    In conclusion, Arizona's internal efforts to manage its 
water resources and its collaborative efforts on the Colorado 
River will be most successful in a setting where federal 
oversight is minimized, regulations and permitting processes 
are reduced or streamlined and the primacy of states to manage 
water resources is honored.
    Thank you.
    [The prepared statement of Mr. Buschatzke follows:] 
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Flake. Thank you, Mr. Buschatzke.
    Ms. Zane.

        STATEMENT OF SHIRLEE ZANE, CHAIRWOMAN, BOARD OF 
 SUPERVISORS, SONOMA COUNTY, CALIFORNIA, AND CHAIRWOMAN, BOARD 
            OF DIRECTORS, SONOMA COUNTY WATER AGENCY

    Ms. Zane. Thank you.
    Chairman Flake, Ranking Member King and members of the 
Subcommittee, thank you for the opportunity to testify today.
    My name is Shirlee Zane, and I serve on the Board of 
Supervisors for Sonoma County, California, and also as the 
Chairwoman of the Board of Directors for the Sonoma County 
Water Agency.
    I'm very proud to be here today to provide a local 
perspective on water management. We believe that securing our 
water future means investing in our water resources.
    Water is life. We have the pleasure and awesome 
responsibility to deliver safe, affordable drinking water, 365 
days a year, 24 hours a day. Drought or flood, we must provide 
a secure water supply.
    There are two points that I would like to convey to the 
Subcommittee this morning. First off, the rule curves used for 
reservoir operations are woefully outdated and are in dire need 
of updates. And secondly, Western water managers require 
improved long-range forecasting of precipitation in order to 
manage water resources for both extreme wet and dry conditions.
    We manage two reservoir projects that provide water supply 
for the people in Sonoma and Marin Counties. Lake Mendocino and 
Lake Sonoma are dual-purpose reservoirs. The U.S. Army Corps 
manages flood protection functions and the Water Agency manages 
water supply functions. The Lake Mendocino Water Control Manual 
was created in 1959. Nearly 60 years later, the manual has not 
been adjusted.
    In 2013, the Corps was required to release 25,000 acre-feet 
of rainfall from Lake Mendocino's reservoir because it had to 
adhere to the antiquated rule curve, despite weather 
predictions that no rain was forecasted. The reservoir dropped 
to 25 percent of capacity later that season and Sonoma County 
lost water valued at tens of millions of dollars. If we had an 
updated rule curve, Sonoma County would have been better 
positioned to adapt to the prolonged drought that followed in 
the next four years.
    The unpredictability in our weather patterns and climate 
means we are constantly managing its water supply with an 
underlying goal of becoming more resilient. Not only is 
resiliency critical for our security, but it also makes sense 
economically.
    We embarked upon an initiative in 2014 with federal and 
state partners to improve weather forecast modeling in managing 
reservoir operations. The effort is called Forecast Informed 
Reservoir Operations, better known as FIRO. It is a partnership 
with the Corps, the Bureau of Reclamation, NOAA, Scripps 
Institute of Oceanography and the State of California, as well 
as our agency. This summer the partnership released a 
preliminary viability assessment of FIRO for Lake Mendocino and 
that document is attached to my testimony. Our ultimate goal is 
to put into place a modern rule for Lake Mendocino.
    We, in the West, need better data and long-term forecasting 
to improve water management. In California, we experience 
atmospheric rivers. These atmospheric rivers provide about 50 
percent of the yearly rainfall in California within just a few 
storms. The frequency and location of atmospheric rivers are 
the primary drivers of floods and droughts; however, rainfall 
forecasting beyond 10 to 14 days remains unreliable. Lead time 
information about weather is crucial for operating water supply 
and flood control infrastructure. These sub-seasonal to 
seasonal rainfall forecasts are critical for improving 
efficiency of water project operations.
    We're working with the Western States Water Council to 
build a coalition of stakeholders that are committed to working 
with our partners at NOAA to improve forecasting capabilities. 
The need for a global system to accurately predict our weather 
patterns is critical. NOAA is leading the way.
    The bottom line is this: better science leads to better 
data, and better data would greatly benefit reservoir 
operations.
    Mr. Chairman, we're committed to working with this 
Committee and other members in Congress who support securing 
our water future by investing in better technology. We know 
that modern technology can be used more effectively to manage 
our reservoirs in California and all across the West. Our 
future generations need us to act now to secure water supply.
    Thank you again for this opportunity to testify, and I'm 
pleased to answer any questions you may have.
    [The prepared statement of Ms. Zane follows:] 
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Flake. Thank you, Ms. Zane.
    Ms. Sheils.

STATEMENT OF MARTHA SHEILS, DIRECTOR, NEW ENGLAND ENVIRONMENTAL 
          FINANCE CENTER, UNIVERSITY OF SOUTHERN MAINE

    Ms. Sheils. Good morning, Mr. Chairman and Ranking Member 
King. Thank you for this opportunity to appear today.
    I am Martha Sheils. I'm the Director of the New England 
Environmental Finance Center at the Edmund Muskie School of 
Public Service at the University of Southern Maine.
    Knowing how busy you all are, I'd like to make three key 
points. First, that clean water is essential for growing our 
economy, protecting our health and ensuring the security of our 
nation. Second, there is cause for hope in the numerous 
examples around our country on how state and local governments 
are saving money by investing in watershed conservation and 
sustainable management practices. And finally, that the Federal 
Government's support, although helpful, should be expanded.
    Clean water is a critical component of the main brand and 
essential for attracting and retaining businesses, residents 
and tourists.
    In Maine, we now have two computer chip manufacturers with 
high-paying jobs, as well as a proliferation of microbreweries, 
all of which require high quality tap water in plentiful 
supply. In the Casco Bay Watershed alone, almost 20,000 jobs in 
the tourism sector depend on the Bay's health.
    Just as in Maine, our entire country is ripe with numerous 
opportunities to protect and manage our watersheds that promote 
cost savings and provide multiple economic benefits from them. 
A great example, located in Senator King's backyard, is the 
Sebago Lake Watershed. It supplies some of the cleanest 
drinking water in the country to the greater Portland area 
which is the economic engine of the entire state.
    The Portland Water District has a sustainable forest 
management program to keep the watershed healthy and resistant 
to invasive species and fire threats, all with the primary 
objective of protecting the water quality of Sebago Lake. The 
bad news is that 90 percent of the watershed is privately owned 
and development pressures are threatening the district's EPA 
filtration waiver. The district is considering a mix of 
management scenarios for private lands that include riparian 
buffers, culvert upgrades, conservation easements and 
sustainable forestry. These nature-based solutions cost 
approximately one-third of what it would cost to build a new 
filtration plant. If we add the other benefits, like wildlife 
habitat protection, recreation, carbon sequestration and others 
to the avoided costs of not building a filtration plant, the 
net positive benefits increase tremendously.
    On a larger scale, New York City invested $1.4 billion to 
purchase conservation land at its drinking water source in the 
Catskill Mountains, ultimately saving approximately $5 billion 
compared to the constructing of a new filtration plant.
    Protecting natural infrastructure also pays off by 
mitigating flood damages. Tropical Storm Irene caused extensive 
damages in Rutland, Vermont, in 2011 but downstream at 
Middlebury, where flows should have been even higher, they were 
actually far less because a large, conserved wetland complex 
absorbed the floodwaters.
    Same with coastal flooding. Maine's shoreline is 
increasingly vulnerable from sea level rise and there are clear 
economic benefits from preserving and restoring coastal 
wetlands.
    In urban areas, built green infrastructure that mimics 
nature, things like bio-retention areas, green roofs and rain 
gardens, are much more economical than sewer separation 
projects to manage storm water and because green infrastructure 
installments are many and diffused, they very well increase 
security by relying on a diversity of approaches rather than 
centralized facilities.
    The challenge for Maine and the rest of the country is to 
better use existing available funds to, first of all, protect 
existing natural infrastructure. And second, to promote built 
green infrastructure that mimics nature in more urban 
watersheds. And finally, financing programs at the federal and 
state levels should require or at least encourage economic 
analysis in the evaluation of projects that clearly show the 
costs, benefits and tradeoffs of projects as in the Portland 
Water District and New York City examples.
    By doing so, the most cost-effective project should be 
chosen to encourage savings and to generate multiple benefits, 
such as water quality protection, resistance to invasive 
species, fire risk reduction, wildlife habitat and recreation 
opportunities, all at the same time.
    We need your help to tell these stories widely so that 
private and public landowners adopt sound financial evaluation 
practices that achieve multiple benefits.
    I'll leave you with this. An ounce of prevention is worth a 
pound of cure. Help us work together to implement the most 
cost-effective strategies that protect our vital water 
resources and also provide multiple benefits at the same time.
    Thank you for your time.
    [The prepared statement of Ms. Sheils follows:] 
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Flake. Thank you.
    Mr. Markhoff.

  STATEMENT OF HEINER MARKHOFF, PRESIDENT AND CHIEF EXECUTIVE 
       OFFICER, GE POWER - WATER AND PROCESS TECHNOLOGIES

    Mr. Markhoff. Good morning, Chairman Flake, Ranking Member 
King and members of the Subcommittee on Water and Power. Thank 
you for the opportunity to testify regarding the importance of 
securing a sustainable water future.
    My name is Heiner Markhoff and I'm the President and CEO of 
GE Water and Process Technologies, a division within the GE 
Power business. GE Water is one of the world's leading, 
advanced water treatment technology companies with more than 
50,000 customers, operations in approximately 130 countries, 
employing roughly 7,500 people worldwide. Our comprehensive set 
of chemical and equipment solutions and our growing portfolio 
of predictive analytics help to enhance water, wastewater and 
process productivity and helps businesses and communities 
overcome scarcity challenges, strengthen environmental 
stewardship and comply with regulatory requirements.
    So far, more than 4,000 of our customers have connected 
over 40,000 assets into our digital platform called Inside, 
which helps us optimize the water efficiency through real-time 
responsiveness to changing operating conditions.
    Overall, our installed base of technologies enables 
customers to treat over three billion gallons of water per day.
    To continue our leading position within the water industry, 
we expect to invest about $500 million in research and 
development over the next 10 years.
    I would also like to mention that in March, GE announced it 
had signed a definitive agreement to sell the water and parts 
technologies business to SUEZ, a global services and solutions 
company with operations primarily in water and waste 
management. The deal remains subject to customary closing, and 
we expect to close by the end of the third quarter. Our 
strategy for water reuse programs and technology development 
will remain and strengthen as we transition.
    According to market research, the global population will 
grow by another three billion people by 2050. This growth in 
population will require 55 percent more water and approximately 
70 percent more energy, a demand that cannot be met with 
current resources.
    Even though the world is facing increasing demands on 
limited water supplies, we believe that greater water reuse can 
materially help address scarcity. It is estimated that globally 
only four percent of wastewater is currently reused, but we 
know that it is possible to reuse much more water. For example, 
in Israel nearly 80 percent of wastewater is reused. In 
Singapore, 40 percent of water demand is met with what is 
called ``new water.'' Here in the United States, approximately 
seven to eight percent of all municipal wastewater is reused, 
but in areas like California nearly 16 percent of the 1.6 
trillion gallons of municipal wastewater per year is reused 
with an increasing trend.
    Our business surveyed the public on World Water Day in 
March of this year regarding its perception of reusing 
wastewater for potable consumption. The response was reassuring 
with 49 percent willing to drink reused water, up from 30 
percent just a few years ago.
    Even though we work with communities around the world to 
help them reuse their wastewater, we also focus on water reuse 
for industrial processes where water does not have to be 
treated to a potable standard to be safely used.
    The majority of my written testimony focuses on how 
advanced water treatment solutions can be adopted by 
communities and industries to help address water scarcity, 
address the economics of reuse and energy efficiency and the 
adoption of digital solutions. Deploying these technologies 
across the water ecosystem will help secure our water future, 
and I believe that our company and other technology providers 
and research institutions will continue to find ways to bring 
innovation to market.
    In addition to developing and implementing water reuse 
technologies, we have released a series of reports highlighting 
policy options for promoting more rapid adaptation of reuse 
solutions and we have some publications that we'll make 
available here for the Committee. The major policy options 
include: education and outreach, to provide information on and 
recognition of water recycling and reuse efforts; reducing or 
removing regulatory or cost barriers, such as the fact that 
there are currently no nationwide quality standards for reused 
water; providing financial regulatory or other incentives for 
water recycling and reuse; and mandating more water recycling 
and reuse.
    We believe that our technology can help unlock the economic 
power of water by adopting water reuse programs, to weather 
climate cycles by harnessing the energy in wastewater for 
energy-neutral plant operation and by leveraging data analytics 
via the industrial internet to solve complex water 
infrastructure and treatment challenges.
    Thank you for holding this important hearing and for the 
opportunity to present this testimony. I look forward to your 
questions and working with you to address these challenges.
    [The prepared statement of Mr. Markhoff follows:] 
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Flake. Thank you.
    Mr. Riva.

STATEMENT OF CARLOS A. RIVA, PRESIDENT AND CEO, POSEIDON WATER, 
                              LLC

    Mr. Riva. Chairman Flake, Ranking Member King, good morning 
and thank you for inviting me here today.
    My name is Carlos Riva, and I'm President and Chief 
Executive of Poseidon Water. We're a development company that 
delivers large-scale, complex infrastructure projects to public 
water agencies through public-private partnerships.
    My written testimony describes the key characteristics of a 
P3 business model which is now widely used in areas such as the 
UK, Canada and Australia and is gaining acceptance around the 
world as a way to speed up infrastructure delivery without 
adding to public debt.
    My own company, Poseidon Water, has been developing water 
infrastructure projects in North America using the P3 approach 
for more than 20 years. Our signature project is a 50-million-
gallon-per-day seawater desalination plant which is the largest 
and most technically advanced desalination plant in the Western 
Hemisphere and it is now serving San Diego County, California. 
After a very lengthy permitting and development period, it was 
constructed on time and on budget and today supplies about 10 
percent of the county's daily water needs.
    Today, I'd like to make four brief and simple points.
    First, we must anticipate and plan for future water supply 
challenges that are brought on by factors such as population 
growth, economic growth, the aging of existing water systems 
and changing climatic factors. It takes years to implement 
projects to meet large-scale regional water needs. We simply 
cannot afford to wait until we're in crisis.
    Second, now more than ever is the time for closer 
cooperation between the public and private sectors to meet this 
challenge. Across the U.S. many of our water systems have gone 
three or four decades with very low investment and the capital 
needs to bring our water systems up to modern standards is 
estimated to be in the hundreds of billions of dollars. Given 
today's harsh political realities, public water agency capital 
budgets simply cannot cover this gap. Fortunately, many private 
investors are willing to invest through the vehicle of P3s for 
the modest but steady, long-term returns offered by 
infrastructure projects.
    Third, to skeptics who fear a loss of public control over 
crucial public facilities, let me emphasize a key point. A 
well-designed P3 project is very different from outright 
privatization. It is, in reality, an alternative method of 
project delivery over a defined concession period with 
specified performance obligations. I'd be happy to illustrate 
the difference by focusing on the example of our partnership 
with San Diego County Water Authority. In this case, the water 
agency exercises a high degree of control over the design and 
operation of the project and ultimately will assume ownership 
of the plant at the end of the contract period.
    Fourth and finally, there are simple but significant steps 
that Congress can take to remove barriers to this business 
model. My testimony describes a few proposed reforms such as 
caps on the use of private activity bonds, or PABs, which could 
be lifted. Also, the Bureau of Reclamation's financing 
authority could be broadened through a program similar to the 
recently enacted WIFIA program at EPA which was itself based on 
the successful TIFIA model for transportation projects. And 
restrictive budget scoring rules related to P3 repayment 
streams should be re-examined.
    Let me close by noting that in the United States we've long 
since come to accept and embrace private financing for many 
other types of infrastructure serving public needs such as 
transportation, energy and telecommunications. I feel the time 
is ripe to bring this approach to renewing our water systems, 
specifically through the model of public-private partnership. 
Where this model fits, it offers a win-win for everyone at a 
time when our country needs some non-partisan wins.
    Water agencies can meet their service obligations and 
conserve their borrowing capacity. The private sector puts up 
the capital. The consumers get the benefit of much needed 
infrastructure on a faster schedule and on more predictable 
terms. Everybody works together for the good of the citizens 
and the overall economy.
    Thank you, and I look forward to any questions you may 
have.
    [The prepared statement of Mr. Riva follows:] 
    [[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Flake. Thank you all for your testimony. I 
appreciate it.
    We will start a round of questions. I will start with Tom. 
You point out in your testimony the cuts to Arizona's Colorado 
River supplies taken under a shortage declaration and efforts 
underway to keep water in the lake. You talk a lot about this.
    Last year the Department of the Interior provided an 
assurance that Arizona's conserved water would not be delivered 
to farmers across the river in California. It is my 
understanding that DCP has a permanent fix for this so-called 
system water. If the DCP will not take effect until next year, 
at the earliest, are we operating once again without DOI 
assurances?
    Mr. Buschatzke. Chairman Flake, we do not have those 
assurances in writing. We would like to see that happen this 
calendar year. The assurances we had last year ran out at the 
end of 2016.
    It's imperative that that conserved water stay in the lake. 
The efforts of Arizona, Nevada, California and Mexico over the 
last several years, to conserve water in the lake, actually 
avoided shortage in 2015, 2016 and 2017. So it's critical that 
that water stay in the lake.
    And the certainty that commitment in writing from the 
Department of the Interior would give us would allow us to 
continue to go ahead with confidence that the money we're 
spending to conserve that water in the lake is going to be well 
served.
    Senator Flake. The perception by some is that the drought 
ended in the West with all the rain and particularly in the 
Sierra Nevadas. Has the wetter winter that we had in the Upper 
Basin changed the equation at all for Colorado, the Lower 
Basin?
    Mr. Buschatzke. So it has reduced the probabilities that 
Lake Mead will go into shortage or fall to lower shortage 
levels in the future. But the wet winter that started kind of 
petered out in the spring. In between March and June, we lost 
about a two million acre-feet out of the runoff projections. So 
it gave us a brief respite, but there's still more to do. And 
again, without the water conservation that we've done in Lake 
Mead, right now, we might even be in shortage in 2018 despite 
the good winter we had this year.
    Senator Flake. I was glad to see in your testimony you 
covered the reuse of reclaimed water, recycling, that we have 
in Arizona. Frequently, we hear about water recycling. When it 
is talked about, it comes with a request for the Federal 
Government to come in and build a treatment plant for recycling 
projects.
    In Arizona, we have seen projects from Tucson, to Phoenix, 
to Prescott, to treat effluent that do not require federal 
funds. Can you explain how Arizona state water law treats 
effluent and how it has created situations where private 
entities have incentives to invest?
    Mr. Buschatzke. Yes, Chairman Flake. The Palo Verde Nuclear 
Generation Station effluent contract that I talked about 
earlier spurred a lawsuit in Arizona, and the Supreme Court in 
1989 did rule that treated wastewater is the property of the 
entity that treats it.
    That really did incentivize folks for doing reuse, building 
the plants, building the infrastructure, and I think the 
certainty that that legal framework created in Arizona, 
certainly, has led to Arizona using quite a bit of its water 
for reuse in the Phoenix metropolitan area--almost 100 percent, 
the same in the Tucson area. So we've long been leaders in 
reuse, and that was one of the key factors that allowed us to 
achieve that goal.
    Senator Flake. Thank you.
    Mr. Markhoff, you mentioned you use predictive analytics to 
better utilize these systems and private investment that you 
have. Explain that. I think people have--predictive analytics 
are being used just about everywhere, but explain how they are 
used here with regard to water.
    Mr. Markhoff. What we're really talking about is in 
different areas.
    One, just looking at the plant operation itself through 
tools of asset performance management. It's really about 
improving productivity, improving efficiency, predicting 
downtimes and taking preemptive measures against it and 
basically protect and prolong the asset life of the plant 
operation.
    If you look outside of the plant itself, we have large 
infrastructure, piping infrastructure, pumping infrastructure 
and there is a whole slew of different tools to protect 
pipeline health, to detect leakages, to address non-revenue 
water, basically, you know, preventing leakages through 
preemptive maintenance activities. And, you know, together with 
analytical tools and analysis up front, this prediction clearly 
helps to drive improvements and operating productivity and 
efficiencies.
    Senator Flake. Senator King.
    Senator King. Thank you, Mr. Chairman.
    Ms. Zane, I was struck by your testimony in the desire for 
more certainty and more science, in terms of predictability 
which is a crucial element.
    What bothers me is that the budget that was recently 
submitted by the Administration cuts the NOAA budget by 16 
percent, cuts research in NOAA by 32 percent and even cuts the 
National Weather Service by 6 percent.
    You said we need better data to better manage. I would say 
we also need better data to make better policy, and I find that 
very concerning for all of the work that we are doing here. If 
we do not have the data, if we do not have the predictability, 
it is simply going to aggravate this problem. Would you agree?
    Ms. Zane. Oh, 100 percent. We've got to invest in 
technology and just to remember what it costs us when we don't 
invest in technology. We went down to 25 percent of our 
reservoir because the Corps of Engineers were following a rule 
based upon the upcoming precipitation.
    On the other hand, we've been able to keep more water this 
last season where we had our Russian River flooded three times. 
So, basically in one year, Sonoma County was declared both an 
emergency in terms of drought and in terms of flood. So that is 
an example of the extreme differences.
    I think it's all about investing in the innovation. It's 
about better forecasting of the skies so we can better manage 
water on the ground.
    Weather is an integral part. And we do know that, even with 
the science that we've now been working on, if we install the 
proper radars along the coast there in Northern California, 
we're going to have, basically, a forecast that gives us three 
to four days in advance to both prepare for floods and to keep 
that water in the reservoirs. The atmospheric river has dumped 
over 50 percent of the precipitation in California, and that's 
the thing that we've got to track.
    We're seeing, again, extreme weather differences and I 
couldn't agree more, NOAA has been an integral partner of ours 
in terms of looking at the forecasting, increasing the 
technology and then, really, it's about efficiency and cost 
savings.
    Senator King. I want to get to that.
    Ms. Zane. Okay.
    Senator King. Mr. Buschatzke, is there some calculable 
maximum--I am looking big picture here--of gallons needed per 
year, per person, in a given area or in the country or in the 
Southwest, and are we bumping up against that or how do we 
calculate what we need? Can we just continue to absorb growing 
population in Phoenix and Los Angeles?
    Mr. Buschatzke. So certainly, Senator King, there is a 
calculation for gallons per day per person. I think it varies 
in different parts of the country. Certainly, in Arizona, where 
it doesn't rain much, the outdoor use that attaches to a home, 
for example. You need water to meet that demand so it would be 
a very different number than perhaps on the East Coast. So 
perhaps on the East Coast it's 50 or 60 gallons per day. In 
Arizona, 170, 150, somewhere in that range is a more reasonable 
number.
    Senator King. Well, okay.
    Is there some sort of global calculation of what is the 
potential for either conservation or reuse? Is it a third, a 
half? I mean, can we invent our way out of this problem?
    We have not gotten to desalination yet, but let's talk 
about the potential for simply low-flow toilets, or more 
conservation measures.
    Mr. Buschatzke. So at least in Arizona, Senator King, we 
have been doing conservation since 1980. We reduced in the 
population centers, our gallons per day by 25 to 30 percent, in 
some cases more. We have projected out our future supplies and 
demands and we know that conservation alone will not achieve 
the goal of keeping up with growth in population and economy. 
We do know, however, that reuse might fill as much as 50 
percent of our future growth projections.
    Senator King. So those are two areas that we just, 
absolutely, have to concentrate on?
    Mr. Buschatzke. Yes, absolutely.
    Senator King. Ms. Sheils, I think you gave this 
calculation, but it is an important one--can you dollar value 
the natural protections, buffers and the like, versus 
filtration? I think you gave a figure on that.
    Ms. Sheils. Yes, in the case of the Sebago Lake Watershed, 
in order to preserve the needed natural infrastructure of the 
forests around the lake, it costs a third less than to build a 
new filtration plant that would do the same work that the 
forest floor does now.
    Senator King. To follow up on that, are there differences 
in abilities to finance those two solutions? In other words, 
can you get federal grants, for example, for a filtration plant 
but not for acquiring buffers?
    Ms. Sheils. You can get some grants for filtration plants 
through state revolving funds and some federal programs, but 
for acquiring land, it's much different. Some state revolving 
funds do finance purchase of land by drinking water utilities, 
but they don't allow the coordination of purchase with land 
trusts who might be interested in that same piece of land.
    Senator King. I would be interested, if you could supply 
this for the record, in a comparison between buying a 
filtration plant and protecting naturally, and what policy, tax 
policy, grant policy--how it works. I am interested in whether 
we are providing sufficient incentives to do it naturally, as 
opposed to mechanically.
    Ms. Sheils. Well, for one thing doing it naturally is 
always less expensive. In the case of Sebago Lake, it's----
    Senator King. I understand that, but my question is are 
there perverse incentives, penalties, or tax benefits. That's 
what I am looking--you don't have to answer me now.
    Ms. Sheils. Yeah.
    Senator King. But for the record, if you could supply that, 
I would like to see a comparison of how tax policy, grant 
policy and regulatory policy affects the two forks of the 
solution.
    Ms. Sheils. I can provide you that. But let me just say 
that it's really difficult to know all the benefits and to put 
that in the avoided cost number. We know the avoided cost of 
building a filtration plant is the cost of that filtration 
plant that you don't have to build.
    Senator King. No, no, I understand.
    Ms. Sheils. Because--but to value the non-market values of 
recreation and carbon sequestration and all those other non-
market values, there's really not an easy way to do that and if 
we don't count those costs, then we're underestimating the 
benefits. So, I will get you that analysis.
    Senator King. Thank you, I appreciate it.
    Ms. Sheils. Thank you.
    Senator King. Thank you, Mr. Chairman.
    Senator Flake. I will turn to the man who has more lakes 
than constituents in his state.
    [Laughter.]
    Senator Franken.
    Senator Franken. No, we actually have more, I have more 
constituents. It is called the ``Land of 10,000 Lakes.'' We 
have about 14,000 lakes, and I have about five and a half 
million constituents.
    Senator Flake. That is why I am a politician. Math is not 
my game.
    Senator Franken. Yes.
    [Laughter.]
    Well, let's talk science, which I believe involves math 
sometimes. Scientists project that by the end of the century 
the Western United States will face higher temperatures coupled 
with more intense droughts. In the Midwest, we will face 
weather events and the resulting flooding. As a result, we need 
to prepare for these changes by adapting or modifying our 
infrastructure, including our dams and levees.
    Ms. Zane, you have been working to manage water 
infrastructure during both droughts and flooding in the past 
few years. What can the Federal Government do to help 
communities prepare water infrastructure for a changing 
climate?
    Ms. Zane. You have to invest in technology. It's that, pure 
and simple. Without the technology, you're not going to have 
more accurate forecasting.
    We are basically using a Midwestern--no offense to the 
Midwest, but you have more thunderstorms there. We're using 
that technology to give us our forecasts on the West Coast. The 
problem is, is that you have radar at a certain elevation and 
the atmospheric rivers come well underneath that elevation and 
it's not being detected. If we invested in technology today, we 
would be able to know four days, five days in advance, when 
those atmospheric rivers hit.
    You know, we literally lived in a state of emergency 
throughout the wintertime because the Russian River crested 
over three times and we had to evacuate, literally, thousands 
of people and animals. We got a $6 million FEMA grant to repair 
our roads and we're putting another $4 million into the general 
fund. And that, to me, is wasted dollars because if we could 
better prepare for these floods and keep that water in our 
reservoir, and we have a $6 billion agricultural industry in 
Sonoma County and a biological opinion that works and our fish 
are coming back, in terms of our endangered species. But if we 
had that technology today, I believe we could do such a better 
job and not waste one dollar or one drop of federal funding 
when it comes to those emergency disasters.
    So I couldn't be more disappointed that technology and 
research was cut in this recent budget. I think it is the wrong 
way to go, and I think I agree with Senator King. It's got to 
be technology and data that is the foundation for all good 
policies.
    Senator Franken. I am concerned about a lot of the cuts 
that are being made, NOAA, of course. The whole Energy 
Committee is talking about less investment on energy 
efficiency, renewable energy, that sort of thing.
    Ms. Sheils, welcome. My wife is from Maine, I love Maine.
    In your testimony, you highlight the importance of green 
infrastructure and rebuilding natural systems, like wetlands, 
as a cost-effective way to protect water by avoiding the more 
expensive forms of traditional infrastructure projects.
    I just had the Commanding General of the Army Corps of 
Engineers in because they dredge the Mississippi a lot to keep 
the channels open for shipping and that is absolutely 
important. And we had a situation where they dredge material--
they are at a point where they are going to have to dump it on 
somebody's farm, you know? One thing he talked about was 
creating wetlands, and he is hoping that he can find that 
solution.
    So can you talk about these types of green infrastructure 
projects and how they can be beneficial, especially in light of 
a changing climate?
    Ms. Sheils. Right. Yes, definitely.
    More extreme weather events up and down the east coast, 
it's affecting communities tremendously, and protecting the 
wetlands that are already in place is the least--the most cost-
effective way to manage floodwaters on the coast. Restoring 
wetlands is another way to do that.
    And then the last thing is creating wetlands, like you were 
talking about. That can also be cost-effective, as opposed to 
the flood damage that you can get if you don't have that 
natural system to absorb the waters.
    I talked about Vermont and how Hurricane Irene hit Vermont 
so hard and Rutland got all these damages because it's 
basically impervious surfaces, but downstream from that where 
there was this enormous wetland, conserved wetland, the flows 
were much less and damages were much less as well. So we have 
to just weigh the costs and the benefits we get from preserving 
these natural areas that will always be cheaper than to deal 
with the consequences.
    Senator Franken. There are significant conservation 
benefits for mediating a fish and wildlife habitat and re-
establishing local species.
    Ms. Sheils. Not only environmental but also social benefits 
and economic benefits at the same time.
    Senator Franken. You are nodding a lot, Ms. Zane. Why are 
you nodding?
    Ms. Zane. Well, because we've been spending the last nine 
years with the Corps of Engineers and our private landowners, 
basically implementing a biological opinion. We have yet to be 
sued. We've worked really well with our landowners and we are 
seeing great restoration in terms of some of our endangered 
species, fish in particular.
    I grew up with a fishing pole in my hand and fished all 
over the West with my father. So, you know, we will often say 
at the Sonoma County Water Agency, ``If our fish are healthy, 
our water supply and quality is healthy.''
    We really use that as a measuring stick and I would invite 
you all to come out and take a look at some of those 
construction projects, in terms of restoring fish habitat along 
the tributary of the Russian River which is Dry Creek. They are 
quite incredible, some of the best wines you'll ever drink. The 
people who own that property are making those wines and they 
are working hand-in-hand with us, as well as the Corps, to 
implement that biological opinion.
    Senator Franken. Well, thank you.
    I am over my time, but Sonoma is just unbelievably 
beautiful, as is Maine.
    Ms. Zane. Yeah.
    Senator Franken. Arizona is gorgeous.
    Where are the rest of you from? I forgot.
    [Laughter.]
    But I am sure it is beautiful. We have a beautiful country, 
which we should be very proud of, and thank you for working on 
our water infrastructure.
    Ms. Zane. Thank you.
    Senator Flake. Thank you, Senator Franken.
    Mr. Riva, you talk about desalination. I have taken a 
couple of survival trips where the only water I could drink was 
what I used a manual desalinator for, and I know that it takes 
a lot of time to produce enough water and a lot of pressure 
with a little manual desalinator, for sure.
    So the big issue is power use, and I assume that is the big 
cost. Tell me, with California producing a lot of intermittent 
power, particularly with solar, does that provide benefits and 
opportunities for desalination where you can, kind of, pick the 
times that you actually use the hardware? Tell me about power 
and intermittent use and how that is aiding or helping your 
industry.
    Mr. Riva. Thank you.
    Power is a major component of the cost structure of 
desalinated water. For instance, for every gallon of water that 
we produce, roughly half of it represents capital, a quarter of 
it represents operating costs that are non-power and another 
quarter represents the cost of power.
    Over the course of the last decade the amount of that 
percentage of power in the overall cost has been declining as 
there have been a lot of technology innovations starting with 
the improvement in filters, improvement in different energy 
recovery systems and the like.
    But in terms of where we get that power from, in the first 
instance, well, let me back out and say this, at Poseidon, we 
feel very strongly that we need to find ways to maximize the 
use of renewable energy in order to address the power supply.
    There are limits that we can do, actually onsite, because 
there's just not enough room to put a massive solar or wind 
array in order to do that, but we will do some. We'll do 
rooftop solar where we can.
    What we would like to do is to be able to access some of 
the renewable energy that's being produced remotely, say in the 
desert areas in California, and find ways to bring it to the 
site. That's currently not possible for us under California 
law, but it's something that a number of people are working on, 
direct access.
    And then finally, the issue that you raised which is the 
ability to take low-cost power, or what there's excess of 
power, and then alter your operating mode in order to 
accommodate that. That's another potential area which we're 
looking at.
    In our Carlsbad unit, there's less potential to do that 
than in other, say, a new build, like a project we're building 
in Huntington Beach where there's much larger water storage. 
And that's really the issue if you have more capacity to store, 
then you can produce more in off-peak and cut back on on-peak.
    This is all very active work for us and working with the 
California Electricity Commissions because there is, really, a 
power/water nexus that is important to understand.
    Senator Flake. Between the hours of 11 am and 2 pm every 
day, California is pushing no-cost power----
    Mr. Riva. Right.
    Senator Flake. ----on the Eastern grid to Arizona and we 
talked about how that could be used in terms of pumping--the 
biggest, single water user in Arizona is the Central Arizona 
Project--to pump water. If that can be done in times when 
intermittent power is cheaper, then it certainly helps out.
    Mr. Riva. Right.
    Senator Flake. Mr. Buschatzke, we have talked a lot about 
the Colorado River with regard to storage, water banking, and 
wheeling, but one thing we really haven't talked about is 
surface water in Arizona and how that is utilized.
    Talk for a minute about the importance of Arizona's own 
watershed, our Northern forests, for example, and how we can 
better utilize or make sure that we're taking full advantage of 
every drop of rain that falls in Arizona, not necessarily in 
the Upper Basin, that flows into the Colorado River. How 
important is that to Arizona's water future and what do we need 
to do?
    Mr. Buschatzke. So, Senator Flake, our in-state supplies 
are critical. Out of our seven-million-acre-foot water budget, 
about 17 percent of that comes from the Salt, Verde and Gila 
Rivers. On the Salt and Gila Rivers, or the Salt River itself, 
Roosevelt Dam is the main reservoir there. It has flood control 
capacity dedicated to it.
    Again, if we could use that flood control capacity to store 
water in the summertime when it's very unlikely that we're 
going to get any kind of major runoff events and we can 
increase the yield out of the Salt River by, as I mentioned 
earlier, about 70,000 acre-feet, on average. It's highly 
variable, but we need to maximize every drop of water that we 
have from our in-state sources.
    Senator Flake. A healthy forest with fewer trees, less 
choked, that is a better system to have, certainly, than what 
we experience now in the Ponderosa Pine forest.
    Is that true and how important is it to manage our forests? 
There are a lot of benefits, obviously, economic and otherwise, 
but in terms of water, is there an imperative to better manage 
our forests?
    Mr. Buschatzke. Senator Flake, absolutely.
    We estimate that in pre-settlement days there were less 
than 50 trees per acre. That has grown now to over 1,000 trees 
per acre.
    So using a lot more water, also----
    Senator Flake. Kind of like straws underground, isn't it?
    Mr. Buschatzke. Right, also creating a lot of fire danger. 
We've had an increase in the number of acres burned over the 
last several decades from about 85,000 acres in the '80s to 
over two million acres in the 2000s. Again, choking the runoff 
and the sediment that comes after those fires, reducing our 
reservoir capacity, causing issues there. So the health of the 
forest is key.
    We do have a four forest restoration project underway. What 
we've seen is that we need to find ways to incentivize private 
industry to come in so that they can take advantage of those 
wood products. So the restoration that's been underway so far 
has, kind of, been hampered by the fact that we can't create 
these industries to actually come in and use the wood products, 
and the cost of just doing the thinning without being able to 
market the wood products is prohibitive. We need to get private 
industry in there.
    Senator Flake. Well, great.
    We talk a lot in this full Committee on these issues of 
forest restoration. I just wanted to bring it back to the 
importance for water as well because that is not talked about 
as much.
    Senator King.
    Senator King. First, I want to ask each of you as you leave 
here--everybody always leaves a situation like this and says, I 
wish I had said this, or I wish I had made this 
recommendation--what can we do in federal policy to help in the 
areas that you are working on, whether it is tax policy, 
incentives or regulation? Because that is our business here, 
making laws, and to the extent you can provide some backup 
thoughts or white paper explanation, that would be very 
helpful.
    Mr. Riva, on desalinization, obviously huge potential. I 
mean, gigantic oceans. What is the cost of a gallon of 
desalinized water created by desalinization versus a gallon of 
water that comes through a public water supply from traditional 
sources?
    Mr. Riva. I think it's fair to say that it's more expensive 
than existing water supply because it's a new water supply.
    Senator King. My question is how much more expensive is it? 
Twice as much? Three times as much? Four? Five?
    Mr. Riva. It depends on the system but it could be on the 
order of twice as much.
    Senator King. Okay.
    Mr. Riva. But I think the reason for that is that the 
existing supplies have basically committed all of the existing 
inexpensive water.
    Senator King. Right.
    Mr. Riva. And so then you're left with what----
    Senator King. It is hard to beat free. It comes out of the 
sky.
    Mr. Riva. Well, that's right or it's in a pond that 
requires minimal treatment or groundwater, but, and if that's 
available to you freely then I think any community is going to 
go to that.
    But it's where you get beyond that, whether because those 
supplies are diminishing or there are restrictions on them or 
because there's growth, population and the like, and 
conservation is, obviously, a critical part of that.
    But I think that for a healthy system that's resilient to 
the type of events of climate and the like, that Senator 
Franken was talking about, you need a diversified supply 
system. To me, resilience equals diversification, and I think 
desal is an important part, piece of that. It's not the silver 
bullet.
    Senator King. And will likely become more so as population 
pressure increases.
    Mr. Riva. Right.
    Senator King. And the amount of fresh water remains 
constant.
    But that raises a question. I am not quite sure who to 
address this to, maybe you, Mr. Buschatzke, is the issue of 
cost.
    I have a friend who is a car dealer and he tells me that 
you can graph to a precision--when gas prices go down he sells 
more trucks. When gas prices go up, he sells more Priuses. I 
mean, it is very clear.
    We haven't really talked about cost. To the extent that 
there is going to be conservation technology invested in reuse, 
all of those things, don't those go back to what the cost of 
the commodity is, and people will conserve more if it is more 
expensive, and there will be more creativity in terms of 
results?
    My friend from GE, you are nodding. Is that an accurate 
perception?
    Mr. Markhoff. Yeah, I would definitely agree with that 
point, Senator King.
    Senator King. If gasoline were $.20 a gallon we would all 
be driving Humvees or something.
    Mr. Markhoff. Well, you see that in the Middle East where 
they drive big cars, but it is clearly, and we see that where 
they perceive or where the price of water reflects more the 
real value of water, that's where you have more conservation 
activities and that's where you have more new technology being 
applied to be able to reuse water and provide a different and 
broader mix of water sources, you know, to address future 
needs. So I think you're absolutely right there.
    Senator King. Well, as demand increases and supplies either 
stay constant or dwindle, that is going to be a logical 
outcome, it would seem to me, just in terms of the market. And 
then, we will see more developments in terms of conservation.
    I am not advocating higher prices for water, but it seems 
to me that is an inevitability as we go to different 
technologies, whether it is filters or desalinization or reuse 
or dual systems within cities for drinkable water versus water 
use for other purposes.
    Ms. Zane.
    Ms. Zane. Yeah, I want to get back to investing in 
technology too, because we've got to understand what the 
weather is going to do if we're going to save water and 
conserve water, that so----
    Senator King. I was going to ask you--would more storage be 
a partial answer here from when you have these storms so you 
can buffer the effect of the flood and also store the water for 
when it is dry?
    Ms. Zane. I don't think so. I think the storage has to be 
in the ground at this point. You know, California is the last 
state in the Western states to have any type of regulation in 
terms of groundwater and we're just beginning to kick that off 
now.
    But I think the answer is that we need to find better 
innovative ways of storing our water in the ground and at the 
same time, maximizing the reservoirs.
    You asked what we would like to share with you. We would 
like to work with you to include projects like ours that do 
involve the Corps and, kind of, emphasize that those projects 
need to be implemented or initiated by the local water sponsors 
only because I did a little research and found out that the 
Corps operates projects in all of your states.
    And so, we'd like to be able to be included in some of the 
legislation that Senators Flake, Risch and Feinstein have 
authored, which we really appreciate that legislation.
    So it's, again, I just want to stress technology and better 
science. I think we would have saved this country billions of 
dollars in emergency mitigation funds if we could figure out 
the technology and the forecasting.
    Senator Flake. Thank you all for your testimony. We have 
just a couple of minutes left in the vote that Senator King and 
I have to run to.
    We have certainly had scheduling issues to get this hearing 
to come off. We are pleased that we were able to do so today.
    I want to thank the witnesses for the testimony. We really 
touched on some helpful issues here.
    Last Congress we were able to put together a drought bill 
that addressed many of the needs that we have, and I think 
between that bill and the testimony that we have heard today, 
we will have the material to put together another water supply 
and drought bill that deals with a lot of the issues that we 
touched on today.
    For the information of members, questions must be submitted 
for the record before the close of business on Thursday. The 
record will remain open for two weeks. We ask the witnesses to 
respond promptly, if possible, and your responses will be made 
part of the record.
    With the thanks of the Committee, this hearing stands 
adjourned.
    [Whereupon, at 11:14 a.m. the hearing was adjourned.]

                      APPENDIX MATERIAL SUBMITTED

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