[Congressional Record Volume 152, Number 106 (Thursday, August 3, 2006)]
[Senate]
[Pages S8812-S8813]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN:
  S. 3798. A bill to direct the Secretary of the Interior to exclude 
and defer from the pooled reimbursable costs of the Central Valley 
Project the reimbursable capital costs of the unused capacity of the 
Folsom South Canal, Auburn-Folsom South Unit, Central Valley Project, 
and for other purposes; to the Committee on Energy and Natural 
Resources.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce a bill that 
is based on the simple fairness principle that you should pay for what 
you get, no more and no less. In this case California water districts 
have been paying for years for conveyance capacity on the Folsom South 
Canal that they do not use.
  This bill would direct the Secretary of the Interior to exclude and 
defer from the pooled, reimbursable costs of California's Central 
Valley Project, CVP, the capital costs of the unused capacity of the 
Folsom South Canal. Congressman Lungren has introduced similar 
legislation in the House of Representatives.
  In 1970, two CVP contractors signed contracts with the Bureau of 
Reclamation to take water from the Folsom South Canal, which had yet to 
be built. The canal diverts water out of Lake Natomas, a regulating 
reservoir immediately downstream of Reclamation's Folsom Reservoir, to 
areas in southern Sacramento County.
  The canal was originally designed to incorporate five ``reaches''--or 
sections--and deliver water to southern Sacramento County, San Joaquin 
County, and to the San Francisco Bay area. Because the planned East 
Side Division irrigation project was never constructed, the anticipated 
deliveries through the Folsom South Canal never materialized. Only two 
reaches of the canal were constructed, and those are dramatically 
overbuilt. In a departure from normal reclamation policy, which 
dictates that signed contracts are required prior to construction of 
projects, signed contracts were not obtained.
  The canal was built with the capacity to deliver 2.5 million acre-
feet of water per year, but the only entity currently diverting water 
through the canal--the Sacramento Municipal Utility District, SMUD--has 
only diverted a maximum of 20,000 acre-feet per year. In short, a 
significantly oversized canal has been used to deliver a very small 
quantity of water.
  Under reclamation policy, the agency allocates the capital costs of 
the canal to the pool of all CVP municipal and industrial water--M&I--
users regardless of whether they divert water through the Folsom South 
Canal. There are 32 M&I customers that are paying for the canal, 
including SMUD, Sacramento County Water District, East Bay MUD, Santa 
Clara Valley Water District and Contra Costa Water District. Today, 
only SMUD diverts any water through the canal, albeit only about 8 
percent of the canal's capacity; the other customers have little or no 
benefit to the project that they fund. This inequity is difficult to 
explain to ratepayers that are already burdened with replacing aging 
infrastructure and upgrading water treatment technologies.
  My legislation would direct the Secretary of the Interior to exclude 
and defer from those pooled reimbursable costs of the CVP, the costs of 
the unused capacity of the Folsom South Canal. While final deferral 
calculations will be performed by reclamation as directed by this bill, 
it is estimated that this bill will result in a deferral of 
approximately $35 million excess capacity costs.
  The concept of deferring costs is not unique to the Folsom South 
Canal. Congress has authorized deferrals for other elements of the CVP 
and in other reclamation projects. Even though there are many instances 
where customers pay for unused capacity, there are no instances that 
come close to approaching the absurd inequity of being forced to pay 
for a canal that is producing 8 percent of what reclamation promised it 
would deliver.
  Should the amount of CVP water conveyed through the Folsom South 
Canal change in the future, this bill includes a provision directing 
Interior to review the change and adjust the deferred costs accordingly 
for unused capacity.

[[Page S8813]]

  I strongly believe this deferral is the correct approach to this 
issue. Reclamation made the decision to oversize this canal based on 
future planned expansions--expansions that did not materialize. The 
water districts that use the existing canal for limited conveyances 
should not pay for the consequences of public policy decisions that 
resulted in a significantly oversized canal. Water districts should pay 
for the canal conveyance capacity that they use--I think this is a 
fairness principle that we can all accept.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3798

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. CERTAIN AMOUNTS EXCLUDE AND DEFER FROM THE POOLED 
                   REIMBURSABLE COSTS RELATED TO THE CENTRAL 
                   VALLEY PROJECT.

       (a) In General.--The Secretary of the Interior (referred to 
     in this section as the ``Secretary'') shall exclude and defer 
     from the pooled reimbursable costs of the Central Valley 
     Project the reimbursable capital costs of the unused capacity 
     of the Folsom South Canal, Auburn-Folsom South Unit, Central 
     Valley Project.
       (b) Calculation of Amount of Deferred Use.--The Secretary 
     shall calculate the amount to be assigned to deferred use as 
     soon as practical and such shall be reflected in future 
     years' water rates.
       (c) Calculation of Capital Costs.--For the purpose of 
     calculating the excluded reimbursable cost for the Folsom 
     South Canal facility, the Secretary shall multiply the 
     existing total reimbursable cost for the facility by a 
     factor, to be determined by dividing the current minimum 
     unused conveyance capacity of the canal by the original 
     design conveyance capacity of the canal. The minimum unused 
     conveyance capacity of the canal shall--
       (1) be determined by the Secretary;
       (2) be based upon actual historic measured flows in the 
     canal and planned future flows; and
       (3) include the amount of Central Valley Project water that 
     was originally conveyed or was historically projected to be 
     conveyed through the Folsom South Canal which may have been 
     contractually assigned to another entity.
       (d) Review and Adjustment.--The Secretary shall review and 
     adjust--
       (1) the amount described in subsection (b)(3) as 
     appropriate and recalculate the amount of such unused 
     capacity of the Folsom South Canal; and
       (2) the amount of reimbursable capital costs of the Folsom 
     South Canal.
       (e) Conveyance of Certain Water.--So long as an entity that 
     is allocated and that pays capital, interest, and operation 
     and maintenance costs associated with an amount of Central 
     Valley Project water historically assigned to the Folsom 
     South Canal does not use the Folsom South Canal for the 
     conveyance of Central Valley Project water, that entity shall 
     be entitled, without additional cost, to convey up to an 
     equivalent amount of non-Central Valley Project water through 
     the Folsom South Canal.
                                 ______