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**Testimony of Dan Keppen**

**Executive Director, The Family Farm Alliance**

**Submitted to the U.S. Senate Committee on Energy and Natural
Resources**

**Subcommittee on Water and Power**

**Hearing on**

**S. 2842 "Aging Water Infrastructure and Maintenance Act"**

**July 8, 2008**

Chairman Johnson and Members of the Subcommittee:

Thank you for this opportunity to submit testimony on behalf of the
Family Farm Alliance (Alliance). My name is Dan Keppen, and I serve as
the executive director for the Alliance, which advocates for family
farmers, ranchers, irrigation districts, and allied industries in
seventeen Western states. The Alliance is focused on one mission - To
ensure the availability of reliable, affordable irrigation water
supplies to Western farmers and ranchers. Our members include irrigation
districts and water agencies that are responsible for the operation and
maintenance of some of the Bureau of Reclamation's largest and most
complex facilities.

I have over nineteen years experience in Western water resources
engineering and policy work, including three years as manager of the
Tehama County Flood Control and Water Conservation District in
California. During that time, I was directly involved with management
and repair work associated with three federally-declared flood disasters
along the Sacramento River and its tributaries.

The following has been prepared to present our perspective on the "Aging
Water Infrastructure and Maintenance Act" (S. 2842) and to offer
recommendations to improve it further.

**[The West's Aging Water Infrastructure]{.underline}**

The Bureau of Reclamation (Reclamation) built and manages the largest
part of the critical water supply infrastructure that is the foundation
of the economic vitality of the 17 Western States. Much of this
federally-owned infrastructure is now 50-100 years old, approaching the
end of its design life, and needs to be rebuilt and rehabilitated for
the next century. The Congressional Research Service has calculated the
original development cost of this infrastructure to be over \$20
billion, and Reclamation estimates the current replacement value of its
water supply and delivery infrastructure at well over \$100 billion.

In the American West, Federal water supply systems are essential
components of communities, farms, and the environment. These facilities
are part and parcel of the nation's food-production system and their
operation helps ensure our ability to provide reliable and secure food
for our own citizens and the rest of the world. Reclamation estimates
that \$3 billion will be needed from project users in the near-term to
provide for essential repairs and rehabilitation of Reclamation
facilities.

Aging public infrastructure across the Nation is a growing critical
problem. Throughout Reclamation\'s history, canals have been constructed
in the West to deliver project benefits.  When these canals were
constructed, they were located generally in rural areas, where the major
impact of canal failure was the loss of project benefits.  However, with
increased urbanization occurring on lands below many canals, loss of
life or significant property/economic damage can now result from
failure.

On April 10, 2008 Senator Harry Reid introduced the Aging Water
Infrastructure and Maintenance Act (S. 2842), which provides an initial,
timely approach to address these changing conditions.

**[Background]{.underline}**

Senator Reid has described S. 2842 as a response to January 5, 2008
failure of the Truckee Canal, which resulted in the flooding of 585
homes and businesses in Fernley, Nevada, causing an estimated \$50
million in property damage. At nearly 100 years old, the Truckee Canal
is one of Reclamation's oldest facilities, and it has experienced
several failures, with the most recent of which is believed to have been
caused by burrowing rodents, a common problem throughout the West.
Senator Reid has said that the purpose of the bill is to provide
Reclamation with resources and the direction to inspect and maintain
aging water facilities so that disasters like the Fernley flood can be
avoided.

S. 2842 would require Reclamation to inspect all of its facilities
within two years and to review those inspections every three years
thereafter. Reclamation would be required to use information gathered
during the inspections to develop detailed maintenance schedules for
facilities that Reclamation operates ("reserved facilities") and
facilities, such as the Truckee Canal, that are operated by non-federal
authorities ("transferred facilities"). S. 2842 also requires
Reclamation to develop a "National Priority List" of reserved and
transferred facilities that need the "most urgent maintenance," and to
review the projects on the list annually.

In addition, S. 2842 would direct Reclamation to develop, within six
months of enactment, regulations to establish standards for the
condition and maintenance of all project facilities. The standards are
to require that the project operates in a manner that ensures the safety
of populations and property located "in close proximity" to the project.
Within one year of enactment, Reclamation would have to develop
guidelines to ensure compliance with the new regulations.

The bill authorizes Reclamation to carry out (or have a non-federal
entity carry out) any repair or modification to a project facility
necessary to preserve its structural safety. If the structural
deficiency to be repaired is on a transferred facility, and the problem
does not result from a failure to comply with the new standards and
guidelines, Reclamation may reimburse the non-federal operating entity
for up to 65 percent of the cost of the repair/modification. If the
structural deficiency on a transferred facility is the result of
noncompliance with new standards and guidelines, Reclamation can make
repairs or modifications to minimize the risk of "imminent harm" to
lives and property and then seek reimbursement of costs from the
non-federal operating entity.

S. 2842 authorizes \$5 million in FY 2009 and \$1.5 million annually in
2010 and 2013 to carry out the facility inspections, and it authorizes
"such sums as are necessary" for project modifications.

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

We note three primary areas of uncertainty in the bill that we think can
be addressed via our associated recommendations.

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

We are concerned about how the remedies proposed by S. 2842 would mesh
with ongoing inspection, operations and maintenance (O&M) activities
undertaken by local interests and Reclamation.

For transferred facilities, there is generally a contract between
Reclamation and the non-federal operating authority that mandates
standards for inspections and project conditions and performance.
Reclamation performs regular inspections on these facilities and
essentially dictates to the local authority which repairs or
modifications are necessary and the appropriate level of maintenance.

For example, the major pumping and conveyance facilities of the Central
Valley Project (CVP) in California are operated and maintained by
non-federal authorities under transfer agreements with Reclamation.
These authorities include the San Luis Delta-Mendota Water Authority
(SLDMWA), Tehama-Colusa Canal Authority (TCCA) and the Friant Water
Authority (FWA). The transfer agreements for the CVP facilities
specifically address inspections. In the case of the Friant-Kern and
Delta-Mendota Canals, Reclamation, in conjunction with the respective
FWA SLDMWA and TCCA water managers perform a detailed inspection of the
facilities every three years and identify for Reclamation items
requiring repair or rehabilitation. Reclamation may require additional
inspections annually.\
\
Maintenance of the CVP facilities has improved since the local
authorities took them over from Reclamation. Since the transfer of O&M
responsibilities to these California authorities, significant progress
has been made on repair and rehabilitation projects that were repeatedly
deferred by Reclamation when it was responsible for operating the
facilities.

Reclamation also has an ongoing program to review the operations and
maintenance on all Reclamation project reserved works. Reports from
those inspections indicate any deficiencies, their relative priority for
correction and other aspects of project function.  These reviews and
inspections have been conducted for many decades.

In Fernley, Reclamation had apparently conducted an inspection on the
failed canal at some point preceding the failure. Their inspection
showed nothing to be alarmed about, and it is not clear whether the
rodent burrows were missed in the inspection or whether the burrowing
occurred after the inspection took place.

> ***Recommendation: Revise Inspection Requirements for Critical
> Areas***

We believe that a different level of scrutiny is appropriate for canal
reaches that are cutting through urbanizing areas. Focusing inspections
and setting standards on aging canals that pose significant threats to
life and property would be far more cost-effective than the
Reclamation-wide inspections and new regulatory structure mandated by
the bill. As specific standards are developed in such cases,
Reclamation, after consultation with water users, should identify
near-term inspections, even though there may have been a recent
inspection.

[The legislation could require Reclamation to revise its inspection
procedures to give a higher priority to identifying structural problems
in facilities where failures could directly impact urbanized
areas.]{.underline} Improved inspections could bring the most critical
aging problems to the forefront and, if done correctly, will allow
prioritization from the most imminent possibility of failure to the
least (natural occurrences notwithstanding). \
\
[The bill should recognize Reclamation's and water users' ongoing review
of operations and maintenance programs]{.underline}. Maintenance
schedules already exist and have been complied with for years. Depending
on how S. 2842 bill would be interpreted by local Reclamation staff,
there is the potential that current appropriate maintenance practices of
non-Federal agencies could be turned upside down.  It may be more
effective for local Reclamation staff to sit down with the canal
managers on a regular basis (e.g., monthly or quarterly) to review
concerns that have ALREADY been identified by the canal managers and
which need attention; thereby creating a regular, cooperative approach
rather than more, questionable, and sometimes confrontational,
\"surprise\" inspections.

[The proposed bill should not create a new federal standard that would
go beyond what might be required by existing contract and/or State
law]{.underline}. For example, Idaho statutes already require that
canals be maintained in good repair and prepared to deliver water each
year.

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

S. 2842 seems to assume that all transferred facilities were in
compliance with engineering design standards at the time Reclamation
transferred the facilities to local authorities. Unfortunately, that was
not always the case. 

A very real problem that Western water managers are facing in some areas
relates directly to the Fernley experience. Many Reclamation canal
facilities were designed at a time when urban development wasn't even a
consideration. Often, these facilities were located in rural, isolated
settings. In the decades that followed initial construction of these
facilities, issues arose that were not serious problems in rural areas.

For example, water seeping from earth-lined canals has created wetlands
adjacent to some canal reaches, attracting all manner of wildlife.
Reaches of the Madera Canal in California near these "wetlands" have
become home to huge populations of ground squirrels, who have burrowed
into canal banks, further threatening the integrity of these structures
and leading to increased seepage[^1].

As new housing developments encroach further and further into the once
rural areas bisected by these original canals, the current level of
repair will not be tolerated by the new residents. In fact, in Madera,
concrete-lined canals -designed with no knowledge of the burgeoning
growth that would occur many decades later - have failed, resulting in
litigation leveled at local districts from new residents that have moved
into the area.

In addition, the bill's definition of "project facility" could be read
to include local distribution works built and/or operated and maintained
by non-federal agencies that are fully paid out but title transfer has
not yet occurred.

***Recommendation: Clarify the Local Responsibility for Transferred
Works***

[The bill should be modified to clearly define the federal obligation
vs. non-federal obligation for facilities transferred to a non-federal
entity that didn't meet "federal standards" at the time of
transfer]{.underline}.

[Water users should have a partnership role with
Reclamation]{.underline} in this process because they have a direct
interest in seeing that Reclamation facilities are operated and
maintained properly. Any kind of canal failure could result in
non-delivery of water and have adverse effects on irrigators (and
municipalities) and their corresponding communities.

[The definition of "project facility" should be clarified]{.underline}.

3.  **Reimbursement timing and reliability are unclear.  **

S. 2942's treatment of how and when reimbursements for facility repairs
and modifications will be provided is not clear. It appears the bill
treats Reclamation-operated facilities and transferred facilities
differently.  Congress should understand that water users currently
cover Reclamation costs for inspections under both situations, and in
most cases, are responsible for funding their own O&M budgets each year.
In some areas, such as Friant, all of the facilities are federally
owned. If the locals undertake the work proposed in S. 2842, which in
many cases would be in addition to their regular O&M budget, they must
first clearly understand when reimbursement money will become available,
how to handle full or partial funding in the absence of collateral, the
manner in which line item earmarks will be considered, etc.

Under the current service agreements between Reclamation and local
authorities, funding for major repair projects can be challenging. Local
authorities are also concerned about Reclamation's discretion to define
which types of project costs are capital and which costs are O&M. In the
water users' view, more and more of these determinations are shifting
costs to O&M, and therefore, the water users are challenged with
significant repairs payable in a single year rather than amortized over
a longer capital repayment period.\
\
Water users will face a challenge to make timely repairs if they are to
rely on funding from this proposed program. By the time funding for a
project would be reflected in Reclamation\'s budget, and that project is
actually implemented, a decade may have elapsed, based on current
practices.

> ***Recommendation: Clarify Reimbursement Terms for Local Agencies***

The bill should be revised so that adequate funding, realistic timing
and a reliable means of reimbursement are provided by the federal
government to non-federal operating entities.  The non-federal operating
entities do not hold title to Reclamation facilities and thus have
limited collateral for financing purposes.

> ***Recommendation: Specifically Direct Funding and Implementation of
> Loan Guarantees Program***

Direct loans provide one useful mechanism for local agencies to make
infrastructure repairs. In the past, Reclamation offered its water users
loans, which allowed users to finance over many years their contractual
share of repair and rehabilitation costs. Currently, Reclamation does
not have an active program that provides either loans or a budget line
for the water user share of these rapidly increasing costs, even under
hardship conditions.

[S. 2842 should specifically direct funding and implementation of the
loan guarantee program authorized by]{.underline} The Rural Water Supply
Act of 2006 ([PL 109-451).]{.underline} The 109^th^ Congress sought to
address the financing difficulties local agencies face by creating an
innovative loan guarantee program to help them meet their financial
obligations for the repair and rehabilitation of Federal water supply
facilities. The Act authorized a loan guarantee program within
Reclamation that would leverage a small amount of appropriated dollars
into a large amount of private lender financing available to qualified
Reclamation-contractor water districts with good credit. In other words,
the Congress gave the authority to Reclamation to co-sign a loan to help
their water contractors meet their contract-required, mandatory share of
extraordinary maintenance, facility rebuilding and replacement costs of
federally-owned facilities.

Given this scenario, it is incredible that Reclamation loan guarantees,
a long-awaited critical financing tool for water users across the West,
are now being held up because of incorrect interpretations of clear
Congressional direction by the Office of Management and Budget (OMB).
This is not what Congress intended.

**[Summary and Conclusion]{.underline}**

Reclamation guidelines for analyzing projects should be updated to
include considerations for urbanization and other effects that were not
in play when these facilities were originally designed, many decades
ago. However, one-size still does not fit all, and blanket inspections
for all Reclamation facilities are not appropriate or cost-effective.
Further, many local districts may not have the financial capability to
conduct required repairs to their facilities immediately. A loan
guarantee program can assist them. We believe these recommendations will
further improve S. 2842.

We hope that you will see our comments in the constructive light in
which they are offered. Senator Reid's bill, if enacted, will impact the
family farmers and ranchers who make up our membership, and our
suggested revisions are intended to help create a revised bill that they
can embrace. We look forward to working with bill sponsors on developing
bill language towards that end.

Thank you for this opportunity to present our views today.

[^1]: In Western Colorado, prairie dogs pose a similar threat. Districts
    in that area fear that if the prairie dog is included on the ESA
    list as currently proposed, there will be nothing they can to
    control their canal banks from being riddled with burrows.