**April 5th Water Conference**

**Participant List**

**[Question 2: Role of the Bureau of Reclamation in the 21^st^
Century]{.underline}**

What should the future role of the Bureau of Reclamation be in the West?
Should the Bureau undertake water supply or supply augmentation
activities which are designed primarily for municipal and industrial
purposes, such as the Title XVI Program? Please also include comments on
potential financing mechanisms such as grants or loan guarantees. What
role should the Bureau play with respect to addressing: the West's
future water needs; drought and flood planning and response; water
infrastructure, including dam safety and site security; facility
operation and maintenance; rural water needs, including in Indian
country; hydroelectric power; recreation; watershed restoration; and
water use efficiency?

**Participants:**

-   National Water Resources Association

-   WateReuse Association

-   Western States Water Council

-   Family Farm Alliance

-   City of Santa Fe

-   Confederated Tribes of the Umatilla Indian Reservation

**Senate Energy and Natural Resources Committee**

**Water** **Conference**

**National Water Resources Association**

**ROLE OF THE BUREAU OF RECLAMATION IN THE 21^ST^ CENTURY**

**Historical Perspective**

The nation as a whole has come to take for granted the benefits that
flow from the omniscience and vision of the policy-makers who, at the
beginning of the 20th century created the federal/non-federal
partnership that settled the West \-- The Reclamation Program.
Reclamation projects authorized by Congress continue to provide numerous
and substantial benefits for the entire United States.

The Reclamation program was initially enacted with the passage of the
Reclamation Act on June 17, 1902. Essentially, the Reclamation Act
provided for the proceeds from the sale of public lands in 16 western
states to be deposited in a fund (the Reclamation fund) to be used for
the "\...construction and maintenance of irrigation works for the
storage, diversion, and development of waters for the reclamation of
arid and semi-arid lands in the said States and Territories\..." It was
one of several acts concerning the transfer and development of public
land in the Western United States. The Reclamation Act is bound up with
these other laws concerning the allocation, transfer, and use of the
nation's public lands. The exploration and settlement of the west became
a matter of great national interest in the latter half of the nineteenth
century.

As the Reclamation program changed throughout the early part of the
twentieth century, the combination of a simple message, clear vision,
and great leadership remained intact. In less than 40 years, the
Reclamation program evolved from single purpose irrigation projects,
funded by a revolving fund, with 10 year repayment periods, to complex
multi-purpose projects, funded by appropriations, with 40 year repayment
periods, and power revenues assisting in the repayment of irrigation
debt. Given these significant program changes, the program message
continued to be that of "making the desert bloom," and the basic purpose
continued to be to promote regional economic development by developing
irrigated agriculture. The Reclamation program stayed on this course
until the late 1960s.

The Reclamation Program is vitally important to the West and the Nation
as a whole. Reclamation projects authorized by Congress provide numerous
and substantial benefits for the entire United States. Among these
benefits are: (1) flood prevention and protection totaling in the tens
of billions of dollars; (2) generation of substantial amounts of
hydroelectric energy using water as a renewable no-cost fuel source; (3)
delivery of irrigation water to hundreds of thousands of acres of
farmland in semiarid and arid regions that has increased and stabilized
agricultural production in those regions; (4) water-based outdoor
recreation facilities that provide recreation for millions of visitors
annually; (5) municipal and rural domestic water supplies for over 30
million people; (6) recharge of underground aquifers and water supplies;
(7) fish and wildlife habitat including new fisheries, wildlife
management areas, and hundreds of thousands of acres of habitat and
marshes throughout project distribution systems and facilities; and (8)
major surface water transportation.

**MISSION OBFUSCATION**

Reclamation has never had a comprehensive Organic Act describing its
mission, much less recent revisions reflecting the evolving needs of the
west (unlike the National Park Service, the Bureau of Land Management,
and the Forest Service). Rather, its role and associated authorities
evolved through a series of individual project acts; many Reclamation
administrative acts concerning such matters as contracting, financing,
and general administration; the overlay of federal environmental law;
the waxing and waning of the federal commitment to Indian programs;
legal interpretation by Interior's legal staff, as well as the courts,
of the many, varied, and sometimes inconsistent federal statutes
associated with the Reclamation program; and the direction provided by
its own internal assessments and policy directives. The absence of an
organic act results in less clear Congressional direction and
contributes to the difficulty of providing consistent program direction.

During the 1960s, three issues began to impact Reclamation's "mission"
bringing focus to this lack of Congressional direction. The first was a
gradual reduction of strong Congressional leadership on water issues.
Members such as Senator Hayden and Congressman Aspinall, Johnson, Sisk,
and Moss left office in the 60s and 70s. The Reclamation program had
fewer strong champions in the Congress and less standing in the
Department of the Interior. The second had been a concern throughout the
Reclamation era and involved questions of the economic justification for
further federally funded Reclamation project development. The third
issue concerned the environmental impacts associated with Reclamation
program activities

Reclamation's construction program was dropping off significantly, and
the planning program was moving away from traditional water projects.
Funding for the loan program was reduced and, ultimately, virtually
eliminated. Several projects were re-authorized (Garrison, Central
Arizona, Central Utah, Central Valley, Truckee Carson, etc.) to reflect
emerging fiscal, environmental, and/or Indian interest resulting in a
piecemeal widening of Reclamation responsibility. This change in
legislative direction by the Congress added credence to what many in
Reclamation viewed as a change in public interest associated with the
Reclamation program. Further, Reclamation's power marketing and
transmission program was transferred to the newly established Department
of Energy in the late 1970s.

From the 1930s to the 1970s, the power and construction programs
provided the funding stability required to run the Reclamation program
in the traditional manner. As these program functions were transferred
or significantly reduced, Reclamation managers found it more difficult
to support the historic organizational arrangements. Overhead costs
began to go up significantly. With a greater interest in cost recovery,
these cost fell, to a greater extent, on the largest remaining program:
operation and maintenance of exiting projects. Since O&M cost are
recovered from the water and power users in the year they are incurred,
this drove up costs to customers, creating another problem for
Reclamation and its user community.

Lacking clear Congressional direction on its mission in the form of an
organic act or some other form of overall policy guidance, and
recognizing all of these changes and the resulting effects on program
management, Reclamation's leadership went through a series of internal
assessments with resulting policy documents. These reviews and documents
include:

• 1987 Assessment

• 1988 Implementation Plan

• 1992 Strategic Plan

• 1994 Blueprint for Reform

• 1997 Bureau of Reclamation Strategic Plan, 1997-2002

In 1997, Reclamation published its five-year Strategic Plan pursuant to
the Government Performance and Results Acts of 1993. The plan states
three mission objectives:

1\. Manage, develop, and protect water related resources.

2\. Protect the environment.

3\. Improve our business practices and increase productivity of our
employees

The objectives are supported by 18 strategies and five-year goals
associated with each strategy. ([Interestingly enough, contract renewal,
which is a near-term vital interest to many Reclamation project water
users, is not even mentioned in the Strategic Plan]{.underline}.) The
Strategic Plan states broad objectives and numerous sub-objectives
(strategies), and includes ambitious five-year goals. The five-year plan
includes Reclamation's historic mission regarding facilities, operation,
maintenance, and dam safety. It incorporates environmental protection as
a fundamental mission of Reclamation. In many ways, it commits
Reclamation to being all things to all people, as it pursues its mission
and mission objectives.

The five-year Strategic Plan basically says that Reclamation will
continue its traditional activities, but with equal emphasis on
environmental protection and remediation. Recreation and Indian Trust
responsibilities are further emphasized as Reclamation objectives. The
problem is that there does not appear to be agreement in Congress or
among Reclamation project water users that 1) this is Reclamation's
future mission, or 2) this mission is being carried out at this time -
or can be carried out in the future- in an acceptable manner.

Given the significant additional responsibilities in the environmental
area imposed by the Congress, the renewed attention to tribal obligation
and the shifts in policy direction and institutional change over the
past 10 years, it is no wonder Reclamation is struggling for a clear
sustained direction. Reclamation can accommodate adjustments to program
direction from year to year and remain effective. It has demonstrated
this over the years. However, direct and sudden reversals of program
direction and organizational philosophy have had a profoundly negative
effect on the organization. A 20 percent reduction in staffing and a
loss of historical leadership and institutional knowledge has also
contributed to Reclamation's instability.

**ROLE OF THE BUREAU OF RECLAMATION IN THE 21^ST^ CENTURY**

Reclamation's "mission" has become so blurred over the past twenty-five
years that it is important for Congress to consider a system of
priorities for funding of the Reclamation's many programs. We believe it
is time for Congress to bring some clarity to the future of the
Reclamation program. There are several possible directions the
Reclamation program can move in the immediate future.

We strongly suggest that there is a legitimate role for Reclamation into
the foreseeable future. Reclamation manages over 350 high dams in the
west. Some agency needs to be administratively responsible for the
operation and maintenance of these facilities. Until - and unless - they
are transferred out of federal jurisdiction, this seems an important and
legitimate role for Reclamation.

Reclamation's history is entwined with the development of the West. That
development goes on today at an unprecedented rate, and is placing
significant pressure on a finite water supply. Ideally, Reclamation
should have sufficient resources to support the states by performing the
full range of functions that diverse western water interests are
demanding today. Regrettably, recent history has demonstrated that
fiscal and human resources are not unlimited. Therefore, the Reclamation
must focus its limited resources on priority projects and programs. The
following priorities are proposed:

• The first and highest priority in dollars and human resources should
be directed

to the efficient and effective operation of existing projects in such a
fashion as to

honor existing commitments and provide authorized benefits in a safe

and reliable manner.

• The second priority should be the timely completion of ongoing
construction so

authorized benefits can be realized within a reasonable time frame. This
includes

pass through funding associated with authorized construction projects

currently underway.

• The third priority should be the funding or execution of new
activities or projects

to provide expanded beneficial use from existing facilities in response
to

increasing demands being placed on western water resources.

• The fourth priority should be funding and execution of innovative new
projects or activities.

The first priority is directed at protecting the existing federal
investment and honoring existing commitments by assuring the
uninterrupted and undiminished flow of authorized benefits from existing
projects. As long as the federal government insists on retaining title
to these project facilities, it must place their operational integrity
as the highest priority. This priority must be fully funded or
Reclamation risks unsafe structures and loss of project benefits. Every
effort must be made to identify means to fund this priority, including
off budget approaches. If Reclamation is unable to fully fund this
priority level, it should identify those facilities with the least
national interest and immediately initiate title transfer to the local
beneficiaries. To do otherwise is to create a maintenance deficit that
will never be overcome.

The second priority is to complete currently ongoing construction
activities in the shortest possible time frame. This serves two
interests. First, it will allow the public to realize the benefits
associated with the expenditure of taxpayer funds at the earliest
possible time. Second, it will minimize the cost of constructing the
project by reducing non-contract costs and the effects of inflation
associated with long construction periods. Any effort to discontinue
funding ongoing construction should be a result of an informed decision
by the Administration or the Congress and should not be a decision by
default.

The third priority is directed towards deriving the most public benefit
possible from exiting facilities. At the direction of Congress and with
the support of the states, additional project benefits can be derived
from existing facilities. The use of existing facilities to meet new
water needs is often the most cost effective and expedient. These
efforts should be supported by the existing project beneficiaries and be
consistent with the state water law.

The fourth priority includes new construction and other activities not
associated with existing projects or ongoing activities. There are many
good activities that may fall in this priority level and this is not to
say they should not be pursued. However, in these fiscally tight times
for Reclamation, these new activities should not be funded to the
detriment of the higher priority program activities. These new
activities may need to be funded from federal sources other than the
Reclamation program or from non-federal sources.

Along with prioritizing the Reclamation program, Reclamation must
continue to pursue efforts to reduce the cost of doing business.
Reclamation is making efforts to empower field offices and flatten the
organization, and should be encouraged to finish what has been started.
There remains room for significant improvement.

Reclamation must administer the projects under its jurisdiction to
achieve the benefits authorized and directed by the Congress. It is not
for Reclamation, but the Congress, to determine if there is a higher
purpose toward which the existing facilities should be used. Until - and
unless - the Congress authorizes these additional purposes, Reclamation
should dedicate its efforts to assure the effective and efficient
delivery of presently authorized benefits. As Congress considers
additional project purposes, current project beneficiaries must be
involved with and supportive of any legislation affecting their interest
in the project.

Lastly, as the Congress, the Administration, and the water community
deliberate the future of the Reclamation program, certain actions need
to be taken in conjunction with the program priorities addressed above.
They include the following:

• Clarify Reclamation's relationship to the states' long-standing
responsibility for allocating water resources within their
jurisdictions, consistent with interstate compacts and decrees.
Reclamation should affirm its long-standing policy of

deferring to the states with regard to allocation of water resources and

administration of water rights.

• Assure that Reclamation actions are consistent with its authorities.
Many, if not

most, Reclamation projects have very narrow project purposes, and cannot
be

expected to meet every current interest in water without reconsideration
by the

Congress.

• Clarify the relationship and obligations to Reclamation contractors,
as opposed to

other interest. Reclamation has specific legal and policy obligations to

Reclamation project contractors. Reclamation has an obligation to
consider the

concerns of others and address impacts of contracting. These are not the
same

relationships and should not be treated as if they are.

• Develop incentive-based approaches to current water allocation
problems.

Increasing demands are being placed on Reclamation project water for
wildlife,

endangered species, recreation, environmental remediation, etc. Rather
than

taking this water from historic water users through regulation or
legislation,

Reclamation should provide incentive based approaches to resolution of
water

problems that ensure provision of water for historic users, while
responding to

new demands.

**Senate Energy and Natural Resources Committee**

**Water** **Conference**

**WateReuse Association**

*2. Role of the Bureau of Reclamation in the 21^st^ Century*

The USBR was established in 1902 with a mission of ensuring adequate
water supplies for the developing West. Congress recognized the need for
multi-purpose water supply projects and authorized municipal and
industrial supply as a mission of the Bureau of Reclamation in 1907.
When the Bureau was established, the total population in the 17 western
states was approximately 11 million people. In 2004, the population in
the West totaled 97.2 million and is growing rapidly. The mission of the
Bureau in developing municipal and industrial water supplies is even
more critical today than it was 100 years ago.

The primary mechanism used by the Bureau to ensure adequate water
supplies in its first century of operation was to build dams for storage
of scarce water resources and the generation of hydroelectric power with
irrigation supplies. While the mission of the Bureau has not
fundamentally changed (although today the municipal and industrial
supply issue is much more critical than the historic emphasis on
irrigation supplies) -- and need not change -- in the 21^st^ century,
the mechanisms of ensuring adequate supplies must be dramatically
different. The Bureau should play a leadership role in the development
of alternative water supplies (e.g., water reuse and desalination),
ensuring water use efficiency, and developing less costly and less
environmentally disruptive means of storage such as aquifer storage and
recovery (ASR) or groundwater conjunctive storage management (e.g.,
Orange County Water District's Groundwater Recovery Project). In many
cases this is true for several federally authorized projects: Southern
Nevada Water Project, Central Arizona Project, San Juan-Chama
(Albuquerque), and the Hoover Dam/MWD's Colorado River Aqueduct. The
Congress in 1986 recognized the need to augment the supplies of the
Colorado River to meet the future needs of the river basin, but in 1986
the emphasis was on large importation projects. Today, it is appropriate
for the Bureau to focus on water reuse, desalination, and water use
efficiency.

The Bureau should take a leadership role in cutting edge technology to
treat and reuse water. Title XVI is an example of a sound Federal
investment. Under this program, the Federal government provides no more
than 25% of the total capital costs while the local water agency
contributes 75% or more. Thus, the Federal government leverages resource
effectively, assists the local water agency with achieving an enhanced
credit rating, and assumes no long-term financial obligation with
operation and maintenance costs. The Title XVI program has benefited
many communities in the West by providing grant funds that made these
projects more affordable. The Federal cost share -- although a
relatively small portion of the overall project cost -- often makes the
difference in determining whether a project qualifies for financing.
Compare this to the historic Federal Bureau authorizations of the
Central Arizona Project, the Central Utah Project, and the Central
Valley Project which provided 100% upfront capital financing and
long-term subsidized repayment contracts (plus in some cases operating
subsidies for many years).

The USBR should collaborate with the CEQ Task Force (described in the
response to question #1) to address roles and responsibilities of
different Federal agencies in addressing western water problems in
collaboration with state and local governments.

**Senate Energy and Natural Resources Committee**

**Water** **Conference**

**Western States Water Council**

**Proposal**:

Expand and fully fund Bureau of Reclamation programs to meet identified
needs.

**Preface**

The Bureau of Reclamation operates hundreds of dams and reservoirs in
the West supplying water and power to millions of people, irrigating
millions of acres for food and fiber, providing flood control and
recreation, and maintaining instream flows for fish and wildlife
habitat, including anadromous and threatened and endangered aquatic
species. The value of federal Reclamation projects in assisting western
communities survive the continuing drought in the West, particularly the
Northwest, can not be overstated. Two of Reclamation's expressed
"mission goals" are: (1) managing, developing and protecting water and
related resources to meet the needs of current and future generations;
and (2) operating and maintaining facilities safely, reliably, and
efficiently to protect the public investment.

Reclamation has stated, "Our challenge is to balance and provide for the
new mix of resource needs in the West\.... \[P\]roviding recreational
opportunities and protecting the environment have become important to
the public, while municipal and industrial development is demanding
more, high quality water. With Western population growth\...the future
will be filled with greater demands on limited resources. Balancing the
needs in the West and providing water resources has brought into focus
our ability to manage existing water efficiently and effectively, and to
resolve conflicting needs through cooperation from multiple stakeholders
and customers."[^1]

Reclamation's mission goals have been subdivided into a number of
long-term goals that include: (1) providing leadership in delivering
water and power; (2) increasing water use efficiency and availability;
(3) ensuring effective operations of facilities; and (4) operating,
maintaining and rehabilitating facilities to ensure reliability and
cost-effectiveness  to name a few. Its strategy for accomplishing these
goals lists several guiding principles that include: (a) the use of
broad based proactive conflict resolution methods; (b) continuing a
close working relationship with traditional water users, while forging
relationships with other users; and (c) promoting and using partnerships
to create sustainable solutions, leverage resources and learn from
others.

The Bureau of Reclamation and western state water managers, represented
by the Western States Water Council, have many common interests. In a
1997 report for the Western Water Policy Review Advisory Commission, the
Council declared, "In the arid West, providing adequate water supplies
to meet future demands continues to be a priority." Making more water
available for new and expanded uses and increasing water use efficiency
are critical, given the fast growing population of the West, subsequent
demands for water for domestic and municipal uses, continuing
agricultural water demands, and increasing demands for water for
environmental uses, particularly the needs of endangered and threatened
aquatic species. Reclamation has and will continue to play an essential
role in meeting western water demands.

**What should the future role of the Bureau of Reclamation be in the
West?**

While the construction of large new federal dams and reservoirs is
unlikely for the foreseeable future, Reclamation faces an enormous
challenge related to its portfolio of aging dams and related
infrastructure. Dam safety must be a priority. Reclamation is also
actively pursuing programs to help irrigation districts and other water
users make the most efficient use of available supplies. The Council
supports this proactive, non-regulatory, incentive-based conceptual
approach to administering federal water conservation programs, and the
related "Bridging-the-Headgate" Partnership. We support the overall
objective of these activities, which is to work together as
federal-state-local partners for the sustained and efficient use of
western agricultural water supplies.

The Congress is considering reauthorizing and extending the Small
Reclamation Projects Act with more money for loans and grants for water
development. This is an important program which deserves congressional
support.

Interior's Water 2025 Initiative is an example of Reclamation's efforts
to address water resources challenges in the West before conflicts reach
a critical impasse, as in the Klamath River Basin. Western states
believe the scope of the program is insufficient to meet the growing
need. As Senator Domenici has declared, the appropriation of \$20 or
\$30 million a year in new money is woefully inadequate to address our
needs. However, the success in leveraging federal, state and local
resources through Water 2025's challenge grants is an example of what
can be accomplished if we are willing to work together. It would appear
that matching non-federal support could easily be found for \$100
million in federal money.

As discussed later in the statement on drought, the Council has a long
history of work in the area of drought planning and management. We
support Reclamation's efforts with respect to assistance for state and
local drought response and relief activities.

**Should the Bureau undertake water supply augmentation activities?**

The development and use of new water supplies to meet present and future
demands is a priority for western states. More storage is essential.
Reclamation has been and should continue to be a leader in the
development of a number of alternatives and technologies that promise to
help meet future water needs: (1) ground water recharge, storage and
recovery projects; (2) water reclamation and reuse projects; (3)
desalination; and (4) phreatophyte control, including eradication of
salt cedar. There may be other opportunities to increase water storage
and yields from wetlands/streambanks through better management of state
and federal lands and riparian zones. New opportunities may exist for
increasing the efficiency and yield of existing federal, state and local
water supply systems through project modifications or re-operations.
Further, new reservoirs and off-stream storage projects should not be
ruled out.

As explained in the Council statement on water supply, the Council
strongly supports federal legislation to provide technical and financial
assistance for small rural communities struggling to meet their water
supply needs. Legislation is needed to create a systematic, integrated
approach to investigating, authorizing and constructing projects to meet
rural western needs in close cooperation with State, local and regional
entities, as well as tribes. Existing authorities, such as the Drinking
Water State Revolving Loan Fund, are not sufficient to meet the needs of
small rural communities, which are facing serious obstacles in securing
the resources necessary to ensure an adequate and reliable water supply
for their future. New authority and significant new funding is essential
to better meet the needs.

**What role should the Bureau play with respect to the West's (other)
future needs?**

Endangered species and western water management are and will continue to
be intertwined. Finding water for fish and farmers, as well as growing
municipal and industrial needs, within the parameters of state water law
and federal environmental law is a challenge that must be successfully
met. Reclamation and others are already deeply involved in negotiating
and implementing programs to purchase and lease water for endangered
species, provide incentives to restore and protect habitat, build fish
screens and fish ladders, etc. With respect to the issue of dam removal,
the engineering issues and legal and socioeconomic issues, as well as
functional alternatives to small and large dams need to be carefully
considered. Reclamation has experience and expertise in these areas.

The needs of native American tribes and settlement of Indian water
rights claims is another priority concern for state and federal water
managers. As explained in a separate statement on the subject, the WSWC
has and will continue to support the successful negotiation and
implementation of settlements that provide certainty for all
stakeholders. The Bureau of Reclamations plays an important role in
achieving this goal.

The efficient, effective and safe operation of Reclamation facilities is
important. Moreover, state and local officials \-- in cooperation with
Reclamation and other federal water managers \-- together need to look
at water problems and opportunities to increase water yields on a
watershed or river basin basis. Participation by all interested parties
in grassroots watershed efforts holds the promise of success in
resolving many, but not all, western water problems \-- water quality
problems, as well as quantity problems.

Federal water project transfers to local ownership, as well as
operation, and the transfer of federal project and wheeling of
nonproject waters are also important areas for cooperative action
between Reclamation and state and local interests.

**Comments on funding mechanisms**

The billion dollar question is how should Reclamation programs and
projects be funded?

The President's FY06 budget request for the Water and Related Resources
account totals \$802 million, down from \$859 million appropriated last
year. Further, the request anticipates that off-setting receipts
collected by the Western Area Power Administration (WAPA) for operation
and maintenance and other expenses allocated by Reclamation to WAPA
would reduce the final appropriation to some \$771.6 million. According
to program and financing figures and estimates, new budgetary authority
(gross) for obligation has dropped from \$994 million in FY04, to \$972
million in FY05 and is projected to be \$919 million in FY06. Total
gross outlays would be \$940 million, compared to an estimated \$1.028
billion in FY05 and \$953 million in FY04.

Meanwhile, the unobligated balance in the Reclamation Fund is expected
to grow from \$3.877 billion at the end of FY04 to an estimated \$4.812
billion for FY05 and \$5.905 billion in FY06. Created by the Reclamation
Act of 1902, the Reclamation Fund was envisioned as the means to finance
western water and power projects with revenues from western resources.
Its receipts are derived from water and power sales, project repayments,
certain receipts from public land sales, leases and rentals in the 17
western states, as well as certain oil and mineral-related royalties. It
is a special fund within the U.S. Treasury that is only available for
expenditure pursuant to annual appropriation acts. With growing
receipts, in part due to high energy prices, and declining federal
expenditures for Reclamation purposes, the unobligated figure gets
larger and larger  while the money is actually spent elsewhere for
other purposes. While receipts in the past were insufficient for the
construction of major federal projects such as Grand Coulee and Hoover
Dams, which required the appropriation of general Treasury funds, today
it appears that the Reclamation Fund could serve as a revolving account
that would pay for Reclamation and related water resources programs and
needs in the West.

Examples of similar federal authorities include the Highway Trust Fund,
Land and Water Conservation Fund, Southern Nevada Land Management Act
and most recently the Arizona Water Rights Settlement Act.

Another alternative might be to create state revolving funds (similar to
the popular Clean Water and Safe Drinking Water SRFs) that could be
capitalized with dedicated Reclamation Fund receipts, in excess of
agency appropriations, to assist in financing state and local water
resource development and conservation projects and programs, or water
right acquisition and water trust programs. Such funds might also be
used to finance water conservation and water resources related
environmental restoration projects and programs (to protect instream
resources, endangered and threatened species, etc.).

On the other hand, some 25 years ago, Senator Domenici and the late
Senator Daniel Patrick Moynihan proposed a \[block grant\] program to
assist states with their water development needs, which western states
thought merited consideration. Virtually every western state already has
some type of water resources related assistance programs in place that
would benefit. Further, it would keep the proceeds for development of
western resources in the West as the Congress envisioned in 1902.

Federal Reclamation funds might also be authorized to provide a Water
Insurance Trust to guarantee the repayment of state and local water
related bonds. The WSWC has in the past supported such an insurance
fund, as well as the use of tax-exempt bonds to finance water resources
needs. State and local agencies have always financed the majority of
their own water needs, but federal assistance has and will continue to
be important.

The federal government has in the past usually taken the lead on large
regional basinwide and multi-state multipurpose projects (with
particular national objectives). While the era of big dams may indeed be
over, a role for the federal government remains. Perhaps it is time to
focus federal financial resources intended to aid in western water
development to help state and local agencies meet the future challenges
of supplying adequate water of suitable quality in the face of growing
municipal and industrial demands and federal requirements to protect
public health and the environment.

Fully funding and expanding past and present Bureau of Reclamation
programs to meet identified needs, and/or authorizing the use of
Reclamation Fund money to capitalize a new federal SRF (or otherwise
assisting existing state and local programs), would go a long way
towards meeting the growing demands placed on western water resources.

**Senate Energy and Natural Resources Committee**

**Water** **Conference**

**Family Farm Alliance**

The Family Farm Alliance strongly supports the focus of the Bureau of
Reclamation (Reclamation) on fulfilling its core mission of delivering
water and power in accordance with applicable contracts, water rights,
interstate compacts, and other requirements of state and federal law.
Inherent in this definition of core mission is the need to prioritize
the expenditure of federal funds and other resources of the Department
of the Interior. Water 2025, so long as it continues to recognize that
transfers and the use of market mechanisms must be voluntary and
pursuant to state law, provides a strong foundation for defining the
role of the Bureau in meeting future water needs of the West.

As is recognized by Secretary Norton's Water 2025 Initiative, it is
imperative that Reclamation provide for the operation, maintenance, and
modernization of existing water supply infrastructure. Many Reclamation
facilities are approaching the end of or are past the design life of the
facilities. In addition, many of these facilities also need to be
replaced with modern designs that provide for greater water management
efficiency. Sound business practices dictate that this existing
infrastructure, and the water supply provided by these facilities, be
protected and preserved prior to the dedication of scarce funds to the
development of new supplies. With respect to the specific question
regarding the role of the Title XVI Program, the Family Farm Alliance
observes that many of the existing and potential recipients of these
funds are entities that have the financial capacity to fully fund the
development of alternative water supplies. The Title XVI Program should
not be funded at the expense of taking care of existing infrastructure
and protecting important agricultural communities that do not have the
same financial capabilities.

The Family Farm Alliance supports the Water 2025 matching grant program,
and suggests that it be expanded to provide additional opportunities for
the investment in water conservation and efficiency measures. However,
because this program is unlikely to meet all of the needs for funding
the repair and modernization of existing facilities, additional funding
mechanisms must be developed. Alternatives include a return to the Small
Project Loan Program, or the development of federally backed loan
guarantees that will enable water users to access alternative sources of
capital in order to repair and modernize existing infrastructure. With
respect to financing projects, the historical use of zero interest loans
already authorized by Reclamation law still has some merit; especially
when it has been conclusively shown that many projects have returned
their construction costs to the Treasury many times over from tax
revenues directly related to the project benefits.  Even in areas of
less intensive irrigation and population, benefits from the various
projects have more than returned their cost, especially when all of the
project benefits, including those not originally authorized and assigned
costs, are considered. 

Another possibility would be to allow entities with annual repayment
obligations to shift those obligations to operation, maintenance and
replacement reserve accounts.  Although this does have an impact to the
return to the Treasury, it could reduce the potential need for future
assistance for major rehabilitation.  Also, it would seem appropriate
for Congress to allow for the capitalization of OM&R.  Many of the
infrastructure problems on old Reclamation facilities could have already
been addressed if capitalization of OM&R had been authorized.

A number of years ago the Family Farm Alliance took the lead in an
effort to provide for cost containment and accountability for work by
the Bureau of Reclamation that was either funded in advance by water
users or subject to repayment obligations. With the cooperation of the
Bureau of Reclamation in general, and Jack Garner in particular, great
progress was made in this regard. However, given that federal, state,
local, and private funds will be scarce, it is imperative that these
efforts continue.

Recent events on several fronts that are related to this issue have been
a source of concern to the Family Farm Alliance. First, the unfortunate
experience with the cost overrun on the Animas-La Plata Project provided
a warning signal that additional work was needed to ensure that
Reclamation continues to focus on cost containment and accountability
for projects funded through the Reclamation Program. Second, a number of
our members have dealt with situations where cost estimates for work
that would be done by the Bureau of Reclamation were substantially over
the cost of having the work done by the local district itself or under
contract with private consultants. There appear to be at least two
reasons for the divergence in the cost estimates -- excess staffing by
Reclamation for work, with attendant increases in costs, and the
requirement of design standards that are excessive or unjustifiable.
Third, the Family Farm Alliance is deeply concerned to hear that at
least one district has been forced to use Reclamation staff for design
work and was not given the option of doing the work itself or having it
performed by qualified consultants. This incident is of great concern
because it is contrary to the practice elsewhere in Reclamation, where
contractors who are paying for the work have had the option to have the
work performed by Reclamation or by qualified consultants.

In light of the fact that neither Reclamation nor water users can afford
to waste money through over-staffing or noncompetitive practices, the
Family Farm Alliance encourages the Committee to take a very hard look
at the policies and practices of Reclamation with regard to the
involvement of the Reclamation programs located at the Denver Federal
Center. The Family Farm Alliance also plans to provide input to the
ongoing review of these aspects of Reclamation by the National Academy
of Engineering, which appears to be focusing on the question of what
capabilities Reclamation should maintain within the agency and what work
or functions can and should be performed by others. However, regardless
of the outcome of this review, fundamental fairness requires that when a
water user is paying for work in advance or through repayment
mechanisms, that water user should have the option to have the work
executed in the manner that provides the most return for the investment.

These concerns regarding cost containment and accountability do not, in
general, implicate the work done at the Regional and Area Reclamation
Offices. The Family Farm Alliance is proud of its partnership with
Reclamation, and believes that Reclamation has much to be proud of in
its service to water users and the public.

**Senate Energy and Natural Resources Committee**

**Water** **Conference**

**City of Santa Fe**

The Bureau of Reclamation has largely fulfilled the mission that
Congress assigned to it over 100 years ago. Sustained rates of
population growth have literally become a way of life in New Mexico and
throughout the West, bringing significant challenges and unprecedented
pressures on our water resources for meeting municipal and industrial
needs. Now is the time for Congress to revisit Reclamation's mission for
the 21^st^ century to undertake water supply and supply augmentation
activities in the West for the purpose of assisting municipal and
regional water providers to meet their water supply and drinking water
needs.

Congress should address several related topics in Reclamation's new
mission to squarely include municipal water supply development and to
help municipal providers obtain and maintain reliable sources of supply.
Our experience in water resources management in New Mexico suggests that
Reclamation's revised statutory mission should explicitly include the
following:

-   Implement new arrangements for Reclamation water projects and
    agreements that do not expire or terminate, to provide
    municipalities with secure and continuous access to the water
    supplies that they depend on to meet their long-range needs.

-   Cooperate with states and municipalities to develop water supplies,
    including new sources of water supply through more efficient storage
    of water and desalination; protecting existing sources of supply
    through watershed restoration; and protection and maintenance of
    water conveyance efficiencies.

-   Streamline market-based conversions of water used for irrigation for
    municipal and industrial purposes and to meet environmental needs.

-   Provide grants and loan guarantees to assist municipalities that are
    demonstrating a strong and capable commitment to help themselves.

-   Develop or provide water to settle Indian water rights and federal
    reserved water rights claims.

Each of these topics is discussed briefly below.

Municipalities, such as Santa Fe, depend on water service contracts for
significant portions of their water supply portfolio. In many cases,
these contracts have expiration dates and may have renewal arrangements
that are subject to Reclamation's discretion. As an example, the City of
Santa Fe and its regional partners are now investing over\
\$100 million in a new system to divert and treat the City's allocation
of Reclamation's San Juan-Chama Project water, even though the City does
not currently have a permanent or even long-term agreement for use of
that water. Given the importance of water supply for the well being of
the people and economies of the West, it would be appropriate for
Congress to limit Reclamation's discretion in renewals of these types of
contracts and to establish congressional policy favoring replacement of
water service contracts with permanent arrangements that do not expire.

The water supplies of the West are generally fully developed, except for
the new usable water that more efficient water storage and desalination
can provide. Reclamation's 21^st^ century mission should squarely
include both of these areas of endeavor. Similarly, Reclamation's
mission should also include watershed restoration and protection and
maintaining the efficiencies of water conveyance in order to maintain
the productivity of watersheds upon which municipalities depend for
their water supply, and protect water supplies from losses suffered in
conveyance. Aquifer storage and recovery has great potential for storage
of municipal water supplies in a manner that eliminates evaporative
losses, increases net supplies, and increases drought reserves, yet its
widespread use will be hindered until further applied research is
conducted. Reclamation should be specifically authorized to assist
municipalities with aquifer storage and recovery and desalination
projects that will reduce water losses, facilitate the development of
waters of lower raw water quality, and increase drought reserves.
Congress also should direct Reclamation to avoid damage to municipal
water supplies through maintaining the efficiency of water conveyance.
Santa Fe, for example, is directly hurt if reduced water conveyance
efficiencies on the Rio Grande contribute to low water storage levels in
Elephant Butte Reservoir, which in turn, prohibit Santa Fe's storage of
native water in its Santa Fe River Canyon Reservoirs. If environmental
restoration needs require additional water losses in conveyance,
Reclamation should be responsible for offsetting those additional losses
so as to keep municipal water supplies intact.

Reclamation's use of a historic federal law (the 1920 Miscellaneous
Purposes Act) to convert irrigation water supplies to municipal and
industrial purposes should be discontinued. While the vast majority of
all the water development of water in the West was for irrigation
purposes in order to settle the West, municipal and industrial and
"urban" growth now represents virtually all increases in water use. But
its vibrant municipalities and industries and economies need water.
Congress should provide for a mechanism that streamlines the process of
market conversions of water to these contemporaneous needs, while
providing fair compensation to the farmers through the market.

As demands on supplies increase, water supply development projects
become even more expensive -- often measured in the hundreds of millions
of dollars even for communities of Santa Fe's size. Congress provided
very low cost development of water originally for the West. Congress
should provide new mechanisms to provide some grant funding and loan
guarantees for the expensive projects that municipalities need, such as
aquifer storage and recovery, desalination, and other technological and
infrastructure needs, to secure their water supply futures. Further,
each of Reclamation's existing funding programs should be reevaluated --
potentially through input from current and potential future local
project sponsors -- to identify the strengths, weaknesses, and
applicability in meeting the evolving needs of communities throughout
the West.

Providing finality through realistic and fair settlements of tribal and
federal water rights claims is essential for the well being of western
municipalities, specifically including Santa Fe (as detailed further in
our submittal for Topic 3, Indian and Federal Reserved Water Rights).
Reclamation should be assigned an explicit role to help fairly settle
these matters and bring the uncertainty that surrounds them to an end.

Together, we believe that these specific changes to Reclamation's
mission and responsibilities will allow Reclamation to fulfill a
critical role in meeting the evolving and growing water needs of the
American West.

**Senate Energy and Natural Resources Committee**

**Water** **Conference**

**Confederated Tribes of the Umatilla Indian Reservation**

**2. Role of the Bureau of Reclamation in the 21st Century**

The Umatilla Basin Project (UBP) Act (*100 P.L. 557;* *102 Stat. 2782
Title II)*, passed by congress in 1988 under the visionary leadership of
Sen. Mark O. Hatfield, is [the]{.underline} hallmark example of the need
for, and the potential of, the US Bureau of Reclamation in planning,
designing and implementing projects to address water supply and water
resource management in the West.

In the UBP the Bureau of Reclamation (BOR) played the central federal
agency role in planning (EIS and feasibility report), designing and
constructing the water supply and distribution infrastructure. This role
was important not just because they had the expertise, but also because
they had the history. It was the BOR in the early 1900's (see ***#1
Water Supply and Resource Management Coordination***) that constructed
and subsequently operated the irrigation reclamation project that
de-watered the Umatilla River and that the UBP ultimately fixed.

In a nutshell, the infrastructure for the UBP took advantage of the
existing irrigation delivery system, and added new, large capacity water
pumps capable of pumping over 200 cubic feet per second (cfs) of water.
The new pumps were located near the mouth of the Umatilla River where it
empties into the Columbia River. With restoration of Umatilla River
streamflows as the project goal, the UBP pumps lift water from the
Columbia River and delivers it to the existing Umatilla River irrigation
distribution system. From a water management perspective, for every
bucket of water not diverted from the Umatilla River, a bucket is pumped
from the Columbia River to the Umatilal Basin irrigation system. The end
result is a partially restored Umatilla River (about 50% of total
spring-fall stream flow is now left in-channel for fish) and partially
recovered spring and fall chinook and coho salmon populations. Summer
steelhead, pacific lamprey and other native fish stocks continue to be
nurtured toward recovery and along with the salmon runs require
additional water and habitat restoration (see ***#3 Indian and Federal
Reserved Water Rights***). Further, this unique "water exchange" between
the Columbia and the Umatilla rivers, regulated under Oregon water laws,
results in no net loss to stream flows in the Columbia River. This
results from the bucket for bucket exchange that leaves the same amount
of water in the Umatilla River and which ultimately empties back into
the Columbia River.

The BOR played a diversity of roles in the negotiation, development and
implementation of the UBP. These roles can be divided into the following
categories:

1.  Proponent -- under the leadership of then-Regional Director John
    Keys, the BOR worked closely with key stakeholders, CTUIR and three
    irrigation districts, to help to find common ground.

2.  Expert -- the BOR was the irrigation infrastructure, reservoir
    contracting, state water rights connection and project design and
    construction expert.

3.  Trust -- a key component to allocating water in the 21^st^ Century
    is trust. The BOR in the 1980's and 1990's provided key senior
    personnel to stay involved in basin-level negotiations between CTUIR
    and irrigation districts and later with citizen groups and others
    interested in the outcome. CTUIR believes that had it not been for
    the active, personal involvement and presence of then-Regional
    Director John Keys and his staff the UBP may not have been
    completed.

Twenty first Century roles for the BOR should continue to be:

1)  Advocate for and assistance in settlement of federal reserved water
    rights for Tribal governments.

2)  Assistance in planning and constructing the infrastructure necessary
    to serve the basic current and future water needs of Tribal
    governments as part of satisfying reserved water rights by striving
    for compatibility with existing water uses and rights.

3)  Providing expertise in developing and implementing solutions to
    water allocations, planning and management of water resources.

4)  Providing direct assistance to Tribal governments in the forms of
    in-kind personnel assistance (e.g. water resource engineering),
    funding agreements to fund Tribal self governance work related to
    water development and management, assisting Tribal governments to
    manage BOR facilities that serve Tribal Governments, assisting
    Tribal governments in marketing and managing trust water resources,
    providing technical assistance to Tribal governments in quantifying
    and planning for the later negotiation and settlement of Tribal
    water rights claims.

5)  Watershed restoration and water acquisition for instream flow
    restoration.

Most important for completion of a long-lasting Umatilla Basin water
solution is for the BOR to complete the shared vision of Sen. Mark
Hatfield, the CTUIR and the Umatilla Irrigation Districts -- Settlement
of CTUIR reserved water rights and completion of Phase III of the
Umatilla Basin Project. Major legal and procedural accomplishments are
being made between CTUIR and the Westland Irrigation District that are
paving the way for BOR planning and design of Phase III and for a
negotiated settlement of the CTUIR water rights. A request for
authorization of construction of Phase III of the Umatilla Basin Project
and the infrastructure needed to serve CTUIR consumptive water needs
will be before the Energy and Natural Resources Committee in the next
couple of years.

Phase III of the Umatilla Basin Project will provide Columbia River
water for Westland Irrigation District, the last remaining and largest
irrigation district on the Umatilla River. Completion of Phase III will
provide enough water in combination with the existing Phases I and II,
and most importantly, water that is not obligated to competing uses, for
CTUIR on-Reservation consumptive uses and for instream flows to protect
the recovered salmon populations and to allow for recovery of lamprey,
steelhead and other important resources. Senator Mark Hatfield
challenged the Umatilla River Basin to achieve that goal -- final and
complete water management and allocation settlement -- 20 years ago.
That goal is now within the vision of the CTUIR and basin irrigation
districts, the Honorable Governor of Oregon Theodore Kulongoski and we
look forward to working with the Committee to make it happen.

[^1]: Draft 2000-2005 Strategic Plan, October 22, 1999.