**Statement of Robert W. Johnson, Commissioner**

**Bureau of Reclamation**

**U.S. Department of the Interior**

**Before the**

**Committee on Energy and Natural Resources**

**Subcommittee on Water and Power**

**U.S. Senate**

**Reclamation's Aging Infrastructure**

**April 17, 2008**

Mr. Chairman and members of the subcommittee, I am Robert W. Johnson,
Commissioner of the Bureau of Reclamation. I am pleased to provide the
Department of the Interior's perspective on Reclamation's asset
management strategy as it relates to our aging water and power
infrastructure. I will also discuss some of the reinvestment needs we
have identified.

Before I start, I would like to note that I have been a Reclamation
employee for over 30 years, and am well aware of the challenges we face
as a result of our aging infrastructure. Operating water facilities,
whether aging or newly complete, brings with it many unknowns and
engineering challenges. A recent example of these challenges is provided
in the case of the Truckee Main Canal (TMC), near Fernley, Nevada. Early
on the morning of January 5, 2008, a portion of the Truckee Canal
embankment failed resulting in uncontrolled water releases into
residential areas of the City, causing varying damage to 590 homes. The
canal, operated and maintained by the Truckee-Carson Irrigation District
under a contract with Reclamation, provides water to agricultural and
wetland uses in the Fernley and Fallon, Nevada areas. At the location of
the breach, the canal, built a hundred years ago, has earthen
embankments and is unlined.

After the breach, the District shut down the canal and placed a
temporary earthen plug into the breach site to stem flows into the City.
Concurrently with designing a permanent repair for the breach,
Reclamation initiated several studies and investigations with the
purpose of determining likely contributing factors to the failure, the
condition of the remainder of the 31-mile long canal, the risks
associated with resuming flows in the canal through the reach above the
City, and the conditions under which deliveries might be resumed. The
inspection of the remainder of the canal was conducted by teams,
including members from the City, the District and the Corps of
Engineers. A team of independent experts determined that the most likely
contributing factor to the failure was rodent activity.

During March, staged diversions into the canal were resumed beginning at
20% of the maximum canal flow with ramping allowed up to 45% of the
maximum flow. Flows above 20% of the maximum are authorized only if the
District meets specific requirements, such as development of emergency
action, maintenance and facility improvement plans. Flows above 33% are
allowed only after a special rodent control program has been carried
out. Flows may not exceed approximately 45% of the maximum flow until a
permanent fix is in place, such as an impermeable barrier on the city
side of the canal protecting the City of Fernley. The staged flow
restrictions are the direct result of the studies and investigations
undertaken by Reclamation -- designed to determine under what
circumstances diversions could be resumed under safe and reliable
conditions.

It is important to recognize the extent of the damage caused by the
failure, but it is also important to recognize that Reclamation was able
to assemble the expertise necessary to evaluate the conditions under
which flows might safely be resumed and develop a flow regime under
which the District could resume restricted diversions within eleven
weeks. It took an intensive, concerted effort by Reclamation and the
District to achieve this result. The Reclamation contribution involved
staff from the area and regional offices, together with staff in
Reclamation's Technical Service Center.

The TMC is over 100 years old. Given that Reclamation's first projects
were started over 100 years ago, our employees and managing partners
have done an incredible job of safely maintaining and protecting our
infrastructure. In the aftermath of events on the TMC, Reclamation has
initiated a new effort to ascertain where growth has occurred around
canals, and where a similar condition may exist that could pose a threat
to life or property. We intend to work with our operating partners to
select representative canal reaches in urbanized areas within each of
our five regions for special reviews to be conducted this year. This
process will afford the opportunity to engage interested operating
partners in the topics of asset management and addressing our aging
infrastructure.

While Reclamation's reach across the West is widespread, our employees
take the safety of our facilities and the protection of our customers
and surrounding communities very seriously. And, as a result, the vast
majority of our infrastructure is in good working order. I am very proud
of our record.

In fiscal year 2009, Reclamation's Dam Safety Program plans to have
corrective actions underway at six facilities across the west, and is
requesting an increase of over \$15 million above the amount
appropriated in fiscal 2008 in the Dam Safety Program. Reclamation has
also requested funds to study the need for potential corrective actions
at other facilities.

Reclamation's mission is to "manage, develop, and protect water and
related resources in an environmentally and economically sound manner in
the interest of the American public." We are the Nation's largest
wholesale water supplier, and the 348 reservoirs we administer have a
total storage capacity of 245 million acre-feet of water. We bring water
to more than 31 million customers and provide 20 percent of western
farmers with water to irrigate 10 million acres of farmland. Reclamation
is also the Nation's second largest producer of hydroelectric power,
generating more than 40 billion kilowatt-hours of energy each year --
equivalent to the energy provided by 80 million barrels of crude oil. In
the 100 years since Reclamation's creation, the Federal government has
invested almost \$21 billion in original development costs for our
facilities. The current cost to replace these assets would be many times
that original development cost.

Reclamation's core mission has remained constant since its inception,
but the way we accomplish that mission has evolved. Today, we focus
primarily on managing and maintaining our facilities to ensure their
safe and effective operation while continuing to deliver water and
power. In terms of actual operation and maintenance, Reclamation
operates about one-third of its facilities, and the other two-thirds
(primarily single-purpose irrigation facilities) are operated and
maintained by non-Federal operating entities (e.g., water/power
districts formed under state laws to provide service to a particular
area or set of customers).

Most of Reclamation's major dams, reservoirs, hydroelectric plants, and
irrigation systems are 50 or more years old. A central point we would
like to make is that a facility's age by itself is not the sole
determinant of its viability -- rather, facility condition is the
central factor in predicting the long-term functionality and maintenance
need of Reclamation assets. As part of Reclamation's oversight of
constructed assets, we initiated a Facility Review Program in 1948 to
assess the condition of assets constructed by Reclamation and operated
and maintained by our non-Federal operating partners. These activities
continue today and, in concert with a preventive maintenance philosophy
and related oversight initiatives, have successfully extended the
service life of many of our water and power facilities beyond original
expectations. Reclamation has recently been taking steps to more
accurately represent its inventory of assets in the Federal Real
Property Profile (FRPP).

Nevertheless, the aging of our infrastructure constantly presents new
maintenance, replacement, and modification requirements. Similar to
other agencies with aging infrastructure, Reclamation has a fiduciary
duty to maintain services to its customers in a cost efficient manner
and to meet other expectations, particularly environmental and
endangered species management. While Reclamation and over 350 operating
partners have for many years operated and maintained the infrastructure,
the very nature of the aging process will inevitably lead to increased
pressure on budgets and user rates to keep infrastructure service and
reliability commensurate with past levels. As such, Reclamation and the
operating entities anticipate a steady increase in infrastructure repair
needs that will continue to grow over time. As part of Reclamation's
asset management strategy, regular operation and maintenance activities
under appropriated dollars will be managed in concert with other
programs and activities addressed in our strategy to improve efficiency
and effectiveness in funding rehabilitation and replacement needs.

Improved technology will also offset many of these costs, as will
innovative construction processes like the one occurring on the Joint
Federal Project at Folsom Dam near Sacramento. Together with the U.S.
Army Corps of Engineers, Reclamation is undertaking an historic effort
to jointly construct features that will address both safety of dams
concerns, as well as expand flood protection for the City of Sacramento.
Separately, these two projects would cost over \$2 billion and would
take 15 years to complete, but by working together to design and
construct features consistent with these two distinct activities,
Reclamation and the Corps estimate that the joint project should cost
half that much and be completed in half the time. Project construction
is planned to proceed in phases by Reclamation and the Corps.

Procedurally, Reclamation's Facility Maintenance and Rehabilitation
Program identifies, schedules and prioritizes necessary rehabilitation
work at reserved works. To fulfill these responsibilities, Reclamation
provides designs and studies, purchases equipment and services, and
provides the resources to support the overall maintenance and
rehabilitation program. Project beneficiaries advance funds for annual
O&M work performed by Reclamation.

However, for many other facilities, rehabilitation and replacement needs
may exceed available resources and could potentially increase the risk
of service interruption or failure, as occurred early this year on the
Truckee Main Canal. To fund this work, in cases where operating partners
cover a portion of the O&M costs for reserved works, or the entire O&M
costs on transferred works, the use of the entity's reserve fund is one
of the first places we look for funding. However, these funds may not be
contractually required nor sufficient to meet the amount needed for
major rehabilitation and replacement work. Thus, long-term financing
must often be obtained to fund such work, and arrangements are made with
operating entities depending on the circumstances of a given project.

West-wide, Reclamation currently estimates that approximately \$3
billion will be required to rehabilitate, replace, and modify
Reclamation assets under major rehabilitation and replacement programs
in the future. This figure was derived from a very rough, field-level
estimate of conceivable needs, and includes work under our Safety of
Dams program, anticipated work on our water and power reserved works,
and preliminary estimates for transferred works operated by our
customers. From a programmatic perspective, much of this data is
insufficiently reliable to serve as a basis for budgeting or long-term
planning decisions. A substantial part of projected needs will be
financed directly by our water and power customers and the sale of
hydroelectricity. Some funds may need to come from appropriations, but
the magnitude and timing of such funding needs is unknown. As noted
above, those entities which contractually operate transferred works are
also required to fund operation, maintenance, rehabilitation, and
replacement work at their cost, and this amounts to at least \$800
million of the \$3 billion estimate.

One of the challenges we face is the varying economic strength of our
operating partners. For some of these partners, the cost-share
requirements associated with the review and repair activities are simply
beyond the means of the beneficiaries. The Administration has and will
continue to be opposed to projects that are authorized without adequate
cost controls and built-in accountabilities to ensure that the Federal
government is not subject to undue costs. While circumstances for each
project in need of review, rehabilitation or repair may be different, in
order for projects to be sustainable, the non-Federal sponsors must be
responsible for a fair share of project costs and, for facilities that
are being operated and maintained by non-Federal entities, these
entities must be accountable for maintaining the assets.

Title II of the Twenty-First Century Water Works Act (P.L. 109-451)
authorized loan guarantees for eligible projects. Currently, Reclamation
is working on the proposed rules for implementing this program.

Sound and reliable infrastructure is the core of Reclamation's mission.
With the support of Congress, our customers, and other stakeholders,
Reclamation will continue to assure the integrity and reliability of
Federal water and power assets.

This concludes my written statement. I would be pleased to answer any
questions.